Rising consumerism and ever-increasing discounts
Most people are losing sight of what is needed, going against basic principle of economics
PHOTO: EXPRESS
KARACHI:
Our society is transforming into a consumer society. Citizens are largely seen as buying machines and are continually bombarded with noisy promotion messages.
These messages are numbing the intellectual capabilities of buyers and thus, they are committing the most fatal mistake; ignoring need analysis in buying decisions.
I was once having a discussion with Faizan Ghori – market leader in local branded rice and one of the premier rice exporters – regarding the Pakistani market. According to him, Pakistan is the largest, untapped, homogenous consumer market of the world. We have a burgeoning middle class that likes to spend. This is the new game. This explains why we have Royal FrieslandCampina acquiring Engro Foods, Arçelik acquiring Dawlance, Careem and Uber on our streets and so many car manufacturers lining up to establish plants in Pakistan.
From bricks to bytes: the impressive growth of e-commerce in Pakistan
Hence, it can be said that our market is the new hunting ground for the juiciest prey of capitalism – the consumers. This may explain why whenever our mobile rings; its a sales promotion SMS with a lucrative discount.
But what’s the point? Sellers are getting an untapped consumer market, buyers are getting lucrative discounts. It is a win-win situation. Isn’t it?
Who am I to suggest anything? Let me take you to one of the wisest financial wizards of all time, Warren Buffet, in regards to buying decisions. “If you keep on buying things you don’t need, soon will come a time when you will have to sell things you do need,” he says.
In the deafening noise of discounts and sales promotion, consumers are committing the most fatal mistake of buying things they don’t need. Our need should be the fundamental driver or determinant of a buying decision and not the discount. You should buy things that you need. You should not buy things just for the sake of discounts.
This Ramazan, I have seen people dining out just to take advantage of the discount on a particular outlet on a particular day. They didn’t want to eat that food, they didn’t even want to eat out but they did it because of a discount. When people told me they are going somewhere to eat because the outlet was offering a 50% discount, I suggested them to avail a 100% discount by not going there.
Similarly, I have observed people buying expensive electronic devices just to take advantage of the discounts. They are buying TVs and mobiles although their current TV and mobiles are perfectly fine.
This rampant consumerism has been imported from the US. It is synonymous with the American Dream. Like them we spend whatever we have and even what we don’t have (credit cards). But we must bear in mind that this dream has not served them well. It has made them the most indebted nation in human history.
This buying behaviour is fundamentally against the basic principle of economics. We have scarce resources in this world and we must bring them to the most efficient use possible. Our extravagance has already harmed this planet in irreversible terms. So we must be cogniaant of the fact that buying things should be a serious decision and must be based on our needs.
Rising use of plastic money
And yes how can I not unveil the greatest evil in this fiasco. Most of this buying extravaganza is financed. Most consumers are spending money they don’t even have ie they are using credit cards and end up paying annualised interest of around 36%. There goes the discount as well.
All of us are consumers but we need to consider making budgets. Otherwise no store of wealth is good enough. Tony Robbins in his book “Money: Master the Game” presents so many examples where fortunes were spent carelessly. Mike Tyson, one of the richest athletes, went broke and Michael Jackson was heavily indebted when he died.
Women throng markets in Peshawar for last minute shopping
Our wealth and financial security is not a function of our income streams only. It is largely dependent on our spending habits. We must wake up from this American Dream and make wise buying decisions before we also become the most indebted nation like the US.
The writer is a corporate banker and teaches economics
Published in The Express Tribune, July 10th, 2017.
Our society is transforming into a consumer society. Citizens are largely seen as buying machines and are continually bombarded with noisy promotion messages.
These messages are numbing the intellectual capabilities of buyers and thus, they are committing the most fatal mistake; ignoring need analysis in buying decisions.
I was once having a discussion with Faizan Ghori – market leader in local branded rice and one of the premier rice exporters – regarding the Pakistani market. According to him, Pakistan is the largest, untapped, homogenous consumer market of the world. We have a burgeoning middle class that likes to spend. This is the new game. This explains why we have Royal FrieslandCampina acquiring Engro Foods, Arçelik acquiring Dawlance, Careem and Uber on our streets and so many car manufacturers lining up to establish plants in Pakistan.
From bricks to bytes: the impressive growth of e-commerce in Pakistan
Hence, it can be said that our market is the new hunting ground for the juiciest prey of capitalism – the consumers. This may explain why whenever our mobile rings; its a sales promotion SMS with a lucrative discount.
But what’s the point? Sellers are getting an untapped consumer market, buyers are getting lucrative discounts. It is a win-win situation. Isn’t it?
Who am I to suggest anything? Let me take you to one of the wisest financial wizards of all time, Warren Buffet, in regards to buying decisions. “If you keep on buying things you don’t need, soon will come a time when you will have to sell things you do need,” he says.
In the deafening noise of discounts and sales promotion, consumers are committing the most fatal mistake of buying things they don’t need. Our need should be the fundamental driver or determinant of a buying decision and not the discount. You should buy things that you need. You should not buy things just for the sake of discounts.
This Ramazan, I have seen people dining out just to take advantage of the discount on a particular outlet on a particular day. They didn’t want to eat that food, they didn’t even want to eat out but they did it because of a discount. When people told me they are going somewhere to eat because the outlet was offering a 50% discount, I suggested them to avail a 100% discount by not going there.
Similarly, I have observed people buying expensive electronic devices just to take advantage of the discounts. They are buying TVs and mobiles although their current TV and mobiles are perfectly fine.
This rampant consumerism has been imported from the US. It is synonymous with the American Dream. Like them we spend whatever we have and even what we don’t have (credit cards). But we must bear in mind that this dream has not served them well. It has made them the most indebted nation in human history.
This buying behaviour is fundamentally against the basic principle of economics. We have scarce resources in this world and we must bring them to the most efficient use possible. Our extravagance has already harmed this planet in irreversible terms. So we must be cogniaant of the fact that buying things should be a serious decision and must be based on our needs.
Rising use of plastic money
And yes how can I not unveil the greatest evil in this fiasco. Most of this buying extravaganza is financed. Most consumers are spending money they don’t even have ie they are using credit cards and end up paying annualised interest of around 36%. There goes the discount as well.
All of us are consumers but we need to consider making budgets. Otherwise no store of wealth is good enough. Tony Robbins in his book “Money: Master the Game” presents so many examples where fortunes were spent carelessly. Mike Tyson, one of the richest athletes, went broke and Michael Jackson was heavily indebted when he died.
Women throng markets in Peshawar for last minute shopping
Our wealth and financial security is not a function of our income streams only. It is largely dependent on our spending habits. We must wake up from this American Dream and make wise buying decisions before we also become the most indebted nation like the US.
The writer is a corporate banker and teaches economics
Published in The Express Tribune, July 10th, 2017.