Posted in Marketing & Strategy Articles, Total Reads: 1416
, Published on 26 August 2012
Once upon a time, the storekeeper had power over the consumer’s purchasing choices. Then over the past century, this power was stripped from the merchant. It became prized territory and was fought over in the battle for market dominance. The trophy was wrested from the hands of the vanquished and held briefly by successive victors – the consumer, the manufacturer, the brand, the retailer and now...?
Since more than five decades now, the consumer habits and procurements have been modeled by environmental engineers. Cultural and physical environments have manipulated and been manipulated by evolving consumerism.
THE GENERIC SHOPPING LIST OF THE FIFTIES
During the fifties, daily visits to corner mom and pop store were the order of the day. This frequent household chore was a matter of personal contact between the consumer and the storekeeper. The consumer would stand in front of the counter with his bag in his hand, while the grocer would preside over his domain behind the till. He would take your order and fetch every item for you. The shopping list would also have been a generic one – sugar, flour, salt, spices, etc. With time, these generic descriptions became brand oriented. So the soap became Lux, toothpaste became Colgate and washing powder became Surf. But the power of making choices still remained with the grocer. It was he who collected the comestibles from the shelves and gave it you. Gradually, he came to know your purchase patterns as well as you knew them yourself!
THE BIRTH OF CHOICE IN SIXTIES AND SEVENTIES
Now the grocer’s dominion began disappearing. The supermarkets had arrived and the world of shopping changed and the retailer’s power over consumer choices shifted to the consumers themselves. Now shopping became the domain of individual choice. Now the grocer did not decide what you wanted and what you did not. This was the first time that the consumer got an opportunity to establish a relationship with the FMCGs. The retail price maintenance systems also changed. Originally the retailer would charge a price different from the one recommended by the manufacturer, and this compromised the consumer’s perception of a brand and even risked diluting the brand’s value.
The Maximum Retail Price (MRP) arose in this era. This practice guaranteed profit margins, forced retailers into obeisance and removed the prime motivator in the consumer’s choice of one retailer over the other (apart from the geographic location). The price and selection in all stores now became uniform. Consumer loyalty to retailer dissolved and gave way to brand loyalty. Now it was up to the brands to keep promises – not only of price, but of consistent quality and reliability. In this process, brands built platforms on which to establish consumer trust.
THE BRANDING POWER OF THE EIGHTIES
Now the power of the brands and the weight of reputation they carried grew. Procter and Gamble, an emerging name then, paved the way for branding and fashioned the consumer experience. Consumer items began existing as icons and metaphors for their own functions. In the late eighties, the power of consumer choice shifted again. The retailers began creating their own brands. So, the retailer’s own products began to compete with the other brands, leading to lot many established brands losing out on significant sales volumes and revenue.
THE RISE OF RETAIL POWER IN THE NINETIES
The retailers began realizing that they accounted for a sizeable portion of a manufacturer’s business. Brands were then forced to create points of differentiation that were based on client-store needs. This turned the tables on the consumer’s prime loyalty to the brand and resurrected consumer loyalty towards the retailer. Retailers increasingly began coming up with their own private labels the way the Future Group has “Golden Harvest”, Tata Group has “Star”, etc. These sub-brands sold at lower or competitive prices and marketed under the umbrella of the retailer’s name. This put the retailer in-charge of the consumer product choice once again.
Loyalty was no more connected to FMCG brands but also to store’s own private labels. But the resurgence of retailer power over consumer choice didn’t stop there. The retailer and its brand suddenly became the small player in the big competition for consumer attention. Consumer loyalty followed the options it was offered and shifted from individual brands to retail identities. These retailers now offered warrantys, price reduction, handy locations and often private label brands. This was the time when the DNA governing consumer behaviour was mapped.
As a result, brands not only had to offer discounts but also pay extra fee to guarantee preferred shelf position. Eventually retailers conceived and introduced loyalty programs. And while the retailer was focused on keeping the enemy, the brand, at bay; the internet crept up on the adversaries’ flanks. A powershift was about to occur, this time moving the power over consumer choice away from both brands and retailers to e-retailers.
THE NEW STORY OF THE NEW MILLENIUM
The advent of internet gave manufacturers an opportunity to bypass the stores, which was traditionally their link to the consumer. By using the consumer data acquired from research companies, from the loyalty programs; the companies could interact directly with the consumers and promote their brands through direct marketing campaigns. The manufacturer thus regained some control over the consumer’s choice and also to control consumer flow in a low profile fashion.
The internet thwarted the retailer’s ability to intercept consumers as they previously used to. The dialogue now became one-to-one basis. The internet prevented competitors from obtaining the full picture of what went on between the competition brands and their consumers. The manufacturer now acts as a retailer. The internet turned the battle for power over consumer choice upside down one more time, creating a new and unexpected retailer enemy. Internet shopping and marketing offered what retail had failed to offer – no queues, no geographic barriers, low prices and unlimited selection. A consumer dream world had appeared.
This way the world has changed from the fifties to now. Today, e-tailers like flipkart, myntra, fashionandyou, indiatimes, eBay, Amazon, etc. have established themselves. Everything from groceries to home appliances, apparel to books, everything can be bought online and delivered home in no time. And the powershift keeps going...
This article has been authored by Bhavi Patel from IRMA.