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12.14.2005

“HartBeat” is The Hartman Group's FREE online newsletter, providing insight, analysis, information and strategy to give business leaders the knowledge and vision to build sustainable brands.

Trend Insights for the Coming Year

The future will be about customers for the moment and not customers for life. "Customer for life" will be largely a distant memory, a 20th century curiosity.
In the future, product life cycles will be significantly shorter unless you can team up with your consumer and get them to create alternate uses/applications for your product.
You will not own or control your brand's message, your consumer will. Because your consumer will be constantly altering and remixing your message, and in many cases your product, you will need to learn innovative ways of working with your consumer.
Conventional advertising will be irrelevant (in many quarters this is already happening). In the (near) future we believe the most effective marketing campaigns will be those offering entertaining and compelling experiential content (e.g., Sony's Bravia). Because messaging will be largely obsolete, focus on cultural partnerships. Likewise, marketing's current fascination with language and messaging will quickly wane as this generation matures. We suspect that conventional television advertising could be obsolete within the next 10 years.
Maintain emphasis on transparency and honesty. Your consumer is (a) the most sophisticated, savvy and educated in world history and (b) the best connected. The chances are likely that the consumer will know more about your product or service than most within your organization ever will. Don't be afraid to look to your devoted consumers for help or advice.
Also, don't be afraid to be too playful and/or be able to laugh at yourself. Your consumer's detached wry stance allows them to enjoy life without a lot of angst, to laugh at themselves most freely, and see their failures as not of themselves, but of their situation. You, too, should take that tact with your brand.
Because yours is the first truly global consumer, your product - as well as your competition - will be truly global. Today's consumer can order candy as easily from Hong Kong as he can the neighborhood drug store, so if you're going to compete with global markets, why not do business there too?

For more Hartman Group articles on TREND ANALYSIS, click here...

December 01, 2005 "Packaged Goods: Value-Add or Value-Less?"

December 27, 2002 "Re-Thinking Our Traditional Notion of the Mass Marketplace: The Emergence of a New Paradigm"

December 20, 2002 "Re-Thinking Our Traditional Notion of the Mass Marketplace: What Happened to the Mass Market?"

April 12, 2002 "Seeing the Future; Seeing What's There" - Part II

April 5, 2002 "Seeing the Future; Seeing What's There" - Part I

June 6, 2000 Entering the Soul Age.

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Trends To Watch In 2006

Trends With Legs: Trends that Are Here to Stay

Creative Consumption: The trend toward active, creative consumption, in which ordinary people are coming to view themselves as creative, collaborative producers of things (material, aesthetic or intellectual) rather than individual, anonymous consumers, has proven itself the most important consumer trend development moving into 2006. And despite what we may think, this is a trend affecting all segments of consumer society. As noted author Douglas Rushkoff points out:

"This renaissance ethos of authorship isn't limited to some isolated group of "cultural creatives" in New York, San Francisco, and Cambridge. No, it's a mainstream "red state" American trend, as well, emerging as crafts fairs, a NASCAR culture of car modification, gun kits, backyard farming, and even home schooling."

In short, people are no longer content to be passive consumers in a marketplace and increasingly utilizing the marketplace for their own creative ends. This is a wide-scale revolution - already underway - that threatens many of the very principles underlying traditional marketplace behavior - a revolution that may radically transform the rules of the commerce game for generations of marketers who've just finished figuring out the old rules. This revolution will call into question the following ideas:

a) That things are things. You may think you are in the toy business, while your consumer may view your toy as an innovative platform for personal communications devices. Recently an entrepreneurial teen made a hefty profit fashioning computer hard drives into Altoids tins. Others prefer to paint corporate logos on insects and release them into the wild simply to satisfy their aesthetic interests.

b) That consumers are consumers. Increasingly much consumption is driven by the indigenous impulse to create or produce in collaboration with others. Why stop at just playing video games when it's much more fun to create the next playfield, course or game itself? Better yet, why not use your computer to direct the next blockbuster film playing within the virtual cinemas of online video games?

c) That the marketplace is natural and ever-present feature of human life. Far from it, markets are creations of our uniquely human imagination and consumers are increasingly leveraging this insight for their own gain. Many currently participate in fully realized virtual economies made possible only by the collective belief in imaginary landscapes (i.e., online video games). Imagined - yet very tangible - markets appear and disappear daily on eBay.

Globalized Food Preferences: Most folks in their 50s or 60s are only now coming around to truly global food preferences. In fact, we interview many consumers around the US - mostly older - who claim to have never experienced Chinese or Thai cuisines. Consumers in their 30s or 40s are, by now, well-acquainted with most global cuisines, yet tend to view them largely as dining out options when in a specific mood for ethnic food (as in, "Do you want to grab Indian food or Sushi tonight?"). Kids in their teens and early 20s, by comparison, have spent their entire lives under such global influence. To these consumers, global styles and cuisines are almost second nature. Today's teenage consumers, for example, are as comfortable indulging in Japanese candy after school and cooking Pad Thai for dinner as they are meeting their friends for Dim-Sum on a Saturday afternoon.

CPG manufacturers would be well advised to understand the global nature of such preferences when plotting strategies for the future. We can promise you that tomorrow's consumer will never be content with potato chips, gum, pretzels and cola. Really.

All Things Fresh: While it isn't exactly the newest of trends, one can't deny the overwhelming impact the trend toward all things fresh has had on all segments of the food industry. From CPG products, to grocery retail, to quick service restaurant (QSR) and even local farm economies, the growing consumer interest in "fresh" products and offerings is transforming the way we all do business on a daily basis. Those who keep a close eye on this trend will generally find themselves well ahead of the curve.

Continued Expansion of Private Labels - Especially in Natural/Organic: The surge in consumer confidence and interest in private label packaged foods is predisposing more and more consumers to experimentation in ever-more categories of private label, natural/organic packaged foods. Consumers have been looking for a long time for ways to incorporate more natural/organic packaged foods into their everyday food regimens that doesn't demand a near constant price premium. Until recently, even committed natural/organic consumers perceived a high cost, rightly or wrongly, to converting most of the grocery stream into the category.

Consumers now increasingly seek out packaged natural/organic foods at channels they associate with bargain shopping: such as Costco, Trader Joe's and mainstream grocers and will continue to do so. As private label natural/organic foods spread across channels, gateways to the category will most likely proliferate. Word-of-mouth concerning Trader Joe's, especially, is rapidly increasing confidence in the taste of natural/organic packaged foods among consumers, sending many back to the center store with renewed hope that there is not necessarily a "bad taste" trade-off for switching to natural/organic products.

All things Children: Those of you familiar with THG know that we have, at times, been rather critical of demographic models. In truth, it's not so much that we disdain demographics as it is we disagree with how they are often implemented. Namely, without much context or depth. Simply telling the world to invest in senior consumer products because there are a lot of boomers getting old at once does a disservice to the complexities of the consumer arena. Case in point, pets and children. The beautiful thing about the children's marketplace is that we're seeing a rather small cohort of children (smaller than ever) being cared for by a wealthier collection of parents - a population replete with an even wealthier collection of grandparents (there's those Aging Boomers, again!). The result is unabashed indulgent consumption on our youth - most notably by our bored grandparents. In short, if you want to market to kids, ignore the price angle and head straight to the indulgent/luxury end of the spectrum. The battle for today's youth will not be fought in the Wal-Mart's of the world.

Consider the following up-and-coming trends...

Educational Toys
Boutique Clothing
Children's Hairstyling
Children's Cooking Classes
Children's Exercise Facilities

Look for our Children's Wellness report in 2006...

Analysts Discussing Wal-Mart: Perhaps the one certainty regarding Wal-Mart these days is that Wal-Mart remains the most discussed subject among journalists and analysts alike. In fact, we believe that much of this dialogue is actually a disservice to those attempting to make sense of Wal-Mart's role in contemporary consumer society. If our data are any indication, we conclude the following:

Despite the media attention, most consumers remain uninterested in the political implications of Wal-Mart's practices.
To the vast majority of consumers, Wal-Mart remains a crowded, chaotic retail experience they would prefer to avoid, yet feel compelled to patronize due to the low-price perception.
This patronage is entrenched and far-reaching enough to support modest growth.
Because Wal-Mart's success with consumers is based largely on its ability to deliver on the everyday, low-price proposition, any attempt to compete on quality and distinction (e.g., Target, IKEA, Costco) will be challenging and, more importantly, jeopardize the success of the Everyday Low Prices proposition.

It's a Toss Up: Trends That Could Go Either Way

"On-the-Go" packaged foods: Consumers are nearly unanimous in their desire for time-saving meal solutions - in theory these products sound like a great idea - yet for a variety of reasons their behavior rarely follows suit. To truly provide convenience over fresh, QSR or fast-casual alternatives, such products require some amount of advance purchase and planning (if you're purchasing on the go, fresh alternatives nearly always win out). But as we all know, if you plan too far ahead, you run the risk of becoming a habitual consumer subject to "flavor burnout." Given our increasingly unpredictable schedules and frenetic lifestyles, which bring us in contact with ever more fresh food opportunities, it's hard to be optimistic here.

Before this trend can grow long-term legs, manufacturers are going to have to figure out how to deliver on the convenience as well as the fresh propositions. Until then, we remain skeptical.

Up-scale Specialty Meal Solutions: By now many are familiar with those "specialty meal solutions" increasingly crowding the freezers of better grocers. Recent food-processing innovations and flexible production arrangements have allowed many smaller firms to release frozen meals of exceptional quality and taste. So today's time-starved urban dweller can feast on, say, Chicken Cordon Bleu that is likely better than anything offered by local bistros and yet do so in the privacy of their own home.

The catch (there is always a catch!) is that these meals often sport hefty price tags - typically about $15 for a meal that serves 2. That's about 2 to 3-fold more than what one would expect to pay for a similarly styled product offered by Stouffers or Bertoulli. While a lot of consumers are responding well to upscale specialty meal solutions, it remains to be seen whether said interest can support such hefty premiums on a wide-scale basis.

Functional Foods: It's no surprise that folks in the CPG industry have been championing functional foods for many years now. In a world where packaged foods have lost much of their luster to the fresh offerings of many grocers, specialty grocers and QSR outlets, it's easy to be lured by the functional foods proposition ("I know...we'll throw some protein powder in it and call it a nutritional shake!"). Add the discussion the recent success of many such products in Europe and you've got what seems to be a CMO's slam dunk.

And yet...Consumers just don't seem interested in a food that focuses more on a disease-state message than taste, at least not in an intuitive sense.

At our heart, we are a nation of people who want our food to be food and our pills to be pills - end of story. Describe the functional foods proposition to a group of consumers and they look bewildered, as if you are describing the sort of futuristic food product one would expect on the Jetson's - all process and no flavor. Yecch!

All that's really certain here is that (a) consumers don't yet desire functional foods, (b) manufacturers are hell bent on selling them and, most importantly, (c) it's going to be fun watching the battle unfold.

To the lucky manufacturer able to convert consumers to the functional proposition - convincing them along the way that food can be tasty and functional without tasting processed - rewards await. Until then, color us (most) skeptical.

Self-Diagnosed Allergies as Lifestyle Consumption: We've written extensively on the rising number of consumers who are modifying their diets - and lifestyles - based solely on self-diagnosed allergies. In fact, a staggeringly large number of the consumers we speak with now claim to be lactose intolerant, a growing percentage of parents report maintaining a gluten-free household out of general health interest, and even more adults we speak with claim the "sulfites in wine" give them headaches. Far from being a rational response to a legitimate medical condition, most engage in these behaviors as part of their overall self-improvement routines (i.e., the urge to constantly tweak one's - or one's family's - diet in order to live a better life). Nonetheless, these behaviors have real-world implications across many CPG categories. Even if it is "in their head," folks who convince themselves they are lactose intolerant do buy less dairy products.

What remains to be seen, of course, is whether this tendency will gain traction over time or whether consumers will move to other self-imposed dietary restrictions. This one remains open.

Run From the Middle: We're all aware of the ongoing attempts by traditional grocery formats to move away from the ever-shrinking "middle ground" of the grocery market toward either deep-discount formats (at one end) or specialty, natural or gourmet formats (at the other). This trend will no doubt continue, but the real question is whether this trend will meet with much success. If early signs from Safeway are any indication, we believe the future looks bleak for mainstream grocers.

Safeway's recent "Lifestyle Stores," - reconfigured interiors with stylish product sets designed to appeal to more sophisticated consumer tastes - have thus far been met with little consumer fanfare or interest. The real problem, of course, is that a Safeway is pretty much a Safeway .

While the new stores look a little better inside, and while the staff are sometimes nicer and friendlier (including always thanking consumers by name when they check out, which in truth just annoys most), beneath the surface the place is still a garden variety Safeway.

Drifting Out to Sea: Trends On the Outs

Fat Free: Consumers surely remain interested in the weight management or heart health propositions - especially as a lifestyle - yet most have by now come to view "fat free" as something of a false promise. In fact, heart- and weight-conscious consumers believe there are many healthier, more effective strategies towards achieving their goals than simply filling their cart with processed foods sporting the "fat-free" seal of approval. Besides, most bemoan the "lack of flavor" in fat-free products.

Tea: We've been hearing about the coming explosion of the tea market for the better part of 15 years and the results have yet to materialize. Initial chatter, following on the heels of Starbucks initial success in the early 90s, sought to create for tea the same experience Starbucks forged for coffee. Along the way, many in the wellness community viewed tea as an ideal delivery channel for herbal supplements, not to mention a great source of antioxidants. Still others explored tea's global-cultural implications via the Asian-based bubble-tea phenomenon. And when it's all said and done, the fact remains that the US is simply not a tea-drinking kind of place. We've always held a healthy contempt for most things associated with colonialism and our individualistic nature eschews the collective aspects of tea-drinking rituals. Moreover, we are generally not a nation known to favor hot or warm beverages. As anyone who has traveled the world intuitively understands, we Americans like our beverages cold!

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