New Digital Behaviors: A New Calendar for the Audio Industry
August 21 2020, 17:10
With the ongoing Coronavirus pandemic effects, in the same way as many retailers' business and entire distribution models have been disrupted, consumer behavior changes are also affecting the manufacturers' calendars in general. The industry is no longer depending on massive industry events that in the past have determined important product launch and promotion cycles.
According to DataReportal's Digital 2020 July Global Statshot: "The global digital landscape is still evolving rapidly as we enter the second half of 2020, with the ongoing Coronavirus pandemic continuing to influence and reshape various aspects of people's daily lives. Lockdowns may have been lifted across many countries, but many of the new digital behaviors that people adopted during confinement have endured, resulting in meaningful increases in various kinds of digital activity."
Among other key findings in this very interesting report, more than half of the world is now using social media, the digital habits formed during the first months of lockdown have endured with new digital platforms surging, and search behaviors also evolving, introducing new important implications for brands.
This shows the shelter-at-home isolation effect is really starting to kick in! Not only on the personal level, but influencing entire industries. We still don't know if these behavior trends are going to last six months, another year, or more. Personally, I believe things will continue to change. And many industries will evolve to new business models, leveraging those same changes. For example, many product segments in the audio industry - and the consumer electronics sector overall - will embrace a new product launch calendar, which seems to be the way to go ...for now.
Why? Because "Consumer habits are shifting, and these changes are dramatically impacting daily habits and purchase plans," says Elizabeth Parks, President, Parks Associates. "The impact of COVID-19 is everywhere for consumers - everything from exercise to learning to communication and entertainment services - and this will affect the adoption of new devices and services in the home," she adds.
In the same way as many retailers' business and entire distribution models have been disrupted, these behavior changes are also affecting the manufacturers' calendars in general, no longer depending on massive industry events that have determined important product launch and promotion cycles. Also, product development efforts are being intensified now that companies have managed to adapt to managing remote teams ...and that engineers are finding they have more time left alone to focus on their work :) Probably also because production schedules continue to be highly unpredictable due the pandemic effects - exacerbated by political tensions and trade disputes - and managers are busy managing their supply chains.
For the next two quarters, manufacturers will refocus their efforts on identifying and following consumer trends, and bringing forward new products in categories that are in high demand, pitching new solutions that people can use at home or anywhere. Marketing and product management departments are also free to plan a continuous flow of announcements at a steady pace, keeping consumers' attention and improving brand loyalty - sometimes even generating new consumer trends.
This is also inspiring new - more agile - integrated marketing strategies. Instead of manufacturing tens of thousands of products, sending containers to warehouses, and then generating demand (wich probably end up being heavily discounted during Cyber Week), companies are exploring the "product drop" concept. This is a strategy that focuses on fostering emotional attachment and brand loyalty, but also generating a new type of demand. A brand announces a new innovative and unique product, promotes it on its website, media channels and social media, and schedules a strict deadline for orders. This can be a limited-edition product, but more frequently, by creating this sense of "uniqueness" and urgency the brand is effectively restricting orders to a limited timeframe - after which it ships just the quantities ordered. In a few weeks, months, or a year, the cycle is repeated - unexpectedly and again with limited availability.
Even established brands can create unique products for exclusive collections, with items that are "dropped" in a way that excites consumers. This was already being used to attract crowds to specific retailers before the pandemic. Now, with consumers more receptive to buying online and receiving products at home, this could be even more effective if duly planned - even for relatively new brands and completely new product categories. The drop culture, combined with agile direct-to-consumer strategies, could be something for audio companies to explore. It is an effective way to differentiate products in very competitive categories.
In its latest consumer technology report, Futuresource Consulting signals surprising demand and growth in categories like headphones and wireless speakers - demand growing 13% and 27% year-on-year, respectively - while products with built-in voice technology - i.e., smart speakers, smart displays, and smart controllers - are seeing strong 60% growth. China, of course, continues to be the star performer and is expected to overtake the US to become the largest smart speaker market in 2020.
"Wireless speakers are set to be one of the better performing consumer electronics categories despite the impact of COVID-19, with volumes set to grow albeit less than previously expected. Most of this growth is driven by smart speakers, which remain attractive due to the indoor use case and low prices on offer from the tech brands. Shipments of non-smart speakers dramatically slumped in Q1 and April, and although there was a fairly strong recovery in May and certainly June. the expectation is that demand will fall compared to 2019," states Futuresource.
These are important trends to take note, but like the growth in the recent sales of laptops (families are investing in updated machines for remote schooling because their children will be studying from home), or sales of communication hardware and software (increasingly adopted for home conferencing use), these are all fairly predictable. What I would like to highlight is the potential for new product launch strategies to engage consumers in this context, even in stagnating segments. In very specific or completely new product categories, there's been an accelerating pace of product announcements and introductions - very unusual for the months of July and August, as reflected by our audioXpress website news sections. This is a good sign, but this continuous pace of new product introductions will also require new promotional strategies, and even more engagement with consumers online, at home, on the devices they are using.
In fact, even the trade show promoters have already realized these consumer behavior changes are shifting the product cycles and the way companies are updating their strategies. In response, instead of just promoting "virtual" alternatives to the scheduled shows at certain dates, they are now promoting an entire month or even new all-year promotional and networking resources for the industries served - mostly available on-demand.
The Audio Engineering Society (AES) is evolving for that model. The National Association of Broadcasters (NAB) recently announced that its annual NAB Show is now promoting NABAmplify.com, a new "year-round digital platform supporting networking, discovery, education, and commerce" initiative, launching in November 2020. Other industry associations and trade show promoters, like the CTA, AVIXA, CEDIA, NAMM, and IFA are all looking at this new "platform" model.
These are unique and unusual circumstances, where trade shows and other industry activities all over the world were frozen since February. Many companies are - ingeniously, in my opinion - trying to use every opportunity to keep their distribution channels and consumers excited with a continuous flow of new announcements. Because, under these circumstances, it doesn't really matter what month we're in. I'm just looking forward to seeing what companies have been saving for the Holiday season!
This article was originally published in The Audio Voice newsletter, August 20, 2020.