This last week of dealing with Covid-19 has seen a decided shift in thinking towards at least planning for what to do in slowly opening up our economy. While government response has varied globally, and also regionally with local conditions, there seems to be some acceptance of the necessary trade off needed to minimize both economic damage and serious health threat.
We’re still very much in the response phase where normal life activities are curtailed and concerns stem from addressing basic human needs, health and safety. Consumer behavior and routines around these activities will eventually dissipate after the crisis, although some patterns may well persevere, as I address below.
Understand that there’s actually TWO other sides of our new normal to envision:
- The far other side – when there is no virus threat and the economy is stable and thriving
- The messy in between side – while we struggle to open and get the economy running while still under limited threat, and an economy likely to be in recession
There are 5 areas of change worth considering now, to be able to plan for both of these scenarios.
1. Changes to consumer behavior
It will be worth consider how your existing target consumer may have changed as a result of the pandemic. This might involve changes in behavior, habits, needs and values. Question to consider:
- How have shopping patterns changed? (time, frequency, availability of substitutes while you were closed)
- Will there be pent up demand?
- What new habits have they picked up which could impact your business? Have their channels of access changed? (home delivery, online shopping, new entertainment options, cooking at home, fitness routines, sanitizing)
- Is there a new target group who is now buying from you? Consumers who discovered you or switched? How are they different, and what changes might you need to make permanently in order to maintain them? (think products, services, pricing, promotion, distribution)
- What behavior changes made, such as working from home, or new innovations that may appear, both altering habits, will become permanent at least in some form? Any how will those changes impact your business?
I’ve also talked in past posts about how Maslow’s Hierarchy of needs plays into all of this for consumers. Right now consumers have been forced to the bottom two areas of the hierarchy – physiological (water, food, shelter, sleep) and safety needs (security, employment, health). As we come out of this, their needs will shift up to the middle, an area highly impacted by isolation, which is love & belonging (friends, family, sense of connection). Brands who traditionally marketed to self-esteem and self-actualization, at the top of the hierarchy, will need to switch their messaging to the middle or lower, as we evolve out of the crisis. An example is travel & hospitality – make messaging about safety, and then connecting with friends and family, emphasizing who you travel WITH or who you travel TO SEE. There’s apt to be less emphasis on the destination exclusively.
2. Changes to competitor environment
We’re still very early on in this crisis. The economic hit has started, but the real impact has yet to land, and once it does the bitter reality is there is a strong likelihood of high unemployment, many businesses not surviving, and others being acquired, or mergers taking place. The competitive landscape will change dramatically over the coming 1-2 years, and with it, competitive positioning will also be altered and challenged. These changes will impact back on consumer behaviors as previous options are no longer available, or have been limited (restaurants, bars, entertainment venues, festivals, fitness centers, tour operators, airlines etc.). Honestly, it hurts me to even list those categories because I dearly don’t want it to happen. The economic hit to consumers, combined with residual fears, will both collectively impact demand in many areas – and it’s the flattening of that demand which will challenge the ability for some businesses to remain viable. That will be at the heart of changes to competition. Some questions to consider:
- What changes might be needed to your products or services due to changed competition?
- What changes might be needed to your pricing structure? (considering both your competitive environment as well as any changes to target customers)
- What changes might be needed in your promotions? If your competitors have changed, and possibly your target audience, how might your messaging need to change? What images, words and context will work best now? If your audience has shifted, due to competitive changes, what media vehicles make the most sense? Have media consumption patterns shifted? Should this cause you to reconsider where your messages should be?
3. Changes to regulatory and legal environment
It goes without saying that the new normal will have many new regulations in place related to health and safety. But there might also be regulatory changes made due to competition (eg: airlines). Regulations around trade, borders, and competition are likely. This could impact importing/exporting, demand, and tariffs. We could also see legal changes around insurance, requirements, and impacts on availability of goods and pricing. Questions to ask:
- What new health requirements will I need to meet? What are the implications in terms of business design to do that? How will it impact my ability to deliver my product or service? How will they impact our volume of business? What costs will be associated with making these changes (materials, staffing), and how will that impact my business viability overall? Will I need to make changes to my cost structure?
- What insurance or legal concerns will I need to address now?
4. Relevance of core competencies
While many companies have had to evaluate their core competencies for what is relevant to consumers “right now”, and make changes in the immediate response phase, as we move towards some sense of normal, needs will have shifted. The big question will be, will your core competency still be relevant?
For example, if your business produces live events, will changes made for delivering entertainment, or virtual events during the pandemic, have a lasting impact? If you are a university who delivers primarily face to face education, but has been forced to modify to online, will you be relevant and in demand for your traditional core delivery? Or will you now be competing with others who do online or perhaps a hybrid better?
5. Consumer economic psychology
When the economy is doing well we feel richer, regardless of the actual amount of money in our bank account. When the economy tanks, even if employed, psychology kicks in. We hold back, we question purchases, and we worry about the future more. The longer the pandemic drags on, and the longer the economic impact lasts, the more likely a flat recovery becomes. This is one curve we really don’t want to flatten, but we may have no choice. Consumer and government debt levels will be at an all-time high coming out of this. Question to consider:
- What do I need to do now in terms of cost structure to plan for slow demand over the next 1-2 years? What is the likelihood of certain economic scenarios? Hope for the best, recognize the worst, and plan for the middle.
- What will demand in my industry look like during a recession?
I certainly don’t have all the answers, but hopefully some of these questions will help point you in the right direction. As governments struggle to strike the right balance in opening up, the stress for individuals and business will be high. We’ve never been through this kind of global economic shut down before. There are no models. The only thing we can do is try to strategically see far enough ahead to plan various options.
If you enjoyed this insight, you might find these articles published previously useful as well:
If you enjoyed these insights, why not subscribe to my weekly Five-Minute Marketing Enewsletter Tips? It arrives fresh every Sunday morning, and has been forever free since 2008.
And if you want to be the first to see videos when they’re published that support my weekly insights, be sure to subscribe to my YOUTUBE CHANNEL.