Of all the things that Mr. Henry Ford is remembered by, his comment on customizing the Model T- the first affordable vehicle for middle class Americans in the early 20th century- is one of my favourites. This successful model was also a symbol of innovation in the early 1900’s, long before personalised digital experience changed the face of the auto industry.
At a time when the moving assembly line was less than a decade old, product personalization was hardly a matter of concern; even to the consumer. That would change rapidly over the next few decades, with automobiles transforming dramatically from the first mass produced Ford models to Tesla’s electric cars of today.
Present day consumers are of course better-informed, connected, and more aware than their early 20th century counterparts. Their constantly evolving interests are driving businesses to re-evaluate their market positioning and explore disruptive business models, no matter which industry they belong to.
And the paradigm shift on the side of the consumer is an equally fascinating opportunity for businesses. With Millennials on the cusp of surpassing Baby Boomers as the largest living generation of adults, it is obvious that the modern customer has expectations of a digital native. While this may sound like the natural order of things, the implications for the market are a little more interesting than simply natural.
The rising number of Millennials, predicted to be the wealthiest generation yet, essentially means that purchasing power can be expected to remain constant, if not increase, over the next two decades. So, a consumer purchasing a smart phone today is likely to purchase a smart home tomorrow and smart health devices the day after. But it’s not just the purchasing power of the future generation of consumers that is affecting the market. The transformation of customer sentiments will have as much of a role to play in market positioning and entry strategies.
Disruption driving Newer Markets
Understand the preferences of the modern consumer and you’ll have a fair idea of the kind of market opportunities that the future holds. The average consumer today has a certain degree of control and opinion over the services they receive due to the advent of consumable technology and its integration with nearly all aspects of their lifestyle. They look for a touch of personalization in nearly every product and service so customization on a large scale is the key. The extent of customization and control will only continue to increase in the future and with it, the need for accessibility to user information.
Another key differentiator when it comes to serving today’s consumer is experience. So much so that brands are beginning to delve into the world of immersive technology in order to go beyond visualization, into sensory experiences. As products and services evolve with consumer requirements, experience may even take the top spot as a differentiator.
What is most important now is for companies to start asking questions that will lead them to the next market opportunity. And it is not a theory for the future. Companies have already begun acting on this notion. For instance, a U.S. airline took to the blue ocean strategy to identify a completely new market space. They introduced a business model of providing no-frills flights for simple, quick, and cheap commute. The result—an exponential growth in sales in a sector notoriously known for high costs and low profitability.
Creating New Consumer Ecosystems
With businesses realigning themselves with the changing market landscape, there is another possible transformation on the horizon. The need to move towards an asset light model combined with technological infrastructure requirements will give rise to a culture of asset light consumers and asset heavy holders with the latter providing the former with a strong support structure. Consumers are also expected to be a factor in such an environment and the present scenario already holds some examples. Take for instance the case of a renowned hospitality brand that owns no hotels but instead depends on users to provide their own homes as lodgings. The importance of the relationship between these two roles is made even more profound when the extent of adoption of technology across services is taken into account: a trend that will continue to persist for the next couple of decades.
Future Ready with the four ‘I’s
The future is certainly a promising one, whether viewed from the consumers’ perspective or the business’s. However, in order to make this future a reality, companies will need to focus on sustainable economic growth through the four ‘I’s:
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Insightful awareness: this will be critical as a starting premise to any conversation and though process, from within, for others and the environment
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Innovation: Enabling a culture of innovation while respecting intellectual property rights will help us push the barriers of technology
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Investment: Building the capital stock through investment is a critical factor. While investing in technology is key, it is important to think about physical assets, human capital and local social implications
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Intrinsic Value Creation: As the Consumer to Customer value chain changes, profit pools across the food chain will change. For sustainability after all the hype settles, key will be to deliver demonstrable value creation as that is what will finally stick
Only through the amalgamation of these efforts will it be possible to make the most of the future. The future belongs to the brave, getting there may be easy but staying there is what matters.
Authored by Amit Chadha, President, Sales and Business Development, Whole-time Director, L&T Technology Services
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