Now that 2020’s global pandemic provides taught most of the world tips on how to live and work totally from home, marketers planning their 2021 strategy are requesting one big question:
â€śWill this uncertain time replace the way people spend money? â€ť
McKinsey — which recently polled consumers in over 48 countries about their 2020 spending habits — says, “Yes. ”
One of the biggest findings in the McKinsey study was that 75% of consumers have got changed brands at least once throughout the pandemic.
McKinsey’s research also noted four other key shifts in consumer spending behavior that could majorly effect brands in the near or even far future.
In this post, we’ll walk you through all five shifts mentioned in the McKinsey study, while giving our insights about how marketers and brands can navigate them.
How Purchasing Behaviors are Changing in 2020
1 . Brand dedication is being tested.
At the beginning of the pandemic, as entire cities began to close non-essential companies, consumers raced to stores or hopped online in order to order essential products they’d need in the coming several weeks. This caused a major disruption in supply chains plus product shortages around the world.
And, even in the earliest days of the particular pandemic, consumers were spending heavy attention to how businesses handled shortages and bursts in product demand.
While some brands saw an influx of new customers that they as soon as lost to bigger rivals, other companies lost customers to because they simply couldn’t maintain a high demand.
“Over 60 per cent of global consumers have got changed shopping behavior, most of them for convenience and worth. In the US, the percentage has been 75%, ” the McKinsey study notes.
When it comes brand name shifts outside the U. Ersus., a whopping 91% of Native indian consumers and 82% of Chinese consumers say they already have changed brands at least once since the beginning of the pandemic.
Based on McKinsey, the top three reasons consumers changed their habits or brands were value, availability, and convenience.
As you can guess from the data points above, the risk of losing a client to another brand is greater than usual in 2020. Even when a product appears essential or even valuable to a prospect, they might not buy it when another brand can deliver a similar item faster.
Exactly how Brands are Navigating
At this point, some large brands are working to better align teams to ensure that products can be discovered, ordered, and delivered quickly — even in times of high demand. In the meantime, some smaller brands are making their products more available online and in-stores to prospective customers which can’t get an item quickly enough from brands they already have used in the past.
According to a post from Repsly, which included data from anonymous title brands, companies that flourished in 2020 used data and company-wide communication strategies to identify areas at risk of higher product demand around March and continued to straighten up with teams including marketing, service, and supply chain teams to ensure their shelves plus warehouses stayed stocked.
Within another recent report from McKinsey, researchers similarly anticipate that successful high-demand brand names will develop an integrated approach between their supply teams, sales, and marketing departments. McKinsey also discourages brands from raising prices in times of popular and focusing on other vital business and customer encounter strategies instead.
“Operational concerns may be even more important than pricing strategy, including backing the supply chain, maintaining products on the shelves, dealing with customersâ€™ urgent needs, and maintaining quality, ” the particular McKinsey report explains.
2 . Consumers aren’t rushing to seize their wallets.
Before the outbreak, Gen Z was the main age group that prioritized important products over other buys. Meanwhile, other generations were more likely to splurge on products based on their brand name or even non-essential perks.
But , right after business closures and economic uncertainty related to the pandemic, consumers in all generations are usually reconsidering spending habits.
Even as cities, businesses, and places of work slowly reopen, shoppers intend to stay cautious about their budgets.
In the U. S. only, 40% of consumers say they’ll continue to be mindful of where they spend money, while 31% plan to buy less expensive variations of items to save money. And, whenever they make those buys, 21% of consumers aim to do more brand and product research than they had with regard to pre-pandemic purchases.
Just how Brands are Navigating
Whilst consumers might have made buys with motives related to fun, entertainment, brand name, or some other perks before the pandemic, most are now more budget-conscious than ever.
For the most part, consumers are primarily zoning in on essential product purchases. And, if somebody does buy a less essential product, such as an item that will entertains them, they’ll perform thorough research to ensure they’re getting the best value for their money.
At this point, many essential plus non-essential product companies have got caught on to consumer budget concerns and have begun in order to leverage online marketing strategies to ensure that consumers can discover goods, learn about their value, plus determine that they’re worth purchasing.
Particularly, companies that market essential products have created campaigns, advertisements, and messages reminding consumers of how important the items are. Meanwhile, businesses that sell less important items are getting creative to distinguish new value propositions for his or her products or brands.
For example , in the ad below, Procter & Gamble acknowledges the COVID-19 crisis, explains just how it will be donating products in order to families and philanthropies in need, emphasizes the importance of their own household and health items, and reminds viewers showing how its brand has helped consumers disinfect their homes for generations:
The particular P& G ad is effective because it highlights that the brand name offers affordable and obtainable products that people trust with regard to cleanliness, shows how the organization is actively aiming to help people impacted by the pandemic, plus reminds audiences of how important its products are to global households.
In another example, Ice Breakers, a great company that sells products that might be considered less important, made an ad in order to highlight how eating mints before you put on a face mask can prevent smelling your breath.
While the P& G campaign acknowledges the reason why its brand’s products are essential to people around the globe, the Ice Breakers ad cleverly places new value into a non-essential mint product that people may not be rushing out to buy at the moment.
3. Shoppers need ecommerce.
McKinsey notes that “most [product] types have seen more than 10 percent growth in their online customer base during the pandemic. ”
Additionally , across most product categories, at least 30% of U. S. and U. Nited kingdom. consumers expect to make much more online purchases after the outbreak.
How Brands are Navigating
While many bigger brands are amping up their e-commerce strategies, a few prominent tech giants have begun to provide solutions that can help smaller or medium-sized brands, such as boutiques, retailers, or restaurants, produce revenue online.
For example , Facebook recently launched a tool known as Facebook Shops, which enables any company with a Facebook or even Instagram Business page to create a mini-online store that links with all platforms owned from the social media brand. Meanwhile, meal delivery apps like DoorDash temporarily reduced commissions associated with local restaurant orders so individuals business owners could sell foods virtually while earning fee-free revenue for each order.
four. Health plays a role in purchasing decisions.
With the pandemic impacting a large number of Americans, people began to consider their health and safety more than ever prior to — even when purchasing products.
In the past, health-conscious consumers may have glanced at back labeling of various products, the interest within health and safety has gotten even deeper. Now, they might request, “What’s the packaging procedure for these products? “, “Are the cashiers in the grocery store given PPE? “, or even “How are businesses positively preventing the spread of germs? ”
While safety and health of consumers and brand employees might not be the biggest purchasing motivator, it’s one people are thinking about much more in 2020.
Ultimately, when big or smaller businesses take action to show that they sincerely care about people, consumers might identify with, trust, and value them more.
How Brands are Navigating
Although it might sound easy to buy a good ad spot with a commercial that simply says, “Our brand cares about you, ” this approach might not convince your audiences that the message is authentic.
Many of the brand names that are thriving in this time demonstrate how they care, rather than just saying it.
For example , as global mask disadvantages occurred in the early days of the pandemic, fashion companies like Louis Vuitton and Burberry diverted clothing production to make encounter coverings.
Aside from creating PPE, other companies have donated in order to causes related to the pandemic or taking extra steps to keep their customers and staff safe.
Target, which is considered an essential business, has been publishing online content about how exactly the company’s aiming to help clients, employees, and communities at this time.
Rather than centering its YouTube page around content that will highlights products, sales, plus deals, Target features a playlist aimed to help shoppers and communities during COVID-19.
Together with health and safety tips related to buying, videos on the playlist clarify how Target is trying to create safe in-store encounters and smooth online shopping options for customers.
Aside from creating videos on how the chain is aiming to help customers navigate COVID-19, the brand has also created a $10 million pandemic comfort fund which dedicates $1,000,000 to assisting Target workers. This demonstrates that Focus on is taking action to assist its community, customers, and employees who work in important in-store roles.
5. Shoppers have become homebodies.
According to the study, 70% of consumers don’t wish to resume activities or work outside of their homes just yet, despite pushes to reopen the economy. If they will not likely leave home to work, travel, or dine out, McKinsey information that many won’t leave home to shop either.
When looking into the near future, “More than 3 away from 4 [consumers] who adjusted their actions due to the pandemic said that reducing government restrictions will not alter their cautious behaviors. People are following guidance from medical experts for reassurance, ” records McKinsey.
How Brands are Navigating
Brands can’t simply assume that people will group back to stores as businesses reopen. While some consumers might not feel comfortable or safe leaving behind the house immediately after a pandemic, others won’t want to store in physical stores simply because they know they can buy nearly every product they want online.
At this time, successful brands are trying to still meet customers where they may be, even if they don’t leave the house.
While some brands are building out online stores and digital solutions, others that don’t sell a physical product are launching online events or even virtual experiences to gain awareness, continue to generate revenue, and delight their customers.
One example of a brand that produced an in-person experience into a virtual offering was an animal sanctuary called Sweet Plantation. When the California-based farm, which runs on donation revenue, closed to the public amongst the pandemic, its owners created a virtual offering where businesses or individuals could pay $65 to $750 for a farm animal in order to guest star in their digital hang out or meeting.
The particular campaign was cleverly titled, “Goat-2-Meeting, ” a perform on GoToMeeting — a popular video meeting software.
According to Sweet Farm, the campaign, which started in March, was so successful that there was a waitlist for animal meet and greets by April, Nice Farm has also partnered with additional sanctuaries to increase meeting accessibility and share donation revenue along with other organizations that care for animals.
How Marketers Can Get around 2021 — and Outside of
This year, marketers and companies were tested by the worldwide pandemic and economic surroundings. As you consider what’s next for your brand, keep these consumer behavior trends in mind:
Consumers crave value plus availability.
More than ever, consumers may choose to shop from a organization because of product value and availability, rather than brand dedication. Business owners who’ve relied upon loyalty and credibility to create sales should also monitor their own supply chain and pricing to ensure that their products are worth the price and accessible in order to customers. Meanwhile, lesser-known manufacturers can use a competitive evaluation or other tactics to learn where they can help individuals who are struggling to find affordable or high-demand products.
Digital change is key.
Brands can no longer presume a billboard or foot traffic will generate vital revenue. At this point, many businesses that were once mostly actual physical are building online stores, using different online channels with regard to marketing, and thinking outside of the box to create virtual offerings that will delight and preserve customers.
“Human” brands may reap benefits.
In 2020, customers began to care read more about how businesses treated workers, how they kept customers safe, and how companies stepped as much as help others in times of doubt. Ultimately, brands with frontrunners who genuinely care about individuals will get better reviews, word of mouth marketing, and positive awareness compared to brands that throw extreme caution to the wind.
Looking to find out more about how businesses are evolving in 2020? Below you’ll find content from HubSpot’s Adapt 2020 series:
- Adapt 2020: An Academic Series
- 5 Ways Go-to-Market Strategies Will Change in the Post-Pandemic Economy
- 4 Pivots Companies are Making in Light of COVID-19 [New Data]