Rohini is an MBA from Vlerick Business School Belgium and the founder of RV LEARNING FOUNDATION
The need for social distancing & the low purchasing power of the consumers on account of COVID 19, has changed the business paradigm. This has induced changes in the purchase preferences of consumers and in the way they shop. Some of the changes may stay forever, changing the business processes and marketing tactics forever.
The three major changes in the consumer behaviour are Changing rules of customer engagement, shift in the media consumption habits of consumers and shift from brand loyalty to value for money equation.
Changing rules of customer engagement
Customer engagement model is bound to change as the human interaction has to be minimal. There is a need for reducing the customer touch points in the physical sense and hence, there has to be a difference between the traditional sales funnel and the new sales funnel facilitated by the digital transformation of the sales process. As the above diagram indicates that the digital transformation enables consideration, Intent to buy and evaluation online compared to the traditional model whereby awareness and interest was generated through media platforms.
Social selling replaces the cold calling with the use of social media platforms. Data analytics and big data helps in customer profiling. This data can help in the customer acquisition. Here the content marketing plays a great role whereby you share content with customers and initiate conversations and subsequently look for the right moment to join the conversation and take the conversation further with the relevant content so as to build trusted relationships.
Artificial intelligence and machine learning throw up relevant information which is customised to each customer and this can help greatly in influencing the customer and generating interest. Price comparison engines and ecommerce sights allow the customer to compare brands online, evaluate products and even purchase online wherever possible. This is how digital transformation has the potential to change the sales funnel and reduce the face to face contact.
Insurance companies have already started making use of digital transformation (Ref.Business standard, Mumbai edition dated June 20, 2020), the processes starting from customer acquisition to generating awareness and later servicing is being handled through apps by companies such as ICICI prudential. Agents are also being trained on educating the customers on the use of apps.
Consumers may avoid going to stores for a long time to come hence manufacturers are trying to tie up directly with online retailers. The local grocery stores in India are now trying to become digital savvy and buying from online sellers as the supply chain fell flat. So the new habits are being born. Now local grocery stores have discovered something new which they would never have discovered otherwise. The question now is that after the lock down, will they go back to their earlier ways or would they switch to online.
Customer engagement methods can be re drawn through digital transformation. Many companies are already practicing this but post COVID, companies will not be left with any option but to bring in technology to drive the sales process. Digital transformation requires people within the organization to accept the change and alter their thinking, behaviour and to rethink existing, structures and processes.
Many brands are dependent on touch and feel of their products, with social distancing as a new variable the entire marketing strategy for the product needs to be re thought. The product positioning and what they communicate to the consumer about why they are different from the rest will completely change now. It means that the entire brand personality and hence the USP will now need re – thinking.
There will be a tremendous shift towards tech driven shopping.Virtual trial rooms through augmented realty to try outfits without actually wearing them, Queing technology for pre-booking appointments in the stores for maintaining social distance while shopping, and identifying those who are not wearing masks in public places through cameras.
Omnichannel marketing is currently being used by companies such as Starbucks, Virgin Atlantic and Disney. However post Covid this is the need of the hour as this gives customer a uniform experience across all the digital platforms may it be the apps, website or any other platform. For example if you have a starbucks wallet and you run out of money in it, you can quickly reload it either on your phone or laptop and the information reaches the billing clerk in the real time about the wallet being charged. This leverages on data from various sources for improved customer experience. It enables the customer to pick up from where they had left irrespective of the platform that they are using. This is different from being multiple channel marketing because in the latter all the media platforms may not be integrated
Brand Loyalty Versus Value for money
The Concept of premium is dwindling because consumers are holding on to the cash, saving it for future expenses. Consumers will now weigh the price value equation more closely. Therefore brands will have to be sensitive towards the voice of the consumers. The top end brands such as Tag Heur, Harley Davidson, Ralph Lauren , Orra and many others are luring customers with heavy discounts. These are the brands which resisted selling online in the normal time because it vitiated their elite image, however now they are using Omni channel marketing techniques.
According to Nielsen research, recent lock down witnessed a surge in the sale of private brands such as tasty treat and golden harvest. These brands grew at a double digit rate, around 25 – 30 % in the absence of leading national brands. The survey indicates that brand loyalty could diminish in the near future which will be replaced by right price and value equation which could help private labels expand their appeal.
Given all these changes, customer expectations are expected to change from brand loyalty to value for money. As consumers will move down on Maslow’s need hierarchy to a level where basic needs will be of utmost importance given that they would like to spend less, basis of loyalty may also change given that hygiene and social distancing will occupy an important place in the consumer’s mind. Whether it is a service such as hospitality or any of the products, this criteria will dominate the consumer’s mind.
An E & Y study says that at present consumers fall under four grids; 35 % of the consumers save & stockpile whereas 27 % have deeply cut their budgets, 11 % are hibernating and then spending and 26% are staying calm and carrying on. In future consumers are expected to fall under four categories where in 50 % consumers will optimistic, 19% will keep cutting spending, 29 % will save and 2 % will be unaffected.
Shift in Media consumption habits of consumers
Today’s ads are reflective of the most searched trends in the country. Google trends in May first week suggests that most searched words were immunity booster. Therefore brands are resonating the same values in their promotions.Delmonte products are using the tag line “Boost your immunity with each step”. Wagh Bakri tea, Horlicks are promoting immunity boosting capability of their products. Companies like Dabur are harping on Vocal for local.
However, a caution needs to be exercised. It is fine to come up with a new product line that address the new issues such as that of immunity but merely changing the current brand’s positioning without any value addition to the product may prove opportunistic.
One thing that clearly stood out during this period is that the extent of video viewing increased greatly. Right from people learning the tips of gardening to an electrician learning more about his work, given they do not possess any formal degree. So we see a shift in the consumer behaviour in terms of the the viewing time spent by the consumer. This is an input to the marketers on the basis of which they can design their marketing campaigns.
© 2020 Rohini Vaishnavi