New consumer segments emerge from pandemic

https://business.inquirer.net/307554/new-consumer-segments-emerge-from-pandemic/amp

COVID-19 continues to ravage many countries and it looks like we will have to live side by side with it until a vaccine becomes available. Such is the macro-environment influence of COVID-19 that clustered behaviors have emerged among different consumer generations and socio-income classes.

The MKS Report on the new Filipino consumer clusters amid a COVID scenario is a product of a duo research survey conducted between April and May 2020. The 500 sample study covers all income classes and five generations of consumers among them: the Boomer Generation born between 1946 and 1964, ages between 56 to 74; the Gen X or sandwich generation born 1965 to 1976, now ages between 44 years old and 55 years;  Gen Y, otherwise known as the Millennial Generation born between 1977 and 1994 and ages 26 to 43 years old and Gen Z, born between 1995 and 2020, the oldest being 25 years old.

Driving forces

The Philippine population is pegged at 109 million by the Philippine Statistics Authority. An estimated 38 percent belongs to the young Gen Z and the millennial market while 28 percent belongs to the Gen X and Boomer markets.

The Millennial and Gen Z populate the working force and are starting to build homes and families, spend for their children’s education, etc. Many are debt-ridden while a small segment belong to the privileged. On the other hand, the Gen X and Boomer markets are nearing the end of their career, except if they are businessmen, entrepreneurs or heirs. They would either have saved, are debt-free or are likewise debt-ridden and filled with material acquisitions with little or no sustained value, but are symbols of an “arrived” social status mentality. A small number are recipients of passed-on wealth guaranteeing them sustained lifetime disposable money.

The world pandemic has changed the economic landscape, dividing consumers into two segments—the first with sustained income or savings and second, those with little or less disposable income.

Nonetheless, regardless of generational age and income, there are five strong cluster motivations that trigger the pandemic consumers’ buying attitude, decision-making and actual purchase.

New consumer behavior

Keep it basic, nothing fancy. Generally practical consumers, this mindset is particularly prevalent among the upper middle-income class.

The need to stock up on basic necessities like food served at mealtimes, rice, water, soap and other commoditized products needed for daily living is a driving motivation. Purchases are nothing fanciful and grand. Other than buying at traditional mall supermarkets, the “buy basic consumer” buys too from direct sources or middlemen. Products are sourced through online resellers in Facebook, Viber, chat rooms, online grocers, etc. who then send these products via direct delivery vans or riders. Among these products include homegrown veggies, fresh seafood catch and meat, bread and condiments, etc.

Home sweet home. Security and safety are the motivating factors for stay-at-home, cocooning consumers. Most consumers in this cluster believe that the COVID-19 pandemic will not be addressed anytime soon. Household cleaning aids, buying home appliances, renovating and redecorating homes and building man caves are some of the apparent behaviors among consumers sharing this mindset. The Gen X, with “mid-nester” families from young to older children populate this mindset.

Health is wealth. Personal health is a strong concern across all age groups. Healthy food belongs to the top five categories likely to be consumed by the Gen Zs while purchase of healthy food and medicines is strongest among the middle-income class. Skin care is indispensable among the upper income class. It remains an important category among the Boomers, Millenials and Gen Z.

Pamper yourself. Despite the pandemic, consumers never fail to resort to buying behavior and products that make them feel good and happy. While the preferences and financial capability differ, both the upscale and lower income segments enjoy feel good moments. Snacks and alcoholic beverages are momentous joys for the low to middle income segment while enjoying spa products and services, skin care and home appliances are among the top drivers for purchase by the upper income.

Mall rats it is! The young Filipino Gen Z so love the mall. No wonder that the mall is their first go-to destination upon relaxation of the quarantine. They are resolute in the belief that their youth provides a safe cover against the horrors of COVID-19. The millennials, while a bit more pragmatic, take after the Gen Z in their desire to go to malls. However, they rationalize their mall expeditions by running errands, thus they gain shopping pleasure and a sense of normalcy. Going to the mall is an activity that cuts across all age groups, particularly when favorite restaurants resumed operations.

Filipino consumers likewise exhibited a general consumptive behavior. Across generations, one common belief is that cash is king.

Filipino consumers prefer to pay in cash followed by a credit card, if there is, and a debit card. Interestingly, online and in-home shopping are more popular among the upper income and older market. This is not surprising as the older mature market has limited mobility due to the pandemic while the upper income seems unconcerned about the costs of personal shopping and delivery fees, Lazada and Shopee enjoy foremost brand recall when it comes to e-commerce websites.

Consumers also have a brand in mind for every category. The health scare has led people to be careful and mindful about their daily time and activities. With limited time outside of their homes and the imposed curfew hours, Filipino consumers no longer enjoy the pre-COVID leisure hours spent in malls. On the contrary, Filipino consumers movement is targeted and so are their purchases. Trust in a product or service is very important and branded products and services provide that guarantee.

Brands that invested in compelling and strategic branding campaigns pre-COVID and continue to do so during tight and loose quarantine periods have provided safety nets, ready for the time when the macro-environment improves once the pandemic is dispelled.

The competitive environment has become a level playing field. Businesses with sufficient operating capital to fund and ride the tide of the pandemic have a greater opportunity to keep their brand in the minds of the purposive pandemic consumer. Nevertheless, even with funds for branding, riding on the opportunity or remaining silent, like most businesses affected by the pandemic, is an internal business strategy that can determine the sustainability of the business and its brands. Only a business owner with a branding mindset can take advantage of the opportunities that are still present amid a crisis.

 

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