Zahran Lebbe
Global crises—such as the ongoing Iran–Israel war disrupting oil supplies, economic crisis or Covid-19—bring back a familiar scene. People queue for essentials such as fuel, sugar and other basic goods, while supermarket shelves empty. Consumers rush to grocery stores and petrol stations, often purchasing beyond their immediate needs.
At the same time, the global market environment has become highly volatile, with rising inflation and shifting patterns in economic cycles. Naturally, this increases uncertainty and influences consumer spending and priorities.
This shows a deeper shift in how consumers think, feel and act. Markets are not driven purely by economic fundamentals. Fear, urgency and social influence begin to take control over rational buying behaviour.
Interestingly, Behavioural Finance used to explain investor behaviour and decision-making, can also help explain consumer behaviour in times of uncertainty, offering insights for firms and marketers to rethink their strategies.
Perception turns into reality – Toilet paper case
A well-known example is the 1973 toilet paper scare in the United States, where a simple concern—amplified by media—quickly led to panic buying. As shelves emptied, the perception of scarcity became visible, triggering even more demand. In reality, consumers respond less to facts and more to what they see, hear and believe others are doing.
Fear, panic buying and herd behaviour
We saw this very clearly during Covid-19. Faced with uncertainty, consumers rushed to stockpile essentials—not necessarily because they needed them immediately, but because they feared not having them later. The discomfort of running out is far greater than the cost of overbuying.
On the other hand, herd behaviour makes the situation even stronger. People observe others—long queues, empty shelves and even social media signals—and follow. The result is a powerful cycle of fear drives buying, buying creates scarcity, and scarcity drives even more fear.
Anchoring and price perception in times of crisis
Interestingly, price perception also changes during crises. Under normal conditions, consumers tend to evaluate prices more calmly. However, in uncertain times, they rely more on reference points. This is where anchoring comes in. A simple “Was $100, now $60” suddenly feels more attractive—not just because of the discount, but because it gives a clear benchmark.
Naturally, when incomes are uncertain, consumers look for justification before spending. Even small reductions can feel meaningful when compared to a higher reference point. For marketers, the lesson is quite clear. Pricing is not just about numbers—it is about perception. And in a crisis, perception becomes even more powerful.
Scarcity and perceived value in times of crisis
Of course, scarcity plays a similar role. Phrases such as “limited stock” or “only a few left” can create urgency almost instantly, making consumers more sensitive to signals of shortage—even when such shortages have not yet materialised. However, caution is needed. While scarcity can drive short-term demand, overusing it—especially in uncertain times—can damage trust.
On the other hand, businesses can also fall into behavioural traps. During Covid-19, many individuals and firms rushed to order large quantities of sanitizers and masks, and even invested in production, assuming demand would continue. However, as conditions stabilised, demand declined sharply, leaving excess inventory and financial losses.
Mental accounting and framing in times of crisis
Consumers do not treat all spending equally. They mentally divide it into categories—essentials, non-essentials, savings and so on. During a crisis, these boundaries become tighter, and spending becomes more deliberate.
This is where framing becomes important. The way an offer is presented can change how it is perceived. Saying “Save $20” often feels more tangible than “20% off,” even if both mean the same thing.
Misuse of marketing mix elements: distorting markets
Of course, in some instances, elements of the marketing mix are misused. Prices may be increased under pressure, supply may be restricted, and communication may create unnecessary urgency. Naturally, this can amplify fear and distort consumer behaviour.
However, on the other hand, the same marketing mix—when used responsibly—can help stabilise the market and build trust.
The responsible use of the marketing mix
In times of uncertainty, firms need to be more disciplined in how they use the marketing mix.
Product: Firms should focus on essential and reliable offerings rather than expanding variety. Consistency and quality become more important than novelty.
Price: Pricing must be fair and justifiable. Instead of exploiting scarcity, firms can introduce smaller and more affordable product formats, helping consumers manage limited cash flows.
Place: Ensuring availability is critical. Consistent supply and clear visibility of stock help to reduce panic and stabilise demand.
Promotion: Communication should move away from urgency-driven messaging. Reassurance, transparency and stability are far more effective in building consumer confidence.
Role of consumer protection
In times of crisis, consumer protection authorities and government agencies also have an important role to play. Timely intervention to monitor prices, ensure the availability of essential goods and address unfair practices helps to stabilise markets, while clear and transparent communication can reduce uncertainty and prevent panic-driven behaviour.
Conclusion
Crises such as the Iran–Israel conflict show that markets are shaped not only by economics, but also by human behaviour driven by fear and perception. Of course, firms that adopt ethical and socially responsible marketing practices will be better positioned to navigate uncertainty and build lasting trust and long-term sustainability.
*Zahran Sikkanther Lebbe is a Financial and Behavioural Market Analyst based in Alberta, Canada. A Chartered Marketer (MCIM, UK), he holds a Bachelor of Science and postgraduate qualifications in Finance from Ontario. His work focuses on applying data and behavioural insights to business strategy. He can be reached at zahranlebbe@gmail.com
