Changes wrought by coronavirus run much deeper than consumer sentiment and spending. Consumer behavior and purchasing habits are changing across sectors, countries and categories, and many of these new ways will remain post-pandemic. For chief marketing officers (CMOs), there is an opportunity to use this change as a catalyst for creativity and reframe their approach to marketing and strategy.
According to McKinsey data, consumers in China, India and Indonesia have consistently reported higher optimism than the rest of the world, while those in Europe and Japan remain less optimistic about their country’s economic outlook.
Divergent consumer sentiment is also reflected in spending intent, with most consumers across markets shifting their money into essentials and cutting back on discretionary categories. Enforced reductions in spending on travel, hospitality and leisure have seen spending flow into other categories. In some markets, including China and India, spending is bouncing back beyond grocery and household supplies. McKinsey says Chinese consumers plan to increase spending on discretionary categories such as travel and apparel in the months to come, suggesting China is further along the path to recovery than other countries.
Such significant changes have caused brands and consumers alike to take stock, to reflect and reprioritize. More than ever, consumers are willing to put their money where their mouth is and make sure the actions of the brands they invest in embody their beliefs and values. Trust is key.
Following the events of 2020, brands have had to speak to customers with empathy and carve out a clear role for themselves in a new, locked-down world. Consumers too have been undergoing a shift of their own, calling on brands to act and help address the societal challenges posed by coronavirus.
Amid this, trust has become an attribute on par with quality, value, convenience and origin as a key purchase consideration.
The cultural earthquake that was 2020 truly transformed the landscape of brand engagement and consumer expectations. A recent study from GfK shows that one third of Americans say they now only buy from brands they trust.
Further GfK insight reveals a global rise in the need for brands to build trust among their consumer base. Today, 48 percent of consumers say they will only buy products or services from a trusted brand, a significant increase on the 31 percent who said the same in 2011.
For brands, living out their brand values during a crisis is one way to build trust with wary consumers. But they need to walk the walk as well as talk the talk.
“Brand purpose has been a consideration for chief marketing officers for around ten years, but they haven’t made a lot of effort to embed it into their DNA; it’s always been left for the public relations team to deal with. Now it’s become a more integral part of the discussion around brand value,” says Eric Villain, Managing Director, Marketing Effectiveness, GfK North America.
He points to brands like Nike and Ben & Jerry’s which have baked purpose into the core of how they operate as brands and built up trust as a result.
Brand equity, Villain asserts, is a complicated construct. However, this new era of conscious marketing has offered a dimension for marketers to build deeper assurance among their core audiences.
For marketers, actions truly do speak louder than words and individuals will reward the brands they perceive as acting on the principles they claim to hold dear.
“Advertisers are moving away from platitudes in their messaging and now they are going to the next level and starting to think about the way their brand contributes meaningfully to consumers’ lives. So a pivot towards purpose from consumers is having a short-term effect on marketers, and I can see that bleeding out into the medium and long term,” says Villain.
Frank, impassioned discussions around racial inequality are sparking greater interest from consumers about the make-up of the corporations they interact with.
As well as purposeful messaging, corporate values on diversity and inclusion matter to consumers more than ever. A diverse and inclusive workforce can generate huge advantages for companies, making them more innovative, more profitable and better able to retain their most talented employees, whether they’re in Singapore, Seattle or London.
Much attention has been drawn to a lack of both gender and ethnic diversity on corporate boards. Now this is spilling into marketing departments and the advertising agencies that service them as consumers look to be reflected in brand communications.
In 2019, Adobe conducted a research report of more than 2000 consumers. Its results showed 66 percent of African-Americans and 53 percent of Latino and Hispanic Americans feel their ethnicity is portrayed stereotypically in advertisements. The same report showed 61 percent of Americans find diversity in advertising important and 38 percent of consumers are more likely to trust brands that show diversity in their ads.
“In the medium term there will be a greater acknowledgement of how marketing departments operate and there will be a focus on the lack of inclusion when it comes to race and gender,” says GfK’s Villain. “In turn, that will change the face of brands and advertisements. These have been changing for a while already, but it’s going to speed up.
“Now that production houses are starting to reopen, we’ll see a medium-term shift in what’s reflected on-screen and in ads because there will be greater inclusion of different perspectives.”
The biggest long-term change for Villain is a shift towards sustainable products as consumer concerns about the climate crisis mount. This is part of a wider shift towards investment in purpose-driven brands.
IBM data from more than 18,000 consumers shows as they increasingly embrace social causes, they are seeking products and brands that align with their values. Almost six in ten respondents are willing to change their shopping habits to reduce environmental impact. Eight in ten indicate sustainability is important for them. And for those who say it is very or extremely important, more than 70 percent would pay a premium of 35 percent, on average, for brands that are sustainable and environmentally responsible.
For Villain, these changing attitudes will have a particular impact on the fast-moving consumer goods and automotive industries.
“There’s a slow but sure trend towards consumers willing to spend more on environmental products, like electric or fuel-cell vehicles,” he says. “It’s going to have a long-term impact on marketing and creativity because brands will have to tailor their communications for customers based on whether they’re willing to pay that premium.”