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Prague University of Economics and Business
Anežka Blažek Wijsman 2021
Master‘s Thesis
Prague University of Economics and Business
Faculty of Business Administration Master's Field: International management
Title of the Master's Thesis:
Change of consumers’ preferences and behaviour due to the influence of Covid-19
Author: Bc. Anežka Blažek Wijsman Supervisor: doc. Ing. Miroslav Karlíček, Ph.D.
Declaration of Authenticity
I hereby declare that the Master's Thesis presented herein is my own work, or fully and specifically acknowledged wherever adapted from other sources. This
work has not been published or submitted elsewhere for the requirement of a degree programme.
Prague, August 25, 2021 Anežka Blažek Wijsman
Acknowledgements:
Above all, I would like to thank Mr doc. Ing. Miroslav Karlíček, Ph.D., as he exhibited upmost patience while guiding my work. I would also like to thank my husband, friends and family for years of support throughout my studies. Lastly, I would also like to thank all the respondents who took part in the research for their time and willingness to participate in the study.
Title of the master’s Thesis:
Change of consumers preferences and behaviour due to the influence of Covid-19
Abstract:
The purpose of this thesis is to examine the changes in Czech consumers' preferences and behaviour due to the influence of Covid-19. The study was conducted using a qualitative research technique. The respondent study pool consisted of great variety of consumers regarding age, demographic location, education level and more. In total, 23 in-depth interviews were conducted. Based on our results, multiple areas of findings emerged. Firstly, the research suggests that Czech consumers engaged in hoarding behaviour depending on their life experience and stress levels. An increase for higher quality and local products was observed. Attitudes towards creating savings changed and long-term trends among the younger generation consist mainly of discovery of home cooking. Furthermore, how does the media influence the Czech consumers perception was detected. Lastly a possible development of online shopping was foreshadowed. These findings are divided into Maslow’s motivation model for better clarity.
Key words:
Consumer preferences, consumer behaviour, Covid-19, crisis and change in behaviour, Czech consumer
1. Introdtion ... 7
1.1 Background of the study ... 7
1.2 Objectives, aim and limitations of the study ... 8
1.3 Structure of the study ... 8
2 Literature Review ... 9
2.1 Consumer behaviour ... 9
2.2 Buyer vs Consumer ... 11
2.3 Decision process of a buying consumer ... 11
2.4 The EKB model ... 12
2.5 Other buying behaviour models ... 15
2.6 Variation of consumer buying decision process ... 17
2.7 The impact of crisis on consumers ... 22
Prevailing changes in consumer behaviour during crises ... 31
2.8 Research Gap ... 34
2.9 Summary ... 35
3 Methodology ... 36
Research question ... 36
3.1 Type of research ... 37
3.2 Data collection ... 37
3.3 Interview guide ... 38
3.4 Chosen Sample ... 39
3.5 Analysis approach ... 42
3.6 Research morality ... 42
3.7 Application of motivation model ... 43
Context of the study ... 46
4 Practical Part ... 49
4.1 Deficiency observations ... 50
4.2 Being needs observations ... 63
2. Discussion ... 82
Conclusion ... 86
4.3 Limitations ... 87
Suggestions for future research ... 88
Sources: ... 90
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1 Introduction
1.1 Background of the study
Only two years ago it would not be possible to write a thesis on this topic. However, times have changed and a global pandemic has literally everybody on this earth in its grasp. For students majoring in economy and business-related studies it can be quite intriguing to see the recent in every part of business. Most changes that happened, are either directly or indirectly influenced by the “pandemic” consumers and their modification in behaviour.
Consumer behaviour is a study of either individual, group or even the whole society. It looks into everything that is connected to purchase, use and then also the disposal of goods. It is also a study where multiple sciences meet, ranging from biology, psychology to economics. It is important to note that it is not tangible, making it difficult to examine. It also has a vast amount of diverse data from each individual, meaning that the data provides many answers but also many more questions. (Kajabi, 2019) The world's largest organizations spend billions of dollars trying to understand consumer behaviour, how they make their decisions and what factors play a role in the purchasing process. They study it in order to improve their marketing to their target market which should in turn increase their sales. When engaging in consumption of goods an individual is influenced by internal factors (such as persons
opinions, interest, and culture) and external factors (such as family, friends, social media, and marketing message) (Omniconvert, 2019).
During a crisis both internal and external factors are influenced. The coronavirus pandemic has multiple trends in common, with other historic crises and its negative impact on
economies and industries. In events like the 2003 SARS outbreak, Hurricane Katrina in 2005, the Christchurch earthquake in 2011, consumers started to have higher levels of anxiety and insecurity (Forster, P. W., Ya Tang, 2005). This results in tightening budgets and less overall spending, with the focus shifting to purchasing necessary goods and rise in phenomena like panic buying, bulk purchasing, and herd mentality. Studies of multiple biological and natural disasters indicate huge psychological and social shocks, meaning a great impact on
consumers' behaviours. (Wetter, E., S. Rosengren and F. Törn 2020).
Coronavirus disease 2019 (COVID-19) is a contagious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). This pathogenic viral infection causes many health complications and can be fatal. First observed in Wuhan, China, with little media coverage and lack of interest from unaffected people, the virus has managed to spread on a global scale, resulting in a pandemic in a matter of months. (WHO,2020) By the end of 2020, with the majority of states affected, many connect its name to restrictions, travel bans, curfews, complete country lockdowns and other drastic rules and measures. The infected along with the non-infected individuals feel the impact. In a matter of 18 months millions of people were infected overwhelming the healthcare system. Changes could also be felt across other industries, with the impact going deep as the social balance of society. Fear of the
8 unknown and multiple waves of the Coronavirus disease along with its mutations, do not soothe the concerns of the population. With the government implementing new measures almost on a weekly basis, the world finds itself in the new normal. In the Czech Republic 8%
of the working population lost its job due to the pandemic, directly affecting their spending ability. The standard lifestyle has a different shape and form now which helped to create new consumer habits. (E15,2020)
Objectives, aim and limitations of the studyThe goal of this thesis is to explore and identify changes in consumer behaviour caused by the Covid-19 pandemic, within the Czech
Republic. The analysis also focuses on diverse attitudes towards the current situation, that are expressed by consumers of different age, gender, family status, achieved level of education, employment status, and their family size. For that purpose, the following three objectives were proposed.
Academic literature does not yet provide insights into change in consumer behaviour and preferences due to the presence of Covid-19 pandemic. This work is aimed to provide to a closer of this research gap. That is why the goal of this paper was set: What are the
behavioural changes and preferential changes in Czech consumers due to the influence of the COVID-19 pandemic? While focusing the scope to retail shopping for better comparability of gathered data. That is why three sub questions were identified: 1) What are the behavioural changes and preferential changes in Czech consumers due to the influence of the COVID-19 pandemic in relation to retail shopping? 2) What are the drivers for these changes observed in Czech consumers related to retail shopping? And 3) What is a long-term prognosis for the observed behavioural changes and preferential changes?
The factors that influence consumers behaviour can be divided into 4 main fields with different characteristics (Kotler & and Armstrong 2012); social, cultural, personal and psychological. With most research and studies limitations are present. A scope had to be implemented to the study for the theme to be manageable.
For instance, the cultural factors will not be taken into account, since the Czech Republic is not large enough for the study to find cultural differences among the inhabitants.
Additionally, the role of the consumer shifts in various contexts, this can be illustrated in the example of parents and their child. The parents have their resources, they serve as the buyers for their children, while the children are the consumers. That is why the interviews in this paper were carried out with individuals that are the buyer as well as the consumer (Solomon, 2017).
1.2 Structure of the study
This work is divided into two parts, theoretical and practical. The first part focuses on the definitions of consumer behaviour, its concepts and different models that allow insight into the decision process. Impacts of influencing factors, meaning price and quality are also
9 explained, this is also applied and explained how it reflects on the Czech market and Czech consumer. This is followed by analysis of behavioural changes and the severity of them during crises of different origins (economic, healthcare etc.). Lastly, long lasting behavioural effects due to the influence of the COVID-19 pandemic are introduced.
The practical part is carried out by conducting qualitative research, meaning 23 in depth interviews, which supply the data for this study. After extraction of the insights from the gathered in-depth interviews, they were laid out in a table, one part being the exact words set by the respondents in the transcript meaning of their status. Meaning, this information is analysed, presented and a conclusion is drawn. For additional clarity Maslow's motivation model was applied to the practical part. As the discovered trends could be connected to the correlating tier in the Maslow's pyramid. As we experienced wild fluctuations in demand over the past two years Maslow's theory helps to lay out the clues for future development.
The first portion of the practical part is devoted to deficiency needs and observation
connected to the tiers that lie in this part of the Maslow pyramid. Into the later part, the author moves on to the observation connected to Bing needs. Throughout all the observation the author was on the lookout for trends exhibiting promise of long-term presence.
2 Literature Review
The goal of this chapter is to gather and present the relevant literature and theories that are important for this study. It is crucial to understand the basics of buying behaviour and the influence factors, to be able to examine where the changes lie and possible future
development . How the consumer behaves and decides, or more importantly, what is behind his behaviour, can be described in and explained through multiple models and theories, which will be described in the upcoming chapters.
2.1 Consumer behaviour
For many decades now extensive research has been done to understand consumer behaviour and it has been subject of study in both science and practice since 1960. It is important to note that it is something more than a marketing field. Even though it’s understating, undeniably, it serves as one of the most important tools for marketers, as a fundament for creation of marketing strategies. Under its definition one can imagine, how individuals, groups or organizations choose, buy, use and then dispose of a product or service, moreover the consumed good or service satisfies their needs. (Kotler, 2016, s. 179). At first this may seem that the definition of consumer behaviour is rather simple, but in reality it’s a
complicated process of uncovering wants and wishes of the consumer. It is more than just an exchange of a good for money, exposing a whole process of phases, where person can engage in buying a consuming, alone or in a group, driven by his criteria’s, he decides where to buy what, then the purchase and consumption, followed by disposal after the goods served its purpose. After this process, the attention is diverted to another good that will satisfy his other
10 or new needs, later the action is repeated again. This provides a link to the Maslow
motivation theory and explanation to which needs will be prioritized. Consumer behaviour consist of both the conduct associated with the immediate purchase or use of a product and the environment which conditions it, reflecting the “consumers essence”, which is partially given genetically and gained throughout the person’s life and his surroundings that was constructed by the society (Koudelka, 2006).
After this extensive description one may be under the impression that science brought enough findings to understand this phenomenon fully, despite the behaviour being complicated to predict. The black box model displays this. The black box presents the mind of the customer that the scientists/corporations/marketers can understand and study only with limited capacity (Vysekalová, 2011, s. 36). The model is based on a relationship: initiative -> black box ->
reaction, and it's illustrated on the picture below.
Figure 1- The EBM model (Blackwell et al., 2006)
Firstly, in the process, the internal and external initiatives are taken in, they are the stimuli that influence the consumer. For marketers the external factors are more important as they can impact them to a certain level and see a certain response, when they tamper with the accessible factor. The “inside world” or black box that follows, is the place of creation for the purchasing decision, (Koudelka, 1997, s. 12). introducing uncertainty to the problematic.
Then why is there still a hunt for trying to uncover what is hidden in this black box? Well, the better one is able to understand consumer behaviour, the more it helps with the accuracy of answers for such an important question that interests both the marketers and scientists today.
Questions like: Why do consumers decide to buy what they buy? What are the influences behind their purchases? Can we see some trends in their behaviour? How will people's preferences change in a crisis?
11 2.2 Buyer vs Consumer
This problem was briefly touched in the introduction and requires further elaboration. Since this study is focused on the change in consumer behaviour, it is essential to know whom this process is about and explain the differences between the buyer and consumer. In some literatures the two are used interchangeably, dismissing their difference. Consumer is a broader term, meaning one can be a consumer without engaging in the buying process.
(Komárková, 1998, s. 29 i Dědková, 2011, s. 10) This represents more than individuals, as it can be a group of individuals or institutions. Buyer is a more specific term, this is someone who orders and purchases products and has a say in the buying process when there are limited options. Typically, this can be seen in the case of a parent and a child, if mother goes
shopping for baby clothes, she chooses which shirt she will buy, however the baby is the one who will be wearing it. In this case, the mother represents the buyer and the baby is the consumer. However, in the majority of cases, the consumer is also in the role of a buyer.
There are more roles in the buying process, and in some situations an individual can engage all of the roles. For marketers it is crucial to distinguish between roles, so they can pinpoint whom to influence to get the desired outcome. (Kotler a Keller, 2016). These are the additional roles (Stávková 2006, s. 14)
• Initiator – the one who suggest purchasing of the good
• Influencer – someone who can influence the outcome just by their opinion
• Decider – they make the final decision
• Buyer – the one who makes the actual purchase
• End user – enjoyer of the bought good
• Gatekeeper – someone who is in control of the flow and amount of information The significance of this resides in the realization where should the qualitative research be steered. Suggesting the focus should be on persons who have their own resources and can act in as many roles as possible, showing how changes in their behaviour directly influenced their buying decisions.
2.3 Decision process of a buying consumer
In the past two decades the consumer behaviour has taken on drastically different shape, especially with the newer generations gaining spending power. When a consumer decides to buy a product, there is a part in his decision that was made unconsciously. For instance, satisfying suppressed wishes when social prestige causes them to buy a higher priced product from a high end brand. Per contra in time of recession, the consumer will not choose a good that has an irrelevant high price to its value, like we can see in case of luxury goods that carry a part of its value in the brand name. And will instead choose goods with a similar
satisfaction level but lower price. (Solomon, 2017). During a crisis people start to be more
12 economical and responsible in their decisions, meaning there is a social and economic effect on consumer behaviour (Kar, 2010).
For better analysis and prediction of changes in behaviours, models of buying behaviour were created. At first, the main point of studying buying behavior was the interaction of the seller and buyer, and how did the buyer react at the moment of the purchase. Now it’s known that it is an ongoing process that happens before and after the moment that the goods are exchanged for money. When this idea was expanded, it also took into account the influencing factors that played a role in the whole process. There are many existing models that help to
understand the phases of the buying process, because of the diverse array, only three of the most used models will be described. (Solomon 2006)
2.4 The EKB model
In the year 1968 the model by Engel, Kollat and Blackwell was introduced (abrv. EKB model), with the intention of describing and dividing the buying process into five typical stages. At first comes the (1) problem recognition, or identification of a certain need. After that the consumer searches for more information on how to solve his problem and satisfy his newly found need. Then the evaluation of alternatives follows, how can he solve his need differently. If the consumer decided for one of the alternatives, he could move onto the purchase decision part, however if he is not appeased by available options, he returns to the second step searching for more information, revealing extra alternatives to choose from. The process ends not after the purchase but after the post-purchase evaluation. (Engel, Kollat, &
Blackwell, 1968). The same goes for Koudelka's theory, where he describes the process of the buying decision from the discovery of new need to deciding what product will satisfy it, to the phase of the fulfilment (Koudelka, 2010, s. 5).
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Figure 2- The five-stage buying decision process model. Adapted from Comegys et al, (2006)
Not always are all of the parts present, this depends on what problem the consumer is trying to solve, what good he has in mind, the importance of the purchase for the person and how deeply it will impact his budget and more. Koudelka mentions three possible processes; The shopper goes through all five stages. The shopper makes a limited decision with a substantial reduction of participation in some of the phases,such as not searching for information or for alternatives. The shopper is making a repetitive decision, where the purchase is only about when and how many of the same product to buy.
2.4.1 Problem recognition
It all begins when a consumer identifies a wish or need that is unsatisfied, thus the creation of craving to fulfil it begins. (Mansoor & Jalal, 2011). It is important to note that there is a huge velocity and variety of problems, ones that are very simple to satisfy and then there are those on a bigger scale, and their fulfilment is not that easy. For all problems one thing is true, the consumer can define that the state he is in right now is not the optimal state he wants to be, and that for him to reach this optimal state he needs to take action. (Solomon 2006). There are two possibilities for a gap to be created, a need recognition, where the quality of the consumer state is declining, or an opportunity recognition, where he can reach a higher ideal state. But there is more than the realisation of a gap that can create a need, factors like social status, level of education or even change in personal preferences. (Salomon 2006, Comegys et al, 2006)
14 2.4.2 Information Search
After the need is recognized, the consumer begins gathering information that will help him comfort his wish. He can look for it in two ways, internally, meaning information that they have in their own memory gained from experience, previous buy or need that was satisfied in similar way. However, if that is not satisfactory, he has to look for external data, to enrich his knowledge to make a better decision. How exchanging this stage will depend on the
importance of the need and other factors, like how available and useful existing information about the desired product of purchase is. The gathering of data can be also prolonged if the consumer finds this part enjoyable and enriching, or if it’s in their nature to be more diligent and precautions. Which brings up another factor, the higher the risk of a negative outcome in a case of not enough obtained information, the longer the consumer will spend eliminating the risk by doing more extensive research to lower his uncertainty. (Alba & Hutchinson 1987, Solomon 2006).
2.4.3 Alternative evaluation
At this moment the consumer has carried out enough research to know what kind of good will satisfy his need. Now he has to evaluate the existing options that should all have the same outcome, solving his problem. The consumer will come up with his own criteria on how to decide, also depending on how diligent he has to be. This correlates to the importance and significance the need fulfilment will have on his current state. He will narrow down the alternatives more cautiously if the involvement is high, but for instance on which bottled water to buy, the involvement will be low or maybe he will decide to not search for alternatives at all. After the evaluation, the consumer identifies his preference among the options and chooses what product to purchase (Comegys et al, 2006)
IDEA - After the rise of globalization and opening of trade, the number of substitutes is quite high, thus his decision will be solely made on the brand or time of delivery.
2.4.4 Purchase decision
At this stage the consumer has made his decision, but he is still debating if he will buy it or not, even at his stage. Philip Kotler (2009) says that the end decision may be interrupted by two factors. There is a possibility that the attitude of another person, maybe with a negative experience with the same product or dislike for the chosen brand of the product, will have an impact on the consumer’s decision. The second factor rises from a change of situation that the consumer was unprepared for, such as an unexpected increase in the product price, sudden unemployment, increase in risk of buying this option. All of this can either make him postpone the purchase or return him to the second stage of search for more alternatives. The marketers can influence this stage by giving more information about the product, stressing the benefits or simply maintaining contact with the potential customer. (Kotler 2009)
15 2.4.5 Post purchase behaviour
The last stage of the process is very important but often forgotten by marketers. It follows after the purchase has been made, and the consumer can evaluate if he eliminated the gap, satisfied his need and/or fulfilled his wishes. Consumers will engage in two behaviours at this stage, post purchase satisfaction and action. There are two possible outcomes if the
evaluation, either he is satisfied, or when the expectation and current state are not fulfilling, he will become dissatisfied. Either the outcome the customer can participate in distribution of his experience, that can serve as a base for other consumers in their information search stage, they can do so by writing reviews on forums, posts on social media, or simple conversations (word to mouth review). For sellers their goal in this stage is to create a pleasant post-
purchase experience, meaning the consumer is so pleased with the purchase he will become a repeat customer. (However, sellers cannot count on a hundred percent success rate, since there is no guarantee that the customer, even though satisfied, will return) (Clootrack, 2020) 2.5 Other buying behaviour models
The two following behaviour models are important since they can show how certain factors have an effect on the output of the behaviour. In 1995, Engel, Blackwell and Miniard expanded on the EKB model by developing the decision process further, creating the EBM model. The EBM model also takes into consideration information input/processing and other factors that influence the process of decision. Another difference between EKB and EBM models is that the latter one focuses more on the external influences. (Blackwell, Miniard, &
Engel, 2006)
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Figure 3- The EBM model (Blackwell et al., 2006)
The picture shows how the several factors and determinants are divided into three categories, the environmental influences, psychological processes and individual differences. Individual differences in the lower right column in figure 3, consist of consumer resources, knowledge, attitudes, personality, values, and lifestyle. Environmental influences found on the upper right column in figure 3 are made up of culture, social class, personal influences (meaning with whom the person is in contact with), family, and the situation, which is the change in
behaviour in connection to different situations. The psychological processes include the same stages that the EKB model has, plus it is broadened by two more and rearranged, resulting in seven steps in figure 3: need recognition, search, pre-purchase evaluation of alternative, purchase, consumption, post consumption evaluation and satisfaction. (Blackwell et al., 2006). One would think that expansion of an older model makes it better, however the
“upgraded” model received critique due to the mechanical outline on human behaviour, as well as the complexity being too much, since some of the variables are hard to define, thus making it harder for functional usage, furthermore ignoring the social and individual factors (Foxall, 1980; Jacoby, 2002). This lack of social application in EKB leads to the third
behavioural model that takes this factor into consideration, the TBD model (Brug, de Vet, de Nooijer & Verplanken, 2006).
Introduced by Ajzen in the year 1985 the TBD model serves as an extension of the previously propose Theory of Reasoned Action or TRA (Fishbein & Ajzen 1975, Ajzen & Fishbein 1980). It is also commonly used, elaboration on how people’s behaviour can change. The
17 main assumption of the TBD model is that behaviour is planned, meaning it can be predicted.
(Ajzen, 1991).
Figure 3-The Theory of Planned Behavior model by Ajzen (1985)
The TPD model takes into account three influencing factors that can be seen in figure 4:
behavioural beliefs, normative beliefs and control beliefs. Behavioural beliefs are beliefs of possible consequences of displayed behaviour, that can be favourable or unfavourable in connection to particular behaviour. Normative beliefs are about expectations of other individuals, like social pressure. Lastly, Control believes is when certain factors are capable of obstructing or enabling the final performance, prompting behaviour control. The stronger these three influences are the bigger the chance of the predicted behaviour. (Ajzen, 1985).
This model is capable of revealing between 25%-50% of deviation in the intended behaviour.
(Ajzen, 1991). This model received some negative judgments as well, there are a few limitations to the TPB model, like the lack of strength between intention and behaviour, because of the behavioural control. Furthermore, the model seems to be performing more accurately in case of positive norms/attitudes toward the behaviour, which are also hard to capture and measure (Kothe & Mullan, 2015). Some suggest the TBD model has to be upgraded due to the vast changes in humankind (Xia & Sudharshan, 2002).
All of the mentioned models try to describe the process of the buying decision of a consumer.
However, in the background of the decision process there are the consumer's personal attributes that come into play, like knowledge, social roles, routines, customs and conventions, implying that if the same product or a service is offered, it may result in a different behavioural response from person to person.
2.6 Variation of consumer buying decision process
Each person reacts differently even though they are reacting to the same thing. Some choose to put in a lot of effort into their decision, some skip the information research stage and make an impulsive purchase. The amount of effort the consumer uses to examine and their level of involvement can be divided into 4 types. (Kardes et al. 2011, p. 71.)
18 Table 1 Four types of buying behavior (Kotler&Armstrong 2010, p. 176)
High involvement Low involvement
Significant differences
between brands Complex buying behavior Variety-seeking buying behavior
Few differences between brands
Dissonance-reducing buying
behavior Habitual buying behavior
In complex buying behaviour it's typical to see big differences between brands and high involvement, usually due to the product being expensive or an infrequent transaction means thorough research before purchase. The consumer behaviour changes, and he acts atypically, with the risk being high, he will talk to his family, friends or even experts. For example, when buying a new house, it’s a huge decision, with high economic risk. The consumer will take into consideration how his surroundings will react, how his social status changes and many more aspects.
For Dissonance-reducing buying behaviour the involvement is also high. The same reasons may apply, like infrequency of purchase or the high price tag of the product. But there is a difference in the number of choices with the differentiation being small across brands. This means a limitation in his alternative decisions, together with time restrictions and limited budget, this results in a purchase of a good that is easily available, and the information search will not be as deep. (Kotler&Armstrong 2012,; Solomon 2006 )
Habitual buying behaviour are usually routinely decisions with low involvement and conscious effort. The consumer does not feel a lot of significant difference between brands.
When a person purchases a product he will use daily, he will not put a lot of thought into that and either stay with his favourite brand or opt for repeated purchase of the same product. A lot of products fall into this category, ranging from cooking oil, pasta, sugar to toilet paper, and although the repeated purchase takes place, we cannot talk about brand loyalty.
Consumers just go to a shop and purchase a rather similar list of goods. Rather than brand loyalty, it is more about brand familiarity. Habitual behaviour can become automatic and it saves time to establish a routine/habit, which means it is harder to influence. Marketers try to do so in the media, radio, television and special offers or price drops. (Solomon 2006)
Variety seeking consumer behaviour shares the low consumer involvement with habitual buying, with the discrepancy in brand differentiation. Consumers participate in regular brand switching, one of the reasons being low transition costs. They do so out of curiosity, wanting to try something new, or they become bored with their regular product. The switch occurs rather for the need of variety than dissatisfaction with the previous product. As an example,
19 when shopping for sweets, a consumer will choose a product without a lot of thought.
However, next time his curiosity for a different flavour or type of sweet wins and he will switch brands. This happens often and with low intentions. Again, variety seeking behaviour is not easy to influence, sellers may try to do so through occupying more lucrative shelf space, eye-catching packaging or advertisements, or free samples. (Kotler&Armstrong 2010) 2.6.1 Factors influencing consumer behaviour
How different factors influence the purchasing decisions, depends how the problem is
defined and from which angle it is analysed. It also depends on which areas are being studied and what type of behaviour is being investigated. As it was mentioned the buying process is influenced by factors both external and internal, expanding the problematic from the field of marketing also to psychology and sociology, that is what most authors of literature agree on.
For instance, Koudelka (2006) distinguishes consumer behaviour models like this:
Rational models - These models view the consumers can be seen as a rational person who makes decisions and acts mainly economically with the availability of all necessary information. Behaviour is the result of rational consumer thinking, where emotions, psychological and social elements do not play a significant role.
Psychological models - According to these models, consumer behaviour is the result of psychological processes, such as learning, motivation, perception, etc. The consumer perceives external and internal stimuli, but various unconscious motives also enter the process.
Sociological models - These models focus mainly on how consumer behaviour is influenced by social circumstances, ties, social groups, etc.
Within these models, it is possible to further examine consumer behaviour in more depth and analyse the individual factors influencing purchasing behaviour. The issue of each influential factor is the subject of many other studies. For better clarification the scheme below by Kotler & Armstrong (2018) defines four basic dimensions of the input factors that affect the buyer.
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Figure 5- Factors influencing Buying Behavior (Kotler & Armstrong, 2018)
• Cultural factors - culture is often related to a specific society that views it as a core inseparable part (Zamazalová, 2009). Kotler states that cultural factors have the strongest and most significant influence on consumer behaviour. Marketers should try to capture changes in culture, as this will allow them to estimate what new products a company might want (Kotler et al., 2007).
• Social factors - Consumer behaviour is also significantly influenced by social factors. These factors include, for example, smaller consumer groups, family, social status and roles. (Kotler et al., 2007).
• Personal factors - this includes age and stage of life, economic situation, employment, lifestyle, personality and self-perception (Kotler et al., 2007).
• Psychological factors - the four important psychological factors influencing purchasing decisions are: motivation, perception, learning, beliefs and attitudes (Kotler et al., 2007).
Kotler and Armstrong (2018) say that these factors influence behaviour of the consumer. The EBM model views these factors as influences of the environment, affecting the buying decision process. In the psychological column in figure 6, motivation, a factor determining particular parts of behaviour, can be observed in the TPB model. A similar but extended dimension has a model by Jakubíková (2008, p. 50), in which she adds another important influential area to Kotler's model, namely the marketing mix. According to Vysekalová (2011, p. 48), the course of consumer behaviour is influenced by: a person's personality, attitudes, opinions, knowledge, motivational structure, social role and his personality traits in conformity or the influence of opinion leaders.
2.6.2 E-commerce and Czech consumers
The rise of e-commerce couldn’t go unnoticed in the past two decades. In the year 2015 up to 41% of internet users globally, have engaged in online shopping. And it is forecasted that this number will only grow in the following years (Statistica Incorported 2015). The 34th rand of internet users goes to the Czech republics with around 8 million users, and for this country an
21 annual growth of 3 % is expected. (Internet Live Stats, 2016). The internet started to become a common tool, a part of the daily life for many people. However, the older generation is still wary of its usage. The younger generation on the other hand do not share this apprehension.
Of the 8 million people in the Czech Republic only 32,1 % purchase goods and services on a regular basis, the rest either shop irregularly or prefer to go in person to purchase the wanted product. The intervals of purchase are mostly done every three months, this applies to 32% of internet shoppers. Czech consumers share similar worries like quality of the product,
impossibility of testing the product before buy, return of goods, security and misuses of personal data, compared to other European countries, the worry about the last problematic is not that high, suggesting Czechs trust this medium. (World Stats, 2016)
2.6.3 Importance of Price and Quality
In the introduction it was mentioned that the COVID-19 pandemic already had an effect on behaviour and its patterns, even the factors experienced a change on what impacts the final purchasing decisions of the consumer. One of the main influences on the influencing factors that affect purchasing decision, are price and quality, meaning a chain reaction, for instance level of price impacts the behaviour which then influences the later steps in the decision process of buying consumer. (Noel 2009)
Price is more than the precise amount that is charged, it also includes the total value that the buyer lost and gained when exchanging money for the desired product. The trend for the past decade is the rise of importance in other non-related factors to price (Kotler & Armstrong 2018). Consumers view companies that they assume have fair prize as better to their competitors (Daskalopoulou & Petrou, 2006), and can be influenced and deceived by a simple number trick, when the price is set at an incomplete number, like 19,99 $ instead of 20
$, and the consumer views the former price is cheaper. However, this does not mean that every consumer feels and acts similarly when faced with the same price, the opposite is true.
Some can be influenced more easily than others when price changes, meaning they are more price sensitive.
There is a close relationship between price and quality, sometimes consumers deduct the quality from the price, like when opting for a more expensive alternative, they assume the quality should also be higher in proportion to the price, this phenomenon often leads to overestimation. (Hoyer et al., 2008). This leads to the definition of quality, which can be stated as a consumer perceived excellence about a certain product or service. (Zeithaml, 1988).
According to a study by Stávková (2005, p. 516.), the price is what influences the decision of most respondents, it actually affects 92% of households. This applies for the quality as well when making purchasing decisions because the households affected by it are more than 98%.
When comparing the two influences in case of grocery shopping, quality wins over the price, according to research by the Ipsos agency for AMPS CR (2016). Two thirds of Czechs (65%)
22 try to find a good price-quality ratio when grocery shopping, and people look at quality (27%) more than at the price (9%). The opposite is true, for example, with the purchase of clothing or household accessories.
After the COVID_19 outbreak, a study suggests that consumers now look for goods that come with higher price tags in search of risk free, highest quality products. This is
particularly true for food and cleaning items. (Nielsen, 2020b). Written literature states price as one of the biggest influencers in purchasing behaviour, however now there is an
impression, price comes second. (Hoyer et al., 2008). The preference for higher quality products during the pandemic can also be seen in the rise of purchases of durable foods like canned, pickled and instant products. Country of origin played a role as well. Products sourced locally were viewed as safer, due to the lesser chance of contamination due to the shorter logistic chain. Meaning consumers were then willing to pay higher price for local products. (Nielsen, 2020b).
2.7 The impact of crisis on consumers
Usually when talking about crises, it is the economic crises that comes first to mind.
According to Singra (2010), economic crises are an age-old natural part of a market system in which they have a cleansing effect. However, it only fulfils this healing function of the crisis if it occurs naturally by fluctuating the real product and demand and supply shocks (Kraft, 2010). It can therefore be caused by the natural development of the economic cycle, but often also by phenomena imported from the outside, which was the case of the 2008 financial crisis. There are other crises that have unwanted effects like: natural disasters and
catastrophes, terrorist assaults, crisis in heartcare and more. All of these situations have a negative impact on day-to-day life, usually on a global scale.
The Covid-19, now considered a global pandemic by the World Health organization (WHO), has a little bit of most aspects listed above. A lot of people at first focused on the healthcare crisis, due to incredibly high infection rates, multiple waves of lockdowns, exhausted medical staff and more. Now the economic impact is heavily discussed in the media, increased
poverty and unemployment, decline in output… because of the latter realization, calling the pandemic a silent financial crisis is emerging. (WorldBank 2021). In conclusion, when a negative event happens, with impact on a global scale, a change in behaviour can be expected. (Forbes 2017). During a crisis, consumers decide to shift away from purchase of luxury goods and focus on necessities, choosing cheaper options, switching brands and buying smaller packages. (Ang et al, 2000) Companies have to respond to these changes in behaviour. During the 2008 financial crisis sellers had to change their 4P (Price, package, place, promotion). They tried to manage this new unpredictable volatile environment, by fair prices and new marketing ways to try to create some customer loyalty (Mansoor & Jalal, 2011). Similar strategies occur during the COVID-19 crisis. Companies like Unilever that abandoned outside advertisements like posters or billboards, shifted this spending to online marketing (Marketing Week, 2020). Ford tries to lock in consumers, by promising, they can
23 return their car after purchase, with no cost, if the reason is unemployment as a result of the pandemic. They do this to appeal to them by minimizing the worry of the uncertain economy (Eddition CNN, 2020). What seems to be the new rule of survival is to go online quite fast, creating internet presence and reach. (Economic Forum, 2020)
2.7.1 Price, quality and crisis
A study by Hampson and McGoldrick (2013) showed how big of an effect price has on final purchasing decisions and change in behaviour, main reason being rise in unemployment, worry from employment uncertainty and unpredictable economy. Consumers buy goods at different prices no matter the time, however during a crisis the need for justification, why the purchase was made and at what price, incenses incredibly, and if there is a decision to pay more of a product there has to be a clear added advantage in quality. If there is some brand loyalty left, the purchase will be postponed, either until when the goods are discounted in price or a better deal by the brand is offered. The depth of impact also depends on inherent qualities of an individual, there are few groups that share similarity in behavioural change, women, consumers with low income and middle-aged population, all become significantly more frugal in comparison to other demographics. (Egol et al., 2010).
Consumers start to become more price sensitive, aware of prices, and sales. The focus is now shifted on low or heavily discounted goods. Due to increase in unemployment, the spending power is weakened by less disposable income of many consumers, this phenomenon leaks into the society, meaning even the ones with unchanged spending power become more cautious about price. (Hampson & McGoldrick, 2013). The study by IPSOS (2015) showed consumers make shopping trips quite often, and for the most part do not create shopping lists, however during difficult times these trips become fewer and shopping lists are created a lot more. The inspirative shopping experience and impulsive buys are reduced, also due to the higher preparation and thought when making a purchase (Hampson & McGoldrick, 2013).
There is a contradicting study that suggests the frequency of shops increases during recession, with the number of goods purchases being small. (McKenzie, Schargrodsky and Cruces, 2011).
Research suggests the price factor overweight’s the importance of quality. These studies are often focused on financial crises, where the focus is mainly on the monetary aspects. During the COVID-19 crisis, health is one of the biggest factors people worry about, research by Sans et al (2008) suggest that during healthcare crises this effect is inverted, and quality factor is the more important one. For instance, when there is a health crisis connected to meat, consumers either look for the highest quality meat, stop buying meat or demand higher and more thorough inspection of meat (Grunert, 2005). During crises connected to viruses’
people look for cleaning supplies which are more effective or are even specific to certain viruses, like the anti-covid disinfections. (MZCR, 2020). Research by Eurorscgco showed that in the healthcare crisis, price is still an important factor, however it comes into play only after the consumer asks himself several questions, these were the most common answers from
24 the consumers surveyed: What is the usefulness? (68%), Is it really necessary and needed to buy this product? (64%), and only then the question Can I purchase or find the same/similar product elsewhere? (49%). (Eurorsgo, 2019).
2.7.2 Change in behaviour during crises
Euro RSCG C&O together with Harris Interactive, conducted an extensive research across multiple countries (France, U.S, UK) with 2 400 participants. The goal being discovering factors that affect preferences, attitudes and behaviour during and after a crisis. The results showed there is a noticeable change in consumption behaviour in their study pool, some of the analysed trends were: dropping and switching brands more often, putting more thought and distinguishing their purchases, choosing local products. In the analysed countries the overall consumption declined, and many people surveyed reported change in view about brands and the benefits or lack of, companies bring. There are multiple ways to research, analyse, study and then describe this phenomenon. Durra Mansoor and Akrham Jalal described a summarized list of trends in the change of behaviour. (Mansoor 2011)
● Need for simplicity – when recession strikes, consumers will reevaluate and lowering, simplifying their demand, and even after the crisis is over it is expected that these trends doesn’t disappear right away
● Temperance – this applies to people who didn’t have to change their habits, but will voluntarily do so, it is either out of solidarity or influence of their surroundings, for instance rich people creating more savings and less spending’s
● Smart consumption – an agile way of thinking, switching brands, abandoning brand loyalty, looking for cheaper prices and better deals, usually dropping their standard for quality
● Green consumerism – a decline in demand for ethical, green, sustainable items, due to the high price, and a lot cheaper not so green alternatives, this trend
● Ethical consumerism – like the saying “first take care of yourself, then others”, people do not engage heavily in charitable actions, due to worry about their wellbeing and their family, however after the situation gets stable and better, the charitable actions will slowly increase back
Another survey with even bigger research pool (5 700 participants) and more countries (Brazil, UK, Netherlands, China, Japan, SUA, France) looked for elements that would help to understand how consumers feel in post-crisis stage. This study was conducted online by Market probe International in the year 2009-2010. Here are the findings:
25
● Increased sensitivity to risk – even though the dark times have pasted, and economy is back on the rise, the fear of unknown prevails, and consumers are not focused on the present but more on the experience from the past (which was the crisis state), there is a hesitance to make long term decisions to try avoiding risk, consumers are drawn to brands that show good managing skills about risk
● Echoing of consumer depression into the society – The new generations were brought up in a lot stabler and peaceful times, with more than plenty of everything, yet Hopes College psychologist, David G Mayer says that young adults tend to be display a lot higher rates of depression, lack of happiness and assorted social pathology. This effect the society as a whole, which then affects individuals, new consumers find it hard to pinpoint their essentials and consume more with less effort
● Need for change and self-support – people enter a state of “active pessimistic
mindfulness”, meaning they want more control over their life and decisions, this also reflects their buying choices and amount of consumed goods
There are also other very important factors that play a role in the change of behaviour during a crisis. Another classification by Stefahska & Bilinska-Reformat (2015) can be made, and it is as follows:
● Demographic factors
o Sex, Age, Highest reached education, bigness of household
● Behavioural factors
o Buying rituals, frequency of purchases, preferred channels and methods of shopping, usual time of purchase
● Psycho-Social factors
o Fear of unknown and unpredictable future, increased instability of financial power
● Economic factors
o Changes due to economic recession, unemployment, government regulations (lockdowns)
This distribution has been made for better understanding and foundation for more detailed explanation of each and individual influential factor.
26 2.7.3 Demographic factors and its role during crises
There is a certain lack of research conducted in the demographic factors changing behaviour during the crisis, especially compared to the other above-mentioned influences. Since this factor tends to get overlooked, important findings can be missed, especially when already existing research suggests that there are existing differences between men and women and their reaction during the healthcare crisis. (Egol et al., 2010) The interconnection of the factors is prominent, meaning full understating of the problematic cannot be reached without understanding each component.
The Belot et al. (2020) study collected and analysed data about individuals and their
behaviour during the COVID-19 pandemic, with the focus on the demographic factors. They found that participants with low income, less flexible work environment and uncomfortable living conditions (smaller spaces, no private outdoor spaces) (especially ones that cannot be transferred online) engage in endangering activities that can result in higher spread of the virus, as an example they often do not participate in social distancing. Another finding is that the negative effect of the pandemic is not distributed equally among the demographic groups, especially the restriction measures made by the government. Another demographic group that is less common to adhere to social distancing are men, women are up to 15% more likely to comply with these rules. (Papageorge et al. 2020). Another interesting study by Baker et al.
(2020) suggests that the older generations do not break the government implemented
restriction as much as the younger generation, and they also tend to be more frugal, while the younger counterparts do not cut back that dramatically.
The demographic components, listed below, should be an interest of future related studies.:
(Kotler & Keller, 2012) - Gender - Age - Education - Income - Family size - Occupation - Ethnicity
27 There are dramatic changes in terms of consumers and E-commerce, also due to the influence of COVID-19. Also, the shift in how a normal day looks is noticeable, like online school and remote working. Households with lower incomes can be impacted a lot more, in a sense that they may not have enough devices for each member of the household to engage in this changed regime. In the Czech Republic alone up to 10 000 children did not participate in any of the online lectures, even though that were made mandatory, due to the reasons of
unavailable technology that would let them connect (IRozhlas,2021). How do consumers react to these many changes and the differences between the different demographic groups need more research for correct deductions to be made.
2.7.4 Behavioural Factors during crises and pandemic behavioural trends
The COVID-19 pandemic created a new environment, and it has impacted behaviour and habits of people. Study by Phillippa Lally Et.al (2009) lists the number of days in which new habits are created, on average it is 66 days, but the range starts already at 18 days and some people can take up to 254 days, furthermore, habits that do not interfere with the normal day to day routine of individuals are taken on a lot quicker. The Czech Republic has exited the emergency lockdown state after long 189 in April 2021 (Covid Portál, 2021), meaning some new habits and patterns of behaviour were definitely formed in response to multiple
lockdowns and restricting measures implemented by the government. These are few of the changes that can already be seen in the society (SwissRe Institute, 2021):
- Quicker adaptation to the digital world - from day-to-day simple tasks to attending virtual courts and hearings.
- Shift in mobility – due to many jobs becoming remote, the use of public transport has been reduced significantly.
- Shift in buying behaviour – value-based purchasing is on the rise, also in the form of online purchases.
- Health awareness – mandatory or voluntary face mask wearing, use of disinfectants and adoption of healthier diets.
- Change in interpersonal behaviour – rise of pet fostering and adoption, decrease in eloping while increase in divorce.
28 When purchasing goods in stores the customer spends up to 90% navigating in the shopping area, meaning this is when the seller can try to influence the buyer’s behaviour in their
favour. (Kantar TNT, 2015). They do so through eye-catching displays, friendly salespersons, positive shopping environment and much more ( Solomon et al. 2006). During the
mandatory lockdowns new rules were created on which shops may remain open, while a big list of regulations had to be followed (social distancing, maximum number of customers, limited offer in goods…) and which shops had to close completely. Meaning a lot of sellers lost the mentioned opportunity to influence the buyer, in result the consumer is going to alter his decision buying process. (Sheth, 2020).
During a crisis the population becomes more cautious of their purchases, drawing a new line in their consumer basket, deciding what is essential. That is maybe the reason why cuts in restaurant spending skyrocketed (Baker et al. 2020). Multiple studies suggest that the frequency of shopping is more dispersed during a healthcare crisis, however the amount bought is different. The Mansoor & Jalal (2010) research suggest bigger quantities per shop, so the consumer does not have to return as often limiting possible contamination with the deadly virus, on the other hand study by Ang et al (2000) says that smaller amount will be purchased, and the overall consumption goes down as well, due to the decrease in disposable income. The change in care for health suggested by SwissRe instituted (2021), is supported by Laguna et al (2020), who analysed Spanish consumers and found a rise in demand for fresh, organic greens fruits and vegetables, while the consumption of non-perishable goods decreased.
There is also a significant difference in the behaviour at the beginning of the pandemic and after it almost became the new normal. (Loxton et al. 2020) This insight can be shown with the help of the Maslow’s Hierarchy of Needs. At the beginning the fear of unknown
overtakes, and demand for necessities and food increases rapidly, these goods that satisfy the most basic human needs for survival fall under the bottom layer of the Maslow’s pyramid, called the Physiological needs. (Maslow’s theory, 1943). This was typical behaviour for the first lockdown, with a spike in spending and hoarding necessities, and then sharp decrease and saving mentality set in. When the second and third wave of increase in Corvid-19 cases came in the Czech Republic, the citizens already had an idea how it would look and what changes would be implemented, allowing more room for purchases of goods that are on the higher levels of the pyramid. The spending habits have been dramatically changed across all industries, with the level dependent on the severity of the outbreak and government measures.
(Baker et al., 2020)
2.7.5 Psych-social factors and their transofmation during the pandemic
The safety measure implemented to fight off COVID-19 had a deep psycho-social impact.
The mandatory quarantine imposed in many states only worsened the negative effects like acute panic, obsessive behaviour, anxiety disorders, hoarding, societal paranoia, depression, and PTSD (post-traumatic stress disorder). There have also been reports of an increase in
29 racism and xenophobia towards certain minorities. (NCBI, 2021). The drivers for these
behaviours are among other things the uncertainty, unpredictable future, misinformation, fear of conducting the virus and intolerance. (Health Psychol, 2014).
When a healthcare crisis happens, the beginning and the first news like increase in death toll, number of infected and rise in unemployment increase populations fears resulting in social instability, worry over the scarce resources drive the public into stockpiling and hoarding goods like hand disinfectant, sanitary products, masks or even toilet paper. (Q J Econ., 1992).
In many countries reports about verbal, and sometimes even physical abuse against Chinese citizens have been reported, refusing them entry from public buildings, service at restaurants and other human rights. (Asmundson, 2020). In the Czech Republic several protests against the Government implemented safety measures emerged, as the protesters view them as oppressive and damaging to the economy. (IRozhlas, 2021)
Research done in China with around 1200 participants tried to uncover the feelings of the population and the psychological impact of the global pandemic. The results showed that 54
% of respondents felt moderate to severe impact, 29% had reported moderate impact with complications like anxiety, and an astonishing 17% of respondents suffered from severe impacts like severe anxiety, stress disorder. Out of all the participants, ¾ reported they fear for their family and close ones. (Asmundson, 2020).
Chakraborty K., Chatterjee M. (2020) found through a study in Eastern India that most of the participants in the research felt financial restraint during lockdown and up to a third found it very difficult adjusting to the new measures. The combination of worsened spending power, negative feelings and inability to purchase goods in the previous norms, affect consumers' shopping experience. This unwanted change and economic instability resulted in an irrational consumer, which presents a big complication, since many sciences from microeconomics to marketing, base their models and theory on rational behaviour, making it very difficult to predict the action of an unhinged consumer. (Loxton et al. 2020). As mentioned in the behaviour factors, hoarding becomes one of the actions that the panicked consumers take.
The media's constant message about COVID-19, containing reports of goods being sold out and out of stock, does not help with this phenomenon, since it can fuel even more this stampede reaction of over buying. (Sheth, 2020).
The social distancing rule was set in action because the disease spreads from infected individuals when in close proximity WHO (2020), when consumers enter a store, they can experience fear of becoming infected with the virus, reducing the pleasure of shopping significantly. The ones who have a considered higher risk (people with severe illness, health complications) (CDC,2019) or have naturally higher risk-averse behaviour, will try to reduce the probability of possible contamination. They do so through decreasing shopping time, avoiding shopping in person, switching to other channels to buy desired goods, like e- commerce Szymkowiak et al. (2020).
30 In Germany during the first COVID-19 lockdown up to 50 % of consumers tried to complete their shop online, due to the above-mentioned fear. Consumers that engaged in this type of channel before only increased the use even more. There were many shops closed off completely, however few stayed open, especially the ones carrying necessary goods. Even though the consumers had the option to buy the necessary options in person up to 18% of consumers preferred to purchase them online. (Deloitte 2020). The internet and in store search for local goods increased as well during the pandemic, a paper written by Watson and Wright (2000) calls this phenomenon ethnocentrism. Andrew Goodacre the CEO of the British Independent Retail Association has been tracking and analysing this shift to local produce. In the UK during the first lockdown the rise was up to 69% in small privately owned shops, a quarter of British consumers noted that their visits were more regular compared to the pre-covid world. (BIRA, 2020). People do so, because they think it will improve or endorse their economy and local sellers will not lose their employment (Shimp & Sharma, 1987).
The close relationship to the internet and rise of use in social media has been steady for the last decade, moreover it only got magnified, when the pandemic hit. Remote working, online school and even pre-school, video calls with friends, work meetings, all became very normal to a lot of people. (Sheth, 2020). When consuming social media, a lot of the content is not sourced and can even be false. The spread of fake news can have deep damaging properties.
When the pandemic started it has been, by many, considered a problem in Asian countries, only later when news about cases in other countries, the severity was understood. While the seriousness inclined, the number of false information did as well. The parcels coming from China have been in some articles described as carrying the virus, damaging the reputation of the country as well as their exports. Even digital contagion has been reported, incorrectly stating that 5G is the origin of the virus. (The Africa Report, 2020). These false facts do not help the uncertainty of the situation, and the fear of the unknown may prevail for quite some time. (Loxton et al., 2020)
2.7.6 Economic factors and its relation to crises
After more than a year of the COVID-19 pandemic being in motion, deep economic impacts can be felt, restrictions in long term investments and postponement in big purchases. Factors like disposable income, savings and investments change during crises and have an effect on consumer behaviour (Ramya & Ali, 2016). The last significant financial crisis in 2008 had a negative impact on the employment level, security of jobs, and stability and growth of
businesses. This resulted in a decrease in total consumer consumption. The world has become more and more connected, even a decade ago the US financial crisis had a negative cascading effect across multiple global markets, not long after, Europe and Asia followed the US in economic recession (Mansoor & Jalal, 2010). This means the current crisis will affect almost every country and set them from previous growth into a devastating recession. The depth of this unwanted state is predicted to be worse than the one after the second World War.
31 The Czech National Bank (ČNB) came up with the Rushin index, the first index of economic activity. It includes four high-frequency readily available indicators on the Czech economy, led by electricity consumption, and six standard macroeconomic variables. In mid-March 2021, the index points to a slight decline in economic activity compared to the previous quarter. ČNB is trying to remain optimistic, saying that it is still realistic that a record year- on-year GDP growth will come in the second quarter of 2021. They assume that at a later time in the year 2021, industry and exports will grow, and that household consumption will gradually increase as epidemiological measures become relaxed. (ČNB, 2021)
The COVID-19 pandemic has many threats, affecting both health and the living situation.
When threats of bigger scale in connection to the disposable income are present it is expected of households to cut down spending, work longer hours and previously voluntary
unemployment will enter the labour market. (Mansoor & Jalal, 2010). The hoarding phenomenon during a crisis occurs not only to the necessities but also to the monetary reserves of households, as they fear the increase in prices of necessary goods, needing more money to afford the same amount of needed goods. (Katona, 1974). In some scenarios it almost seems saving is a trend among the community, and they do so not out of need but out of societal influence. (Herman 2009). How much the household cuts back differs from case to case, it also connected to the level of brand loyalty and spending prioritization.
The households in Czech Republic did not recover after the multiple lockdown measures went into action, on the other hand exports and industry are already above pre-Covid levels.
Households remain affected despite the fact that wages in the Czech Republic rose last year and unemployment remained low. The rate of household savings from disposable income rose to 16.7% (latest data at the end of 3Q 2020) against the normal of 11.6% (average 2015–
2019). These savings come from postponed purchases and savings out of precaution.
Households now have savings of 120 billion crowns higher than in normal times. Plus, they will add about 80 billion cash in the year 2021 thanks to a reduction in income tax. As the Czech Republic progresses to higher vaccination rates and the economy relaxes, ČNB
expects savings to fall and return to normal, household consumption to increase gradually and to become the main source of economic growth alongside exports. (ČNB, 2021)
2.7.7 Prevailing changes in consumer behaviour during crises
Every negative event will have short- and long-term effects on many factors influencing the consumers behaviour. It was thought that the effects and changes experienced during the crisis or after it, return back to the previous unaffected state. However newer findings suggest the fall of sales during the crisis overweight the later increase in sales, meaning consumers tighten their budgets and later on do not realise them at the same level that they spend pre crisis. (Hampson & McGoldrick, 2013). Researchers now agree that the consumer's
behavioural patterns during crises change permanently, continuing even after the economy is in plateau or even in recovery and growth (Piercy, et al, 2010). Here are some of the trends in
