According to a recent report by Deloitte on consumer behavior, the consumer has not changed in many of the ways popularly believed and commonly reported. To be clear, the consumer is changing. But these changes are primarily driven by economic and market conditions rather than by what might appear to be fundamental changes to consumers’ psychological makeup.
At Pivot International, we’re a global single-source leader that understands that successful product development depends on an integrated understanding of the dynamic demographic factors that generate the unique needs, cultural biases, and purchase decisions of today’s changing consumer. These demographic factors are complex and varied, and include but are not limited to:
- Education levels
Companies seeking to bring new products to market must identify partners that bring: 1) deep insight into how demographic factors influence consumer behavior, and 2) proven experience in applying this insight to every phase of the product development process. These phases encompass product conception, design, prototyping, manufacturing, distribution, and supply chain management.
With this in mind, here are four changes to the consumer landscape product developers need to be aware of.
1. The Consumer Base is Becoming Increasingly Diversified
Today’s consumer base is diverse, splintered, and heterogeneous. Though this diversity is most pronounced among the Millennial generation, a dramatic shift in U.S. ethnic and racial composition is a well-established and ongoing phenomenon.
What’s more, the rise of Gen Z and the growing emphasis on “personalization” will not only continue to drive diversification but also further increase demand for individually configurable or customized products. With this desire, the challenge of personalization at scale will continue to mount.
2. Younger Consumers are Moving to City Centers
In contrast to the Baby Boomer’s flight from city centers to suburbs, today’s young consumers are migrating to them, possibly drawn by a closer proximity to work (which eliminates the expense and inconvenience of a long commute) as well as greater access to cultural activities.
This trend is complexifying the consumer landscape. Just as the mid-century mass migration from city-centers to suburbs had a major impact on the economy and consumers’ spending patterns, so do today’s migratory patterns. Among other challenges, increasingly dense city centers will continue to pose last-mile delivery hurdles to successful distribution.
3. Regional Migration is Driving Fragmentation
Geographic and demographic factors are more complex than urban vs. suburban and rural. It’s not just that younger consumers are increasingly moving to city centers; it’s that there are larger, generation-specific, regional migrations underway.
Baby Boomers, Gen X-ers, and Millennials are all on the move to different areas of the country. The implications outlined by Deloitte are clear: “Each generational cohort brings its own set of needs and demands to the region they migrate to, further amplifying the differences among consumers in various parts of the country.
4. Economic Inequality is Growing
A deepening divide is taking place between the top 20% of income earners and the rest of the population, with this divide profoundly impacting consumer behavior.
Between 2007 and 2017, income growth for high-income earners (>US$100,000 in mean household income) rose 1,305% higher than their lower-income peers. (<US$50,000 in mean household income). This divide is exacerbated by the increase in nondiscretionary expenses like healthcare and education across all groups.
To further complicate matters, expenses have emerged over the last decade (such as smartphones and data plans) that compete with traditional retail, making the competition for discretionary dollars even more intense.
Conclusion: The Need for an Integrative Understanding of the Consumer
In today’s changing consumer landscape, the term “average consumer” has lost all relevance. Today’s (and tomorrow’s) consumer base is more diverse, differentiated, and complex than ever before.
When consumer demographics are examined in an integrative fashion (factoring race and ethnicity, income and education level, age and generation, migratory patterns and geographic distribution, broader economic trends, etc.), it’s clear the consumer can’t be easily categorized.
If you’re looking to bring a new product to market, Pivot can help. With nearly a half-century of proven experience in single-source product design, development, manufacture, and supply chain solutions, we apply a sophisticated, integrative understanding of consumer behavior and market conditions to every aspect of the product development process. Our approach had led hundreds of companies worldwide to partner with us to create winning products and successfully scale. If you’d like to learn more about the difference a partnership with Pivot can make to your business, contact us today for a free consultation.