BabyBoomers change the markets

Download the full ebook chapter (pdf)

Summary

Video: Paul Hodges discusses the changes taking place in consumer markets.

Household consumption dominates demand. Chapter 7 therefore looks at the changes taking place in consumer markets. These provide vital insight into likely developments in the New Normal.

The key learning is that companies are re-adapting their business models. The great companies of tomorrow will build their businesses by providing products that are of genuine benefit to society.

We therefore highlight three case studies to help companies develop their thinking in this critical area. They provide concrete examples of the changes being made by far-sighted businesses in different regions:

  • Procter & Gamble, the world’s largest consumer products company, is now following a ‘white space’ strategy to reposition itself for future growth.
  • We also look at the lessons to be learnt from the launch by India’s Tata Motors of the world’s cheapest car, the Nano.
  • Plus we highlight the new business and technical innovation models being successfully developed by the Bill Gates-funded Meningitis Vaccine Project in sub-Saharan Africa.

These three examples highlight the opportunities as well as the challenges facing companies as they seek sustainable and profitable growth in the New Normal. They also support the new concept of Shared Value developed by Professor Michael Porter.

As Porter summarises the position:

“Firms have focused on enticing consumers to buy more and more of their products. Facing growing competition and shorter-term performance measures from shareholders, managers resorted to waves of restructuring, personnel reductions and relocating to lower-cost regions, while leveraging balance sheets to return capital to investors.

“The results were often commoditization, price competition, little true innovation, and no clear competitive advantage….Companies have overlooked opportunities to meet fundamental societal needs….Our field of vision has simply been too narrow.”

We argue that doing nothing, and hoping that yesterday’s consumer-led boom will reappear, is no longer the low-risk option for companies, as profits and growth levels slip.

‘Who dares wins’ might instead be a good motto to post on every boardroom wall. This, after all, is how today’s great companies built their franchises in the past, through world wars, depressions and many other equally uncertain times.