Commercial business activities can be a cut-throat affair. Whether the business carries on its activities in the local arena or internationally, there is always plenty of competition trying to take customers away and grab market share. Winning market share, and retaining customer loyalty from their existing customer base is an art form often entrusted to the Marketing Department.

The big supermarkets are masters of this art, or so they thought, with an array of techniques for us to enjoy such as special offers, price matching and loyalty schemes. The desire for them to grab a larger slice of a mature market meant that the consumer benefited from the competition, with each supermarket’s in-store prices always being kept within a narrow band of the equivalent product of another supermarket. As we know, that meant suppliers bore the brunt of price squeezes, and that producers had to adapt their own business model to accommodate a single customer in the form of the supermarket giant. So whilst every little might have helped the consumer it also gave rise to problems for producers whose margins were squeezed.

In the past few years we have seen some changes in that market, with discounters starting to lure customers away, and another group of consumers turning their backs on supermarkets and choosing to buy differently, giving rise to farmers’ markets and smaller niche outlets.

Another mass market that is fascinating to witness is consumer energy. That is domestic gas and electricity. I was fortunate enough to be at a talk last week, sponsored by UWE in Bristol, as part of the Bristol Distinguished Address Series http://www1.uwe.ac.uk/whatson/bristoldaseries.aspx. The presenter was Dr Tony Cocker, CEO of E.ON UK, who was talking about issue of trust between businesses and their customers. In fact, he was talking about why EON had chosen to improve the level of trust that they have with their domestic customers. Presumably this was because after an earlier piece of research, it was recognised that the quality of the relationship between EON and their customers was so poor that they were losing market share to the other major players.

What I found most interesting in the talk was that the decision to follow a strategy of getting to understand customers better and help them use less energy was presented as an ethical decision. In other words, it was the “right thing to do”. For all sorts of reasons – ranging from responding to politicians’ expectations, to helping members of the public escape fuel poverty, to rising to the challenge of decarbonising the atmosphere – it was the “right thing to do”. What we didn’t hear though, was that it was also the right thing to do in order to deliver the expected return that shareholders wanted, or that it was the right thing to do in order to grow their market share, or that it was also the right thing to so they could demonstrate to politicians that the energy market place was efficient and responsive to customers. I suspect that if these secondary concerns were not being achieved then maybe a different strategy would have been developed and enacted.

In the past few years, we have seen questionable business practices from some dominant organisations upon whom we are all dependent for the basics in our lives. I am thinking especially of supermarkets, banks, and utility companies. The messages they present are often about how they are here to help us in our daily lives. It is very easy to become seduced by these stories. Let’s try to remember that there are always other choices available for the consumer and that all businesses are, above all, concerned about the bottom line. Playing the ethics card is just another way to gain our loyalty. After all, we all want to be associated with the good guys.

Simon Bruce

Author Simon Bruce

Simon qualified as a Chartered accountant with BDO London in 1982 and then began a career taking in banking, manufacturing and international trading working in UK, Europe and Australia. He has worked with publicly quoted companies, family companies and start-ups.

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