Will market research take a backseat after the pandemic?

The question in the subject line may not be the case as large and medium companies will try and understand consumer sentiment because they want to customize their products along those lines. In this blog, apart from broadly describing the key elements of this subject, I will also share a few examples of certain sectors.

I was reading some data from Greenbook.org blog where they have sourced the data from Trading Economics. It says that consumer confidence drop after 9/11 and stayed at the same level for 4 years and it took 7 years to reach the same level of consumer confidence. Yes! That is a fair amount of time. Indian consumers also contracted from retail after the 2008 crisis. There were innumerable stories of heartaches wherein people drawing very high salaries and paying six digit EMI’s were suddenly left without a job overnight. The effect of this pandemic is yet to unfold. The news from Hindu says 12.2 crore Indians have already lost their jobs. 

Now what will it take and how long will it take for this trend to reset to pre Covid-19 levels. For one there is a difference between the 2008 shock and this pandemic in terms of businesses. In 2008 the global banking industry collapsed and Governments globally had to step-in to resurrect these banks. This time it is different. We can think that banks are still capitalized and ready to lend. In India the public sector banks are doing a phenomenal job in lending therefore businesses can put in the capital gap and restart. Secondly, in India this loss of jobs in India to a greater extent looks temporary as factories are opening again and offices will start opening by Mid June to latest by July. They will give their level best to recover the losses that they have faced for the first quarter. Labors will start to move back within the next 3-6 months and surely after Diwali.

With this background in place, medium and large companies especially in consumer space will need to get an idea of consumer sentiments. The goal post will be moving as more companies open up people will start spending more than yesterday but a quantitative market research can throw more light on the consumer sentiments. Getting this trend right is of paramount importance as forecast based upon a survey and established models can provide the trend that will help them to shape up their strategies. I will refer back to the Greenbook blog where they are saying that there are 2 fundamental guiding principles to help you navigate decision-making during these complicated times.

1. Conduct various scenario analyses: based on three different sentiments which are very worried consumers, worried consumers and mostly worried consumers.
2. Accept the use of ‘working assumptions’ during the turbulence, and modify them over time.

In terms of different industries, agriculture looks the most unaffected by the pandemic. The winter harvest is on in full swing and agriculture implements have been in great demand. There is no reason to believe that during the upcoming sowing season that demand for agri implements will be any less. Agriculture will have some expected cost cutting as labor costs may be a little less than the previous years as migrant laborers who have come back may be ready to work at a lesser cost. Therefore there may be a little more money in people’s hands.

In automotive across categories, companies are readying new launches. As BSIV has kicked in, companies are launching their revamped product line after withdrawing their earlier products. However the reports are not very positive for this sector. A  report by Bosch says that the recovery may take around 6 years if Government steps in with scrappage policy, GST reduction and overall improvement in buyer sentiment.

If we look at the service sector, the demand scenario remains intact because non-discretionary projects or mandatory projects will start kicking in as soon as offices re-open and staff start working in full force. However the optional projects may take some time to restart and this is following the same trend as we have seen after the 2008 meltdown. However, the recovery this time will be quicker than expected.

This crisis will not be solved in the next 2-3 months as experts have been saying globally. The opportunity costs of holding on to research can be huge and companies should not consider research as optional at this stage. The best decision that companies can make at the moment is with the info that is available and follow-up with data driven research and apply forecasting models on the data. As consumer sentiments are dynamic they need to be monitored continuously over time and the best market research companies are creating models to get closer to the reality. Decisions can be modified as per consumer sentiments and changes in demand.