Consumer Behavior: Should You Worry About It During the COVID-19 Crisis?

We are in a new world order in the blink of an eye!

The entire world has come to a grinding halt due to the COVID-19 crisis. We are beginning to realize the magnitude of the coronavirus pandemic, and the anxiety still remains as to when it will all end. It is going to disrupt millions and probably even billions of lives across the globe.

According to an Ipsos poll, 72% said their lives had been disrupted in some way by the coronavirus. The disruption included many that affected daily routines like a canceled dinner, postponed vacation, or canceled religious service.

COVID-19 also might strip people and businesses of the cash that’s much needed for a strong economy. A tsunami of disruptions like these can bring in tremendous changes in customer behavior.

Consumers are already becoming highly aware of their needs and want. Consumers are carefully segregating their purchases as 'essential' and 'non-essential' products.

“People are scared to spend money that’s not essential,” notes Darren Williams, MD, DW Exec Consulting.

Most of the changes in behavior we see are involuntary and are to adjust to the new normal. People are not in a position to articulate these changes or predict how it will evolve.

As the COVID-19 outbreak is reaching far and wide, marketers have started to delay campaigns, cut down marketing budgets, and stop product launches.

The Marketing Week conducted a survey of 887 respondents. The survey showed that 60% of marketers are delaying or reviewing their marketing budgets. Further, 55% of marketers have already delayed campaigns and have taken a decision to pause new product or service launches.

This is a logical move considering the changes that happened in the market and the outlook for the coming months. Further, in the light of changing consumer behavior, businesses and brands strongly feel the need to revamp their marketing campaigns and strategies.

The new strategies would be focussed on conserving resources while doing the right things to be on top of customers' minds. This is the time to be compassionate, and at the same time, understand how customer sentiments and needs are evolving.

The Chief Marketing Managers (CMO) Are Faced With New Challenges

While more than half of the marketers are delaying their campaigns and product launches, companies are left with uncertainty. They are afraid to make long term strategies based on short term data.

So in such an uncertain situation, is it really worth doing market research? Should the marketers just hit the pause button on all market research? Moreover, how much confidence can we have on the data gathered during such a crisis?

Marketing managers have a lot of questions with possibly no one to guide them or provide answers:

• How can we identify the changing patterns of consumer buying behavior?
• Will consumers shift for a different brand?
• Will the price of the product play a great role in consumer buying?
• What kind of innovation is required in marketing campaigns so that it can align with the changed consumer behavior?
• How is it possible to identify new buying behavior?

These are just a handful of questions, but a lot more is swirling in the minds of the marketing managers.

Further, since there are travel bans, isolation orders, and risk of infection, in-person qualitative research is almost absent.

This Is The Time To Observe And Learn

This global crisis is opening new opportunities for Chief Marketing Officers (CMO), Marketing Strategy Heads, and Brand Strategy Managers. The crisis is pushing marketing leads to embrace new ways of working, explore new methodologies, and to develop new solutions.

“Listening is hearing the needs of the customer, understanding those needs, and making sure the company recognizes the opportunity they present.” - @FrankEliason, Consultant & Customer experience leader. Previously he was the Head of Customer Experience at Zeno Group and Global Director, Client Experience Team at Citibank.

Market research, during a time when there is no other guiding force, is emerging strongly as a solution for marketing managers. Analyzing consumer buying patterns during this COVID crisis will present critical consumer insights to brands and businesses for designing their marketing strategies. The reality is that understanding consumer buying behavior now is going to determine how your business will fare during the next few years.

When in distress, brands should start to measure the shift that is happening due to the crisis. It is during such changing times that it becomes more important to listen to your consumers and learn to understand. It is also important to keep connected to consumers.

A few businesses are feeling the heat to shut down everything and wait for it to come back to normal, whereas many brands feel the need to stay connected with their consumers to assess their changing mindset. After all, it is exactly for this reason why research should be conducted to help brands to understand and react to consumer needs and wants. 

Not only is market research going to be meaningful in the current state of this pandemic, but it is going to be even more meaningful in the aftermath of COVID. It will be the key to bring stakeholder alignment on strategies to be followed in these times when trends are unpredictable and changing rapidly.

Quelch points out that during a recession, companies need solid market research more than ever, saying, "In flush times, a rising tide of consumption can compensate for less than optimal branding, positioning, pricing or segmentation. That is certainly not the case now."

Consumption priorities are going to change during the downturn and will continue much into the future period. As priorities change due to several constraints, consumers may altogether eliminate certain purchases, substitute purchases, and swap products. Consumers tend to become price sensitive and show lesser brand loyalty during recessions. They might expect their favorite products at lesser cost or might choose less expensive alternatives.

 It's of prime importance to track how customers are reassigning budgets, reevaluating purchase priorities, and if they plan to switch brands. Hence it is essential to continue to invest in market research.

Use the market research data to understand consumer's current feelings, and keep a watch on when they return to normal. Consumer attitudes and buying behaviors will change during and after the COVID-19 crisis. There will be many long-term implications. Market research will help to understand what are the long term implications and how they will impact your brand.

The market research has evolved over the years, and we have observed that face-to-face surveys and person qualitative research have tapered significantly. But on the contrary, the digital form of research has gained steadily. 

There has been a birth of AI-based platforms that can analyze consumer data within no time. With the speed with which consumer data is accumulating, brands are exploring different methods to conduct market research. 

Great Examples Of Companies That Used Market Research To Guide Through A Downturn Or A Crisis

Walmart used market research and data-driven marketing during the great recession of 2008

During the recession, Walmart would have come across as an obvious choice for consumers. But Walmart was busy investing in data-driven marketing strategies and product development. The consumer data-driven strategies of Walmart aimed at meeting consumers where they were at that moment.

Detailed market research of consumers and their buying behavior, highlighted that consumers preferred to stick to their shopping list rather than browsing for items. Also, the recession made the consumers less brand loyal, leading them to choose alternate brands to save money. 

Another important insight from the market research showed a surge in home entertainment and personal health-related purchases. In times of recession, entertainment at home was considered cheaper by consumers rather than spending on a restaurant or a vacation.

With these market research insights, Walmart introduced "take and bake" advertising campaigns. It also released offers on home entertainment products such as DVDs and TVs.

Walmart went that extra mile to understand what their consumers valued the most during a difficult time like the recession.

No wonder economists list Walmart as a great example of a recession-proof company.

Campbell sets an example by using market research during the recession

Campbell is an American processed food and snack company. During the recession, there were a lot of things going on in the lives of consumers that were out of control.

Campbell noticed that their consumers were going through real tension relating to affordability and nutrition. Market research hinted that consumers did not want to trade off nutrition with cheaper products. Hence they found an opportunity to actually cater to this desire for affordable nutrition.

“We really took the time to talk to our consumers and understand what was important to them....and really focus those insights into design development,” says Darralyn Rieth, director of global packaging design. “That led us to what we call the joy of soup, the redesigned Campbell Soup label.”

Campbell took to redesigning their packaging by highlighting nutritional information and moving it to the front of the packaging. The brand understood that it was important to reassure customers that they made a wise decision of choosing nutrition at an affordable price. 

Awaiting A New Beginning……

“Change happens when the pain of staying the same is greater than the pain of change.” — Tony Robbins, New York Times best-selling author, business strategist, and entrepreneur.

When the COVID-19 crisis slows down, consumers will return to normal lives and start buying. But will it be the same as before? Or will it be a new buying pattern?

Many businesses might be feeling nervous about COVID-19 harming your business. The smartest thing you can do is to dominate your market by making the right decisions. Decision-making has to be made based on data and insights - and not fear!

It will become very important to measure consumer behavior repeatedly to see where things settle. When there is continuous measurement right from now, until the data starts leveling off, the final consumer data will be more believable.

We cannot afford to guesswork on consumer buying behavior. Market research will help to determine whether consumers will resume fully and go back to their favorite brands, or will they find alternatives. 

Brands that focus on consumer needs will be strongly positioned for brighter days. Companies that listen to their consumer needs will have the capability to offer the right products and communication that is better aligned with the changing needs of the new consumer segments. And for all this, there is a great need to continue to measure.

Let us gear up for the new beginning. Stay healthy, be safe.