Over the next decade consumers internationally are likely to spend a third more on themselves. The collective impact of increasing affluence, new categories and brands, and an increasing focus on apparel, eating out etc hardly seems like a scary opening scenario where strategists need to bring out their creative marketing hats and plug into emerging trends. But spare a brief moment for those who will enter your categories looking for added growth and whether you will be in a position to offer added value. Or what is going to happen to your brand's frequency of consumption?
Now couple that with the fact that according to The Henley Centre most businesses will have about an hour a year to impress their consumers, and that includes both experiential and advertising. Will most marketers be able to differentiate between the 'wow' moments and the 'just get on with it' moments? Not scared yet? While money will remain the currency of business its value will decline, yielding in importance to consumer currencies of energy, space, time and information. Will you offer value for time? And have you ever paused to consider that most news that consumers hear about your company and business comes from other people not from your press release or other official communication. Where did you hear about that snazzy new mobile phone or that swish new restaurant? Is your business tuned into the emerging collectives of information and their spheres of influence?
The hot marketing companies wrote the book of rules on marketing but a funny thing happened on the way to the grocery store. The consumer forgot to read the book and is in the process of writing one of her own.
So lets list some broad themes of consumer change:
- Markets are global on the outside and local on the inside
- Consumer diversity and power is multiplying
- Money is not the only resource that matters
- Brands are more important but the way they are built is changing
- Consumer satisfaction hype is being replaced by reality
Lets investigate the 3 key themes of marketing strategy that try and reflect the above.
Why consumer is dictator
The fact that consumers are empowered is less the result of increased affluence and more the outcome of an increasingly emasculated position within the other spheres of their existence. This is less philosophical than it sounds. We operate in three over reaching modes - as citizens, employees and consumers. Increasingly citizens are disenchanted with their politicians and governments [if you needed proof of this kindly refer to the front page of your daily newspaper]. Employees are increasingly dissatisfied and feel powerless in their workspace. Have you read your latest employee satisfaction feedback - most employees think they are overworked, underpaid and unappreciated. That brings us to the third mode - that of us as consumers. Now, watch real democracy at work. We have the information --and the power of choice and exit. We buy brands we want to and if we don't appreciate the experience we do not choose it again. We vote with our wallets and enjoy our sense of power. If Descartes were alive he would have changed his 'I think therefore I am' line to 'I buy therefore I have the power'. Consumers have found a voice - they communicate their needs and complain when their needs and expectations are not met. Information captured in The Henley Centre's Planning for Consumer Change study indicates that consumer complaints have increased 6 - 9% depending on mode of complaint against poor service or faulty goods. Add to that the fact that militating directly against your companies desire for multi channel efficiency, the consumer is seeking multi channel choice - and will reject your offering in favour of one that is actually 'within an arms reach of desire'. Consumer is not merely king - he's a dictator. The same consumer can vary in behaviour more on two different occasions than two different consumers' on the same occasion and we better know them all.
Money is not the only resource that matters
Strange though it may sound a lot of marketers cracked this one a while back. Why would today's savvy consumer pay more than 4 Dollars for a cup of coffee? Because Starbuck's knows how to sell a US$ 4 coffee? Most people operate out of two places - home and workplace, or home and college etc. Starbuck's, and Barista in India have created and institutionalised the third place - your neighbourhood coffee shop and you pay for coffee, style, ambience, a little privacy, and maybe even a little bit of rent for that third place. Some of us have our favourite seats in our coffee shop [remember the serial Friends]. The fact that we exchange cash for goods and services is a traditional paradigm. But consumers' are willing to pay a little extra to save time - at airline counters, shopping malls - and preferred consumers can jump the queue on consumer helplines by tapping in their unique customer codes on the phone. Consumers spend a lot of energy making purchase decisions and businesses need to consider whether their propositions require consumers to expend energy or save it or add to their store of it. Does your proposition take into account the space that it will fit into in the consumer's life? And information is a two-way street, consumers want it to make a better choice and marketers want it to hone their propositions. Have you worked that flow out? We need to develop propositions that are sensitive to the different currencies consumers' value and spend. And almost every category develops its unique priority of consumers currency ITEMS [Information, Time, Energy, Money and Space]. This concept would probably go some way in explaining why consumers often seem to be behaving in paradoxical ways, laying to dust the best laid marketing plans.
Well, most economic theory is based on that one most important of all assumptions - that the consumer is a rational being and all purchase decisions are driven by consumer rationality. The counterpoint to that is the winner of the 2002 Nobel prize for Economics - Daniel Kahnemann is a psychologist who has spent most of his career challenging the principle of consumer rationality. Brands are more important but the way they are built is changing
Let's think briefly about consumer's mental budgets. Consumers have different mental pots to which they allocate parts of their income. So, there is likely to be an essentials' pot, and one for entertainment and another for savings and so on. All purchases come out of one of these pots and it's important that we understand where our offering fits in. This is particularly important in the case of absolutely new categories driven by new technology. It is probable that a De Beers diamond comes from the same pot as the luxury cruise down the Nile. Consumers may feel richer or poorer in one of their different modes depending on which pot they depleted faster this month, entertainment, essentials, medical or some other.
Lets talk about agelessness. Across the world upper middle classes display an increasing desire to portray an aggressive imagery of youth and fitness even as they enter into their middle years. And that's increasingly true of Indian consumers as well. Paradoxically, the ability to display a youthful attitude increases with rising income that age and experience bring. Which is why we probably see more 30 somethings in hot youth nightspots or buying brands positioned squarely at the below 25's.Blue jeans, and in fact, all denim once used to be the ultimate teen preserve capturing the very essence of rebellion, youth and new experiences. It used to differentiate the young from the polyester clad, suited and booted establishment. Today, international press captures Bush jr in blue jeans and Blair in denim shirts. And don't miss out the portrait of the new Indian CEO in the business press. Forty plus, balding and decked out in denim. That would probably explain the rise of new youth totems - lycra pants and brands like Diesel and Gasoline and closer home, the rise of Provogue.
And finally, consider the fact that in any survey the position of 'friends and family' strengthens every year as the recommendation that 'I listen to before I buy'. Word of mouth delivers GRP's that we haven't yet invented a system to track.
Are you right or are you ready?
As long as there will be business schools [and they definitely will into the next 50 years] there will be label research, packaging research CLT's and microtests, and the benefits of these are undeniable. But the real marketing men will be separated from the boys by one attitudinal discriminator only - are they ready to bring propositions that fulfil unique consumer needs to market fast or will their careers be marked by the numbers of estimates pushed and unactioned strategy notes written. Marketing strategy is supposed to be the cutting edge of business strategy. Hopefully, that truth will prevail.