In today's political system, market liberalism is central. This means that we must have competition, and that the products that the customer prefers are the ones that win, while products that no one wants will disappear from the market, i.e., a pull system where the customer's needs are the guiding force for the suppliers. In practice, we see that this does not happen. The invisible hand, which is referred to as Adam Smith's important contribution to market thinking, does not work as we expect.
Instead of suppliers striving to satisfy customer needs, they work diligently to influence customers' perception of what they need and build expertise and systems for advanced push-thinking on how to change market needs. Educational institutions train experts in creating needs and persuading customers to buy a product or service, at too high a price, with poorer quality than they expect and at conditions that are not in line with the customer's interests.
The marketing – experts make sure that goods and services, or information, are in demand. They will build up a "Pull effect". But a pull effect that is made up of promises of something that the customer thinks to be satisfied is false. In many cases, the customer is disappointed and regrets the purchase. Very often, customers buy something they have no real need for. In other words, we get a society that overuses resources to satisfy needs that do not exist, at the expense of the satisfaction of real needs of people because they lack purchasing power.
A society should base itself on a real pull effect, according to what the audience needed and what they wanted. Don't develop products first, and then "trick" the market into thinking that this is something they need. Politicians believe that this is good, because it provides jobs, and creates prosperity. But this is a Push philosophy, camouflaged as Pull. A manipulation strategy where scientific methods are used to trick us into spending money on things that we do not need at all. Turnover without value creation does not create prosperity. It just means moving money from some people to someone else. Those who profit from this are those who make sure to take some percents of the cash flow, and who in reality reduce prosperity instead of increasing it.
We see enormous resources being spent on building brands and logos. Not for the benefit of customers, but for the suppliers. If we have achieved recognition in the market, we can charge higher prices than our competitors, even if the recognition stems from advanced market tricks, psychological influence, and heavy presence in important arenas.
One representation in marketing is that a pull strategy involves building up a market so that the item is in demand. For example, we can advertise a toy on a children's channel and create demand for the toy in question in the market, thereby we get a "Pull effect" because demand arises. But is this a real Pull effect or is this just an advanced form of Push?
Marketing is based on the supplier's desire to sell goods, not on meeting the needs of the market.
In marketing, one would call the figure above a Pull strategy, because the two arrows on the right show demand. This is a fake Pull effect because it is driven by the Push of the Left. The pull effect should be based on the customer's needs, not on the supplier's marketing activities.
We know the argument that competition brings benefits to customers. Suppliers, marketing experts and salespeople have understood and adopted this as a basis for making money. Centralisation and economies of scale are used as an argument that customers benefit from it, while the real driving force seems to be profiling and market power.
We have heard of large capital-rich players dumping prices for competitors to go bankrupt or sell themselves to the big ones. When competitors disappear, prices can be increased.
A small business with long traditions produced high-quality tools. In communication with the big chains, the chains demanded a price from the manufacturer that they could multiply by four when setting their retail price. Although this was fulfilled by the company, when visiting the outlets, the stores prioritized cheap products that were highlighted on tool boards and storefronts, while when you asked for the quality tool in question, they had to pick it up from the warehouse, or it was down in a drawer without the customer being able to see it. The chain wanted to sell the product they profited best from, and the customer, although he wanted a quality tool, ended up buying a poor-quality tool at as high a price as the quality tool, because this was pushed forward by the retailer's marketing activities.
In a country with good public services, we can see that private actors step in and "steal" tasks and resources from the public sector. They select the most attractive tasks and offer them at lower prices, they offer good conditions to the most attractive personnel and they steal the most lucrative services from the public sector. New airlines serve routes with the best customer base, daycare companies establish themselves in places with great ability to pay, health enterprises offer cosmetic procedures, etc.
Chains and Push Strategy
The construction of chains became a Columbi egg in the 60s - 70s, based on the theory of the return on capital. In the Du Pont model, one saw that one could obtain infinite returns on capital. You negotiated purchasing agreements where you got long credits from the producers on purchases, without interest costs, then you sold out the goods to consumers in return for cash payment. You got the money in before you paid anything to the suppliers. The tied-up capital in inventories and logistics was less than zero, and the return thus went towards infinity. After paying rent, staff, and other expenses, a creative owner could earn a lot, with little or no capital tied in.
We heard many stories about people who were skilled in this game. They started a store, once they got it up and running with a profit and some capital, they started a new store. They continued like this until they got a necklace. Then they sold the chain to a capital owner who bought up several chains and established nationwide and international chains. Many people will call these capital owners: entrepreneurs with great value creation who "create" jobs, while others experience that capital owners foremost years as profiteers at their customers' expense. They manipulate their position by buying into a market and becoming billionaires at the expense of their customers. They claim to compete with each other at the same time that we can see the same item being sold in different places with price differences of several hundred percent.
The chain formations were initially defended by the fact that they benefited customers by establishing efficient logisticsk-chains and economies of scale in the distribution sector. This was experienced to disappear quite quickly when the chain gained market dominance and thereby got into a position to decide pricing to the customer. Even if there are a few more chains within a segment, there will still be no real competition. Rather, it becomes an opposite market effect, where the strategy will be the largest and achieve market power. Thus, one can squeeze the suppliers' prices and delivery terms significantly below the competitors' terms. Huge amounts are spent on branding, marketing and PR, and an illusion is built up that goods are cheap, which they can document to some extent by being a few tenths of a percent below their competitors. The biggest chains stand out as price leaders, claiming that they are constantly pushing their prices to customers down, while their strategy is to push their suppliers on price to increase their own margins. The effect in the market is that the slightly smaller competitors get increasingly poorer purchase conditions from their suppliers and the player who has market power, and profiles are themselves as the cheapest, are the main reason why prices in the market go up.
Chains often specialize in a segment and have a large selection of goods within this segment. Such a department store presupposes that you have a large customer base, and large trading centers grow up on the highways near the big cities. This is based on the supplier's premises.
Overproduction and garbage
The market is flooded with garbage that is marketed and distributed by major players. Be it manufacturers or retailers. Far too large a percentage of what is produced today goes directly to the trash, at best, if it does not end up on the street, in the woods or in the sea. Many products are downright useless. This is based on a Push principle at all levels where the players' sole purpose is to make money. The media and market experts applaud everyone who is successful in society, based on how much money they make. With a Pull principle, likely, much of the products in the market would disappear, without anyone other than the suppliers losing out.
It creates internal competitions between people where fashions, trends and popularity are cultivated so many feels left out if they do not buy a product, and products are developed to have a short lifespan. By getting a larger sample, satisfaction in the market is perceived to deteriorate. We do not need this large selection; it just makes us picky and dissatisfied and serves to unnecessarily increase turnover and disadvantaged customers where resources are consumed to produce goods that no one needs.
Pull, the ideal allocation model
Today's ideal systems thinking is based on the market shifting its focus to where the need is greatest. That's a good thought, but that's not what's happening. The focus is not shifted to where the need is greatest, but to where purchasing power is greatest. A good example of this is just to look at how nearly a billion people suffer from malnutrition or hunger in the poor part of the world, while three million children die every year for the same reason. Based on a pull thinking with the customer at the center, one would assume that all suppliers strove to satisfy this need. Instead, so much food is produced and traded in the rich part of the world that only half is eaten. In addition, most of the food grown in the poor part of the world is sourced to those with high purchasing power through local forces who profit from taking the food from their own population and exporting it to capital-rich speculators abroad. The loser becomes the customer, that is, the people. Instead of choosing the best product and the best supplier based on their needs, we get a Push system where all efforts are put into pushing goods and services to where purchasing power is greatest.
Our society needs a Pull system, an information system that answers customer questions, not an advanced push system that steals goods and services from those who need it, using psychological tricks so that they are sold to people who do not need them, but have excess purchasing power and money. With today's information technology, power can perhaps be shifted back to the customer, if the political authorities regulate the possibility of dominance via centralization and media coverage.