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.
When you think “luxury,” you likely think of anything but Detroit. Chrysler’s Super Bowl commercial assumes as much, with the narrator asking, “What does a town that’s been to hell and back know about ‘the finer things in life?’” The two-minute ad answers that by showcasing the Chrysler 200 as a car rendered luxurious by Motor City’s “hard work, conviction and the know-how that runs generations deep.”
The ad does a great job of burnishing the image of Detroit, considered one of the most miserable cities in America but also one of our “Things to Watch in 2011,” based on excitement around the city’s progress toward remaking itself as a smaller and more efficient town and the influx of creative entrepreneurs. The spot taps into the hope many Americans feel for the struggling town, which is almost a metaphor for the country itself (the ad contrasts Detroit with the more glamorous America, saying “We’re from America, but this isn’t New York City, or the Windy City, or Sin City”).
While one might feel proud to drive a car built by the people of Detroit, the message is a bit of a stretch. Detroit is still down and out, and it’s not quite convincing that a city’s toughness and resolution translate to an ability to manufacture luxury, especially if “it’s as much about where it’s from as who it’s for,” as the spot proclaims. By contrast, in Levi’s “Go Forth” campaign, we see the people of working-class Braddock, Pa., going to work in their Levi’s jeans. We’re not so sure many more Detroiters other than Eminem (who stars in the spot) will be driving Chrysler 200s around town anytime soon.
Home improvement retailers have been hawking DIY as an empowerment tool for some time, but the downturn has seen some other brands looking to the same strategy. Consider iSold.com. The U.K. real estate service, backed by supermarket chain Tesco, is offering a package that includes home valuation, online and print advertising, and agent-led open houses for £999 and up. The service aims to straddle the line between pure online selling—via eBay, for example—and agent-lead sales. Considering that U.K. real estate agents earn 1.5 to 2 percent on each home sale, according to the iSold site, the package could save sellers thousands of pounds. Home owners are responsible for negotiating selling prices and meeting with prospective buyers, but that could be a good thing for iSold. Owners made to feel helpless by the recession might like a turn in the driver’s seat.
In a country with a melting pot of cultures—local citizens make up only around 20 percent of the population—anxieties vary greatly among residents. Since locals have the security of strong government support (free education, health care and assisted housing loans), it’s not surprising that anxiety levels for Middle Eastern expats are higher across all areas of concern.
According to our most recent AnxietyIndex survey of 503 adults conducted in October and November 2009, the greatest source of angst in the UAE is economic and financial, as the nation saw drastic layoffs and organizational restructuring starting in the second half of 2008. After the collapse of the real estate market, the inflated cost of living did not drop fast enough to reflect the end of the period of speculation, placing purchasing power and family security high on the list of anxiety drivers.
Middle Eastern expats are concerned about a shift in societal values, health issues (we saw a surge in health advertising and psychological advice) and the rising unemployment rate. Locals are not as concerned about societal values, as theirs are preserved within a close-knit community. Interestingly, for a nation criticized for its lack of environmental care, locals’ major concerns revolve around the impact of global warming and food prices.
The outlook for the next six months is pessimistic, with anxiety centered around the cost of living and food prices. Job security, however, is expected to improve.
Click here to download the full UAE AnxietyIndex report from the Trends and Research page.
In Spain, the downturn has not yet slowed, and the economy is still under a dark cloud. Brands are feeling this lack of oxygen, and new campaigns are few and generally conservative. One area where we’re seeing some activity is brand stores. This trend is being accelerated by the real estate crisis, which has created lots of cheap opportunities. Finally brands are playing with shops as experience spaces for consumers.
First, Danone opened up a store in Barcelona, a huge yogurt bar and restaurant project. Now Casa Knorr has launched in Barcelona and Madrid, with free cooking and nutrition workshops for kids and adults, as well as product tastings. Workshop attendees will learn to put together a weekly menu and prepare healthy snacks, and even be accompanied on instructive supermarket shopping trips by a chef and dietitian.
These consumer experience labs are a smart investment. It will be interesting to see whether they become a permanent part of the marketing mix once the downturn ends.
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
One real estate company in Cairo is finding a novel way of attracting wary customers. Oriental Coast, a local developer in Marsa Allam (along the Red Sea), is trying to gain an edge over its competitors by guaranteeing buyers an 8% return (per year) of their property’s price—by renting it out for them. This incentive is especially appealing to buyers of summer homes, which are generally considered tricky sales due to their limited use during those non-summer months. Providing buyers with a quick rental solution is a smart way to encourage a quick sale.
Could the American dollar be a real estate firm’s ticket to success in Egypt’s stagnant real estate market? With ads touting a monthly installment of as low as $120 without interest, Murabahat is using a novel strategy to get the attention of increasingly anxious consumers. Many Egyptians buy foreign currency: The Egyptian pound is extremely undervalued, and foreign currency has become synonymous with value here. Plus, when readers see a low price in comparison to what the amount would be in Egyptian pounds, their interest is more likely to be piqued. Although the offer may come across as a deceptive move, it’s likely to encourage consumers to consider Murabahat, with the added bonus of helping to increase circulation of a strong foreign currency in a relatively stagnant market.
Now AIG Israel is putting a creative spin on the tactic: It’s selling mortgage insurance for people afraid they’ll lose their job after taking on a mortgage. If the fear is realized, AIG will pay the person’s mortgage for up to a year. It’s a way to sell security to consumers afraid of long-term financial commitments—and, for a brand that’s facing serious challenges, a way to attract consumer attention.
As noted in previous blog entries, brands are increasingly resorting to “free” as a price tag to stay competitive, from “buy one, get one free” promotions and free shipping to various creative iterations. With Egypt’s biggest mobile service providers, MobiNil and Vodafone, neck and neck in the market, a new company is trying to gain a foothold with a promotion that some consumers might find hard to resist: Etisalat promises to pay customers’ phone bills every other month for six months.
And Palm Hills Developments, one of Egypt’s real estate giants, has come up with an interesting twist on “free” as competition in the real estate market continues to tighten. The offer is “Free Homes” to customers—the catch is that buyers actually pay 80 percent more for a property than its going price, receiving an investment certificate with each installment paid. When the installments are completed after seven years, property owners can cash in their certificates, which will be worth the total property price. At least in the short term, it’s a clever way for Palm Hills to raise cash and attract investors.
An Egyptian developer is adopting an incentive practice to lure potential home buyers to new developments: Purchasers of units in the Ashgar Heights luxury compound outside Cairo will receive a free Chevrolet Optra. Similar offers have been seen in the U.S. They help motivate consumers anxious about investing in an unstable property market—especially those who must give up thoughts of a new car if they’re putting their savings into a new home—and help protect housing prices so that those already living in the development don’t feel their investment has been devalued.