Produktmanagement im Technologiesektor – Tipps zu den Themen Produktmanagement und Innovation. Von Andreas Rudolph
Recently I wrote about the current economic crisis, and studies, which suggest strategies about how to → win in this down economy. Here and there, these studies already talked about changes in the customer buying behavior and patterns, which might also be relevant for the innovation at all.
However, it was not quite clear, what exactly changed with the consumer behavior, and how to react to the particular changes. I have looked at the following research from McKinsey & Company → Beating the recession: Buying into new European consumer strategies, which sheds some light on this particular question, and, which elaborates recommendations for companies to react on these changes.
Right after publication of this article, the Manager Magazin published the article → Was jetzt noch Wert hat (German), which explains this particular topic from the German perspective. I have added this information further below.
The authors intend to identify possible developments, should the crisis widen. To do so, they look in their study into current economic data, and use data from a survey with European consumers.
Furthermore they analyze, how European consumers have acted in past economic downturns. They conclude that the economic data shows that consumption already started to decrease before the crisis. At current, many consumers control spending even more, and stay prepared to further tighten their budgets, in case the crisis worsens.
As can be seen on slide 2 of the study, even compared with earlier crisis, the current consumer budgets are under particular large stress. The following factors might make further deterioration likely:
Compared to earlier crisis, the only factor in favor of a better consumption is that the inflation rate is low.
The authors use experiences from earlier recessions and downturns to find out if all product categories will be affected, and how.
They come to the conclusion that in earlier recessions all product categories came under pressure, but especially equipment good purchases (such as Furniture, Cars, Electronic Equipment), and certain leisure activities (such as Eating Out, Entertainment, Games/ Toys, Clothing, Holidays, but also Education) suffered the most.
The study identifies different saving patterns, and argues that the saving is different for all these areas. Depending on the type, the consumer use the following strategies:
Their study finds that, at current, the first group is the largest.
When saving, these consumers typically use different tactics to respond to their diminishing purchasing power. The authors explain the different possible tactics with an example from the touristic industry.
|
Tactics |
Example |
|
Control spending |
Cancel travel plans |
|
Replace only when needed |
Defer travel plans |
|
Do-it-Yourself |
Stay with friends instead of in hotel |
|
Seek value |
Book hotel with a high added value |
|
Shop smarter |
Look in the internet for better prices |
The study states that the tactics, which consumer use, depend on the product category. For example in terms of eating out, consumers normally employ “control spending”, whereas they use for car purchases a mixture between “control spending” and “replace only when needed” tactics.
The authors suggest different counter tactics, depending on the motivation of the different consumers. Among them they suggest counter tactics as shown in the following table.
|
Tactics |
Example |
|
Control spending |
In this tactics consumers tend to avoid temptations, or they resist signing large orders. To ease the purchase decision, you could assist your consumers in budget making, or they could offer flexible payment schemes, or you could increase visibility of usage costs. |
|
Replace only when needed |
Here consumers intend to save waste. You could simplify buying decisions, i.e. by offering buy-back schemes, or you could promote incentives for replacement. |
|
Do-it-Yourself |
Consumers who follow this tactics tend to save foreign costs. You could react by allowing consumers to test the product at home, or to have them take over parts of the manufacturing/ assembly. |
|
Seek value
|
Consumers, which follow this strategy are interested in immediate savings, and are interested in simpler offers. You could for example offer simpler products, or you could offer private labels. |
|
Shop smarter |
These consumers tend to search for best prices, or are open to test different sales channels. To support these consumers, you could make sure that our products sell at a competitive price, or that they are visible in several channels. |
Manager Magazin follows a similar line in their article → Was jetzt noch Wert hat (German). They claim that the current German consumers are willing to spend money in spite of the crisis, and consumption partially takes over the lead (although the German consumers have a realistic view to the economic crisis).
The article argues that past crisis has shown that consumer’s view on a these problems can be reduced to the question of how likely the consumers feel to use their jobs. In the moment, governmental unemployment programs make sure that the majority of the consumers do not feel endangered to loose their jobs. Consumers thus do at current not postpone too much spending into the future.
A further factor, which stablizes consumption in Germany is the fact that a change in attitude took place since 2000, which now starts to be recognized by many businesses. The current consumers demand consistency and durability. The trend towards individualization, which took place sinces the 1960ies came to an hold as of 2000, and the current evolution is directed into the opposite direction, back to traditional values, and consumption („Regrounding“). Many businesses still create the wrong products for these new trends.
The article mentions a further factor; since the burst of the internet bubble in 2001 the crisis came not really to a halt for many domestic consumers, and real income did not increase for a long period of time.
Even the small boom between 2005 and 2007 felt for most customers like crisis. The sharp increase in the incomes of the richer part of society, while the other incomes stagnated, has generated the general feeling of inequity. As Germany consumers were already used to control their spendings, the crisis did not lead to a sharp slump in consumption, like in other countries.
As the following German statement makes clear, the value shift of German consumers is characterized by a lower aspiration towards a growing income, but a higher ambitions towards familiy, health, and environment. Businesses who serve these consumer aspirations might make good business in the current crisis.
„Der (Anm. des Autors: Wertewandel in Deutschland) sei gekennzeichnet durch geringeres Streben nach sozialem Aufstieg und nach hohem Einkommen bei gleichzeitig gestiegenem Familiensinn, Gesundheits- und Umweltbewusstsein. Wer diese neue Befindlichkeit bedient, kann auch in der Krise gute Geschäfte machen. “ – Manager Magazin
If you are selling into industrial markets, you might face special requirements. However, the general pattern should be comparable. To support the different buyer types, you could alter your innovation. Reiterating some proposals from my article non → innovation strategy these changes could be as follows:
Do you have any other idea? Feel free to write a comment.
→ Study (You might need to create you a user first to download the study)
→ In the original article, you can also launch the slideshow
Das Original dieses Artikels ist auf →Der Produktmanager erschienen (©Andreas Rudolph). Regelmäßige Artikel gibt es über die (→Mailingliste), oder indem Sie →mir auf Twitter folgen. In der Online Version finden Sie hier die versprochenen weiterführenden Links:
Ich arbeite seit vielen Jahren in der Softwareentwicklung für Unternehmensanwendungen bei der SAP SE. Dieser Blog ist privat, und die Meinungen sind meine eigenen. Sie sind hier richtig, wenn sie sich für Praxiserfahrungen im Produktmanagement für Investitionsgüter interessieren.
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