Informed consumer

The concept of the informed consumer is a fundamental one in the law of the European Union. Since the general Resolution of 1975, one of the primary objectives of the European Community, and then the European Union, has been the provision of information to consumers. The rationale is that market actors who are informed and have a greater capacity to understand the importance of their market actions and choices, and are enabled in making better choices.[1]


According to the European Union, "Information is a deciding factor for consumers when making their choices and affects both consumer interests and their confidence in the products and services circulating within the market."[2]

Consumer expectation

The consumers expect to get fair treatment in the market place and avoid unscrupulous or sharp business dealings. They envisage a fair market environment that facilitates and supports several consumer rights:

  • The consumer must get a fair chance of choosing from the range of goods and services available in the market place.
  • The consumer must be provided with complete, unambiguous and explicit knowledge about the products. The information must contain details regarding the contents of the product, safety warnings and product care instructions.
  • The information should be written in plain and understandable language, which is self-explanatory. Also, the text should be readable in terms of the size and type of font.
  • The consumers expect just and equitable pricing of the commodities. Fair price is equal to a reasonable profit margin added to the real cost of manufacturing of product or service (with no exorbitant mark-up cost). Information about the related costs of the product must be brought to the knowledge of the consumer.
  • The consumers also have the right to indiscriminate prices, that is paying the same price as other customers, without any discrimination.
  • Consumers also expect to get a communication channel for enquiry and complaints about the product or service. They want effective redressal and remedies to loss, such as implementation of legal regulations and prosecution to law violations .

With the advent of electronic media in marketing, and the mass information storage capacity of computers, consumer privacy has become a great concern. Hence, consumers want to ensure privacy of information. The consumers want to be able to cast off the invasive marketing methods, and threat of entry into the private system of consumers.[3]


Consumer information is the most important element for consumer protection and policy decisions. It is the solution to issues ranging from online transactional threats, behavioural targeting, loss of privacy and other problems.[4] A consumer must treat every purchase as an important Investment. Making an uninformed investment in the stock market can result in huge financial losses to consumer, the similar rule applies to daily purchases. Being an informed consumer is advantageous to the economy, market and consumers . An informed consumer is capable of making sensible decisions, gains an insight about a product prior to its purchase. This insight equips the consumer with the data to arrive at an evidence based conclusion.

Higher-quality investments

  • With almost every purchase, comes a variety of other options to choose from. This is where the information plays an important role. Information enables the customers to differentiate the quality products from non- quality ones and purchase durable goods that sustains for a longer period.

Safe investments

  • Information about products facilitates safe purchases. With the production taking place in bulk quantities, there maybe instances that the product bores certain manufacturing defects. Recognizing these defects can prevent the customer from financial injury or loss. The product and brand reviews and consumer forums online can be instrumental in educating the customers about them. This should essentially be considered while making big purchases like electronic products and vehicles.

Money-saving investments

  • Consumer often suffers from the danger of being misled by the sales professionals, especially the ones paid commission. These sales personnel are paid commission proportionate to their sales. These sales person are capable of enticing the consumer to buy the most expensive options. Information about your potential purchases can help in saving money and ensure a smarter purchase.

Ethical investments

  • A consumer must never deal with the company indulging in unethical practices. One must check for things like animal testing and experimentation, labour abuse, or donations to a superficial NGO before taking the decision of engaging with the company.

Responsible investment

It is the responsibility of the consumer to get all the information about the potential purchase and associated background before making a decision to buy it. "Getting armed with information about the consequences of your purchase doesn't just make an informed consumer, it makes a Responsible consumer." [5]

Uses of information

Transparent information about the terms and conditions associated with the product or service can facilitate a plenty of regulatory requirements to redress the consumer related grievances. Primarily, complete information will level the information asymmetries, improve consumer's decision- making capability vis-à-vis the seller's complex knowledge about the product they are selling. Consumer information also harmonises and solve consumer problems, create awareness and guide their behaviour. Another important objective that is achieved by informing the consumer is impact on Competitive policy. This will enable the traders and service providers to give greater information to consumers about their product, educate them about the product quality and other specifications. In addition to the compliance to the legal obligations, the business firms also have their planned, tactical and important business- related reasons behind informing the consumer. The business organisation ensure consumer's expectation management by equipping them with certain knowledge about the commodity. Many times, business face disincentive by providing information to the consumers, as it might harm the marketability and attractiveness of their product. This indicate the power gained on being an Informed consumer. The economic analysis indicates that information asymmetry to consumer is a major ground for market failure, causing the consumer to make irrational decisions. Thus, unbiased information can solve the market problems by equipping the customers with appropriate information and thereby ensuring healthy market practices.[6]

Sources of information

Consumers derive their information from multiple sources. The following are the sources from where a consumer gathers the desired knowledge about the product:

  • Governments issue public information for the consumers
  • Regulatory authorities, review and testing services and comparison sites
  • Social networks (friends, family, children, acquaintance etc.)
  • Suppliers of the products or services.
  • the media

Consumer derives information from a variety sources, each source illustrating its own interest, skills and resources . However, it is essential for the consumers to recognise their personal interests and make a judicious decision.[7]

Customer know-hows

  1. Know who you are dealing with: Don't do business with any company that won't provide its name, street address, and telephone number.
  2. Protect your personal information: Share credit card or other personal information only when you're buying from a company you know and trust.
  3. Take your time: Resist any urge to "act now" despite the offer and the terms. Once you turn over your money, you may never get it back.
  4. Read the small print: Get all promises in writing and review all the documents carefully before you pay any money or sign a contract.
  5. Never pay for a "free" gift: Throw away any offer that asks you to pay for a gift. If it's free or a gift, you shouldn't have to pay for it. Free is free.
  6. Know the risks before you spend your money: When it comes to investments, every potentially high-profit investment is high-risk. That means you could lose your investment – all of it.


Market shift

The influx of electronic media and abundance of available information has triggered a complete transformation of the market orientation. There has been a transition in the "traditional customer engagement", whereby the model of teaching the customer about the product or service has changed to knowledge- ridden customers who know exactly where they want to spend their money. The digital invasion has initiated an exploration drive in the consumers, turning the consumers into 'Informed Consumers'. This trend can be substantiated by the research led by the firm Forrester that suggests "buyers are often between 70 and 90 percent of the way through the sales process before they ever engage a vendor". This evolution in the market- orientation is a challenge for the existing and the emerging businesses. Following are the steps to take advantage of changes in, market:[9]

  1. Know your customer
  2. Get discovered/Stay in public view
  3. Utilize grassroots tactics

Challenge for marketers

Consumers are becoming web-savvy, mobile enabled data sifters, who attain complete knowledge about the product prior to even stepping in the store.

To deal with highly informed consumers, the marketer must do the following:

  • Be prepared that the consumer has knowledge about the product and manoeuvre it into something useful.
  • Be the source of comprehensive knowledge to the consumers.

With the increase in the variety of sources for consumer education, it is important for the marketer to enter the sales process at an early stage. The marketer must move ahead of the curve and make sure to bring some value to the customer’s purchase beyond just fulfilling his/her need.[10]

EU legislation

EU consumer policy is designed to

  • protect you against serious risks and threats that you cannot tackle on your own
  • enable you to make choices based on clear, accurate and consistent information
  • safeguard your consumer rights, enabling you to resolve disputes with traders quickly and efficiently
  • ensure your rights keep pace with economic and social change – especially in the food, energy, financial, transport and digital markets.

In an efficient, integrated EU economy underpinned by EU-wide rules, you must be able to trust that your rights as a consumer will be upheld in the event of any problems when purchasing goods and services in other EU countries. At an annual cost of just 5 cents per person, the EU's consumer protection programme for 2014–2020, is designed to enforce consumer laws throughout the single market, giving you a high level of legal protection.[11]


  • According to the "2013 Edelman Trust Barometer", an online survey of 26,000 general population respondents across 26 countries, 35% of those identified as "the informed public" need to hear company information three times to believe it, while another 29% need to hear it 4–5 times more.[12]
  • The study also looks at how consumers place their trust in corporations of different sizes. In the US, 86% of informed consumers trust small businesses, while just 55% trust big businesses. A similar gap is apparent in the UK (78% vs. 48%), but the opposite is true in China, where 89% trust big businesses compared to 65% for small businesses.

In fact, whereas informed publics in developed countries are more trusting of small than big businesses (76% vs. 53%), emerging market respondents placed more trust in big businesses (79% vs. 70%). Overall, small businesses are slightly more trusted than big businesses (70% vs. 62%). Looking at company types, the study finds that trust in media companies rose from 52% of informed publics globally in 2012 to 57% this year. Within the US, trust in media companies crossed into the majority, increasing from 45% to 51%. [13]


  1. Guido Alpa (2002). "Trading On-line and Consumer Protection". In Guido Ferrarini; Klaus J. Hopt; E. Wymeersch (eds.). Capital Markets in the Age of the Euro. Kluwer Law International. p. 133. ISBN 9789041117373.
  2. "Consumer Information". EUR-Lex. Retrieved 27 October 2014.
  3. Hurme, Sally Balch. "Consumer Protection". Retrieved 27 October 2014.
  4. Helberger, Natali. "Form matters: informing consumers effectively" (PDF). Archived from the original (PDF) on 8 July 2014. Retrieved 27 October 2014.
  5. Nelson, Lauren. "Why Is it Important to Be an Informed Consumer?". Retrieved 27 October 2014.
  6. Helberger, Natali. "Form matters: informing consumers effectively" (PDF). Archived from the original (PDF) on 8 July 2014. Retrieved 27 October 2014.
  7. Helberger, Natali. "Form matters: informing consumers effectively" (PDF). Archived from the original (PDF) on 8 July 2014. Retrieved 27 October 2014.
  8. "How to be an Informed Consumer". Federal Trade Commission. Retrieved 28 October 2014.
  9. Newman, Daniel. "How to Sell to the Informed Consumer". Retrieved 29 October 2014.
  10. Court, David. "The consumer decision journey". McKinsey & company. Retrieved 27 October 2014.
  11. "EU Legislation on consumer protection". Retrieved 27 October 2014.
  12. "Global Deck: 2013 Edelman Trust Barometer". edelman trust barometer. Retrieved 29 October 2014.
  13. "8 in 10 Informed Consumers Need to Hear Company Info More Than Twice to Believe It". Retrieved 29 October 2014.

Further reading

  • Thomas Wilhelmsson (2007). "The Informed Consumer v the Vulnerable Consumer in European Unfair Commercial Practices Law – A Comment". In Geraint Howells; Christian Twigg-Flesner; Deborah Parry; Annette Nordhausen (eds.). The Yearbook of Consumer Law 2007. Ashgate Publishing, Ltd. ISBN 9780754647331.
  • Stephen Weatherill (1994). "The Role of the Informed Consumer in EC Law and Policy". Consumer Law Journal. 2: 49–69.
  • Cristina Poncibò & Rossella Incardona (March 2007). "The Average Consumer, the Unfair Commercial Practices Directive, and the Cognitive Revolution". Journal of Consumer Policy Issue. 30 (1): 21–38. SSRN 1084038.
  • Stephen Weatherill (1996). "The Evolution of European Consumer Law and Policy: From Well Informed Consumer to Confident Consumer". In H. W. Micklitz (ed.). Rechtseinheit oder Rechtsvielfalt in Europa?. Baden–Baden. pp. 424–440.
  • Norbert Reich (2005). "Autonomy: The concept of the "Informed Consumer" and the standard of deception". Understanding Eu Law. Intersentia nv. pp. 297–298. ISBN 9789050954655.
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