Be fair without being a 'frier'
Op-ed: Arrival of chain offering coffee for NIS 5 shows profit maximization is not only way to run business
The Cofix
chain's appearance on Israel's
café map has directed the spotlight to a concept which some will say is at the essence of commercial economy and which others will see as the essence of capitalist piggishness: Profit maximization.
It's true that a café has other expenses – a kitchen, a larger area and additional workers. But does this difference justify the huge gap in price? The fact that some café chains reduced prices after Cofix's inauguration likely indicates that the high prices were not inevitable.
The NIS 5 (about $1.40) cup of coffee, along with a pastry for the same price, sticks out a long tongue at the profits of cafés charging NIS 12-14 ($3.40-$4) for a cup of coffee, and shows that there's yet another way.
Price War
Meirav Crystal
One of Israel's biggest café chains quick to respond to arrival of Cofix, which sells cup of coffee for just NIS 5. Starting Sunday, Aroma to offer small takeaway cappuccino for NIS 8. 'We wanted our customers to feel they are getting a fair price,' owners explains
There is an impression that the high pricing is aimed at yielding the maximum profit from consumers' desire to find themselves a place to sit or meet outside their homes or offices, knowing that the consumer protection systems – the early inquiry and price comparison – will not work in this case. Supporters of the free market structure may see it as a legitimate exploitation of a business opportunity.
Nonetheless, the feeling that the consumers' constraint was misused in a way of presenting unnecessarily high prices, leaves a bitter taste in regards to the way consumers are perceived by part of the business sector.
There appear to be two types of business owners in this context: Those who see the consumer as their partner in the profit-making process and treat him or her with the required decency, and those who think that if they fail to "milk" every possible profit from the consumer they will be seen as "friers" (suckers) and as failing businesspeople.
Economic feasibility
The fear of being perceived as a "frier" is often seen as a national trait in Israel. Even if we don't refer to it as a scientific finding, we must admit that too many people among us are driven by such a fear, which they perceive as the greatest humiliation and as a show of disrespect towards them.Indeed, no one likes to be exploited. But there are those among us who take the term's interpretation to extremes, believing that "if I don't take advantage of everyone I can every time I can, people will call me a frier."
In the world of commerce, consumers personally feel the results of this perception on a daily basis. This approach is fed by fear and insecurity about one's self-image in the best-case scenario, and by greed, alienation and evil in the worst-case scenario. In both cases it's a distorted approach, which mars the entire country with unfairness.
Someone should have stood up against it and denounced it a long time ago. Recently, this appears to be happening: The Knesset is currently debating an unusual amendment to the Consumer Protection Law, which defines unfair ways of commerce as an offense.
The Israel Consumer Council, together with the Research Administration in the Ministry of Economy, is developing the Fairness Index, which will examine and assess the conduct of commercial industries, as well as of individual businesses and companies, and will be reported to the public.
The outgoing director-general of the Education Ministry has accepted the Israel Consumer Council's request and declared that "education of fairness" would be the main issue on World Consumer Rights Day 2014 in the education system.
And Cofix has set the price of a cup of coffee at NIS 5, showing that there is such a thing as economic feasibility for a business managed according to a fair profit policy, thereby declaring in regards to the profit maximization approach that the emperor has no clothes.
Ehud Peleg is CEO of the Israel Consumer Council
