The past 12 -18 months have been brutal. Many people are still reeling in the wake of the Granddaddy of all recessions.
Hopefully the worst is past,’though most pundits expect that the ripple effect will last for some time yet and a “double dip” is not out of the question (fingers crossed people)? Many are predicting an “uneven recovery” whatever that means?
One thing’s for sure, the past few months have raised a lot of questions and a lot people have taken the time to re-examine their values and spending habits. I think that’s a good thing.
Many consumers have adopted that stance that “once bitten twice shy”; especially those that may have lost jobs, lost their business and homes. Some are thinking “never again…will I put myself and my family in the position to lose it all“. Not unusrprisingly, many people have lost confidence in business, and the economic system or more specifically, those who are meant to safeguard and administer it. If you thought the consumer was value/price driven in the past? You ain’t seen nothin’ yet.
In the past year or two a lot of people have had to give up things that they thought were vital to their lifestyle. Discovering along the way that not only are they not vital, many consumers are wondering why they ever thought they were?
Certainly there will be some consumers who will opt for pleasure revenge and spend to compensate for the depressing woes of past months “Come on Alice, lets buy that new car! We deserve it after all we’ve been through.” But most consumers, I think (and hope) will hit this next Christmas thinking “Spend 5 grand on useless stuff we don’t need…are you mad?”
No. I think most consumers have adopted a very frugal outlook , they will think twice if not 3 times before they spend a dime and they will be looking to maximize value at every opportunity… saving money to replenish the nest egg. Good.
But…Maybe not so good, if you’re a marketer? A lot of companies must be thinking, Now What?
Well, it really boils down to 3 options (albeit with a lot of variations)
1. Drop prices
2. Increase value
3. Do Both
I think we’ll see initially a renewed call for lean principles but they’re not going to work, those self-same principles in practice are part of the reason we’re in the mess were in. In principle the idea is sound. Cut the operating cost while maintaining value and price, keep the increased difference in profits.
Unfortunately in practice I think what happens is a reduction in operating costs to the point of compromising value, in the hopes of gaining extraordinary margins. Nothing to obvious, a gradual nibbling away at value… one small thing at a time. Other companies appear to believe, that because small incremental erosion may go unnoticed, value can be pared down to some knife-edge point and held there, maximizing profits while at the same time optimizing value, maybe even up the price a tad. Nice theory…I don’t think it works. Values are aggregate and fluid, not constant.
What consumers want is a demonstrably healthy relationship between value and price. They don’t want cheap and nasty and they don’t want overpriced fluff. What they want, is a reasonable price for good value, evidential value, not a ruse…not smoke and mirrors. In particular they admire brands that they perceive to be part of the solution…not part of the problem. They’re going to take the time to check out offers and compare value more assiduously than they have in the past. Not much of a future in impulse purchases, I wouldn’t think?
Those companies that figure out how to deliver it, will do well. Those that don’t, will not.
Hint: Find ways to deliver remarkable value.
What do you think? Drop prices…create remarkable value? What solutions is your organisation considering?
Ohh be nice push some of those buttons below, please.
Xross that line