Informed consumer



The concept of the informed consumer is fundamental in the
law of the European Union European Union law is a system of rules operating within the member states of the European Union (EU). Since the founding of the European Coal and Steel Community following World War II, the EU has developed the aim to "promote peace, its valu ...
. Since the
European Council The European Council (informally EUCO) is a collegiate body that defines the overall political direction and priorities of the European Union. It is composed of the heads of state or government of the EU member states, the President of the Eu ...
Resolution of 14 April 1975, one of the primary objectives of the
European Community The European Economic Community (EEC) was a regional organization created by the Treaty of Rome of 1957,Today the largely rewritten treaty continues in force as the ''Treaty on the functioning of the European Union'', as renamed by the Lisbo ...
, and then the
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been ...
, has been the provision of information to
consumer A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ...
s. The rationale is that market actors are enabled to make better choices when they are informed and have a greater capacity to understand the importance of their market actions and choices.


According to the European Union, "Information is a deciding factor for consumers when making their
choices A choice is the range of different things from which a being can choose. The arrival at a choice may incorporate motivators and models. For example, a traveler might choose a route for a journey based on the preference of arriving at a give ...
and affects both consumer interests and their confidence in the products and services circulating within the market."

Consumer expectation

The consumers expect to get fair treatment in the market place and avoid unscrupulous business dealings. They envisage a fair market environment that facilitates and supports several consumer rights: * The consumer must get a fair chance of choosing from the range of goods and services available in the market place. * The consumer must be provided with complete, unambiguous and explicit knowledge about the products. The information must contain details regarding the contents of the product, safety warnings and product care instructions. * The information should be written in plain and understandable language, which is self-explanatory. Also, the text should be readable in terms of the size and type of font. * The consumers expect just and equitable pricing of the
commodities In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a co ...
. Fair price is equal to a reasonable
profit margin Profit margin is a measure of profitability. It is calculated by finding the profit as a percentage of the revenue. \text = = There are 3 types of profit margins: gross profit margin, operating profit margin and net profit margin. * Gross Pro ...
added to the real
cost In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in whic ...
manufacturing Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector of the economy. The term may refer t ...
of product or service (with no exorbitant mark-up cost). Information about the related costs of the product must be brought to the knowledge of the consumer. * The consumers also have the right to indiscriminate prices, that is paying the same price as other customers, without any discrimination. * Consumers also expect to get a communication channel for inquiry and complaints about the product or service. They want effective redressal and remedies to loss, such as implementation of legal regulations and prosecution to law violations . With the advent of
electronic media Electronic media are media that use electronics or electromechanical means for the audience to access the content. This is in contrast to static media (mainly print media), which today are most often created digitally, but do not require ...
in marketing, and the mass information storage capacity of computers, consumer privacy has become a great concern. Hence, consumers want to ensure
privacy Privacy (, ) is the ability of an individual or group to seclude themselves or information about themselves, and thereby express themselves selectively. The domain of privacy partially overlaps with security, which can include the concepts of a ...
of information. The consumers want to be able to cast off the invasive
marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to empha ...
methods, and threat of entry into the private system of consumers.


Consumer information is the most important element for
consumer protection Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent busines ...
and policy decisions. It is the solution to issues ranging from online transactional threats, behavioural targeting, loss of privacy and other problems. A consumer should treat every purchase as an important investment. Making an uninformed investment in the
stock market A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange, a ...
can result in huge financial losses and this same concept applies to daily purchases. Being an informed consumer is advantageous to the economy, market and consumers. An informed consumer is capable of making sensible decisions by gaining an insight about a product prior to its purchase. This insight equips the consumer with the data to arrive at an evidence based conclusion. This can be made clear through in a few common aspects: *Appropriate quality – Almost every purchase comes with a variety of options from which to choose. Consumer information enables the customers to select a quality of product which matches their needs for durability or sustainability. *Reliability – Information about products facilitates safe purchases. Mass production of bulk consumer goods may result in instances of products bearing manufacturing defects. Recognising these defects can prevent the customer from financial injury or loss. Product and brand reviews and consumer forums online can be instrumental in educating the customers about potential problems with the product, and should be considered when making big purchases like appliances and vehicles. *Affordability – Consumers may be misled by aggressive sales tactics, especially by professionals paid by commission, who may entice the consumer to buy expensive products, products with a high mark-up, or expensive options. Information about the potential purchases can help the consumer save money and ensure a smarter purchase. *Ethical considerations – Consumers may not wish to deal with a company which indulges in unethical practices, such as animal testing, labour abuse, environmental pollution, and political corruption. It is the responsibility of the consumer to get all the information about the potential purchase and associated background before making a decision to buy a product. It is ultimately the consumer, through their market choices, which endorses or rejects a product, thus shaping the marketplace. Becoming educated about the consequences of a purchase makes the consumer both informed and responsible.

Effects on marketplace

Providing complete information levels the information asymmetries between the producer and consumer and improves consumer
decision-making In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the cognitive process resulting in the selection of a belief or a course of action among several possible alternative options. It could be either rati ...
. Transparent information about the terms and conditions associated with the product or service make plain the regulatory requirements to redress any consumer grievances. Informing the consumer can also help set the consumer's expectations of the product, which can be useful to the producer. Some businesses may be reluctant to inform their potential consumers, concerned that this might harm the marketability and attractiveness of their products. However, economic analysis indicates that informational asymmetry between the producer and consumer is detrimental to the marketplace and a major ground for market failure – with consumers left to make irrational decisions. Unbiased information can help solve market problems by equipping the customers with appropriate information, ensuring healthy market practices.

Sources of information

Consumers derive their information from multiple sources. The following are the sources from which consumers gather desired knowledge about the product: * Governments issue public information for the consumers * Regulatory authorities, review and testing services and comparison sites * Social networks (friends, family, fellow consumers, etc.) * Suppliers of the products or services. * the media Consumers derive information from a variety sources, each with its own interest, skills and resources. It is essential for the consumers to recognise their personal interests and make a suitable decision.

Customer know-how

The US
Federal Trade Commission The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
recommends that consumers: *Know who they are dealing with, and to not do business with any company that cannot be contacted. *Protect personal information, and share it only with a trusted company. *Resist high-pressure sales techniques, and take time to consider a purchase. *Get all promises in writing and review all documents before paying or signing a contract. *Discard any offer that asks payment for a gift. *Know the risks when it comes to investment.

Market shift

The abundance of available information via electronic media has created a transformation of the market orientation. While traditional
customer engagement Customer engagement is an interaction between an external consumer/customer (either B2C or B2B) and an organization (company or brand) through various online or offline channels. According to Hollebeek, Srivastava and Chen's (2019, p. 166) S-D l ...
required teaching the consumer about the product or service, consumers have become knowledge-ridden with strong opinions on how they want to spend their money. This trend is substantiated by
Forrester Research Forrester is a research and advisory company that offers a variety of services including research, consulting, and events. Forrester has nine North America locations: Cambridge, Massachusetts; New York, New York; San Francisco, California; McLe ...
which found "buyers are often between 70 and 90 percent of the way through the sales process before they ever engage a vendor". This evolution in the market orientation can be a challenge for existing and emerging businesses. Some ways of taking advantage of the new market are to understand the target customers, maintain visibility to these people, and utilize grassroots tactics. To deal with highly informed consumers, the marketer must understand that the consumer has knowledge about the product and be prepared to manoeuvre this knowledge into a sale, and be well-informed to provide comprehensive knowledge to the consumers. With the increase in the variety of sources for consumer education, it is important for the marketer to enter the sales process at an early stage. The marketer must move ahead of the curve and make sure to bring some value to the customer's purchase beyond just fulfilling his/her need.

EU legislation

EU consumer policy is designed to: * protect consumers against serious risks and threats that they cannot tackle on their own * enable consumers to make choices based on clear, accurate and consistent information * safeguard consumer rights, enabling consumers to resolve disputes with traders quickly and efficiently * ensure consumers' rights keep pace with economic and social change – especially in the food, energy, financial, transport and digital markets. In an efficient, integrated EU economy underpinned by EU-wide rules, consumers must be able to trust that their rights will be upheld in the event of any problems when purchasing goods and services in other EU countries. At an annual cost of 5 euro cents per person, the EU's consumer protection programme for 2014–2020 is designed to enforce consumer laws throughout the single market, giving consumers a high level of legal protection.


According to the 2013 Edelman Trust Barometer, an online survey of 26,000 general population respondents across 26 countries, 35% of those identified as "the informed public" who need to hear company information three times to believe it, while another 29% need to hear it an additional 4–5 times. The study also looked at how consumers place their trust in corporations of different sizes. In the US, 86% of informed consumers trust small businesses, while just 55% trust big businesses. A similar gap is apparent in the UK (78% vs. 48%), but the opposite is true in China, where 89% trust big businesses compared to 65% for small businesses. Whereas informed publics in developed countries are more trusting of small than big businesses (76% vs. 53%), emerging market respondents placed more trust in big businesses (79% vs. 70%). Overall, small businesses are slightly more trusted than big businesses (70% vs. 62%). Looking at company types, the study finds that trust in media companies rose from 52% of informed publics globally in 2012 to 57% in 2013. Within the US, trust in media companies crossed into the majority, increasing from 45% to 51%.


Further reading

* * * * * {{Consumerism European Union law Consumer protection law