Innovation and new consumers

The explosion of apps across platforms and other innovations offers a cornucopia of buying and selling  opportunities.  At least that is the thesis of the latest "briefing" by trendwatching.com, an "independent and opinionated trend firm, scanning the globe for the most
promising consumer trends, insights and related hands-on business ideas".

Trendwatching labels the new multitudes as "virgin" consumers, those who have never experienced the new product or service or quite simply are new consumers entering the market. They cite consulting giant Ernst & Young's prediction of 1 billion new consumers who will enter the market by 2025 to buttress their argument.

Interestingly, per the consumer trend prognosticators, much of the exponential growth being witnessed is driven by "newism"; the tendency of consumers, old and new, to hanker after the dazzling array of new products, services and experiences that are created daily. They go on to note that newism is about five principal aspects of an emerging consumer business model:

    – creative destruction, an idea, largely associated with Austrian economist Joseph Schumpeter, that continually "forces" innovation and new ideas, products and services.

    – FSTR, shorthand for faster, where all aspects of the buy-sell continuum move at an accelerating pace.

    – experience cramming, where consumers yearn to learn coupled with near exhibitionist notions of what others "need to know" about their experiences.

    – status stream, a corollary of the preceding notion whereby consumers seek to trumpet their edge on being the first to know.

    – trysumers, an awkward if somewhat apt label for the low to zero risk to consumers for trying and buying only to discard their choice in mere moments.

Trendwatching points out that virgin consumers are not monolithic in their purchasing choices or their profile with many of them being "well versed in consumerism" even if not in the particular product, service or experience.  For purveyors, branded or not, the challenge is to "think like a virgin" which translates into 3 simple dicta: keeping it simple, explaining the brand and not asking for commitment.

Apropos the foregoing, a recent post in "Schumpeter", the Economist's Business and Management blog was all about the rapidly expanding list of apps to book a hotel room. Apps, in general, are seemingly developed and deployed faster than bacteria with apps for the iPhone alone accounting for 19,000 per month. Easier and faster ways to book a hotel are not only going to be appealing to the virgins chasing newism, but are going to disrupt, arguably for the better, the hotel distribution model.

Schumpeter suggests the latter in noting much of the "new" business derived from hotel apps is from those looking for "on-demand consumption" which is somewhat synonymous with instant gratification. Perhaps. It is hard to get away from the fact that a likely by-product is a lack of rate integrity and erosion. Then again, it argues for creative-destruction, the engine of modern economic growth.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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