The impact of COVID-19: Changes in buyer behaviour

A key component to successful marketing of new products and services is understanding the buyer behaviour process. Whether launching a go to market plan for new products or refining the market position for existing products, research and understanding of buyer behaviour is an instrumental component for creating successful market strategies.

COVID-19, no doubt, has had a radical impact on how people find, explore and use products or services as the global pandemic has forced people to change how they have always ‘done things’. Whilst this change in buying behaviour was underway with enhancements in technology, COVID-19 has accelerated the change and acted as a catalyst for changes in buyer behaviour.

In order to create new products or services and successfully market them to a wider audience, companies need to understand the radical transformation in buyer behaviour that has occurred as a result of the pandemic. Recognising and adapting to the change presents an opportunity for truly innovative marketers to tap into new ways of reaching their target audiences. 

This article explores the changes that have occurred in buyer behaviour and seeks to understand the impact the changes have, not only how we market products or services, but also the wider impact in terms of innovation in marketing strategies.

But first a bit of background

Buyer behaviour refers to the decision and the associated acts people undertake when they go through the process of deciding to buy or use something. Buyer behaviour is the driving force behind any marketing strategy.  Understanding buying behaviour is the key to reaching and engaging consumers  and actively converting  them into customers.

The buyer decision-making  process is a relatively natural and unconscious process for most consumers.  Consumers can make hundreds of such decisions every day which   range from simple decisions (also known as low-involvement decisions, those involving little risk and repetitive behaviour), such as what someone wants to wear, through to more significant purchasing decisions such as buying a new car (high-involvement decisions, involving greater investment and risk). 

Understanding or ‘decoding’ the processes behind a buyer’s decision is crucial to understand what kind of products or services will be received positively by the market. This also includes understanding who it should be marketed to, how it should be positioned and targeted and the marketing language and value proposition that needs to be presented.  Studying and understanding consumer behaviour ultimately helps marketers decide how to present their products in a way that generates maximum impact on consumers. 

COVID-19

The COVID-19 pandemic has had a profound impact on society as globally governments have reacted to the disease by introducing a range of measures, such as partial or complete lockdowns, as a means to stop the spread of the virus. This has had a devastating impact on many businesses as people have been limited from leaving their homes and as a result  have been forced to find new ways to purchase and acquire the  products or services they need. This has also acted as a catalyst and key driver in buyer behaviour transformation  as consumers  shift purchasing preferences to new/digital channels. Whether this transformation will be sustained once COVID-19 diminishes remains one of the greatest unknowns. There is large industry recognition that COVID-19 has simply accelerated the shift in consumer behaviour, which was already trending towards digital preference. However, there is also recognition that digital experiences will not completely diminish the preference for physical interaction and experiences.

We need to understand how the consumer behaviour has changed during the COVID-19 crisis and in the subsequent lockdown period’s when the world stood still for more than a quarter of a year, as well as considerations businesses and marketers should make when planning for a world post-COVID

The SwissRe Institute Trends Identified

Even though we are only just over a year into the pandemic significant research has already been conducted to try to identify trends. Whilst there is consistency in some of the findings, for example an increasing focus on online shopping, there are also significant differences in how they break down these changes and whether they believe they will continue post COVID-19. 

The SwissRe Institute has identified five key trends in the behavioural changes emerging from the impact of COVID-19, which provide a useful overall summary:

1. Increased digital adoption: People shifting to using digital platforms for day-to-day needs, such as grocery shopping. 
2. Change in mobility patterns: Less use of public transport as people attempt to limit their exposure to other people and opt instead to work remotely. 
3. Change in purchasing behaviour: A move towards value-based purchasing and online shopping.
4. Increased awareness of health: An increased focus on concerns over people’s health, with the wearing masks, increased hygiene (i.e. washing of hands) and a shift towards healthy eating as people focus more on their health. 
5. Changes in interpersonal behaviour: As people spend more time at home it’s likely to lead to changes in interpersonal behaviour, such as increased rates of divorce, people adopting more pets etc.

Clearly these five trends are interconnected on multiple levels so should not be seen as being individual or one-off changes. This is clearly demonstrated by the fact that the pandemic has increased people’s usage of digital tools in life and at work in order to stay connected in a world that’s physically disconnected. This is blurring the lines between work, play, social interaction, and between domains like mobility, health, and finance. Furthermore, as illustrated by Figure 1, these trends can be broken down into subcategories, with the degree of permanence varying significantly. 

Figure 1 – Expected permanence of habit changes from COVID-19

Source: The SwissRe Institute: All change: how COVID-19 is transforming consumer behaviour, 11th Dec 2020

Increased digital adoption

Digital adoption seems logical and stems, to a large extent, from the way consumers have had to adapt their behaviour and interactions as a result of lockdown laws. Whether they will continue to use digital technology as their preferred method of engagement is likely to depend on whether these behaviours have become entrenched in their  daily habits, or whether their experiences have been positive and frictionless, out-weighing the benefits seen in traditional consumption models,  resulting in more convenience. 

A good example of convenience led initiatives is the changes seen in digital entertainment and food delivery apps, which is likely to lead to more permanent changes in consumption habits. The move by some of the major studios, most recently Warner’s and Disney, to release their films online at the same time as in the cinema in a form of ‘day & date’ release has made experiencing new film features more accessible and therefore perhaps indicates and promotes a permanent shift in entertainment consumption. 

The rate of digital adoption is a trend that has been consistently identified and monitored. PwC’s global survey in 2020 found that retail and consumer brands need to ensure that their digital engagement strategies  are robust and diversified enough to adapt to consumers who are becoming more ‘free-footed’ in their approach to sticking with brands and experimenting with their shopping choices online.  

Research by McKinsey’s has found that more people expect to make a portion of their purchases online post-COVID19 than before. However, the rate of digital adoption varies across industry and also geographically, with some industries more impacted than others. Industries such as apparel (i.e. jewelry, footwear) are less impacted, which makes sense given the importance of physical touch in influencing a person’s buying decision for such products. In such cases, it is valuable to focus on engaging the customers in a more ‘experience’ orientated manner. In particular when the customer shops in a physical store, leveraging key touch-points during the buying decision-making process to influence the sale. Not only will transforming stores through innovation in the physical experience improve the offering, it is also likely to entice consumers to return andt increase the likelihood of purchases. Innovation in physical store experiences is being adopted by many industries such as Apple’s Genius Bar and Amazon’s cashierless store, as well as Tesla. However, it is the connection between the physical and digital experience that brings a truly omnichannel approach to engagement and where companies can leverage innovation in the overarching customer experience. 

Aside from the differences across industries, McKinsey’s also identified significant differences between countries in whether they expect to continue to make a portion of their purchases online in a post-COVID world. Countries such as China and Germany anticipate these changes to not be significant whilst the US and the UK see the highest rates of changes. In fact, McKinsey’s research anticipates a reduction in online shopping in a few sectors, which may be due to the fact that Chinese already had a high level of online penetration prior to the pandemic, with online tech giants such as Alibaba dominating the commercial landscape. It’s possible that the harsh lockdowns imposed at the start of the pandemic has made consumers appreciate more the value in purchasing goods such as footwear and make-up offline. 

Companies need to anticipate these differences and adjust their marketing and product or service offering accordingly to reflect these differences. Developing a geographically tailored approach is likely to provide these companies with an opportunity to tap into the changes most effectively, especially in terms of how they subsequently position and target their marketing. Figure 2 highlights the changes across industries – 

Figure 2 – Customers Purchasing Online according to country and geography

Source: McKinsey & Company, Consumer sentiment and behavior continue to reflect the uncertainty of the COVID-19 crisis, 26th Oct 2020

Change in mobility patterns

The changes in mobility identified by SwissRe are likely significantly more complex than they initially seem. Prior to the pandemic there was a global upward trend in people using public transport and in the use of car-pooling services to save costs and to be more environmentally conscious. Yet as a result of the pandemic public-transit ridership has fallen 70% to 90% in major cities across the world with many operators such as TfL in London needing Government support to survive. They have also required assistance to adapt to the strict hygiene protocols introduced, such as compulsory face-masks. Ride hailers have also experienced declines of up to 60% to 70%, and many micro-mobility and carpooling players suspending their services. 

It’s not just that people are working remotely more from home, when people do travel they do so by walking, biking, or by using micro-mobility means such as a scooter. These changes are likely to linger on as people have become accustomed or even enjoyed travelling these ways. It’s also likely that there will be a shift back to private vehicle usage as people opt to avoid using public transport.  These shifts will have a considerable impact on people’s buying behaviour with an increased focus on buying locally or within walking/biking distance. This is likely to alter how many make their choices and brands and marketers need to adapt accordingly. Spatial and geographical changes are likely on a local and far wider global basis. Furthermore, there is likely to be an increase interest in purchasing equipment or transport (i.e. micro scooters and electric bikes) as a result of these changes, which opens up new markets for companies to explore. 

Change in purchasing behaviour 

Other researchers have also identified a move towards value-based purchasing and online shopping as a result of COVID-19. PwC’s global survey in 2020 anticipates this to lead to wider market volatility and for buyers to continue to be price sensitive in their purchases. This shift towards value-based purchasing behavior was also identified by McKinsey’s, who found that value and mass products have experienced the greatest increase in share due to COVID-19 as people shift from premium products and focus on value for money, especially in essential categories. For example, McKinsey’s found that shopping in shampoo on Amazon, value and mass products have experienced the greatest increase in share, at two- and five-percentage-points gains, respectively. Premium shampoo products have seen significantly less growth in comparison, losing more than five points of volume. This can be seen in Figure 3. 

Figure 3 – The switch to value and mass purchasing options online for shampoo products online

Source: McKinsey & Company, The great consumer shift: Ten charts that show how US shopping behavior is changing, 4th Aug 2020

Increased awareness of health

As as COVID-19 resides, hygiene is likely to continue to be a key concern for many people, with mask wearing likely to continue to be common-place and an emphasis on food hygiene and washing of hands. It is becoming increasingly important for stores and restaurants to not only follow hygiene requirements but also communicate clearly to the public that they are doing so as it’s now a key concern for people. This provides an opportunity for retailers and for brands to connect with their potential customers by directly addressing these concerns. According to PwC’s global survey in 2020 retailers and brands need to provide a consumer experience rooted in safety and accessibility. If they can doso, then customers could become long-time advocates of the brands due to the brands prioritising health and well-being and being more innovative in how they reacted to COVID.  

Indeed, this is where brands and their marketers have a significant opportunity as consumers are more open to experimentation and in changing their buying behavior, which can be influenced during this period of adoption..  McKinsey’s has identified that innovative technologies that enhance hygiene, particularly contactless activities such as food and grocery delivery and curb-side pickup, will likely continue to see significant growth. This is likely to be an area where innovative approaches in the distribution and go-to-market plan could be developed by companies to tap into and address these concerns. Figure 4 provides an overview of the anticipated growth in some of these areas. 

Figure 4 – Growth of low-touch activities

Source: McKinsey & Company, The great consumer shift: Ten charts that show how US shopping behavior is changing, 4th Aug 2020

Changes in interpersonal behaviour

As people have spent more time at home it’s likely to lead to changes in interpersonal behaviour, such as increased rates of divorce, people adopting more pets etc. However, how permanent these changes are remains questionable, especially as people are more mobile in a post COVID-19 world, so we’d anticipate things to return to normal.  

Other trends identified

There are a number of other trends that have been identified. Accenture found that COVID has pushed consumers out of their normal routines and that they are subsequently  adapting new habits and behaviours. They divided these trends into three distinct categories, namely i) an increasing focus on health, ii) a rise in conscious consumption and iii) a growing love for local shopping as identified as shown in Figure 5. 

Figure 5 – Three Long-Term Trends

Source: Accenture, COVID-19: How consumer behavior will be changed, 28th April 2020

Whilst the SwissRe Institute did identify a shift towards a health focus the rise in conscious consumption and people wanting to purchase locally sourced products and brands was overlooked. We believe that these two trends are actually two of the most significant ones to have taken place as a result of COVID-19 and thus offer an opportunity for brands to connect on a personal level with potential customers. If brands can adapt their messaging to tap into this local focus and provide a differentiated, yet localised, marketing strategy then they could benefit positively from these changes. 

Overall, this article has provided a summary of key changes in buyer behavior identified by researchers as a result of COVID-19. Brands and marketers that can adapt to these changes and alter strategies from their product or service offering, through to their marketing/promotion strategy are likely to do well.  

At Proto Innovation we are working with companies to understand these changes and to better position their product or service as a result of COVID-19. Whilst COVID-19 has had a devastating impact we believe that it also presents new opportunities for companies to better position their product or service and to connect with their customers better than ever before. Companies that truly understand the changes that have taken place and adapt accordingly are likely to emerge stronger from COVID-19.