As we know because we feel it, these are economically challenging times in Nigeria. Inflation is high, and consumer disposable income has diminished leading to weaker demand and a contracting economy. Economists say we are in a season of stagflation defined by persistent high inflation, increasing unemployment and stagnant consumer demand. ‘Recession’ has become a buzzword on the streets.
As a consequence of this ‘new normal’, consumer confidence and intention to spend in the near term has waned, with consumers re-prioritizing what they spend money on: spending more on what they consider as essentials such as staple foods, transportation, telephone airtime, and school fees; and spending less on discretionary items such as luxury products, branded consumer goods and outings. Customers are redefining what value means to them and broadening their choices. Th e tribe of bargain-hunters has increased seeking better value-for-money and SWITCHING to more affordable, (not necessarily ‘cheap quality’) options. The online hotel booking site, hotels.ng has reported increase in traffic and bookings as customers search for increased value for every Naira spent.
Customers are also SQUEEZING by rationalizing frequency and quantity of usage. For example, households are limiting the number of hours that generators are powered in the event of public electricity power outage; some families have reduced consumption of cocoa beverage from twice a day to once a day, whilst others rather than use 2 cubes of sugar per mug are reducing to one cube (and not due to health consideration!).
This brings back memories growing up in the 70s when there was an economic downturn and my mum would allocate weekly rations of milk and sugar to each person in the family; it was your hard luck if you exhausted your ration before the week ran out! More than ever before, Affordability,
A dissatisfied customer is bad for business; aside from not repeating purchase, he would tell about 8 other potential customers about his negative experience, and it costs 5 times more to win new customers than to retain current ones.
Awareness, Availability and Assurance (Trustworthiness) are key factors for winning with consumers and shoppers. Data from Nielsen indicates that Familiarity (37%), Affordability (35%), Availability (31%) and Recommendation/Word-of-mouth (25%) are top considerations that determine consumer choice. In economically tough times, customers also seek escape and safety: research in some countries indicates that consumption of alcohol, use of condoms and religious activities increase during times of economic recession.
Question is: how do you position your business as offering better value, escape or saf ety? Where is that space (‘positioning’) you can occupy in the minds of customers and make a difference to both the customer and your business? To cross the bridge from where you are now to where you would like to be, a deep understanding (‘The what?’ and ‘The why?’) of your current and potential customers’ needs and motivations is imperative. Mapping the customer is critical and research (qualitative and/or quantitative) would help to deliver this. Qualitative research enables depth of information, whilst quantitative provides width.
Customer mapping entails asking and answering certain questions: Who are the users and shoppers, bearing in mind that for some products or services, the user may not be the shopper? Who are the initiators, influencers and deciders of purchase? What do they buy? Why do they buy what they buy? What are the barriers to purchase?Where do they buy? When do they buy? How do they buy? Every customer is a data point, which can
be turned into information and insight. A big challenge for businesses is to identify the best customers and effectively deploying the marketing mix to them so that spend is optimized. Th is calls for clear segmentation, targeting and positioning. No brand or business can successfully be everything to everybody. Th e most successful businesses and brands in various sectors are those who occupy differentiated positioning in the
minds of well-defi ned target customers.
Look for gaps in the market and ensure that there is a market in the identified gap. Cadbury’s Richoco was birthed during a time such as this, off ering a cocoa beverage that was granular, more affordable and perceived by targeted consumers to be better value-for-money than Bournvita and Milo. During this downturn, creatively engage with target customers in order to build equity and loyalty. Driving for customer loyalty and
retention is critical. Business survival and success is dependent on delivering superior Customer Value proposition (CVP) which is Relative Performance with price factored in. A dissatisfi ed customer is bad for business; aside from not repeating purchase, he would tell about 8 other potential customers about his negative experience, and it costs 5 times more to win new customers than to retain current ones.
To win with your customer, you need to design the right off ers and experiences. You need to keep your promises and deliver your proposition.
Customers are redefining what value means to them and broadening their choices.
Don’t compromise quality in the name of cost-cutting. Act with honesty and integrity. Eliminate points of pain. Make moments of truth to be moments of magic and not of misery. Be a keen observer of customer behavior and desires and seek ways to exceed expectations. Like the barber who provided a transparent overall for his customers so that they could use their phones whilst under the shaver. Like the successful Coca Cola ‘Share a Coke’ campaign which was driven by connecting with consumers on the emotive platform of personalizing cans and bottles with their
names. Consider customer loyalty programs that off er incentives for purchase of goods or services, for example, along the lines of ‘frequent fl yer’ programs of airlines. Concluding, winning with customers in these times would require fresh insight, innovation anddiff erentiation to drive
As Albert Einstein said, ‘in the middle of every difficulty lies opportunity’.
*Lampe Omoyele is a Business leader and Marketing Strategist.