Millennials are increasingly spending their money on experiences rather than the latest products
Twenty years ago the World Wide Web was in its infancy, mobile phones were still a luxury item and listening to music on the go meant carrying a portable CD player.
Since then, advances in digital technology have revolutionised the way people access, buy and pay for goods and services. Music and news are consumed via digital download or streaming. Social media sites are helping people to connect, and a new generation of online consumers is emerging.
For companies, understanding these shifts and recognising what will influence consumers in the future will be increasingly important.
Thanks to the rapid growth of internet-enabled mobile phones and tablets, e-commerce has thrived over the past decade. Companies in developed countries are expected to have an interactive online presence. Rising income levels in emerging markets mean that companies will increasingly need to think about how they sell online to a burgeoning middle class there, too.
In emerging markets such as Brazil, Thailand and Turkey, more than 40 per cent of consumers now buy something online at least once a month
In emerging markets such as Brazil, Thailand and Turkey, more than 40 per cent of consumers now buy something online at least once a month. That figure is set to grow.
China, too, has embraced digital innovation. The number of internet users has risen rapidly over the past 10 years – more than half of the population has an internet connection – and China is now the world’s largest e-commerce market.
This means that – whether they are targeting Chinese consumers or those in other emerging markets – companies will need a clear mobile and digital strategy.
Meanwhile, just as demand for goods rises in emerging markets, there are signs that Western consumers are reaching saturation point when it comes to owning material goods. HSBC’s new Future of Consumer Demand report highlights how for ‘millennials’ – those born after 1980 – the focus is increasingly on experiences. Eating at the latest restaurant, going to a music festival, travelling – these are the new status symbols for a generation that wants to document their lives on social media.
A ‘sharing economy’ has emerged, with a growing number of people choosing to exchange goods or pay for temporary access rather than owning them permanently. With population growth outstripping housing growth in many countries, it makes sense for a generation of renters to share rather than own. It is also more sustainable – something that is increasingly important to ethically-minded consumers.
Changing consumer tastes are encouraging companies to diversify and reconsider the way they sell and distribute goods. Trade is no longer just about physical goods – increasingly it’s also about services that are delivered digitally.
Marketing goods and services to a global audience requires thought, however. Companies may need to rethink their business model, seek advice and ask themselves some key questions to be effective in new markets. Do they understand the markets they are targeting? How does local culture affect buying tastes? What do millennial consumers want? Is it best to enter a new market alone or with a business partner? How is new technology affecting buying habits?
Making sense of the answers will help companies to successfully target an increasingly tech-focused society. And with the right strategy in place, there are huge opportunities for businesses to expand overseas at a rapid pace.