Is Consumer Really The King in India?

Introduction
Consumers are considered to be king in a free market; the sellers are guided by the
will of aconsumer. Webster's dictionary defines Consumerism as "the promotion of
the consumer'sinterests" or alternately "the theory that an increasing consumption of
goods is economicallydesirable". "
Consumerism
" is likely to dominate the Indian market in the coming years, thanksto the economic
reforms in the present years and increased direct foreign investment in the
retailsector. The transition will be from a predominantly "sellers market" to a "buyers
market" wherethe choice exercised by the consumer will be influenced by the level of
consumer awarenessachieved. By "consumerism" we also mean the process of
realising the rights of the consumer asenvisaged in the Consumer Protection Act
(1986) viz. right to safety, right to be informed, rightto choose, right to be heard, right
to redress, right to consumer education, right to satisfaction of basic needs and
ensuring right standards for the goods and services for which one makes apayment.
The big multinationals will leave no stone unturned to gain the attraction of
theconsumer and will try to gain a respectable market share. However, some of the
companies try toengage in unscrupulous, exploitative and unfair trade practices like
defective and unsafeproducts, adulteration, false and misleading advertising,
hoarding, black-marketing etc. Theearlier approach of
caveat emptor
, which means Let the buyer beware, has now been changedto
caveat venditor
(Let the seller beware). There is an active need for having awareness on
theconsumer protection rights.
Evolution of Consumer Protection Rights in India
The consumer movement in India is as old as trade and commerce. In Kautilya's
Arthashastra
,there are references to the concept of consumer protection against exploitation by
the trade andindustry, short weights and measures, adulteration and punishment for
these offences. However,there was no organised and systematic movement actually
safeguarding the interests of theconsumers. Prior to independence, the main laws
under which the consumer interests wereconsidered were the Indian Penal Code,
Agricultural Production, Grading and Marketing Act,1937, Drugs and Cosmetics Act,
1940. Even though different parts of India exhibited differentlevels of awareness, in
general, the level of awareness was pretty low. Indian consumermovement began

with Passengers and Traffic Relief Association (PATRA) in Mumbai, in 1915.The growth
from there has been incredible and the momentum of this growth started during
the60s.In 1969, Monopolies and Restrictive Trade Practices Act was enacted and
MRTP commissionwas set up under the provision of the act. The act deals with cases
of restrictive trade practicesadversely affecting competition and with unfair trade
practices arising largely out of false andmisleading advertisements. After this act,
consumer groups emerged. The emergence of the
1
Amartya Bag, B.A. LL.B. (1
st
Semester), KIIT Law School, KIIT University, Bhubaneswar, Orissa. Email
:amartyabag@gmail.com

Consumer Education and Research Centre in Ahmedabad, in 1978, was a milestone

in theconsumer movement of India. It provided a thrust and a direction to the
movement in terms of aresult-oriented approach through effective uses of the law
and the courts, and injectingprofessional inputs into the movement. In the 1980s was
the time for the consumer rights andmany consumer groups were formed by now in
different parts of the country. In 1986 theConsumer Protection Act was enacted. In
1987, the Indian Standards Institute (ISI), which wasstarted around 1947 as a
membership society largely dominated by industries, was turned into astatutory
corporation called the Bureau of Indian Standards with greater participation
byconsumer organizations thereafter. In 1993, the Consumer Protection Act was
amendedovercoming few limitations and making it more effective and inducing the
concept of consumercourts. Three tier consumer courts at the nation, state and
district level known as the DistrictConsumer Dispute Redressal Forum, State
Consumer Disputes Redressal Commission, and theNational Consumer Disputes
Redressal Commission respectively was established under theprovision of the act.
Consumer Welfare Fund was also created during that time. We have theSecurities
and Exchange Board of India, 1992, the Telecommunication Regulatory Authority
of India, 1997, and the Central Electricity Regulatory Commission, 1998. Apart from
these, anumber of acts like Indian Contract Act, Sale of Goods Act, The Essential
Commodities Act,The Agricultural Produce (Grading and Marking) Act, The Prevention
of Food Adulteration Act,The Standards of Weights and Measures Act have been
enacted by the Indian legislature fromtime to time to protect the interest of the
consumer. The system has been considered as one of thebest in the world in the
matter of consumer protection.
Consumer Awareness and Rights a Ground Reality
Even with so many milestones, the system is not perfect and there are still hurdles in
providing justice to the consumer in some cases. In spite of having a separate

ministry or department of consumer affairs at centre and in every state, the reality is
that consumer loses the battle everytime and bows before the big wigs that own the
industries and rein the huge consumer market inIndia. The consumer is nothing but a
crownless king; the real power lies in the hands of bigmultinationals and retail chains.
Another reason may be the lack of awareness amongst theconsumer about their
rights. A recent study found that although the people have basic knowledgeabout
the Weights and measures act but very few people have knowledge about the other
lawslike the Drug and cosmetic Act; Prevention of food adulteration, food product
order, the essentialcommodity Act; Display of price order; prevention of black
marketing and maintenance of supplies. It was also found in the survey that the
males are much more aware about the consumerprotection laws than the females. It
was also found out that the people were not aware aboutorganization working at
district and national level. Out of total sample, 48 percent males and 20percent
females were aware of both consumer courts as well as consumer forum. Only 6
percenteach of male and female respondents were aware about the sub- divisional
magistrate (S.D.M.)office. Very few knew about the public supply office. Majority of
respondents that is 50 percentmales and 12 percent females were aware about the
National Consumer Forum at Delhi. 2percent males each were aware of consumer
Guidance Society, Hyderabad and Consumer ForumBombay. None of the female
respondents were aware about Consumer Guidance Society andForum. This survey
shows how the consumers in India are unaware about their legal rights.Indian
consumers want quantity not quality, they prefer to compromise rather than
complain.Though charging of a good above the maximum retail price (MRP) is
against the law, it is a very

common observance that the seller tends to charge a good above the MRP. It is
common that onehas been charged above MRP for buying a bottle of mineral water
at railway station ormultiplexes. There are many goods which are sold in the market
without much information abouttheir quality, quantity and purity. In case of goods
meant for mass consumption like, food, milk products, edible oil etc. the ingredients
are not known. Manufacturers or producers seldomfollow the safety regulations
in the products like, lamps, batteries, footwear, electricalequipments, wires,
cement, LPG cylinders, stoves, switches, plugs, sockets etc. leading to manyfatal
accidents. Adulteration of food is another major problem. Milk can contain
detergent,refined oil, caustic soda or urea. Mustard oil can be adulterated with
argemone oil and
arhar dal
with yellow colour. Vegetables and fruits are artificially coloured. Indiscriminate use
of pesticides by farmers and untreated effluents by industries, have led to the
problem of foodcontamination by pesticide residues and toxic heavy metals. The
consumers are cheated by asection of sellers.The big multinational companies make
a huge profit from whatever they sell; they try to gain theattention of an average

consumer through catchy slogans and advertisements with Bollywoodcelebrities and

cricket players as their brand ambassador to promote the goods. The consumerlured
by the advertisement follows the preference of their silver screen idol blindly
withoutknowing the ingredients of an article and suffers. Sometimes the sellers offers
unrealisticschemes on anything ranging from soap to a two-wheeler or a computer,
the consumer isdeceived by these schemes offered by the manufacturers, who
spend crores of rupees on theirbrand ambassadors. The poor consumer, who is
caught-up in buy-one, get one schemes hardlyfinds time to apply his mind that it is
he who pays everything, even for those so-called free-giftsand gold coins that are
used as marketing tools.The tragic part of all this is that at the time of purchasing the
goods, the consumer is never shownthe clauses of warranty, written in the
microscopic fonts, with so many conditions applymentioned in the foot-notes of
these documents hidden somewhere in owners manual. Theconsumer gets this
owners manual only after he makes the payment of the product he intends
topurchase. However, a closer look at such warranties makes one to ponder upon
the fraud mostof the companies commit with a consumer. Take an example of a twowheeler or a four-wheelerpurchased from any reputed automobile company. The
warranty says like this: This warrantydoesnt apply to proprietary parts like tyres,
tubes, battery, plastic items, bulbs, indicators, rubbercomponents, grommets, O
rings, bellows etc. Then what is left that comes under warranty?There is another
fraud attached to such goods. A branded company uses and assembles the tyresand
spare-parts of lesser known companies. The consumer hardly knows about this
arrangement,as no such trade secrets are revealed through the advertisements by
the brand ambassadors. Thepoor consumer, who intends to bring home the leader
from the firm of international fame,comes to know about such fraud only after the
purchasing of the goods that is stuffed with lowquality
desi
spare-parts.Now have a look at the warranty card provided with any electric or
electronic goods item,including television sets, DVDs, computers etc. The consumer
is again duped in the similarfashion. Here again, the hidden warranty speaks
something like this: In the event of damage onaccount of high or low voltage,
fluctuation in current, lightening etc, the warranty is
automatically null and void. Is a consumer responsible for the high or the low
voltage that issupplied by the electric department?Again, in case of refrigerators or
air conditioners, the companies claim that they will not beresponsible for the
leakage in the gas, for which extra money is to be paid. Further, similarconditions
prevail in case of automobiles, which say that there will be no replacement on
rubberor plastic items, notwithstanding the fact that the ACs or fridges are mostly
made of such stuff. If there is no warranty on such items, then what is the warranty
all about? Just to deceive the Indianconsumer who simply purchases the goods
thinking that the same can be repaired or replacedwithin the warranty period while
remaining ignorant of the basic difference between guaranteeand warranty.And
when any aware consumer dares to challenge such self-made clauses in the court
of law inthe event of any defect in the goods within the warranty period, he comes

across with anotherproblematic clause in the warranty that reads like this: This
contract is effective at a place wherethe company has a manufacturing unit (say at
Mumbai) and claims if any, shall be made onlybefore the courts having the
jurisdiction in Mumbai and no claims shall be made outsideMumbai, notwithstanding
that the refrigerator, two-wheeler, TV etc may have been sold ordelivered or any
stipulation or commitment in respect thereof may have been made elsewhere.Have
another look at clause in warranty: This warranty is in vogue only for a period of
12months from the date of purchase. The fact is that ACs or fans remain off for at
least six monthsa year in most parts of the country. Yet another clause says that if a
machine has beennegligently used, then the company is not responsible for the
damages.Despite the existence of consumer forums at various levels, many people
are compelled to go tothe courts seeking remedies. In India sellers try to corner and
catch the consumers on wrong footin the courts of law by putting the onus of
damage on to the consumer, declaring him anuntrained to operate the consumer
goods, while arguing the cases through highly paidadvocates. And the poor
consumer, who is already depressed on account of having purchased adefective
item, thinks twice before moving consumer protection forums or NGOs for
theredressal. Can he afford to hire the services of a good advocate to fight the case
against suchmultinational companies who have a turnover in crores of rupees per
year? And then suchforums too show inability at times to help the consumer, after
going through the cunningnesshidden in every term and condition written in the
owners manual. One wonders, who hasauthorised such companies to incorporate
all such conditions that suit only them and not theconsumer. The concerned ministry
aware of all this deceit and yet, the consumer is far frombeing the king. Why? For
one, he is averse to be a litigant and prefers to suffer in silence. Foranother, the
courts are so over-burdened with cases, majority being trivial, that justice isinvariably
delayed, if not denied. The Consumer Courts were created with an objective
todispose the cases within a very short span of time, but the ground reality is that the
case remainswithout trial for many years, thus defying the very objective of its
establishment. Presently, thecourts are located at district headquarters. This
prevents consumers of far-flung areas,particularly in big states like Uttar Pradesh and
Madhya Pradesh, from approaching the courts for

5|
P a

justice. A more disparate distribution of the redressal machinery is desirable. The

cumbersomeprocedure for filing a case adds to the burden of a consumer in the
process of getting justice.

Conclusion
Consumers have the social responsibility of exposing the manufacture/supplier or the
serviceprovider for resorting to illegal trade practices. Unethical notings like Goods

once sold willnever be taken back are in sharp contrast to the practice in some of
the developed countries,where the sellers declare; In case you are not fully satisfied
with our product, you can bring thesame to us within a month for either replacement
or return of your money. This is the result of consumer consciousness. Consumers
have to realize their role and importance. The consumermovements can be winner
movements only with our active involvement by knowing our rightsand enforcing
them. Formation of consumer associations in every town would be the first step
inthis path. It requires a voluntary effort involving the participation of one and all. If
the consumersremain passive, they will continue to be exploited. It is necessary that
consumers take action withsolidarity to get a fair deal and timely redressal. An alert
consumer is a safe consumer! There isneed for a fresh look at the machinery already
set up to protect consumer interests. Establishmentof more number of mobile
consumer courts and fast track consumer courts to resolve minorissues should be
done to make the judgement procedure fast. In the coming years, everyconsumer in
his own interest has to realise his role and importance in the right perspective. In
acompetitive economic environment the consumer has to exercise his choice either
in favour of oragainst the goods and services. His choice is going to be vital and final.
He should realise hisimportance and prepare himself to exercise his rights with
responsibility. It is very often stated"Customer is sovereign and consumer is the
King." If that is really so, why do we have theConsumer Protection Act? Why is there
a need for protecting the King? Should it not be rightlycalled "Consumer Sovereignty
Act"? It is for the consumers to decide. After all the dictum indemocracy is, the
citizens get a government they deserve. Similarly the consumers in society geta
position in the market depending upon what they do or do not do. It is agreed on all
hands that"consumer empowerment" in India has a long way to go. This is the right
time to act.

Is Consumer really the King?

Posted by Alex M Thomas on February 21st, 2007

In free market economics, consumers dictate what goods are produced and are generally
considered the center of economic activity. [Wikipedia]
Is the price of commodities and services determined by the consumers? Does the consumer have
significant control over the prices of good they purchase through their purchasing power? Or is
it just a farce?
Who is a consumer?
Consumer is an individual who has the necessary purchasing power to consume good and
services.

On Consumerism
The prices in an economy are said to be dictated by the consumers. The law of demand states
that other things remaining the same, as more and more good are demanded, the prices rise
and vice versa. In accordance to this law, when the consumers demand a great amount of a
particular good or service, their prices tend to rise. The reasoning behind it being, when there is
more demand, the producers raise the prices in order to acquire a larger profit arising out of the
increased demand.
Consumer and Choice
The consumer is always at an advantage when there is competition because competition means
choice. Their votes determine the fate of the manufacturer or service vendor. [Pai 2001]
The theory of consumer choice in Economics states that consumers take into account the
following factors before making a purchase. They are
1) How much satisfaction they get from buying and then consuming an extra unit of a good or
service
2) The price that they have to pay to make this purchase
3) The satisfaction derived from consuming alternative products
4) The prices of alternatives goods and services
[Source: Tutor2u]
Rarely do consumers make this kind of analysis. Moreover these days, all sorts of attractive
offers are given along with commodities and even services, which attract the consumer towards
a particular commodity or service. In the R and D labs of the companies, huge chunks of monies
are invested to create a brand image and to promote the product. The scary thing being, the
advertisements go to which ever extent possible to attract the consumer.
Rather than the consumer going through the price of alternatives, the company in question
provides a comparison table along with the advertisement; making it easier for the consumer.
(Hopefully!)
If the consumer had the resources to make the above mentioned comparisons and then make a
transaction based on that, probably the consumers would have been the King. Moreover, most of
the information is kept as secret by the company. With regard to the existing informational
asymmetries in the markets, the Right to Information Act passed by the Government of India
is a welcome step.

Asymmetric Information and Consumers

Asymmetric information in markets is aggravated by the advertisements, as they portray the
best in their respective products, by employing the best possible personnel. This not only distorts
the true image of the product, but also places the consumer in a difficult position. [Thomas
2006]
Conclusions
Thus, in an economy characterized with sharp informational asymmetries, the presence of trans
and multi national companies, a booming advertisement market coupled with more than 50 per
cent of the Indian populace earning less then $2 a day, the consumers will really find it extremely
hard in making informed choices.

Customer is king
In Business

I recently read through Delivering Happiness by Tony Hsieh who

started Zappos.com, the worlds largest shoe store, and it surprised me how quickly the company multiplied around a simple decision
be customer focused. Its almost clich when a company says they are customer focused or care about their employees however at
Zappos it seems genuine.
At one point within the company they were debating whether to outsource customer service, but they decided it was a core function of
the company and that should never be outsourced. That decision is what defines Zappos today. Its not some new technology they
created, its not some cool application they coded, its just basic customer interaction in helping a customer with their buying needs.
Have you heard this story before? I have, its called Nordstrom. Nordstorm is a large department store chain in the US that was known
for their customer service back in the day (I dont know about today, have not visited in years). Like Zappos they also wrote a book
documenting their path called The Nordstrom Way to Customer Service Excellence. In one story, a customer wanted a refund for tires
that were bought. The salesperson refunded the money to the customer even though Nordstrom does not sell tires. Im guessing the
salesperson figured they could take the tires to the actual store and get a refund and then payback Nordstrom. Ive noticed more and
more companies emulating the Zappos model in the apparel vertical including Bonobos. They have a heavy internet presence but if you
need assistance you can call them on the phone and talk to a customer service ninja who can guide you through the process.
As I mentioned before Zappos was looking to outsource their customer service department and of course India was at the top of the list.
If Paul in the US can help a customer at $15 an hour, then someone named Paul in India can do the same thing much cheaper, its all
about labor arbitrage. So naturally you would think Indians living in India would have access to amazing customer service
everywhereWRONG.

Its almost a given that you can expect poor customer service in India, whether its a store, restaurant or your mobile phone provider. I
believe its because there is so much pent up demand that these companies are just trying to scale to meet the demand. At some point
when the market is saturated you will see companies offer true customer service. In the meantime the companies that are providing a
high level of customer service are growing exponentially such as Flipkart. Flipkart is what happens when Zappos meets Amazon, they
are an online bookstore with excellent customer service. I swear by them, I might goto Crosswords to browse books but I usually end
up going online and buying them from Flipkart. I recently order a book on a Monday night and by Tuesday evening I had it in my
handsthat customer experience just blew me away.
I would love to see a company like Bonobos or J. Hilburn start in India, considering India has such a rich textile history. Imagine the
customer service they could provide by sending a tailor/ninja to the customers house, take measurements and then show various
fabrics available. Then come back a week later for a trial fitting and then deliver the final product in a couple weeks. This would also
solve the issue I always hear from entrepreneurs that getting commercial space in Bombay is very expensive and throws every
business model out the window.
Honestly, there is no excuse for an Indian company to provide subpar customer service today. With all the technology that is available
via forums, Facebook, Twitter, help desk software, blogs, podcast, etcyou can constantly stay in touch with your customers and find
out if they are happy or have issues. By getting a customer addicted to your customer service you have locked in a customer for
life. Granted you might end up targeting early adopters but these same early adopters will tell all their friends and family about their
experience just like I did with Flipkart.
Manish Jain has lived most of his life in the US. In 2005 he moved to India to focus on technology-based ventures. He is currently
working on a consumer business targeting India's financial sector. You can read his blog at http://celestri.org

From the Editor: Is the consumer king or victim in the market economy?
There is no simple answer to this question. Some consumers have the knowledge, skill and ability to negotiate and get good value for
money. Others seem to close their eyes to risks and hope for the best - or at least that they will not be alone if problems arise.
We receive reports from both groups of consumers. Even if people have managed to take care of their own affairs, they may still make
a report so that authorities can do something about questionable practices.
Reports cover everything from unjustified collection letters to misleading advertising and unfair contract terms. Consumers can run into
problems whether they buy airline tickets, electronic equipment or electricity.
So far this year the Finnish Consumer Agency has received about 15% more reports than in the same period the year before. The
figure for the whole year will probably exceed 4,000. By far the largest number of reports concerns communications services. Financial
services are second on the list.
Shortcomings in customer service are a perennial subject of reports, along with the time and bother required to compare prices and
quality and consumers' sense of helplessness when it comes to understanding businesses' contract terms.
Against this background it is gratifying to note that the EU's consumer policy strategy underlines the role of consumer policy by stating
that our need for confident consumers to drive our economies has never been greater.
The number of consumers who are in a vulnerable position is increasing as a result of the growth in consumption by children and an
ageing population. Consumers can be empowered by improving regulation, enforcement, legal protection and consumer education. The
objective is make markets genuinely serve consumers.
The strategy's message is no surprise. Without consumers and their confidence there can be no trade, and without trade there can be
no internal market and growing prosperity. The minimum requirement when it comes to considering consumers is to comply with
legislation.
The old virtue of obeying the law is not something that is outdated. Rules exist to protect everyone. The reports that we receive and
pass on to businesses should be taken seriously into consideration in planning activities.
EU consumer protection legislation is being reformed at a rapid pace. A political consensus was recently reached on a reform of the
Consumer Credit Directive, for example. The reform will have few benefits for Finnish consumers, but at least the level of consumer
protection will not fall significantly in Finland.

The level of consumer protection should not be lowered simply because this would make it easier to get credit abroad. The directive's
full harmonization nature will in future prevent national legislative measures that could be justified on account of the special features of
Finnish consumers and financial markets.

Why Consumer Is King: Moving With Our Mobile Market

Posted by Ben LeetThursday, September 6, 2012, 7:28 am
Posted in category Best Practices, Business Leadership, Co-creation, Consumer Experience, Economic Trends, Events, General
Information, Industry Trends, Innovation in Market Research, Market Research Techniques, Mobile Research, Online
Research, Respondent Engagement, State of the Industry
1 Comment

I wonder why we continue to question whether our industry should adopt mobile research as a core methodology?
By Ben Leet

Texting on the Tube (Photo credit: Annie Mole)

It is the summer of 2012. As I sit on a busy train during my morning commute, fellow passengers are glued to their
mobile devices almost all smartphones. Most people are not talking on these phones. They are pinching and
scrolling, browsing and thumbing. They are streaming information as fast as its released- a visual sign of the future of
human behaviour. In fact, scrap future its here, right now, and is only expected to proliferate. So I wonder why
we continue to question whether our industry should adopt mobile research as a core methodology?

(Photo credit: Wikipedia)

English: Forecasts for mobile and desktop Internet, original data from Morgan Stanley report on mobile Internet

Morgan Stanley predicts that the number of searches done on mobile handsets will overtake those done by PC in the
next year. Others posture that the mobile internet will overtake desktop internet usage within three years. Alarming
though this sounds, its a real environment for the consumer they, we, have the internet in our pockets 7 days a
week and 24 hours a day. Why would we open up a PC or notebook to do our browsing, surfing, buying, networking,
organising when we can do it with just a few clicks without moving from our chairs?
So what does this all mean for the MR industry?
As researchers, we have to understand this shift in behaviour, and see it as an opportunity rather than a threat. Our
survey respondents havent changed, but the way that they use technology has. If we as an industry are not able
to keep up, then we risk losing our most prized yet undervalued asset our consumers, respondents, the
people who regularly provide the feedback we need to do our jobs and sell our products.
Of course, Im not suggesting we try to cram a 30 minute online survey into a mobile device.That just wont work. But
what we can do is make use of this new behaviour to devise new methodologies that can be sold to our client base and
generate additional revenues for the MR industry as a whole.
One potential innovation is geo-targeting: the only other methodology that can successfully create a geo-targeted
survey is a face-to-face researcher and clipboard, which is expensive and not particularly twenty-first century. Instead,
why cant we push a survey to respondents thats relevant to the particular location they are standing in? Consumers
could elect whether or not they wanted to participate, would be paid an incentive if they chose to respond. As a result
of technology, the data is also likely to be of higher quality because people have actively chosen to participate rather
than having to be coerced at the store exit. The power is in the hands of the participants that we value.

Techo-TeenagersTecho-Teenagers (Photo credit: Leonard John Matthews)

Another very simple example of the benefits of mobile research is the ability to reach younger audiences. A few weeks
back, a group of friends and I were camping with no power. Most of us turned off our mobiles for most of the time, but
this one 16 year old spent at least an hour a day trying to find power so that he could stay in touch with friends. Once
again, my aha! moment was triggered by observing human behaviour.Mobile is the way for the MR industry to
engage with the ever elusive 16-24 age group.
Conclusion? Its not the audience thats the problem, we are! This guy has better things to do with his time than
responding to an e-mail inviting him to take a 20 minute survey for a few cents, but get him to download a cool app
with relevant rewards and an interesting (and short!) survey, and the response rates will rocket.
As an industry, we have to start thinking more about this consumer behaviour and tailoring methodologies
to suit it rather than continuing to push the same boring and lengthy online surveys to audiences that just arent
interested. Why ask people to stop at a store exit with arms full of shopping bags rather than simply pinging them the
same survey through their mobile? Just because the clipboard approach has worked in the past doesnt mean that it
will work in the present mobile age.
And respondents are the lifeblood of our industry without their opinions, we have no product, service or value that we
can add. In fact, without respondents, we have no MR industry at all: therefore we must keep pushing forward with
mobile methodologies to simply keep up with consumer trends, before those same consumers disengage with us
entirely. So lets move with our market, and get started on mobile today

Customer is King
Members are often the starting point for activities in personnel-owned enterprises. Their goals and
reasons for coming together decide if the enterprise pursues to provide jobs for them or to trade in
certain lines of business. This creates a solid ground for aiming the activities towards the members
own goals.
This comes with some weaknesses, though. There is a danger that planning and practices revolve too
much around the internal activities of the company. It is a well-known fact that a company survives
and implements also the owners goals only if it has customers. Especially on the modern market,
regardless of the branch, one has to pay special attention to customers.
These days customers, it may be individuals or communities, stand out in a crowd, behave as their
own persons, sometimes even quite surprisingly, and this has to be acknowledged. They are an
important source of information for the company, and the interaction works both ways.
In this section we focus on the customers from the point of view of both small enterprises and
businesses in the service sector. The aim is to create an overall picture of the importance of
customers and customer management and also practical tools for that. Furthermore we examine the
possibilities that personnel ownership and networking have created in customer thinking.
Different Customers
To understand the meaning of customer thinking one has to start by considering what kind of
customers there are. At first, it is worth while to think about this on a general level and then to see,
if it works in ones own business. Different groups of customers require different measures and cause
thereby different costs. All in all, also the meaning of different customers on the profitability of the
company and especially of its marketing measures is very different. This leads to considering even
further the intended actions. Looking at the lifespan of a customer relationship and the maintenance
of it through different phases, gives some depth to this consideration.
Present Customers
When we talk about customers, we normally think about the present ones, those that are buying,
buy repeatedly or have recently bought from us. As a matter of fact the latter may already do
business with another company. This gives very little time perspective or ways to manage the
clientele. The company is totally at the mercy of the customer, (who is a closed book), and can only
wait when he deigns to come and do business. To reach the customer fairly general marketing is used
and the product is a central tool in it.
New/potential Customers
A new customer is, in general, a precondition for growth in the company. It is also an important way
to reduce the risk in a situation where just one big customer buys the whole capacity. Getting new
customers should be planned and justified in the company. Marketing should be based on customer
goals. This makes it possible to plan the capacity, for example in service production so that there is
something to sell.
Previous Customers

A previous customer is always an important learning lesson for the company. One should first ask
why the customer chose another provider and then look at the activities in ones own company from
this angle. The reason why the customer left elsewhere can be the product itself, its price, quality,
availability or merely the fact that the customer was not taken care of properly. The company did not
provide a solution that the customer was expecting or the contacts were far too few.
This means that a previous customer is a good source of information but this comes at a price. For
the first, the company looses the cover he would provide and for the second, the company has to
invest in getting new customers in order to restore the turnover to its previous level. It is always
costly to get customers, especially when a run-away customer is brought back with money. It
certainly pays off to hold on to the present customers.

The Customer is King: But do you know who the

Customer is?
Its a very old adage and it is rolled around by companies and consultants the world over. Even my favorite
Management and Marketing guru Peter Drucker has a good quote relating to it:

Marketing is the whole business seen from the point of view of its final result, that is, from
the customers point of view.
But how many companies actually live and breathe it? More fundamentally, how many companies actually know
who their customer actually is? And, are they right? Because if the customer is king, but were not clear who the
customer is, then were almost certainly going to make a pretty poor job of serving that king!

The customer is king; the

consumer is king?
It appears that in the consumer goods world there is a clear, implicit belief that the consumer is the customer.
Indeed, from the responses to this question posted on LinkedIn, it appears that the words consumer and customer
can be used interchangeably. Indeed Druckers seminal quote) was used for the purpose of justifying the value of
consumer-centricity. The word switch from consumer to customer is made almost subconsciously in many posts
here, which leads me to conclude that the words are completely synonymous in the minds of many in the
industry. When we say the customer is king what we often mean is the consumer is king.

And what is wrong with that? This is the consumer goods industry after all! We know that consumers are important
and that not satisfying them is likely to lead to a very short-lived brand. Isnt all this semantics? Isnt it, as one post
on the LinkeIn thread suggested, that consumer-centricism lies the heart of true marketing? Well lets see what
happens when businesses become too consumer-centric, by way of a case study.

Why do you need to know who your customer really is?

Consumers in one market like to drink beer at parties: so they need lots of stock at home at one time. A brand
decides to corner the party market and launches in only a jumbo 48 pack. They launch it at a discount to the market
because in research consumers expected to pay less for a bulk pack, but they had also made it a premium quality
brew as the target consumer was planning to serve at upmarket events. Needless to say they researched heavily
with consumers and created a brilliant communication message which they leveraged through all available media.
So far, so good, but what happens when it is presented to the trade? Well it gets rejected by most customers.
Retailers are disappointed with the lower than average margin, and the fact that it trades down other premium beer
buyers on a bottle to bottle comparison. Once the buying team is finally bought off, it is rejected by the store
operations team as it doesnt fit on the racking, and given its relatively low rate of sales it will only get one facing: the
equivalent of two units per store. If only theyd thought about the retailer as well as the consumer eh?
Three weeks in the product isnt selling. Junior managers are dispatched to stores to see what is happening. The
product is listed, they report, at the right price. But nothing is happening. Nobody could spot the problem, until one
bright young manager observes the shoppers. 82% of them have baskets. Even those with trolleys buy only a few
items. Following some shoppers back to the parking lot, she observes that there are very few cars, but lots of free
courtesy buses. Then it clicks. The pack is way too big to carry home on a bus.

We Three Kings?
The story is exaggerated, but only a little. Perhaps there was a time fifty or sixty years ago, when complete focus
on the consumer was good enough. Trade was relatively weak and highly fragmented, so big national brands could
easily call the shots. And for many household goods the housekeeper/mom/consumer controlled what went in and
out of the family. But things have changed. Trade consolidation has given retailers power, and that means brands
need to serve this customer too. Shoppers are much more influential, and behave differently and are influenced by
different things than that which influences consumers. If all we do is focus on them as consumers, we will miss
much of the opportunity to learn about them, to connect with them, and to influence them.
Which king?
Consumer marketers, dont fret. The consumer is still king of kings: without consumption brands die, it is as simple
as that. But brands must be configured to ensure that they serve all three customers. Branding models may still
have the target consumer at their heart; but should also reference what the brand delivers for shoppers and
retailers.
Shopper Marketers. The shopper, as the newest king on the block, is most often the one who gets neglected.
Ensure your colleagues and peers know the difference between the shopper and the consumer, and how this varies
by store type.
Customer managers. Your customer is a king too. Brands that dont serve retailers will struggle to get to shoppers
and therefore to consumers. But we mustnt make the mistake of serving this king to the detriment of the others, or
the detriment of the brand. Just because it is good for your retailer, doesnt mean it is good for the brand.

The customer is king, but the consumer goods industry has three kings: the consumer, the shopper, and the retail
customer. Marketing must move on to a marketing approach which recognizes the need, and indeed the
opportunities which come from marketing to these three customers in an integrated manner. Feel free to contact
me if you would like to learn more about how to build brands which work for all three customers; and to use this to
drive phenomenal growth and better investment returns.

3928.3K

There is only one boss. The customer. And he can fire everybody in the
company from the chairman on down, simply by spending his money
somewhere else.
Sam Walton

Business, Money, Everybody

The aim of marketing is to know and understand the customer so well

the product or service fits him and sells itself.
Peter Drucker

Understand, Service, Itself

The toughest thing about the power of trust is that it's very difficult to
build and very easy to destroy. The essence of trust building is to
emphasize the similarities between you and the customer.
Thomas J. Watson

Trust, Power, Between

A satisfied customer is the best business strategy of all.

Michael LeBoeuf

Business, Best, Satisfied

Most of us understand that innovation is enormously important. It's

the only insurance against irrelevance. It's the only guarantee of longterm customer loyalty. It's the only strategy for out-performing a
dismal economy.

Gary Hamel

Understand, Against, Loyalty

Branding is not merely about differentiating products; it is about

striking emotional chords with consumers. It is about cultivating
identity, attachment, and trust to inspire customer loyalty. Chinese
brands score low on attributes such as 'sophisticated,' 'desirable,'
'innovative,' 'friendly,' and 'trustworthy.'
Nirmalya Kumar

Trust, Emotional, Loyalty

We see our customers as invited guests to a party, and we are the

hosts. It's our job every day to make every important aspect of the
customer experience a little bit better.
Jeff Bezos

Experience, Job, Bit

In business, the idea of measuring what you are doing, picking the
measurements that count like customer satisfaction and
performance... you thrive on that.
Bill Gates

Business, Idea, Count

The simple act of saying 'thank you' is a demonstration of gratitude in

response to an experience that was meaningful to a customer or
citizen.
Simon Mainwaring

Thankful, Experience, Simple

Our DNA is as a consumer company - for that individual customer

who's voting thumbs up or thumbs down. That's who we think about.

And we think that our job is to take responsibility for the complete
user experience. And if it's not up to par, it's our fault, plain and
simply.
Steve Jobs

Experience, Job, Individual

If employees need to stay late in order to curry favor with the boss,
what motivation do they have to get work done during normal
business hours? After all, they can put in the requisite 'face time'
whether they are surfing the Internet or analyzing customer data.
Robert Pozen

Time, Work, Business

The golden rule for every business man is this: 'Put yourself in your
customer's place.'
Orison Swett Marden

Business, Yourself, Rule

It is not the employer who pays the wages. Employers only handle the
money. It is the customer who pays the wages.
Henry Ford

Money, Handle, Pays

It is so much easier to be nice, to be respectful, to put yourself in your

customers' shoes and try to understand how you might help them
before they ask for help, than it is to try to mend a broken customer
relationship.
Mark Cuban

Nice, Yourself, Help

The first step in exceeding your customer's expectations is to know

those expectations.
Roy H. Williams

Step, Exceeding

Courteous treatment will make a customer a walking advertisement.

James Cash Penney

Walking, Treatment, Courteous

We've had three big ideas at Amazon that we've stuck with for 18
years, and they're the reason we're successful: Put the customer first.
Invent. And be patient.
Jeff Bezos

Successful, Reason, Three

The best customer service is if the customer doesn't need to call you,
doesn't need to talk to you. It just works.
Jeff Bezos

Best, Talk, Call

The purpose of a business is to create a customer.

Peter Drucker

Business, Purpose, Create

If you work just for money, you'll never make it, but if you love what
you're doing and you always put the customer first, success will be
yours.
Ray Kroc

Love, Success, Work

Many corporate leaders and employees have the right intentions, but it
can be overwhelming when you consider how everything is affected
from leadership styles, to organizational structure, to employee
engagement, to customer service an marketplace.
Simon Mainwaring

Leadership, Service, Leaders

Innovation comes from the producer - not from the customer.

W. Edwards Deming

Innovation, Producer

Statistics suggest that when customers complain, business owners and

managers ought to get excited about it. The complaining customer
represents a huge opportunity for more business.
Zig Ziglar

Business, Complain, Ought

If your customer base is aging with you, then eventually you are going
to become obsolete or irrelevant. You need to be constantly figuring
out who are your new customers and what are you doing to stay
forever young.
Jeff Bezos

Young, Stay, Forever

You don't need a big close, as many sales reps believe. You risk losing
your customer when you save all the good stuff for the end. Keep the
customer actively involved throughout your presentation, and watch
your results improve.
Harvey Mackay

What is meant by the statement the consumer is king explain?

It is because of the consumer that the producer earns his livelihood hence the consumer is
regarded as the king. In the absence of consumer, earning the daily bread would be hard to
comprehend for the manufacturer.
Still we hear cases of counterfeit against the consumer. The egocentric seller looks only for his
gains rather than consumer needs. Providing adulterated or low-grade products or service
ameliorates in cost -cutting for the organization but hinders the consumer. The consumer
protection act of 1986 acts as a reconcile for such situations.
Cases of consumer being treated with honour are also contemplated. Their grievance is tackled
with care and they are provided with adequate facilities if demanded for. The service industry in
India is fast gaining appreciation. New ways are implemented in order to provide the best service
possible so that the customer comes back to you and spreads the word about your organization.
Customer satisfaction research is one way to know how a consumer acknowledges a company. It
can help the businesses in building stronger relationships with customer. The information gained
through customer satisfaction research allows you to target limited resources in improving
services. Gone are those days when producers would be kings, today the consumer is the king.
The key to entry-exit of companies is in the hands of the consumer.
Today, the major driver of a company's profitability depends on customer satisfaction level. With
easy availability of options in today's world; the consumers are riding a high wave.
navneet kaur

Customer is king
The customer experience champion is always right: marketers who champion the customers
experience have a golden opportunity to make their mark in the boardroom by improving their
brands bottom line.

Case study: TGI Fridays. Click here to find out how investment in staff training helped raised customer
satisfaction for the brand
Case Study: Hilton Worldwide. Click here to read how the hotel brand successfully relaunched its
HHonors loyalty programme
Call centre experiences can have a big impact on customer experience, click here to see how brands
compare
RSA Group (owner of More Than) chief marketing officer, Pete Markey, talks about how
marketers should be central in the customer experience
Read why Marketing Week editor Mark Choueke thinks customer experience is the new battleground

Harry Gordon Selfridge, founder of the luxury store that bears his name, summed up the importance of
flawless service when he reportedly coined the phrase the customer is always right at the start of the 20th
century, but it has taken more than 100 years to make a link between customer experience and the bottom
line.
Although a weight of evidence now exists to demonstrate the two are inseparable, it appears to have reached
too few boardrooms. As Mike Ashton, former senior vice-president for international brand marketing at Hilton,
puts it: You have only to look at the companies that stand out for doing this to realise they are the exception,
not the rule.
With marketers largely in charge of managing consumer relationships, how can they convince corporate
boards that improving customer experience will pay dividends?
Ashton spent 18 months gathering evidence from 250 hotels to show that investing in a positive experience for
customers would boost Hiltons bottom line. Part of this exercise involved demonstrating to the board how
much money the company was losing through poor customer experience.
The resulting transformation programme eventually made Hilton number one in every market outside the US
(see Case Study, below). And the hotel operator is not alone in putting resources into managing and measuring
customer experience. Businesses such as Nationwide, More Than and TGI Fridays are also looking at how the
experience their customers have with them affects the bottom line, whether that be through a call centre,
meeting staff or on a brands website.
Plenty of evidence exists to show that satisfaction with the customer experience is linked to profitability. For
example, twice as many car dealerships with low satisfaction scores went out of business in the recession as
those with high scores, according to figures from Maritz Research.
Its research also shows that 55% of people who are happy with a sales experience will pay for the same
dealership to service their cars, but only 35% of dissatisfied customers would go back to a dealership they
werent satisfied with.
Ashton, now managing director of consultancy ABCG, agrees that smart companies will want to create an
experience that meets or exceeds the customers needs and expectations in a way that is profitable,
operationally deliverable and sustains a point of difference in the marketplace.

Internal struggle
Nationwide introduced a tracker to measure how satisfied people are with its service in April 2010. Head of
customer marketing Alex Bannister says there is still an internal struggle for businesses to get the boardroom
to understand how important a customers experience of the brand is.
Marketers should be well placed to point out the business benefits of a high-quality customer experience, given
they are the ones who most appreciate what customers want. Arguably, marketers should also be responsible
for the promises brands make about their service and as such should be aware of the perils of failing to meet
them.

Yet, despite it being cheaper to keep a customer than acquire a new one, Ashton says marketers often struggle
to convince their organisations that the cost of ensuring a consistent experience is an investment in ongoing
profitability.

Loyal following: More than 45% of Hilton occupants are HHonors members

Few marketers are sufficiently influential within their respective businesses at board level to be able to create
a robust business case and a workable operational model that will galvanise an organisation, he argues.
The marketers that can persuade the board of the importance of customer experience are seeing undeniable
results. Hilton has achieved year-on-year growth in membership of its HHonors loyalty scheme, which was
relaunched this March to focus more on guests experiences rather than simply collecting points. Scheme
members now contribute more than 45% of the hotel companys overall revenues (see Case Study, below).
While loyalty schemes can help create happy customers, other brands have found they need to focus on
making their core proposition match the service they offer.
Meeting expectations
For example, More Than uses its marketing to suggest it is more than just an insurance provider, but it found
that only 52% of its car insurance customers were satisfied with the general service they got when it carried out
a survey in August 2010.

It also found that only 44% of customers were satisfied when they renewed their car insurance and that only
half said the company had fulfilled their needs first time (see Q&A, below).
This led the business to question whether its core proposition actually met the expectations it had created. A
particular cause of frustration, More Than found, is first-contact resolution, or solving customers problems
first time without them needing to call back.
More Thans survey drew links between first-time resolution and satisfaction, and between satisfaction and
insurance policy renewals.
According to RSA Group chief marketing officer Pete Markey, who oversees the More Than brand, there must
be a balance between the experience someone has with a brand and what their expectations are.

Looking at the customer experience and delivering it consitently should be considered

as sexy as the brand itself
He argues that the equation is not as simple as either promising what you can deliver or matching your delivery
with what you have already promised. It is somewhere in the middle. Do you wait to be perfect before you
communicate? Obviously not. You have to be true and have integrity in what you are promising as a brand and
consistently deliver that.
More Than has seen first-contact resolution and satisfaction rates rise since devoting more attention to call
centres.
Focusing on the customer experience is equally important for brands that offer a face-to-face service. Since
being bought by a consortium of investors in 2007, restaurant chain TGI Fridays began measuring how
customers experienced its outlets. Overall satisfaction improved by two-thirds between 2006 and 2010, and the
business claims it is now seeing compound sales growth ahead of the market (see Case Study, below).
That turnaround was prompted by the fact that satisfaction was at just 35% in 2006 and the business had to
decide whether the American diner atmosphere at the heart of the brand was still relevant. It realised that to
maintain its premium pricing and remain popular, it had to invest in training restaurant staff and revamping its
venues.

Few marketers are sufficiently influential within their respective businesses at board
level to be able to create a robust business case and a workable operational model
that will galvanise an organisation
However, for some brands, not promising much can mean that customers feel more satisfied with an
experience than they thought they would. For example, low-cost airlines might get fewer complaints than those
brands whose image is more premium.
One such carrier, Ryanair, claims to have the lowest complaints rate of any European airline, with 0.57
complaints per 1,000 passengers in August and 99% of these resolved within seven days. But it could never
be accused of setting expectations of the customer experience too high, given chief executive Michael
OLearys periodic threats to charge for ice cubes or for using the toilet on the plane.
Ryanairs head of communications Stephen McNamara agrees that the brand is not shy of negative press
stories, but says it focuses its marketing on price and punctuality as opposed to the quality of the experience
on the plane and in the airport.

We never miss an opportunity, and from time to time engage in guerrilla marketing to garner quick and easy
publicity. But our customer surveys consistently show that over 50% of our passengers fly with us four or more
times a year.
Lowering expectations is not a sound marketing strategy for most businesses, however. The more likely task
for a marketer is to justify the promise being made and to make the argument within the business for why this
must be met. As Eurostar sales and marketing director Emma Harris summarises: A businesss brand
positioning should be built on competitive advantage, and to deliver on that competitive advantage the
experience must be consistent with the brand.
Eurostar began a review of its customer experience in 2008 to assess whether its service personality reflects
the pioneering spirit that Harris says is at the centre of its branding.
Call centres were identified as an area with particular deficiencies, she adds, because the way staff were being
rewarded and measured didnt match the customer experience being communicated by the brand. Eurostar
threw out all of its scripts and call centre staff are now measured on building rapport with customers, rather
than on call length or how much they cross-sell or upsell.
Call centres
This might seem like a recipe for increasing costs without any measurable benefit. But a poor experience in a
call centre is likely to cause a customer to take their business elsewhere, according to research into mobile
phone operators by Maritz. Half of all bad experiences that cause a customer to leave a brand happen in call
centres (see Make or Break Experiences, below), indicating that it would be foolish to skimp on delivering a
consistently good customer experience in this area.
Marketers are probably well aware that cutting down on the customer experience is often a short-sighted
strategy, especially since a company has nowhere to go once costs hit rock bottom. But without presenting
hard evidence, they will not be equipped to demonstrate why it is important to invest.
Regulated industries such as water have a more formalised approach to gathering that evidence. Water
regulator Ofwats Service Incentive Mechanism (SIM) determines how much the regional monopoly suppliers
can charge. It contacts 200 customers every quarter for a qualitative study and also assesses complaints and
repeat or abandoned calls by customers.

Veolia Water uses a text message system from customer insight company Rapide to get feedback from its
customers, giving it a picture of its performance between surveys. Every customer who contacts the company
is sent a text message asking whether they would subsequently recommend it on a scale of 0-10. Those
scoring 0-6 are called back, since a low score means a customer is more likely to need to make a repeat call or
complain.
According to Veolia Water marketing manager Morag Kent: Most customers do respond, and we get really
faithful results out of it; so much so that we are using it to predict our SIM scores.

With Veolia Water, the customer experience is embedded in its operations, since it helps determine profitability.
But where responsibility for customer experience lies varies between companies. In some, there is a dedicated
customer experience department, in others marketing will take the lead and in others it could be operations.
The businesses that do invest in putting customer experience at the core of their profitability seem to have two
things in common - consensus at board level that the experience must meet the expectation, and the ability to
communicate this to all members of staff.
At Nationwide, for example, there is no specific customer experience function within the building society, even
though it has set a target of beating all other high street banks on this measure and has begun publishing
complaints and service tracking data on its website to prove it.
Instead, the goal is embedded throughout the business. It is a structure whose efficacy depends on one
fundamental question, Nationwides Bannister says. Is there a good line of sight between the strategic
objectives at the top and the day-to-day operations and conversations with customers? It is quite easy for
someone to have a vision at the top, and for it not to reflect what is going on on a wet Thursday morning in a
branch or call centre.
In many organisations, no department has greater incentive than marketing to ensure that this line of sight
exists. Marketers are responsible for making the brands promises, so they must also take responsibility for
keeping them. But to show the business the importance of doing so, they must use hard evidence to get the
support of staff in every discipline and at every level, from the board downwards.
Case study: TGI Fridays
When US restaurant chain TGI Fridays came to the UK in 1986, it was famous for its distinctively American
atmosphere. But by the mid-2000s, the brand had lost its way and when Whitbread sold the operating rights in
2007 to a consortium, including the brands US owner Carlson and investment bank ABN Amro, a
reassessment of the entire restaurant experience followed.

Cocktail for success: Satisfaction has risen 13 percentage points since TGI Fridays refocus

Commercial director Darrell Wade, who started as marketing director when the brand transferred ownership,
says: The brand was tired, it was a bit old, people did not have pride in what they were trying to do.
TGI Fridays responded by pouring time, effort and investment into the development of its staff. Its strategy was
to rejuvenate the dining experience and to go back to what made us famous originally, Wade says. The brand
worked with consultancy SMG to look at four measures on top of general satisfaction - the most important
being overall fun experience.
The restaurant also started a training programme called Earn Your Stripes, ensuring all staff reach a minimum
standard. It added a scheme called Plus 1, which encourages a more outlandish approach to service, such as
specialist cocktail making, servers carrying multiple dishes or doing magic tricks. Wade says the brand looks
for personality rather than skills when hiring new staff.

TGI Fridays saw satisfaction rise from 35% to 58% between 2006 and 2010 and the number of guests citing
an overall fun atmosphere increased from 36% to 52%. Wade claims that sales growth for the business is
tracking at 7.5% above the market, following similar results a year ago. In the coming year, the restaurant is
adapting its customer research model in response to demand, with pace of experience becoming the lead
measure.
Wade also points out that the menu has been refreshed. It is our 25th year, so we have taken what we are
famous for - burgers, ribs, steaks and pizzas - and made them better, he says.
Case Study: Hilton Worldwide
Hilton Worldwide relaunched its loyalty programme HHonors in March this year, as reported exclusively by
Marketing Week. It wanted to focus on the experiences available to customers, rather than on the mechanics
of amassing points. Eight months on the brand is already seeing results, with new HHonors customers and an
uplift in the proportion of its business that comes from those in the scheme.
Senior vice-president of customer marketing Jeff Diskin says: We are going to have more than 50% more new
members this year than we did last year - the highest number of new enrolments we have ever had, in a
programme that is nearly 25 years old. We are tracking at more than 45% of all occupancy globally coming
from HHonors membership. That is also its highest level ever.

The rewards on offer have been picked according to the data shared and preferences expressed by HHonors
members. Hilton has also recently made 200,000 extra premium-rate rooms available for redemption of
HHonors points. According to Diskin, customers booking online have begun taking advantage without Hilton
even marketing this new availability - 20% of new redemptions are now made on premium rooms.
The data generated by the HHonors scheme gives Hiltons marketing team irrefutable evidence of the
customer experience strategys impacts on the financial health of the business, Diskin says. He adds that
control testing was also done to add further weight to the figures.
Earlier in the year, we did a promotion where if you stayed longer you got more points. For the first time in the
history of the company, the length of the stay went up for the three months that the promotion ran.
What is not as measurable is what incremental improvements in sales are attributable to customers general
feelings about the experience at Hiltons hotel brands, as opposed to the effects of experiences offered through
promotions.
However, the HHonors programme has previously been used to demonstrate how negative customer
experiences hurt business, according to Mike Ashton, who until 2008 was senior vice-president of international
brand marketing for the companys previous incarnation, Hilton Hotels Corporation.
He says that HHonors members were asked in their satisfaction surveys to point out where bad experiences
had led them to decide not to return. Over a period of time, we demonstrated the amount of business that we
were losing because of things we were not getting right. It becomes very hard to argue with the amount of

money that you are losing because of things you are doing that do not match up to what the customers
expect.
Make or break experiences
Bad call centre experiences are a particularly sore point for customers, according to a study by research firm
Maritz, shown exclusively to Marketing Week. And among UK mobile operators, Vodafone and Three are seen
to be the worst offenders in failing to take responsibility for customers issues on a call.
The research into the mobile phone market looks at events termed make or break that turn a customer from
loyal to devoted or from passive to disgusted. More than half of all break experiences happen during phone
calls, as opposed to in store or online.
Failing to take responsibility for a problem is also the most common reason for a call centre turning a customer
off a brand for good. A spokesperson for Vodafone says that, for contact centre staff, taking responsibility for
any issues raised with them is a specific part of their training.
If the problem is one that cannot be resolved at that time, there is also a formal escalation process, of which
staff are made aware. Vodafones spokesperson says: All our calls are recorded and if we track any failure in
the way complaints are handled, we take action to make sure it is not repeated.
We also have an internal process - a forum that meets fortnightly - which allows employees to raise issues
that are causing problems for our customers so we can put remedies in place. We make sure our customers
can contact us easily online, including webchat, an eforum, Facebook, Twitter and by email and phone. We
have also developed self-help videos on YouTube and avatars for billing enquiries. Over a year, we have
reduced customer complaints by 50%.
Yet while Vodafone is working on these issues, the highest proportion of make - or positive - experiences
among mobile operators occur in high street stores, Maritzs study finds. The three factors most likely to
influence a make experience in store are staff being knowledgeable, courteous and communicating clearly.
Brands may use a variety of approaches to measure the customer experience they provide. But alongside
traditional scoring models that give a general picture of how well a brand does most of the time, companies
need to take account of the extremes of good and bad experiences because the make or break moments are
the ones most likely to push someone to decide to give their custom long-term to a brand, or to leave and
never return.
How UK mobile phone brands compare (source: Maritz)

Q&A: Pete Markey, chief marketing officer, RSA Group (owner of More Than)

Marketing Week (MW): Is the marketing department responsible for the customer experience?

Pete Markey (PM): Marketers should not have to kick off every initiative around the customer, but we should
be central to it, representing the brand and its values when we are designing the customer experience. In our
business, marketing will play an increasing role in looking after the customer.
MW: In August 2010, More Than found only about half of its car insurance customers were satisfied with their
experience. Did this prompt change in the brand?

PM: Yes. What is very clear is we are not getting it right all the time. Striving for perfection is a key driver in our
business. The financial implications of not getting that right are significant. Its basic stuff - if you do not sort the
contact out first time, it generates more calls and more unhappy customers.
MW: What impact does customer experience have on RSAs business objectives?

PM: We have done a lot of work that clearly links customer service and experience with people voting with
their feet - either staying or going.
Resolving a query the first time it is raised has a significant impact on retention. Customers that are satisfied
with us are 50% more likely to renew with us than those that are dissatisfied.
MW: How has the businesss attitude towards customer experience developed, and how is this communicated
between colleagues?

PM: We have a set of common metrics that are understood by the business, so that whether they are in the
right place or not we understand the impact and what we need to do, right from our group board through the
UK board and down. Saying that, there is a business case required. Get your metrics together, understand the
measures that drive satisfaction for the customer, and keep track of these. Then use them to help drive
change. Looking at the customer experience and delivering it consistently should be considered as sexy as the
brand itself.
MW: How important is the call centre experience in keeping customers satisfied?

PM: As more service goes online, the nature of the calls are getting more complex. The customers who ring us
from our website or from a price comparison site get a different sales journey from those who ring us through
our call centre lines. We realise that those people are time-poor and in most cases just want to pay and answer
a few simple questions. That has really improved satisfaction and retention rates.

Whether the economy is hot or cold or somewhere in that lukewarm malaise we seem to be in now
business survival is never easy. Businesses of all types and sizes go bankrupt and die every day. One
thing is for sure: Only the smart survive.
While companies focus on branding and customer-loyalty strategies to attract and retain customers, the
consumer's attitude is, "It's all about me." Consumers expect companies to do anything to earn their
business. We've all heard the story about the guy who returned a shirt to Nordstrom with an ink stain from
a leaky pen. Was it the store's fault? No, but they replaced the shirt anyway to drive customer loyalty. I saw

someone return a lawnmower to Home Depot because he didn't like it after using it for several weeks.
Was that the store's fault? No, but they stand behind what they sell. What are the true costs of these
actions? Someone has to pay.
In recent years, the for-profit sector has become ruthless in its customer-acquisition tactics. The hunt for
high-value customers has forced corporations to adapt to a more segmented customer base. While
customers are saying, "It's all about me," companies are moving from a customer-is-king attitude to one
where only certain customers are kings. What about the rest? They get standard service, and the
company isn't too concerned about letting them go elsewhere. This might explain some of the less-thanstellar service people have experienced at some establishments and have been complaining about for the
last couple of years.
Practices that work well in the for-profit world often are adopted and modified in the nonprofit world.
Organizational branding and shared services are good examples. Does this mean associations should
"fire" their low-value members and focus on high-value members in order to prosper and grow?
All Customers Are Not Created Equal
Successful companies are using sophisticated analysis and deployment strategies to segment customers
into categories such as "high value" and "low effort." This lets them allocate a disproportionate amount of
resources to high-value customers, resulting in improved loyalty and higher revenues from customers who
are good for business. For example, think of the frequent traveler points offered by many airlines, hotels,
and rental car companies.
Successful companies employ these simple concepts:

Not all customers are of equal value. Segment your customers and focus on those
who will help deliver higher profit margins and make you more money.

Loyal customers are good for business. A loyal customer costs less in terms of
marketing, sales, and service. That saves money.

Allocate a disproportionate amount of time, money, and resources to

acquiring and keeping high-value customers. This is a good return on
investment.

Customers who want to form a business-to-business partnership instead of

treating your organization like a commodity are more profitable over the
long term. They tend to buy more and complain less, they collaborate on innovation
and product development, and they keep switching costs high. (Simply put, switching
cost is the amount it would cost a customer to move from your organization to your

competitor. This cost is prohibitive because you already have a multifaceted, long-term
relationship with the customer.)
Corporations need to make tough choices. If they're smart, they'll keep the good customers and let the
competition have the low-value customers. This way they drive up their competition's operating costs while
driving down their competition's profit margins. When this happens, the aggressor is likely to prosper and
the competition will likely die. Proof of this is a comparison of the top 10 corporations over a 10-year
period. In a relatively short period of time, some dominate and some fail, change strategies, or are
acquired: think Sears and Wal-Mart, Dell and IBM, Chrysler and Daimler-Chrysler, TWA and Southwest.
Feasibility
In deciding whether this is a useful tactic for associations, the first step is to examine some factors about
which members turn to their associations or that in some way affect how they interact with their
associations.
Stagnant salaries;
Lagging job market;
Economic uncertainty;
War;
World politics;
E-commerce;
Technology;
Work/life balance;
Mergers and acquisitions;
Cost of travel;
Globalization;
Gender or cultural issues;
Environmental issues;
Becoming a service economy;
Education;
Human resources development;
Politics;
Attitudes toward the United States;
Aging population;
Real-time access;
Converging markets;
Degradation of moral/ethical standards.
With all the "noise" in our world today, associations are faced with the daunting task of focusing time and
resources on delivering value to members so they will truly benefit from what the association has to offer.
Without improved focus, associations risk falling into the "mile-wide and inch-thick" trap, in which
members perceive a low return on their membership dollars and a reason not to renew. Associations need

to focus on the key issues affecting their membership and then integrate these issues into the value
proposition they offer. Using this strategy, the association will actually provide more tangible value,
improving its chances of attracting and retaining high- value members.
Steps for Improved Profits and Long-term Health
Here's a page from the corporate playbook. Corporations who practice good analysis and deployment
strategies actively segment customers into high-value, low-effort categories. For an association, the
attributes that classify members as being high value or low effort might include the following.

High-value attributes. Has leadership potential, attends meetings, buys products and services
from the association, helps recruit other members and sells the "brand," participates in committees,
writes articles for association publications.

Low-effort attributes. Pays dues on time, uses the staff's time wisely, complains rarely and is
always constructive about it.
Once the criteria have been established for a high-value member, the association needs to refine its

recruitment effort so that it targets high-value members. It's important to continue to measure the
membership acquisition rate (defined as the percentage of people targeted for membership who actually
become members) and the membership retention rate. It also is important to develop measurements that
will tell you how many of your members are high-value members. Each association should establish its
own criteria, which could include such things as "spends at least $500 on association products or services
in a year" or "writes an article for an association publication or serves on a committee."
A member who is considered high-value and stays for many years and a low-value member who falls off
after a couple of years have very different cost bases to the association. Leaders should organize
recruitment and retention efforts based on the member's long-term value to the organization. Associations
can't afford to wait for high-value members to fall off the membership rolls and then try to recover them. If
a high-value member doesn't renew two or three weeks after the first renewal notice mails, that member
needs a phone call immediately. Of course the better strategy is to ensure that those phone calls are
never made. If you dazzle your high-value members with personal touch and service throughout their
membership terms, they'll renew immediately.
The SAMA Example
The Strategic Account Management Association (SAMA) is an example of an organization that is trying
new and innovative approaches in the following areas:

Positioning their brand image to appeal to the members they want to attract;

Offering tiered membership that appeals to both individuals and organizations (the association
version of mass customization);

Saving time and energy.

SAMA has a tiered membership structure that can meet the needs of every would-be member, from
individual membership to corporate members with a variety of tiers in between (bronze, silver, and gold).
The association is constantly looking for new and innovative ways to improve member loyalty.
SAMA conveys a clear brand value proposition to current and potential members one that appeals to
the type of members they want to attract and retain. The three messages SAMA conveys are that SAMA is
"connected, focused, and fast."
Connected. SAMA says they have spent 40 years building a vast network of contacts across the globe
practitioners, researchers, academics, and consultants all of whom add constantly to their body of
knowledge on customer-supplier partnering. SAMA claims to be the source of the best research, best
practices, and best professionals.
By positioning its community of interest this way, SAMA lets prospective members know their brand stands
for research, integrity, and relationship-building opportunities with other similarly focused professionals. In
addition, by offering such a flexible, tiered membership model, SAMA also reaches out to a wider swath of
potential new members.
Focused. SAMA claims to be "the only organization solely devoted to "developing and promoting the
concept of customer-supplier partnering." This tells prospective members that, in the entire world, there is
only one place to find what you need on this subject. This powerful statement suggests that members
need look no further than the association to find the resources, tools, and relationships they need to be
successful. Taking this type of bold position means the association must deliver on its brand promise by
providing educational programming, tools, and resources that live up to member expectations.
Fast. SAMA offers Web site and human support to assist busy executives quickly. It appeals to global
members who need access to information when North America is asleep. SAMA promises to deliver on its
value proposition when the member wants it, not the other way around. That's powerful. (To learn more
about SAMA's membership value proposition, seewww.strategicaccounts.org/
public/membership/membenefits.asp.)
Fire Members?
Should you fire your low-value members? Common sense says no if they write you a check, you should
cash it. But be mindful of becoming a mile wide and inch deep. It's a mistake to try to please 30,000
different members in 30,000 different ways.

Should you find ways to turn low-value members into a high-value members? Common sense says yes,
but be careful. You need to resist the urge to make this your organization's focus. Develop and test
specific strategies and keep a close eye on the resources you're expending.
Should you set your sights on high-value members who will help build your brand, fill leadership positions,
and bring in more revenues over time? When it's put like that, clearly, the answer is yes. The challenge for
associations is planning to put the resources behind it. When describing military engagement, General
Norman Schwarzkopf, head of coalition troops in the Persian Gulf war, said simply, "Plan your work and
work your plan." The same is true for organizations. Now is the time to act, because in the fight for highvalue members, only the smart will survive.

Is the Customer Really King?

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It might be heresy to say this, but your customers shouldn't always rule
by William J. McEwen
Author of Married to the Brand
1 2 >

The marketing world, much like the financial world, has been in considerable flux. But one thing seems fairly clear, and it
has to do with the shifting balance of power between the companies that produce the goods, the retailers that stock and
distribute them, and the consumers who are counted on to buy what's provided.

We're told that we're in an entirely new age. Today, the story goes, the customer finally runs the
show.
For a good many years, the world largely belonged to the manufacturing and marketing powerhouses that dominated
consumer demand through the twin powers of promotion and product development: They sold, you bought. But a few
decades ago, there was a sea change in which power transitioned to the retailers. The major retailers controlled what was
featured in the stores and what appeared on the shelves and thereby determined what was available for the shopper to
buy. Marketplace control went from Procter & Gamble and Sony to Walmart and Best Buy.
But now we're told that we're in an entirely new age -- the "new normal" -- when neither the manufacturer nor the retailer is
in charge. Today, the story goes, the customer finally runs the show.
There's a good deal of evidence in support of this. Not too long ago, mighty Walmart reportedly was forced to reinstate
about 300 items that the company had eliminated from its shelves in an attempt to streamline its operations. Walmart

shoppers apparently weren't pleased with the disappearance of some of their favorite brands, and they let the company
know it. The lesson learned, in the words of former CEO Lee Scott: "Rule No. 1 in retail, don't aggravate your customer."
Of course, Walmart isn't alone in recognizing the need to pay closer attention to customers, whose loyal patronage can't
simply be assumed. Other retailers are also responding to the emergence of the newly empowered consumer. For
example, Walgreens announced a renewed emphasis on "customer centric retailing," redesigning up to 3,000 of its stores
to make them easier to shop and more enjoyable for their shoppers. In the words of one leading industry advisor, retailers
today have to take a different approach; they must "focus on exactly what the customer wants to buy."
All hail the king
And so the new normal has brought us to a time when consumers seem firmly in command. After all, they're the ones with
the cash, and they have the access to information and seemingly limitless choices, thanks to the Internet. During this
economic downturn, companies have realized that they can't simply push what they hope to sell; they must wait for the
consumer to resume spending. Companies must court customers, not dictate to them. Companies must be responsive to
their customers' blogs and tweets. They must entice them to convince others, seeking brand advocates who serve to
proselytize through YouTube and Facebook. In short, companies must act more like Zappos and less like the traditional
packaged goods marketer or department store promoter.
There's a good deal of agreement that, in the new normal, the customer is king. And we all know, as Mel Brooks so
memorably stated, "It's good to be the king."
The apparent conclusion is, whether you're a manufacturer or a retailer, this customer king must now be treated like a
king. But what does a king do? The king dictates his desires. The king's word is law, and he's always right. The king has
subjects, not partners. The king is only spoken to when the king requests it.
Enticing, perhaps. But when business success requires establishing enduring company-to-customer relationships and not
just generating transactions, there are some important caveats that companies must bear in mind. (See "Managing the
Value of Your Brand" in the "See Also" area on this page.)

Why the Consumer should not be the King in India?

Jitender Dabas, VP & Strategic Planning Director, JWT India

(For this winning article, Jitender Dabas will receive a cash award of $5,000 from WPP CEO Martin
Sorrell in London later this year. The event was judged by Jim Stengel, Global Marketing Officer, Procter &
Gamble; David Kirkpatrick, Senior Editor, Fortune Magazine; and Judie Lannon, Editor, Market Leader.
Atticus Awards are an annual event open to all WPP employees. Hundreds of entries from WPP companies
like O&M, JWT, Grey Worldwide, Bates David Enterprise, Group M, IMRB and Millward Brown, etc.,
compete every year for the prestigious awards across the network.)

The sudden rise of bully consumers in India

When was the last time you heard someone warning his mobile service provider and threatening him about
switching to another brand? Or when was the last time you snubbed a representative from a reputed bank/
insurance company who tried selling you one of his loans/investment products? Else, try recalling the last
time you heard someone proudly brag about the dressing down he gave to his MNC bank/credit card
company about the poor quality of their customer response time?
The chances are that if you are in India you would be experiencing one or more of these things around you
very frequently. And if you were an outsider you are most definitely likely to reach a conclusion that youre
perhaps seeing the reactions of consumers in market where they dont have good service providers and/or
the quality of service is fast deteriorating.
Now consider the reality.
About 10 years back it used to take 15 days to 3 months to get a telephone installed at your residence. Today
it takes less than 24 hours for an active landline connection and you can have an active mobile phone
connection almost instantly. The approval time for a home loan has come down from months and weeks to
5-7 days. You can apply and get a credit card almost instantly. The time required to get cash from bank has
almost come to nil thanks to the technologies like ATMs compared to half day that it took a while back.
Now consider the brand choice equation. About 10 years back there was one telecom service provider, one
life insurance company and not more than 4-5 big banks to choose from. Today there are more than 5
telecom service brands ranging from the international giants like Vodafone to homegrown biggy Airtel, Tata
and Reliance to choose from. There are more than 10-12 insurance brands almost all of them partnered by
the world leaders. There are more 20 banks to choose from all of them armed with latest technologies to
make your life easy. From Citibank to HSBC to Barclays to Deutsche to Stanchart to ICICI to HDFC etc.
etc. More than half a dozen airlines are ready to fly you through the day between different towns.
In light of this truth the above described aggressive behaviour by consumers clearly defies any logical
deduction from reality. An even more intriguing aspect is the consumer behaviour before all this. 10 years
back the linesman from the stateowned BSNL installed came and installed the telephone after month and a
half most consumers very happily offered him sweets. But now the same time has been cut down to 12-24
hours but agitated consumers are chiding the hapless new service providers for taking so long. Today our
Pizzas are getting delivered in 30 minutes, our bills are being collected from our doorsteps and the service
brands are treating the consumer as the King. Yet were becoming more and more foul.
Clearly, we are seeing the emergence of an extremely intolerant breed of consumers who are forever
threatening and bullying the service brands. While the choices available to the consumers and the service
standards have improved in absolute terms the consumers behaviour towards the service brands has
progressively deteriorated. While due to the high degree of competition in all the service sectors the brands
are stretching themselves to delight the middle class consumers the consumers are treating them with
increased disdain.
There seems to developing almost an inverse relation between the efforts that the service brands are putting
to delight the consumer and the consumer respect towards the brands. As an outcome today even some of
the international brands in areas like financial services have started losing the global halo that used to fetch
them a premium. Therefore the brands need to worry. Not just because the consumer is getting irritated or
behaving badly but their brand premium has started to get eroded.
What explains the sudden emergence of this rude consumer behaviour towards service brands?
Is this the REVENGE OF THE CONSUMER?

After years of being treated shabbily hes got the choice finally and therefore he is venting out his built up
frustrations. But logic says why should he be unhappy about getting what he wanted and more.
The second hypothesis is about the intensity of competition in the market raising the consumer expectations
every day to a level where hes become insatiable and unhappy.
Some may also suggest that the increased brand choice across all categories has made him a spoilt child
and hence his bully behaviour. But strangely in categories like DTH where the choice isnt much the
consumer bad behaviour is already prevalent.
And even if one was to believe the increased choice leading to unhappiness theory, what one cant explain is
the increasing bad behaviour or intolerance from the consumers in a culture which is seen as more tolerant
and polite. This behaviour goes against the cultural grain of the generally polite and tolerant Indian Middle
class.
What has changed? The new power equation
What has changed in the last few years is that the consumer has become more powerful because of the
choices that he has today as a result of opening up of the service sectors to the private players. But why has
this led to the change in the value system of the consumers?
The answer lies in the understanding of Indian social structure and the abilities of its sub-parts to handle
power.
A look at the social structure in the Indian society would reveal a pyramidal construction with the power
gradient being steep between levels/classes. A structure that has existed since ages and we find that Indians
are very comfortable in this structure. And the truth about a Pyramidal structure is that in such a structure
you either look up or look down at other people. There cannot be a third way. There cannot be a relationship
of equality. In such a structure either you rule or you are being ruled. Therefore the only relationships that
the Indians have existed comfortably in are of either superior or subordinate.
Added to it is the historical experience of the mainstream of the society of handling power. There havent
been too many instances in the history that the middle class has had the power in India. Whenever a part of
the middle class has acquired power, suddenly those parts have generally displayed a change in behaviour
which has been towards becoming rude. (The Neo-rich class has at times tried to aggressively assert its
dominance in an ugly way).
This comes from the fact that by and large the mainstream Indians (or the middle class) are bad masters
they dont know how to handle authority. Weve never been good to people below us. The casteist nature of
the Indian society reveals this fact.
Weve never been too courteous to lower castes (who perform the menial tasks) and in this regard most we
find that people in some of the western societies are far more courteous to the bar tender or the guy at the
gate or the valet at the car park. We on an average perform much worse.
The Power distance theory: Understanding the Indian culture through Hofstedes cultural dimensions
A more scientific understanding of this behaviour comes from the study of different cultures by Geert
Hofstede on various dimensions. The Hofstede model of five dimensions of national cultures has analyzed
and differentiated societies from 50 countries on the basis of five dimensions, namely, Power Distance,
Uncertainty Avoidance, Individualism, Masculinity and Long Term Orientation. One of the dimensions on
which the 50 countries were plotted and differentiated was the Power Distance Index.

Power Distance was defined as the extent to which the less powerful members of organizations and
institutions (like the family) accept and expect that power is distributed unequally. This represents inequality
(more versus less), but defined from below, not from above. The most important bit is that it suggests that in
a lot of societies the level of inequality is endorsed by the followers as much as by the leaders. All societies
are unequal, but some are more unequal than other. On the basis of how people in different cultures
willingly accept or reject these inequalities the societies in 50 different countries have been classified as
small and large power distance societies.
Some of the characteristics of a large power distance society are:
Power is a basic fact of society antedating good or evil: its legitimacy is irrelevant
Parents teach children obedience
Older people are both respected and feared
Teacher-centred education
Hierarchy means existential inequality
Subordinates expect to be told what to do
Corruption frequent; scandals are covered up
Income distribution in society very uneven
Religions with a hierarchy of priests
India has Power Distance (PDI) as the highest Hofstede Dimension (among the five dimensions) for the
culture, with a ranking of 77 compared to the world average of 56.5. This Power Distance score for India
indicates a high level of inequality of power and wealth within the society. But what is important to
understand that this condition is not subverted upon the population, but rather accepted by the population as
a cultural norm. This somewhere explains the legitimized and comfortable existence of the caste system and
other hierarchical behaviour in society. The fact that this inequality is endorsed as much by the followers as
by the rulers explains why in spite of being a democracy the we are obsessed with one family rule/ why we
treat our cricketers as demi-gods/why we worship our movie stars as gods. It is almost desired by the
population to have heroes whom we can put up on the pedestals and then follow them.
This is where India completely differs from some of the western cultures like Sweden, Austria, UK, US and
Australia who have very low PDI scores less than 40 and hence are classified as low power distance
societies. Hence the relationships between entities there are more equal and less hierarchical.
Power distance between the brands and consumers and therefore the choice before brands
What this means is that in the low power distance societies it is possible for brands to have the relationship
of equality with the consumer. The brands can ascribe the status of King to the consumer and yet retain the
status of equal in the hierarchy. But not in a High Power Distance society like India and the others.
And therein perhaps lies the reason for the problems the service brands are facing in controlling their
relationship with the consumers. As the development of the service sectors of the economy happened first in
the industrialized west, therefore the theories of service marketing and models of service brands have taken
shape in the West in societies with lower power distance. In those markets the consumer-centricity of the
brand management slowly evolved to putting the Consumer at the centre of everything and started treating
them as the king. But since these were all small power distance societies therefore even while treating the
consumer as the king the brands themselves didnt have to compromise their own position since the
inequality between different social levels was never too high.
Therefore, in the low power distance societies the service brands could retain the equality in the relationship
even when they treated the consumer as King. But not in a High PDI (Power distance Index). In such

cultures there can only be a hierarchical relationship between the consumer and the brand. By the servile
nature of the business itself the service brands get disadvantaged in the relationship with consumers in such
cultures and over and above this when they follow let the consumer be the king model in their demeanour
they completely become subservient to the consumer in the equation and consumer starts treating them with
the same disdain it treats any subservient entity in their culture.
This explains why as the service brands are falling over each other to please the consumer; he is treating
them with more and more contempt. Not that he dislikes being given importance but because thats the only
way he knows to treat his subject. Hence the increasing disdain towards brand which want to make him the
king.
This also explains why the consumer was more respectful 10 years back when he wasnt treated too well by
the state owned brands. It is very simple. Then intentionally or otherwise the service providers kept the
power with themselves and the consumer who was comfortable with being at lower rung of power equation
gave the brands the status of the ruler and was happy to be ruled.
But as the service brands these days have ended giving all the power to the consumers, the consumers have
become rulers and have started behaving like tyrants. In such a scenario the brands have serious challenge in
front of them to retain their premium-ness going forward.
To be respected in such a culture, the brands will need to increase their distance and will have to assume
power. If brands try to play a subservient role in such cultures, they will not be treated well. Hence, the
conclusion that in India (and in similar cultures with high PDI), THE CONSUMER CANNOT BE THE
KING. The brands should not operate from You are the king mindset with the consumer.
The Consumer Cannot Be the King: What does it mean?
It simply means the brands need to be always at a higher level of hierarchy than consumer if they need to
protect the premium-ness. If the choice has to be made then the brand should be the king. In a competitive
market the brands that display a servile demeanour in order to win consumer preference will eventually end
up being exploited and bullied by the consumer.
So are there examples of brands that seem to be doing it right? Are there service brands that behave like
kings and have people following them? Well there are many like Gymkhana club and India Habitat centre
which enjoy high premium simply because of their exclusionist positioning. The most interesting case in
point is Kingfisher Airlines which seems to climbing fast on brand preference among fliers in India. The
whole experience is built almost as an invite from king to his private kingdom to enjoy the luxury. It offers
you great service but keeps itself at a higher pedestal and doesnt compromise its position in the whole
equation. Therefore, it is very much possible to keep the consumer at the centre without having to make him
a King.
What it does not mean? What the brands should do and not do?
What needs to be understood that this is not about treating the consumer disdainfully. It is about the equation
that the brands will choose to have with the consumers. It is about the demeanour the brand will have when
it deals with the consumer. The brands will need to provide the best of service but what they need to avoid is
becoming too eager to please the customer. Across all consumer touch points we need to be careful about
our status in the relationship. The more number of humble telephone calls I receive from the customer
service asking if Im happy, the more I will start asserting my ruler status on the brand.
The service brands needs to be careful when theyre training their staffs in the softer skills. They need to be
told the difference between being polite and being servile. The CEOs of top companies should not appear in
a servile avataar in TVCs even if theyre handling some delicate PR issue. I would always recommend the

way Vijay Mallya invites you aboard his flight. That looks like a King inviting to his kingdom. The
equation with the consumer is therefore stated clearly in the very beginning.
It is also not about being niche and mass. The argument that by increasing the power distance from your
consumers you will become niche is also not correct. In fact, the brands with high power distance from their
consumers will always be the bigger and more desired brands than others. Sonia Gandhi and Shah Rukh
Khan are examples of two celebrities in India whose popularity has increased in direct proportions to their
power distance from their consumers. And in market share terms they are bigger brands than any other in
India.
After the telecom and financial services the next wave of service brands to hit the Indian consumers are
going to be in the area of retail, entertainment and food services. As the brands like Wal-Mart, Carrefour and
Indian giants like Reliance go about creating the next set of service brands they need to decide the nature of
their relationship with the Indian consumers. Before the make plans to rule the market they need to decide
who will rule the relationship?
Not just India but other markets as well
Indian has a PDI of 77. But then there are countries like Russia, Romania, Mexico, Bangladesh and
countries from the Arab world with PDI scores higher than 80. The service brands will have to make similar
choices in those cultures as well. There might be impact of other cultural dimensions affecting the overall
consumer behaviour in each country but I believe that brands will have to decide which side of the power
equation they want to be.
Therefore, let the brand be always the KING. Or at least the consumer should never be...