Market Share: From Product Value To Consumers' Values
Get ready marketers. According to a report by management consulting company A.T. Kearny, influence is the new affluence. The report, America’s Next Commercial Revolution: Influence vs. Affluence, defines how influence, personalization and trust have replaced the traditional methods of growth: mass production, distribution and media models. Simply put, the study shows the voice(s) of an individual or group (influence) is overpowering affluence (value) when it comes to selling products. And according to A.T. Kearny, this change is so major, companies that don’t adapt will eventually fail.
The shift was driven by changes in demographics, values and technology. Under the affluence model, finances controlled the market, and a company’s performance was defined by profits, market share and revenue periods throughout the year. When change was enforced internally, it was through a top-down structure, and companies invested heavily in marketing tools designed to connect consumers’ purchases with their pride and self-worth. Now, under the influence model, the market is driven by consumers, with people singlehandedly stirring change and building online networks that influence their friends and families, along with the government, brands and the media. Also, unlike the affluence model, influencers don’t have to be financially powerful to evoke change, as it’s driven by values.
The report also looks at the three drivers of change: demographics, values and connectivity. We’ll focus on the first two drivers, as connectivity—referring to the population of Americans who are plugged into the internet—was briefly covered in the report.
Demographics. By 2026, the U.S. will have six consumer generations for the first time ever. Two of these generations are identified as Bookend Generations because of their limited purchasing power: the Silent Gen (born between 1928-1945) and the Alpha Gen (2017-2023). The others are Baby Boomers (1946-1964), Gen X (1965-1980), Millennials (1981-1997) and Gen Z (1998-2016). The population is expected to grow from 324 million in 2016 to 350 million by 2026, and will see 13.7 million more Hispanics, 4.7 million Asians, 3.6 million African Americans and 1.3 million Caucasians. The median age will be 37 and more people will live in urban areas, raising the population in cities by 10 percent. Living patterns will also change, and by 2026 the traditional household of the 1950s—two married, heterosexual parents with at least one child—will account for less than 20 percent of households nationwide.
Values. In the report, “values” are defined as “the relationship between an object or service and its price.” Under the affluence model, consumers believed some brands had more value than others, which accounted for price difference. When an expensive purchase was made, like a designer handbag or sunglasses, consumers felt a sense of pride for owning the possession. Under the influence model, consumers determine the value of the product according to how well that product matches their personal values. This is why consumers today are concerned with where and how a company sources its raw materials, rightful and safe labor practices and even the political affiliation of company leaders. This is also why consumers prefer experiences over products—like using ride-sharing apps rather than purchasing a vehicle—referred to as the NOwnership model.
To prepare for this shift and welcome disruption as a motivator for innovation, A.T. Kearny recommends these five steps for companies.
- Collect data, in the least-intrusive way, to learn more about your customers
- Develop a new way to define your target market. Because demographics are changing, and there’s little way to capture all of the needs, values and personalities within each, consider using “personagraphics,” defined in the report as “the use of psychographics, anthropology and sociology to understand the individual needs and desires common across emerging subgroups.
- Rethink scale. It might be more achievable to launch 20 micro campaigns that appeal to five million shoppers each, as opposed to a single campaign that appeals to 100 million consumers.
- Think from the customer’s perspective, especially when it comes to trust.
- Make the most of your employees’ skills. This includes creating an environment that encourages growth and development.
Danielle Renda is associate editor of PPB.