Business outlook: The empowered consumer

In the present world of information overload, consumers are taking the reins in their hands, sometimes even dictating what companies should make for them. To compete, manufacturers of everything from sports gear to medical equipment are taking note.

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In the present world of information overload, consumers are taking the reins in their hands, sometimes even dictating what companies should make for them. To compete, manufacturers of everything from sports gear to medical equipment are taking note.

The advent of Internet movie and music piracy means that consumers with less than pristine scruples can watch and listen to what they want, where and when they want it.

This new behaviour seriously undermines trad-itional sources of music and movie distribution, and as a result movie attendance figures and CD sales are dwindling worldwide. And this push-pull phenom-enon between consumer and producer is slowly revolutionizing just about every industry.

In the advertising and marketing world, for example, traditional and expensive billboard and TV advertising is no longer considered the optimal way to reach targeted audiences. According to Forrester Research, a leading Internet industry research consultancy, consumers in 2005 were 50 percent more likely to be influenced by word-of-mouth recommendations from their peers and other consumer-generated media than from radio and TV advertisements.

In a world of information overload, consumers are finding the messages they want to hear for themselves – through Internet message boards, Web sites, podcasts, blogs or simply word-of-mouth. So, say the experts, companies must embrace these new media and not fight them, as the music industry did with Napster several years ago. The result of that fight was that, although Napster closed, many other free services took its place.

“Experienced consumers are lusting after detailed information on where to get the best of the best, the cheapest of the cheapest, the first of the first, the healthiest of the healthiest, the coolest of the coolest, or how to become the smartest,” says Reinar Evers, founder of the Web site, which identifies and analyzes global trends with the help of 8,000 trend spotters around the world. “Instant information gratification is upon us.”


Most recent trends identified by have to do with how information technology is changing the way we shop, buy, use, and share information about products. The trends are alphabet-ically indexed on the site with names such as “massclusivity,” “minipreneurs” and “tryvertising” and explained in their minutia.

“This desire for relevant information is insatiable and will soon move from the online world to the real world to achieve full ubiquity,” says Evers. “Get ready for a click-and-know, point-and-know, text-and-know, hear-and-know, smell-and-know, touch-and-know and snap-and-know world.”

In other words, consumers themselves are taking over the reins as never before, and sometimes they even dictate what companies should make for them.

The New York Times reported in a June 18, 2006, article on shoe designer John Fluevog, who shoes film stars and fashion models with colourful and distinct-ive footwear. Fluevog started soliciting his customers for their own shoe designs. He called it “open-source footwear.” Customers post their designs on his Web site,, and the most promising designs are manufactured and sold.

Also quoted in the article is Eric von Hippel, head of the innovation and entrepreneurship group at the Sloane School of Management at the US Massachu-setts Institute of Technology, who calls this phenomenon “lead-user innovation” and has studied its effects in industries ranging from extreme sports gear to medical equipment.


Von Hippel stipulates that in a world where dedicated consumers are all connected by broadband Internet communication tools, intensely dedicated and engaged users of a product often find ways to enhance it before the manufacturer does. And companies that aspire to stand out in fast-moving consumer markets ought to listen to these consumers and invite them into the product design process.

“It is getting cheaper and cheaper for users to innovate on their own,” von Hippel said. “This is not traditional market research – asking consumers what they want. This is identifying what your most advanced users are already doing and understanding what their innovations mean for the future of your business.”

But there is more than just listening to your most avid customers. Jones Soda, a fast-growing soft-drink company from Seattle that makes such sodas as Blue Bubblegum and Fufu Berry, makes it a point to involve customers in developing the Jones soda brand.

For instance, the labels include striking black-and-white photography taken by customers themselves and sent in via the Web site. Web site visitors vote on which photos will adorn the labels. Over the years, the company has received millions of images.

Customers can even order a 12-pack of soda featuring their own photographs on the labels. This Internet-enabled personalization has become a high-margin business for the company. Perhaps there is an important lesson here for other companies.

Is Jones a soda company? An Internet company? A social-networking company? “We are all of that,” says Peter van Stolk, founder and chief executive of Jones Soda. “Our goal is to find more ways for customers to exercise ownership of the brand.”


But enabling consumers also has its drawbacks. According to a 2005 study performed by Intelliseek, a marketing intelligence company with headquarters in Cincinnati, Ohio, USA, that has heavyweight clients such as Nokia, Microsoft, Sony and Toyota, the obvious step that companies take in this new environment is to create artificial buzz around their products by paying consumers to recommend products and brands. This is called “shill marketing,” and it is nothing short of a guerrilla tactic.

According to the study, one-third of the participants would be disappointed if a trusted contact did not fully disclose a paid or incentive-based relationship with a company, 26 percent said they would never trust the opinion of that friend again, and 30 percent said they would be less likely to buy a product or service from that company again.

“Trust is the currency of effective advertising, but it is highly fragile,” says Pete Blackshaw, Intelliseek’s chief marketing officer, on the
Web site.

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