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Consumer Trends - Sharing Economy

Many of today’s consumer trends came about in part due to the Great Recession. Millions of consumers were forced to change their behavior and even though most have recovered at least in part, many of their recessionary behaviors remain.

One trend to come in part from the recession is known as the sharing economy. Millennials in particular have embraced this, but all generations are taking part in this trend. Consumers have found ways to share or rent things once typically owned. Some people do this simply because it’s cheaper, or they can’t afford to buy something. Some people don’t want the responsibility of ownership and some like the flexibility it provides. We have seen this unfold in all kinds of different categories. Take transportation. Outside of New York and a select few other cities in the US, most consumers have their own car as a means of transportation. However some people (especially Millennials) are going without their own car. They rent one when needed from services like Car2Go, where they have in essence a membership and pay only for the time they drive the car, or they turn to taxi-like Uber for a more up-scale driver transportation service that operates via app, and pricing is dictated by supply and demand.

Upscale fashion is also part of this trend, with sites like Rent the Runway that allow shoppers to rent high end items for a period of time that they could not or would not otherwise buy outright. This gives them the flexibility to use a luxury item and on limited budget or rent a gown for that once in a lifetime event. People are even renting out the apartments or rooms to strangers on Airbnb. They make extra money and travelers get better deals than hotels, and a more personal, less touristy experience.

One of the most prevalent areas we have seen this shift is with entertainment content…music, movies, and TV. When was the last time you bought a CD or DVD? The dawn of the digital age has made it easier and cheaper to access content. The shift from analog to digital took us first to buying digital singles on iTunes and that has transitioned to streaming services like Pandora. Increasingly we are owning less and less content and finding it for free or renting it from services like Netflix. Consumers increasingly don’t see the need to own content anymore.

What does this mean for brands? Not every brand can leverage this trend directly, however every brand needs to understand this shift in consumer mind-set. How can you position your brand to fit with changing consumer needs? Does it make sense to offer a new version of your product aimed at those who rent or share something vs those who buy? Can you partner with other brands to tap into this? If your industry hasn’t been impacted yet, how could it be impacted in the future and how can you stay ahead of this trend? Take the time to sit down and have these discussions in light of the new sharing economy.

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Consumer Trend

The “New Normal”

The Great Recession has fundamentally changed consumer behavior over the long term not just for a moment in time. While it officially ended in 2009, many consumers didn’t notice. They were out of jobs and learning how to live what is now referred to as the “new normal.”

Starting in the early 1990’s, for nearly 15 years, the U.S. economy was growing, and consumers had simply become accustomed to that. According to the Harvard Business Review, during that time, real disposable income increased by one third, Americans were living the big life. Feeding into this was the financial system that handed out subprime loans to almost anyone. This easy access to money fed into the need to keep up with the Jones. As friends and neighbors got new cars, new devices (60” flat screen TV anyone), and took amazing vacations, others followed, whether or not they could actually afford any of this. Hey, their home values would continue to go up right? Well by 2007 the bubble had burst. Data from Zillow shows the average U.S. medium home value topped out at $196,000 in May 2007 and fell 22% by October 2011. Consumers were losing their jobs, were upside down on homes, cars, and other major items, not to mention mounting credit card debt. The party was most definitely over.

In this “new normal,” consumers found themselves forced to change their buying behaviors and quickly. Being thrifty and value driven we on their minds, even some affluent consumers who didn’t have to cut back did. Couponing become cool again, Dollar Stores are hot, buying used from places like thrift stores is en vogue once again, DIY continues to grow, and it seems like everyone is foodie/home chef these days.

Simply put, consumers were forced to do more with less. Many learned just how much excess they had been living with and they no longer feel they need it to be happy. They are finding the store brand is sometimes good enough, compared to the name brand. They have learned to re-purpose old items like furniture, and are enjoying the creative process of bringing things back to life a fresh new way.

What does this mean for brands? Consumers are sticking with at least some of their thrifty new ways, taking pride in saving money, re-purposing items, doing DIY projects, and spending more time with family and friends instead of just spending money. Smart brands won’t fight this “new normal” but will leverage it. How can you position your brand to be a value player (it’s not about being low priced but what you can offer consumers at the right price)? Can you be part of the DIY movement and help consumers do more for themselves?

Want to dig deeper into this trend and learn how to position your brand in this “new normal?” Chat with us at [phone] or at [email protected].

Sources:

http://www.zillow.com/home-values/

https://hbr.org/2009/07/understanding-the-postrecession-consumer

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Consumer Values

Authenticity, Simplicity, Immediacy, and Transparency

Consumer values are at the core of what consumers do, it’s the why behind the what. For 2015, there are four key consumer values that will drive trends across industry’s, generations, and nations. These values are authenticity, simplicity, immediacy, and transparency. These are truly at the core of why consumers do what they do, and brands who understand and leverage these values will win with consumers.

Gone are the days when brands and marketers controlled the conversation with consumers. A Company created an ad campaign, selected what to say, and how to communicate the message, typically through TV, print ads, radio, or billboards. Traditional media was a one way conversation and consumers had little ability to voice their opinion or challenge what a brand was saying. This was how consumers heard from brands. Oh how times have changed. This paradigm shift in power is here to stay, and brands that don’t understand how to communicate with consumers in this new marketing world will not be successful long term.

Just how have things changed? The internet is the pivotal point is this shift. First it connected people all over the world at rapid speed. From websites filled with information that anyone could post. To emails that connected friends, family, and business colleagues around the globe. To chat rooms where strangers could connect around shared interests. To social media of today, where people can connect with anyone around the globe, connect with brands, and for the first time really share their opinions on any topic and have their voice be heard around the globe. The balance of power has shifted and consumers are much more influential than ever before.

What does this mean for brands? You no longer control the conversation 100%. Consumers are part of the conversation and if you don’t engage with them, they will overtake the conversation.

How can brands be successful in this new marketing world? The two way conversation with brands needs to focus around a few tenants: authenticity, simplicity, immediacy, and transparency. Consumers know when you aren’t being real with them. They would much prefer to hear the truth in an authentic way, with a few flaws, then an overly developed marketing message. Just be real. Consumers are also seeking simplicity, their lives have become increasing complex and they are bombarded with thousands of media messages every day, keep things simple and easy for them to engage with your brand. Next, so many things in our lives happen in an instant, and consumers expect immediacy. Not responding to a social media post for days, will certainly warrant backlash and guess what, lots of people will know about it. Finally, transparency, don’t try to hide things, consumers will find out and they share with their networks. Be open, honest, and real.

All of this boils down to engaging with consumers in a meaningful way and directing the conversation where you can. Consumers will share what they want wherever they can. Be sure they are sharing it where you can be a part of the conversation. Bottom line: tell and authentic brand story consumers want to hear and want to be a part of.