Are you an essential, a fence-sitter, a bargain hunter or a low priority? Wherever you sit, you can move up by leveraging shopper needs.
The next question is, what is the right brand planning strategy? The answer lies in knowing how relevant your brand or category is to shoppers.
Looking at the 125 FMCG categories we track continuously, we are able to group them into four main quadrants based on the big change in behaviour we’ve witnessed in Malaysia: buy more/ less vs. pay more/less.
these categories are the must-haves in the household. Shoppers also tend to buy more due to increased demand/usage. And because they’re essential, shoppers have no choice but to pay more for them.
These categories are still needed on a daily basis, but shoppers are more willing to sacrifice usage/consumption to manage their budget or shift their money to categories that are deemed to be more essential.
These categories are also viewed as a necessity, with shoppers still buying more due to demand. However they’re also looking for cheaper alternatives, which makes it highly probable that these categories will be impacted by the downtrading trend.
These are the categories shoppers are least likely to prioritise in terms of spend, and where they’re likely to reduce usage/consumption. Consumers are also not willing to pay a premium for them.
In Malaysia, half of the FMCG categories fall into the Fence Sitters quadrant, which is huge. What this means is that the tendency for a category to be a secondary priority for consumers is very high. These are the categories shoppers will sacrifice first when times become challenging and uncertain – either through buying less volume or cutting them from their repertoire entirely.
If brands and categories that are Fence Sitters don’t react quickly enough to maintain their relevance, it’s likely they will shift towards the Low Priorities quadrant, which must be avoided at all costs. If that happens, shoppers will just look for cheaper products to serve their basic day-to-day needs, and it will cost brands even more to win shoppers and to develop their category.
Talk to shoppers, look at what they want from the category and how you can leverage their needs, tapping into the white spaces by coupling understanding with the right execution strategy. This will enable you to move up to the Essentials quadrant, or at least remain within the Fence Sitters quadrant.
Brands in the Essentials quadrant are not necessarily safe, as the increase in demand could be temporary. If they are complacent, it’s highly likely that they will shift toward the Fence Sitters quadrant where they will need to inject more effort to drive growth. And if they are relying on pricing alone for growth, sooner or later they might end up in the Bargain Hunters quadrant where communicating value will be a lot harder.
