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    Columns

    Strategy Sketchbook: Trends To Watch In 2004

    From specialization to information sharing to weight loss, there is a lot to be on the lookout for in 2004.

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    Greg Kitzmiller11.01.03

    Trends To Watch In 2004



    From specialization to information sharing to weight loss, there is a lot to be on the lookout for in 2004.



    By Greg Kitzmiller



    What should companies be prepared for in 2004? How can they best be poised to take advantage of future trends? Well, with the help of two industry experts and an economist we will look at several trends that will affect nutraceuticals into 2004.


    Economic Recovery



    There have been clear signs of a sustained economic recovery in the U.S., which is expected to continue through 2004, according to a forecast presented by economists in the Kelley School of Business at Indiana University. This panel expects output growth next year to approach 4%. “Next year should be the best year for gross domestic product growth since 1999,” said R. Jeffery Green, co-director of the Indiana Center for Econometric Model Research and professor of business economics and public policy. As such, an im­proved economy should pave the way for taking advantage of other trends.


    Looking at Specialization



    Harvey Hartman, CEO, The Hartman Group, Bellevue, WA, believes a major trend is the redefinition of health and wellness moving to specialization. Mr. Hartman feels that general terms and general products no longer satisfy consumers and that consumers are looking for very special wellness benefits. Thus, he thinks a multivitamin plus a single is outdated. Research from The Hartman Group finds consumers searching for very specific solutions to very specific problems. Mr. Hartman suggests this will become more apparent in the coming year and people will be willing to take a host of different products to fit different needs.

    Usage Occasions



    Consumers are no doubt complex but it is important to understand that in this day and age they are living their lives as occasions not as one overall theme. A quantitative study may re­veal seemingly contradictory results where it shows that consumers are cutting back on carbohydrates but also drinking beer. However, an in-depth study, which looks at usage occasions, may indicate that consumers see nothing wrong with combining a new eating habit with an occasional indulgence. As a result, consumers may actually attain weight control by shifting between occasions of strict diet and occasions of indulgence. It is necessary to understand all parts of the consumer lifestyle not just averages. Not understanding their occasions means that their behavior is being looked at far too broadly. The combination of different occasions into lifestyle patterns is a trend to watch in the coming year.


    Information Sharing



    Another major trend cited by Mr. Hartman will be the sharing of information through a social network. In years’ past, consumers might have had a circle of friends that they met with on occasion and on which they relied for information. However, today with the Internet and the work environment, the circle for sharing information has gotten bigger. Whether this is a result of an Internet bulletin board, a retailer’s website or some other informal or formal setting, people receive streams of information from those that they feel they can trust. Firms will do well to think about the source for consumer streams of information. These information streams are likely to continue and broaden in the coming year.


    Continued Demographic Fragmentation



    Steve French of the Natural Marketing Institute (NMI), Harleysville, PA, believes continued demographic fragmentation will be a key market driver for 2004. Not only are “Baby Boomers” becoming more important to the wellness market but there are also other demographics coming about that will also play an important role going forward. He pointed specifically to Latinos, children, women in the workforce and single-person households as examples. Marketers who try to define one “average consumer” instead of their specific consumer groups might miss the chance to do one version of a product for children plus another version for working women. The Mexican-American population will continue to skyrocket in the U.S. and understanding that this is a younger population than traditional Americans of European decent and that they have different values is crucial. Fragmentation is a very good word because it forces companies to understand individuals instead of segments. Younger working women living alone are very different from young working mothers. Both are significantly different in lifestyle from women who have returned to the workforce once children are grown. Keeping an eye on the changing demographics will be key over the next 12 months.


    Emphasis Shift from Value to Values



    Mr. French also pointed out another major trend—the shift from emphasis on value to emphasis on values. It is not that price is unimportant but few firms want to compete on price only. Firms need to be aware that consumers are more concerned than a few years ago about “values.” For example, a number of consumers will buy fair trade coffee, providing the grower with reasonable revenue, and those consumers will pay a higher price for this product. Consumers have also become more interested in rallying around charitable organizations and firms that support these growers. In today’s world, many people have had enough of scandals and place ethical values in the forefront. This will also likely be a market driver during the next year.


    Weight a Minute



    A column on trends for 2004 would not be complete without discussing the major weight loss trend. The awareness of the obesity of Americans will drive major changes in 2004. From government agencies to healthcare organizations, the focus on America’s weight is driving product and distribution changes. Both Mr. French and Mr. Hartman see this leading to a long-term shift decreasing the number of those trying to lose a quick ten pounds and increasing the number of consumers making lifestyle changes in diet. Watch for these dietary changes to force smarter eating decisions in 2004.


    Competition will Heat Up in Retail



    Both Mr. Hartman and Mr. French focused on the blurring between lines of retail distribution. Mr. French highlights this as “…convenience and availability migrates across trade channels.” Consumers don’t care where they buy. They simply want to find products conveniently and this might be in a store where they are already shopping for some other good. An implication of this is that in order for manufacturers to maximize sales, they must attain distribution in multiple channels. Nutraceutical products are found across food, drug, mass, and natural products retailers. Competition will heighten with continued retail concentration likely next year.NW
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