Who are Your Future Customers?
Manuel Puig: Megatrends determining growth are demographics, megacities and digital / Photo: Jordi Estruch
"Growth is the number one KPI. You can improve the margin, but growth is what counts."
Manuel Puig, vice chairman of the Puig Group, visited IESE’s Barcelona campus this week to share insight with students of the MBA program on the drivers of growth.
Puig Group which owns a number of global fashion brands including Jean Paul Gaultier and Nina Ricci, recently celebrated its one hundredth anniversary in business: a sustained success story that Manuel Puig attributes, in part, to its ability to "analyze megatrends to determine future opportunities."
Megatrends: Demographics, Megacities and Digital
Megatrends identified by Puig as being "key drivers of growth" include demographic changes, the emergence of megacities and, above all, the digital revolution – with the Internet "facilitating the disruption of business models and bringing new players into the arena."
"Über will operate in Barcelona, like it or not; Netflix will work in Spain, like it or not," Puig said. "Changes will increase. We have to live with it and accept this new world."
The Internet is also driving changes in consumer behavior, empowering consumers to inform themselves about products and prices – and make "intelligent" purchase decisions. Improved and immediate access to information also means greater transparency and the demise of the "moment of truth" marketing model.
"This model consisted of stimulus, in the form of ads, followed by the first ‘moment of truth’ at the store, where the purchase takes place and then a second ‘moment of truth’ at home when the product is used and evaluated."
"Today, there are zero moments of truth: After receiving stimulus, a consumer can immediately purchase and evaluate a product. This makes every brand interaction important. And now with the Internet, those stimuli can also be predictive. If someone watches a video on YouTube about a specific model of car, Google knows that he may soon be buying that car," said Puig.
Winds of Change Blowing East
The world is changing and the business center of gravity is moving to Asia, as a growing middle class there become consumers, said Puig. In the so-called developed world, the population is becoming older as life expectancy increases, and people are having fewer children. Companies need to have a strategy for Asia while not neglecting their Western consumer base, he said. "Exports should not however be the principal aim, but rather a consequence of quality."
Combined with this demographic shift is the emergence of the megacities – which are making the world "a bit more boring," he said: "In London or Paris you find the same brands and shops and the same kind of restaurants."
However, the growth of the megacities means that a brand can effectively have a global presence simply by operating in those cities. "Approximately forty percent of the world’s consumption of luxury goods happens in the ten largest megacities."
Where’s the Competition?
Competition will come from players that think and act differently than you — as well as from other sectors, said Puig. "Perfumes compete against watches or cell phones today," he said, as more and more products become "signifiers of lifestyle."
And the future cannot be predicted by past results. Puig cited the example of Sony’s content-driven marketing strategy. "Sony’s plan was disrupted by Apple’s iTunes – a clear example of the sales channel overtaking content in importance. But perhaps no one could have foreseen that change."
Asked by MBA students how the Puig Group analyzes the world’s megatrends, Puig said that the company focuses on "segmentation and deep analysis."
"We work on loyalty. We have to learn more about the consumer: why does a consumer buy a product? Why is a customer loyal or not? What can we do to encourage loyalty?"
Analysis of megatrends yields crucial data about who your future potential customers might be, he said, and what your sources of future growth look like. "And then it’s up to your company to have sufficient agility to bring your brands and products closer to those future customers."
"This isn’t easy. But like it or not, the companies that can step up this challenge will push the others aside."