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The state of the economy is clearly going to crimp gift giving plans for most folks this year. However, it appears our pets will continue to make out just fine. A report recently published by MSNBC shows that while 84% of consumers say they are going to cut back on gift giving this year, only 23% are going to do so with their pets. (You can read the full article here: http://www.msnbc.msn.com/id/27582273/from/ET )
This finding certainly comes as no surprise to me. Earlier this year we reported findings from a Trone consumer survey that showed pets to be the last place consumers planned to cut spending, faring better than even our children. (Trone report here: http://www.trone.com/index.php/category/consumer-snapshots/pets/ ). What we know is that for a large percentage of “pet parents” their pets are much more than mere “animals,” they are part of the family. In fact, we have identified 8 distinct segments of dog owners and 6 segments of cat owners. Contained within these segments are 44% of dog owners and 33% of cat owner who are highly bonded with their pets. For these consumers, their relationship with their pet drives spending, and is a much better predictor of how much they’ll spend caring for Fido than any socioeconomic variable.
So, if you’re in the market for a Shark Attack Hoodie, you’d better hurry. There are only 17 shopping days till Christmas and it looks like demand for doggie gifts will be at an all-time high!
Standing in any retailer across the country and seeing a national brand name priced 2 to 3 times higher than the private label brand sitting next to it, are you tempted to pick up the private label or do you stick with the brand?
As a self-proclaimed brand loyal consumer and mom, I, along with 58% of the Trone Consumer Panel concerned with finances, am using more coupons. But unlike the 54% who are frequently or very frequently switching to less expensive brands because of the economy, I have only dipped my little toe into the world of private labels.
Some would say my marketing background should tell me that with the national brands the customer is not only paying for the name but for the marketing investment as well. But growing up with brands and believing national brands equate to expertise, quality and consistency, it’s hard for me to rationalize the switch. Although I have to admit, there are some private labels that are appealing. From the design of the packaging to the direct comparison information, it’s hard to pass up. I’ve officially made the switch in allergy medicine and baby shampoo, but diapers, baby food, clothing and the list goes on, not so much.
What is your favorite private label product? What product are you never willing to walk away from the brand? What categories have you had success with private labels – Groceries, Home Improvement, Apparel, Accessories, Health, Beauty Aids, etc?
I am reading a book right now that talks a lot about the ‘new normal.’ The author writes about when things happen in our lives that permanently change what was previously normal for us. Life changing events like the death of a spouse, birth of a child, an accident, a job loss or pay cut. The new normal can be a change for the good or more often than not, a change that we think of as bad in our lives. I would bet that nearly everyone reading this post has gone through at least one new normal event in the past year. I have probably had more new normal’s in the past year and a half than I’d had in the previous five years combined.
The new normal for many of us that I’d like to discuss here is about money. I can’t name one friend, co-worker or family member that hasn’t been affected by the current economic situation in some way, shape or form. But through all of the bad, I have been amazed at the things that we’re all doing now and at how it feels like we’re starting to understand that, together, we can all get through these tight times. We’re clipping coupons and proudly proclaiming how much we’ve saved by using them. We’re getting to know each other better in car pools and breakrooms over packed lunches. We’re growing gardens. . . and sharing the food that’s coming from those.
So I guess on the one hand, the new normal that we’re all faced with is bad – we have less money to live on. But I prefer to believe that this new normal will in the long run be good for us as we have found ways to adapt and are better people for it. I hope that we all return to a more comfortable, confident in our economy state of mind, but I hope that the lessons of getting by with less and sharing what we have to help others do the same never leaves us again.
What are some things that you’ve learned and would like to share about the new normal?
What is it that separates brand leaders from others? Is it spending? I believe that myth has been disproven many times over – how many brands have spent millions, only to fail (Pontiac, anyone?). Perhaps it’s time/longevity? Again, that hypothesis is easy to disprove. How long did it take the iPhone to become the leader in the mobile device market, one week?
The reality is that no one thing creates a brand leader. Such status cannot be bought, but neither is it free. Last month Trone updated our consumer study on brands and the economy, and the news was indeed grim . Consumers have made serious changes in their shopping behaviors and for the most part, brands have suffered and will continue to do so. However, there are brands that consumers are going to stick with, even when money is tight. Kraft was mentioned by an astonishing 13% of all respondents (N = 1,638) to the open-ended question, “What 3 brands won’t you give up, no matter what?” To be sure, Kraft spends money on it’s brands, and it’s been around a long time. But how do you explain brands like Fisher Price making the top 20?
Brand leaders follow several key strategies:
1) They invest in their brands – note to marketers, this isn’t code for “advertising.” Rather, they seek to understand their consumer and work to meet their needs. This is not about “selling” products. It’s about giving your customer what they want.
2) They know who they are. A favorite quote of mine is “A principle isn’t a principle until it costs you money.” Brand leaders know who they are and what they stand for. Brand leaders not only delight their consumers, they also don’t confuse them. Whether through product, price, distribution or promotion, they stay true to themselves.
In today’s economic climate it’s all to tempting to abandon your core brand principles, or to stop communicating with your consumers. But brand leaders, the brands with staying power, know who they are, what their consumers want and nuture those relationships, even in times like these.
Mom’s financial burdens are impacting her brand relationships, but not all of them.
As we have reported in the past, short-term economic influences are affecting moms’ behavior and their attitudes toward brands. A recent study of 1,638 moms on the opinions@trone panel was designed to confirm our prior learning and to gain incremental understanding of how these changes are being manifested.
The study confirmed that short-term economic issues are mom’s single greatest source of stress, surpassing even the anxieties associated with their hectic schedules and the pressure to get everything done. This is both a reasonable and understandable phenomena as 53% have experienced a decline in income of an immediate family member, resulting from either a layoff or a reduction in hours and/or wages.
Taking steps to cope.
The most common thing mothers are doing to deal with this financial pressure is making sure they aren’t “leaving money on the table.” Sixty-six percent report being much more cognizant of in-store offers and 58% are using more coupons. Beyond this they are displaying a surprising willingness to change brands.
Fifty-seven percent are frequently or very frequently shopping at less expensive stores while 54% are frequently or very frequently switching to less expensive brands in some categories.
The impact is being felt across the board.
Virtually every member of the family is experiencing this change to some degree. The same holds true for nearly all the product categories moms buy. The biggest change is occurring in packaged goods where more than two-thirds of moms have modified their behavior. In canned goods, for example, 14% report shopping at different stores for the same brands, 34% are buying less expensive brands at the same stores and 15% have changed both the stores they shop and the brands they buy.
Beyond consumables, moms are most likely to change the brands/outlets they shop for their children first, next themselves and finally dad and the family pet. Lest we think that moms have been driven to an as yet unseen degree of selfishness based on the economy, we need to bear in mind two things about purchases for children. First, their goods are short-lived and second, their needs are not easily deferred. Mom can delay purchasing that new outfit for herself, but if the children have outgrown their clothes, purchases must be made. And, where mom’s outfit might last years, the kids’ items might make it through a season.
Moms’ traditional unselfishness was demonstrated in another line of questioning. When asked about their willingness to change to less expensive sources for a gift for their child or clothing they’d wear to a special event, moms were 68% more likely to deny themselves.
Willingness to change has its limits.
While it’s not true for all, most moms have limits. There are some brands they just don’t want to give up—under any circumstances. So, as a part of the survey, we asked them on an unaided basis to name three brands that fell in that category. Considering the tens of thousands of brands that moms interact with, from Carter’s® to Coach®, Tampax® to Tiffany®, it is surprising that there is any consensus at all. But, there is. Of the 88% (12% are brand ambivalent) of the respondents who indicated one or more brands they would never want to give up, 20 brands were mentioned by greater that 1.5% of the sample. As the following brand preference cloud demonstrates, some were mentioned far more frequently than that. In fact, the leader (Kraft®) was mentioned by a remarkable 12.8% of respondents.
There are two stories to this data.
This grouping tells two important stories for marketers. It identifies, on the one hand, how strong a brand relationship can be and on the other just how fragile. Given the billions of dollars spent by the tens of thousands of brands with which moms interact, why did these 20 rise to the fore? Clearly, recency is an issue, but that does not explain the presence of Sony®, Levi’s® or Fisher-Price®. These brands share no common attribute or application. Some are mom’s brands, some are for the kids and some have application across the entire family. Some are consumables and some are durables. The only thing these brands have in common is the one thing that all marketers strive for: They have built a sustainable relationship with their customer.
Over the last six months, almost every marketing company has had to call their agency to inform them that the budget has been cut. Not big news this year given the tough economy. Wisdom says to increase marketing spending when the business is down. Increase demand and increase sales, right? Well, I realize that is not reality when the CEO or the CFO calls in todays market. This type of year tends to create a very “inward” focus for everyone and that mindset makes marketing professionals think about cutting costs and saving money. External focus is often overlooked. Marketing tactics and programs are cut very quickly but rarely is there a change in the strategy or a new focus on a narrower target audience. The result is a dilution of the effectiveness of marketing spending.
There is a better solution. In tight times, agencies should be recommending to clients to narrow their strategic focus first and then realign their spending. We have all heard the saying, “all customers are not created equal”, yet too many times the spending plan does not reflect this type of thinking. Similar programs are conducted as the year before but they just reduce the amount spent. In these tough times, it is critical to focus the strategy and the budget where it will have the biggest impact on the business. That might be retaining your best customers, narrow your target for your promotional or media spend, increasing your share among your mid tier customers or a number of other strategies .
So unless you have an endless budget like our friends in Washington, take the time and ”focus”, dont just “cut”. These are not easy decisons to make but taking the time to think through the challenge will make a significant difference in the performance of the business.
A small bank based in Fort Worth Texas went after the big guys. And so far, it’s working. One billboard at a time, they are riding the wave of consumer opinion that the banks must have done something wrong if they needed TARP money. By letting people know that Worthington Bank didn’t take any of that money, they are creating a halo effect. People are feeling more comfortable putting their money into Worthington. But comfort isn’t the only motivating factor. It’s pride. Most people have worked very hard for what savings they have and take pride in knowing that they’ve been able to survive on their own without much help from others. They relate to a bank that does the same. It’s not that they wanted the economy to go into a tailspin or that they don’t think people should get help when they need it. But banks are not exactly an easy institution to sympathize with. And consumers understand that no matter how small their account is, what they do with their money is in fact a vote for what they stand for. Understanding this consumer insight has proved to be priceless.
Billboards saying things such as “Just say no to Bailout Banks. Bank responsibly,” “Did your bank take a bailout? We didn’t,” and my personal favorite that was placed next to the local zoo “Don’t feed the animals” with the word animals crossed out and “big banks” scribbled in.
And while big banks are crying foul saying that TARP money was important and helped a lot of people out, this little bank is growing rapidly. To the tune of $5 million in new deposits since the launch of the campaign. In their own little way, consumers are saying enough is enough with the poor me mentality of big banks.
After all, if we’ve learned anything from the automobile manufacturer Ford lately, it’s that stability is still part of the American dream.
Here is a video about the work. http://www.youtube.com/watch?v=9SNCuQ04ang.
Some of the back and forth about the campaign:
http://www2.snl.com/Interactivex/article.aspx?CdId=A-9218440-12642
http://www.bizpress.net/display.php?id=9849
Sometimes it takes an outside perspective to see if you’re going the right way, or the wrong way. When you’re driving your own car, or brand, dealing with your day-to-day challenges and battling for resources it can be hard to take the long view. It’s all too easy to say, as John Candy does in Planes, Trains and Automobiles, “how do they know where we’re going?” I’ve got bad news for you – they know exactly where you’re going.
If you’re cutting your investment in marketing today you are going the wrong way.
In spite of study after study, when the economy turns south marketers cut spending. Empirical evidence tells us all it’s the wrong thing do, but how can we resist? (For some ideas, here’s a great article from Harvard Business School professor John Quelch. http://hbswk.hbs.edu/item/5878.html )
For most companies, their marketing spend, while large in absolute terms, isn’t a huge line item on the corporate ledger (direct sellers like Temperpedic and The Snuggie are exceptions), so why does it get cut? The answer is quite simple: because it’s easy. Marketing dollars, particularly advertising dollars, when cut fall directly and immediately to the bottom line. No one has to be laid off. Other difficult decisions can be avoided. And since too many CEO’s view marketing as an expense rather than an investment, it’s the first thing to go. The reality is that CEO’s need to look at marketing as more of a balance sheet item than income statement item.
”…some of the biggest names in branding (including Procter and Gamble who survived the crash of the 1930s) are suggesting marketers at all levels do just the opposite [of cutting budgets] and are even going as far as encouraging companies to stay on track, but use dollars carefully.” From “market onward, market stronger” – positions shared at recent annual Association of National Advertisers Conference.
”It is incredibly important to be risk-takers in the economic climate we’re in. People have the tendency to pull back. In economic times like these, you don’t hunker down and go in the bunker.” Hewlett-Packard VP and CMO Michael Mendenhall
Those brave souls who can fight, and it is a fight right now, to invest in their brand will see their investments deliver meaningful dividends.
Do you know where you’re going?
This one is a downer. Just call me the harbinger of doom.
All businesses should have a solid and explicit plan for how they are going to keep running in the event of a disaster. This is part of developing a Business Continuity Plan. Who do we call first? How do we make sure everyone is OK? What actions do we take to restore “business as usual” as quickly as possible?
All good and important questions. And ones that should be answered on a personal level as well.
What’s that? You already have the family fire drill, speed dials to public servants and a rope ladder that will get your kids from their bedroom window to within jumping distance from the ground? Excellent! Sounds like the safety of the most important things are covered.
What about all your digital assets?
They’re all in the cloud?
Uh-oh.
It is my suspicion that, during the next year or so, many companies that have sprung up with Web 2.0/cloud (yes, I know they’re not the same, but that’s not what I’m covering here) applications that are low or no cost will end up having to discontinue services. I trust their motives, and all of their simple down-to-earth language on their sites and in their agreements, but I’m not so sure that they will have the resources available to allow everyone to “get” all of their assets from them.
I’m not talking about companies like Google (gmail, picasa, etc.) or Apple (MobileMe)…they will probably just continue to take a loss (if it comes to that) or increase costs. But, if you have a significant portion of your life (online financial software, to-do lists, family wikis/contacts) and memories (pictures, videos, etc.) with some of the smaller application providers, I would recommend an audit of sorts:
- Figure out what data in the cloud you can’t afford to lose.
- Peruse their service agreements to see what level of service you should expect.
- Even if they make strong promises related to service, figure out a way to download that data to your computer locally.
- Consistently make sure that backup solution you implemented last year (right?) still works…actually try to restore a file now and then.
This is a good practice even if you only store data with the big guys, too.
Sometimes it is just necessary to go old school.
By old school I mean buying two external hard drives, keeping one attached to your computer and backed up and another one off-site (trade with a friend you trust, safety deposit box, etc.). Swap and restart backups as often as you can afford to lose the information.
I really don’t want to think that the economic times we are in will force those high quality small companies to stop providing services, but, if they do, you are the one responsible for securing your data.
Here’s to hoping I’m wrong.
Moms modify purchasing behavior more than any other customer group.
The economy. It’s become a daily reason for not buying, not going, not doing and not splurging. And it’s affecting everyone. But no one quite so much as Mom.
Trone recently polled 1,140 mothers with children still at home to find out how the waning economy was impacting their lives and routines. We then compared their answers to those of the 2,181 other respondents and noted some clear distinctions.
Stress levels are up.
It’s not extremely surprising. But it is disturbing. Our panel of moms indicated many more sources of stress than other respondents. They’re frustrated that there’s never enough time to get everything done. They’re concerned about their relationships with their spouses. And most importantly, they’re worried about how the current economy will affect their families and their children. Moms were actually 26% more likely than other participants to say that the long-term implications of the economy are contributing to their stress level. The difference jumped to 29% when asked about short-term financial issues.
Spending is down.
Moms are doing everything they can to plan for their family’s financial future—including reducing spending on everything from health and beauty aids to home furnishings. They’re spending less on the things they need and deferring purchases of the things they want until a later date.
Across the board, moms are being more aggressive than other segments of the population to pursue savings opportunities. Coupons are becoming more important and family entertainment and vacation allowances are being cut.
Even the woes of the automobile industry are partially attributable to the recent behaviors of families with children at home. Moms are 25% more likely than others to defer a planned automobile purchase this year. And, among those that must buy, most are more likely to purchase a smaller or used car to save money.
Brand relationships are at risk.
Here’s the big one. Moms’ economy-driven behaviors are affecting brand loyalty.
In all packaged goods categories, moms are more willing than others to switch both product and retail brands to lower expenses. Take groceries for example: Among moms looking to reduce spending on groceries, 66% are very or extremely likely to shop at less expensive outlets and 77% will switch to less expensive brands.
The effects don’t stop at packaged goods either. While moms will obviously do their best to protect their children from feeling the impacts of the economy, the same can’t be said for themselves or the family pet. Fifty percent of moms plan to reduce spending on themselves this year by shopping at less expensive outlets (78%) and switching to less expensive brands (73%). Similarly, over 75% of moms that are interested in saving on pet expenses plan to try different retailers or seek cheaper brands.
Brand communications must adapt.
Two things are obvious.
- The economy has changed Mom’s spending behavior.
- Brands must address this new Mom differently.
The tactics that have been used to reach and speak to moms in the past are obsolete. Every message that a brand puts out into the world must now pass through a financial filter. Do I need it? Do I want it? Is it worth it?
In the future, manufacturers and retailers alike will need to consider this financial filter and stay in touch with their customers’ changing needs. Constantly evolving will be the key to keeping their brands relevant in these trying times.
