MBA 583 - Consumer Behaviour Trend Analysis
As consumers go about their daily lives and interact with their surrounding environment, their behaviours become influenced by a myriad of macro trend drivers that directly affect how combinations of products and services are selected, purchased and consumed. Businesses must be cognizant and observant of such emerging consumer trends in order to position themselves in the market place to be able to satisfy shifts in consumer demand. Consequently, consumer behaviour itself serves as a driving force behind business strategy, industry growth and the emergence of new innovative business models.
Cooperative-Consumption is a growing trend among many conscious-driven consumers, who not only seek a healthy work-life balance, but are increasingly motivated to be physically involved in the various value creating activities through which products and services are supplied.
Consumers today live life in the fast lane, constantly seeking out new convenience
options from industry to help manage their multi-task lifestyles in an
increasingly time-stressed world. In an era of dual-income families, coupled by rising workplace demands, extra-curricular activities, family responsibilities, and shifts in generational culture, consumer behaviour has gravitated significantly towards the notion of reducing time scarcity constraints by adopting the trend of convenience-consumption.
Arguably, the prevalent convenience-consumption model in today’s marketplace may appease short-run consumer demand (end-state product/service delivery to the consumer); however, the long-run effects of these convenience-variants are now surfacing across much of society, especially in terms of health conscious consumers and satisfying psychological needs. As a result, many consumers are now seeking new lifestyle options and opportunities to regain some level of lost utility and personal satisfaction by being more involved in their consumption process by doing things themselves, or at least contributing in part to an activity within the consumption process.
In order to understand the recent growth of this cooperative-consumption trend, it
is necessary to examine the underlining consumer trend drivers that influence consumers to participate in such activities. Similarly to consumer behaviour for other consumption related decisions, consumers decide to engage in cooperative-consumption to satisfy their diverse economic, psychological, and social needs.
Consumer Trend Drivers
As global economies remain fragile, many consumers remain frugal in their
consumption practices. Today, more and more consumers are demanding a voice in the type of product and service alternatives available in the marketplace to help ease economic burdens. Through cooperative-consumption, consumers take part in the value chain functions of a product or service, which in turn relieves manufacturers, retailers and distributors. The result is a reduction of operating expenses and costs-of-goods sold for business, thus permitting a transfer of associated savings to consumers (ceteris paribus).
Cooperative-consumption also imposes transaction costs on the consumer when they decide whether or not to engage in such consumption activities, thus drawing similarity to organizational strategies of to “make-or-buy”. Consequently, consumer rationale must value the economic benefits of engaging in a cooperative-consumption activity more than the associated opportunity costs; otherwise, the consumer will be more adept to follow more traditional “convenience-consumption” trends rather than participating in cooperative-consumption.
Cooperative-consumption costs are subjective in nature for each consumer. Many consumers face time-scarcity constraints, thus the economic “value of time” often influences consumer practices and behaviours. Time spent with family, academic study, fitness/sport, and leisure activities, all demonstrate varying degrees of economic value to a consumer. The cooperative-consumption trend is not limited to a single consumer-type or market niche; it is fueled by any consumer who is attentive or sensitive to the value of time and convenience in their daily routine. Subsequently, consumers who have surplus and/or flexible time benefit economically from engaging in this trend, as it allows them to offset their consumption costs and gain greater utility. Moreover, this trend also serves consumers with high time-scarcity constraints by offering the affluence of convenience by reducing traditional time-demanding activities, yet sustaining a degree of personal involvement and economic utility gained by taking part in the activity.
Cooperative-consumption extends beyond economic influences; the trend is also driven by consumer satisfaction and the fulfillment of psychological needs. Consumers seek a sense of belonging from their surrounding environment and are motivated to be involved in activities that enrich their lives.
Unfortunately, consumer lifestyles and work patterns have shifted significantly over the past decade in light of technological advancements and a shift in corporate culture. Many consumers are facing new work stressors based on “always-on work hours” and more streamlined organizational structures, including such practices as telecommuting and virtual offices. Consequently, the once dynamic, creative, and
emotional working environment among co-workers is transforming into mundane more repetitive work patterns, consisting of isolation behind computer screens,
little physical exertion, and a diminishing requirement for face-to-face human
interaction. It can be argued that such workplace alienation has had a direct impact on the psychological needs of the consumer, thus influencing consumer attitudes and their ultimate behaviours.
The trend of cooperative-consumption has gained appeal by many consumers who are motivated to satisfy their psychological needs by engaging in more meaningful
activities that draw on their personal creativity, provide emotionally connection with others, and are physically rewarding. For many years, industry has blanketed the
marketplace with mass production products and pigeon-toed service options, thereby reducing differentiation and self-expression among consumers. Today, consumer practices and behaviours are increasingly grasping for alternatives that support individual expression, uniqueness, and distinction. The consumer trend of cooperative-consumption extends beyond the notion of self-standardization; it provides consumers with a means to self-express through customization, thereby satisfying their psychological needs.
Consumer esteem is another psychological factor that has contributed to the recent
growth of the cooperative-consumption trend. Many consumers have a desire or need to be accepted, recognized, and valued by others in their surrounding environments. In most cases, consumers rely on their profession or extended hobbies to satisfy this psychological need. Unfortunately, many consumers today simply lack all or some of the skill and experience needed to participate in many traditional Do-It-Yourself (DIY) activities that help provide such esteem and self-actualization. Consequently, consumer behaviours are showing a rising appetite to be more involved in “guided” DIY applications. In turn, many consumers are turning to cooperative-consumption as a means to satisfy their psychological need to “earn”
recognition for their applied efforts by participating in the final product or service end-state.
Consumer behaviours and consumption cultures are highly influenced by contributing social factors. These social factors or trends often manifest in the creation of reference groups, social networks, and online social networks, which are often formed based on various topics and interests that connect consumers. Such linkages may correlate to age, attitudes, beliefs, social status, profession, life style, as well as family. Societal shifts directly impact consumer behaviour and the manner in which products and services are consumed. In particular, “family” today differs in
many ways from previous generations, thus influencing consumer demands, behaviours and associated market trends.
In the 1950’s and 1960’s, the majority of family roles consisted of males being
the sole household wage-earner, and woman fulfilling “domestic” responsibilities. Today, families are now represented by dual-income spouses working outside the home, whereby significantly changing how home responsibilities have been redistributed and fulfilled. Consequently, today’s consumers face new challenges to balance associated stressors and responsibilities arising between work, family, and personal life.
Several social factors affecting consumer work-life balance include: heavy workloads
caused by frequent restructuring, downsizing, and unrealistic management expectations (e.g. immediate email monitoring and response); generational gaps in management (e.g. non-supportive attitudes from supervisors towards family needs); career vs. family dilemmas (e.g. employment barriers, climbing the corporate ladder,
glass ceilings, parental leave implications); and organizational culture (e.g. job commitment as an indicator to one’s willingness to work after hours). As consumers experience rising demands and stressors at their place of work, more and more families (thus, consumers) are resorting to convenience-consumption tactics (i.e. child-care services, fast and frozen food consumption, maid-service, and television/multi-media entertainment) to steady work-life equilibrium. Unfortunately, such convenience-consumption applications have also led to the onset of other social factors, including a decrease in health and wellness, and a reduction in “quality family-time”.
Although there are no easy solutions to solve the work-life balance challenge for
consumers, social groups, public awareness and self-help programmes have contributed greatly towards how consumers approach more desirable work-life balance. As a result, this social trend is influencing healthier lifestyles and stronger family ties, which has helped shape the recent growth of the cooperative-consumption trend.
Food Industry Application
Meal-Assembly Kitchens evolved from the overarching consumer trend of cooperative-consumption, which has gained new traction among savvy consumers who demand convenient, reasonably priced, time-saving alternatives to preparing healthy meal options, while giving consumers the satisfaction that they have partly prepared the food themselves.
The business model concept :
- Meal assembly kitchens provide consumers with a variety of entrée menu options (typically in the range of 12-14); each entrée serves 4-6 people at a rough cost of $5 per serving.
- The consumer selects a meal option and schedules a visit at a local franchisee.
- Upon arrival, the consumer is provided with easy-to-follow recipes and all necessary fresh ingredients (already prepared by staff). Consumer customization is possible (ingredients and spices) to suit individual tastes.
- The facility provides full use of a state-of-art kitchen and all necessary cooking utensils. Once the meals are assembled and cooked, they are placed in oven-safe travel containers to be brought home for the freezer.
- No kitchen clean-up. Service is provided by staff, as well as culinary
assistance, health tips, and friendly conversation (as desired).
- For an additional fee, many meal assembly kitchen franchises will also assemble, cook, and package selected entrées for consumer pick-up.
Business Model Videos~ SupperWorks & Let's Dish:
Meal assembly kitchens have gained strong popularity and food industry momentum across North America since their debut in 2002, especially among working families,
aging consumers, students, and even the culinary-challenged. The meal-assembly
kitchen industry experienced rapid expansion in 2006, equating to approximately
700 outlets in the United States alone. According to the Meal Assembly Network, in 2008 there were 1,293 meal assembly kitchen outlets.
"the meal prep industry is, hands down,among the top franchising trends for this year "
- Entrepreneur Magazine's Franchise 500
In 2009, a Datamonitor survey (spanning across 15 countries) revealed that 44% of
respondents stated that they were challenged to find free-time amid their daily
obligations. Further results revealed that only 25% of American’s cook an evening meal from scratch five or more time a week. In 2008, a national survey commissioned by ConAgra Foods reported that more than 70% of working parents experienced some type of stress with dinnertime, including 47% of stress resulting from deciding what to prepare, 23% attributed to preparing and cooking, and 8% from grocery shopping and having the right ingredients.
What's driving consumers to Meal-Assembly Kitchens?
Consumer lifestyles and societal demands are rapidly changing; many consumers
face time-scarcity constraints which have led to a deterioration of meal planning, preparation, and quality meal-time with family. In turn, meal assembly kitchens fulfill a consumer demand for convenient, cost-effective, and healthy alternatives to lengthy scratch cooking, expensive restaurants, and unhealthy fast-food, prepared and frozen meals.
Meal assembly kitchens are not grocery stores, nor are they configured under a
restaurant or fast-food business model; rather, they provide consumers with a
one-stop preparation and cooking facility to better manage work-life stressors
and provide healthy meal options. In many cases, traditional scratch meal
preparation is considered by consumers to be very labour intensive, especially
when accounting for the planning, shopping, preparation, cooking, and clean-up
time. In fact, industry standards reveal that a consumer can prepare and cook a month’s worth of meals at a meal-assembly kitchen in less than two hours for roughly $250, which equates to a savings of 16 to 18 hours and $300 per month when compared to traditional scratch meal preparation.
Consumers not only face the dreaded question of “what’s for dinner?”, but they also face the conscious dilemma of healthy food vs. convenience-consumption food options. Today, consumers generally understand the link between food choice and health, and many seek to act accordingly.
Health conscious food consumption is a driving force behind the business model of meal assembly kitchens; it provides consumers with the ability to consume and provide their families with higher-quality, nutritious food, without the lengthy preparation times.
The food industry has also undergone a significant change in how consumer products are marketed, packaged and services rendered. Regulatory bodies now impose nutritional information to be made available and clearly labelled on consumer products, including similar adherence by food service providers and restaurants. Subsequently, consumers are more aware of their food consumption options and can make more informed decisions that support a healthy lifestyle.
Culinary Skills & Experience:
As generational gaps expand, consumer culinary skills continue to diminish. In many instances, culinary skills use to be taught by parents and at school; however, today’s generation of consumers are experiencing less home-cooked meals and more favourable convenience techniques (e.g. microwave meals, frozen meals, deep fry, and fast-food service). Moreover, the days of following Mom’s recipe book are almost non-existent; consumers today rely on on-demand internet recipes and television food hosts to walk them through simplified step-by-step processes that require minimal culinary experience, knowledge, and creativity.
Notwithstanding the culinary shortcomings over the years among younger generations, many consumer groups are trending to satisfy the social perception of “sophistication” and the “culinary experience”. Consequently, many consumers are turning to culinary arts to develop skill sets, are enrolling in cooking classes (individual, group, and partner based), and are attending more food & wine tradeshows as a source of entertainment and social status. The cooperative-consumption industry not only supports consumers who wish to address healthy eating alternatives, but it also caters to a market niche of consumers who seek greater personal value, recognition, social status, and esteem from learning culinary skills and preparing one’s own meal.
Popular Franchised Companies (USA & Canada):
Trend Implications on the Food Industry:
The recent growth of cooperative-consumption in the food industry, specifically the
emergence of meal assembly kitchens, has not only captured a new market share
of consumers, but the trend has contributed to overall consumer awareness and
the consequences of lifestyle choices, which in turn has impacted other elements of the food industry.
According to the Food Marketing Institute’s 2007 U.S. Grocery Retailer Trend report, 69% of consumers say they are cooking more and eating out less than in previous years. What does this say about the trend implications of meal assembly kitchens on supermarket retail?
Whether food ingredients are purchased directly by the consumer, or they are purchased via a meal assembly kitchen franchisee, the economic effect on supermarket retail is minimal. The more important trend implication is that
more and more consumers are realigning their food consumption behaviours to
reflect greater meals at home and more emphasis on healthy choices. In turn, supermarket retail benefits directly from the consumer trend of meal assembly kitchens, as less consumer business is going to competing restaurants and fast-food retailers.
Supermarket retail has also been influenced by recent consumer preferences for convenience, Many grocery chains have started to adopt similar products and services that the meal assembly kitchen model provide in attempt to capture additional revenue streams. For instance, supermarket retail has expanded its general merchandise selection and services; many groceries have rolled-out freshly prepared meal deli’s (e.g. salads, meats, sushi, pasta’s, etc.) to be able to provide
consumers with convenient one-stop-shopping along with providing their
merchandise needs. Moreover, many supermarket retailers (e.g. Sobeys’s, Loblaw’s, Great Canadian Superstore, and Independent) are now offering designated floor space within their locations to support demonstration kitchens, healthy cooking classes, and available community rooms that can be rented out to small business or social groups for batch cooking (preparing meal entrées in bulk to be later frozen at home).
As a result, the supermarket retail segment within the food industry has benefited from the trend of meal assembly kitchen’s as it has created more public awareness for healthy eating and has placed more emphasis on home cooking vice restaurant and fast-food retail, thus generating more supermarket sales.
It is of no surprise that many consumers frequent fast-food retailers to satisfy their immediate, no-fuss meal needs; however, many fast-food retailers have been facing a rise in industry challenges. From rising food costs, economic recession and changing consumer perceptions about healthy eating alternatives, retailers have had to adjust their products and marketing strategies to remain profitability among competing food industry business models.
The meal preparation kitchen trend may not consume a large percentage of market share in the food industry, but the business model has arguably contributed to growing awareness and promotion of healthy eating alternatives for consumers. The
consumer movement has been further supported by popular books such as Fast Food
Nation and documentaries like Super-Size Me that highlight the negative consequence of fast-food consumption. The trend of meal assembly kitchens is developed significantly on consumer education of healthy meal options and the notion that convenience is not limited to fast-food retail. Consequently, many fast-food retailers have responded to this consumer trend by adopting and marketing healthier menu choices, while continuing to provide on-the-go consumers with convenience.
Fast-food retail continues to represent a diverse, powerful, and resilient segment of the food industry. Traditional fast-food retailers have taken note of shifting consumer preferences and behaviours; in response to competitive business models such as meal assembly kitchens, fast-food retailers are adjusting their business strategies (e.g. pricing, healthy menu options, late-night drive-thru, 24/7 hours) to entice and lure consumers back.
The trend of meal assembly kitchens has also brought implications to the restaurant segment of the food industry. Specifically, as more and more consumers adjust their consumption behaviours and embark to make their meals in bulk at local meal assembly kitchens and spend more time eating at home, fewer consumers will dine-out at local restaurants. The most obvious negative implications arising from this consumer trend include less revenue generation by local restaurants and their ability to sustain a shrinking consumer base.
Notwithstanding the loss of some consumer groups, the meal-assembly kitchen trend has also fueled the restaurant segment to rethink and explore new target consumers. For instance, many restaurants are now tailoring their products and
services to “foodies” (consumers who are or seek to be more knowledgeable and
sophisticated about food and beverage). Moreover, the rise of foodies has also led to restaurants as a source of entertainment and culinary experience vice just a means to consume food). Subsequently, many restaurants are reducing their menu options and focusing on chef interaction, the use of local organic ingredients, premium and artisan products, gluten-free selections, restaurant food trucks (mobile restaurant options as opposed to the flash-in-the-pan concept), and more ethnic cuisines and flavours.
Trend Applications in Other Consumer Industries:
Cooperative-Consumption draws appeal from conscious-driven consumers who are looking to maintain a healthy work-life balance, but are also motivated to be physically involved in the various value creating activities through which products and services are supplied. As a result, cooperative-consumption can be applied to a wide-range of industries and subsequent business models, including:
Merchandise Industry - Self-Assembly Retail:
The trend of cooperative-consumption is highly visible in many business models, most notably is that of IKEA, a self-assembly retailer that originally debuted in the
Netherlands in the 1960’s. Today, the company is reported to be the world’s largest furniture retailer, operating in 38 countries. One of the staple traits of this business model is the requirement for consumers to engage and perform the final product assembly. Subsequently, the majority of furniture products sold are packaged in flat cardboard boxes, which ease consumer transport, and include all necessary parts and accessories for self-assembly, including easy-to-follow picture instructions. This cooperative-consumption trend has flourished in the merchandise industry as it provides consumers with lower costs, convenient transport, and instills a sense of physical accomplishment and consumer fulfillment when assembled (subjective to the consumer of course!).
Residential & Industrial Construction Industry – Sweat Equity Labour:
Cooperative-consumption in the residential and commercial construction industry has adopted new forms of consumer involvement over the years to allow consumers to achieve greater affordability, whereby supporting sweat-equity labour into the construction process. New home construction companies traditionally provide consumers with a choice of limited home blueprints and material options to select from; in turn, the construction company builds the home from step A-Z.
The consumer trend of cooperative-consumption can be applied to this traditional business model, as it allows the consumer to customize the home by executing some of the trade-jobs themselves, whereby receiving a product that would otherwise be
unattainable due to cost. For instance, a construction project manager informs the consumer when the flooring needs to be installed (or any other trade application), and the consumer takes direct responsibility to complete that task within the given work window of the project (including sourcing the material and installation, which can save thousands on material-markup and labour costs). This particular application serves consumer groups who possess required construction skill sets to perform select tasks, but may not have the expertise to build an entire home on their own. Similar to the self-assembly business model, sweat-equity labour also satisfies the psychological needs of recognition, esteem, accomplishment and self-actualization.
Landscape Industry – Lawn, Garden, and Snow Services:
The landscape industry can be broken down in a variety of segments, including lawn,
garden, and snow services. The cooperative-consumption trend can be applied in this particular industry as many consumers have the desire to complete household chores on their own, but they are physically (health) limited. Accordingly, many consumers are seeking new alternatives to the traditional practice of paying the neighbour’s kid to cut the grass and shovel the snow. Arguably, a large segment of the aging population spent their entire lives doing their own chores and yard tasks. Thus, this particular consumer group could apply a cooperative-consumption approach to meet their needs. For instance, a landscaping company could provide a tailored service program that suits the consumer’s needs and desired-involvement (e.g. cutting the main grass area, but no trimming service, or snow removal only after 5mm of accumulation). Therefore, this cooperative-consumption trend could be applied to the landscape industry, whereby satisfying landscaping demand from the aging consumer base.
Agriculture and Agri-Food Canada. (2010). Market Analysis Report. Accessed: http://www.gov.mb.ca/agriculture/statistics/food/consumer_trends_convenience_en.pdf
ConAgra Foods. (2007). National Consumer Survey. Accessed: http://www.conagrafoods.com
Datamonitor Survey. (2009). New Consumer Insights Series, Global Consumer Trends: Convenience. Accessed:www.datamonitor.com
Datamonitor Survey. (2006). Changing Cooking Behaviours & Attitudes: Beyond Convenience. Accessed: www.datamonitor.com
Easy Meal Prep Company (2013). Accessed: http://www.easymealprep.com/main/direct02.php
Food Marketing Institute, (2007). U.S. Grocery Retailer Trend Report. Accessed: http://prestohost23.inmagic.com/Presto/content/Detail.aspx?q=MjAwNyBncm9jZXJ5IHJldGFpbGVyIHJlcG9ydA==&ctID=NDY1Mjc2OTAtYTA5OS00OGUxLThlNjYtMWQ5Y2FjYzY5MWVm&rID=Njg3MQ==&qcf=&ph=VHJ1ZQ==&bckToL=VHJ1ZQ==&