What are the potential consumer market opportunities in 2023?

In 2023, the market economy began to develop in an orderly manner. Changes in the market environment led to the birth of diversified demands, and new demands created more opportunities for brands. In such a market environment, companies need a guiding light. This article analyzes four trends in the 2023 consumer market and recommends it to friends in the consumer industry.

All things are reviving, and the four seasons are beginning. After three years of suffering from the pandemic, people's lives have gradually returned to normal, and the market economy has moved from turbulence to an orderly development track.

However, behind the seemingly stable economic environment, a phenomenon that cannot be ignored is that consumers' purchasing behavior tends to be cautious, brand growth dividends disappear, and the previous growth misunderstanding of "taking dividends as capabilities" will be exposed.

After the storms and turmoil, compared with opportunism aimed at short-term growth, using the "long-term variables" perspective to explore future opportunities and enhance growth potential seems to be the way for companies to maintain stability.

Based on this, the "Consumer Growth Research Institute", which has focused on the long-term value growth of enterprises for many years, released the "2023 China Consumer Market Hidden Value Research Report", which provides continuous analysis and insights into changes and new opportunities in the consumer market.

By tracking the changing trends in the consumer industry, the report deeply analyzes the potential value of China's consumer market from four dimensions: scenario building blocks, Mix consumption, sinking markets, and social responsibility , and sorts out key clues for companies to rebuild their momentum.

Trend 1: Generational change promotes rational consumption, and scenario innovation brings new opportunities

In 2003, Dave Brailsford, general manager of the British Cycling Team, disassembled the cycling process and proposed the famous "marginal gain theory", which is to focus on the improvement and growth of every tiny link and ultimately achieve a leap from quantitative change to qualitative change.

This theory is still applicable to modern business today.

With the generational change of the population, the young group aged 18-35 is becoming the main force in the current consumer market. The consumption amount surpassing that of the previous generation and the huge population base have gradually shifted the discourse power of Chinese consumption to this generation. Correspondingly, the new consumption concepts formed by the evolution of the social environment are also bringing new growth opportunities to the consumer market.

"Research Report on Hidden Value of China's Consumer Market in 2023"

The survey report shows that returning to real needs, rational shopping, careful evaluation, and delicate feelings are becoming important criteria for purchasing decisions of this generation of young consumers.

Zhao Yihe, an expert consultant at the Consumer Growth Research Institute, believes that this is because the maturity of the underlying infrastructure of the commercial society has greatly facilitated the easy availability of goods, and the conspicuous consumption of buying, buying, and buying is no longer the primary goal of the younger generation of consumers. What they need is products and services that are within their ability and can bring good feelings.

Scene innovation is the result of many brands learning from others’ experiences.

HARMAY, a global beauty and cosmetics store, has insight into young people's concerns about the trial and error risks of high-end brand formal products, and has innovatively launched the "brand travel package" business model to help the younger generation effectively reduce decision-making costs. It has quickly completed four rounds of financing within two years, and its first-time purchase rate and repurchase rate are twice that of its peers.

Similarly, the "brewing tea around the fire" that was very popular in the fall and winter of 2022 also provided users with an "incremental atmosphere" with a better experience at a lower transaction cost, creating a sense of pleasure in daily life, and related topics became popular on social platforms.

Both follow the scene innovation logic of "marginal increment", breaking down consumers' decisions into three criteria: scene metaphor, marginal utility, and emotional value, and providing users with a wonderful consumption experience at the lowest cost, highest efficiency, and best experience. This is also a new consumption logic derived from the needs of rational consumer groups.

Trend 2: Digital technology breaks the inherent marketing paradigm and reshapes brand relationships

With the rapid development of digital technology and the increasing fragmentation of social media information, consumer attention and consumption behavior are also becoming more dispersed.

The report shows that in 2021, the average monthly number of apps used by all mobile Internet users in my country was 26.3, and the number of apps used has been rising year by year. Among them, the average monthly number of apps used by Generation Z users is as high as 27.1, and the length of time used has penetrated into more segmented application areas.

Under the catalysis of the surging information wave and the overwhelming APPs, consumer behavior shows the characteristics of multiple verification, multiple decision-making, edge refreshing and rich experience, which is also called Mix consumption .

For enterprises, how to adapt to the Mix consumption trend, integrate increasingly complex and changeable consumer touchpoints, and efficiently convert target consumers has become the most difficult challenge at present.

Using digital tools to capture opportunities and formulate strategies can certainly solve temporary problems, but it cannot help brands build long-term moats. To solve this puzzle, we need to follow the map and go back to the “people” themselves.

Zhao Yihe believes that "all businesses are based on connections with people." On this basis, the Consumer Growth Research Institute proposes "returning to the essence of business and reshaping the consumption paradigm." Simply put, it is to seize consumers' attention by reconstructing the relationship between people and business.

If companies want to establish relationships with consumers, they must provide them with accessible resources. In the context of countless new information and new things, such resources can be to simplify things and solve the pain points of consumers' difficult decision-making; or they can refresh the experience and stimulate consumers' itch for novelty and difference.

For the two different strategies, the Consumer Growth Research Institute listed two typical brand solutions respectively - "What's Worth Buying" and "San Dun Ban".

The What’s Worth Buying APP is positioned as a scientific consumption guide, aiming to help consumers make better decisions by integrating fragmented consumption information and building a complete and three-dimensional cognitive system framework; Sandunban uses coffee as its entry point and has organized a variety of activities such as "Flying Radio" and "CHAMBER Market", leading consumers to explore more novel and interesting experiences.

One is aimed at rational persuasion, and the other is aimed at emotional stimulation. The two seemingly different solutions actually point to the same logic - identifying needs, improving experience, and jointly shaping brand culture, thereby establishing a solid relationship with users. This is also the "TEC relationship-driven brand growth" model summarized by the Consumer Growth Research Institute based on years of research insights:

Trend 3: The potential of the sinking market should not be underestimated, and the core demands should be targeted according to local conditions

There is also an interesting keyword in the report - sinking market, which has also been frequently mentioned in the consumer market in recent years.

The research report shows that the population of the sinking market currently accounts for 71.4% of the total population of China, among which the number of mobile Internet users accounts for 74.7% of the total number of mobile Internet users in China. This huge blue ocean of traffic has attracted countless brands, but only a few have successfully entered the market, because the market has a misunderstanding of "consumption downgrade".

"People tend to think that consumers in lower-tier cities have lower spending power and don't care about quality, which is actually a fixed impression," Zhao Yihe said. "Compared with first- and second-tier cities, consumers in lower-tier markets even show a stronger willingness to consume.

The reason why the brand failed was that it did not conduct investigations based on local conditions and come up with targeted strategies, but instead directly copied the model used in first- and second-tier cities.”

Due to the different operating structure, consumer demand and passenger flow from first- and second-tier cities, the business model development of the sinking market has its own ecology and logic. Enterprises need to have a deep insight into the culture, consumption habits and ecological environment of the sinking market and formulate targeted marketing mechanisms in order to truly enter the sinking market.

For example, convenience store giants represented by Lawson have improved the original business structure of convenience stores and adjusted their product and service content by analyzing the target audience, consumer demand, and population density of the sinking markets. They have changed fresh foods such as oden, which were originally popular in first- and second-tier cities, into snacks, introduced Internet celebrity products, and added lottery, recharge, express delivery and other services that can attract customers to the store, effectively leveraging the growth of the sinking market.

According to statistics, in 2022, the number of convenience stores, ownership per 10,000 people, and coverage rate in China's third- and fourth-tier cities have all increased significantly compared to 2019, with strong growth momentum.

Given the narrowing of the cognitive gap brought about by the development of the Internet, the existence of a large population and some "invisible rich people" in the sinking market, the sinking market will explode with even greater consumption potential in the future.

Trend 4: Fighting the epidemic and building a community with a shared future, "effective" consumption may become a new trend

For decades, "sustainability" has always been one of the principles for companies to pursue long-term growth and move forward steadily, but some consumers find it difficult to empathize with them, which is also an important reason why sustainable consumption is often left as a castle in the air and cannot be implemented. In recent years, the spread of diseases has caused humans to have an unprecedented sense of crisis, which has further promoted the awakening and transformation of consumer awareness.

Kantar survey data shows that 63% of consumers believe that promoting sustainable development is not their responsibility, but the responsibility of enterprises and producers; 50% of consumers believe that they can have an impact on the environment around them through personal choices and actions. It can be seen that most consumers have expectations for companies to practice sustainability.

When this part of emotional resources is understood by enterprises and truly implemented into development strategies, it can usually gain empathy from consumers and promote consumption.

To implement sustainable marketing, enterprises can start from the following two aspects:

1. Help consumers "save the world" and let consumers truly participate in the brand's green actions. When the brand and user behavior are tied together, it can not only truly stimulate the vitality of green consumption, but also enhance consumer loyalty.

Whether it is beverage brands such as Sprite and Pepsi announcing the cancellation of their iconic green bottles and bottle labels to reduce the use of non-recyclable materials in their products, or Sandunban launching the "Return Plan" to build a brand user community by recycling empty coffee pods and exchanging them for peripherals, they have all stimulated "productive" consumption to some extent and enhanced user favorability.

2. Implement ESG strategy: Enterprises, especially large enterprises, need to examine their own strategies, missions, and values ​​with macro and long-term goals, and make efforts in the environment, society, and corporate governance. This is one of the criteria for companies to be listed and an important proposition for achieving long-term growth. Facts have also proved that there is indeed a positive correlation between ESG index and financial performance.

Conclusion

In general, these four trends actually have a common thread: people. In this era of information overload, brands need to return to users, because the brand itself is a combination of products and users.

Changes in the market environment have led to the birth of diversified demands, which in turn have created more opportunities for brands. The flapping of a butterfly's wings is enough to trigger a tsunami, and the next step for brands is hidden in these seemingly insignificant trends.

As Zhao Yihe said, "What we need to do is to bring the new phenomena, new trends, and new practices we observe into the thinking framework of long-term variables, tap into potential growth opportunities, and provide growth inspiration. All continuous successes must be methodological victories." In this turbulent market environment, companies need to remain rational and need a guiding light.

Author: TOP Jun

Source: TopMarketing (ID: TMarketing), when it comes to Marketing, Top is a belief - TopMarketing.