In Electronic Communities, Marketplace Power Shifts to Consumers

The shift of marketplace power to consumers that began with the quality movement of the 1980s will only accelerate as consumer processes are redesigned for an on-line world.

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There are some parallels here to power shifts between consumer product companies and retailers. In the 1980s, the balance of power between producers and retailers began to tip in favor of the retailers, particularly those with sophisticated, computerized point-of-sale and inventory systems. Many retailers demanded ; and largely received ; concessions on price, packaging, delivery and other terms. Retailers like Wal-Mart, Target and a number of large supermarket chains, possessing precise, timely information on what was or was not selling in a particular store ; and with the buying clout to back up their threats ; have had significant impact on the way consumer product companies operate.

Electronic communities that focus on end-consumer segments represent a similar threat to the end producers of goods and services. Here, again, arming consumers with information and buying clout is likely to have significant impact. Consumers will gain "information power" through these electronic communities with two abilities:

· To compare products (mortgages, airfares, car prices, etc.)

·  To converse with other consumers about the suppliers of those products

The Internet allows discussions among consumers on an endless number of topics to b e everyday occurrences ; markedly improving the need to network. That, in turn, creates the potential for inefficient and inept operators to be exposed far more quickly than in the world of bricks and mortar.

Many of these kinds of conversations are happening in cyberspace. The producer of the NBC-TV science fiction series seaQuest was surprised to see a Web site organized by fans and filled with pointed advice about how to change the show. In Spring 1995, some 5,000 fans signed a document demanding changes. This kind of dialogue will happen in and outside full-fledged electronic communities. Hundreds of organized discussion groups have been on the Internet for years.

In an on-line world, reputations can get tarnished ; or varnished ; quickly. We expect many more incidents like Intel Corp. and its Pentium computer chip, whose defects were discussed over the Internet in 1994, prompting a multimillion-dollar recall.

Return to "The Rise of the E lectronic Community"

InformationWeek http://techweb.cmp.com/iw

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