Consumer Behavior – Data Privacy & Protection

INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE

EXECUTIVE POST GRADUATE PROGRAMMES

CONSUMER BEHAVIOUR – PROJECT

DATA PRIVACY & PROTECTION

Submitted by:

Sumit Ranjan
EPGP-13C-117

1
 Consumer Behavior – Data Privacy & Protection

CONTENT

INTRODUCTION ------------------------------------------------------------------------ 3
CONSUMERS TAKE ON PRIVACY LAWS -------------------------------------- 3
GOVERNMENT REGULATIONS --------------------------------------------------- 7
RECOMMENDATIONS FOR ORGANIZATIONS ------------------------------ 8
REFERENCES ---------------------------------------------------------------------------- 9

2
 Consumer Behavior – Data Privacy & Protection

INTRODUCTION
DATA PRIVACY AND PROTECTION
In recent times, Consumers have become more aware of how their data is being stored, processed,
utilized, and shared across and beyond the organization. Governments are also coming up with stringent
privacy and cyber security laws and making organizations accountable to ensure they have maximum
adherence to various compliance policies.

Consumers are increasingly adopting digital technology and the data generated are both an opportunity
for various organizations to improvise their enterprise strategy and improve customer engagement, while
it’s a significant responsibility to keep their data safe. Data may include various location-tracking,
sensitive personal information like Gender, age, location, monthly income, unique identification id’s
which are very helpful for organizations to understand the various needs of their consumers both met and
unmet. These insights are not only helpful for the companies to improve their existing product and expand
but also to develop a completely new product. This vital information also feed into marketing and
advertising teams to create more personalized campaigns for prospects, convert them into active
customers and increase their respective share of wallet within the industry.

A) CONSUMERS TAKE ON THE PRIVACY LAWS

Few studies have shown that consumers across the globe are increasingly taking action to safeguard their
data, by exercising their data rights under the respective existing data and privacy laws. In case these data
rights are not followed they are even deciding to stop buying products from respective organizations.
Consumers have been very supportive of the existing data privacy and protection laws implemented by
various government authorities. They have also shown lot of discomfort in utilizing their personal data on
artificial intelligence and machine learning algorithms.

MULTIPLE SURVEY RESULTS

In a recently conducted Consumer Privacy Survey by CISCO in 2021 where atleast 2600 anonymous
responses across 12 countries were recorded. Below are few interesting findings:

1. Consumers want Transparency and Control

Almost half of the respondents felt they are unable to protect their personal sensitive information and the
top reason came up as companies are not coming up with clear communication on how their data is being
processed. Not surprisingly one third of the respondents have become “privacy actives” which includes
switching companies or providers for specifically their data handling practices. On top of that list includes
traditional companies like retail, banking, and credit card companies.

3
 Consumer Behavior – Data Privacy & Protection

Additionally, 25% of respondents have made enquiries to companies about their data and 17% have
requested changes or deletions of their data.

2. Privacy Laws viewed very positively but awareness remains low

Most of the respondents expect their local or national authorities to lead a major role to ensure their
personal data is secured. 60% of the respondents felt their respective country’s privacy regulations are
having a positive impact versus 4% felt otherwise.

Surprisingly, only 43% of the respondents were aware about these laws. Awareness about the privacy
laws varied from country to country. For example – Japan had 25% awareness while India had 70%.
Respondents who were aware of their privacy laws felt more confident in securing their personal data
more effectively.

Despite the ongoing pandemic situation, consumers showed less interest in reducing the privacy
protections.

3. Consumers are very concerned about the use of Personal data in AI

72% of the respondents felt the companies are accountable to use their personal data in various AI driven
technologies in an ethical way.

56% of respondents showed concerns with the current state

In another survey conducted by McKinsey, there are few additional interesting insights as mentioned
below.

1. Consumers level of trust varied by industry type. Sectors like Healthcare and Financial services
showed highest score for trust which was 44%. While for industries like consumer-packaged
goods or media and entertainment had the lowest score.

4
 Consumer Behavior – Data Privacy & Protection

2. Nearly, 2/3 of Internet Users in US, mentioned that the content of the email should only remain
accessible to people whom they have authorized, and the name and email address should
remain private.

3. 50% of the respondents mentioned they are more likely to trust an organization which asks
information which are strictly relevant to its products or that limits to reveal the personal
information. These insights are useful for organizations to carefully manage their data and its
storage protocols.

50% of consumer respondents are more likely to trust organizations who react swiftly to any
data breach or hacking activities and are transparent with their customers. Such practices have
come up as a critical for both organizations and customers as the impact of data breach are
growing exponentially and government authorities have formed various policies for data- breach
disclosures.

5
 Consumer Behavior – Data Privacy & Protection

4. Consumers showed low confidence on how their personal data is being processed, stored, and
utilized, they often want to restrict the kind of data shared with various business entities.
However, for the product and services which are critically important for the consumers like
healthcare and money management they are more willing to share their personal information
and keep aside their privacy concerns. Consumers are not willing to share their data where the
product or services are less important for them and can even choose to opt out of companies
whose data privacy practices, they do not trust or agree with.

6
 Consumer Behavior – Data Privacy & Protection

B) GOVERNMENT REGULATIONS
Authorities across various nations have become stricter and evolving their policy regulations marking a
strong shift towards protecting consumers.

GDPR is implemented in Europe in May 2018, which provides consumers more choices and protections
about how their data are used. This policy allows consumers to have easier access to data that
companies hold and makes it easier for them to ask organizations to delete their personal information
from their respective databases.

With GDPR implementation, it requires organizations to do substantial changes in the way they collect,
store, share and delete data. Failure of any such protocols could result in steep fines that could even
go up to 4% of its Global revenue. Recently one organization incurred a fine of $180 million for a data
breach. In another case, $57 million was fined due to not complying with GDPR.

Authorities outside Europe have also started putting various regulations protecting their citizens from
data privacy perspective. In Brazil, government have come up with LGPD (General Data Protection Law),
which comprises of nationwide law centralizing and codifying rules governing the collection, use,
processing, and storage of personal data. LGPD can also cost 2% of Global revenue if any organization
found not complying with the protocols.

In United States, authorities have come up with the California Consumer Privacy Act (CCPA), which
came into effect from January 2020. It gives consumers the right to know where the personal data is
getting collected and preventing the sale of their data.

As per the official website of United Nations Conference on Trade and Development, 137 out of 194
countries had put in place legislation to secure the protection of data and privacy.

7
 Consumer Behavior – Data Privacy & Protection

C) RECOMMENDATIONS FOR ORGANIZATIONS

As per recent research and various studies, its mandatory for companies to build confidence among
their consumers on how their personal data is being used, stored, and processed. Few key steps which
could be helpful for organizations are mentioned below:

1. Provide Clear Communications:

As we see from various research and surveys, consumers want to know how their data is being
used. Organizations can truncate this concern by easy explanations on how their data is being
used to elevate the quality of product and services.

2. Data Mapping & Data Infrastructure:

Global companies have created data maps to segment the various types of data they are storing
from consumers. And as per their need they identify which data is required to serve the
consumers now and in future. Companies need to analyze large volume of data to understand
the changing consumer behavior and needs which can feed back to the product and
development team to either improve their existing product or services or develop a new
product altogether. Artificial intelligence is one of the key initiatives which all the organizations
are utilizing the process millions of records and get the insights. Companies may choose to only
use supervised machine learning algorithms which would give them lot of control and minimize
the risk.

Organizations must work to develop enterprise level Data infrastructure using various Data
Lakes like (MS Azure, AWS) that can efficiently handle large volumes of data following all the
compliance protocols which would also bring technological innovations for their respective
business divisions.

3. Data Security and Operations:

Organizations must develop identity and access management processes which would restrict the
access of data within the company based on the individual roles. One should only access the
data which is required for them as per their job roles and responsibilities. Additionally, there
must be a well-defined approval management system to ensure compliance.

A standard operating procedure must be developed and followed in case of any data breaches
along with timelines, responsible people who will be involved and a strong communication
strategy. The speed of company in response to any data breaches is one of the highest
predictors of consumer trust and in most of the new regulations require organizations to
disclose breaches very quickly. For example, the GDPR needs disclosure within 72 hours of data
breach discovery.

8
 Consumer Behavior – Data Privacy & Protection

D) REFERENCES

https://iapp.org/news/a/study-consumers-are-taking-more-active-role-in-protecting-their-privacy/

https://www.mckinsey.com/capabilities/risk-and-resilience/our-insights/the-consumer-data-
opportunity-and-the-privacy-imperative

https://unctad.org/page/data-protection-and-privacy-legislation-worldwide