Brexit: How situational factors influence decision making
In this exemplar we visit London immediately after the Brexit announcement. The first few days after the Brexit announcement were filled with uncertainty – five years on – it is still uncertain – perhaps more so.
themarketingconcept [e-book] identifies ‘situational factors’ as the characteristics of the customer, organisation, market, and the product [COMP]. The notion is that the COMP factors influence consumer behaviour and consequently their behaviour impacts on organisational performance.
COMP factors can be viewed from both a customer and/or organisational perspective. Although, the customer and the organisation will look at the COMP factors through different lenses – both will influence the other.
This article looks at how situational factors can quickly change perceptions and how the situational factors may impact on customer and organisation decision making.
I have visited London more than a dozen times. You would think that I would be comfortable with the arrival procedures; however, I always find arriving in London a little overwhelming. Maybe it’s 24 hours of inactivity on the plane and then the sudden overload of information, or, it could be that lots of little things change between visits, or, the differences between the different airports and multiple terminals. Regardless; the process always seems unfamiliar and a little stressful. After a long walk from the plane – hoping that the luggage will also arrive, then relief at finding the luggage, negotiating several long queues at immigration, descending and ascending elevators, locating the tube station, understanding the different tube options, buying the correct tube ticket, and maneuvering the luggage through doors that always close at the wrong time – you collapse into a seat, if you are really lucky, on a train in the London Underground. There you are, a little flustered, and hoping that you are on the right tube train. On the Heathrow to London tube you always feel a complete foreigner; surrounded by unflustered people who appear familiar with what to them appears a routine task. It is hard not to speculate when you watch people, perhaps, they are going home, going to the shops, or going to work. One thing is obvious, on this tube over 90% of commuters are holding a mobile phone and over 60% of this group are occupied with some sort of phone task.
As I sit on the tube I reflect how I saw my first mobile phone in London many years before. This was a few years before the Motorola ‘Brick’ arrived and changed everything. In those days you would occasionally spot a business person walking through ‘The City’ with a large battery about 50cm X 30cm X 30cm, an 180cm aerial rising from the battery and located on the top of the battery would be a traditional phone with a push button pad for dialing. It must have weighed between 30 to 40 kgs. Now 10 years after the first iphone the mobile phone has become central to many peoples lives – the only constant is that we are still complaining about battery life. Before mobile phones the tube was full of people reading newspapers, I remember marveling at how a tied and suited man could read and fold a newspaper with absolute precision –I tried and failed and returned to people watching instead.
The unflustered people around us are not constantly checking that their luggage is safe, they are not counting the stops or planning how to best exit the tube. Adding to our exit dilemma is that on our last few visits to London we have stayed at the Premier Inn at County Hall next to the London Eye, however, on this occasion we chose to say at the Double Tree in Westminster. I am a bit of a fan of Premier Inn hotels, they are clean, the staff are always efficient and friendly, they have simple booking processes and a good breakfast deal. However, this time it was peak season, Wimbledon has just started and the conveniently located Premier Inn County Hall was booked out well in advance.
Therefore, we are not familiar with the exact location of the Double Tree or the best way to get there. The plan is exit the tube at Westminster Station, which, by the way, is one of the most complicated tube stations; you may recall it from the Bond Movie -Skyfall, and then, because of the suitcases, catch an elevator to street level, and then, even though it is only a five minute walk to our hotel, catch a cab. A word of warning it was not quite that simple, to catch an elevator, and I have empathy for mothers with prams and people negotiating wheelchairs, but eventually we find ourselves staring up at Elizabeth Tower which contains the clock of Big Ben; it is raining moderately, however, something is going on that makes London more chaotic than usual. It takes a little while for it all to sink in – there are multiple Police sirens and possibly a thousand police on the streets some in normal uniforms but many in riot gear. What is going on? We assumed a terrorist attack. Anna later commented that the world is now a more unnerving place and people are programmed to assume that the worst has happened.
We wander down Whitehall and hail a cab. Within a minute or two, but at the time seemed longer, we were in the safety of a London Cab. The Cabbie apologises that he has to take a longer route to reach our hotel, ‘because of the police barricades’. We ask what is happening and he announces ‘BREXIT’, before leaving Australia we had heard very little about the British referendum to leave the European Union. The cabbie explains ‘Britain has decided to leave the EU, the outcome was unexpected, and some people are concerned about what this means and are now expressing their concerns; it turns out that what seemed a simple decision, in the cold hard light of day, is a more involved than what was previously thought’.
In my experience, taxi drivers around the world are generally very good. Only now and then do you get a bad taxi driver. I have never had a bad taxi driver in London – in fact, to me, they are part of the overall London experience – sometimes I take a Cab when I want to rather than need to – I just want to enjoy a greater London experience – sure the tube is convenient but the tube experience is a more functional – more of a service than an experience. It is therefore pleasing but not a surprise when we pull up to our hotel that our Cabbie hops out and helps with our luggage; he gives us a little map and then explains that to get to Westimister Tube Station we just walk down the road and turn right, then left when we see the Thames, 300 metres is the Westminster Tube Station. Later we agree money that the taxi fare was money well spent.
We negotiate the front desk of the Double Tree Hotel, present our credit card, collect our plastic access cards and push and pull our luggage into our room – after 14,470 kms the carpet really slows you down in the last 50 metres. We have made it. And for what is probably the 100th time in my life, Anna, makes an affirmation to pack less and travel lighter next time – I just give her that ‘I told you so’ look that has no malice and no belief that she will ever travel light.
We look around our hotel room – if it was an ice cream it would be vanilla – however, no better or no worse than what we expected.
Three minutes later we are back on the streets to explore – after all – why waste time in a vanilla hotel room. Shall we go left or right? Go right. For some reason we tend to always head in the direction of the city centre.
We are soon in the middle of the protesters, I ask a Policeman to explain what is happening, he said “are you from this planet” I said “I am from planet Australia and just arrived on your planet” he laughed “It’s Brexit – basically everyone is trying to get a spot on TV to present their opinion”. He points in the direction of a group of white tents erected in Abingdon Street Gardens – some tents are two stories all are populated with video cameras pointed at the Houses of Parliament – “the press” he explains. He is a friendly chap and points – see that guy with the white beard he is the Labor leader. I nod. I can see that he is walking quickly, as if he is in a hurry to say something important, and is being followed by a group of overly dressed people, this makes them stand out from the untidy crowd, one of the followers has well coifed hair, a string of pearls, matching pearl earrings, and trying to keep up with the group which is difficult in high heels, all the followers are trying to conceal their excitement at suddenly being important, and all trying to advise the white beard [I have forgotten his name] on what to say.
We wander around and then find a pub, an Irish chap tells me that this could impact on his ‘start up’ – it means that it might restrict his entry into Europe and effect the value of his IPO. He is speaking quickly and rather excitedly and I am having trouble understanding his brogue. So I asked – “what is your unique product proposition? and who is your customer?” Being succinct was all a bit beyond him. He asked what I did for a job and when I told him I lectured in marketing he announced to his friend that “we need to speak with him a bit more” He offered to buy us a drink but his credit card was rejected and his friend ended up buying the drinks – he blamed BREXIT.
We make our way back to the Double Tree and watch the BREXIT event on TV. Next morning it is still the major news item – and it remains so for the weeks, then months to come. It was only weeks later, when I was in Italy and away from the constant noise of BREXIT, that I realized, that in the first few days, the only people that made any sense were the Cabbie and the Policeman.
Looking at BREXIT from a marketing perspective is quite insightful. Firstly, it has to be said that all of the early concerns that were expressed about BREXIT were understandable. Most marketing plans begin with a situational analysis; this provides the reader with an overview of the situational factors that were identified, analysed, and considered when the marketing plan was crafted. What is often overlooked is that the situational factors in a marketing plan are the factors that influence the organisation because these are the factors that collectively influence consumer behaviour and market behaviour. Also most of the decisions made by marketing practitioners are made after considering the situational factors of a particular time – this is second nature to marketing practitioners. When considering the situational factors, marketing practitioners generally have a mental template of four overarching factors that they must analyse – the characteristics of the customer, the characteristics of the organisation, the characteristics of the market, and the characteristics of the product. To make this easier, I refer to them by the acronym COMP, my thinking is that COMP brings the factors together and suggests that they are interdependent.
What had happened with BREXIT was that all of the COMP factors were now unknown – therefore the situation was unpredictable. The known COMP factors of the past had been abruptly and completely disrupted. Businesses who had freely traded across Europe saw uncertainty and therefore increased risk; managers were now trying to predict possible scenarios and to craft new and appropriate business strategies for possible scenarios – one said “we may have to completely reshape our business – we don’t know”. I spoke with several business people in the days following the announcement that had been contacted by European clients trying to understand the situation and seek reassurance – the European clients were just trying to plan for the future. Smaller retailers that I spoke with were also conscious that individual consumers were distracted and felt anxious – clearly, overall consumer confidence had dropped suddenly.
Perhaps, there would not be a negative impact across all sectors, I soon realised that the impact of BREXIT would also vary according to the sector and the product type [comP]. Some sectors where purchases are generally funded from discretionary income would likely be postponed, such as automobiles, homes, furnishings, high cost fashion, jewellery, overseas travel, would suffer an immediate impact as consumers delayed decision-making. Therefore, the buyer decision process for many products had an uncertain dimension; and as individual consumer decision-making influences collective decision-making – this would have an impact on retailers and then the channel partners. However, I also felt that in time the shock of the decision would lessen and consumer confidence would normalise with time.
When we caught up with friends in London they questioned whether the narratives expressed for and against BREXIT were fully accurate and whether the whole referendum process had been highjacked and dominated by emotions rather than accurate data. One person questioned whether the rules regarding misleading advertising had been breached.
Adding to the overall concern were opinions in the media from representatives of other countries, generally they could not speak specifically, however, the general view was that this would impact on macro-economic factors. Marketing practitioners generally have to manage changing situational factors, however, rarely would all the COMP factors be so radially disrupted as they were in the United Kingdom in June 2016.
One senior executive stated that non-British staff had sought reassurance that their jobs would be safe, he understood their concern; another senior executive echoed this concern and added “that most people really live day to day and are aware that if they lost their income would within a month be unable to pay their bills – mortgages, or rents or utilities and I think that small and medium sized companies are often in the same situation”. Within days it was clear as we travelled around London and spoke with people that although the consumers ability to purchase had not yet changed their willingness to purchase had changed dramatically.
 I explored the GfK Consumer Confidence Index [www.gfk.com] at the end of July 2016 and the end of August and the falls were as we would expect an immediate sharp fall in consumer confidence the highest in a quarter of a century and some recovery in the Consumer Confidence Indicator as people became less concerned rather than more confident.
The consumer dream
‘There is a view expressed in the media that many consumers have bought the promise of the ‘consumer dream’ yet feel left out of the dream and that this is leading to a general disenchantment in society.’
In this survey [run on two occasions with similar findings] participant were asked whether they agreed, disagreed, or neither agreed or disagreed with the above statement: