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An economics phenomenon, a search good refers to an item or service that carries a value that can be assessed prior to any sales transaction. It is a product that gives consumers some leverage because the worth of the item can be compared and contrasted with prices at other sales providers. Retailers can use a search good to their advantage by implementing a bait-and-switch tactic, where the consumer is lured through advertising to come in for an item but upon arrival is encouraged to upgrade to a different product.
Perhaps the best way to understand a search good is to examine its counterpart, the experience good. Also an economic term, this product does not have such an obvious value ahead of purchase. Instead, there are more factors that weigh into its worth that make the value more obscured prior to taking ownership of it. Once the item is acquired, however, the value becomes more apparent, such as the case with a new wine. There is increased risk in buying an experience good because there is less of a guarantee that the buyer will be satisfied with the purchase.
Certain online retail outlets provide a ratings system where consumers can assign a grade to items purchased. This may prove helpful because, even when buying a search good, there could be misconceptions circulating the market. Reviewing what other purchasers have to say and the experiences surrounding the item could lead to a more well-informed decision.
Price competition is when retailers attempt to outdo one another in an attempt to win business, promoting search goods benefits to the consumer. More than one seller may advertise and stock the same item. Consumers may be able to negotiate the price of a search good as a result. This may require some research and comparison on the part of the customer, but it can lead to a favorable outcome when making a purchase.
Search goods are also replaceable. For instance, if the cost of a particular commodity, such as lumber, is triggering price hikes on items such as pencils, consumers may be drawn to substitute items, such as ink writing instruments. Also, retailers can use the branding of search goods to their advantage. By marketing a particular good at a given price, consumers may be drawn to shopping at the store because of an attractive price point. Retailers can then use the opportunity to upgrade consumers to a search good at a higher price point because it is clear that the customer has an interest in this type of product.
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