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.
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.
Walking around Dublin, you can’t miss the campaign from Unilever. “Who wants lower prices on the Flora range?” one ad on the side of a building reads. “Who wants lower prices on Cif sprays?” another plastered on a bus asks. “Who wants lower prices on Vaseline lotions?” yet another begs. Each time the answer—punctuated by a check mark in a box—is unanimous: “Ireland says Yes!”
Smartly, the campaign is riding the wave that followed Ireland’s overwhelmingly positive vote for the Lisbon Treaty, which includes a pulling together of all EU members in matters of legislation, trade, etc. Following the Oct. 2 vote, there was an air of good feeling (which is thin on the ground), a slight togetherness and almost a sense of maturity in the country. (When the treaty first came up for a vote in June 2008, Ireland was the only country to have a referendum out of the 27 EU states, citing reasons such as loss of sovereignty and a lack of clarity around the specifics.)
What’s even more smart is the fine print in the ads: Unilever says it’s reducing its prices for retailers “to help them reduce prices for you.” A press release about the campaign crams in the facts: “With 1.3 million Unilever products sold in retail outlets nationwide every day in Ireland and an average price reduction of 11 percent across 70 percent of its 900-strong brand portfolio, Unilever Ireland’s price reductions will play a significant part in delivering real value to consumers on premium brands.”
With Ireland’s unemployment rate hitting 13 percent, its citizens need all the help they can get. Unilever trimming prices positions the company as an ally in trying times and will help to instill good will in the consumer not only now but in the years to come.
I understand that retailers still have to keep turning over stock during hard times. But some are going about this in a way that does serious damage to their brands. JoS. A. Bank, the North American menswear chain, had a reputation of offering pretty good stuff at a fair value. That image is gone, as their recent promotions have me believing their prices are pure fiction. The base offer is now “buy one, get one free,” and they also do a “buy one suit, get another suit AND a sport coat free” on Mondays and Tuesdays, with similar deals available on Wednesdays and Thursdays.
In our first AnxietyIndex Quarterly earlier this year, we advised that if tactics aren’t approached in a branded way, brands risk becoming genericized. Like I said, times are hard, but JoS. A. Bank’s strategy has me convinced that (a) The original prices were way too high, or (b) The only time to shop there is when the promos are crazy good. Neither option is good for the brand. There has to be a better way to move clothing.
This Christmas won’t be a merry one for retailers, which are faced with frugal consumers still anxious about the economic upheaval of the past year. In the U.S., the National Retail Foundation is forecasting a 1 percent drop in total sales for November and December combined. That’s a decline over last year—which is considered the weakest holiday season on record (that is, since the Commerce Department started tracking retail sales in 1967).
Not surprisingly, the NRF says it expects to see aggressive price promotions, with some prices, notably in electronics, dipping below last year’s. Wal-Mart is setting the tone: Last year it priced 10 popular toys at $10 for the holidays, and this year—after working with toy makers to create new items and institute cuts on existing ones—it’s expanding the offer to more than 100 toys. To achieve the $10 threshold, the retailer cut prices by up to 50 percent. Target countered by saying it will match Wal-Mart’s prices where it sells the same items.
Along with price wars, expect to see retailers “turning back the clock, conjuring images of hearth and home,” as the Associated Press recently reported. Comforting consumers by tapping into nostalgia has been a popular tactic during the recession, as several of our contributors have noted, and it will dominate this holiday season. Where whimsical and splashy characterized marketing in recent years, now it’s all about old-fashioned and traditional. Seen any good examples? Send them our way.
What screams value more than an unlimited quantity at a fixed price? Given today’s ultra-value-conscious consumers, the “All You Can …” offers are increasing, and they’re no longer limited to crab legs. JetBlue did an all-you-can-fly for a month, for $599. The Epic Pass in Colorado allows for unlimited skiing at six mountains, also for $599.
Since selling tickets to Detroit Lions’ games is a challenge—a local depression, the nation’s highest unemployment, the first 0-16 season in NFL history—the team has launched an “All You Can Eat Seat.” It includes the game and as much junk food as a fan can stomach, for the same price as last year’s ticket alone.
Since this won’t damage the Lions’ brand, it’s a good idea, as it shows that the organization is trying to make the experience more affordable for downtrodden fans. That counts for something around here right now.
One homemaker tells a story that echoes the situation across many homes: After a decade or so of competently managing the household budget, she recently felt compelled to ask her husband for a raise in her “monthly,” colloquial shorthand for the monthly budget she gets to run the household. For the first time in years she had fallen short, due to the rising prices of staple foods. The cost of sugar, for instance, has more than doubled, and the story is the same for potatoes, tomatoes and so forth, as we’ve noted.
Apart from asking for a raise, the homemaker is solving the problem in other ways. This might mean changing suppliers after years of loyalty; instead of going to the neighborhood mom-and-pop store at her convenience, she travels farther, at a specific time, to the outskirts of the city to buy her weekly veggies from the wholesaler.
Brands can help these homemakers with timely solutions: super-saver packs, tips and recipes for stretching the budget, promotional wholesale-price days. In these “doubling price of sugar” times, brands must help homemakers sweeten the pill.
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 
Walking around Dublin, you can’t miss the campaign from Unilever. “Who wants lower prices on the Flora range?” one ad on the side of a building reads. “Who wants lower prices on Cif sprays?” another plastered on a bus asks. “Who wants lower prices on Vaseline lotions?” yet another begs. Each time the answer—punctuated by a check mark in a box—is unanimous: “Ireland says Yes!”
I understand that retailers still have to keep turning over stock during hard times. But some are going about this in a way that does serious damage to their brands. JoS. A. Bank, the North American menswear chain, had a reputation of offering pretty good stuff at a fair value. That image is gone, as their recent promotions have me believing their prices are pure fiction. The base offer is now “buy one, get one free,” and they also do a “buy one suit, get another suit AND a sport coat free” on Mondays and Tuesdays, with similar deals available on Wednesdays and Thursdays.
What screams value more than an unlimited quantity at a fixed price? Given today’s ultra-value-conscious consumers, the “All You Can …” offers are increasing, and they’re no longer limited to crab legs. JetBlue did an all-you-can-fly for a month, for $599. The 
