Rules of Evidence

This post was a response to a student's concern that consumers have no real protection from poor quality products in the market.

SONY VAIO

I do not agree with the general proposition that there are no checks in the marketplace to stop people from selling poor quality or defective products. Consider the role to branding and middlemen in a free market "competitive" economy.

Brands

First, one of the most valuable assets (often the most valuable asset) owned by a company is its brand. For example, I started buying laptop computers a few years ago. The last computer I purchased was a Sony. I purchased it because I had run into problems with the other two computers after about a year of use. My mother owned a Sony and always said good things about the quality of her computer. I have now owned my Sony for a year and a half with no problems. In the future I am willing to pay more because of the Sony brand on a computer. For Sony, this reputation for quality means extra money in the bank from every computer they sell. If Sony began releasing poor products, they would quickly destroy their most valuable asset. While some company in
China that nobody has ever heard of may release something that does not work well and not pay much of a price, a company like Sony would be nuts to release a poor quality product.

Middlemen

Second, think about the role of a middleman in the market. Take Best Buy for example. While none of us has the expertise, time or ability to check out each item in detail before we buy it, if you are Best Buy and you are looking to sell a few hundred thousand units of a product, it is in your interest to thoroughly check out the item before you make a purchase. If the item does not work well, you are going to have your stores full of angry customers returning the product. They will want their money back. That is expensive to you. In addition, they are much less likely to shop at your store in the future. Once you establish a reputation for poor quality products, you would destroy the "Best Buy" brand and the business.

If you are buying something from Joe Blow out of the back of his pick-up truck, you do have a lot to worry about. However, brands and middlemen do play an important role in a free market system when it comes to protecting consumers. As consumers we can gain a lot of protection by using brands and middlemen to our advantage.

		July 27, 2007 *Brands and Middlemen - The Consumer's Protectors*
	This post was a response to a student's concern that consumers have no real protection from poor quality products in the market. SONY VAIO I do not agree with the general proposition that there are no checks in the marketplace to stop people from selling poor quality or defective products. Consider the role to branding and middlemen in a free market "competitive" economy. Brands First, one of the most valuable assets (often the most valuable asset) owned by a company is its brand. For example, I started buying laptop computers a few years ago. The last computer I purchased was a Sony. I purchased it because I had run into problems with the other two computers after about a year of use. My mother owned a Sony and always said good things about the quality of her computer. I have now owned my Sony for a year and a half with no problems. In the future I am willing to pay more because of the Sony brand on a computer. For Sony, this reputation for quality means extra money in the bank from every computer they sell. If Sony began releasing poor products, they would quickly destroy their most valuable asset. While some company in China that nobody has ever heard of may release something that does not work well and not pay much of a price, a company like Sony would be nuts to release a poor quality product. Middlemen Second, think about the role of a middleman in the market. Take Best Buy for example. While none of us has the expertise, time or ability to check out each item in detail before we buy it, if you are Best Buy and you are looking to sell a few hundred thousand units of a product, it is in your interest to thoroughly check out the item before you make a purchase. If the item does not work well, you are going to have your stores full of angry customers returning the product. They will want their money back. That is expensive to you. In addition, they are much less likely to shop at your store in the future. Once you establish a reputation for poor quality products, you would destroy the "Best Buy" brand and the business. If you are buying something from Joe Blow out of the back of his pick-up truck, you do have a lot to worry about. However, brands and middlemen do play an important role in a free market system when it comes to protecting consumers. As consumers we can gain a lot of protection by using brands and middlemen to our advantage.