Monday, September 21, 2009

Monopolies, market research and reputation management (branding)

4iP have invested in a site called MyBuilder. It's designed to make it easier to find a good builder without being ripped off.

I'm only pointing to this because it is sort-of related to an observation that I made here recently (in a longer post) about how monopolies are sustained by their superior market research - and that the way that they keep this information to themselves could be seen as an appropriation of information that - by rights - belongs to us.

We may not have made a fully-informed decision in which we allowed them to use our judgement in the first place.

As a result, monopolies can fine-tune their services to make theirs the least uncompetitive one on offer. The result is not necessarily good for the consumer and it creates a high barrier to entry that excludes genuine entrepreneurs.

Market research also informs brand development. If you've stumbled across the concept of the 'market for lemons', one of it's corollaries is that - with imperfect information or understanding of various market options - we undervalue products. Brands allow large companies to circumvent this and be able to get higher prices for their goods and services.

So, MyBuilder - by promoting reputation management - will allow smallish builders to develop a reputation independent of large brands. Admittedly, it's not a market that is particularly dominated by these brands anyway - but I'd like to see similar projects in markets that are more dominated in this way.

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