Conspicuous consumption is out—the new normal is frugality
Living beyond your means is out—the new normal is savings
High fashion stores are out—the new normal is second hand outlets
Airlines are cutting the number of first class seats—the new normal is business class
A new normal for many industries is a constant refrain. But I have a question: was there really an old normal; in the sense of a very stable pattern of behavior that a business could confidently use in its plans? Well, yes, some behavior patterns were predictable, but these were stable because the economy was relatively stable. Speculative bubbles followed by spectacular crashes have been occurring for hundreds of years—any one out there want to buy a tulip bulb?
So the questions now are how stable are these patterns of behavior over what period of time, and how do we stay ahead of, or least track, the changes? Both my parents were relatively lucky during the Depression as their fathers had jobs and could feed them although all extras such as new clothing were eliminated. But even so, the Depression did influence their spending behavior for the rest of their lives. The current downturn has been called the Great Recession; is/was it great enough permanently alter behavior? Probably yes, but conspicuous consumption and speculative bubbles will return—they always do eventually.
So you not only have to figure out the new normal and be sure that you have a process to keep track of the changes in the new normal.
The organization that figures out the new normal before rivals do gains a significant competitive edge. You have to carefully monitor your customers’ thinking and adjust your value proposition to reflect the current normal for your target market. Otherwise, one of your competitors will discern the new normal before you do and steal your customers.
How can you do this monitoring? Good question. You have to use all the market research tools that you can to track the changes. If you have not already set up a communications vehicle with customers to receive their feedback, do so. Examine your customer base to identify the early trend setters or early adopters and keep careful tabs on their thinking and behavior. Work with other departments within your organization, including, but not limited to, market research, marketing, sales, and purchasing, to be sure to be on top of these changes.
And do not lesson your focus on your rivals to anticipate how they are reacting to the new normal. The combination of market research and competitive intelligence is essential in this situation—as it is in many others.