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Having
lived in North America for 16 years, before returning to the UK (Ed.), there's
a philosophy over that side of the pond that revolutionised their mass
marketing techniques. Simply, "Stack 'Em High, Sell 'Em
Cheap!"
In the UK the name of the game is "Stack 'Em
as low as you can, and sell 'Em for as much as you can"
This
philosophy has been fundamental in shaping a significant difference in prices
paid by consumers in the USA, and us in the UK. For instance, have you ever
tried to buy a new lounge suite or washing machine 'off the shelf' manufactured
in the UK? It can take literally weeks whilst it is 'ordered'.
The fact of the matter is that in the USA most factory inventories
are in a high state of readiness, whilst here in the UK the item generally has
to be manufactured 'on demand' to keep inventories of raw materials to a
minimum.
So why does a Chrysler Voyager cost £10,000 more in
Britain than in the United States?
Why does a litre of Coca Cola cost
65p in Britain compared with 43p in America?
These differences can be
traced to five basic reasons:
- Profit margins
British Treasury research shows that American consumers benefit
from the greater efficiency of domestic firms being passed on to them in the
form of lower prices. British prices for food, drink and tobacco are, on
average, only slightly higher than in America, according to the Treasury. But
for some products, such as soft drinks, the difference is 28%. Our discussion
about 'profit' in the UK is expanded on in Treasure Island - Profit or
Plunder?
- Taxes
We can always blame Government taxes for high prices in the UK.
Certainly, petrol (gasoline) taxes account for 85% of the cost of a litre or
gallon. Any rise in Government taxes is inflationary, and this cost is
eventually passed onto the consumer. VAT, import duties, income &
corporation tax play their part - but this ain't the whole story!
See our
article: Government - Stealth Tax
Rip-off's
- Price Fixing
British and many overseas companies are openly flouting the law and
attempting to fix the prices at which their products are sold in Britain.
Rather than pass on discounts they are squeezing out their suppliers, whereby
retailers are boosting their own profits. The recent cases of Volkwagon and
Volvo are typical.
- Traditional marketing
methods
Let's face it - The North Americans
(although not the first to invent) were the first to develop the telephone,
supermarkets, fast food, franchising, drive-in's, etc., most mass marketing,
and of course - internet marketing. In the UK we tend to hold
onto old and outdated marketing methods. This creates greater operating costs
for UK companies, who in turn pass on these costs to the
consumer.
- Disposable Income - USA v
UK
Average incomes are substantially higher
in the United States. On a per capita basis American incomes are 45% higher.
One area where British consumers do significantly better than their American
counterparts, however, is medical costs, which are 71% higher in the United
States. Nevertheless, average incomes are substantially lower in the UK, and
income taxes are significantly higher than in the USA
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