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Trend
Update: Massclusivity
report
from Reinier Evers & Trendwatching.com
What
is Mass Class?
The
ongoing democratization of luxury (read: quality consumer goods
and services at ever decreasing prices) has created powerful icons
of new-style mass consumption: think Nokia, H&M, Zara, ING,
DELL Computers, Gap, Virgin, Microsoft, Nike, EasyJet, or L'Oreal.
These
companies cater to what TRENDWATCHING.COM has dubbed MASS CLASS:
the hundreds of millions of global consumers who are now unified
in their quest for the best deals on offer on a global scale in
virtually each B2C category.
The
MASS CLASS has not replaced its well-know predecessor, the 'Global
Middle Class', but rather incorporated its richer cousin, sharing
a level of purchasing power when it comes to most B2C goods and
services, save for the really big ticket items like housing, college
education and high-end cars. In other words, MASS CLASS puts any
Shanghai and Prague shopper making $5,000 a year on par with Swiss
and US consumers bagging $5,000 a month, when it comes to consumption
of quality mass goods.
So
what are the drivers behind this trend? A snapshot:
-
Unprecedented wealth in the 'developed' world, encouraging and
inspiring leading entrepreneurs and corporations to continually
introduce higher quality goods and services (GDP per head in
OECD countries has increased up to tenfold over the last three
decades. Biggest winner: South Korea: up twentyfold from little
more than US$700 in 1970 to US$15,000 in 2000).
- Equally
impressive growth in prosperity in many developing nations,
spawning hundreds of millions of 'new' consumers that are copying
the developed world in taste and preference.
- Entire
countries and regions becoming both factories to the world (keeping
costs down) AND massive consumer markets (Swedish home furnisher
IKEA opened its largest store in Asia in April of this year,
the retailer's second outlet in China's largest city Shanghai.
Ten new outlets should be in operation by 2010. China is Ikea's
largest purchasing market, with 15 percent of its products originating
there.
- Global
communication channels allowing for mass branding and advertising
like we haven't seen before in economic history: the global
MTV network alone annually attracts more than 366 million households
and a billion viewers.
How
to profit from a massive trend like MASS CLASS?
Well,
to start off with, try incorporating it into your strategic vocabulary.
MASS CLASS as a phenomenon represents new markets, new consumers,
and new competition going after these vast opportunities. Prepare
for a new breed of entrepreneurs willing to challenge any existing
business model that shows even the slightest sign of fatigue,
jumping on the enormous economies of scale and scope made possible
by this unified mass of consumers. Furthermore, expect many incumbents
in retail, travel, financial services, etc. to try to copy their
low cost / high quality rivals by imitating new business ideas,
failing to grasp that behind those ideas lie fundamentally different
business models. Witness airlines like British Airways and KLM
recently giving up on establishing MASS CLASS carriers inspired
by Ryan Air and EasyJet.
And
consider the opportunities offered by the unavoidable anti-trend,
which for MASS CLASS would be MASSCLUSIVITY: a sudden craving
for a bit of privilege and status amongst the masses will favour
a new breed of nimble service providers, modeled after phenomena
like the restricted-access airport lounge. But even here, incumbents
may find that their 'old-style middle class' won't fill this niche:
their bland service levels represent neither true privilege nor
true MASS CLASS value.
Again,
this trend is multi-faceted and incorporates plenty of sub-trends,
which is why we will devote more space to it in upcoming issues.
Stay tuned, en masse ;-)
Massclusivity
The
popularity of Royal-Class airport lounges and invitation-only
Centurion credit cards are just two examples of modern man's immense
need for respect and privilege. The more access consumers have
to outstanding quality goods and services (the DVD player in your
living room probably doesn’t differ too much from the one
Queen Elizabeth’s grandchildren use to watch ‘Lord of
the Rings’), the more they want exclusivity and status of
a different order. The kind that visibly sets you apart from the
masses and gives you access to privileges most others won’t
get.
This
'exclusivity for the masses’, or MASSCLUSIVITY, can be
an instant add-on and revenue booster for many services in the
public domain. MASSCLUSIVITY
is NOT about exclusively opening up Harrods or Macy’s late Sunday
night for a Hollywood super-celeb looking for a last-minute party
dress, but rather about setting up special in-store coffee lounges
or luxurious fitting rooms for members only. Respect and privilege
are scarce nowadays. Reason enough to add them to your offerings.
The
Mass Class Car
The
MASS CLASS CAR is not new: Latin Americans had their Volkswagen
Beetle (affectionately called ''el huevito'', the little egg,
or "el vocho"), Indian consumers have their Maruti 800 (selling
for as little as USD 4,860), and in the 1990s, Fiat of Italy flooded
the developing world with its Fiat Palio, the company's 'world
car', aimed at emerging countries such as Brazil, Argentina, India,
China and Turkey. Today the Fiat Palio is marketed in forty countries,
and produced in nine plants. (Source: Wikipedia.) However, with
especially India and China rising and shining, a slew of new initiatives
promises to rejuvenate the MASS CLASS CAR trend.
EXAMPLES
of the MASS CLASS CAR
Renault
X90 (aka Logan) French car manufacturer Renault is now in
full gear, preparing the building of its Logan 'World Car'. The
Logan, initially named the X-90, is also known as the 5,000 Euro
car (after the planned sales price for the entry-level model in
developing markets). Production will soon start at Renault's Dacia
subsidiary in Romania, which previously built the Dacia 1300,
a copy of the 35-year-old Renault 12. It recently ceased manufacturing
this model, thereby freeing up capacity. Dacia is aiming to build
200,000 cars a year for Eastern Europe, and the Dacia plant will
be followed by factories in Iran, Russia, Morocco, Colombia and
probably China and India. Renault hopes to sell 700,000 Logans
by 2010. (Sources: Financial Times, just-auto.com.)
-----
Chery
QQ and Geely Haoqing China's burgeoning automobile
industry is also seeing initiatives for new MASS CLASS CARS, most
notably those of Chery and Geely. The two car makers have gained
a domestic market share of around 10% by undercutting their larger
rivals on price, with vehicles currently priced at around Rmb
40,000 (USD 4,800). This spring saw the introduction of the Chery
QQ, a spartan but cute four-door hatchback.
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China's
only privately owned car manufacturer Geely Group unveiled
its new Geely Haoqing last April. Both Chery and Geely are very
ambitious and have just announced a push into overseas markets.
Geely is planning to step up exports to the Middle East, South
America, and in a first for a Chinese carmaker, also to the US
with sales targeted at 5,000-6,000 units in 2005. Chery, for its
part, is planning to export 10,000 cars this year. Despite lower
vehicle quality levels, the carmaker is aiming to grab market
share from foreign rivals in overseas markets by selling cars
at even lower prices than in China. (Sources: Financial Times,
China Daily.)
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Indian
car giant Tata Motors is hoping to make motoring available
to the country's masses with the introduction of a car costing
about USD 2,000 (!). The vehicle, which is still at the "ideation"
stage, is expected to have a 600cc engine and to be fighting for
space on India 's roads within three to five years. India 's cheapest
car, the Maruti 800, currently costs about USD 4,860 (200,000
rupees). Among the strategies for producing a car retailing at
half that amount is to set up a network of low-cost, low-volume
manufacturers around India for component production and assembly,
acting under license. The low-cost cars would be aimed at people
graduating from two-wheelers to cars. Five million two-wheelers
are sold each year in India, while 200,000 Indians made first-time
purchases of entry level cars last year. Tata believes that demand
for the 'People's Car' could rise to 500,000 within two years,
with opportunities in other parts of Asia and Africa. (Sources:
Financial Express India, Telegraph.co.uk.)
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The
above may not make your day if you're an environmentalist, but
as we often need to point out: the art of trend watching really
is about observing first, then drawing conclusions. It's better
to be in the know, good or bad. Now, chances are you're not into
the automotive world at all, in which case you may not care about
the Renault X-90 or the Cherry QQ. However, these same MASS CLASS
initiatives are building in real estate. In travel. In fashion.
In finance. And thus, studying these initiatives, even if they
are far removed from your own industry or your geographical location,
should get you thinking and, eventually, going.
TRENDWATCHING.COM
founder Reinier Evers (34) is an accomplished trend watcher, entrepreneur,
and business strategist. While at interactive agency AGENCY.COM
in NY and London, he worked with global clients like British Airways,
Texaco, Compaq, managing a team of strategists and analysts. Many
of these projects involved trend spotting, business research,
vision development and competitive analysis, making TRENDWATCHING.COM
a natural progression of his activities.
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