MODULE 7:

Industry Trends

Topics:
A. Social Networking
B. Outsourcing
C. Franchising
D. Retailing
E. Electronics

Topic #1: Social Networking

2021 has forged a unique customer base with special requirements – and the social media trends follow suit. As
people have adapted to virtual living, technology has advanced in numerous ways, and consumers are pushing
hard to bring societal change along with it. Any marketing strategy must recognize and adapt to these forces or
die trying – because if they can’t adapt, they won’t last very long.

Here, we’ll dive into the 15 social media trends for 2021 and beyond – trends that your marketing department
should be actively engaged in. If you’re not ticking off all of these boxes yet, that’s okay – it’s never too late to get
started. These social media trends are white-hot right now, so get fluent in them and get moving. That way,
you’re meeting your customer in a manner that’s timely, relevant and forward-thinking. Specifically, we’ll explore:

1. TikTok’s continued takeover

2. Livestream’s power to connect with consumers
3. Mainstream virtual reality
4. Augmented reality is everywhere
5. Audio chat is taking the world by storm
6. Video content is king
7. Instagram stories for strategic marketing
8. Reddit for real-time market intelligence
9. Everyone needs artificial intelligence
10. The value-based buying boom
11. Psychographics are the new demographics
12. It’s all about inclusivity
13. The sustainability showdown
14. Flexitarians take a seat at the table
15. Influencers and KOLs push the social throttle

And before we get rolling, here are a few social statistics to keep in mind as we go:

The average social media user is engaging with social media for over two hours per day.
As far as monthly active users go, Facebook comes in on top with 2.7B, followed by Instagram at 1.15B, TikTok
689M, Snapchat 433M, Reddit 430M and Twitter at 353M.
Of all social media platforms, posts on TikTok receive the highest level of engagement per post.

First, there is the outsourcing phenomenon. Now, it is the social networking and it is proving to be not just
a fad. The phenomenal success of this could not be ignored like the more popular ones such as Facebook,
Twitter, and YouTube.

On the other side of the millions of individuals who communicate via the social network are ate marketers
who are hoping to get buyers out their products advertised online.

Marketing practitioners have pointed out that sales generation may not be the ultimate objective. It may
be more of building relationships just like what social networks intend to do.

Brand can post an online community and let individuals register and give their ideas. A popular franchise
did something like that and it generated thousands of ideas.

Social networking is characterized by engagement. After engagement comes sales. There is a tool
developed by Resource Interactive called Off the Wall in Facebook wherein its members receive product
endorsements through the Facebook news feeds and then customers can buy directly from the wall.

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Topic #2: Outsourcing

Outsourcing is one of the fastest growing industries on the world. The Philippines’ outsourcing industry is
one of the more successful industries today. It offers a wide range of services to companies such as traditional
voice and IT services, finance, animation, engineering, medical transcription, and architectural services.

to date, the business process outsourcing (BPO) has grown annually by 46%. Majority of the facilities are
located in Metro Manila and Cebu.

To call center industry comprises 80% of the outsourcing industry in the Philippines. The country is
chosen for its cheap operational and labor costs plus the fact that the workforce can speak and understand the
English language. Furthermore, the Philippines is a premier destination for the $150 Billion industry.

Despite its success, there are of course the usual pros and cons to organizations that avail outsourcing
services.

An outsourcing company should have a pool of experts who can deliver first class services. Cost overrun
is one of the most common problems of outsourcing contracts. It should maintain a good relationship with its
clients and there should be no surprises as to the contents of the contract.

A company that would like to avail of outsourced services should clearly define the scope and schedule
of the project. The objectives of the project should be clarified.

The Philippines is the source of human capital among multinational companies.

Current Trends in the Outsourcing Industry

Outsourcing as an industry is just a couple of decades old. The first instances can be traced to the late 80s. Since
then companies have come a long way, now relying on BPOs to get most of their non-core services done (HR,
Finance, Procurement and Fulfillment).

The digital business space was primarily serviced by marketing agencies carrying out digital marketing and other
allied services. With the advent of platforms and programmatic, these services have been outsourced too to
BPOs. Scalability and cost arbitrage helped outsourcing thrive.

Current Trends in the Outsourcing Industry

Digital Transformation:

Digital Transformation is the consolidated effort by an organization to transform (better organize) their business
workflows to digital in order to make it faster and more effective. This can be implemented by various levers such
as digitization, tech intervention etc. All these have an impact on the operations of the business as it's an org-
wide initiative with impact in every department. Hence outsourcing is becoming a less preferred option.

However, today, there are three outsourcing industry trends that are driving businesses to re-look at captive
models rather than outsource.

Key trends in outsourcing industry:

Automation The process of making machines do all repeatable tasks thereby reducing dependency on humans -
is a strong driver against outsourcing. This is mostly done by tech intervention which can be as basic as XL
automation to something as robust as implementing a robotics platform. This ensures a decrease in headcount
and creates avenues for people to diversify effort into other work areas which can give greater financial benefit to
the organization.

Data Ownership The USP of the digital medium is its measurability. A lot of data is being captured and used for
various (typically) sales and marketing activities. However, the collection of this data also comes with its caveat of
security and usage. With new initiatives like GDPR clients are becoming vary of data ownership in the
outsourcing model. This is a primary driver to the decision making process. Owing to the above reasons, we are
seeing a lot of shakeup and changes in the digital industry. Interesting times ahead.

Outsource ability Grid As part of DBS' client-focused approach, we have created an Outsource ability grid that
will help the clients view their processes or brands (in case of multiple brands) in a grid that accurately captures
their stage in the outsourcing journey and helps them understand the benefits they can derive out of outsourcing.
A brand or processes' place in the grid is a combination of its potential for getting outsourced and the operational
challenges it currently faces. By filling up a simple questionnaire, the customer helps us gauge and measure
these factors. Along with their response and some publicly available data, we configure the brand/process' place
in the grid and showcase how each of them can derive benefits from outsourcing.

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Topic #3: Franchising

Franchising in the Philippines has become a lucrative industry especially in food and clothing.
Franchising is from the French word means “free”. It is one way of doing business. A franchisor provides a
licensed privilege to the franchisee t do business and offer assistance in organizing, training, merchandising,
marketing, and managing in return for a certain fee.

One type of franchising is called a single unit franchising. This is the most popular and simple form of
franchising.

The second type of franchising is called sequential franchising. After an initial franchise agreement, the
franchisee may further her/his capability by acquiring another franchise from the sme franchisor.

According to the website of Franchising Information in the Philippines, to date there are eight most
popular franchise in the Philippines.

8th – water refilling franchises

7th – education and training
6th – bakery and food stores franchises.
5th – bar and café franchises
4th – personal care franchises
3rd – service-type franchises
2nd – fasr-food and restaurant franchises
1st – food cart and kiosks franchises

Current Trends in Franchising

If you’re a current or aspiring franchisee or franchisor, it’s important to stay on top of the latest trends in the
franchise industry to inform your business decisions. Let’s take a look at some of the most important franchise
business and marketing trends and stats. We also included explanations about how to best use these trends to
your advantage.

Franchise Industry Analysis

To stay at the forefront of your industry and local market, examine these four franchise trends:

1. Franchise Market Share Is Substantial

The U.S. Small Business Administration reported in 2016 that franchises accounted for 5.3% of small employers
and 9.6% of large employers in the United States. FRANdata reports that the North American franchise industry
includes approximately 420,000 franchise units and has demonstrated consistent growth for the past decade.

Franchise market share varies widely by industry. Below, we listed the franchise-owned share by market (U.S.
Census Bureau, 2012):

Optical goods: 93%

Private mail centers: 63%
Fast-food restaurants: 54%
Diet/weight-loss centers: 53%
Used car dealerships: 3%
Warehousing and storage businesses: <0.01%

2. Pandemic Recovery Will Be Strong for Franchises

There’s no doubt that the franchise industry has been impacted by the COVID pandemic. From 2016 to 2019,
annual average franchise employment growth approached 3%. During 2020, franchise employment declined by a
whopping 11.2%, shedding almost a million jobs due to limited business capacity and lost revenue. The number
of franchise establishments also declined by 2.6% in 2020.

The good news is that the franchise industry is expected to add more than 26,000 locations and nearly 800,000
new jobs nationwide by the end of 2021. The year-over-year increase in franchise establishments in 2021 is
projected to reach 3.5%. According to Entrepreneur, this growth will be driven by the fast food, commercial
cleaning and fitness industries.

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3. Franchises Still Fare Better than Independent Businesses
The survival rate for new businesses is often surprising for many new entrepreneurs. According to the SBA Office
of Advocacy, approximately half of all new businesses last for five years or more. Only about a third of new
establishments survive for 10 years or more. New-business survival rate, however, did improve in the few years
prior to the COVID-19 pandemic.

Having the support of expert franchisers and a network of experienced franchise-owner peers seems to have a
positive impact on business success and longevity. For franchises, the two-year success rate is eight percent
higher than the success rate of independently owned new businesses. The one-year success rate for new
franchises is 6.3% higher than for independent companies.

4. A Shift Toward Digital Marketing for Franchise Businesses

Nearly half of franchise professionals think traditional marketing methods like advertising, direct marketing and
public relations are no longer worth their time or money. Building digital marketing channels is no longer a vanity
project – without optimized local listings, social media accounts, and websites, a franchise system is virtually
destined to sink.

And while the need for a digital strategy is proven, many franchisees still feel lost when it comes to digital
marketing. Franchisers traditionally provide basic digital marketing support and resources to franchise owners,
but a 2016 BIA/Kelsey survey revealed that 33% of franchisees feel they need more training in digital advertising.
The survey also showed that the average franchise owner uses up to 20 advertising or marketing channels. A
complicated approach like this is difficult to execute.

Topic #4: Retailing

The Philippines posted a substantial growth in the retail industry in the past decade.

The food industry consist of the following: sidewalk vendors, sari sari store, wet and dry markets,
groceries, supermarkets, hypermarkets, warehouses and discount clubs, and convenient stores.

Large retailers like supermarkets enjoy tremendous growth. Their success is highly attributed to their
high-tech facilities, well-equipped warehouses, point of sales, scanner systems, among others.

On a smaller scale, sari-sari stores dominate the retail market particularly in rural areas.

In the Philippines, the distribution and retail outlets depend largely on the number and purchasing power
of consumers. Based on incomes, majority of the retail outlets are sari-sari stores followed by market stalls and
then a poor third are the supermarkets.

The retail trends of 2021 explored above all find themselves at various stages of development. Which trends
will permanently shape the future remains an open question.

This much is certain: e commerce will continue to grow rapidly in the near future.

From novel technologies to changing consumer attitudes, Applause has selected the top 10 retail trends of 2021.

1. Omni channel

In order to continue to provide customers with a secure shopping experience during the pandemic, many retailers
started to provide Omni channel offerings. Click-and-collect services, for example, enabled customers to
purchase products online and pick them up in-store for free. According to an Applause survey conducted last
November, 71 percent of respondents said they would shop at merchants that offered an Omni channel
experience. Find out here how suppliers can avoid stumbling blocks in Omni channel retail.

2. Social commerce

Given that Gen Z consumers spend several hours a day on social media, selling products via platforms such as
Instagram is becoming increasingly advantageous. A key benefit is that product ads closely resemble organic
content, making them more engaging for consumers. Social commerce also shortens customer journeys, as
customers can complete their purchases directly on the platform without being redirected to an online store.

3. Big data drives personalisation

Ordinary data rarely provides a solid foundation for personalisation. In order to capture all visitor data and divide
customers into comparable subgroup segments, retailers are turning to a practice known as clustering.
Multidimensional analysis divides the entire customer base into smaller clusters with similar characteristics such
as device, frequency of support requests, or shopping cart value. This enables retailers to maximise
personalisation in the customer journey.

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4. Augmented reality (AR)

According to a Google survey, 66 percent of consumers are interested in using AR whilst shopping. The
advantages for retailers are considerable. 3D visualisations, product demos and virtual try-ons mean that
customers can trial items before making a purchase, thereby dramatically reducing returns rates for retailers.
Moreover, data from Shopify shows that employing AR can boost conversion rates by 94 percent.

5. Direct-to-Consumer (DTC)

With a DTC channel, companies can sell their products or services directly to consumers, eliminating the need for
intermediaries. The most obvious benefits are higher speed to market, more favorable prices, higher margins,
and the ability to rapidly identify and respond to customer needs. In the United States, DTC sales grew 45.5
percent from 2019 to 2020, with a growth of 15.9 percent expected this year as well, according to a report by
eMarketer. Read more about why brands are investing in DTC here.

6. AI focus

On many retail websites, products are already suggested based on previously viewed or purchased items. With
AI technology, personalisation can be improved even further, enabling landing page text and product descriptions
to be updated in real time based on customer needs. AI can also benefit online store navigation and shorten
customer journeys by creating personalised shortcuts, e.g. by displaying women’s, unisex or men’s clothing first
depending on the consumer's gender identity.

7. Livestream e-commerce

A list of top retail trends in 2021 wouldn’t be complete without an exclusively pandemic-driven trend. Livestream
shopping enables customer representatives to interact live with prospective customers, so that they may respond
to and execute customer requests more efficiently. China leads the way in this trend, with Chinese livestream
ecommerce estimated at around US $158 billion in 2020 according to a report by Dao Insights. In Europe,
retailers like Dior already present their products on TikTok.

8. Voice commerce

As Applause has seen first hand, voice commerce is one of the key retail trends of 2021. The term refers to
online sales facilitated by speech recognition technology. In Germany, 60 percent of consumers have already
operated one or more devices using voice control, according to data from Statista. Even if they don’t use it, 92
percent of those surveyed are familiar with Amazon's Alexa. Given the increasing popularity of voice for online
search, retailers would be well advised to integrate voice recognition technology into all digital touch points.

9. Recommerce

So-called recommerce or reverse commerce involves the selling of used products both online and offline. eBay
published its first Recommerce Report this year, having surveyed over 4,000 buyers and sellers in Germany,
France, the UK, Canada and the US. In the survey, 79 percent of German consumers stated that they had bought
used products on eBay in the past year. In addition to lower prices, the sustainability aspect of recommerce is a
key driver of adoption.

10. Sustainability

Following on from #9, a key retail trend in 2021 is sustainability. According to a survey by Box Inc, 46 percent of
consumers believe that e-commerce is not a sustainable way to shop. 73 percent believe that the high returns
rate proper to online retail renders it not sustainable, while 49 percent identify transportation and shipping as
unconducive to sustainable practice. Offering options for environmentally-friendly shipping and sustainable
packaging is becoming increasingly important for online retailers.

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Topic #5: Electronics
_______________________________________________________________________________________

2021 Trends in the Electronics Industry: What You Can Expect This Year.

When the electronics industry evolves, the world evolves alongside it. The most ground breaking technologies in
the world are arriving every day in deceptively small electronics enclosures, and society shifts as they become
ubiquitous.

But the feedback loop goes both ways, and technology is also shaped by the material needs of society. The
coronavirus pandemic that has devastated the world for the past year has also caused some seismic shifts in
technology, and you’ll see these in action in many of 2021’s most important upcoming technological trends.

What are the major tech trends you should know about as 2021 gets into full swing? The five we’ll discuss here
are among the most potentially consequential.

1. Medical IoT

In 2020, the number of people receiving medical care through digital channels exploded as the pandemic raged,
and in 2021, that growth is predicted to continue and create a $295 billion global market for digital healthcare. To
ensure the many new telemedicine patients receive an excellent standard of care, medical device companies are
avidly seeking healthcare IoT solutions that will allow them to connect with patients in new ways.

Monitoring chronic conditions is among the most important use cases for medical IoT, and smart wearable
devices like glucose monitors will likely continue to climb in popularity. And with the medical IoT floodgates now
fully open, many new innovators are envisioning a whole world of critical medical functions packed into tiny silicon
chips and plastic enclosures.

Data management has turned out to be a huge challenge, thanks to the new influx of information arriving from
telemedicine and IoT sources. Medical technologists are working to ease the burden on providers of managing
and interpreting these enormous amounts of data, and machine learning is likely to play a critical role in IoT-
based diagnosis and care management, thanks to its ability to find patterns in a sea of data points.

2. Working from Home

You knew this one was coming, possibly because you yourself may have been working from home for most of the
past year. Large-scale reorganizations are sweeping many industries as one workplace after another pivots to a
partial or even fully remote model. Naturally, with this shift comes a huge surge of demand for technology that
facilitates remote work.

Video chat has been the subject of the most discussion. Apps like Zoom and Google Hangouts got a serious trial-
by-fire in 2020 as millions of new users logged on at once. But now that some of the kinks have been worked out,
this suddenly massive market will see even fiercer competition, including a recent entry by WhatsApp into the
desktop video chat sector.

But video chat is far from the only part of the tech sector primed for a WFH frenzy. Cloud software for
collaboration and project management will likely have another banner year as businesses continue to increase
their use of these tools. On the employee end, the likely announcements of big desktop computer products like
Apple’s new iMacs featuring proprietary chips seem perfectly timed, and the market for wireless mice and
keyboards should also see big sales as people deck out their home offices for long-term use.

3. Playing from Home

2020 saw people confined to their homes—not just during their working hours, but their downtime as well. Many
interesting cultural phenomena developed as a result, from bands livestreaming concerts to office happy hour
going virtual.

Whether live streamed concerts will retain popularity is uncertain, but some kind of expansion of virtual
socialization platforms seems likely. From apps that allow people to play board games virtually to the mega-
popular gaming voice chat app Discord, virtual socialization platforms are hot. What’s interesting is that many of
the most popular ones are outside the sphere of social media.

But what about the virtual reality/alternate reality technologies we’ve had several years of hype for? VR and AR
had a relatively quiet year in 2020—Animal Crossing was far bigger in terms of cultural clout. But sales figures for
VR headsets and games are growing every year, and it seems more than ever they’re just one breakout hit away
from becoming ubiquitous.

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4. Fintech Frenzy

Financial technology, or fintech, has been introducing one innovation after another. 2020 saw the industry
continue to move at a breakneck pace, and 2021 promises more disruption and more big deals.

2021 already began with one of the wildest financial stories in recent memory as legions of retail traders from the
Reddit forum wall street bets wreaked havoc on actual Wall Street. The stock trading app Robinhood has become
the forum of choice for a retail trading renaissance, underscoring the degree to which fintech has made
sophisticated financial products available to the average consumer and investor.

Digital payments are another hot area of fintech development. Demand for digital payment apps skyrocketed
during a year when nobody wanted to handle cash or get too close. And with an ever-growing variety of goods
available through omni channel eCommerce, these technologies will likely remain prominent even after we can
take the masks off. Digital payment companies will be there in 2021 to scoop up the revenue from processing all
of these transactions.

5. 5G Turns the Corner

Despite a lot of excitement, the performance of 5G in the U.S. has, thus far, been pretty unexciting. 2021,
however, has already seen a record number of 5G phones released, with market leaders like Apple and
Samsung’s flagship models shipping 5G-ready. Sales responded well, meaning consumers and phone
manufacturers alike are ready to bet on 2021 being the year 5G goes truly mainstream. Plus, you can see the 5G
towers going up across the U.S. in major cities every day, and you’re going to see more of those tall towers with
an electronic project box attached as the year goes on.

So far, the news looks reasonably good on the U.S. 5G rollout in 2021. Industry reports predict almost half of all
phones will be 5G-capable by 2022. Combined with major carriers continuing to steadily build out their 5G
capacity and increase the speed of their 5G networks, many analysts think this will be the year this long-heralded
technology finally starts firing on all cylinders.