The third age of consumption: What the new era requires of brand management

Looking at the Best of BrandZ 2020, we show that the new era of consumption presents multiple challenges for brand managers.
11 December 2020
Woman shopping BrandZ
Thorsten Esch

Brand Strategy, Insights Division, Germany

Get in touch

Note: This article is part of a collection of the best brand-building and thought leadership articles from our BrandZ reports in 2020. This article can be found in the BrandZ Top 50 Most Valuable German Brands 2020. 

Global fast-moving consumer goods brands are losing market share to small and medium local and regional competitors. Kantar Worldpanel and Boston Consulting Group data shows the shift has been taking place for several years, and is happening in North America, Europe, and beyond, affecting the broader retail sector.

We have crossed the threshold into a new era characterised by a shift in value creation and growth. We call this new era the “Third Age of Consumption”. Most of us grew up and were socialised in the second age of consumption, which continued into the early years of the 21st century. This era was strongly influenced by three things:

  • Major trends and global concepts
  • A belief in progress (faster, higher, further)
  • Growth through expanding scale

All of this is currently in disarray. The framework conditions in the Third Age of Consumption are changing radically. Three central phenomena illustrate this:

1. The end of no limits. We are at a turning point, because the idea of pure expansion no longer works. We are reaching our capacity limits: cognitively, economically and ecologically. Today, we need digital assistants and artificial intelligence to cope with growing complexity. Progress is not automatically associated with more, but often with achieving more with less. This is especially the case as we become more and more aware that the resources of our planet are finite.

2. Divergence. We are currently observing that many things are drifting apart: whether in politics, in the working environment, in society or in fashion. We have more and more choices to make.

3. Granularity. Demand is becoming more fine-grained. Since digitisation gives us instant access to every product and service, we are seldom satisfied with the ordinary. Internet entrepreneur Joe Kraus puts it simply: “The 20th century was all about dozens of markets of millions of people, whereas the 21st century will be all about millions of markets of dozens of people.”

This might be an extreme view, but it is clear that many markets are moving in this direction at a tremendous pace. For example, in the German beer industry, the number of breweries is increasing, even though the volume sold is declining. In the German car industry, the number of models available is increasing rapidly, with almost fivefold the number of choices compared to 1990. On the other hand, the number of new car registrations is stagnating. Companies like Amazon are transforming the vision of the “long tail” business strategy into reality. The result: Strong demand shifts with a wide variety of requirements and very granular demand in search of what is special; new players who are fundamentally shaking up existing markets or creating completely new ones; and companies in transformation that need to reinvent themselves and their role in the market. All this also presents brand managers with new challenges.

Three of the most important challenges are:

1. Understanding and anticipating demand shifts. Brand managers must deal with more intense shifts in demand than ever before. Major macro-movements must be understood, as well as their influence on the market and a brand’s products and services. The better that brand managers understand the periphery, the more confident they will be in adapting to the changing needs of their core market, and the sooner they will recognise where opportunities lie and where dangers loom.

2. Tapping potential via granular segmentation. Brand management requires a profound understanding of target groups and demand. The increasing granularity of both necessitates a very detailed microanalysis of the defined market, to evaluate the potential of niche growth areas. These analyses detect opportunities for how brands can be developed in relevant ways. Past market segmentation models with five to six consumer clusters are too coarse-grained to lead brands into the future.

3. Staying focused on brand purpose. Brand management must serve niches via micro-targeting, but at the same time it is vital not to lose sight of the big picture. While the value proposition way of thinking remains relevant, the multiplicity of messages threatens to become too fragmented and dilute the brand. The brand purpose, which answers the question of “why does this brand exist?” and “what is its meaning and goal?”, must therefore provide the superstructure on which more focused initiatives are based.

For more perspectives and insight like this, check out the BrandZ Top 50 Most Valuable German Brands 2020 report, and the BrandZ Top 100 Most Valuable Global Brands 2020 report.

Get in touch
BrandZ 2020 Global Brands Report
BrandZ Top 100 Most Valuable Global Brands 2020
Explore how high-performing brands are proving their resilience, the pandemic impact across 14 categories, and implications for future growth.
Find out more