Click the image for details When the demand for consumption upgrade arrives like a spring breeze, both the business community and investment circles are excited. After being suppressed and anxious for so long, they finally seem to see a new commercial trend! But why does consumption need to upgrade? Who drives the upgrade? What changes have occurred in consumer psychology? What regional characteristics do the opportunities for consumption upgrade have? What changes are happening in different consumption sectors? Euromonitor Information Consulting released an article last year listing the top ten global consumer trends for 2016:
Consumer unpredictability
Trading money for time
Challenging age
Driving social change
Blurring gender boundaries
Healthier food
Focus on mental health
Over-reliance on the internet
Spending money for security
Single nobility In essence, these ten trends boil down to a gradual shift from consumption compensation to consumption evolution, only accelerating in speed. In 1993, Grunert developed and improved the theory of compensatory psychology, noting that a need can be satisfied in multiple ways. That is, the need for X can be met by acquiring X, but also by acquiring Y. If Y is used, the process is called compensatory consumption.
- The simplest example: you want to eat something spicy, but the Sichuan restaurant you want to go to is packed, while a nearby Hunan restaurant has seats, so you choose the Hunan restaurant.
- A further example: one day you are driven by lust, but you have no girlfriend and no courage to go to a place of entertainment, so you turn on your computer and pick a movie starring your favorite AV actress.
- A more complex example: you are afraid of delaying your flight and want to book a taxi, but you worry the taxi might not show up, so you choose Shenzhou Car Rental. Since you have companions and luggage, you book a seven-seat vehicle. The progression of these three examples is no longer simple compensatory consumption but gradually becomes consumption evolution. Diverse product and service models are the foundation of consumption evolution. However, diversity alone cannot fully solve the evolution problem, which is the biggest difference between consumption compensation and consumption evolution. The extension of compensatory consumption shifts from meeting consumption needs to satisfying consumers. Consumption compensation is the first step of extension, starting with material satisfaction and substitution. When users' spending power gradually increases, meeting the lowest level of basic needs like food, clothing, housing, and transportation is sufficient. Taking a step forward requires a qualitative leap, not just a simple upgrade. Taobao's rise addressed the need for C-end users to access more products. JD.com, competing for market share with Taobao, further solved C-end users' requirements for product quality and fast, stable logistics. Taking the most intuitive catering industry as an example, the rapid rise of Western fast food was the lowest-cost way for users to break through economic income classes, carrying social attributes like luxury goods. Its decline is due to users evolving from eating to eating well. The rise was due to compensation; the decline is because users have evolved. Similarly, the prevalence of imported and joint-venture cars in first- and second-tier cities, and the surge in domestic car ownership in third- and fourth-tier cities, reflects the broadening of C-end users' shift from compensation to evolution. The expansion of consumption compensation areas follows the increase in user income, shifting from individual compensation to individual-centered radiation compensation. The most typical examples are the prosperity of the elderly gift market represented by "Brain Platinum" and the children's tutoring market. The former compensates for children's lack of filial piety, and the latter compensates for individuals' childhood dreams. In the era of consumption compensation, it is ultimately a stage of C-end user awakening. Users go from knowing to getting, and when unsatisfied, they turn to substitutes. From knockoffs to second-tier brands to international brands, from pursuing quantity to pursuing quality, to put it bluntly, this is the stage of "satiety and warmth leading to lust"—the satiety stage. The most critical point from consumption compensation to consumption evolution is the shift from "having it is enough" to "if it's not right, I'd rather not choose." Obvious features are "non-choice consumption" and "changeable user habits," manifested in significantly lower brand loyalty and the contradiction between "killing time" and "saving time." At the low-demand level, users hope to use various online and offline tools like the internet and commercial complexes to quickly complete the process from purchase desire to purchase completion. At the high-demand level, users hope merchants can provide sufficiently complex or personalized scenarios to meet individual deep needs. User demand begins to force merchants to upgrade or die. Previously, users made products based on large-scale sample needs, achieving profits through high volume and low margins. Just as store openings and website traffic were the foundation of profits, the more signs exposed to consumers, the more customers. Now you need to pursue per-customer profit rate. Previously, if you opened a restaurant, a dinner table turnover rate of 2 times gave you only 40% profit. Now, if you open a restaurant with only 80% dinner occupancy, you can achieve 60% profit. The difference is that the refined living standard or tone you create satisfies user psychology. The relationship between merchants and target groups is no longer one-way sales but becomes more interactive, even requiring merchants to customize products for target groups and iterate continuously. Consumption capacity often rises during economic downturns. Compared to European and American countries that have already completed this step, the domestic environment still needs to consider urban-rural differences and an unmentionable XX solidification factor (you know what I really mean). These two factors present more opportunities than disadvantages. You can quickly replicate first-tier products and services and establish a simplified exclusive brand locally. A city in the N-tier is in the consumption compensation stage. For example, "Xi Shao Ye Rou Jia Mo" might be questioned in Beijing, but if you open one in an N-tier market, could it replicate the prosperity of Western fast food? While others are still doing the suburban tourism market, you have already laid out outbound tourism. Could you steal business from Ctrip? What did "Kuaishou" do? It simply simplified a platform that should have been exclusive to internet celebrities, stars, and experts into one for people with consumption evolution needs. Others were unwilling to do it, but it did it to the extreme, locking in the psychological consumption account of this group. Of course, if you can better grasp the commercial essence of sales evolution, comprehensively create consumption details, become more refined with a touch of uniqueness, then for consumers who want to show off but are still struggling, you will gain more share in the new wave of dividends. -END-