Remember your first economics classes? Those were the ones that explained how systematically the price and production level of a product are set at that precise point where supply meets demand. Once students gain an understanding of that theory early in their economic studies, they spend the rest of their economics education learning the flaws and fallacies that keep the theory from working. I know. I majored in economics at Florida Southern College.
Knowledge in the Market Place
There are many factors that keep that theory from becoming reality. The primary fallacy in economic theory is the assumption that consumers have perfect knowledge in the market place.
Many of us have walked into a store and purchased a soft drink, then left the store, arrived at another location and found the same soft drink available for a lower price. And nearly everyone has purchased a product that they were incredibly disappointed with it once they used it. If they had known before the purchase what they knew after the purchase, they would have never made the purchase!
These mistakes are made constantly on a grander scale throughout the business world. We make these mistakes because of things we don’t know.
Social Media = Knowledge
Social media is moving us closer to having that “perfect knowledge”. It’s not hard to go to a search engine and type in the name of a product you are interested in and find some opinions written on it. Today, people set up blogs focused on venting their frustrations about products or companies they are unhappy with. And others are quick to post their praises for products they are very happy with. For a good example of both sides just go to Facebook, search “Walmart” and see the array of pages that are available.
Businesses Must Satisfy Their Customers
In the past businesses focused on how their products were perceived prior to purchase. Customers made the purchases based on what they expected to receive. Today businesses must focus on how their products are perceived after the purchase. If the customer isn’t happy then the customer will tell the world about it in great detail.
We still have a long way to go to reach that point of perfect knowledge in the market place. And I doubt we will ever get there. But, thanks to social media, we are able to avoid many of the mistakes we have made in the past. Customers know what they can expect. And businesses that use social media know what their customers want. Those that don’t, well, they will lag behind their competitors who do and some of them won’t be around much longer.
How has social media impacted your business decisions?