The fear economy – how will you adapt to survive?
The future looks bleak for Dr. Peter Steidl and Carl MacInnes, who believe that as we face security threats and economic uncertainty, we will enter into a fear economy in which consumers seek familiarity, nostalgia and escape from the ordinary. Success will go to those who are able to adapt and be agile to suit the marketplace.
We are living in a turbulent world. Still suffering from the aftershocks of the GFC and the European Sovereign Debt Crisis, we are faced with economic disruption from declining growth rates, high unemployment, and a massive fall in the price of key commodities.
The outlook for the developing world is uncertain, while Europe is struggling to deal with the biggest wave of migration since World War II. Terrorist attacks see our perception of safety crumble, politicians tell us that we all have to tighten our belts, the media constantly tout the beginnings of a new and even worse economic crisis, and extreme right and left groups move from niche movements to centre stage.
Yet most of us have somehow become used to a certain degree of turbulence and have learned to accommodate bad news with a belief that it won’t happen here and it won’t happen to us. But what we are describing is the past. We are now moving into a new phase of development which can aptly be described as the ‘fear economy’
What is different?
There are too many factors creating synergies that will change our economic order for ever. From the fall in commodity prices to (youth) unemployment, the indebtedness of nations, seemingly unresolvable religious conflicts, technologies that render whole industry sectors redundant, and governments that are unable to manage the transition to a service economy.
Add to this the slowly emerging impact of climate change, the growing certainty of major food and water shortages down the track, and terrorist threats.
These and other developments don’t just create confusion and uncertainty, they disrupt life and create fear.
As is often said, challenges bring out the best in humans. But the problem is that in today’s complex and confusing world we are largely unsure as to what the challenge is exactly, let alone what we can do about it. After the Second World War the challenge was to rebuild.
You might argue that this challenge was much greater than the one we are facing today, but at least there was a clear outcome everyone could subscribe to. A clear direction, together with an expectation that things will get better and that we can re-create a secure and rewarding life, gave everybody a sense of purpose and a clear direction.
But what are we to do today? What can we hope for or strive for? Who do we listen to? Where do we start?
In today’s world nobody is immune or safe and we don’t understand what we should be working towards to end up with a world we want to live in. Not surprisingly, this disruption to life as we know it will have severe consequences when it comes to consumer behaviour.
The fear economy
How will consumers deal with the emerging fear economy? We know from recessionary periods that consumers are likely to review their habitual purchases to identify categories where they might switch to lower cost alternatives. For most of them this is not because of economic necessity but rather to the uncertainty they are experiencing.
At the same time consumers tend to buy more inexpensive permissible indulgences, such as sweets, lipstick, chocolate and so forth. We can expect these trends to play out again – but there will be much more change.
Fear has a way of making us more aware of our own weaknesses and drives us to improve ourselves – or at least to try to. Being unable to comprehend and deal with the big issues that destroy life as we knew it, we focus on the part that is under our control.
Needless to say, new technologies are playing an important role in this. We expect to see a massive increase in self-monitoring with a focus on physical and mental health and a return of the rather superficial trends of the eighties with their self-centred focus on drugs and escape. We also expect good-for-you products and services to become a more significant part of the permissible indulgences consumers favour.
Seek safe places and people
When people fear the future they tend to move closer together. Expect a switch in spending from out-of-home/on-premise to in-home, including home entertaining and entertainment, home improvements and spending even more time online.
In the medium and long-term we expect even more purchases to move online as consumers attempt to avoid busy places due to the increased risk factor – although cybercrime will eventually put a dent in this trend.
We can also expect nostalgia to become more effective in marketing communications and the positioning of brands. After all, we will be looking at the past as the ‘good old days’. But even more important, anything that has happened already is by definition safe. It is not exposed to uncertainties and unpredictable outcomes. Nostalgia is a safe bet.
We also note the emergence of nationalism. This is already clearly visible in elections in a range of countries and is only to be expected: fear gets people to move together more tightly on a national as well as personal level. This trend needs to be factored into sponsorship decisions, the context the brand is presented in at various touchpoints, social media, and so on.
Escape to a better world
When we fear the future we value an opportunity to escape. Marketers are well advised to consider escape strategies in their brand positioning, communications, social media activities, competitions and other marketing efforts.
Brand myths that suggest imaginary worlds, powers or remote places will be more effective than traditional brand stories. Consumers want to escape to a world that is predictable, safe, enjoyable and rewarding – a world where we know who the good and bad guys are and the good guys always win.
Needless to say, this will also have an impact on entertainment and the movies, television series, computer games and apps consumers will increasingly favour.
Keep a low profile
Conspicuous consumption is likely to be abandoned by those who revel in it today. It will be seen as risky to stand out and attract attention. The design and marketing of luxury brands will need to take this into account by playing down the visible consumption element while emphasising the ‘in the know’ factor. In other words, your peers know which brand it is and with others it may be better they don’t.
We have seen this on a much smaller scale with prestige cars. Some buyers do not want to have the model number made visible – they don’t want the world to know that they parted with several hundred thousand dollars to have a six litre engine under the bonnet. This is niche behaviour but we expect this to develop into a trend that will shape luxury markets.
Excite and surprise
We may have given the idea that consumers will become serious and favour a boring life, seeking security to the detriment of enjoyment. Not so!
We are all hardwired to seek happiness and this will not change. Consumers will still want rewards and surprises. They will still want to feel good, respected and welcome. They’ll just be more selective in how and where they seek these rewards.
For a marketer it will still be important to deliver excitement and surprise – probably even more so as day-to-day life is likely to offer less of these. It is important to stress that we are not talking about traditional loyalty schemes here, but rather unexpected rewards because these lead to a much stronger release of dopamine, the feel-good transmitter.
Deliver consistency to avoid uncertainty
Not surprisingly, consistency and thus predictability gain importance in an uncertain world. Marketers need to keep their core strategy constant and focused, even when they need to change direction in the execution of this strategy. Continuity is important.
Brand vision archetypes that represent stability may be more valued than archetypes that stand for change.
Shift focus to the decisive point
With uncertainty abounding and the consumer questioning even their habitual purchases it makes sense to shift the marketing focus to a greater degree to shopper marketing, to win at the decisive point where the brand choice is being made.
Naturally, it is still worth priming the consumer at various touchpoints before they reach the point-of-sale. But with consumers more receptive to changing their purchasing behaviour on the spur of the moment we expect shopper marketing initiatives – the unexpected offer or shortcut at the point-of-purchase – to be more impactful than ever.
Strategies and competencies companies will need to invest in
We can only highlight likely trends and developments as the fear economy takes hold. But one point we can make with certainty: the world will increasingly belong to the most agile. It is interesting to note that evolution has often been interpreted as ‘the survival of the fittest’. What it really is, is the survival of the most adaptable species.
The same rules will apply in the fear economy: the most agile organisation that is sensitive to indicators of change and able to adapt quickly and effectively will gain a competitive advantage. Sure, dominant brands will always have a head start because of the influence they can exert and the fact that consumers often see leading brands as a viable shortcut in their decision-making.
But agility will become a formidable weapon in the hands of challenger brands – and will make leading brands unassailable.
Marketers will also have to come to grips with the lack of focus and the increased fragmentation that has more recently replaced strategy in many organisations.
The integrated path-to-purchase is a concept that has become viable due to the contribution the neurosciences have made to our understanding of how the consumer’s mind works. But many marketers are so absorbed in mastering the digital world or married to traditional data and concepts that they are missing out on putting to work what is arguably the biggest breakthrough in marketing since its inception.
Maybe the one positive outcome of the fear economy will be a return to strategy, recognising that new digital channels are just that – simply channels that facilitate exposure and engagement.
To lift the return on marketing investment one has to develop an integrated strategy rather than fragment the effort while chasing after imaginary technology-led success.
This may be the first time that we have authored an article in the hope that we will be proven wrong. Not all our predictions will come true for certain, but we fear that many of them will. Let’s not forget that while we may have presented a gloomy picture of the future and things may turn out better, they could equally turn out much worse. Success has a lot to do with being prepared for a likely future. Accepting the emergence of the fear economy may well be a sound investment into future success.
Dr Peter Steidl is a marketing consultant and neuromarketing expert who has worked with leading corporations in 20 countries on five continents. Carl MacInnes is a senior executive responsible for global shopper marketing practice at Fonterra. The opinions expressed by the authors are their own and should not be taken as representative of their respective employers.