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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!
Lonnie and Kara here, tasked once again with critiquing a new advertising campaign that we really feel passionate about. Here’s the problem: there aren’t many right now. This is the time of year when local car guys try to sell you a clunker and marketers hold their dollars back for when American Idol returns to the screen.
So for this post we picked a campaign that has been around for a while. But these babies are still cranking out an ad here and there. See the latest E*trade baby commercials.
What do we think?
Kara: They’re freaking hilarious! E*trade took a subject that’s been making everybody cringe—the stock market—and made me laugh. I mean, how can you not laugh at a baby calling an old guy in a sweater vest “Shankapotamus” or saying he wants to “punch the economy in the face”?
Lonnie: Really? Talking babies? Sure, I will admit that this was funny, 2 years ago! They got their money’s worth from this campaign. Time to evolve or move on. No wonder the economy is in such bad shape, you have babies working the market. What stocks do babies trade, Toys R Us? Did the Wiggles go public?
Kara: Maybe they’re trading diapers. I don’t care. What I care about is the fact that the makers are brilliant. They get away with using the lowest quality video available, on purpose. And when the baby spits up, instead of yelling cut, they just crack a joke about how the economy makes him sick. Oh, and by the way, it did evolve. He now has baby friends!
Lonnie: Babies shouldn’t be trading diapers, they should be filling them. We are living in a recession. We need hope and confidence. We need a Sam Waterston as a spokesperson, not the Gerber baby with a credit line. Your money is no laughing matter and if I caught my toddler on a “playdate” with my 401k, I would definitely put her in time out. Bad Baby, NO!
Kara: You and your living in a recession crap! You sound like my dad. Stop watching the five o’clock news and turn on some Family Guy. Laugh a little. 4.4 million other people took five minutes out of their recession-driven lives to watch the latest Baby Outtakes video. And I must say, it cracked me up.
Lonnie: If I were your dad, I would send you to your room with no dinner. That’s part of the problem, too many people have changed the channel from the news to Family Guy. I would suggest that those 4.4 million viewers need to get off of YouTube and spend more time on Monster.com looking for a job. Plus, talking babies just creep me out. It’s not natural.
Kara: Hey, I have a job. Oh, by the way, who is Sam Waterston?
Lonnie: You know, The Great Gatsby, The Killing Fields, Mindwalk?
Kara: Wait a minute…wasn’t he on Family Guy?
Lonnie: Nevermind.
We traditionally think of consumer behavior during a recession as largely driven by rational motivations. We shop for more private label groceries, clip more coupons and shop more discount apparel stores. So perhaps the best strategy for brands to survive this recession is by using rational tactics likes sales, deals, and promotions.
But consider these three brands that are perceived as cost savings brands. It’s no surprise they’re doing well, or at least better than their competition. What is surprising is that all three are positioning themselves as “better life” brands, not just “better deal” brands. By making emotionally relevant connections now, they are profiting in the short-term while positioning for the long-term.
Hyundai - Struck with the fear and anxiety of losing their jobs, many Americans have postponed major purchases like automobiles. But Hyundai posted their highest market share ever in the first 6 months of 2009. And it’s not just because they sell cheaper cars. It’s that their Assurance Program helped put consumer fear in the backseat. While many others have launched similar programs since, Hyundai was the first to win the hearts of consumers.
Home Depot – In this recession many homeowners are putting off fixing that leaky faucet or painting the living room. But when that to-do list piles up, it weighs on us like a heavy burden. While Lowe’s has been promoting their every day low prices, Home Depot has translated their own savings message into an emotional payoff – “More Saving. More Doing.” The results? In the first 6 months of 2009 their stock outperformed Lowe’s by over 15%. Home Depot gets it. When consumers feel paralyzed to do even the small things, a message of practical empowerment is the emotional antidote they’re seeking.
Walmart – In an interesting counter trend, Walmart is trying to become a house of brands while Target is pushing their private label “up & up.” To support their massive makeover, Walmart has revamped everything from logo and advertising to store formats, replete with fresh signage and hardwood floors.
Their new tagline “Save Money. Live Better.” gets to the heart of the matter. The brands that will win in the long run are the brands who position themselves with consumer’s hearts, not with their wallets.
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.
Part of my job at Trone is to continue to evaluate our online toolset to see what is out there that can be used to better serve our clients. Compete.com has an extensive list of tools available to report on site metrics. What’s the cool part? They will allow you to report on site metrics for sites other than your own. They do this by compiling data based on web browser toolbars (yes, those usually report usage back to someone), receiving statistics from internet service providers and other proprietary dark magic. Recently, I went on a quest to entertain myself trying to find correlations between certain domains based on my perception of their success in this economy, times of year for spikes, etc. Here are some fun/interesting results:
Obviously, there are annual events that spike certain site usage during the same time each year:
In light of Obama being sworn in today, this is interesting (nevermind that the October stats for unique visitors are within a half of a percentage point of the electoral vote):
Hummer’s site traffic suffered in close inverse proportion to the increase in site traffic to sites that help consumers find cheap gas. I believe the spike in April was a response to some Feb/March ads before the gas prices started really increasing.
Also interesting this year are the graphs for visitors to popular job hunting sites:
The social networks are battling it out:
My favorite one shows people obviously play hard ramping up to the holidays, work hard in the new year and then get spring fever.
What can we truly deduce from these? Nothing for certain with just this information in a vacuum, but our strategy and research guys can do stuff that makes my head spin. I’m sure they have their own interesting (and almost certainly more accurate) views on the simple data I’ve played with.
Article after article has been written about the stress of joblessness, trading down and sacrifice when it comes to adults. But how does that affect our children? During the gas shortage this fall as I drove from one empty gas station to another, my eight-year-old son asked “What do we do if there is no gas to buy? What if we run out of gas far from home?” Actually, I was asking myself the same questions, but the last thing I wanted was for him to be worried about a situation so dire.
Stress is like smoke. It is in the air. You can’t pin it down. And generally you can’t even track its path, but it affects you, making it harder to breathe. Harder to function. Secondhand stress is even more invisible in its origin. But it’s there. Just like smoke. As tense parents answer their children in monosyllabic answers. As preoccupied parents stare off into space, minds racing about the next day’s work or the friend or family member who was recently laid off, even though they should be listening intently to the events of a second-grader’s day.
We don’t think children feel the stress of a recession, but they do. They watch their parents change before their very eyes. From carefree to worried. From attentive to preoccupied. From yes to no. As a child growing up in the seventies, my wonderful and protective parents never, ever mentioned things were bad. But even they couldn’t protect me from the death tallies of Vietnam on the news each night and gas lines that snaked into roads and record unemployment.
Home should be the stress-free zone, much like the smoke-free restaurants and workplaces. As parents, we should be as concerned with the mental health of our children as with the physical. Children grow up too fast anyway, but history has taught us that children of war time grow up carrying the weight of sheer existence with them like a physical responsibility, knowing that each day could be worse than the day before.
