EURO RSCG WORLDWIDE VOL 6 | 2010the future of value
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THE FUTURE OF VALUE VOL 62 Introduction: Hunkering Down6 Defining the New Value: The Hunter-Gatherer Imperative15 Communicating Value: A Semiotic Analysis
2 “Wolves at the Door” (The Economist, Nov. 6, 2008) “The New Financial Ice Age” (BusinessWeek, Oct. 13, 2008) “Holding On for Dear Life: The Economy and You” (TIME, Mar. 9, 2009) INTRODUCTION: Hunkering Down For months on end, headlines in leading periodicals have spread tales of economic gloom and doom. Consumers are waking up to news of depleted investment accounts and plummeting home values. Gas prices continue to fluctuate, and each trip to the grocery store seems to cost more. Major corporations are surviving only with the help of massive government bailouts, and more than a few well-known institutions have shuttered their doors. It’s a scary time for businesses. And it’s a scary constitutes value. As a first step, the agency time for consumers, who have virtually no control fielded a quantitative study (n=500) in the over the economic maelstrom that has descended United States, the United Kingdom, and France. upon them. Yet how much of the consumer Using our Decipher® tool, we then conducted a anxiety in evidence around the globe is a direct semiotic review of the communication of value, response to reduced personal circumstances (e.g., analyzed research available online, and conducted job loss, home foreclosure) and how much is the shop-along ethnographies in supermarkets and result of a media-created zeitgeist of fear? malls. This research has afforded us a unique perspective on how consumers are responding to Beginning in December 2008 and continuing current economic realities and how these realities into 2009, Euro RSCG Worldwide has investigated will likely affect future consumption choices. the consumer response to the downturn and its impact on purchase behaviors. Our intent was Note: In the interest of length, only select data tables are to determine to what extent consumer attitudes included in this issue of Prosumer Report. and behaviors have changed, with an emphasis on understanding changing perceptions of what
5 How much have you cut back on personal and household How much do you expect to cut spending in the last few months? spending in 2009? A lot A lot t: P: m: t: P: m: 17% 17% 17% 23% 14% 15% 18% 18% 18% 22% 14% 18% A moderAte Amount A moderAte Amount t: P: m: t: P: m: 27% 19% 28% 33% 26% 24% 34% 30% 34% 39% 35% 27% A little A little t: P: m: t: P: m: 42% 50% 41% 37% 47% 41% 39% 41% 39% 31% 41% 45% none none t: P: m: t: P: m: 14% 14% 14% 7% 13% 20% 9% 12% 9% 8% 9% 10% t: Global Sample—total; P: Global Sample—Prosumers; m: Global Sample—mainstream Consumers
6 Defining the New Value: The Hunter-Gatherer Imperative The overarching purpose of the study was to determine how, if at all, consumers’ definition of value has been affected by the downturn. What we found is that shoppers’ focus is now less on the price of individual transactions than on the perceived overall value of the products and the purchase and ownership experience. For some time now, Euro RSCG has studied the shift toward “experiential retail,” looking at such phenomena as the theme-restaurant trend of the 1990s, the increase in in-store diversions, pop-up retail, and multisensory store design. The “value experience” consumers now seek is different in that it has less to do with sensory stimulation than with making the very best choices. Done right, the purchase experience satisfies two need states: hunting (the need for discovery—“Look what I found!”) and gathering (the need for selectivity and trust—“This is a purchase I feel good about”). Satisfying the Hunter More than two-thirds of the sample admit to being consumed with getting the best deal possible. I am consumed with getting the Evidence of that mindset can be seen in the best deal for a service or product aggressive shopping practices taking hold online and I purchase in the increased visits to such bargain bastions as tag sales and secondhand stores. AGreeinG StronGly/SomewhAt Significantly, the appeal of the “hunt” is not just t: P: m: about cost savings. Human psychology tells us that real value is not found, it is discovered. Active 67% 73% 66% 66% 68% 66% value hunters don’t want “something for nothing”; they want to feel they have earned something not“Knowing something’s available to the average shopper. They enjoy the process and take pride in the effort they expend to a good deal requires get the best deal. TIPS FOR CONNECTING WITH THE HUNTER a transparent price This hunting instinct has important implications for • Continuously offer new news—not policy.” (France) product promotion. First and foremost, the experience just new products, but new stories must offer opportunity for interactivity. This can be as simple as requiring shoppers to register for promotional and associations. codes or as complicated as creating an ambassador-type program that rewards the most active evangelists with • Make the most of the Internet— prizes and other incentives. Exclusivity also conveys value: People want to think they are getting a deal empower consumers (especially available only to those who have made an effort to prosumers) to evangelize your pursue it. Marketers are catering to this desire with brand in the digital world. such promotions as “private” and “members only” sales, which convey a sense of exclusivity even when all that’s • Invent promotions that offer a sense required to qualify is an e-mail signup or prior purchase. of discovery or require a little effort Earlier this year, a home furnishings company in Connecticut sent out postcards advertising a holiday (contests, tell-a-friends). weekend promotion. During each day of the three- day sale, discounts deepened, with the best bargains • Let consumers discover your brand. available on Sunday. The postcards challenged customers to make the “right” choice: Do they visit the stores on Day One, when the greatest selection is available but at the lesser discount, or are they “brave enough” to wait till Day Three, when discounts are steeper but the selection might be more limited? It t: Global Sample—total P: Global Sample—Prosumers was a great way to actively involve bargain seekers in m: Global Sample—mainstream Consumers the thrill of the hunt.
9 What’s a Prosumer? Prosumers are the most influential men and women within any market. Empowered by new technologies and improved access to information, they have tipped the scales of power away from manufacturers and retailers, and toward themselves. They are highly knowledgeable and demanding consumers who expect their brand partners to acknowledge their value and treat them accordingly. Prosumers typically make up 15 to 25 percent of any market. Euro RSCG Worldwide has made them an ongoing focus, because, beyond their own economic impact, prosumers influence the brand choices of others. Simply put, what prosumers are doing today, mainstream consumers are likely to be doing six to 18 months from now. KEY PROSUMER TRAITS: >> Embrace innovation—curious >> Are marketing-savvy and plugged in to to try new things, challenges, multiple media sources and experiences >> Demand top-notch customer service >> Keen on new technology and gadgets and access to information >> Transport new attitudes, ideas, and >> Proactively seek to maximize control behavior—they are “human media” over their lives through information, >> Pursue timeless value communication, and technology >> Recognize their value as consumers and >> Constantly seek information and opinions; are eager to share their expect brand partners to do likewise views and experiences with others
10 “A good value has to take into account sustainability, protection of the environment. It has to not be misleading anymore. Good value is linked to fairness, to sharing, even to gifting.” (France) This is not to say price is unimportant, but simply traditional value brands are pushing quality of that it is but one factor in a broader consideration product and experience over price. McDonald’s has set. When asked how satisfying various “added perfected the art of “food porn” photography, values” are when making a purchase decision, “cost giving every menu item enormous visual appeal. savings” came in at number one among mainstream JetBlue is a discount airline, but its communications consumers; leading-edge prosumers, in contrast, center not on price but on the quality of the placed “top-notch customer service” first. That’s a experience—from the blue leather seats to the clear indication that service is set to become a name-brand snack selections. Zappos.com more important criterion among the mainstream. differentiates itself from other e-retailers not by offering lower prices or a better selection but by The shift in focus from low price to high value can continually searching for ways to “wow” its be seen throughout the marketing community. Even customers through service. IN GENERAL, HOW MUCH SATISFACTION DO YOU GET FROM EACH OF THE FOLLOWING “ADDED VALUES” WHEN YOU MAKE A PURCHASE? Cost savings (e.g., sale price, discount Freebies (e.g., gift with purchase, coupon, three for the price of two) free samples) eXtreme/Quite A Bit eXtreme/Quite A Bit t: P: m: t: P: m: 68% 72% 67% 71% 71% 60% 54% 62% 53% 58% 59% 44% Top-notch customer service Item is made by a company I admire eXtreme/Quite A Bit eXtreme/Quite A Bit t: P: m: t: P: m: 62% 76% 61% 67% 60% 60% 37% 48% 36% 45% 33% 33% Item is made by a company I trust Feeling conscientious/making eXtreme/Quite A Bit a difference (e.g., eco-friendly product/packaging, % of purchase t: P: m: price goes to a good cause) 48% 59% 46% 57% 42% 44% eXtreme/Quite A Bit Item is scarce/hard to find t: P: m: eXtreme/Quite A Bit 36% 46% 34% 37% 29% 40% t: P: m: t: Global Sample—total 42% 63% 39% 47% 43% 36% P: Global Sample—Prosumers m: Global Sample—mainstream Consumers
12 “A good value now depends on whether I NEED it, not just want it for the given price.” (U.S.) The Added Value of Trust in Anxious Times Significantly, nearly half of the total sample As we have seen in its returns over the last few (48 percent) and around six in 10 prosumers consider quarters, Walmart has emerged as a hero in these purchasing a product from a company they trust as recessionary times. We would argue this is due, at an added value. At a time when so many leaders least in part, to the fact that the massive discount and institutions have proved unreliable, consumers retailer has come to understand that low prices are are looking to brand partners they can count on not enough. With its new logo—“Save money. Live today and over the long term. In the same vein, better.”—the company is highlighting the positive sizable minorities in each market (and just less than role it plays in people’s lives. Importantly, the half of prosumers) derive satisfaction from brand is not offering some sort of aspirational purchasing the goods of companies they admire fantasyland, but, rather, “real” products sold by and from buying items that make them feel “real” people who live in the “real” world. Through socially or environmentally responsible. its $4 prescriptions and home-centered advertising, Walmart speaks to the sense of interconnectedness These latter findings speak to what Euro RSCG has and interdependency people craved even before termed the humanization of business. It is no the downturn. Hyundai has done much the same longer enough for companies to produce goods thing with its Hyundai Assurance guarantee, a that are useful and defect-free. Consumers are tactic that has been broadly imitated in recent demanding that the companies behind the months. More recently, discount retailer Kmart has products act in a more conscientious way. More expressed its solidarity with the down-and-out by than eight in 10 respondents agree that, to be offering a Smart Assist Savings Card to unemployed successful, corporations of the future will need to residents of hard-hit Michigan. The cards give show a more “human face”—meaning they must be the unemployed a 20-percent price reduction on more caring toward people and take a more active Kmart’s private label goods for six months. role in supporting community and social causes. A near majority (46 percent) prefer to buy from More and more, consumers are seeking the added companies that share their personal values. In value of brand partners that treat them in a way every country surveyed, this is a trend led by that is distinctly human. For companies, this prosumers. means building a relationship of trust based on consistently good product and service quality, and It’s easy to spot companies that have built their interacting with customers on a personal level. brands on humanized values; they include such icons as Whole Foods Market (“Whole Foods. Whole Today’s most successful brands are taking steps People. Whole Planet.”), Starbucks (Fair Trade, to satisfy both sides of the modern-day value profit sharing), and Google (“Don’t be evil”). In shopper: the hunter and the gatherer. They make speaking with U.S. consumers during the current shopping an experience of personal discovery, recession, however, it was a different sort of while also reassuring consumers that they are on company whose name kept coming up: Walmart. a shared life journey. tiPS for ConneCtinG with the GAtherer • 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. • Build a genuine bond of trust.
13 To be successful, corporations of the future will need to show a more “human” face (meaning they must care Compared with a few years ago, it’s about people—employees, suppliers, more important for me to feel good customers, etc.—and take a more active about the companies with which I role in community and social causes) do business AGreeinG StronGly/SomewhAt AGreeinG StronGly/SomewhAt t: P: m: t: P: m: 82% 90% 81% 82% 78% 86% 46% 53% 45% 47% 41% 50% I am more likely to buy a certain Ethical conduct is a key factor for brand if I admire its parent good business company AGreeinG StronGly/SomewhAt AGreeinG StronGly/SomewhAt t: P: m: t: P: m: 56% 72% 54% 79% 50% 41% 45% 64% 42% 51% 42% 41% The most successful and profitable I prefer to buy from companies with businesses in the future will be those a reputation for having a purpose that practice sustainability other than just profits AGreeinG StronGly/SomewhAt AGreeinG StronGly/SomewhAt t: P: m: t: P: m: 53% 71% 50% 63% 54% 40% 38% 46% 37% 47% 38% 31% I am willing to pay a bit more for a I avoid shopping at stores that don’t product if a portion of the proceeds treat their employees fairly goes to a good cause AGreeinG StronGly/SomewhAt AGreeinG StronGly/SomewhAt t: P: m: t: P: m: 50% 58% 49% 50% 47% 53% 43% 50% 42% 48% 34% 46% I prefer to buy from companies with I prefer to buy from companies that a reputation for being active in share my personal values social causes AGreeinG StronGly/SomewhAt AGreeinG StronGly/SomewhAt t: P: m: t: P: m: 46% 60% 44% 48% 44% 47% 35% 48% 33% 34% 35% 35% t: Global Sample—total; P: Global Sample—Prosumers; m: Global Sample—mainstream Consumers
14 the APPeAl of fruGAlity in An erA of mindful ConSumPtion The Future of Value confirms findings from two earlier studies by Euro RSCG: The Future of the Corporate Brand (2008) and The Future of Shopping (2009). Once again, we see evidence that consumers are moving away from mindless spending and toward a more measured, sustainable approach to consumption. More than a quarter of respondents (26 percent) believe their lives would be better if they owned fewer things. This feeling is most prevalent in the U.S., where 31 percent agreed with the statement. The extent of American “overownership” can be seen in the boom in self-storage facilities over the past quarter century. Of the approximately 58,000 such facilities worldwide, 52,000 are in the U.S., totaling 2.35 billion square feet of storage space. The Self-Storage Association reports that one in eight U.S. households now rents a self-storage space—an increase of 75 percent since 1995. This is despite the fact that the average U.S. home increased from 1,660 square feet in 1973 to 2,400 square feet in 2004 (National Association of Homebuilders). That’s a lot of “stuff.” After decades of accumulation, many consumers are finding satisfaction in downsizing—whether that means minimizing day-to-day expenditures; replacing a gas-guzzler with a hybrid car; moving into a smaller, more sustainable home; or growing vegetables in the backyard. These changes are not just about saving money; they are also about feeling good. Excess consumption has left a lot of people feeling worn out. They are sick of playing the accumulation game. In this context, it is easy to see why a majority of Americans (55 percent) are deriving a sense of satisfaction from reducing their purchases during the downturn. Near majorities in the U.K. and France said the same. This satisfaction is tied, in part, to the overall move toward conscious consumption and greener living: 80 percent of prosumers in the total sample and 69 percent of others are feeling good about reducing the amount of waste they’re creating. Significantly, four in 10 respondents don’t plan to go back to their old shopping patterns even when the economy rebounds, and six in 10 are committed to reducing their credit card use over the long term. Whether they will stick to these resolutions in flusher times remains to be seen, but the draw of a more measured approach to consumption is unmistakable. TO WHAT ExTENT DO YOU AGREE WITH THE FOLLOWING STATEMENTS? My life would be better if I owned I am committed to reducing my use fewer things of credit cards over the long term AGreeinG StronGly/SomewhAt AGreeinG StronGly/SomewhAt t: P: m: t: P: m: 26% 23% 27% 31% 25% 23% 60% 73% 58% 67% 57% 55% I’m getting a sense of satisfaction I feel good about reducing the from reducing my purchases amount of waste I create AGreeinG StronGly/SomewhAt AGreeinG StronGly/SomewhAt t: P: m: t: P: m: 48% 50% 48% 55% 46% 43% 70% 80% 69% 73% 72% 65% I won’t go back to my old shopping patterns even when the economy rebounds AGreeinG StronGly/SomewhAt t: P: m: 41% 41% 41% 47% 38% 38% t: Global Sample—total; P: Global Sample—Prosumers; m: Global Sample—mainstream Consumers
15 Communicating Value: A Semiotic Analysis Decipher® is a methodology Euro RSCG has refined from semiotics, the study of visual and verbal signs and cultural codes. It allows us to decode how category communications are changing and to anticipate future shifts. As part of the study, we applied this tool to the subject of “value.” Here’s what we discovered: In the past, communications of value were all Dolce & Gabbana. Celebrities assure us it is both about the price game. Advertisers focused on smart and stylish to shop at Target, JCPenney, cost savings—offering generic products, three for and other discount venues. Communications are the price of two, and other forms of discounting. centered on shoppers being smart and discerning. Underlying the communications was a sense of Us Every one of us deserves the best. vs. Them: “We know you’ve been clobbered by the big guys; we’re going to give you the low price Now our Decipher research has uncovered signs you deserve.” More was definitely better. of another shift, this time toward getting the right bang for one’s buck. Buying Brand A isn’t More recently, value communications have focused just the smart thing to do; it’s the wise thing to less on more bang for the buck than on a better do. Being wise means buying exactly what we bang for the buck. The masstige movement has need—no more and no less. It is about a return pushed quality over quantity (“Now you can have to such traditional values as frugality, temperance, what used to be available only to the exclusive and common sense. Excess consumption is few”). And value brands have taken on the codes out, replaced by a more values-infused way of and cues of premium brands: Ads for economy cars considering goods: “Do I truly need it? Will I are now virtually indistinguishable from luxury get good use of it? Do I trust the company that car advertising, and H&M print ads have the look makes and sells it? Is the purchase ethically and feel of advertising for high-end design house supportable?” reSiduAl: dominAnt: emerGinG: More Bang Better Bang Right Bang for Your Buck for Your Buck for Your Buck • Quantity; bigger is better • Quality; masstige; • Better experiences smart/savvy • Cheap is good; generics • Traditional values • The way to a great life rebooted • Save because you have to • Stylish and playful • Save because it’s the • Pile on “extras”—even wise thing to do if most of the bells and • Save because you’re whistles will go unused smart “Good value now has a lot more to do with getting good customer service and having a minimal-to-positive impact on the environment. It is no longer just getting the biggest bang for my buck.” (U.S.)
16 emerGent vAlue CodeS Experience Good Enough Revivalist Wisdom (vs. consumption) • brand as resource • voluntary simplicity, • concern for • less about getting or tool for richer conscious consumerism responsible choices, one over on the big experience relationships, brands than about • transparent brand community getting to what’s • forgoing ownership personality, real important and accumulation product story, simple • can be about looking packaging to future instead of • project a more plural, • eBay, auction past, taking the old inclusive, humble, culture, Craigslist • magazines celebrating and making it new well-adjusted outlook cool self-reliance, • rent a car, not an pragmatism, DIY • Obama’s Inaugural; • YAWN (Young and RV; charming hotel, Anne Hathaway, Wealthy but Normal); not a resort • Craftster.org, Make, Craft Norah Jones Obama “The most important thing a Brands of all types and sizes are tapping in to this new dynamic: Etsy.com, the popular website for handcrafted company can do to make me goods, offers consumers an appealing alternative to feel I have gotten a good deal mass-produced, impersonal items. American Apparel and other clothing retailers are rediscovering the basic is to provide customer service T-shirt and pair of khakis. DeBeers is telling women they don’t really need to splurge; a nice that’s free and efficient, fair pair of diamond stud earrings will do. It’s not about prices, and products of perfect doing without; on the contrary, it is about finding satisfaction from getting just enough and no more. quality, and to show respect Smart marketers in every consumer-facing industry for the environment and will find a way to communicate value messages—and human values.” (France) values messages—just right for these times. That means emphasizing such essentials as quality and durability, while also promoting a backstory that speaks to traditional values that were all but lost in the conspicuous consumption of recent decades. It also means actively engaging consumers in the hunt for value, giving them the satisfaction of finding or even earning something better than the average person is able to attain. And it means letting consumers know how the brand is making a positive contribution to the broader world—whether that involves surprising and delighting consumers, tackling a hot-button global issue, or something in between.
Prosumer Reports is a series of thought leadership publications by Euro RSCG Worldwide – part of aglobal initiative to share information and insights, including our own proprietary research, across theEuro RSCG network of agencies and client companies.Euro RSCG Worldwide is a leading integrated marketing communications agency and was the firstagency to be named Global Agency of the Year by both Advertising Age and Campaign in the same year.Euro RSCG is made up of 233 offices in 75 countries and provides advertising,marketing, corporatecommunications, and digital and social media solutions to clients, including, Air France, BNP Paribas,Charles Schwab, Citigroup, Danone Group, Heineken USA, IBM, Kraft Foods, Lacoste, L’Oréal, Merck,PSA Peugeot Citroën, Pernod Ricard, Reckitt Benckiser, sanofi-aventis, and Volvo. Headquarteredin New York, Euro RSCG Worldwide is the largest unit of Havas, a world leader in communications(Euronext Paris SA: HAV.PA).For more information about Prosumer Reports, please visit www.prosumer-report.com or contactNaomi Troni, global chief marketing officer, at firstname.lastname@example.org.Follow us on Twitter @prosumer_report