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BW Businessworld

Is The Consumer Being Served?

As consumers fight back, becoming expressive and vocal, service providers and producers hit back with equal intensity and fiercer vengeance.

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Every economic activity originates in and embodies the consumer. The consumer is besieged and under grievous threat. Each year the economy adds about 15 million consumers, many underprivileged and vulnerable. Most lack the knowledge to understand, and fewer to evaluate the information ‘pushed’ toward them.

While the chasm between delivery and promises is widening, customer feedback is taken not to better the service, but to formulate devious income sources. And once ‘captured’, consumers are invariably exploited by marketers who adopt unfair and restrictive trade practices, including tacit cartels. 

A Crux study decisively indicates that good customer experience boosts loyalty, generates goodwill, paying back many times over. Apparently, there is a direct and often disproportional correlation between customers’ delight and the bottomline. An ‘excellent’ rating ‘cashes’ in three times more than the one with a ‘poor’ rating.  The long-term impact is even more profound.

When consumers take control: Consumer activism always leads to a gush of innovation, enhancing quality and lowering prices. It has another fervent follow through. It increases the quality of  the ‘regular’, thus narrowing the gap between the best and the ordinary, with every product being of  ‘adequate’ quality, regardless of price. 

However, as consumers fight back, becoming expressive and vocal, service providers and producers hit back with equal intensity and fiercer vengeance. They enjoy a vital and crucial advantage, i.e. unlimited resources. Being cushioned by investors and shielded by the government makes marketers invincible. 

Moats that spiders build: Organisations invest heavily in ‘building’ consumer moats i.e. virtues that create competitive advantages. The airline industry, once known for hospitality and warmth, convenience and the ambiance they offered – now devise ways to charge us for the air we breathe and the leg-room we deserve. Corporate hospitals charge a king’s ransom. Airports and multiplexes ‘persuade’ us to pay twice as much for a bottle of water. Builders inflate prices and reduce sizes. The insurance industry denies benefits for not reading the ‘fineprint’. Some prey on our misery, and most on our weakness. They thrive by exploiting the ‘positional’ moat, behaving like monopolies. 

Imbalance of power: The assumption that in a market-led and competitive economy, firms will serve the interests of consumers is flawed. The government must insist on fair play. It must recognise that the consumer is the weaker party: vulnerable and exploited, unable to challenge and incapable of fighting back. 

The government has been a votary of self-regulation, citing this as the mantra for an effective commerce ecosystem. However, self-regulation leads to exploitation, because the consumer protection environment is still in its infancy, institutional capacities are limited and laws and regulations are not effective.  

Self-regulation is not working: The state neither provides resources nor support in a battle where the imbalance of power is clear and growing. It must rush in, and redress the imbalance, providing consumers support and prohibit – and even punish – deceptive and unfair practices. The ‘rushing in’ itself, will empower consumers adequately.

Consumer protection is vital and requires legislation and should be strengthened by a robust, effective and implementable framework for speedy and inexpensive resolution of disputes. Consumers need help. 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
consumer economy Marketer customer

Dr. Vikas Singh

The author is a senior economist, columnist, author and a votary of inclusive development

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