New information technologies, especially those often loosely grouped together as “Web 2.0,” are changing the actual and potential interactions between companies, customers, and other stakeholders. The authors of this paper focus on retailers and consumer packaged goods companies (CPGs) and the ways in which the new technologies create transparency, making “previously difficult-to-access information readily visible to all key stakeholders.” As a wide variety of detailed, real-time information becomes increasingly accessible, relationships are being transformed. Among the opportunities the authors see opening up are those for increased revenue growth; competitive strategies based on micro-targeted, real-time marketing campaigns; collaborative shopping experiences; as well as shifts in bargaining power between retailers, CPGs, and consumers.
What questions should leaders of retail and consumer product companies ask themselves in light of the IT-powered rise of transparency? They should think carefully about the particular ways in which IT could bring more transparency in their particular industries. They should ponder the effects on consumer behaviors, retailer strategies, producer strategies, and information-empowered stakeholders. And they should figure out how to profit from and protect against problems from transparency in areas such as pricing and reputation.
Before discussing action areas for leaders, the authors first examine the main drivers of transparency. The main one is the spread of new information technologies that allow faster and real-time access to information, deeper communications, and analysis. In addition, regulation has called for greater increased disclosure about products, services and even companies themselves. Risk management also plays a role as companies grapple with sourcing, product safety, and identity theft.
The bulk of this wide-ranging article investigates six areas where CPGs and retailers must focus if they are to deal effectively with competition under more transparent conditions: 1. Creating customer trust and preserving reputations. 2. Involving customers to co-create trust and value. 3. Competing on responsiveness. 4. Competing on design. 5. Competing on brand. 6. Strategically and proactively using information to define demand.