Marketing Dilemmas and Consumer Phases

Marketers are inundated with questions right now: Should I advertise or not? How should I optimize marketing investment? Should I invest in brand or product? When should I advertise? Which media channels should I advertise on?

The longer the global pandemic goes on with varying degrees of restrictions, the more uncertainty it creates as marketers transition to a ‘new normal’—which varies on a weekly basis.

Consumers have also been phasing gradually into the ‘new normal’.  

According to online search data, consumers are going through ‘states of need’ which can be broken down into three phases:

  1. Survival State: panic-buy pantry items, disinfecting and protecting
  2. Embracing Quarantine: in-sourcing, pimping the office and cabin fever
  3. Making the Most of the Crisis: fitness freak-outs and power nesting

Impact on Different Sectors

The repercussions of these phases will mean different things to different sectors.

Some brands are thriving on demand. Others have been heavily affected by government restrictions which have resulted in entertainment venues and store closures. There are other businesses challenged to meet demand due to changes in supply chains.  

And then, there are brands that are already well prepared for e-commerce who are at an advantage.

But we believe that most marketers can help their business by understanding business needs and sector context, asking the right questions, and guiding their decisions in the most robust manner possible.

Claudia Sestini, Global CMO hosted a fireside chat with experts Jon Webb and Matthew Chappell to get their view on Grocery, Retail, Finance, CPG and Telecommunications providing marketers with:

  • Sector overviews
  • Questions marketers should be asking
  • What marketers should do

Grocery

Key Takeaways:

  • The grocery sector is not experiencing growth, largely due to the constraints in place. Social distancing measures are having an impact on footfall into the store (e.g. lines around the block and capacity limits). There are also limits in place on purchase volumes.
  • Phases of consumers shopping in grocery:  
    • Most consumers used to do a big shop once a week.
    • In the period of pre-lock down, the frequency was as high as 9-10 trips a week.
    • Data from Google shows that footfall at grocery retailers (in the UK) is down 30% compared to this time last year.
    • Now, a lot of people are back to one shop a week, either in the grocery store or online, and they are choosing to go to the same store week after week.
  • Marketers should ask themselves:
    •  Are we trying to change people’s transaction behavior? This may not be the case during this pandemic. However, there are opportunities to change basket size and to increase loyalty.
    • When things get better, how do we ensure people stay loyal by shopping there week after week or online?
  • We also need to recognize the frontline workers staffing grocery stores, who are facing the coronavirus. What impact will this have over time?
  • What planning should marketers do for Q3, Q4 and the run-up to ‘holiday season’?
    • This may be the end of social distancing, a time when people want to host a big family Christmas.
    • One thing we are seeing now is consistent advertising from grocery and paid media. This is the right decision. This presence now and throughout the year shows you are empathizing with consumers, even when things get back to normal. Continue with media advertising, placing the right message in the right media at the right time.

Retail

Key Takeaways:

  • We are in a battle with phases in Retail. Initially, many companies were evaluating whether they would be in business at all by the time this is over.
  • Retail (non-grocery) sales as of today (April 24) are down 5%.
  • The business fundamentals haven’t changed. The demand is still there for most retail sectors if it can be reached. The services sector: sports, gyms, restaurants–that’s a different conversation altogether, because of social distancing measures at this moment.
  • What has changed is where those customers can be reached, and that’s where we should consider changing the media mix. Use the full suite of Owned, Earned and Paid. TV and video are still effective ways of reaching a great proportion of your target audience.
  • We don’t know whether this will be a ‘V’ shape recovery or whether it will be a bit more prolonged. In Germany and Spain, some restrictions will be eased. For retailers in other markets, watch how things are progressing in these countries closely.
  • Fashion is tricky. In the UK we’ve had a few known brands close down in the last few weeks.
    1. From a consumer perspective, there are segments who have always bought fashion online, but other segments prefer the brick and mortar experience. Think about the impact this will have on messaging.
  • Home improvement stores are already allowed to open as they are defined as a ‘key sector’ by the government.
    1. If you have a well-run and viable business with solid cash flow, now is not the time to stop marketing. Maintaining a presence with consumers is important.
    2. You may need to tweak your messaging, but the overall creative shouldn’t change entirely.

Finance: Retail Banking

Key Takeaways:

  • As more people move online for sales, you can’t use cash.
  • For retail banking, the spread between what a bank can charge (loans, mortgages) vs. what it can cover (savings accounts) is getting narrower and doesn’t show any sign on increasing over the next few months. That’s putting tremendous pressure on banks and making it difficult to make money at a time when costs are going to increase.
  • Governments are increasing costs for banks, allowing people to forego paying on their loans, making interest rates lower, lessening the qualifications to take out loans. Anything like this impacts costs and decreases earnings.
  • There’s a possibility that banks can change their ‘bad boys’ image from the recession and be able to alter their image to a ‘force for good’ player with things like small business loans.
  • Brand behavior now will have an impact on people’s consumer behavior in the long term.
  • On the bright side, it is less of a balance sheet issue and more of an earnings issue. There will be earnings pressure as the interest market is low and operating costs go up. But this is not an existential threat with toxic derivatives and bad debt.
  • In terms of marketing, it’s more of a holding pattern. No need to go guns blazing for high growth, which is unlikely to happen in this environment. People aren’t looking to introduce more risk in their lives by changing providers.
  • Marketers in Finance should keep a close eye on Germany, Spain, and Italy. Agility and a willingness to pivot quickly will be the keys to determining the winners.
  • There is the risk/reward of finance brands being seen as ‘heroes’ right now. A lot of banks are currently putting out commercials about protecting their customers during this time. If you can support them, this is a real opportunity to have a more heroic customer brand persona.
  • Questions to ask: Will people be wanting to consolidate their money in one bank, or will they want to find brands that are more digitally native if they cannot go to a branch? Why wouldn’t you want to go to a bank that is set up as an app run by FinTech if you’re doing all of your banking online?
  • The point of brand promise, expectations of brands, and consumer experience, etc. is really key right now.

CPG

Key Takeaways:

  • There could be a return to the products people used to always love when this is over.
  • We know that during crisis periods such as recessions, people change from branded goods to unbranded goods because for many consumers pricing will be a major consideration.
  • What we do know is that people are shopping online. DTC companies will be gaining market share online, forcing trial and repeat–not just though pricing and mechanics.
  • P&G is working out of their playbook, continuing their marketing efforts. Coca-Cola has decided to pause marketing. It will be interesting to see how these two approaches affect the major players once we have data.
  • Most of your competition is reducing investment; you could spend the same or a little more and increase share of voice.
  • If people are experiencing big life-changing moments and making key decisions, being there with the right messaging could help CPG brands gain more ground.
  • Around 70% of all CPG return purchases are made in the long run. Memory structures play in, making it easy to buy a brand when people are faced with a choice.
  • You’re not advertising for now. You’re advertising for the future and to solidify yourself as a strong brand.  

Telecommunications

Key Takeaways:

  • Consumers are starting to experience first-hand how poor internet connections are in the UK, Europe, and the U.S. vs. China.
  • We’re seeing people technically using their mobile networks of 3G, 4G data much less, and relying much more on their home broadbands and TV packages.
  • There’s a big risk and big opportunity for telecommunications companies right now as people may be looking to upgrade their networks to boost connectivity.
  • The big question for marketers is: Do we want to support and upgrade our existing customers e.g. offer free content, packages, etc.? Or are we going to aggressively pursue more of the market? There may not be the opportunity to do both.
  • There is a link between brand building and price in this acquisition phase. A case could be made for some price-led packages or extra data for a few months during this time.
  • There is still a case for maintaining a strong brand and customer relationship, otherwise this just creates a market where consumers go for the cheapest price.
  • Remain true to your brand purpose and values in your messaging. If you can grow your brand purpose and relate it to what you’re doing as a brand, that is a great opportunity.

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