June 18, 2007

Power to the (online) consumer Part 2

Quick summary Part 1: The Internet has become an indispensable part of our life

Next to becoming the prime source of information for most of us the Internet influences in other ways our position as consumers. You will hardly find anyone around who does not have a personal story to tell about getting a better deal the last time he or she bought flying tickets, vacations, books, furniture, computers, new or second hand car, clothes, electrical appliances, kitchen equipment and anything else you can imagine, just by taking the time to do some search with Google before buying the product.
The whole situation is often labeled as “customer empowerment”, a situation attracting a good deal of the attention of both academics and practitioners. A symptom of changing attitudes: business people are not anymore surprised when you tell them that the era of the corporate market domination is over and that the existential, online consumer is on his way to become the dominant party of the marketing equation.

Customer empowerment has its roots to a number of evolutionary causes but it is primarily related to the Internet that made available and easily accessible large amounts of information that has led to a unique transparency of the marketplace, in combination with the ease of transacting with any supplier, in any part of the world as long as he offers a better deal. Recent developments around the social media (blogs, forums/bulletin boards, communities and social networks) have further contributed to customer empowerment by offering to consumers the option to further refine their product information and better assess the value of different offers by directly getting in touch with other users or experts and asking their opinion or experiences. The customer empowerment is also visible in the fact that the Internet has given consumers the opportunity to act as part of the supply chain, eliminating traditional intermediaries from the process. A simple example: The photo film and film processing industry are in the edge of extinction because of the digital technology replacing the film role and the Internet replacing the photo shop. Similar developments have affected a whole series of industries: airlines and Travel, banking, media, newspapers, telecom, employment services, printing and even the traditional high-street retailer.

The effects of customer empowerment on customer behavior but also on business processes and market structures are remarkable and far-reaching yet for many businesses it is not exactly clear what the consequences can be. A few tips in my next posting.

Next week: Part 3