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.
Post-Wall Street meltdown, it’s no surprise that bankers have lost people’s trust and respect, a fact U.K. brewer Scottish & Newcastle leverages in a spot for Strongbow Cider. Hardened-looking workers standing on a hillside rally around a leader who praises the accomplishments of roofers, gas-fitters, etc. Then he gets to a group of buttoned-up bankers, who are told to “sod off” by men in the group as well as the leader.
This bit of class warfare is intended to help drinkers who are more likely to identify with the blue-collar workers bond with Strongbow. Whether the YouTube-based campaign can accomplish that depends on whether viewers believe the spot is authentic or feel it exploits current events. Consider one viewer’s reaction to the ad:
“Hahahaha, right? Sod off, bankers! Yeah! Let’s buy some cider, because clearly this is a company that understands the working class. Oh, except: Scottish and Newcastle, brewers of Strongbow, was just recently purchased by Heineken, a public company, in a transaction supported by Credit Suisse, Bank of America, Barclays, BNP Paribas, Citibank, Fortis, HSBC, ING, and JPMorgan Chase. So actually, the joke’s on the working class after all.”
“There may be a limit to how incensed a large corporation can get in an ad,” noted Stuart Elliott in a May New York Times piece headlined “Angry Ads Seek to Channel Consumer Outrage.” As ad man Marc Brownstein told Elliott: “You can’t anger people into buying your brand.”
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.
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.
In a recent post, I declared that while cheap is cheap, value is relative. In other words, value doesn’t always mean bargain-basement prices: In the case of Olay Professional Pro-X, for example, a $60 jar of face cream is still a heck of a lot cheaper than an afternoon with a Botox-wielding dermatologist.
On the other hand, it still helps to offer some bargains in order to retain customers who might be tempted to trade down. One brand that’s doing this while still maintaining brand equity is J. Crew. The 26-year-old retailer is offering a greater number of knits and pants priced under $80; these and other items priced under $100 are now listed in an “instant gratification” section of jcrew.com. At the same time, the brand continues to promote its premium J. Crew Collection.
While J. Crew is faring poorly at the moment (profits were down 33 percent in Q1 2009), the company is confident that it can weather the recession, in large part because the days of $800 high heels are over, as CEO Mickey Drexler colorfully told Neiman Marcus CEO Burt Tansky at a conference last January. Ideally, affluent shoppers will spend more time and money at J. Crew while budget-conscious middle-class shoppers will trade down to lower-priced items. This smart strategy is likely to help J. Crew weather the recession with its gauze ruffles intact.
Rather than just trading down, some consumers are saving money by opting out of certain categories altogether. For brands, this means the competitive set is getting broader: It’s no longer just brand vs. brand (e.g., Bally’s vs. New York Sports Club), it may also be category vs. category (Bally’s vs. cable TV).
Since brands may be competing for share of purse along with share of market, marketers have to sell the category as aggressively as the brand. Last week, Guy Murphy offered an example of this—a U.K. ferry operator promoting the travel category.
Microsoft’s latest campaign, “People Ready,” is another example: It sells the idea of software as a tool that can save businesses money. For instance, the TV spot here doesn’t tout specific Microsoft products but rather explains how technology can help businesses thrive, despite the “economic tsunami.”
Considering that Forrester Research forecasts that business and government purchases of IT goods and services will decrease by 3.1 percent in 2009 (compare that to a 7 percent rise in 2007), now is the time for Microsoft to promote not just itself but the benefits of investing in IT. This campaign does it right.
Last week, Stuart Elliott at The New York Timeswrote about how marketers are aggressively going after thrift-minded consumers. The most obvious solution—one we’ve documented in a number of brand cases—is simply to make prices more competitive. Recently, Procter & Gamble said it plans to do just that, cutting prices in categories where its brands are seen as relatively costly and developing more lower-priced products.
Nonetheless, one of its new product lines is going in the opposite direction: Olay Professional Pro-X skin care products cost $42 to $62 per item, two or three times as much as products in another Olay line, Total Effects. Despite this, P&G’s messaging for Professional Pro-X is about value. A print campaign set to launch in July will be headlined: “As effective at wrinkle reduction as what the doctor prescribed. At half the price.”
This strategy strikes at an important distinction that all marketers should remember: In a recession, cost-cutting can sometimes be the knee-jerk solution, but it’s not always the best one. For some brands, a better idea may be to communicate relative value.
There has been a lot of talk lately about which categories are “recession-proof.” Are there certain goals and aspirations that trump the desire to save money? Are there priorities people will simply not skimp on?
With these questions in mind, today we release “Balancing Health, Wellness and Budgets,” a trend report that examines how the boom in health and wellness has been affected by the global financial crisis and the growing consumer desire for thrift.
Our research shows that people are adopting creative ways to pursue their healthy habits while watching their budgets. Cost-cutting might mean opting for conventional vegetables rather than organics or forgoing gym memberships and using fitness DVDs instead. Some are taking resourcefulness too far, splitting prescription pills in half, sharing prescriptions or dangerously rationing medicine.
Not long ago, many Americans were flaunting their comfortable middle-classness with shopping bags in the left hand and frothy lattes in the right. Or perhaps it wasn’t flaunting; after all, no one was self-conscious about buying. Consumption was as American as apple pie.
Today, however, it seems almost selfish to indulge in life’s little luxuries. As a nod to the new discreet consumerism, the designer fashion site Net-A-Porter—which offers “unprecedented access to the hottest looks of the season from international cutting edge labels”—is now offering to send New York customers their purchases in plain brown bags rather than its signature black, branded bags. With the “discreet packaging” option, the online retailer assures customers that “Your secret is safe with us!”
In a downturn, when people are looking to tone down on ostentatious bling, how should luxury brands respond? Should they help their customers be more discrete—and if so, how can they do so without losing the luxe appeal of their brands?
Starbucks has traditionally been regarded as a premium brand, thanks to its comparatively high price point and general fussiness (size “tall” = small, etc.). At a time when low price is everything to many consumers, it’s in a tough spot. Which explains why Starbucks is now trying to straddle the line between value and premium with its new breakfast offerings—so-called pairings that allow patrons to buy food (egg sandwiches, oatmeal, etc.) with coffee for just below $4. These are targeted at the budget-conscious, infrequent Starbucks customer.
The danger is that Starbucks will lose its premium proposition by emphasizing value. And consumers might find the value proposition dubious, considering that a “deluxe breakfast platter” (eggs, sausages, hash browns and a biscuit) can be had for a similar price at McDonald’s. And that other ubiquitous beverage chain—Dunkin’ Donuts—now sells a small latte for 99 cents. In terms of price, there seems to be a race to the bottom among fast food marketers.
But Starbucks isn’t about fast food, and there’s no way it can compete on price; it should differentiate itself by emphasizing the quality and nutritional value of its offerings (its “perfect oatmeal,” for example, has fewer than 200 calories).
On my way to work on Friday, I noticed a number of people reading this sign. Smart move, Equinox—gym memberships are often among the first things to go when times are tough. But compared with a cable subscription or dining out, fitness is certainly more of a necessity than a luxury. Especially if staying in shape gives laid-off workers the confidence to go out and seek new opportunities.