NEW YORK: Brand owners looking to drive long-term growth must respond to a range of "megatrends" from the explosion of digital media to the rise of competitors in emerging markets, a study has argued.
The Boston Consulting Group has been tracking 78 "megatrends" since 2005, and argued the firms that react most effectively to these shifts will be best placed to increase sales going forward.
Half of the developments the company is monitoring gained ground during the downturn, including matters such as corporate social responsibility and issues linked to health and wellness.
A further 29% were strengthened by the crisis, from the surge of "challengers" in emerging economies to the revolution in wireless communications and anxiety surrounding identity theft and counterfeit brands.
The fact that 44% of these "megatrends" each offer a potential market size of $500m (€410m; £342m) worldwide indicates the value that could follow on from the adoption of new strategies.
For example, the ageing of the population in many nations has led to the expansion of the "silver market", or shoppers over the age of 65, a demographic that is worth an estimated $700bn globally.
This target audience could be of particular interest to the cosmetics industry and financial services providers, BCG said.
Similarly, concerns about obesity levels in areas like the US and Western Europe should stimulate an uptick in demand for products from organic food to sports and fitness goods.
Turning to the retail sector, BCG said the “trading up” observable before the onset of the recession has been supplanted by “trading down”, with a number of consequences.
Wal-Mart has leveraged this transition to boost its US sales, and then used these revenues to “position itself for the next wave of growth” by enhancing its network in China from 89 to 146 stores.
The discounter should thus be well placed to exploit what was described as the “biggest trend cluster”, in the form of the “Asian ascent” spearheaded by China and India.
In demonstration of the scale of this movement, BCG stated brand owners wishing to reach 70% of middle class and affluent consumers in China in 2005 needed a presence in just 70 locations.
This figure has now reached nearly 240 separate towns and cities, and will climb to an estimated 400 by 2020 thanks to the country's prolonged economic boom.
BCG suggested that firms currently leading the way in China must ensure they “stay ahead” of the evolving trading climate, while “laggards” can catch up by tapping in to new dynamics.
General Electric has won the “heart” of key emerging markets like China by rejecting the policies that have previously proved successful in favour of establishing “local growth teams”.
These units are given full autonomy to construct bespoke business models and develop products tailored to fit the requirements of individual countries.
More broadly, the need to create novel solutions has been fuelled by the “e-migration” of companies and their customers, as tools from social networks to iPhone applications reshape the media landscape.
It only took five years for over 50% of the travel market in North America to move online, and this process is now at work in sectors from banking and stock trades to books and even education.
For retailers, the advent of mobile technology enabling shoppers to scan barcodes and compare prices also means their stores could become “unwitting and uncompensated 'showrooms'” for online and offline rivals.
“The ability to of businesses to manage multichannel complexity will increasingly define winners in the new frontier,” BCG said.
Data sourced from Boston Consulting Group; additional content by Warc staff, 04 June 2010....warc.com