Emerging Consumer Trends Create New Opportunities for Businesses

Innovative market positioning generally emerges in response to new customer groups, changing consumption needs, societal shifts, new technologies, emerging distribution channels or innovative production capabilities. Businesses can take advantage of new trends and develop unique value propositions by identifying and targeting groups of consumers whom their competitors may overlook. The objective of this report was to highlight some emerging consumer trends to help SME s seize these opportunities. Keep in mind that not all trends can or should be pursued at the same time. In some cases, the decision to adopt them may require a so-called “straddling strategy,” where a company simultaneously competes on dual fronts. This could erode a company’s unique value proposition and affect profitability. It’s a situation that often occurs when established companies try to adapt emerging business models to incompatible core activities. Deciding which trends to follow largely depends on whether they dovetail with a company’s current activities. Obviously, the goal is to enhance value, not destroy it. With this in mind, some trends are substantial enough to merit the attention of all companies. Below are the key takeaways from this research. 1. Engage customers in a closer dialogue. Understanding one’s customer remains the key to success. By building a dialogue, SME s can effectively communicate their value proposition, create a better understanding of consumer needs and encourage customers to share their opinions. The goal is to increase consumers’ engagement in product development. Any type of organization in any industry can adopt a customer-centric approach. Without a closer constructive relationship with their clients, SME s could find themselves at a competitive disadvantage. Here are some suggested approaches that can help to engage clients. > Encourage and monitor online consumer reviews. Since the positive or negative experiences of other users often shape purchasing decisions, monitoring and responding to this feedback is vital. > Use online platforms to engage customers and make it easy to share ideas. Engaging consumers in the creation of new products can help companies better understand market demands and reduce development risks. > Allow customers to modify or customize products. These measures do not necessarily require a massive investment in equipment and production processes, as long as consumers feel empowered by the choices and they enhance the product’s functionality. > Investigate the potential of analytics. Analytics are not just “big data.” SME s can use free and accessible tools on platforms such as Facebook, Google’s Search Trends or Twitter to gauge general consumer metrics140 before investing in more sophisticated, yet still affordable, custom solutions that will deliver a better understanding of their clients’ needs and behaviour. Conclusion 2. Understand the factors that are reshaping the way consumers perceive value. The evolving needs of societies—due to cultural, demographic and economic shifts—often bring the most profound changes in consumer behaviour. For SME s, it’s important to figure out how to embrace these changes. The new post-recessionary frugality, an aging population that is more health conscious and the proliferation of accessible technology are some of the new forces reshaping consumption decisions. The following three trends are likely to have an important impact going forward. > Economic concerns continue to linger in consumers’ minds. The age of frugality is creating opportunities for new business models that offset the risks of acquisition and ownership. As consumers get on board with models such as the sharing economy and aggressively seek bargains, businesses can consider flexible models that maximize the perceived value of products, and minimize acquisition and ownership costs. > Social and environmental policy statements alone are not enough. To gain consumer trust, companies must clearly communicate tangible, measurable actions they have taken, and the results. Offering transparent information about sourcing, and emphasizing the “local” or ethical aspects of products, can often influence consumers’ purchasing decisions. > Health concerns are on the rise across the board. For consumers, health awareness is no longer limited to recognizing that a healthy diet and physical activity are important. It now affects all consumer businesses. Companies that can adapt their products to these concerns are likely to generate positive reactions from customers and position themselves favourably in the marketplace. 3. Emphasize the value of their products. The full value of a product may not always be apparent to consumers. The strategies outlined in this report offer insights that can inspire companies. To generate meaningful returns, they must be accompanied by effective communication with customers. Some of these strategies may already be part of a firm’s operations, but unless they are clearly highlighted and communicated, they are not creating value for the company. To achieve a meaningful connection with clients, it’s essential to get the fundamentals right. The importance of a proper online presence cannot be overestimated. Customers’ first point of contact with a business will likely be through an online channel. They will also likely conduct any further research about a product this way. As a result, companies need a multi-platform online and offline presence that provides accurate information and convenient ways to buy the product, and engages consumers with more than static boilerplate information. The goal is to get the message out about the value a product offers through the communication channels that resonate most with a specific client segment. The following key aspects should be emphasized wherever possible. > The fact that the product is made in Canada or locally, or that other value chain-related activities—such as design or R&D—are done locally. All of these can lead to premium product positioning. > Ethical and environmental features of the production process need to be measured in tangible ways and clearly displayed on products. Consumers are becoming more conscious of these aspects and are willing to spend more for ethically produced and eco-friendly products. > Health-related benefits of products, such as low toxicity, or research-backed results that link the product’s ingredients to health benefits, should be clearly communicated, as they can be key differentiators. From  Five game-changing consumer trends by bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA

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