The rise of PROsumers (And what it means for CONsumer companies)
PROsumers is a term that was originally coined by Alvin Toffler in his 1980 book The Third Wave. The term is a mixture of the word “producer” and “consumer”, originally intended for the active role that consumers would play when goods would be mass customized in the production process. Alvin envisaged a world where consumers would be able to alter the design of the product they want and therefore become an integrated part of the development process, shifting from “consumers” to “prosumers”.
Recent developments, however, have introduced new definitions to the term. Some of the common connotations are as follows:
- Producer + Consumer: The original intent of the term is still valid. Q&A forums, Wikipedia and social media websites are clear examples which have been significantly impacted by the rise of such prosumers.
- Product and brand advocate: The rise of social media and UGC means that consumer voices are heard easily and matter more than before. Reviewers and bloggers now play an ever-increasing role in the customer decision journey.
- Semi-Professional Consumer: The abundance of information means that consumers are more aware of products and how to use them. Complex equipment meant for professionals is being used by enthusiasts and hobbyists and “semi-professional” consumers. The easiest example comes from photography, where complex cameras are used in non-professional settings by consumers.
Where do they come from?
Different types of prosumers have resulted because of different behavioral shifts in consumers and it is important to understand which factors are driving this kind of change:
- Availability of information: Consumers can now access and interpret large amounts of data and news every day from websites. Curation apps make it easier for consumers to read exactly what they are interested in and learn more about it. This has enabled consumers to go beyond what they were used to and act semi-professionally in their hobbies and pursuits leading to increasing demand for higher and higher technologically advanced and complex products.
- Online retailing: The ability to identify long tail customers and really early adopters, and to service them at scale while creating a profitable business has enabled passionate entrepreneurs to create complex products and find customers for them fairly quickly. Interested consumers and producers can find each other easily on the web leading to increased sales for producers. Roposo is a great example of how strong recommendation platforms can enable businesses to attract and sell to long tail customers.
- Social media and consumer awareness: Prosumers are able to influence consumers easily due to the fact that customer voices can be heard. Companies now actively track and identify key opinion leaders on social websites in order to build strong brands and move audiences favorably. Communities of followers for “professional type products” can drive education and adoption of these products and enable successful market creation. The way Soylent has been able to use this medium to generate buzz around the product as well as get consumers to experiment and come up with new formulations is amazing.
- Customization at scale: Software products aside, even hardware products can now largely be customized without impacting cost. This, coupled with strong IT systems, has enabled companies to engage customers in product development and really own the product that they purchase. Customers now prefer to have control over the specifications of products and ensure they meet exact needs rather than broad outlines. 3D printing will enable personalization not only for toys and mobile phone cases but also houses and buildings!
It is important to note that there have been shifts in certain industries that have facilitated different prosumers. Intuitively we can say that brand advocates have been actively on the rise due to the proliferation of social media and emerging economies which are at the cusp of internet boom will see these prosumers become active first. Prosumers that actively partake in the production process require technical shifts in the manufacturing of products, these will arise slowly as different industries adopt new technologies such as 3D printing. The last category, semi-professional prosumers, on the other hand, are a relatively new phenomenon and requires strong marketing skills on behalf of individual companies to create and grow communities of extra early adopters.
Impact on Companies and Business Models
Businesses, especially startups, have been impacted significantly by the rise of prosumers. Media agencies that no longer need an editorial staff can now exist and create new and valuable content. The world’s largest encyclopedia, Wikipedia is created and maintained by Type 1 prosumers. You no longer have to be a celebrity to have the power to influence consumers. Business models such as Juicero are viable because of the rise of a distinct class of prosumers.
It is important for startups and marketing teams to actively identify and engage the type of prosumers that exist in their market. Different types of prosumers have started to become an important part of different industries and have impacted them significantly. The table below shows some of the prominent companies in different verticals that exist because of a growing base of different types of prosumers.
This is just a quick snapshot of the influence prosumers have already had on a wide range of verticals. More and more companies will continue to come up with innovative products and use social media to engage and educate customers in the future. Products which do not seem intuitive today will find and cultivate a strong user base and replace older technology. The rise of prosumers has enabled companies to target technology experimenters, those ultra-early adopters that are willing to learn and give complex products a try. This wave will only continue to grow, facilitating new startups and challenging traditional incumbents.