Most, if not all, brands have a good handle on who their customers are and who their targeted prospects are. This information is often based on who the product was designed for and marketing campaigns, sometimes using market research insights to drive strategy. But what are the risks if you get these wrong? Product non-acceptance, failure to thrive, lost revenue, negative growth, brand denigration? In the best-case scenario, your brand or products survive through unintentional market interest or quick action by your organization.
This brings me to Toyota’s discontinued Scion brand. Scion was launched in Toyota’s effort to attract a younger demographic with unique features appealing to this group. However, the brand skewed older when it entered the market and, over time, didn’t change sufficiently to grow or remain relevant with younger buyers and wasn’t viewed much differently than the parent brand. It can be argued that monitoring trends more frequently, to stay on track with product updates and features that appeal to the desired target, may have turned out differently for them.
Where will the market be in 2050?
What is the right play here? A recent report from the United Nations indicates that our demographics are changing significantly over the next few decades. By 2050, the world population will increase by 2 billion, with the largest increases across nine nations, including car-centric countries such as India and the United States.1 Great news for carmakers — there’s sufficient time to prepare new products. However, what will the world look like in 2050? The same UN report tells us that while the population will increase, “the population of Europe is likely to shrink,” and that those ages 65 and over will outnumber those between the ages of 15 and 24.
Also, interest in driving among the younger population has waned over the past several decades. According to the U.S. Federal Highway Administration, the share of 16- to 19-year-olds with a driver’s license fell to 40% in 2021 from 64% in 1995. The Mercury News reports that fear, anxiety, time, and money contribute to this lack of interest and postponement of obtaining a license. Road rage, cost of ownership (initial purchase, gas, maintenance, and insurance), and the availability of public transportation and ridesharing were cited.2
So, given the above, should we design and market with the expectation of an older purchaser? Possibly, but the outlook can rapidly change. Thus, it’s imperative to fully understand what will be required to remain forward-looking in the optimization of products and marketing, and who comprises your largest share of likely purchasers. And with multi-year development times for new vehicles, this makes it even more critical to keep a regular pulse on these trends and not follow recent trends or targets blindly into the future.
Recommendation
We recommend evolving or putting in place a formal process that identifies your future high-opportunity customers and monitors, on a global basis, proposed regulation changes, competitive intelligence, and trends in technology and consumer needs, attitudes, and behaviors. This should include internal and external data and viewpoints, including your market research activities. This system should be managed by a dedicated team to classify trends and inform the business:
- Monitor: Something new or a change in the market has appeared. It’s too early to be considered a solid trend but should be watched.
- Alert and Plan: Change is coming. Continued noise or disruption over a period of time leads you to believe this may come to fruition, and the company should have a plan.
- Act: Trend or change confirmed. Enact the plan to exploit it.
At Radius, we help our clients understand external forces such as consumer needs, attitudes, and behaviors (NAB). A market segmentation study, coupled with segment trend tracking (continuous or pulse), is a great start to this formal process. Identifying patterns in demographics and NAB related to your products helps you connect the dots with other trends occurring, develop action plans for product and marketing, and ultimately drive brand growth.
Contact us to explore how our insights approach can ensure your brand remains future-ready.
1. United Nations, 2020 and Beyond, Shifting Demographics.
2. The Mercury News, Driving delays: Teens and young adults say getting a driver’s license can wait, August 22, 2024.
