12 - A Glimpse Ahead
It's generally accepted that the rate of change is rapid and shows no sign of slowing. In particular, the digital world will continue to expand, and will shape the environment, our choices, and the way we make decisions.
- People will depend increasingly on devices to make decisions for them, and artificial intelligence may come to the forefront.
- Businesses will be more driven by streams of data rather than by human logic
- There's great faith that someone in future will discover a way to utilize the vast data hordes we are mindlessly accumulated in the present. The "big data" fad is focused on this.
- In marketing, "social contagion" among users is important to having credibility and influence and traditional media will continue to lose numbers and credibility.
- Recovery in economic markets is likely to be slow, and people will carry on recession-era habits even after it has recovered, which will drive a "thrift economy" in which ownership will become less common than swapping and renting.
Interview with J. Walker Smith
The author interviews a chairman of a research firm that focuses on projecting how trends in the consumer market will influence the more distant future.
- Technology will be the dominant factor for the next five years, and everything else will continue to be secondary. It has always had the potential to change the future, and now there is economic necessity to undertake changes we have disregarded before. It will become the infrastructure of everyday life.
- Gamification is a fad that will pass. However, some of the principles of games will spill over to influence the mainstream: it sets our expectation for interacting with devices, gives us a mercenary mindset, and sheds light on motivating and guiding behavior.
- Word-of-mouth from trusted people has always been important, and will continue to gain importance as advertisers and media have lost their credibility and are unlikely to regain it. People are smarter about parsing messages, and quick to avoid or shun those that do not represent their interest.
- The circle of influence of an individual is wider and righter. People who used to brag about the number of people and firms they connected with are now finding they have to disconnect with many to decrease the clutter and noise.
- In a similar way, people are quick to distance themselves from others who are noisy but offer no value to their audiences. In this sense, metrics such as Klout are "a bit amusing"
- Thus far, we have been obsessive about the amount of data we can amass, but haven't figured out a way to use it. Perhaps we finally will?
- Media in the store environment is still hugely underdeveloped. The store experience has changed little for more than a century and we have not evolved much. Convergence can change that.
- There is a large, and largely ignored, economy in after-market goods, and we can expect to see more bartering, trading, and sharing models. Customers want the benefits, and are recognizing that they can be had without holding a permanent title to an object. This will continue to grow, but still not become dominant.
Interview with Chris Keating
To get a broader perspective on consumer behavior as an economic phenomenon, the author also interviewed a consultant who considers economic trends.
- The biggest factor influencing consumer economics is the housing market, and it will likely be 20 years before we see an improvement. It's highly significant because real estate has long been considered a sound investment, and its vulnerability has been a significant blow to our collective psyche. People don't feel as wealthy and secure anymore.
- Healthcare will become a significant issue: an increasing number of boomers will need it, and the number of medical school graduates is decreasing. This will mean a shortage and price increases, reducing the amount of income available to spend on other things, dampening the overall economy.
- It has always been the case that a currency is worth what it is perceived to be worth, by those who will accept it in exchange for goods. The Euro has in that sense been shaky, and even the US dollar is not as invulnerable as it had been. Even so, it is difficult to conceive that a localized currency or virtual currency will replace traditional currencies in the foreseeable future.
- Internationally, the value of a currency is in its ability to be exchanged for other forms of currency, which may explain why virtual currencies have not really caught on, and why people are eager to exchange them for real money when they can. It fails a number of tests that are applied to currencies - and until it remedies that, virtual currency will be marginal, a thing unto itself that is not perceived as money.
- The smallness of virtual currencies have also kept them below the radar. If they did succeed in growing, it is certain to bring with it government scrutiny, not the least of which will involve taxation and regulation. Until it reaches a certain amount, maybe a billion dollars a year, it will remain ignored. Once it crosses that threshold, government will become suddenly interested.
Thoughts for the Future of the Shopper Economy
The author considers the way in which artificial intelligence can infiltrate consumer behavior: it's fairly simple to automatically pay regular bills and automatically place orders to restock items, but intelligent shopping agents may take on more or a role in identifying, then recommending, then having full authority to control the purchases of their owners.
This is already seen in the deference people give to technology - using a Web site to identify the highest-rated product and the lowest-prices retailer, then accepting the selections made by technology without applying any independent judgment.
(EN: This is accurate of behavior, but a bit imprecise in the suggestion that "technology" does this all on its own. It's more accurate to suggest that people defer to the expertise of those who wrote the algorithms and programs that govern the way the algorithm rates and ranks products. It's not new, as many people simply go with whatever the editorial staff of Consumer Reports happens to suggest, rather than making an independent assessment with an eye toward their own needs. However, it is a bit worse because the people who write the algorithms are not particularly bright or well-informed about the products their software evaluates, and there has already been some blast-back against the notion of "crowdsourcing" as applying the average opinions of an unintelligent mob. Ultimately, it is mitigated by the willingness of individuals to abdicate the choice - scary how many will do so, but heartening to know that it is a voluntary choice.)
On the other side of the fence, brands and businesses are relying on AU tools to optimize their participation in the marketplace. There are already in place decision-support tools and decision-making tools that decide which products or promotions to offer a customer based on statistical algorithms that attempt to identify a shopper's interests and respond accordingly with customized communications - though these are generally evaluating "rules" that are set by the advertiser.
(EN: Maybe this is a bit silly, but I do see the potential for a very absurd situation in which the firm's marketing tech are communicating to customer's buying tech and the human element becomes entirely removed from the equation - which would mean that the human will become the anomaly in the systems, and some very bizarre things could result.)
The author suggests that, while these intermediaries seem like further separation of brand and consumer, "I believe that they will lead to a much greater degree of intimacy" in their ability to refine the approach - our methods today are clumsy and uninformed, and the level of information we can leverage in future will enable us to be more precise and specific.