How Millennials Will Change The Market?

Millennials may just change the nature of business and what type of products and services are likely to be rewarded in the market. Millennials are significantly different than Baby Boomers and have been one of the hardest hit by the recession making them more focused on different aspects of life. This different focus impacts their perception of what they are looking for in the market and what they are likely to spend their money on. 

Millennials communicate differently than previous generations and use technology to talk to each other (1). This means that information spreads quickly among this population and they stay in touch with each other through posting on Facebook, Twitter, and other methods. They are fairly transparent in their communication patterns and how they view particular issues. 

According to a study conducted by Harstad Strategic Research, inc. Millenials want things like affordable college, retirement, social equality, healthcare, environmental policy, and helping the poor (2).  They are focused more on the necessities of life and developing a better society that is inclusive of different types of people. 

Millennials have also been hardest hit by the recession, less likely to focus exclusively on careers, have less spending money than previous generations, and are more educated (3).  They are a generation of people that come to a more global market with lots of education but have learned that opportunities are not always available. They have turned to other pursuits and needs in life. 

They also view family life differently than previous generations. Millennials are focused on establishing themselves first, marrying later, and avoid the devastating divorces of older generations (4). They are more interested in the quality of life and are much less interested in choosing a career over family. 

This is not a physically inactive generation. They seek to create healthier lifestyles, eat better, exercise more and engage in more physical activities (5). They purchase organic food, go to yoga classes, and seek a balance with other activities. They view life in a more holistic manner than other generations. 

What does all this mean for business and investment? Those industries that are likely to do well include online education, vitamins, social media, online retailers, sporting equipment, family products, health food stores, recreational goods, and fitness companies. The Millennials represent a different way of looking at the world and are likely going to change purchasing patterns as they move into their peak earning and spending years. Companies that find their core base retiring or passing away will need to find new ways of reaching this soon to be powerful new demographic.

Creating National Innovation Through Information Diffusion

National innovation is an all growth proposition that seeks to make maximum market gains by exporting relevant products to excited customers. Charging forward with a barrage of new products and services creates a zeitgeist of growth that is not easy to match. The researchers Change and Cui (2013) analyzed the factors that help encourage higher levels of international competition that led to GNP growth and development. 

Countries rely on informal and formal innovation networks to turn good ideas into marketable growth. National innovation systems refer to the innovative network within a country whereby departments and agencies promote innovation through the economic, scientific, and technological organizations (Zheng, 2006). Each of these organizations uses the knowledge of other sectors to enhance their own positions. 

Often countries use more of a closed innovation system. Each company works within a silo and doesn’t share information. Even though great ideas do come forward it is often much slower than what would be realized through higher levels of mutual development. Those countries that can generate more ideas, better products, and lower lead times can dominate the market. 

National innovation can be improved by applying scientific and technical knowledge to the development processing and exportation of products (Wang and Zhang, 2002). As universities develop new methods and people with practical experience apply that knowledge in new ways product enhancement is realized. The transference and application of information is an important criterion in the creative process.

Even though in a knowledge economy the markets transfer information across borders economic hubs should be draws for such information.  Let us assume that a new process for product development is used in one country. It will not take long before that process is copied by others as its benefits become apparent to competitors. Global hubs should be drawing in this knowledge to enhance their local hubs and operations. 

The authors found that technology transfer and diffusion are important elements in growth.  All hubs must draw in, generate and then diffuse information for the greatest possible growth. This occur most often when international trade, foreign investment, and cross border R&D processes are developed. Each hub brings in resources and information and then uses this information to enhance their competitive position.   

Chang, Y. & Cui, X. (2013). The Interactive Relationship of Transnational Technology Transfer & Diffusion and National Innovation Capability. International Journal of Business and Management, 8 (21).

Wang, Z. & Zhang, W. (2002). Foreign direct investment, technology licensing and technology innovation. Economic Research, 3, 69–75.

Zheng, X. (2006). Research Review on National Innovation System. Scientific Management Research, 24(4), 1–5.

Focusing on Selling Experiences versus Products in the New Economy

Service dominated logic or S-D Logic may be a better viewpoint to train managers and teach college students about the nature of modern business. Considering how much society has changed over the past few decades the movement from tangible goods to service offerings creates a fundamental shift in the economic system. This fundamental shift should be incorporated into training and education so that decision-makers can master new economic conditions.

A total of 75% of all business revenue is currently service oriented while 80% of the GNP is service related (Ford & Bowen, 2008). That is a huge number! With this fundamental change from agricultural, products, and commodities to service oriented offerings it is necessary to train managers on the new S-D vantage point of seeing and perceiving their operations in a new light. Such an approach will help decision makers view organizations and problems from a perspective that actually reflects current economic activities.

The differences in technique are significant. According to Vargo and Lusch (2004), a shift from products to intangibles, specialized skills, knowledge and processes requires companies to focus more on marketing and integrate of operational processes. If an organization is selling experiences (i.e. service) then their approach to management would be completely different and decisions would focus closely on enhancing that perceived value.

The selling of experiences occurs whenever a company uses services as the stage and products as the prop (Pine & Gilmore, 1999). Where companies once showcased their products and earned revenue they are now making the majority of their revenue from the services attached to those products. There is a fundamental shift in thinking that focuses on the intangible but extremely important psychological experiences of services while less on the give market value of products.

Let us put this to an example. An organization sells an electric toothbrush and earns a few dollars of revenue. Under traditional economic models the sale is made when the transaction is completed. Yet in a service economy it is possible to sell the experience of being beautiful with white teeth. The selling of the toothbrush may be part of a beauty makeover service that transforms a person’s image and comes with teeth whitening, cosmetics, hair products and other related offerings. The products are secondary to the service.

Changing the perspective creates greater opportunities to maximize revenue generation streams. The economic approach adjusts to better reflect modern economic conditions. Operations become more of a support and enhancer to experiences than a logistical path of selling products. The very way people are trained, the type of systems used, and the marketing mix adjust to enhance the experiences and positive feelings of customers.

Tips:

-View experiences as service.

-Sell products that enhance that experience.

-Adjust management styles, organizational structure, and operations to enhance experiences of customers.

-Focus on the total customer experience.

-Raise the perceived value of products with service.

-Integrate operations into the marketing strategy.

Ford, R. & Bowen, D. (2008). A service-dominant logic for management education: its time. Academy of Management Learning and Education, 7 (2).

Pine, B. & Gilmore, J. (1999). The experience economy. Boston, MA: HBS Press.

Vargo, S.  & Lusch, R.(2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68 (1)