Marketing for growth in the next normal
The ‘new normal’ signified some substantial shifts in social changes, brought on by the COVID-19 pandemic. Consumer behaviour changed rapidly and in response, brands had to move equally quickly to keep up. Some of the shifts in consumer behaviour are expected to remain, such as the migration to online and the switching of brands at unprecedented rates, whilst others will likely continue to evolve.
Anticipating consumer behaviour is difficult, and we have seen recently that predicting changes accurately is challenging. For example, it would have been difficult for even the most sophisticated of models to predict that baking bread would become a top pastime for millennials during lockdowns, to the extent that purchases of flour surged by 160% year-over-year. Within a quickly evolving situation, consumer behaviour is not set in stone. Brands must be prepared to understand shifting trends and agile enough to modify their approach in line with, and at the speed of, changing consumer behaviours.
A change of fortune for brands and the supply chains to meet it
While some brands experienced unfortunate losses and challenges due to the impact of COVID-19, some were able to deliver on consumer needs arising in the moment. Prior to the pandemic, consumer packaged goods (CPG) brands were already considering moving away from centre-of-store products to more niche, bespoke consumer offerings. The pandemic led to more cooking at home, which became a boon for large CPG companies. Winning brands quickly tailored their offerings towards grocery, meal-pack or gifting delivery services which facilitated cooking at home.
With trends such as pet ownership and crafting activities also on the rise during the pandemic, companies in these sectors, which had previously struggled to raise brand awareness and capture market share, suddenly experienced significant consumer interest. Increased demand for their products led both to a demand for new supply chains, as well as increased demand on existing ones. While many consumer brands catering to new pandemic trends were able to quickly ramp up supply chains to meet consumer demand, they’ve also had to invest and plan quickly. Changing regulations and the easing up of stay-at-home orders again impacted buying behaviours, showing that demand can both rapidly increase and decrease, making responsiveness in planning and supply chain flexibility a winning attribute.
Some pandemic-driven consumer trends and behaviours (such as pet ownership, for example), are likely to stay for the long-term, but others may not have the same permanence. Applying consumer intelligence can be helpful, as in both examples, supply chains need to be adjusted to meet changing consumer demand over time. That means brands must prepare for potential drop-offs in some areas of demand, and pivot their offering to meet different, new needs. Brands which can look strategically forward and nimbly manoeuvre will have better long-term outcomes than those that can’t flexibly and realistically plan.
The role of purpose-driven marketing
Prior to the COVID-19 pandemic, smaller, niche brands often successfully challenged larger, more established brands. Based on building trust amongst consumers and trading on their values, smaller brands were able to impress consumers to win market share. However, when the pandemic started, we saw large market players winning market share due to product availability and the reliability of big-brand pricing and promise.
A similar importance is placed on values. 33 percent of millennial and Gen Z consumers say they choose to buy a product from a company that shares their values. However, alignment with a consumer’s values may put a product in the consideration set but may not drive it over the line to purchase. Product superiority, whether that’s taste superiority, functional superiority, or a price-to-value equation, remains important.
Brands’ ability to pivot plays a role in purpose as well. Some of those which were willing to quickly pivot to support social causes during the pandemic both created a positive impact and, in many cases, gained market share. For example, as the severity of the pandemic became clear, household cleaning product companies or alcohol manufacturers were able to quickly shift their assembly lines into producing hand sanitizer. Doing so not only delivered against a real market need, but also showed that these brands cared about a greater societal purpose. By showing consumers that they cared about global safety and wanted to be part of the solution, some companies were able to earn affinity amongst shoppers looking to put their money towards ethical brands that they felt they could trust.
Expecting the unexpected
Rather than expecting consumers to settle into a well-defined ‘new normal’, brands should consider preparing for an evolution of buyer needs and behaviours. Consumers don’t always know what they want, and they can’t predict how their behaviour will change. So traditional consumer research — which asks consumers how likely they are to purchase something — is becoming less relevant than actual data in the market. That’s why applying advanced analytics to understand and see trends can be so valuable. Companies that deliver data-driven marketing at scale can increase net sales value by 3 to 5 percent and marketing efficiency by 10 to 20 percent.
Behaviours have changed in the past 18 months, but old behaviours may bounce back. The brands that get ahead will likely be those who are savvy about navigating change and listen to customers whilst embedding flexibility into their plans. They will seek to strike the right balance between creativity and data, and between performance-driven marketing and traditional brand building.