The impact of Covid-19 on the marketing mix
If forecasting has been adversely impacted by Covid-19, and therefore affected associated business and marketing strategies, to what extent has the pandemic ‘injured’ the 7Ps? DR MYLES WAKEHAM and CARL WAKEHAM share their opinions.
The isolated period brought about by Covid-19 has been ongoing for over 18 months. For marketers, the data acquired over this period will certainly skew what will transpire in the future.
Most people are aware marketing consists of seven elements, which are collectively known as the extended marketing mix. They include product, price, place (distribution), promotion, people, processes and physical evidence. The latter three are usually associated with a service. If the accuracy of forecasting has been adversely impacted, and therefore associated business and marketing strategies, to what extent has the pandemic ‘injured’ the 7Ps?
With most crises, many humans tend to descend Maslow’s Hierarchy of Needs towards the essentials such as food, security and safety. Unfortunately, the isolation demanded by Covid-19 protocols has forced aside the need for physical contact with friends and colleagues. As a result of this, people have moved to technology to commune with others, an unhealthy arm’s length divide culminating in ‘low-touch’ or even ‘no-touch’ relationships.
So, with the above in mind and the pendulous swing of changing consumer behaviour, to what extent has the pandemic affected the seven elements of the mix? These assertions are based on the opinions of the authors and were developed during the pandemic. Whatever transpires might not happen, as Covid-19 is a moving target, and one that changes at the slightest whim.
Although existing products will not change much, the pandemic has certainly spurred scientists and pharmacists into developing detergents, cleansers and other materials to reduce the likelihood of people contracting Covid-19. A plethora of germ, bacteria and virus killers that negate the threat of dangerous bacteria and germs have flooded the market. Covid-19 has also brought about rethinking around producing goods with long sales cycles. Producing and carrying too much stock increases carrying costs, reducing profits over the medium to long term.It has delivered an opportunity to evaluate the size (breadth and depth) of their ranges in order to cull slow-moving stock, thus increasing profits and decreasing dead stock. Many researchers suggest that offering a substantial number of products does not necessarily contribute to profitability, although a reduction in range could lead to short-term category sales losses but not at the expense of long-term sales. The effect on customer profitability and lifetime value is unknown and these could decline if certain products are no longer available.From a service point of view, much has emerged. Organisations have sprung up overnight to provide a range of services from personal food delivery, the delivery of prescription and other drugs to patients at home, food preparation, care for the elderly and infirm at home, lift clubs (to avoid contact with passengers on buses and trains), on-the-road hairstylists and beauticians … an endless list of innovations.
Price is the only revenue-generating element in the marketing mix. Sadly, it has been badly prostituted as shortages have appeared through frenzied buying, insufficient or inefficient logistics and a drop in production. The illicit trade of cigarette and alcohol at the beginning of the pandemic saw prices increasing from R20.00 for a packet of 20 cigarettes to over R120.00 a packet. Consumers had to pay a premium for their alcohol beverages, with some paying up to R450.00 for a bottle of whisky. Even the shortage of toilet paper impacted on family budgets. The lockdowns adverse impact of the prices of vitals is a consequence of irregular fluctuations in supply and demand.Finally, our view is that price must be used with great care during this crisis. The price sensitivity of consumers increases during a contraction, and the extent to which it increases is dependent on various factors, such as the uniqueness of the offering, the importance of the product to the customer, and possibly the brand equity in the eyes of the buyer. Now more than ever, it is about creating products that offer the consumer ‘value for money’.
There is no doubt that the pandemic’s greatest influence is on distribution. Covid-19 drove people from shopping at supermarkets and shops. This led to a demand for home delivery services and even Uber flourished as a result of being used to transport food, groceries, personal hygiene products and medication. Some pharmacies and retailers saw the opportunity for differentiation and either purchased or hired vehicles to provide home delivery or outsourced such delivery to service providers. Shopping patterns have shifted to online buying and as a result, online stores are experiencing enormous increases in turnover. Consumers who were not previously familiar with online shopping are converting and we expect this shift will be permanent. Encouragingly, there has been a move towards buying more locally produced food.
The pandemic forced businesses and brands to re-evaluate current and future advertising and marketing campaigns. While brands need to strike the right tone, changes in the market and increased competition call for creative and aggressive marketing practices.Only the highest traffic and trusted media platforms will weather the pandemic storm. Digital channels reflect increases in usage and offer mobile, social media and video opportunities, leading to a modification in the media mix.In terms of messaging, consumers want brands to focus on value, transparency, authenticity, honesty and social awareness. Communicating a sense of purpose can tap into nostalgia and should generate greater loyalty over time.Regardless of the industry or level of digital knowhow, the impact on consumer behavior is clear and much of the change will be permanent. Organisations must ensure that their products, services, messaging and marketing plans are tuned into these changes and remain dynamic.
Employees and customers are an essential element of the extended marketing mix because service is performance, and performance cannot be separated from the performer. Sadly, many people have lost their jobs and careers as a result of the virus. Many restaurants may never open their doors again and the same can be said for fast food franchises, hotels, taverns and B&Bs. As the pandemic continues, further unemployment and closures are almost guaranteed, reducing consumer choice, and heralding potential price increases.
Processes determine the method and order of services provided by an organisation and ensures the value proposition promised to customers is maintained. Poorly designed and implemented processes result in slow, and sub-standard service delivery, frustrating customers. As technology improves, the personal touch has been replaced by automation, which has in many ways alienated long-term customers, especially the aged.Forced seclusion has highlighted the crucial role of communication with suppliers and retailers. Personal interchanges by means of the telephone are more effective than poorly recorded automated messages. Organisations wanting to forge and maintain strong relationships with customers must ‘humanise’ their processes with a focus on customer-centricity and not purely revenue.
- Physical evidence
Physical evidence refers to everything customers see when interacting with a business. This includes the physical environment, layout and interior design and whether employees are professional and service oriented. Keeping the customer engaged will lead increasing spend during the visit.How important will ‘physical evidence’ be in the future? Years ago, significant retailer space was taken up by storage. As a result of Just-in-Time logistics, storage space has shrunk and improved the area allocated to the shopper’s experience. With online shopping volumes increasing, will brick and mortar retail outlets change in size and locale to be replaced by smaller outlet offerings. As the months go by, many marketing departments and organisations will seek to take up the challenges of creativity, innovation and customer-centricity, and look to create, implement and control marketing strategies and practices that will aid business through this ‘new normal’. Creative and strategic marketing campaigns with targeted advertising – including traditional and online media – will be the focus of many marketers. As will artificial intelligence and the effective use of other technologies to win the hearts, minds and pockets of a damaged society.
The IMM Graduate School’s Dr Myles Wakeham is a motivated and well-connected academic and businessman. He has consulted to a variety of institutions and organisations, such as the South African National Treasury, National, provincial and local government. He is also involved in international research, and with an academic consortium has researched the impact of IT on university education.
Carl Wakeham is an ex-marketing executive specialising in business and brand strategy. He is director of and shareholder in a marketing company based in Johannesburg and a founding member of the largest independent advertising network in Africa. He has worked throughout Africa, the Far East and Europe. Wakeham has a BA and MBA and has studied other business related fields. He remains actively involved in a digital media company.
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