Copyright World Future Society Jul/Aug 2009| [Headnote] |
| IN A STRUGGLING ECONOMY, THE FORCES OF CHANGE ARE PUTTING MORE PRESSURES ON BUSINESSES AND FROM MORE DIRECTIONS. SUCCESS REQUIRES BOTH STAYING ON TOP OF CURRENT TRENDS AND SPOTTING NEW ONES OVER THE HORIZON. |
The one thing that marketers cherish the most is a fleeting glimpse of the future. That glimpse would make the challenge of planning strategies, of devising the appropriate marketing mix elements, much simpler and less fraught with risk. This need accounts for the many articles and books generated each year, all proclaiming to understand and forecast future developments.
Forecasts of future social trends can only be developed with an understanding and utilization of underlying demographic and economic trends. This article captures some of the most important social trends that will unfold over the next 20 years, in the hope of providing some of those glimpses into the future that astute marketers seek.
1. The Emergence of China as the World's Largest Economic Power
With a purchasingpower parity GDP of more than $7.8 trillion in 2008, China ranks second in global economies behind only the United States, with a GDP of about $14.6 trillion in 2008. China's growth rate of about 10% annually will allow it to overtake the United States in the next few years, assuming that China's government allows the country's hypergrowth rate to continue and that the U.S. growth rate continues in the range of 2% to 4% per year. China has absorbed much of the manufacturing businesses formerly done in the United States, and China's economic composition is now about 49% manufacturing and 40% services, compared with about 20% manufacturing and 79% services in the United States.
Doing business with China - either as a company that wants to utilize the country's large, skilled labor force or as a consumer of goods made in China - requires a higher level of understanding of the Chinese culture than most Americans currently possess. In their book, China Now, authors N. Mark Lam and John L. Graham discuss some of these challenges. Nonverbal cues are different, standards of business practices are different, and protections of intellectual property and patents by the respective governments are different. Software and video piracy are particular concerns in this area.
2. Global Demographic and Migration Shifts
Populations of countries change in several predictable ways. Babies are born, people live a certain number of years and die, and new people migrate into the countries.
The United States had about 430,000 births in 2008, compared with 251,000 deaths, according to the U.S. Census Bureau. By tracking this ratio over time, and looking at unusual variances in the data, one can get a good understanding of a population's characteristics and even project those characteristics forward. In the United States, for example, the baby-boom cohort, consisting of those born between 1946 and 1964, is a large bulge in the population numbers. Even larger is the group labeled the echo boomers, those children of the baby boomers born in the 1970- 1985 time frame. These two bulges represent large pools of economic activity and will shape the types of products and services consumed in the United States for several decades.
During 2008, the United States also experienced a net legal migration of almost a million persons. The lifespan of U.S. residents continues to lengthen, enhanced by better health care and medical options than their ancestors enjoyed. A child born in the United States today has a life expectancy of more than 78 years. The U.S. population, recently cresting 300 million, is projected by the U.S. Census Bureau to exceed 345 million in 2025 and 400 million by 2045.
The population growth trends seen in the United States are not seen uniformly around the world, however. Japan has a relatively strict policy regarding incoming migration and is not replacing deaths at the same rate with new births. As a result, the Japanese population is rapidly growing older and starting to shrink. Already, elementary schools around Japan are closing for lack of students. Japanese industry is placing increasing reliance on robotic help in areas such as health care and personal services. If this negative population growth trend continues, the Japanese population will be unable to sustain its current economic output of about $4.5 trillion, the third largest economy in the world.
The European Union, consisting of 27 European countries banding together as a trading bloc, is also showing a rapid population decrease, partially offset by large inward migrations from Middle Eastern countries. Germany and Russia, two large components of the EU, have negative net population growth rates. As a result, this trading bloc, which currently accounts for almost a quarter of the world's purchasing-power parity GDP at roughly $15 trillion, is expected to see that amount fall to less than 20% of the global total in the next 10 years.
3. Energy and Water Shortages
As energy prices surge, driven partly by constrained production and refinery capacity, consumers are being forced to allocate increasing amounts of their monthly budgets to this area. This area includes electricity and natural gas for home consumption, gasoline for automotive transport, and higher product costs from manufacturers and retailers also being hit with higher energy costs.
There is a second, subtler, but possibly more powerful, shortage emerging around the world. It is a shortage of freshwater. For decades, large cities have built complex and expensive aqueduct and reservoir systems to serve their growing populations, but getting water into these systems is becoming more and more difficult.
Addressing these resource issues is an enormous challenge - and opportunity - for business. As energy prices climb, alternative sources of energy will be developed and deployed. While not as cost-effective as the relatively inexpensive burning of fossil fuels, these sources will be critical to the continued economic success of developed and emerging economies around the world.
Water presents a different challenge. While three-quarters of the world's surface is covered by water, it is primarily salt-laden and not directly drinkable. Desalination technologies are being developed in arid parts of the world but still have a long way to go before they are capable of providing freshwater on a large scale at acceptable cost. Unlike energy, there is no alternative source of freshwater.
Migration patterns from rural areas into urban centers will continue the concentration of population into smaller footprints. Energy and water generation is typically done in more remote areas, putting additional pressure on transportation and distribution of these resources.
4. Managing Waste, Reusing Products
Twice a week in many U.S. neighborhoods, the garbage truck comes to people's homes and picks up the refuse left at the curb. This refuse consists of both trash that cannot be reused and processed materials that can be reused, such as glass, paper, and plastics. Packaging is one of the major sources of reusable materials but is often discarded without a second thought.
This discard process contains two major areas of concern. First, the landfills are rapidly becoming filled with materials that take decades or even centuries to decompose. Second, the cost of producing new materials for packaging will continue to climb as necessary raw materials become scarcer.
In the European Union, countries have aggressively promoted or mandated recycling. If a retailer sells an appliance, that retailer is responsible for taking back the appliance after it has passed its useful life. Packaging is also under significant scrutiny: Much packaging is simply unnecessary, and that which is necessary contains reusable and recyclable components that could be reclaimed.
"Green" is the new mantra for both consumers and businesses and may have reached a critical mass in terms of consumer understanding and willingness to participate.
5. Falling Education Standards, Less-Skilled Thought Leaders
In the middle of the last century, a college education was an aspirational goal and viewed with respect. Advanced degrees, such as an MBA, were relatively rare and earned only by the brightest and most-dedicated students. College degrees weren't prerequisites for management positions in many corporations. Many labor positions were manned by apprentices, who spent years learning their trades from skilled masters.
Today, the U.S. education system is producing far greater numbers of people with college degrees, and advanced degrees are becoming more and more common. In many corporations, the college degree and place of matriculation are important considerations in career advancement.
However, the general level of education has fallen, with many college students and even graduates unable to compose a simple business letter or critically think through a complex business problem. As developed economies like the United States continue their transition from manufacturing to service economies built around knowledge workers, this presents a serious conundrum. Entry-level service jobs are being deskilled, as with the use of icons rather than words and numbers on cash registers; this is leading to significant numbers of those positions moving to less-educated immigrants. Shortages of engineers and scientists are being filled via the massive immigration of skilled workers from India. In recent discussions with 
Microsoft research managers, they estimated that more than one-third of Microsoft's 70,000 knowledge workers in Redmond, Washington, are from India.
Peter G. de Krassel has discussed the crisis facing the American primary and secondary school system in his book Custom Maid Knowledge for New World Disorder. Though some standardized tests report sporadic increases in scores, the general trend over the past two decades has been downward.
One of the resources being utilized by rapidly growing economies is knowledge. Brazil, Russia, India, and China all have rapidly growing economies, partly driven by impressive gains in mathematics, engineering, and science education.
6. Brand Relationships Intensify
Disney's mouse ears. Apple Computer. The golden arches of McDonald's. Coca-Cola. Nike and its swoosh - these are examples of dominating iconic global brands, easily identifiable and with simple, consistent brand promises. Increasingly, consumers are looking for ways to connect with these iconic brands, and this further strengthens the dominance of these brands.
In a world where consumers have increasing access to comparative information and global purchasing, brand strength will become critical to a firm's survival. As more and more countries cross the theoretical $5,000 GDP per-capita level, where brand becomes important, and then cross the theoretical $10,000 GDP per-capita level, where global purchasing becomes the norm, lessknown national and regional brands will struggle for survival.
7. Instant-Gratification Shopping
As time pressures increase, consumers more frequently turn to convenience for their purchasing tasks. The explosive growth of Internet shopping is one indication of this trend. In addition, with attention spans shortening, consumers either multitask or flip from one alternative selection to another, forming purchasing decisions with increasing rapidity. Products that do not present a compelling, immediate purchase justification will be passed over.
Amazon has taken the concept a step further, with a technology that allows consumers to use their cell phones in stores to photograph product bar codes, and then use those bar codes to find the same product on Amazon at a reduced price. Merchants are rapidly deploying technologies to speed the purchase process, such as an RFID-enabled credit card that just requires a tap on the terminal to complete the transaction. Micropurchases using cell phones to buy from vending machines are being deployed in Japan and Korea.
8. On-Demand Media
The explosion of video media - e.g., cable channels, iPod webcasts, video streaming on computers - allows multitaskers of today to dip into news, entertainment, or sports streams whenever they desire. Downloadable books, songs, and movies combine with time-shifting technologies like DVRs to make scheduled media consumption a nostalgic reminder to baby boomers. Technology such as the recent introduction of the electronic reader tablet will facilitate this trend.
Computer and communications convergence will be a strong and continued driver of on-demand media. It is getting almost impossible to find a product these days that doesn't have some type of electronic or microprocessor component. Smart refrigerators keep track of their own contents and use the Internet to signal the need for repurchases. Cameras that once used film now store images on tiny chips, and iPods with 80 gigabytes of storage (equivalent to many desktop computers sold only a year or two ago) are common-place.
The integration of these technologies is leading to massive substitutions of product categories. Many young people use their cell phones for keeping time rather than watches. One large cell phone manufacturer is developing an electronic wallet, in which the cell phone contains credit card and identification information. Already, Japanese consumers use their cell phones to make micro-purchases from vending machines.
9. Customization, Personalization, And Community Experiences
Consumer brands are increasingly reaching out to unique, homogeneous groups of consumers to deliver customized and personalized goods and services to them. The emergence of communities bound by shared interests, particularly in virtual communities, provides not only opportunities for marketers to gain insights about the needs of these unique groups of consumers, but also challenges in tailoring messages and products for them.
One result of this growth in community experiences is that people will utilize positive psychology to become happier in their daily lives, according to Harvard University psychology lecturer Tal Ben-Shahar.
Social networks will continue to emerge as a major driving factor in the success or failure of certain consumer brands. These networks will grow on a global basis, with many network members only communicating with other network members on a virtual basis, never interacting in person.
10. Youth Rules
The baby-boom generation is about to enter the age of traditional retirement. The echo boomers, progeny of this baby-boomer generation, are about to dominate the workforce. Raised in an era of relative luxury, with immediate gratification for most basic needs, the youth of the world will play an increasingly vital role in identifying new product and service requirements, in causing the rapid spread of new trends and lifestyles, and in changing the ways in which businesses interact with them.
Key issues for youth will revolve around the dynamics of health and wellness versus increasing obesity, the incorporation of traditional and holistic medical practices, and the exploration of health and relaxation techniques from around the world. Yoga and eclectic foods will begin to replace golf and beef steaks. In the United States, for example, golf courses are already seeing rapid declines in utilization as the golfing population shrinks.
As the expected life span of people continues to lengthen, this will place a related demand on medical services and assisted-living facilities. In his book Ageless Nation, Montclair University management professor Michael Zey predicts that this extension of the human life span will create significant opportunities for cultural enrichment.
This trend is contrasted with a large, obese segment of the United States population. To a degree, convenience foods and a lack of outdoor recreation are resulting in expanding waistlines and related health problems. This is true both in the United States and in many other developed nations.
How the Future Forces Add Up
The implications of these trends could drive businesses around the world to either rethink their business models or make significant changes to the ways in which they interact with their customers. As time frames shrink, reactionary businesses will struggle to survive, while firms that engage in proactive, long-range research into the needs of their customers will have a higher likelihood of success.
It is important to remain futurevigilant: New forces will likely emerge with new impacts, while some of the trends described above could fade in importance in coming decades. Astute organizations will combine aggressive research programs with scenario planning to help chart their way through coming decades. Those who don't may be facing a series of "icons on a cash register."
| [Sidebar] |
| For Further Information |
| Ageless Nation by Michael G. Zey, New Horizon Press, 2007. |
| China Now by N. Mark Lam and John L. Graham, McGraw-Hill, 2007. |
| CIA World Factbook, February 2009, www.cia.gov/library/publications/the-world-factbook. |
| Custom Maid Knowledge for New World Disorder by Peter de Krassel, Cal Books, 2007. |
| Decision Analyst Economic Index, Decision Analyst Health and Nutrition. |
| Happier: Learn the Secrets to Daily Joy and Lasting Fulfillment by Tal Ben-Shahar, McGraw-Hill, 2007. |
| Strategist, and Decision Analyst In The KidZone, www.decisionanalyst.com. |
| U.S. Census Bureau, www.census.gov. |
| [Author Affiliation] |
| About the Author |
| Michael Richarme is a senior vice president for the market-research firm Decision Analyst Inc., 604 Avenue H East, Arlington, Texas 76011. Web site www.decisionanalyst.com. |
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