Market Place and Balance of Power

Consumers and Technological Innovation

Consumers now have more power than ever before thanks to technological innovation. Throughout the last few decades, global markets have seen significant change. Furthermore, political paradigm reforms have extended consumer choices, spurred the expansion of the global middle class, and created enormous wealth (Labrecque et al. 2013).

Similarly, the digital revolution has empowered the same consumers by linking them and providing them with information (Labrecque et al. 2013). Modern technology have steered disruptive developments, and media has provided corporations with chances to explore and reach global markets and consumers. Such changes have left many companies struggling to adapt to increasingly powerful consumers in a dynamic and unpredictable global market. Organizations are abandoning the traditional way of marketing in which they relied on the marketing function to cater for the needs if the consumers and adapting a consumer perspective (Labrecque et al. 2013). In other words, consumer perspective has become an integral element in all processes in an organization. Every employee of the company regardless of the level of management addresses the needs of the consumer. The following academic paper seeks to show that consumers are dominating the balance of power in today's digitally marketplace.

Market Place and Balance of Power

A market can be defined as a place where suppliers and buyers meet. On the other hand, power in marketing relates to the information the consumers have about the product especially the price, quality, and availability (Baines, Fill & Page, 2013). Contrary to the traditional business when what was important is what businesses thought they produced, what matters in the contemporary world of business is what consumers think they are buying. What consumers think to gives value to their money is what matters.

The double forces of digital technology, as well as the political reform, has shifted the balance of power from developing the marketplace to the developing world. Similarly, the balance of power has shifted from institutions such as government to individuals. People utilize their new power to get information. Such information acts in their favor in the sense that they can use their mobile devices to compare prices and product, read reviews of other consumers who have used the product as well as contact the producer and learn more about his products (Clegg, Kornberger & Pitsis, 2015).

The digital era had eliminated the situation that existed when there were only a few channels in which information flowed in one direction. During that era, companies used to communicate in highly controlled messages that were carefully crafted. However, in the contemporary world, companies and consumers engage in unplanned and unscripted discussions with the help of the social media platforms (Pitt et al. 2002). The executive officers in a company understand that any person can create a crisis that is threatening to the company's profitability just by pressing 'send.' Besides, they understand that the mobile devices and the internet provide a huge amount of data that can be used to analyze the consumers and identify their needs (Pitt et al. 2002). In other words, the information available in the social media can give insight into the lives of the customers.

The Phenomenon from a Global Perspective

The change has contributed to the efficiency of the global market in which they operate in such a remarkable speed. This can be illustrated by the rate at which the Apple Inc. grew in the period before digital technology and political reform. In 1984, the company launched the Mac computers. It took them more than 20 years to sell 50 million units of the product. On the other hand, the company launched the iPad in 2010 and a period of two years, it had surpassed the threshold of Mac computers sold in 20 years (Pitt et al. 2002). New products are launched every day meaning that the digital age has witnessed a stunning array of disruptive innovation. For instance, Samsung has new products with enhanced features and efficiency in the market throughout the year.

The digital age has brought significant changes in business. In the golden age, the consumers had limited choices, limited information and acted independently (Moynagh, & Worsley, 2002). However, the digital age has expanded the choices, provides unlimited information and consumers are more connected. Besides, the competition in the golden age was characterized by the slow pace of rivalry, scripted media, sparse data as well as limited innovation. The digital age, on the other hand, has accelerated rivalry, disruptive innovation, a media that is interactive as well as a wide range data (Moynagh, & Worsley, 2002). Finally, the markets which were established economies, dealt with domestic competition and experienced stability are now global markets, deal with international competition and very dynamic.

The Importance of Focusing on the Consumer

The digital technology era has led to consumers who are empowered, have greater choices, and the level of competition has accelerated. One a consumer has recognized a particular need, they search for information about the product. That way the customer can evaluate the available alternatives and make a purchasing decision. The decision to purchase is usually dependent on the intention of purchasing which is determined by either the attitude of another consumer unexpected situational factors.

With a marketplace where the consumers are more powerful, competition increasing at such a rapid rate, as well as the threat of disruptive innovation, the management of a company needs to recognize that the traditional organization of a company is too slow, very expensive, and inefficient in satisfying the needs of the consumers. Such traditional organization is characterized by functional depth, highly structured processed and isolation of the consumer perspective. Companies need to adopt the consumer-focused business model in which involves having new organizational structures as well as new approaches to the engagement the company has with its customers.

Abandoning the traditional approach means that the management will stop believing that the consumer affairs can be delegated to the market research and be kept separate from the marketing function. In other words, the customer becomes an integral part of every decision the company undertakes from leadership to development strategy.

The chief marketing officer leads the cultural transformation in which the focus of consumer perspective is moved beyond its traditional marketing function and into the core processes of an organization. The introduction of expanded sources of information for the consumer such as social media has made it possible for the companies to measure the impacts of marketing efforts in a granulated manner. In the same way, the consumer behavior as well as purchasing patterns generate considerable volumes of information thus increasing the need for data analytics to be used in the organization's decision-making process (Moynagh, & Worsley, 2002). Chief marketing officers should be forward thinkers to be in a position of developing organizational capabilities for the purpose of aggregating or putting the information together as well as interpreting it. Finally, the global nature of competition is yet another factor that necessitates the companies to focus on the customer.

The Shift in Marketing Tactics

The empowerment of consumers and increasing rate of competition poses a fundamental threat to the development process of strategies. Before the modern era in which customers are more empowered, the strategy processes were typically highly structured, carefully and deliberately developed since consumers had limited alternatives in which to choose from and the fact that markets were more stable (Clegg, Kornberger & Pitsis, 2015). However, the development of strategy processes is now founded on deeper insights of consumers from how they behave to what motivates them. The process of strategy development has shifted from being highly scripted and structured process to adaptive and inventive one.

The marketing tactics have also been affected by the shifting of the balance of power. For over 40 years, Philip Kotler's 4Ps of marketing which includes product, price, place, and promotion, have been the guidelines for marketing tactics. However, emerging approaches are being adopted in an effort to respond to the empowered consumers. The first P representing product has evolved to product system (Clegg, Kornberger & Pitsis, 2015). The possibility of a company's product being duplicated is too high because of the hypercompetitive conditions. Therefore, companies have shifted to product systems which are linked with software, expertise, and content in which greater revenues are provided while maintaining sustainability and competitive advantage. Product systems are more stable and less vulnerable to competing products which makes duplication impossible.

On the other hand, the second P or price have been replaced by the revenue models established by companies. Companies are working towards creating value for the empowered consumers in a continuous relationship. Pricing is no longer a focus in many organizations. Since the product system allows the flow of resources and value, it is up to the company to decide on how, when and where to extract the resources from the system (Moynagh, & Worsley, 2002). The third P or the place has evolved to accessibility and availability. Adopting the product system affects the distribution function. The availability of both physical and online is essential in determining how the consumers will access such products. Finally, the fourth P or promotion has shifted to consumer engagement approach since the consumers are empowered and connected, the information does not flow in one in one direction (Baines, Fill & Page, 2013). Most organization design strategies in which they engage the consumers rather than inform them. It is evident that there has been a shift in balance of power in which there is a complex flow of resources between the organization and its consumers before, during and after purchase.

Contextual Example

The luxury brand is a contextual example to illustrate the shift in the balance of power. Luxury is a product that is of high quality and price, hard to obtain, generates pleasure and it is not a necessity meaning one can do without it. A study performed on value perception between the emerging and developed markets revealed that consumers in UK and India conform to the expectations of others meaning they perceive a luxury brand in a standardized way. However, customers in India accept information from others as evidence of reality. The origin of a luxury brand matters to a consumer in the UK, but it does not matter to a consumer in India. Besides, the study showed that brand image influences the purchase intention indirectly. Consumers show a higher brand connection when the brand image is consistent with the image of the social group that they want to be associated with. Therefore, if most of the people in the social class one want to be associated with drives a Mercedes-Benz, then the purchasing intention of that person when he or she chooses to buy a Mercedes-Benz will be affected by what everybody else in the social class perceives. Brand origin in both UK and India has an indirect influence on the purchase intention if it is promoted through societal classes.

Conclusion

From the above analysis, it is evident that consumers are dominating the balance of power in today's digitally-driven marketplace. Technology advancement, as well as political reforms, have shifted the balance of power from developed markets to developing markets and from institutions to individuals (Moynagh, & Worsley, 2002). Social media platforms allow consumers to stay connected and provide a wide range of information in which consumers can learn about certain products in a given marketplace. Customers have become more empowered such that companies are shifting from the traditional marketing model to a model that is consumer-focused. Digital technology has led to the evolution of the four marketing Ps. Organizations are adopting better strategies that will enable them to provide value to the consumers. Consumers are more empowered in this era than in the golden era since they are informed, and the information flows in a single channel.

References

Baines, P., Fill, C., & Page, K. (2013). Essentials of marketing. Oxford University Press.

Clegg, S. R., Kornberger, M., & Pitsis, T. (2015). Managing and organizations: An introduction to theory and practice. Sage.

Labrecque, L. I., vor dem Esche, J., Mathwick, C., Novak, T. P., & Hofacker, C. F. (2013). Consumer power: Evolution in the digital age. Journal of Interactive Marketing, 27(4), 257-269.

Moynagh, M., & Worsley, R. (2002). Tomorrow's consumer—the shifting balance of power. Journal of Consumer Behaviour, 1(3), 293-301.

Pitt, L. F., Berthon, P. R., Watson, R. T., & Zinkhan, G. M. (2002). The Internet and the birth of real consumer power. Business Horizons, 45(4), 7-14.