Everyone would agree the U.S. has become a consumer nation. While not everyone agrees with it, everyone understood the memorable Wall Street movie line delivered by Gordon Gekko, “Greed is good.”
From the intoxicating dot.com overnight millionaires era of the 1990’s to the seemingly never ending Wall Street investment banking solid gold bathroom fixtures era of the 2000s, being rich, or at least looking rich, was an American pastime. It was a goal and viewed as a right for many.
Consumerism was in. Even America’s middle class bought McMansions, luxury cars, big boats, luxury vacations, designer clothes, iconic label shoes and handbags, colored diamond jewelry, and “the lifestyle”. The U.S. became a consumer economy, and buying was easy with easy loans and even easier credit.
It all came to an abrupt end for most with the 2007 financial meltdown and the resulting potential collapse of Wall Street and banks if not for an almost trillion dollar federal government tax payer bailout.
Banks and the stock market have recovered for the most part. Consumers, and the consumer driven U.S. economy, have had a harder time with record setting unemployment, high personal debt, high foreclosure and bankruptcy rates, lower credit scores, strict credit standards, and high inflation creeping into the economy.
Many Americans learned a lesson, and mindless consumerism may be gone for a long while. Many have changed their spending attitudes, priorities, expectations, and needs. Many of these lessons have changed their consumer opinions and actions in buying products.
Many consumers just don’t have the money or credit any more. Most no longer see their home as an ATM. Many baby boomers are finally being more thrifty as they ramp up retirement savings.
A consumer product’s functionality, practicality, and pricing are important again for most buyers. Product innovation and global competition, increasing monthly it seems, has consumer product companies in a fierce battle for the consumers’ attention, buy, and loyalty.
Consumer conscience and buying forces have a new identity in the 2010s. Consumer product companies need market research analysis frequently to stay on top of rapidly evolving trends and environments. They must develop strategies that keep them in business in today’s economy.
Cheryl Max, Senior Vice President of North American Marketing for TNS Global notes, “Companies need to fully understand consumer attitudes, behaviors, and demographics. Often social, political, and economic trends have an impact on market influencers and developing winning consumer product strategies.”
Mike Fridholm, Senior Vice President, Consumer Sector North America shares his expert insight.
BKH: What specific areas of the consumer products industry are you following in 2011 for clients?
MF: Key areas are:
* Shopper and Retail Research
* Brand and Communications
* Innovation and New Product Development
* Digital and Mobile Trends
* Emerging Market Growth (Brazil-Russia-India-China or BRIC, Africa, Multicultural, U.S. Hispanics)
* Global Consumer Trends (Impact and Opportunities)
Key consumer product trends are:
* Health and Wellness
* Emerging Market Growth (Described Above)
* Global and Social Responsibility (Sustainability)
* Media Fragmentation and the rise of Digital Media
* Value Offerings Growth (Private Label, Generic Drugs, Value Airlines like Southwest, etc.)
BKH: What are the most important factors in branding consumer products companies with Americans?
MF: Companies must understand the consumer. To give the consumer what they want, companies need to understand consumer needs, motivations, wants, and behaviors. Brands can connect with consumers in both rational and emotional ways. We work with clients:
* In the area of early foundational innovation to identify unique, differentiated, “white space opportunities” for new products and benefits that are incremental to their portfolios.
* To help ensure they communicate these unique benefit areas in a compelling and clear manner later in the process, as concepts are flushed out and developed.
* In understanding a concept’s “buzz” potential and excitement level. This is important with the growing use of social media.
* To drive strong emotional connections with client brands. We do this through projective techniques that help our clients to understand the perceived personalities and characteristics of their brands, as well as the broad landscape of brands within a given category. This helps clients understand how they may be able to drive the emotional connection of their brands with consumers.
* To help them track consumer awareness and perceptions and ensure consistency of their intended message across traditional (TV, print, radio, outdoor) and digital media touch-points once clients know what they wish to communicate.
BKH: How does your market research work help a company do this most successfully?
MF: Market research forms the basis for many business decisions. It helps companies understand the future and competitive opportunities in the market place, it helps companies pre-empt what the consumers will do, the success for these companies is in the quality of their research capabilities. We provide very actionable research output in the forms of:
* Growth platforms and their corresponding sized opportunities, along with consumer target and unique benefit direction from the rational innovation work,
* Direction on emotional aspects to leverage through communication to enhance brand perceptions,
* Increased understanding of the strategic continuity of their efforts through ongoing involvement with their brands across the innovation process and in-market learning across consumer touch-points in media and at retail.
* Activation work sessions with client cross-functional teams to develop strategies and tactics to explicitly act on consumer understanding and learning.
BKH: What are the top new consumer products you see in sales for 2011?
MF: While not brand-specific, the pads/tablets will remain strong. Mobile data subscriptions that allow consumers to access a variety of information via these tablets will, correspondingly, be strong.
Beverages that tap into more positive nutrition and health & wellness areas will remain in demand, especially if they can do so with natural ingredients and relatively short ingredient lists at a reasonable price. You may notice new beverage offerings at traditional grocery retail, as well as expanding the menus of fast-food retail outlets.
BKH: What consumer products sectors do you see having the most development and innovation dollars being put into them for 2011-2012, 2013-2015?
MF: Breakthrough innovation is a key area of growth for our clients. Trying to understand how to get to that great idea will certainly drive growth for any client willing to invest properly in the whole process. This will mean a move away from the traditional pipeline and the creation of something new to avoid killing new ideas.
The technology sector, with the growth of pads/tablets, will continue to evolve rapidly as they may replace the laptop for many consumers, according to the TNS Mobile Life survey, now in its sixth year.
Health and wellness is an important consumer issue as health care costs rise and the government continues to debate solutions. Consumer companies seek to capitalize on helping the consumer day-to-day in managing their health and wellness needs.
Large investments by food companies in the areas of health and wellness are starting to appear. PepsiCo has efforts to transform their portfolio to more nutritious offerings. Nestlé is investing in driving the growth of healthy foods, and McDonald’s is changing their menu offerings. Some of these investments may be trying to get in front of regulatory debates around food nutrition.
In addition, personal care product growth will continue to be strong with more value-oriented products that offer solutions for what were once higher cost solutions. For example, teeth whitening strips versus visits to the dentist for ten times the money. There is growth in over-the-counter versus prescription drugs, and generic and private label offerings.
Products that offer people the ability to “age gracefully” will remain in demand with the boomer population and others. Products that lower cholesterol, fight diabetes, or maintain colon health are all broad needs for a population that is living longer and trying to stem the obesity epidemic in the U.S. Some brands may command a premium, but today’s economic times have people preferring value pricing.
Environmentally friendly products and packaging, that address sustainability concerns, will continue to grow. The most obvious current example is the focus of car companies to produce vehicles with greater gas mileage. However, the renovation of the light bulb category, growth of water filter use, and others will arise.
BKH: What social media trends are you following the closest for clients?
MF: Through our annual Digital Life Study we are looking at the whole area of how people live online. The scale of this yearly investigation allows us to track trends as they arise. TNS is working with our clients to understand the best ways to interact with consumers in the areas of custom online group dialogues, crowd sourcing social media in the innovation process, and engaging online and mobile marketing campaign elements in both developed and emerging markets.
In addition to the Digital Life segmentation launched 10/10/10, we provide syndicated information through our Mobile Life Study which is now in its sixth year. TNS is increasingly connecting in this space with other Kantar and WPP groups to provide holistic solutions to our client’s business issues and to understand the return on investment (ROI) in online and digital efforts.
BKH: Do you see the mobile app "coding" being a sustainable and growing trend in 2011-2013?
MF: Yes, mobile apps are here to stay and are growing in importance. Ignore them at your peril.
BKH: Do you see mobile app branding being bigger than Facebook and Twitter in 2011-2013?
MF: Facebook and Twitter have some first mover advantages in their relative social media spaces. However, Groupon is an example of how others still have the potential to grow a brand quickly with a different benefit and to take their message to consumers online and through mobile connections to consumers. There may still be a large mobile opportunity for brands with scale that offer consumers the ability to easily find solutions to shopping needs.
BKH: Do you see radio, television, and traditional print (newspaper and magazine) advertising staying strong?
MF: There is still a very important role for traditional marketing methods. It’s important for companies to have a clear understanding of the entire marketing mix including digital and mobile marketing channels. Holistic marketing is key in their agendas, and TNS are in a great position to help support that understanding.
For example, TV still has some scale and efficiency over many other media forms when trying to drive the initial awareness and reach for a new product. In addition, this traditional communication may have higher importance in lower involvement consumer goods categories like food categories versus much higher ticket items such as automobiles, financial investment companies, and insurance.
Nevertheless, even these traditional advertising forms are becoming increasingly targeted due to competitive media fragmentation and must understand how to leverage digital media in a holistic marketing campaign.
BKH: What is the impact inflation will have on the consumer products industry?
MF: Simply put:
* The rising cost of raw food prices will be reflected in the price of products offered to the consumer.
* Consumers may cut back on “non-essential” items. We saw in 2009 that most consumers seemed to cut back on the frequency of food shopping trips across all retail channels and extend their purchase cycle in more durable categories like mattresses.
Yet, many consumers were still willing to spend money on items, such as the iPhone, that greatly facilitated their day-to-day lives and offered entertainment and a greater ability to leverage connections with others and ease of access to information.
* Brands will continue to experience pressure for greater innovation and differentiation.
* Retailers continue to try to balance a somewhat consolidated breadth of offerings while growing their own quality, value-oriented store brands, and keep operations costs as low as possible.
BKH: What do you see as the most innovative new consumer products features and services trends?
MF: Trends include products tailored specifically to fit a currently under served sub segment of the population, and products that support an unmet need. Successful disruptive innovation processes are key for companies to truly innovate.
As noted, development dollars are going into consumer products and services that offer ease of connection to other people and information via mobile devices.
New trends include products that offer new health and wellness benefits like “energy”, i.e. the 5-hour energy brand, moving beyond avoidance of negative nutritional attributes like sugar or fat, or one positive ingredient like pomegranate juice. Fresh and natural items that are less processed are growing in importance too.
Major trending includes products that are affordable solutions and items that fit with environmental sustainability. Ultimately, a product that incorporates multiple elements of major trending insights will do very well.
BKH: Thank you Mike. (Mike’s social insights will be in Part 6, Social & Polling. His international insights will be in Part 7, Global Focus.)
Part 1, Insights From Global Leader TNS
Part 2 – Automotive
Part 3 – Consumer Products
Part 4 - Financial Services
Part 5 – Technology
Part 6 - Social & Polling
Part 7 – Global Focus