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The Consumers of the Future

The so called “next billion” consumers come from Brazil, China, India, Eastern Europe and even parts of Africa and Asia and represent the largest untapped consumer market in the world. The Boston Consulting Group estimates that these new consumers already spend over a trillion dollars a year although they have barely entered traditional consumer markets yet. The individuals who make up this new consumer market are neither especially affluent nor particularly poor, however most are young and economically active. They have growing salaries at their disposal and spend around a third of this on consumer goods.

Until recently, however, businesses have been avoiding the challenge of trying to win over these consumer groups. Most underestimate their growing value or are still blinded by old stereotypes.

The following characteristics distinguish the ‘next billion’ from other consumer groups:

• Fluctuating incomes. The monthly income of this group is fairly high; somewhere between 63 and 700 US Dollars (China: 63-375, Brazil: 100-700) however it is also volatile and customers are therefore more likely to hold back from purchasing non-essential items.
• Practical constraints: Most people live in small flats with very little space and have to cope with electricity and water breakdowns.
• Careful shoppers: With less money to throw around, these customers prefer to research and compare products before making a purchase.
• Ignorance: They are often new consumers and need comprehensive operating instructions. They will also shy away from advertising which doesn’t explain a product’s benefits.
• They look for trusted advice: The experiences of friends and family play a bigger role on the decision to buy a product than advertising.
• Familiarity and status: This new consumer group wants to show off their status by buying expensive but good quality products. They also prefer to shop in small neighborhood shops than in anonymous, intimidating supermarkets.

The “next billion” does not represent a homogeneous group. Requirements are largely based on country and even differ from culture to culture. Nevertheless, none of these consumers should be under-estimated. They are increasingly sophisticated and well educated people and are certainly not ignorant about what products are available on the market.

There are a number of things that businesses need to watch out for if they want to capture this new target group as new customers.

1. Fully functioning products need to be developed at appropriate prices, to fit into small flats and be able to cope with electricity and water breakdowns.

2. Partnerships need to be built with existing distribution networks. A good example of this is the Indian telecommunications firm Airtel who sell telephone cards over the network of office food delivery boys or “Dabbawallas” in Mumbai.

3. Advertisement and educational marketing programs must be clear and informative.

4. Businesses shouldn’t shy away from new and unknown opportunities.

The summary above was prepared by Natasha Doff of the Atlantic Community editorial team from ‘Decoding the Next Billion Customers’, Boston Consulting Group, January 2008.

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