One of the fundamental lessons we learned in economics is that customer demand is a necessity in order to survive in business. Given the right tools and methodical approach, one can make reliable predictions about their consumer’s behavior, which enable them to adjust their level of production as well as the pricing schedule to meet the demand of their market.
But now that we live in a digital age, the face of consumer demand has greatly changed as well. Throughout the years, different factors such as changing demographics (the rise of millenials), new technology and changing behavior and attitude throughout the world have shaped the consumer demand as we know it today. Here are some things that show how customer demand has changed, and where it is heading to in the future.
Consumers Now Demand More Tailored Solutions and Experience
One of the most noticeable characteristics of 21st – century consumers is that they expect all businesses to provide satisfactory experience and solutions that are perfectly tailored to their own preferences.
In the online world, for instance, people would ignore your content unless you provide a context – they should be familiar with what you are trying to promote first before you can win their attention. It has to do with what they have experienced or current situation first before they can thoroughly understand the message you are aiming to convey.
Another example is the rise of on-demand services such as Netflix and Spotify. Both allow their customers to view and listen to different shows and music according to when and where they want it. The rise of personalisation – where people want to take control of their life outcomes, rather than being influenced by external forces – has since become a focus of most marketers in the past recent years.
According to Econsultancy, personalisation demonstrably increases conversions. After its joint venture switchover in 2011, Co-operative Travel has seen a 95% increase in visitors and 217% increase in revenue once it started implementing personalisation on its website.
Consumer’s Focus Have Shifted from Price to Quality
Even though many are still a sensitive to price changes these days, it is not as severe as it was in the previous century, where high prices are extremely painful in the pocket, due to economic crises from wars and other catastrophes.
According to Australian Bureau of Statistics, Australia’s purchasing power has increased appreciably over recent decades – real net national disposable income per capita rose by 50% between 1991–92 and 2005–06, an average increase of 3% per year, and real national net worth per capita grew by 10% between mid-1992 and mid-2006, an average increase of 0.7% per year.
Due to this, customers look for businesses who can solve their problems and needs based on the quality of the outcome and not necessarily the lowest prices. For instance, many vehicle owners nowadays seek for more sustainable fuel, despite its relatively high prices, in order to reduce their carbon footprint.
Consumers Have Become More Control on the Sales Process
Today’s global consumer have become more experienced with competitive, well-planned sales process. With the presence of new technology and the internet, buyers can instantly compare prices from different providers, and make a quick judgment even they are already in the store premises of another provider.
Also, the presence of newer selling platforms has allowed modern-day consumers to get rid of middlemen and have an upper hand in the sales process. For instance, some car selling applications have enabled people to find the car and the dealerships that sell it based on the budget they have keyed-in on the app.
This kind of selling platform has completely transformed the overall car buying process where one has to visit different dealerships before he can find the perfect vehicle that suits her budget and needs. With just a few click on a smartphone, one can easily conduct a research and make a purchase decision without breaking a sweat. An effective sales person must know how to use these platforms to their advantage so that they can gain more qualified leads and customers rather than losing them.
Consumers Have Become Less Loyal
Perhaps one of the biggest changes in the consumer demand that businesses have to be wary about is the declining loyalty of consumers. To quote from an article published in Forbes, “In the rush of business necessity and the desire to meet quarterly financial requirements from Wall Street, branding has become less about solving specific needs – and more an attempt to quickly create new revenue streams by promoting solutions for needs that don’t exist.”
The ineffectiveness of companies on their branding efforts in the past recent years has resulted in the loss of interest by their customers. Unless these companies begin to engage with their clients authentically, either through social media or other platforms, consumers will perceive their brands as a profit-centric business rather than customer-centric.
Now that we have seen the changes that have transpired in customer demand in the past years, let’s now see the four major trends that will shape the way businesses go to market in the years to come, as pointed out in the recent study by HSBC Global Connection.
Middle-Income Consumer Spenders Will Rise
Defined as the people who earn US$10-20 per day, middle-income consumers represent one-seventh – over a billion – of the total world population today. It is also predicted that by 2020, this number will rise to 3.2 billion, and will rise to 4.9 billion a decade later.
Given the massive size of this market base, their discretionary spending power will have a significant impact on strategies of businesses, especially those who are in Asia where the majority of this population lives. If you want to focus your sales efforts on this market, you need to consider how cultural differences could affect their buying behavior.
Female Consumption Power
Now that gender equality is in the interest of countries, of organisations, of companies and of people, we can expect that the female workforce will play a very crucial role in shaping the face of customer demand in the years to come.
According to World Economic Forum Gender report, over 250 million women have joined the workforce since 2006. Today, around 1.75 billion are employed. With their strengthening economic power, their earnings are set to rise to US$18 trillion globally by 2018, a staggering rise from US$12 trillion in 2010.
Women’s work-oriented lifestyle is a factor that you should analyse effectively if you are aiming to target this particular market. In a survey, it is revealed that both men and women give importance to aspects such as buying from reliable and trusted brand, leisure, and consuming products ethically. This means that gender plays a little part in attitude to consumption.
Advancement of New Technologies
The fast-growing number of people who are online, especially those with the mobile devices, means shoppers are enjoying greater choice, wider networks and the ability to be more discerning than ever before. In fact, 6.1 billion people will use a smartphone by 2020.
Members of Generation Z, born between the mid-1990s and the mid-2000s, have grown up as ‘native’ users of digital technologies and their expectations for simplicity and accessibility have been shaped accordingly.
The report also explores the economic importance of different generations, from Pre-War and Baby Boomers to Generation Z. The purchasing power of the over-60s will keep rising, and that by 2020 this age group will outnumber the under-50s for the first time in human history. Millennials may be less satisfied with their financial situation, but they are now approaching their prime working years and demonstrate relatively distinctive behaviors such as the prioritisation of experiences over possessions.
So that is how consumer demand has changed throughout the years, and where it is heading to in the future. Knowing these things will allow you to anticipate the factors that will affect your business, so you can create a more effective business strategy that will help you survive regardless of any changes that could happen in the market.