If you buy a big ticket item it will obviously be worth your while to pay some attention to where you can get it at the lowest price – although other factors, such as convenience, the reputation of the seller, or the quality of the brand may be at least as, if not even more, important than simple cash.
But how do you make purchasing decisions for smaller, more everyday items?
When Resale Price Maintenance was abolished in Britain in 1964 there was plenty of advice for housewives; we were advised, in all seriousness, to walk the length of the high street stopping at each relevant outlet to check the price of the items on our shopping list. You then turned round & walked back home, this time stopping to buy bacon, bread & baked beans at whichever shop offered the lowest price for each.
In fact this was the way that perfect competition was described as operating in the only venue in which it could conceivably do so, as it was described in our Introduction to the Theory of Economics lectures; consumers entered the street market & carefully checked the price & quality of the potatoes on offer at all the different stalls before making a decision.
Aqueous cream has once again made me think about all this.
If you are a nurse or a carer or an elderly person you will be familiar with aqueous cream – a skin cleansing agent & emulsifier for softening & soothing skin. It is a great boon. With the addition of magic ingredients & perfumes it is essentially what beauty editors call moisturiser or cleansing or anti-ageing lotion, but bog standard is available in non-branded form. It consists mostly of petroleum & water.
The last time I left hospital with a goody bag full of pharmacy products, one was a big tub of emollient cream, apparently made up in the hospital itself since their label only appeared on the tub. When it eventually ran out I thought I would buy the nearest available commercial product & trotted off to a well known High Street Chain with the list of ingredients – which included some chemical names which meant nothing to me.
The lists of ingredients on the creams available on the shelves brought only confusion – how did I know which might be vital to my needs? A discussion with the pharmacist whizzed me through a very interesting lesson on the science of moisturising different areas of skin. When feet were mentioned – well I don’t think the word lard was used, but the implication was that any old fat would do for that & I left with a tube of the cheapest available cream.
It was some time later that I noticed a display in the same pharmacy of large hospital sized tubs of aqueous cream at a very advantageous price. I soon noticed that supermarkets were doing the same – I put it down to their strategy for maximising their share of the prescription market, since the majority of customers for aqueous cream will be elderly & the elderly account for 6 out of every 10 prescriptions issued by the NHS. The price seemed to hover around the £4 mark.
It is not something I need to buy very often, so I would just buy it in whichever store I happened to be in on the day. Until one day that store was Sainsbury's & I discovered that their price was only £2.02. So next time I needed some I made sure it was a Sainsbury’s day.
But Oh dear – last week there was an empty space on the shelf where the aqueous cream should have stood. Well, the shelf is in the pharmacy section & as there was no queue at the counter I went across to ask if they had any.
The pharmacist went & brought a tub from round the back. I had to pay him for it, rather than take it to the checkout with the rest of my shopping – and it cost £2.99! Almost 50% more than the shelf price of the other stuff (I did go to check just to make sure).
Well it’s not the kind of thing to make a fuss about, or walk away & buy it somewhere else.
But why the difference? The size is the same, as are the listed ingredients (white soft paraffin, liquid paraffin, cetostearyl alcohol, sodium laurisulfate, phenoxyethanol, purified water) though they do not appear in the same order & they do not give the percentages in a way that is directly comparable.
The one from behind the pharmacy counter specifies that it meets the BP (British Pharmacopoeia) standards.
Both are manufactured in Ireland (by different companies) but the one on the public shelves also carries the name of an English distributor.
Oddly, the one from round the back has the more attractive label, with a pretty yellow & green logo.
Of course, in many cases, those getting the pharmacy version on an NHS prescription will not have anything to pay at the point of delivery; indeed those who are liable to pay the charge of £7.20 per item would be well advised to make a private purchase.
I do not know what I conclude from this nano-economic analysis. It certainly shows the complexity of the globalised consumer world in which we live, & how complicated is the business of being a purveyor to the masses. It even shows how confusing it can be for a mere consumer, attempting to obey the simple law of price & demand.
I once read a very splendid article about how to make sure you got your new car at the lowest possible price, using game theory to set dealer against dealer. Written of course by a man. I do not think such stratagems would work for the weekly shop – the math is probably far too complicated anyway.
So I think I will just fall back on the law of large numbers & say that all these would-be rational, sometimes illogical choices work out in the end to fit the macro-economic forecasting models which guide the Chancellor’s decisions.
