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A 2011 Update. BrandShelter

SM

In July, 2009 we released findings from an extensive research initiative focusing on how Americans were dealing with the unfolding recession. In that report, we outlined many issues and challenges faced by people in these turbulent times. But our data also revealed opportunity amidst the gloom, and this became the basis for suggesting a number of paths of possibility for brands. The 2009 release reflected analysis of data collected in late March/early April of that year from a nationally representative sample of 1,000 American adults. Six months later, in October 2009, we fielded a tracking wave in order to understand what movement, if any, had occurred in terms of recession-related attitudes and behaviors. While some measures revealed a slightly less frightened consumer profile, the data overall did not paint an encouraging picture for brands.

completed another update, tracking many of the same measures as well as some new ones, this time among a sample of over 1200 American adults half interviewed in January 2011 and half in May 2011. While there are some bright spots here and there in the data, we mostly see a picture of still-behaviors. This suggests the country has a long way to go before confidence in the

financial situation is strong enough to resume robust consumer spending. The recession may be technically over, but for most Americans it is simply not so. There are also growing indications that the length and severity of the Great Recession has caused people not just to make temporary adjustments, but to make some potentially permanent shifts as well. For the majority of Americans (most of whom were not adults during the difficult economic

the current crisis has provided an unwelcome shock and a difficult life lesson. As a result, brands are going to continue to face major headwinds even if the economy begins to make more solid gains, and very stiff

The BrandShelterSM Project

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challenges if it continues to falter as it has in recent months. This study will reveal the nature and depth of consumer reticence, it will highlight bright spots where opportunities appear to be arising, and will suggest a series of things that brands can do in this still weakened consumer environment.

The Elusive Recovery

illuminating to look at what key economic indicators reveal about the recession and recovery. These trends help explain why people are still so hesitant about returning to their old patterns of spending. The National Bureau of Economic Research, which officially declares start and end dates of recessions, pinned the Great Recession as beginning in December of 2007 and ending nineteen months later in June 2009. This makes it the longest recession since the Great Depression. Over the 24-months of recovery since then, we have unfortunately witnessed still-sluggish performance on many measures. GDP, for example, has not rebounded as expected . Over the six recessions of the past forty years, GDP quarterly change was substantial and rapid averaging 9.4% over the four quarters immediately following a recession. The comparable figure for the current recession is only 3.9%, suggesting a very anemic recovery. To complicate matters, federal stimulus spending, additional increases in federal spending, plus lower tax revenues have created huge budget deficits and dramatically increased national debt. As

creating enormous worry for most Americans. This appears to be adding another drag on the recovery. Unemployment has been a major concern. During this recession it peaked at 10.1% and still lingers above 9.2%. Compared to past recessions this is exceeded only by the Great Depression and by the recession of 1981. With unemployment at these levels, people reached out for government

the point where one in six Americans is receiving some form of government aid. Ten million Americans get unemployment benefits and 4.4 million get direct cash assistance, an 18% increase from 2008. Since December of 2007, Medicaid has increased 17% and now supports 50 million people. Food stamp enrollment increased by 50% since 2008 and now supports 40 million Americans.

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Deficit

On the investment side, the stock market has recovered to some degree, and this has been a bright spot for the many Americans who own stock or who have stock funds in IRAs and 401Ks. But these gains have been offset to a large degree by the disastrous situation in the housing market. Steep declines in home values has had a profound impact on people because the notion of building wealth through homeownership is central to our concept of prosperity. The now infamous housing bubble has burst, and while current home values are still a bit over what would have been predicted by the average growth projections, many people who bought or re-financed homes at bubble prices are now underwater on their mortgages. The current percentage stands at a startling 28% of all homes. Because many of these mortgages were subprime and/or adjustable, affordability became an issue for many homeowners, leading to increased foreclosures, as many walked away from their homes. Currently, 13% of homes in the United Sates are vacant, and the incidence of home

peak in early 2005. This, coupled with the fact that it is now much more difficult for most people to obtain a mortgage loan, has had a powerful negative impact on new home construction. In February 2011, housing starts posted their biggest decline in twenty-seven years and with that, we saw building permits drop to the lowest level of recorded data. Housing starts tumbled 22.5% percent to an annual rate of 479,000 units. The number of building permits, an indicator of future construction demand, fell about 20% compared to a year back in February 2010.

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Consumer confidence also remains low, and is now declining. After hovering around one hundred (average confidence) from 2004 - 2008, the onset of the recession fueled a steep decline, reaching a low of twenty-five in February of 2009. Although this had rebounded to seventy in April, it is now again in decline sixty-two in May and fifty-eight in June. Consumer confidence statistics also reveal a longer terms decline throughout the entire first decade of the new century. Poor confidence, coupled with mortgage issues, and, for many, credit card debt problems, continues to drive soft consumer spending. Core Consumer Spending, while still growing, has slowed substantially over the last few years and is no longer keeping pace with population growth. Against this backdrop of worries, Americans have dramatically shifted their rate of personal savings. The personal savings rate, which reflects both actual saving as well as paying down debt, has made a rapid increase in a short amount of time to reach levels not seen for 10 years. From a low of close to zero in 2001, it is now running at about 6%. While saving and paying down debt is a good thing for many individuals, it is not helping economic recovery overall. In all, the Great Recession has put into motion a series of consumer dynamics unlike anything we have seen in decades. A major concern for marketers given the weak situation of the national economy and the pessimism of so many Americans, is that consumer spending levels may remain depressed for a much longer time to come. Against this backdrop, the consumer survey portion of the BrandShelterSM study will examine in depth the current mindset of Americans, in order to gain insights into to how they feel about the economy generally, how they feel about their own prospects, and how they are likely to behave as consumers. We will also reveal implications this has for marketers. Many of our findings will be compared to earlier waves of BrandShelterSM so as to reveal how attitudes and behaviors have trended over time.

themes that are most relevant for navigating this still challenging economy.

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Core Consumer Spending

1. For most people, the recovery looks much like the recession.

The most striking finding in our survey data is the degree to which people are still talking about the recession using present tense. This despite the passage of two years since its official end. However, given the negative

surprise that most Americans are still in a recession mindset, not a recovery one.

economic situation and how this has or will impact them moving forward, than it does with their own personal economic situations. To many, the recession is still a major part

and as a result it is still heavily impacting their behaviors. For example, while fewer Americans believe

Depression than believed this two years ago, fully two-thirds of Americans still agree

likely to be more severe and last longer than other

Seven out of ten also believe that recovery will not begin for at least two more years and these numbers are getting worse, not better. Even when we explained to respondents that the recession officially ended twenty-four months ago, we still found 60% of Americans worried about significant economic problems ahead. Setting aside the exact end date, what is most concerning is that 52% believe that once the recession they still perceive as ongoing does in fact end, our economy will not come booming back it will be weaker than before. This is up from 37% way back

pieces of evidence in the study that point to a fundamental shift in opinion about the likelihood of a solid recovery. With so many people lacking confidence in the future

real danger of a long-

challenging to get people to return to higher levels of consumer spending. This suggests that marketers should prepare to be met with cautious consumers for some time well into the future.

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When the economy recovers, it will be (% agree):

People are clearly skeptical about the

to their own personal situations, however, they are a bit more optimistic though certainly not at robust levels. As a result, most express attitudes that suggest they

behaviors to pre-recession levels. Specifically, while 22% of people are more optimistic about their personal prosperity than 18 months ago, slightly more are now pessimistic, and the vast majority are sitting

situation has significantly decreased from March of 2009, we still found that only 15%

measures from January 2011 to May 2011 have gotten slightly worse, not better. Perhaps most telling is the data on emotions, which has remained largely unchanged since our March 2009, when the recession was raging. People are a bit less

longer at 2009 levels on at least some of the personal situation measures, we would normally expect far stronger upward momentum at this point in a recovery. So this data, like the national economy data in the previous point, suggests that the country seems to be settling into an extended period of consumer caution. To this end, 49% of Americans now agree strongly with the

While many view personal caution as prudent, it has the macro effect of dampening the recovery. As QE2 winds down, the absence of strong consumer spending will hurt. Most recessions have steep positive recoveries in part because pent-up consumer demand kicks in. Like the hare in the old fable, people rush

recovery, none of these dynamics exist. When it comes to confidence and spending, we look more like a nation of tortoises.

49% (May 2011)

Top 3-box % agree, 10 point scale

2. Pessimism in the national outlook drives personal worries which in turn depress spending.

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Top Worries and Concerns in January 2011  Jan-11   Change  

%T3B Agree   Rank   (Jan '11-

Oct '09)  1. Gasoline prices will go back up 78 1 15 2. Productive, hard working, tax-paying people will be forced to should most of the burden 64 2 3

3. My town, city, or state will raise taxes and affect me 62 4 8

4. Inflation will kick in and I will lose personal spending power 60 5 10

5. My state/local income taxes will increase significantly 57 7 10

6. The effect of growing national debt on my children 56 3 1

7. The effect the growing national debt will have on me 55 15 13

8. Our federal government will make bad decisions & hurt the economy more 54 8 8

9. Congress or the President will fail to stop deficit spending 53 - -

10. I will have a major unforeseen expense (home/car repair) 53 13 10

11. America will have a weakened position in the world 52 - -

12. Unemployment will stay high for a long time 51 6 4

13. Few new jobs will be created in our country 51 - -

14. My federal income taxes will increase significantly 50 10 5

15. My personal financial future will remain in question 49 11 4 16. Congress or the president will attack the deficit with raising taxes instead of cutting spending

49 - -

17. The healthcare reform that recently passed will hurt our country more than provide benefits in the long run 45 - -

18. Our country will not pull out of the recession for years 45 25 10

19. I will be unable to save what I need to for retirement 44 12 0

20. America will experience hyper-inflation 43 - -

21. The value of my home will decline further 43 31 11

22. My own economic situation will be weak 40 17 1 23. I will need to eliminate discretionary spending on things like travel, entertainment, luxuries, etc. 40 16 0

24. I will be unable to sell my house when I want to 40 27 6

25. The republicans now in control will do things to only help the wealthy 39 - -

26. My income will fail to go up or will even start to decline 39 9 -7

27. I will not be able to afford health insurance 37 14 -6 28. Environmental regulations will be put in place that will cause the economy to suffer 35 29 3

29. My IRA, 401K, or retirement funds will lose value in the coming months 35 23 -1 30. The environment will be forced to take a backseat to the economic problems of the country 35 30 3

31. The stock market will not recover for many years 35 34 6

34 18 -3

33 37 5

34. I will not be able to enjoy the same lifestyle anymore 33 19 -4

33 44 12

36. I or someone in my household will lose their job 33 22 -4

37. I will have to cut back on health care, prescription drugs, etc. 32 21 -4

38. The recovery from this recession will be followed by another recession 30 41 5

39. I will be unable to qualify for a mortgage loan 30 33 1

40. I will not be able to get out of debt 28 20 -8

41. Our country will move away from capitalism and into socialism 28 26 -6

42. My credit rating will be damaged 28 32 -4

43. I will be unable to pay my credit cards 27 38 1

44. Crime will increase in my neighborhood 27 24 -8

45. I will not have enough money for utility bills like phone, electricity, etc. 25 28 -8

46. I will be unable to put food on the table 22 40 -3

47. I will be unable to save up a down payment for a home 22 35 -7

48. I will be unable to afford trading up to a better home 22 39 -4 49. I will be unable to keep up with my rent or mortgage payments and will lose my home 18 36 -10

50. The country will experience deflation 17 42 -5

Outside  Factor   Government   Personal  

The level of worry people are experiencing was brought home by the data to the right. We gave people a list of specific things that they might potentially be worried about, and asked them to indicate how much or how little of a worry each one was. The table to the right shows the percent of Americans who agreed strongly that an items was a

the worries to indicate those that are primarily government-driven (gold), primarily driven by other external factors (green) and primarily personally-driven (orange). Two things are striking in this data. First is the degree to which the top of the list is populated by worries that are either government-driven or driven by external forces, as opposed to personally-driven concerns. Gasoline prices, higher taxes, and deficit spending and the national debt dominate the top ten. The only close-in worry is that of an unforeseen expense. Second is the degree to which top-of-list-worries have generally increased in magnitude from 2009 to 2011. What this means is that the average American is now seriously concerned about a variety of macro-economic forces, often looming in the future, more so than they are worried about immediate pocket-book problems. The macro-worries are taking a serious toll on consumer behavior. We found strong correlations in our data between the top worries and overall feelings about the seriousness of economic situation and the lack of belief in a robust and near-term recovery. The more a person was worried about government and external factors at the top end of the worries list, the more likely they believed the economic situation

that real recovery will be weak and delayed. More important, the less confidence they had in a near-term, robust recovery, the more they claimed to be holding back on consumer spending. The implication of this is important. While marketers normally worry to some degree about macro-economic effects particularly those that impact product price it is now important to worry about the effect that the daily drumbeat of news about these effects is having on consumer psyche.

Since the start of the recession, people have adapted a variety of shopping strategies to save money -- from using coupons and discounts to trading down to less expensive brands to reducing, postponing or eliminating purchases in entire product categories. In our first round of data collection in January, 2011, we saw an encouraging decline in the number of people reporting engagement in these types of behaviors. And while actual behavior

least this was a good sign. But by the May 2011 wave, the levels were trending back up again towards where they had been in 2009. This is unfortunately consistent will much of the other data in the May study. Routinely bad news on major economic indicators driving worry about the health of the overall economy seems to having a prolonged effect on brands. For example, in October 2009, 29% of people were eliminating entire product categories. By January of 2011 this number had fallen to 21%. But in May 2011, it had climbed back up to 25%. Taken in isolation this would not be concerning, but the pattern repeats itself on numerous other category-related measures. The same is true for measures about use of discounts and trading down to cheaper brands within a product category. In 2009, for example, we found that 25% of consumers claimed to be trading down to cheaper brands across many of the product categories that they were shopping. In January this number had eased to only 17% but it has since risen back to 23% in May 2011. In a similar vein, the percent of people agreeing strongly that they are thinking less about trading up and more about trading down in brands rose substantially from January to May 2011. The same pattern emerges on a statement about the overall importance of brands. It was heading in a positive direction through January, 2011, but has now receded a bit. So, while there was initial cause for optimism earlier in the year, it now appears that the path for brands is again becoming difficult, and that marketers should prepare for an extended challenge.

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3. Brands still face difficult challenges.

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It comes as no surprise that Americans have lost trust in many institutions, given what has occurred over the past several years. In 2009, we saw that people exhibited low levels of trust across a variety of financial and government institutions. Unfortunately, this has not improved in the two years since the recession officially ended. When asked about trust across the institutions, organizations and people we originally tracked , we see it has fallen in twelve of the thirty-six instances, remained essentially unchanged in sixteen, and has risen in only eight. Where trust levels have risen, it tends to be non-institutional, closely linked to self and immediate surroundings .

members, place of worship, local police, etc. all have seen levels of trust increase over the past twenty-four months. Trust in government, political leaders and other more distant institutions has fallen, typically from horrible to nearly non-

tracked, only President Obama has a trust level over 20% and even this has fallen by five points to 29%, consistent with his falling job approval ratings in external polling. Congress fares far worse, with overall trust levels at 3%, and anchoring the bottom of the list. Likewise, financial institutions, energy companies and media organizations all suffer from a substantial lack of trust. Setting aside trends and just looking at the absolute numbers, only six of thirty-six items showed top three box trust levels (on a ten point scale) above 33%. And with the

-institutional. Thus, there is a palpable sense on the part of Americans that you can only trust yourself and those closest to you during these difficult times. This has led to a powerful (if perhaps unwelcome) sense of the need for a high degree of self-reliance. Specifically, 44% of people agree strongly as to the need for self-reliance as difficult times linger essentially unchanged since October 2009.

4. Diminished trust offers opportunities to support self-reliance.

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self-

Mar 2009 Oct 2009 Jan 2011 May 2011 N/A 40% 45% 44%

Top 3-box % agree, 10 point scale

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By contrast, only 23% agree that you need the government to help you through a recession. In fact, over one third of respondents (38%) continue to believe that the federal government will make bad decisions that will actually hurt the economy even more. This measure has been a bit volatile as high as 54% in January --- suggesting that people may be reacting more to current political events when they respond to it. Nevertheless, 38% is close to 100 million adults who feel strongly that bad decision-making in Washington is a problem for them personally, underscoring again the degree to which the national economic outlook is affecting personal attitudes and ultimately behavior. With the increase towards self-reliance, Americans have significantly upped their likelihood of taking a variety of things into their own hands in order to help them through the economic times. Compared to 2009, they are now even more likely to be looking for low cost entertainment alternatives, going online to check prices at different stores, checking prices at several different stores before buying, putting money into a savings account or CD, going to coupon websites and looking into changing the nature of their mortgage. In other words, with the worry that the national

trust government to help us turn the corner, people seem to be taking the need to save money even more seriously than before. There is little indication of any lessening of value-seeking behaviors. Given this dynamic, brands have opportunities to engage in trust-building. Honesty and authenticity will be even more valued in a world in which people increasingly believe they can trust few institutions. In a similar vein, brands that do

self-reliance to help them take on more things successfully, to foster a can-do attitude, and to bolster confidence will find receptive audiences.

Mar 2009 Oct 2009 Jan 2011 May 2011 N/A 46% 54% 38%

you really need government to help you

Mar 2009 Oct 2009 Jan 2011 May 2011 N/A 40% 15% 23%

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Top 3-box % agree, 10 point scale

Top 3-box % agree, 10 point scale

Despite these difficult times, the majority of Americans still harbor a long term belief in the American Dream and in their own ability to achieve at least a part of it. Most also believe that the opportunity to capture it comes through hard work and takes time. When asked specifically which of twenty-one characteristics best defined the Dream in their minds prior to the start of the recession, most people predictably selected items about being happy and fulfilled in life, owning a home, educating their children and having a great job. When asked if they would change any of

economic situation, 64% said no. What this suggests is that despite the immediate challenges brought on by the recession and the weak recovery, Americans remain optimistic about the long view. If there is a

to suffer it indefinitely. As a result, most continue to try and build towards the American Dream, albeit perhaps more slowly, with greater difficulty, and with less assistance from anyone but themselves. But what of the third (36%) who would change the characteristics of the American

we asked them to indicate what on the list they would change, the results were revealing. Being happy and fulfilled has takes a back seat in their minds to things that are more basic: simply having a job that pays the bills, providing the basics for their children, affording necessities with a little left over for fun, and having job stability and security (over having a higher income.) Home ownership in a community of choice no longer defines these people. They have downsized their dreams. Who constitutes this 36% with diminished long-term expectations? The Silent Generation, age 65+ (and almost all retired) have the most resilient view. Baby Boomers are a bit more likely to have downgraded their concept of the American Dream than are Gen Xers. This is not surprising given the hit that many of their

of retirement, and given the struggle many

5. The long view reveals a shift in opportunity towards older people.

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most (60%) Boomers have not changed their definition of the Dream and many are likely to postpone retirement a bit in order to make up for losses. But in a rather stunning inversion compared to previous recessions, nearly half of those 18-34 have downgraded. Thus, the group in which one would typically expect to find the most optimism given the long period of time they still have to pursue to build a prosperous life, are behaving just the opposite. This finding could have particular significance if the economy does not turn around soon. The last time a group of young people had such pessimism was back when the G.I. generation came of age during the Great Depression. In many cases, they never left the Depression mentality and never shifted away from their frugal ways for an entire lifetime. Given this, the level of long-term pessimism being exhibited by the 18-34 year old Millennials bears careful watching, as this shift could signify the beginning of a permanent lifestyle trend towards frugality and diminished expectations. If Millennials become permanently frugal, the lifetime value that marketers normally accrue from a generation may fall short of historic standards. To make up for lost revenue, marketers may well have to turn elsewhere, and elsewhere is most likely to be a new emphasis on selling to older consumers. Finally, while the majority of Americans still believe in the American Dream and still define it in conventional ways for themselves, there have been shifts in our data just recently (between January 2011 and May 2011) that suggest that the overall long-term optimism may be eroding more broadly than the previous data suggests. While people still see themselves as being

less clear to them that the average person can. Specifically, 30% of people agree strongly that the ability of many people to achieve the American Dream is now dead up from 26% in January. Similarly only 40% agree strongly that an ordinary person has more opportunity to pursue their dreams and achieve success in American than in any other country on earth down from 56% in January. If these trends continue they may signal a more serious erosion in long-term optimism.

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ability of many people to achieve the American

26% (Jan 2011) vs. 30% (May 2011)

country is facing, I still believe that an ordinary person has more opportunity to pursue their

dreams and achieve success in America than in any other country

56% (Jan 2011) vs. 40% (May 2011)

Top 3-box % agree, 10 point scale

Top 3-box % agree, 10 point scale

6. There are opportunities for brands to reframe essentiality and functionality.

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continuum, or is it more complex? Shedding light on this would have implications for what manufacturers in certain types of product categories might do going forward. To address this, we gave people a list of 45 different products and asked which they had or had not cut back on during the recession. We found that people claimed to have cut back on almost half of them during the past few years. They were then asked to rate how well a variety of statements described the products. These covered a range of constructs relating to essentiality such as: necessity, convenience, indulgence, functionality, etc. When run through correspondence analysis, a statistical technique that plots data into space based on variance, the ensuing map reveals that what constitutes essential or non-essential is neither simple nor linear. In the map below, which shows the attributes, the vertical axis is clearly about the conventional definition of essentiality. It is characterized by items at the top that are all about the difficulty one would have living without something. Conversely,

What is more interesting is how the space is defined horizontally. On the right are items that are all about functionality -- making life run smoothly, filling in knowledge gaps, providing services, being logical, and so on. On the left are

functionality. There are both functional needs (upper right quadrant) and emotional needs (upper left quadrant). At the same time, wants (non-essentials) are not just emotional. There are both emotional wants (lower left quadrant) as well as functional ones (lower right quadrant).

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Correspondence analysis also plots in the products which were rated on the attributes. As you can see below, the products fall in predictable ways. Those in the upper right quadrant which are Functional Needs include things like detergent, insurance and gasoline. Those which are emotional needs (upper left) include things like vacations and various types of entertainment. Those in the lower left (Emotional Wants) include things like designer clothing, jewelry and salon treatments. Finally those in the lower right (Functional Wants) include things like snack foods, carbonated soft drinks. Each product has been color coded based on how people claim they have behaved towards it since the recession began and what they intend to do going forward. The products labeled in green are those people claim to have not cut back on during the past few years. Interestingly, the upper-right quadrant is populated almost entirely by green products, suggesting that when something is perceived as both necessary and functional they are unlikely to cut back. Conversely, there are virtually no green products in the lower left quadrant, the nexus of Wants and Emotion. This suggests that being perceived strongly on one, but ideally both Need and Function, has insulated certain products to some degree during the recession. The red and yellow products are those people claim they did cut back on, sometimes substantially. Yellow products, however, are those they claim they are preparing to re-engage with during the next twelve months, and thus should be leading indicators of recovery when it comes. By contrast, red products are those which people claim they will continue to cut back on. These will face a difficult road to recovery. Interestingly, a majority of the red items are sitting in or near the lower left, Emotional Wants quadrant. This suggests that once a product is perceived as both a Want and as fulfilling Emotional rather than Functional needs, it will remain vulnerable. The yellow products, generally sit somewhere between the red and green on one or both axes. In other words, they tend to have perceptions of being strong on either Needs or Function (but not both) or (for those nearer the middle of the map) they have modest perceptions on both dimensions.

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The implication of this is important for brands in struggling categories. If a brand in a struggling product category that is seen as largely Emotional can manage to position itself as delivering on an Emotional Need rather than an Emotional Want, it should fare better. Vacations, for example, can only be deferred for so long before they begin to become (as they are now doing) Needs not Wants. Similarly, if a brand in a struggling product category that is seen largely as a Want, can position itself as more Functional Want than Emotional Want, it should also do better. What are the tensions that can help re-frame a brand as more of a Need than a Want? Several things emerge from the attributes that defined the space, shown in the top box -- reframing towards, happiness, life enrichment, quality of life, or even badge value. Similarly, the data reveals several ways that a brand can attempt to move from Emotional towards more Functional interpretations, shown in the bottom box convenience, longevity, logic or service.

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How to Move From Want to Need Make a connection with importance to

happiness in life Make a connection to life enrichment, growth

or knowledge Make a connection to higher quality of life Frame the product as something through

which others evaluate you

How to Move From Emotional to Functional Make a connection to some type of

convenience that using the product makes life run more smoothly, easily or efficiently Frame the brand as having recurring not

fleeting benefits something that delivers for the long haul Infuse logic or planning into the decision

making process Infuse or reframe the product with elements

of service

Whether it is going through the papers to collect coupons, using online vehicles for savings, or driving further to get better deals at a mass merchandiser, Americans have engaged heavily in chasing discounts and bargains in order to find ways to save money overall as well as to find ways to keep purchasing preferred brands. When we first measured this phenomenon in 2009, our focus was on understanding what people were doing with regards to cost saving. Now, two years later, we wanted to explored what people are finding is working that is, which discounting activities have

turned out to be most worthwhile. To explore this, we measured two things about savings behaviors. First, is a behavior effective or not, and second, how much effort is required to achieve the desired result. To this end, we asked people to rate twenty-eight behaviors across twenty-three product categories on whether or not they found the behavior to be effective as well as how much effort they felt it took. As you can see from the data to the right, the most effective things were never the easiest. Given the independence of effectiveness and ease, we plotted them in a two-dimensional space (following page) to bring interactions to life. The horizontal axis measures effectiveness, so as you move to the right the behavior becomes increasingly effective at helping someone get through difficult times. The vertical axis measures effort with low effort at the top and high effort at the bottom. So as you move up on the map, the behavior becomes easier. We also asked people how likely they are to continue each behavior. We then color coded the behaviors based on this. Red items are those that most people are less likely continue performing, yellow are those that a few people will continue trying, but not most, and green are those that the vast majority say they will continue doing moving forward.

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7. Optimizing on perceived effectiveness and effort is key to successful promotions.

CHANGE TO EASIEST

We learned several things from the map. First, there are relatively few things that deliver a lot of effectiveness but that are also easy to do.

significant savings, the behaviors will continue. Thus, people have decided that discounting and cost savings programs that require effort but that reap strong rewards are worth continuing. Interestingly, most of these high effort-high effectiveness activities (lower right circle) are the old tried and true ways of saving money checking prices carefully in store, comparison shopping different stores, using coupons, shopping mass merchandisers, waiting for sales, and checking prices online. Third, there are a number of easy but relatively ineffective things that people have indicated they are less likely to continue doing (upper left circle). Most of these have to do with trading down in product quality, buying less preferred brands or using products less often. Apparently which saving money easily, these have led to less-than-satisfactory results, making the trade-off unacceptable. What is also interesting is that crowd sourcing appears in this group. This suggests that while easy, and while offering great bargains on certain often very discretionary items, crowd sourcing may not be proving to be a very effective way to save in totality.

do as much of initially but now are likely to do more. While it can vary a bit by product category these offer the sweet spot of opportunity for brands seeking to branch out from the tried and true methods in the lower right, since these yellow items are the ones with momentum. They include things that tend to require vigilance and advance planning to some degree, and often a willingness to purchase at a time that may not be exactly right watching for sales, taking advantage of very deep periodic discounts, buying in quantity, and joining loyalty programs.

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in the storm of falling fortunes brought on by the recession. This was the notion that hard times tend not only to bring people closer together but often cause them to get back to what matters most. In the case of this recession, we saw a definite trend towards people setting aside materialism, rediscovering the merits of simplicity, and re-centering on things that had real meaning in their lives. Now, more than three years since the recession began, there are indications that people are starting to tire of these things. Not everyone, as there are still significant levels of agreement with items about the silver lining. However, we believe there is an element of recession fatigue beginning to set in. For example, the percent of people

realize that a simpler, less materialistic life

percentage points since March, 2009. In a similar vein, the percent agreeing strongly

myself spending more time on things that are really meaningful like time with family and friends, doing simpler but more

These declines suggest that while not everyone is wandering away from the silver lining, and while the trend may only be starting, there is a definite tarnishing beginning to emerge. This bears watching because as people become disenchanted with simplicity, the usual response is to seek out escape. Unless the economy begins to gather steam and Americans can grab onto some optimism, we should expect to see people looking for ways in which they can find breaks from bad news and escape even in small ways from the constant

and half years.

8. Opportunities are emerging to leverage themes of escape.

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For more information please contact:

Carol Foley carol.foley@leoburnett.com Dave Kuhn david.kuhn@leoburnett.com Brian Samar brian.samar@leoburnett.com

BrandShelter SM