BESIDES the goods and services tax (GST), consumers are scrutinising their spending habits due to the threat of an economic downturn and the devaluation of the ringgit, according to a recent study.
A new BBDO Malaysia study reveals that brands must therefore demonstrate value in order to maintain customer loyalty post-GST economic environment.
“GST was not the only cause for the paradigm shift in consumer behaviour. What it did was to expose and thus, exacerbate, this shift,” BBDO chief innovation and strategy officer Anirban Ganguly says in a statement.
BBDO’s study on Creating Brand Worth In The Age Of GST And Other Economic ‘Grisslies’ is a series of qualitative market studies to understand issues before, during and after GST implementation.
The study takes into account the views of a spectrum of wage earners, small and medium-sized entrepreneurs and several CEOs from different key industries; from all Malaysian ethnic and language groups.
BBDO has identified two broad categories of spenders in Malaysia’s new economic reality. The first, those who maintain their lifestyle with some compromise and second, those who drastically cut or stop certain purchases all together, it adds.
Malaysians are cutting down on what they can, to save for what’s worthwhile. As many as 62% of respondents said they would cut down on eating out and 48% would buy less clothes. Only 36% would cut down on vacations and 33% on cosmetics.
“Consumers are willing to compromise spends on everyday items, but are less willing to cut categories that are ‘worthwhile’ such as travel or personal care,” Anirban says.
Drawings from these insights, BBDO developed four lessons that will help businesses create value and weather the shift in consumer spend:
> Value creation must be a central part of every brand’s marketing strategy. Value – whether it’s the added convenience, experiences that money can’t buy – must be tangible across all consumer touchpoints.
> Simple pricing and categorisation. BBDO’s study shows that more than 85% of respondents say they did not know much about and feared the consequences of GST. As a result, while many Malaysians actually believe GST is fair, the lack of education and clarity about how it would benefit the country created nationwide anxiety. Brands can learn not to make the same mistake as customers value transparency.
> Malaysians are willing to rally around something they believe in, as the uproar over GST has demonstrated. If brands would rally around a cause for the greater good, customers are sure to follow.
> Products and services that benefit the group is a powerful value proposition. BBDO’s study found that Malaysians will band together in times of strife. In the height of the GST anxiety, BBDO’s study showed that Malaysians were concerned about the consequences of GST on the quality of life of their families and neighbours across cultural and economic divides. Not just their own.
Besides Anirban, the creative agency also announced the recent appointments of Adrian Cheah as client service director and John Teoh as general manager.