the future of value - presentation
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TRANSCRIPT
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Value: Eternal Truths/Emerging Surprises
Advice & Implications From Euro RSCG -
January 2008
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Agenda
Part 1.
Marketing Through a Recession: Time-Tested Tips
Part 2.
A Snapshot of Today’s Consumer
Part 3.
The Value Relationship: What Consumers Need
Part 4.
Communicating Value: A Semiotic Analysis
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The Worst Economic Crisis Since the Great Depression
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Traditional Marketing Advice
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Playing Offense
1.
Don’t Cut Advertising
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Playing Offense
1.
Don’t Cut Advertising
0
50
100
150
200
250
300
1972 1973 1974 1975 1976 1977
`
Did not cut in
1974 or 1975Cut in both
1974 or 1975Cut in 1974 but not 1975
Cut in 1975 but not 1974
89 106 119
375
8896100
283
195159137
100
0
50100
150200
250
300350
400
1980 1981 1982 1983 1984 1985
`
Eliminated or decreased advertising in both 1981 and 1982
Eliminated or decreased advertising in both 1981 and 1982
Brands that maintain or increase advertising during recessions increase sales 3x those of brands that cut their budgets
Source: Rosberg & American Business Press Study (B. Ryan); McGraw-Hill Research Laboratory
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Playing Offense
1.
Don’t Cut Advertising
2.
Don’t Cut Prices
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“More Likely To Damage Profits Than Maintain Sales”*
Playing Offense
•
dilutes brand’s positioning/value
•
squeezes bottom line
•
“difficult to escape downward trend”
•
offers new entrants a foothold
1.
Don’t Cut Advertising
2.
Don’t Cut Prices
Source: * Ehrenberg-Bass Institute (B. Sharp); Ananda Roy
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Playing Offense
1.
Don’t Cut Advertising
2.
Don’t Cut Prices
3.
Innovate, Innovate, Innovate
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Playing Offense
1.
Don’t Cut Advertising
2.
Don’t Cut Prices
3.
Innovate, Innovate, Innovate
Source: * Ehrenberg-Bass Institute (B. Sharp)
“Categories that grow the most [during recessions] are those that
show the highest level of product introduction”*
1930s 1970s
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Playing Offense
1.
Don’t Cut Advertising
2.
Don’t Cut Prices
3.
Innovate, Innovate, Innovate
Source: * Ehrenberg-Bass Institute (B. Sharp)
“Categories that grow the most [during recessions] are those that
show the highest level of product introduction”*
1930s 1970s
During the 1970s, 50% of supermarket categories grew more than 15%.
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It’s Right to Play Offense
Don’t Cut Advertising
Don’t Cut Prices
Innovate, Innovate, Innovate
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It’s Right to Play Offense
Don’t Cut Advertising
Don’t Cut Prices
Innovate, Innovate, Innovate
“The best approach is a version of business as usual.”
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But…
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What We Did
500-person quantitative study in 3 markets (U.S., U.K., France)
Subsets of Prosumers & women (Grocery Shoppers)
Analysis of case studies and academic research
Shop-a-long ethnographies (supermarkets and malls)
Semiotic analysis of changing codes of value
A real-time snapshot of the anxious consumer
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This Recession Isn’t Exactly Like Previous Ones
1929–33 1973–75 1980–82 2008
GDP -13.0% -0.5% -1.9% +1.2%
S&P 500 -86.0% -48.0% -26.0% -38.0%
Inflation -10.0% 11.0% 13.5% 3.8%
Real disposable income has not decreased as much as in
previous recessions
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a crisis of money
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Make No Mistake, Consumers Are Afraid
(equal anxiety across age, gender, and HHI)
1 5No Anxiety Severe Anxiety
72%
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And 52% Believe the Crisis Will Get Worse
1 5No Anxiety Severe Anxiety
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And 52% Believe the Crisis Will Get Worse
Anxiety Driven By …
1.
rising unemployment
2.
decreasing property values
3.
lower consumer spending
1 5No Anxiety Severe Anxiety
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How Worried Are You About the Following?1
5N
o A
nxie
tySe
vere
Anx
iety money to retire
paying my bills
keeping up with cost of living
getting out of debt
putting food on the table
putting gas in the car
losing my job
funding my kids’
educations (30-
to 44-year-olds)
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How Worried Are You About the Following?1
5N
o A
nxie
tySe
vere
Anx
iety money to retire
paying my bills
keeping up with cost of living
getting out of debt
putting food on the table
putting gas in the car
losing my job
funding my kids’
educations (30-
to 44-year-olds)
Much Consumer Anxiety Is Future-
Focused
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But That Future-Focused Anxiety Is Changing Their Behavior Today
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Changing Consumer Behavior
staying home more (62%)putting off major purchasesusing couponslowering the heatreducing travel
buying more store brands (42%)searching for bargains onlinemaking meals from scratchconserving household goodsdriving less
How Are You Reducing Expenses?
15
No
Anx
iety
Seve
re A
nxie
ty
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A “Homing”
Instinct
66% would rather spend time at home than go out—a 7% increase since 2007
75% agreed this past holiday was more about “family and simple pleasures”
than gifts
Changing Consumer BehaviorHow Are You Reducing Expenses?
staying home more (62%)putting off major purchasesusing couponslowering the heatreducing travel
buying more store brands (42%)searching for bargains onlinemaking meals from scratchconserving household goodsdriving less
15
No
Anx
iety
Seve
re A
nxie
ty
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less
likely to go to a restaurant
58%
58%more
likely to go to Wal-Mart
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Active
Bargain Hunting
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Active
Bargain Hunting
I am consumed
with getting the best deal for a service or product I purchase:
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Active
Bargain Hunting
I am consumed
with getting the best deal for a service or product I purchase:
70% agree
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80% Prosumers agree; many hunting online (overstock.com, eBay)
women increasing visits to garage sales, thrift stores
less “impulse”
buying; more time at shelf
Active
Bargain Hunting
I am consumed
with getting the best deal for a service or product I purchase:
70% agree
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And Despite Their Anxiety, There’s Still Some
Joy in the Hunt
65%57%I enjoy shopping. It’s recreation.
65%48%Shopping is more fun than other activities.
52%42%Shopping makes me feel great.
ProsumersWomen
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The Satisfaction of the Hunt
I looked everywhere
for the perfect cashmere sweater for my husband until I found it at
Bloomingdales for 50% off.
You have to sort through
all the crap until you find what’s really good.
I checked eBay every day,
waiting to find a new Kindle—and I did.
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The Satisfaction of the Hunt
I looked everywhere
for the perfect cashmere sweater for my husband until I found it at
Bloomingdales for 50% off.
You have to sort through
all the crap until you find what’s really good.
I checked eBay every day,
waiting to find a new Kindle—and I did.
Implication
Real value is found. It is discovered. Valuable
things aren’t given away for nothing.
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(The Hunt for a “Good Deal”)
Defining Value
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What Do You Associate with Value?
lowest price
more for the same price/added value
multi-uses
quality
long-lasting
great service
guarantee/warranty
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What Do You Associate with Value?
quality (135)
more for the same price/added value (122)
long-lasting (115)
lowest price (94)
great service (52)
guarantee/warranty (44)
multi-uses (33)
inde
x
100
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quality (135)
more for the same price/added value (122)
long-lasting (115)
lowest price (94)
great service (52)
guarantee/warranty (44)
multi-uses (33)
inde
x
100
What Do You Associate with Value?
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quality (135)
more for the same price/added value (122)
long-lasting (115)
lowest price (94)
great service (52)
guarantee/warranty (44)
multi-uses (33)
inde
x
100
What Do You Associate with Value?
Which seems obvious, but …
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A Surprising Trend
Feb 08 Today
Price is not the most important factor–getting exactly what I want is 46% 58%
I buy based on quality, not price. 36% 60%
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A Surprising Trend
Feb 08 Today
Price is not the most important factor –
getting exactly what I want is 46% 58%
I buy based on quality, not price. 36% 60%
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It seems like stores are saying, “Please take this crap off my hands.”
—Megan McArdle, Financial Analyst, The Atlantic
Low-Price Skepticism
In fact, the International Council of Shopping Centers blames “heavy discounting”
as one of the primary causes of the worst holiday shopping season since 1970.
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It seems like stores are saying, “Please take this crap off my hands.”
—Megan McArdle, Financial Analyst, The Atlantic
Low-Price Skepticism
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So If Price (Alone) Doesn’t Signal a “Good Deal,”
What Does?
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Beyond price, how satisfying are the following “added values”
when you make a purchase?
Top 2 Box Summary
67%
top-notch customer service
61%
freebies (gifts with purchase, etc.)
58%
made by a company I trust
45%
made by a company I admire
44%
scarce/hard to find
38%
conscientious/making a difference
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Rational Signals of Value
low price
premium quality
great customer service
added value/freebies
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Value Is Quality
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Rational Signals of Value
low price
premium quality
great customer service
added value/freebies
Digging Deeper…
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How satisfying are the following “added values”
when you make a purchase?
Top 2 Box Summary
67%
top-notch customer service
61%
freebies (gifts with purchase, etc.)
58%
made by a company I trust
45%
made by a company I admire
44%
scarce/hard to find
38%
conscientious/making a difference
68% Prosumers
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The companies I admire today are …
friendly/approachableethicalefficient
competitiveEnvironmentally consciouscommunity-mindedinnovative
creativevisionary
frugal
(29%)
(< 20%)
(< 10%)
(4%)
honest/trustworthy(49%)
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The Enormous Value of TRUST in a Time of Anxiety
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The Enormous Value of TRUST in a Time of Anxiety
We’ve been betrayed by the institutions we trusted the most
a palpable need to be “taken care of” by trustworthy, decent brands
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The Enormous Value of Trust in a Time of Anxiety
I want companies to show a more human face. 82%
quality products at affordable prices
fair compensation to its employees
great customer service
providing employees a good work/life balance
products that are safe and reliable
doing all it can to protect the environment
giving back to the community
letting employees share profits
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So What Does All This Mean?
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The Emerging Picture
a consumer very worried about the future
hunting for value today
(and sometimes even enjoying it)
she’s not persuaded by price
but looking for “human”
companies she knows she can trust
to deliver quality goods and an “honest”
experience
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Value Isn’t a Message
Value Is an Experience
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The “Value Experience”
Satisfies …
need for trustneed for discovery
“Look What I Found!” “This is really good.”
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The Value Experience
need for trustneed for discovery
HUNTING GATHERING
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The Value Experience
need for trustneed for discovery
HUNTING GATHERINGThe Value Experience
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Satisfying
THE HUNTER
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Satisfying
THE HUNTER
a time for new news—not just new products, but new stories and associations
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Satisfying
THE HUNTER
a time for new news—not just new products, but new stories and associations
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Satisfying
THE HUNTER
make the most of the Internet—empower consumers (esp. Prosumers) to evangelize your brand in the digital world
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Satisfying
THE HUNTER
All Prosumers
The Internet is a very important part of my “shopping”—even if I don’t make purchases online. 78% 90%
I’d like to be part of an online community to share opinions and information about brands. 60% 87%
make the most of the Internet—empower consumers (esp. Prosumers) to evangelize your brand in the digital world
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Satisfying
THE HUNTER
make the most of the Internet—empower consumers (esp. Prosumers) to evangelize your brand in the digital world
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Satisfying
THE HUNTER
invent promotions that give consumers a sense of discovery or require a little effort (contests, tell-a-friends, etc.)
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Satisfying
THE HUNTER
invent promotions that give consumers a sense of discovery or require a little effort (contests, tell-a-friends, etc.)
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Satisfying
THE HUNTER
invent promotions that give consumers a sense of discovery or require a little effort (contests, tell-a-friends, etc.)
Consider online promotions that
reward consumers for their effort.
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Satisfying
THE HUNTER
invent promotions that give consumers a sense of discovery or require a little effort (contests, tell-a-friends, etc.)
promos that help consumers feel like
“insiders”
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Satisfying
THE HUNTER
new news
digital discovery
promos that help you hunt
Let Them DISCOVER Your Value
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Satisfying
THE GATHERER
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Satisfying
THE GATHERER
promise a better real life; avoid the untrustworthy fantasyland of aspiration
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Satisfying
THE GATHERER
promise a better real life; avoid the untrustworthy fantasyland of aspiration
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Satisfying
THE GATHERER
promise a better real life; avoid the untrustworthy fantasyland of aspiration
Value Score+ 40
Value Score+ 15
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Satisfying
THE GATHERER
promise a better real life; avoid the untrustworthy fantasyland of aspiration
even traditionally “aspirational” brands must get real
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Satisfying
THE GATHERER
celebrate time-tested values; be nostalgic without being old-fashioned
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Satisfying
THE GATHERER
celebrate time-tested values; be nostalgic without being old-fashioned
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Satisfying
THE GATHERER
celebrate time-tested values; be nostalgic without being old-fashioned
A Puritan Revival
good clean family fun
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Satisfying
THE GATHERER
demonstrate a commitment to all; be a brand for the interdependent “us”
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Satisfying
THE GATHERER
demonstrate a commitment to all; be a brand for the interdependent “us”
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Satisfying
THE GATHERER
demonstrate a commitment to all; be a brand for the interdependent “us”
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Satisfying
THE GATHERER
demonstrate a commitment to all; be a brand for the interdependent “us”
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Satisfying
THE GATHERER
demonstrate a commitment to all; be a brand for the interdependent “us”
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Satisfying
THE GATHERER
demonstrate a commitment to all; be a brand for the interdependent “us”
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Satisfying
THE GATHERER
embrace corporate transparency; admit to your objectives; don’t pretend you’re not hurting as well
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Satisfying
THE GATHERER
embrace corporate transparency; admit to your objectives; don’t pretend you’re not hurting as well
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.”
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Satisfying
THE GATHERER
embrace corporate transparency; admit to your objectives; don’t pretend you’re not hurting as well
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.”A Thought
What if we told consumers they didn’t need all of our
products—or as much as the ones they buy?
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Satisfying
THE GATHERER
embrace corporate transparency; admit to your objectives; don’t pretend you’re not hurting as well
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.”
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Satisfying
THE GATHERER
customer service! it’s never mattered more!
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Satisfying
THE GATHERER
customer service! it’s never mattered more!
Beyond price, how satisfying are the following “added values”
when you make a purchase?
67%
top-notch customer service
61%
freebies (gifts with purchase, etc.)
58%
made by a company I trust
45%
made by a company I admire
44%
scarce/hard to find
38%
conscientious/making a difference
Top 2 Box Summary
67%
top-notch customer service
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Satisfying
THE GATHERER
customer service! it’s never mattered more!
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Satisfying
THE GATHERER
customer service! it’s never mattered more!
Shipping and return shipping are free; most repeat customers get
upgrades to free overnight or second-day delivery.
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Satisfying
THE GATHERER
customer service! it’s never mattered more!
Beyond price, how satisfying are the following “added values”
when you make a purchase?
67%
top-notch customer service
61%
freebies (gifts with purchase, etc.)
58%
made by a company I trust
45%
made by a company I admire
44%
scarce/hard to find
38%
conscientious/making a difference
Top 2 Box Summary
67%
top-notch customer service
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Satisfying
THE GATHERER
Build a Genuine BOND OF TRUST
promise a better real life; avoid the untrustworthy fantasyland of aspiration
celebrate time-tested values; be nostalgic without being old-fashioned
demonstrate a commitment to all; be a brand for the interdependent “us”
embrace corporate transparency; admit to your objectives; don’t pretend you’re not hurting as well
customer service! it’s never mattered more
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The Gold Standard
need for trustneed for discovery
HUNTING GATHERING
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pursued new partnerships: Apple
a variety of tones: fun, eco-conscious
new emphasis: food
revamped website with community feature
real family life
political involvement/
community activism
for all: America’s store
indispensable greeters
Moved Away
from Explicit Price Message
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Communicating Value: A Semiotic Analysis
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R E S I D U A L D O M I N A N T E M E R G E N T
Semiotics Trajectory
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R E S I D U A L D O M I N A N T E M E R G E N T
Semiotics Trajectory
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quantity
generic
necessity
PRICE!
R E S I D U A L
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Quantity
Generic
Necessity
More Bang for Your Buck
R E S I D U A L
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quantity
generic
R E S I D U A L D O M I N A N T E M E R G E N T
necessity
More Bang for Your Buck right price > right product
more is always better
(“Depression Mentality”)
“brands”
scream: sunbursts!
low prices: a democratic right
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quantity
generic
necessity
More Bang for Your Buck
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
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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
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quality
smart/savvy
“masstige”
Better Bang for Your Buck
D O M I N A N T
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quality
smart/savvy
“masstige”
Better Bang for Your Buck
D O M I N A N T
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imitate premium codes (style > price)
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(celebrity-endorsed) quality for less
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appeal to “trendy”
values (value/values)
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a smart choice, not a cheap choice
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quality
smart/savvy
“masstige”
Better Bang for Your Buck premium codes
popular values
smart/savvy
D O M I N A N T
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You can buy cheap things.
More Bang for Your Buck
Better Bang for Your Buck
You can maintain a great life.
Generic and informational. Stylish and playful.
Save because you have to. Save because you’re smart.
R E S I D U A L D O M I N A N T
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More Bang for Your Buck
Better Bang for Your Buck
R E S I D U A L D O M I N A N T
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R E S I D U A L D O M I N A N T
More Bang for Your Buck
Better Bang for Your Buck
A Formula for Success,but …
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You can buy cheap things.
More Bang for Your Buck
Better Bang for Your Buck
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
R E S I D U A L D O M I N A N T E M E R G E N T
Right Bang for Your Buck
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More Bang for Your Buck
Better Bang for Your Buck
Right Bang for Your Buck
consumption(explicit communication of value)
R E S I D U A L D O M I N A N T E M E R G E N T
EXPERIENCE(implicit communication of values)
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Value Values
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118EMERGENT VALUE CODES
•
voluntary simplicity, conscious consumerism
•
transparent brand personality, real product story, simple packaging
•
magazines celebrating cool self-reliance, pragmatism, DIY
•
Craftster, Make, Craft
•
brand as resource or tool for richer experience
•
forgoing ownership and accumulation
•
eBay, auction culture, Craigslist
•
rent a car, not an RV; charming hotel, not a resort
•
concern with responsible choices, relationships, community
•
can be about looking to future instead of past, taking the old and making it new
•
Obama’s Inaugural; Ann Hathaway, Norah Jones
•
less about getting one over on the big brands than about getting to what’s important
•
project a more plural, inclusive, humble, well-
adjusted outlook•
YAWN (Young, Wealthy, and Normal); Obama, Bjork
Experience (vs. Consumption)
Good Enough Revivalist Wisdom
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• Point is that money can’t buy you love, and the best things in life are free. Or, as MasterCard prefers to put it, they are priceless.
• Consumption should always be a fun adventure (e.g., shopping in new places, experimenting with new sorts of things); or an opportunity for conviviality (with family, friends, romantic interest); or an invigorating competition or challenge (auction, haggling, eBay, Craigslist).
• Consumption can be a creative act, involving your imagination, generosity, sense of daring.
EXPERIENCE vs. CONSUMPTION
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• 33% more is only better if you really need to eat that much cereal, drink that much juice. Value isn’t only about more, it’s about more of the right thing, cheaper price for the right amount, paying a fair price for something fit for purpose—instead of cheaply made, one-size-
fits-all product or service.
• Making more considered, responsible choices generally; this doesn’t necessarily mean choosing a value brand, but it can.
• Responsible people don’t overreach, don’t greedily, instinctively go for the most/best bang for your buck…but the right bang.
• Notion that austerity isn’t only/always a burden, but can be a means to becoming a better person, deciding what really matters, living lightly on the earth, not being wasteful.
• RIGHT-SIZER: Paying less for something big and wasteful, trendy and pointless, is not saving money. It’s OK to spend more on something that lasts.
GOOD ENOUGH vs. MORE/BETTER
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• We don’t need to retreat back into old-fashioned values (moderation, doing-it-yourself, taking responsibility for choices, concern with community and family). Instead, we can reboot these values, make them our own; make them new, for now. It’s forward-looking revivalism.
• We admire austerity, pluck, resourcefulness, cheerfulness in the face of hard times when we think of our ancestors, so let’s also admire it in ourselves: Value brands can encourage intergenerational, historical, American pride in value-for-money.
• Instead of aping the codes of the latest, trendiest brands, value brands should reference the good old days—but without slavishly replicating the color palettes, design styles, typefaces, and so forth, of those times. Always make it new.
REVIVALIST
vs. NOSTALGIA
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• “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
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Learning from “Ethical”
Brands
community/movement
handcrafted/under-designed
quality above all else
develop a personality (use humor)
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COMMUNICATION OPPORTUNITIES Owning an Emergent Value Space
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“NEW DEAL”
GENERICS
A populist proposition—excellence for everyone. A world in which there are no “second class citizens”—inclusive, pragmatic, and genuinely simple. The best of what democracy has to offer. The “no logo movement.”
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A new hopefulness with a strong desire to focus on that which is
“meaningful.”
Increased appeal around participative experiences (versus things
that are simply acquired). A secular way of finding meaningfulness. New respect around public service i.e., teachers, nurses, cops, etc. (versus decreased respect for businessmen). Value not as the need to cut out or give up, but as an opportunity to find real meaning.
GENUINE MEANING
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The desire for strong, confident, male leadership—a new idea of the well-adjusted male outlook on the world that is neither aggressive nor self-conscious.
ENLIGHTENED MALE
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A new sense of respect and decorum in which humility, and trustworthiness is valued above extravagance. Prudence, moderation, and appropriateness. Decency, civility, and respect. Emulating the Greatest Generation, while looking to the future.
NEW RESPECT
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Media Inquiries
For inquiries regarding Euro RSCG Worldwide’s studies, please contact:
Lisa Gruber
Global Communications Manager
Euro RSCG Worldwide
T +1 212.886.2018 E [email protected]
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For more insights from Euro RSCG research, visit www.Prosumer-report.com
And follow us on Twitter
(@Prosumer_report)