Understanding the Post-Crisis Consumer

Success in building brands and growing market share depends first on understanding your target consumers better than your competitor understands them. Specifically, it is critical to understand consumer needs, and especially their emotional needs, in order to be able to create a brand proposition and offering that best meets those needs.

In the crisis economy, consumer needs change. The change may be permanent – it’s too early to tell yet – but it’s certainly current and brands must respond. Exactly how the consumers’ needs have changed – and what you should do in response – is the subject of this white paper.

The starting point is the consumer’s feelings of trust. Culturally, democratic capitalist societies are built on trust and the spontaneous sociability and collaboration which come with it. People are willing to depend on each other, to rely on the mutual undertakings that constitute social fabric, and to trust in institutions. Translated to the level of brands, consumers trust in the propositions that brands make to them, and specifically in the offering of emotional benefits that are relevant to their particular need. They believe that if they pay the brand premium, they will experience the benefits that are promised.

In the crisis economy, much of the trust that consumers feel towards other people, companies, and institutions has been eroded. Indeed, that is the definition of an economic crisis: the loss of the trust and optimism that drives economic growth. Consumer’s belief in their future prospects is damaged and their expectations are dampened. Some of this loss of trust is transferred to brands: how can consumers trust in yesterday’s emotional benefit proposition of premium brands when the entire foundations of trust are crumbling around them today, and the expectations of a sunny future are now deeply clouded?

The behavioral consequence of the consumer’s loss of trust is withdrawal. They withdraw their support for institutions they no longer trust, such as banks, credit, and politicians. They withdraw socially, narrowing their social activities to closer friends, more intimate experiences, and more reliable environments. They withdraw their participation from some categories of activity, like vacations or dining out. And they withdraw or reduce their involvement in some categories of consumption, such as jewelry, high fashion, and new cars. This phenomenon is often reported as a reduction in spending and transactions, but the emotional driver of lost trust occasioning withdrawal is the attitudinal trigger we must understand and analyze.

In the process of withdrawal, consumers also re-evaluate their trust in brands. In the prior period, they trusted the proposition of emotional benefits such as social recognition and the sense of achievement that these brands confer (“Look at me, I worked hard and succeeded in order to earn this badge”). Today, they not only question whether these emotional benefits still represent their life goals, they also spend more time and effort to evaluate the functional underpinnings of the brand proposition (“Can I be confident that there is real quality and superiority in the offering, before I start thinking about how the brand makes me feel?”)

The analytical tool to reveal and understand these shifts in consumer needs is the Means End Chain. This tool reveals the shift in consumers’ emotional needs as a result of the erosion of trust, and demonstrates what brands must do to rebuild the chain and regain the trust.

First, we analyze how consumers’ hopes and fears have shifted. These emotional categories are the engine of the Means End Chain.

HOPES
FROM (Growth Period)	TO (Post-Crisis)
Climbing the social ladder	Protecting the status quo
Demonstrating my achievement to others	Demonstrating my responsibility to myself and my inner circle
More riches	Richer experiences
Widening social network	Higher intensity, smaller circle
What’s next?	What’s important?
Feel richer	Be wiser
Show the world	Contribute to my inner circle
Change the world	Focus on MY world
Influence	Enrich

FEARS
FROM (Growth Period)	TO (Post-Crisis)
Being left behind by others	Falling down on my responsibilities
How I am perceived by others	How I feel about myself

These dramatic shifts in the Hopes and Fears of the post-crisis consumer – these symptoms of withdrawal as a result of the erosion of trust – trigger a shift in their highest values. These are the values that color their approach to life, providing the permanent background and lasting context for all their decisions and behavior.

We can look at these values on a pre- and post-basis. In the pre-crisis world, affluent, optimistic consumers expanded their horizons to look for the wide social recognition that they felt they were entitled to as a result of their ascent of the ladder of success. Brands were a part of this cultural recipe for success. The premium brands that signaled that their consumers had reached a higher level of achievement were in high demand – from organic food to health and beauty products, cosmetics, fashion label clothes, and imported cars and watches. The consumer was able to trust the implicit equation – you earned it, so you have permission to wear the badges that will signal to society that your achievement merits recognition.

After their trust implodes, many of these consumers re-calibrate their values. They narrow their perspectives from wanting to demonstrate their success to the world, to paying more attention to their inner circle of family and close friends, securing the status quo, and exercising more thoughtful choices. They may feel as though they have been undisciplined, and may want to retrieve and re-emphasize their sense of responsibility. They seek to reground themselves and re-establish a new and sustainable balance in their lives. When this is the case, their brand behavior will also shift. They will re-examine the functional benefits of a high quality to price ratio, seeking a high level of functional performance for a fair price, and making sure they are getting what they pay for. They will put more emphasis on attributes of fairness, honesty, transparency, and avoidance of waste. Authenticity and timelessness (“what’s important?” versus “what’s new?”) will be reasserted.

Clearly, this is a major shift. It may not apply to all consumers, and it may apply at different degrees of intensity. But there are a large number of consumers going through this re-ordering of their values right now. Brands that fail to recognize it will be spurned.

What should brand owners do?

1. Talk to your consumers immediately. Look for signals that they are re-thinking their priorities. You can do this with rapid qualitative research, web traffic analysis, buzz analysis and many of the instant data gathering tools that are available today. Hurry.
2. Re-draw the Means End Chain for these consumers. If the resulting insight indicates a change in the highest values, then re-examine the lower levels of the chain.
3. Look at the brands in your portfolio which require you to refine and rebalance the value proposition to appeal to the new priorities of your consumers. This rebalance can be achieved via extra emphasis on the functional benefits and quality of ingredients. It might come from reassurance about authenticity and timeless values (i.e. reinforcing consumer trust). If price: quality ratio adjustment is called for, you might be able to do so via promotional rewards or volume pricing for your best customers, rather than lowering shelf price on every unit.
4. Finally, it is critical to re-segment your consumer universe. This will take longer, because it requires quantitative research. You must identify whether a new segment has emerged and how to serve it. You must also identify whether the new value priorities have changed attitudes and behaviors in existing segments. Do it now. You can get to new results and new insights in about 6 weeks if you start now, and then being immediately the re-tooling of your portfolio and your brands that will be indicated if there are major shifts in the segmentation of your consumer universe.