Business Strategy Consulting reveals study about the earthquakes impact on the relationship of Mexican consumers with brands.

MEXICO CITY (27 November 2017) FARO Business Strategy Consulting introduced today the findings of the study “Brands in Mexic in the aftermath of the earthquakes”, whose conclusions provide companies a standpoint on the requirements of strategic action for brands in the short, medium and long term so that they may be aligned to the new consumer expectations after the 7 and 19 September earthquakes.

The main conclusions of the study highlight the need to include a social purpose as a fundamental part of brand positioning, bringing in the agenda of social responsibility as a paramount setting that generates brand value, reinforced by specific tools and actions, and not only communication efforts.

“The expectations of consumers in terms of the actions of brands in natural disasters have changed. In the past, any initiative was well seen, well received. At present, brands face a judgment platform for those that don’t make the right decisions at the right moment. Given the fact that natural disasters will continue to occur, companies must plan future strategic actions that can be implemented at any critical moment in order to provide consumers with certainty and safety”, stated Miguel Mendoza, FARO’s marketing strategy partner.

The earthquakes of 7 and 19 September, with a magnitude of 8.2 and 7.1 on the Richter scale, respectively, took 471 lives, left 250,000 people homeless and more than 16,000 schools damaged. They meant a profound tragedy in the lives of those affected first-hand and had a considerable impact on the minds of the general population. This change in the social psyche had a standing effect on the way consumers interact with and relate to brands, and in some cases, on their consumption habits. The study revealed that, after the catastrophe, the population started a healing and grieving process in which brands played an important supportive function towards society, one that was normally held by the government. In other words, people experienced a more profound relationship of trust, cohesiveness, coordination, empathy and solidarity with those companies that supported the efforts to collaborate and rebuild than with authorities.

In light of the initial shock caused by the earthquake began a collective mourning focused on rebuilding what was materially lost. This grieving process, in which brands and their closeness with the consumer play a very important role, is made up of five overlapping stages that remain valid:

01

Stage one is defined by fear and dread. It’s a stage of emotional shock, which is why consumption in this stage focuses on high-ranking drivers such as survival, protection and help. In this phase, companies must concentrate on the safety of their own employees and facilities. Once this is guaranteed, companies can shift outwards and start implementing aid programs to help society. Ideally, this assistance is part of a planned protocol, whose structure enables linking it to its core business and having the greatest possible impact. “Brands must become aware of the active role they have within society and of the expectations consumers have from them. The first stages of a crisis are the most important ones for collective actions; therefore, it is paramount for companies to have in their DNA a transcending purpose validated by structured action protocols enabling them as agents of change for the benefit of citizens”, stated Martha Sánchez-Saldaña, strategist at FARO.

02

The second stage is one of tension, anxiety and a state of hyper-alertness. Consumption remains focused on the market basket (a.k.a. commodity bundle) and on helping others, but elements are added that have to do with the search for safety and the dramatic need to be close to relatives or close friends. The sectors of real estate, construction, insurances and financial services are benefitted, as well as mass media. In addition, certain categories start to resurface, those focused on soothing and reducing anxiety, such as chocolates, snacks, alcohol and appetizers, as well as a high preference for home delivery services. Social media and mass media become a space for people to “vent”, for relief and spread of anxiety. A new culture is born for the use of social media in favor of society and awareness is raised of the need to verify the information shared on social media. In this stage, consumers expect from brands specific actions to support and aid society. Seeing brands that are active, empathetic and engaged is an element that provides peace of mind and loyalty acknowledged by consumers. Brand actions and communication are under scrutiny; opportunism is penalized and the legitimacy of their actions is appreciated.

03

After days of alertness, the third stage corresponds to exhaustion. Focusing on the family and avoiding crowded places, but now based on the motto that one has to seize and take advantage of life, and indulge oneself. What brands need to do in this stage is listen, back and offer certainty. This leads to a resurgence of the brands “that have been present throughout their lives”, driven by a sense of melancholy, a need to return to what’s always been there, to what is well-known by them, comforting and safe. In these initial three stages, the consumption of luxury goods, cars, entertainment, restaurants and massive events drops. Likewise, at the end of the third stage, we start to see hostility towards all the products that remind people of the earthquake.

04

Along with exhaustion comes the stage of anger and frustration. People start to perceive the injustices, the acts of corruption and the aspects that could have been prevented. People look for those responsible, someone to blame and reasons to justify their anger. The future seems bleak and confidence drops -the Consumer Confidence Index decreased 1.2% in the month of October with seasonally adjusted figures, after eight months of ongoing growth -. In this stage, brands must maintain their selfless commitment to society and prove that their engagement with Mexicans does not carry an expiration date. What is required from them is to encourage, show empathy, trust, hope and safety.

05

Finally, the process ends with the phase of acceptance and recovery. The future is perceived as less bleak and they start to notice the strength after the tragedy. Self-esteem improves and there is a kind of satisfaction for having reacted with solidarity and empathy. They perceive the opportunity to establish a new order, the will to assist, to be fairer, kinder and reexamine life’s priorities. They go back to living the way they did, but with certain adjustments in order to live with greater safety and better preparation. The categories that benefit from this stage are security equipments, restaurants and family activities. This goes hand-in-hand with greater appreciation for the physical aspect when being in touch with their loved ones –beyond the digital scope.

After these natural disasters, brands become a facilitator for family bonds, a hub for trust and a promoter of universal values. Likewise, they must fulfill a function of support and backing, as well as of generation of a culture of prevention and protocols. In this final stage, they expect for brands to offer a high content of emotiveness focused on contention, listening, company, entertainment and safety. The messages relayed should offer certainty and should talk about closeness and family aspects: it was indeed hard, but everything’s going to be alright or it was definitely hard, but we’re brave, stronger, better.

The earthquake also bolstered national pride, seeking a revaluation of localness, the re-dignification of Mexicans as a culture and the confirmation that Mexicans are supportive, strong and warm people.

“This is not a time when people expect for brands to surprise them with humor, creativity, innovation; instead, they expect brands to maintain impeccable the variables associated with transparency, good service and quality. Reliability, reputation and values that hit close to safety, as well as to generating long-term goals will also be very relevant topics”, stated Arturo Pons, FARO’s Retail, trade and shopper marketing partner.

As weeks go by, the patterns of consumption will gradually become normal. Consumers will tend to prioritize their everyday lives but this does not mean they will have forgotten the fact that help is needed. Thus, they will expect for big companies and authorities to be the ones to live to up to the challenge and lead the social effort, as well as regular citizens did during the emergency.

“When helping each other out is no longer trendy, that’s when help is most needed, and it’s in this recovery phase where brands should be working more actively. The duties of Marketing and Social Responsibility must show, based on strategic initiatives, that brands have not only not forgotten about the natural disaster, but rather that helping and assisting has become a part of their DNA”, added Vicente Cortina, FARO’s brand strategy partner.

It is of the outmost importance to understand that the order of things, the priorities, have changed beyond the most recent earthquakes. These events shed light on a new reality that generates important and permanent changes in the way consumers see the world and life itself and, above all, in the way they prefer, interact and relate to brands. It is therefore important to address this new reality with robust strategic processes that gear up brands to make them win in this new context, in a permanent manner and not only in moments of crisis.

“At FARO we believe that in order to accomplish this, we need to review the strategic platforms of brands, as well as their agendas to create value so as to guarantee that, in addition to exceeding the commercial and business objectives, brands achieve a cultural resonance in people’s lives, beyond the categories they compete in, and they need to do this by incorporating in their positioning platforms high-ranking goals, fittingly built in to their business plans and deployment strategies”, concluded Jesús Balseca, FARO’s business strategy partner.