The market is entering a historic anomaly: employment is high and on the rise as many countries start to recover from the pandemic years. But booming inflation and supply chain shortages are causing record-low and decreasing consumer confidence. Are we at the brink of a crisis? Will this affect your business? Regardless of the answer, you are better off keeping in touch with your consumers.
As many consumers expected life to go back to normal as most Western countries start to recover from the pandemic years in the first quarter of 2022, the war in Ukraine and Covid-19 induced supply chain shortages seem to have stolen the spotlight from the fact that the vaccine rollout and natural immunity has eased Covid-19 restrictions and reopened many countries to business and tourism.
This means GDP rates and employment levels are rising and traditionally those would be the perfect combination to enter a period of growth. But nothing in the world today is “textbook”. So reality is that OECD’s consumer confidence index hit a record-low of 97.3 in April, a level similar to the beginning of the financial crisis in 2008 and the Covid-19 pandemic in 2020.
It seems inevitable that this will affect household consumer choices, so let’s take a look at how you make the right decisions for your business.
The most important thing right now is that you base your decisions on specific insights for your market(s) and consumer segments. Depending on where your product/service is placed on a scale of necessity to amusement on one hand and your current price point on the other, consumers will evaluate their purchase decisions differently; some categories can experience significant cuts as a whole while others may maintain the amount of units sold but consumer spending will be redistributed among competing brands. We all need basic goods like eggs, gas, or a smartphone, but maybe we will choose less premium brands or move closer to the brands we feel more connected to.
The way to find out what might be true for your brand is - to keep in touch with your customers!
Many brands learned the value of quickly assessing the changes in consumer expectations when Covid-19 hit and required brands to adjust as quickly as consumers. With the current market situation brands may have more than a few days to adjust, but they may not have several months.
Thus, the task now is to ask the right questions and get the necessary insights to point your brand in the right direction.
It’s tempting to raise prices as production and logistics costs increase, but it is not your only possible move. Some brands are decreasing prices to snatch up market share while others are decreasing packaging sizes to maintain their unit prices but cover increased expenses - and others are introducing new products to the market. Some brands change neither their offer nor their pricing but tackle the market changes through branding and marketing campaigns.
However, there are two types of consumer insight studies that we currently experience an increased demand for:
Often these studies serve as a vital part of a business’ data foundation together with insights from sales data, social listening, focus groups and desk research on market developments.
Regardless of the category your brand belongs to I think it is safe to say that if you are not keeping in close contact with your customers on how they tackle market changes, your reaction risks hitting too late - and that will likely be very expensive, if not fatal, for your brand.