the future of value - presentation

Value: Eternal Truths/Emerging Surprises

Advice & Implications From Euro RSCG -

January 2008

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

The Worst Economic Crisis Since the Great Depression

Traditional Marketing Advice

Playing Offense

Don’t Cut Advertising

Playing Offense

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

8896100

195159137

150200

300350

1980 1981 1982 1983 1984 1985

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

Playing Offense

Don’t Cut Prices

“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

Don’t Cut Prices

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

Playing Offense

Don’t Cut Prices

Innovate, Innovate, Innovate

Playing Offense

Don’t Cut Prices

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

Playing Offense

Don’t Cut Prices

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%.

It’s Right to Play Offense

Don’t Cut Prices

It’s Right to Play Offense

Don’t Cut Prices

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

But…

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

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

Make No Mistake, Consumers Are Afraid

(equal anxiety across age, gender, and HHI)

1 5No Anxiety Severe Anxiety

And 52% Believe the Crisis Will Get Worse

Anxiety Driven By …

rising unemployment

decreasing property values

lower consumer spending

How Worried Are You About the Following?1

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)

How Worried Are You About the Following?1

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

But That Future-Focused Anxiety Is Changing Their Behavior Today

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?

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

likely to go to a restaurant

58%more

likely to go to Wal-Mart

Active

Bargain Hunting

Active

Bargain Hunting

I am consumed

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

Active

Bargain Hunting

I am consumed

70% agree

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

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

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.

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.

(The Hunt for a “Good Deal”)

Defining Value

What Do You Associate with Value?

lowest price

more for the same price/added value

multi-uses

quality

long-lasting

great service

guarantee/warranty

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)

quality (135)

long-lasting (115)

lowest price (94)

great service (52)

multi-uses (33)

quality (135)

long-lasting (115)

lowest price (94)

great service (52)

multi-uses (33)

Which seems obvious, but …

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%

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%

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.

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

—Megan McArdle, Financial Analyst, The Atlantic

Low-Price Skepticism

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

What Does?

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

when you make a purchase?

Top 2 Box Summary

top-notch customer service

freebies (gifts with purchase, etc.)

made by a company I trust

made by a company I admire

scarce/hard to find

conscientious/making a difference

Rational Signals of Value

low price

premium quality

great customer service

added value/freebies

Value Is Quality

Rational Signals of Value

low price

premium quality

added value/freebies

Digging Deeper…

How satisfying are the following “added values”

Top 2 Box Summary

scarce/hard to find

68% Prosumers

The companies I admire today are …

friendly/approachableethicalefficient

competitiveEnvironmentally consciouscommunity-mindedinnovative

creativevisionary

frugal

(< 20%)

(< 10%)

honest/trustworthy(49%)

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

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

So What Does All This Mean?

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

Value Isn’t a Message

Value Is an Experience

The “Value Experience”

Satisfies …

need for trustneed for discovery

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

The Value Experience

HUNTING GATHERING

The Value Experience

HUNTING GATHERINGThe Value Experience

Satisfying

THE HUNTER

Satisfying

THE HUNTER

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

Satisfying

THE HUNTER

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

Satisfying

THE HUNTER

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

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%

Satisfying

THE HUNTER

Satisfying

THE HUNTER

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

Satisfying

THE HUNTER

Satisfying

THE HUNTER

Consider online promotions that

reward consumers for their effort.

Satisfying

THE HUNTER

promos that help consumers feel like

“insiders”

Satisfying

THE HUNTER

new news

digital discovery

promos that help you hunt

Let Them DISCOVER Your Value

Satisfying

THE GATHERER

Satisfying

THE GATHERER

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

Satisfying

THE GATHERER

Satisfying

THE GATHERER

Value Score+ 40

Value Score+ 15

Satisfying

THE GATHERER

even traditionally “aspirational” brands must get real

Satisfying

THE GATHERER

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

Satisfying

THE GATHERER

Satisfying

THE GATHERER

A Puritan Revival

good clean family fun

Satisfying

THE GATHERER

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

Satisfying

THE GATHERER

Satisfying

THE GATHERER

Satisfying

THE GATHERER

Satisfying

THE GATHERER

Satisfying

THE GATHERER

Satisfying

THE GATHERER

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

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.”

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?

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.”

Satisfying

THE GATHERER

customer service! it’s never mattered more!

Satisfying

THE GATHERER

scarce/hard to find

Top 2 Box Summary

Satisfying

THE GATHERER

Satisfying

THE GATHERER

Shipping and return shipping are free; most repeat customers get

upgrades to free overnight or second-day delivery.

Satisfying

THE GATHERER

scarce/hard to find

Top 2 Box Summary

Satisfying

THE GATHERER

Build a Genuine BOND OF TRUST

customer service! it’s never mattered more

The Gold Standard

HUNTING GATHERING

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

Communicating Value: A Semiotic Analysis

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

quantity

generic

necessity

PRICE!

R E S I D U A L

Quantity

Generic

Necessity

More Bang for Your Buck

R E S I D U A L

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

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

quality

smart/savvy

“masstige”

quality

smart/savvy

“masstige”

D O M I N A N T

quality

smart/savvy

“masstige”

D O M I N A N T

imitate premium codes (style > price)

(celebrity-endorsed) quality for less

appeal to “trendy”

values (value/values)

a smart choice, not a cheap choice

quality

smart/savvy

“masstige”

Better Bang for Your Buck premium codes

popular values

smart/savvy

D O M I N A N T

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.

A Formula for Success,but …

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

consumption(explicit communication of value)

EXPERIENCE(implicit communication of values)

Value Values

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

• 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

• 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

• 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

• “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

Learning from “Ethical”

Brands

community/movement

handcrafted/under-designed

quality above all else

develop a personality (use humor)

COMMUNICATION OPPORTUNITIES Owning an Emergent Value Space

“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.”

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

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

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

129 129

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 lisa.gruber@eurorscg.com

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

And follow us on Twitter

(@Prosumer_report)

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