2020 Mega Trends

As 2019 draws to a close, businesses are already looking toward 2020. In this day and age, accurate and detailed business insights are vital in navigating businesses through rapidly changing operating environments. Here are the developments that will define 2020:

Slowing global GDP growth in emerging and developing economies, as well as major economies, such as India, Mexico and Germany. A series of stimulative factors will result in continued moderate global growth (3.1%) throughout 2020:

Negative global growth factors Positive growth factors
  • Rising trade war risks
  • Rising geopolitical uncertainty in the Middle East
  • Declining business/consumer confidence
  • Global debt levels high/rising
  • Low monetary policy interest rate-> limited room for further cuts
  • Slow labour productivity growth in advanced economies constraining household income growth
  • Relaxed monetary policy/declining long-term interest rates relative to the end of 2018
  • Global consumer confidence remains above average
  • Unemployment rates remain low in key advanced economies
  • Current global growth slowdown mainly limited to manufacturing and trade sectors
  • Ongoing relative strength in consumption and services sectors

However, downside risks are increasing and considering current interest rates, traditional stimulative tools will only have limited room in stimulating investment during a recession.

2020 will be the start of the Asian century, with Asian economies outgrowing all other economies combined for the first time since the dawn of the 19th century. This event, however, will be overshadowed by slowing economic growth in the region, with Hong Kong protests, Japanese and Korean trade tensions and a sluggish Chinese economy.

The 2020 Summer Olympic Games will present a turning point for Japan, as the country loosens visa regulations, opening its doors not just to tourists, but to a broader set of stakeholders.

Recent climate events will result in an intensified climate debate, resulting in the possible readjustment of the global warming target to 1.5°C during the United Nations’ COP26 summit in Glasgow.

Brexit and associated issues will remain a business concern in 2020 and beyond. Trade deal negotiations, formulation of new trade and migration legislations are expected to take many years.

2020 will see the emergence of a new shopping phenomenon: “Entertainmerce” a combination of e-commerce and entertainment, seeking to recreate social interactions associated with traditional online shopping. Furthermore, online retailers will continue to strive for faster delivery services in the new year in the battle for market share.

2020 is furthermore believed to be the end of the age of tech SAAS entrepreneur-kings (WeWork, Uber), with investors increasingly looking toward Zebras; start-ups focused on addressing real-world problems, still achieving profit and scaling at a manageable pace.

The world will furthermore continue to debate #Metoo, the justification of flexible work arrangements, work/life balance, with the topic of mental health in the workplace gaining greater attention under the #Dearmanager movement.

Facial recognition has reached a stage where it can be widely applied in analysing buyer intent, class attendance and student’s attention span, assisting in the recruitment process and official identification. The technology could have severe effects on safety but also human liberty, with threats to data safety, civil liberties and privacy, it is expected to fuel serious debate.

Conducting market research and identifying relevant trends and developments allow businesses to adjust business plans, adapt evolving technologies and devise risk management plans to ensure continued commercial success.


Sources:

Daniel Solomon, G. S. (2019). Webinar: Global Economy in 2020. Euromonitor International.

MacDonald, N. (2019, 12 11). 20 Big Ideas that will change your world in 2020. LinkedIn. Retrieved from LinkedIn: https://www.linkedin.com/pulse/20-big-ideas-change-your-world-2020-natalie-macdonald/

 

The 8 global consumer types and how to reach them

Increasing sales whilst tightening budgetary expenditure seems paradoxical, but it can be achieved by focussing marketing efforts on your key audiences.

Traditionally, consumers were categorised by demographics, skewing representation of their habits and lifestyle; however, marketers are now releasing that consumer habits and preferences are the most important factors influencing purchasing behaviour.

Evaluating personal attitudes (i.e. media consumption, buying behaviour, individual aspirations); Euromonitor International identified 8 global consumer types in a 2018 study:

 

Identifying key audience/s, their shopping motivators, major personal influences, habits, and purchase decision drivers when evaluating product innovation, sales and the marketing will enable retailers to maximise sales on a low budget.

Source: Euromonitor International

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How to build emotional customer connections

Today companies face ever increasing global competition, whilst striving for continuously growing profits and market share. Most firms focus on achieving high customer satisfaction at every stage of the customer journey. But satisfaction is not enough!

A recent study published by the Harvard Business Review suggests that customers with an emotional connection to a brand are 52% more valuable than highly satisfied ones.

They purchase more and more often, are less price sensitive, pay closer attention to promotional material, follow advice and actively promote the brand.

But how can a brand build emotional connections with their customers?

A brand has to understand their customers’ deep and often unspoken needs and link these motivators to specific purchasing behaviour to evaluate which desires are most profitable.

 

Source: Scott Magids, Alan Zorfas, and Daniel Leemon, “The New Science of Customer Emotions" 

Source: Scott Magdis, Alan Zorfas, and Daniel Leemon, “The New Science of Customer Emotions”

 

Emotional connections may differ between industries, categories and customer segments and may even shift in a segment depending on where a customer is in their customer journey.

Each brand needs to identify a specific set of needs that motivate their key customers and drive sales:

  1. Examine how the top quartile of your customer base or your most successful location differ from others
  2. Search for the key motivators of these connected customers
  3. Quantify the impact of different motivators on purchasing, spending, loyalty, and advocacy
  4. Gain a deeper understanding of connected customers through online surveys
  5. Evaluate motivators separate from your brand (reasons for brand choices do not always match key motivators)
  6. Develop informed strategy and optimise investments to turn highly satisfied customers into emotionally connected ones
  7. Make emotional connection a key objective not just in the marketing department but across the firm
  8. Regularly review customers’ emotional connection levels, as well as the correlation of customers’ emotional connection scores with lifetime value measures, such as annual spending, churn and tenure to adjust the strategy

A retail case study has shown that the implementation of an informed strategy led first year sales of new stores to exceed past averages by 20%, leading to shorter breakeven times and higher returns on capital. Sales grew by 3.5% in comparison with the annual average of just 1%, whilst inventory turnover increased more than 25%. Market share and customer advocacy also grew, contributing to record-high customer lifetime values.

The retailer had identified the need for a sense of belonging, a sense of thrill and a sense of freedom as key motivators. The brand redesigned their stores and implemented a social media campaign were customers could share their favourite outfits to satisfy their customers deepest desires.

 

Sounds daunting?

Actually, some of the world’s leading brands mistakenly believe that being considered a “good brand” by a large percentage of customers will secure long-term success. However, the blue bar in the following graphic demonstrates how many customers these brand failed to build an emotional connection with.

 

Source: Scott Magids, Alan Zorfas, and Daniel Leemon, “The New Science of Customer Emotions" 

Source: Scott Magids, Alan Zorfas, and Daniel Leemon, “The New Science of Customer Emotions”

 

This emotional connection gap represents an enormous opportunity for all brands to transform satisfied customers into emotionally connected and more valuable ones.

Source: The New Science of Customer Emotions

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The Power of Data Analysis

Global competition and increasingly ambitious business objectives leave no room for instinctive decision making.  Staying ahead in a world of infinite social media tweets and posts and online shops requires a 360-degree view of the elusive customer to guarantee successful and goal oriented omni-channel brand engagement. You have to know your customer and their every wish and desire to service them strategically and uniquely to guarantee sustainable success.

However, a 2017 CMO survey by Black Ink revealed that marketers perceived access to advanced analytics and general data to be the biggest hurdles in marketing; and, continually find themselves forced to rely on legacy solutions such as Excel or CRM systems.

The key to sustainably successful marketing is to align data insights with strategic company objectives.

Ask yourself:

  • What are your core objectives?
  • How does marketing contribute to these objectives?
  • Which data can you utilize to analyse your performance?
  • How will you measure success?
  • How can you design and install a systematic and continuous measurement process?

These questions will help you identify your key objectives and strategically collect and analyse data to measure success and inform strategy.

Be very selective about which data you choose to analyse and how and why. Metrics should only be included if the relationship between the metric and the goal is clear.

Such as:

Goal

Metric

Increase brand awareness Number of daily website visitors
Focus budget on most profitable customer segments Return on ad spend
Maintain market leader position Content trends
Optimise spending on campaigns Campaign conversion rates

 

This objectives-focused data analysis approach makes data both accessible as well as actionable by providing an in-depth performance summary, enabling decision making on the spot.

Metrics should be re-evaluated and modified regularly and made accessible to all team members; guaranteeing informed, prompt and appropriate decision making and goal oriented actions.

Source: Marketing Analytics dashboards: The do’s and don’ts

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Market Research – The Key to Successful Marketing

Marketing is a vital part of business operations, as it promotes the business brand, products and, importantly, what they stand for, hopefully in front of the company’s target audience and ultimately grow their customer base and sales.

However, every business differs in its products, services, customers, target audiences, distribution and many more factors. So, the success of every marketing strategy depends on market insights, informed strategy and appropriate budget allocations.

In order to develop an effective marketing strategy and maximise outcomes, businesses have to understand their own industry trends and inform themselves about major players within the industry in order to identify threats and opportunities (to their business), prior to potential disruption of sales, but also jumping on any first-mover competitive advantages there may be.

An in-depth analysis of regulations and risk factors, such as impacts of political and financial fluctuations will help risk mitigation or avoidance of some costly missteps down the track.

The importance of an overview of industry external influences, such as substitute and complementary industries is commonly underestimated. Strategy informed with industry insights allows a business or company to position themselves to add more value to their customers’ lives, and also helps to define and improve the company’s Unique Selling Proposition (USP), i.e. that X-Factor.

A crucial part of market research is the identification and profiling of target customer groups. This will inform the development of new products and/or services, as well as assisting in targeting marketing campaigns, maximising outcome, whilst minimising expenses, i.e. reducing expenditure in areas where it is not needed as urgently.

Every company aiming for sustainable growth and success should trial new products and services and give their customers a voice – they can tell you everything you need to know. This will identify areas of improvement, growth opportunities and minimise of risk exposure. Key Performance Indicators (KPIs) should be implemented and used to measure the success and effectiveness of every marketing strategy and campaign and ensure that organisational objectives are aligned with appropriate budget allocations.

These combined, will then empower a business to effectively allocate their budget accordingly to needed areas, maintain good relationships with suppliers and distributors, and ultimately maximise customer satisfaction and value.

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