In times of crisis

Pinoy consumers adapt and evolve; advertisers need to play catch 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. Evolving tastes in brands The PSRC survey also tracked changes in consumers’ behavior across product categories revealing important insights to evolving preferences during less-thanideal environment. During crisis periods, Pinoys are kicking the habit of “going-solo” in paying for beer sessions with friends. Instead, sharing and dividing the costs of beer consumption are becoming the order of the day. Even the choice of the place where they enjoy their favorite beer brand changes as they drink more at home or in cheaper places – forgetting for a while the flashy beer gardens they used to go to for night-outs. PSRC said 38% of consumers are likely to switch brands while 37% reduces the number of beer bottles they consume. Pinoy smokers also feel the pinch as they reduce “puffs” of their favorite brands. They buy by the stick than by packs. They also are now more considerate of prices among outlets with some going out of their way just to get cheaper cigarette sticks. The PSRC survey discloses that, in times of crisis, 28% of smokers switch brands while a staggering 57% reduces quantity. As regards home care products, more and more Pinoys are showing very discriminating tastes scouring the market for more efficient and multi-purpose products that are suited for their basic needs. In times of crisis, some are products and being considered unnecessary and a number of consumers are aggressively looking for promos. Some 42% of those surveyed says they switch brands while 43% reduce number of home care products in difficult times. Tech-savvy consumers are also rethinking their purchases of electronic gadgets. Gadgets are fast becoming “on a need “and on an “exact-specs please” basis only replacing the “must-have-coz-my-friend-has” era. Gadgets that contain and promote multi-functionality, cheap and bundled with a lot of freebies are the current preference. In the period of “tight-budgeting”, 33% is switching brands and 50% is reducing purchases of electronic gadgets. The consumer behavior around telecom services is quite similar to behavior in gadget purchases. More users tend to be open to changing their habits. They limit the amount of use of phone for calls/ SMS. They downgrade plans; do not going

beyond free minutes/SMS, use multiple SIM cards, and are switching from postpaid to pre-paid schemes t better control consumption. Promos on free or unlimited calls/ SMS are most appealing. More than half (55%) of consumers switch brands and also more than half (53%) reduce purchase of telecom services. Expectedly, behavior around food and beverage and personal care products are changing. Pinoys cut their consumption of soft drinks; eat less or in cheaper places; pay attention to amount purchase and are now likely to bring home “doggy” bags”. Unlike before, people bring home unfinished food when eating out. While 36% switch brands, 51% reduce quantity of purchases in food and beverage category. As to preference and purchases towards personal care products, Pinoys are more prudent in product purchase and consumption. ”Bottoms up” i.e. finishing all the contents before throwing out is becoming the norm among consumers. Shockingly, Pinoys are using products less frequently to save on purchases. The “tipid” mentality is all over the place even as they pursue products that offer good promos. In crisis periods, 39% switches brands while 47% reduces the number of personal care products. There is also a marked change in the behavior of consumers in the light of increasing fuel prices. More and more people plan trips and errands to save in gas. They use car less and more people are re-discovering commuting to and from the office. Even driving habits are being changed to adapt to highly volatile fuel price environment. In purchasing fuel, 35% of Pinoys switches brands while 46% reduces quantity. Esteban believes the key lesson that advertisers should learn from these is very basic- knowing their consumers really, really really well. “Immersion with your consumers is a quick and insightful way of understanding the coping behavior of your consumers. In times like this, there is a need to redefine value in your category: absolute amount in relation to pack size, cash poor vs. cash rich segments, “Esteban said, even as he reminded PANA members that recessionary periods are rich in innovations. “Consumers are willing to adapt new products, and companies are and will be forced to innovate to survive,” he added. He ended his presentation with a clear message, “Promote, communicate value, heighten saliency and invest in marketing research”.

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