Time to Rethink Everything
In part one of our series, we noted that since the year 2000, we’ve experienced three major business disruptions—the 9/11 terrorist attacks in 2001, the financial crisis of 2008 and now the COVID-19 global pandemic. And while our first installment focused on brand opportunities in the resulting, contactless society, in part two of our series, we examine how organizations must rethink their product and service offerings to meet the new needs of consumers in the midst of this new business era.
Part 2 – New Product and Service Innovation
Predict the Future by Looking to the Past
Learnings from the second disruption, the financial crisis of 2008, have taught us that low-income consumers will be challenged to trade up to better or premium products and services. Many may struggle to afford the bare essentials. And for the unemployed, they may simply go without products or cancel services in an effort to closely budget any relief they may receive as a result of local and federal economic mitigation measures. In a good, better, best product and service tier, this group is at the bottom, or they’re trading out and going without.
For middle-income earners in 2008, they traded down to low-cost tiers to stretch their budgets. Their choices were benefit-led with a focus on value—“how can I get the most for the least amount of cost?” Expectations of brands are high for this group. They expect more but want to pay less. They’ll look for the most at the lowest cost.
High-income earners have the highest level of discretionary spending, savings and assets. However, they are sure to pull back on spending and trade down to middle-tier products and services to conserve and prepare for future disruptions and downturns.
Although we may feel as if the future is uncertain, we know with certainty from 2008 how consumers will react and manage an economic downturn. And as we look forward, brands will need to rethink their product and service portfolios to meet the evolved needs and budgets of consumers.
Human-Centered Design Thinking
At Magnani, we conduct user research and utilize human-centered design thinking to identify business opportunities and develop innovative products and services for brands. By understanding the needs, attitudes, behaviors and motivations of consumers in this new era, brands will be able to create new products and services that deliver on consumers’ needs and budgets while building brand loyalty and long-term growth.
Moving forward, new product and services tiers will need to deliver on the bare essentials and the functional needs of consumers, with added features and benefits that create value—all at a price point that meets their budget. Using design thinking methods and strategic frameworks, successful brands will identify and create new business models, utilize new technology platforms and develop holistic user experiences to differentiate themselves in this new era.
Ready. Set. Prep.
As brands consider this new era and shift in consumers’ mindsets and needs, they also need to recognize the emerging desire to be “prepped and ready.” As we learned early in the pandemic, larger institutions have been judged as lacking in preparation, especially for much-needed medical supplies. Consumers themselves, seeking control, reverted to store runs and hoarding of many categories. As brands rethink their product and service offerings, this is an opportunity to diversify supply chains and partnerships and develop agile and flexible processes that give businesses options and time to maneuver and survive during periods of downtime rather than shutting their doors.
Similarly, consumers are prepping for the future by looking for products and services that deliver on essential needs so they can save money and be ready for future disruptions. Brands that deliver on these new needs and add value will win with consumers long term. And as brands rethink their product and service offerings, now is the time to improve the customer experience with contactless user experiences outlined in part one of our article series.
In part three of our series, we’ll focus on how brands will need to rethink their role in society and contribute to a new era of social good.