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

Learn about how you harness the power of consumer profiling. Don’t miss out.
Contact us now for a free, no obligation, 2 hour consultation about your research needs.

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

Know what your customers are thinking. It’s really that simple.
Read more about the Key to Successful Marketing.

Aged Care – A Critical Analysis

We have seen an exponential increase in the number of elderly in proportion to the total population over the past decades. However, people aged 65 and over are not as healthy in old age as projected considering our prosperity, according to recent findings of an international study done by BDO in cooperation with the OECD.

Additionally, elderly and healthcare costs are continuously increasing especially due to an international increase in comorbidity (two or more illnesses are present in the same person simultaneously) among those aged 65 and over, placing a heavy social and economic burden on future generations.

Average medical expenses for a person aged 85 and over amount to over AUD$79,200 per year (BDO); an alarming amount considering that this group is expected to exceed 25% by 2050 worldwide.

Furthermore, due to high educational requirements, the demand for health care professionals far outstrips the supply. What’s more is, many lower-skilled health care professionals were made redundant in the last years, due to unnecessarily high requirements.

Analysing national differences in their approach to aged care revealed extraordinary insights in BDO’s recent international study.

Even though all examined countries were faced with tremendous demographic challenges, the study found that not only differences in health care models and funding seemed to impact the health of the elderly, but lifestyle and habits too. In Norway, for example, people are healthier for a significantly longer period of time due to an outdoor lifestyle, a ‘culture of caring’, with families taking care of each other and the elderly taking an active and meaningful part in society

Furthermore, smokers made up only 4% of the population, whereas in Germany, where elderly (on average) only have 8 healthy years over 65, 20% of the population smoked.

A different approach to evaluating return on investment (ROI) in the Netherlands is showing positive results. The country seeks to shift their focus away from the disabilities of patients and further towards their abilities.

BDO concluded that current healthcare systems focus on curing the sick rather than preventing sickness and does not deal with the root of the problem.

To achieve a more affordable, more effective and sustainable aged care system we need to:

  1. focus on innovation, prevention and rehabilitation;
  2. target funding to boost innovation;
  3. lower educational barriers for health care professionals;
  4. develop technical innovations;
  5. encourage and support big-scale lifestyle changes;
  6. invest in methods, solutions and processes that ensure people age differently;
  7. seeking greater dialogue with the elderly to identify areas of improvement;
  8. evaluate ROI;
  9. acknowledge lack of difference between private and public healthcare systems; and
  10. give the elderly a place and purpose in our society.

Source: https://www.bdo.com.au/en-au/insights/healthcare/publications/new-perspectives-on-elderly-care

Market Research + Economic Trends

To successfully operate a business and grow profits, it is important to have a thorough understanding of the economic opportunities and, equally, threats. Market research provides decision makers with strategic, high quality, objective and comprehensive insights, ensuring long-term, sustainable growth for business.

The economic landscape offers great financial opportunities, as foreign investment fosters local growth on one hand and labour costs, exchange and interest rates and increase competitiveness on the other.

Global economic growth supports Australian economy

The Australian Economy has just completed its 26th year of continuous growth, setting an international record. Australia’s economic future looks promising, while growth has accelerated in around 75% of Australia’s major trading partners. Favourable conditions, such as low interest rates, a relatively weaker Australian Dollar and low unit labour costs, boost Australian competitiveness. This means that expanding manufacturing and service sectors ultimately support domestic financial markets.

Only US trade restrictions, tensions with North Korea and Iran, as well as rising global government debt could potentially cause growth disruptions.

Guaranteed Growth – commodity headwinds support economy growth

The acceleration in economic growth in 50% of countries worldwide (IMF) translates into increased infrastructure spending and consequently fuelling demand for more Australian commodities. This growing demand is strong enough to offset against a slowing Chinese demand, safeguarding the national economy.

A booming Indian population combined with urbanisation and the “Made in India” campaign seeks to grow India’s manufacturing base, fuelling the need for more infrastructure. Furthermore, China’s “One Belt One Road” initiative is estimated to be one of the largest infrastructure projects in history (TIME) while Trump’s US$1 trillion infrastructure program will significantly contribute to commodity demand and set an end to the downturn.

Additionally, LNG contract agreements has commenced multi-year infrastructure projects (0.5% of GDP) and Asian economic and demographic momentum is pushing Australian tourism and education demand upwards (0.5 – 0.75% of GDP), all looking to boost Australian economic growth.

Tightening labour markets and weak wages keep inflation under 2%

Possible growth in wages, as a result of a positive economic outlook, might bring inflation closer to the Reserve Bank of Australia’s (RBA) 2-3% target. However there still are very few upward pressures on wages or prices. The government’s focus on budget repairs makes tax cuts or welfare increases appear highly unlikely, meaning that an increase in household spending could only come from either wages growth or an increase in small to medium enterprise (SME) profits.

However, Australia is currently experiencing the lowest wages growth on record (only 2% p.a.), a reality of a highly competitive product and labour market.

RBA Governor Dr. Philipp Lowe expressed his hope for a “pickup in wages” and declared it would be “a good thing if workers asked for a pay rise”. Australia could miss the next wave of global economic growth if consumer spending does not increase.

Households – macroeconomic risk?

Weak income growth, decreasing consumer spending and high levels of household debt are posing a serious financial risk to the Australian economy.

It is not just the fact that the average household debt has increased, but more households have debt and carry it for longer. Increasing living costs combined with weak income growth and job security concerns are creating delicate environment sensitive to interest rate fluctuations. This evokes exaggerated consumer responses to economic news. However, it should be noted that unemployment, interest rates and mortgage rates are decreasing and the labour market is picking up. This means at least in the short-term, nothing will trigger any major financial risk factors. If companies recognise the booming economic headwinds in the future and offer their employees higher wages, consumer spending will increase and the Australian economy will once again prosper.

Does your business strategy incorporate opportunities related to economic growth?

Knowledge is power, and market research provides your organisation with business intelligence tailored to your needs and reduces risky decisions on strategic direction

Source: Euromonitor International

Set your Organisation up for success.