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Conformity Rules

Ever wonder why forwarded hoax on Whatsapp can spread so quickly? It doesn’t happen only in Indonesia, a study by American Psychological Association, reveals both conservative and liberal Americans share misinformation to avoid social exclusion.

Conformity and social pressure drive the dissemination of fake news, as individuals within online communities feel compelled to share such content, regardless of its accuracy, when others in their group do so.

A 2005 study indicates that maximum conformity occurs within groups of 3 to 5 people. Beyond this range, additional members have minimal impact, while groups with fewer than 3 people experience significantly reduced conformity.

Behavioral science is a passion of mine: I love thinking about what shapes our behavior and why we make the decisions we do. And conformity is a big part of the metric, driven by users (us!) who play key roles in shaping those metrics.

While we may not always be fully aware- the small daily decisions we make snowball to significantly impact our (everyone's) lives.

Taking from a recent event, following Hamas's recent attack on Israel and the ensuing Gaza siege have propelled the BDS (Boycott, Divestment, Sanctions) movement back into the spotlight.

Source: theguardian

Just last year, a survey shows that ~82% Americans are not aware about this two-decade long conflict. Now, people are very vocal on social media to call for boycotts of brands with ties to Israel. McDonald's, Domino’s Pizza, and Burger King are targeted for supporting the Israeli military, while Starbucks faces backlash for suing its labor union over expressing solidarity with Palestinians.

Global demonstrations are spawning worldwide. However, compared to the clear stance during Ukranian invasion, companies thread with caution as the conflict is very sensitive and complex, thus issuing binary viewpoints can backfire.

These international big brands are also feeling the impact in Indonesia. For example, the Starbucks queue in our office has significantly dwindled. On days with buy-one-get-one promotions, the line used to stretch outside the building, but that's no longer the case...

Taken at peak hour, 13.15 PM today

Although not directly linked, a Starbucks employee revealed a significant 40% drop in foot traffic when we asked. Yesterday, my Americano purchase came with a 30% discount for next purchase if I kept the bill—seemingly an effort to lure customers back.

On the flip side, the nearby local indie coffee shop was surprisingly busier than usual. Perhaps you have observed similar trends? Penny for your thoughts.

Other impacted brand, McDonald's, despite being locally owned by PT Rekso Nasional Food. They've extended humanitarian aid worth IDR 1.5 bn to express support for Palestinians and safeguard their brand from tarnish.

Recent research from Meta and Bain & Co also highlights a rising consumer caution in spending in Southeast Asia, seeking more value in purchases. This caution extends to brand support, with people associating it with their stance—better safe than sorry.

In the last decade, insurgent disruptors have been steadily capturing market share in Indonesia. These disruptors are rapidly expanding their presence across various key categories. Consumers are becoming less brand-centric, favoring products that provide added value and align with their values.

Source: Meta, Bain & Company

Certainly, this trend is further amplified by the global BDS campaign, and the repercussions may escalate as the conflict between Palestine and Israel intensifies, forcing both brands and individuals to take a stance.

The current scenario emphasizes the need for all businesses, big or small, to carefully consider their position in the socio-political landscape, understanding that consumer loyalty can sway with the tides of public opinion.

As we move forward, the dynamics of consumer behavior in relation to world events will likely continue to shape and redefine the business landscape, especially with the power of social media. Adaptability and strategic foresight will be key for brands to thrive going forward.

Underscoring the profound effects of this event on consumer and F&B brands, local entities like ICBP and TBLA- devoid of international ties, emerge as 'safe' choices. Expected to deliver strong 4Q23 results, ICBP are likely to benefit from improved sales mix and lower input costs. As of TBLA, driven by the increased sales of imported raw sugar and the recent rally in domestic sugar prices.

Always happy to discuss our calls!

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