How the shift in purchase behaviour calls for an overhaul in branding

As consumers make the slow march to normalcy, brands will be forced to rethink their category presence, purpose, and pricing strategies

Optimistic, but frugal could well be the cross-generational tag line that brands use to categorise consumers in the post-lockdown marketplace. A report by EY (Covid-19 and emergence of a new consumer products landscape in India) indicates that the lockdown has led to dramatic shifts in consumer behaviour and this calls for an overhaul in the way brands are priced, positioned and targeted.

“Considering the socio-economic impact of the pandemic, we believe that changing consumer behaviour will leave lasting impressions on category dynamics,” the EY report said. What was considered to be discretionary or volitional spending before the pandemic may well become an essential good in perpetuity, think liquid hand wash, hand sanitisers, lifestyle appliances such as vacuum cleaners and such other products. Some discretionary spending may disappear altogether as budgets expand for hygiene and safety products (the report noted that 55 per cent of consumers intend to increase spending on the two categories hereon). 

Purchase behaviour is being churned too; 60 per cent of Indian consumers believe the way they shop will change forever. All of this will change the category-price-value dynamics that brands have traditionally used to model their marketplace behaviour. If consumers are reworking the monthly budgets, brands realign their category priorities, just to stay in the game. 

The report identifies three phases that brands must plan for. It also breaks down consumer behaviour into four distinct emergent patterns. The three phases for brands are Now (immediate response), Next (reboot and react) and Beyond (adapt to the new world). The four grids for consumer behaviour are: ‘Hibernate and spend’ (concerned about the pandemic but also best positioned to deal with it), ‘Cut deep’ (pessimistic about the future and are spending less across all categories), ‘Save and stockpile’ (worried about their families, less optimistic about the future and have been stockpiling essentials), ‘Stay calm, carry on (relatively, a very small segment who are expected to resume their old shopping behaviours). These behavioural patterns are expected to morph into five different classes of shoppers, as the pandemic subsides, the report said.

 

Pinakiranjan Mishra, partner and national leader, Consumer Products and Retail, EY India explains that the key trend from the EY Future Consumer Index survey (based on a survey of 1,046 Indian consumers, mostly in urban areas, covering their current behaviour, sentiment and intent) is that close to 50 per cent of the consumers are optimistic about the future, which translates into shoppers saying they expect to be back with a bang (38 per cent) and be cautiously extravagant (11 per cent). But consumers in the “Cut deep” group (35 per cent) will either “stay frugal” (29 per cent) or “keep cutting” (19 per cent) their expenditure on all categories except groceries. Researchers say that brands must run a qualitative analysis of the trends, more than just crunch numbers. A report by Google, released late last month, noted that while deciphering what people really want has always been a tough undertaking for marketers, they are now faced with the added challenge of understanding the transient nature of today’s consumer. 

Mishra believes that consumers are looking for brands that they can trust to be safe, reliable and available and at the same time, do not cost much. The frugality of the customer must be factored into all the three phases (now, next and beyond) of a brand’s response to the pandemic. He advocates scenario modelling to plan different response strategies, a Covid-19 checklist to monitor implementation and sustained analytics to uncover potential risks and timely management of disruptions. From a finance perspective, he added, consumer products companies must make provisions to extend financial support to its channel partners. 

For example the credit lines extended by ITC, HUL and Cargill to kirana stores. “From an operations perspective, the immediate focus is to keep the supply chain operational, including adjusting production as per demand fluctuations and channel partnerships for last-mile delivery. For example, HUL shifted to larger order sizes and direct shipping from factories and Marico launched ‘Saffola Store’ on food delivery platforms Swiggy and Zomato,” Mishra said.