Although prospects differ somewhat from sector to sector, business in developed countries – especially the automobile, retail and healthcare sectors – is expected to show encouraging results very soon.
Are we on the point of emerging from the economic slump? The latest annual report published by the Economist Intelligence Unit (EIU), entitled ‘Industries in 2014’, seems to suggest just that. Having polled 647 business executives worldwide, the EIU is announcing better prospects in the coming months for the main industry sectors. The findings of the survey point to an imminent recovery in the developed countries, driven by the resurgence of the automobile industry, growth in the retail business and the growth impact of the new United States regulations on healthcare systems. But what is perhaps more interesting than the apparent increase in overall consumer confidence is the factors powering the recovery. In all the three of the sectors mentioned above, it is innovation that is driving growth, by both generating unique products that are more tailored to customer needs and bringing about steady reductions in prices due to increasing economies of scale.
Emerging markets: targeting the customer more carefully
Western companies’ determined policy of innovation will certainly help to breathe new life into product offerings in mature markets, but this approach has basically been triggered by the need to address new markets. In the automobile sector for example, the recent deal between PSA Peugeot Citroën and Dongfeng Motor of China will surely enable the French car brands to penetrate the Chinese market. And indeed, exporting companies across the board seem to have adopted a new strategy – instead of marketing low-cost, bottom-of-the-range products in emerging markets, they are now looking to meet the needs and desires of aspirational consumers for whom a brand purchase may be a source of social recognition. Accordingly, many manufacturers have abandoned minimalist design in favour of brand image. This drive to get closer to the customer was pioneered by auto-makers, and the same approach is now helping to fuel the boom in retail. WalMart continues to invest in South Africa and Carrefour in West Africa, where the rise of the middle class is leading to greater demand for quality products. In China demand is forecast to grow by 9%, on the back of the development of e-commerce and the surge of the middle class in the country’s interior provinces. An essential factor in the approach to these markets is e-commerce, with the accompanying centralisation of consumer data and the various uses to which it is put, the EIU points out. Similar moves are being seen in the third sector destined for strong growth – healthcare. Following the example of the United States, China, India and Brazil plan to partially liberalise the medicines market this year and also to modernise their national healthcare systems, which is likely to open the way to new markets for western companies.
Data, data, everywhere, and firms will have to think
All these examples have a common thread – the transition to a customer-centric approach. Thanks to the ever-increasing amounts of data available and the growing sophistication of analytical software, some western countries seem to be emerging from their hitherto rather geographically-limited product development cultures. Instead of the old formulaic approach, which consisted of trying to simply transpose home-developed products and services directly from one market to another, there is now a definite trend towards a much more personalised approach to the customer. Whether we are talking about creating concept stores in the retail sector in developed countries, or a more subtle approach to the price-quality nexus in emerging country markets, the sheer volume of available information nowadays means that no company can today think in terms of the consumer, but must view customers as individuals, stresses the EIU report.