Empowerment to the consumer

Disintermediation is an ugly word but one popular in marketing circles these days. Its limited charm resides in the layers of nuance that can be attributed to it. Thus for the aspiring Internet company, launched in the spring and floated on Nasdaq in autumn of the following year, it’s a buzzword liberally sprinkling any document drawn up to justify its fragile existence to potential investors.

To the manufacturer, too, disintermediation is the embodiment of hope. It hints at a not too distant future where – through the agency of technology – high-street retailers are at last reduced to impotence. In other words, a valuable and more profitable relationship with the end-consumer is envisioned, cemented on the spoils derived from cutting out the middleman.

But brand marketers should beware. The consumer will not be so easily harnessed – or hoodwinked. Note, for example, developments in the UK car industry. For years car makers have colluded in a ‘captive’ retailing system which enables them (as a cartel) to charge pretty much what their competitors will allow them to get away with. There’s been little room for the private buyer to manoeuvre. Accusations of rip-off pricing have been arrogantly shrugged aside by the makers, who assert that any perceived ‘imbalance’ in UK pricing is illusory, and results from an imperfect understanding of the oppressive tax systems prevailing in the rest of Europe.

Until now, that is. Little by little, consumer power has been making itself felt. First, because the Government has perceived that ‘Rip-off Britain’ is a real vote catcher and begun to act accordingly, with the promise of more effective price competition and swingeing fines for those caught fixing the market. Second, because consumers have taken the initiative themselves, with significant adverse results for UK car sales. Personal imports of lower-priced vehicles, a process traditionally considered too bureaucratic and time-consuming to pose a serious threat, have increased from a trickle to a torrent.

Media coverage has played its part, but so too has a proliferation of Websites offering the consumer easy access to hitherto elusive information, such as price comparisons. Highly significant, perhaps, is the entry of the Consumers’ Association as a kind of ‘honest broker’ on the personal import scene. It will be able to offer the kind of leverage no individual could dream of.

The fact that Saab has now broken ranks and publicly accepted that car makers must slash their UK prices or face a market crisis may, or may not, be a milestone. What is indisputable is that consumer collective bargaining, whether through the Net or other means, has come to stay. A number of sectors will feel the heat: among them travel and tourism, financial services (particularly pensions), telecoms and utilities.

The question is: are marketers up to the challenge?

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