I’ve always been fascinated by the way consumers act and react. Whenever I teach to or talk with marketing professionals and entrepreneurs, I try to find out which journey their customers follow. Over the years I have come to the conclusion that people never really change. Consumers all go for what their feeling tells them. What has changed is the context in which these people operate. And that has a profound impact on how customers react to marketing. And when I say marketing, I talk about the broad sense of the word meaning: products, pricing, distribution and communication.
From scarcity to unlimited possibilities
Let’s take a step back. At the beginning of the previous century people were happy if they could afford the comfort of a bed, the luxury of a bath and food. The majority of people in Europe were working hard to just be able to afford these things that made life comfortable enough. There was very little time for fun & entertainment. Enjoying culture, sports or hobbies was not a priority. That changed in the ‘interbellum’, the period between the two world wars, and had completely flipped by the fifties. In a matter of years, living conditions evolved from harsh war-time to a new world of endless possibilities and with gadgets that made life so much easier. There were no limits to these new wonders of the world: washing machines, kitchen aids, transistor radio's, vacuum cleaners, cars, etc. And this has remained the case until today. I spent a good part of my career at Samsonite and the number of suitcases we designed and developed every year was astounding. Looking back at it, I sometimes wonder what the use was of launching 4 or 5 lines of luggage (with each 5 to 10 items in 3 to 4 colours) per year. Each version with a small, often mainly visual difference to cater to the consumers’ insatiable thirst for the ultimate product. Of course we would not have made those products if there was no market for them, but objectively speaking they were just variations of boxes with a handle and with or without wheels.
Retail controlling supply
When I said there were no limits in the 50ties, 60ties and 70ties I omitted one element however. The one hurdle that consumers had to take was actually obtaining the products. Launching magnetic tape recorders was a great innovation, but if consumers would have only been able to buy them at the factory in Germany, then very few people would have bought them. That is where distribution (retail) came into play. They became the curators of luxury and gave people access to products produced hundreds of kilometers away. And thus people were spending larger and larger parts of their income on luxury products. And if they didn’t have the money, banks would lend it to them. For a generation who had experienced war times (directly or through their parents), and for whom these products were novelties, buying and owning goods was something that made them feel good. Marketeers and sales people were catering to needs ranging from ‘It helps doing boring chores’, through to ‘everybody in my family has one’ up until ‘It will boost my ego’.
It reminds me of the ‘wonderpolish’ sales guy I used to see at the local market, the same guy that sold vegetable cutting tools the next year. Everybody knew this stuff would probably end up unused, but stil they bought it because the market-guy may not be there the next week.
The end of retail
Over the past 25 years something remarkable has happened. The context consumers operate in has changed considerably. The artificial scarcity managed by retail has completely disappeared. We can now buy anything from anywhere in the world with the click of a thumb. The ultimate illustration of this is the Wish app on your smartphone. Want to buy a smartwatch straight form China? No problem, three clicks, 6 euro’s + 1 euro transport costs and a few weeks later your high-tech bluetooth enabled watch drops in your mailbox. Amazing! There are truly no more limits.
This evolution has shaped the minds of the people into a new kind of thinking, a lot of the stuff that is served by traditional companies (advertisers, brands) leaves consumers with a 'been there, done that' feeling. Buying products or services from this or that brand no longer gives the same ego-boost as before. People would rather spend their money on something which adds something to their life. That could be sitting in a coffee bar with good music, fair trade coffee and high speed internet. They don't mind that the coffee is overpriced because they don't spend it on other useless stuff.
The future of marketing
The impact of this shift in consumer thinking has a profound impact on all area’s of marketing.
When developing new products and services, product marketeers need to think in terms of what people really need. Marketeers need to cater to genuine concerns people have, things that will make a difference in their lives, not just fill up the kitchen drawers. Very often this will be services. Services as such, or as a complement to a physical product.
The communications department has to look all the communication tools they develop as a service that is a relevant addition to the product. Content marketing is one example, but an entertaining TV commercial may also be considered valuable. Traditional brands often wonder how to become relevant on smartphones, where new brands like Uber have grabbed this territory and made it ‘usefully theirs’.
Sales people too must rethink their role. They are no longer there to push products into retail channels. Sales is now a service provider facilitating the adoption of what they sell. Why not merge the sales department with the service team?
Even the price setting process is impacted as customers are no longer prepared to pay for tools they may not use. Why buy a CD if you will only listen to it once or twice? They rather prefer to pay for the value they actually get and when they get it. People happily pay for a monthly Spotify subscription which they can stop whenever they don’t use the service anymore.
Looking at consumer history we see how buying has evolved from fighting to get what you need, to abundance of consumables and durable goods. A flow of abundance that was only controlled by marketing and sales. But that way of thinking is rapidly dying. The flow of information and goods is no longer controlled by retailers and marketeers. The only thing they can do is make sure that whatever they do, adds something relevant to the lives of people. More then ever, all the aspects of the marketing mix must be useful to consumers.