Eng
Eng
What does the consumer want? The correct answer to this question guarantees success. A combination of requirements and desires of consumers is some kind of puzzle which can be solved by observing their behavior. This observation not only enables an analysis of their desires and requirements and predictions for the future, but sometimes reveals those new needs that they may not even know about before and without which, the puzzle would remain a mission impossible. Even though a company’s work is guided by top managers, their decisions are still directly or indirectly always related to consumer behavior. This study assists companies to gain a deeper understanding of their consumers’ desires and requirements and making the right steps accordingly.
It has already been two decades since ACT’s team started operating on the international market in the consumer behavior research and analytics field. We help clients have a real understanding of what their consumers want, what are the characteristics of their behavior, requirements and priorities. Based on business analytics focused on research and consumers, we help companies generate consumer insights, which assists in:
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Modernization of own product and service
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Development of product or service in compliance with consumers’ requirements |
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Generation of more value for clients and consequently, a boost in client satisfaction and loyalty |
We deeply believe that data-driven decisions significantly boost a company’s effectiveness and present one of the main elements to succeed.
ACT’s team works in two directions in the field of consumer behavior research:
Crisis caused by new Coronavirus accelerated pace of digital transformation even more and forced businesses to include remote work and development of e-commerce into the “agenda”. The other side of the market – consumers remained without digital influence. E-commerce became a replacement or filler of physical shopping for them and presumably, these changes will make deep roots in their behavior and will continue in post-pandemic period as well. However, background of these processes is even more interesting – did every business mange to timely and properly respond to digital challenges, what do international statistics say and what is the vision – did the pandemic landscape of retail trade give businesses time and resources to adapt?
International trends – are businesses ready for digitalization?
It’s been a long time since change in consumer behavior and their readiness to engage in e-commerce processes became one of the main focus of studies conducted by international organizations. For example, United Nations Conference on Trade and Development (UNICTAD) annually measures B2C e-commerce index, which combines levels of internet consumption by individuals, share of protected internet servers and data on owning accounts in financial institutions. Similarly, International Tele-communication Union (ITU) offers information and communication technologies (ITC) development index [1], which is also oriented on online shopping behaviors of consumers and channels utilized in this process. This list also includes statistical data gathered by Organization of Economic Cooperation and Development (OECD).
If we have a look at e-commerce report called “E-commerce during the COVID-19 pandemic” conducted by OECD in October of 2020, we will clearly see that online commerce is very quickly developing. According to the report, retail sales (orders) made through e-mail and internet in EU member countries increased by 30% in April of 2020 compared to the previous year. Trends are similar in USA, where e-commerce orders increase by 14%-16% (see chart N1). The said report also highlights dynamic development of e-commerce in Europe, Northern America and Asia-Oceania regions in the first half of 2020.
[1] The ICT Development Index (IDI)
Source: OECD, E-commerce during the COVID-19 pandemic, 2020, October. Calculations are based on EUROSTAT statistics.
UNICTAD report “COVID-19 and E-commerce” published in summer of 2020 shows quite an interesting picture, incorporating experience of 257 companies from 23 less developed countries [1]. Some of the identified trends truly deserve our attention:
[1] These countries mostly cover Africa and Asia – Pacific Oceania regions.
Source: UNICTAD, COVID-19 and its impact on e-commerce of businesses, 2020
ACT’s role – experience from even broader geographic area
The 2020 pandemic and economic crisis enabled ACT through cooperation with different countries and international organizations (EBRD, World Bank, UNDP, USAID) in various projects to contribute globally in increasing sustainability of business sector and identifying pandemic channels affecting them. The said projects enabled us to study e-commerce development issues in focus regions (Caucasus, Western Balkans, South-East Europe, Central Asia and South and East Mediterranean) and do a research on the impact of the pandemic on businesses. As expected, business operating in focus regions shows different types of readiness for digitalization (chart 3). However, regardless of such different results, it is important to mention the overall attitude inquired respondents had in common – small and medium-size businesses have a desire to involve in e-commerce but they hesitate because of lack or complete absence of information and digital tools.
Source: ACT Research, 345 SMEs inquired in Caucasus, 827 SMEs inquired in the Western Balkan region
Our team had a chance to additionally study challenges of small and medium business operating in Central Asia, South-East Europe and SEMED countries during the pandemic within the scopes of the EBRD-sponsored project “Impact of COVID-19 on small and medium businesses”. As a part of the given study, we asked respondents representing small and medium-size businesses what percentage share of the company’s sales switched to online platforms after the pandemic started. Overall picture is also very interesting, as declared by the majority of small and medium businesses from the listed regions, sales did not switch to online shopping at all, while only a very small part of companies managed full digitalization. Businesses operating in South-East Europe (chart 4) appeared to be the most prepared for such transformations, this can be explained by the fact that logistic services were already well-developed and organized in this region and already established practice of e-commerce.
Source: ACT Research, 570 SMEs inquired in SEMED, 598 SMEs inquired in Central Asia and 184 SME inquired in South-East European region
Unplanned changes with long-term results
The new Coronavirus pandemic turned digital development into inevitable reality. When searching for answers, we clearly saw that this seemingly simple way is actually quite complex process and to pass this road, only “desire to digitalize” is not enough. Businesses had to cope with all the problems which already accompanied the process of switching to a new platform: absence of relevant experience, lack of resources or infrastructure. Even though supporting business became main migraine for every government, the majority (more than 50%) of businesses participating in different studies unanimously admit that unfortunately, their government, when working on development of priority sectors, left this part behind and online commerce still remains as unsolved issue.
It’s a fact – digitalization has not entered our lives just temporarily. These are more unplanned changes which will bring prolonged, long-term results.
Coronavirus which has been spreading all over the world and making it upside down for three months now, makes practically every field of occupation face significant challenges. People of various professions are already assuming that the pandemic has changed the world and rules of play not only for now. They expect, that still fully unexplored virus can forever alter some behaviors and everyday life of people.
New reality required businesses to provide answers to seemingly already familiar, already answered questions, while marketing as mediator between business and consumer, appeared one of the first on “frontline”. It is assumed that Covid-19 will result in need of updating the role and approaches of marketing so that under force-majeure, companies can better feel consumer’s heartbeat and needs, not only to respond to their requirements, but create this requirement and manage it.
Considering the importance of the topic, to discuss challenges and future tendencies of marketing, ACT gathered professional marketers working in various sectors. What did Coronavirus change? What is now a tendency in the sector and what lost its importance? How did companies adjust to new reality? What new needs does a consumer have? How will consumer’s behavior change in future and how will he try to meet needs? – these were main topics of discussion.
A meeting was held in the form of online focus group and involved representatives of different fields such as banking and gambling business, sales of food products and hotel business. For those who are familiar with Georgian marketing, will most definitely know names of David Birman, Nino Egadze, Katia Absandze, Misha Kurdadze, Lasha Gogua and Khatuna Mamadashvili. Obviously, we could not involve every interesting respondent in the discussion, but the approach ensured to choose field professionals from completely different sectors in order to obtain maximally diverse opinions. The given article briefly reviews results of discussion on opportunities and challenges of new reality which marketing field had to face.
As believed by markets, now, as never, it is important “marketing to stay relevant and minimize “bullshit” in communication”; to adjust to necessary requirements without becoming artificial and losing connecting with consumer. At the same time, marketing today has to explain and financially prove reasonability of every action.
Under these circumstances, one of the main challenges of marketing is believed to be quick digitalization and as noted by marketers, how well various sectors will address this challenge significantly depends on their previous experience and in general, on specific nature of business, quality of digitalization of its work. For example, banking sector appeared to be advanced from this point of view, while quick transition to online space seems problematic in the sector of food products (lack of so called delivery services, unorganized management of stock, etc.). In sectors where digitalization is organic part of process this did not cause significant revision and changes of marketing strategies. However, marketers described digitalization as a quite complex process requiring specific expertise and companies with less experience in digitalization face the need of enhancing relevant resources. As repeatedly noted during the discussion, “digital is not just boosting on Facebook”.
“Consumer behavior will change and business needs to respond to it, it needs to adjust respectively which requires human resource. This is problematic nowadays. And I think that this is the chance for business to use this pause to adapt, adjust… If you see that consumer asks for digital, then provide digital. It just requires expertise how to provide digital”. [Lasha Gogua, “Europebet”].
Another new reality noted by marketers is the requirement marketing to be more rational than emotional. Digitalization itself helped the marketing to be more numbers now than before, because effectiveness can be better measured with digitalization. As believed by marketers, role of marketing will become more practical and they expect more vivid benefits from it.
“Measuring effectiveness of TV commercial has been a complicated task in this country for over 20 years and this is more or less simple in digital. I believe that now is the time for marketing to being speaking with numbers more than it has ever been before… all these image campaigns and steps taken to play with emotions which can equally be pleasant for founder and client are minimized this time and functions directly supporting sales are mostly activated”. [David Birman, TBC, Football Federation of Georgia, Domains.ge]
Marketing was eventually being digitalized without digitalization of product, but now marketers speak about “accelerated digitalization of products, business”; switching to online space as partially irreversible process. Marketers do not expect offline trade to be fully replaced with online shopping, but they all agree that component of online shopping will be enhanced in every sector. This is backed up by their observation that demand on creating online stores and adding completely new functional to websites has increased to great extent.
Transformation period for businesses may impose more radical changes – expansion of their work or revision of profile. As an example of the best adapted businesses during pandemic, marketers repeatedly named Glovo and Wolt which maximally adjusted to consumer’s needs (even with certain technical gaps). As believed by marketers, these companies managed to maximally utilize opportunities – they not only thought about survival, but diversified their offers during crisis and acted as rescues for those staying at home. Example of more radical changes in future may appear some eateries which may enhance delivery service component and completely remove in-house service. In these case, marketer’s role is to feel and predict market’s demand with skin.
Changes resulted from Coronavirus acted as a spur for companies to promptly switch to digital platforms, adjust to e-commerce. However, marketers assessed reaction as partially belated, dictated from outside. They believe that not being appreciative to e-commerce and postponing digitalization process cost businesses lose years. As believed by respondents with more critical attitude, from this point of view, marketers were significantly late in responding to opportunities and “raising the alarm” when they could create this demand years ago.
„I think marketing was late in responding reality in many sectors. Challenge of digitalization was already obvious before COVID-19, but many businesses and many marketers too preferred to remain in traditional format. For instance: we see the development pace of e-commerce service, this service was available before, but many companies did not even have website in their priority not to say anything about e-commerce and delivery. One more observation is that players of the sector need to develop the sector, every player has its share of educational and innovative role. These insights and signals were a bit forgotten but clearly sent by the market but responses were made to so many things only after bumping into the crisis”. [Nino Egadze, TBC]
Professionals of marketing field speak about re-consideration of the role of marketing, its organizational function. This is one of the key challenges of modern marketing and at the same time, inevitable outcome. Marketing has become greater part of organizational structure, expanded its objectives and to some extent, got involved in “execution” processes too. Marketing does not exist independently from other organizational units. It more often has to unite consumer experience, brand, management, digital and non-digital communication; it does not view events “in narrow marketing perspective” but is a part of broader picture. Marketers more often consider marketing as functional and effective in tight cooperation with other units. From this point of view, the most serious challenge for companies may become finding professional and multifunctional staff. Depending the level of the respective staff on the market, companies will make decisions what competences to develop on their own and what services to buy.
„Marketing will play altered role in the company… there were companies not aware of digital, not aware of the function of marketing. They said it is simple to respond to messages in Inbox of Facebook page. There are companies where marketing and sales do not work together, without realizing that every penny spent is a big support for sales. Every department works in the company, each of them has their goal, so it will be much more united now, marketing’s function will become wider and other departments will probably appreciate it more…” [Katia Absandze, Le Meridien Batumi”]
On its part, marketers have hard time predicting how consumer will change after pandemic hurricane goes away. They noted that to do so, marketers have long observation ahead. However, in this case too, they agree that business will play important role in “growing up” the consumer as business creates demand and draws interest of a client.
It is believed that it’s still early to observe any specific changes in consumer behavior. It is hard to predict, because of euphoria of the given period on one side and on the other side, impossibility to foresee what habits will be forgotten by consumer and which of their current behaviors will “turn into a habit”. However, what marketers can clearly predict, is increased use of digital services as trust towards them will increase during this period and respectively, demand will raise in future; marketers expect that behavior of spending money online will reinforce. Each of us may feel the result of this – for example, by minimizing the need of receipts, when paying utility bills online will become a routine for people. This perspective may feel a bit strange now, but an example from nearest past makes it fully realistic – how taxi drivers who were used to completely different reality promptly headed over to online apps and turned them into integral part of their work.
„I think it will be a new mix of online and offline judging from what happens now and what we are observing. People who had problems with digital now get known with it. Us, who use digital cannot imagine that someone does not use it, but now is such a crisis, people are getting familiar with benefits of digital who were afraid of it in the past, I mean they had hard time spending money online”. [David Birman, TBC, Football Federation of Georgia, domains.ge]
Marketers are even more careful to discuss and practically unable to predict what changes consumer’s lifestyle may endure. For example, no one can tell whether abstaining from ordinary leisure (attending concerts of football games) for months will leave consumers loyal to once favorite activities or not. It is even more difficult to tell how consumers’ needs will change to not emotional, but more rational needs. For instance, will consumer who are thirsty for face-to-face interaction will eagerly attend physical trainings or seminars or will they prefer to participate from online space already turned into a comfort zone and save money. Marketers predict altered habits of consumers, but no one knows where it will bring us to.
The universe is still carefully observing spread of Coronavirus and changes resulted from pandemic, but this situation, together with lots of difficulties, may become a source of opportunities and inspiration as well.
*ACT continues series of meetings with professionals of various fields, stay tuned for our next article on Georgian brands engaged in export of their products and services.
