Brand awareness is the level of familiarity and recognition a consumer has with a particular brand or product. It is typically measured by asking consumers if they are familiar with a brand and if they can recognize it when presented with it. Brand awareness is also known as brand recognition or brand recall. The responsibility for brand awareness within an organization typically falls to the marketing and advertising departments.

There is no maximum amount of brand awareness that a brand can expect, as it can vary greatly depending on the industry and competition. A well-known brand has a high level of brand awareness among consumers. Brand awareness can be good or bad, depending on the reputation and perception of the brand.

Brand awareness metrics are vital for brands because they can understand how well their marketing efforts resonate with consumers and make strategic decisions accordingly. An organization should start measuring brand awareness as early as possible, ideally during the development and launching of a new product or brand. 

As of 2021, the most valuable brand in the world is technology giant Apple. According to Interbrand’s “Best Global Brands” report, Apple’s brand value is estimated at around $234 billion. Apple has consistently been ranked as the most valuable brand globally for several years, thanks to its strong reputation for innovation, design, and customer loyalty. The company also has a diverse product portfolio that includes iPhones, iPads, Macs, Apple Watches, AirPods, and services like the App Store, Apple Music, and iCloud.

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Other top brands worldwide include Google, Microsoft, Amazon, Coca-Cola, and Samsung, which also have strong brand values and reputations. These brands have a strong presence in their respective industries and consistently show strong financial performance.

It’s important to note that brand value is subjective and can fluctuate depending on factors such as market conditions and brand performance. Factors that cause brands to lose awareness include changes in consumer preferences, increased competition, and negative publicity.

The history of brand awareness research

The first examples of brand awareness research can be traced back to the early 20th century with the advent of advertising and the growth of consumer culture. 

One of the earliest examples of brand awareness research is the “Top of Mind” study, which was first conducted in the 1930s by George Gallup, the founder of the Gallup Poll. The study aimed to identify which brands were most frequently mentioned by consumers when asked to name a brand in a particular product category without any prompts or cues.

The “Top of Mind” study was a pioneering research method in brand awareness. Advertisers and marketers widely use “Top of Mind” research studies to understand consumer preferences and measure the effectiveness of advertising campaigns.

Additionally, in the 1940s, Louis Cheskin, an American psychologist and design consultant, developed the “Association Test,” which measured brand awareness and brand association by asking consumers to list the first word or phrase that comes to mind when thinking about a brand.

These early examples of brand awareness research laid the foundation for modern brand research and have been adapted and developed over the years to include more advanced methods and technologies such as online surveys, focus groups, and social media analytics.

Measuring brand awareness has changed over the years with the advent of new technology, such as online metrics and social media analytics. Modern technology has made researching brand awareness more efficient and cost-effective.

What is the best formula or method for measuring brand awareness?

There is no specific formula for measuring brand awareness, as the methods used can vary depending on the research objectives. 

There are different ways to measure brand awareness, and some methods include the following:

  1. Unaided recall: This method measures the percentage of people who can spontaneously recall a brand without any prompts or cues. It’s a measure of top-of-mind awareness.
  2. Aided recall: This method measures the percentage of people who can recall a brand after being prompted or given a list of options. It’s a measure of brand recognition.
  3. Brand association: This method measures the strength and relevance of consumers’ associations with a brand. It can be done by asking consumers to list the first word or phrase that comes to mind when thinking about a brand.
  4. Brand loyalty: This method measures the degree to which consumers are loyal to a brand. It can be done by asking consumers how likely they are to repurchase a brand or recommend it to others.
  5. Brand consideration: This method measures the degree to which a brand is considered by consumers when they are making a purchasing decision. It can be done by asking consumers if they would consider purchasing a brand in the future.
  6. Brand tracking: Brand tracking measures changes in brand awareness over time by conducting regular surveys and comparing the results.

Different methods may be more appropriate for different types of research and various industries. Additionally, the sample size, the formulated questions, and the study’s context should be considered when measuring brand awareness.

How do you calculate the value of a brand?

There are different ways to evaluate a brand or trademark, including: 

Brand Value: This is the most common method which measures the financial value a brand name or trademark contributes to the company. It is calculated using a combination of factors such as revenue, market share, customer loyalty, and brand awareness.

Brand Equity: This method refers to the added value that a brand name gives to a product or service beyond its functional attributes. Brand equity is built over time by creating positive associations in customers’ minds and can be measured by how consumers perceive the brand in terms of quality, reputation, and loyalty.

Brand Strength Index (BSI): This method calculates brand value by measuring the power of a brand in the marketplace. BSI takes into account factors such as brand loyalty, brand awareness, and brand perceptions.

Royalty Relief: This method calculates brand value by estimating the amount of money a company would have to pay to license the brand if it did not already own it. This method considers factors such as the brand’s strength, market conditions, and the company’s projected revenues.

Cost of Replication: This method calculates brand value by estimating the cost of creating an equivalent brand from scratch. This method considers factors such as the cost of developing the brand name, logo, and other intellectual property, as well as the cost of advertising and building brand awareness.

Brand Contribution: This method calculates brand value by estimating the revenue or profit a brand contributes to a company. This method takes into account factors such as market share, customer loyalty, and brand awareness.

Regardless of the method chosen, brand awareness is a critical aspect of a brand’s value. High levels of brand awareness can contribute to a strong reputation and customer loyalty and ultimately increase the financial value of the brand.

Can brands with higher awareness charge more?

While brand awareness is a key factor in a brand’s value, brands with a strong reputation for quality, for example, may be able to charge higher prices than others. Brands that have a loyal customer base and have built a strong emotional connection with them may also be able to charge a premium.

A brand with a strong level of awareness is often easier to license and can command a higher value for licensing agreements.

Consumers may be willing to pay a premium for a product or service from a brand they are familiar with and trust, as they perceive it to be of higher quality or offer more value than similar products from lesser-known brands.

Luxury brands may charge higher prices based on the exclusivity and prestige associated with the brand.

However, charging higher prices is only sometimes possible or appropriate for all brands. Brand awareness can be a factor in charging higher prices, but it is not the only one. It’s important to consider the competition, target market, brand reputation, positioning, and emotional connection with its customers. 

Additionally, it’s essential to ensure that the higher prices are justified by the brand’s value and that the prices are not too high to discourage potential customers.

How can brands grow their brand awareness?

Brands can help grow brand awareness by implementing various marketing strategies, such as:

  • Building a strong visual identity and consistent brand messaging
  • Investing in advertising and promotions
  • Building relationships with influencers and media outlets
  • Creating engaging and shareable content
  • Leveraging social media and digital marketing
  • Hosting events and sponsorships
  • Creating a strong customer service experience
  • Building a solid reputation and positive brand image

It’s important to note that while these strategies can help increase brand awareness, it’s crucial to tailor them to the specific audience and objectives of the brand and to measure the strategy’s effectiveness to ensure they are working.

What happens to brands that fail to measure brand awareness?

If a brand fails to build brand awareness, it can have many negative consequences. Some of the most significant ones include:

  1. Reduced sales: Without brand awareness, consumers may not be able to find or recognize a brand’s products or services, leading to reduced sales and revenue.
  2. Difficulty standing out in a crowded market: A lack of brand awareness can make it difficult for a brand to differentiate itself from competitors and stand out in a crowded market.
  3. Difficulty building customer loyalty: Without brand awareness, it can be difficult for a brand to build customer loyalty, as consumers may not have a strong emotional connection to the brand.
  4. Difficulty attracting new customers: Without brand awareness, it can be difficult for a brand to attract new customers, as they may not know that the brand exists or what it offers.
  5. Difficulty creating a strong reputation: Without brand awareness, it can be difficult for a brand to create a strong reputation and be perceived positively by consumers.
  6. Difficulty in launching new products or services: Without brand awareness, it can be difficult to launch new products or services, as consumers may not be familiar with the brand or its offering.
  7. Difficulty in expanding to new markets: Without brand awareness, a brand may find it difficult to expand to new markets, as consumers in those markets may not be familiar with the brand.
  8. Difficulty in negotiating with suppliers and partners: Without brand awareness, a brand may find it difficult to negotiate favorable terms with suppliers and partners, as they may not see the brand as a valuable partner.

Overall, building brand awareness is an important part of building a successful business. It helps to create a strong emotional connection with consumers, increase sales and revenue, and create a competitive advantage in the marketplace.

Can brands reverse a trend of declining awareness?

Reversing a trend of declining brand awareness can be a challenging task. Still, there are several strategies that brands can use to improve their brand awareness and regain consumer recognition and trust. Some of these strategies include:

  1. Re-evaluating brand positioning and messaging: Brands should review their current positioning and messaging to ensure they are relevant and resonate with consumers. They should re-position and re-brand themselves if necessary.
  2. Investing in advertising and promotions: Brands should invest in advertising and promotions to increase consumer exposure to the brand. This can include traditional advertising, such as TV and print ads, digital marketing, and social media advertising.
  3. Building relationships with influencers and media outlets: Brands should build relationships with influencers and media outlets to increase exposure and credibility.
  4. Creating engaging and shareable content: Brands should create engaging and shareable content such as videos, infographics, and blog posts to increase brand visibility and build an emotional connection with consumers.
  5. Leveraging social media: Brands should leverage social media to engage with consumers and build a community around the brand.
  6. Building a solid reputation and positive brand image: Brands should focus on building a strong reputation and positive brand image through positive customer experiences and word-of-mouth marketing.
  7. Reviewing and adjusting the customer service experience: Brands should review and adapt their customer service experience to ensure that it aligns with the brand’s values and goals and helps build a positive brand image.
  8. Investing in market research: Brands should invest in market research to understand the brand’s current awareness and perception and identify the areas that need improvement.

Reversing a trend of declining brand awareness takes time and effort, and it’s not a one-time task. Brands should continuously monitor and measure the effectiveness of their strategies and make adjustments as necessary.

What insight can be gained through a brand awareness research study?

When gathering information about brand awareness, areas that should be researched include consumer recognition and familiarity with the brand, brand loyalty, and brand perception. 

You can use metrics such as market share or brand recall to compare a brand’s brand awareness over its competitors. 

Gathering brand awareness metrics can be different in international or foreign markets, as cultural and language differences may affect consumer recognition and perception of the brand.

It is essential to use a variety of research methods and to consider factors such as sample size and representation so that the information gathered in brand awareness research is correct and trustworthy. 

Different types of brand awareness research include surveys, focus groups, and online metrics. 

Gathering information about the awareness of brands is important because it allows companies to understand how well their marketing efforts resonate with consumers and make strategic decisions accordingly.

What factors and steps should you consider when conducting a brand awareness study?

When researching brand awareness, important considerations include sample size, representation, and research methods. 

The steps for calculating brand awareness can vary depending on the specific research methods and objectives, but generally, the process includes the following steps:

  1. Define the research objectives: Identify the specific information you wish to gather about brand awareness, such as consumer recognition and familiarity with the brand, brand loyalty, and brand perception.
  2. Develop a research plan: Determine the research methods that will be used to gather information about brand awareness. This may include surveys, focus groups, or online metrics.
  3. Conduct the research: Use the research methods identified in the research plan to gather information about brand awareness.
  4. Analyze the data: Organize and analyze the data collected during the research phase to identify patterns and trends in brand awareness.
  5. Make strategic decisions: Use the insights gained from the research to make strategic decisions about how to improve brand awareness, such as adjusting marketing strategies or targeting specific groups of consumers.

Brand awareness should be measured regularly, depending on the brand’s specific needs and the industry. Some brands may measure brand awareness quarterly, while others may measure it annually. The frequency of measuring brand awareness also depends on the level of competition, the product or service, and the market conditions.

What types of questions are typically asked during brand awareness research?

When collecting information about brand awareness, it is important to include metrics such as consumer recognition and familiarity with the brand, brand loyalty, and brand perception. 

It’s important to remember that the research questions used, whether qualitative or quantitative, will depend on the survey’s specific research objectives and goals.

Several types of research questions should be asked to gather valuable information about consumer recognition and familiarity with the brand.

Some examples of these types of research questions include:

  1. Recognition: “Are you familiar with [brand name]?”
  2. Recall: “Can you name a brand in [product category]?”
  3. Top of mind: “What is the first brand that comes to mind when you think of [product category]?”
  4. Spontaneous: “What brand did you last purchase in [product category]?”
  5. Aided: “Can you name a brand of [product category] that you have seen advertised recently?”
  6. Unaided: “Can you name a brand of [product category] without any prompts or cues?”
  7. Brand loyalty: “Would you consider purchasing from [brand name] again in the future?”
  8. Brand preference: “Which brand of [product category] is your personal favorite?”
  9. Brand association: “What words or phrases come to mind when you think of [brand name]?”
  10. Brand perception: “How would you rate [brand name] in terms of quality, value, and customer service?”

After the data is collected, it is generally recommended to segment the responses to the brand awareness survey based on demographic factors such as race, age, income, and education. 

Segmenting the data in this way can help identify patterns or differences in brand awareness and perception among different groups of consumers. For example, segmenting responses by age can reveal discrepancies in brand recognition and loyalty among different age groups. Segmenting by income helps to understand how brand awareness and perception differ among consumers with different financial means. Segmenting by education can reveal how brand awareness and perception may vary among consumers with different levels of education.

It is important to note that demographic segmentation may not be suitable or appropriate in all cases, and it is essential to consider the ethical and legal implications of collecting and using demographic data in research. Additionally, it’s crucial to ensure that any data collected is handled and reported in a way that respects the privacy and confidentiality of survey participants.

It’s also important to remember that demographic segmentation is one of many ways to segment the data. Other ways to segment the data include:

  • Behavioral segmentation (e.g., purchase history, brand loyalty, frequency of purchase)
  • Psychographic segmentation (e.g., personality, values, lifestyle, interests)
  • Geographic segmentation (e.g., region, urban or rural)

Why consider a research partner like Kadence International to conduct your brand awareness research?

There are several reasons to use a research agency when conducting brand awareness studies.

  1. Expertise: Research agencies have the knowledge and experience in conducting research studies, including brand awareness studies. They can design a study tailored to the brand’s specific needs and provide actionable insights.
  2. Objectivity: Research agencies are independent of the brand, which can provide a more objective perspective on the brand’s awareness and perception.
  3. Resources: Research agencies typically have a wide range of resources, including staff, technology, and data collection tools, which can help conduct a brand awareness study.
  4. Time-saving: Outsourcing the research to a research agency can free up time for the brand to focus on other important tasks, such as building the brand or developing new products.

Using a research agency like Kadence International when conducting brand awareness studies can provide valuable expertise and objectivity.

Kadence International partners with the world’s largest and fast-growing, emerging brands to help them make game-changing decisions. If you would like to discuss your brand’s awareness and how research can help, please reach out. 

Pricing is a critical component of the marketing mix. Think about what drives shoppers to purchase a product or service. Is it brand value, product quality, level of customer service provided, design, or price? 

According to research, 60 percent of online shoppers globally consider pricing as the first criterion affecting their buying decision. In tough economic times, this percentage can rise by as much as 20 percent. 

Price is an important part of the marketing mix. When all things are equal, the price of a product or service is often a significant differentiator. Since the 1950s, the focus on the 4 Ps —product, price, place, and promotion —has been at the core of marketing. As the marketing mix has evolved beyond the 4Ps to include packaging, positioning, and people, pricing remains an important differentiator as it is transparent and easily comparable. It has been established that a one percent improvement in pricing raises profits by six percent. 

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With e-commerce, price analytics takes on another meaning. Price analytics for e-commerce helps brands track their competitors’ pricing changes and analyze how their own prices perform daily. This is why e-Commerce brands use competitive price analysis software to execute their pricing strategy.

Today, online shoppers have various tools, like Honey, that scour the internet to find the best prices. Many studies show that as much as 90 percent of online shoppers spend substantial time finding the best deals. 

What are the most used pricing models?

The cost-plus price model. 

When using the cost-plus model, companies determine the unit product costs for each product and then set a target profit margin. The profit margin is added on top of the cost of the products, often as a percentage. These costs are different for retail and e-commerce brands. While e-commerce businesses do not incur brick-and-mortar costs, such as store rent and utilities, they often include other costs, such as domain registration, website hosting, rent (if there is office space), online platform fees if that applies, software, bank processing fees, shipping and fulfillment costs, marketing, returns, and refunds, among others. 

Knowing the exact unit costs is critical, and so is arriving at a reasonable profit margin that makes the sale profitable while also considering what the customer is willing to pay. Pricing too low will undervalue the product or service, and pricing it too high will make it less competitive. 

For instance, luxury brands like Rolex can afford a massive profit margin because they know their target audience cares more about the brand image than the price. However, the same approach doesn’t work for fast fashion brands because the target audience is looking for affordable clothing and accessories; therefore, the product’s price needs to be competitive. 

When using the cost-plus pricing strategy, brands must thoroughly research their competitors’ pricing. 

Market-based pricing.

With many tools available to consumers, primarily online, they can easily compare prices of competing goods and services at a click of a button. Therefore, brands need to clearly understand how their competitors price their products and consider the market value and demand for them. However, brands entering a pricing war can risk losing out if they mark their products and services too low.

Using market-oriented and competitive pricing, brands can utilize the data to increase prices while maintaining competitiveness. 

By keeping an eye on the market and using competitor pricing software, eCommerce brands often raise prices just below the competitors’ so they stay competitive and increase profit margins. 

Dynamic pricing. 

Dynamic pricing, also known as surge pricing, is a time-based pricing model. It is a flexible approach to pricing based on market and customer demand. When using dynamic pricing, the prices of goods and services fluctuate based on their demand. For instance, if there is a big concert in town and lots of tourists are expected to attend, the prices of Uber rides, hotels, and airlines for that city will surge upwards. 

Hotels and airlines utilize online algorithms to price hotel rooms and airline tickets based on market demand to maximize profits and maintain a competitive edge. 

Bundle pricing.

Bundle pricing is a simple pricing strategy where brands sell a range of products together at a lower price than individual products or services. 

For instance, a cookware brand may sell its pot and pans in a bundle for less, or an electronics brand may sell a camera, with accessories, at a lower price.

Bundling products of a similar type allows retailers to increase the average order value. Many consumers find their purchase to be more valuable as they are likely to need other products or accessories that go with their purchase. It’s a good deal for all parties involved. 

Freemium pricing.

Freemium pricing is offered to acquire new customers. It offers your product or service for free for some time so that potential new customers can try your product for a limited time. Profit margins for freemium pricing are calculated based on converting free trial users or sign-ups.  

Freemium pricing is valuable because it gives you access to a new customer’s email, phone, or address so you can use marketing to nurture the customer over time so they purchase from you in the future.

For prospects who sign up for a free trial, they get to experience the product, lowering perceived risk and removing “buyer’s remorse”.

Freemium pricing is often seen with free trials of online software, where prospective users sign-up for a free trial use period. 

High-low pricing strategy.

Brands utilizing a high-low pricing strategy initially price their product at a high price but lower it when it loses its novelty value or relevance. 

An excellent example is Lululemon studio, a workout mirror launched as Mirror and later rebranded as Lululemon Studio. It recently dropped its price by 50 percent as more similar products entered the market. To learn more about the story behind Lululemon Studio, download our report here: 

Skimming pricing model.

Brands use the skimming pricing model when they initially offer a higher price for their product and gradually lower it as it loses market demand and becomes less popular. This pricing model differs from the high-low model because this strategy progressively reduces the price over a period of time.

Penetration pricing.

Brands often use the penetration pricing model when entering a new market or introducing a new product line with lower-than-market prices. These brands set their prices lower than the competing brands to lure customers. 

Price discrimination. 

Many eCommerce brands employ the price discrimination model, selling the same item at different prices to different buyers. This is a tailored approach based on the customers, not the product. 

Price discrimination can be used in the following ways:

  1. Consumers are in the driving seat; for instance, they might be offered free shipping or a lower price if they purchase a certain number of items or shop for a minimum amount. 
  2. Consumers bid for products, so they pay more than they may be willing to pay otherwise due to auctions on platforms like eBay. 
  3. Products are priced based on customer segments. This is done by utilizing customer order history and data to generate prices for specific customer segments. 

Psychological pricing.

Psychological pricing utilizes human psychology to boost sales. When brands price items at 3.99 instead of 3.00 or 99.99 instead of 100.00, they use consumer psychology to increase sales.

This has intrigued researchers for years: How can rational consumers perceive a price ending in nine to be significantly lower than a price less than one percent higher?  

Research has shown consumers do not respond to minor price changes; however, recent research suggests that the last digit of a price can have a massive impact on a firm’s revenue. This is because we process data from left to right and perceive an item priced at 2.99, closer to 2.00 than 3.00, according to numerical cognition. 

Geographical Pricing.

In this pricing model, brands set prices based on the geographical location or market. 

How to price a product or service for international markets

Pricing can become even more complex when brands enter new international markets and various market forces and price structures come into play. 

So what determines a successful export pricing strategy? It includes assessing your company’s foreign market objectives, costs, demand and competition, transportation, taxes and duties, sales commissions, insurance, and financing. 

How do you adjust prices in markets where the currency exchange rates are much lower? In 1986, The Economist, a British weekly newspaper, invented the Big Mac Index, which measures the purchasing power parity between nations using the price of McDonald’s Big Mac as a benchmark to determine whether currencies are at their “proper” level. 

The Big Mac Index is based on the purchasing-power-parity theory, which suggests that exchange rates over time should move in the direction of equality across national borders in the price charged for an identical basket of goods, in this case, the Big Mac. 

The Big Mac Index was created as a lighthearted tool to measure the differences in consumer purchasing power between nations.

The idea was to make the exchange-rate theory easier to understand. But it has now become a global standard for brands entering new markets and academic studies.  

According to PPP theory, a change in the exchange rate between countries should be reflected in the price of a basket of goods.

The Big Mac Index is based on the premise that a basket of goods in one country can rarely be exactly duplicated in another country. For example, an Indonesian basket of groceries and a basket in England likely contain very different products. On the other hand, the Big Mac provides a fair comparison as apart from a few local ingredients, it’s the same product. 

The Big Mac Index isn’t the only method brands use to price their products and services in international markets. The GDP-adjusted index has challenged the Big Mac Index, suggesting the average burger prices should be cheaper in a country like India versus the U.S., based on lower labor costs. 

While the PPP theory addresses where exchange rates are headed in the future, it doesn’t factor in the current exchange rates. 

Many economists believe the relationship between prices and GDP per person is a better guide to assess the current fair value of a currency. 

Despite not being a perfect tool, the Big Mac Index is widely used by brands entering new markets. There are also similar PPP models such as the Starbucks Index and the Apple iPhone index.

Pricing products during times of high inflation.

Inflation is back; for many brands, this means sustainably adjusting their pricing. This is a frequently discussed topic in boardrooms globally as organizations work toward strategies to cope with an inflationary market.

Strong demand in a post-pandemic world, supply chain disruptions due to extended lockdowns in China, Russian supplier sanctions, labor shortages, and rising fuel prices have resulted in cost volatility worldwide. Brands need to adjust their pricing to offset fluctuations and inflation without risking future revenue growth. 

Inflation is the rate of price increases that impacts the cost of living in a country over a given period. 

When the money supply grows too big compared to the size of an economy, the unit value of the currency reduces; in other words, its purchasing power falls, and prices go up. 

With inflation and a recession on the horizon, consumers are tightening their purse strings. High prices of fuel to food are impacting consumer spending. For brands, it often signals a need to get more creative, and eCommerce sellers are in a more favorable position to weather the economic downturn using competitive pricing software and data-rich touchpoints to inform better decision-making.

How to create a sustainable pricing strategy and stay competitive. 

Fix your current pricing strategy.

Focus on the easy wins and communicate your positioning to the consumers, like reducing less profitable SKUs and adjusting service pricing based on market trends, like shipping costs that have gone up over the past two years. 

Build a strategic pricing plan.

Build a structured pricing strategy based on a deep understanding of products and customers for improved retention and volume growth. 

Communicate effectively.

Communicate effectively internally to sales teams and externally to the consumers and public. Deliver customer-centric thinking, clearly communicate attributes and price points, and emphasize product uses and value. 

Provide transparency on price increases.

If it is necessary to increase the cost of your product based on an increase in logistics costs such as fuel and shipping, breaking out that cost separate from the product cost can help consumers separate any necessary price increases and why they are necessary.

Understand new consumer behaviors and revisit brand positioning.

Brands need to deeply understand the dramatic shifts in consumer behavior over the last few years to manage high inflation. The pricing strategy should consider changes in post-pandemic behaviors and preferences. 

Best pricing strategies for high inflation rates

There are several pricing strategies to increase the price of your products ad services during an inflationary economy. Companies often use a combination of pricing strategies to combat high inflation. 

Cost-plus pricing model

During a period of high inflation, it helps when companies allow the product price to increase in line with the cost of the product. However, this pricing model can make a brand less competitive when used alone. 

Competitive pricing model

During inflation, your competitors also make price adjustments, so it is essential to utilize the competitive pricing model to stay ahead. 

The key-value item pricing model

During times of high inflation, brands can lure customers into their physical or online stores with discounted prices for best-selling products. Once in the door, they profit from their other purchases, so dividing products into key-value items and profit-margin items is best. 

Dynamic Pricing model

Dynamic pricing is an excellent strategy for companies selling multiple products during high inflation. This type of pricing uses competitive pricing software, AI, and algorithms to automate the price adjustment process. 

How can brands maintain quality without impacting price, even though their costs have increased?

Shrinkflation

A brand’s response to rising costs of goods and inflation depends on the product or service. There are many products for which consumers are more sensitive to changes in price rather than quantity. This is where downsizing or shrinkflation comes into play. 

Shrinkflation is the practice of reducing the product size in an attempt to maintain its sticker price. This is an excellent strategy, especially in the food and beverage industry, to boost profit margins or maintain profits during inflation. This is not a new practice and is not limited to inflationary times. However, when costs are rising, brands utilize it to their advantage as it allows them to maintain quality while also reducing prices. 

For instance, Simply Lemonade (and other juice brands) in the U.S. have gone from 64oz to 59oz to 52oz over the years while the price has remained the same or increased.

Earlier this year, the size of a Cadbury Dairy Milk chocolate bar was reduced by 10 percent and is available at the same price. The parent company, Mondolez, uses this tactic to combat the rising costs of producing chocolate bars to provide consumers with the same taste and quality without increasing prices. 

Skimpflation

Yet another practice brands use to combat inflationary environments is skimpflation. As the name suggests, skimpflation refers to skimping on service or quality to cut costs. For instance, airlines may stop serving meals, or hotels may reduce the number of times they offer housekeeping services. Airport lounges or hotels may skimp on the hot meals or free breakfasts and offer pre-packaged cereal and bars instead. Brands may also choose to swap out more expensive ingredients with cheaper substitutes. However, there is always the risk of losing consumers if they find the difference noticeable. 

Brands globally are facing enormous challenges due to socio-political issues and supply-chain problems. They must become creative to offset rising materials, gas, and labor costs to maintain profitability. The use of sound pricing strategies, retaining positioning, and communicating the brand’s position with internal and external stakeholders are critical measures in product pricing. 

How market research helps brands determine the optimal pricing. 

Market research has developed several approaches to price optimization that are widely used to evaluate optimal pricing for different products and innovations. They include direct methods, such as estimation of willingness to pay, indirect methods, such as Gabor-Granger and Van Westendorp techniques, and product/ price mix methodologies, such as several discrete choice methods. 

Gabor-Granger Vs. Van Westendorp pricing techniques

The Gabor-Granger method is used to measure the elasticity of demand. It determines how much a potential customer is willing to pay for a product or service. For instance, a brand may show a camera to its customers and ask them how much they are willing to pay for it. But this may be too simplistic for certain cases because when consumers think of pricing, there is a range. Also, not every customer who is offered the camera at the price point determined via this method will be willing to purchase it at that price. 

The Van Westendorp

The Van Westendorp is one of the most commonly used pricing techniques that help customers understand such price ranges. It may ask multiple questions, like at what price is it s low that they would doubt product quality, at what price they would consider the camera to be a bargain, at what price is it too expensive, and so forth. This p[rovides more insights into the price range and a better understanding of the consumer’s mindset. 

Both methods have their place depending on the situation. When a brand has little or no idea about the price range from the customer’s standpoint, it is better to use the Van Westendorp pricing method. Once the range is known, the  Gabor-Granger pricing technique can be used to measure demand elasticity to discover price points at which a brand can maximize revenue.

Purchase intent testing

Consumers may want a product or service, but this doesn’t necessarily mean they are willing to open their wallets and purchase the product. 

Purchase intent testing is a type of concept testing approach related to pricing, which helps determine if people will purchase your product or service at your desired price.

Many brands test the product without the price first to estimate consumer interest and later add the price to determine purchase intent. 

For instance, the pioneering Electric Vehicle brand Tesla conducted purchase intent testing for a car model before it even designed it.

It is paramount to get the product pricing right. Pricing products is an art and skill that makes brands calculate how much human behavior impacts how people perceive price and value. A pricing strategy is used to determine and establish the best price for a product or service to maximize profitability and shareholder value while assessing consumer demand and perception.

Kadence International helps brands worldwide understand the importance and impact of price on demand. If you would like to increase demand or profit by developing a deeper understanding of how price impacts growth, please contact our team for more information.

2022 may be in the rearview mirror, but we wanted to look back at our most visited posts and articles for the year. Researchers are naturally curious people, so here are the pages you sort out the most in the past year.

The benefits of market segmentation

When you know, you grow! Segmentations can guide everything from marketing to product development to identifying new market opportunities. In this article, we outline the key benefits of market segmentation.

READ THE FULL ARTICLE HERE: https://kadence.com/the-benefits-of-market-segmentation/

What is market entry strategy?

Entering a new market can be a complex process. Having a robust strategy maximizes your chance of success. In this article, we explore what makes a sound market entry strategy and the differences between entering a new domestic market or an international one.

READ THE FULL ARTICLE HERE: https://kadence.com/what-is-market-entry-strategy/

What are the four market entry strategies?

When entering a new market there are many routes you can take. This article explores four of the main type of market entry strategies and the pros and cons of each.

READ THE FULL ARTICLE HERE: https://kadence.com/en-us/what-are-the-four-market-entry-strategies/

Biggest risks and benefits to market entry

Launching your product or brand into a new market can be littered with many potential pitfalls, but often the benefits outweigh any risk. In this article, we take a deep look at both the risks and benefits of entering a fresh new market, so you are armed with the information to help you succeed.

READ THE FULL ARTICLE HERE: https://kadence.com/biggest-risks-and-barriers-to-market-entry/

What is market size, and why is it important?

In this article, we not explore what market size is and why it is important but also look at the best ways to calculate market size and is there such a thing as too small when it comes to your brand or product’s serviceable obtainable market.

READ THE FULL ARTICLE HERE: https://kadence.com/what-is-market-size/

5 major challenges of market segmentation and how to mitigate them

Market segmentation can be riddled with challenges. In this article, we explore some of the main obstacles to market segmentation and equip you with the knowledge and tools to segment your market correctly.

READ THE FULL ARTICLE HERE: https://kadence.com/en-us/5-major-challenges-of-market-segmentation-and-how-to-mitigate-them/

What is quantitative research?

What is quantitative research? How is it different from qual? Why is it important? and what are the best collection methods? All these questions are answered in one of our more popular articles for 2022.

READ THE FULL ARTICLE HERE: https://kadence.com/en-us/what-is-quantitative-research/

What is top-down market sizing?

Top-down market sizing is one of the two main methods researchers can use to calculate the serviceable obtainable market. This article looks at what top-down market sizing involves, how you can use it in your business, and the strengths and weaknesses of this approach.

READ THE FULL ARTICLE HERE:  https://kadence.com/what-is-top-down-market-sizing/

The top 5 challenges in international market research

Researching a new market in another country can be a challenge to get right. This article explores the top five challenges in international marketing research and our top tips for overcoming these.

READ THE FULL ARTICLE HERE:  https://kadence.com/the-top-five-challenges-in-international-marketing-research/

What is concept testing in new product development?

Ideation is often seen as the easiest part of product development. But how do you know that your great idea is actually what the market wants? This article looks at concept testing and the different approaches to testing new products. 

READ THE FULL ARTICLE HERE: https://kadence.com/what-is-concept-testing-in-new-product-development/

Now that 2022 is a wrap, we can’t wait to share more insight and information to help you with your research goals. Sign up below to receive our monthly newsletter Connecting the Dots, to get the latest news from Kadence and our team.

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If you want a crocheted sweater or a bespoke engraved cutting board but need help finding an artisan, you might turn to platforms like Etsy that connect buyers with artisans on their eCommerce platforms. 

The last decade has brought a massive consumer shift in mindset. Consumers today care about where their products come from, who produced them, and under what conditions they were made. They care about the impact of everything they purchase —on the workers and the environment. 

Many trends are responsible for the maturation of the artisan economy around the globe, such as the rise of e-commerce, a growing interest in the environment and sustainability, the demand for rare, unique, personalized items, and a desire to support the local economy and small businesses. 

Consumers care about sustainability, ethical consumption, and small-batch production and are looking for unique pieces with a story to add to their lives. 

There has been a massive demand for handmade products globally. Handmade or artisanal products are high quality and unique, making them desirable for people looking for one-of-a-kind products with a strong narrative. 

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The need for personalization and the recent movements supporting local businesses and artisans have also helped promote bespoke brands or handmade products.

Unlike mass-produced goods, handmade products have certain deviations, and no two products will be the same, adding to the uniqueness consumers seek in the products they purchase.

When consumers purchase a handmade product, they are also buying into the story and history behind it and building a deep connection with the artisan making the product while supporting craftsmanship and local businesses. Consumers are avoiding off-the-shelf pieces, and artisan goods are becoming a staple. 

According to a U.K. Crafts Council report, 73 percent of U.K. adults had bought a craft in 2019 —which amounts to almost 25 million handmade items. About 32 percent of today’s buyers are under 35 years of age, making the younger populations of Millennials and Gen Z the biggest craft shoppers today. There are 11,620 craft businesses in the U.K., with over 43,000 employees. 

Consumers often save crafts and techniques that face extinction and erasure by purchasing artisanal goods. And now, many big brands want to add a piece of the traditional method to their products. For instance, independent watchmaker Daizoh Makihara decided to use the traditional Japanese glass-cutting technique called Edo-kiriko for the dial of his first watch. He found eight companies that specialized in the method, but only one agreed to do it. This was Kyosuke Hayashi, the president of Mitsuwa Glass Kogei. 

In English, Edo-kiriko means “cut glass from Edo”: Edo is an old name for Tokyo, and kiriko is the name of the cutting technique. This partnership gave birth to the first edo-kiriko watch in the world in 2018. 

The weavers and artisans work hard to keep the rich Indian arts and crafts heritage alive. According to IBEF, the total handicraft exports from India reached $3.5 billion in FY20. With over 200 million artisans, India’s handicraft sector is the second largest employer after agriculture. 

While fast fashion is pressuring the environment with its heavy carbon emissions, water waste, and poor working conditions and treatment of workers, consumers are hungry for a better model that offers trendy essentials and accessories without harmful environmental and socio-economic impact.

eCommerce has enabled many skilled artisans and hobbyists to profit from their passion and talent. 

Consumer obsession and interest in handmade products have also seeped into reality T.V., and craft reality T.V. shows have become quite the rage. 

British reality show Handmade: Britain’s Best Woodworker is a furniture-making competition similar to a cooking contest that has captured the hearts of audiences worldwide. Every major network and various streaming platforms are in on the trend. Other similar shows include BBC’s All that Glitters, Netflix’s Blown Away, NBC’s Making It, HBO Max’s Craftopia, ITV’s Bling, and Channel 4’s The Great Pottery Throwdown.  

The pandemic spurred the demand for handmade goods. Online platforms have fuelled much of this growth: in December 2018, Etsy, a U.S.-based online platform for artisans to buy and sell handmade goods, reported that there were 220,000 active sellers in the U.K. with a further 9,000 makers on Folksy, a U.K.-based online platform to purchase handcrafted gifts and original artwork, sold directly by the artists and designers who have created them.

Top handmade product categories on Etsy 

According to a report, the top handmade product category on Etsy in 2020 was home and living, with a 25 percent seller share, followed by art and collectibles (21 percent), jewelry (15 percent), clothing (11 percent), accessories (8 percent), bath and beauty (6 percent), toys and games (4 percent), bags and purses (3 percent), weddings (2 percent), and books, movies and music (2 percent).

Etsy has three main sections in its online marketplace: Handmade, Vintage, and Supplies. Handmade represents 85 percent of sellers, Vintage represents 6 percent, and Supplies represent 12 percent of sellers.

Etsy, founded in 2005, now has more than 1.4 million sellers and 19.8 million buyers. Etsy focuses on handmade and vintage items and features over 5.4 million craft supply items.

Handmade gifts provide a personal touch and make the gift unique and personalized. This unique factor has driven platforms and brands that offer handmade products as popular choices during the Holidays. 

There has been an 80 percent jump in searches on the creator-driven platform Etsy for Holiday gifts in the past three months compared to last year. In 2020, CNBC reported that Etsy saw a 156 percent increase in search traffic during three months compared to the year prior for custom gifts.

Case Study: How Etsy carved a niche for the handmade sector using an e-commerce platform

The Overview

Based in Brooklyn, New York, Etsy is the largest online marketplace globally, connecting buyers to sellers of handmade and vintage goods and craft supplies. Etsy is built on a smart revenue model: it charges sellers a listing fee and a commission and upsells advertising services to push a seller’s products to boost reach. The company expanded through acquisitions, including Blackbird Tech for USD 32.5 million, Reverb in 2019 for USD 275 million, and the fashion resell marketplace Depop in 2021 for USD 1.63 billion.

The company has competitors like Amazon Handmade, Big Cartel, Folksy, iCraft, and eBay. 

The Approach

Etsy took the value creation approach and narrowed its product offering to handmade or artisan-made products. While it has created a community of buyers and sellers, it moved its focus to buyers as the core market when eBay vet Josh Silverman took over Etsy’s reins. A year after hitting an all-time low in 2017, Etsy’s stock rebounded and grew; today, it stands at USD 119.74 a share. Defining and focusing on its key audience helped the brand grow. 

Once the brand identified its core audience, the buyers, it hiked the fees it charged its sellers from 5 percent to 6.5 percent. Even though 20,000 of its sellers went on strike, the company did not budge, and the results showed in the most recent third-quarter earnings in 2022, reporting a revenue bump of 11\.7 percent over the same quarter of 2021, to USD 594.5 million. 

Etsy is also attracting more buyers to its platform via the mobile app. In 2021 alone, the brand reported a 45 percent increase in app downloads bringing 5.7 million new shoppers to download the app. The brand also leverages targeted, compelling email offers based on items favorited or shops browsed. The brand funded discounts and sent them to 18 million shoppers in 2021, and also provided discount technology allowing shoppers to discount goods from their shops. The brand also encourages buyers to follow more shops through sweepstakes and contests. 

The brand also offers multiple additional services to facilitate communication with sellers, on-platform transactions, and access to ratings and reviews. 

Etsy provides its sellers a collective to voice their concerns with congress members and local and federal governments. And lastly, the brand continuously invests in retail technologies like machine learning via acquisitions. The brand has designed convenient distribution channels, upgraded buying and selling software and merchant services, and improved its social media presence to boost brand awareness. This month, Etsy rolled out a new image search feature to allow shoppers to find an object faster than with a keyword search. Users on iOS can now tap the camera icon and search for images by uploading a picture. Etsy then scours its platform to find products visually similar to the ones the user is searching for. Etsy plans to expand image search to Android app users soon.

The Results

Etsy’s impact on the artisan economy is robust. The most recent quarterly earnings report disclosed revenues had risen to USD 198 million, a 31.64 percent increase year over year. Etsy currently holds a market cap of just under USD 5.5 billion – quite a climb from its USD 1.1 billion market cap back in March 2017. The brand attracted 6.3 million shoppers in the third quarter of 2022, ending with 88.3 million active buyers on the Etsy marketplace.

In most developing nations, the handicraft industry is fragmented, lacking legal Intellectual Property laws surrounding its products, and artisans not getting fair compensation for their craft. 

In most countries, handcrafts are highly valued because of the high skill level and talent required and are sold in luxury stores at premium prices. However, although India has a rich culture and many categories of handicrafts, they still need to be given their deserved value and place. Ramesh Menon founded Save the Loom, a nonprofit community group to revive, restore, and restructure the handloom industry in India.

Many other such organizations are helping artisans overcome the many challenges they face. However, online platforms and eCommerce websites like Etsy, Folksy, Amazon Handmade, and others have helped create a viable worldwide path forward for the handmade industry. 

While not every product fits the artisan-made model, the lessons from this growing trend apply to all categories. Consumers want to feel connected to the story behind the product, how a product is made, and the feel-good impact on the environment and people after purchase.

For more insights into the shifting trends in online shopping and consumer behavior around the globe, download our complete report, “The Future of Online Shopping.” 

Product managers and designers frequently get requests to design new products and add new features to existing products, making it difficult to determine which ideas to invest in for the best outcome. 

This is where concept testing comes into play. 

Concept testing ideas and even features for existing products before moving into implementation and design is the best way to approach a customer-centric product development process.

What is concept testing?

Concept testing is a market research method to get user feedback before bringing a new product or feature to the market. It often allows users to provide their input on potential solutions. When end users are involved in the initial product development and design phase, it takes the guesswork out of what consumers want and allows them to shape the idea before it is launched in the marketplace.

It involves putting the idea in front of real consumers and asking them to assess the product’s value in multiple areas. 

Whether the goal is to bring a new concept or product into the market, update an existing product, or change pricing or messaging, input from real customers translates into informed decision-making. This allows brands to save time, money, and resources while preventing financial losses due to failed products and also helps protect the brand and customer relationships.

In today’s highly competitive business environment, brands need to employ a customer-centric approach, and all decision-making should start and end with the consumers’ interests and preferences in mind.

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The value of concept testing

According to studies, more than 25 percent of total revenue and profits come from launching new products, which is true across industries and product categories. 

With concept testing, brands can validate an idea or vision before investing valuable resources into building something that may not resonate with its users. It also helps brands identify potential challenges in executing the idea. Concept testing precedes usability testing, which must be conducted once the refined design prototype or wireframe becomes available. Product testing is crucial and happens after the final product is ready for launch to get first-hand information on how consumers will respond to the final product. 

Launching a product or service is a massive undertaking, even for larger organizations. Research shows only 55 percent of all product launches occur on schedule, and 45 percent are delayed by at least one month. 

Therefore, brands must ensure the product resonates with the end user before launching it. Concept testing helps confirm that your assumptions around a solution or idea are correct. 

Concept testing comes after the ideation phase and is a way of testing ideas that have been developed to an extent but need further refinement and provides a more detailed understanding of the needs of your potential customers. 

Concept testing may also be used to design a complete User Experience (UX). According to studies, every USD 1 invested in User Experience (UX) design results in a USD 100 return. Providing consumers with a seamless UX is crucial for brands to stay competitive in today’s volatile market conditions. 

Concept testing should be considered an unobstructed learning process where brands open the concept up to end users to discover their perceptions —without any predefined parameters.

Benefits of concept testing

Concept testing minimizes risk and is easy to set up.

Concept testing allows brands to test and understand how real consumers will feel about the product before investing time, money, effort, and resources into it, which minimizes the risk of product failure. 

Concept testing can help you optimize the concept before the launch.

Concept testing can provide more information regarding the potential roadblocks to implementation, consumer perceptions, price perceptions, competition, and how the new concept fits into the brand. 

It also allows brands to test multiple solutions or concepts to arrive at the best one and helps provide some information on potential market demand.

Research helps forge strong brands.

Concept testing is a great way to show consumers and investors that your brand believes in constant innovation, has a customer-centric approach, and is transparent. This helps boost loyalty and enhance brand value and equity.

Concept testing prevents costly mistakes.

Even some of the biggest brands, like Google and Coca-Cola, are not immune to making mistakes due to false assumptions about what consumers want (or do not want).

In 2012, Google first announced Google Glass —an eyeglasses-shaped head-mounted display with smartphone functionality. It was based on the premise that “technology should work for you —to be there when you need it and get out of your way when you don’t.” The brand wrongly assumed what consumers wanted from technology. In 2015, the company discontinued the product due to low market demand. 

Coca-Cola is another great example illustrating the importance of concept testing. When Coca-Cola’s flagship cola drink started losing market share to Pepsi, it changed its drink formula for the first time in 99 years. It introduced New Coke, which failed miserably. The brand reintroduced its older recipe and rebranded it as Coca-Cola Classic.

Similarly, in 1990, US-based beer Coors introduced Coors Rocky Mountain Sparkling Water to tap into the fast-growing bottled water segment but fell flat as the Coors name confused consumers. 

Concept testing boosts confidence in product launch and team buy-in.

If you have a concept but need to assure the senior team that it will work, concept testing is the best way because you can show evidence that real consumers will use it.  

The importance of well-designed questions

Over 80 percent of all new products fail, and concept testing allows brands to determine if a new product or feature is a good market fit by asking real users the right questions. 

Therefore, you must ask the right questions that will give you valuable insights into the needs and requirements of real users. Determining the metrics, you will measure in your concept testing is crucial. 

You will set your goals depending on the concept and methodology you choose, and your survey questions should aim to reach these goals. For instance, if you are testing a new type of single-serve, wireless blender, the goal is to determine if your potential customers need a product that makes smoothies on the go. The questions will revolve around understanding the consumer better and if they need a solution like this, along with any other features they might want to see in this blender, for instance, a sippy cup cover or straw to go with it. 

This is where research design comes into play, and the research questions depend upon the business need. For instance, if a brand is taking its concept to a new market segment, they need to conduct a needs analysis using qualitative and quantitative research methods. The questions will be designed to find out if the concept will work in the new market. 

Let’s say the brand is testing a new concept before its initial introduction. In that case, they need to conduct Concept Fulfillment utilizing qualitative research to determine if there is a need for the new product concept.

Some common goals brands set for concept testing are as follows.

  • Get a metric on how likely existing customers and new market segments will be to purchase the product. 
  • How the product will do based on current competition in the market, and what features will make it stand out. 
  • Learning which features would get existing customers to purchase from the brand.

These goals provide brands with invaluable, high-quality data and insights into consumer behaviors, attitudes, and preferences. 

Concept testing methodologies

Brands test concepts in many ways and all the methods involve getting feedback from potential users on the idea’s validity. It can be done via a face-to-face or remote interview. Depending on the concept and the study’s goals, it can be done asynchronously or unmoderated. 

There are four standard methods for concept testing. They are based on the number of ideas you want to evaluate.

Comparative testing

This method is used when you have more than one potential concept to test. Brands use the comparative method to see how multiple concepts measure against each other.

When using this method in a survey, respondents are asked to rate each concept against a set of criteria. Questions must be specific features that can also be ranked to determine which features are most preferred by respondents.

Monadic testing

Unlike comparative testing, monadic testing shows research participants one product or idea. 

This concept testing takes your entire target audience and breaks it into subsets, showing only one concept to each. These user-friendly tests provide a deep dive into the consumer’s mind. They also reduce bias and provide accurate results.

Sequential monadic testing

A sequential monadic survey shows your entire target audience or a subset of the audience, either all of your concepts or some of them—with at least two concepts being shown randomly.

Proto-monadic testing

Proto-monadic testing combines sequential monadic and comparison testing. It asks participants to analyze concepts and compare features to help them choose the best concept.

Steps in Concept testing survey design

When you’re ready to test your concepts, there are four steps to follow:

Choose the most suitable methodology for your business needs.

Select the best methodology depending on the scope, time, and number of features or concepts being tested.

Set a goal.

Work backward, set a goal based on the objective and the information you want to gather from your customers, and design survey questions accordingly.

Choose survey components appropriately.

Make sure you use the most appropriate components for your surveys. From Likert scales to images and demographic questions, brands should carefully make these choices to design a survey with questions that will produce valuable data.

Identify the most promising concept.

Review the collected data to get a clear picture of the concept favored by the target market. Dive deeper into the most desirable features to determine which concept has the highest potential for market success. 

If the data reveals something unexpected or is something you did not imagine before, feel free to change course. This is why you conducted concept testing in the first place —to ensure the concept works in the marketplace. The ultimate goal of this study is to do what’s profitable for the brand. 

Real-world examples of Concept testing

It’s one thing to determine if people want a product or service and yet another to say they are willing to open their wallets and buy the product. 

This is where purchase intent testing comes into play. This helps determine if people will purchase your product or service at your desired price.

Many brands test the product without the price first to gauge consumer interest and later add price to determine purchase intent. 

US-based Electric Vehicle brand Tesla conducted purchase intent testing for a car model before it even designed it.

In 2016, the pioneering EV automobile brand tested purchase intent for the Tesla Model 3 before it was even designed. Interested buyers were asked to put down USD 1,000 for the Tesla Model 3, and about 400,000 people ended up putting down money to book the car. The participants also provided feedback on the car, and Tesla made modifications and features based on real customer input. This also gave Tesla the confidence and the capital needed to develop the car. 

Another undefeated brand due to its concept testing research is Denmark-based Lego, a plastic building-block toy company. For years, Lego was predominantly bought for boys, so the brand conducted extensive market research to discover that boys and girls played with Legos differently. Boys preferred stand-alone structures, while girls enjoyed recreating backgrounds, scenes, and environments. 

In 2012, based on these findings, the brand launched the Lego Friends product range with cafes, salons, supermarkets, and so forth to tap into the new consumer segment successfully. 

Concept testing is a great way to evaluate and identify winning product concepts. It promotes innovative thinking and developing products, features, and pricing that resonates with end users. It allows brands to stay ahead of the competition by developing and designing concepts based on market demand and creating products only after testing the idea and getting invaluable feedback from real consumers. 

Kadence International helps leading brands make game-changing decisions. If you are looking for a research partner to help better understand your customers, we would love to help. Fill out our Request for a Proposal here.

Digitization has reset the online shopping game board, and the pandemic has accelerated technology adoption by both brands and consumers. Today, the most successful retailers have adopted technology at warp speeds. With breakthrough technology complementing every step of the retail process, where are we headed? 

Download our complete report, “The Future of Online Shopping,” to find out.

Here’s a summary of the most significant trends shaping the future of online shopping worldwide. 

Trend 1: The Future is ‘Phygital’ — Reinventing the retail experience. 

At the intersection of physical and digital is a connected retail environment where consumers are placed at the center. In this consumer-centric, channel-agnostic, connected environment, consumers can buy online and pick up from stores.

They can try clothes and accessories virtually, in-store or online, browse large touchscreens for product information, dispense products from vending machines, and even scan an aisle in a grocery store to view an overlay of information about products. 

The future of retail is omnichannel, an approach providing customers with a unified shopping experience. This approach connects experiences across multiple touchpoints, including brick-and-mortar, web, and mobile apps. 
Discover how Singapore’s NTUC grocery chain increased retention and repeat business using an omnichannel approach.

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Online Financing Options – “Buy-Now-Pay-Later.”

Retail brands are removing barriers to make the shopping experience as frictionless as possible, including easy financing terms. 

Apps Making Online Shopping Seamless.

Mobile apps offer retailers an engaged audience they can easily connect with to sweeten their shopping experience, building loyalty and driving in-store sales. 

Download the complete report to discover how Shopee, the leading eCommerce online shopping platform in the Philippines, Taiwan, Thailand, Singapore, Malaysia, Indonesia, and Vietnam, and Sephora, a multi-brand beauty retail store, leading the way in making the shopping experience seamless. 

Trend 2: DTC brands are booming worldwide.

Direct-to-Consumer (DTC) has disrupted the eCommerce industry. As more brands manufacture, design, market, sell and ship their products directly to customers, they are more agile than traditional brick-and-mortar retailers. 

Download the complete report to learn how Nike tapped into the DTC space along with other legacy brands.

Social media advertising significantly contributes to DTC sales; however, rising ad prices damper many of these brands. 

Download our report to discover how DTC brands target users in a cookieless world. 

Also, learn how a home-grown Vietnamese DTC start-up raised USD 2.3 million in the middle of V.C. winter in the country. 

Shein, another DTC brand based in China, adopted and perfected its business model and developed a massive, vibrant, international community around Shein with a customer-centric approach. 

Download our report for the complete case study and discover how Shein has tapped into a massive international market of online fast fashion shoppers in the U.S., Europe, the Middle East, and other big consumer markets. 

Trend 3: Influencers are the new sales associates.

In a crowded digital space, where media consumption is highly democratized, brands seek attention by creating entertaining content that moves the audience. 

Consumers are now in charge — and rather than listening to brands, they listen to peer-to-peer advice on products and services. Consumers are increasingly filtering content, ads, and posts that reek of brand promotions in favor of posts and promotions from people they trust, a.k.a. Influencers. 

So who are the top Instagram influencers right now? 

Download our report to find out who owns the top spot for earnings per paid promotion, and learn how Kim Kardashian sold 150,000 bottles of perfume within minutes on a live stream in China. 

Trend 4: Personalizing the online shopping experience. 

Customers have spoken. They don’t just want personalization; they expect it from brands. 

Research shows that when brands provide personalized experiences, 80 percent of customers are more likely to purchase. When brands personalize a customer’s experience, they anticipate what they want and deliver it to them, increasing engagement, improving conversions, boosting customer loyalty, enhancing the experience, and gaining a competitive advantage. 

Download our report to find out how U.S.-based grocery chain Kroger is delighting shoppers with next-level personalization strategies in our brand case study. 

The future belongs to retail brands that master the omnichannel experience.

Consumers are tightening their purse strings due to inflation and the fear of an impending recession.

High prices of fuel and food are impacting consumer spending. It’s time for brands to get more creative, and eCommerce sellers are in a favorable position to weather the economic downturn using competitive pricing software and data-rich touchpoints. 

Download our free report to find out how top retail brands are globally navigating the new online retail playing field during these uncertain times. 

Brand trust is one of the most valuable intangible assets of a company. Brand trust is meeting or exceeding consumer expectations by how well a brand delivers on its promises with its products and services. When a product fails to launch successfully, it can be costly and erode brand trust, which can take years to rebuild.

While product innovation is essential to building market share and customer satisfaction, products that fail to launch successfully can have the opposite effect, eroding market share, creating dissatisfaction, and sometimes bad press. 

For example, the US Food and Drug Administration (FDA) recently reviewed claims that pulse oximeters, the medical device that clamps onto a patient’s fingertip to measure their blood oxygen levels, can yield less accurate readings in people with darker skin tones. Medical professionals use these devices in ambulances, surgeries, emergency rooms, and hospitals worldwide, so it is alarming that these commonplace devices could be inaccurate. Thorough product testing with a diverse sample could have potentially detected this problem before launch and helped avoid the erosion of trust for these products. 

Recalling faulty, dangerous, or flawed products can cost a company millions and cost much more in lost brand trust. The most costly product recall to date is the Takata Airbag which is said to have cost USD 24 billion.

While safety, functionality, and accuracy are reasons to conduct product testing, it also analyzes a product concept or feature to determine how existing or potential customers will use or react to a product. 

Product testing is a research methodology that allows brands to collect qualitative and quantitative data about consumers’ potential consumption and usage behavior, preferences, and reactions to a product.

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Product testing helps development team members measure a product’s market potential. Brands can use product testing research to determine whether a product functions as expected or whether a target audience will find value in a new product feature. Specifically, product testing helps research, marketing, product managers, and developers:

  • Gain insights: Discover valuable insights about customers’ needs and preferences, which can provide direction during development.
  • Improve products: By gathering and reviewing feedback during development, product development teams can use this information to improve products to meet customers’ expectations.
  • Save time: Product testing can help teams save time during development by identifying potential problems or risks early in the development process before launching the product to consumers.
  • Achieve business goals: Product testing helps product development teams prioritize so they can achieve key business goals, such as attracting more customers or increasing revenue.

Six common types of product testing

The type of product testing deployed can vary based on the project. Here are six common types of product testing. 

1. Concept testing

Commonly used to explore the feasibility of a product idea or concept, concept testing evaluates how the product may perform in the marketplace when launched. 

Depending on the product, concept testing often involves presentations, customer surveys, or wireframes. Concept testing can help product developers and engineers determine whether to progress to the next stage of development by evaluating responses to the idea. It can also clarify the features or functionality customers want from the product.

2. QA testing

Quality assurance (QA) testing is commonly conducted in a staged environment, where product developers test the features or functionality of a product before its public release. QA testing research teams evaluate the product using different scenarios to imitate a customer’s use. QA testing can test product updates or new features before releasing the changes to a broader audience. This type of research ensures the product works as expected and helps teams identify problems before launching the product.

3.A/B testing

With this type of product testing, product developers create two versions of a product’s feature or component and ask a research sample of customers which version they prefer. The differences in the versions may be slight, such as two different color schemes on a product label, or they may be considerable, such as two distinct brand names. A/B testing helps product developers and engineers make design choices based on customers’ preferences. 

4. Market testing

Market testing introduces a product to customers to assess the market potential. Market testing is finding the optimal landscape, at what price point to sell, and which types of customers fit best. The product and research teams typically release the product to customers in different geographic areas and/or demographic groups, such as Gen-Z. Market testing can help product development teams measure the potential success of a product in the market. Market testing is often used to forecast product sales, plan advertising campaigns and determine effective distribution strategies.

5. User testing

User testing is research after the development team has built the product. Product development and research teams perform user studies by observing how customers interact with their products. They gather data and information based on customers’ experiences with the product to determine whether to make changes in future product releases. 

6. Regression testing

Regression testing occurs after customers have begun using the product. During regression testing, teams test the current features of a product to help them determine the features they want to add or update. While some existing features may remain, regression testing helps product development teams determine if newly added features impact the current product’s functionality.

Product testing best practices

There is rarely a one-size-fits-all when it comes to product testing. To get the most from your next (or first) product test, it is always best practice to speak with experts in the field. 

  • Use different methods: It’s helpful to use different product testing methods to provide clear direction throughout all phases of development. For example, your product development team may use concept testing to determine the viability of a product idea, A/B testing to assess its design, and QA testing to ensure the product functions as expected.
  • Refrain from making assumptions: Though it’s helpful to develop a hypothesis before product testing, refrain from making assumptions about how customers may use or react to a product. This mindset allows you to evaluate data objectively.
  • Test successful products: While it’s important to conduct product testing to identify potential problems or risks, it’s also helpful to test successful products to learn what’s already working well. Collect this data through product testing and use that information when developing future products for continued success.

Launching a new product into an existing market, releasing new features, or launching a current product to a new audience is an exciting time for a brand. Product launches come with a certain amount of risk. With the right product testing research, you can swing the pendulum in your favor, make sound strategic decisions and maximize optimal returns. 

Consumer behavior is shifting more rapidly and drastically than ever before. Brands are trying to keep up with massive changes in consumer behavior and preferences in virtually every sector, from groceries and fitness to banking and finance. Consumers continue to pivot their preferences and priorities with uncertainty, inflation, and an economic downturn. 

In the early days of the pandemic, an uncertain and dismal picture caused anxiety and depression, which led to panic buying globally. Those were short-term behaviors and did not last. However, many massive shifts due to the pandemic have stuck, including online shopping and the need for speed, efficiency, and convenience. 

The pandemic has changed certain habits for the long haul, with many consumers going to stores less frequently than before. Buyers are now more comfortable shopping online, and most consumers prefer a hybrid shopping experience combining the physical and digital worlds as convenience becomes paramount.

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With the growth of online shopping and technological advancements making online shopping as personalized as a store visit, consumers are exploring options beyond traditional brick-and-mortar stores and looking for a complete experience, be it physical, online, or hybrid. Businesses must adapt quickly to these changes and shifts in consumer preferences to remain competitive in a dynamic and ever-changing market. These changes have been taking place for some time, but the pandemic accelerated the rate of change unexpectedly. 

Some of the consumer behaviors that have drastically shifted post-pandemic are food and grocery delivery services. In the U.S., consumers did not regularly use grocery delivery services. According to some reports, about 15 percent of U.S. consumers tried grocery delivery services for the first time due to the pandemic, about 80 percent of those first-timers liked the service, and 40 percent said they would continue using it post-pandemic. 

While convenience and safety were the two reasons delivery services skyrocketed during the pandemic, the price will likely supersede convenience as we enter a time of out-of-control inflation. Consumers will try to make their money stretch further because savvy consumers know the premium they pay for using delivery services like Instacart. 

In this new economy, will they still be comfortable paying a premium and missing out on discounts for fuel when they don’t shop in person? 

Food delivery services also became more popular worldwide, and the takeout and delivery trend was rising. However, as people returned to in-person dining, food delivery apps took a hit. These apps will also follow the same path as grocery delivery services because when consumers buy from DoorDash, the prices are higher, and they cannot use vouchers. 

Many big retailers like Walmart are following shifts in consumer behavior by offering pick-up and delivery with no markup on prices. Other delivery apps are double-dipping on price, and the consumer pays more than they would in the store. 

Brands need to understand that just as convenience and safety were top priorities during the pandemic, consumers prioritize value and price over everything else, given the current economic environment. 

The fitness market is also seeing massive shifts, and consumers now want an omnichannel approach to fitness, where they use at-home gym equipment and online classes and apps in combination with in-person classes. 

Many e-commerce brands capitalized on creating connections with their consumers by using hand-written-style notes to add to the unboxing experience.

Beauty and fashion brands made it easier for consumers to shop online by using machine learning and artificial intelligence to offer personalized suggestions, experiences, and Virtual try-on sessions using Virtual Reality to mirror an in-store experience. 

Brands need access to high-quality consumer data, insights, and business Intelligence to stay in the game, meet customers’ demands, and outpace the competition.  

In any business environment, enterprises need to clearly understand the psychology behind why consumers behave the way they do. Consumer behavior is the study of consumers and analyzes how consumers decide what to buy, when, and how to buy. It seeks to understand the psychology behind consumers’ needs, wants, and desires and how they purchase, use and dispose of products and services. 

This study is critical because it helps brands understand the motivations and influences behind their purchases. It allows brands and marketers to develop the right products for the right audiences and market the product with the right messaging to convert prospects into buyers and retain them over time. 

Several factors come into play during the purchase decision stage, and these may include personal (age, culture, values, beliefs), psychological (brand perception), or social (friends, family, influencers, social media).

There are four types of consumer behavior:

  1. Complex buying behavior

This type of buying behavior is associated with big-ticket purchases, like buying a home or a car, where consumers invest a lot of time and energy. 

2. Dissonance-reducing buying behavior

This type of consumer behavior is often seen when a consumer is highly involved in the buying process but takes longer than usual because they do not want to regret the decision. This happens when multiple brands are very similar, and choosing one is tricky.

3. Variety-seeking behavior

This behavior is exhibited by consumers who opt for a different brand, even if they were happy with their previous purchases because they value variety.

4. Habitual buying behavior

Consumers that purchase the same brand because of habit rather than brand loyalty are in this category. 

A grasp of the type of consumers your brand attracts will allow you to segment your market based on consumer characteristics.  

Marketers also need to understand buying roles and who is the decision maker regarding their specific product. In a family, for instance, the parents make major buying decisions; however, in some cases, young children are highly influential in the decision. In fact, unlike in the past, the younger cohorts, Generation Alpha (those born after 2010) and Gen Zs (those born between 1995-2010), make many important buying decisions regarding what they wear, eat, or travel. 

There are six major buying roles brands need to take into consideration:

  1. Influencer(s): Several people may be involved in the purchase decision in many cases, but they may not all be consumers. Influencers are those who can exert influence in the final decision. These could be bloggers in today’s world or friends and family whose advice commands weightage in the purchase decision. 
  2. Gatekeepers are usually family members who control the information flow regarding a product within a household. 
  3. Initiator: This is the person who first initiates the purchase idea. 
  4. Decider: This person has the final say in the purchase decision and decides whether or not to buy the product. He also may determine how and where to buy it. 
  5. Buyer: This is the person who ends up buying the product.
  6. User: This is the person who consumes or uses the product purchased. 

Consumer behavior helps with market segmentation, as it goes beyond the essential demographic elements like age, gender, and location to explore the behavior patterns customers exhibit when interacting with a particular product, brand, or website. This concept is instrumental in e-commerce and online shopping environments. 

Here’s how e-commerce brands use consumer behavior to segment customers and users based on their level of engagement with the website, app, or product page. 

They segment or group their customers by their attitude toward their brand, level of brand recognition, usage, frequency and timing of purchase, and purchasing patterns or tendencies, like special occasion buying behavior. 

This allows them to tailor their marketing messages and create compelling campaigns to achieve their goals. 

By utilizing behavioral segmentation, brands can get a complete picture of their customers and filter them by the highest levels of engagement. For instance, brands can track those who regularly open their emails or visit their product pages. Marketers can also target ads with the most appealing messaging to customers based on their needs. For instance, an online shoe store can show those interested in athletic wear more running shoes and sneaker ads, and at the same time, serve ads with formal shoes for those interested in evening shoes. 

Another significant shift in consumer behavior is related to a demand for personalized and customized products, especially amongst the younger cohort of Gen Zs. Using behavioral segmentation, brands can provide more refined personalized experiences to win business. Brands can gain deep insights into their consumers’ needs, wants, desires, challenges, preferences, and concerns to gain a competitive advantage. Upselling and showing complementary products and replenishment reminders based on customer history and interests can reduce cart abandonment and boost brand loyalty. 

The use of behavior segmentation beyond the purchase also helps provide a high level of customer service to cement the relationship with the customer, leading to higher retention rates, more repeat business, referrals, and brand loyalty. 

Using behavioral segmentation, brands can unearth invaluable data and insights that may otherwise never have been discovered.

Understanding consumer behavior comprehensively helps brands improve performance across channels to diversify their marketing efforts. Brands can use these insights to adjust brand messaging, packaging, design, features, pricing, and more to stay ahead of the competition and boost brand equity. 

Kadence International helps leading brands make game-changing decisions. If you are looking for a research partner to help better understand your customers, we would love to help. Simply fill out our Request for a Proposal here.

Just like reaching an unknown destination without a map is difficult, so is building a business strategy without competitive intelligence. 

Competitive intelligence helps brands shape their product development, distribution channels, pricing, messaging, positioning, brand promotions, and features. It allows brands to identify their challenges and opportunities in the market in relation to their competition, so they can see what their competitors are doing and differentiate themselves from them. 

What is competitive intelligence (CI)?

Competitive intelligence refers to any intentional research where brands collect, analyze, and utilize data and information gathered on their competitors, customers, and other external factors, potentially providing brands with a competitive advantage.

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When brands ethically and legally collect competitive intelligence, it can help boost the organization’s decision-making capabilities. The goal of any competitive intelligence study is to create a business plan and strategy so organizations can make well-informed decisions based on market considerations.

Competitive intelligence goes beyond knowing the competition; the process is designed to take a deep dive to unravel the finer points of the competitor’s target markets and business strategy. 

The Japanese auto industry carried out a compelling competitive intelligence study in the 1970s. The Japanese automobile industry analyzed the U.S. automobile market to discover a need for smaller, more fuel-efficient cars in a country where gasoline prices were rising. Using competitive intelligence across its borders, Japanese automakers identified a critical trend to beat their competition in the U.S. 

Competitive intelligence plays a vital role in all major departments of an organization and can take on a different meaning for each department or function. For instance, for a product development team, competitive intelligence may mean new features being added to products. For a sales executive, it may be helpful to know how to create a winning proposal. For leadership, it may be understanding the competitor’s marketing strategies so they can craft a plan to gain more foothold in the market.

Competitive Intelligence studies and exercises can be tactical (shorter-term) or strategic (longer-term). The goal of tactical competitive intelligence studies, for instance, can be to obtain insights into increasing revenues or gaining market share. At the same time, strategic or longer-term reporting focuses on significant risks, threats, and opportunities, present or emerging. 

A competitive intelligence study typically includes a wealth of information and insights from various sources, like government records, online mentions, social media, trade shows and journals, customer data and interviews, and traditional news media, to name a few. These sources are easily accessible and form the starting point for the studies. More in-depth information from distributors, suppliers, competitors, and customers is needed to make truly informed decisions. 

What are the key benefits of competitive intelligence?

There is no substitute for Competitive intelligence research when it is undertaken with care and diligence. It is a powerful tool for brands to gain market share, boost revenue, and continue to build the right products at competitive prices.

Here are some key benefits of using competitive intelligence for brands:

#1. Ability to predict patterns and emerging trends

As brands excavate an enormous amount of data and insights related to their competitor’s activities, they begin to identify and foresee emerging trends in the industry. This allows brands to gain deep foresight to make informed decisions and strategic business plans. 

#2. Aids in brand positioning

As brands gather insights and data about the competitive landscape, they also gain clarity on their activities and messaging. It helps them understand what works and doesn’t and cement their marketing. 

#3. Helps make more informed decisions.

When brands unearth information, they gain critical insights into how the customers feel about their brand and the competing brands. This gives brands a better view of their customers’ wants and how their competitors are meeting the needs of the target markets. 

#4. Boosts returns and profits

When you have a good understanding of the strategies and tactics employed by your competition and how they are performing, you will be better able to invest in areas that bring the highest returns, reducing risks and boosting profits.

Going back to the definition of Competitive Intelligence, we can see three necessary steps: “collect, analyze, and use competitor and market information to make informed decisions.”

Collecting data

There are many ways of unearthing relevant competitor data legally and ethically. Searching for information online may seem rudimentary, but it can provide invaluable information about the competitors and their activities. This information is readily available and accessible on the internet and is considered low-hanging fruit. With a few simple web searches, you can find great information on what the competitor is doing and what it has done in the past. You can also learn about product features, pricing, innovations, leadership, and important news and announcements relevant to your competition. There are tools that provide insight into the competitor’s search engine optimization activities and their online advertising efforts. 

From here, brands often go deeper and beyond the internet to analyze target markets and customer segments. Brands use quantitative and qualitative market research to gain more market insight. 

Brands use data to analyze their competition beyond the simple search process. This entails going through endless data and making sense of it all can become cumbersome. This is where data mining comes into play. Besides gathering data from third-party sources, brands also gather human intelligence by interviewing relevant people, including customers and past suppliers. This is a time-consuming process and must be undertaken by experts in market research to ensure it is done ethically and legally.  

Analyzing data

Analysis of data is a crucial step in the competitive intelligence process. Once brands collect data, it needs to be analyzed carefully to provide actionable insights. This allows brands to understand the patterns and separate them from the outliers. 

The analysis aims to uncover strengths, weaknesses, opportunities, and threats as they relate to the competitive landscape. Therefore, collecting and analyzing information from disparate sources is essential in verifying their authenticity and validity. This helps us move away from making assumptions and gaining real insights from more accurate pieces of data. 

Crafting a strategy 

Once a brand has enough verified data and information on its competitors and strategies, it can utilize it to differentiate itself and make informed decisions regarding product, price, messaging, and other essential aspects. It allows brands to weigh the competitor’s strengths, weaknesses, and opportunities in relation to their own to gain a competitive advantage.

For instance, pricing is an important area for differentiation but can only be done right if everything is studied and taken into account to find the right price that is profitable and aligns with the customer’s perceived value of a brand or product offering. Therefore, a successful price is not about pricing your product at the same or lower price than your competitor but positioning your brand as the choice that provides the greatest value. And to make that happen, you need to know the price of competing products and their perceived value in the buyer’s mind. This calls for a thorough study and analysis of the competing products, markets, and consumers. 

Today, e-commerce companies use sophisticated software for competitive pricing due to the market’s highly competitive and dynamic nature. Read more on how e-commerce brands utilize price monitoring software technology to track competitor pricing here.

To get the complete picture, brands may conduct competitive intelligence surveys. They can define their target audience and use various demographic and psychographic questions to identify consumer behavior. These also include questions about competing products and services. You may also use ranking and rating type questions and identify any unmet needs or gaps in the marketplace or use open-ended questions to get a more in-depth view of the consumer’s mind. Brand recall and recognition surveys are also helpful in gaining consumer perception of various brands. For instance, a sparkling water brand may ask: “When you think of bottled sparkling water, what brand comes to mind first?” This can help brands discover how frequently their brand is mentioned compared to competing brands in the category.

When armed with the powerful insights gained through competitive intelligence, brands can be more strategic in all aspects of business, from product development to pricing and distribution. By differentiating themselves from competitors, they can gain valuable market share, grow brand value, and brand equity, and boost their return on investment (ROI).

Fear is a negative emotional response to the presence of danger or threat. Speculative fear is a negative emotional response to the anticipation of danger or threat, which may or may not occur. Humans are hardwired to look for things to fear, forming a necessary part of our survival instinct from birth. 

The human response to danger or threat is flight, fight, or in extreme cases, immobility. However, people respond in several ways when trouble or threat is perceived only as a looming risk. Avoidance, hunkering down, freezing in place, and acting impulsively are responses to prolonged anxiousness caused by pending fearful situations.

While fear is ingrained in our nervous system, it can also be taught. Technology has dramatically changed the way people get information. Social media has become the primary source of news online, with more than 64 percent of internet users receiving breaking news from social media instead of traditional media.

These statistics may be a sign of modern times. Still, the challenge with most people getting their news on social media sites is concerning when coupled with the fact most people do not read past the headline, and the vast majority of headlines are negative. 

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Negative media coverage reports show that negative words such as “bad,” “worst,” and “never” are 30 percent more effective at catching people’s attention than positive words. Research studies also revealed that negative words improved the average click-through rate. Headlines with negative bias showed a 63 percent higher result when compared to positive ones. Most (59 percent) of all news article links shared on social networks aren’t clicked on, implying that most article shares are not read in their entirety. 

So, you’d be right if you think we live in an increasingly hostile world, and most news is bad news. We are increasingly exposed to negativity and fearful news, affecting our collective anxieties and behaviors.

Panic buying

When the Spanish flu arrived in Britain immediately after the First World War, people panicked and rushed to purchase quinine and other medications, leading to national shortages.

Since then, panic buying and hoarding have been observed during many crises. Panic buying is much more common in developed or industrialized countries where people expect they will always be able to access food and other essential items easily. 

During the COVID-19 pandemic, psychologists observed that panic buying was associated with individuals with higher incomes, the presence of children in households, depression and death anxiety, and mistrust of others or paranoia.

Panic buying results from the perceived threat of the event and the perceived scarcity, fear of the unknown, and as a coping mechanism.

Retail therapy

Retail therapy is shopping primarily to improve the buyer’s mood or disposition. It is often a short-lived habit in people with depression or stress. 

Research has shown that shopping can help reinforce a sense of personal control and ease feelings of sadness.

In 2014 the Journal of Consumer Psychology found that retail therapy makes people happier immediately and can also fight lingering sadness. According to the study, the choices and outcomes inherent in the act of shopping can restore a feeling of personal control and autonomy. 

Another study by the University of Michigan showed that purchasing things you enjoy can be up to 40 times more effective at giving you a sense of control than not shopping. In this study, those who actually purchased items were also three times less sad compared to those who only browsed.

How brands can respond to environments of high fear and low trust

Listen to your customers. 

During times of financial stress, such as high inflation or recession, seek as much information as possible about your audience. 

Take a deep dive with multiple data streams to build a clear picture of behavior and sentiment. It will likely be vastly different than it was a few months ago and will continue to change. Don’t leave questions out of your research about fear and perceived risk with your customers.

Words matter.

The world is changing faster than ever, with your buyers’ attention and priorities shifting quickly in response to stressful events. 

For brand marketers and product managers, understand that language that sounded good last month can mean something entirely different today.

Take action. 

With insights from your research, determine what your brand should do to address your customers’ wants, needs, and fears. Your target audience has expectations from brands during uncertain times. Discover what they are, and see if you can deliver while remaining authentic to your brand promise. 

Communicate authentically. 

Be bold and authentic when storytelling and communicate practical information to help reassure and educate your customers. Give your customers an added feeling of security and stability by providing in-depth information. Choose to be a voice of comfort, instilling confidence in your consumers and alleviating fears with the right message. 

Fear and anxiety aren’t going away anytime soon. Financial fear and stress can adversely affect buying behaviors, so it is essential to acknowledge these emotions and develop strategies to address them head-on. What was true of your target audience a few short months ago may not be true today. It all starts with an in-depth understanding of the perceived risks and barriers to purchase when it comes to your product or service. Great research is the first step for brands to develop compelling and compassionate messaging that helps customers feel empowered, confident, and comfortable with their purchase decisions during times of financial stress.

Kadence International helps leading brands make game-changing decisions. If you are looking for a research partner to help better understand your customers, we would love to help. Simply fill out our Request for a Proposal here.