Consumer Behavior Monitor: When consumers start thinking, A-brands have it tough

Consumers often think they make choices based on reason, but in reality, they usually make choices based on feelings and emotions. This is because a rational choice requires more energy than an emotional one. Consumers are focused on conserving energy. That’s why they operate on autopilot as much as possible. Premium brands make smart use of this by appealing to consumers’ emotions. But what happens when consumers start listening more to their reason, for example, because concerns about privacy or rising prices are growing? In the Consumer Behavior Monitor, an initiative of VU Amsterdam and Validators, we see that when concerns increase, consumers listen more to their reason.

How far are consumers willing to go for premium brands?

As mentioned earlier, consumers make decisions based on gut feeling more often than they realize. This is also true at the supermarket. Many consumers buy premium brands because of their image, because they grew up with them, out of habit, or because they expect better quality. They are happy to pay the premium price for these brands, even though they know that not all premium brands are of higher quality. So, in many cases, it’s a purchase based on emotion. But is there a tipping point where reason takes over from emotion? At a time when more and more consumers are concerned about rising food prices (33%, +5% compared to week 14) and the prices of premium brands are rising significantly, that may well be the case. And this is evident from the Consumer Behavior Monitor. Now that wallets are under pressure, consumers are buying more (cheaper) B-brands en masse (62%, +14% compared to week 14). So while A-brands appeal more to emotion, B-brands appeal more to reason. This is also evident from the quotes we receive from the voice module in the monitor:

“I buy fewer name-brand products, and I check the flyers in advance to see what’s on sale.”

“I pay closer attention to prices at the supermarket, skip the name-brand products, and go for the store brand.”

This breaks long-standing habits. And this can have major consequences for premium brands. Once consumers have switched and continue to use a different product for an extended period, it becomes difficult for premium brands to win them back.

Marcel van Brenk, partner at EY VODW:

We are at a delicate juncture in the market. Consumers are noticing that prices are rising and are accepting this to a certain extent. But we have now reached a point where some brands are in danger of overplaying their hand. Terms like “grabflation” and “shrinkflation” illustrate growing consumer dissatisfaction. Premium brands in particular will need to be vigilant to prevent the shift toward cheaper private labels from continuing. A sophisticated, data-driven pricing and promotional strategy is essential to address this challenge.

Consumers are caught between a rock and a hard place when it comes to privacy.

In addition to concerns about price increases, consumers are also worried about privacy. Concerns about privacy and the processing of personal data have existed for quite some time. Every so often, the issue makes headlines again, only to seem to fade away for a while. Recently, it has been a hot topic again due to the “data hostage situation at the KNVB,” but concerns about TikTok have also been around for some time. Consumers appear to be responding to this. In fact, consumers find it increasingly important that brands communicate how they process consumers’ personal data and safeguard their privacy (29%, +7% compared to week 14). Never before has this been so relevant to consumers. But are consumers, just as they do in the supermarket, actually changing their behavior as a result? Or are we seeing a true privacy paradox, where consumers say they value their privacy more and more on the one hand, but on the other hand are sharing their personal data more and more?

Convenience wins out over worry

It certainly seems that way. Over the years, consumers have become increasingly comfortable sharing personal data (DDMA Privacy Monitor 2023). Especially when it makes their lives easier or lets them swipe, scroll, and like to their heart’s content. So they tend to set their concerns (reason) aside quite easily if it brings them convenience or pleasure (emotion). This explains the privacy paradox, where, on the one hand, concerns are growing, but on the other hand, consumers calmly continue to share more and more personal data.

TikTok, who's there? Hello, it's Ratio

TikTok has also been in the news a lot lately due to its inadequate privacy policies and allegations of espionage. How are consumers reacting to this? Is the privacy paradox rearing its head again here as well? Or is reason finally prevailing over emotion for once? According to the Consumer Behavior Monitor, it does seem to be heading in that direction, albeit cautiously. For example, the number of Dutch people who use TikTok at least once a week has dropped to 14% (-8% compared to week 12), and the number who now use TikTok only rarely has risen to 13% (+5% compared to week 14). TikTok usage has therefore declined. Consumers seem to be listening to their reason more than before when considering whether to use TikTok.

Will consumers now use their common sense and handle personal data more carefully? Or is this just a temporary scare, and will consumers soon fall back into their old habits? Only time will tell.

You can also read this article on MarketingTribune.