Dr. Rajesh Bhargave
It’s no surprise that consumers have changed their habits since the onset of coronavirus, but what does this mean in the long-term?
In the past month, online search volume for holiday destinations has plummeted – so has digital ad revenue. Consumers are spending more on board games, yeast, and home office furniture. They are also buying more business shirts but fewer trousers (tip: pyjama bottoms are unseen in Zoom calls). These show the change in the consumer behaviour. There is also an overall reduction of consumption, resulting in economic downfall. Undoubtedly it is a source of stress for the service providers. Financial crunch, losses, doubts and uncertainties about the future – all of them add to it. Stress may culminate into anxiety affecting the mental health. If a person has anxiety and bleak view of future severe enough to hamper their functionality, it becomes all the more difficult to take control of self and think rationally about the future course of action. That creates a vicious cycle leading to further worsening of the economy and mental health.
After these short-term spikes, dips, and peculiarities, what will be the long-term effects of the coronavirus (COVID-19) pandemic on consumer behaviour? Managers are looking ahead with great anxiety, bracing for steep falls in demand, while also seeking new opportunities in a transformed marketplace. Understanding the future consumer behaviour and its probable trend can help them strategize how to redirect the resources and can instill hope in them. Even a tiny bit of hope works wonders for people to function to their fullest capacity. The stress, anxiety may take a backfoot and give way to planning for improvement.
Here, I explain three principles of consumer behaviour that can guide them on what happens next;
1. Consumer exploration
Normally, consumers are fairly set in their ways, purchasing the same items using the same channels every year. The status quo exerts a certain gravitational pull, limiting how often consumers try different brands, technologies, and even financial investments.
However, at pivotal moments, such as a graduation or relocation and milestone birthdays, consumers tend to explore, adapt and re-examine their habits. For many, the pandemic is proving to be one of these junctures.
This unlocking of consumer experimentation is likely to add rocket fuel to existing market trends. Contactless or mobile payments (vs. cash) and online shopping (vs. high street) were previously halted to some extent by sheer inertia. Many consumers who are now purchasing more groceries online out of necessity will discover the benefits and make the switch permanently, meaning the online share will rise over and above trend lines.
2. Choices and values
“Your habits become your values” – this insight, spoken by Mahatma Gandhi among others, applies not only to political actions, but also to consumer choices. In marketing, social change has been both a top-down and bottom-up effort, through brand and consumer activism, respectively. For instance, brands display their “green” credentials in adverts, whereas consumers do so through boycotts and grassroots movements.
While both these direct approaches can instil values and ultimately alter consumer behaviour, the causal arrow often points the other way. That is, as consumers take on habits, they form values that align with their emerging behaviours.
Consumers tend to remember what they paid before and would view price increases as unjust in poor economic conditions.
Frequent air travellers might be shy to espouse values of sustainability, given their contribution to fossil fuel consumption. Yet, when they fly less often, as is likely post-coronavirus, they might be more inclined to identify as environmentally friendly. As a result, some consumers will adopt values of simplicity, sustainability, and less materialism in FMCG (fast-moving consumer goods) and fashion, as an oblique effect of restraint in other sectors. On a more pessimistic note, the strife and competition typical during a recession can also lead to a decline in prosocial values.
3. “Sticky” prices
The pandemic is disrupting supply chains, forcing some businesses into administration, and rattling foreign exchange markets.
These effects, along with demand-side shocks, make future prices hazy. Yet, managers should be wary of depending on pricing alone to stimulate demand or to return a business to profitability.
Prices are “sticky” – consumers tend to remember what they paid before and would view price increases as unjust in poor economic conditions.
Meanwhile, cutting prices after the pandemic would also be short-sighted, eroding pricing power. Managers would be better off adjusting prices only to align with changes to their target markets and product positioning.
How are these points related to mental health of the providers?
Well, they will act as materials which knowledge and anticipation can be based upon. In mental health discussion, we often talk about defense mechanisms. Anticipation is a mature defense, acting in the underlying unconscious part of the mind, helping a person expect a certain scenario and thus preparing him/ her for it. If we anticipate an unfavourable outcome, we can strengthen ourselves with appropriate coping strategies, look for more favourable alternatives and very importantly, do not lose our hearts when the actual event occurs. That makes a person more focused on trying till he/ she attains the goal. Proper knowledge and information are the keys for a successful anticipation.
Other keys to the development of a fruitful plan are:
1. Setting realistic goals.
2. Hopeful pursuit of the goal.
3. Taking care of the smallest details as well as the broad aspects while planning.
4. Armouring oneself with problem solving strategies while working on the plan.
5. Empathic understanding of the consumer behaviour.
6. Using the understanding in shaping their work in an ethical and constructive way.
There may still be stress, anxiety and apprehensions about the economic future. There are relaxation techniques, stress management strategies, self-monitoring and correction as required, positive reappraisal techniques which can come to help. In case if there a change in the mental state continuously taking a toll on the productivity, help is always available.
So, know yourself! Know your consumers! Plan intelligently. Take care of others’ needs along with yours. Stay healthy. Seek help when things are beyond your control. Stay safe!
Dr. Rajesh Bhargave is Associate Professor of Marketing at Imperial College Business School London. His research and teaching specialises in the area of consumer behaviour.