Catching the wave of the new consumerism
– by Matt English
Surfers know that catching a good wave requires keen judgment around three things, namely positioning, timing and agility. Each of these needs to be well executed for success. In this context, positioning means not being too far out to miss the wave, and not to close in to be dumped in the churn near the shore. Timing works to support this by moving at exactly the right moment to capture the wave. Agility is needed to respond to a whole range of changing and variable conditions such as currents.
The big wave for business today is the rapid growth and change in consumerism, which is occurring globally and across all industry groups. The term consumerism only gathered common use back in the 1960s and 70s. Consumerism as we know it today has come about through the convergence of three factors:
- The choice of products and services for consumers – do you remember the excitement when that new supermarket or department store came to your neighbourhood providing all that extra choice?
- The growth of channels to supply those products and services – think of the impact of the online channel in the way we shop and the opportunities it has created for consumers
- The expanding purchasing power of consumers and the expansion of individual wealth over the past 50 years – notwithstanding economic challenges such as oil shocks and the GFC.
But more recently, another major factor has joined this list and skyrocketed to prominence, namely direct consumer influence.
This factor has always existed in some form or another. For example, consumers have been involved in focus groups or product discussion forums for a long time. But technology has changed this dramatically, and today we now have instant and global communications and connectivity. This has enabled a more profound change by placing enormous power in the hands of consumers, thus creating a new wave of direct consumer influence.
Consumers today have never had it so lucky. Not only do they have seemingly endless choices and channels from which to buy, but they also can access significant volumes of advice from their fellow consumers via a raft of online sources such as social media, chat rooms, blogs and so on. Consumer to consumer dialogue is now a game changer.
A report from the Boston Consulting Group called Harnessing the Power of Advocacy Marketing highlights the snowballing effect of consumer sentiment and commentary. Consumers are also delivering a message that is loud and clear regarding their purchasing decisions. Various studies from Nielsen and recent IBM research on the smarter consumer show that consumers place far more reliance on the opinions of family, friends and commentators than on the providers of the products or services. Much of that information is provided through online channels such as Facebook and chat rooms.
Now we are also seeing a big shift in the way organisations are responding in very targetted ways. A recent report from Burson-Marsteller on social media in the Fortune Global 100 shows a major increase in the variety of social media channels being used by organisations. For instance, in 2010 there were 4.2 Twitter accounts per organisation compared to 10.1 Twitter accounts in 2012. This reflects the growing trend to target the customer dialogue around very specific market segments.
So what can organisations do to ensure they not only catch this wave but also to ride it well? What are the right questions to ask?
- Where is the consumer’s place in the business model? An organisation facing consumers directly such as a retail bank will face a very different set of issues compared to say a mining business that sells to industrial customers
- How can the organisations be pro-active regarding direct consumer influence? For instance, how can consumer dialogue via social media be effectively tapped for product development ideas and opportunities?
- What can organisations do right now to understand the true impact of direct consumer influence, both currently and in the future?
- How and when can the business model be re-shaped to drive value in the light of direct consumer influence?
- How quickly can organisations respond to changing market conditions?
- What plans do organisations have to effectively deal with moves in consumer sentiment?
So how many organisations will ride this wave successfully? Or how many will see the wave pass by as a missed opportunity or else be caught up in the churn by the shore?