The Samsung NEXT Innovation team is focused on delivering insights and strategies that paint a picture of how consumers, industries, and technologies could evolve over the next five to 10 years. Led by President of Samsung NEXT and Chief Innovation Officer of Samsung Electronics David Eun, the team dedicates its work to studying how the world is changing, and from there, where it will evolve and what this could mean for Samsung, its products, partners and customers, and industries at large.
During his keynote at Web Summit last year, Eun unveiled Samsung NEXT’s perspective on the future of the home. Today, companies everywhere are trying to figure out how to deliver new experiences to consumers, which raises crucial questions, such as:
Do we really understand the future consumers of experiences? Do we know what they want? What should companies consider doing to be successful?
As technology evolves to meet the challenge, the consumer landscape is also rapidly changing. In the early-to-mid 1900s, consumers in the U.S. were mostly homogenous -- that is, primarily young, white, and male. The demographics have changed dramatically over the last 50 years, as people of color or people who are not white now comprise 40 percent of the U.S. population, have strong purchasing power, and contribute to Gen Z being the most diverse generation in the nation.
Today, consumers from diverse backgrounds have $3 trillion in purchasing power in the U.S., which is comparable to India’s GDP. They are more likely to seek out products and experiences tailored to their interests, with 70 percent saying they would pay more attention to personalized products. And they are much more likely to support companies that align with their values.
“As we... grapple with this new normal, companies everywhere are trying to figure out how to deliver experiences in this new reality,” Eun said.
To discuss how those shifts in demographics and consumer demands are being met by brands, Eun held a conversation with Steven Wolfe Pereira, co-founder and CEO of Encantos, and Michelle Ebanks, the former CEO of Essence Communications, which was streamed during the annual Collision conference.
The fall of the mass market
Based on the diverse cultural backgrounds of consumers today, as well as changes in the way they interact with culture and technology, the panelists agreed that major brands can no longer focus on the mass market and expect to compete with emerging players that take a more targeted and personalized approach.
“Consumers are changing. They are more diverse, they're more expressive and more empowered than ever before. Consumers want more meaningful experiences that are personal and with brands that align in terms of values and identity,” Eun said.
“To rely on mass marketing now can be perceived as lazy and not broad in terms of the diversity of consumers today,” Ebanks said. “The power of media pushing a mass message also separates us further rather than recognizing our differences and seeing beauty and power and success along a wider continuum.”
A reluctance to change has seen many mass brands losing share across industries and geographies to emerging brands. According to recent research, 90 of the top 100 consumer packaged goods (CPG) brands have lost market share to smaller, more nimble upstarts that are better using technology to reach their customer base.
Building a personalized “market of one”
How are emerging brands able to succeed? They focus on filling gaps in specific verticals by delivering more personalized experiences and connecting with consumers in more authentic ways, through an unprecedented amount of data and direct access to consumers.
“Technology has enabled emerging brands to rival the traditional mass brands who are not typically built to deliver these experiences,” Eun noted.
This opportunity for emerging brands is built more around personalization and creating “markets of one,” according to Wolfe Pereira. “You see it in the rise of all the direct-to-consumer brands. It's something that is going to be transforming every single company, every single industry, and every single customer experience,” he said.
In turn, these personalized experiences are leading to increased consumer loyalty and a more profitable business for emerging brands. While customer loyalty for mass brands previously meant spending on advertising to win the same consumer each time they made a purchase, emerging brands are driving deeper connections with consumers that serve as a form of self-expression across identity and values.
Consumers want brands that align with their values
According to Eun, consumers of all backgrounds want to support companies that have a particular type of identity, voice, and moral compass on issues that may or may not be directly related to the fields that they're in.
More than ever, consumers are shopping for brands with values they want to express as part of their own identity. A majority of Millennial consumers say it's important that brands align with their personal values, and believe that CEOs should speak out on social issues they care about.
“These are now younger communities that want social change. They are not comfortable with having the set social structures that give economic opportunity and access to a few,” Ebanks said. “These groups will demand from corporations to understand how they are helping to build the communities where their customers live so that there is a trust and a relationship for corporations.”
Brands need to reach diverse consumers where they are
Those communities are increasingly diverse. According to Wolfe Pereira, the top 20 markets in the United States are already “majority multicultural.” That said, consumers from different racial or ethnic backgrounds are not a monolith, and brands must be able to speak directly to the experiences of their customers.
“How do you reach Black consumers? How do you reach the Latinx consumers, Asian consumers, white consumers?” Wolfe Pereira said. “You have to be very specific about what is going to resonate because there isn't some diversity brush that you're just going to paint your marketing campaign with. It has to truly understand the struggle, the needs, the emotion, the heart and mind of those consumers.”
Ebanks said the opportunity to reach diverse consumers is there and the solutions to reach diverse communities are already in place. Wolfe Pereira went a step further, in saying that to do so is a “business imperative” and that companies would not be able to grow if they cannot connect with these consumers.
Consumers from diverse cultural backgrounds spend a higher degree of their disposable income, over-index on technology, and typically are early adopters that embrace and drive technology trends, Ebanks said. But to be effective at capturing their attention and loyalty, brands need to reach consumers where they are, and be authentic while doing so.
Business leaders need to lead
So why aren't more businesses accelerating their efforts to reach out to these different audiences and communities?
“Our corporate C-suites are not capable. They don't have the diversity within their teams in order to really have an understanding of what it means to move beyond mass,” Ebanks said. Creating a more diverse leadership team and a more diverse overall workforce is only one part of the equation, especially in the wake of recent events.
As consumers deal with the fallout of the COVID-19 pandemic, as well as national and international protests due to police brutality and systemic racism, the panelists agreed that business leaders need to be speaking not just to their own employees but also to the community at large.
“I believe that in a time such as this, it is imperative that our business leaders engage. It is not okay to be headquartered in a community and not engage in how those community citizens are being treated. Business leaders can no longer sit on the sideline and focus solely on business,” Ebanks said.
“Consumers expect brands to take a stand,” Wolfe Pereira said. “Whether it's government, whether it's education, brands are going to take a leadership role in people's lives.”