In the past two decades, the world changed exceptionally fast – and then in 2020, Covid-19 struck, and the world changed at an even faster rate – and boom, the next thing we knew is that consumers have changed even more and businesses must find new ways to engage them.
Brands lose consumer trust when they make over-the-top claims. A look at consumer responses to advertising claims online will give anyone who cares to check an idea of how cynical consumers can be when brands try to oversell their benefits. Consumers consume their content on multiple screens and the reality is that advertisers are no longer competing with other brands, they are competing with TikTok, Netflix, Facebook Watch and other online content. (This is what gave rise to ‘influencer marketing’ although whether Pakistani ‘influencers’ actually influence a purchase decision, is highly questionable.).
Furthermore, global trends indicate that affluence is rising, urbanisation is increasing, family structures are changing and individualism permeates lifestyle trends – all of which are affecting consumer behaviour. And although the pace and intensity of these trends differ from country to country, Pakistan too is going through similar changes.
Is E-commerce Going Anywhere?
In Pakistan, until the current economic downturn, both traditional and e-commerce were thriving. Start-ups were getting funding and consumers were bombarded with new apps – and despite the fact that things have slowed down economically e-commerce is still growing to an extent. This being said, Pakistan only has one player in food delivery aggregators – Foodpanda – and which is operating without much competition; the same goes for Careem. The closure of Airlift has left a big gap in the grocery deliveries segment. Yet, Pakistan is a country of over 200 million people and a market of this size will always be attractive to brands and investors. The issue is that investor confidence has been shaken over the last couple of years and the declining rupee-to-dollar rate has not helped.
Targeting the Not So Affluent
In 2009, Nestlé Pakistan had a programme known as ‘Popularly Priced Products’ (PPP), which targeted consumers who could only afford products priced in the five to 10 rupee range and the objective was to create customised offers for these consumers. However, today, Nestlé Pakistan’s focus and growth lie in their premium products; juices, coffee and an expensive tea whitener. It seems that brands have tilted towards affluent consumers and have customised their propositions accordingly. No doubt, Pakistani consumers have the buying power to fill up restaurants on weekends, create waiting lists for the purchase of new cars and account for the high growth rates of multinational companies among others. Nevertheless, the fact remains that price increases are becoming the norm due to economic pressures and businesses should be looking into customising their product offerings for the lower-income segments.
Increasing Urbanisation At What Cost?
These developments are partly connected to increasing urbanisation. The agriculture sector, which was the backbone of the economy, has been struggling in the last couple of decades due to natural disasters, inadequate infrastructure and political turmoil – and rural consumers are moving into the urban centres. According to the United Nations Population Fund (UNFPA), in the last 40 years, urban populations have tripled, a trend that has adversely affected brands that target rural populations. Pakistan’s urban population is expected to reach 50% of the total national population, which was 29% in 1980 (source: Urbanization, City Growth and Quality of Life in Pakistan by G.M. Arif and Shahnaz Hamid.) Urbanisation is not necessarily a bad thing. India, for example, benefitted from the rise in urbanisation by managing it better. They have regional hubs for different industries which created employment for labour migrating from rural to urban centres. At the same time, they invested in their rural consumers. Amul, one of the biggest brands to come out of India, has pledged to create 120 million jobs in rural areas over the next 10 years. This is the same company that put FitBit devices on their cows to monitor their health. Increasing urbanisation does not have to come at the cost of rural development, especially when a country’s economy is based on agriculture.
New Family Structures
Shifting family structures are probably the most interesting trend among all, if only because they have affected buying power, preferences and lifestyles. The rise of multi-income households, the fact that the joint family system has given way to nuclear households (defined as a couple or a single person with or without children), and the slow but definite increase in the number of working women, have all contributed in strengthening multi-brand usage and the use of a higher number of high-end consumables in the home. Yet, despite these changing trends, our advertising still seems to favour a family dinner table of 10 members, while showing just a couple living together or children moving out of the family home is still considered taboo. This needs to be addressed, although I would be surprised to see a brand encouraging kids to move out of the family home any time soon.
Who Is The Decision Maker?
Another interesting development in consumer behaviour (probably worldwide) are changes in the decision-making process. For the longest time, in societies like India and Pakistan, decisions regarding household purchases remained with the woman, while high-involvement purchases (cars, banking products and property) were the man’s domain. Decision-making is not as linear anymore. Children have started choosing soap brands, thanks to Commander Safeguard in the 2000s. Teenagers and young adults have taken over the decision-making when it comes to fast food. Furthermore, tech advancements mean that many decisions are arrived at by reading online reviews, hence making the process more of a collective decision.
All these trends have put the consumer-brand relationship under scrutiny. One of my pet peeves is observing brand marketers underestimating consumers. “The consumer will not understand” is a phrase all marketers and advertisers have either used or heard. But the fact is that the consumer will understand if you communicate the benefit in the right way. Consumers in Pakistan have embraced Careem and Foodpanda and other tech companies. Consumers in Pakistan have created their own world on Tiktok. They consume content from South Korea and Turkey – which sometimes is not even culturally relevant. Yet, our marketers are adamant that the consumer is uninformed and has a low IQ. Furthermore, inter-generational consumer behaviour requires brands to evolve as much as consumers have. The promises sold to the Boomers are not likely to work with the tech-savvy current generations. Businesses need to work on product offerings, the claims they make and on how they communicate with a younger, nuclear, progressive target audience.
And no, when I say communicating to the younger audience, I don’t mean rap and neon lights.
Sami Qahar is CEO, Stimulus Productions. email@example.com