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 pitching cost-saving railcards to young people, families and the more senior among us, National Rail has moved from a positioning of pure cost savings to equating those savings with the warmer, cuddlier things in life. It seems that they’re seeking not only to address anxieties about the cost of rail travel (which is on the increase) but also those tied to the fact that we don’t connect face-to-face as much anymore. A headline of “1/3 off hugs with mum” is paired with the line “because a text won’t get your washing done”; “1/3 off hugs with grandad” adds the line “because it’s hard to play hide and seek on a webcam.”
We’ve seen a similar idea from Nescafé in Australia, where a “Get a little closer” campaign urges consumers to “turn off the gadgets, turn on the kettle and enjoy a cup of coffee together.” These campaigns tap into the trend of Savoring Simple Pleasures as well as the growing urge to unplug in an increasingly digital world. Quality face time certainly feels like something the modern world needs. A virtual hug via Facebook really isn’t the same, is it?
We’ve noted how drastically the luxury category changed with the recession. Ostentation is out, practicality is in. And while recent research from Harrison Group found that affluent consumers are less likely to feel guilty about buying luxury goods today than they did a year ago, that doesn’t mean a return to the days of freewheeling spending.
Luxury automaker Acura does an excellent job tapping into today’s practicality ethos with a campaign promoting its spring sales event, dubbed “Driven by Reason.” Six spots feature affluent shoppers making bogus justifications for eccentric luxury purchases. In one spot, a man confidently describes the virtues of his Damascus steel watch—which features a “perpetual calendar with leap year” and over 680 handmade moving parts—and in another ad, the proud owner of a tube amp owner throws around phrases such as “crossover croaxial” but shruggingly admits he doesn’t know much about how it works.
These characters may be wealthy, but they are fools. A voiceover at the end of each spot explains, “There are excuses for spending money on luxury, and then there are reasons,” giving the target consumer permission to find sound justification for buying a new Acura. The spots are funny and should resonate with affluent shoppers, who are increasingly rethinking their frugal habits post-recession.
The latest tactic to motivate shoppers to spend: the members-only sale site. These online outlets require “membership” (usually just a matter of signing up but sometimes a bit more involved), then run flash sales of designer goods or services. The concept started a decade ago with French fashion site Vente-Privee, according to The New York Times, but is a more recent phenomenon in the U.S.—one that makes a lot of sense at a time when most shoppers are still hesitant to shell out for higher-end brands.
It started about three years ago with fashion, a category now largely dominated by Gilt Groupe andideeli but getting more crowded and expansive (beauty offerings are a new feature). More recently, members-only has spread to travel (Gilt-owned Jetsetter, among others), home furnishings (Décor Insider) and mom-and-kids stuff (e.g., bTrendie and The Mini Social).
The concept is a smart one, providing not only the thrill that bargain lovers seek but a sense of urgency that can help override a shopper’s more cautious instincts. For brands, it’s a great way to discount when necessary without cheapening their image (since only members see sale prices, these don’t pop up in Google or aggregator sites). Plus, happy customers may well come back at full price. “We’ve had brands tell us that after one of our sales, the traffic on their own sites has increased in the double digits,” the VP for beauty at HauteLook told The New York Times.
A friend of mine was a loyal customer of Dale & Thomas Popcorn, the gourmet popcorn maker, until they eliminated their PopClub Rewards program. She felt they were punishing all their loyal customers and has been boycotting their store.
A recent Wall Street Journalcolumn lamented changes in loyalty programs run by Starbucks and the New York drugstore chain Duane Reade. Basically, customers have to buy more than before to get the same type of reward. Loyal customers now feel like something is being taken away from them, even when they’re still getting rewarded; they feel cheated.
At a time when customers are choosing cheaper alternatives, companies need to give consumers more reasons to remain loyal, not fewer incentives. And in the age of social media, dissatisfied customers often vent via social networks, amplifying the problem. A simple solution in today’s hyper-connected world is clearly communicating changes well before they occur and grandfathering in older customers.
A “money back” plan to incentivize consumers has been a popular promotion tactic in Egypt. We wrote about Kabnoury, a manufacturer of doors, windows and cabinets that offered “investment certificates” that customers could cash in for a 30 percent refund after a certain amount of time. Some real estate companies have also used this strategy to encourage buyers.
At American Furniture, a high-end retailer that’s one of Egypt’s most popular furniture stores, shoppers who bought any two sets, such as a bedroom and dining room set, could get back a full 90 percent of one set’s cost after five years. Customers received bank certificates that they can eventually cash at Al-Ahli Bank. As an added incentive, they could also pay via interest-free installments over two years with a 25 percent down payment.
Though the refund is delayed, consumers respond to these types of promotions because, as one interviewee said, “We feel that we are getting something out of this offer”—in other words, a good bargain. “Money back” gives consumers the impression that what’s being offered is virtually free.
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.
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.
Assurances and guarantees were a dominant theme in marketing during this difficult year, helping to assuage consumer anxiety about spending. It kicked off with Hyundai’s widely copied Assurance Program. By late summer, GM was offering a “60-day satisfaction guarantee” (“If you don’t absolutely love your new vehicle, we’ll take it back”). In the online-travel category, Orbitz now offers both a “Price Assurance” program (if another customer books the same flight/hotel for less, Orbitz refunds you the difference) and a Low Price Guarantee (find a lower online fare for the same booking and Orbitz refunds the difference and gives you a $50 coupon). Competitor sites are doing likewise.
Now Gap is experimenting with putting this idea in the mall. Its Sprize program, so far only operating in the Vancouver area, has shoppers register for a Sprize card, which they show whenever they buy a Gap item; if the item’s price drops within 45 days, the difference is credited to the card. That credit is redeemable for up to a year.
This seems like a smart response to what’s become a sticky problem for retailers, which have been forced to slash prices this year, in effect training today’s value-conscious shoppers to wait for sales and offers (coupons, etc.). Since Gap’s refund is in the form of a credit, a good percentage of shoppers will likely spend extra once they’re back in the store or forget to redeem it at all. It will be interesting to see whether Sprize provides enough incentive to get bargain hunters to buy now and hope for discounts later.
Looking back on the recession and marketing in Saudi Arabia this year, we’ve seen brands shift from mass generic communication to more targeted advertising. Some brands have been trying to create more value. And for the first time in a while, we’ve seen brands going the extra mile to communicate discounts or value products, which used to be shunned by the cash-laden Saudi.
Two recent examples of this are Wafrah, a brand that has been focusing solely on marketing affordable products (its name translates as “save”), and Petromine, a motor oil brand offering 50 liters of gasoline free with an oil change.
But not enough brands here have directly addressed consumer anxieties, and most remain unconvinced that they need to focus on championing value. In the end, they just keep talking about how premium their product is while ignoring what people are feeling and an opportunity to really connect with their consumers.
As in much of the rest of the world, the UAE’s luxury sector has been the hardest hit segment of retail, as consumers save more and focus on necessities. Luxury purchases are now looked at as long-term investments—which makes one question whether today’s price-sensitive consumers will go for short-term emotional satisfaction at a not-so-cheap cost.
Still, as we previous noted, a “rental economy” seems to make sense at a time of prevailing uncertainty, when consumers are cautious about long-term financial commitments and the appeal of ownership is waning. Indeed, Rent the Runway, a new venture in the U.S., is betting that this idea will work with designer dresses. It will be interesting to see if copycats again pop up around the world or if cooperative consumption—as we’ve previously dubbed this business model—has its limits.
In pitching cost-saving railcards to young people, families and the more senior among us, National Rail has moved from a positioning of pure cost savings to equating those savings with the warmer, cuddlier things in life. It seems that they’re seeking not only to address anxieties about the cost of rail travel (which is on the increase) but also those tied to the fact that we don’t connect face-to-face as much anymore. A headline of “1/3 off hugs with mum” is paired with the line “because a text won’t get your washing done”; “1/3 off hugs with grandad” adds the line “because it’s hard to play hide and seek on a webcam.”
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.
Assurances and guarantees were a dominant theme in marketing during this difficult year, helping to assuage consumer anxiety about spending. It kicked off with Hyundai’s widely copied Assurance Program. By late summer, GM was offering a “60-day satisfaction guarantee” (“If you don’t absolutely love your new vehicle, we’ll take it back”). In the online-travel category, Orbitz now offers both a “
Two recent examples of this are 
