The powerful combination of youth, technology and rising consumerism across the globe is creating opportunities – and challenges – for companies looking for their next billion customers. Readers will learn how to connect with those “under 30’s” from these authors, who have written a book on how to do it.
Emerging economies such as those of China, India, Brazil, South Africa, and others represent the fastest-growing middle class consumer markets in the world. Nearly one billion potential customers are beginning to earn enough discretionary income to afford quality brands and quality consumer experiences. At the same time, many of these markets are just now seeing widespread penetration of the Internet and social networks – in societies where upwards of 60 percent of the population is under the age of 30.
This combination of youth, technology and rising consumerism across the globe offers challenges and opportunities to companies looking for their next billion customers. The past 5-7 years have demonstrated the potential of a number of collaborative marketing and engagement strategies that leverage the interactive, community-oriented capabilities of social computing technologies to turn young consumers into brand “ambassadors,” willing to contribute discretionary time and effort to ensure the success of their adopted brands. Some are even rising to the level of “consumer entrepreneurs,” and working with companies and brands to co-create personalized value and content using the brand as platform.
Young world markets are the key to growth
The world’s top consumer brands need new customers. Demographics in Western Europe, North Asia and North America point to an aging population as the Baby Boom generation heads toward retirement, with fewer replacements coming behind due to decades of declining fertility rates. In the U.S., the Millennial generation (b.1981-2000) has seen its entry into the workforce marred by economic turbulence and recession. Buying patterns are changing as credit-fueled purchasing declines. For example, on top of all of its other problems, the auto industry must deal with the fact that it is facing a generation that is less likely to view a car as a status symbol. The popularity of hourly rental companies like Zipcar illustrates the change in perception of a car to — at best– a mode of conveyance and at worst an embodiment of pollution.
As the U.S., Europe and Japan limp along at 1-2 percent annual growth rates, Latin America, parts of Africa, and Southeast Asia are experiencing their first period of prolonged, stable growth in quite some time. India grew at an annualized rate of 6.4 percent from 2000-2009. The more promising nations in Latin America, North Africa and sub-Saharan Africa are on the same path. Despite profound gaps that remain in many areas including infrastructure, governance and workforce development, these economies are the ones experiencing the most rapid recovery from the recession; in many cases, expansion is already well under way.
These countries have something else in common. They are among the youngest in the world, with median population ages under thirty, and stable or declining ratios of dependent populations (children and elders) compared to those of working age. Harvard demographer David Bloom identifies this condition as a “demographic dividend,” and has shown correlations between youthful workforces and economic growth in the Tiger economies of Southeast Asia, China, and parts of Europe.
Young people in emerging nations are growing up as their horizons, buying power, and future prospects continue to brighten. They are eager to move beyond old models and old conflicts that bedevil their societies; they are hungry for the fruits of greater wealth and greater productivity. And there are billions of them. This rising young world, exposed to global media and global consumer culture through the Internet, represents the next frontier for branding.
That’s the good news.
The bad news for traditional marketers is that today’s global youth is coming of age in the same dynamic and unpredictable digital media culture that has disrupted old business models and old marketing strategies in the developed world.
The spread of technology across the Young World has been accelerating dramatically over the past decade. During this period, connectivity grew by over 1000 percent across Latin America. Even lower-income countries like Ghana and Vietnam are approaching 100 percent mobile phone penetration. Last year in Africa, consumers with mobile data plans on their phones exceeded those with voice-only for the first time.
As these young people start to log on to the Internet, they adopt many of the attitudes and behaviors seen in the Millenials elsewhere in the world. Facebook and other social networks are growing fastest in emerging economies; so are instant communication services like Skype. Online movements spread through blogs and Twitter. Mobile and location services are used to coordinate flash-mobs and other loosely coordinated activities that demonstrate the power of emergent networks and the clay-footed stodginess of old, centralized hierarchies.
The immediacy of the networked Young World is a challenge to marketers. There are few gaps in sophistication between the vanguard young opinion-leaders in emerging markets and their jaded peers in the developed world. But this dynamic creates an opportunity for those companies that have mastered the techniques of branding and collaborative innovation that have evolved in tandem with social media.
Wikibrands Engage Social Consumers
For most of the mass-market consumer era, companies created products and services, then pushed them out to their customers using available media channels – print, billboards, radio, television – which were almost always one-way. The “Four Ps” of marketing were sacrosanct – product, place, promotion and price. When strategies were formed, these customer functions were in the business of planning and pushing out these messages, through media intermediaries. The message was controlled; our role as consumers was to listen and buy.
Now that dynamic has shifted fundamentally. Two-way communication channels facilitated by the Internet and social media have given rise to “Wikibrands” – products, services and brand identities co-created in collaboration with customers. With Wikibrands, consumers have a voice in the brand conversation. Co-creation gives consumers far greater ownership and identification with their brands, creating a sense of loyalty that can serve companies well in a competitive and confusing marketplace. However, the strategies of engaging customers through two-way channels and dialogue are significantly more complex and require companies to rethink old communication strategies.
Wikibranding in the Young World
The strategies of Wikibranding can help companies engage and motivate Net Generation consumers anywhere, but they have some special benefits for businesses navigating the challenges of trying to reposition or introduce their brand in a new market.
Creating brand awareness and engagement in a new market
It is always a challenge to launch a brand in a new market and claim a piece of the public mindshare from well-established local competitors. These days, it is even more complex, because a certain segment of networked consumers in new markets may have already encountered “echoes” of foreign brands from movies, videos, discussions on social sites, and other second-hand sources. Perhaps it was a glimpse of a logo from a product-placement in a popular movie; or perhaps it was a news story containing some unflattering information about the company.
Collaborative and social marketing provide companies with a chance to reset any residual perceptions about the brand by engaging in a direct conversation with trendsetting consumers in the new market. In fact, an effective conversation enables companies to produce goods and services that more precisely meet the needs of a local market. In addition to greater customer satisfaction, such conversations keep margins high because companies do not need to discount to move surplus goods or even completely absorb the cost of unwanted inventory.
Tohato, a Japanese snack manufacturer, introduced consumers to new products while providing an entertaining experience. The “World’s Worst War,” was an online game created to promote the launch of two new spicy snack flavours: “Tyrant Habenero Burning Hot Hell” and “Satan Jorquia Bazooka Deadly Hot.” To join the battle, consumers would purchase their preferred flavour and scan the barcode with their cell phone. Consumers would join either Tyrant Habenero’s or Satan Jorquia’s army and engage in daily battles.
Players became engaged in the experience and created online communities to discuss battle strategy. When the products launched, they already had positive word of mouth and a sense of ownership amongst the players/consumers.
Connecting consumer communities across geographies to promote universality/global reach of brand.
Consumers want to feel part of something bigger, and brands give them a way to do that. Powerful global brands can enable young consumers in frontier markets to feel plugged-in to a world-class experience. Companies can reinforce that perception by connecting communities of consumers across new and existing markets. Mingling with existing fans can initiate new consumers into the folklore of the brand and provide added social reinforcement for them to become enthusiasts and evangelists themselves, among the communities where their voices are most credible. Luxury brands are especially good at creating these kinds of communities through messages of exclusivity. In the era of global Wikibranding, those strategies are available to a much wider range of businesses with a broader set of target customers.
Even in geographic areas where salaries are still modest by Western standards, the youth lead the income growth. Many of the new white collar middle class in India that hold jobs outsourced by the U.S. are twentysomethings whose pay exceeds that of their parents, sometimes by an order of magnitude.
At the extreme, the newly minted rich of the developing world are becoming serious consumers of luxury goods, from Chinese millionaires who are becoming an important market segment for high-end automobile producers to Russian oil barons whose love of real estate has forced towns in Tuscany to scramble to change ownership laws as locals were being priced out of their own villages.
Optimizing localization strategy for brand and offerings.
The history of marketing is littered with unfortunate and sometimes humorous examples of brands or products that lost something in translation. For example, Coca-Cola struggled with matching the phonetic characters to an appropriate translated meaning. Some shopkeepers made signs that “sounded right,” but led to unfortunate meanings like “Bite the Wax Tadpole.” The company was eventually able to come up with a series of characters that sounded like “Coca-Cola” but represented the nuance “something palatable from which one receives pleasure.” Note: the story of the Chevy Nova failing in Latin America because “no va” means “doesn’t go” in Spanish is mostly apocryphal. In any case, you do not want your brand to become the punch line for one of these stories.
Fortunately, when localizing a youth-oriented brand in a new market, company strategists can now consult a vast community of vocal and largely unpaid experts. Young world consumers understand their market better than you do. Reaching out to them through collaborative channels can help you identify subtle strategies that promote success, while avoiding embarrassing pitfalls. For example, a company with an “eastern European” or “Asian” marketing strategy will run into trouble because the many cultures captured under such a broad brushstroke are so proud and distinct.
Collaborating with Young World “consumer-entrepreneurs” to co-create offerings suited to local tastes.
As Young World consumers adopt social technologies, they take on the traits and value of the global Net Generation, including the desire to customize and personalize products to suit their individual styles. While some companies disdain the appropriation of their intellectual property by consumers who create their own rips, remixes and mashups of music, fashion, art, design and entertainment, smart businesses understand that they can learn a lot from the directions in which these consumer-entrepreneurs take their products and brands.
The most successful brand communities listen, observe, and offer a less corporate and more relaxed setting for participation. They also listen to customers and engage them on their own turf, in their way, to help them solve problems. These communities transform strangers into members, members into customers, customers into contributors, and contributors into powerful competitive advantages of content developers, distributers, and scouts.
The Young World is a Mobile World.
In the developing world, access to new markets will focus on mobile apps. African, Indian, Latin American and East Asian countries lead the world in innovation on mobile platforms, thanks in large part to a large population of “mobile natives” who have grown up accustomed to using the mobile device, rather than a PC or television, as their primary means of information access. Social Media expert Euan Semple believes that places like Africa will leapfrog Europe and North America with respect to mobile innovation and firms will look to it to provide more effective trials than the more developed world.1 Many African countries now have cellphone penetration rates in excess of 60 percent, and in 2009, mobile communications plans with data access surpassed voice-only plans for the first time on the continent. In fact, the mobile phone is expected to be the chief method of banking in the developing world, as people will use them to make micropayments to each other.
Caveats and Limitations
Wikibranding can be a powerful tool for extending a successful brand or introducing a new brand in a complex new market. However, this strategy has some limitations and introduces some uncertainties into traditional corporate decision-making processes. Companies considering this approach should be aware of these caveats and limitations.
Risk and uncertainty in Young World markets.
Even the most promising emerging markets are subject to high degrees of risk. Brands can trespass on cultural sensitivities, become proxies for international disagreements, or become the subject of political and social controversy, with extremely unpredictable results. This is especially dangerous for brands that thrive on transgression and controversy. Young World consumers are as eager as their more established counterparts to push boundaries and tweak their parents’ sensibilities. The strategies that activate brand loyalty among young consumers by playing to generational gaps may work better than expected in Young World markets – and also create unforeseen levels of difficulty.
In China, for example, many luxury brands that are well known in the West are looked upon by the newly-monied youth with disdain. ”Tu” a Chinese word often used to describe something dated or unsophisticated is applied to brands such as Gucci, Rolex and Mercedes-Benz, according to the GenYChina.2 More popular among Chinese youth are brands that were not embraced (or idealized) by their parents.
Unmoderated collaboration vs. curated communities
Among proponents of open innovation, there is an ongoing debate as to the value of breadth vs. depth. Is it better to have a large, unmoderated community engaged in an open discussion, where extreme viewpoints tend to cancel each other out in the statistical mix? Or do organizations get better outcomes by handpicking smaller “curated communities” with special expertise, constraining the boundaries of the discussion to make it more manageable while potentially leaving out the random, disruptive perspective that contains an unexpected breakthrough?
Persistent value of internal processes and decision-making
Collaborative processes are a great way to obtain external inputs and socialize new branding ideas with a wider community. However, many companies are reluctant to turn their entire decision-making process over to the wisdom of crowds. The danger is that processes that are declared “open” at the outset raise expectations.
Marketing’s transition from broadcast to conversation will, however, continue unabated. The technology will enable companies to listen with greater acuity and respond more precisely and quickly to customer demand. Millennials, who have become accustomed to customization and accumulated more wealth and spending power, will demand nothing less. When a company asks for input from its customers and appears not to listen it is worse off than a company that does not even ask.
Change the nature of your corporate communications
Broadcast will no longer be effective. Companies need to actively engage with consumers in a conversation. The concept of a brand can no longer be developed by marketing executives in the boardroom; the conversations in the community determine the true nature of the brand.
Customize the message and delivery for the rising new world
The Young World shares many of the same characteristics as their contemporaries in the developed world, and one of the key examples is their ability to deftly scrutinize. A campaign that is reproduced or superficially tweaked for a new market will be at best useless and at worst counter-productive (many of the target audience may have already experienced the campaign via social media).
Balance the media mix
It isn’t just television that’s the wrong platform to reach the Young World. So too is the Internet Browser. Most of the marketing reach to the Young World will be delivered through handheld devices. It is important that the campaigns and community building be designed with these devices in mind rather than modifying another platform.
- Interview with Euan Semple, conducted by Mike Dover, June 10, 2010.
- Kevin Lee, “Youth Marketing: China Youth are calling these brands ””Tu”” (Not Cool). Why?”, GenYChina Blog, Nov 13, 2009