DEATH OF THE CONSUMERS

Honestly, before we had our lecture about this topic, I was puzzled of what it really means. Are the consumers dying? Is there an economic crisis? These questions are very nonsense but, what can I do? I have really no idea, even a single idea, about this topic. I mean. I know who the consumers are but talking about their death is another thing. As our discussion goes on, my empty mind was slowly filled with little infos about the said topic. But before we go deeper about the Death of Consumers we will simply first define the basic terms related to it. So, what are these terms?

Who are Consumers? 

There are in fact two types of consumers. First, there are individuals and their households. Goods and services intended for these types of consumers are known as 'final' or 'consumer' goods and services. Goods and services intended for business as an input to the production function are known as 'intermediate' or 'producers' goods. The final consumer is the focus of microeconomic theory. And what do consumer's get from consuming goods & services? They get 'utility'. In common language, this seems to suggests 'usefulness'. However, in economics 'utility' has a much deeper and in some ways darker meaning within the 'felicitous calculus' of Jeremy Bentham (1748-1832). In simple terms, Bentham believed that all of human existence could be explained by the search for pleasure and the avoidance of pain. Thus 'pleasure and pain are the sovereign rulers of the State'. He believed that pleasure and pain could be reduced to what would eventually prove to be physically measurable units called 'utiles', hence 'utilitarianism'. Thus utilitarianism is radically materialistic at root. Another name for utilitarianism, as defined by Bentham, is 'ethical hedonism'. The search for pleasure was inhibited in Bentham's scheme by the assumption that human beings carried a God-given ethic of right and wrong - essentially the Protestant work ethic. Once that ethic faded, however, we were left with only 'Me-ism': only my pleasure counts, and anything I do to increase it, no matter the pain and suffering to others, does not matter! The consumer goods market, as we know it today, began to emerged in the 18th century with the arrival of a mass 'middle class' or bourgeoisie. Before that time the lower classes, in the main, produced their own consumer goods at home while the upper classes either directly employed craftspersons and artisans in their 'great houses' or estates or contracted 'freemen' to produce the quality goods required by 'nobles'. Second, there are firms that purchase goods and services as 'inputs' to the production process of final goods and services. Goods and services purchased by firms are known as 'intermediate' or 'producer' goods and services. Taste and style play a significantly less important role. Rather it is price and technical quality that dominate the producers' goods or the 'input' or 'factor of production' marketplace. Firms as consumers are the subject of a separate part of microeconomic analysis known as 'factor market' analysis.he most important price taker in our society is the consumer who faces set offers in practically all his market transactions. He has an income which he can spend on different goods and services in a variety of ways; and the alternative patterns of expenditure open to him are determined by the variety of offers and the structure of prices facing him. Of the alternatives made available to him by his income and his market opportunities, he will choose the one that best conforms to his preferences. The way in which he actually spends his income therefore depends on his personal preferences, on the size of his income, and on his market opportunities. In the following, we shall discuss, first, the way in which the market's offers and the consumer's income determine the latter's market behavior and, second, how changes in income and market offers affect his behavior. The consumer's preferences, however, we shall regard as fixed. The economist's task is to analyze how and to what extent economic activity conforms to consumers' preferences; but these he cannot question and must accept as given. How can we find out what the consumer's preferences are? We can hardly question him on the subject and so establish his scale of preferences. This would be a lengthy and clumsy process even if applied to only one person and is obviously impossible to apply to all members of the community. We can, however, infer the consumer's preferences from his market behavior, on the assumption that this is governed by rational choice and is not merely a matter of habit or accident. When the consumer spends his income in a certain way, we assume that he finds this the best way of spending his income at the existing structure of market prices, because it it were not, he would surely spend his income differently. The theory of consumer's behavior, therefore, is purely descriptive and describes the behavior of the rational consumer. We can neither prescribe how the consumer should behave nor judge his behavior by comparison to an ideal behavior pattern, because we have no such ideal pattern. To establish an ideal behavior pattern would require independent information of the consumer's tastes and preferences; whereas we know these only as they are reflected in his market behavior. This means conformity of the consumer's market behavior to his preferences is the assumption we start out with and not something that can be proved or disproved by our analysis. (http://members.shaw.ca)

Producer

According to the dictionary, producer is the one that produces, especially a person or organization that produces goods or services for sale.

He is the one who supervises and controls the finances, creation, and public presentation of a play, film, program, or similar work. this term is commonly used interchangeably with manufacturer. A manufacturer is an entity that makes a good through a process involving raw materials, components, or assemblies, usually on a large scale with different operations divided among different workers.

The Rise of the Prosumers

Prosumer is a portmanteau formed by contracting either the word professional or producer with the word consumer. The term has taken on multiple conflicting meanings: the business sector sees the prosumer (professional–consumer) as a market segment, whereas economists see the prosumer (producer–consumer) as having greater independence from the mainstream economy. It can also be thought of as converse to the consumer with a passive role, denoting an active role as the individual gets more involved in the process. More recently, in the mental health field, the word "'prosumer'" has come to mean "consumer/provider," also known as a "peer provider," such as a peer support specialist or other mental health consumer who also provides peer support mental health services (background on peer-run mental health services). The word "Prosumerise" has been coined by Widality to represent the merging of the IT and mobility requirements of the prosumer, consumer, and enterprise. This word is becoming fairly common but can be confusing, as it has two meanings. It was coined in 1980 by the futurist Alvin Toffler — in his book The Third Wave — as a blend of producer and consumer. He used it to describe a possible future type of consumer who would become involved in the design and manufacture of products, so they could be made to individual specification. He argued that we would then no longer be a passive market upon which industry dumped consumer goods but a part of the creative process. Derrick de Kerckhove has called this mass customisation, in which everybody is in effect a member of a niche market, something Internet e-commerce is encouraging through cutting out the middleman between maker and buyer. This sense of prosumer has been taken up by some marketing people, but remains limited in its application.The second usage describes a purchaser of technical equipment who wants to obtain goods of a better quality than consumer items, but can’t afford professional items (older terms for goods of this intermediate quality are semi-professional and industrial quality). Here, the word is a blend of professional and consumer. Prosumers of this sort are famed for their enthusiasm for new products and their tolerance of flaws and, from the marketing point of view, have much in common with early adopters. This usage is common among those selling video equipment, digital cameras, and similar goods (and the examples below illustrate this sense). Some manufacturers treat the SOHO (Small Office, Home Office) market as being much the same thing.(www.worlwidewords.com) The concept of a prosumer is a late 20th century idea that combines some of the common characteristics of a professional and a consumer. The term is generally applied to situations where consumers are considered to have reached a level of sophistication that the professional-consumer can effectively dictate the perimeters for the production of goods and services in terms of quality and structure. The difference between the garden variety consumer and the prosumer is that the latter typically possesses such a strong working knowledge with the product that he or she can successfully determine and perhaps even design a better product offering. Prosumers are now common in many fields that were once the sole province of professionals. One of the areas where the prosumer has gained a high degree of visibility is in the home improvement industry. A number of household tasks, such as the installation of ductwork, plumbing, wallpaper hanging, and installing major appliances, are now done by many homeowners. In times past, these were all functions that were considered to be the work of professionals, with only the occasional amateur attempting this sort of high profile work. Cooking is another area where amateurs have become more proficient. As a result, prosumers now bridge the gap between people who prepare simple meals for the household and persons who are trained as professional chefs. One of the avenues that allow amateurs to expand the level of culinary education is cable television. Since the medium became widely available in the late 1970’s, many people have become exposed to the preparation of cuisine that was usually available only in upscale restaurants. The result has been the creation of a large audience of prosumer enthusiasts that delight in expanding their culinary skills, without necessarily planning on making a living in the industry. The combination of affordable computer technology and the Internet have also made it possible for the prosumer to assume a place in the world of publishing. Thanks to software programs and high quality printing materials and equipment, the prosumer can now produce hard copy and electronic magazines on a favorite hobby or interest. Desktop publishing also allows these highly skilled amateurs to produce high quality greeting cards, promotional brochures, and a wide range of published material. Even fledgling writers can be classified as prosumers, simply by using current technology to product an electronic book for distribution. The prosumer can also be associated with a number of other fields as well. Photography, interior decorating, and even the beverage industry have a number of people who qualify as prosumers. As technology continues to evolve, there is no doubt that the prosumer phenomenon will continue to grow.(www.wisegeek.com) Here are some definitons given about what prosumer is. First is, Professional consumer. With customization focused on leisure pursuits, Toffler's initial combination has been largely supplanted by a second pair of blurring roles: that of the professional and consumer. In particular, hobbyists have become ever-more demanding in the pursuits of their hobbies, often rising above the level of dilettante (an amateur, someone who dabbles in a field out of casual interest rather than as a profession or serious interest) to the point of commanding skills equal to that of professionals. Key examples of such hobbies are:home improvement as illustrated by the rise of hardware stores such as Home Depot, cooking as illustrated by creation of entirely new cable television channels entirely dedicated to the culinary arts such as The Food Channel or Food Network, photography as illustrated by still cameras and camcorders that, often, are on a par with equipment used by professionals. This professional slant of the prosumer term is most common in photography which is a field that highlights prosumer trends. Access to professional-level equipment and skills is made possible by combination of factors such as:high disposable incomes by some sectors of the population, increased leisure time, again, for some sectors of the population, continuously falling prices of ever moreadvanced products (especially electronics), media geared towards amateurs and hobbyists: beginning in the 1980s with the advent of desktop publishing, a growing profusion of magazines to satisfy specialized interests, beginning in the mid-1990s with the advent of the Internet, an even wider range of websites with online forums to pool experience, Pertaining to electronics; are considered to be "on the fence" as a product of lower quality than a professional product, and higher quality,(sometimes in the form of bells and whistles) than a consumer product. Some examples include:Digital camcorders, Still cameras and HDTVs. (http://en.wikipedia.org/wiki/Prosumer)

The Prosumer Opportunity

The Connected Life market, which comprises both telecom services and consumer electronics, continues to grow and prosper. Quantifying the size of the prosumer market is difficult—largely because there are several different definitions of the term “prosumer.” Compared to the broader population, prosumers are classic early adopters of technologies, and their mobile phone use is the highest in the business sector. Prosumers’ salaries are 15 percent higher than those of their counterparts in other segments, and with an average age of 40, they are in the prime money-making years of their careers. Because prosumers tend to be in their middle years, they also have bigger families (57 percent larger than those of counterparts in older or younger demographic groups), and are the ones most likely to make spending decisions in the home. As early adopters, prosumers make use of solutions that keep them in touch with their families and friends, including Connected Life services such as social networking (personally and professionally). For example, instant messaging, which originated as a business tool, has become the prosumer’s preferred way to stay in touch with work colleagues and friends and family. The prosumer opportunity for industries lies in creating solutions that tightly integrate work and home life to attract these individuals. Such solutions are hard to replicate, because changing providers also involves transporting and re-creating both personal and work data and services. Securing the prosumer segment allows vendors to create a full portfolio of Connected Life services that will draw more customers as this segment grows. In some verticals—service providers, consumer electronics, and travel, among others—establishing a strong prosumer clientele is a must. (Prosumers: A New Growth Opportunity by William Gerhardt, Principal, Service Provider Practice, IBSG)

The Prosumer Challenge

Serving prosumers is complex; their needs cannot be defined by location, application, time of day, or device alone. In fact, that is what makes them prosumers. They seek to be connected and serviced no matter where they are, what they are trying to do, or when they are trying to do it.

Although prosumers are heavy technology users, they want solutions to be simple. In particular, application user interfaces must be easily accessible for both work and their personal life, raising some issues relating to overlap between the two. For example, loading Connected Life applications onto company-owned phones is a concern to employers because of security and liability, and to employees because of privacy and ethical concerns. When work and personal lives overlap and blend so seamlessly, billing for things like mobile phones and application software also becomes blurred.So, serving the prosumer—to the satisfaction of the prosumer and his or her employer—is far from easy. Early prosumer offerings have fallen short of what these individuals really need. Mobile mail is an example of this. When it is provided by the employer, it works well for business purposes. But personal mobile mail requires yet another application from a provider such as Google or Yahoo! The only way to handle this situation is to maintain one phone for personal mail and another phone for business mail—an equally awkward solution. Effectively serving this segment requires delivering value that works for both the prosumer and the enterprise.(Prosumers: A New Growth Opportunity by William Gerhardt, Principal, Service Provider Practice, IBSG)

Serving the Prosumer

The financial services industry has begun cross-selling products such as insurance and banking services, especially to small- and medium-sized business owners (prime prosumer targets), recognizing that when someone starts a business, that person is more inclined to select a financial services institution with which he or she is already doing personal business. Higher-education institutions position their services to alumni as they enter the workforce, because alumni often seek corporate sponsorship for more costly graduate work. Most industries, however, have not yet instituted formal business models to pursue prosumers as a target segment. Capturing the emerging prosumer category requires a deliberate and systematic approach, with full understanding of what makes these complex individuals tick. The service provider industry (telecommunications, IP services) is absolutely essential to the prosumer’s connected lifestyle, yet these companies have done little to court this segment. Providers need to invest in network infrastructure to deliver seamless, ubiquitous, and secure prosumer experiences across personal and work requirements. Because these industries have so much to gain from prosumers, it makes a great deal of sense to start with the design of user interfaces that are blended, yet provide sufficient separation between work and personal content to avoid conflict with corporate policy.

It also behooves the service provider industries to figure out a way to provide services and billing methodologies that keep the prosumer connected, yet allow for separation of work and personal activities. For instance, there should be a simple, nonintrusive method for keeping mobile phone charges separate. And there should be a way for prosumers to integrate their home and work calendars and address books without providing employer visibility into personal information (and vice versa). Enterprises addressing the prosumer market must make an effort to educate prosumers about the value of their offerings. Prosumers can be reached in many ways: through traditional consumer channels (advertising, direct mail, and so forth); nontraditional channels (e-mail, online, or sites such as Google or Second Life); or through business-to-business channels (industry site advertising, trade publications). Before embarking on a communications / promotion program, however, analyze channels carefully; not all will work. Prosumers rarely see television ads, for instance. Instead, they record their favorite shows and watch them when they have time—skipping commercials as they go. Vertical industries must capture critical data about prosumers’ interests, activities, and behaviors to improve their product and service development for this segment. For instance, airlines have precise data about the habits of their business customers, which they then apply to attracting their leisure-time travel business. The data is there, flowing across your network; methods can be developed to identify, isolate, analyze, and apply this data to develop new services to this well-heeled and receptive group.

I know that there will be a lot of new ideas coming as the changing world continue to revolve.