4 opportunities for brands during the upcoming period of recovery
Kantar's Jacqui Horsley: How brands should go about winning their share of consumers' diminished spending power.
Covid-19 has impacted consumer needs and, in some cases, because of a lack of availability, has forced them to try new brands that they would not have otherwise considered. Sometimes they find that those new brands that they have tried only due to circumstance offer better value or more convenience.
This is according to Kantar’s brand strategy director Jacqui Horsley, who believes the recession that the lockdown has triggered is going to be more damaging to brands than the lockdown itself. This is because many industries are going to take years to recover. As restrictions are lifted, the extent of the fear factor surrounding the virus is going to determine how quickly brands are going to be able to recover.
Jacqui was addressing top marketing executives leaders in the Marketers Community Conversation, which is a bi-monthly online gathering of marketing leaders within the CFO South Africa and CHRO South Africa networks.
“The recession is also going to force trading downwards as consumers postpone purchases and shift demands towards the most essential goods and services. Brands are going to have to battle for their share of consumers’ diminished spending power.”
Jacqui said she didn’t don't know yet what the next normal was going to bring. Only that she did expect that, at some point, demand would stabilise as brands returned to a world where significant market share gains only happen through complete disruption and innovation.
With that in mind, she presented four opportunities during the upcoming period of ‘recovery and recurrence.
“There is an overwhelming amount of information out there and I'm sure many of your inboxes are being spammed with plenty of articles from companies offering advice during this time. This is our view on the facts that every brand should be considering right now.”
1 New price-value equation
Jacquie said consumers are going to respond to the new economic reality with an ever-increasing value sensitivity in which they are likely to pay more attention to sales, with many choosing to shop online because they believe there are more good offers available there. According to Kantar’s research, she said the attention people were paying to price had grown sharply by about 17 percent from the start of lockdown to the end of April.
Said Jacqui: “Not surprisingly the big-ticket items are the ones that are going to suffer first. We asked people whether they were likely to continue, delay, or to stop making purchases that they had planned in various different product categories and we saw that many people are anticipating delaying or even stopping buying in many different categories, with travel and car maintenance being the most affected ones with almost 80 percent of people saying they would delay or stop travel purchases
However, despite the increased price sensitivity, Jacqui said that brands should resist the urge to compete solely based on price.
“Learnings from the great recession and 2008/09 financial crisis show us that, although consumers are noticing price more, value is much more important than the absolute price point. So a cheaper yet unknown import might not win over a trusted and slightly more expensive local brand as people weigh up things like affordability against factors like trust and safety, quality, convenience, and their emotional relationship to the brand.”
The next opportunity for brands to think about the acceleration of omnichannel was taking place. Because of the reduction in traffic to malls and megastores, Jacqui said there were more opportunities in the online space. This meant that the acceleration of brands’ digital transformations and ensuring an omnichannel solution would be critical taking advantage of the online opportunities.
“We have seen some uniquely South African solutions like ordering via WhatsApp or partnerships like the one between Pick n Pay and alcohol delivery service Bottles to deliver essential shopping baskets, as retailers battle to retain customer loyalty,” said Jacqui.
“The burning question that everyone wants answers to is whether these new behaviours learnt during the lockdown are likely to continue. Customers tell us that they will continue buying online and will still prefer electronic forms of payment long after the lockdown has been lifted.”
But how good are consumers at predicting their own behaviour? Jacqui said that, in China, there was a growth in the number of people buying online from 31 percent to 46 percent during the lockdown but, now that people can move around more and restrictions are relaxed, that percentage is dropping back down.
3 New needs economy
Consumers are also adjusting to life during the various levels of lockdown during which the basic need for survival and safety become the focus of their attention. In this new reality, people are letting go of the nice-to-haves and spending on the need-to-haves.
“We, as consumers, are hypersensitive to issues of health and hygiene and our number one concern has been how long the virus lives on surfaces. We have decided to reduce physical contact with other people and also other surfaces, which is why people prefer electronic forms of payment,” said Jacqui, adding that companies would have to offer assurance that their products are sanitised. “This is why we have seen a return to single-use plastic to avoid contamination. Starbucks, for instance, has already indicated that they were temporarily stopping the use of reusable cups.”
Jacqui said, with more people at home and fewer opportunities to shop, brands can tap into customers’ desire to be more experimental. More people are cooking and baking, trying new recipes. Others were finding new and interesting ways to exercise, and many families were trying different activities together while at home. All of these needs presented an opportunity for companies to innovate and find new ways to cater to the consumer.
4 An era of shared humanity
The fourth area of opportunity for brands in these times presents itself in the way Covid-19 has reshaped consumers’ world views. In an era of consumerism, instant gratification, and conspicuous consumption, Jacqui said the virus had amplified people’s sense of isolation and insecurity but at the same time magnified the realisation that they were social beings with an innate desire for connection.
It means people want brands to engage with them in a way that is authentic and practical while celebrating humanity.
“At the start of the pandemic, our most important need was information. We wanted to feel prepared and in control. But that desire has declined by 10 percent over the last weeks. Now we have a growing need for a community,” said Jacqui. As an example, she referred to the story of the British war veteran Captain Tom Moore who walked the length of his garden 100 times in his stroller to raise money for the National Health Service and its staff ahead of his 100th birthday. He will soon be rewarded with a knighthood from the Queen.
She said consumers did not want companies to stop advertising but that they do want messaging that speaks to values of humanity.
“One fabulous example is Koo, which offered consumers very practical ideas on how to create inspiring meals with cupboard staples that they might have stocked up on at the start of the lockdown,” said Jacqui, adding that Haagen-Dazs was another great example, internationally.
The luxury ice cream brand Häagen-Dazs teamed up with Secret Cinema, the pioneers of immersive storytelling, to launch Secret Sofa – a weekly home entertainment series where audiences can create their own unique immersive cinema experiences – to tie in with its new “Häag-Indoors” initiative.