INSIGHT: Brand Relevancy in the Age of Frugality
in the Age of Frugality
in the Age of Frugality
Change makes things different. And if you don't think things are changing for consumers in America and all around the world, lift your nose out of your sales data for a second, and take a whiff.There is no question that consumers are changing their attitudes and adapting their behavior. In a survey by Faith Popcorn, 90% of respondents said they were considering options for "the simpler life;" 84% said they were inclined to "buy less stuff." Booz recently conducted a survey of 1,000 households and found that 43% of respondents said they were eating at home more and 25% said they were cutting back on costly hobbies and sports activities. In both cases, most said they would continue their frugal behaviors even when the economy improves.
Five Rules for Brands in the Age of Frugality
- Believe in your brand: Whether your brand has been in the market for years or is relatively new, you have equity with your customers. If you lose faith and break with your brand values now, you'll need to give your customers another, more compelling reason to stay with you. Building new products and offering fresh messages and innovative promotions that leverage the promises you have made to your customers in the past will bear fruit, even in these tough times.
- Know your customers and speak to them: In this new Age of Frugality, old values are coming to the fore. What's important: Health? Security? Education? Family? These values will drive your customers' decision-making. Make sure your salesforce, retail salespeople and customer service personnel have the training they need to empathize with your customers. Help them consider alternatives, including doing nothing. Help them evaluate the purchase by touting benefits, both rational and emotional.
- Try something new: Speak to a new customer segment, use a new media or promotion vehicle, develop new packaging, launch a new distribution channel, or make an acquisition that helps your growth. Even though money is tight, doing new things is less expensive as the entire marketing eco-system looks for ways to survive.
- Focus on value, not simply price: Lowering price to attract new customers is a viable strategy. But if it is the only way you can compete, you are committing to being the low-priced brand in your category. Your brand has value (see rule #1), therefore you must exploit that value to be more competitive and make sales without giving away all your margin. If you understand your category and your competition, you can find ways to create value without being on sale every day.
- Have a strategy for permanent frugality: There is no reason to believe that this is going to be a one-year-and-out downturn with consumers returning to their free-spending ways. The net worth of Americans has been dramatically reduced and it will take many years for your customers (and you) to rebuild financial well-being. In many cases, whole new thrift behaviors are being learned, which will preclude a rapid rebound of consumer spending. Put long-term brand strategies in place now that comprehend a frugal consumer for years to come.
Now, building brand value is wholly dependent upon understanding how your customers' values have evolved. Getting it right is essential for both short-term survival and long-term growth.
This whitepaper from SieckGrowth examines how the current economic environment is affecting consumer buying behavior, and what leading brands are doing to become more competitive. Brand Relevancy in the Age of Frugality
Source: Greg Sieck, Sieck Growth.
For more retail perspectives, please contact Therese Daves.