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Ten Key Societal Trends For Market Researchers:
Domestic and Global
By
Michael Richarme
The one thing that marketers would cherish the most is a fleeting glimpse of
the future. That glimpse would make the challenge of planning strategies, and
of devising the appropriate marketing mix elements, much simpler and less fraught
with risk. This need accounts for the many articles and books generated each
year, all proclaiming to understand and forecast future developments. Forecasts
of future social trends can only be developed with an understanding and utilization
of underlying demographic and economic trends. This paper, utilizing a wide
variety of primary and secondary research sources, captures some of the most
important social trends that will unfold over the next 20 years and, hopefully,
provides astute marketers with some of the glimpses that they seek.
| 1. |
The Emergence of China as the World’s Largest
Economic Power |
With a purchasing-power parity GDP of over $10 trillion in 2006, China ranks
second in global economies, behind only the United States, with a GDP of about
$13 trillion in 2006. China’s growth rate of about 11% annually will allow
it to overtake the United States in the next couple of years, assuming that
China’s government allows their hypergrowth rate to continue and that
the U.S. growth rate continues in the 4%-per-year range. China has absorbed
much of the manufacturing business formerly done in the U.S., shifting its economic
composition to about 49% manufacturing and 31% services, compared to the U.S.
composition of about 21% manufacturing and 78% services.
Doing business with China (either as a company that wants to utilize the large,
skilled labor force or as a consumer of goods made in China) requires a higher
level of understanding of the Chinese culture than most Americans currently
possess. In their new book, China Now, authors N. Mark Lam and John L. Graham
discuss some of these challenges. Nonverbal cues are different; standards of
business practices are different; and protections of intellectual property and
patents by the respective governments are different. Software and video piracy
are particular concerns in this area.
| 2. |
Global Demographic and Migration Shifts |
Populations of countries change in several predictable ways. Babies are born;
people live a certain number of years and die; and new people migrate into countries.
The United States, according to the U.S. Census Bureau, had about 412,000 births
in 2005, compared to 242,000 deaths. By tracking this ratio over time, and looking
at unusual variances in the data, one can get a good understanding of a population’s
characteristics and even project those characteristics over time. In the United
States, for example, the baby boom cohort, consisting of those born between
1946 and 1960, is a large bulge in the population numbers. Even larger is the
group labeled the echo boomers, those children of the baby boomers born in the
1970-1985 time frame. These two bulges represent large pools of economic activity
that will shape the types of products and services consumed in the U.S. for
several decades. During 2005 the U.S. also experienced a net legal migration
of over a million persons. The life span of U.S. residents continues to lengthen,
enhanced by better healthcare and medical options compared to those of their
ancestors. A child born in the U.S. today has a life expectancy of over 77 years.
The U.S. population, recently cresting at 300 million, is projected by the U.S.
Census Bureau to exceed 345 million in 2025 and over 400 million by 2045.
But this trend of population growth seen in the U.S. is not one seen uniformly
around the world. Japan has a relatively strict policy regarding incoming migration,
and is not replacing deaths at the same rate with new births. As a result, the
Japanese population is rapidly growing older and starting to shrink. Already
elementary schools around Japan are closing for lack of students. Japanese industry
is placing increasing reliance on robotic help, including areas such as healthcare
and personal services. If this negative population growth trend continues, the
Japanese population will be unable to sustain its current economic output, at
about $4.2 trillion, the third largest economy in the world.
The European Union (EU), consisting of 25 European countries banding together
as a trading block, is also showing a rapid population decrease, partially offset
by large inward migrations from Middle Eastern countries. Germany and France,
two large components of the EU, have negative population growth rates. As a
result, this trading block, which currently accounts for almost a quarter of
the world’s purchasing power parity GDP, is expected to see that amount
fall to less than 20% of the global total in the next 10 years.
| 3. |
Energy and Water Shortages |
As energy prices surge, driven partly by constrained production and refinery
capacity, consumers are being forced to allocate increasing amounts of their
monthly budgets to this area. This area includes electricity and natural gas
for home consumption, gasoline for automotive transport, and higher product
costs from manufacturers and retailers also being hit with higher energy costs.
There is a second, more subtle but possibly more powerful, shortage emerging
around the world. It is a shortage of fresh water. For decades large cities
have built complex and expensive aqueduct and reservoir systems to serve their
growing populations, but getting water into these systems is becoming more and
more challenging. As energy prices climb, alternative sources of energy will
be developed and deployed. While not as cost-effective as the relatively inexpensive
burning of fossil fuels, these sources will be critical to the continued economic
success of developed and emerging economies around the world.
Water presents a different challenge. While three-quarters of the world’s
surface is covered by water, it is primarily salt-laden and not directly drinkable.
Desalination technologies are being developed in arid parts of the world, but
still have a long way to go before they are capable of providing fresh water
on a large scale. Unlike energy, there is no alternative source of fresh water.
Migration patterns from rural areas into urban centers will continue the concentration
of population into smaller footprints. Energy and water generation is typically
done in more remote areas, putting additional pressures on transportation and
distribution of these resources.
| 4. |
Managing our Waste/Reuse of Products |
Twice a week, the garbage truck comes to our homes and picks up the refuse
that we leave at the curb. This consists of both trash that cannot be reused,
as well as processed materials that can be reused, such as glass, paper, and
plastics. Packaging is one of the major sources of processed materials and is
often discarded without a second thought.
But this discard process contains two major areas of concern. First, the landfills
are rapidly becoming filled with materials that take decades or even centuries
to decompose. Second, the cost of producing new materials for packaging will
continue to climb as necessary raw materials are made more scarce.
In the European Union, countries have taken aggressive recycling stances. If
a retailer sells an appliance, that retailer is responsible for taking back
the appliance after it has passed its useful life. Packaging is also under significant
scrutiny for unnecessary or reusable/recyclable components.
Green is the new mantra, and it may have reached a critical mass in terms
of consumer understanding and willingness to participate.
| 5. |
Lowering Education Standards/Less Skilled Thought Leaders |
In the middle of the last century, a college education was an aspirational
goal and viewed with respect. Advanced degrees, such as an MBA, were relatively
rare and earned only by the brightest and most dedicated students. College degrees
weren’t prerequisites for management positions in many corporations. Many
labor positions were manned by apprentices, who spent years learning their trades
from skilled masters.
Today it seems that the United States education system is producing far greater
numbers of people with college degrees, and advanced degrees are becoming more
and more common. In many corporations, the college degree and place of matriculation
are important considerations in career advancement. However, the general level
of education has fallen, with many college students and even graduates unable
to compose a simple business letter, or critically think through a complex business problem.
As developed economies like the United States continue their transition from
manufacturing to service economies built around knowledge workers, this presents
a serious conundrum. Entry-level service jobs are being fortified by icons on
cash registers, leading to significant numbers of those positions moving to
less educated immigrants. Shortages of engineers and scientists are being filled
by massive immigration of skilled workers from India. By one estimate, over
a third of Microsoft’s 70,000 knowledge workers in Redmond, Washington,
are originally from India. Peter de Krassel has discussed the crisis facing
the American primary and secondary school system in his book, Custom Maid Knowledge
for New World Disorder. Though some standardized tests report sporadic increases
in scores, the general trend over the past two decades has been downward. One
of the resources being utilized by rapidly growing economies is knowledge. Brazil,
Russia, India, and China all have rapidly growing economies, partly driven by
impressive gains in mathematics, engineering, and science education.
| 6. |
Brand Relationships Intensify |
Disney’s mouse ears. Apple Computer. The golden arches of McDonald’s.
Coca-Cola. Nike and its swoosh. The green man-in-the-moon star of Starbucks.
These are examples of dominating iconic global brands, easily identifiable and
with simple, consistent brand promises. Increasingly, consumers are looking
for ways to connect with these iconic brands, and this further strengthens the
dominance of these brands. In a world where consumers have increasing access
to comparative information and global purchasing, the importance of brand will
become critical to a firm’s survival. As more and more countries cross
the theoretical $5000 GDP per capita level where brand becomes important, and
then cross the theoretical $10,000 GDP per capita level where global purchasing
becomes the norm, less known national and regional brands will struggle for
survival.
| 7. |
Short Time-Frame Transactions |
As time pressures increase, consumers more frequently turn to convenience for
their purchasing tasks. The explosive growth of Internet shopping is one indication
of this trend. In addition, with attention spans shortening, consumers either
multitask or flip from one alternative selection to another, forming purchasing
decisions with increasing rapidity. Products which do not present a compelling,
immediate purchase justification will be passed over. Amazon has taken the concept
a step further, with a technology that allows consumers to use their cell phones
in stores to photograph product bar codes, and then use those bar codes to find
the same product on Amazon at a reduced price. Merchants are rapidly deploying
technologies to speed the purchase process, such as an RFID-enabled credit card
that just requires a tap on the terminal to complete the transaction. One large
cell phone manufacturer is developing an electronic wallet, in which the cell
phone contains credit card and identification information. Micropurchases using
cell phones to buy from vending machines are being deployed in Japan and Korea.
Smart refrigerators keep track of the contents of the refrigerators and use
the Internet to signal the need for repurchases.
| 8. |
On-demand Media Consumption |
The explosion of video media—cable channels, iPod webcasts, and video
streaming on computers—places the multitasking teenager of today in a
position where he or she can dip into news, entertainment, or sports streams
whenever the desire manifests. Downloadable books, songs, and movies combine
with time-shifting technologies like DVRs to make scheduled media consumption
a nostalgic reminder of baby boomers. Technology to support this trend, such
as the recent introduction of the electronic reader tablet, will facilitate
this movement.
Computer and communications convergence will be a strong and continued driver
of this trend. It is getting almost impossible to find a product these days
that doesn’t have some type of electronic or microprocessor component.
Cameras that once used film now store images on tiny chips. iPods with 80 gigabytes
of storage (equivalent to many desktop computers sold only a year or two ago)
are commonplace. And the integration of these technologies is leading to massive
substitutions of product categories. Many young people use their cell phones
for keeping time rather than watches.
| 9. |
Extensive Expansion of Customization, Personalization, and Community
Experiences |
Consumer brands are increasingly reaching out to unique, homogeneous groups
of consumers to deliver customized and personalized goods and services to them.
The emergence of communities, where shared interests act as cohesive and binding
connections, provide both insights into the needs of these unique groups of
consumers and challenges of tailoring messages and products for those groups.
One result of this growth in community experiences, according to Dr. Tal Ben-Shafir
in Happier, is that people will utilize positive psychology to become happier
in their daily lives. Social networks will continue to emerge as a major driving
factor in the success or failure of certain consumer brands. These networks
will grow on a global basis, with many network members only communicating with
other network members on a virtual basis, never interacting in person.
Another result of this trend is the shifting perception of quality and luxury
items. In the past century, price levels often signified differing levels of
quality. A car costing more was expected to have significantly better performance.
A more expensive television had a longer lifetime or more features. Current
manufacturing techniques have almost erased this distinction, in that even the
entry-level automobiles and televisions are built to very high-quality standards.
As a result, the concept of high prices translating into high quality will largely
evaporate. Automobiles and televisions, formerly luxury and status-conveying
items, have moved from aspirational goals to expectations of basic lifestyles.
The baby boomer generation is about to enter retirement. The echo boomers,
progeny of this baby boom generation, is about to dominate the workforce. Raised
in an era of relative luxury, with immediate gratification for most basic needs,
the youth of the world will play an increasingly vital role in identifying new
product and service requirements, in causing the rapid spread of new trends
and lifestyles, and in changing the ways in which businesses interact with them.
Key issues for youth will revolve around the dynamic of health and wellness
versus increasing obesity, the incorporation of traditional and holistic medical
practices, and the exploration of health and relaxation techniques from around
the world. Yoga and eclectic foods will begin to replace golf and beef steaks.
In the United States, for example, golf courses are already seeing rapid declines
in utilization as the golfing population shrinks.
As the expected life span of people continues to lengthen, this will place
a related demand on medical services and assisted living facilities. Dr. Michael
Zey, in his book Ageless Nation, predicts that this extension of the human life
span will create significant opportunities for cultural enrichment.
This trend is contrasted with a large, obese segment of the United States population.
To a degree, convenience foods and a lack of outdoor recreation are resulting
in expanding waistlines and related health problems. This is true both in the
United States and many other developed nations.
Summary
The implications of these trends could drive business around the world to
either rethink their business models or make significant changes to the ways
in which they interact with their customers. As time frames shrink, reactionary
businesses will struggle to survive, while those firms which engage in proactive,
long-range research into the needs of their customers will have a higher likelihood
of success. There are most likely additional trends that will emerge, and some
of these trends could prove to have less importance in coming decades. Astute
marketers will combine aggressive research programs with scenario planning to
help chart their way through coming decades. Those who don’t may be facing
a series of icons on a cash register.
Information Sources:
- Decision Analyst Economic Index
- US Census Bureau
- CIA World Factbook, December 2007
- Decision Analyst Health and Nutrition
Strategist™
- “Decision Analyst In The Kid Zone”
- Ben-Shafir, Tal, Happier, McGraw-Hill (2007). de Krassel, Peter, Custom
Maid Knowledge for New World Disorder, Cal Books (2007).
- Lam, N. Mark and John L. Graham, China Now, McGraw-Hill (2007).
- Zey, Michael G., Ageless Nation, New Horizon Press (2007).
Copyright © 2008 by Decision Analyst,
Inc.
This article may not be copied, published, or used in any way without written
permission of Decision Analyst.
About the Author
Michael Richarme (mrichar@decisionanalyst.com)
is a Senior Vice President at Dallas-Fort Worth based Decision Analyst. He may
be reached at 1-800-262-5974 or 1-817-640-6166.
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