In the time of crisis, when consumer confidence is low, it is hard for marketers to decide how to advertise their brands. Over the last 8 weeks, the top priority for consumers around the world has been safety – protecting themselves, their families, and communities from COVID-19. Many have lost their jobs, while individual households have suffered financial losses. This sentiment has been reflected across news channels, social media platforms, as well as in announcements made by public health and government bodies across the world.
But this will change, gradually.
Our analysis at NorthSide shows that during this pandemic, all countries will go through three phases over the next 9-12 months. The demands on stretched resources and opportunities in each phase will determine the way brands shape their marketing strategies.
Across these phases, consumers will be looking for brands that meet their needs, are affordable, given that economic uncertainty will be high, and at the same time prioritise categories and brands that suit their modified lifestyle. One simple strategy to execution framework (see below) for brands can be based on the brand’s affordability index (with brand pricing indexed to the lowest price competitor in that segment; lower pricing will mean higher affordability) and place of consumption (in-home or out of home).
Note: Lower Pricing means higher affordability
Within this framework, brand actions should revolve around showing empathy in advertising as long as it is linked to brand core values, investing in building in-home consumption where possible, and cutting costs where consumption is unlikely. For example, within personal care, the need for affordable DIY (do-it-yourself) in-home solutions will be stronger than the more expensive out of home solutions, as will be the need for in-home ready to cook frozen raw foods and solutions that help cooking at home. In the same way, demand for bicycles and more affordable, popular priced automobiles will come back faster than the demand for the luxury automobile segment.
Phase 1 (March-July 2020): Severe Restrictions
Based on evidence from China, South Korea, and Europe this phase will last up to 16 weeks till July and will cover the start of infections, and the flattening of the curve until the virus growth rate falls to below 1% growth in daily infections* and the active cases start declining. Even if governments ease restrictions, consumers are likely to continue to self-impose restrictions. India is currently in this phase.
In this phase, all brands should show empathy for the current situation and link it to core brand values, in a way that builds an emotional bond with the consumers. Some good examples of this are Nike and Mercedes Benz, which have found creative ways to inspire and motivate their consumers.
Watch Mercedes Benz
Consumers are actively searching for in-home solutions to battle boredom or looking for new products and services that can help them in their new normal. Therefore, for brands with in-home affordable products, this period will be beneficial, and they should continue advertising their products as soon as supply chain is normalised. Brands should consider changing the intensity of advertising, and the choice of media since consumer preferences are also changing. There are numerous studies that indicate that social media, digital and TV consumption has increased drastically during this period. For this reason, brands should invest more in these mediums to increase their penetration and frequency of consumption.
Lastly, brands that have high affordability but do not offer any in-home service and brands with low affordability, should cut advertising costs and focus on engaging with consumers by showing empathy linked to brand core.
Framework for Phase 1 (March-July 2020)
Phase 2 (Aug-October 2020): Cautious relaxation of restrictions
Based on evidence from China, South Korea and Germany this phase will cover the declining phase of infections, and the time required for adjustments to relaxation measures in case more infections appear in various areas. This stage also covers the time needed for improvements in medical healthcare infrastructure to prepare for any second outbreak. All the countries will enter this phase by August 2020, 16 weeks after the restrictions were first imposed in most countries and continue in this phase until the end of October. Our research shows that while some governments will relax restrictions earlier, they will need to introduce modifications to their guidelines from time to time to control out-breaks. This will make consumers cautious.
For most consumers, the continuing economic uncertainty would reach its peak. Therefore, driving affordability and reducing the risk of purchase should be a key part of brand-messaging. Brands can achieve that by offering buy-back schemes and similar assurances.
In this phase in-home consumption will grow rapidly across categories. Brands that are affordable will have many opportunities in this phase and brands with lower affordability should innovate and find ways to build an in-home consumption end product or service, which they can market efficiently.
Framework for Phase 2 (Aug-October 2020)
Phase 3 (November-Q1 2021):Full relaxation of restrictions
Based on evidence from previous outbreaks and taking into account the higher infections in the case of COVID-19, the return to normalcy is expected around November-December of 2020 into Q1 of 2021. In India, this will also be the festive and marriage season, which will result in additional buoyancy. In addition, this phase is going to be characterised by definitive prevention guidelines, more clarity on the actual death rate considering the high number of asymptomatic cases and new advancements in medical cures. Thus, consumer confidence is likely to return. According to IMF, economies around the world are also expected to rebound by 2021.
In this phase, brands can return to their normal activities and drive sales by giving consumer offers to kickstart consumption. At the same time, the messaging across mediums should be focused on brand core values.
Framework for Phase 3 (November -Q1 2020)
Through this crisis, digital transformation will play a key role, and brands, which are agile, will come out stronger. During these challenging times, marketers will need to stay close to the consumer at every stage and work with their colleagues to find creative ways to promote their message. Even if brands are not relevant during the first few months of the pandemic, investing appropriately behind building brand equity will help in the third phase when consumer confidence returns, and will definitely help in the long run.
About the Authors
Vidur Vyas is a Partner in the Gurgaon office of NorthSide. He was formerly, VP marketing at hike and Chief Marketing Officer at PepsiCo India Foods. He can be reached at [email protected]
Gaurav Mehtais a Partner in the Gurgaon office of NorthSide. He was formerly, Sr. Director of Insights and Services and Category Director, Western Snacks at PepsiCo India. He can be reached at [email protected]
The authors would like to thank Evi Tsokanaki and the team at Connecthub for their contributions.
NorthSide is a strategy and execution company that partners with young businesses in their startup and scale up journey to help build robust brands, develop differentiated products and transform business models.