On 16 April 2018, CPRC released its foundational research report Five Preconditions of Effective Consumer Engagement.
The report presents a conceptual framework to build consumer confidence and trust when it comes to product choice. It explores the core preconditions required to enable consumers to effectively participate in markets and make genuinely informed choices about the products and services. Remedies and interventions for businesses, regulators and policymakers to improve supports, protections and outcomes for consumers are outlined.
Issues in consumer markets
- Across Australia and internationally, consumers are questioning who markets are working for – the communities they were established to serve, or the suppliers who operate within them.
- According to the Edelman Trust Barometer, trust in Australian businesses declined for another year from 48 percent to 45 percent in 2017. Moreover, a series of significant government inquiries have been launched into the operation of the financial services and energy sectors.
- Complexity, disengagement and inability to choose products that suit consumer needs and preferences have all been raised as significant challenges for consumers.
- A balanced focus on the supply- and demand-sides of markets is needed so consumers can make informed choices to receive adequate, appropriate services at a fair and reasonable price.
CPRC examined international and local reforms, looked at the fields of behavioural economics and the broader policy framework within which markets operate, and developed Five Preconditions of Effective Consumer Engagement, namely:
- Barriers to access for consumers with reduced capacity or vulnerability are removed;
- Key product information is disclosed in a relevant, clear and comprehensible manner;
- Comparison tools are accurate, simple and effective;
- Switching costs (financial and non-financial) are low; and,
- Consumers are aware of how to access, assess, and act on information.
As part of this release of this research project, CPRC interviewed leading academics and experts to hear their thoughts on some of the challenges for consumers when it comes to product choice. Watch the highlights of their conversations with CPRC here: