Tiina Tanninen-Ahonen: Silicon Valley lives consumer market of the future

5/20/2014

The consumer is said to be king. There is much truth to that. The better a client feels that he or she is getting good value for money, the better sales go. And it is not a question of small change: here in the USA private consumption accounts for 65 percent of GDP and in Finland it is 59 percent.

A superficial knowledge of a customer's needs is no longer enough. The pioneering companies in Silicon Valley are now drilling deeper beneath the surface, all the way down to the motivations and values of the end user. This does not only mean market studies. The results should have an impact all the way down to the building of a company's business model, earnings logic, partnership networks, and personnel management, as well as its innovation activities.

A paradigm shift is involved, in which the end user is the starting point of the value chain: how can we serve him or her better?

Each of us has different roles when we make choices, but we are still not permanent model buyers who would be driven by the same motives in every purchase situation. This makes understanding an end user a challenge for any successful company. A deep understanding of consumer roles is a precondition of success.

In his work written for Tekes, What makes us buy and why, the author, Professor Soren Kaplan, divides consumers into eight different roles. These include value chasers, simplicity seekers, impulsive followers, brand lovers, fear fixers, experiental engagers, meaning makers and expressive creative. The roles are guided by different motivations: for instance the choices of fear fixers have their security-seeking tendency in the background.

Engagement is one way to understand the motivations behind an end user's decision-making.

The internet, and to an increasing degree, smartphones, are enabling the interaction of a multitude of producers and end users. The more strongly an end user is hooked, the more committed he will be to a long term customer relationship. There are already numerous services making use of engagement, such as the online community Zazzle, in which the user can plan products, sell them, or buy products designed by others.

Another kind of engagement is the experimental culture in Silicon Valley, where a product is put on the market quickly for evaluation by consumers, and for testing for further development.

The public sector has also found the power of engagement. There are many examples of this around the world, for example in Finland and in my neighbouring city San Francisco. IBM has divided the people as participants into four separate types: designers, brainstormers, researchers, and dismantlers. As roles these are more permanent than those in the consumer business.

I have identified in myself very different kinds of roles depending on the time and content. I was a seeker of simplicity when I decided to buy all of the furniture, and even the car of my predecessor when I moved to California a year ago. But when I buy glasses I admit to being a lover of brands, driven by the community, and identifiability. I have also been loyal to the same brand for the preceding ten years.

P.S. In the autumn, new Team Finland Future Watch reports will be published on the Tekes web pages on consumers' different roles as a decision-makers, and on methods of engaging people in decision making.

Tiina Tanninen-Ahonen
Head of Office, Tekes Silicon Valley

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