)
In the latter half of last century, the rising competition among suppliers tilted the bargaining power in favour of the buyer. Competition intensified, so much so that the purchase decisions of the customer started deciding the fate of suppliers. This resulted in the oft repeated marketing jargon, 'the customer is the king'.
The power of the customer was further expected to multiply manifolds with globalisation. Instead, abundance of information, coupled with large number of options, did not enhance the power enjoyed by the customer and reduced the power of the supplier. This power moved to a new class of market players - the influencers.
Enter the influencer
The ever expanding consumption basket of the consumer and the abundance of options and associated information have put an intense pressure on consumer's decision-making capability. The consumer is increasingly using inputs from third parties, consultants, search engines, her personal trustees etc. By sifting through the surfeit of information and the maze of options, these third parties help her in decision-making. Influencers have become, in one sense, the 'BPO for decision making'. Influencer's role, therefore, can significantly impact the fate of suppliers, thus, leading to shift in relative power to the influencer.
More and more marketplaces are experiencing the phenomenon of larger portion of decision-making moving out of consumer's domain. For instance, it is the interior designer, who decides what materials/products will be used even though the consumer is spending the money. It is, therefore, the designer who determines the fate of the suppliers of furniture, kitchenware, wallpaper, lightings etc, thus occupying the most enviable position in the power structure within that marketplace.
Similar is the case of film critics. Their decision impacts the first weekend collections, giving them huge power at the box-office.
There are also cases when consumer is statutory prohibited from making decisions. For example, regulation mandates doctor's recommendation for sale of medicine or for settling insurance bills. Rising competition among pharmaceutical companies and hospitals has reduced their own bargaining power but not empowered the consumer. The incremental power is enjoyed solely by doctor - the influencer.
Social networking sites provide a platform for consumers to exchange their opinions. Using this information, technology identifies what is trending and also influences subsequent trends. The former helps these sites understand consumer's mind and the latter makes them a large-scale influencer. However, the biggest beneficiary of the information explosion is Google - it plays a key role in deciding which website a browser hits first, the advertisement he sees and so on. This coupled with its trans-geographic presence makes it a supernatural power.
The stages one to three experience high mortality rates (for example, Orkut). However, the monetisation options after occupying the space around consumer's DMN are so lucrative that even non-influencers occupying that space (without going through stages 1-2) find it difficult to resist monetisation. For example, success in their fields make celebrities role models for consumers. Therefore, marketers sense opportunity in engaging celebrities to influencer consumers. As a result, celebrity endorsement has become a huge business vertical.
The vulnerable consumer
With many potential influencers attempting to temper with consumer's DMN, it is impossible for consumers not to be swayed. Therefore, consumer's decision-making is no more like that of a king who decides in solitude. The buck doesn't stop at her. The power of organisation-backed influencers (search engines, social networking sites) is much more than that of individual influencers (interior designer, film critic etc.). A classic case is that of the Indian media sector that has enjoyed an exceptional rise in power as an influencer in the last few years. It is no co-incidence that this sector's influencer too has religiously followed the above mentioned five-stage path.
Thus, from determining the fate of suppliers to deciding the very destiny of nation, the influencer's power gets insurmountable proportions when it morphs from an organisation to a sector. No wonder, global credit rating agencies can make a nation bankrupt.
Where does this lead to?
The influencer's power has raised many ethical, academic and regulatory issues. With the influencer's power expected to rise, should it be regulated? If yes, then can the consumer who receives information without any consideration and probably even without any legal contract, have any legal claim. An agreement without consideration is void. If no, then the influencer is enjoying power without responsibility. Should this be allowed?
For consumers and the marketers, the presence of an influencer raises new challenges. Whether she likes it or not, the consumer will now have to live with influencer. The consumer will need to ensure that influencer is more loyal to her than the marketer. This can be done through: Disincentivising bias: Marketer would work towards a reward system for the influencer; consumer could work on the polar opposite. A 'dislike' button for influencers could become influencer's barrier in losing consumers' confidence.
Transparency from influencers: A case in point is www.whosmydoctor.com. It is a website wherein doctors can subscribe and provide all their details including sources of income from pharmacy companies. If patients/hospitals can make it mandatory for doctors to subscribe, doctors will have to disclose their biases.
Fee-based influencers: Fee could bind the influencer within moral and legal framework. It would also lower influencer's propensity in leaning towards the marketer.
Though full backing from influencers may not ensure success for marketers but antagonising influencers is surely a recipe for failure. The influencer's presence being a fait accompli will mean influencer management a must activity for many marketers.
In traditional economics, seller sells goods and receives money from buyer. However, influencer sells goods (i.e. information) to person A and receives money for the same from person B. By questioning the definition of 'buyer' and 'seller', the influencing business challenges the basic tenets that have all along been axiomatic. We are, hence, not far from the day when the theory of microeconomics at large (and therefore that of business strategy) undergoes a rewriting of sorts, to accommodate the role and power of this new king on the block - the influencer.
Deepesh Salgia
CEO & Director, Shapoorji Pallonji Group
