Leveling the Marketing Balance of Power.
“Information Asymmetry” is a phrase first coined by economist George Akerlof back in the 1970s. Basically, it refers to the inherent imbalance of power (information) between seller and buyer.
Akerlof’s thesis is that in the earliest phases of a transaction, the seller has more information than the buyer does. Akerlof’s assumption was that a sale is not going to occur until the buyer has enough reliable information to make what he feels is an informed decision and be confident in it.
In interchanges that involve more risk (for example, buying a house or a car), the buyer may need quite a bit of information before he feels confident pulling the trigger. Other times it may not require much information at all (which brand of chewing gum to purchase at the check-out stand).
It goes to reason, therefore, that the easier the marketer makes it for the buyer to get the information he needs, and the more relevant that information is, the more likely a sale is to take place.
At its heart, Akerlof’s premise defines the basic role advertising (and indeed all marketing communication)—to get information the seller wants conveyed to the prospective buyer, thus speeding up the sales process.
Today, marketers have a wonderful tool to aid them in shortening this inherent sales cycle–the Internet. The Internet plays a huge role in balancing the Information Asymmetry dynamic. Buyers can find a plethora of information on any given product, service or category, and get it from the sources of their choice, whether the company itself, industry experts, other customers or what have you. And the depth of information available to consumers is indeed incredible by historic standards. Within a few minutes, a web user can not only find out what the factory invoice is on that new BMW he’s been eyeing, he can also get road test results, historical resale information, compare it to other makes and models and get competitive offers from dealers.
In fact, by some estimates, as many as 70% of all shoppers are “web first,” meaning they research (or in many cases purchase) before ever setting foot in a store.
In other words, the consumer is taking the initiative to balance the Information Asymmetry that used to be the exclusive domain of the marketer.
Does all this mean that advertising as we know it is in its last legs? Hardly. What it means is that as marketers, we need to put the information our customers are looking for in more places and empowering them to find it on their own. This doesn’t mean sending corporate press releases to every web site you can think of or uploading all of your commercials to YouTube thinking customers are just going to flock there. It means finding out what customers are already saying about you in cyberspace. It means finding the relevant thought leaders in your industry and making sure you and your products are on their radar. It means finding which sites, blogs or communities your customers are going to for information and advice and making sure you have a presence there or that at least your products/services are represented.
That’s where your customers are looking for you.
Posted by Mickey
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