Given the mood of the times, consumers are changing their habits and redefining how they evaluate the value of the products they purchase. Whether the goal is to cut the household budget, hunt for bargains or contribute to a greener world, people are thinking harder about where they spend their money: choosing lasting over fleeting, and meaningful over frivolous.
The old culture of style over substance is giving way to one where the watchword is value. Consumers want to feel they are, as well as are seen to be, making smart choices in these uncertain times.
The impact of this heightened importance on value is that consumers are increasingly making tradeoffs. In the past, they might have taken the expensive trip and bought the new car. Now, they want to avoid taking on the extra debt, which means making the hard choices. The implication for marketers is that you now have to compete for a smaller overall consumer wallet. One of the most obvious signals of the changing times is the decrease in global tourism. Even those still well-off financially are shying away from high-end travel for fear of looking out of step with the times. But there is a silver lining here: People are choosing to spend their personal "escape time" and entertainment dollars locally.
The potential benefits for marketers do not apply only to local travel and entertainment alternatives; people are also looking at a wide variety of new ways to treat themselves in lieu of extravagant luxuries. The brands in highest demand are those that deliver the best economic or emotional value. For example, lipstick sales are up - it's an inexpensive indulgence. A local optometrist reports that customers are spending more than usual on stylish glasses to make themselves feel better. Movie theatre ticket sales have reversed their downward decline, and are up a surprising 17.5 per cent, as people look for an inexpensive way to forget their troubles.
A few tips for delivering value in the current environment:
Understand your competitive context. To ensure your brand is perceived as delivering value, it's important to understand how consumer behaviour is shifting. Before, the competitive context for lipsticks was other cosmetics; now it's "things I buy to make myself feel better."
Offer consumers new ways to experience your product. One aspect driving the increased cinema box office is giving customers more entertainment value for the same price. The growth of Imax and 3D films (such as Hannah Montana/Miley Cyrus: Best of Both Worlds and Jonas Brothers: The 3D Concert Experience) offer exciting, but less expensive, ways to keep the kids entertained.
Tap into the best-kept secrets of local community. As consumers stay closer to home, they need to look more closely at what is available in their own backyard. With the increased functionality of the iPhone and BlackBerry, people have new tools to seek out intriguing local options. Location-based services allow marketers to inform consumers about specific and relevant offerings in a more immediate and direct way.
Shift from owning to using. How many hours a year do people actually use their power tools or power washers? Savvy marketers are creating businesses built around the shift from owning to using, as people realize that they can get the full value of a product without shelling out the full purchase price. An example is companies such as Zipcar or Vancouver's Co-operative Auto Network, which let people share vehicles and pay only when they actually use them. Beyond the value benefit, selling shared ownership also gives marketers a green story to tell.
Tap into the power of local stories. Another aspect of value for consumers is helping them understand more about where and how the products they purchase are made. And example is the fast-growing Good Earth Cooking School in the Niagara Valley. It sees its success as a direct result of offering customers an experience tied to the region where the owner grew up; she knows how the land has been cared for, provides the best in local ingredients, and freely shares her own story with people. Building on local stories also helps people feel that they are giving their "neighbours," rather than strangers, a helping hand in a tough economy.
As economic factors continue to shift, you can't sit on the sidelines as a marketer. Take the time to understand the context in which your brand competes, and look for smart opportunities that add value to your brand story.
Andrea Southcott is president of ad agency TBWA\Vancouver