In this series, we explore some takeaways and implications of the prolonged pandemic on consumers and businesses—covered in three parts. Part 1 paints an overall picture of the PH economy, consumer spend and considerations. Part 2 explores the dimensions of safety and opportunities within this space and Part 3 looks at how consumers define survival today and talks about the opportunities here.
Economic and Societal Indicators point towards a slow recovery for the Philippine economy as employment rates, consumer confidence and vaccination remain low in the country. As a consumer-driven economy, the growth and abundance we experienced pre-pandemic and the contraction that followed as COVID-19 hit, was driven primarily by the shifts in private demand and consumption.
Successfully navigating the new business as usual requires a deep understanding of consumer behavior, its drivers, and the shifts that have resulted from the uncertainty and impact of the COVID-19 pandemic. This vital consumer understanding anchors in two key questions. First, how are consumers behaving today? And what drives their choices?
Answering these questions will allow businesses to gain clarity on how to sustain a business, drive relevance and capitalize on opportunities for growth.
Decreased discretionary spend as budget tops consideration set
Our 2021 consumer research revealed a marked shift in spending, specifically a marked decrease in discretionary spend and a return to basics—people go out less, out of home spend is down, travel & leisure spend has declined significantly and spend on luxury items has dropped.
This behavior reflects the impact of growing customer uncertainty. With no clear end in sight, consumers are compelled to be more mindful of their spending, leading budget and longevity to top their list of key purchase considerations today.
Value will be key: Research reveals safety and survival drives value in differing consumer dimensions
Economic forecasts indicate a slow recovery and consumer spending will continue to be restricted. To survive, businesses will need to fight for relevance. The close link between consumer relevance and value means that the businesses that allow consumers to maximize their budgets and have a strongly established value propositions will have a key advantage in this area.
So what drives value? Across the consumers we spoke with coming from a range of income groups, demographics and age, the unifying themes most relevant to consumers today are safety and survival.
What is accepted as a safe activity varies across segments. In the course of the pandemic, three areas of consumer spend have emerged—the public economy where activities involve going out and exposure to people whose activities are unknown to us, the home economy and the middle ground called the bubble economy which has emerged unique opportunities for businesses. We explore this in more in part 2 of this series but as a business, we should be thinking about whether our portfolio of brands, products and services is optimized to make the most out of these three spaces where businesses can play.
Moving now to the different views of survival, the consumers we surveyed expressed many emerging concerns. Topping the list, 78% of consumers surveyed shared that they were moderately to highly stressed about health and wellness. Importantly, concern in this area is not limited to physical wellness. Mental and emotional wellness are viewed as equally important to consumers today. Following health and wellness, for many, survival today means making ends meet and keeping up with the many things they need to learn and adjust to the uncertain and rapidly evolving reality that we face today. Finally, while not as pressing, social wellness and the need for interactions and entertainment still factor in to the survival of many.
The intensifying fight for share of wallet is challenging businesses to make a strong case for how they provide value. Businesses must ensure that they know what matters to consumers today, that they pass consumers’ value test, drive value for existing brands, products and services, and revisit their portfolio to make sure they have the right set of products and services to fit consumer needs and budgets.
A deep understanding of safety and survival, the key themes that drive customer value today, will allow businesses to maximize current opportunities and reframe the relevance of their brand in the present environment.
To position businesses for continued relevance, innovation and the ability to reinvent your business and brand will be valuable capabilities as markets and consumers continue to evolve.
About the Author Anny Oliveros
Anny Oliveros heads Acumen's Knowledge and Intellectual Property Development Center and has had over 15 years of experience in Business, Strategic Planning, Marketing, Sales and Capability Building both locally and in South East Asia building global and local brands. She is a certified Agile practitioner and has been working with Acumen to builds in knowledge and insights base for the last 5 years.