With all the development and wealth of the world the paying capacity of the consumer has dropped significantly and will continue to do so in times to come. Surprised or shocked? This statement might sound completely incongruous to the current economic condition and also sounds like someone giving this statement during the time of depression. You might not warrant this view of mine as of now but I can hope that by the end of this post you shall subscribe to my view; partially, if not completely.

Now, first of all, let’s begin with putting on paper the meaning of verb, ‘To pay’. To pay means to give something of some value to someone in return of the goods or services or favour of some importance to us.

Economy is growing, there is more disposable income, buying capacity of tweenagers globally has been estimated to be hundreds of billions of dollars and substantive increase in purchasing power of populace has been recorded and given the kind of growth we are witnessing, the buying capacity of larger base of human population will increase exponentially in time to come. If everything is so rosy than why am I saying that the paying capacity of people has reduced and will keep on reducing if not checked in time?
Costs

Let’s again define something. This time we’ll define the currency of this post-biological world. And before going further let’s put in words all the costs associated with our buying or consuming any product. The associated costs are:
• Monetary Cost
• Non Monetary cost
o Search cost
o Transaction cost
o Physical cost
o Psychological cost
o Social Cost
Purchasing power in terms of money just holds one place and this we consider as most important cost while making any purchase decision if we see ourselves towards the bottom of economic pyramid.

bop

Once we move towards the top of this pyramid, monetary cost start losing its importance. People toward the bottom of the pyramid functions mainly in ‘need market’ while their counterparts towards top functions in ‘want market’. Majority of players perform economic activities towards the top as we go down and down towards bottom the number of player as well as activities tend to reduce.

Free Economy!
The best part of new economy is; producers don’t shy away from offering their basic products for free. Free is the mantra. It’s quite normal a practice to offer any product or part of a product for free, at least initially. Still, lots and lots of FREE products fail to register their presence. Why? If we consider monetary price to be of paramount importance than why don’t we bag all offering that comes for free? Sounds nonsensical? It is. It is nonsense to even think of having everything. why? Because time is limited. No one has luxury of infinite time. Even when we’ve time at our disposal, trust is not.
Currency of New Economy
So, the currency of new economy is not money but time and attention which are scarce resource, to put in economic term.

Time is the cost we incur in every activity we undertake and all of us just have so many hours in a day and in no way the number of hours in a day can be increased, so effectively the number of activities we can do in a day is limited to a few and it includes our consumption as well. The amount of time we spent on each of the product-family is decreasing with increasing number of alternatives being available for us to choose from.

We’ll continue our discussion from this point onward in next post.

Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • StumbleUpon
  • Reddit
  • Y!GG
  • BlinkList
  • Bloglines
  • Facebook
  • Spurl
  • Technorati
  • YahooBuzz
  • Ask
  • DZone
  • Folkd
  • Furl
  • Google Bookmarks
  • LinkaGoGo
  • LinkedIn
  • Live-MSN
  • Ma.gnolia
  • MySpace
  • Oneview
  • Print
  • Propeller
  • Squidoo
  • TwitThis

One Response to “Decreasing Paying Capacity of populace Part -1”

  1. Simply wish to say your article is as amazing. The clarity in your post is simply spectacular and i can assume you’re an expert on this subject. Well with your permission let me to grab your RSS feed to keep updated with forthcoming post. Thanks a million and please keep up the gratifying work.

Leave a Reply

Your email address will not be published. Required fields are marked *