Today's consumers are different than yesterday’s. This is the consequence of three major mutually interacting factors: Demographics, markets and economics. Alongside historically unprecedented demographic changes, people’s behaviours have also changed: They are getting married later, having fewer children, both parents are both working and young adults are entering the job market much later than they used to. Understanding these demographics changes is essential to understanding consumer behaviors.
The report “Demographic Focus - Changing Global Consumers” of Credit Suisse provides insights into changing global consumer behavior and expenditure patterns.
The market place has also changed mainly due to new technologies and new marketing techniques. The way people consume today is very different to how they used to consume in the past. Indeed with ongoing global technological changes people are becoming more and more reliant on technology to consume. This creates pressure for certain age groups that may not adapt as quickly as they should to cope with these new ways of consuming. Moreover marketing techniques are becoming more prominent and are creating difficulties for consumers to assess the cost-benefit characteristics of a product. This has huge implications as it means people will need to spend a lot more time trying to decipher the huge amount of information available on goods and services that can be quite complex.
Moreover freer international trade, more efficient international transportation services and new information and communications technology have created more open international markets for goods and services. Increased trade has promoted competition thereby boosting consumer welfare worldwide. Once again this has both an upside and downside impact on consumers, as they have access to more products and information but they also need to sort out the amount of information available to make optimal consumption choices.
In the first section of our report we talk about changing consumers analyzing how consumers have changed. In the second section we look at how they consume, what affects their consumption and how their consumption has changed. “The power of individual choice has never been greater, and the reasons and patterns for those choices never harder to understand and analyze.” Mark J. Penn (Chief Strategy Officer, Microsoft & former advisor to Bill Clinton).
According with Credit Suisse those are the eight factors that will change global consumers behaviours:
- Demographics is about consumers and workers. Individuals consume from birth to death and there are nearly 7.3bn global consumers today. With dramatic life cycle changes, individuals’ consumption behavior and patterns have been undergoing major rapid changes – later marriage, and parenthood, multiple workers in a family and delayed job market entry.
- The G6 (France, Germany, Italy, Japan, UK and US) countries’ consumers account for 50.3% of world consumption, thus have the world's largest consumer markets. The EMG6 (Brazil, China, India, Mexico, Russia and Turkey) countries’ consumers account for 19.6% of world consumption, their consumption share is growing.
- Contrary to popular perception, old people are the largest consumer group as they are the richest age group. Consumption shares for the 50+ age group accounts for 58.1%, 54.2% and 59.7% of the total consumption in Japan, US and Germany respectively.
- Today’s young adults consume relatively less than their corresponding cohorts born a generation or two earlier. They start accumulating assets later due to longer years in education. High youth unemployment and high student debt levels put additional pressure on these young adults.
- Working women are a group of new consumers with increasing numbers of them getting educated, working and becoming richer..
- Consumer behaviors have been impacted by changing technologies. Consumers are more sophisticated and more impatient in terms of purchase experiences. An information intensive and complex market place forces them to access and process information quickly
- The state of the economy and their own economic status also influences the way people consume. Job uncertainty leads to increased precautionary saving amongst workers. Economic confidence and fads/fashions also affect consumer expenditure patterns.
- Those who miss out on these consumer trends and changes are unlikely to capitalize on opportunities and are unlikely to be winners.