Who’s got the power?

Increasing customer power is a continuing challenge to marketers in today’s economy. In what ways have you personally experienced this shift in power, either as a customer or as a business person? Is this power shift uniform across industries and markets? How so?

It is not a secret to anybody that even fifteen-twenty years ago the power was focused on suppliers and manufacturers. A company would decide what kind of a product to produce and the profit margin. There was limited information on the market. For instance if a family needed a microwave oven, they would go to the store and decide what kind to buy right there on the spot.

Today things work differently. Companies make marketing plans not based on production but sales. Sales are moving everything. First of all a company needs to decide how much they should charge for its product to be competitive and make good sales. Afterwards it plans a productions/supply chain process from sales prices.

Another change in the market happened due to the boost of informational technology and growth of the internet. Lack of information is no longer an issue. Presently we have to learn how to handle an overload of information. If a family needs a microwave oven, it does not need to go to the store to find out what is there. E-commerce became a big competitor to regular stores and a part of our lives. It is possible to gather all necessary information about the microwave you want, find the brand, size, features and the best price with several clicks while sitting at your desk. Often the delivery will be included or possible for an extra charge, so you can buy your microwave without having to drive anywhere!

In today’s mature markets the seller’s job became extremely hard. Take for example car dealers. Customers have access to all information they need about a car, including the price. Dealers do not have the advantage anymore! Today customers rule the market. They decide where and how much to spend. They have unlimited access to information about products and services. Customers became very price/quality sensitive and very unloyal to a brand. They treat products as commodities not caring where to make a purchase. The key to success is, as Ferrell (2010) noted, to switch from transactional marketing to relational marketing, and in product differentiation.

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