What are search costs?
search costs are costs associated with obtaining product information. This can be literal costs in terms of money that must be paid for finding information, but it can also be costs such as time or energy spent on search. The lower the search costs, the easier it is to get product information for consumers. This plays a role in deciding consumers. The consumer has a number of shampoos for prepared comparison, allowing the consumer easy to look at differences in quality, ingredients and price. Shampoo search costs are low because all information is in a suitable location. Since there is no need to spend any additional costs when comparing products, the consumer tends to attract cheaper products in the product class that the consumer is interested in, such as the fragrance-free shampoos or anti-dandruff shampoos. This increases search costs because the consumer must spend more time searching forDukt. Likewise, if the consumer has to go to different places to compare the prices of products, it also increases search costs.
When consumers take a purchase decision, search costs can play a key role. As a related transaction cost, it can increase the total price of the product up or down. It can also become what is called a switching barrier, which means it is an obstacle to switching products or suppliers. For example, if it is difficult to obtain information about the prices of mobile phones, the consumer can hold an existing plan to incur search costs for NT. Companies can use this by advertising their rates to reduce search costs for consumers and provide motivation to switch.
The Internet has evolved into a large equator in terms of search costs. Consumers can easily search forProducts on the Internet to get information about them, and some websites even provide tools for comparing products that allow people to select a group of products that could explore side by side. If search costs are low, the product costs tend to be similar from different traders, because traders know that consumers are floating to the lowest prices.