The recession, or the threat of a recession, is close to the minds of business and consumers alike, especially in the context of the pandemic that has just happened, where the world was caught unaware.
They did not have enough liquidity, or enough to get through a pandemic and were left scrambling to rally their resources to manage through the crucial and protracted pandemic period.
Fresh from that, consumers are being a lot more cautious in their spending.
They are being choiceful of what is it that they can spend on, and how they can further their own goals while also protecting what they have as well.
During the pandemic, we saw that the gap between the haves and the have-nots have changed and widened quite a bit. People are now more into wealth protection versus investing, especially when they don't know what the future outlook looks like. So, they are making sure that their choices reflect their goals, reflect their learnings from the pandemic, and what exactly they want going forward for their lives.
Yet, there are some things that you cannot avoid spending on, like essential groceries, the three basic needs of food, clothing and shelter, and these days, even your digital products, which have become one way that people connect to the world.
Balancing the need for quality with value
Beyond that, people are making choices in light of what they want to do. We are now experiencing a preparedness mindset because consumers know that times will get hard, not just in the immediate context of recession, but as the world changes globally.
You do find some spaces for personal indulgence, or as I would call it, impulsive indulgence. As consumers are being more controlled and rational in their decision-making, making sure that they are making choices that are the best for themselves, and for their future, there will be occasions where consumers decide that they need that occasional impulsive indulgence to spoil themselves or to make them feel better about the choices that they have made.
We are seeing consumers shift from name brands in terms of essential groceries to more grocery store brands. Yet, they quality is one thing that they refuse to compromise on. Therefore, brands must now balance that need for quality and value to take consumers to a level where they are making choices around what really matters and driving value right beyond the price.
Maintaining emotional attachment and avoiding become a functional transaction
Brands are a big driver of loyalty, and quality is one of the big reasons why brands exist. A brand means something in the person's mind. It has an emotional attachment, it has as a quality implication. There is typically an expectation of value that comes with the brand.
However, as we head into a recessionary scenario, we find that there is now a lesser brand loyalty because as costs go up consumer demands are getting higher. So, as brands build into these higher demand, there needs to be more diversification where more products are created to suit the consumers. Consumers are making choices for which brand and which product is the right one for them and fits their needs.
As expectations go up and consumers get more demanding, they also talk to other consumers and there is a community that they build around their needs and wants. Brands that are able to deliver that value, even in these tougher demands and higher expectation scenarios, are the ones that will really keep value.
It is really important to deliver because consumers tend to shift their relationships with brands and the product they use during a recession. The most important thing for a brand to battle this period is to actually make sure that they do not get downgraded from being an emotional attachment into a functional transaction. This is crucial because how much ever consumers say that they are deciding rationally, they are still human beings with emotional mindsets and they do choose with their hearts as well.
It is a relationship
Like all relationships, communication is very important. Marketers have to keep talking to their consumers, especially the ones that they want to maintain and build a relationship with.
They can choose when, where and which moment is the right one to communicate, but they should not completely go cold from the spaces in which they have been present with consumers. This will imply to the consumer that the marketer is no longer interested in that relationship.
As they do that, marketers also have to make sure that they have a role in the consumer’s life and the creative option to create new value for the customer. That is just as important as having that communication, because that's what you're communicating about.
Beyond that, it is important to make sure that you're empowering the consumers with choices. Choices that make them feel better about their lives, closer to the goals that they set for themselves, and make them want to achieve more, or move closer to the ideals that they set for themselves.
The way they do this is not just with brands, but also with the community that they surround themselves. Loyalty is important and driven by community. So how can marketers empower communities? How can they create tribes around the products where consumers talk to each other and celebrate their relationship with the brand? Because that's how they can grow a lot more brand value, by pulling consumers towards them, versus pushing communications out that simply tells people what to do.