Every Fortune 1000 company is currently contemplating what a recession will mean for its business. And while many of our clients are asking us to help them understand how consumers are dealing with and planning to deal with inflation, we are also seeing a dangerous pattern emerge. Namely, companies are starting to respond reactively, instead of proactively, to consumer behavior.
We saw this during COVID.
An external force led to consumers changing their behavior. This could be seen in consumers gravitating toward comfort food or opting for harsher cleaning solutions as their pandemic-driven anxiety was at an all-time high.
But these were simply blips in behavior.
They were not cultural shifts driven by long-term consumer beliefs.
Clients of ours that understood this didn’t abandon their wellness or well-being strategies. Nor did they abandon their investments in innovating with more natural cleaning solutions. As the anxiety dissipated, and normalcy returned, the dominant cultural beliefs that had been growing in relevance over the past five years returned as well.
Of course, companies that doubled down on blips in behavior saw short-term gains. But now, they are scrambling to catch up with clients that innovated to satisfy the beliefs of the consumer and didn’t fall for a behavior that was the symptom of a circumstance largely outside of the consumer’s control.
You’d think the industry would have learned a lesson from this.
But as the recession now looms, we are once again seeing innovation teams lose resources and funding. This is why Lux MotivBase wants to provide some guidance on how to avoid the siren song that is a behavioral blip and keep your innovation and insight team on the right course.
How to use anthropology to respond to the recession
In the days to come, you will see consumers making choices that will be inconsistent with what you have seen historically. Or they will make decisions that, flat-out, make no sense. That’s because we are human beings. We are emotional creatures. We don’t always act rationally.
But if you work in innovation, R&D, or insight, you still need to make sense of what is happening.
The key to understanding the present and anticipating the future is studying the meanings that have shaped your category in the past and mapping changes as they unfold.
So, when a behavior emerges that needs to be addressed, here are the three questions you need to ask yourself.
Do you understand the consumer’s unmet need? And can you reframe a solution to keep the consumer engaged?
In 2020, a U.S.-based quick-service restaurant saw a reduction in breakfast sales during the pandemic. When this company saw a drop in sales during this daypart, it started focusing on dinner bundles to try and compensate. But the drop in sales was driven by the reduced pressure to commute. It didn’t mean that consumers didn’t want to get breakfast. It simply meant that the occasion needed to be reframed.
A competitor leveraged anthropology to understand and examine the situation culturally. By investigating the meanings that were dominant in the context of breakfast before COVID, it was able to see that the consumer was dedicated to finding creative ways to simplify and relax during or after a stressful morning routine.
So, the company didn’t abandon breakfast. It combined cultural insight with behavioral restrictions to come up with a solution: It invited consumers to get out for a “walk” to the restaurant for breakfast. It was a simple solution but effective because it addressed both the emotional and rational challenges the consumer was trying to overcome.
Now that things have returned to normal, the competitor is seeing growth during the breakfast daypart thanks to having created a new routine for consumers, and now seeing drive-thru traffic return.
Is this behavior due to a current event? Or is this a cultural shift that has been building over time and the current event simply, sped things up?
It is very, very rare for a behavior to appear out of nowhere. One needs to look no further than Geoffrey Moore’s book Crossing the Chasm to understand how big changes in culture start as small, ideological movements. In my book entitled Microcultures (written with cultural anthropologist, Ujwal Arkalgud), we go on to explain that for these movements to take hold, they need to address or be linked to human vulnerability.
Often, a big event like a pandemic or a recession accelerates a culture by bringing consumer vulnerabilities to the surface.
Consider the culture of wellness: Pre-pandemic, there was a small group of consumers dedicated to taking a more holistic approach to their health and well-being. It was growing, but it was growing slowly and steadily.
But with the emergence of COVID, suddenly, many consumers started to realize that the system was not as capable as they had believed. Many consumers started to realize that their health was in their own hands. They were on their own. As a result, this started to shift how consumers thought about food, exercise, and stress.
Clients that used anthropology to understand this scenario were able to look back at the expectations of consumers before COVID to anticipate what beliefs and values would survive and remain post-COVID. This cultural understanding of the past allowed these clients to focus on the long-term consumers and not tailor solutions to tourists that would go back to their old ways once the crisis was over.
What does the consumer believe this behavior says about them? And does it align with or contract their values?
Lastly, there will be situations where consumers will act in a way that contradicts their values. So, as the recession looms, we can anticipate that having less money will force some to change their behavior. But as many experts have pointed out, that doesn’t mean that consumers will completely stop spending.
The key is to understand the values that the consumer holds dear and then consider how we can soften the blow of the recession. By studying their motivations and values, we can decode the ways consumers are compromising and identify ways where we may be able to help them.
Currently, we are doing a tremendous amount of work on inflation. The goal is to understand the meanings that consumers link to a product or service, as they contemplate that they may need to change how they live to get through tough economic times.
The beauty of taking an anthropological approach is we can see the behavioral changes the consumer is considering, but we can also see what is motivating these shifts, how it is creating anxiety for the consumer because it is forcing them to act against their values, and how they are seeking solutions that can make the whole process more manageable.
Conclusion
Many experts are saying it is not a matter of if a recession is coming, but a matter of when. The key to navigating a difficult road ahead is to not react, without ensuring you have a clear understanding of the consumer perspective. If consumers are choosing a behavior, ask yourself why. If you can’t answer the question, an anthropological approach is key to getting the full picture.