Shifting consumer focus means manufacturing rethink, says Genex

 Modern consumers are privileging the ‘value’ of a product rather than the product itself according to a new report from GENEX Partners, with ramifications for today's manufacturers. 

Tokyo-based management consultancy GENEX Partners has released an intriguing report into the manufacture of goods in the IoT era, contending that modern consumers are more interested in obtaining the ‘value’ that a product will provide than the actual product itself. A member of the Cordence Worldwide consulting network, GENEX serves the manufacturing, media, retail, and technology & communications industries among others such as energy, life sciences and financial services.

According to the firm’s founder and author of the report, Maki Kazutoshi, with IoT providing ceaseless internet coverage, the functions of a particular product – and therefore the benefits it conveys – are now flexible rather than fixed. As such, it is vital that manufacturers in the modern era “redefine goods as a medium or platform to keep providing new value through IoT”, rather than simply focusing on producing and selling items with limited functions as in the past.

“In the past, the value that customers wanted was linked to the hardware (= thing) as a function that can only be obtained with the product,” Kazutoshi writes. “In other words, owning the thing was recognised as a symbol of value in its own right. Now, he says, the item of consumer interest “relates to its value rather than the thing itself, and the customer wants to spend as little money as possible for the thing itself as this is only part of the method of obtaining the value.”

Kazutoshi forwards the shifting consumer attitudes toward high-end durable goods such as cars and houses as one clear example. Whereas in the past, car and home ownership was atop the list for aspirational consumers, today the priority for many people is the value obtained from sharing a car or renting a house rather than outright ownership – that is, the growing emphasis placed on travel time and transportation flexibility and on home comfort and convenience above status.

The management consulting veteran further notes that the value sought in a product by any given consumer is both varied and fluid, with diverse individual needs toward health, time, safety, and lifestyle as just some examples. Those personal needs may also shift over the course of a product’s lifespan, or include desired utilities not foreseen by a designer. Therefore, “if a product is designed for single application in a limited field the value to today’s user is also limited.”

In this respect, the GENEX Partners report highlights the importance of IoT as it can lead to rational business solutions. “For product manufacturers, the connected item can be used as a sensor to collect customer usage information while at the same time providing functional value, so it is possible to analyse data collected through these products, and create new value.” In addition, the consumer may themselves create value by making use of a product in unintended and novel ways.

“It will be essential for organisations to work together and collaboratively prototype products. In this “test bed” approach, participants can collect data, analyse it appropriately, and develop effective applications,” Kazutoshi concludes. “For users now it is no longer acceptable that the product designer focuses on ‘This is interesting!’ when drawing up the product or only on satisfying their own interests. It is imperative to foster a robust, challenging spirit in seeking new value.”