The Future of Value - Presentation

1

Value: Eternal Truths/Emerging Surprises

Advice & Implications From Euro RSCG -

January 2008

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Agenda

Part 1.

Marketing Through a Recession: Time-Tested Tips

Part 2.

A Snapshot of Today’s Consumer

Part 3.

The Value Relationship: What Consumers Need

Part 4.

Communicating Value: A Semiotic Analysis

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The Worst Economic Crisis Since the Great Depression

4

Traditional Marketing Advice

5

Playing Offense

1.

Don’t Cut Advertising

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Playing Offense

1.


0

50

100

150

200

250

300

1972 1973 1974 1975 1976 1977

`

Did not cut in

1974 or 1975Cut in both

1974 or 1975Cut in 1974 but not 1975

Cut in 1975 but not 1974

89 106 119

375

8896100

283

195159137

100

0

50100

150200

250

300350

400

1980 1981 1982 1983 1984 1985

`

Eliminated or decreased advertising in both 1981 and 1982

Eliminated or decreased advertising in both 1981 and 1982

Brands that maintain or increase advertising during recessions increase sales 3x those of brands that cut their budgets

Source: Rosberg & American Business Press Study (B. Ryan); McGraw-Hill Research Laboratory

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Playing Offense

1.


2.

Don’t Cut Prices

8

“More Likely To Damage Profits Than Maintain Sales”*

Playing Offense

•

dilutes brand’s positioning/value

•

squeezes bottom line

•

“difficult to escape downward trend”

•

offers new entrants a foothold

1.


2.

Don’t Cut Prices

Source: * Ehrenberg-Bass Institute (B. Sharp); Ananda Roy

9

Playing Offense

1.


2.

Don’t Cut Prices

3.

Innovate, Innovate, Innovate

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Playing Offense

1.


2.

Don’t Cut Prices

3.


Source: * Ehrenberg-Bass Institute (B. Sharp)

“Categories that grow the most [during recessions] are those that

show the highest level of product introduction”*

1930s 1970s

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Playing Offense

1.


2.

Don’t Cut Prices

3.


Source: * Ehrenberg-Bass Institute (B. Sharp)

“Categories that grow the most [during recessions] are those that

show the highest level of product introduction”*

1930s 1970s

During the 1970s, 50% of supermarket categories grew more than 15%.

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It’s Right to Play Offense


Don’t Cut Prices


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It’s Right to Play Offense


Don’t Cut Prices


“The best approach is a version of business as usual.”

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But…

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What We Did

500-person quantitative study in 3 markets (U.S., U.K., France)

Subsets of Prosumers & women (Grocery Shoppers)

Analysis of case studies and academic research

Shop-a-long ethnographies (supermarkets and malls)

Semiotic analysis of changing codes of value

A real-time snapshot of the anxious consumer

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This Recession Isn’t Exactly Like Previous Ones

1929–33 1973–75 1980–82 2008

GDP -13.0% -0.5% -1.9% +1.2%

S&P 500 -86.0% -48.0% -26.0% -38.0%

Inflation -10.0% 11.0% 13.5% 3.8%

Real disposable income has not decreased as much as in

previous recessions

a crisis of money

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Make No Mistake, Consumers Are Afraid

(equal anxiety across age, gender, and HHI)

1 5No Anxiety Severe Anxiety

72%

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And 52% Believe the Crisis Will Get Worse


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And 52% Believe the Crisis Will Get Worse

Anxiety Driven By …

1.

rising unemployment

2.

decreasing property values

3.

lower consumer spending


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How Worried Are You About the Following?1

5N

o A

nxie

tySe

vere

Anx

iety money to retire

paying my bills

keeping up with cost of living

getting out of debt

putting food on the table

putting gas in the car

losing my job

funding my kids’

educations (30-

to 44-year-olds)

22

How Worried Are You About the Following?1

5N

o A

nxie

tySe

vere

Anx

iety money to retire

paying my bills

keeping up with cost of living

getting out of debt

putting food on the table

putting gas in the car

losing my job

funding my kids’

educations (30-

to 44-year-olds)

Much Consumer Anxiety Is Future-

Focused

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But That Future-Focused Anxiety Is Changing Their Behavior Today

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Changing Consumer Behavior

staying home more (62%)putting off major purchasesusing couponslowering the heatreducing travel

buying more store brands (42%)searching for bargains onlinemaking meals from scratchconserving household goodsdriving less

How Are You Reducing Expenses?

15

No

Anx

iety

Seve

re A

nxie

ty

25

A “Homing”

Instinct

66% would rather spend time at home than go out—a 7% increase since 2007

75% agreed this past holiday was more about “family and simple pleasures”

than gifts

Changing Consumer BehaviorHow Are You Reducing Expenses?

staying home more (62%)putting off major purchasesusing couponslowering the heatreducing travel

buying more store brands (42%)searching for bargains onlinemaking meals from scratchconserving household goodsdriving less

15

No

Anx

iety

Seve

re A

nxie

ty

27

less

likely to go to a restaurant

58%

58%more

likely to go to Wal-Mart

28

Active

Bargain Hunting

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Active

Bargain Hunting

I am consumed

with getting the best deal for a service or product I purchase:

30

Active

Bargain Hunting

I am consumed


70% agree

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80% Prosumers agree; many hunting online (overstock.com, eBay)

women increasing visits to garage sales, thrift stores

less “impulse”

buying; more time at shelf

Active

Bargain Hunting

I am consumed


70% agree

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And Despite Their Anxiety, There’s Still Some

Joy in the Hunt

65%57%I enjoy shopping. It’s recreation.

65%48%Shopping is more fun than other activities.

52%42%Shopping makes me feel great.

ProsumersWomen

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The Satisfaction of the Hunt

I looked everywhere

for the perfect cashmere sweater for my husband until I found it at

Bloomingdales for 50% off.

You have to sort through

all the crap until you find what’s really good.

I checked eBay every day,

waiting to find a new Kindle—and I did.

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The Satisfaction of the Hunt

I looked everywhere

for the perfect cashmere sweater for my husband until I found it at

Bloomingdales for 50% off.

You have to sort through

all the crap until you find what’s really good.

I checked eBay every day,

waiting to find a new Kindle—and I did.

Implication

Real value is found. It is discovered. Valuable

things aren’t given away for nothing.

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(The Hunt for a “Good Deal”)

Defining Value

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What Do You Associate with Value?

lowest price

more for the same price/added value

multi-uses

quality

long-lasting

great service

guarantee/warranty

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quality (135)

more for the same price/added value (122)

long-lasting (115)

lowest price (94)

great service (52)

guarantee/warranty (44)

multi-uses (33)

inde

x

100

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quality (135)


long-lasting (115)

lowest price (94)

great service (52)


multi-uses (33)

inde

x

100


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quality (135)


long-lasting (115)

lowest price (94)

great service (52)


multi-uses (33)

inde

x

100


Which seems obvious, but …

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A Surprising Trend

Feb 08 Today

Price is not the most important factor–getting exactly what I want is 46% 58%

I buy based on quality, not price. 36% 60%

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A Surprising Trend

Feb 08 Today

Price is not the most important factor –

getting exactly what I want is 46% 58%

I buy based on quality, not price. 36% 60%

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It seems like stores are saying, “Please take this crap off my hands.”

—Megan McArdle, Financial Analyst, The Atlantic

Low-Price Skepticism

In fact, the International Council of Shopping Centers blames “heavy discounting”

as one of the primary causes of the worst holiday shopping season since 1970.

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It seems like stores are saying, “Please take this crap off my hands.”

—Megan McArdle, Financial Analyst, The Atlantic

Low-Price Skepticism

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So If Price (Alone) Doesn’t Signal a “Good Deal,”

What Does?

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Beyond price, how satisfying are the following “added values”

when you make a purchase?

Top 2 Box Summary

67%

top-notch customer service

61%

freebies (gifts with purchase, etc.)

58%

made by a company I trust

45%

made by a company I admire

44%

scarce/hard to find

38%

conscientious/making a difference

46

Rational Signals of Value

low price

premium quality

great customer service

added value/freebies

47

Value Is Quality

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Rational Signals of Value

low price

premium quality


added value/freebies

Digging Deeper…

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How satisfying are the following “added values”


Top 2 Box Summary

67%


61%


58%


45%


44%

scarce/hard to find

38%


68% Prosumers

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The companies I admire today are …

friendly/approachableethicalefficient

competitiveEnvironmentally consciouscommunity-mindedinnovative

creativevisionary

frugal

(29%)

(< 20%)

(< 10%)

(4%)

honest/trustworthy(49%)

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The Enormous Value of TRUST in a Time of Anxiety

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The Enormous Value of TRUST in a Time of Anxiety

We’ve been betrayed by the institutions we trusted the most

a palpable need to be “taken care of” by trustworthy, decent brands

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The Enormous Value of Trust in a Time of Anxiety

I want companies to show a more human face. 82%

quality products at affordable prices

fair compensation to its employees


providing employees a good work/life balance

products that are safe and reliable

doing all it can to protect the environment

giving back to the community

letting employees share profits

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So What Does All This Mean?

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The Emerging Picture

a consumer very worried about the future

hunting for value today

(and sometimes even enjoying it)

she’s not persuaded by price

but looking for “human”

companies she knows she can trust

to deliver quality goods and an “honest”

experience

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Value Isn’t a Message

Value Is an Experience

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The “Value Experience”

Satisfies …

need for trustneed for discovery

“Look What I Found!” “This is really good.”

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The Value Experience


HUNTING GATHERING

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The Value Experience


HUNTING GATHERINGThe Value Experience

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Satisfying

THE HUNTER

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Satisfying

THE HUNTER

a time for new news—not just new products, but new stories and associations

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Satisfying

THE HUNTER

a time for new news—not just new products, but new stories and associations

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Satisfying

THE HUNTER

make the most of the Internet—empower consumers (esp. Prosumers) to evangelize your brand in the digital world

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Satisfying

THE HUNTER

All Prosumers

The Internet is a very important part of my “shopping”—even if I don’t make purchases online. 78% 90%

I’d like to be part of an online community to share opinions and information about brands. 60% 87%


65

Satisfying

THE HUNTER


66

Satisfying

THE HUNTER

invent promotions that give consumers a sense of discovery or require a little effort (contests, tell-a-friends, etc.)

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Satisfying

THE HUNTER


68

Satisfying

THE HUNTER


Consider online promotions that

reward consumers for their effort.

69

Satisfying

THE HUNTER


promos that help consumers feel like

“insiders”

70

Satisfying

THE HUNTER

new news

digital discovery

promos that help you hunt

Let Them DISCOVER Your Value

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Satisfying

THE GATHERER

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Satisfying

THE GATHERER

promise a better real life; avoid the untrustworthy fantasyland of aspiration

73

Satisfying

THE GATHERER


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Satisfying

THE GATHERER


Value Score+ 40

Value Score+ 15

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Satisfying

THE GATHERER


even traditionally “aspirational” brands must get real

76

Satisfying

THE GATHERER

celebrate time-tested values; be nostalgic without being old-fashioned

77

Satisfying

THE GATHERER


78

Satisfying

THE GATHERER


A Puritan Revival

good clean family fun

79

Satisfying

THE GATHERER

demonstrate a commitment to all; be a brand for the interdependent “us”

80

Satisfying

THE GATHERER


81

Satisfying

THE GATHERER


82

Satisfying

THE GATHERER


83

Satisfying

THE GATHERER


84

Satisfying

THE GATHERER


85

Satisfying

THE GATHERER

embrace corporate transparency; admit to your objectives; don’t pretend you’re not hurting as well

86

Satisfying

THE GATHERER


1932 GM Advertisement:

“There is nothing altruistic about GM research. We expect it to broaden our goodwill. We expect it to help us sell more automobiles.”

87

Satisfying

THE GATHERER



“There is nothing altruistic about GM research. We expect it to broaden our goodwill. We expect it to help us sell more automobiles.”A Thought

What if we told consumers they didn’t need all of our

products—or as much as the ones they buy?

88

Satisfying

THE GATHERER



“There is nothing altruistic about GM research. We expect it to broaden our goodwill. We expect it to help us sell more automobiles.”

89

Satisfying

THE GATHERER

customer service! it’s never mattered more!

90

Satisfying

THE GATHERER




67%


61%


58%


45%


44%

scarce/hard to find

38%


Top 2 Box Summary

67%


91

Satisfying

THE GATHERER


92

Satisfying

THE GATHERER


Shipping and return shipping are free; most repeat customers get

upgrades to free overnight or second-day delivery.

93

Satisfying

THE GATHERER




67%


61%


58%


45%


44%

scarce/hard to find

38%


Top 2 Box Summary

67%


94

Satisfying

THE GATHERER

Build a Genuine BOND OF TRUST





customer service! it’s never mattered more

95

The Gold Standard


HUNTING GATHERING

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pursued new partnerships: Apple

a variety of tones: fun, eco-conscious

new emphasis: food

revamped website with community feature

real family life

political involvement/

community activism

for all: America’s store

indispensable greeters

Moved Away

from Explicit Price Message

97

Communicating Value: A Semiotic Analysis

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R E S I D U A L D O M I N A N T E M E R G E N T

Semiotics Trajectory

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Semiotics Trajectory

100

quantity

generic

necessity

PRICE!

R E S I D U A L

101

Quantity

Generic

Necessity

More Bang for Your Buck

R E S I D U A L

102

quantity

generic


necessity

More Bang for Your Buck right price > right product

more is always better

(“Depression Mentality”)

“brands”

scream: sunbursts!

low prices: a democratic right

103

quantity

generic

necessity


quality

smart/savvy

“masstige”

Better Bang for Your Buck

R E S I D U A L D O M I N A N T

104

quality

smart/savvy

“masstige”



105

quality

smart/savvy

“masstige”


D O M I N A N T

106

quality

smart/savvy

“masstige”


D O M I N A N T

107

imitate premium codes (style > price)

108

(celebrity-endorsed) quality for less

109

appeal to “trendy”

values (value/values)

110

a smart choice, not a cheap choice

111

quality

smart/savvy

“masstige”

Better Bang for Your Buck premium codes

popular values

smart/savvy

D O M I N A N T

112

You can buy cheap things.



You can maintain a great life.

Generic and informational. Stylish and playful.

Save because you have to. Save because you’re smart.


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114




A Formula for Success,but …

115

You can buy cheap things.



You can maintain a great life.

Generic and informational. Stylish and playful.

Save because you have to. Save because you’re smart.

Have BETTER EXPERIENCES.

REBOOT TRADITIONAL VALUES

Save because it’s THE WISE THING TO DO


Right Bang for Your Buck

116



Right Bang for Your Buck

consumption(explicit communication of value)


EXPERIENCE(implicit communication of values)

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Value Values

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118EMERGENT VALUE CODES

•

voluntary simplicity, conscious consumerism

•

transparent brand personality, real product story, simple packaging

•

magazines celebrating cool self-reliance, pragmatism, DIY

•

Craftster, Make, Craft

•

brand as resource or tool for richer experience

•

forgoing ownership and accumulation

•

eBay, auction culture, Craigslist

•

rent a car, not an RV; charming hotel, not a resort

•

concern with responsible choices, relationships, community

•

can be about looking to future instead of past, taking the old and making it new

•

Obama’s Inaugural; Ann Hathaway, Norah Jones

•

less about getting one over on the big brands than about getting to what’s important

•

project a more plural, inclusive, humble, well-

adjusted outlook•

YAWN (Young, Wealthy, and Normal); Obama, Bjork

Experience (vs. Consumption)

Good Enough Revivalist Wisdom

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• Point is that money can’t buy you love, and the best things in life are free. Or, as MasterCard prefers to put it, they are priceless.

• Consumption should always be a fun adventure (e.g., shopping in new places, experimenting with new sorts of things); or an opportunity for conviviality (with family, friends, romantic interest); or an invigorating competition or challenge (auction, haggling, eBay, Craigslist).

• Consumption can be a creative act, involving your imagination, generosity, sense of daring.

EXPERIENCE vs. CONSUMPTION

http://www.priceless.com/

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• 33% more is only better if you really need to eat that much cereal, drink that much juice. Value isn’t only about more, it’s about more of the right thing, cheaper price for the right amount, paying a fair price for something fit for purpose—instead of cheaply made, one-size-

fits-all product or service.

• Making more considered, responsible choices generally; this doesn’t necessarily mean choosing a value brand, but it can.

• Responsible people don’t overreach, don’t greedily, instinctively go for the most/best bang for your buck…but the right bang.

• Notion that austerity isn’t only/always a burden, but can be a means to becoming a better person, deciding what really matters, living lightly on the earth, not being wasteful.

• RIGHT-SIZER: Paying less for something big and wasteful, trendy and pointless, is not saving money. It’s OK to spend more on something that lasts.

GOOD ENOUGH vs. MORE/BETTER

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• We don’t need to retreat back into old-fashioned values (moderation, doing-it-yourself, taking responsibility for choices, concern with community and family). Instead, we can reboot these values, make them our own; make them new, for now. It’s forward-looking revivalism.

• We admire austerity, pluck, resourcefulness, cheerfulness in the face of hard times when we think of our ancestors, so let’s also admire it in ourselves: Value brands can encourage intergenerational, historical, American pride in value-for-money.

• Instead of aping the codes of the latest, trendiest brands, value brands should reference the good old days—but without slavishly replicating the color palettes, design styles, typefaces, and so forth, of those times. Always make it new.

REVIVALIST

vs. NOSTALGIA

122

• “Get smart”

is a pejorative, these days: By always trying to outsmart the other guy, get the most/best bang for your buck, you’ve only outsmarted yourself. Because you ended up buying things you didn’t need, aping a lifestyle you never wanted to live, paying less for things that were too expensive in the first place.

• Value brands can tap into emergent Wisdom coding by avoiding “smart”

messages (you-can-

have-it-both-ways, e.g., cheap and luxurious/stylish/plentiful) and instead emphasizing “wise”

messages (eating locally, buying local products is not only cheaper but better for the community/environment; spending less on the things you need and avoiding things you don’t need gives you more time and money to do the things you want).

• Value brands can tap into emergent Wisdom coding by educating consumers that paying more for something that lasts, vs. buying cheap and disposable items, is not only better for your wallet in the long run but better, period.

WISDOM

vs. SMART/SAVVY

123

Learning from “Ethical”

Brands

community/movement

handcrafted/under-designed

quality above all else

develop a personality (use humor)

124

COMMUNICATION OPPORTUNITIES Owning an Emergent Value Space

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“NEW DEAL”

GENERICS

A populist proposition—excellence for everyone. A world in which there are no “second class citizens”—inclusive, pragmatic, and genuinely simple. The best of what democracy has to offer. The “no logo movement.”

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A new hopefulness with a strong desire to focus on that which is

“meaningful.”

Increased appeal around participative experiences (versus things

that are simply acquired). A secular way of finding meaningfulness. New respect around public service i.e., teachers, nurses, cops, etc. (versus decreased respect for businessmen). Value not as the need to cut out or give up, but as an opportunity to find real meaning.

GENUINE MEANING

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The desire for strong, confident, male leadership—a new idea of the well-adjusted male outlook on the world that is neither aggressive nor self-conscious.

ENLIGHTENED MALE

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A new sense of respect and decorum in which humility, and trustworthiness is valued above extravagance. Prudence, moderation, and appropriateness. Decency, civility, and respect. Emulating the Greatest Generation, while looking to the future.

NEW RESPECT

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Media Inquiries

For inquiries regarding Euro RSCG Worldwide’s studies, please contact:

Lisa Gruber

Global Communications Manager

Euro RSCG Worldwide

T +1 212.886.2018 E [email protected]

mailto:[email protected]

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For more insights from Euro RSCG research, visit www.Prosumer-report.com

And follow us on Twitter

(@Prosumer_report)

http://www.prosumer-report.com/

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The Future of Value - Presentation

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Transcript of The Future of Value - Presentation