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 Greece, going out for a coffee is a favorite leisure activity, as we’ve previously noted. But the financial crisis has slashed disposable income. Some major coffee chains like Starbucks and Costa Coffee have closed branches and, in some cases, left the market altogether. Homegrown brand Mikel Coffee Co., however, has been doing well since it launched in 2008 at the start of the crisis.
Mikel coffee shops are sprouting up like mushrooms, overtaking established local and international players, and soon there will be more than 100 branches in Greece. In 2013, Mikel reported a gross profit of €991,237. The secret to Mikel’s success is catering to a multitude of consumer needs. The prices are competitive, but not low enough to affect quality and brand perception (indeed, Starbucks has been forced to adjust its prices to be able to compete). Consumers also appreciate the generous freebies (small cakes, savory snacks, etc.) that come with the coffee. The stores are open longer than many competitors, with most operating from 5 a.m. till 11 p.m. or midnight. Mikel also offers home delivery, which is proving very popular, particularly for businesses.
The shops answer Greeks’ need to enjoy coffee out of home and socialize like they used to pre-crisis, and let them do so in an affordable way while still catering to the quality expectations Greeks have for their cafés. The chain has become very popular among youth, and the fact that it’s a Greek success story further helps drive brand preference. The moral of the story: When catering to the right needs with the right ingredients, you can succeed even in a crisis environment.
This week, Banco Popular and JWT San Juan won a bronze Lion at the Cannes Lions International Festival of Creativity for “My Bank, My Space,” a response to Puerto Rico’s eight-year recession that focused on promoting customers’ small businesses. Banco Popular and JWT have been aiming to infuse hope into the Puerto Rican economy for the past few years. In 2011, the bank rewrote a popular song to help stimulate the economy by challenging a reliance on welfare (winning a Grand Prix at Cannes), while in 2012, another campaign transformed an Olympic hurdle event into a metaphor for overcoming life’s obstacles.
Puerto Rico’s economy is still struggling, and after its credit rating dropped to junk status, the bank took its efforts a step further. Focusing on actively generating fiscal development rather than simply inspiring it, the “My Bank, My Space” initiative gave 140 small-business customers the marketing platform and budget to fuel their enterprises. Banco Popular built a full-scale production studio to produce TV and radio spots, using its entire advertising and corporate media budget for the project, which included print ads and an online platform for these businesses to promote their products. The campaign garnered significant media attention, providing additional promotion for the small businesses and for the bank.
Banco Popular successfully combined corporate and human interest to help stimulate growth, not merely speaking to customers’ monetary troubles but tackling them head-on with a pragmatic expediency.
As the U.K. budget is announced, JWT London launches the fourth quarter of its Austerity Index report, marking a full year of data tracking the impact of prolonged economic adversity on British consumers and markets. The report reveals that the younger generation are taking matters into their own hands. Meet the Resilients, aged 18-39, who set themselves apart via a strikingly proactive and entrepreneurial approach to their finances, coupled with a comparatively upbeat attitude. Rather than waiting for rescue from any institution, the Resilients are taking their own measures. They are significantly more likely than any other cohort to have found an extra job or taken on more work (35 percent), bought items specifically to “flip” for profit (20 percent) and even started their own business (11 percent). Their resilience is also in evidence when it comes to a startling willingness to make tough decisions and sacrifices: 4 in 10 regularly skip meals to save money, nearly a third (30 percent) are selling items they actually still need or want, and 18 percent have moved to a cheaper city or town.
Despite being among the hardest hit by the austerity agenda—experiencing higher unemployment and negative earnings growth—the Resilients remain pretty positive. Their Austerity Index measure is 22 points below average, indicating that their assessment of austerity’s impact on their lives is less severe than most. Their positive outlook stretches to their appraisal of others, too: They are more forgiving toward brands and institutions, including the government.
Some of this positivity is likely down to youthful optimism, but we suspect that it’s also due to the generation’s sense of connectedness. This is the cohort that has grown up witnessing and harnessing the power of social networks, so they have greater faith in themselves and their communities to wield influence and to drive change. They may well be more in control than most in the face of austerity.
British Chancellor George Osborne’s Autumn Statement brought positive news for the U.K. economy. The forecast GDP growth for this year improved to 1.4 percent from 0.6 percent and was revised up for 2014, to 2.4 percent. Osborne claims that austerity is working. JWT’s latest Austerity Index suggests this is not the full picture and that many Britons are not seeing evidence of a recovery where it matters most: in their wallets. In fact, almost half of the 800 respondents we polled for our Q3 study reported having somewhere between nothing and £50 in disposable income each month.
At the same time, some have been able to relax the purse strings a little. The “Efforts to Restrict Spending” Index figure has fallen 81 points since Q2. While this is still small-scale movement in the greater scheme of things, it might suggest that consumer confidence is building in places. This suggests a two-speed recovery, one where some find their lives getting back to normal while others continue to struggle. The JWT Austerity Index shows wide disparities in the impact of austerity, with a difference of 251 points between the highest and lowest income groups.
Our finding is supported by recent analysis from Manchester University’s Centre for Research on Socio-Cultural Change, which shows that London and the Southeast have recovered more rapidly than other regions of the U.K. and that higher earners have become more prosperous since the crash compared with middle and low earners. With the U.K.’s first “social supermarket” for those on welfare opening in Yorkshire, it’s poignant to note that 13 percent of parents said they have been obliged to skip meals so their children can eat.
This polarization is not going unnoticed: In our study, 81 percent agreed that austerity has deepened the social divide in our country. And they want businesses to do their part: 65 percent call for brands to help those most affected by austerity. Contrary to Osborne’s assertion, austerity is not working for everyone, and as systems and institutions fail to address the growing chasm, there is a clear opportunity for businesses to seek ways to even out the disparities in economic fortune.
The Austerity Index survey was conducted using SONAR™, JWT’s proprietary online tool. The JWT Austerity Index is a quarterly study that analyzes the impact of prolonged economic adversity on British consumers and markets. The Q3 report is available to download here. The Q1 report is also available for download, here, as is the Q2 report, here.
It’s been more than two years since the date 3/11 took on a special significance in Japan. This disaster followed 20 years of recession that caused the Japanese to shrink emotionally: With the country’s competitiveness declining, the whole society became accustomed to getting overtaken by many emerging countries. Then came that disaster, and many Japanese felt they might never recover. But anxiety seems to improving, thanks in part to the new prime minister, who emphasizes the will to be No. 1 in the world in certain areas and is urging industries to institute pay increases; the stock market is rising for now.
Responding to the inferiority complex that Japanese often have when it comes to comparisons with Western nations, especially Americans, the satellite broadcasting company Wowow recently ran a campaign called “Japan is doing well.” Eight TV commercials, which promoted the company’s monthly featured programs, showed a typical Japanese boy cleverly outwitting a competitive Western boy to attract a girl’s attention in a comical way. The idea points to Japan’s recovery and captures a feeling of optimism that some people are starting to feel.
We’ve seen a lot of brand messages in the past two years that can be categorized as “cheering-up,” “social contribution” and “love and bonding.” It looks like we’re now getting to the stage of motivating beyond optimism.
Last year Banco Popular, Puerto Rico’s largest bank, changed the lyrics to one of the country’s most popular songs in a bid to help end an almost eight-year recession. This week the campaign, created by JWT, won the Grand Prix Lion for public relations at the Cannes Lions International Festival of Creativity.
The bank wanted to help stimulate the economy by challenging a reliance on welfare (among 60 percent of the population) and a mindset celebrated in a hugely popular salsa song, “No Hago Más Ná” (“I Do Nothing”), by the band El Gran Combo. The lyrics include the lines, “It’s so good to live like this, just eating and not working/It’s so good to live like this, just eating, sleeping, and not working.” Banco Popular worked with El Gran Combo on a new version of the song that goes, “It’s so good to live like this, always willing to work/It’s so good to live like this, moving forward, never backwards.” The bank then started a successful campaign to make the new song the No. 1 track in Puerto Rico, generating around $2.3 million in earned media in the process.
The campaign addressed the bank’s core need (a better economy means more business for Banco Popular) and also boosted its image and reputation. At the same time, it helped to spark a political debate and, ultimately, a movement of Puerto Ricans committed to the island’s economic progress.
Last August, our AnxietyIndex research in the U.K. found that concern over the cost of living was on the rise, and the second highest driver of anxiety after the state of the economy. Now, with the U.K. in a double-dip recession, it’s an even worse time to be perceived as a posh place to pick up groceries. So Marks & Spencer—seen as a destination for treats more than everyday goods—recently introduced Simply M&S, a roster of 500 “shopping list favorites” at budget prices. Advertised as “M&S quality now at prices you’ll love,” the new line may help the retailer retain some of its “squeezed middle” customers. Revamped value ranges from supermarkets including Tesco and Morrison’s are also vying for these consumers.
The move is another sign of a trend we termed Navigating the New Normal—the idea that with many economies continuing to struggle, brands will need to retool for highly cost-sensitive consumers, opening up new entry points. While competing on price can be tough for retailers like Marks & Spencer, many consumers are seeking budget options that don’t feel terribly downmarket, giving this upmarket brand some leverage in retaining customers.
Last month, as part of its 375th anniversary, the Crédit Municipal de Paris began forgiving loans for some 3,500 clients with debts of less than €150. The state-run institution, a cross between bank and pawn shop, was created by a 17th century doctor, journalist and philanthropist to provide the poverty-stricken—who would even pawn mattresses for small cash loans—with access to loans at reasonable rates. With the downturn, Crédit Municipal de Paris has seen a 57 percent uptick in clients over the past three years and reports repayments are extending to an average of 24 months, up from 10 to 13 previously. (“Our director likes to say our waiting room is like that of a hospital emergency room,” a spokeswoman told Good. “Everyone comes to it at some point.”)
With a rising number of people down on their luck and scraping together whatever they can to make ends meet, this gesture is a nice way for the institution to show that it’s staying true to the philanthropic principles laid out nearly 400 years ago.
With continued forecasts of economic gloom in various parts of the world, the usual focus on unfettered holiday spending feels out of sync with the times. So some shoppers are embracing the idea of simple pleasures, opting for a less materialistic season. With retailers reporting depressed sales figures in an economically cautious Britain, for instance, The Christian Science Monitor reports anecdotal evidence of less-commercial holiday outings, such as an uptick of interest in carol concerts.
Some marketers are tapping into this mindset by emphasizing relationships and togetherness rather than overstuffed Christmas stockings. In a heartwarming spot set to Jimmy Durante’s mid-century classic “Make Someone Happy,” Vodafone reminds viewers that “It’s the little things we all do at Christmas that make us happy.” The spot shows people giving “free” gifts, such as cleaning the snow off a neighbor’s car or calling in a radio song dedication for a friend.
Jack Daniel’s is more direct in its approach, with the line “It’s not what’s under the tree that matters. It’s who’s around it.” A print ad and commercial show residents of Lynchburg, Tenn.—home to the iconic American distiller—coming together for the lighting of a giant Christmas tree constructed from whiskey barrels. The concept is meant to pay homage to the brand’s 19th-century founder, who supposedly “liked to bring people together at his home during the holidays,” harkening back to a time of simpler celebrations.
As brands and consumers alike work out how to navigate the new normal in the year ahead, watch for marketers to focus on the basic pleasure of bringing loved ones together.
With the New Normal gradually becoming simply the normal, entertainment media is beginning to reflect this reality, as we highlighted in a recent post about the CBS comedy 2 Broke Girls, which has now been deemed a hit. In another example, Sesame Street recently aired a primetime special addressing the issue of hunger and food insecurity, something faced by more than 16 million American children, according to USDA figures. To convey its message, Sesame Workshop—the nonprofit that produces the show—created a new Muppet, Lily, a 7-year-old girl living in a food-insecure household (which the USDA defines as one that’s “uncertain of having, or unable to acquire, enough food to meet the needs of all their members because they had insufficient money or other resources for food”).
Through Lily, Sesame Workshop explored the issue in a positive and healthy way while putting a face—albeit a Muppet’s—on this growing problem for viewers big and small. As the negative effects of the New Normal become more pervasive, expect to see more content creators tackling the struggles of everyday Americans.