Home' Spa and Clinic : Volume 60 February 2015 Contents BUSINESS OPERATIONS MANAGEMENT
So, what’s going on? Are we struggling or are we booming? We
use science to get to the real truth. More to the point, I and my
team of social scientists, studied almost a million people on three
continents over 10 years and looked at 2,000 measures of what they
bought, why they bought it, and how that behav iour changed over
time. The results are startling.
What is clear is that there is not one consumer market. There
are two fundamentally different types of consumers with extremely
different reasons behind what they buy and why they buy it.
How distinctly different? They’re so different they might as well
be from two different planets.
Each of these imaginary planets contains people of all ages,
incomes and social groups.
Let’s pause for a moment and think about Gen X and Gen Y.
Everyone is used to hearing the pundits proclaiming Gen Y will behave
this way or that. However, only one factor defines Gen Y. And that’s age.
So what Gen Y is really good at telling us is how old someone is.
It turns out that demographic factors such as age, occupation,
education and even income are nowhere near as important as the
demographers would have us believe. Take it all with a grain of salt.
Using 194 factors to identify radical consumers the forensic
evidence base managers need, during the 10 years of the study, not
one man or woman moved from one planet to the other, no matter
how much his or her income, or age, increased. And in this economy
they’re getting further and further apart.
People on the first planet, Traditional, are driven by the deal. Those
on the other planet, NEO, are driven by a search for the extraordinary
– the true sense of the “one-and-only”, and they are willing to pay for it.
Crucially, any business stuck in the space between the two planets
will struggle more and more.
On Planet Traditional we have a huge number of people – just
over 50 percent of the consuming population. That’s eight million
Australians, or 120 million Americans.
As the economy faltered in 2008 with the Global Financial Crisis
(GFC) and slipped into its hangover period, on Planet Traditional
spending was unsafe, so Traditionals of all ages cut back on their
discretionary spending, only venturing out when the deal was so
good they couldn’t turn it down.
The GFC and its hangover caused the focus on price, features
and status to intensify immeasurably.
Traditionals aren’t just looking for a good deal, they need an
extraordinary deal to make them part with their cash. Offers, deep
discounts and sell-outs have increasingly become the currency on
The ev idence shows that this behaviour is very likely to become
permanent. You do not want to have the second best offer on
To a Traditional the deal is ever ything, whether it comes
from the best price, the most features, or the highest status – or,
increasingly, all three.
Then there is the other planet where life is a little bit more complex.
These individuals make their buying decisions on a measurably
broader range of factors. This is the New Economic Order (NEO).
The evidence shows the economic importance of this group is surging.
Let’s look at the difference in the confidence on the different planets.
Traditional consumer confidence is barely above pre- GFC levels,
while the people on Planet NEO are a good 20 points ahead of that
– a nd the gap is widening.
Those ver y confident NEOs earn more, are better educated,
dominate entrepreneurial, senior management and professional
roles and are socially progressive.
NEOs research, shop and buy in ways that are significantly
different to Traditionals. And the companies that understand them
have flourished despite the economic hangover in our economy.
For a NEO, while price remains a factor, it is often not the most
important in the decision to buy. They need to feel a connection
with the product or ser vice, and implicitly see it as a representation
of their own individuality.
As a result, they place a premium on a whole range of things that
typically wouldn’t even register for someone living on Planet Traditional.
Some of the most significant of these include Design – NEOs
place a value not only on how things look, but how that design
translates into the elegance of how the product works.
Next comes Authenticity – NEOs want the real deal, no substitutes.
And who they buy from is just as important as what they buy.
And then there’s Provenance. NEOs place a high value on things that
are individual or unique, with a real sense of being the one and only.
Discover y – the whispered secret is far more valuable than
something mainstream to the individual living on Planet NEO.
They want to find things for themselves rather than being
assailed by aggressive marketing. They value new experiences and
want experiences that are on the edge. They’re the first to try new
ideas, new concepts and new places. When NEOs discover things
that match their personal values, they spend freely.
Ninety-three percent of NEOs are in the top third of
discretionary spenders in the Australian economy.
Now let’s compare that to those who live on Planet Traditional,
many of whom earn big salaries and have high net worth.
What percentage of Traditionals are in the Big Spender
category? Ninety three percent like NEOs? Only four percent of
Traditionals qualify as Big Spenders. And yet for most of us, doing
business on Planet Traditional is all we know.
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