One of the effects of any recession is a shift toward short-term thinking, with many people concerned mostly about surviving the immediate future. This has manifested itself in various ways and is currently emerging in the arena of B2B services in Israel. With many businesses having to let go of employees, buying software licenses does not seem cost-efficient. So Microsoft in Israel is now offering businesses software rentals. Microsoft’s communications stress the cost savings, the greater flexibility in terms of payment and number of software licenses, and the peace of mind this option provides. Companies that need to cut staff can do so without large sunken costs and can then re-expand with ease.
We have seen this shift from owning to renting in a variety of categories across the globe, but few have yet adopted this thinking in Israel.
During uncertain economic times, consumers looking to invest in property will respond positively to brands that give them the confidence that now is the time to do so. An HSBC print campaign that announces the bank’s latest home loan rates does so effectively.
It leads with a rational claim based on its market-leading low rate and then leverages the fact that HSBC is offering its “lowest rates since the ’50s.” Executions reference the style and signifiers of that era (the Melbourne Olympics, the invention of the television and vintage cars) to contextualize the rate and therefore amplify the message. The low-rate message is clearly communicated through a creative idea that not only amplifies this message but also draws on nostalgia and old-fashioned values to further engender trust and confidence.
Some companies, like heating-and-cooling manufacturer Trane, are finding creative ways of tying together several sources of anxiety for many Americans: the environment, energy costs and how to get a piece of all that “stimulus” money floating around.
As part of President Obama’s federal stimulus package, many billions in incentives were allocated for homeowners to replace old, inefficient furnaces and air conditioners with modern, high-efficiency models. When they do, buyers qualify for a tax credit of up to $1,500, making the decision that much easier.
Everybody wins. Orders for durable goods increase, people save on energy costs for years to come, local installers get more work and fewer greenhouse gases are emitted.
More importantly, consumers can feel like they’re doing something proactive during challenging times, while personally profiting from federal spending.
Recently, fast food purveyors such as KFC and a local chicken fast food chain called Al-Tazaj (which translates as “fresh”) have been offering budget meals. This is notable because it represents a change in approach; normally, these companies run all-you-can-eat promotions, rather than discounted price offers.
As people seek to reduce their budgets, they are eating a bit less at fast food restaurants, opting instead to eat at home. As the global economic downturn decreases the number of construction projects in Saudi Arabia, there are fewer of the workers who make up a sizable percentage of customers at these low-cost fast food joints.
These promotions may actually be a great development all around: The consumer can have his favorite grilled or fried chicken cheap. And it proves that the brands understand their customers and want to help them enjoy a hot, quick meal. I have already seen anecdotal evidence of people using these offers. On Friday (which is the end of the weekend here in KSA), the cashiers remarked that since the campaign started, they have more traffic than they can handle.
In anxious times, brands don’t always need to focus only on magical innovations—sometimes it’s enough simply to adapt solutions that already exist in the “economic pop culture.” Honda recently brought an existing innovation—Brazil’s ethanol-friendly Flex engine—to a very relevant category among Brazilians: motorcycles.
Brazil’s auto industry created the Flex technology, which allows cars to be fueled by gasoline or ethanol, or even both concurrently. Ethanol is also a Brazilian innovation: The country found a way to subvert the oil industry—gas in Brazil can cost three times as much as it does in the U.S.—and develop its own industry by creating and producing this alternative fuel. Ethanol causes less pollution and comes from a renewable source of energy, sugar cane (which grows in abundance in Brazil).
A Flex engine can cut fuel expenses by 30 percent. Flex engines came out in 2003, and now about 90 percent of cars sold in Brazil have them. In putting them in motorcyles, Honda is tapping into the anxiety of low-income consumers over gas expenses and democratized a relevant innovation, promising more savings to those who need it the most, when they most need it. —with the contribution of Luiz Mastropietro
Russians were the most intensely anxious consumers among the eight countries JWT surveyed earlier this year. They feel that Russia is suffering the most in this global recession, ahead of the U.S.
Our most recent AnxietyIndex, which you can download here, finds that 84 percent of Russian consumers say they are anxious, and 38 percent of those express intense anxiety.
Memories of the ’98 financial crisis are still top-of-mind. And most Russians believe this crisis will be long-lasting. Still, they see the mass media as exaggerating the crisis’ influence and stirring aggravation and anxiety.
There’s a panicked mood among circles of friends and colleagues, and for good reason: With layoffs and salary cuts, Russians are seeing a reduction in their household income even as the cost of products and services continues to climb—prices are two to three times higher in Moscow than in other European capitals. (Only petroleum has become a little cheaper with the crisis.) As a result, the country is seeing major cutbacks in consumer spending and a crime wave. One thing Russians aren’t too panicked about, however, is losing or changing jobs.
The drivers of anxiety in Russia (Click to download AnxietyIndex: A Cross-Market Look.)
Continue reading ‘Highly anxious Russians see their country as hardest-hit’
Filipino kids are taught not to be wasteful—our moms always reminded us to finish all the food on our plate, not keep the water running while bathing and turn on lights only when it got dark. And in these trying times, this Filipino value of thrift and resourcefulness is thriving, as we noted when we visited consumers’ homes recently. We met one woman who washed her hair using the small dipper pail (“tabo”) that Filipinos use in the bathroom and caught the rinse water in another pail for cleaning the bathroom floors. Some people invert their bottle of shampoo or lotion halfway through the bottle to ensure that every last drop is used and not left clinging to the side.
Another consumer practice is to go for the cheaper refill packs of fabric conditioner, pouring it into old bottles. Now Vaseline shampoo is responding with the first refill pack in the shampoo category, and adding 50 percent more to the product. Just one example of how, during difficult times, smart brands can use packaging to maximize their consumers’ experience of the product.
In Spain, television ad spending has dropped since the downturn. So with TV ad time not as profitable as it once was, the government has made the decision to wipe out advertising on the two public TV channels starting in September, to emphasize a clearer “public service” orientation. There will be no more ads on the Televisión Española (TVE) network, and new taxes on private channels and telecom companies will support public TV budgets.
The first reaction from TVE’s commercial sponsors is clear: They oppose this move and want at least 12 minutes of advertising an hour. Their argument: Less advertising will mean less consumption, and so the downturn will be even worse.
Optimists might note that the Internet keeps on growing as a medium—online advertising was up 3.6 percent in the first quarter. Many Spanish marketers are still using it as an extension of their media plans and starting to transpose their conservative adverting culture to the Web. This decision may push them to bet on the Internet in increasingly clever and more effective ways, leaving a lasting impact on the ad world here after the crisis ends.
The core team: Dr. Manmohan Singh, prime minister, with Sonia Gandhi and Rahul Gandhi
Results of the general elections in India have been announced, and Congress beat its toughest competitor, BJP, by a mile. The nation welcomed the results with open arms. Hope and optimism abound: India is looking forward to a government that brings with it political stability, no sudden swings in decision-making (this time the ruling party isn’t at the mercy of its sometimes unruly allies), and the possibility of continuing on the growth path while (hopefully) shielding the nation from the full impact of the global recession. The stock market has responded with a big thump: The BSE (Bombay Stock Exchange) Sensex rose more than 2,111 points to around 14,000 on Monday morning. Even if temporarily, consumers have all but forgotten the sounds of slowdown. It’s out-and-out buoyancy!
One real estate company in Cairo is finding a novel way of attracting wary customers. Oriental Coast, a local developer in Marsa Allam (along the Red Sea), is trying to gain an edge over its competitors by guaranteeing buyers an 8% return (per year) of their property’s price—by renting it out for them. This incentive is especially appealing to buyers of summer homes, which are generally considered tricky sales due to their limited use during those non-summer months. Providing buyers with a quick rental solution is a smart way to encourage a quick sale.
