OPINION6 April 2021

We need to stop calling people ‘consumers’

Opinion UK

With the relationship between businesses and people no longer defined solely by transactions, the term ‘consumer’ should be dropped, says Iona Murphy.

Humour me for a minute. Pick a person; someone close to you; your partner, your bestie, your roommate – and, in a couple of sentences, describe them as a ‘consumer’.

Read that back to yourself. How well does that capture the person you know? Is that a complete picture, or is it missing something crucial?

Now, it’s entirely possible that through this exercise, a stranger reading this description can still learn a lot about your chosen person. They may successfully make inferences about who they are and what they are like, especially if they have a particularly revealing hobby or habit: maybe they’re a vegan, or they love luxury fashion. But in focusing only on what they buy, we’ve overlooked their attitudes, values, drives – in short, everything about them that made them the person you ended up choosing for this example in the first place.

What I’m trying to illustrate here is that it’s reductive to view people through the lens of the transactions they make.

I’m not suggesting for a second that anyone in the market research industry actually thinks this way about people. A lot of our work is expanding our understanding of people beyond consumption: we do attitudinal segmentations, ethnographies, all in the aim of getting this nuanced picture of human behaviour. So why doesn’t the language we use reflect that?

Maybe it’s because the term ‘consumer’ is used in the context of discussing the relationship between people and brands. Historically most brands have only cared about people insofar as they are decision-makers making choices about which goods and services to use.

For much of the twentieth century the ‘consumer’ represented the rational decision-maker of neoclassical economics’ ‘consumer demand theory’. In the rational choice model, the consumer considers all information and arrives at the choice that maximises value to them personally.

It’s beautifully simple, but it’s a poor descriptor of actual behaviour; one that doesn’t hold up against decades of research from behavioural economists and psychologists (most famously Amos Tvsersky, Daniel Kahneman and Richard Thaler). It fails because there is too much complexity and nuance in a person to be reduced to a set of rational, logical economic decisions.

This ‘consumer’ making the choices about products and services is a nested part of a larger whole, the person; one with biases, who takes mental shortcuts, gets emotional, gets distracted, one who is fluid and random rather than straightforward and linear. One who has problems and competing priorities and is navigating a sea of chaos within which your brand merely bobs by on the periphery.

The wider business paradigm that the consumer demand theory belongs to, the profit-maximising, Friedman-inspired discipline whereby “the business of business is business”, is outdated. Brands have looked around and read the room. We are facing widening inequality, financial shocks, political polarisation and inching closer to the point of no return with the climate emergency.

Staying within a safe space for humanity requires drastically redefining our relationship with consumption – the UK needs to halve its resource use to reach net zero by 2050. Harvard Business School’s Rebecca Henderson wrote last year that reimagining capitalism as it stands is “the best way to ensure both businesses and our society prosper in the decades ahead”.

In 2019, the chief executives of 181 major brands known as the Business Roundtable released a statement redefining the purpose of a corporation from existing solely to create profits for shareholders, to something that exists to benefits all of its stakeholders; that is, anyone affected by the business; its customers, employees, suppliers, communities, the state, and society as a whole (and of course, the shareholders too).

Before Covid-19 took hold, ‘stakeholder capitalism’ was having a moment. Following in the suit of the Business Roundtable announcement, business and world leaders kicked off 2020 World Economic Forum at Davos debating if there are better ways to organise the economy to account for the triple bottom line.

Whether or not business have able been able to deliver on these visions yet aside; we should see this for what it is; a statement of intent, a sense of ambition about what must be achieved.

This embodies a shift in perspective from business as having a purely transactional relationship with their customers, to one that takes seriously the role that business plays in driving the social, economic and environmental forces that shape those people’s lives. All of which is to say: the relationship between business and their customers is no longer solely defined by what they buy.

So not only does the term ‘consumer’ undermine the complexity of human behaviour, it’s starting to feel a little redundant. Maybe the transition to a stakeholder-centric capitalism will be smoother if the language we use acknowledges the fact that we are more than what we consume. I’ve got a radical suggestion – we start calling people what they are: people.

Iona Murphy is associate director at Red C Research

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