Unit 3: Consumer trends

The drivers of change


It is quite easy to notice that the behaviour and preferences of consumers are quickly changing. It can be inferred also by the changes in Modern Distribution layouts, and in advertisement messages, which, of course, follow closely every trend.

But what have been, and are, the drivers of these changes? What are the powerful trends that induce modifications in the way people evaluate – and what are the most important and rank of different aspects of quality and the elements that make them feel satisfied when they purchase and consume?

In the following sections a few of the main driving forces that can be identified are listed.

General economy

The “mood” of the general economic situation influences the propensity to spend or to save. The key aspect is the degree of uncertainty. Of course, when the general level if uncertainty is high, even those who are in a satisfactory economic condition may feel the need to spend less, to save more, because “one never knows”. At the same time, those who face economic problems may show a low propensity to save just because they cannot manage to set money aside. In periods of crisis, luxury goods may keep on being sold, but are less freely and less frequently shown. How do you “measure” the general economic situation? By the growth rate of GDP (GDP is alλ the value added produced in a country, a very large sum, therefore even small percentage increases are relevant. Another variable is given by unemployment rates: their increase contributes heavily to a feeling of uncertainty. Also inflation is a key factor: rising prices may (according to their economic condition) either induce consumer to buy less, or induce consumers to buy earlier, before prices have further increases. Symmetrically, decreasing prices induce consumers to buy, and also to buy higher quality products that are perceived as cheaper, but if more price drops are expected, purchases may be delayed (with people waiting for prices to be lower).


Social change

Social changes may be either temporary or permanent. Their lifespan is related to the depth of their effect. Here we mention three of the main changes that have been (and still are) affecting western societies:

  • Women working and having their own careers. This, together with elastic working schedules, has changed the habit of families of meeting 2-3 times a day around the kitchen table to eat together. Each family member has different times, so there is little or no time to eat together, to cook every day, to prepare articulated meals. Therefore, many meals are more similar to snacks, and quality regarded as a “service” is incorporated in products (which means that products are ready to eat or to cook) which is much appreciated. This long-term trend is partially counterbalanced by a recent trend towards cooking at home during leisure time, for the family and/or for friends. This does not cancel the previous trend, it only creates different needs at different moments: quick, and ready-made meals, or out-of-home eating during working days; tasty, “special” and easy-to-use ingredients during leisure days.

  • Average age increasing. People born in the Sixties of the previous century are called “baby boomers”, because improving social conditions in that period enhanced the growth of families. Baby-boomers have had a very intense life, full of technological growth, problems to solve, goals to reach. They do not like the idea of getting old. Nevertheless, they are. Since in the following periods, births were less numerous, our societies are changing in their structure, with a higher % of mature and elderly people compared to the % of young individuals. This means that a very important market segment is, and will be, made of aged people, who remain active for a long time, and nevertheless show special needs in terms of nutrition, products and services. Of course, this large group of people has to further segmented, but quality in this case can surely mean easy to find and to buy, easy to eat, easy to digest, bringing important nutrients, low fat, low salt, and, since there are many single elderly people, sold in small portions, and even ready-to-eat.

  • Smaller families. The decreasing size of families is due to an increasing life expectancy (single widows); an increasing number of individuals choosing not to marry, to marry late, not to have children or to have few children; an increasing number of divorces. Singles, small families and large families have different needs. For example, large families have different tastes to take into account in their choices, and are more prone to take advantage of special offers; singles have much spare time, tend to treat themselves well, like to eat out, like small portions, ready-to-eat products and products with a long shelf-life.

Cultural change

Cultural change is the aspect that changes faster, influenced as it is by economic, social aspects but also by international exchanges and extemporary events. A few important trends have to be underlined.

  • Transparency: consumers like to have clear, reliable, accessible and guaranteed information about what they buy;
  • Identity and authenticity: after years of undifferentiated, standardised food, consumers begin to like food telling, food with a message, food with a link with the history and traditions of its place of origin;
  • Less but better: eating very much is not regarded as healty, in times of economic crisis it can alse be regarded as unsustainable. But if consumers eat less, they also want to eat better, which means that they exchange quantity for quality.
  • Experience: consumers have learnt that eating (but also buying food) can be an experience which involves all senses, and also one’s brain (food knowledge) and heart (emotions). Points of sale (also direct sale), the relation with sellers, products and product information may all contribute to a pleasant and interesting buying and consuming experience;
  • Ethics and environment: fair trade, environmentally friendly products (among which local products and organic ones), products whose production process fully respects animal welfare are increasingly appreciated;
  • Health, mostly intended as prevention (also of aging). Health concerns involve the appreciation of products “without” (fats, salt, sugar, gluten, lactose, heavy metals, residues of chemical plant and soil treatments, etc.) and of products “with” healthy nutrients (either naturally present or added).

Technology

The fast growing importance of technology cannot be underestimated.

It gives access to (more or less reliable) information; allows quality and price comparisons; spreads fashions (“What, you are not eating chia seeds and Goji berries every day? Don’t you care about your health?” ...); creates a new distribution channel; creates a “globally thinking” young generation. It can enhance or sink a good idea, a company reputation.

It is a powerful, and also dangerous, instrument.

Technology is not only linked to the web and information. It also affects production methods and process controls, and therefore the quality of products. It can help give life to more sustainable farming, to products with a longer shelf-life, to useful and environmentally friendly kinds of packaging, this way integrating other important consumer needs that have been mentioned so far.

Key questions

  1. Do consumer trends in your country resemble the key ones listed in this unit? Which differences do you identify?
  2. Are there specific demand trends concerning your core business? Which are they?
  3. How do you comply with them?
  4. What are the main sources of information you use to understand new trends? Websites? Association magazines? Professional magazines? Direct contact with consumers and B2B clients?
  5. How important is technology in your activity? Are there recent technological aspects changing the way you work and clients’ needs?

The Unique Selling Point

Why "unique"?

Imagine that you have to promote ... yourself. Suppose that you do have all the characteristics listed in the picture above. What are you promoting yourself for? A new job? A boyfriend / girlfriend? Where can it be? In Sweden, in Spain? Whatever the situation, it would be confusing, and perhaps sound a bit boastful, if you listed all of your wonderful features. It would be much better if you chose the aspect that would mostly help you in each situation. For example, blue eyes could be useful to find a boyfriend / girlfriend in Spain, but not in Sweden (where many people have blue eyes), your physical strength would be appreciated for a physical activity, but would be insignificant for a desk job. Similarly, being creative might not be so important when you have to stamp envelopes all day, being polite is crucial if you are in a front desk, and there are people who appreciate, in a potential partner, sweetness more than wealth.

The same goes for a product or service. Consumers get confused and / or bored if you boast too many qualities, and might get to think that you actually have none of them ... it is better to think and try until you have chosen the right, “unique” on ...

How can I find my unique selling point?

  1. Make a detailed list of your potential targets, e.g. “young business-women”, “70-year-old singles”, “large wholesaler”, “purchasing manager of a fruit processing company” ...
  2. For each of them, list, according to the product you are thinking of, what problems they might need to solve, or what their desires might be. Young business-women might need to save time, 70-year-old singles might love to have a chat, purchasing manager might crave very punctual deliveries ...
  3. Think about the way they are solving their problem or satisfying their wishes now, and try to figure out if there are different, better ways ..
  4. Then write down the definition of your product and the benefit that it will bring ..
  5. You might have a list of options, and a good brainstorming session with your colleagues will be very useful and interesting, both to take a decision and to think things over ...


Did you know?

A selling point is what you say, or write, about your product and/or service to enhance its sales.

It reminds your current customers why they have made a good choice in choosing your products ...

... and tells your potential customers why they should do the same.

It states what makes your offer different from your competitors

... but ... why “unique”?


Sometimes it seems difficult to leave a few of your features untold.

You can help yourself decide by imagining a packaging in which ALL of them are written and putting yourself in the place of consumers.

How would that packaging look?

Perhaps a bit crowded?

And what would its visual effect be?

A useful exercise for step 3 is to take a look at what it is already on the market, and look at existing messages ...

Exercise 1

Write the selling point that is associated with these products. Write a comment by answering the following questions: Who do you think they are targeted at? Do you think they express a real benefit and are really distinctive? What benefit does it give? Does it offer nothing special? What benefit, in your opinion, did producers mean to offer?

Exercise 2

Think of this product: extra virgin olive oil. For this product, find a particular kind of product and a selling proposition for each of these targets (for example, elderly people who are not used to extra virgin olive oil might like a light taste, etc.)

People who cannot eat much salt because of high blood pressure

People who love to spend their holidays in Southern Italy

People following the vegan diet

People with long hair

Time - to - market

From product design to putting the product in our client’s hands

We have said that it is necessary to analyse our markets, and we have also said that markets change very quickly: new habits emerge, old habits and needs fade away. All the analyses we have made might become quickly obsolete.

Because of this, it is obviously very important to keep short the time that passes between a new idea, the related product / service design, and its launch (which is the moment when the product is actually made available on the market). This is called “time – to – market”, and during this lapse of time many things may change: innovations, new information, competitor’s new strategies .... If the new product is meant to fill a market space, the longer the time -to – market the higher is the possibility that other competitors, who are not blind and might have identified the same space, act faster than us. And the first mover often has an advantage. It is different if you say “I am the first one who has identified your need and found a solution for you”, or if you say “Me too, me too! I have found the same solution, too!” in this latter case, you’ll have to invest more money and energies to get noticed ...



Keep in mind

"Better three hours too soon, than one minute too late."

William Shakespeare

"For every minute spent in organising, an hour is earned."

Unknown

"The bad news is time flies. The good news is you're the pilot."

Michael Althsuler



Lead time

The “Lead time” is the time that passes between a client’s request or order for a product and the moment when you deliver what has been requested.

For example, when you order a pizza in a restaurant, the waiter will write what you have chosen and this message has to reach the cook (which can be done either by physically bringing him a piece of paper, or via smartphone, etc.). The cook is busy, but at last he reads the message, then he needs some time to prepare the pizza, and when it’s ready the waiter brings it to you. If the process is quick, you will finish earlier and more people can eat at the same table during that same evening. The waiter works the same hours but the restaurants will sell more pizzas (so the average cost of the waiter for each pizza will be lower, which means higher profits), you’ll be more satisfied, and the pizza will have reached your table while it is still hot. The speed of the process depends on several things: the way orders are communicated to the cook, the ability of the cook and the way he is organized, the attention and speed of the waiter, the way tables are organized. etc.

This is even more important with more complicated processes, that involve not only paying someone for the job, but also buying raw materials, keeping stocks (which have a value), etc.. Even with fresh products, the lead time can be important. Fruit and vegetables are picked up, cleaned, sometimes pre-packed, and, for instance, a retailer prefers frequent orders to keeping stocks of perishable goods.

Opening times

People who are working are often very busy, and a shop’s opening times can make the difference. If they are the same as people’s working times, the shop will end up having its main clients consisting of only retired people and housewifes.

If you offer a home delivery service on saturdays, you can make your clients happy by taking them, for instance, their fruit and vegetables right home while they are optimizing their time by cleaning up the house, taking out the dog, and so on ...

On the other hand, elderly people like shops being open during the day, when they can have a walk, meet people they now, have a chat ...

Days of invoice collection and invoice payment

The financial equilibrium of your firm can depend on time.

A production process may require the purchase of raw materials, payments for utilities, expenses for services (e.g. certification, controls, analyses, accounting ...), the remuneration of the labour force. You may have to comply with most of these expenses before you sell the product and collect your invoices. This has to do with stocks (it is better if they “rotate” frequently, which means that you frequently sell your products and renew your stocks), but it also has to do with the comparison between the time that passes before you pay the invoices from your providers and the time that passes before your clients pay yours.

Even for the products you sell without producing them, there is a time before you pay the people you have bought them from, and you have to compare it to the time that passes before your invoices are paid.

What comes out of this comparison? Is everything smooth, are cycles overlapping well, or are there moments when you have problems, because you have still not received your payments?

These considerations are very important when planning your activity and negotiating days of collection and payment with clients and providers ...



Technical, economic, financial cycle

Your technical cycle is the length of the process with which your inputs are selected, bought transformed into outputs and then those outputs are sold.

Your economic cycle has to do with costs and sales, and a comparison between the two, which gives way to considerations about your cost structure, your efficiency, your margins.

Your financial cycle has to do with time, too, and with the survival of your activity. It concerns the equilibrium between revenues and expenses, in every moment and on average. Your cash flow can be negative for a while (which means that you spend more than you


Time before you reach the desired performance

Results do not necessary come immediately. Clients have to learn that you are offering something (and here communication plays an important role), then they have to evaluate your offer conceptually (and here good communication plays an important role). Then there is the trial phase, in which they evaluate their buying experience and then their consumption experience (and here quality is protagonist). If the product passes these tests, then there is a repeat phase, in which the product is bought again, and hopefully again and again, until it becomes part of this consumers’ habits (the challenge here is the constancy of quality: if quality varies, consumers may feel uncertainty as regards the consuming experience that awaits them).

So, before starting a new marketing “adventure”, while you are still building your business plan, make sure that you have assessed how long you are able to wait before sales and profit reach your desired level. Of course, there are no certainties about this, but you can reach an idea if you examine a few benchmarks (similar experiences lived by other farmers who have already performed similar projects).

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