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.
Over the past 50 years, living standards, life expectancy and material wealth have increased—the only thing that hasn’t is happiness. Numbers from the World Database of Happiness confirm this. During a recession, happiness naturally performs even worse, with consumers experiencing status anxiety more deeply: “Why do others have more than me?”
That’s one of the reasons the happiness economy becomes more important. As a brand that has been leveraging the concept of happiness for years, Coca-Cola has turned out a slew of ads during the downturn that put a creative and inspiring spin on the idea. In one of the latest spots, a university’s Coke machine becomes a “happiness machine,” dispensing everything from sunflowers to pizzas along with a bounty of Cokes.
Smart brands are gaining followers on Twitter by offering real-time discounts or giveaways to get customers into their stores. Borders, the bookstore chain, is offering free or discounted books at certain locations. Baja Fresh, the Mexican fast food food chain owned by Wendy’s International, offers freebies or discounts during lunch hours to customers who show the Tweeted offer at the register.
This kind of promotion is smart for a couple of reasons. Establishing consistent rapport with consumers during a downturn helps a brand remain top-of-mind when the economy improves. And for chain retailers, which are often seen as having no real connection to the communities where their stores are located, a promotion like this evokes a sense of local familiarity. The tactic is also extremely measurable—return on investment is easily calculated based on the number of Twitter followers a brand has and the number of people who follow through on the giveaway.
Plus, this is a great way to participate in the online conversation, the constant stream of social media chatter that brands need to join. Our most recent trendletter, “The Now Web,” explores how brands can leverage the Web’s shift to real-time communication.
We included “freebies” on our of “90 Things to Watch in 2009,” and indeed we’ve seen marketers of all stripes deploy the “f” word this year, from Harley-Davidson’s free-for-a-year offer to Stop & Shop’s free generic drugs promotion. The latest tactic in this category: a free kid’s meal with purchase of a regular entree.
The struggling restaurant industry is pulling out every trick in the menu, given that NPD Group reports total U.S. restaurant industry traffic declined 2.6 percent in the quarter ending in May 2009 versus the same period in 2008—the sharpest drop since 1981. “Over half of the industry’s decline this past quarter traced to fewer supper visits from parties with kids,” NPD notes. To win these diners back, IHOP is now touting a month-long offer of free kids meals from 4-10 p.m. A few other chains are trying similar strategies—Fazoli’s is offering gratis kids meals on weekends in August; West Coast operator El Torito does it for lunch on Saturdays—but IHOP’s offer is by far the boldest.
“Free is magic,” Swarthmore psychology professor Barry Schwartz told USA Today. “It will seduce people into eating out who shouldn’t.” It can certainly help generate good will, and these offers are a good way for family-oriented chains to demonstrate empathy with parents.
Earlier this month, Best Buy accidentally put a $3,999 52-inch TV for sale on its Web site for $9.99. Oops! By midday, a Best Buy rep had posted an apology, calling the glitch an embarrassing error; the offer was canceled, and customers who’d bought the bargain TV got their money back. By contrast, in a similar incident last June, Dell Taiwan also refused to fill orders after a pricing glitch, but those who’d attempted to take advantage of it were compensated with discount coupons.
By brushing off the mistake, Best Buy missed an opportunity to spin an error into a brand-building activity, at a time when the company faces tough competition from online rivals and consumers are putting off big-ticket purchase. In his book Free: The Future of a Radical Price, Chris Anderson argues for the rise of free as a business model—the model is based on cross-subsidy, with consumers encouraged to pay for a product via give-aways (e.g., a free video game with the purchase of a gaming system). While it may have been impossible for Best Buy to ship thousands of TVs for $9.99, the company could have compensated shoppers in a way that played off the radical price while creating an incentive to encourage people to buy something else.
As part of a promotion for the third-generation Toyota hybrid, Prius is touring giant flower sculptures outfitted with solar panels to six U.S. cities (they are currently in Chicago). The panels power outlets are at the base of each flower, where people can sit and charge electronic gadgets or take advantage of a free wi-fi connection. Prius is also installing solar-driven fans in bus shelters—a direct tie-in to the 2010 Prius’ solar-powered ventilation system.
As we found in our recent study “The Recession and Its Impact on the Environment,” economic concerns haven’t pushed aside Americans’ environmental concerns. Indeed, 44 percent of Americans fear that the recession will impede the green movement. This clever promotion clearly aligns the Prius with the green cause by illustrating the vehicle’s niche environmental benefits while avoiding trite “green” buzzwords. Brands that can clearly show consumers how they are green will win, as our research suggests consumers’ environmental concerns are here to stay.
Brazil’s level of anxiety is relatively low (among the 10 markets we’ve studied, only Australia and China rank lower), since the country is having a good economic moment despite the global downturn. However, Brazil hasn’t altogether avoided the psychological repercussions caused by a global crisis like this, something that’s showing up clearly on the real estate market.
Nowadays, go to any developer and you’re likely to be offered some kind of gift—a credit for a furniture store, tickets to Europe, etc. The value of these gifts can reach US$6,000. Wouldn’t it be more logical just to reduce the price of the property? But this is not how consumers’ minds work: Professionals in this market say that gifts change how potential buyers think about the business, with gifts making them see the house as more valuable, not more expensive.
These companies realize that in a crisis, value is bigger than price. Consumers feel that it’s smart to “gain” something when nobody is giving anything away. Which doesn’t make much sense, but that’s how people tend to see it. Brands that understand that the crisis is much stronger in people’s minds than in their pockets will manage this situation most successfully. –With the contribution of Felipe Senise
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.
OK, Hyundai, I’ll see your offer of gasoline locked in at $1.49 and raise you: Free gas for the summer for buyers of the SX4!
Known in the U.S. primarily as a maker of SUVs, Suzuki has been hit hard by this downturn and consumers’ shift to smaller cars: So far, sales this year are down more than 50 percent.
So along comes free gasoline, assuaging a concern of many: the possibility of spiraling fuel costs. The memory of last year’s spike lingers, and prices have recently started to climb again. Buyers can thus rest assured that if prices skyrocket, they’ll be protected for 90 whole days! Evidently this is targeted at those buyers who live in the moment, never planning as far ahead as September.
Suzuki is desperate, and it shows. Hyundai’s offer is part of a coherent, comprehensive plan. Suzuki’s is a cry for help.
Yesterday, Hyundai announced an expansion of its successful Assurance Program, which gives new-car customers the option of returning the vehicle if they lose their source of income. Through July, customers will have the option of locking in gas prices at $1.49 per gallon for the next year when they buy or lease eligible vehicles. (See program details here.)
Participants in the Assurance Gas Lock promotion will receive a card for purchasing fuel; card users will be charged $1.49 per gallon regardless of the true price, and Hyundai will pick up the difference.
This is a smart effort to build brand confidence and alleviate consumer anxieties in uncertain economic times, especially as the company’s research has shown that fluctuating fuel prices can be a major deterrent for potential car buyers. But it could backfire if gas prices decline sharply. When Chrysler launched a similar program in 2008, participants got the short end of the deal when gas fell below the fixed promotion price of $2.99 per gallon.
Royal JordanianAirlines has just launched a marketing initiative that’s not about free upgrades or price reductions. Its “Get to Know Your World” competition is simply about consumer engagement.
The mechanism is simple enough: Every Tuesday for eight weeks, Royal Jordanian is publishing ads featuring a photo of a well-known landmark. Contestants must enter the name of the corresponding city on the airline’s Web site. The prize: free tickets with Royal Jordanian to these very places.
The results: Royal Jordanian drives traffic to its site, gets consumers to interact with its brand, generates word-of-mouth and stimulates demand. In this recession-sensitive industry and in this part of the world, where brand-driven contests are not the norm, this effort is spot-on. Today’s prospective passengers are not being drawn in by bargains and promotions. Royal Jordanian is opting for a differentiating and less gimmicky approach, one that has greater potential to further brand loyalty. After all, when offers are comparable, the power of the brand can make all the difference.
Brazil’s level of anxiety is relatively low
Yesterday, Hyundai announced an expansion of its successful 
