By Professor Michel Wedel

The economic and psychological impact that the pandemic has had on brands and marketing in the beginning of 2021 will likely continue to reverberate. For one, the pandemic has accelerated the shift towards online and mobile shopping. A large part of this shift will be permanent as consumers have incorporated new online shopping behaviors into their lifestyles. Consequently, the customer journey has permanently changed for many consumers. The shift towards online purchasing is beneficial for branded products because of the trust and consistency they provide. However, the shift also challenges retailers selling branded products on platforms such as Amazon, because for them price is the only discriminating factor, which intensifies price competition. Companies will increase spending on search engine optimization on search websites and selling platforms, and on online brand marketing via user generated content by more precise targeting of influencers and brand ambassadors.

With the growth of image and video sharing platforms, visual marketing will become ever more important. The need for deployment of (automated) image and video content personalization is rising, and companies are increasingly producing short sharable commercial messages and clips for entertainment products including movies, streaming, and other services. Livestream shopping is a growing component of this trend, as well as mobile and outdoor video advertising.

Technological developments will facilitate these trends. While purchase and use of head-mounted VR marketing applications have fallen short of expectations during the pandemic, possibly because of barriers in the purchase and use of the equipment, augmented reality (AR) advertising and selling has seen tremendous growth. This trend is likely to continue in sectors such as fashion and cosmetics (virtual try-on), furniture and home improvement products  (virtual in-home try-out), automotive (virtual test drives), real estate and museums (virtual walkthroughs), and entertainment and sports (virtual events). Exciting new commercial developments around virtual haptics (feeling) and olfaction (scent) have the potential to take virtual product experiences to the next level and are awaiting widespread applications.

With the U.S. and world populations becoming vaccinated and people returning to pre-pandemic living, pent-up demand for discretionary spending is expected to unleash. Many luxury brands are ready to deploy marketing resources to capitalize on a rebound in consumer spending following fashion, dining, out-of-home entertainment and travel taking a hit during the pandemic, which was compounded by the drop in physical social events that spurred luxury purchases. However, competition will intensify in this sector, for example because of the entry of Amazon via its invitation only Luxury Stores, and because these trends also have increased opportunities for resale platforms and resale experiments at department stores.

Super-granular personalization through converging recommendation engines, chatbot and virtual shopping assistant technologies, will enable companies to take advantage of the trends induced by the pandemic. These trends, such as a more casual lifestyle, working from home, and migration to suburbs likely will continue when the pandemic recedes amid rising anxiety among some consumers about returning to workplaces. The shift towards working from home spawns the need for a host of new products (apparel, computing, home entertainment) and services (home improvement, cyber security) targeted at the individual needs of consumers.

Traditional shopping malls will see slow recovery and have begun to rethink their marketing by moving towards offering comprehensive consumer experiences. This includes not only shopping, but also high-end dining and entertainment. Shops in malls should facilitate their tenants providing the ease of shopping that consumers have come to expect online, the deployment of analytics to support product search and recommendations utilizing mobile and beacon technologies, and in-store AR and VR try-on technologies. Omnichannel marketing practices such as click-and-collect and return-in-store will continue to grow.

On the other hand, consumers’ rising awareness and concern over climate change, equity, diversity, and income inequality, will continue to induce brands to forge authentic connections with customers around these issues. Companies have already started to and increasingly will play an important role in addressing societal issues that are of growing concern especially to the Gen Z population.

There is a growing segment of the population with very limited discretionary spending and increasing debt because of unemployment and low wages exacerbated by the pandemic. Companies focusing on price competition, economies of scale and cost-efficiencies in production, supply chain and marketing provide great value for these consumers. Hardline discount retailing, everyday low pricing, layaways, long-term payment options and free shipping are some of the tools that are already successfully used to target this segment.

Marketing in 2021 will increasingly deploy technology to meet customer needs in real time. This, by facilitating interactions among consumers and their transactions with companies,  inclusively and sustainably. And in doing so, companies will help consumers navigate the economic and psychological aftershocks of the pandemic by providing value, utility, and enjoyment.

 

Michel Wedel is the PepsiCo Chair in Consumer Science at the University of Maryland’s Robert H. Smith School of Business.

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