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Image Credit:
Lians Jadan

8

min read

IT'S HERE! INDUSTRY 4.0

Consumers are quickly and organically taking a more active role in today’s business cycle. Firms, however, are still gradually arriving. Large strides have been made with the full-throttle adoption and integration of Big Data and the Internet of Things. Personal assistant devices like Alexa by Amazon and customised shoes by Nike utilise these very technologies to combat challenges from omni-channel consumer behaviour.

This essentially means that consumers are actively seeking out information about brands, services, products, ingredients, or practices through online and offline channels.

Rapidly growing media and channel fragmentation is proving to be quite the challenge for mass-producing firms that are trying to keep up with equally fragmenting consumer needs. Furthermore, consumer to consumer conversations and communities (familiar or unfamiliar persons) are more trusted than traditional one-way brand communication.

Several approaches to product innovation practices and approaches have been proposed over time in order to derive the most relevant product development insights arising from consumer needs. One such process-based solution highlights the importance of directing consumers to perform need-fulfilling tasks in the in the process. This approach also suggests that brands should retain the solution-related tasks. Most researchers in the fields of innovation and customer value are in agreement that co-creation is one such innovative approach that enables consumers to undertake a far more active role in the creation of the product/service they are consuming. This becomes increasingly relevant in various mass-producing consumer goods industries as the one-size-fits-all approach towards gathering heterogeneous consumer insights, segmenting them in homogeneous consumer groups and creating relatively standardised products is not as successful as before.

Advances in data analytics and information technology channels have fuelled this phenomenon further by empowering consumers all over the world who would prefer being involved in the product development process. The rise of the new global consumer is driving brands to listen attentively, interact personally and innovate quickly. This is supported by the spike in expected growth (share of 50%) for emerging markets in terms of beauty and personal care by 2025.

Survival and success in the business world in this era is mainly the result of companies’ ability to innovate. Whether it is innovation driven by short product life cycles that characterise multiple industries for strategic reasons and involve the improvement or complete replacements of existing products, or if it is innovation driven by the need of staying ahead and avoiding being taken over by the competition to ensure differentiation and relevance... Innovation is therefore linked to growth since the main notion is transforming opportunities into new ideas that have the potential of being implemented and materialised to create value.

Since value creation is one of the most important drivers behind innovation , innovation processes are characterised by having high risk and require systemic management at different scales from project levels to business levels as well as the delicate aspects of passions, vision , enthusiasm, insight, energy and hard work that lead to the materialisation of the ideas. 

Consumers have been and still do (to a certain extent) play a passive role in conventional product development strategies employed by mass-producers of consumer goods. Only with recent cultural and technological developments have consumers started recognising their power to influence the way products are created for them to buy and use. One such socio-cultural development is the increasing level of scepticism and distrust in marketing claims and practices. Multiple studies under the discipline suggest that apart from high suspicion of marketing communication in general, consumers also are increasingly sceptical about performance claims of new products.

Additionally, increasing dissatisfaction with the process and state of consumption itself elucidates that material products have been unable to fulfil psychological needs of consumers. Studies in the field of cognitive psychology propose that such intrinsic requirements can be addressed though creative tasks, involvement and processes.

Consumer Expectations

The increase in expectations of consumers from brands is further propelled by technological advancement as earlier suggested. The Internet has made it possible for consumers to access a variety of information sources and channels. It has been established through research that educational and user-friendly tutorial content available on the internet has positively influenced consumers’ knowledge in creative tasks and processes. For example, YouTube and now even Instagram upload thousands of educational/tutorial videos each day on a variety of topics or products.

Social media influencers (also broadly known as lead users) can educate an un-informed consumer on everything from learning about product ingredients, their effect in usage, learning how to make natural/organic beauty and wellness products at home, product reviews, etc. This influences a consumer’s purchase decision as increased awareness and information establishes a sense of customer agency where they take a more active role in clearly understanding their own needs and expect brands to satisfy them through functional product attributes.

One of the driving forces behind this trend is consumer demand. People, specifically in the technology industry, have been increasingly demanding more control over, and impact on, the development of their own services.

Mass customisation has been around for many years, just under a different label.

If you ever went to a school or played on a sports team where you received a custom sweater or track suit, that is customisation at work. It was this demand for customisation of products that formulated one of the early concepts that is now prosumerism. But nowadays, this concept has expanded far beyond a few sweaters and tracksuits.

Prosumer Distinctions

One of the most common examples to date of prosumers are highly involved hobbyists and the Do-It-Yourself approach. These are consumers who are more independent and self-sufficient with sometimes even near professional level needs from the goods and services they consume. One of the most recent examples of this is the rise of the 3-D printing industry and community.

A second relates more to the digital world. The open source software movement is a prime example of prosumers. Where people are able to collaborate, share, and build on what others have created. This is generally all done for free as well. The line between consumers and producers is fully blended here when a community collaborates and builds products and services for their own communal use. Some of the most successful examples of this are the operating system Linux and statistics software R.

A third type of prosumers comes from the energy industry. Depending on where you live, you might have already seen some people placing solar panels on the roofs of their homes. These people are one of the newest forms of prosumers and companies are already jumping on the trend.

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Key Takeaways
  • Customisation of products and services is more relevant today than ever before.
    - Increased differentiation in consumer needs alongside the access to information are driving the growth in customisation demand.
  • Companies are finding new ways to create and deliver tailored brand experiences to their consumers.
  • The degree to which a product or service is customised is specific to:
    - The nature of the industry
    - The feasibility of a company and its supply chain
    - The demand for customisation
  • The demand for customisation led to new business models that allowed local brands to serve global segments.
  • Mass customisation is a win-win for brands.
    - Firms that are quick to identify their consumers’ individual needs will remain competitive.
    - Successful brands are able to employ consumer input early in the value chain process and deliver relevant products. 
  • Advancements in technology enabled brands new opportunities to co-create value. 
    - Mass-producing brands can still employ mass customisation with minimal configuration while maintaining the production status quo.
  • Drivers for consumer participation in mass customisation
    - Attributes like preference fit/uniqueness/self-expression tend to be parameters in product-based evaluations.
    - Psychological attributes like process satisfaction and sense of achievement serve as the evaluation parameters of customisation.

by

Nikita Ashok

On

Sep 15, 2021

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