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Strategic Toolkit- Scenario Planning

Strategic Toolkit: Scenario Planning

Lyn Wilson

Integrated Senior Planner

Wunderman Thompson

Lyn.Wilson@wundermanthompson.com 

In a little more than 100 years, the world has braved World War I, the Spanish Flu pandemic, the Great Depression, World War II, the 1973 and 1979 oil shocks, and the 2008-2009 financial crisis. Now we are faced with the COVID-19 pandemic, and predictions are that global GDP will fall more steeply than at any time since the Great Depression.

Not to dismiss the deleterious effects of the pandemic in any way, we can take heart from data and history, which tell us that brands that act effectively in a crisis can become disproportionately stronger after the event. Timely and sensitive use of marketing communication can help brands demonstrate their values, relevance, and purpose to people at a time when they are needed most. If ever there was a time to be agile, anticipative, innovative, and progressive, it’s now. Going dark is not an option. As we have seen from past crises, recovery from silence and inaction takes exponentially longer and is vastly more expensive.

Beginning in the late 1960s and early 1970s, Shell developed a technique known as “scenario planning”. In essence, scenario planning looks at underlying demand potential and supply/demand balance over a given time to postulate “zones of extraordinary opportunity or misery".

By listening to planners’ analysis of the global business environment, Shell’s management was prepared for the eventuality, if not the timing, of the 1973 oil crisis. And in 1981, prior to a supply glut and price collapse after the outbreak of the Iran-Iraq war, Shell sold off its excess, while other oil companies stockpiled reserves.

 

Deciphering scenario outlooks includes hypotheses on two key drivers: population and prosperity.  These drivers are key for emerging markets as they enter their most consumption-intense phases of economic development. We have seen that COVID-19 has an indelible effect on both. It affects population through disability and death. The latest data, although not unequivocal, shows that fatalities skew higher for African and Asian origin minority groups. Further, it goes without saying, that COVID-19 affects prosperity through its enormously depressive economic impact.

Recently, The Futures Practice at Kantar developed a set of COVID-19 scenarios as plausible ways that things may evolve over the next 6 to 12 months.

Severe yet sharp scenarios:

Scenario A                                                                                                                                                                 One-Time Outbreak - Fragmented Governmental & Institution Response                                                           = a period of “brief chaos” / consumers experience a “panic attack”

This scenario envisions a one-time outbreak with a fragmented governmental and institutional response. It leads to a period of brief chaos in which customers experience a panic attack. Then life goes on.

Scenario B

One-Time Outbreak - Comprehensive Governmental & Institution Response

= a period of “surviving the storm” / consumers experience a “close call”

In this scenario, there is a one-time outbreak but a comprehensive governmental and institutional response. It leads to a period of surviving the storm, in which consumers largely experience the event as a close call.

Deeper and longer scenarios:

Scenario C:

Seasonal/Multiple Outbreaks -Fragmented Governmental & Institution Response

= a prolonged period of “putting out fires” / consumers experience a “recurring nightmare”

In this scenario, there are seasonable and multiple outbreaks. The government and institutional responses again are fragmented, which leads to a longer period of putting out fires, during which consumers experience a recurring nightmare.

Scenario D:

Seasonal/Multiple Outbreaks - Comprehensive Governmental & Institution Response

 = a “new normal” / consumers experience a “brave new reality”    

The final scenario envisions seasonal and multiple outbreaks mitigated by comprehensive governmental and institutional responses. This leads to a new normal in which consumers experience a brave new reality.

No one knows for sure what will happen. Regardless of the scenario (identified or not), we are seeing more and more consensus as to a global sobering, a slowing down trend in which consumers shift from accumulating goods to living more meaningful experiences.

We know that COVID-19 has forced a global pause, a reassessment of culture, and a reset on values that touch on many aspects of 21st century life, e.g. conspicuous consumption, capitalism, celebrity culture, societal values, climate change and our impact on the natural world, and our undeniable connectedness (global community, co-operation, and creating shared value).

COVID-19 has forced isolation on consumers who are inherently social and have an innate need for connection.

It has ushered in a period of hardship and sacrifice on consumers who were largely engaged in an era of individualism and status. It has created a period of scarcity and insecurity on people who were largely engaged in consumerism, conspicuous consumption and instant gratification.

The world as we knew it has changed. We know that there will be systemic changes just like there were after 9/11 and the recent global financial crisis. We know that COVID-19 has prompted changes in consumer behavior that are likely to continue for some time. And Gen Z’s and the Alphas, are consumers of the future, will be undeniably changed by this event. Nonetheless, we can plan now for possible future scenarios and adjust as necessary as we go along — and at least forearm ourselves to the extent we can.

If we are lucky, as COVID-19 shakes our worldviews, making us question what really matters, this event could be a watershed for humanity, and we may look back on the virus as the catalyst for the resurgence of human values of belonging, shared humanity, and a sense of duty to the collective.

Using scenario planning, brands can pivot to focus on creating collective meaning, building shared values, and connecting through them to achieve sustainable growth and emerge disproportionately stronger after the event.

If scenario planning isn’t in your strategic toolkit, perhaps it should be.