The following is excerpted from Liang's Economics in Fables.
The fable of King Chu's good waist comes from Mozi, which tells that King Chu Ling likes ladies with thin waist. In order to get the favor of King Chu Ling, the ladies-in-waiting went on a diet and pursued "beauty of bones". As a result, they were all sallow and emaciated with hunger. The irony of this fable is obvious. But from the perspective of modern economics, we can give the king of Chu a brand-new and completely different meaning.
In a market economy, the quality of product sales depends on the needs of consumers. The consumer's demand for something is the unity of purchasing desire and purchasing ability. Purchasing power depends on income, price and other factors. In modern society, people's income increases and their purchasing power is not weak, but why can't many products be sold? This is because consumers lack the desire to buy these products. Economists especially emphasize the importance of purchasing desire, because once consumers have a strong desire to buy a product, they will earn more money to realize this desire (for example, young people buy a car part-time) and improve their purchasing power. Or he can convert his future purchasing power into today's real purchasing power through consumer credit. This shows the importance of purchasing desire in creating demand.
The desire to buy comes from the preferences of consumers. Consumers buy goods for consumption in order to obtain utility (that is, satisfaction). Utility is consumers' subjective feeling, which depends on consumers' preference for this kind of goods. The greater the consumer's preference for an item, the greater the utility it brings to him, the more willing he is to buy it, and the higher the demand. So, what does consumer preference depend on?
Preference is a psychological phenomenon, which varies from person to person. But people's psychological phenomena also have the same law to be found. People's preferences come from desires, or physical desires, or psychological desires triggered by society. In modern society, the basic physical desire for survival is easy to satisfy, and what is important is the psychological desire triggered by society. People's preferences arising from this desire are obviously influenced by society, that is, the consumption fashion of the whole society. Therefore, we must understand the formation of consumer fashion.
At first glance, consumer fashion is irregular, irrational and rapidly changing. There was a hole in my pants yesterday, called poverty. Nowadays, it has become a fashion. No wonder some people lament that they can't keep up with fashion. But the formation of a consumer fashion also has its own laws. There are many factors that determine consumption fashion, such as advertising, historical tradition, policy orientation and so on. However, a consumer fashion still comes from the demonstration effect.
Demonstration effect is the influence of taking someone's (or group's) behavior as an example and others learning from him. Consumer fashion comes from demonstration effect. This is what we like to say, "the power of example is infinite." So who can be an example? Let's imagine, if an official in the Chu Palace likes to be slim, can he have such a slimming fashion? I'm afraid not only can't, but this official will also be laughed at by others. Only the preference of the king of Chu can be taken as an example, not because of his high aesthetic taste, but because of his status as a king. So the demonstration effect is that the upper class sets an example and others imitate it, forming a fashion.
Why can only the upper class set an example? It is an animal instinct for people at the lower level to learn from the upper level. Animal behavior has been proved by experiments. Find a little monkey and teach it to wash before eating fruit. Put this little monkey into the group of monkeys. As a result, the monkeys not only refused to learn, but also beat it. Find another monkey king to teach him to wash fruit. Putting this monkey king into the monkey group, many monkeys follow suit, and washing fruit before eating has become a fashion for monkeys. The demonstration effect of mankind is rooted in this animal instinct and formed by social factors. As far as consumption fashion is concerned, internationally, developed countries are role models for developing countries, and consumption fashion is always formed by the demonstration effect of consumption patterns in developed countries. In China, it is always the upper class that leads to consumption fashion. This is the reason why only the king of Chu can create the fashion of losing weight.
Only when the products of enterprises can satisfy the desires of consumers can there be a market. Therefore, enterprises must pay attention to the changes of consumer fashion. In doing so, enterprises should always pay attention to the consumption behavior of developed countries and the upper class. Suppose you are an entrepreneur in Chu State, you must pay attention to the consumption fashion of Chu Palace. If you can find that the king of Chu has a thin waist, you should foresee that not only the palace, but also the whole society will have a consumption fashion of thin waist, and the demand for slimming products will increase sharply. At this time, you produce all kinds of diet foods and medicines, design all kinds of fitness or other weight-loss projects, and the market will prosper, so you can earn enough. It's a pity that Mozi's satirical thin waist is an unhealthy trend and didn't think of this business opportunity. Mozi is a moralist who always wants to correct the unhealthy consumption fashion of losing weight. He forgot one thing: there is no right or wrong in consumer fashion itself, and it is irrational. Look at the skirts worn by medieval upper-class women, supported by whale bones. They are big and stupid, and it is inconvenient to wear and walk. But this is fashion, and you can't help it.
If you are an entrepreneur in the state of Chu, you should pay attention to two points. First, take the lead in using consumer fashion. If everyone else knows that losing weight is a consumption fashion and produces weight-loss products, then you are finished. Second, consumer fashion is changing. If the preference of the king of Chu changes, and the beauty is as fat as that of the Tang Dynasty, or the new king of Chu only likes to wear shoulder hair regardless of fat or thin, then you must keep pace with the times and turn to producing hair care products or wigs. This is to pay attention to consumer fashion at any time, adapt to the changes in consumer fashion, and adjust their own production. "Those who know the times are heroes", and enterprises can only succeed if they know how to consume fashion.
Mozi talks about "universal love", but he doesn't like thin waist. As an entrepreneur, we should really love all kinds of consumer fashions. But Mozi is still great. After all, he realized the relationship between the demonstration effect of the king of Chu and the fashion of losing weight more than two thousand years ago.