By Berenice Ring, Professor at Fundação Getulio Vargas
Have you noticed how many decisions we need to make nowadays and the amount of details involved in each one? Surely life was much easier in the early 20th century, when consumer staples were sold in bulk and housewives had their goods chosen for them by the shopkeeper, whom they relied on and trusted.
If you wanted to buy a car in 1915, the choice was quite simple. The only automaker was Ford—who had introduced the assembly line—and the options boiled down to one model, the Model T. In 1987, Brazilian consumers could choose automobiles from six makers: Ford, Volkswagen, Fiat, GM, Gurgel, and Toyota. By 2008, 36 car manufacturers offered their vehicles, exponentially increasing our options.
A 1991 supermarket offered 15,000 items; today, in the same store, we find almost 50,000—including 100 types of yogurt and 200 models of mobile phones!
However, abundance of choices does not necessarily mean better decisions. As psychologist and professor Barry Schwartz points out in his wonderful book, The Paradox of Choice, the huge amount of options adds excessive strain to the decision-making process, causing exhaustion and discouragement. Furthermore, making one choice means relinquishing all other options, so that your preferred alternative seems less appealing and even elicits a sense of loss.
Until recently, people counteracted this frustration by consulting other people they trusted. But today, our world has become an ocean of information. For instance, if you’re planning a honeymoon trip to New York City, sites like TripAdvisor will provide complete information on virtually every hotel in the city. For example, if you decide to spend your hard-earned money on a wedding night at The Pierre, the famous hotel featured in several movies, you can read online comments by the site’s user community, ranging from “Great hotel!” to “Disappointing.” It is a huge benefit to get recommendations not only from your travel agent but from people who have stayed there recently. And upon your return, if you invite friends over for dinner, you can visit Epicurious on Facebook to find recipes, or you can search Twitter using the hashtag #recipes to find plentiful tips from users.
Some brands have grasped this new trend and offer their customers a dedicated section for comments and criticism, such as My Kmart and MySears Community. Other sites were specifically founded upon this trend, such as byMK and Polyvore, which allow users to express themselves.
The penetration of social networks today is amazing. A recent survey shows that 90% of respondents know at least one—and on average, four—social network websites. Facebook is the best example, of course, with more than 500 million users and countless communities. And if you want to find customer reviews of New York restaurants, the American site Yelp lists 12,000-plus establishments—not to mention more than 7,000 stores—along with user reviews of dentists, architects, and even surgeons.
As a Nielsen study confirms, “Recommendations by personal acquaintances and opinions posted by consumers online are the most trusted forms of advertising globally.” The study of 25,000 Internet consumers in 50 countries shows that nine in ten people trust recommendations of people they know, and seven in ten trust online recommendations from strangers.
In this scenario, a good social media strategy can do wonders for a brand in terms engaging its audiences. Can the brand help consumers make better choices or play the role of an early 20th century “shopkeeper” whom its customers trust and rely on? Are brands making the best of this tremendous opportunity?