Abhinav Anand
Planner's Journal

"Premium sedans, SUVs might have to wait, but regular models might see faster recovery"

In a new series Planner's Journal, we explore what the world looks like from the perspective of those in charge of mining consumer insights every day.

Samir Datar heads strategy at Hakuhodo India and before answering our questions, he decided to weave in a bit of quantum mechanics by way of Schrodinger's cat. He says that as of now, the future could reboot very quickly, or it could take forever. Most of the current predictions are based on how people are reacting and behaving during lockdown.

He asks, "Will they continue to behave the same way to form the so-called new normal, or will these few months of being deprived of many things lead to a completely new behaviour?" He continues, "Also, how people behave will be a function of how many get laid off versus how many continue to work with a salary cut, and for how long. So, the disclaimer - all answers are subject to how things turn out on many fronts in future."

"Real estate just might see a boost. This lockdown period would have made people realise the importance of having their own homes versus shelling out rental money. Even though the moratorium was a scam, people can still expect respite from the government in times of crisis as against landlords relenting."

If there’s one piece of advice you could give all brand marketers now, what would that be?

Do not press the red button just yet. If you do decide to press it, it could lead to implosion, explosion, or basically, it will obliterate the economy. For the brand to survive, it requires marketing. Perhaps, repurpose the effort to a more amenable audience, but don't just shut shop. There is always a bounce back, and you don't want to be caught napping.

What are the top 3 ways in which the Indian consumer has changed? And, how will these changes affect the way brand managers will sell to them (the consumers) in the days ahead?

Has the consumer changed, or the change has been forced by the situation, so, it is like a necessary evil for now? I was reading somewhere that all our buying behaviour is turning online. So, online shopping, online payment, etc. But weren't we doing that already? Post demonetisation, there was a spurt in online transactions, but it did settle down. Or, online shopping, for instance. The growth numbers for Amazon, Flipkart, BigBasket, and many others showed that online shopping was growing.

So then, how has the consumer really changed?

1. Hoarding of essentials is back in fashion. The way our grandparents used to do. Also, larger packs of everything, if possible.

2. Focusing on what is really needed. Given the lack of choice and the definition of essentials, people are focusing on what is needed on a regular basis because beyond that, nothing is available.

3. These couple of months have helped the consumer to figure out the level of discretionary spending they were indulging in since most of the items that contributed to that spending are not available, and, hence, it has been money saved.

This will impact the future to the extent that a lot of consumers, who had stopped with monthly buying, will go back to stocking up. Spending on discretionary items will take time to start again (it won't be done away with completely), and possible large scale spending on what they were deprived of during lockdown.

"Post lockdown, the task will be to up the sales and revenue and profits. The task will be of recovery. It will require very direct communication that induces consumers to buy. So we will need a lot of tactical communication to get rid of piled up inventory rather than purpose led communication."

Which product segments will have the toughest road to recovery? And, which categories will bounce back faster than others?

All products where the decision to buy can be postponed, or a substitute that might perform the same function, are going to have a longer lead, time in terms of recovery. Automobiles, for instance (four-wheelers), will take a while to recover. Though within the category, people might not buy what they were really aspiring for, but settle for something less, since individual cars will become a need versus public transport. Two-wheelers, for instance, might pick up in sales in order to avoid travelling by public transport. Auto financing, therefore, might get a boost due to this, and also falling interest rates. So, to rephrase, perhaps, premium sedans and SUVs might have to wait, but regular models might see faster recovery.

Same is the case with consumer durables - premium durables will take time to recover, but durables that fall under necessities will recover much faster.

This might surprise many, but I believe travel will be one sector that will bounce back faster.

(a) People who were stuck away from home, or old parents who could not be with their children, will give a boost in the first phase.

Same holds true for eating out and pubs. Yes, the consumers will be wary and take precautions, but most definitely would want to step out.

Online shopping for stuff other than groceries will also see quick recovery. Since contactless might just become the norm, consumers will indulge in online shopping for much-needed retail therapy.

Real estate might just see a boost. This lockdown period would have made people realise the importance of having their own homes, versus shelling out rental money. Even though the moratorium was a scam, people can still expect respite from the government in times of crisis, as against landlords relenting.

(b) After being cooped up for so long inside the house, there would be many who would want to just head out in the open and get over the claustrophobia that was setting in.

Are we headed towards a world in which consumerism will become a bad word? What will happen to marketing in such a world?

I wonder why people think that consumerism will become a bad word? There will always be consumers who are willing to buy products and services. Yes, there will be a significant number (if the layoffs and salary cuts become rampant, leading to the second wave of possible destitutes after the daily wage earners and labourers) who might not buy all things pricey, but they will buy. No one will move to charcoal from a toothpaste after having used toothpaste for years! Marketing will need to be aware of the changing matrix as per the needs of the consumer and focus better.

Perhaps, the biggest thing that will happen is brands might look for niches that will serve their purpose through the entire product portfolio, and aim to target the niches, which will allow them to recover quickly.

Do you see purpose-led brand communication increase, or decrease, in the days ahead?

To answer this question, there needs to be a thorough consumer research to understand how many of them believed in the so-called purpose-led brand communication. All the creative ways the logos were used to focus on social distancing -- did it do anything for the consumer? There is so much communication by the brands as to how they are helping people survive the lockdown period. Did that create a good feel in the consumer's mind to stick to those brands, or to shift to them once the lockdown is over?

But honestly speaking, I foresee a decrease in such communication. Post lockdown, the task will be to up the sales and revenue and profits. The task will be of recovery. It will require very direct communication that induces consumers to buy. So, we will need a lot of tactical communication to get rid of piled up inventory, rather than purpose-led communication.