JWT’s AnxietyIndex is designed as a place to discuss how brands and consumers are responding to the global recession. With daily content updates, AnxietyIndex.com includes contributions from around JWT’s network, offering a truly global perspective.
On holiday in one of the most remote places in India, I was surprised to meet a number of people who were there on a long break, having no job to rush back to. Their stories were similar: They used to be expats working in London (from Australia, New Zealand, the U.S., etc.), they were made redundant (expats tend to be the first to go), and before going back home, they’d decided to take an extended trip—something they’d always wanted to do but never had the time for. They stay in guesthouses or do home stays; eat in local eateries; take long-distance buses rather than fly or hire taxis; go on meditation treks and walks. They’re on relatively modest budgets and things aren’t always comfortable, but the experience, they say, is very fulfilling and inspiring.
Such “gap year” travel, along with doing volunteer projects overseas, is apparently booming. Although in general travelers have greatly cut back on overseas holidays during this recession, people are being forced to re-evaluate their priorities and values—so while spending more to make the most of one’s limited holiday may no longer be viable, investing in a long break now seems like a good way to spend one’s limited money. People will spend on what’s meaningful.
Being made redundant is obviously something you’d rather avoid, but the people I met looked as though they’d gained much more than they probably would have were they still employed, at least from a life-fulfillment point of view.
One of South Africa’s “big four” lending institutions, Nedbank, is attempting to grow its client base by offering R750 (approximately $100) for new customers. Aptly named the “Fresh Start Account,” this targets consumers in their early twenties who have not yet formed any serious attachments to banks. When a minimum salary of R3,000 (about $450) is paid into the account, Nedbank credits it with R750 after 45 days. A “refer a friend” portion of the promotion attempts to tap into the social networks of these new consumers by offering R30,000 (just over $4,000) in a random drawing to one customer who has successfully referred a friend.
This is a good tactic by Nedbank. Not only is it providing a financial incentive for joining the bank (at a time when people really need extra cash) but it’s targeting people who will potentially stay with the bank for years and expand their product portfolio, generating revenue for Nedbank that will eventually eclipse the R750 it has paid out.
It’s amazing how India’s two biggest cities are reacting so differently to the world around them. The people of Delhi are twice as anxious as those in Mumbai, according to JWT’s recent AnxietyIndex research. (See AnxietyIndex: India.) Specifically, Delhites are very nervous about the state of crime and terrorism, while Mumbaikers—despite being at ground zero of the November terror attacks that shook the nation—actually scored quite low on anxiety related to terrorism and crime.
Instead, Mumbai residents choose to worry about more everyday factors, such as the cost of health care and food prices. Rather than look back, the city with the never-say-die spirit prefers to move on and approach the future with hope. Indeed, Mumbaikers believe many factors will improve in the next six months, including real estate, fuel prices, access to loans and the unemployment rate. Delhi, by contrast, feels the exact opposite—residents say all these factors will worsen.
What are the implications for brands? In Delhi, brands stand a good chance of connecting with consumers by infusing optimism into their messages and promising soothing, uplifting or upbeat experiences. In Mumbai, brands can borrow/play off the city’s hope and confidence. Delhi may also react more strongly than Mumbai to depictions of familiar situations and comforting factors—e.g., family and friends—that alleviate anxiety.
For a long time, bigger was better. Now, we’re backing off of big. Drivers around the world are embracing small-class cars, developers are downsizing their blueprints, and big businesses are revising their game plans. We’re calling it The Small Movement.
Why is small having its big moment? A global recession that’s forcing us to live with less makes frugal seem fashionable. An environmental crisis makes smaller houses, cars and carbon footprints look more responsible. Booming population growth has turned smaller, more streamlined products into space savers—a key quality in a crowded world.
Small Movement success stories plug into one or all of these themes. Concentrated laundry detergents allow for smaller containers, taking up less space in cluttered home and giving consumers the sense that they’re helping to save the world. Smart cars are eye-catching, gas-friendly and easy to park in crowded cities. Stand-alone kiosks are now big business with big retailers, allowing them entry into new venues—like Blockbuster kiosks in malls and pharmacies.
These are tricky waters for businesses that have relied on selling bigger, shinier doodads for decades. But this new culture of restraint is far from bad news for brands. The Small Movement isn’t necessarily about living with less; it’s about getting the most out of life—your home, your budget, your electronics—without contributing to the world’s ills. Smart marketers will show consumers how to do just that.
Our latest trend report explores these themes and more—download it here.
Even before this economic meltdown, which has Harley-Davidson sales down substantially, the company had challenges. The brand is seen by many as offering playthings for well-off baby boomers pretending to be rebels. Younger guys are shying away from this image, preferring Japanese super-bikes or even Italian exotics.
Harley needs new, and younger, buyers. To that end, it has created a program that essentially lets a first-timer ride one of its entry-level models, the Sportster, for free for a full year if they then trade it in for a higher-end motorcycle. This minimizes the downside for unsure buyers: If they decide riding, or the brand, is not for them, they can sell the used Sportster, taking only the depreciation hit on the cheapest bike in the lineup. If they fall in love, they can step up to top-of-the-line hogs, and Harley gets another disciple.
This is a great example of a brand eliminating psychological barriers to purchase with a program disguised as an incentive.
Etisalat, a telecommunications services provider, has used cutthroat prices and competitive promotions to maintain an edge since arriving in the Egyptian market. Its latest campaign, promoting a package that provides free intra-company minutes and SMS messages, is a direct response to the diminishing funds allocated to corporate employees. Claiming that Etisalat offers the “most affordable corporate bill,” the TV commercial is a comedic look at recession cost-cutting.
Corporate honchos are shown going to extremes such as firing half the employees, maximizing as much space as possible, giving out hand-held fans (batteries not included) to cut down on AC bills, limiting lunch breaks to just one minute and traveling by any means possible. The humor of the ad, as well as its ability to relate to the circumstances of many people, helped push the product forward. In a market where a lot of the communication is failing to recognize the effects of the recession, this ad cut through the noisy clutter and was spot-on for many corporations.
Experts can’t seem to agree on what the post-recession consumer will look like. Some, such as Lauren Weber, author of an upcoming book on thrift (In Cheap We Trust: The Story of a Misunderstood American Virtue), suggest consumption will eventually go back to pre-recession levels, as the U.S. has cycled through this “virtue of thrift” throughout its history. Others, including John Gerzema, Chief Insights Officer for Young & Rubicam, believe “consumers won’t be so fast to return to defining consumption as the way to discriminate and differentiate themselves.”
Some of our research (see The Recession and Its Impact on Luxury) supports the argument that this recession is causing a fundamental shift in consumer ethics, resulting in a more “sober” consumer. Conspicuous consumption has become déclassé as people grow increasingly determined to live within their means. After more than a year and a half of hesitating before splurging, consumers will need clear messages about concrete benefits to justify a brand’s value. They’ll also be looking for deeper meaning to justify purchases so that they’re not consuming just for the sake of it. Marketers will have to respond by expanding their definition of brand value, incorporating moral or social values into a brand’s meaning.
No summer vacation for Santa this year. “Christmas creep,” the phenomenon whereby retailers launch holiday promotions ever earlier, “is expected to kick into overdrive this year,” reports Reuters. First out of the gate among major retailers is Sears Holdings Corp., which has opened Christmas shops at 372 Sears stores and a “Christmas Lane” at both Sears.com and Kmart.com. Next up is Toys “R” Us, which will run a weeklong “Christmas in July” sale that promises “affordable and fun gifts at prices usually expected during the holiday shopping season.” It even includes a two-hour in-store event that will have children making Christmas cards, playing games and getting candy canes.
“They’re trying to get to the consumer before they run out of money,” retail analyst Marshal Cohen told American Public Media’s Kai Ryssdal. It’s a dubious strategy, as Cohen pointed out, considering that most consumers are buying only as much as they need right now: “Retailers have been continually, over the last few years, heading in this direction of trying to get the consumer to spend earlier and out of season, and that is something the consumer is clearly telling us they don’t want to do.”
There will surely be a heated battle for share of wallet this holiday season, but launching the fight months in advance is unlikely to win contenders any clear advantage.
Peter England, a leading mid-priced menswear retailer in India, is re-strategizing and starting a “value retail format” that will offer only lower-priced labels (these were formerly sold by another business operated by Peter England’s parent company). “Value retailing is a concept based on offering quality brands with huge savings for consumers,” explains India’s Economic Times.
Consumers here have been trading down when it comes to apparel: In our recent survey of 500 Indian adults from Delhi, Mumbai and Bangalore, a third of respondents said they would consider buying less branded clothing, and a third also said they would consider trading down or stop purchasing their regular brand of clothes.
Rather than cheapening the Peter England brand by slashing prices, the company is smartly trying to keep its brand image intact while simultaneously appealing to customers who are trading down. J. Crew in the United States and Crazy Line in Israel offer similar case studies.
Woolworths Supermarket has launched a TV commercial that addresses one of the most common symptoms of the global economic downturn experienced by Australians to date: unemployment. The spot shows a mother going to a job interview with her son, with the message that “Woolworths employs thousands of Australians. And we’re always looking for more.”
While Australia has so far escaped the dreaded “R” word, Australians are actually very pessimistic about their near-term economic future. The best approach for brands in this environment is to communicate with pragmatic optimism—just as Woolworths is doing. Especially since the fickleness of Australian consumer confidence suggests it’s unwise for brand communications to leverage either “R” word (recession or recovery) explicitly.
On holiday in one of the most remote places in India, I was surprised to meet a number of people who were there on a long break, having no job to rush back to. Their stories were similar: They used to be expats working in London (from Australia, New Zealand, the U.S., etc.), they were made redundant (expats tend to be the first to go), and before going back home, they’d decided to take an extended trip—something they’d always wanted to do but never had the time for. They stay in guesthouses or do home stays; eat in local eateries; take long-distance buses rather than fly or hire taxis; go on meditation treks and walks. They’re on relatively modest budgets and things aren’t always comfortable, but the experience, they say, is very fulfilling and inspiring. 
One of South Africa’s “big four” lending institutions, Nedbank, is attempting to grow its client base by offering R750 (approximately $100) for new customers. Aptly named the “Fresh Start Account,” this targets consumers in their early twenties who have not yet formed any serious attachments to banks. When a minimum salary of R3,000 (about $450) is paid into the account, Nedbank credits it with R750 after 45 days. A “refer a friend” portion of the promotion attempts to tap into the social networks of these new consumers by offering R30,000 (just over $4,000) in a random drawing to one customer who has successfully referred a friend.
It’s amazing how India’s two biggest cities are reacting so differently to the world around them. The people of Delhi are twice as anxious as those in Mumbai, according to JWT’s recent AnxietyIndex research. 
Peter England, a leading mid-priced menswear retailer in India, is re-strategizing and starting a “value retail format” that will offer only lower-priced labels (these were formerly sold by another business operated by Peter England’s parent company). “Value retailing is a concept based on offering quality brands with huge savings for consumers,” explains India’s Economic Times.
