At first glance there is little in common between Nokia, Intel and Kodak. Nokia was a mobile devices and telecom equipment company, Intel a chipset manufacturer and Kodak was known for it’s imaging products.
Intel is perhaps the largest and most valued semiconductor chip maker in the world today. Introduction of the x86 range of processors in the early 80s helped it dominate the PC market for over 2 decades. Despite this advantage, Intel failed to get an early foothold in the mobile chipset market. This was largely due to its failure to predict the popularity of smart devices like the Apple iPhone and Google’s Android devices. In 2014 Intel’s Mobile Chipset division, had a total revenue of $51 million, down 67 percent from the previous quarter and down a whopping 83 percent year-over-year.
Speaking at the Fortune Brainstorm Tech conference, Renee James Intel’s President said, “We didn’t anticipate that (these smartphone) devices would become general purpose computing devices. We led in the first wave of mobile with Wi-Fi and Centrino,” James said, referring to the company’s Wi-Fi product line. But she said the company initially viewed the iPhone as part of the phone market, not the computer market. “Apple gave us the guiding light and we missed that … or were slow to it.”
Mean while across the Atlantic, Nokia, a Finnish company and a pioneer in mobile communications, dominated the mobile phone market for over a decade, commanding a whopping 62% share of the smart phone market in 2007. However, in the following years, Nokia failed to spot changing customer preference for touch based devices. Nokia Xpress Music 5800, the first Nokia device to feature a touch interface was launched in 2009 a full 2 years after the iPhone. Over the next 7 years Nokia’s share of the smart phone market declined to single digit figures, forcing it to sell the loss making mobile division to Microsoft in 2013 for a little over 6 billion dollars.
Founded in 1892, Kodak more popularly known as Eastman Kodak was a technology company that focused on imaging products. It was well known for its photographic film products, a sector it dominated in the 20th century. Kodak’s troubles started in the late 1990s when it failed to pick up on changing customer preferences for digital cameras. Being a late entrant in the digital camera race didn’t help it replace declining revenues from film based cameras, leading to the filing of Chapter 11 bankruptcy protection in Jan 2012.
Intel, Nokia and Kodak, once market leaders in their respective sectors, fell prey to changing customer attitudes and behaviours. Failing to spot and capitalise on customer trends proved costly for them. For Intel it meant a serious set back in it’s quest to dominate the mobile chipset market, for Nokia it meant exiting the mobile devices business and for Kodak it was fatal.
Trends can make or break a company. Capitalising on a trend can help a company succeed while ignoring It, can threaten its very existence.
Contrast this with another epic corporate battle of our times, the Coke Vs the Pepsi challenge. For years the two companies fought long and hard for leadership in the soft drinks market. Some say that it was finally over with Pepsi conceding defeat to Coca Cola. In 2014 Coca Cola was a clear market leader in the US with a 42% share of the market, compared to Pepsi’s 27%. Coke had finally beaten Pepsi, but ironically the overall market for soft drinks was on the decline for the 10th straight year.
Pepsi may have lost the soft drinks battle, but under the leadership of Indra Nooyi, it won the war for the larger food & beverages market. Executives at Pepsi spotted the changing attitude of consumers towards their health. People were exercising more, eating healthier and smoking less, these changing attitudes fuelled the ‘Living Healthy Trend’.
Marketers at Pepsi, quickly capitalised on this trend and diversified away from soft drinks into healthier options like fruit juices. A series of acquisitions and new product lines like Quaker Foods, Tropicana, and Gatorade gave them the head start they needed.
Today Pepsi may have lost the cola wars, but it is ahead of Coca Cola in the overall food & beverages market, driven largely by the healthy foods and drinks sector. Spotting the ‘Healthy living’ trend and capitalising on it gave Pepsi the competitive edge in the market place.
Trends can be defined in many formal and informal ways, but I prefer the following definition, “Long term change in customer attitudes and behaviour that offer marketing and New Product development opportunities.”
Power of Trends
The adage Customer is King has never been more true. In the era of hyper connectivity, the individual is truly empowered. Customer’s purchase decisions are not being made based on what marketers are telling them, but by what they are telling each other. In such an era, it is critically important that businesses keep track of trends and even fads in their customer segments and beyond.
Studying trends is the best way of predicting the future and planning for it. Trends can help businesses develop new products, plan entry into new markets, align their marketing tactics and pick the right communication channels.
Purchase drivers: Emotions as much as rationality drive consumer purchase decisions. Spotting changes in customer attitudes and purchase drivers can have a big impact on sales. The recent economic downturn and joblessness has increased the sense of insecurity among people, causing them to look back at the good old times with a sense of nostalgia.
This is fuelling the ‘Back to the basics’ trend. Capitalizing on this trend marketer are emotionally connecting with their customers through, company history museums and chronicles of their founders.
Marketing Communication strategy: Trends have a profound impact on the way marketers communicate with their customers. The ‘Social & Mobile trend’ in which customer switch between many different online platforms is forcing businesses to relook at their marketing budgets. Companies are shifting their budgets away from traditional media like television and print to online media & social networks.
Distribution: Studying trends can also help formulate new ways of distributing products. Marketers keen on capitalizing on the ‘To Go trend’ are building a range of vending machines that sell portable electronic devices at airports, mobile phone manufacturers like Motorola are choosing an Online only distribution approach and online fashion retailers like Myntra are adopting a mobile app only strategy.
New product introductions: Trends can help companies identify develop new products that cater to changing customer attitudes. Pepsi’s foray into fruit based beverages and sports drinks or new entrants in fitness bands and portable health monitors are all examples of businesses capitalizing on the ‘Living Healthy Trend’.
New markets: Changes in customer attitudes can open up whole new market segments. The ‘Metro Sexual trend’ i.e. the blurring of traditional gender boundaries has opened up the market for male personal care products while women are now the new target segment for Gaming, a traditionally male dominated market.
Trends can influence company decisions in areas ranging from marketing strategy, new product introductions, new market expansions to marketing communication and even business strategy.
How to identify and exploit a trend
It is clear that trends have an important role to play along side other business strategies. Trend marketing is much more than just spotting changes in customer attitudes and behavior. Observation is an important first step, but analysing how trends develop and understanding it’s effects on a particular business is the key to exploiting their power.
Observe: This involves spotting changes in customer attitudes and behaviors. Observation can be direct e.g. focus groups, natural settings etc. or indirect like tracking popular and business media, search keywords, trending topics on social media etc.
Analyze: Not all trends develop into long term customer behavior or attitude change. Some might remain on the fringe and only affect a small segment of society, while other may just be fads that last a few months. Long terms trends on the other hand can be game changers that make or break a business. Analyzing trends and segmenting them into Long term, Fringe or Fads is a key step in trend marketing.
Apply: Trends can be Micro or Macro trends, National or International. Some trends apply to specific customer segments while others may be more universal. Understanding how trends effect a particular market segment or business can help formulate appropriate strategies. Decisions such as new product developments, firm’s entry into new geographies or markets are made at this stage.
Identifying and using trends is a three step process; Observe your customers and identify the trend, Analyze the trends progression &Apply it your specific market situation.
Looking for the spark that ignites trends
Trends are like forest fires, in todays hyper connected environment they spread rapidly but like forest fires they need a spark to ignite. Looking for a triggering event is good way to spot the trend at its infancy. Customers react to many different forms of trend initiators; PESTLE is a popular framework used to study these situations.
Looking for the sparks is a good way to spot trends early in their cycle. Trend initiators can be segmented into Political, Economic, Social, Technological, Legal and Environmental conditions. (PESTLE)
Political & Legal: Actions by governments such as changes in laws or new legislation can inadvertently spark off trends. For example, laws banning smoking in public places spawned a whole industry of e-cigarettes.
Economic: The changing economic status of the consumers can spark off trends. Back to basics trend, was sparked off by the economic downturn and the job losses that came with it. Localization and Anti- Immigration are also examples of trends that can be sparked by changing economic conditions.
Social: These are related to the age, Health, Employment and Education levels of consumers. Better education sparks of new behaviors, live healthy trends help a range of industries from Gyms to Health band makers. Migration of workers from rural to urban areas is a trend that can effect the housing industry. And a reverse migration from urban to rural areas can provide the spark for the ‘Back to Basics’ trend.
Technological: Introduction of a new technology can start off trends. The high quality front facing camera in phones sparked off the Selfie trend. A number of apps like ‘Dubsmash’ and selfie sticks are products that cater to this trend.
In today’s fast changing connected world monitoring trends that effect customer behavior and attitude are critical for the firm’s future. I would love to hear your views. Do you monitor consumer trends in your firm? How do you use these trends?
