Right now the market is experiencing a tug of war between consumer sentiment and pent-up-demand, making consumer behavior unpredictable. Market research in four key areas provides consumer insights that make brands more resilient:
- Spending: As inflation shrinks discretionary income, it’s important to know how consumer’ spending priorities and purchasing criteria shift
- Conversion: Consumers care about more than affordability now, and brand purpose, trust and engagement influence purchasing decisions
- Purchases: The way people shop continues to evolve, it’s essential to know how consumers want to buy brands in your category
- Innovation: Discovering and addressing consumers’ unmet needs spurs growth
Spending: Do you know your customers’ spending priorities and purchasing criteria?
Consumer sentiment has dipped to a 40-year low, and historically this is a precursor for a recession. In fact, the June 2022 University of Michigan Consumer Sentiment Index found nearly half of consumers say rising cost of living is going affect spending patterns.
A survey by the National Retail Federation found 71% of consumers understand businesses have to raise prices in order to continue operating and employing their workers, but consumers are becoming worried about higher prices for:
- 66% – Everyday necessities
- 41% – Discretionary purchases
- 34% – Out of home experiences and entertainment
- 35% – Big ticket items
The May 2022 EY Consumer Index reveals consumers are more willing to accept price hikes for necessities like gas and food, as well as non-alcoholic beverages, personal care and household products. But consumer’s purchasing criteria now hinge more on personal priorities than affordability. While affordability and customer experience are ranked as top purchasing criteria, personal values and beliefs influence the way more than half of consumers rank their purchasing criteria:
- 25% – Affordability
- 24% – Customer Experience
- 21% – Sustainability
- 18% – Health and Wellness
- 13% – Social Impact
Conversion: Does your brand purpose measure up to consumers’ expectations?
It now takes more than price, quality and convenience to motivate people to buy your brand – purchasing decisions are also influenced by brand purpose, trust and engagement.
A greater level of social awareness, the current geo-political climate and experiencing a global pandemic have compelled consumers to rethink their personal values and priorities. And they expect brands to do the same. However, most consumers say brands need to focus on a little less talk and a lot more action.
In fact, a May 2022 EY Future Consumer Index survey found only 38% of the respondents believe the actions brand are taking are good enough, while 68% of the survey respondents think a company’s behavior is as important as what it sells and 69% said brands must behave ethically and operate in line with community expectations.
Purchases: Do you know where your customers want to shop?
Digital transformation and habits adopted during the pandemic are changing shopping behavior. And timing for seasonal shopping is being impacted by fears about inflation, availability, shipping delays and supply chain issues; motivating many people to shop earlier in the year for school supplies and holiday gifts.
Consumers now build their own timelines and shopping experiences, using a mix of in person and digital channels according to a study by the IBM Institute for Business Value (IBV).
The study found 72% of consumers rely on stores as their primary buying method, and digital tools are also an important aspect of the shopping experience for most people:
- 58% use in-store self-checkout, and 13% intend to try it
- 56% use restaurant delivery apps, and 12% intend to try it
- 50% use buy online, pick up in store; and 14% intend to try it
- 47% use mobile contactless payment, and 10% intend to try it
- 44% use grocery delivery services, and 13% intend to try it
- 37% use order online, pickup curbside, and 13% intend to try it
Now that the economy is fully opened up, people are also beginning to develop preferences for the types of items they buy online and in-stores. An IPSOS study reveals most people browse online, and a growing number of consumers are buying fashion items and groceries online. However, people are gravitating toward in-store purchases for cosmetics, and bigger ticket purchases like luxury items, electronic devices and home appliances.
Innovation: Do you know what consumers really want or need?
Breakthroughs happen when brands address a previously unmet consumer need, or create value by introducing a new way to use products to address a gap in a brand category.
In fact, innovative brands pivoted and drove growth during the pandemic by meeting unmet needs with existing products or services like Zoom, UberEats, DoorDash, Peloton, QR codes and curbside pickup.
Research by McKinsey actually indicates industries with the greatest potential to meet unmet consumer needs through 2025 are consumer packaged goods, financial services, pharma and medical supplies, retail, healthcare systems and services, and technology.
How can market research make your brand recession proof?
Quick-turn solutions like polls and pulse surveys are a reliable resource to monitor consumer intent in real-time, enabling you to stay in touch with customers purchasing criteria, spending priorities and price sensitivities.
Quantitative research solutions like attitude and usage studies combined with qualitative research methodologies such as focus groups, ethnography and shop alongs identify consumers’ unmet or unsatisfied needs by asking the right questions, and observing how people shop and use products or services.
Market research is valuable because it evokes feedback from consumers, employees and investors to create a more complete understanding of their values, needs, habits, interests, and feelings. These consumer insights also explain the logic behind the behavior and subconscious emotions that motivate people to buy a particular brand, choose an employer or invest in a business.