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30. März 2020

Five tips to overcome crises like this!

Admittedly, the corona virus is one thing... But it's not just crises like this that put us to the test. Because there are plenty of challenges in our digitalized society. Some companies master them, others go under.

In this article, I would like to tell you how you, too, can successfully master crises and what role market research plays in this process.

New circumstances always mean new buying patterns!

We can bathe ourselves in chaos and mope around, or we can take advantage of the opportunities that change has in store for us. Market and research-oriented companies have good cards to play here particularly. Numbers, data and facts prove to be a useful compass, so that we don't lose sight of our goal even in stormy times and keep our "MS Enterprise" fleet on course.

That's why I have five helpful market research tips for you that can help you take the wheel.

The four different types of customers

Let me start by explaining the four different types of customers. Roughly broken down, you can think of four groups:

The full brake man

Purchases are skipped, postponed, reduced or replaced. The full brakeman feels financially threatened. It is irrelevant whether this concern is rationally justified. Consumers who have only a low income fall equally into this segment, as do anxious consumers with higher incomes. Especially if their health or financial situation deteriorates.

The ascetic

Much like the "full brake" consumer, the "ascetic" saves in all sorts of areas, albeit less aggressively. Ascetics form the dominant segment. They comprise the vast majority of households unscathed by unemployment, representing the broad spectrum of income levels. The ascetic tends to remain resilient and optimistic in the long run. However, he is less confident about the prospect of short-term recovery or the ability to maintain his usual standard of living. As negative headlines increase, ascetic consumers gradually move into the "full brake" segment.

The affluent

This segment consists mainly of people in the top ten percent income bracket. However, you also include those who are less affluent but still feel confident about their finances. The affluent consumer is confident that he will overcome current and future economic problems. He consumes unchanged, although his buying behavior is more selective anyway.

The fun-loving consumer

The fun-loving consumer is an urban and younger person who prefers to pay rent rather than own property. He also tends to spend his income on experiences rather than luxuries (except for consumer electronics). This consumer continues life as usual and does not care much about savings. The fun-loving consumer reacts to the crisis almost unchanged. It is unlikely that his consumption behavior will change as long as he does not become unemployed.

The four different product types

Regardless of which of the four groups individual consumers belong to, they prioritize their own consumption by dividing products and services into four categories:

Essential

Basic food, hygiene products, and most importantly: toilet paper. Essential products are vital to survival and essential to one's well-being.

Treats

Pleasurable products whose impulsive purchase is justified by the need for pleasure.

Deferrable

For the pantry, the household or the office - deferrable products are needed, but - as the name suggests - can also be deferred for the time being.

Unnecessary

Less relevant products, which in many cases are also expendable and whose purchase in retrospect was generally unnecessary.

I think there is agreement that basic food, shelter and clothing are essential. Currently, many would certainly also place transportation and medical supplies in this category. Beyond that, the classification of products or services can be very idiosyncratic.

At times of crisis, consumers (except for the fun-loving) question the priorities of their consumption. We know from previous findings that products and services such as restaurants, travel, arts and entertainment, clothing, automobiles, appliances, and consumer electronics can quickly shift in consumers' minds from important items to treats, deferrable, or even unnecessary items, depending on their needs.

Once priorities change, consumers eliminate purchases of a particular category altogether, such as household services, they prioritize products from essentials to non-essentials, or they replace purchases of one category with purchases of another. So, potentially, the restaurant patron can become the home chef. Then suddenly the Italian around the corner becomes unnecessary and instead, pasta and pesto end up on the shopping list.

In addition, most consumers are more price-conscious when shopping during a crisis, which means that their brand awareness decreases. As a result, favorite products and brands can be expected to be replaced with lower-priced alternatives.

Five tips on how you can use market research to master this crisis as well

Tip 1 - Know your customers!

Now that you know about customer and product types, it's time to get down to the nitty-gritty! Which customers are buying your product? How do they view your product? How do you position your product so that your customer will still buy it?

This is where market research can help:

With studies on segmentation & personas you can find out what, when and who thinks about your product and how they evaluate the need for your product. A classic study is the best way to segment the target market. A persona study gives you information about your product from the customer's point of view. This can help you segment customers based on attributes they expect from the product.

So, personas can help you understand who is buying your product and why. Or, conversely, why not. Either way, personas provide a good starting point for adapting your marketing to changing patterns of thinking and buying.

Tip 2 - Look for new opportunities!

Where weaker competitors falter, you can gain new market share. Enter new markets, add new products, or consider acquiring a faltering competitor!

How market research can help:

There is no question that new product concepts need to be reviewed, tested and proven. You should consider developing new concepts that really appeal to the consumer, your consumer, now in this situation. Remember, during a crisis or impending shortage, the consumer is incentivized to buy. He buys less, he buys differently, he changes brands or tries completely new product concepts. Either way, he buys.

This is where you could invest in qualitative and quantitative research to understand your customers' "Consumer Journey". The "Customer Journey" can reveal new decision patterns and market opportunities for you. It sheds light on risk areas that you need to address quickly or potential golden treasures that have been hidden from you.

Tip 3 - Rethink your products!

Even in times of crisis, are you still selling what the customer needs? If not, it's time for change. This can be permanent and temporary. Flexibility is crucial here! If you, as a company, are already working in agile structures with a high degree of digitalization, congratulations!

How can market research help:

Good advice is expensive. Not necessarily. But a recommendation is worth its weight in gold in any economic situation, especially in times of crisis. Crises can cause radical (and often permanent) changes in buying processes, brand preferences, and even consumer lifestyles. Do you know your "Net Promoter Score" and if so, how is it changing right now because of the crisis?

In addition to innovative features, many companies are testing new margins, different features, and often lower prices. For example, companies can retain (and gain) market share and margins by lowering prices and their costs (size / features).

Tip 4 - Rethink your prices!

Ideally, however, you should find an attractive offer to strengthen your current price. For example, could you offer a bonus product or service to make the product more enticing?

How can market research help:

Price cuts are never really the best strategy, but still an option that wants to be thought through (or scrutinized by a market researcher). Adding or optimizing the offer seems to be a lucrative way to go. Conjoint studies can help you determine which strategy is best to choose. Price research and conjoint studies take the following considerations into account:

• More product: Features for the same price?
• Same product: Features for a lower price?
• Less product: Fewer features for a lower price?

Tip 5 - Increase your marketing!

Some competitors will reduce their spending and others will pull out altogether. Like the four types of customers, your competitors will react differently to crises. While some may pull out, you can invest! Take advantage of the new attention in your marketing!

This is where market research can help:

Simply investing in advertising spend is blunt as a weapon, however. Especially if brand awareness is already there, different marketing may be more advisable than simply "more".

This is where Attitude and Usage research offers added value: Especially if it includes deep psychological elements, you can find out whether your challenge is awareness (in which case higher spend makes sense) or whether there are other conscious or unconscious barriers to purchase (in which case you need to adjust your communications).

Knowledge is power. Especially in times of crisis.

In times of crisis, the wheat is separated from the chaff! The decision paths of your customers can change. Also, the perception of your product. So be extra mindful and attentive to understand how your customers (or potential customers) think about your brand, how they evaluate competitors and adjust their consumption. Don't make the mistake of assuming your customers will shop the same way they did before.

Put everything to the test. Question whether what you knew before the crisis is still true now. Compare your research results with your market strategy and adjust your strategies depending on the persona or product type.

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