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Consumer Trends and Valuation

The rightful domination of the stock market scene by Finance professionals tends to relegate the customer to the background. Executives provide good news of product acceptance to the stock market more readily than troubling leads on how consumer habits change and drift away from established brands. Indeed, such moves may be so subtle that even companies may be taken by surprise! The preoccupation with numbers for the quarter tempts all of us to gloss over essential consumer trends. The momentum of a large brand, or its company with many other products in a combined financial statement, can window dress some very disturbing news for the stock market!

Consumer intimacy is a vital, if sometimes hidden, ingredient of stock market investing success. Even industrial marketers cannot afford to ignore their direct and downstream customers. The best technology companies have come aground because they have not invested adequate resources in tracking consumer behavior accurately. Cosmetics and detergents on the other hand, have made rising profits out of generics for decades, because brand owning companies do little else than observe customers at close quarters!

Globalization and the Internet make consumer knowledge even more relevant for stock market results than in the old days. Companies which have succeeded in their domestic markets, have floundered in emerging countries with strange tongues and exotic customs. E-commerce and web sites are services that no stock market can limit effectively to a particular territory. Segments are being redrawn, so all companies are forced to return their Marketing Strategies to the drawing boards.

Statutory reporting does not enjoin on stock market members to provide details of their consumer knowledge and trends. Many professionals would baulk at the thought, because it would mean loss of proprietary information, and would expose those at the helm of affairs without deep consumer knowledge. It is up to stock market investors to seek dialogue with the companies in which they have important fund allocations, so that they can gauge how well prepared each enterprise is for the new circumstances of the conventional market place.