Changes in consumer behaviour to drive brands to rethink positioning norms

Topics Coronavirus | Google | Lockdown

The current crisis will hit harder on the consumption habits of the young, many marketers predict
For a few years now brands have strived to jump on to the premium ledge, an overused and overcrowded positioning platform that found favour with marketers across categories. Be it exclusivity, personalisation, creating cult-like communities around a brand or wearing the herbal-natural tag, all routes led down the premium trail. Now, as Covid-19 has thrown past behavioural norms into a deep freeze, many predict that the premium tag may well be the first casualty in the new world.

Soumya Mohanty, chief client officer, South Asia, Insights Division, Kantar believes that the changes in consumer behaviour will drive brands to relook at positioning norms. “We expect Maslow’s hierarchy to be upended. The discretionary items and even within that premium items (like high-end shoes and bags) vs daily-wear apparel will be de-prioritised. The main reason for this is the reduction in income that is expected by almost everyone. In the survey done by Kantar’s Insights Division, we found 46 per cent saying that they will save more going up to 58 per cent among those worried about jobs. Only 20 per cent said they will spend more.”

According to a study by Nielsen, as more markets begin to emerge from lockdowns, there are some early signs that consumer habits will be forever changed. Sameer Shukla, West market leader, South Asia, Nielsen Global Connect, spoke to Business Standard during the release of the report and said that from all the data now available (from affluent segments of society) down-trading is an inevitable fallout of the pandemic. He and several other marketers say that the Indian consumer is unlikely to trade up in a hurry, once things get back to normal.

 

 
The current crisis will hit harder on the consumption habits of the young, many marketers predict. As Mohanty explains, in an aspirational society like India where a generation doesn’t even recall scarcity or rationing, this pandemic has been a rude wake up call, one that will leave a lasting impact (much like famines and wars did on previous generations). 

Does this mean premium brands will fade out unless they change tracks? One needs to read the purchase behaviour carefully to read the trends, say marketers.  Santosh Iyer, head of sales and marketing at luxury car market leader, Mercedes Benz says that the demand for new cars may not be as buoyant as it was. There may be down-trading between segments—those considering a Mercedes model may settle in for a top-end variant of a Skoda or a Skoda buyer may end up buying a top-end Hyundai model. But one is unlikely to opt for a cheaper trim level within a segment. “Buyers in the luxury segment won’t compromise for a lakh or two,” he points out. 

However given that customers will weigh the price-value offering more closely than before, brands will have to be mindful of the lines that lie between budget, premium and luxury. According to a recent Google report on search trends during the pandemic, a shift in consumerism is unfolding as modern internet users are becoming increasingly conscious of their choices and demanding truly transparent and timely information from brands. 

Jatin Ahuja, founder and managing director at Big Boy Toyz (BBT), a multi-brand showroom for pre-owned luxury and super luxury sports cars says, “It’s no longer about people opting for cheaper or premium trim levels or models, its value for money driving buying behaviour. If one can get a car worth Rs 1 crore for Rs 65 lakh, in all likelihood one will opt for the latter,” says Ahuja. 

Brands have to listen in carefully to the customer’s voice, not just watch her wallet, say market researchers. It is time that brands define their premium values with greater care and sensitivity, and as Mohanty says many premium categories are also experiential categories, which need touch and feel. Social distancing will change that so how they communicate what makes them differentiated as compared to the rest of the category, will need to change.


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