by Melanie Misslinger for Vivaldi
Why are people stockpiling food and other essential household supplies, such as toilet paper? Why are TikTok and Zoom the most downloaded Apps surpassing Instagram and WhatsApp? This post reveals the behavior of the pre-, mid-, and post-pandemic customers, their underlying motives and why it is important for brands to understand the psychology of customers.
THE PRE- AND EARLY PANDEMIC CUSTOMER: Buying goods gives people a sense of control
Traditional economic theory says that people have self-control, are utility-maximisers and rational in their actions. They compare costs and benefits of alternative choices and then choose the option that maximizes their net utility. However, this theory is of little use in explaining the behavior of the pre-pandemic customer who horded products in irrational amounts and made decisions impulsively. Behavioral economic theory challenges this traditional assumption by hypothesizing that people make decisions based on experiential, emotional, and irrational ideas. The rapid spread of COVID-19 brings along these deep emotional and irrational fears, hence, we are seeking comforting experiences that give us a sense of control. Buying things is one way how we can regain a feeling of control, not because there is any evidence that we will need them, but the very act of doing so gives us comfort as we are doing something. At this stage of the pandemic outbreak, people tend to spend money in ways that satisfy their basic survival needs.
As a result, we saw people stockpiling life-essential products such as non-perishable food, toilet paper, cleaning supplies, and medicines. Companies responded by increasing their production and others even entered new market segments and started producing elementary goods such as facemasks or antiseptics. For example, the world’s biggest beer and spirits producers Diageo and Anheuser-Busch produced millions of free hand sanitizers. Marketers are important players in this, as they had to adapt product pricing, distribution and communication strategies.
THE MID-PANDEMIC CUSTOMER: Social distancing has created a new normal
In New York City, the normally crowded Times Square lies deserted. In Munich, the once bustling Marienplatz and Old Town is abandoned. With the measures taken by the government to stop the spread of the virus, people must refrain from their normal lifestyle of meeting friends in public places or going to the office. Humans are by nature social animals and social connection improves our physical and psychological wellbeing. So, we have had to find new ways to compensate for that social abstinence, which created a new social distancing economy. We are getting used to being at home more and adapt to living almost entirely indoors. We are accepting the fact that this condition may last for longer and turn to products that help comfort and entertain. This comfort-seeking behavior combined with the heightened state of existential anxiety makes people more likely to spend in ways that supports their self-esteem or self-identity. Hence, the need focus of this stage is in the upper half of the pyramid.
The new social distancing economy sees people spending more on products that are less essential and more quality-of-life oriented. For example, we saw people expressing their need of belongingness by joining new social platforms, for example ‘TikTok’ or ‘Houseparty’. Companies want to give back to the community with social response initiatives, thereby gain respect by others. Individuals acted upon their creativity (self-actualization) by selling self-made facemasks or singing for their Instagram community. With more time at home, people are likely to feel the short comings of their home environment, leading to more decorative purchases or home improvement projects. As marketers, it’s important to acknowledge these new realities and adjust strategies accordingly by focusing on social distancing products and the communication thereof. Brands and companies need to think about which products or services can build an experience in a social distancing economy.
THE POST-PANDEMIC CUSTOMER: Purchasing Habits Ready for Disruption?
Consumption behavior is habit driven and habits are hard to disrupt. However, something as big as the Corona crisis triggering intense negative emotions, is a prime example of the kind of things that can disrupt habits. The unprecedented situation gives people an opportunity to change their habits, which could change their behavior eventually. People engage more in activities that can be executed at home such as cooking, gardening, arts and craft, redecoration, and media consumption, just to name a few. These changing habits may manifest in the future. Based on what we see in China after the Coronavirus outbreak and psychological predictions we can expect a different post-pandemic customer.
- Digitally savvy: When faced with shopping restrictions, customers find and adopt newer ways to shop through technology (e.g. online groceries). This heightened tendency to purchase online is bound to lead to a rise in e-commerce, also post-pandemic. Hence, it is essential for brands to offer meaningful online experiences to keep their connection with consumers intact.
- Sustainable: People are becoming much more aware of the supply chain and how much we depend on other countries. Also, the government is stressing the importance of supporting local companies. This has prompted many consumers to turn to Direct to Consumer (D2C) manufacturers. Hence, we expect a shift towards Glocalization – Localization of the Global – with customers shifting their preference to responsible, sustainable, and local products.
- Health conscious: The World Health Organizations (WHO) is stressing the importance of proper handwashing and sanitary measures. Sports centers offer online workouts and news programs provide health and lifestyle tips. At the same time, experts warn that a lack of physical activity and poor eating habits during quarantine pose risks to our health: Hygiene, healthy eating and sleep patterns supported with exercise will strengthen our immune system and protect us from the pandemic. This external influence combined with being forced to cook at home and having more time to think about nutrition is bound to influence people to live healthier lives. This could be a win for brands selling healthy food options and sustainable products.
- Revenge purchasing: One day after reopening, an Hermès boutique in China made $2.7 Million. This blockbuster reopening could be a barometer of post-pandemic shopping behavior, offering brands and retailers hope of what economic recovery may look like. Revenge buying may not only be social media term but eventually come true with citizens treating them once quarantine is over.
Why is this Customer Insight Important for Companies?
On the one hand, companies who understand the consumer motives and needs can use the insights to influence customer purchase behavior. On the other hand, people are forced to change their lifestyle and companies need to adopt a lifestyle marketing perspective to identify products and services that are linked to the lifestyle of the pre- mid- and post-pandemic customers. All goods carry meaning, but none by itself.
In light of these recent events, we will continue to provide content on how your business can ahead of the crisis. We’d like to stay in touch with you – follow us on Instagram or LinkedIn, and feel free to continue the discussion via email.
Der Experte/ Die Expertin