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Changing “Business as Usual” posted on Monday, 01 February 2010

Five consumer trends small businesses should capitalize on now.

by Paul Diamond, Web Editor, Vistage International

The concept of "business as usual" is undergoing a transformation in the face of changing consumer and dramatic economic pressures. I spoke recently with noted trend analyst William Higham, author of “The Next Big Thing - Spotting & Forecasting Consumer Trends for Profit.” He identified five key business trends:

1. Short-Termism: The financial crisis that brought us to the brink made consumers realize that governments, institutions and even brands don’t have a good sense of the future and they certainly can’t control a quickly developing crisis. Consumers have become afraid of what might happen next, and they no longer trust that companies are managed for the long-term.

“People are thinking more about the here and now, and less about things that will last a long time,” says Higham. “This sentiment makes us buy based on our immediate needs. And it also makes us want to take greater responsibility for ourselves across a range of sectors, rather than relying on media, politicians, professionals or brands, who we feel have let us down." He notes that consumers are increasingly self-diagnosing and self-treating their ailments, scheduling their own entertainment, and customizing their music instead of buying CDs.

Additionally, says Higman, people now understand that the pace of innovation means today's costly technology is quickly obsolete. The relative usefulness of smart phones, navigation systems, laptops, software and televisions lasts no more than a year. Consumers have adopted a wait-and-see attitude before buying technology.

2. Brand Aid: Companies are now building brand loyalty by helping customers navigate today's complexities. “These brands want to be seen as helping consumers through life,” says Higham. Brand aid typically takes the form of advice, information or free services provided to the public. Consider:

• Microsoft publishes a free, online magazine, “Home,” offering unbiased Internet guidance.
• Charmin sets up free public restrooms for shoppers in New York’s Times Square during the holiday season.
• Evy Baby, a diaper company, places branded changing rooms in Turkish shopping malls.
• American Express launched the site openforum.com to help small businesses grow.

Higham sees the trend expanding: “Tomorrow's consumers will pay a premium for brands that help them avoid activities that are difficult, time-consuming, or unpleasant. This will be a particularly strong driver in the luxury sector, as definitions of luxury evolve from ostentation to experience and, more recently, to convenience and privilege.”

3. Conscious Consumerism:

You know those people who buy something only if it’s made locally, it’s organic, or it’s eco-friendly. Soon most of us will be making our purchases on such highly selective, specific criteria. “Companies should think about their consumers in terms of what, why and how they purchase,” says Higham. Impulse buying is waning, giving way to purchases that are driven by enduring core values. "With less money to spend, there will be a reduction in impulse purchasing and a growth in conscious consumption: where individuals limit purchases to products that matter to them. Brands will increasingly need to provide a meaningful reason for consumers to buy their products: from strong aesthetics to durability, heritage to sustainability. And they will need to target their products more specifically to particular attitudinal and needs segments."

4. Customer profiling: How can you figure out what, exactly, your customer values? Start by building a profile of each customer. Larger businesses have invested in systems that gather information on each customer individually or as a demographic. For example, Amazon.com recommends products to you based on what you’ve purchased in the past, and the company knows how often to send those recommendations to you based on preferences that you set. Smaller companies also need to build profiles for their customers. “Businesses build profiles in two ways,” says Higham, “by doing research and surveys or by tracking what their customers do on their website, what site they came from and where they go next. The more you know your customers, the better you can meet their needs.”

5. Simplification: One of the key trends of the 2000s was the growth of consumer choice. But a backlash has begun, as more and more consumers suffer choice fatigue. “Consumers will increasingly seek, not unlimited choice, but an edited choice,” says Higham. Simplification creates three distinct marketplace opportunities for nimble companies, including:

1. Recommendation as a service: Recommendations and shortlists of options that give us the right choice rather than a lot of choices will become increasingly popular. Additionally, products that reduce the need to make a choice will benefit from this trend.

2. Single-occasion products: Certain single-occasion products such as birthday cakes, wedding gowns and event insurance have long been with us. Now companies are elevating daily activities into occasions that pair with their products. “Already you can buy bottles of wine made to be drunk with specific dishes like fish or chicken, says Higman, "or coffee brands that are made to be drunk at specific times of the day.” This pairing serves to simplify choice.

3. Multi-use products: “If an individual owns a single device that acts as phone, camera and music player, they don’t need to decide which of several single-use products to take with them when going out.” Multi-use products are marginalizing certain types of single-use products.

Posted by bizSanDiego: San Diego Business News