Keeping It Real with Forward-Looking Research

Life is uncertain.

It’s a platitude that captures the root of most human—and business—problems. Yet somehow this truism feels even more compelling in September 2022, as US households grapple with inflation, a potential recession on the horizon, and a volatile stock market.

 In this consistently unprecedented environment, brand teams may find themselves asking:

• How will consumer behavior change in a post-pandemic recession?

• Will it rhyme with 2008, or has the experience of pandemic lockdowns spurred new compensatory behaviors?

• And how will changes in the housing and lending markets factor into all of this?

Research can be a great tool to start answering these questions. But regardless of methodology, a common mistake I see in research design is getting too speculative with consumers. Rather than asking about direct experiences, scenarios, and attitudes, some speculative approaches ask consumers to project exactly how much more or less they plan to spend/consume/buy in the future. Sometimes this research is as bold as to ask for exact percentage point shifts!

In a simple world, where humans are formulaic and dispassionate in decision-making, this type of speculative research would be adequate. However, we're talking to real people, about decisions that are often more complex than they appear.

Working with Uncertainty

Two guiding principles inform how I approach forward-looking market research:

1)    Humans aren’t great at predicting their future behavior with specificity—and that’s OK!

2)   Forward-looking research is most helpful when it reveals not just the “what”, but also the “why” and the “how”

Now, let's explore this in a hypothetical example.

Let's say I'm a premium orange juice brand manager trying to determine how to protect my brand from the potential impacts of a recession. I could survey premium OJ customers about how likely they are to continue purchasing my brand in a future economic downturn—a simple and direct solution.

However, the realities of consumer choices, particularly when facing pressure or adverse circumstances, cannot always be neatly captured in a few survey questions. And from a business strategy perspective, we need to understand more than whether they will remain loyal: we need to know both why and how their loyalty will manifest. Understanding the why and how lets us devise an appropriate recession strategy to defend share and strengthen brand loyalty.

 All in all, relying on consumers' projections into the future could lead us to plan for scenarios that reflect more fantasy than reality.

 Here are a few reasons why consumers are not always great at predicting their own future behavior:

We're Too Idealistic

Have you ever signed up for a 6am workout class, only to snooze through it the next morning? Or maybe the New Year's resolution that invigorated you on December 31st drains you come January 14th. The lesson? Aspirations, while critical to understand, don't cleanly predict our actions. We can't always live up to who we want to be in the moment.

We Don't Know Until We Know

We may like to think we know how exactly we'd react to any kind of challenge—but it hits different once the situation becomes real—like really, real. Just ask new parents! Our personal tolerances and priorities may evolve in ways we cannot anticipate right now. Other factors can enter the picture, requiring us to consider new strategies.

Plans Change

Just ask any Account Manager: Surprises can and will pop up, despite the best laid plans. And that goes for both the known unknowns and unknown unknowns.

Now, let’s get back to the premium OJ example: Say a family of 4 loses about half of their income in a recession. Here's a sampling of potential effects on their premium OJ consumption:

 Consumption DECREASES because they…

• Start watering down juice to make it last longer

• Continue to buy the same brand, just less frequently - premium OJ becomes a special treat

• Switch to a cheaper brand of OJ

• Stop buying juice entirely and switch to a cheaper ready-to-drink beverage

• Become more health conscious, deciding to drink water instead

 Consumption STAYS THE SAME because they…

• Cut back elsewhere in the grocery budget

• Start couponing/deal hacking to buy premium brand

• Are just too emotionally tied to their favorite morning OJ to give it up—especially during a stressful time

• Are dipping into savings and credit to maintain their grocery budget

• Become more health conscious, leading to greater willingness to spend on quality food items

 Consumption INCREASES because they…

• Spend more time at home, which means more trips to the fridge for refills

• Become increasingly worried about losing income due to sick days, so they decide to invest in more dietary vitamin C

• Replace pricier supplements and vitamins with premium OJ

• Cut back on Starbucks and breakfast smoothies in favor of more premium OJ

Devising the appropriate strategy to engage premium OJ drinkers during a recession will depend not just on IF they are cutting back, but also WHY and HOW they are changing their habits.

Even for those increasing their premium OJ consumption, the right messaging strategy will look very different for those treating OJ as a smart health investment vs. a consolation prize for giving up their daily iced latte. And keeping those loyal customers once financial confidence returns will require different strategies as well.

How can we move past speculation and generate meaningful insights about future changes in consumer behavior? In part 2, I'll share my thoughts on quant and qual methodologies that can help brand managers plan realistically for an uncertain future.