The ongoing democratization of luxury (read: quality consumer goods and services at ever decreasing prices) has created powerful icons of new-style mass consumption: think Nokia, H&M, Zara, ING, DELL Computers, Gap, Virgin, Microsoft, Nike, EasyJet, or L'Oreal.
These companies cater to what TRENDWATCHING.COM has dubbed MASS CLASS: the hundreds of millions of global consumers who are now unified in their quest for the best deals on offer on a global scale in virtually each B2C category.
The MASS CLASS has not replaced its well-know predecessor, the 'Global Middle Class', but rather incorporated its richer cousin, sharing a level of purchasing power when it comes to most B2C goods and services, save for the really big ticket items like housing, college education and high-end cars. In other words, MASS CLASS puts any Shanghai and Prague shopper making $5,000 a year on par with Swiss and US consumers bagging $5,000 a month, when it comes to consumption of quality mass goods.
So what are the drivers behind this trend? A snapshot*:
Unprecedented wealth in the 'developed' world, encouraging and inspiring leading entrepreneurs and corporations to continually introduce higher quality goods and services (GDP per head in OECD countries has increased up to tenfold over the last three decades. Biggest winner: South Korea: up twentyfold from little more than US$700 in 1970 to US$15,000 in 2000).
Equally impressive growth in prosperity in many developing nations, spawning hundreds of millions of 'new' consumers that are copying the developed world in taste and preference.
Entire countries and regions becoming both factories to the world (keeping costs down) AND massive consumer markets (Swedish home furnisher IKEA opened its largest store in Asia in April of this year, the retailer's second outlet in China's largest city Shanghai. Ten new outlets should be in operation by 2010. China is Ikea's largest purchasing market, with 15 percent of its products originating there.
Global communication channels allowing for mass branding and advertising like we haven't seen before in economic history: the global MTV network alone annually attracts more than 366 million households and a billion viewers.
* Each and every of these developments warrants its own
trend description and elaboration; the upcoming issues of this newsletter will
bring you just that.
How to profit from a massive trend like MASS CLASS? Well, to start off with, try incorporating it into your strategic vocabulary. MASS CLASS as a phenomenon represents new markets, new consumers, and new competition going after these vast opportunities. Prepare for a new breed of entrepreneurs willing to challenge any existing business model that shows even the slightest sign of fatigue, jumping on the enormous economies of scale and scope made possible by this unified mass of consumers. Furthermore, expect many incumbents in retail, travel, financial services, etc. to try to copy their low cost / high quality rivals by imitating new business ideas, failing to grasp that behind those ideas lie fundamentally different business models. Witness airlines like British Airways and KLM recently giving up on establishing MASS CLASS carriers inspired by Ryan Air and EasyJet.
And consider the opportunities offered by the unavoidable anti-trend, which for MASS CLASS would be MASSCLUSIVITY: a sudden craving for a bit of privilege and status amongst the masses will favour a new breed of nimble service providers, modeled after phenomena like the restricted-access airport lounge. But even here, incumbents may find that their 'old-style middle class' won't fill this niche: their bland service levels represent neither true privilege nor true MASS CLASS value.
Again, this trend is multi-faceted and incorporates plenty of sub-trends, which is why we will devote more space to it in upcoming issues. Stay tuned, en masse ;-) >> Email this trend to a friend.
Trends linked to the MASS CLASS trend:
1. EASY ASIA
NOVEMBER 2003 | We admit we're jealous it wasn't us but Goldman, Sachs & Co. who came up with the 'BRIC' acronym. BRIC stands for Brazil, Russia, India and China, the four nations that together -- according to a Goldman Sachs report -- will outdo the current G7 in economic output in the next three to four decades. Which means even more eager consumers will be joining the MASS CLASS.
One company that understands the deep impact of BRIC nations joining the world of conspicuous consumption is IKEA. The Swedish furniture phenomenon announced that it will be expanding and opening new mega stores in Russia and China, which makes sense as its Moscow MegaMall and Beijing and Shanghai super stores are selling furniture faster than you can say 'BRIC'. Late 2004, Moscovites will be able to wander through another 230,000 square meters of retail space when MegaMall 2 opens its doors in the northern suburb of Khimki, close to MegaMall 1.
And Chinese members of the MASS CLASS can look forward to two new IKEA stores: one in Beijing and the other one possibly in South China's Guangdong Province. By 2010, IKEA hopes to have a total of 10 new stores in Beijing, Guangdong and Shanghai's Pudong New District. TRENDWATCHING.COM wouldn't be surprised if that number proves to be on the prudent side, seven years from now.
Need more examples for your company's BRIC, expanded G7 or enlarged European Union strategy? Keep an eye on our MASS CLASS updates! >> Email this trend to a friend.
JANUARY 2004 | The front-end manifestations of MASS CLASS consumerism are more than visible these days, from the gleaming shopping malls of Kuala Lumpur to GAP and H&M flagship stores colonizing NYC's 5th Ave. But what about the back-end infrastructure? Who or what is going to move people, goods and bits around the world in ever larger numbers? More MASS CLASS spending power means more travelers, more bulk transport, more giga-bytes clogging up fiber cables and copper lines.
To answer the people and bulk question (we'll save the techie stuff for the next edition): check out the much talked about Airbus 380, which is capable of seating 550 to 800+ (!) passengers per flight, and is steadily cruising closer to its 2006 launch date. These enormous double-decker planes will become a symbol for a world where at any given time, millions of MASS CLASS holiday goers, business travelers and HOME TROTTERS will think nothing of boarding and unloading in giant swarms, from stretched-to-capacity Heathrow and JFK to the ever-expanding Pudong and Dubai airports.
Or consider the new breed of mega freighters sailing the seas. Due to the enormous increase in volume of goods being exported (and imported!) from and to China (remember; MIC, MFC, OBC!), South Korea's Samsung Heavy Industries now builds giant container crafts, 340 meters long and 43 meters wide, for its client Seaspan Container Lines. These ships can hold up to 8,000 containers, versus 5,000-6,000 containers carried by previous mega vessels. (Source: BusinessWeek.)
In fact, just last month, Seaspan placed a new order for eight container ships of at least 9,500 TEU*, in a deal that will produce the largest container vessels ever constructed. The ships, each costing over USD 90m, are likely to operate on trans-Pacific and Europe-Asia routes following their delivery in 2006. (Source: www.porttechnology.org.)
Don't expect a slow-down any time soon: with Asian tigers and dragons only just waking up, shipping industry sources forecast global container freight to increase at a rate of 10% per year until 2010, and expect 10,000 TEU container carriers to dominate the market in the near future. Samsung, for one, is already working the development of 12,000 TEU container carriers.
Yup, its going to be an interesting ride (and flight), from the factories of China to double-decker jets and mega freighters shuttling between the various continents... You can hate it or love it, but a MASS CLASS strategy for 2004 is anything but a luxury these days. >> Email this trend to a friend.
* TEU stands for 'twenty-foot equivalent unit', and is used to express the relative number of containers based on the equivalent length of a 20' container. See how TRENDWATCHING.COM truly broadens your horizon? ;-)
AUGUST 2004 | MASS CLASS is taking on the world. From saturated consumer societies in Canada and Norway to the rampant boom markets in China and India, hundreds of millions of consumers now ALL sip Starbucks lattes, blabber away on Nokia phones and dress up in Zara and H&M. Whether you make USD 60K in Oslo or USD 3K a year in Shanghai, branded, high quality products and services at affordable prices now define the minimum standards for MASS CLASS living, making it a very competitive market out there, for established and new brands alike.
Having mapped the purchasing power of billions of consumers in BRIC (Brazil, Russia, India, China) nations and beyond, TRENDWATCHING.COM in its seminars has started to turn its attention to the three must-have consumption trophies that will afford emerging MASS CLASS consumers access to Middle Class Walhalla: a comfortable home, (multiple) holidays, and a nice set of wheels. In this edition we'll focus on the latter. Make way for the MASS CLASS CAR.
The MASS CLASS CAR is not new: Latin Americans had their Volkswagen Beetle (affectionately called ''el huevito'', the little egg, or "el vocho"), Indian consumers have their Maruti 800 (selling for as little as USD 4,860), and in the 1990s, Fiat of Italy flooded the developing world with its Fiat Palio, the company's 'world car', aimed at emerging countries such as Brazil, Argentina, India, China and Turkey. Today the Fiat Palio is marketed in forty countries, and produced in nine plants. (Source: Wikipedia.) However, with especially India and China rising and shining, a slew of new initiatives promises to rejuvenate the MASS CLASS CAR trend.
Renault X90 (aka Logan)
French car manufacturer Renault is now in full gear, preparing the building of its Logan 'World Car'. The Logan, initially named the X-90, is also known as the 5,000 Euro car (after the planned sales price for the entry-level model in developing markets).
Production will soon start at Renault's Dacia subsidiary in Romania, which previously built the Dacia 1300, a copy of the 35-year-old Renault 12. It recently ceased manufacturing this model, thereby freeing up capacity. Dacia is aiming to build 200,000 cars a year for Eastern Europe, and the Dacia plant will be followed by factories in Iran, Russia, Morocco, Colombia and probably China and India. Renault hopes to sell 700,000 Logans by 2010. (Sources: Financial Times, just-auto.com.)
Chery QQ and Geely Haoqing
China's burgeoning automobile industry is also seeing initiatives for new MASS CLASS CARS, most notably those of Chery and Geely. The two car makers have gained a domestic market share of around 10% by undercutting their larger rivals on price, with vehicles currently priced at around Rmb 40,000 (USD 4,800). This spring saw the introduction of the Chery QQ, a spartan but cute four-door hatchback.
China's only privately owned car manufacturer Geely Group unveiled its new Geely Haoqing last April. Both Chery and Geely are very ambitious and have just announced a push into overseas markets. Geely is planning to step up exports to the Middle East, South America, and in a first for a Chinese carmaker, also to the US with sales targeted at 5,000-6,000 units in 2005. Chery, for its part, is planning to export 10,000 cars this year. Despite lower vehicle quality levels, the carmaker is aiming to grab market share from foreign rivals in overseas markets by selling cars at even lower prices than in China. (Sources: Financial Times, China Daily.)
Indian car giant Tata Motors is hoping to make motoring available to the country's masses with the introduction of a car costing about USD 2,000 (!). The vehicle, which is still at the "ideation" stage, is expected to have a 600cc engine and to be fighting for space on India 's roads within three to five years. India 's cheapest car, the Maruti 800, currently costs about USD 4,860 (200,000 rupees). Among the strategies for producing a car retailing at half that amount is to set up a network of low-cost, low-volume manufacturers around India for component production and assembly, acting under license. The low-cost cars would be aimed at people graduating from two-wheelers to cars. Five million two-wheelers are sold each year in India, while 200,000 Indians made first-time purchases of entry level cars last year. Tata believes that demand for the 'People's Car' could rise to 500,000 within two years, with opportunities in other parts of Asia and Africa. (Sources: Financial Express India, Telegraph.co.uk.)
The above may not make your day if you're an environmentalist, but as we often need to point out: the art of trend watching really is about observing first, then drawing conclusions. It's better to be in the know, good or bad.
Now, chances are you not in automotive at all, in which case you may not care about the Renault X-90 or the Cherry QQ. However, the same MASS CLASS initiatives are building in real easte. In travel. In fashion. In finance. And thus, studying these initiatives, even if they are far removed from your own industry or your geographical location, should get you thinking and, eventually, going. In the end, MASS CLASS CARS are yet another take on SACHET MARKETING techniques of offering your 'emerging' consumers more digestible, affordable, 'light' versions of whatever it is you're selling your 'mature' consumers. Want more examples outside the automotive sector? The September edition of our newsletter will feature an update on the latest and coolest SACHET MARKETING examples from Brazil, India and the Philippines. See how hard we're working to keep you cutting edge? ;-) >> Email this trend to a friend.
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