6. Great expectations, ie "the way you make me feel" (Michael Jackson)

- changing societal and consumer expectations for experiential products/services, experiences and social interaction rather than material goods. Technology, income growth, rising levels of educational attainment and cultural change have had an impact on the experience economy, eg in the past the families would make a special cake for a children's birthday party, with the cake being remembered for its great taste; now as people are time-poor, they will buy a pre-made, birthday cake with outstanding decorations and the decorations will be remembered; from now on, more parents will outsource the entertainment, hire facilities, etc for the party, eg hire clowns, use facilities like McDonald's restaurant, etc which include a themed birthday cake and the whole experience will be judged and remembered. Thus, there has been a progression from the experience of tasty ingredients of the home-made birthday cake through to the experience of remembering the event, ie the emphasis has shifted from the physical ingredients to a complete experiential package. Research (Stefan Hajkowicz, 2015) shows that people are getting less satisfaction from acquiring more material goods; on the other hand, more satisfaction is derived from life experiences. In fact, aspirations for financial and material success were reportedly associated with increased behavioural problems, worse mental health and overall diminished well-being.

"...regardless of age, income, or culture, materialistic people face greater risk of depression, anxiety, low self-esteem and lack of social intimacy. Materialism makes you miserable......more fun, less stuff..."

Stefan Hajkowicz, 2015

Research shown that individuals who are altruistic and have caring behaviours enjoy better mental and physical health. As long as your altruism is manageable and not overwhelming!!! It has been observed people live longer who volunteer and it is almost as effective as other preventive health matters, like stopping smoking

"...quality of life also comes from a less materialistic culture where people are focused on experiences and interacting with - helping - other people instead of acquiring  stuff......social science studies show beyond all reasonable doubt that materialistic lifestyles not only can use scarce environmental resources, can generate misery. Lifestyles built upon positive experiences and caring for others tend to generate happiness..."

Stefan Hajkowicz, 2015

(NB According to Oxfam, around 1/2 of the world's wealth is owned by 1% of the population; the income gap is widening, ie 7 out of 10 people live in countries where income inequality has increased over the past 3 decades!!!!
- our rising discretionary purchasing power (this is linked with improved technology, ie with the same or less inputs we are getting more outputs). Income growth gives people discretionary expenditure beyond the essentials for life. Previously we spent most of our money on the basics, eg food (includes drinkable water), clothing, shelter, personal safety, health (includes hygiene, medicines, etc), education, power, access (roads), communications (radios, mobile phone, etc), etc. As our income grows, we start to spend more money on non-essential items, eg instead of basic clothes, we buy fashionable clothes; instead of preparing meals at home, we go out to a restaurant; instead of watching TV at home, we go to movies, nightclubs, restaurants, etc. Thus a greater portion of our budget is allocated towards purchases which have little or no essential component. Successful manufacturers know that their products must have an experiential factor, ie people want more than a gadget - they want a product that is simple, visibly appealing and makes them feel good. For example, Apple with its iPod, iPad and iPhone has stressed fonts, colours and sounds as well as the technological advances. This has resulted differentiating its products and being able to connect to the massive and growing market. A similar story for 3M (started in 1902) it has supplied many innovative office-like products such as scotch tape, post-it notes, etc

"...design brings innovation to life with arresting beauty, captivating stories and exceptional attention to detail. We search for unexpected solutions to create passion; stepping beyond function towards the iconic. It's innovation worthy of love..."

Kevin Gilboe (Head, 3M's Global Design Branch) as quoted by Stefan Hajkowicz, 2015

Need to think about how consumers will experience the product, ie shifting the emphasis from selling the product to selling the service, eg the power company doesn't sell electricity - it sells light and comfort; cafes don't you sell food and drinks - they sells ambience, aroma and a feel-good factor.
- focus on authenticity, friendliness and personalisation with increasing products and services labelled as environmentally and socially responsible, eg from 2005 to 2010, there was a 2,000% increase in sales of these products (certified fair trade products) in Australia and New Zealand. Some investors are preferring to invest in firms that deliver improved social and environmental performance, ie ethical principles, despite the possibility of lower financial returns. It is estimated that around 11% of all US funds are managed with ethical guidelines (Stefan Hajkowicz, 2015). There is increasing consumer demand for information about the environmental and social performance of the firm, eg almost all of the world's 250 largest companies conduct sustainability reports on a regular basis. There is increasing pressure organisations to show greater transparency around governance, ethics and integrity, supply chains, anti-corruption and greenhouse emissions. In the resource industry, there is a concept gaining traction about firms needing "to gain and maintain a social licence to operate" in relation to social inclusiveness and gender equality principles
NB  Much of the impact of rising income can be summarised by Maslow's Hierarchy (1943). This explains how people first are in survival mode to meet their basic needs like food (includes drinkable water), clothing, shelter, personal safety, health (includes hygiene, medicines, etc), education, power, access (roads), communications (radios, mobile phone, etc), etc. Once these basic needs are met, then they move on to more advanced needs like social networks, self-esteem, etc and put their money into more advanced experiential activities like culture, entertainment, etc rather than basic necessities (see diagram of Maslow's hierarchy below for more detail)


source: Wikipedia, 2016

On the other hand, post GFC we are not seeing the recovery that economic theory states should happen, ie make money cheaper by lowering interest rates to stimulate growth including wages. What has happened is that we are still having low growth despite the low interest rates and higher debt (both public and private). Most of this cheap money has caused asset growth, like in housing and shares, which has increased the gap between the wealthy and the poor. The poor have suffered no real growth in their wages. This has increased the dissatisfaction amongst the masses. In addition, job markets are changing owing to new technology like automation, artificial intelligence, etc. This has resulted in traditional jobs, like in manufacturing, disappearing. This dissatisfaction has resulted in people favouring more popularist politicians like Trump.

Oxfam claims (2016) that the wealth of 62 people globally is on par with that of 3.6 billion of the planet's poorest. In real terms, this means that 1% of the population is in possession of US$ 1.7 trillion of the world's wealth.

Before 1990s, most people's wealth came from tangible assets like products. Since the 1990s wealth has come from services like Internet, finance, software, big data, social media, digitalisation, etc that has given birth to a new economy. In the future, wealth is expected to be generated from areas like data visualisation, genomics, quantum computers, bitcoinomics, artificial intelligence, stem cells, synthetic biology, outer space, etc. People growing up in this era have little or no memory of the world without the Internet, mobile phones or downloadable apps.

The young rich are rejecting terms such as authenticity, craft, artisan, heritage and provenance. These are being replaced with global, future-faced, innovative, peripatetic. Ownership is less important than access; it is important to share.

"...In the past we equated wealth with greed, conspicuous consumption and taking out......(young)......high net worth individuals...... it's about considered consumption, giving back and embracing the very things that are the antithesis of establishment......embrace radical transparency, pay their workers a fair wage, use eco-friendly manufacturing processes..."

Martin Raymond 2006

Some community issues will focus around "ABC", ie AIDS, breast cancer and child poverty

 

Search For Answers

designed by: bluetinweb

We use cookies to provide you with a better service.
By continuing to use our site, you are agreeing to the use of cookies as set in our policy. I understand