(MENAFN- Khaleej Times) Inflation, unemployment and healthcare costs are some of the major concerns for consumers in the UAE, a study by global marketing and consumer intelligence firm GfK, has shown.
“These circumstances have created opportunities for new entry brands to capture market share from premium brands,” Gonzalo Garcia Villanueva, Global CMO at GfK, told Khaleej Times. Marketing teams are increasingly turning to artificial intelligence to create ever more personalised campaigns, he added.
Excerpts from an interview:
What is the impact of inflation on consumer behavior in terms of purchasing power?
Inflation has a significant impact on consumer behaviour, particularly in relation to purchasing power. It is a prevalent issue globally, and there is a notable level of concern about potential recessions across major economies that have raised anxieties about financial futures.
According to GfK's Consumer Life Study which covers 30 countries across the Americas, EU, APAC, and MEA, one of the primary concerns among consumers is inflation. Nearly 38 per cent of consumers in the UAE have expressed worry about inflation. The other two major concerns are unemployment and healthcare costs.
These circumstances have created opportunities for new entry brands to capture market share from premium brands. There has been an emergence of new players offering competitive price points and desirable features which has squeezed well-established brands into an even more premium segment. Gonzalo Garcia Villanueva, Global CMO at GfK. - Supplied photo
Adapting to ongoing disruptions is becoming the new norm. Therefore, investing in brand development remains crucial to maintain brand values, connecting with consumers, and fostering loyalty. While pricing decisions must be made, it is worth noting that companies that continued to invest in brand promotion and building during the Covid-19 crisis emerged stronger.
Is there a significance of seasonal sales marketing campaigns?
Seasonal campaigns are significant for businesses and present a unique opportunity for brands to tap into heightened consumer spending, enhance brand perception, and drive purchase decisions.
Interestingly, this trend has transcended regional boundaries and has now become an international phenomenon. Some notable examples of this are the growing popularity of Black Friday at a global level, Ramadan in the Middle East, the Dubai Shopping Festival, etc.
According to a recent consumer life survey conducted by GfK, nearly 60 per cent of the surveyed UAE consumers agree that one of the significant factors they consider when choosing a brand is its ability to offer excellent value for the money. This demonstrates that consumers look to cash in on deals across sectors and prioritise obtaining the best value for their money.
At GfK, our primary focus lies in helping clients execute impactful promotions while concurrently optimising the appropriate channels, all the while safeguarding their premium positioning. Our always-on intelligence platform, gfknewron, empower brands to not only gain insights into sales projections and develop strategic plans but also measure the impact of promotional activities on sales volume.
Therefore, by leveraging our comprehensive data and intelligence, marketing and commercial leaders and C-Suite can derive substantial benefits. They can continuously fine-tune volume and pricing strategies to maximize profitability, all while upholding the integrity and distinctiveness of their brand identity.
How do you see the integration of AI into marketing tools?
The incorporation of AI into marketing tools holds great potential. AI, as a broader concept, serves various purposes within our organisation, like data structuring, smart pipeline qualification, or real-time personalisation for consumers. However, the implementation of Generative AI, such as ChatGPT, brings a distinct dimension to the table as it generates valuable assets like content, creative design, or even code. This aspect has captured the attention of many consumers, leading to increased engagement and interest.
The visible proliferation of AI applications in the marketplace highlights its growing significance. Undoubtedly, AI is poised to make a profound and expedited impact on the marketing landscape.
While AI undoubtedly proves to be an invaluable resource, it is crucial to recognise that human involvement remains essential. AI serves as a powerful tool that enhances efficiency and enables marketers to allocate more time to other critical aspects that require a human touch.
Overall, the integration of AI into marketing tools offers significant benefits, allowing marketers to leverage its capabilities to improve efficiency, and ultimately focus on what matters most in their strategic endeavors.
During Covid, we witnessed a boom in online retail, and now that we have stabilised, physical stores are returning to normal. How do you perceive the coexistence of these two channels? How do marketers approach the phygital phenomenon?
Online and offline channels are coexisting in the retail landscape with remarkable momentum. Even before the pandemic, online activity surged in the latter half of 2019, and during the Core-Covid period, Technical Consumer Goods experienced a value growth rate of approximately 257 per cent in the UAE and Saudi Arabia. Almost half of the consumers in the region are engaging in social commerce and using 'Buy' buttons on social media networks or clicking on 'shoppable posts' or 'shoppable stories' on social networks.
Countries previously slow to adopt digitalisation swiftly embraced online platforms as viable alternatives. There has been a notable shift in consumer behavior across different demographics, with older generations embracing the convenience of online shopping and younger consumers supporting local products.
The retail landscape is finding a coexistence between online and offline shopping. Global and regional brands recognise the importance of utilising both channels to provide a seamless customer experience, leading to long-term growth and success. Thus brands that maintain a presence in both realms are poised to thrive in today's dynamic marketplace.
How do you see the progression of brand marketing and promotion in the UAE's marketing landscape?
The region offers significant opportunities for growth, with inflation and other disruptions having a lower impact on the country compared to other markets in the world. Moreover, positive indicators such as higher GDP projections and limited impact from factors like inflation in the US and the Russian crisis contribute to a favorable business environment in the Middle East. According to the Consumer Life Study, 48 per cent of the surveyed consumers in the UAE expressed confidence in improved personal economic situations within the next 12 months compared to the present.
This presents wide-ranging opportunities for marketers to tap into the expanding market and leverage the growing interest in the region. For instance, one of our clients despite seeing natural sales growth identified white spots and opportunities to appeal to the consumers. In addition to overall economic growth, the UAE and KSA are experiencing a rapid increase in tourism.
Considering these factors, the UAE marketing industry is poised for progress in terms of brand marketing and promotion. By capitalizing on favorable conditions and targeting the right audience, businesses can establish a strong presence and maximise their growth potential in this dynamic market.