Bargain Hunters Beware: 'Cheap' Thrills Come at a Price

Dissecting the Global Effects of Low-Cost Goods

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My first job out of high school was at a local family-owned department store. It had about seven or eight departments, ranging from toys to records to paperclips to cameras to "gifts." It was started in the 1920s by a little old man who still came in every day, though he'd handed the reins off to his son years earlier.

Our customers knew they weren't getting the cheapest price when they shopped with us, but they came in nonetheless. Why? Perhaps for convenience -- we were right in the middle of town -- or because they wanted to support the community, or because they were comforted that the family who ran the store backed up every item they sold. Or maybe some other reason.

That store has long since gone out of business, but I was reminded of it time and again while reading Ellen Ruppel Shell's "Cheap: The High Cost of Discount Culture." For I realized not only that stores like that don't exist anymore, but that even trying to describe them to my kids begets the same incredulous looks as when I tell them about phones that were attached to walls, or why 8-track tapes were once a good idea.

When Ms. Ruppel Shell talks "cheap," she does not mean "that which is a good value for the money." She means that which we buy because it is priced insanely low, whether we need it or not. It is this cheap, she argues, that is now the driving force in the world economy. And that's bad.

To pursue her argument, Ms. Ruppel Shell has taken an approach that gives us an appropriately complex, comprehensive and, it must be admitted, depressing view of what's going on. In a sense, "Cheap" is a Venn diagram consisting of 10 economic and psychological conundrums, with "us" being the place where all those questions overlap.

How does cheap affect consumers? How does it affect stores? How does it affect manufacturers? How does it affect the economy? Why do we think cheap is good? What was life like before cheap? Did such a time even exist? How do we justify cheap when we know it's not realistic? What are the hidden costs to it? And lastly, how do we stop?

"Cheap" is a well-told story of how dangerously the consumer dynamic has evolved. But this focus on the actual transaction of goods-for-services begs a question: What the hell does it have to do with advertising? Advertising is about awareness, not sales. Words like cheap, expensive or otherwise generally concern advertising agencies only insofar as they affect the brand personality.

So let me phrase the question differently: Why should every advertising executive read this book? Two reasons come to mind.

The first one is internal. If "Cheap" proves nothing else, it's that a race to the bottom in terms of price is always a death spiral. For advertising agencies to think it could end otherwise is the height of hubris. Even in these economic times, your agency must sell itself to clients on something other than price -- genius, dedication, lovability, shoe size, whatever. To sell purely on price -- on cheapness, no matter how you dress it up -- is to play Russian roulette with a fully-loaded revolver.

The second is external. We are in the business of reflecting and refracting culture in our work; it behooves us, therefore, to never let our clients sell to customers on price alone. Doing so uses our abilities to expand the culture of cheap, accelerating the descent into madness. Doing so educates consumers that cheap is the priority. As marketers, we know that cheap is neither the most compelling nor the most sustainable reason to purchase. It may be one of the reasons, but it is never, in the long run, the reason.

This is not to say that advertising agencies are at fault. Ms. Ruppel Shell makes no such claim, and neither do I. But we do have a hand in the problem, which means we can also have a hand in the solution.

And that's a valuable lesson, indeed.