Not a
day passes when one trader or another does not ask the question: but what’s going
wrong? My sales are down and I
have tried everything. My reply is often similar: Are you following market
trends?Are you understanding
your client’s needs? Are you looking elsewhere to understand what is going
on?
Market
trends are not simply read by seeing what the competition is doing. There was a
time when one could sell practically anything. Retailers and traders were not
so many. Trade restrictions and other
trade restrictive practices limited our already constrained
Island market and,
more often than not, it was a sellers market. Take it or leave it. Of course
someone else was surely to take it.
Things
have now changed. We are all seeking new consumption patterns consumers after
all. We all love to be respected when we’re spending our hard earned income. We
all like to buy what we believe to be trendy.
Markets
not only change, but they also shift.
Gartner,
the consumer trends researchers, believe that we are undergoing a fundamental
shift in market power due to the proliferation and commoditization.
Commoditization is the transformation of what is normally a non-commodity into a
commodity, or, in other words, to assign value. As the word commodity has
distinct meanings in business and in marxist theory, commodification has
different meanings depending on the context, business or
economics.
In the
business world, commodification is a process that transforms the market for a
unique branded product into a market based on undifferentiated price
competition. In economic terms, the market changes from one of monopolistic
competition to on of perfect competition. Commodification can be the desired
outcome of a planned market strategy by an entity, or it can be an unintentional
outcome that no party actively sought to achieve.
Consumers
usually benefit from commodification, since perfect competition usually leads to
lower prices. Branded producers often suffer under commodification, since the
value of the brand (and ability to dictate price premiums) can be weakened. For
example, commodification has been a challenge to companies like Sony. Almost as
soon as Sony unveils a new device, cheap knockoffs are built in
China. This means
that Sony products become quickly undifferentiable from competing products,
diminishing the value of the Sony brand. This is happening to many product
ranges more especially in the market for personal computers and internet access,
but also in many other market sectors.
Gartner
believes that over the next 10 years there will be “an unstoppable whirlwind
of change throughout enterprise IT, the industry and the society as a,
whole”. This 10 year scenario ultimately means a fundamental shift in
the balance of power, as it relates to big business, and the retailer and
consumer. We are half way through a 60 year journey form an analogue world to
a digital one, which started in 1980
with the PC. The first 30 years have been about driving technology into the
enterprise. The next 30 years will see technology reaching every individual, in
every part of society and will in turn have a huge impact on the way business
operates.
This
fundamental shift will generate new, monumental challenges for all types of
business regardless of size or trade sector. And it is a universal shift. It is
not a question of a larger rather than smaller economy. It will affect us all.
Indeed we are already subject to this fundamental shift. Yet businesses are not
realising the challenges, which include:
·
Business agility is critical, but most
enterprises are still held back by traditional or legacy
systems
·
Ethical and environmental issues can no
longer be ignored as consumers demand that enterprises operate as good
citizens.
·
Established businesses are facing
increased competition from entrepreneurial, “green fielders” who are pioneering
new business models.
Within
this scenario many establishments will find themselves in a bit of a pickle,
especially the more conservative firms that do little to change their image or
invest in R&D efforts. There are
interesting new small to mid-market firms who are willing to take advantage of the next
consumer trend, and those that are the most nimble are those that will succeed. This is good news
for small firms.
It’s
oftentimes tough for large companies to quickly hop on a new trend, let alone
create one, even though today’s big companies consistently churn out a lot of
great stuff for consumers. The challenges are various. Besides the
technological, and environment challenges there are also those posed by the
demographic shift as the baby boomers new turning 60 get older and continue to
dominate the market as they get older. All these consumers trends affect our
businesses.
In the
food and drink sector for example, today’s food and drink consumers connect with
thousands of brands, thousands of times through an enormous range of
experiences. Business owners need to have brand strategies that make their brand
stand out form the crowd and they need to be constantly abreast of the branding
strategies for the future.
But
the trend is everywhere. We all want to save the world and we all want to save
ourselves. The enterprise that will not follow this market trend will suffer.
Anyone who has been to a Whole Foods Market know what I mean. The queues to pay
are longer and though prices are high, consumers leave contented, happy that
they made their own hummus from “blitzing” raw chicken sprouts, lemon, olive and
garlic in their cuisnart and that they met the in house – feng shui
guru. The new ethical shopper is here. People are not going to go
country and raise their own livestock. They are going to the new shops. It’s the
treatment hall, the oyster bar and the sushi counter – respect for the earth –
partnership with the farm – enjoyment in the cup. The message is clear: our
motto reaches beyond retailing – enterprise supports health, well being and
healing of people – customers, team members and business owners – and the
planet. For business it’s Sheng Qi –
this is the life force that facilitates the making of money and financial gain,
naturally.
For
all areas of the food and drink market specific studies are today available that
guide businesses as that what best branding strategy to adopt. Interesting
studies are available for organic food and drinks sector with excellent analysis
of consumer trends and new product development. This is a tremendous market
trend. The UK and German
consumers are expected to become the largest consumers of organic food by 2008.
This trend will affect us all.
The
shifting market trend is visible in various markets and it refers also services.
The financial services industry, for example, is increasingly becoming customer
focused. Without the customer, financial service providers have no purpose, and
good customer service is the goal to which most of these providers aspire.
Various services sectors are now working on the production of Codes of Ethics as
more and more service providers read the times and understand that the new
market trends are shifting. The balance is in favour of the consumer, and the
shift is not directed only at a demand for the more trendily commodity but also
to a more acceptable consumer service imperative. This imperative is
increasingly being demanded in the form of a Code.
Various
market assessment reports are indicating that customer service is not only
improving but that the demand for better customer service is accelerating. This
is sharping the tension between customer preference for face-to-face contact and
the adoption of new electronic distribution channels. This has strong
implications for the quality of customer service, where customer preferences
conflict with the pressure to reduce costs. Market trends happily, still show
that consumers in general prefer friendly staff more than accuracy of service
than those who placed speed and accuracy of service above friendly staff. Our
research shows that half of the consumers surveyed agree that customer service
has improved over the past 5 years.
Significant
progress is being made in promoting customer service to consumers. But our
business intelligence is not so positive on the evaluation of new trends in
product and commodity ranges offered on the local market. The sectors who have
responded to the more challenging market trends are those that have consistently
reported increasing positive results. The sectors that are facing the new
challenges are growing but there is need for greater and greater awareness by
traders and retailers, large and small, of the more fundamental trends that
affect their trade sectors.
We
live and work today in one large market where conscientious consumerism is on
the rise as marketers, retailers and consumers realise that their actions have
ethical, social, and environmental consequences. The successful trader in the
next 10 years will be the one who accepts these new market trends and consumer’s
increasing preference for ethical and conscientious choices
