The role of consumer information in public policy

In today's business environment the role of the effective control, which is based on reliable information, sharply increased. Errors of management, based on insufficient or misinterpreted data, could lead to the collapse of even large companies. The most interesting technology and management rules and planning provide the strategic management, which is engaged in the developing and implementing the firm’s strategy. There are many definitions of the term, but in the general sense a strategy is a long–term plan for the management of the company, aiming to the strengthen its position, to the customers’ satisfaction and to the achievement of objectives. Managers develop a strategy to determine the direction in which the company will develop and make an informed decision when are choosing a mode of action. Selecting manager’s specific strategy means that of all the possible ways of the development and modes of an action, a manager has to choose one strategic direction in which the company will be developed. Without a strategy the manager has no comprehensive plan for an action, there is no guide in the world of business; there is no single program for the achieving the desired results. The strategic management today – it’s a very fast and dynamic scientific and practical function, which is not surprising, because its development due to the requirements of the modern market. Companies around the world are using new methods and tools for strategic management to rethink their approaches to make business, by the business line, ensure the competitiveness and achieve better results in their field. Information becomes one of the most powerful tools in the hands of the manager. The effective management is impossible without a collection of information and its processing of a variety of methods. The most interesting thing of information is the methods of its processing and a distribution to the target recipients. Methods of processing and analysis of economic data are the essence of the econometrics and also the question of the building an integrated information system designed to address the challenges facing the company, which is a reflection of business processes.

The functioning of the market depends on how much information about the consumer properties of goods do market participants have, on the possibilities of a technology, on trends in market conditions. The incompleteness of information, its unsteady distribution between buyers and sellers leads to the fact that consumers and producers can make the wrong decisions or even use the resources ineffective. Always one of the participants has the better position than another. The current market of information is really asymmetric. The incompleteness of information is the essential feature of economical life. More or lesser incomplete information may affect the conditions and characteristics of the functioning of markets, may create additional transaction costs for economic agents. The greatest impact on the market activity has a special type of incomplete information – asymmetric information. Asymmetric information creates the potential for abuse of a lack of awareness among participants in the transaction counterparty. The informational asymmetry, unlike the actual incompleteness, leads to a drastic reduction in a social welfare.

The incomplete awareness of buyer of the commodity prices, as well as his lack of knowledge about quality, allows firms in the market with a low concentration of sellers receive an economical profit. The price competition between firms in the market is limited the stronger, the worse buyers are aware of the level of prices for the substitute products from different sellers. Lack of knowledge of at least part of buyers on prices of the similar items from different sellers enables to raise the price.

Since the uninformed consumers are beneficial for firms, and allow them to generate more revenue from the higher prices, firms tend to increase the costs of obtaining information for consumers. Different levels of awareness can serve as a criterion of the price discrimination. Like any other form of the price discrimination, different prices for the same product of the same seller can increase profits. Often for more effective price discrimination firms enjoy selling the same product under different brands. Since it is difficult to trace all the prices and to establish the consumer characteristics for all brands of goods, information outlay of consumers are increasing, reduced their level of the awareness that allows the seller to generate more revenue.

Asymmetric information about the pricing, as well as asymmetric information about the quality reduces the effectiveness of the competition and provides the framework of the monopoly power in the commodity markets. Market participants are primarily interested in the acquiring of information about prices. A public decision–making under the conditions of asymmetric information can help the control functions to be performed on the basis of the comparison of the asymmetric information flows from the risk manager. However, it should be emphasized that there is no universal method of a control. There are various methods, techniques, all of them has both advantages and disadvantages. Most justified are their systematic, comprehensive utilization. In addition, the modern management is open to penetration of new methods, procedures, tools, and ideas in accordance with the goals and objectives. In the context of asymmetric information that exists in the market, there is a dictate of the manufacturer. This leads to the fact that the supply of services covered by the state. It is assumed that the public sector in terms of the political democracy is subject to control by the society. Besides laws protecting the rights of consumers, asymmetric information neutralized laws on the advertising, the labor protection, the sanitation and hygiene of food production, the laws on fraud, insurance of bank deposits, etc. Incomplete information about the transaction, about the transaction and its possible implications caused by the following reasons: to obtain information related to the cost of resources.

The rational economic agent will not pay for information more than the level at which the marginal cost is bigger than the marginal revenue from its use; information is not always reliable. Even if the information, which was received by the entity, today is accurate, tomorrow it may become obsolete due to changes in the economical environment and, therefore, it can no longer be relied upon in making economical decisions; economical agents are not able to remember and process the entire volume of information available to them. They have to select for the storage and direct use only the most important information. Part of the total information is inevitably lost; not all economical agents have sufficient knowledge and skills that would enable them to adequately processed incoming information.

The state is one of the most important and valuable members of the informational relations along with other subjects, but the impact of their activities should not lead to the excessive centralization of the information processes. The excessive centralization has a negative impact on the functioning of the economical system, the entails bureaucratization of public relations, increases the uncertainty of the information flows .The effective methods of the state control of information include:

• The adoption of legislative acts;
• The support for standardization and certification;
• The control of the advertising activity of sellers;
• The pricing policy;
• The use of certificates of quality.

These measures prevent the penetration of the market – consumer demands products stimulate the producers to improve quality; products greatly facilitate the process of making consumer decisions. The use of software approach in the information policy allows us to focus on those areas where the imperfection of the information manifests itself is particularly clearly and represents tallies for the tasks, resources and timing of the implementation of complex research, socio–economical, organizational and economical measures to ensure the effective solution of the problem. Priorities are not centralized methods of the exposure and actively inform participants of the information relations. This policy is expressed in a kind of advertising information concern to those aspects of social life that are most exposed to information imperfections. Program information policy among the measures is necessary to achieve the values of the indicators of welfare.

For the implementation of its provisions, in the planning system provides the necessary resources. Thus, an integrated approach to improve the welfare of the population, specifically, measures to reduce the socio–economic impact of the loss of information imperfections on the households’ consumers’ decisions. Thus, at the present stage increases the value of information as a resource for the determining the consumer decisions of households. In order to reduce social and economical losses from the imperfection of information society actions of the private sector should be complemented by the structural state information policy. This policy will reduce the impact of the information asymmetry, consumers will have an access to more relevant information, will be able to secure them and equal participation in the international transactions.