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.
In our spring AnxietyIndex Quarterly report “The Genericizing of Brands” (downloadable from our Trends and Research section), we argue that tactics must be approached in a branded way—that brands must find a unique value voice. A recent Wendy’s commercial for the Deluxe Value Meal is a good example of that.
The commercial, a part of the fast food chain’s “You Know When It’s Real” campaign, shows two guys eating a burger combo meal. But while one has only a tiny plastic burger, fries and soda, the other is eating a real and satisfying lunch from Wendy’s. The man with the miniature version notes that his meal cost just $2.99, only to hear that the other guy paid the same low price.
In a downturn, consumers tend to search for smaller, cheaper options, and in response, most brands target price-driven consumers with basic offers, usually inferior alternatives to the “real thing.” Using an absurdist comparative approach, Wendy’s assures consumers that it’s not among those promising “less for less” and that customers need not make sacrifices in order to save.
In a recent promotion for summer drinks, McDonald’s in China turned a simple buy-one-get-one-free offer into a resonant campaign that enhanced the value of the brand rather than take away from it (see commercial here). This was done by laddering the promotion to a higher-order benefit: quality time spent face-to-face with friends.
The campaign leveraged the insight that youth tend to spend more time online than socializing with friends outside the home. Hence the strategy was to encourage youth to meet their closest friends more often, at McDonald’s. The creative idea is that even though one may have hundreds of friends online, only a few of those are close buddies, and more time should be spent with them offline.
As we noted in our first issue of the AnxietyIndex Quarterly, “The Genericizing of Brands,” price and value messaging must be approached in a branded way. When offering consumers more value, smart advertisers make sure the offer works harder than a promotion, something that McDonald’s has pulled off with this campaign.
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.
CiCi’s Pizza, the $5 buffet chain, is giving “a penny saved is a penny earned” a whole new meaning. Its strangely depressing “Penny Picker Upper” campaign involves leaving 1 million pennies affixed with stickers offering coupon deals near each of the 650 restaurants. As noted in The Wall Street Journal , many quick-service restaurant chains—Denny’s, Domino’s and Subway among them—are offering “aggressive promotions” as the industry suffers the fallout of people eating at home more.
While it’s nice that a donation is given to Big Brothers Big Sisters of America after the return of each penny, asking patrons to scrounge for pennies in public won’t help boost consumer optimism. Especially when millions are now searching for real change every day.
The recession opens up opportunities for brands to identify gaps in the market and create products that provide affordable indulgence. Here’s one good example:
In this country, a sachet (single-dose pack) of Nescafe Instant Coffee is the common waker-upper, while brewed coffee remains an indulgent luxury for many. 7-Eleven Philippines, which used to offer only vending-machine-type instant coffee, is attempting to fill this gap with brewed coffee priced at 35 pesos a cup (roughly 72 cents). By comparison, Starbucks sets you back at least 90 pesos ($1.85).
The catch: DIY. You pour your own brew from the coffee machine and put on the cover and sleeve. The silver lining: Unlike Starbucks, where you wait for your barista, here you pay, DIY-assemble and you’re off.
7-Eleven’s coffee has proved popular among the office crowd, even in Makati streets, where convenience stores are side by side with Starbucks. In offices we visited, 7-Eleven’s coffee cup was as prevalent as Starbucks’ green and white cup.
With the credit crisis having a “profound effect” on household spending in the U.K., according to the Telegraph, it seems fast food brands are having the time of their lives. There has been a veritable procession of good results from the likes of Domino’s, KFC, McDonald’s, Subway and Gregg’s. All plan to open many more stores while creating thousands of jobs.
Is it possible, however, that in their hurry to leverage their recent success, these brands are setting themselves up for a hard landing when recovery kicks in? The current economic crisis may change mind-sets for the long term—causing a deep re-evaluation of spending and lifestyle habits—thus fostering a permanent love for affordable brands among mainstream consumers. But it’s also possible that this shift is nothing more than a short-term coping strategy. Given that aspirations are more likely to be bottled temporarily than shelved permanently, it may be a good idea for brands to closely follow consumer psyche and behavior down and up the economy curve as they plan ahead—especially if “cheaper” is their only calling card.
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).
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.
CiCi’s Pizza
The recession opens up opportunities for brands to identify gaps in the market and create products that provide affordable indulgence. Here’s one good example:
With the credit crisis having a “profound effect” on household spending in the U.K., according to the 
