Thursday, December 30, 2010

Has the Internet Moved Pricing Power to the Consumer? (comScore Voices)

"It’s clear that retailers have gone far beyond the use of paid online display advertising to cost-effectively communicate deal pricing information to consumers, while at the same time consumers have now become accustomed to using online tools to root out best prices," says Gian Fulgoni, comScore chairman. That statement is hard to argue with, most might agree.

In many ways, the aggressive acceptance and use of these tools by consumers means that they can easily find the most attractive price for any product and, as such, pricing power has surely moved from retailers to consumers, says Gian Fulgoni, comScore chairman.

Such observations, including the notion that "brands have lost control to consumers," are catchy, seem to resonate and capture something of the drift of the times. But the statements are not so accurate as statements of fact, one might argue. Consumers do not actually have pricing power, retailers do. Consumers do not define brands, brands do. That is not to say that in nearly every market, brands must deal with more powerful word of mouth than they used to, and that retailers have to respond more actively to price discovery mechanisms that make pricing more transparent than before.

But brands haven't lost control of their brands, or retailers control of their own pricing decisions. Markets simply are more transparent and "liquid" than they used to be, especially regarding pricing and information about alternate retail channels.

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