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LatAm Chile Consumers

In Chile, the growing participation and empowerment of consumers is a hot topic. In fact, consumer complaints are becoming more frequent and have evolved from simple criticism to organized actions. Consumers have become more clear and direct in demanding their rights in general, as well as their rights to information.

Topics of complaint have changed. Whereas previously, criticism tended to centre on retail, and later banking, now there is a return to issues of mass consumption and especially food.

This phenomenon has found resonance in the media, generating a proliferation of TV programs dedicated to denouncing breaches, not of civil or human rights, but of consumer rights. The media itself has given rise to a need for new regulations of consumer issues in Chile. As a result, in the second part of this year, a new law will be enacted to regulate nutritional labeling.

A clear sign of the strength and impact of consumers’ increased organizational capacity is the government’s recent creation of agencies like SERNAC (Servicio Nacional del Consumidor - National Consumers Service, a Government institution) on finance which protects consumers’ rights.

How are brands reacting to this new context of consumer participation? Insufficiently, it seems. Brands haven’t redefined their relationship with consumers, who are now clearly social actors – as seen especially clearly in online social networks. In Chile, social networks still represent the fastest growing platform for participation and organization, it’s where consumers express themselves most clearly and fully. But, brands have not yet grasped the fact that the demand coming from these ‘new consumers’ is for a more horizontal and candid relationship. Instead, brands limit their use of social networks to two areas: promotional advertising and complaint departments.

Similarly, brands apparently have misunderstood or ignored the demand for more transparency. Brand managers seem to believe that the more horizontal, candid approach will leave them vulnerable. However, the transparency consumers want doesn’t imply a larger quantity of information, but rather more sincerity and honesty, a relationship built around dialogue, not monologue. Consumers seem to be saying, “Don’t leave me in the dark. And when you do provide information, don’t insult my intelligence.” Today’s consumers demand two things: plain talk, and to be informed about how problems will be resolved.

This demand for transparency doesn’t necessarily mean a desire for more data or more detail about aspects that don’t interest consumers. They just want to be leveled with. Two recent cases exemplify the fact. One study revealed that packaged bread labeled ‘light’ provides more calories than the regular, unlabelled marraqueta (a traditional Chilean type of baguette). Another study showed that olive oil is not always as beneficial to health as people have been led to believe.

So, consumer mistrust is on the rise. Brands make and break promises or are vague and insincere in their communications. Consumers themselves are

questioning regulations – not just product quality itself, but the actual norms regulating that quality. They are focusing on the distinction between what’s legal and what’s legitimate. This is especially evident in the case of health insurance and retirement funds, where consumer organizations currently have over eighty thousand petitions for legal recourse pending.

In the light of this trend, the telecommunications industry has moved a step ahead by establishing self-regulation; something other industries have failed to do. They changed their language and stopped talking about volume in terms of number of megabytes (which by the way, they were not really providing) and responded to consumers’ new status, proactively heading off potential problems before they could arise. The most recent example regards call centers: the day after a news item appeared denouncing irregularities, SUBTEL simply stopped all sales by phone. The company didn’t wait for an investigation, but ended the problem almost instantly.

Another example that speaks of sincerity is H&M’s arrival in Chile with a very publicized promise of fair price for fashion; a promise the company has apparently been successful in keeping. H&M is an international brand that probably has experience in these issues, and knows how to relate to consumers on their new terms. It has recognized that in a socially networked economy, every individual is empowered to be either an advocate or ‘badvocate’ (critic) of a brand. It’s clear that Chilean consumers are determined to exercise this power, so brands must hasten to develop strategies to mitigate against its effects and capitalize on its potential for good

Marcela Pérez De Arce

Client Service Director, Millward Brown Chile