Covid-19: Rejig product offerings for the “Brave New World”
Prof Arindam Banerjee, IIM Ahmedabad, advises marketers to rejig product offerings to make them suit a changed consumer market, that has, at least somewhat moved back to the basics. However he cautions against relying too much on current assessments regarding where we are headed.
The Covid-19 crisis is a truly unprecedented calamity that defies parallels in recorded history. We have never faced a situation like this in our generation (and across the world). Examples that come close but still not of the same magnitude are – “the Gujarat Earthquake” and “the 1971 war“. The comparison with these events is at best asymmetric.
For businesses as well as individuals, this is a time when they need to resist the focus on their short-term gains. It is a period where societies and nations need leaders to step up to the occasion. This is not only the right thing to do by conscience, it also qualifies as sound business strategy.
It is understandable that only some organizations can afford to be so broad minded. But to the extent they can, companies should be CSR-focused. They need to build confidence in the society about the future, contributing to easing out the miseries of the underprivileged, communicating their deeds and also giving a “thank you” message to the society for patronizing their ventures in normal times. This is not the time to ask for relief packages, as there may be another day for that. Governments across the world are in a “Catch 22” situation. Concurrently, the silent and impoverished sections of society need help. So socially responsible messaging is the need of the day.
One of the most critical questions that companies are asking today is how consumer behaviour is expected to evolve in the coming months. And this is also a very tricky question. It all depends on the kind of medical resolution that is found for this malady. If there is a solution in the near term, which works (vaccine, curative or herd immunity), habits will not change much.
However, if the current situation persists for a longer period of time, habits may change with some irreversibility in the medium term. Confidence in the future may diminish, consumer spending will be moderated, jobs may be scarcer, and households may become more self -reliant. Besides the devastating economic impact, consumer confidence on product safety will be at a new low.
Urban economic networks may rupture badly, and with a slower ability to bounce back. The working class wants to go home, leaving behind the land of opportunities. It is not illogical to wonder if you will be able to employ a cleaning hand for your house, as they may have returned to their native places en masse. This may also have a positive repercussion, with decongestion of cities and more equitable economic development in the country, given the right policy inputs. Not everyone will then have to travel to a Mumbai, Bangalore or Gurgaon looking for a job.
Marketers will have to win the communication war through information. They need to provide more cognitive inputs that are trustworthy. Consumer confidence will be low and hence they will require a trusting “hand” to provide support. The family will matter foremost, society will be important for long term survival but will be kept at arms-length for some time. Concerns about hygiene and safety can be addressed by reducing human handling to the extent possible with robotics – but that will take time. Frequent use of non-corrosive disinfectants may have to be ensured until the Point of Sale (POS or last mile).
It is highly likely that the transformation in consumer media choices will follow the changes in the transaction model in the retail space. Marketers will therefore have to reorient more of their budgets online. In the short run, communication should ideally be more focussed on reliability of on time delivery and quality but utilitarian product features. If the lock down continues for a longer period, however, low confidence in consumers may require “trust building” messages to cope up with the mental stress of a biological “catastrophe”. Marketing budgets have to be spent optimally. Corporate budget squeeze will impact communication budgets the most in my assessment.
The emphasis needs to be on efficiently delivering quality and necessary products. Businesses that have diversified into “bells and whistles” services (not necessities but aspirational goods and services) will get negatively impacted. Rejig product offerings to make them suit the “Brave New World” that has moved back to the basics (at least somewhat). A “no nonsense” approach to marketing is very much needed to get the world back on its feet.
There will be somechange in traditional channels of retail. If retail stores, markets and malls become taboo, companies may have to again come up with out-of-the-box solutions to use this setback to their advantage. For instance, they can utilise their retail outlets as stocking points for faster delivery to the home. If malls are going to be a taboo for some time, mall rents may fall too and the entire POS infrastructure may metamorphose into a largely stocking point. Retailers may not be averse to providing home delivery in the local vicinity and may get on the e-commerce space themselves. Interestingly then, the traditional e-commerce players may have local competition.
Finally, I must add this disclaimer. It is difficult to say where we are headed. If the present pandemic situation forces the world to “slow down and halt” for a longer period (4- 12 months or more), the above issues are worthy of consideration. If the world gets back on its feet in the next couple of months, all this would be just a ‘bad dream”. I cannot wager a bet which way we are headed. Of all the trade and business conferences that had titles like ” VISION 2020″ in the past two decades, none of them would have envisioned the state that the beginning of the year 2020 got us into. Such is the (in)capability of futuristic visioning in today’s time.
Arindam Banerjee is Professor of Marketing at IIM Ahmedabad (IIMA). He has been associated with IIMA for the past over twenty one years, teaching Marketing, Strategy and Quantitative Research and Analytics to Post Graduate and Doctoral students. He is an expert in Marketing and Financial Risk / Collections Analytics having developed models for industry applications in India and the USA in the past over 20 years. He has also consulted with Analytics operations in various organizations in CPG and Retail Banking sectors.
Prior to working at IIMA, Arindam was associated as a Senior Associate at Mitchell Madison Group, a global management consulting firm, based at their Chicago Office. Previously, he has headed the Marketing Analytics team at A.C. Nielsen Corporation, Chicago, providing research and analytics support to some of the Philip Morris Group companies.
He has a Ph.D. in Marketing Science from the State University of New York at Buffalo, a PGDM from IIM Lucknow and, a Bachelors degree in Mechanical Engineering from Delhi College of Engineering (now, DTU).