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Perspective: Endless Potentials, with Broader Consumer Protection

We asked Innovation Exchange members to share their thoughts on meeting consumer needs in a world of Universal Commerce. This post from guest blogger Jim Brown from University of Wisconsin is part of the series.

Large organizations as well as the proverbial young entrepreneurs out in their garages are working right now to figure out new ways to use Universal Commerce tools beyond what’s been imagined. The seemingly limitless potential promises huge transformations. No one knows exactly how that will play out, but the changes will almost certainly beget more focus on consumer protection and financial safety.

Many questions will emerge from the widespread implementation of Universal Commerce opportunities. Personalized marketing, enabled by advanced data capture and analysis technologies, is the subject of one of the most immediate questions: To what extent will pricing and availability of products or services become more individualized through widespread, more frequent use of rewards, and as a result, likely more and more economically regressive?

This is an example of effective personalization: As Jill pulls into the parking lot of her favorite electronics store, she receives a text – it’s an offer for 15% off a new TV. The retailer designed the deal specifically for Jill, based on knowledge gained from personalized marketing techniques. Jill walks in and buys the model she has her eye on.

While undeniably effective in inducing consumer adoption and utilization, targeted discounts or other sorts of “rewards” involve aggregated increases in systemic costs. The added expense to develop and extend the personalized TV offer to Jill is built back into the overall system, and, indirectly, all customers pay for the benefit received only by Jill.

The benefits from personalized marketing will flow, almost inevitably, to the better educated, typically more affluent consumers. So, if structural systemic change – such as that which resulted from the offer to Jill – primarily benefits someone like me, but entails more aggregated costs, that will mean other, less educated, less affluent consumers will miss the benefits and advantages (or at least not enjoy them to the same extent). Indeed, they may be disadvantaged by the system through higher systemic prices or reduced availability of choice.

That outcome could hardly be expected to be welcomed unanimously, especially in an era all too often characterized as the 1% vs. the 99%, and it will likely add further fuel to the fire when it comes to expanding regulatory reach (essentially a political reaction) in the Universal Commerce world.

The phenomenon of Universal Commerce is unknown – how will the new technologies, the new prioritization of consumers improve our lives (and whose lives)? The possibilities directly intersect with privacy, data security, and/or financial safety and close review of consumer-focused policies and regulations are a given. One big unknown? The extent and focus of regulatory reach in an effort to minimize the potential outcomes and developments.

James L. "Jim" Brown is professor emeritus and consumer advocate at the University of Wisconsin - Milwaukee and a member of the Innovation Exchange.

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