A new wave of consumerismAs the aftershocks of the global financial crisis die down, financial market uncertainty, rising inflation and suppressed housing values continue to dampen consumer sentiment and limit the spending capacity of individuals. Consumers in Korea now search for the lowest prices for staple items and are less vulnerable to products’ images than their quality. However, they also hone in on coveted products even though they may be more expensive.
Other shifts in shopping behavior are no less far-reaching. Korean consumers are becoming more and more proactive in terms of making sensible purchases. They realize that buying environmentally- and socially-friendly products makes a statement about their values and aligns with so-called “Capitalism 4.0,” or compassionate capitalism, which rebukes the excesses and disregard seen before the global financial crisis.
Using smartphones and social media to obtain information about production and consumer opinions also means less dependence on companies’ descriptions of their goods. And using social media to organize massive feedback to companies gives consumers a powerful tool of persuasion.
Companies need to be cognizant of three groups of buyers in this shifting consumer environment. Conventional cost-cutting in marketing during a slumping economy yields poor results, whereas responding to consumers’ revised shopping behavior will create new demand.
First, there are “prosumers” (producer plus consumer), or nonexperts who have valuable ideas that can play a direct role in product development and marketing. A good example of this is the Kokomyun instant noodle craze that started last year with a recipe by a comedian. An opportunistic food company took it from there and created a product that went on to take the market by storm.
The second group, “socialsumers” (social plus consumer), engage in social activities in order to voice opinions and spur changes. This trend meshes with the new direction of corporate social responsibility, in which businesses work with society to create value. The last group of consumers can be called “curasumers” (curator plus consumer), or those who design and display their lifestyles in the same manner as curators of exhibitions do. For example, people customize their phone screens using apps with distinct styles, and remove or add certain interfaces.
Prosumers can be turned into consultants on product development by opening up channels for their participation. Moreover, since prosumers are predominantly male adults, there is room for greater diversity to include input from children, housewives and other groups.
Customers also can be turned into brand ambassadors. People trust each other more than they trust advertising or salespeople.
To capture socialsumers’ attention, companies should make products that benefit individual customers, companies and society in general, and create ways of gathering socialsumers’ ideas to help society.
Another approach is to sell lifestyles rather than products. This is done by providing an enriched shopping experience. One example of this is Swedish home products manufacturer IKEA and its stores that double as massive showrooms for its furniture and household products. Customers can more easily visualize how they can express their tastes in such an environment.
Finally, to capitalize on our growing dependence on digital products, digital concierges can be created to give people a taste of more personalized services. Woodapples, a mobile marketing platform, provides companies with publicity via social networking sites. It also helps companies devise marketing campaigns that target niche consumers in one area for a limited time.
Innovative marketing that adapts to changing consumer behavior is ultimately about getting closer to customers. To meet the demands of lifestyle creators, companies now need to analyze not only trends, but individual customers.
by Lee Dong-Hun
* The author is a research fellow at the Samsung Economic Research Institute. Visit www.seriworld.org for more SERI reports.
More in Finance
5-day winning streak ends as Kospi drops 0.62 percent
Debt is the latest hot product being pushed into the market
China's WeChat Pay and Seoul's Zero Pay now interoperable
Kospi sets another all-time high as optimism continues
Kim Kwang-soo named as sole candidate to head banking federation