The Future of Consumer Buying Power

Consumer buying power is the measure of whether a customer/consumer has the capacity to buy products or goods in the market. If the customer has a greater income and the prices of the products or goods available in the market are lower, then the consumer is said to have a higher buying power and vice versa. So if a company wanted to sell its goods in the market, first it needs to understand whether its targeted customers in the market can afford its products and whether there is enough inventory to meet the customer demands. But In today’s world, the so called power in the hands of consumers has been stripped off to the point that everything in the market could be sold one way or another to them irrespective of his/her needs and the companies need not worry about their sales as long there is Internet in everyone’s hands.

I was scrolling through my Instagram feed and i happened to come across a post about someone playing the Ukulele in the Himalayas. At that point I had no idea what it was 😝, So I googled “guitar like instruments” and voila i found it. Google also happened to mention its prices on multiple sites and i realized that they were cheaper when compared to guitars. So for a second, I thought maybe, just maybe, i could buy one since it was also small and that it would be nice to learn it. That one second was enough for the internet giants to decide on my behalf that i must own one ukulele. Ads were vehemently shot at me from different apps that i use such as Google, Instagram, Youtube and many more.

This holds true not only for physical products but also for services provided by other apps. Through Twitter, I got to know that Congress MP, Shashi tharoor was taking a special lecture series on the Unacademy app about world politics and history in general and so I decided to check it out. Henceforth, I have been constantly fed with ads on taking the full UPSC course on Unacademy for a discount 😑, so much so that at this point i can recite the entire ad that has been shown to me countless times between every video i watch on Youtube.

We have all been through this. This type of advertising is called Targeted Advertising where ads are shown to consumers based on their activity on the internet. Apps generate specific ads from the local cache available from the internet searches or websites that the consumer has been to. By doing so, Relevant products or services can be sold to them.

Although frustrating, We cant really blame these apps for doing so cause at the end of the day they also need to make money and ads are one of their major sources of income.
For any online business i.e services or products offered online, to make money, at first one has to give their services or products for free and get customers to start using them, constantly providing improvements based on their feedback until a point where customer’s mindset changes to the notion that it has become a basic necessity to them. Once these companies have the required audience, they unleash the ads on their customers. All major online businesses follow this trend but some do even more than just ads.

Let us take the case of Swiggy. They offered their services for free for years, getting customers to use their app, expanding their reach and now not only do they show ads but they also have started levying heavy charges for their services. Delivery charges, Restaurant charges, Surge fee and many more to come. Customers found it hard to accept this change all of a sudden (which Swiggy hoped for) and so they introduced their subscription based model(Swiggy Super) where customers only had to subscribe to their services monthly and in return, avail their services through out the month for free or at low cost. By doing so, They create the false impression that a customer is saving money on the services provided, by opting for their subscription model. Whereas in reality, It is rather actually a win-win situation for the company. A not so regular user who now has become a member to the subscription would increase his/her app usage slowly to become a more regular user and as for a regular user, although the subscription would feel like a better option , It will only remain so until they increase the subscription fare by when the user would have become a much more frequent user who would simply submit to the fare increase. This is the case with a lot of online businesses. The same trend also can be seen in below apps/companies,

My parents used to ask me, why are these companies giving away things for free? How will they make money from this? wouldn’t they go bankrupt?
The thought process, is to sell the brand first more so than its products. Once brand value is established in the minds of the customers, they will literally buy anything that is being sold by the company and in order to sell the brand, they have to offer their products or services for free. When Ola was launched it was about establishing trust in minds of people that the cabs under the Ola brand were easy to use and were safer. To establish this trust, they had to give their services for free to almost anyone with a smart phone and now Ola is the first name that pops into anyone’s mind when they decide to step outside, so much so that India’s Financial Minister blamed them for decline in automobile sales😝. FYI the same parents are now regular users of Prime,Ola and many more apps😆

We are living in a world where everyone is a seller and every other person is a buyer. There are companies working specifically on ways to improve the sales of products or services by analyzing how people interact with everything on the internet. They provide insights to other companies on how their products can be sold better based on metrics such as total traffic, time on site etc

When more and more people are working on improving sales, It gets more difficult to not buy them. We are moving towards a future that will probably be like,
Amazon shows X an ad for a brand new iphone in the market while he is watching a show on prime. Soon after,
Amazon — Greetings sir. We noticed you saw this ad for a new iphone in the market on prime and so we have ordered one for you 😃
X— What???? Why did you order it for me? I don’t want it 😲
Amazon — Why not sir? Its got all these new features
X— I don’t care. I am happy with what i have. 😠
Amazon — But sir, if you did not want it, Why did you watch the ad? 😅
X— You showed me the ad. I didn’t ask for it. Should i now close my eyes while you show me ads? Please cancel the order 😠
Amazon — I’m sorry sir, we cant cancel the order now. Its already been shipped and we have deducted the money from your account for it. 😄
X— whatttttttt? Why did you deduct my money? I don’t want the phone. How did you deduct my money without my permission? 😨
Amazon — Well sir, You had saved your credit cards to our account and in our terms of agreement, which you had agreed to, in page 856 it is mentioned that we can deduct money from your cards in terms of life essential products.
X— 😵But.. but.. I don’t want it. I already have a phone, Why would i need a new one and how come it is a life essential product?
Amazon — Sir, this new phone has a feature where it will display 3d projections of your girlfriend when phone is placed down during video calls. 😜
X— But…but… I don’t even have a girlfriend 😢
Amazon — Sir, I checked for girlfriends in our inventory and it is currently out of stock. I have added it to your wish list and will order one for you as soon as it is available😄
X— 😫Maybe I should just close my eyes hence forth when they show ads 😕
Amazon — Thank you for shopping with us. Have a pleasant day 😃

So, Is there any way to escape the grips of targeted advertising?
In order to restore the power in hands of consumers(Us), one can practice minimalism. Minimalism is living with things you really need. It means to only buy stuff that you actually feel makes your life better in the long run. Basically One must try not to waste much of his/her money on stuff that depreciates its value soon such as smart phones. One only has to look around their house to find a lot of junk stuff they had bought long ago but has been sitting idle ever since. If anything, writing down stuff that he/she needs after seeing ads, before taking the decision to buy them can actually help get immune to targeted advertising.

It is true that one’s hard earned money lying idle in their bank accounts loses its value on inflation but it doesn't mean one has to spend them on every ad targeted at them. So to conclude, have i bought a ukulele? No, maybe in the distant future 😝. Have i subscribed to the UPSC class on Unacademy? Hell, no, I wont 😝. Thanks for reading and beware of the ads.😄

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