COVID-19’s effect on the economy – and what marketers need to do about those conditions – differs wildly by category, sector and audience: understanding the dynamics at play is crucial, says the economist Dr Grace Kite.
As the UK enters another lockdown, and sees the extension of the furlough (job retention) scheme, the issue of unemployment remains key. But these are not evenly distributed, Kite told the Festival of Marketing. (For more, read WARC’s in-depth report: What is coming down the track for the UK economy? And what does it mean for marketing?)
“Job losses are hugely concentrated among the under-30s,” Kite reported. “Those are the people that work in face-to-face sectors like restaurants and pubs.”
As a result, demand in categories where the under-30s are the target market are also likely to be hit hard. In the case of job losses, necessary categories will likely be protected. Categories that are typically bought as treats or little luxuries, however, are likely to suffer.
Whether your output is a product or service will also be key. “This is the idea that people wanted to buy things during lockdown but couldn’t,” Kite said. “So they’re catching up now.”
While this will be more important for manufacturing and retail categories, “service categories won’t see the same benefit: however many haircuts we missed, we only needed one when lockdown finished”.
For marketers, then, the question becomes about what you expect to happen to market share in the short and medium terms.
“You may be able to buy extra market share, but whether that is worth it depends on how big your category is going to be in the future and [how big it is] now. If the category is smaller, because [fewer] people are buying that product, the market share gain is going to be a slice of a smaller pie, so that, even if share a voice is cheaper, the payback will be smaller too.”
Sourced from WARC