Once, a company could depend on its reputation to earn sales: Customers were willing to buy a GM car or Sony device based on advertising and prior experience with the brand. Then came Consumer Reports, JD Power, and most importantly, the Internet. Now, consumers have a wealth of information on any given product at their fingertips, and they no longer need to rely on brand knowledge, writes James Surowiecki in the New Yorker. Indeed, according to a new book, "the rise of brands was a response to an information-poor environment," Surowiecki notes.
Now, some 80% of customers say they view online reviews before buying pricey items, according to a PricewaterhouseCoopers study. What's more, thanks to social media, "a dud product can become a laughingstock in a matter of hours." Surowiecki points out that the phenomenon doesn't apply to status-conferring luxury items or purchases like Coca-Cola, "where the brand association is integral to the experience of a product." The winners here? Better-informed consumers, who have seen quality rise while prices don't—as well as new companies, whose quality products can quickly make a splash. Click for Surowiecki's full column.