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.
As we discussed recently, too many choices can paralyze consumers, creating anxiety and deterring people from making any purchase at all. So Nokia’s new naming convention for its phones is a step in the right direction for a company with a multitude of products.
The phones are grouped into four series by function: N (most advanced), X (social networking), E (business) and C (basic functions). Within each series, phones are assigned numbers from 1 to 9 that signify the range of features available and, hence, cost. So buyers know from the start whether they’re looking at a highly sophisticated device (rated 9) or a stripped-down one (rated 1).
Nokia’s solution—paring down information to its essentials—allows consumers to more easily weigh price range, features and functionality and more quickly determine what they want. This takes some of the anxiety about making the right choice out of the equation, especially at a time when diligent consumers must do a great deal of work to wade through the fine print.
Value deals and incentives proliferated during the downturn as consumers with shrinking budgets increasingly focused on finding deals. This includes “Buy one, get one free,” or BOGOF, offers. But encouraging consumers to get more than they need creates a huge amount of food waste, something the Department for Environment, Food and Rural Affairs in the U.K. is trying to fight. The Times Onlinereported last year on a government finding that British “households throw away 4.1 million tons of food each year that could have been eaten if it had been managed better.” The cost to the average household is £420 a year.
Tesco has addressed the issue by introducing “Buy one, get one free later” for perishable goods that may spoil before being consumed. This is an ingenious solution that still helps consumers who are cost-conscious and boosts Tesco’s sustainability credentials. Finally, it ties the consumer into repeat shopping in order to redeem offers, increasing brand dependency and footfall.
Walmart, Target, CVS and Walgreens are among the major retail chains paring brand-name products from their shelves in favor of private-label brands. This means fewer choices for consumers. Although conventional wisdom has it that people prefer more options, and a recent analysis in the Journal of Consumer Research seems to back this up, a piece in The New York Times challenges this theory. Reporter Alina Tugend questions whether choice overload can create anxiety and “paralyze people or push them into decisions that are against their own interest.”
Tugend describes a study by Columbia University business professor Sheena Iyengar. When a booth in a gourmet supermarket offering samples of jam included six varieties, 30 percent of shoppers who stopped by bought a jam; when the booth offered a much wider 24-flavor selection, only 3 percent actually purchased something. (But while 60 percent of customers stopped by when more flavors were on offer, the six-flavor selection attracted only 40 percent.)
Extreme couponing was a common theme of last year’s recession news, with stories of cash-strapped consumers clipping their way to deep discounts. Now, the “find great deals” site Groupon is putting a tongue-in-cheek twist on that survivalist spirit with its Live Off Groupon promotion: One person will be chosen to “attempt to survive for one year with nothing but a laptop, cell phone and an unlimited supply of Groupons.” At stake is $100,000.
CNET calls it “one of the most ridiculous social-media promotions that any brand has attempted to pull off.” Admittedly, the contest isn’t a real option for the average family squeezed by the economy. But judging by the response on Groupon’s site, it has struck a chord with some very excited people, what seems to be a young, mobile crowd who have more time than money on their hands (funemployment, anyone?). Groupon’s offer, with its promise of a cross-country adventure and a big dose of humor, is appealing to them—and a clever way to get this demographic onto the site.
It’s well-known that consumers have been less loyal to name brands, switching over to private label in an effort to pinch pennies. They’ve been cutting corners anyplace they can, especially on items they’re going to throw away—like garbage bags.
When Hefty first came out with its Odor Block bags, it touted the bags’ ability to block the stink of garbage. Now, Hefty’s commercials have a twist: A woman wants her husband to throw out a trash bag that’s barely full because it stinks; her husband says, “That’s wasting money” and “Wasting money stinks.” So not only does garbage stink, but wasting money does too—and Hefty Odor Block protects against both! And does it with “new lower prices.”
This is smart thinking, killing two birds with one stone by adding value in consumers’ minds.
The recession saw many consumers postpone big-ticket purchases, a challenge that electronics chain Best Buy is addressing with its novel Pitch In card. Think bridal registry meets microfinancing meets layaway. Best Buy terms it “easy group gifting.”
Customers looking for help financing a purchase create a Pitch In card along with a Best Buy wish list, which they share with friends and family. Gift-givers can contribute payments ranging from $5 to $9,999.99. “It’s the perfect way to get that big Wish List item you’ve been dreaming of,” says Best Buy on its Web site.
Recently we’ve seen a rise in collective action, with people increasingly understanding that every bit counts in addressing today’s big issues, from the economy to the environment—adopting a “we” rather than a “me” mentality. While we’ve seen similar efforts in the independent music scene, Best Buy is charting new territory by bringing this idea to the commercial realm, enabling consumers to tap into the collective conscious of their friends.
It’s a great example of how brands can help spur spending without relying on steep discounts while their customers are laying off the plastic.
For $99, a nAscent Art consultant will visit a client’s home or office to match works from the company’s catalogue of emerging New York artists. The client then pays a monthly rental fee for the work, a portion of which can go toward its eventual purchase. Renters who choose not to buy can simply trade in their artwork when they want something new.
The recession has had a sobering effect on the contemporary art market (after 10 years of explosive growth, the art auction market saw a 75 percent decline in sales this past year), leading many sellers to investigate alternative distribution channels. Could “cooperative consumption” (as we’ve termed the spread of the timeshare concept) and rent-to-buy models be one solution? We’ve seen these models win converts in new categories during the downturn, and we’re likely to continue to see experimentation in categories that once seemed unlikely candidates for this concept.
While much of the Western world is still anxious about the global economy, the sentiment in Asia is quite different. Nielsen’s most recent Global Consumer Confidence Index, released in October, showed significant spikes in Asia. Many Asian countries registered much higher increases in consumer confidence than the global average of 9 points, including Vietnam (+24), Hong Kong (+23), Korea (+22), Indonesia (+21), Singapore (+16) and Thailand (+13).
However, these improvements in sentiment haven’t yet translated into consumer behavior. Across various categories, consumers in many Asian markets appear to be eager to spend—but only if the situation continues to improve. It seems then that anxiety in Asia is no longer centered around the recession but rather the recovery—i.e., a desire that it just happen already so things can go back to how they used to be.
Brands that haven’t already need to shift the conversation from damage control to “How can we help people prepare for the eventual recovery?” We wrote about hope-fueled vs. fear-fueled marketing in our second AnxietyIndex Quarterly report, and amid the anxiety over recovery, nurturing optimism and hope seems to be more relevant than ever.
I’d written earlier that GM’s satisfaction guarantee was an act of desperation, something a car company would do when it had few, if any, other options. Desperation move or not, early results show it’s working, with GM’s sales up 5 percent in October in an overall flat market. All four of GM’s surviving brands were up for the month.
It wasn’t just the guarantee: GM hit the airways hard, heavily pushing the “May the Best Car Win” theme, with Chevrolet the primary focus. And incentives were up substantially, especially for Chevrolet, and the trade-in data suggests it’s overwhelmingly GM buyers coming back for another.
But none of that matters right now. Market share was up, and GM is hinting that November will be strong as well. GM needed a big month, and some good news, and got both. The guarantee seems to be what got the ball rolling, so it has to be judged a success so far. Sometimes desperation plays pay off.
One of my first posts looked at UBank and its series of “Money Box” Webisodes,a sort of “Recession 101” for younger Australians. Six months on, UBank has launched its first TV commercial, “Saving Is the New Spending,” to promote the USaver account. The spot sweeps through an upscale restaurant, noting how many of those enjoying the high life are actually living beyond their means (one diner’s maxed out his credit, another’s eaten baked beans for a week to afford a lobster dinner). The tone manages to stay more lighthearted than preachy.
It’s interesting to consider “living beyond your means” as an undesirable, and almost laughable, trait—particularly when it follows a period where credit-fueled exuberance has been the norm and one’s ability to keep up with costly trends has been a common aspiration and driver of social status.
Leveraging this shift feels like a strong strategy for a savings offering such as UBank given the current climate; however, the question is how ownable this will be for the brand ongoing—and whether this will strategy will stimulate a change consumer behavior (if that is indeed the objective for UBank!).
It’s well-known that consumers have been less loyal to name brands, switching over to private label in an effort to pinch pennies. They’ve been cutting corners anyplace they can, especially on items they’re going to throw away—like garbage bags.
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