Start marketing planning now to stay ahead of the big bounce back. The pandemic has forced changes in consumer behaviour. Life will not return to normal, a new normal will evolve with new habits and rituals. Consumer mindsets and behaviours have changed, some will be temporary but others will become permanent. These changes will need to be rapidly understood and your product, price, positioning and channel will need to be adjusted. Contact us at email@example.com if you need help.
22 minute read
Richard is the Managing Director of Cimigo, an independent Asian market research and consulting firm. He has a 25-year career researching, teaching and testing consumer behaviour in Asia. He has counselled clients on consumer behaviour, response and the bounce back through significant shocks in Asia; the Asian Financial crisis, SARs, the global financial crisis and the Swine flu. Richard and the Cimigo team are well-positioned to help guide you through these turbulent times.
Now is the time to begin planning for the bounce back after this pandemic. A pandemic which is happening at a far greater global scale and economic impact than any recent crisis; the Asian Financial crisis, SARs, the global financial crisis and the Swine flu.
Life will not return to normal, a new normal will evolve with new habits and rituals whilst the collective memory of lockdown, anxiety for loved ones and financial insecurity abounds. There will be constant reminders in the new restraints impacting our lives.
Social norms will change in who, when and how we greet, bars and restaurants will have restrictions on customers (far fewer than available seats), gyms customers will be allocated shifts to maintain social distance and schools with have new restrictions on class sizes, sports days and many smaller assemblies.
Public environments will see their footfall return very slowly and gradually. The idea that because we have all been cooped up and will dash out and start a revenge spending spree is a fantasy.
Consumer mindsets and behaviours have changed, some will be temporary but others will become permanent. These changes will need to be rapidly understood and your product, price, positioning and channel will need to be adjusted. Get in touch to discuss how to get your commercial plans prepared so that you are ready for the bounce back.
Consumer confidence will have hit new lows, businesses will have faltered, jobs lost and incomes reduce. Many sectors will remain distressed, especially tourism, the airline and the leisure industry. Disposable incomes will have been severely impacted and uncertainly will reign at the forefront of consumer minds. Spending beyond necessities will remain suspended. Greater value will be sought across household expenditure;
- Consumers will trade down their brand choices to save money.
- Consumers will shop more frequently but in smaller quantities. They will seek to conserve cash in their pockets. Cash outlay will trump price sensitivity. A minority of affluent consumers will seek value in bulk, multi-serve and large pack purchases.
- Consumers will seek lower-cost channels.
- Consumers will pay greater attention to promotions.
- Consumers will seek innovation in small treats, rewards and indulgences that can provide comfort.
Some of the temporary behaviour changes forced upon us by the pandemic will be permanently game-changing. We will all have found new ways of working, socialising, entertaining, shopping, minimising travel costs, being thrifty, staying fit and eating well.
Consumer spending will bounce back in time. South-East Asia has a great opportunistic and entrepreneurial spirit that will never be tamed. Momentum will need to build over time. The bounce back will be a marathon, not a sprint.
Consumer spending will return to pre-pandemic levels after 18 months. Post SARS and Swine flu consumers memories quickly faded as the world returned to normal. There was no new normal, behaviours did not significantly change. The global scale, the containment measures, the closing of borders, quarantines, social distancing and economic impact for this pandemic are unprecedented.
Relapses may well happen with new public health scares, pushing the true bounce back by yet more months. Eventually, a vaccine will alleviate fears of a repeat in the near future, but caution will prevail, for many consumers and authorities alike. The level of consumer caution will correlate with age, taking a significant step up at 60 and increasing exponentially thereafter.
Consumer behaviour will change and we believe in hindsight will demonstrate the pandemic sparked many new habits, rituals, social norms and trends. Change will be most pronounced amongst those consumers embarking on new life stages where their lives pivot in a new direction and temporary behaviours can be readily moulded into a new normal;
- Young adults starting or leaving university.
- Marriage and first child.
- Families approaching empty nests (children have all left home).
The chart below shows a forecast for the proportion of the population, spending at pre-pandemic levels, including essentials and discretionary spending. The forecast accounts for adjustments in both essential and discretionary expenditure. In 2019, pre-pandemic, 33% of expenditure was on discretionary items. The crisis will also force a sharp drop in essential expenditure initially, out of necessity, before recovering gradually over the following 18 months.
Household spending will resume gradually over 18 months for most consumer categories. Some expenditure categories will be restrained a further one to three months as a result of continued social distancing measures such as on-premise hospitality, gyms, cinemas, health and beauty services, live audience sports and entertainment events. Other expenditure categories will take an additional four to six months to return to pre-pandemic levels, for example; domestic travel, high-value electronics, automotive and property.
The ideal communications budget mix is; brand building 60% | sales activation is 40%. Sales activation includes shopper marketing, promotions, trial generation and visibility on page, app, shelf or menu. This varies by slightly by category, but largely holds true across categories, markets, business to consumer and business to business marketing communications.
This ratio needs to be recalibrated and budgets need to be redistributed, in order to get the jump on competitors and stay ahead of the bounce.
Month 0 | Homebound lockdowns | 51% to 67% of pre-crisis consumer expenditure
If public mobility is restrained between 2 and 4 weeks during the pandemic, we estimate that accounting for pre and post mobility restraints, that the average business will have lost 24% and 36% of their annual revenue in 2020.
Brands readily available online:
During a period very limited public mobility and brand accessibility (available and affordable); communications for those brands (products and services) available online for delivery, downloading or streaming should be increased. The ratio between brand building (and at times merely brand maintenance) and sales activation communications should tilt heavily toward sales activation.
A&P budget mix: brand building 10% | sales activation 90%
Brands not readily available online:
For those brands not readily accessible, consumers attention is diverted by the pandemic and budgets should be temporarily curtailed.
A&P budget mix: brand building 100% | sales activation 0%
Months 1 to 3 | Gearing up | 68% to 76% of pre-crisis consumer expenditure
As outlets begin to re-open and public mobility enable people to return to work you must adjust plans. Cautious and thrifty will be the norm for consumers for at least three months, barring a relapse on containment and a return to lockdowns. The most adventurous and assertive consumer segments will begin to return to pre-pandemic expenditures.
A&P budget mix: brand building 20% | sales activating 80%
Months 4 to 6 | Finding your stride | 77% to 84% of pre-crisis consumer expenditure
Once public mobility has seen people to return to work without further scares or relapses, a confident majority will bring the momentum to bring home the bounce. The bounce will vary by industry, category, product and service. However a confident majority will require between three and six months to bring about a tipping point, where more return to pre-pandemic expenditures than those who remain thrifty.
A&P budget mix: brand building 40% | sales activating 60%
Months 7 to 12 | Maintaining your pace | 85% to 91% of pre-crisis consumer expenditure
By this point in time, the critical mass within adventurous, assertive and confident majority will be back and spending. The more conservative consumer segment will see this around them and begin to believe things are returning to new normal and begin to emulate their pre-pandemic spending.
A&P budget mix: brand building 50% | sales activating 50%
Months 12 to 18 | Finishing strong | 92% to 100% of pre-crisis consumer expenditure
At this point in time, marketing plans and budget allocations can revert to pre-pandemic plans. A new normal will have already evolved with new habits and rituals in everyday life and no doubt for your brand and category. This new normal needs to be understood, your commercial plans (brand, innovation, marketing, channel and sales) will need to evolve, opportunities leveraged and risks reduced.
A&P budget mix: brand building 60% | sales activating 40%
Say less and do more
Telling customers that you there for them through difficult times is rather disingenuous and often outright irritating. No one needs to be reminded that these are tough times. It is far better to say less and do more. Do more by supporting your staff and then your customers. Staff must come first if you expect to deliver a great customer experience.
Those organisations with resources (financial, skills or time) can go beyond and provide support to the community. These actions will build far more loyalty than disingenuous communications, which seek sales under the pretence of empathy.
Imagine the mindset of your consumer; bored, anxious, financially insecure, stressed by children (or children stressed by tension at home and uncertain school futures). Many will be wishing they could regress into the safety of the countryside, quieter lives, connecting with and comforting close family and friends.
At this time your consumer will be most receptive to messages which are;
- Reassuring, supportive and comforting.
- Reflect on all we can show gratitude and awe towards (even small and simple moments).
- Highlight belonging and recognition by uniting neighbourhoods, communities and the nation.
- Forward looking to better days ahead.
At this time communications should seek to;
- Be uplifting and positive.
- Be entertaining.
- Be humorous.
- Be inspiring.
How not to communicate
Do not draw on nor remind us of the pandemic. See here for how not to connect to your consumers.
Expect shopping channels to shift as people have experienced new channels, seek to avoid crowds, air conditioning and even touching doors. High traffic environments will be avoided by some for a time, including the mall and the wet market. Streetside neighbourhood stores may be preferred over chrome handled air-conditioned convenience stores. These changes may be sustained for six months and perhaps will never fully return to pre-pandemic norms.
Supermarkets will have experienced highs and lows as shoppers re-adjust their levels of stock at home, ultimately supermarkets are likely to be net gainers, at the expense of wet markets and smaller (confined) convenience stores.
Shopping behaviour at malls will have shifted to online shopping, trips will become less frequent for most shoppers. Malls will need to ramp up consumer experiences, even more, to bring footfall back. Many consumers will have experienced the convenience of online shopping and have built trust in the channel accelerating the growth of online platforms.
Plan for the bounce back
We all look forward to the bounce, those whom will benefit the most will be well prepared, they will have adjusted their marketing plans and media mix.
There will be no revenge spending spree, as a new normal appears it will be most marked by a very thrifty consumer.
Make sure you have a portfolio which includes; value propositions and brands have small pack sizes to enable lower cash outlay. Start designing promotions that enhance your customers’ experience and your share of their basket. Consider innovations that reward and indulge consumers.
Brands should say less and do more during the lockdown. Communications going forward should focus on comforting, entertaining, uplifting and inspiring consumers.
The bounce back will be a marathon, not a sprint. During normal times we expect marketing budget allocations at; brand building 60% | sales activation is 40%. These should be turned on their head, with sales activation taking 90% during the lockdowns, gradually decreasing through various stages of the bounce back to return to 40% only after 12 months.
A new normal will have already evolved with new habits and rituals in everyday life and no doubt for your brand and category. Some of the temporary consumer behaviour changes forced upon us by the pandemic, will be permanently game-changing. We will all have found new ways of working, socialising, entertaining, shopping, minimising travel costs, being thrifty, staying fit and eating well.
This new normal will need to be understood, your commercial plans (brand, innovation, marketing, channel and sales) will need to evolve, opportunities leveraged and risks reduced. Get in touch to discuss how to get your commercial plans prepared so that you are ready for the bounce back.
You may download the webinar presentation here.
Feel free to watch the webinar;