At this year’s North American Marketing Summit, Samsung was privileged to hear from a leading consumer-marketing expert, Michael J. Silverstein. Silverstein is a senior partner and managing director at The Boston Consulting Group; and for over 25 years he has worked with consumer goods, retail and service companies.
Silverstein is an authority on consumer behavior, spending and innovation. His books, Trading Up: Why Consumers Want New Luxury Goods — and How Companies Create Them and Treasure Hunt, describe his findings about recent changes in consumer behavior.
Silverstein’s session challenged the summit’s participants to consider a new consumer paradigm. Over the last 15 years, women have created a revolution in consumer products and retailing. Women are entering the workforce in greater numbers, earning parity wages and, in most cases, are responsible for 100% of discretionary family income. These are the primary forces behind the new consumer economy. Furthermore, Silverstein predicts that by 2030 women will earn more than men on average, and will be using that spending power to trade down nearly twice as often as they trade up.
He shared with us, “Consumers today have more discretionary income, more cash, more product knowledge, more sophisticated tastes and far more product choice than ever before. We believe that consumers will only grow more discriminating in their purchases. It is clear that consumers around the world are willing to pay a premium for goods that they believe deliver better quality, higher performance and more emotional benefits than do conventional goods.”
Savvy Shoppers
In ongoing studies, consumers tell us that they are happy, financially secure and looking forward to the future. They also tell us that they believe in themselves, their families and their dreams. A big part of the consumer’s mission is acquiring goods at the best possible price. Success is a treasure hunt. Therefore, in this era of smart, strategic shopping our companies need to think differently about their offerings. Specifically, companies need to present their commodities as treasures, not just bargains. They have to create a regular cycle of innovation as well as relentlessly drive costs down.
Michael J. Silverstein at the North American Marketing SummitTo the savvy shopper, the new “cheap” has to be more than just cheap; it has to be good. Whenever a consumer makes a purchase of any kind, he or she makes a detailed analysis of many factors to determine how the value of the product compares with the price. These factors include the technical and functional features of the product, the price of the cheapest alternative, the intangibles of the brand, and the circumstances at the purchase moment. Sometimes, people make the value calculation instantly. At other times, it takes weeks of thought and comparison-shopping. Occasionally, consumers get the value calculus wrong; but most of the time, they get it very right. It fits their hopes, dreams and imagination. It is the salve for the ailments of modern life.
As a result, most consumers, especially those with standard incomes, are constantly making careful choices and complex tradeoffs when it comes to spending money. They often trade down; buying the quality they need at the lowest price they can find. Occasionally they trade up, splurging on certain things that hold meaning and value for them. Now and again, they’ll settle for something in the middle. These consumer behaviors have created whole new patterns of spending and saving. People save a little in one category so they can spend more in another. They make one important purchase and opt out of purchases in other categories to make up for it.
On his work, Silverstein says, “We focus on empathy, understanding and a directed, targeted response. We help our clients invent new products that deliver technical, functional and emotional brand advantages.” In the months that follow, Samsung will be launching marketing programs that will reflect the ideals of Silverstein’s work and wisdom.
By Joy Fournier
Customer Engagement Planner
No comments:
Post a Comment