Making business decisions in times of uncertainty is difficult and disconcerting. The economic stakes are extremely high right now and for many this time of uncertainty will lead to a legitimate fear of calculated business risks. It’s understandable that many businesses panic when they see drastic changes, but the key is to remain as level-headed as possible, to make sensible decisions on factors that you can control and objectively evaluate data that can support your future success.
So, whilst proactive efficiency drives are a commonplace reaction for businesses in a tougher economy, avoiding mistakes through understanding the market has never been more important. To do this, we believe that consumer research is more important now than ever. Understanding changes in consumer mindsets and decision making is critical to avoid market missteps and to ensure your business takes advantage of shifts in the market. This isn’t ‘business as usual’, and cooler heads will prevail.
Here are the main reasons why consumer research is vital:
1. Find your optimal target market
As capex and opex budgets shrink across the board, and consumer spending declines across many sectors, understanding who the most optimal group to target is important. It’s no longer effective to appeal to the mass market for either products or services. Knowing who to connect with and how you can reach them effectively is necessary for success and survival. Without understanding who your optimal target market is, a business has no way to effectively direct its resources to those customers with the highest potential for sales growth and loyalty to the brand.
The most effective way to identify your target market is by asking questions of those within the market itself. Whether by quantitative or qualitative research methods, it’s useful to uncover what drives their purchase decisions, which brands they consider or are loyal to and which brands they might reject. The goal of any research method always centres around uncovering the underlying needs, attitudes and motivations of consumers to discover which areas align with your brand’s offer.
2. Understand lapsed users
For many businesses the value of consumer research not only is about looking forward at which consumers to target but also looking back at those who used to choose your brand and no longer do so. There’s always wisdom in learning from your mistakes and a business that fails to learn is at risk of continuing to make the same errors and therefore not evolve to survive.
Understanding what might have driven consumers away, whether a more attractive competitor offer or a larger shift in consumer needs, is necessary for a business to move forward. By understanding why you are losing consumers, your business can make key strategic changes to your offer to bring them back to your brand. Without this understanding a business will have to continue making key decisions without data explaining how, and also importantly why, consumers are no longer choosing a brand.
3. Find who the brand’s new users are
Some might say this point is the same as understanding your target market, because what could be more important in a target market than those who choose your brand? However, while there should be overlap between your target market and your current consumer base, there’s much that can be gained from taking a closer look at those new to your brand.
Knowing how these new users heard about your brand lets you know which channels are reaching those new markets and are therefore worthwhile to continue investing in. Research also allows a business to uncover what attributes new users associate with the brand. This association gives key insights into what elements are working well for your brand and should be maintained when considering any other strategic, tactical or operational changes the business may decide to make in this time of uncertainty. In the end, research into new users allows you to ensure that the business changes you make tomorrow don’t alienate your newest and therefore least consumers.
4. Create clear brand distinction in a sea of competitors
In times of uncertainty it’s common for spending to be down and therefore competition in the market to be more aggressive. For a business this means that understanding what gives a brand a competitive edge in the eyes of the market is even more critical.
Consumer research takes the guesswork out of understanding what makes a business distinct and appealing. It’s not just assumptions made in a board meeting about what makes consumers choose one brand over another. It’s handing the question over to consumers and asking them, using direct and indirect methods, what it is about each brand that drives their purchase decision. Great risk lies in making the wrong assumptions about your brand’s distinctiveness and therefore spending valuable resources communicating the wrong message or even worse making changes that remove the reason existing users choose your brand in the first place.
5. Make sure your marketing spend is accountable
Last but not least, consumer research during times of uncertainty helps to evaluate whether marketing spend is benefiting the business and what adjustments are needed to optimise the communications strategy. There’s no point in spending money on marketing that isn’t returning anything to a business. While some may argue short-term sales are the only measure of success, brands that build a platform in the current uncertainty are the ones that will foster long term consumer trust and loyalty for the future. And while this may not mean an immediate impact on the bottom line during high consumer uncertainty, effective marketing will assist a business in recovering faster than competitors who have stayed silent.
In times of economic stability, where the market is strong, the rise of consumer and business spending can compensate for less than optimal branding, positioning, pricing, or segmentation. However, today’s market is anything but certain and the risks of making uninformed assumptions about consumers is very high.
Your business decisions during this crisis are important and making sure you have a clear understanding of your consumers is critical in ensuring you are making the right decisions. So while much of the current crisis is out of our direct control, ensuring you have the right information to make the most optimal decisions for your business is a big part in being prepared for the new world to come.
Please speak to our team at BrandMatters if you have any other questions about consumer research in times of uncertainty.