OK, Hyundai, I’ll see your offer of gasoline locked in at $1.49 and raise you: Free gas for the summer for buyers of the SX4!
Known in the U.S. primarily as a maker of SUVs, Suzuki has been hit hard by this downturn and consumers’ shift to smaller cars: So far, sales this year are down more than 50 percent.
So along comes free gasoline, assuaging a concern of many: the possibility of spiraling fuel costs. The memory of last year’s spike lingers, and prices have recently started to climb again. Buyers can thus rest assured that if prices skyrocket, they’ll be protected for 90 whole days! Evidently this is targeted at those buyers who live in the moment, never planning as far ahead as September.
Suzuki is desperate, and it shows. Hyundai’s offer is part of a coherent, comprehensive plan. Suzuki’s is a cry for help.
Yesterday, Hyundai announced an expansion of its successful Assurance Program, which gives new-car customers the option of returning the vehicle if they lose their source of income. Through July, customers will have the option of locking in gas prices at $1.49 per gallon for the next year when they buy or lease eligible vehicles. (See program details here.)
Participants in the Assurance Gas Lock promotion will receive a card for purchasing fuel; card users will be charged $1.49 per gallon regardless of the true price, and Hyundai will pick up the difference.
This is a smart effort to build brand confidence and alleviate consumer anxieties in uncertain economic times, especially as the company’s research has shown that fluctuating fuel prices can be a major deterrent for potential car buyers. But it could backfire if gas prices decline sharply. When Chrysler launched a similar program in 2008, participants got the short end of the deal when gas fell below the fixed promotion price of $2.99 per gallon.
With fewer people in the workplace and workers fearing redundancy, people are putting in ever longer hours. According to a global online survey recently conducted by recruitment agency Robert Walters, people in Hong Kong and Singapore are working harder than ever: Of those surveyed, 62 percent in Hong Kong and 59 percent in Singapore said they’ve been putting in more overtime. The global average was 55 percent.
For brands, this could be a great moment to provide some much needed relief through entertainment, humor and plain old fun. How can our brands bring a greater source of joy to people in these gray times?
Normally, Thai women spend around 4,000-6,000 Baht (about $120-$180) when buying a set of skin care or cosmetics from premium counter brands. Now, many of these brands—including Shiseido, Clinique, Estée Lauder, Lancôme and Kanebo, etc.—have launched a new strategy of minimizing the beauty basket to make it a little more affordable: 3,500-5,000 Baht ($105-$150). The products are the same but come in smaller quantities. In addition, most premium brands are now offering free workshops at their stores, advising women on skin care, makeup application and various other beauty topics of current interest.
Value-adds such as these seem to be an essential component of efforts to lead consumers to actual purchase. And activities like free workshop or training also play an important role in deepening the bond between brand and consumers, especially now. Price promotion alone is not a panacea.
Time recently reported that high-end yoga mats are bucking today’s frugality trend. These mats—the priciest of which cost about $100—are made by a company called Manduka, whose sales rose 55 percent in the first four months of 2009. Manduka now has a distribution deal with nationwide retailer Dick’s Sporting Goods.
The article points to several reasons why sales are soaring: the continuing popularity of yoga, the “superior traction” and “extra cushioning” of the mat, etc. But I believe the driving reason behind Manduka’s success is outlined in our recent paper The Recession and Its Impact on Luxury, in which we discuss the future of luxury and what it means for health and wellness: People are re-evaluating luxury altogether. In some cases, this means redefining it in non-materialistic ways—time with family, doing good, being healthy. It can also mean spending more for products that conform to the highest green standards … or for things that enhance health and well-being.
Manduka’s pricey mats fit perfectly into the new mold of luxury: They allow people to invest in their health and wellness while simultaneously flaunting their wealth to those in the know. Call it stealth consumption rather than conspicuous consumption. Bad news for the Guccis of the world, good news for Manduka.
In economic downturns, people are less willing to donate to charity. But then, they are likely more willing to spend their time—the new currency—or other resources to support a good project. The new Austrian platform SOS Mother Nature, initiated by the Austrian environmental organization Global 2000, works with this assumption: It gives people an opportunity to support the fight against global warming simply by creating a profile and spreading the word by providing a new-media channel like a personal Web site, an online banner, a screen saver, wallpaper, e-mail, mobile or SMS. SOS Mother Nature platform gets an enormous below-the-line push for free, while participants get a quieter conscience and little bit of publicity too.
It used be that most people who took advantage of vouchers, deals and discounts were living on a shoestring. Today, it’s simply a sign of a savvy shopper, whatever their income. This recession has seen the rise of the deal-seeking affluent, and brands that have not traditionally catered to an affluent audience should be doing all they can to appeal to this new breed of discount shopper. By luring in these consumers now and offering them a good experience, brands may well retain their custom beyond the recession.
One example from the U.K., which I highlight in our Balancing Health, Wellness and Budgets presentation (download in the Trends and Research page), is discount supermarket chain Aldi, which swiftly added luxury items such as whole Canadian lobster (£5.99) and premium caviar (£1.69) in response to an influx of high-income customers. One trend forecaster has labeled these shoppers “the Aldirati,” while some call them NFAs (no-frills affluents), as an article in the Times of London points out. A recent Aldi campaign hit the nail on the head with the tagline: “Don’t change your lifestyle, change your supermarket.”
DIY isn’t just what you do after a shopping spree at IKEA. Today, do-it-yourself is influencing a range of categories, including entertainment, food, beauty and fashion. From locals organizing and promoting their own parties and events to teens formulating at-home beauty treatments, the ethos of DIY is becoming increasingly pervasive.
A confluence of factors is shifting this movement from the fringe to the mainstream, chief among them the anxiety brought on by the Great Recession—DIY is simply cheaper than the alternatives. DIY also seems like the savvy, even chic thing to do at a time when frugality and anti-consumerist sentiment are proliferating. The Internet is also a key factor, helping DIY-ers learn from and inspire each other. And in a world where mass-produced goods dominate, DIY allows for a sense of discovery and a way to stand out from the crowd.
Our latest trend report explores how DIY ideas and attitudes are affecting consumer behavior and purchasing habits in a range of categories, and looks at what it means for brands and marketers. You can download the report from our Trends and Research page.
With “the java wars intensifying” in the U.S., as The Boston Globe puts it, a Starbucks-McDonald’s rivalry is also heating up around the globe. In Thailand, Starbucks has run a limited-time promotion offering half-price coffee in the afternoon to customers who already bought one in the morning. Now McDonald’s McCafe is fighting back with a two-year-anniversary special: a free upsize of any cup of coffee. Customers can get extra caffeine without extra spending.
Even while running promotional offers, the McCafe brand still does well in maintaining its image as a premium coffee brand that’s available in a nice environment, complete with free Internet access and a variety of magazines. Price promotion doesn’t have to dilute brand image, as long as a brand can figure out how to talk with consumers so that the key message they take away is “It adds value to your life” rather than “You can now afford it.”
With media outlets filled with stories on General Motors’ downward spiral, one wouldn’t suspect that a GM brand, Chevrolet, continues to lead Colombia’s auto industry. Chevrolet has been the top brand in Colombia for two-plus years, a period in which it’s invested more than $60 million Colombian pesos in media (Renault, in the No. 2 spot, spent $45 million). And Chevrolet hasn’t been pulling back as much as might be expected; spending is now on par with Renault.
Lately, Chevrolet has sealed its commitment to the Colombian consumer with the “Number 1 Chevrolet Fan” campaign. During the first phase, people who submitted a picture with an explanation as to why they are the brand’s biggest fan were eligible to win an HHR, the newest Chevy model. People who voted for the Number One fan online could also enter to win a Chevrolet Spark Go. The campaign also reminded consumers that Chevrolet offers a low interest rate.
Chevrolet doesn’t seem to be losing momentum as of yet, but we can only wait and see if it can keep moving at the same pace under GM’s “reinvention.”
