Changing Consumer Behavior

Part
01
of two
Part
01

Changing Consumer Behavior (1)

Five insights surrounding the way consumers are changing their behaviors and expectations toward brands and companies with either membership/subscription models or brand partnerships include an expectation of strong customer experience, an expectation of a more personal experience, interest in content and information in their brand decision-process, using a community-based decision-process in their buying decisions, and placing more importance on social and environmental considerations when choosing to engage with a brand.

Customer Experience More Central to Purchasing

  • Customer experience, the way a consumer perceives they are being treated by a company, is a trend impacting purchasing, loyalty, and likelihood to recommend a brand to other consumers.
  • A CISCO report predicts 70% of consumer purchase decisions will be based on customer experience by 2020, and 86% of consumers will be willing to pay more for a product offered by a brand providing a great customer experience.
  • Dunkin Donuts and Waze is an example of a partnership that is focused on driving exceptional customer service at the local level. Targeted toward the 86% of commuters who drive to work each day, it provides the opportunity to order ahead. The partnership has been considered successful for both companies, increasing brand equity and sales, because it requires participants be Dunkin rewards members and download the Waze app. The program offers a significant customer service benefit through convenience and gives local franchise owners an opportunity to build their relationships with customers by promoting the partnership and executing well.
  • Another partnership that offers customers an enhanced experience is Uber and Spotify, which offers Uber riders the opportunity to connect to Spotify while waiting for their ride and developing a playlist. The partnership benefits both Spotify and Uber by reaching a broader user base.

Personalization and Experiential Benefits Drive Consumer Choice

  • Consumers are seeking more personalized engagement with brands and experiential benefits, expecting products and services tailored to their specific needs. The trend is being driven by Gen Z, and is seen across a variety of products and industries.
  • A study by McKinsey found curation subscriptions, which are membership-based brands that focus on personalization by offering new items or highly personalized experiences designed to surprise their subscribers, accounted for 55% of total subscription programs. 28% of curation and access subscribers (those who sign up for a monthly fee for specific discounts or members-only perks) say a personalized experience is the most important factor driving their decision to subscribe.
  • One example of a partnership that successfully offered a personalization experience to consumers is AirBnb, the room-sharing service, and Flipboard, a news aggregator that collects news and topical content shared on social media and provides as a summary in a social media format. This partnership launched "Experiences", which offers AirBnb users content tailored to their interests. Its success spawned a second partnership, "Trips", which allows AirBnb users to connect with hosts who share similar interests, and then book these experiences when traveling.

Buyers Seeking An Informational, Content-Driven Brand Experience

  • With the proliferation of advertising across multiple channels, consumers have become more disengaged with traditional marketing messages and are looking for information and insights beyond a traditional selling message.
  • 50% of respondents in a 2018 econsultancy survey of advertisers, marketers, media owners and agencies and senior marketers say that consumers are seeking more content compared to two years prior. Brands have responded to this greater demand for content, with respondents in the 2018 econsultancy survey noting they are increasingly offering more story-driven content in their messaging.
  • Tiege-Hanley, a men's skincare subscription company, partnered with a YouTube personality, Alpha M., owner of a 750,000-follower YouTube lifestyle channel, which focuses on teaching men how to make improvements in fitness, grooming and wardrobe. In addition to this content-based partnership to promote their brand, they also created their own vlogs which engaged their potential consumer base by having followers offer input on packaging designs and advertising taglines. These content-focused strategies helped contribute to an increase of 6,000-8,000 subscribers over 6-8 months.

Consumers Seeking Community-Driven Brand Experience

  • This trend involves consumers socializing their brand experiences, with companies initiating conversation among consumers, who share information and recommend products as a means of connection with the brands and other consumers.
  • A 2018 Internet Trends Survey of 1000 US consumers indicates that consumers are increasingly discovering products on social media and then going on to buy them. 78% of 18-34 year-olds reported learning about a product they were interested in purchasing on Facebook, while 59% of consumers indicated they learned about a product on Instagram or Pinterest.
  • Bootaybag, an underwear subscription company, invests significant time in spreading their message over Instagram. The company engages consumers by asking their opinion on topics such as what colors and styles they want to see next and their satisfaction with their purchases, sparking conversation and responding to feedback. They have grown to more than 140,000 followers on Instagram and use this platform as a primary vehicle to attract and retain subscribers.
  • A partnership that reflects success in building both an individual personalized relationship with their customer and driving awareness of their products through social platforms is Levi's partnership with Pinterest. Users pin posts they like to their Pinterest profile, Levi's offers style insights tailored to users tastes and preferences, and with many potential buyers turning to Pinterest for inspiration, it is an excellent way to reach a broader user base by building on the community-focused, social interests of consumers.

Consumers Considering Social and Environmental Impact in Brand Choices

  • Consumers have higher expectations that a brand's social positions, actions and messages should align with their own personal values. This trend in brand engagement is notable and has an impact on corporate financials, as 47% say they will leave a brand that doesn't meet their expectations and 17% of those will not return.
  • A December 2018 Accenture survey noted 62% of total consumers want to see meaningful social, political and environmental involvement. 62% of consumers also said they would be attracted to one brand over another based on the brand's support for reducing plastics and improving the environment. 66% of consumers overall are willing to pay more for brands who demonstrate support for these social and environmental causes.
  • This trend is even more pronounced among a younger generation, with 81% of millennials stating they are more likely to support brands that are involved in causes that go beyond the bottom line to show commitment to social cause and the environment.
  • There are numerous subscription services focused on a model that supports sustainability and social purpose, including GreenUP Box, which offers zero-waste, eco-friendly, reusable items that will help reduce a consumer's plastic footprint.

Research Strategy

We began by reviewing materials related to trends focusing on changes in consumer behavior and expectations towards brand partnerships or membership/subscription models. We reviewed expert consumer brand behavior and attitude trend-focused reports, such as those provided by McKinsey and Accenture, trend surveys conducted by online experts, such as econsultancy, as well as brand partnership and ecommerce and membership model case studies. These case studies highlight how trends which emerged in the trend analyses focused on consumer expectations and behaviors have impacted membership models and brand partnership strategies, showcasing how these companies have reacted to the various ways consumers are changing their behavioral engagement and expectations of brands.

We also found that, while these trends are highly applicable to companies who have developed partnerships or those who offer subscription models, these brand engagement trends among consumers are not exclusive to companies with membership models or brand partnerships. For example, while a company such as Unilever has built sustainability and social causes into their inherent business model across all brands based on consumers' desire for their brands to be committed to social causes beyond profit, numerous subscription models, such as GreenUP Box, have also succeeded by offering a sustainability-focused product that reflects the same growing consumer focus on corporate social responsibility.

The trends selected have been sourced from at least 2 respectable sources uncovered in our research, including expert trends surveys, conducted by Mckinsey and Accenture, reputable ecommerce and digital consultancies following consumer trends, and marketing experts who follow trends related to consumer and brand engagement, including marketingland and hubspot.

Examples of brands implementing these best practices were included from marketing industry-focused publications, such as Shopify and Campaigndrive, showcasing how companies with membership models or brand partnerships have implemented strategies based on these trends. The examples were selected based on being showcased as a company who has been considered successful by implementing a strategy based on the trend.





Part
02
of two
Part
02

Changing Consumer Behavior (2)

Some insights surrounding ways consumers are changing or evolving behaviors and expectations toward entertainment brands and companies include increased consumer empowerment, demand for customized experiences, building better service capabilities, access to new products and services, and demand for more simplicity.

#1. Increased Consumer Empowerment

  • Modern consumers have increasingly been craving new and better entertainment experiences that advance their lifestyles.
  • Traditionally, the creation and distribution of entertainment content was linear, which forced consumers to be more passive as they had limited control over the content. Consumers had to wait for whatever content that was created, while the time that the content was made available was dictated by entertainment companies.
  • However, with the advent of new technologies, consumers have been more empowered thus changing their expectations of the content that they demand as well as when they want the content delivered.
  • In order to provide increased flexible that resonates with the dynamic demands of consumers, entertainment brands have been keen on providing memberships and subscriptions such as pay-TV and video streaming services that are tailored to the needs of consumers.
  • According to Deloitte, 69% of entertainment consumers pay for internet video streaming services compared to only 65% of consumers who pay for traditional cable or satellite subscriptions because they are able to have more control over the content.
  • Subscriptions of streaming services have played a fundamental role in shaping the consumer landscape by providing consumers with personalized experiences that meet their demands.
  • Besides, memberships and subscriptions in the entertainment sector have changed consumer expectations on the time and place where the content can be delivered.
  • Netflix is an example of a company that has shaped the video streaming world by enabling consumers to subscribe and avail premium video content from any region at any time.

#2. Demand for Customized Experiences

  • Partnership and collaborations of entertainment brands with other companies in various industries have proved worthwhile in enabling entertainment companies to provide more value to consumers.
  • The creation of new ecosystems has led to massive disruption in the entertainment industry which is currently powered by new inventions and technologies.
  • The new technologies have shaped the consumer landscape as consumers demand better choices, value, and convenience, all wrapped inside customized experiences that are availed on demand.
  • Additionally, consumers, especially the younger generations seek instant gratification and want to be able to access content from across the globe, with minimal advertisement.
  • The Walt Disney Company collaboration with Carnegie Mellon University and the Swiss Federal Institute of Technology Zurich has helped the company to develop AI sensors that seek to understand, interpret and also respond to human behaviors. This helps the brand to be able to provide customers with more customized experiences.

#3. Building Better Capabilities and Innovative Products

  • According to a 2019 report by BCG Research, "83% of digital ecosystems involve partners from four or more industries and 53% involve partners from six or more industries."
  • Entertainment brands have shifted to forming collaborations with other innovative companies as they seek to offer consumers innovate products and services that provide increased flexibility, more convenience, and better content.
  • For instance, entertainment brands may collaborate with companies that provide AI services, R&D companies, as well as marketing agencies. Such ecosystems enable entertainment brands to leverage the capabilities of other companies in providing consumers with innovative products and a seamless experience.
  • According to a report by McKinsey, the automotive industry has embraced increased partnerships with entertainment brands as they seek to leverage the existing capabilities of these brands in providing in-car experiences to consumers.
  • With the forming of these innovative ecosystems, consumers can gain more control and access better choices that have been bundled in other products and services that surround their lifestyles leading to increased brand loyalty.
  • For instance, several entertainment brands including Netflix, Hulu, and Spotify have partnered with Tesla to provide in-car entertainment for on-demand entertainment content.

#4. Access to New Products and Services

  • Partnerships of entertainment brands with other companies have been critical in the advancement of technologies that present consumers with access to new products and services.
  • Modern consumers have been accustomed to innovative products and services and they always will be loyal to brands that are quick in availing new products and services to the market.
  • However, while entertainment brands seek to provide better innovative products and services that will resonate with their audiences, they should be keen to ensure that they provide original content.
  • 57% of consumers of video streaming services admitted that they subscribed to brands offering the streaming services because of the access to premium and original content.
  • However, consumers expect to be able to access the new services with more ease such as through the use of virtual assistants to search content.
  • For instance, Spotify partnered with Samsung in efforts to expand its business model as well as core competencies, thus enabling the entertainment company to leverage big data that helped the brand to plan on rolling out its podcasting service.

#5. Consumers Expect Simplicity

  • The proliferation of entertainment content and services that have resulted from partnerships between entertainment brands and other companies, as well as the unlimited options available to consumers through subscription, has been overwhelming to most consumers.
  • While the partnerships and subscriptions sort to provide consumers with increased control and better choices over their entertainment consumption, the situation has changed to become "too much". [8]
  • A survey study conducted by Global Entertainment & Technology Tracker (GETT) revealed that consumers had already reached the peak of entertainment consumption.
  • The survey revealed a slight decline in the demand of video streaming subscription from 59% in 2018 to 54% in 2019. Besides, only 24% of consumers admitted that they would be watching more content as more video streaming services are rolled out compared to 31% in 2018.
  • Additionally, 48% of the respondents admitted that there was too much content that was available from subscription providers making it hard for them to find the particular content that they required.
  • The friction is poised to be compounded with the entrant of more video streaming options in the market.
  • These frustrations can influence consumers to downgrade or cancel their subscription altogether because they fail to derive the desired value and satisfaction from them.
  • However, in order to address consumer needs for simplicity, some entertainment brands have been seeking to reaggregate their services to provide consumers with more value and increased convenience.
  • For instance, Apple allows its consumers to view premium content from multiple networks such as Starz and HBO directly from its Apple TV+ app. Also, Spotify has partnered with Hulu to provide a bundled package of video content and music content at discounted rates.
Sources
Sources

From Part 01
Quotes
  • "The CISCO report "Customer Experience in 2020" reveals that 70% of purchasing decisions will be based on the consumer experience and, according to VentureBeet, by 2020, the average person will have more conversations with bots than with a partner."
  • "Consumers are becoming more and more demanding with the content they want to receive. They are willing to make changes in order to obtain a more personalised service tailored to their tastes, seeking quality rather than quantity. Changes in content consumption are determined by on-demand generation (Generation Z) and affect the business model of various sectors, from telecommunications to entertainment. "
  • "In the study "From Me to Us: The Emergence of Purposeful Brands," conducted in December 2018 with the participation of more than 30,000 consumers, 62% of those surveyed want companies to be meaningful in social, cultural, political and environmental issues. "
Quotes
  • "Once you know your consumer, you can get past the logic of promotion. When you don’t know someone, you have to talk about price,” said Bellaiche. “If you know the consumer, you can personalize the experience and provide more than just discounts — product recommendations based on membership models, content, exclusive sales and events. These brands with cult followings could build something worth paying for, and that’s where we’ll see this shift.”"
Quotes
  • "Brands have recognised that some sort of value exchange needs to take place: rather than simply directing consumers towards their product, they need to provide insight, inspiration, and an informative message – something that customers can take away besides “Buy our product”. Respondents to Econsultancy’s research report an ever-increasing demand in this area, with 50% confirming that they request more content marketing compared to two years ago."
  • "At the end of the day, creating a great “experience” with a brand is no substitute for a poor-quality product, but the experience that brands can offer their customers will increasingly differentiate them in a competitive marketplace. Personalisation will be a key factor in this, with new innovations like Content as a Service delivering real-time personalised experiences to customers as they browse a website, or guiding them towards content that will suit their needs."
  • "As the Future of Marketing report author notes, “People crave human connection and being part of a community, and this is part of the reason we will continue to see customers socialising their experiences.”"
  • "And according to data gathered by Adobe, the percentage of ecommerce referrals coming from social networks has risen four percentage points over the past three years: from 2% in Q1 2015 to 6% in Q1 2018."
Quotes
  • "In fact, 86% of buyers are willing to pay more for a great customer experience. The more expensive the item, the more they are willing to pay, according to a research from PWC. For example, customers are willing to pay a price premium of up to 13% (and as high as 18%) for luxury and indulgence services, simply by receiving a great customer experience."
  • "A Walker study found that by the end of 2020, customer experience will overtake price and product as the key brand differentiator."
  • "When it comes to providing a positive experience across different channels, mobile customer service is expected to soar. The reason is simple – a bad mobile experience can do serious damage to your brand!"
  • "For example, 57% of customers won’t recommend a business with a poorly designed website on mobile. And if a website isn’t mobile-friendly, 50% of customers will stop visiting it, even if they like the business."
Quotes
  • "To continue subscribing, consumers (particularly curation and access subscribers) expect personalized subscriptions to become more tailored over time: 28 percent of both groups said that a personalized experience was the most important reason for continuing to subscribe."
  • "For replenishment subscribers, convenience (24 percent) was the most important consideration, though value for the money (23 percent) and personalized experiences (22 percent) were also important."
  • "The good news is that subscription e-commerce consumers can be sticky once they find a service they like. Replenishment services have particularly high long-term subscription rates: 45 percent of members have subscribed for at least one year, about ten percentage points higher than the level for curation or access services. The companies with the highest long-term subscription rates include Amazon Subscribe & Save, Dollar Shave Club, Ipsy, JustFab fashion, and Loot Crate."
  • "There are three broad types of subscriptions: replenishment, curation, and access. Replenishment subscriptions allow consumers to automate the purchase of commodity items, such as razors or diapers. Curation subscriptions seek to surprise and delight by providing new items or highly personalized experiences in categories such as apparel, beauty, and food. Last, access subscribers pay a monthly fee to obtain lower prices or members-only perks, primarily in the apparel and food categories. "
  • "Curation services, with 55 percent of total subscriptions, are by far the most popular, suggesting a strong desire for personalized services."
Quotes
  • " A recent study found that 81 percent of millennials expect companies to go beyond generating profit and serve as drivers of change and become active in their communities. This can have a major impact on loyalty, as consumers are increasingly more likely to support brands with a purpose. Almost 66 percent of consumers are willing to pay extra for products and services that come from companies committed to positive social and environmental impact. "
  • "Research by Gallup has demonstrated that emotionally loyal customers are willing to spend with the brand even if meaningful and available alternatives are presented. They found that consumers with strong emotional connections to retailers will visit their stores 32 percent more often and spend 46 percent more money than those without emotional bonds."
Quotes
  • "In 2018, Accenture Strategy conducted the 14th annual Global Consumer Pulse Research to gain an understanding of current global consumers’ preferences, beliefs and behaviors. The goal was to identify how consumer expectations are evolving—and how companies can capitalize on that evolution to achieve new levels of growth and competitive agility. "
  • "Our online survey of 29,530 end consumers in 35 countries was conducted between August 1 and October 16, 2018. "
Quotes
  • "However, Meeker’s 2018 Internet Trends report shows that social commerce might finally be getting somewhere, particularly with the 18-34 age group. Rather than making direct purchases through social platforms, people are discovering products on social networks in record numbers – and often going on to buy them."
  • "In a survey of 1,000 US consumers, 78% of 18-34-year-olds said they had discovered products on Facebook within the last three months that they were interested in buying. Fifty-nine percent also reported discovering products on Instagram and Pinterest, demonstrating the power of visual social media for retail discovery."