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.
Photo Credit: www.knorr.es
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
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.
“If you lose your job, we’ll cover for you” is a strategy we’ve noted that’s proved popular with a range of brands, from automaker (Hyundai) to airline (JetBlue) to phone company (Spain’s Telefonica). The New York Times also discussed this trend in an article that appeared today.
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.
Distinguished Indian strategist CK Prahalad’s words, “It’s important to break the tyranny of dominant logic and bring back a dash of creativity” have never been more relevant.
One application of this idea is to challenge the assumption that the whole nation will uniformly experience slowdown. Marketers primarily look at big cities because they are easy consumer centers. But in current times, smaller towns and cities need to be evaluated more seriously, as the effects of economic crises haven’t really trickled down to them.
For example:
• Jones Lang LaSalle has identified 30 Tier-3 cities—where 41 percent of India’s wealth resides—as hubs of real estate activity.
• Hospitality group Global Hyatt Corp has planned a $200 million foray into midsize hotels in Mysore, Lucknow and Indore over the next four years.
• The NASSCOM (National Association of Software and Services Companies) president has pointed out 43 tier-2 and tier-3 cities as primary growth centers for IT/BPO sector both immediately and in the long term. BPO industry vouches for their lower operational cost, good talent and regional language expertise.
In short, to bring the optimism back to your business, it pays to remember that small is the new big.
Even with interest rates at a historic low, the global housing market remains in freefall, forcing property marketers to dream up ever more innovative methods of getting customers to look their way. In the U.K., marketers have tried all the usual tactics, from price cuts to part-buy-part-rent and shared-ownership schemes. One promoter, MIA Developments Ltd., is working a particularly interesting angle: giving away a property worth £8.25 million in prime Central London … for £50. You read that right. The news may be all gloomy in the world property market, but one lucky winner out of the anticipated 200,000 entries will be smiling in a week’s time. To enter, participants must buy a £50 ticket or either of two MP3 players from CyCoTechUSA, priced at around £100.
As if being a property millionaire isn’t enough motivation, participants are also contributing to a good cause—£3 from every entry is to be donated to Great Ormond Street Hospital Children’s Charity. MIA Developments seem to have all the flanks well covered. And a quick calculation will tell you that it also stands to make a tidy profit on this one.
