In this first part of a three-part series we look at the impact of the state of global and national affairs and its impact on consumers, from how they are interpreting branding communications to their discretionary and non-discretionary spending, and what it means for marketers in specific categories.
The myriad of current global and local events, including not least COVID, the war in Ukraine, and the rising cost-of-living, has triggered a widespread turning of attention, and re-evaluating, of household financial maps.
Income has been slowing and access to public services (public education availability, hospital services, aged care, GP availability) is perceived to be deteriorating. Increased uncertainty about COVID, Long-COVID, cost-of-living, personal transport future and housing (at a family level), is putting significant downward pressure on consumer confidence, which is racing towards the low levels seen during the first wave of COVID.
Consumer confidence is on a downward trend
For many Australian households, this implies a need to save more to ensure access to adequate quality and a buffer against uncertainty. The magnitude of COVID’s impacts has triggered reflection on matters financial that have turned up a host of spiders under rocks that were previously not being considered jointly, and which are inclining people towards more conservative budgeting (more savings).
The cost of living in Australia is increasing, sharply, with inflation up by 5.1% from March 2021 to March 2022, and wages increasing at less than half of that (the bulk of inflation is currently being caused by corporate profits). While periods of high inflation are a normal part of economic cycles, the current increase is set against a backdrop of things like COVID and the war in Ukraine. For many consumers, the driving shock is the recognition of the weaker actual control of quality of life than they previously imagined they had; key threats are obviously systemic rather than ephemeral.
Coined in the post-Cold War era, and re-emerging in the 2000’s with the advent of the internet, the term VUCA (Volatile, Uncertain, Complex and Ambiguous) was coined to try and help explain emerging new world dynamics like cultural and technological change. With the emergence of COVID, a new term, BANI, was born, standing for brittle, anxious, nonlinear, and incomprehensible.
To be brittle is to be susceptible to catastrophe; think businesses that put all their eggs in one basket. Foundations thought robust prior to COVID have unfortunately turned out to be fragile for thousands of businesses.
Research we conducted with Deakin Health Economics and AUSActive, the leading not-for-profit industry body for Australia’s health and well-being, shows that severe anxiety is alarmingly widespread across the nation. Adding to the concern is that, while not necessarily being clinically anxious, a further one in three of us are languishing –not mentally unwell, but not well, either.
The sense of urgency that envelops the thinking of anxious and languishing consumers impacts decision-making. While many of us (45%) are goal-oriented and respond well to communications couched in a gain-framed way, our research shows that an increasing number of us are tending towards loss-frames. By segmenting consumers into their information processing types, we have been able to identify brand messaging that more strongly resonates among current consumer mindsets, of different kinds. For example, take the following brand message: Lose those COVID kilos!
Among a set of messages tested, this message was not particularly appealing overall, being motivating to just 37% of consumers. However, among a key target segment who had lost their mojo due to COVID, it resonated far more strongly with over two in three finding it appealing – one of the strongest messages tested. A number of other messages were more appealing overall, but tended to reach the goal-oriented, gain-framing cohort who were already active again (thus not needing to be reached by messages). Through identification of the unique mental processing filters currently in use by the target segment, maximum reach was achieved were it needed to be.
“Nothing makes sense anymore” has been a very common quote we have heard in our research over the past two years. The current world shakeup is viscerally nonlinear, with seemingly disconnected world events and their disproportionate impacts making well-defined, long-term planning exceptionally difficult for households and businesses alike.
The final dimension of the BANI framework, Incomprehensible, is a core component of the widespread uncertainty consumers have – the misunderstanding generated from finding answers which turn out to not make sense. The lack of control over fundamental quality of life (non-discretionary) factors is very top of mind for many, and our research from across the globe shows that uncertainty is persisting in a deep and dynamic way. Combining our information processing segmentation approach with direct financial and more emotional impacts of COVID on consumers, we have created COVID Archetypes, which leads us to the next part of the series (which will be released in mid August), in which we will survey leading Australian marketers and CMO’s on what burning consumer insights they need to help navigate current times.