Consumers Use the Internet for Pricing Power

Not long ago, e-commerce provided companies with the most sophisticated abilities to market to consumers. A website could display different pricing, depending on the person looking. Companies could test different offers or maximize overall margin.

But the same technology that gave marketers control also put power into consumers’ hands. Computers, smartphones, and the Internet have given them new ways to find deals and comparison shop. You don’t need to show your business administration degree online to get in on the strategy; consumers are getting the upper hand and smart businesses must find ways to work with these changes — both online and in the real world — and turn them to their advantage.

Last year on Black Friday (Thanksgiving) weekend, over a third of consumers shopped online, according to a National Retail Foundation survey. That was up from 28.5 percent the year before. Not surprisingly, 45 percent of consumers said they had seen more special offers online prior to Thanksgiving, according to comScore. And close to 90 percent of retailers offered Cyber Monday online promotions, according to the National Retail Foundation:

And yet, online display advertising was down. Companies did use email to reach consumers, but people also learned about specials in such ways as social networks and daily deal sites, according to comScore.

Consumers hear about specials from friends, neighbors, family, and even complete strangers. Specials also went beyond e-commerce and into traditional brick-and-mortar retailing. And the consumer tools to stay ahead of pricing only get more sophisticated. According to comScore, 8 percent of consumers in December 2010 used a smartphone to look up competitive pricing online while shopping in a store; 5 percent found or redeemed a coupon code. Given the growth in smartphones, those numbers will only increase.

What can businesses do? Realize that technology may help people find information, but smart marketing is knowing how to use that information to their advantage. Consumers want deals, so create offers to bring them in and then be ready to merchandise. Create product bundles to boost margin (buy two for $30.00 instead of one for $15.99). Cross-sell and up-sell to increase average order size. Employ superior customer service to make people want to do business with you to convert them into regular buyers. Use the very mechanisms that consumers favor to get across your marketing message, and then employ a degree of business intelligence to make their research work to your advantage.