“Congratulations! I heard you have received a 10% hike in your salary. What are you planning to buy with it?”-If this question were put to me about 2 years ago, I would have said,” Thanks mate. I will watch this year’s IPL on my latest LCD television that I am planning to buy. “Now, when we are recovering from the dreaded recession, which crippled the financial systems across the countries all over the world, my answer to the same question would be,” Thanks mate. I’ve got this hike after a very long time and I am not going to part with it so fast.”
The severity of the recession has brought about a sea change in consumer values, spending habits and lifestyle choices in customers like me and many others. What would happen to the different market segments that marketers have all along based their marketing efforts upon? Will there be a drastic change in the needs and wants of the customers? What about their buying behavior? Let us try and explore the possibilities and challenges for businesses and marketers in a post recession world.
While the effect of the recession might be receding, customers worldwide may still hold on to their thrifty habits, according to a study by Nielsen on consumers post recession. The study goes on to state that customers who cut back on new clothes, out of home entertainment and take away meals and switched to cheaper local brands may stick to the same habits even after the recession is long gone. However there is a silver lining to this otherwise dark cloud. These recessionary habits are not the same in all parts of the world. Consumers in the US and Europe are the hardest hit by the recession, and are most determined to cling on to future cost saving measures in the post recession world. But the consumers in the BRIC markets on the other hand are looking forward to putting the recessionary behaviors behind them and return to their spending patterns with the Chinese, Russians and Indians leading the way.
Consumers, especially in the west are realizing that sustainability, recycling, organic food, bottled water and global environment as a whole are related to the actions they choose today. Organic food, for example may prove to be among the first victims in the post recession world with consumers who already had stopped using them for economic reasons might question the need of using them now, especially with the ongoing controversial debate on the real goodness of organic products and the waste that is created by the plastic water bottles.
Challenges facing the Marketers in a Post-Recession World
How do you convince the customers to switch back to their ‘old’ brands they used before the recession? This seems to be the question, marketers around the world are asking. The difficult part is that the customers, who were satisfied with the low cost options they chose during the recession, might continue using the same as they might not see the need for spending more on popular brands. Therefore the economic downturn has called for product innovation-marketers are increasingly realizing the need for a particular innovative product that hits all the right spots with customers to pry them away from their usual brand. The challenge is achieving the right combination of value, product innovation and competitive differentiation.
The values a brand is associated with also plays a major role. It has become a purchasing factor since the post-recession customers have re-assessed their lifestyle and have become more socially aware and ethically minded buyers. They expect the same values to resonate in the brands and the companies they buy from. Therefore a post-recession manufacturing company should be socially accountable in the way their products are sourced and manufactured.
However, the good news is that customers who had postponed their purchases especially in the white goods sector are expected to replace their old products with new ones. But value for money is one platform on which brands should continue to be positioned to appeal to the post-recession customer. Marketers need to be wary of this change in purchase behavior in the customers. Hence existing market segments will now be characterized by an additional attribute-price consciousness. This makes it imperative for marketers to communicate the functional value of a product each time they interface with customers using the various media.
All said and done the basics still remain the same. Customer orientation is the best and the only way to go for a marketer. With customers changing their buying patterns based on external factors, marketers need to adapt themselves to these changes and be in tune with the customer’s needs.
-Satish Kumar K (Batch 2009-11)