My name is Lesley Pennington. I am the CEO and founder of Bemz.com. We are a swedish company- based in stockholm. We produce and sell sofa covers for IKEA sofas and chairs via the internet to customers worldwide. At the beginning of the 21 st century we are in the midst of a fundamental shift in the way we do business- the end of the mass market as we know it today. Today I am going to talk about the business concepts and business opportunities caused by this transformation in society and in the market.
Need to define- What is a mass market? The largest group of consumers for any given product or service.
The goal and dream for every marketing manager and CEO. The mass market represents the maximum amount of customers for any given product. A clustering of people with common interests, needs at the middle of the bell curve- with fringe, niche customers and markets at each end. Mass market marketing targets their similarities- creating messages to the thing which these consumers have in common. there by getting maximum impact for each marketing dollar.
In order to supply the mass market with mass market products you need a mass market production process- Standardised, efficient assembly lines with the goal to deliver the highest quantity at the best price. Henry Ford
IKEA is an example of a mass market company which excels at mass market products and production. Standardised infrastructure and logistics to deliver those products . IKEA has been able to drive the price of furniture down due to a focus on efficient production and logistics.
Coca Cola is another great example of a mass market brand. Lots of money is spent on marketing and positioning Coca Cola to the largest customer base. How many people really chose Coke because of the taste? How many people can tell the difference between Coke and Pepsi. A mass market product focuses on marketing and positioning to reach the largest group of customers with products that are (interchangeable) not differentiated.
The beginning of the 20 th century, the beginning of industrialization Henry Ford invented the car and mass market assembly lines Move from the countryside into cities to work Depended on formal or informal organizations as support rather than the closely knit community at home- churches, unions, family Needs of the group were more important than the needs of the individual- depended on each other
These People worked to earn money to support their families- they didn’t think about a job that fulfilled their spiritual needs, but, a job to give them money so they could buy the things that wanted in order to make a better life for themselves. This desire for things created the mass market consumer. Today in an affluent society we have different dreams- money takes a smaller role- fulfillment is the priority. Control of our own destinies- self determinism. The important word here is self.
Additionally We no longer have a rigid place in society- we don’t take over our fathers farms. We are not expected to work in a family trade. We can move to another city and completely rewrite our identities. We can engage with others on the internet and find like minded groups even if we couldn’t find those relationships or support infrastructures in our own society. For the first time ever in history our lives are not predestined- not foretold- but rather an open canvas waiting for us to paint our futures.
The result of that is the rise of the individual Who are these new consumers? Who are we? Our families will survive. There will be food on the table. We have choice about how to live our lives. So We look for meaning in our lives. We take yoga classes, meditate, try to understand ourselves, the world around us. Things are still important, but, for a different reason- our things reflect our values, who we are are, or, who we want to be- rather than a desire to demonstrate our material worth. We spend more money on experiences such as travel, events, dinners instead of expensive possessions. We dont’ want to be like our neighbors- we want to express ourselves, we want to be involved, and we want to make sure that we matter- that we have an affect on the world in which we live. We create our own identities based on the society around us, our personal experiences and our personal will.
We are asking to be heard- in a world of chaos and competing messages. We want our own voices to be heard. We listen, value and respect the opinions of our friends more than the opinions of media or corporations. Our friends are a reflection of our own personal values. We want to share our opinions. We expect a 2 way dialog with other consumers and corporations. We are forcing corporations to reengineer in order to support this expectation of open dialog and 2 way communication. A basic shift in power- from the corporation to the consumer .
The internet has enabled this shift from a mass market society to a society of individual consumers. By connecting us- allowed us the ultimate freedom to seek individual expression. Additionally the internet fundamentally changes the way that we as businesses can both create, and deliver products and services AND at the same time supports the consumer need for involvement.
Here are the most significant ways that the internet changes the way business today.
The internet enables the endless supply of products or services by connecting vast, virtual warehouses and making them available to anyone, any time.. G oods can be digital (I t unes) or physical (amazon) (ebay) Can create or connect virtual warehouses without investing in products or inventory.
that has created the long tail.- a market for every product. There is endless demand, and so a customer for every product. There are still “top selling” products, but,they don’t represent the majority of your business, or,perhaps the real business opportunity. The interesting business opportunity happens in the long tail- the market of niche, unique products. The head of the tail is a price competitive, price sensitive position- the long tail represents unique, niche products with lots of customers for unique products. You can offer 1,000s of possible product combinations for individual consumption and make money on every one. Because you don;t have to pay for inventory It doesn’t cost money to keep little sold products in stock, it doesn’t cost money to keep an extensive range of product options. We noticed in our business that 20% of our products represented 50% of our sales- but 50% of our business is in the long tail- every textile (and there are over one hundred) is sold...
By its nature the internet provides Automatic access to a global market That’s a lot of customers… which diverse cultures, needs, desires The internet provides the platform to address this large customer base and sell niched, unique products.
In this case, a company that sells fly fishing equipment worldwide. And, in our case- our customers buy a product that they can’t get anywhere else in the world… Remember, the internet is the opportunity of niche markets. Such a huge worldwide market which offers customers the opportunity to find millions of unique products. An opportunity for them to find exactly what they want rather than having to fit into the mainstream market.
The internet has enabled something called “Mass Customization” which represents the best of both worlds- Use of a Mass market supply chain to produce unique, one of a kind products You create and sell unique, one of a kind products to a mass market. Offer unique products at an adequate price and cost level Let me show you how we do it.
Bemz.com is an internet only ecommerce store that produces and sells sofa covers for IKEA sofas and chairs exclusively via the internet. Today we sell over 3000 sofa covers per month to 35 countries worldwide via the internet. Bemz is a web 2.0 company Bemz could not exist without the internet
At Bemz, customers find their sofa model…
And then they try different textiles on the sofa to create their final product. They can choose from over 100 different colors, textures, designs and even a mix and match product where they can choose different colors and designs for the frame, back cushions, seat cushions. Once they have found their favourite combination, they put it in the shopping cart and purchase the product. When we receive the sale, we send the order to our sewing factory to be sewn.we send daily orders to the sewing factory. It takes approx 4 weeks for our customers to receive their orders. A custom sewn sofa cover… Following are some other examples of co-created products where the customer is involved in the product development.
The most famous one…
Next generation- customers then sell their own designs
The internet enables you to produce on demand because you can represent products without having to physically produce the product. (or have a virtual warehouse of products without actually owning or stocking them) No inventory= less risk= you produce or products for which you already have a customer.
Customer Co-Design Customer completes the product Meeting the needs of the customers/ focus on customer service/ listen to the customer/put their feedback back into the product development process For example our customers told us discontinued models, evolve our product line Pricing - Needs to fit the space between mass produced and custom In our case, the options were IKEA or seamstresses… Requirement- near shore production- we can’t produce our products in China.
One of the hallmarks of mass customization and the shift to the individual consumer is that customer feel intimately involved with your products and your business. They want to give feedback and they want to have contact with you. Make sure you support that feedback. Customer service is vitally important. Use the knowledge and offer products that they want- feed that information back into the product development cycle. The internet creates the opportunity for globalisation, niche markets, mass-customization or co-creation with your customers.
What we are seeing in these new emerging business models is a shift from the power of the masses to the power of the individual The internet has enabled the individual. People have a platform to communicate their beliefs and find others that share common ideologies. In a worldwide market you can always find someone that shares your opinions.
And the internet fuels the raise of the individual Enables the formation of niche, splinter groups- free form- an individual belongs to many of these and not with the same people in each one. Common interests across societies- a special kind of new orleans jazz, hagiology, these groups associate in loosely formed “tribes” They look to others in these interest groups for authority, or, to their friends with common interests. They are informed about the things that they care about, and have interest in. they develop their own opinions, and develop their own beliefs based on the information with they have found.
In summary, The bell curve has disappeared Mass market- Groups of individuals- arbitrary -collected around interests, niches. Want to be treated as individuals, not as a collective Influenced by people they respect- which could be friends, friends of friends, a trusted source of information Can use mass marketing to find these consumers but need to back it up with 2 way communication, involvement, personal messages They want Engagement with the brand Customers today want to have a relationship with you- want to build products with you, want to participate in the customer journey. We need to re-engineer our businesses to support the delivery of products and services to meet their needs. The Business Opportunity 7.015 Billion potential customers that want to help you be successful
03 torsdag lesley pennington sebc
The End of the Mass Market Lesley Pennington CEO, Founder www.bemz.com
Mass Market The mass market is a general business term describing thelargest group of consumers for a specified industry product.
Mass Market ProductionMass production is the productionof large amounts of standardizedproducts, including and especially on assembly lines
Mass Market Society• Individuals were less important than groups• Standardized, psychological testing• Associations, organizations, unions, clubs, churches were on the rise• Groups were more important in providing security and competitiveness to the individual
Mass Market Consumers• “People who had little and wanted much”• “Dreams of a better quality material life helped to make them willing participants”• Changes in people’s dreams equals changes in their consumption• Prosperity and democracy spread by mass capitalism gave birth to psychological self- determinism
The Twenty First Century- achanging paradigm• “For millions of people today, life is no longer foretold, but rather is an open canvas waiting to be painted by individual choice” – The Support Economy
Rise of the new individual• Seek meaning, not just material security and comfort• Place a high value on quality of life, in which possessions play a part• They insist on self-expression, participation, and influence, because their lives cannot be deduced from the general case• Their identities must be cobbled together from personal initiative and private judgement
Demand for Voice• People want to participate in the creative process• They want their voice to be heard by other consumers and the enterprise• They need to express their individuality throughout the economic and consumption process
Produce on Demand/Supply on Demand• Create the product when the customer places the order• Source/access the product when the customer places the order• Products on demand = no inventory, less risk
“Co-Creation”• Customer Co-Design• Meeting the needs of each individual customer
Close Customer Relationship• You have an intimate, two way relationship with your customer• Use that relationship to feed back into product/business development• Use internet social channels to further enable the conversation with your customer – Facebook, Twitter, Blogs,
The Power Of the Individual• Everyone has a voice• Everyone has a platform• Individuals can unite and create movements• Individuals WANT to be involved in the things that they care about• Individuals want products or services that support their desire to be unique
The Internet fuels thepower of the Individual• Multiple, splinter groups of niche interests and beliefs- “Tribes”• Authority- who has it? Shift of power from authorized sources to individual sources• From Popular Opinion to individual beliefs•
From Mass Market toIndividuated Consumption• There is no “average” consumer- just clusters of individuals and niche markets• They are looking for personal products• We need to re-engineer our businesses to support the delivery of products and services to meet their needs