Management Centre Europe | MCE | Organizational and Management Development - Strategy Execution

Changes in B2C Markets

Customer Priorities are Shifting in the New Consumer Markets Reality

As the dust of the recession settles, we realize that we have awoken to a new market and consumer reality. Rather than wonder “What will be next?” we need to focus on the ways we adapt our businesses to the new situation. Are you and your people ready for the shifting demands of consumers and market forces? 

Changes in B2C Markets

Seven trends are emerging in consumer markets that require everyone's attention. See Part I below for the complete picture. In a time when consumers are less and less sensitive to marketing claims and promises, focusing on the experience customers have with your brand becomes all-important. But how do you get your people to “live the brand”? See Part II for more information.
 

 

Part I: Seven Realities No Consumer Company Can Ignore

1. Frugality is here to stay

The recession of 2008 has changed consumption patterns in ways that will persist even as the economy starts to recover. This means that consumers will not accept a higher price unless there is a clear value advantage. Even in those cases, consumers will still look for “the best deal”.
As a result private labels, price-shopping on the Internet and low-cost retail shops will become stronger than ever. Consumers will even be prepared to sacrifice convenience for a better price. So, brands need to make sure they deliver clear value at every price point, even if this is much lower than before.

Ask yourself: Is the relative and absolute value of my offer large enough to justify my price to cross-channel, bargain-hunting, value-critical shoppers?

 

2. Sustainability is not optional

Consumers are getting more serious about the sustainability of the brands they buy. Their concern is broader than just ecological awareness. Recent examples include the pressure on Starbucks to come to fair trading relationships with Ethiopian coffee farmers or the pressure on Nestlé to stop buying palm oil from an unsustainable vendor.
Brands need to make sure that their operating principles at every step of the supply chain—and with every supplier they use—can stand up to public scrutiny. Even so, most consumers are not prepared to pay more for brands that behave in a sustainable manner. But they do vote with their wallets when a brand is perceived to be inconsiderate of the world in which operates.

 

3. Personalized experiences are critically important

Consumers increasingly expect personalized products, services and experiences. Popular examples include the personalization technologies of the sportswear industry, or the ability of iPhone users to totally personalize their “standard” phone.

If brands are not instantly responsive to this need, consumers will use Internet and mobile communications to seek what they want, even if it is offered by lesser-known brands, or companies in another geographic region. So, brands need to find new ways to tailor their offer. This could include allowing consumers to modify products so they exactly meet their needs. Experience IS the product they are offering. So, brands need to look at every customer touch point across every channel to demonstrate their value to their consumer.

 

4. The Retailers take charge

Retailers are increasing their stronghold on the customer relationship. Brands need to keep the balance of power. They have to become more and more skilled at the development of retail-wholesale partnerships. They need to establish market positions or skills retailers can’t copy. And in some cases, this may mean setting up distinct distribution channels.

5. The multichannel retail reality is unavoidable

Today, consumers use all kinds of distribution and information channels to get the best price and experience available. They compare products and features online. They ask sales associates to demonstrate products in the store. Then they return home to purchase them from the best price at an online retailer. When the product breaks down, they contact the most convenient retailer and expect to be serviced the best possible way. Brands need to understand the pathways that consumers follow and be prepared to meet them on their terms. For some brands it may even mean setting up proprietary retail channels or customer interaction centres.

6 Marketing communications is a two-way street

Traditional marketing communication methods are increasingly ineffective. Consumers have become so immune to advertising promises that they simply tune out when brands shout at them. Instead of talking to consumers, brands need to engage them in a two-way dialogue.

These dialogues need to be conducted with integrity and be consistent across all channels. After all, some consumers have become very active in voicing their opinions through social and digital media. On these Internet sites, complete accounts of unsatisfactory customer transactions or grievances reach thousands of consumers in a matter of hours.

7. Customer loyalty is the name of the game

In the frugal market place, brands can no longer afford to kiss and leave consumers because there may not be new brands to replace them. Brands across all categories need to make sure that they maximize the lifetime value of their customers. Financial measurements need to include Customer Net Present Value (NPV). Brands need to manage the relationship with and the loyalty of individual consumers.

Marketing activities need to have a very active presence in online communities from within to gain an almost infinite positive impact on brand value and sales revenues. They need to focus on gaining “viral” (rapidly self-replicating) recommendations from delighted customers. In the process, brands need to focus on the real drivers of loyalty—which are tied to the customer experience.

Part II: Getting Your People to “Live the Brand”

The Six Dimensions that Drive Implementation of Strategy

The attitudes and behaviours of people in any organization are driven by six dimensions. These dimensions form a system in which they are interdependent and interact with each other. They need to be managed as a whole.

Today's consumer is less and less sensitive to the claims and promises brands make. Instead, consumers increasingly use conversations and social media to turn to each other for information on brands and products. They formulate a point of view based on the reputation of these brands among people whose opinion they respect. In other words, it is not what the brands say about themselves that matters. It is what others say about the brand, based on the whole customer experience with the actual behaviour of the brand.
So, brands need to deliver experiences that make sure people will “speak well of them”.