Consumer Behavior during Crisis: a tall order for Advertisers (Part 1)

by Ronald Jabal

Time and again, Filipinos have proven to all and sundry of their ability and capability to weather any storm that hit the country. While others suffer a lot even from a small pinch brought about by political, social and more so economic upheavals, Pinoys have been able to cope and adapt to the ever changing environment they live in.

But will the more than 90 Million Filipinos be able to shrug off the financial crisis that is currently being experienced around the world? Will they be able to cope with the rising unemployment; dwindling savings; and the constant adjustments in the prices of basic goods and services? Will the Pinoy consumers hit rock bottom this time and grovel at the sight of the rampaging difficulties now and ahead?

The crisis is here all right. It is felt by all indeed, but even prophets of doom and local pundits are one in saying the resiliency of Filipinos remain intact and cannot be easily shattered. Filipinos have stared at the eyes of the 1997 Asian financial crisis and survived, they will do the same this time around.

This is confirmed by a survey recently conducted by the Philippine Social Research Center (PSRC) which was presented during the General Membership Meeting of the Philippine Association of National Advertisers (PANA) last February 27, 2009 at the Rock Hard Café Glorietta III Makati City.

When the going gets tough, Pinoys adapt.

In his presentation titled “Storm clouds over us: Understanding the Filipino consumer in times of Crisis”, R. Esteban of the PSRC stressed that Filipinos will once again overcome the on-going crisis given their innate ability to evolve and adapt to any crisis before them. “It’s not that bad actually As Pinoys seem to be coping forever”, Esteban said.

He, however, disclosed that there are a number of changes in consumer attitudes and behavior during crisis periods that advertisers need to know and consider in the development of their campaign plans and media mixes.

“The rules of the marketing landscape maybe changing. There is a need for more careful market segmentation strategies. In the short term, behavioral dimensions may be more important than lifestyle or brand attitudes or even consumer needs,” Esteban said.

He quickly pointed out though that brands remain important. “Don’t forget to invest in them. Do not starve your brands. Brands can maintain even build trust by showing sympathy and engaging emotionally with consumers,”

If push comes to shove, Pinoys evolve.

During his well-received presentation, Esteban disclosed a number of observed changes in attitudes and behavior of Filipino consumers during the period of crisis.

Based on the survey, there appears a general feeling of frustration among consumers and they talk about shifting gear towards “survival mode” However, unlike other people elsewhere, Pinoys do not express their frustration through aggression. Instead, they cope through withdrawal. In response to crisis, Filipinos take comfort in the warmth of self and family. They generally accept the current situation and work around it by exploring all possible sources of income “to make ends meet”.

Pinoys do more over time work to earn an extra buck. They get side jobs, multiple jobs and start small businesses on the side. They also borrow money from friends, relatives and other sources such as SSS, Pag-Ibig etc.

Along with these changes, Pinoy’s taste also adjusts and adapt to the changing environment. Esteban says brands are now more scrutinized as consumers want value for their little money. He discloses that there seems to be a shift from premium brands to less premium; look at performance rather than image of the brand; from imported to local; and from branded to unbranded.

During crisis situations, Pinoy consumers also become “wiser” when they buy products. They give priority to basic goods; express more interest and preference to product promotions; and are less impulsive in their purchases.

Upscale and mid-low income households express different interests in buying products when times are hard. Consumers belong to C and D stock lesser quantity and prefer small packages while those belonging to B and C buy in large quantities and prefer bigger sizes – underscoring the need for a more careful look at market segmentation. Both Upscale and Mid-low income households however agree in one issue i.e. they both compare brands by reading labels.

Even behaviour in using products and services are also affected. “Dun tayo sa makakatipid” is the prevailing sentiment. There is an observed decrease in usage/ consumption, product substitution, and declining in the usage of “not so important” products like mouthwash, moisturizers and the like.

Esteban also disclosed that lifestyle activities are being sacrificed during crisis periods. Going-outs are being reduced as gimmicks are now being carefully planned. Instead of high-priced bar and restaurants, they are “downgrading” themselves to mid-priced establishments even as they look for cheaper alternatives. Some consumers have also dropped other “indulgences” previously availed regularly when times are a lot better.

People are cutting expenses on parlors and salons, gyms and massages. There seems to be an apparent shift to simpler activities – ala “back to home” fun activities.