Customer exploitation, the term is becoming more important nowadays as the world continues to buy and consume. Nowadays we buy a wide variety of products and most are bought from firms such as Google, Apple etc. In this day and age these firms have turned to new ways to increase profit whether that be lowering production costs or using clever techniques to encourage us to buy. I want to make clear why these large firms are not as brilliant as they seem and how they are twisting customers around their little finger.
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“The rise of 'tax shaming’”. One example of the many headlines which were seen across the web and TV in 2013 as it was found in the UK that large firms such as Amazon paid only £1.8m in tax, while their UK sales were £3.35bn in 2011. This is an unbelievable figure and not a one of occurrence, many other firms have been doing the same such as Google. It is reported that they paid £20.4m in taxes in the UK while their sales in the UK were £3.8bn. This highlights one of the main ways we are being exploited as even though firms earn large revenue each year, they avoid paying tax (through legal loopholes). It’s appalling that we are charged ridiculous prices for products and in return firms contribute little (in proportion to their revenues) in tax and instead continue to grow exponentially. Making us realize these firms are simply greedy and are cruelly manipulating us into buying their products and not contributing their part to the economy. The morals of these companies are really put into question.
Imagine working for 11 hours a day for 6 days a week in a large building crammed with many others like you, being under a lot of pressure to create products and working under pitiless managers only to be paid minimum wage. Unfortunately, this is reality and these horrible conditions were seen by China Labor Watch in their investigation of large factories or more commonly known as, sweatshops. The investigation also found any workers don’t have the much protective equipment and are exposed to dangerous conditions daily. Is it really surprising to hear that these are regularly used by many firms which we know so well? Apple to name a company is a big culprit in using the inhumane sweatshops. In their sweatshops in China conditions and pay were so bad that in 2010 there were 18 reported suicides in an Apple factory in Longhua. Can you believe these figures? I personally cannot even fathom it.
There are many more examples, firms like Nike have also been accused of utilizing these factories. The idea of this saddens me that these firms abuse lower production costs in poorer countries in order to maximize profit. For example, a woman making NBA jerseys earns 24 cents per jersey produced and these garments sell for over $140. How can sit by and let this happen as these firms bask in money while these hard-working individuals toil for countless hours in horrible conditions? This adds to my point before that these firms take advantage of customers who buy their products as by charging us high prices(and making productions costs as low as possible) they continue to profit in unbelievable numbers. How is this fair?
It is no secret that firms use many tactics in order to sell us their products. In this day and age of online shopping where advertising is even more pivotal in the selling of products, firms are using psychology and clever marketing techniques to manipulate customers into buying products which they don’t need or are not as good as they look. One example of this is when firms increase the prices of products and then have a sale on them later on bringing their price down to their previous value and advertising it as a massive saving. Customers see this as a great reduction and feel they are getting the product for great value for buying it however, in reality, they are simply paying the original price. One of the greatest problems with the internet age is data. When we buy products online from the large retailers we give access to our data without thinking. These firms use this data to not only bombard us with specific advertising but also sell the data to other third parties who use the information to send us products and emails. I feel this is a disgusting act by firms as we trust them and in return, they exploit our trust. These are simply two examples from a wide range of techniques firms use without us realizing. This really compels us to understand how cunning firms are and how we are monitored and targeted daily. How can we still support these large firms? According to bizfluent “Up to 78 percent say that their buying decisions are influenced by how companies handle personal data”. An alarming statistic and it really puts into perspective the true power of these large-scale firms. It truly goes to say that with great power comes great responsibility.
It is evident that these firms are becoming extremely prominent in society and now have more power in their respective industries through large mergers. In mergers, two companies join thus reducing another competitor in the market which increases the power of a firm in their market or more than one market. One example is the recent go-ahead for the merging AT&T and Time Warner (Telecom and TV companies respectively). To put into perspective how many people this will impact, in 2017 AT&T had 156.67 million subscribers, and this isn’t even all their customers. This means that AT&T now has immense power in television and news as well as their telecom network. This is preposterous and unbelievable that the court allowed this to happen as this now means AT&T now has large control over prices and however they may try to convince us they will save us money, we know this won’t last. This is a clear example of firms exploiting customers as they are using their market power to control prices and strong-arm customers into paying their prices, which is atrocious. Mergers are common in economies, however through them firms obtain market dominance and this has to be stopped to ensure customers have the greatest choice of goods. This will instead cause firms to innovate and increase the quality of their products, a move which will highly benefit customers.
Another way of firms manipulating customers is in high profit and popular markets where there are a large number of consumers. An example is the clothing industry, a market with a lot of money which is growing constantly, where companies like Luis Vuitton and Chanel charge ridiculously high prices for simple products. For example, a plain color t-shirt with the Louis Vuitton logo can cost £245 which gives a clearer idea of the prices of the products from these companies which can cost 1000s. This is a prime example of firms exploiting the fact they are leaders in the market and the fact these high-end clothing companies are so popular means they are able to control the fashion trends and so profit effortlessly. Through the fact that they are so big and important for the culture large fashion brands are able to control customers into blindly following and buying into the latest fad.
Overall we can see that these firms, although we feel are bringing a lot of benefit to society, are not as remarkable as they seem. I personally feel that we should begin to take a stand against these firms, it is time we change how they are run and regulated. For example, governments need to take more of a stand against the use of customer data, a step that has already been taken in Europe with the new data protection act. Also, we as customers should begin to clamp down on firms by not paying into their profits as much and should perhaps instead help smaller firms. Finally, the government should stop firms from being too powerful in their respective industries.