It is critical that regulatory bodies make use of a new ESRI study to ensure consumers are not bamboozled into overpaying or making the wrong purchase, writes Business Editor David Murphy.
We all know the feeling.
You go to buy something and within minutes you are completely bamboozled.
Perhaps health insurance is the best example. There can often be 30 different policies on offer within a limited price range.
Each policy has a vast array of different features. Some hospitals are covered others are not, some offer health cover after the consumer pays for the first €250 and others offer high end treatments.
Within minutes the poor consumer is trying to decide between so many competing factors they are completely confused.
Health insurance is not unique.
Think broadband, energy or financial products. The list goes on.
So how many variables can consumers assess before they get confused?
The answer is very few.
In contrast comparing petrol and diesel prices is remarkably easy because the only real determinant for motorists is price.
A new study by Dr Pete Lunn and his team at the Economic and Social Research Institute has found that the list of products where just or two additional attributes can reduce the accuracy of consumer choices is "surprisingly long".
The report is based on work which has been taking place at the ESRI's price lab.
It carried out a battery of tests on consumers. The central point was how many additional variables confused consumers into making the wrong purchase.
The report says particular attention such be paid to the areas of energy and telecoms.
It says special attention should be paid to markets where a large proportion of the population are customers and where specific marketing practises are suspected of adding to the complexity of choices facing consumers.
The ESRI study finds price comparison websites have a valuable role to play.
One of the most interesting aspects of the ESRI study is that it has been funded the Central Bank, the communications regulator, the energy regulator and the Competition and Consumer Protection Commission.
These authorities have the power to simplify advertising and marketing in their respective fields. In fairness they have done some work in this area already. However, given the fact many consumers are confused by different product offerings there is a lot of scope for progress.
In the US companies have been mandated to simplify their products.
Now that the regulators have this valuable study it is critical they make use of it to save the bamboozled consumer from overpaying.
