Reinventing marketing: Alan Mitchell explores consumer empowerment as a key marketing tool

Asda empowers consumers
Asda empowers consumers

Asda's Andy Bond foresees a 'democratic age' where the public will take the lead in the way we do business, but first consumers will have to get over their 'learned helplessness.'

In a famous study conducted in the 80s, researchers gave a group of nursing home residents different degrees of choice over their lives. Those on one floor were allowed to choose which pot plants they would have and were given responsibility for watering them. Collectively, they could also choose a day of the week to run a movie night. Residents on another floor got the same deal in terms of plants and a movie night, but with the staff making the choices for them.

The patients on the floor with a sense of increased control not only became more cheerful and active, they also became healthier. After 18 months under this regime, the death rate on the 'sense of control' floor was half that of the 'no control' floor.

A few years ago, Tesco chief executive Sir Terry Leahy alluded to the psycho-logical importance of a sense of control - of 'empowerment' - in a speech recalling his early years on a Liverpool council housing estate.

'Choices were more limited,' he said, 'so small things matter. The ability to make a choice gives you power in your life. They may be small choices, but they can add up to a sense of control and purpose. People draw tremendous self-esteem from being asked to choose - from being trusted.'

The psychological harm caused by lack of choice - disempowerment - can also be huge. In the late 60s, Martin Seligman, now a doyen of the 'positive psychology' movement, conducted some tragically sad experiments on dogs. He punished the poor mutts with small electric shocks for whatever they did, 'good' or 'bad'.

Eventually, the dogs just gave up - when they were placed in a position where they received electric shocks, for example, they didn't move away, even when they could. As Seligman put it, they had 'learned helplessness' - a phenomenon he later linked to depression in human beings.

Why are these insights relevant today? Because 21st-century marketing is becoming ever-more defined by the issue of consumer empowerment.

Take Asda boss Andy Bond's recent 'democratic consumerism' speech.

'There's no doubt we're seeing the dawn of a new age,' he declared, 'an age which is not about the traditional holders of power and influence, but where consumers dictate the way we do business and the products we sell. It's an age in which far-sighted companies will hand control to the man and woman in the street; a democratic age where consumers are truly empowered.'

Stirring stuff. Yet new research, conducted by Lightspeed for Ctrl-Shift, finds little evidence of this 'new age'. When asked about their perceptions of value, for example, consumers felt they were getting poor value from 13 out of the 17 industries or categories surveyed (see graph, left). If they felt genuinely empowered, this would not be the case. They would be using their powers of choice to get better value.

Poor perceptions

The research also investigated what consumers felt when dealing with organisations. The results were not encouraging. A majority (52%) felt that utility companies 'are far more interested in their own convenience and profits than they are in their customers'. Banks and big brands (such as mobile phone, electrical goods and car companies) aren't that far behind, at 46% and 32% respectively. For each sector, fewer than 10% of consumers agreed with the statement 'They really try hard to treat their customers well and it shows.' Less than a quarter agreed that if they have a problem 'I will be listened to and they will do their best to deal with my request.'

Oh dear. That sounds more like learned helplessness than empowerment. Yet, these poor perceptions aren't universal. In four of the categories surveyed (groceries, laptops, electrical goods and gas), for example, a majority of consumers felt they were getting good value. And when it comes to consumers feeling listened-to and perceiving that the companies have a desire to look after their interests, supermarkets did much better than the rest. So what's going on?

A state of equilibrium

One possible explanation is that many of the industries surveyed (banking, utilities, mobile phones, cars) effectively operate as oligopolies within a Nash equilibrium.

Let me explain. A Nash equilibrium (the brainchild of the game theory genius John Nash) happens when self-interested players seeking to maximise their own outcomes end up 'stuck' in a status quo none of them has any incentive to challenge.

Instead of trying to upset the applecart by innovating to deliver breakthrough consumer value, for example, they all find it much more convenient to adopt 'standard industry practices' that extract value from consumers.

Take banking charges. If any individual bank slashed its fees, the amount of money it would lose is far greater than the money it would gain by attracting new customers. That is partly because of consumer inertia, although learned helplessness might also be a factor: not enough customers believe that making a change will make a real difference, even when they are receiving the consumer equivalent of electric shocks. The net effect is that banks end up competing ferociously, not over who can deliver best value to consumers, but over who is best at levying fees and fines - a situation in which consumers aren't really empowered at all.

So, is Bond talking out of the back of his hat? I don't think so. The slogan 'consumer empowerment' sounds wonderful, but the reality manifests itself in different ways and at different levels.

The first level is choice. The classic arena of choice is between competing products and services. More recently, however, consumers have also gained much greater choice over the sources of information they pay attention to. This has huge implications for marketing communications.

The second level is voice. Consumers' ability to use online social media to publicly express their views and feelings is a hot topic. Viral messages have far-reaching implications for reputation management. As Bond noted: 'Within seconds, customers can compare notes, demolish price structures, destroy marketing strategies and tell the world to shop elsewhere.' If, that is, there is a genuine 'elsewhere'.

Another layer of voice, with even bigger implications, is consumers' ability to volunteer information about themselves: who they are; what they want; what they want to find out about; what their changing life circumstances and goals are. Volunteered personal information could, literally, turn many aspects of marketing upside-down - into a process driven not by marketers, but by consumers.

A third level of empowerment is the ability to specify what I want, how and when. This is more about empowering processes rather than choice or voice.

A fourth level of empowerment is control over 'choice architectures' - the ways in which our choices are constructed, framed and presented in the first place.

This really does put the cat among the marketing pigeons. A menu in a restaurant is an example of a choice architecture. Yes, the menu 'empowers' diners via choice, but the restaurant-owner retains power as the 'choice architect', selecting what choices his customers are presented with. In his speech, Bond was hinting that consumer empowerment could extend even to this 'choice architect' level.

Choice as an instrument of empowerment is a great thing. What's significant about emerging levels of consumer empowerment is that they transform the nature and the dynamics of the marketer-consumer relationship and open up opportunities for marketers to add value along the way.

Far from being a threat, 'consumer empowerment' presents innovative marketers with a real chance to upset the applecart and gain genuine competitive advantage. If this is what Bond was getting at, he really does have a point.

Alan Mitchell is a respected author and a founder of Ctrl-Shift and Mydex.



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