Consumer product trends
Five ways marketers should respond
Consumer product companies and marketers face a confluence of rapidly evolving technologies, consumer demographic shifts, changing consumer preferences, and economic uncertainty. These quickly shifting dynamics could undermine not only historical sources of profit but also historical sources of competitive advantage, and could potentially render traditional operating models obsolete by 2020. We propose five undercurrents that brands and marketing executives should keep in mind as they try to chart a clear path to 2020 and beyond.
- Core consumer segments are still struggling economically. Based on our own research and supported by research from the International Monetary Fund, the economy will likely continue to stagnate, and may give rise to increased widening of income levels, poor consumer confidence, and a struggling middle class.
- Consumers value health, wellness, and responsibility. Companies will likely experience greater pressure to better align offerings and activities with consumer interests and values, namely personal health, the environment, and social impact.
- Digital technology influence will increasingly influence consumer paths to purchase. Traditional brick-and-mortar business models may be dismantled as consumers fully embrace digital. The lion’s share of consumer spend and activity—promotion, search, and procurement—will take place over digital channels.
- Consumers have a growing desire (and budget) for customization and personalization. Consumer spending will likely shift toward customization of both the product and the end-to-end shopping experience across a broad range of consumer products.
- Resource shortages will likely cause price and supply volatility. More frequent shortages of natural resources, including water, could cause more supply chain disruptions and increase costs. Traditional strategies will be increasingly insufficient to guarantee supply, harness innovation, and align with social responsibility, making it potentially difficult for marketers to guarantee the brand values that they are advertising.
Consumer product trends: Navigating 2020
Consumer product companies are complex, and nearly every organizational and process area is impacted by these rapidly changing industry dynamics. The rapid pace of change will require marketing executives to move quickly and effectively, in a coordinated way, with their fellow organizational leaders.
To help marketing executives plan and act amid these undercurrents, we have also developed five specific navigation aids that may help address each of the five potential uncertainties.
- Revisit product portfolio, pricing, promotions, and merchandising. Brands should understand and target lower-income and middle-class consumers’ preferences in what they consider both affordable and desirable.
- Align offerings and engagement strategies around consumer interests and values. Health and wellness are increasingly important for consumers. Many companies are already acquiring, reformulating, or rebranding products to at least seem healthier.
- Create seamless experiences via technology and collaborations. Digital technology has already permeated the path to purchase, as today’s consumers use websites, social media, and mobile apps. Marketers can use digital media to become a part of the consumer’s pre-store planning process by offering features such as online product comparison tools. During in-store shopping, enhance the in-store product experience and deepen the brand conversation to help consumers save time and make better decisions.
- Develop processes and business models to allow for customization and consumer interaction. Savvy marketers are already increasingly tapping into consumers for ideas on new products and product variants.
- View commodity decisions with resource preservation and social impact in mind. Forward-looking executives are thinking about not only the economic bottom line as they make sourcing and procurement decisions (for example, vertical integration), but also about their double (social) and triple (environmental) bottom lines as well.
In this rapidly evolving, low-growth, and margin-compressed environment, clear strategic direction and coordinated efforts are not all that should be pursued. Speed of execution and completeness of action are just as important, if not more important, to consider. Taking decisive action will be key to helping your organization meet the challenges it may face in the journey to 2020 and beyond.
For more in-depth information on these trends, read Deloitte’s full report: Consumer product trends 2020.