a new generation of consumers

Thursday, August 28, 2008

The new-age marketer must don multiple hats of a sociologist, psychologist and anthropologist too. After all, markets and consumers are changing and to stay ahead in the race, marketers must stay on top of changing paradigms


When Toyota’s sales fell this May, the Japanese auto major immediately revamped its marketing strategy and decided to take a closer look at its potential customers. They found a group that no one had taken seriously – the African American Women. According to the 2005 US census data, it’s the black and Asian women who are better educated and earn more than their white women counterparts. From this June, Toyota launched an innovative ‘reality-game’ targeting this segment which would feature a black women and her new Camry. The aim: to change the perception of the car from suburban, solid, but boring, to urban and exciting. No one till date had focused on African American Women like this and made advertisements to appeal to them. Toyota might yet again defeat its competitors through its better understanding of consumers.

The July issue of the fashion magazine Vogue has been a runaway hit. In New York City, newsstands that carried the issue sold out within hours. The Italian Vogue’s July issue was dedicated to black models. The idea was such a big hit, and the buzz around the product was so positive that it created a demand that newsstand operators had never seen before for a foreign publication. People had to put their names on waiting lists to be able to grab a copy from the second lot of reprints. It was a dream run situation for any publication house. Yet when the issue was being launched, there was speculation that it would not sell. Everyone was proved wrong. Interestingly, there were hardly any advertisements (in this hot-selling-black-issue) which featured black models… A lost opportunity for many brands to connect with their target audience.

The world is changing

Barack Obama might just become the first black President of America. Hispanics have accounted for about half of the growth in the US population since 2000. Their buying power in increasing too, and so is the buying power of Asian Americans. Things are changing. According to a report by McKinsey, till 1985 more than 90% Indians lived on less than a dollar a day. That’s changed today and the number of deprived households has decreased from 93% to 54% of the population. Not just this, these days a global Indian earns more than a million rupees on an average.

In America, by 2040 half of all population will consist of what are now called minorities. Global fertility rates are falling constantly. In Australia, Estonia, Singapore and Scandinavian countries, birth rates have minimised to such an extent that governments in these countries have been forced to device incentives to increase childbearing to ensure national survival.

America is not a young nation any more. Its Baby Boomers (those born 1946 to 1962) are now aging. This group has dominated the demographic landscape for decades and shaped marketing strategies. It’s time marketers sit up and take note of the changing demographic trends & device strategies accordingly.

The changing consumer

Indians are getting younger and richer, Americans are getting older and richer. World over there is a change and companies are responding. With a change in demographics, comes a change in psychographics too (change in values). Baby Boomers of America today value things like increased quality of life, moral standards, balancing family & work, or issues like health and personal meaning. In contrast, the new Indian consumer values branded clothes, appreciates the convenience of packaged foods and no more considers buying gold a good savings plan or investment. The new and rapidly growing middle class may still not have deep pockets, but they certainly have rising aspirations and a whole lot of companies are filling up this void. A car is what many households desire the most. Maruti has tied up with SBI and is now offering customers a chance to buy their dream vehicle at installments that are less than those of a motorbike. Not to forget Tata and their Rs.1,00,000 car – the cheapest in the world. These companies are not working on large margins, but large volumes, and are hoping for a release of a huge pent up demand. They may just be on the right track, discovering a vast fortune at the bottom of the pyramid.

Arvind Mills has made a ‘ready-to stitch’ jeans kit for rural India (which still doesn’t trust readymade clothes and for the first time has purchasing power too). The innovation was bang-on-target and within a month more than a million of these kits were sold. Videocon has come up with a $66 washing machine, which apart from being cheap has features that suits Indians. For example, if during a wash the power goes off, the machine will automatically finish the wash. Besides, it does not have features like a dryer (which increases costs), as the Indian climate is anyway warm enough to facilitate drying clothes in the sun, all year round! As the consumer gets ready to spend, companies must not waste time and develop products to suit changing needs.

If Indians are getting affluent in India, it’s the Hispanic market that’s showing a lot of activity in the US. The media company ‘Todobebe’ realised there was a dearth of information on parenting and pregnancy in Spanish and provided the same via its print, online and television outlets. Considering the fact that the number of babies born annually in US to Hispanic parents is poised to cross the million mark this was a good move. On the other hand, there are still many companies (selling baby-related-products) who have not tuned into this market and changed their marketing strategies. This means more than just bilingual ads or translating packing & advertising text in Spanish. It means understanding their culture & responding to it. It’s like doing what Sovereign Bank has done in Boston. The bank has a 100% Chinese-American staff that understands the needs of the very affluent and vibrant Chinese-American community of Boston. According to its CEO, Jay S. Sidhu, “People have such an affiliation with that bank that they travel from far off places of Boston to bank there.”

Multicultural marketing is the need for the day. Look at Colgate-Palmolive. With its belief and commitment to multiculturalism for over 20 year now, it’s no surprise the company enjoys a 53% market share, especially among Hispanics – Americas fastest growing and affluent community. It sponsors various Hispanic events and has extensive work force diversity programmes. According to a survey a whole lot of US businesses today are unprepared for changing workforce demographics, which is not good, as they could just be caught napping by their competitors.

Companies need to understand their workforce as well as well as their customers. After all your employees are your first consumers. With baby boomers declining, it’s the millennials who are now coming up. If the former were very ostentatious, the latter are grab-and-go and convenience oriented. Today salad-bars generate the majority of sales at corporate cafeterias. Hot food that makes up 35% of labour cost generates about 15% of all sales today. Clearly, it’s a new generation of employees, consumers societies and those who adapt and adapt fast that will survive. The rest would perish.

Just change and more change

Fast food today is considered bad. Walking into office with a burger is frowned upon, walking with a salad box or a whole wheat brown bread sandwich is trendy. It’s no accident that chains like Pizza Hut & Nandos are changing their menus too. Pepsi changed its focus from the fizzy cola to Gatorade (the health drink) and beat its old rival Coca-Cola. Tastes are changing and branding techniques are changing too. Kellogg’s has realised that today’s kids are smarter and need to be marketed to differently. Today’s children don’t just watch cartoons on TV, they watch big-budget animated movies in theaters and also are regular users of computers. Kellogg’s now has a flashy website and indulges in big budget movie tie-ups to increase its sales.

Today’s generation hates being marketed to. You do it, they tune off, so bragging about your product will not go down well with them. You need to work toward connecting with them innovatively. The web is gaining prominence as people are connecting more and more and just as positive feedback is spreading fast, so is any negative comment about your product or service. In a nutshell, all marketing theories are going to change or be modified in the near future. Your existing customers are getting older & wiser and your new consumers are those who never featured in your radar earlier. No wonder multicultural & ethnographic research is gaining prominence. Brands that understand changing needs of today’s consumers and brands that identify and quickly spot potential consumers will be the choice of this new generation of consumers.