Why consumer insights are your best weapon right now
The market is in a historic anomaly: employment is high and on the rise as many countries recover from the pandemic years. But booming inflation and supply chain shortages are causing record-low consumer confidence. Are we in a crisis? Or are we merely fearing it because some indicators behave as they would normally in the run up to recession and we make it self-fulfilling prophecy by employing a crisis behavior? Regardless of how your business is addressing the situation, you are better off keeping in touch with your consumers.
As many consumers expected life to go back to normal as most Western countries started 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.
But even through rising GDP rates and employment levels that would traditionally be the perfect combination to enter a period of growth, nothing in the world today is “textbook”. Reality is that OECD’s consumer confidence index hit a record-low of 96.5 in June 2022, a level similar to the beginning of the financial crisis in 2008 and the Covid-19 pandemic in 2020. Coupled with - or caused by - the rapid increase in inflation, consumers’ reaction was instant and brands’ need to position themselves in this new market situation likewise. And still is.
OECD key economic indicators
CCI = Consumer Confidence Index, 100 = longtime average. EMP = Employee rate %. Inflation forecast, annual growth rate %, right axis. Source: OECD
Keeping up with consumers’ reality
The most important thing for consumer brands amidst sudden and radical market changes is to react in accordance with your 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. Or towards the brands that understand to adjust their offering to the new consumer situation.
The way to find out what that is 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 have had more time than when Covid-10 hit to adjust, but most brands saw immediate reactions in their revenue numbers and, thus, the time to react was not much longer.
One year into the new situation, inflation seems to have peaked (for now) and the dust may be settling. If your brand did not spend the last 12 months investing heavily in your branding, now is the time to get in touch with how consumers evaluate you and your products in their new, adjusted spending habits. Thus, the task now is to ask the right questions and get the necessary insights to point your brand in the right direction.
What is the right tactic when inflation is high?
It is 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 (shrinkflation) to maintain their unit prices but cover increased expenses - and others are introducing new products to the market or adjusted packaging. Some brands change neither their offer nor their pricing but tackle the market changes through branding and marketing campaigns.
Two types of consumer insight studies make up the quantitative consumer insights foundation to assess what is right for your brand:
Market assessment studies to evaluate offerings and opportunities
Pricing studies to determine price elasticity and price sensitivity
Often these studies serve as a vital part of a business’ data foundation together with consumer insights from sales data, social listening, focus groups, and desk research on market developments. Regardless of the category your brand belongs to, it is safe to say that if you are not listening closely to your customers on how they tackle these market changes it will be very expensive, if not fatal, for your brand.
Explore what difference swift consumer insights made for Lantmännen
“The Covid-19 pandemic and nationwide lockdown in the UK, significantly impacted the shopping behaviour of many consumers, for whom a fresh, sweet pastry was a habit. We wanted to quickly identify the attitude towards purchasing of such pastries and draw comparisons between the pre-, during- and post-lockdown times. Thanks to Opeepl’s agility in setting up and launching the survey, not only did we receive the results within a few hours but we were also able to make informed recommendations to our retail partners.”
Paulina Gorska
Marketing Manager
