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12.20.2002

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Re-thinking Our Traditional Notion Of The Mass Marketplace: What Happened To The Mass Market? - Part One

During the last ten years we have witnessed a profound and well-documented shift in the habits and behaviors of American consumers. I'm referring to the now widespread interest in highly differentiated consumer goods - goods whose purchase and use are driven more by cultural and lifestyle patterns than abject utility. While the seeds driving these patterns can be traced back some 20 or 30 years, it was only in the early 90s that consumers began, en masse, to seek out these specialized, highly differentiated indicators of lifestyle, culture and identity. Early examples of firms and industry segments, which are now bona-fide institutions in the arena of American commerce, include Whole Foods Market, Patagonia, Trader Joe's, boutique wineries, Pottery Barn, etc. More recent additions to this list include Anthropologie, boutique olive oil shops, Restoration Hardware and the reengineered Target. Whatever the example, I think most of us recognize this profound (and unprecedented) transformation.

Of course, recognizing these as meaningful patterns of true change in the landscape of American consumption has been a difficult road. Traditionally, we were taught that only the wealthy, or those wanting to emulate the wealthy, could be counted on to pursue highly differentiated consumer goods. The former did so as an attempt to establish social standing (i.e., cultural capital), while the latter was thought to be merely emulating this social standing (i.e., conspicuous consumption). Either way, these consumption behaviors were considered irrational and relatively "insignificant" from the standpoint of mainstream business principles. As a colleague once remarked to me, "We're marketing to the masses, not the patrons of obscure art galleries. After all, that's where the real money is."

Fast forward to the year 2003, and we see an entirely different consumer landscape, one driven by wide scale (dare I say "mass") consumer interest in highly differentiated goods and services. Moreover, the fact that this interest appears little related to income or other measures of wealth only underscores the significance of this shift. Whereas mountain climbing was once a mere "noble" concern shared by a small subset of the elite classes (e.g., Sir Edmund Hillary), we now see consumers from all walks of life scavenging the racks at the local REI, searching for the highly specialized gear that facilitates their weekend journeys up the sides of nearby rock faces.

Despite these observations, the rebuttals I encounter begin with the premise that there has been no real change in patterns of consumption. Ironically, the most straightforward replies once pointed to the economy, arguing that these "apparent" shifts in consumption patterns were merely the by-products of an exuberant domestic economy. Conventional wisdom then suggested we could have expected things to "return to normal" when the economy cooled. Well, with the economy now on ice, we still haven't seen all those folks with their ultra light tents and Gore-Tex backpacking equipment returning to Sears for the old-fashioned canvas stuff. Ditto for coffee: Did we really think consumers would trade their Starbucks for Folgers when the recession hit?

More frequent (and puzzling) than the simplistic, economy-driven explanation is what I term the "patronizing uncle" approach. Here, our interests are always met with insinuation that these behaviors or consumption patterns aren't particularly important or noteworthy, since they don't represent the "mass marketplace." There are those who dismiss these trends as an inexplicable by-product of "living on the West Coast." "Only in San Francisco," one colleague gently teases, "would people ever want to bother choosing between 15 loaves of bread." Others downplay the frequency and significance of such behaviors, suggesting that such patterns are "statistically insignificant." Even others merely shrug their shoulders and describe a stereotyped picture of the "typical American consumer," then ask the rhetorical question: "Do you really think Josephine Average is interested in organic produce, specialty coffees and fine olive oils? Get real." Yet, when I ask them who this typical American consumer really is, they seem to be in a bit of a quandary.

All around us, wherever we turn, these "new" industry segments appear to be generating very real profits - and not just on the West Coast. Starbucks, for example, could never have achieved such rapid market growth if they confined themselves to large urban areas and "eclectic" communities on the West Coast. Their very success, in fact, stems from the wide-scale (mass market) acceptance of their otherwise niche market, specialty products.

Perhaps what we are witnessing, then, is the emergence of a new paradigm. As part and parcel of this new paradigm, the "mass marketplace" is being quietly reconfigured. What was once portrayed as a vast, singular "market space," with room for a small number of competing brands in each product category or channel, is now being recast as a collection of distinct product worlds, themselves capable of supporting a surprisingly wide degree of variation and niche specialization.

Part II: The Emergence of a New Paradigm

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