The COVID-19 pandemic has driven some new consumer behaviors. For example, 28 percent of online grocery shoppers surveyed in March made their first online grocery order ever because of coronavirus concerns, according to CPG marketing agency Acosta.
The unknown is whether those behaviors will stick. Human behavior is incredibly elastic after all. However, we at Oracle CX Marketing Consulting believe some consumer behaviors will stick because of the impact of health and safety concerns, stay-at-home orders, the shutdown of non-essential businesses, remote working, travel restrictions, social distancing, supply chain disruptions, and other aspects of the COVID-19 crisis.
Going forward, consultants and analysts at Oracle CX Marketing Consulting and Oracle Data Cloud see significant shifts in consumer preferences around:
Consumer products brands
Retail store brands
Let’s discuss some of those changes, the data behind these changes, and how they might affect your marketing strategy.
Because of rolling out-of-stocks, consumers, starting in the second half of March, have been trying new brands at much higher rates. According to consumer-packaged goods (CPG) sales data from Oracle Data Cloud, in early May 40 percent of weekly buyers for the average CPG brand were new to the brand, not having purchased the brand in the past 52 weeks. For a little perspective, at the same time in 2019, 33 percent of weekly buyers were new to the brand.
And in categories such as soup, cereal, pasta, sauce, and household cleaners where out-of-stocks were more pervasive, more consumers tried new brands.
While the vast majority of consumers who try new brands will likely revert to their previously preferred brand once it’s available again, some will have discovered a new brand that they prefer more and make a permanent switch. Given the financial pressures that many Americans are experiencing, consumers who trade down to a cheaper brand are more likely to stick with that brand change, at least until their financial situations improve. Conversely, we see other households trading up in their CPG purchases, particularly in their scratch cooking ingredient lists.
“Food brands have been noticing these trends and leveraging contextual targeting to place ads in relevant recipe content,” says Tim Carr, Product Marketing Director, Oracle Data Cloud. “They are trying to inspire people with innovative ways to use up staple items that were pantry-loaded in March and to help stretch and encourage home chefs to expand their culinary repertoires.”
What marketers should do:
Retailers, we recommend that you pay close attention to your product sales and analytics to inform your promotions. If you’re not using an AI-powered product recommendation engine, consider implementing one to better serve your customers on a 1-to-1 basis. You’ll also gain the added benefit of having your product recommendations automatically adapt to future customer preference changes, which are likely considering ongoing supply chain disruptions.
Product subscriptions are another potentially fruitful approach, with customers who sign up to receive a product regularly getting priority over one-time buyers when supply is low.
We recommend CPG brands try to mitigate defections among long-time customers, while simultaneously trying to drive repeat purchases among newly acquired buyers.
“Brands gained trials at never-before-seen levels,” says Megan Margraff, Sr. Director of Applied Data Science, Oracle Data Cloud. “However, the ability to retain consumers and generate repeat sales remains to be seen.”
CPG brands could encourage brand loyalty by offering product bundles, similar to those offered for back-to-school events, says Clint Kaiser, Head of Strategic & Analytic Services at Oracle CX Marketing Consulting. For example, they could offer a “cleaning bundle” that might include detergent, hand soap, cleaning wipes, and other products, or a “paper products bundle” that might include toilet paper, facial tissues, paper towels, and other products. If each bundle is anchored by a high demand, low supply product, some consumers will be more than happy to switch brands for some of their products.
Because of those same out-of-stocks, as well as the need to consolidate essential buying into fewer trips, many consumers are heavily spending in stores they used to shop very infrequently. From mid-March to early May, grocers saw their year-over-year sales grow much faster among their less-frequent “opportunity” shoppers and their very-occasional “fringe” shoppers than their most-loyal “core” shoppers, according to Oracle Data Cloud figures.
What marketers should do:
Don’t take for granted that previously loyal customers will come back after coronavirus concerns subside. Use your marketing and loyalty programs to reestablish loyalty with core customers, as well as engaging those customers by leveraging your CRM and 1st-party data assets with digital media.
At the same time, seize this opportunity to try to build stronger loyalty with your less-frequent customers and first-time customers. Activate highly relevant 3rd-party audiences to reach current and prospective customers.
“Retailers are seeing the largest upside from opportunity and fringe shoppers, providing potential for more sustainable revenue,” says Margraff. “Conversely, retailers’ core shoppers are likely more at risk. Anchor your marketing around what really differentiates you as a retailer. Lean into your private label programs to provide value to budget-constrained consumers and don’t underestimate the importance of leaving a positive price perception with your new shoppers.”
During the stay-at-home mandates, Americans made dramatic changes in how they shop, buy restaurant food, and get entertainment. For example:
28 percent of online grocery shoppers made their first online grocery order ever in March because of coronavirus concerns, according to CPG marketing agency Acosta.
Among the 7 percent of American consumers who had never purchased anything online prior to the stay-at-home orders, 32 percent have now bought online for the first time, according to research by USC Center for the Digital Future and the Interactive Advertising Bureau (IAB).
The value of online orders that are picked up in-store or curbside will rise roughly 60 percent this year, according to Econsultancy, which had previously predicted an increase of 38.6 percent.
Restaurant delivery apps DoorDash, Uber Eats, and Grubhub saw sales through their apps increase 33 percent year-over-year in late March, according to Earnest Research.
Premium video-on-demand has become a proven market, with 70 percent of Americans saying they would choose to stream a first-run feature at home rather than go to a movie theater in the coming months, according to Performance Research.
Brands also introduced a variety of virtual services to either facilitate sales or replace in-person services. For example, West Elm introduced virtual design sessions; Lane Bryant virtual bra fittings; and Guitar Center virtual instrument lessons.
What marketers should do:
Necessity has driven lots of consumers to shopping channels that they likely wouldn’t haven’t tried otherwise—or at least wouldn’t have tried until much further in the future. Long term, adoption of these behaviors will accelerate, since many of these digital behaviors were already growing.
We recommend using your digital marketing and loyalty program to continue educating your customers and prospects about your virtual, to-go, and delivery offerings, as well as spur profitable digital behaviors. For example, you could promote deals that are only available for curbside pickup to maintain store visits. Also, consider activating your first-party data to target digital ads toward those already in your CRM files, plus lookalikes.
“Restaurants and retailers have been particularly interested in leveraging a myriad of ecommerce, direct-to-consumer, and mobile, app-based audience solutions that were not previously part of their 3rd-party targeting mix,” says Carr. “Brands are realizing that they have only captured a small portion of the digitally-engaged consumer and need to increase their acquisition efforts. They are also leaning more heavily on in-market audiences and contextual targeting to better reflect consumers current mindsets and situations.”
We’ve undergone the largest work-from-home experiment in history. While the majority of jobs can’t be done remotely, for the roughly 30% of the workforce that can do their jobs from home, we’ll see some of that continue. Given the workplace recommendations from the Centers for Disease Control and Prevention (CDC), many businesses may prefer to have employees work from home to avoid the costs of complying. In fact, Twitter, Facebook, Alphabet, and other companies have said that most or all of their employees can work from home at least through the end of the year, if not indefinitely. Long term, this trend will likely mean that more workers will have greater flexibility to split their time between working at the office and at home, in addition to some employees remaining 100% remote.
The impact of this shift could include:
A decline in gasoline sales, since fewer people are commuting, as well as a change in the number or kinds of automobiles purchased
A decline in the use of public transportation, with people wary of being packed in small interior spaces for long durations—which may have the effect of partially or fully counteracting the decline in cars on the road caused by more telecommuting
A rise in urban flight, since commute times will become less important or irrelevant for some workers, who will likely want bigger homes to allow for a dedicated home office
A decrease in the consumption of podcasts, radio, and other media that are popular during commutes
A rise in video conferencing and virtual events, as workers and companies avoid travel
A redefining of business casual apparel as more employees engage in “tabletop dressing,” knowing that they’re only going to be seen from the waist up in their Zoom meetings and wanting to wear comfy clothing
What marketers should do:
Brands should lean into a workplace that involves less commuting and less travel. For instance, while nothing can replace in-person events, the increase in virtual meetings, webinars, and virtual conferences is likely to be lasting, says Autumn Coleman, Consulting Technical Manager at Oracle CX Marketing Consulting.
“While the lockdowns have eased, consumers and businesses are still aware of the risks assembling in large groups,” she says. “Encourage collaborative environments where people feel safe.” Coleman added that Oracle Eloqua's new App integration with Zoom streamlines data collection and lead capture with full automation capabilities when hosting Zoom webinars.
How will these changes in consumer preferences affect your business? And more importantly, how will your company adjust its operations and its marketing to get in sync with these changes?
Better reporting and improved analytics can give you the visibility and insights you need to understand your changing business environment. And better personalization, segmentation, and automation can get the right messaging in front of the right customers.
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Need help with your messaging strategy? Oracle CX Marketing Consulting has more than 500 of the leading marketing minds ready to help you to achieve more with the leading marketing cloud, including Strategic Services and Creative Services teams that can help you develop and execute the right messaging strategy.
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