Essay on Consumer Behaviours

CHAPTER FOUR

RESULTS

4.0 Overview

In previous crises, consumer tendencies were highly similar to those being observed in the times of the Coronavirus pandemic following analysis of the different crises that have been experienced in the world. Predictably, retail consumption suffered a sharp decline in the wake of the Coronavirus pandemic. A 16.5% decrease in retail sales was experienced in the United States in April, 2020 which was an increase from an 8.4% drop in the previous month. Measures of containment which were imposed by the government resulted in many of the stores being closed which curtailed the spending by some of the customers (Trading Economics, 2020). However, not being able to buy goods in a conventional manner and lack of consumer confidence cannot be attributed as the reasons behind the consumption decline since the afore-mentioned months marked the initial phases of the COVID 19 outbreak.

4.1 Categories of baby care products purchased

Table 1: Age of baby and category of baby product purchased

In the study by Li & De Clercq (2020), in contrast with other age groups, less than one year old babies had most of the baby care products purchased for them. When comparing the demand baby care products, diapers were second only to soap and other bathing products in terms of demand (Table 1).

4.2 Consumer behaviour

4.2.1 Panic buying

Opportunistic behaviour and supply changes have caused price inflation during this period marking this as one of the major impacts of panic buying. Shortages caused price inflation straightforwardly owing to the fact that certain products’ demand increased spurred by the rise in herd mentality and panic buying. In the Coronavirus outbreak, exhibition of opportunistic behaviours occurs in a number of ways. Firstly, the United States and China are among the countries whereby inflated prices were recorded once unscrupulous individuals bought household products in large volumes and then hoarded the products in order to drive up demand and then later on sell the products at exorbitant prices. Additionally, the pandemic provided the perfect time for some businesses to drive the prices of final goods and raw materials up and thereby exacerbating price inflation. Coronavirus fighting apparatus witnessed the largest surge in prices with medical supplies reportedly having their prices doubled in the process. Haghani et al. (2020) argues that owing to the variation of severity and statistical data abundance the behaviour of panic buying can now be studied given the unique opportunity presented by the current global pandemic despite minimal panic-buying research.

Essential items were the subject of panic buying behaviours and limitations had to be put in place in order to reduce price inflation by retail suppliers. For instance, baby care products such as shampoos, lotions, oils and soaps were the subject of limitations set by Coles, Woolworths and other Chinese supermarket giants. Garfin et al. (2020) suggests that the behaviours of herd mindset are perpetuated when the consumers panic due to a crisis’ uncertain circumstances Nonetheless, herd behaviour which was highly irrationally resulted from increased public fear caused by unexpected exposé of supply shortages thereby showing that these limitations were counteractive. Media depiction could have caused the intensification of the portrayal of limited supplies and panic. It is noteworthy to know that irrational is not the only term in times of crises that could describe all irregular patterns of the consumer. For example, there was a considerable increase in the demand for hurricane-damage-preventing hardware products in the crisis of Hurricane Irma. Just before the event, the West Palm Beach region recorded an increase of nearly 70% in building supply sales according to Forbes (2017). Similar events took place in the US where mass warnings notwithstanding, devastating effects resulted after the country was hit by Hurricane Sandy in 2012. Storm severity awareness was high (80%) as revealed by a study conducted before the disaster. Nevertheless, a disaster management plan was only installed by less than 20% of the residents before the hurricane. The storm’s severity was underestimated by many people due to the population’s excessive optimism. The pressure to make plans to counter the storm was reduced significantly if one resident saw other not preparing, leading to herd thinking mannerismsNon-discretionary goods such as baby care products saw a large surge in demand in both the Coronavirus pandemic and Hurricane Irma despite the significant decrease in the overall consumption in both crises (Trading economics, 2020). In the course of Hurricane Irma, building supplies saw an increase in demand which also bears similarities with the Coronavirus pandemic in which baby care products have also experiences an increase in demand. Remarkably, rational panic buying is exemplified in both crises where non-discretionary and necessary products are purchased in large volumes. In the current pandemic, mass hoarding of goods irrationally is in stark contrast to non-discretionary goods being purchased in mass scales than in normal times. In this current context, the causal relationship has minimum empirical evidence owing to the scarce pandemic experiences, giving a unique feel to the Coronavirus outbreak. However, according to Zhang et al. (2016) and Dang & Lin (2020), consumer decisions are majorly driven by social context as highlighted by neuroeconomic analysis and literature on consumer behaviour. Behavioural guidance is left in the hands of peers when a consumer panics, when there is an ambiguity of information or when foresight is limited in the event they have to face the situation that the current pandemic presents. The behaviours of herd mindset are perpetuated when the consumers panic due to a crisis’ uncertain circumstances. In line with other findings of earlier crises, the current study found out that coping mechanisms such as hoarding and preparation activities are induced by loss of control over an individual’s surroundings, fear of scarcity and social context which result in herd mentality.

4.2.2 Herd mentality

In keeping with the earlier crises, behaviours of herd mentality and increased hoarding activities are exhibited. Baby care products and other goods which are regarded as vital are more often than not hoarded when disaster strikes. Herd mentality is provoked by product scarcity induced perceptions and a surge in temporary product shortages caused by specific consumer goods being purchased significantly. The perceived necessity of a product can increase when consumers experience a loss of control occasioned by product scarcity as noted by the psychological reactance theory. A sense of security is provided by possessions in this context. Between February and March, 2020 there was a 52% increase in the purchases of baby care products in the United States as reported by NC solutions, a consulting firm. Nevertheless, in the space of a day in March (March 11 – March 12), 2020, there was a staggering 845% increase in sales of baby care products in the United States after various states reported that there were introducing lockdown measures (NC Solutions 2020). Compared to the week prior, purchases were nearly doubled with a 55% increase recorded for household consumer packaged goods purchased by US consumers on March 12 (NC Solutions 2020). In contrast to pre-pandemic levels of purchasing, it was recorded that there was a 35% increase in the average household spending after March 12 where there was an increase in hoarding activities. (NC Solutions 2020) In China, compared to the year before in the same period, there was an 80% increase consumer spending on baby care products in March 2020.

Figure 1: Expenditure in selected economies

Moreover, business opportunities may arise from behaviours of herd mentality as indicated by the results. Gowns, medical-grade masks and other Personal Protective Equipment (PPE) were produced on a massive scale courtesy of production facilities and resources volunteered by over 100 Chinese companies (Yuen et al., 2020). The same was replicated by Zara, Prada, Nike, H&M and Gap among other firms globally.

Figure 2: Baby care products consumer spending

4.2.3 Brand loyalty

Table 2: Brand loyalty perception of customers

Many of the sampled consumers (74%) in the study by Li & De Clercq (2020)when buying baby care products were conscious of the brand they were using. In the category of baby care products, the preferred brand by the consumers was the purchased (Table 2).

4.2.4 Experience of new brand

Table 3: Experience of a new brand of baby care products

In their shopping spree, the sampled consumers (34%) of baby care products in the study by Li & De Clercq (2020) have ventured into new brands as posited by Table 3.

4.2.5 Bulk purchases by consumers

Table 4: Bulk purchases by consumers

Among the sampled consumers in the study by Li & De Clercq (2020), a majority of them (84%) admitted to having made purchases in bulk at the height of the Coronavirus pandemic (Table 4).

Additionally, to enhance the child’s safety and health, sanitizers are increasingly being prioritized by many parents as evidenced by different scholars (Pieri et al., 2021; Keane and Neal, 2021).

4.3 Influence of the media

At the start of the Coronavirus pandemic, considerable attention was given to mass media as suggested by media websites access by consumers as they generated traffic around the sites and also through the analysis of web-analytics. There was a 30% increase in web traffic across the news outlets in the United States in 2020 between February and March. On the other hand, there was a 55% spike in web traffic across the Chinese news outlets within the same period. Slovic et al. (2017) and Yang et al. (2019) affirm that in periods of crisis, outlets of mass media have a heightened informative power that is validated by the significant figures shown above. Additionally, subsequent consumer mentality was allegedly influenced to a higher degree owing to the high correlation of media framing that was affirmed by analysis of key-phrase data. There were mentions in the region of 232,000 in connection with the term stockpiling on mass media sites worldwide while there were mentions in the region of 137,000 in reference to the word out-of-stock. Behaviour was perpetually influenced by media coverage as indicated by fear-sentiment and consumer behaviour peaking was observed after both the aforementioned peaks. The discussion segment extrapolates further these results and their implications.

Figure 3: Out-of-stock mentions in media outlets

Figure 4: Stockpiling mentions with regard to Coronavirus by various articles

CHAPTER FIVE

DISCUSSION

5.1 Consumer behaviour

With the Coronavirus pandemic outbreak worldwide, there has been an emergence of behaviours associated with panic buying as witnessed in previous shock events. Perceived essential categories of food were established by consumers globally as anxiety and fear spiked. Baby care products such as baby oils, baby formula and baby nappies among other products such as gloves, facial masks, hand sanitizers, toilet paper, baking supplies, dried goods and tinned foods were among the products considered essential. Gaming consoles, office equipment, hair clippers, bikes, and home gym equipment were among particular goods which experienced severe shortages as lockdowns imposed the various governments loomed (Yuen et al., 2020). Respective networks greatly affected the behaviours of consumers with Coronavirus-induced social restriction and containment measures taking a toll.

In the course of the Coronavirus pandemic, panic buying identification is through the independent variable which has been indicated as the consumer purchases in terms of timing and volumes. The occurrence of the phenomenon is identified through the increases reported. In keeping with preceding instances of panic buying, in April 2020, there was 12.9% drop in baby care products spending compared to an increase of 33% in the preceding month of March 2020 in the United States. The foregoing conclusion could mean that in April, there were sufficient supplies owing to the overspending in March or the occurrence of panic buying is comparatively short-lived. In the United Kingdom, there was an 80% increase in the sales of baby diapers while Spain, China and the United States recorded 82%, 98% and 140% increase in sales, respectively, of the same baby care product in March 2020 (Li & De Clercq, 2020). Previous periods of crisis and the present circumstances must be linked together in order to understand why the Coronavirus pandemic keeps presenting inconsistent tendencies with regard to consumer consumption.

Panic responses elicited as the result of the effects of virus transmission were modeled by a panic index created by the business school in the University of New South Wales. These findings were corroborated by Keane & Neal (2021) who assert that the occurrence of panic buying is directly proportional to the fear associated with a pandemic or a crisis. Nonetheless, government-imposed restrictions and legislation as well as the surge in the number of infected individuals did not impact panic buying as indicated by the model. Within a few days of the announcement, stabilization was realized after a period of intense panic buying associated with increased consumption levels. In this period, panic buying only lasted for a few days. Thus, in the United States and China and indeed the whole world, consumption patterns were heavily impacted, although fairly short-term, by the internal restrictions announced. With the foregoing background, the pandemic satisfied my hypothesis following the established consumer behaviour patterns. My conclusion therefore is that in times of crisis, behaviours of panic buying are portrayed by the consumers.

Decision making by the consumer is driven majorly by social context as highlighted by the analysis of consumer neuroeconomic. Behavioural guidance is left in the hands of peers when there is panic around the consumers, when there is ambiguity of information and when there is a limitation in foresight by the consumers. If a groupthink alternative is floated around, one may start to question their judgement as suggested by experiments of conformity. Moreover, in the context of a group, if one is confronted with doubt, the brain’s fear centers, insula and amygdala increase their activity as indicated by further studies. Mass warnings notwithstanding, devastating effects befell the United States after it was hit by Hurricane Sandy in 2012. Storm severity awareness was high (80%) as revealed by a study conducted before the disaster. Nevertheless, a disaster management plan was only installed by less than 20% of the residents before the hurricane. The storm’s severity was underestimated by many people due to the population’s excessive optimism. The pressure to make plans to counter the storm was reduced significantly if one resident saw other not preparing, leading to herd thinking mannerisms. The coronavirus pandemic acts negatively to this cognitive bias. Similar behaviours of hoarding were practiced after conclusions of scarcity were generated by consumers who also saw others preparing of the uncertain period that seemed inevitable at the time.

The Tragedy of the Commons theory is reflected in the current pandemic where baby care products are horded spurred by the herd mentality. Stress levels are positively linked to seeming loss of control of a situation. Helplessness and distress feelings can be induced by the unprecedented restrictions such as the ones introduced in the wake of Coronavirus outbreak. Therefore, despite broader societal consequences, comfort and a sense of security together with the activities that provide them are ultimately what consumers seek. Acquiring products that are thought to be crucial gives a sense of comfort to the consumer owing to the fact that the Coronavirus pandemic normalized increased purchasing behaviours.

Business models extension or a complete overhaul were the prerequisite during the current pandemic if herd mentality tendencies were to be leveraged by firms as noted in the results section. Owing to panic buying of goods, some goods are perceived to be surplus or limited and therefore production and distribution of these goods is assisted by the extension of business models or the change of firms. For instance, hand sanitizers, gloves and other products which were perceived to be on high demand at the onset of the current pandemic were being manufactured by firms which never engaged in that line of business before. Bacardi and Bundaberg Rum, Carlton United Breweries, Procter and Gamble, Coty and LVMH are examples of firms that ventured into other markets at the height of COVID 19 pandemic. These firms were able to leverage the changing consumer preferences occasioned by herd mentality-induced anxiety. Given these results, the ongoing Coronavirus disease has satisfied the hypothesis of herd mentality portrayed by consumers in times of emergencies.

Brand loyalty was not so paramount in the current Coronavirus pandemic owing to the limited stocks of baby care products in the market. Consumers had bought large amounts of these products owing to the fear of future scarcity and some of the unscrupulous ones hoarded the products in order to create an artificial shortage and drive up the prices. This is in tandem with Slovic et al. (2017) who asserted that the collective interest is overlooked in times of crises as opportunism and self-interest are commonplace as panic purchases reign supreme. Moreover, the consumers were forced to buy alternative brands from their favourite ones owing to the scarcity of the commodities.

The sales for sanitizers spiked as the product was heavily demanded by the consumers. Sanitizer use became important as a baby care product since parents had to sanitize their hands and surfaces before handling the baby. Only a handful of the sampled consumers were not using sanitizers as a baby care product. The sanitizer will help enhance the safety around the baby and will keep the COVID 19 disease at bay. In the event of purchasing baby care products, a parent’s utmost concern is the safety of his/her child as observed by Mathes et al. (2020).

5.2 Media’s influence

It is a daunting task to assess and determine how the Coronavirus period and the events that surrounded it were influenced by the media. This is because the consumers were influenced by the media subject to various environmental factors. To begin with, the White House in the US, which is characteristically a trusted source for information was conferring questionable information which was devoid of any reliability or clarity. Moreover, in the last half a decade, trust garnered and the structure of the news media have been dismantled. Consequently, in many cases, mass media workforces have been understaffed, consumers have had a lack of trust and there has been a lack of unreliability with regard to information garnered. Despite all these challenges, during periods of crisis and uncertainty, the media has traditionally been expected to disseminate unbiased and reliable information and this was augmented by the surging levels of anxiety and also people working from home during the current pandemic. There was a 30% increase in the major news outlets online traffic in the US between February and March 2020. The same phenomenon was also seen in China where in March 2020, there was 105% domestic increase in the audience of the main news outlets (Pieri, 2021). It is hypothesized that the behaviour and the sentiment of consumers might have been influenced by the major news outlets which were provided with more than double the viewership.

Consumer behaviour and sentiment and how these corresponded to the framing of the pandemic by the news outlets remained the big question. The World Health Organization (WHO) called the concern of the whole world to the health emergency that was threatening to cause profound havoc if it remained untamed on January 30^th 2020. Trusted institutions gave out ambiguous responses as a direct reflection of the sensationalism and speculation which was rife as the media received this announcement. It was not until 15^th March that gatherings of people were prohibited by the Center for Disease Control (CDC) in the US and it was not until 11^th March that Coronavirus was declared a pandemic by the WHO. Increased appraisal of threat can result from ambiguity caused by unknown information or ineffectively communicated information as various scholars have noted (Forbes 2017; Keane & Neal, 2021). As the number of infected people grew, the media response to Coronavirus reflected the above statement. Deadly disease and killer virus were the terms associated with the COVID 19 pandemic by the various media outlets. These terms were inducing fear and they were sensational at best when the mortality rate was considered. Staple goods hoarding and stockpiling were the social implications of the media’s framing. As shown in Figure 2, major news outlets in China, the UK and the US had close to 200,000 mentions of the word out-of-stock in just a week as found out by Garfin et al. (2020).

As visualized in Figure 4, across China, UK and the US, behavioural peak observation was after the peaking of the number of articles talking about stockpiling in connection to COVID 19 as noted by Garfin et al. (2020). During the period, abnormal behaviour was attributed to the influence of the media as indicated by the lag in Figure 4. Media exposure promulgates increased anxiety and distress as asserted by the American Psychological Association. When there was a significant rise in confirmed cases in early March, there was also a peak in number of articles associating COVID 19 with stock piling as demonstrated in Figure 4. As affirmed by the graphs, in the Coronavirus pandemic period, consumer behaviour was significantly impacted by the role the media played and my hypothesis is satisfied.

5.5 Future research

The current study assessed herd mentality, panic buying and other forms of consumer behaviours that are exhibited in times of crises. The causality of these factors needs to be understood with further research as the current study has demonstrated and come to the conclusion that the factors are well represented in the ongoing pandemic. Thus, the current pandemic and how it relates to consumer behaviours and a preliminary understanding of the two is provided by this current study. Other avenues for research might include how trading volumes and stock prices are impacted by shifting consumer spending tendencies, herd mentality and panic buying. Furthermore, this study has also put more emphasis on the baby care products industry in the US and in China, hence, future research can explore other geographical areas and other industries and explore the impact of the current pandemic in those areas.

6.0 Conclusion

In comparison with recent historical outbreaks, the healthcare crisis brought about by COVID 19 is way more broader. Natural disasters or crises typically induce consumer behaviours that cannot be applied in the current context of COVID 19. In contrast with historic crises, the ongoing pandemic is unique considering that it does not have a typically localized geographic region and its international scope make it even more complicated to analyze. Furthermore, the vaccines manufactured across the globe have not been produced in the required quantities for widespread dissemination, However, on a positive note, the existence of a vaccine against COVID 19 has allayed the fears that would otherwise been exhibited through irregular and abnormal spending tendencies. It is the submission of the current study that, the past crises and shock events have elicited the same consumer behaviours as the ones exhibited during the current pandemic.

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