Wednesday, May 20, 2009

Modify your consumer research in a recession


I’ve just put down Dr Peter Steidel’s recently published book Survive, Exploit, Disrupt – Action Guidelines for Marketing in a Recession. It’s an excellent read and I highly recommend it to executives navigating their way across the stormy waters of the current economic downturn.

You know there is a theory out there in the land of academia (one, incidentally, to which I adhere to) that argues that recessions are part of the grand evolutionary process. A recession blows across a country or the world weeding out the inefficiencies and the excesses, the bad ideas and sheer human stupidity. This leaves room for the good stuff – good ideas and innovations - to develop and grow leading to the wealth of the future.

Steidel asks us as marketers, what can we do to ensure that we are one of those businesses that evolve, survive and continue to grow?

I’d like to pick out and elaborate on a particular element that Steidel highlights. It is an area that I believe is of particular relevance and importance in the current business environment and should occupy the business leader’s attention. It is this:

Sharpen your understanding of consumers and how they are affected.

There is one factor that is certain in a recession - consumers review and change their behaviour and buying habits. We do not know the scope, timing or scale of these changes and so it is essential we attempt a well-informed assessment.

This exercise should seek to establish the extent to which consumers will:

a) Drop out of the market because they cannot afford to buy
b) Modify the trade-off decisions they make leading to a change in their consumption patterns
c) Not change their purchase patterns significantly

This assessment falls into the category of understanding what consumers are doing. It should be made on a continuous basis so that as we come out of recession we are able to gauge the way the relationship between the brand and consumers has changed. For instance, some consumers may have switched to own-brand labels (like Woolworth’s ‘Home Brand’) and will stick with them following the recession as they have found the own-brand to be just as good as the brand bought before.

During a recession we need to know how consumption patterns evolve and the associated pressures that impact on purchasing behaviour. Having a better understanding of how such patterns evolve gives us a better understanding of the consumption patterns of tomorrow.

It therefore seems appropriate to have smaller, ‘dip’ surveys than one big one. Surveys that employ conjoint methodologies help us identify the trade-off consumers make. Many businesses have Data Warehouses that enable the wily Group Planning Manager or Product Manager to analyse shifts in purchase behaviour in terms of product categories, distribution channels, price brackets and so on. This analysis can be supplemented with an appropriate conjoint survey, that further enhances our understanding of consumer trade-off patterns.

We also need a better understanding of how consumers feel and why. In a recession, consumers’ modified purchase behaviour is underpinned by that most powerful of human emotions, fear. They will be fearful of losing their job. Will they be able to pay their mortgage/rent/bills? Will they have to sell their home?

Clearly, the feelings that we need explore are highly emotional and negative. It is highly unlikely that in a focus group, surrounded by strangers in a highly artificial environment, people will talk about their true feelings and motivations. New methods need to be employed such as a technique described by Gerald Zaltman in his book How Customers Think. The ‘Mind-of-the-market’ methodology relies on images to open pathways to emotions. Participants are asked to bring images to a one-on-one, in-depth interview and these are discussed. The images act as a metaphor that more accurately describes the participants’ emotions than a verbal and, invariably, rationalised and misleading response.

The point is that in a recession we need to modify the way we do consumer research. Conventional methodologies like focus groups are unlikely to deliver the insights into the emotions that modify the trade-offs consumers make and their purchasing behaviour. Immersion programs, where executives spend time with consumers, are increasingly seen of value, to observe how consumers shop, prepare meals, discuss bills etc. Proctor and Gamble have institutionalised such programs.


To conclude, recessions change markets. They change consumers’ purchase patterns, which in turn changes consumers’ perceptions, expectations and values. The marketing strategies of the pre-recession period will not wash going forward. Neither will consumer research. It should adapt to unearth the new consumer mindset brought about by the tough economic times. Businesses that invest in sharpening their understanding of how and why consumers alter their purchasing behaviour will be well placed to return to growth.