Credit Crunch March 09


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Credit crunch impact on UK consumersexploring; utilities, finance & savings, luxury foods, flowers & cars

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Credit Crunch March 09

  1. 1. CREDIT CRUNCH: WHERE YOUR CONSUMERS ARE AT TODAY EXPR ESSIO N S B R A N D P LA N N IN G PHASE 3 [FULL REPORT] Julian Rodway Expressions Planning Limited 416a King’s Road London SW10 OLJ Tel: +44 (0)20 7376 3356 Fax: +44 (0)20 7376 3447 Email: April 2009
  2. 2. CREDIT CRUNCH CONTEXT  The last quarter of 2008 was a dress rehearsal for 2009  The UK economy experienced record rises in fuel, impacting on: • Home heating • Transport costs • Production costs  Compounding these fundamental costs was the credit crunch  From a consumer perspective the world was changing: • Mortgage companies were failing  Icons of consumerism were crumbling: • High street shops were closing  Banks were bailed out: • Motor manufacturers were looking for economic support Consumers were experiencing the cold winds of change Expressions Planning Credit Crunch - 1
  3. 3. A YEAR LONG REVIEW  Expressions conducted 4 groups in March 2009: • 2 in Birmingham • 2 in London  In each location one group was conducted amongst: • Consumers confident about their economic future • Consumers experiencing recent economic difficulties and concern over jobs  The aim is to understand the current environment: • Select 8 households for an ethnographical study  The intent is to follow the fortunes of these 8 families monthly over the year  In this third phase we explored 4 categories • Utilities • Finance and savings • Luxury food and flowers – in home • Cars  We invite you to submit other categories and specific questions to be explored during the subsequent monthly interviews  This is a free service Expressions Planning Credit Crunch - 2
  4. 4. RECESSIONARY MINDSETS: RECREATIONAL TO REALITY Expressions Planning Credit Crunch - 3
  5. 5. RECESSIONARY CONSUMER TYPOLOGIES Driven by a need to conform to situation Confident Conscious that conspicuous consumption is not socially or politically correct Selectively join in but will also exploit opportunities Recreational Relatively confident they will not be impacted on Not overly concerned about serious economic issues Recognise situation as an opportunity to review & reduce household expenditure Reserved Elements of regaining control of expenses Participation is about cutting back: - not cutting out Perceive household as vulnerable to unemployment Need to be proactive, manage their household expenses Retrenchers Matter of prioritising expenditure Cutting back & out without being too puritanical Concerned Experiencing economic difficulties; adjusting & adapting Reality Desperate measures need to be enforced by many Optimistic belief means some adopt a progressive cut back/out policy Learning to adjust to a different set of priorities Prominence Expressions Planning Credit Crunch - 4
  6. 6. DYNAMICS OF RECESSION TO DEPRESSION The economy is fuelled by individuals spending When this necessary impetus is slowed or restricted recession spirals downwards As more consumers lose confidence the economy is disproportionately impacted Recreational Recreational & Reserved need to retain their sense of buoyancy & optimism Reserved Recreational Reserved Retrenchers Retrenchers Reality Reality Expressions Planning Credit Crunch - 5
  7. 7. RECESSIONARY CONSUMER TYPOLOGIES: SUMMARY Reserved Summary Recreational Summary Not overly concerned Need to conform Opportunity to review & reduce Selectively join in expenditure Exploit opportunities Regaining control Relatively confident Cutting back, not cutting out Reality Summary Retrenchers Summary Experiencing economic Vulnerable to unemployment difficulties Need to be proactive Desperate measures Prioritising expenditure Progressive cut out policy Cutting out & back Learning to adjust Expressions Planning Credit Crunch - 6
  8. 8. RECREATIONAL MINDSET  Economically comfortable; adopt a secure attitude to employment  Typically working in public sector or companies supporting essential services  Boast about low mortgages or tracker mortgages Context  Perceive themselves as financially astute  Not prepared to alter their lifestyle but less overt about it: “…we’re still going skiing but feeling a bit guilty about it…”  Voyeurs of crisis; a topic of discussion not an imminent threat  Opportunity for some to carefully and covertly exploit: “…at least you can now negotiate over prices…” “…you can now get a builder and at a reasonable price…” Crisis  Critical of the ‘doom & gloom’ of economic news; considered an irritant: “…the media don’t help, full of depressing stories…” “…stopped listening to Radio 4…too depressing…” Expressions Planning Credit Crunch - 7
  9. 9. RECREATIONAL MINDSET (Cont’d)  Feel an opportunity to review household expenditure  More about exploiting offers than consolidating: - minimizing expenditure & getting greater value: “…Sky are doing some good offers…” Considerations  Concern over value of sterling & foreign holidays  For the brave an opportunity for investments: “…house prices are going to fall…they’ll be some bargains about…”  Belief in buying brands unshaken; not going to compromise  Conversely, many aware of brands being discounted: - from chocolate biscuits to BMWs  Resist changing established and efficient shopping habits Brands  Recession more about being seduced to remain loyal to existing suppliers: - exploiting an opportunity Expressions Planning Credit Crunch - 8
  10. 10. RECREATIONAL MINDSET (Cont’d)  Confident, to an extent complacent  Perceive situation as an opportunity to exploit  Voyeuristic and vulture mentality  Not prepared to compromise on lifestyle Summary  Respect need to be less conspicuous consumers  More likely to buy a bigger car at reduced rate: - than a smaller more economical car  Crisis is about selectively joining in when it suits them Expressions Planning Credit Crunch - 9
  11. 11. RESERVED MINDSET  Younger couples, some professionals (teachers, librarian, IT workers)  Feel relatively secure in job; unemployment not an issue Context  Focus is on maintaining lifestyle by efficient finances  Concern is about the future and future planning  Impact is by association; house prices have fallen  Constraining plans for family improvements: “…we wanted to move to a bigger house this year…”  Talk about friends and relatives being affected; second hand experience: Crisis “…my brother-in-law’s badly hit, he’s a builder…”  Period of reconsidering financial situation, reviewing expenses  Sensitive to the plight of others; cutting back part of conformity: “…you see people buying more economy lines…so you think you might too…” Expressions Planning Credit Crunch - 10
  12. 12. RESERVED MINDSET (Cont’d)  Reference the need to budget and consider expenditure carefully  Future plans involving big ticket items or household improvements put on ice  Holiday plans have become less extravagant & UK based due to the £: - no longer able to enjoy cheap € Considerations  Looking to make savings where possible without sacrifice  Mood of being prepared for worse times: - preparing a plan to cope - a phased strategy from cutting back to cutting out  Still remaining loyal to ‘icon’ brands (washing products, butter, cereals, etc): - switching where deemed less important: “…I’m not down to buying the economy own labels but Brands cutting back where possible…it is a sign of the times…”  Challenge mentality towards expenditure: “…I feel as if I have to justify what I buy to myself…” Expressions Planning Credit Crunch - 11
  13. 13. RESERVED MINDSET (Cont’d)  Feeling of being prepared  Gaining control of expenditure  Prioritising values  Refreshing attitude to extravagant consumerism  Adopting more family and free entertainment Summary  Turning from consumerism to culture  Need to justify purchases; element of guilt over extravagance  Seeking to compensate when cut back: - indulgent meal in rather than a night out  Initiating family values and appreciating of money management Expressions Planning Credit Crunch - 12
  14. 14. RETRENCHERS MINDSET  Concerned about unemployment  Experience of friends, family and colleagues who have been made redundant Context  Work in sectors vulnerable to downturn (building related, catering, manufacturing, etc)  Anxiety about surviving through meeting essential commitments  Driven by the need to be prepared  Having a sort of plan, campaign management  Unspoken expectation of at least one partner’s income being affected Crisis  Have often reviewed household finances and cut down and out: “…we haven’t pared back to the bones …but should it happen we know we can be more ruthless…” Expressions Planning Credit Crunch - 13
  15. 15. RETRENCHERS MINDSET (Cont’d)  Staged reduction in unnecessary expenditure and lifestyle  Desire to implement drastic cuts after Christmas: “…we knew we had to do it but wanted to have a good Christmas first for everybody…”  All household bills and outgoings reviewed: - some subscriptions cut out (mobile phones, Sky, etc) Considerations - some services switched to exploit offers (dual fuel discounts, cheaper suppliers, etc) - some cut back (basic Sky package, selling 1 car, etc)  Desire to revisit mortgage but concern about ‘opening a can of worms’  Want to be living as expediently as possible; weaning themselves off credit  Some brands non negotiable (coffee, cereal, shampoo, toothpaste, etc)  Perceived as false economy  All discretionary expenses cut back  Experiment with other stores and own label products: Brands “…I’ve always driven past Morrison’s to get to Sainsbury’s but now I’m converted…excellent fresh fruit and veg…”  A period of redefining household tastes and expectations  Trading down whenever possible and practical Expressions Planning Credit Crunch - 14
  16. 16. RETRENCHERS MINDSET (Cont’d)  Planning for the worst  Learning to live on a reduced budget  Challenging past consumer aspirations  Acclimatising the family; changing tastes and expectation  Learning different shopping regimes Summary  Seek non extravagant rewards and treats  Family based activities evident  Parental concern on children not being the innocent victims  Prepared to compensate children and family with small shared indulgences Expressions Planning Credit Crunch - 15
  17. 17. REALITY MINDSET  One or both partners made redundant or hours shortened  Immediately impacting on household finances and emotions  Take desperate and immediate expenditure decisions: Context - driven by necessity  Pride prevents consideration of outside financial planning and help  Reluctance to talk to mortgage provider or landlord  Living through economic turmoil  Perceived themselves as victims, want to apportion blame  Government and banks cited as being responsible for ‘the mess’: “…it’s about people in power playing with our lives…” Crisis  Adopt a pessimistic view of the future: “…I’m 48, I’m not likely to get another job in engineering again…or at all!” Expressions Planning Credit Crunch - 16
  18. 18. REALITY MINDSET (Cont’d)  Radical change of life  Minimising expenditure and impact on family: “…you know there are plenty of us out there and there will be plenty Considerations more but you don’t want your kids to be affected…”  Evident psychological impact  Brands are luxuries that need to be justified: “…it’s only a few pence more for Heinz and they can tell the difference even if I hide the tin…”  Challenge is to survive on a reduced budget  Economies are essential, not optional: “…heating or eating…” Brands  Significant change in shopping and eating habits: “…now buying more vegetables and cooking from scratch…found some really good recipes…”  Discount stores now offer a shopping relevance: “…now go to Aldi first…what I can’t get there I get at Tesco’s…” Expressions Planning Credit Crunch - 17
  19. 19. REALITY MINDSET (Cont’d)  Challenges and changes family life  Learning to cope with circumstances  For some adoption of different value systems  Different coping strategies; resignation to optimism  In a changing world brand loyalty perceived as a luxury  Consumers looking for survival strategies Summary  However cheap does not always represent value  Need to treat themselves and family  Distractions deemed important; family outings, gaming consoles  Discovery of a different set of values and consuming experiences: - eg swapping culture or exchanging items on EBay Expressions Planning Credit Crunch - 18
  20. 20. UTILITIES Expressions Planning Credit Crunch - 19
  21. 21. UTILITIES Comfortable & confident about utilities generally Aware of fuel costs escalating last year but could appreciate why (world energy costs) Increases did not really impact on household Need to maintain comfort of home Recreational Only switch(ed) supplier due to moving home Conservative about utility companies, looking for comfort, believe in tried & trusted Interest distracted by conservation & ecology messaging Have previous experience of switching: - incentivised by offer of savings Prompted by a personal call (door 2 door or phone) Disappointing experience for most Problems of having to pay 2 bills & admin errors Reserved Promised reductions only short lived: “…after 6 months wrote to debit needed adjusting…more than we were paying before…” Poor switching experience made customers loyal by default; avoidance of mechanics of switching Expressions Planning Credit Crunch - 20
  22. 22. UTILITIES (Cont’d) One of the most considered items of household expenditure Easier to switch than other direct debits, eg mortgage Some serial switchers looking for cheapest/cheaper supplier Tend to review utilities relatively regularly anyway: But prompted by threat of reduced income More inclined to adopt an immediate & commodity Retrenchers perspective: - want savings today, less concerned about tomorrow Attempt to save on energy usage, implement economy programmes & strategies Have considered insulation as part of this Some switched to water meters to reduce bills (where perceived as viable) Struggling with paying utility bills, monthly problem to meet direct debit Have considered pay as go & charge cards: - rejection over added cost & stigma Reluctance to switch due to cost implications & losing Reality perceived loyalty credits for current suppliers New supplier maybe less sympathetic if situation worsened Implementing tough conservation strategies Turning down thermostats, shutting off radiators, nothing left on standby Reluctant & embarrassed to ask for help from utilities Expressions Planning Credit Crunch - 21
  23. 23. UTILITIES (Cont’d)  Most respondents aware of U-Switch and similar websites Switching  Internet sites considered objective and often the first port of call Strategies  Reluctance to accept cheapest quote due to concerns over service and administrative efficiencies  Consumers wanted a degree of brand reassurance with their utility company  Whilst consumers were confident they could switch gas & electricity supplier they were less confident about water  Many liked the idea of taking control over the cost of water rates Water  Some had looked into water meters  Water meters were only thought appropriate where there were 1 or 2 in the household; for many water meters were perceived as a consumer gamble  Did have the halo of environmental considerations  Against this they were considered to be another meter requiring supplier intervention to regularly read & monitor Expressions Planning Credit Crunch - 22
  24. 24. UTILITIES (Cont’d)  Generally utilities were perceived as a commodity item  Offers were seen as ‘much of a muchness’ with only minor cost differences between suppliers  However, there were considered to be distinct service differences  British Gas & previously deregulated companies still believed to offer superior tangible service (LEB, MEB) Switching  Past experience tended to dissuade many: - perceived as disappointing & too much hassle for too little saving  Believed to be a passé activity  Moreover past experience prompted concerns over need to pay 2 bills: - disincentive for financially concerned Expressions Planning Credit Crunch - 23
  25. 25. UTILITIES (Cont’d)  Savings by energy conservation were of more interest  Savings could be implemented through greater efficiency via insulation (Recreational & Reserved)  Or savings could be imposed on the household through greater Savings consideration of usage (Retrenchers & Reality)  Consumers relatively blasé about insulation & home efficiency  Most believed greater economies could be made through greater control of energy usage  For many energy was perceived as an invisible cost & a cost which could not credibly or readily be controlled  Consumers generally interested in all aspects of energy savings, either due to ecological responsibility or their financial positioning  Prospect of meters to enable them to gauge consumption was a powerful attraction Expressions Planning Credit Crunch - 24
  26. 26. UTLITIES (Cont’d)  Utilities were thought to have profiteered from rising fuel prices in the recent past  Consumers were aware through the media about increased domestic fuel Utility Attitude costs  Some were appreciative that the utilities needed to increase their costs  However many were critical over utilities still maintaining inflated costs after market prices had returned to near normality  Many considered utility companies to be opportunistically exploiting rising fuel prices Expressions Planning Credit Crunch - 25
  27. 27. UTILITIES: LEARNING  Utilities perceived as a household necessity  Often the first point of call when consumers are looking at household budgeting  The vogue of switching supplier was approached with caution  Experience of switching, both personal and through family and friends, was one of disappointment through: • Process • Long term savings  Consumers were more interested in reducing energy costs by conservation through either insulation or reducing usage  Most consumers were relatively complacent about the level of insulation of their home  There was an evident reluctance to invest in insulation to save money  Consequently conservation was of more general interest  Energy conservation in a household often prompted tension between partners or parents and children  Consumers consider themselves relatively ignorant over conservation strategies beyond basic procedures  Consumers believe they need to work in partnership with the utilities to save energy  The incentive varied dependent upon consumer typology and circumstance, with the incentive being either ecological or financial Expressions Planning Credit Crunch - 26
  28. 28. FINANCE AND SAVINGS Expressions Planning Credit Crunch - 27
  29. 29. FINANCE AND SAVINGS Some positively impacted by recession: - tracker mortgages = cheaper monthly outgoings Some saving the residual, others investing it in the home on improvements & extensions These consumers considered it a good time for household improvements & investment: - too precarious to move Recreational - supply of cheap(cheaper) builders Interest rates considered a disincentive to save: - consequently a desire to spend was evident Concern over interest rates eventually rising caused a restriction on big ticket spending: - less long term investments, eg cars - more short term enjoyment, eg holidays Had not experienced any significant financial impact Considered it more prudent or acceptable to be more financially discreet Frustrated over savings/low interest; look for other investments Often have reviewed finances prompted by media exposes & interest rates Reserved Become less apathetic over switching accounts: - beginning to appreciate minor rate differences Concern more about exploiting a better product offer than changing bank/building society Expected & wanted more imaginative products to encourage investment Expressions Planning Credit Crunch - 28
  30. 30. FINANCE AND SAVINGS (Cont’d) Have reviewed savings to see how long they could survive redundancy or reduced income Past savings have become current security: - appreciation of their financial prudence Despite reduced income (for some) still subscribe to saving ethic, particularly for children’s savings Retrenchers Some considering using savings to compensate for reduced income (inherent reluctance) Savings have become a war chest to fight the threat of recessionary impact Undergoing a balancing of reducing household expenditure & increasing savings to protect from redundancy Undergoing a financial crisis Family’s financial rhythms are completely disrupted: - however large outgoings can be negotiated & reorganised Liaising with building society about mortgage options: - extending, interest only, holiday Reality Desire to ‘make ends meet’ without using now valued savings Despite desperate finances relatively optimistic about finding a new job or temp employment (black economy) No surplus cash to top up savings However want savings to work hard to earn interest Expressions Planning Credit Crunch - 29
  31. 31. FINANCE AND SAVINGS (Cont’d)  For some, especially those on tracker mortgages, the financial impact has been positive  These consumers stated they had more money at the end of the month  Allied to this there was a perceived opportunity to exploit cheaper services & trades: Spending - thus an opportunity to indulge in home extensions & improvements  Others were less confident about long term or high ticket investments  Generally there was reluctance to save by Recreational & Reserved who saw saving as unnecessary: - wanted to indulge themselves and exploit spending opportunities on holidays etc Expressions Planning Credit Crunch - 30
  32. 32. FINANCE AND SAVINGS (Cont’d)  Low interest rates acted as a disincentive for those who could to save Savings  Acting as an incentive amongst the financially concerned (Retrenchers) was the imminent threat or redundancy or reduced income  In a time of economic uncertainty these consumers wanted to build up a war chest:  Motivation was survival rather than interest Interest Apathy  Low rate of interest had prompted many savers to review product conditions & options  Consumers spoke of managing their savings more carefully  Savings becoming more important to their short to medium term security Expressions Planning Credit Crunch - 31
  33. 33. FINANCE AND SAVINGS (Cont’d) Savings vs  Realisation that savings were false economy where they had loans Loans  Perceived as financially astute to use savings to pay back loans  General reluctance to acquire short term debt either on credit cards or loans if unnecessary  Many households talking of reducing collective loans  For some in preparation of the possibility of reduced income  Despite experiencing or the imminent threat of redundancy there was a degree of financial optimism  Retrenchers & Reality consumers believed they would weather the recession  Major household expenses such as mortgage & utilities were perceived as negotiable Financial  Thought that lending institutions & utilities were & would be sympathetic to Optimism the current situation  Most believed that should redundancy happen then it would only be a temporary situation  General view of ‘something will turn up’ & that they needed to be flexible & versatile about future employment Expressions Planning Credit Crunch - 32
  34. 34. FINANCE AND SAVINGS: LEARNING  For some the recession has been favourable (tracker mortgages)  These consumers are experiencing monthly surpluses  These are being invested in either home improvements or personal indulgences  For these consumers the interest rates are a disincentive to save  Where saving was evident it was as a safety net against the recession and redundancy  These savers were less incentivised by interest rates as survival  The sense of saving apathy previously experienced had been replaced by an interest and proactive concern over managing savings  Consumers were likely to be more involved and interrogate saving options  Propensity to switch existing savings to capitalise on recession oriented offers  General frustration over lack of imaginative savings products  Evident need for savings products to accommodate redundancy payments and consequential need to draw down on these Expressions Planning Credit Crunch - 33
  35. 35. LUXURY FOOD AND FLOWERS IN HOME Expressions Planning Credit Crunch - 34
  36. 36. LUXURY FOOD AND FLOWERS IN HOME Appreciate a number of tempting offers Lack of budget constraints means tempted to trade up Encouragement to experiment with: - promotional offers - value meals Perceive themselves as positively exploiting the situation Recreational Spread of instore bargains on premium lines such as meat, fish & flowers Restriction is not financial but family acceptance Conflicting emotions evident: - indulgence in a period of public prudence Share many of the values of above However, justify trading up to superior cuts or more expensive items; home entertaining replacing going out Emotional justification also given; light relief in a period of gloom: “…need something to brighten our lives up…why not treat Reserved ourselves…it’s cheaper than it’s been for a long time…” Believe they are making certain longterm or larger sacrifices & home indulgences compensate for these Element of rewarding & indulging the family: - asserting or reaffirming their economic positioning Encouraged to regularly take advantage of such promotions Expressions Planning Credit Crunch - 35
  37. 37. LUXURY FOOD AND FLOWERS IN HOME (Cont’d) Need to reward & indulge still evident However, excuse needed; special occasion, Mother’s Day, etc Perceived as treating self & family consequently infrequent For some a quality cut of meat or fish serves as compensation: “…if we’ve had an economical week of casseroles & sausage Retrenchers then I don’t feel too bad about splashing out at the weekend…” Prawns considered a typical example of a family indulgence Often bought on promotion & stored for an occasion (formal or informal) Considered a reassuring token to the family Extravagant cuts of meat/fish only for very special occasions: “…you can’t economise forever…you have to eat good food…it’s a way of the whole family joining in…” While good food could be justified as a family treat: - flowers were a housewife indulgence - consequently perceived as selfish unless a gift Reality Shopper extremely conscious of shopping on a budget but always susceptible to a bargain: “…they always have some fish on promotion…it’s even cheaper if it’s getting close to the sell by date…” Tend to be cautious over unusual cuts of meat (uncertainty over cooking) & experimenting with fish (don’t want wastage) Expressions Planning Credit Crunch - 36
  38. 38. LUXURY FOOD AND FLOWERS IN HOME (Cont’d)  Evident attempts to cut back on meat from Retrenchers & Reality  Cuts/joints of meat being replaced with other dishes  Occasionally substitutes were meat oriented, eg sausages, burgers, etc  Often consumers trying different proteins (fish & fowl) & pasta  Looking for bargains when shopping & did tend to shop the meat fixture looking for promotions or special offers  A few had tried substitute meat; found it okay to extend but not to replace Meat  Believe these consumers lacked the vegetarian conviction  Moreover several found substitute as expensive as the real thing  When shopping for meat consumers tended to be selective: - resisting overly fatty looking pieces  Market would appear to be polarising with Recreational & Reserved consumers looking for adventurous & indulgent cuts of meat: - Retrenchers & Reality tended to look for economy offers Expressions Planning Credit Crunch - 37
  39. 39. LUXURY FOOD AND FLOWERS IN HOME (Cont’d)  Similar motivations & mechanics were happening in the fish market  A few felt they were eating more fish nowadays: - health & price imperative  Retrenchers especially believed that fish offered a cheap alternative: - especially for active families where a ‘proper’ protein was seen as essential: “…my husband’s a manual worker, I can’t expect him to come home Fish to a bowl of pasta, he needs meat and veg or fish…”  The more financially challenged were prepared to experiment with more economic fish options  However some concern over family acceptance & wastage  Incentivising some to the fish counter was the popularity of fish recipes, particularly for the spring weather Expressions Planning Credit Crunch - 38
  40. 40. LUXURY FOOD AND FLOWERS IN HOME (Cont’d)  Perceived as polarising: - some consumers resisted them as being bottom feeders & potentially problematic  Amongst prawn advocates they were seen as adult oriented indulgence  Usage of prawns was not thought to have been too adversely affected by the recession, even amongst the Retrenchers  Frozen prawns were considered to be an item often on promotion and when on promotion were bought in quantity & stored in the freezer  Fresh prawns were considered more of an indulgence & were less likely to be promoted Prawns  Amongst many frozen was seen as not just an expedient substitute for fresh but a comparable product  Apparent that when considering prawns many spontaneously referenced the larger, king prawns  Smaller (coldwater prawns) were thought to be less of an indulgence & more of an ingredient  Usage of coldwater prawns tended to be more for sandwiches or to bulk out king prawns in Mediterranean dishes  Suggested that whilst king prawns had indulgent status & believed worth ‘splashing out on’, coldwater prawns lacked this sense of occasion Expressions Planning Credit Crunch - 39
  41. 41. LUXURY FOOD AND FLOWERS IN HOME (Cont’d)  Research coincided with Mother’s Day & for some the beginning of Easter  Fresh flowers were seen as a treat more for the housewife than the household  Recreational & Reserved still enjoyed the notion of fresh flowers in the home  Believed flowers complemented the home in terms of aesthetics & fragrance: - an icon of home comfort Flowers  Retrenchers & Reality believed fresh cut flowers were unaffordable luxuries at the moment  Exception of this was if they were bought as a present which was welcomed or hand picked when their intrinsic value was even greater  The earlier work on flowers was around Valentine’s Day, here women expected both flowers & wine/chocolates as a measured token of affection  For Mother’s Day flowers alone were deemed acceptable Expressions Planning Credit Crunch - 40
  42. 42. LUXURY FOOD AND FLOWERS IN HOME (Cont’d)  Perceived as part of the in-home entertaining process  Entertaining friends at home rather than going out was a recessionary benefit  Consumers enjoyed entertaining at home & the ability to indulge  Indulgence was justified due to comparative economy  Even family entertainment at home was often valued when it replaced a more conventional meal or evening out  Thus consumers were prepared to spend more on such occasions  This included trading up in terms of wine: “…if I’m staying in rather than going out I think I can afford to pay £5 for Dips a bottle of wine…that wouldn’t buy you even half a glass in the pub…”  This compensatory extravagance extended to other snack products: “…a bag of crisps in the pub would cost you 75p, for £1 you can buy a rather nice big bag…” “…if you go out & get stung for a round it’s easily £10-12 and for that you can get a nice bottle of wine and some snacks to go with it…”  When buying such snacks consumers were looking for adventurous recipes to complement known & acceptable favourites Expressions Planning Credit Crunch - 41
  43. 43. LUXURY FOOD AND FLOWERS IN HOME (Cont’d)  For families, especially those with teenagers, smoothies were enjoyed: - however they were seen as expensive  Against this perception smoothies were acknowledged as being healthy  Mothers argued a smoothie was a good way of ensuring their growing teenagers or younger children approached their 5 a day target Smoothies  Smoothie acceptance was believed to be due to the taste combinations  Mothers approved of the blends, combining unusual fruits & occasionally super fruits  A litre of smoothie was thought relatively economical compared to buying the same quantity of fruit: - notion of producing own smoothies was ruled out Credit Crunch - 42
  44. 44. LUXURY FOOD AND FLOWERS IN HOME (Cont’d)  Consumers perceived a vegetable juice to be something like tomato juice  Several referenced V8  Some did make a connection between a vegetable juice & a fruit smoothie  The concept was highly polarising  It was only those who regularly bought into tomato juice who found it to have any intrigue  Concept currently suffers from a lack of intrigue with consumers believing Vegetable Juice a vegetable juice will comprise a blend of conventional vegetables: - carrots and tomatoes  Careful consideration needs to be given to the development of this  Concept needs to arouse taste curiosity & motivate consumers primarily on a taste platform and secondly on health  Evident need to entice on taste intrigue: - breakdown resistance of vegetable juice prejudice Expressions Planning Credit Crunch - 43
  45. 45. LUXURY FOOD AND FLOWERS IN HOME: LEARNING  Consumers want to indulge in quality foods whenever possible or whenever they can justify  Quality food was something the family could share  Respondents aware of supermarkets promoting cuts of meat & selected fish, enabling them to take advantage  Slight resistance to buying unusual cuts of meat as consumers were not confident about recipes and promised economy  Similar considerations occurred with fish with consumers needing fish to have family acceptance: • Acted as a barrier to experimentation  Consumers could be incentivised to buy into more adventurous foods if seduced by appealing, convenient recipes  In terms of luxury food consumers are now going through a transformation and more diligently shopping fixtures  Certain consumers are looking for value not necessarily bargains  Equally some consumers are looking for indulgence whilst others are looking for expedient meal solutions  A bargain hunter on one occasion could be an indulgent purchaser on another Expressions Planning Credit Crunch - 44
  46. 46. LUXURY FOOD AND FLOWERS IN HOME: LEARNING (Cont’d)  Whilst luxury food has the potential to be a treat for the family to enjoy, bought flowers were seen as an indulgence for the housewife  Many financially constrained believed this to be selfish, unless the flowers could be justified as a present or reward Expressions Planning Credit Crunch - 45
  47. 47. CARS: BUYING, SERVICING AND REPAIRING Expressions Planning Credit Crunch - 46
  48. 48. CARS: BUYING, SERVICING AND REPAIRING Most in this sector were at least 2 car households Several were considering replacing their car: - incentivised by downturn & hope of a bargain, esp. used cars Expectations fuelled by media coverage were that the trade was desperate: Recreational - respondents motivated by price rather than auto altruism Experience proved anticipated bargains were not available: “…I didn’t think they’d fill the glove box with fifty pound notes but I was expected a better offer than I got…” Adding to the new car draw was the low level of interest: - again actual experience proved disappointing: “…I get 1% on my savings…4-5% on a car loan…” Less enthusiastic to enter into a major purchase More keen to maintain status quo until economy more stable Adding to consumer uncertainty were recent fuel cost fluctuations; uncertainty to go for economy or performance Emission charging, company parking & impending budget Reserved acted as further barriers to progressing Current cars were likely to be relatively new, thus serviced at main dealer: - older cars (3+ years) did not warrant the extra expense Expressions Planning Credit Crunch - 47
  49. 49. CARS: BUYING, SERVICING AND REPAIRING Despite redundancy threat & financial impact reluctance to get rid of car or cutting back to 1 car Respondents argued car(s) a necessity for household routine Little consideration given to alternatives Public transport, bikes, motor bikes dismissed as impractical Retrenchers Consumers argued the car or second car was worth so little as to be not worth selling Belief they could manage to significantly reduce running costs Saving on service by using cheaper source, insurance by online quote, some even considered 6 month tax Economic running was a critical issue to these respondents Even having been made redundant the car was rationalised as a necessity: “…I need it to get around for job interviews…you couldn’t depend on public transport…you’d turn up later & how would that look…” Reality For these respondents the car was an expensive household item but deemed essential Consequently all associated costs need to be pared back Friends or family encouraged to service when absolutely necessary; deals were done for mechanical expertise Cheap parts were sought rather than branded replacements Expressions Planning Credit Crunch - 48
  50. 50. CARS: BUYING, SERVICING AND REPAIRING (Cont’d)  Bikes were believed only appropriate for children  Evident resistance to using a bike in place of a car for daily transport  Bikes were associated more with leisure activity & exercise than a practical means of transport  Respondents in urban areas resisted the use of bikes, considering them a danger for commuting & an inconvenience: “…you’d have to turn up to work & have a shower before you could do anything…” “…you’d have to carry wet weather gear & set off an hour earlier…” Bikes  As a substitute for the car bikes were resisted  Conversely as a leisure activity bikes were encouraged  Biking was a good means of getting exercise & family involvement  Purchase of a bike was still perceived as a present to mark a birthday or Christmas  For some buying a bike was a rite of passage, marking the child as: - old enough to ride a bike - responsible enough to ride a bike to school - independent Expressions Planning Credit Crunch - 49
  51. 51. CARS: BUYING, SERVICING AND REPAIRING (Cont’d) Acquiring a  For most Halfords was the first point of call when acquiring a bike Bike  Some believed a more personalised service would be available from a local bike shop  These consumers liked the idea of more personalised service attention when buying: - and later when servicing the bike Expressions Planning Credit Crunch - 50
  52. 52. CARS: BUYING, SERVICING AND REPAIRING (Cont’d)  Irrespective of consumer category new cars were thought to warrant main deal servicing  This was believed to be part of the guarantee for the first 3 years  Consumers were contractually obliged in these circumstances to fit branded parts and had little say in the service  Once car was out of manufacturer’s warranty then consumers were on their own  This necessitate them being selective about how they serviced the car  For economic reasons many believed an older car did not warrant main dealer servicing: - and could be more cheaply serviced at a generic garage Cars: Servicing - or by a competent friend, mechanic, mate of a mate, etc  When the car was out of warranty consumers were less concerned about the quality of the parts used & more focused on costs  Consumers stated they would find it difficult to judge the value of parts, even if they were asked  It was a desire to abrogate all responsibility to the garage or mechanic: - in terms of sourcing, selecting and fitting parts  Most of these consumers wanted to keep at arm’s length, with car mechanics being perceived as ‘too complicated’ Expressions Planning Credit Crunch - 51
  53. 53. CARS: BUYING, SERVICING AND REPAIRING (Cont’d)  Engine oil was something that was rarely checked by all motorists we spoke to  Prompting a check would be a long journey or a specific concern, such as drops of oil under the car or loud noises  Many (men & women) said they did not know where the oil would go  Consumers accepted the logic that a serviced car could save significant amounts of money in terms of fuel efficiency  Extending this logic some believed an engine oil could also contribute to Cars: Oil economy through greater efficiency: - however many felt this would be marginal  For such a claim to be credible it would need to be endorsed or reinforced by an objective mechanically respected body: - or the mechanic trusted to service the car  The message of an oil with an economy dimension needs to be primarily directed at the mechanic and secondarily at the consumer Expressions Planning Credit Crunch - 52
  54. 54. CARS: BUYING, SERVICING AND REPAIRING - LEARNING  Evident reluctance to cut down or consolidate on cars  Consumers argued household routine and status quo is dependent on use of the car(s)  A car was seen as a necessity, even for the redundant for job interviews  General awareness of economic impact on car industry arouses expectations of bargains  Disappointment that manufacturers not promoting more deals  Additional disappointment over car finance not reflecting the low bank rate  Concern amongst some over future fuel fluctuations  Adds uncertainty as to what type of car would suit them in the future (fuel efficiency vs comfort)  Allied to this there were other Government uncertainties which detracted from progressing a car purchase: • Emission charges • Taxing company parking Expressions Planning Credit Crunch - 53
  55. 55. CARS: BUYING, SERVICING AND REPAIRING – LEARNING (Cont’d)  Those with new cars (under 3 years) believed they needed to service their car at a reputed dealer in order to ensure continuity of warranty  Those with older cars felt they had more latitude to select a garage, but whilst selecting a garage did not want to select spares  These consumers wanted to abrogate complete responsibility to the mechanic  Thus the choice of spares was largely dependent on the mechanic with consumers briefing the mechanic as to the standard of service expected  Economy was seen as a benefit of regular servicing  Notion of an oil which would contribute to economy & greater mileage was considered credible but possibly only marginal in terms of its financial impact Expressions Planning Credit Crunch - 54
  56. 56. OBSERVATIONS Expressions Planning Credit Crunch - 55
  57. 57. OBSERVATIONS AND ANOMOLIES  The fieldwork for this phase took place during the mid to end of March  At the time the media was still bleak about the world economy: • Unemployment and Government bail outs dominated the headlines  Despite this consumers were adopting a resigned attitude  Even those who fell into the Retrenchers and Reality categories were not overly despondent  Many believed they had already put in place or formed economic initiatives and contingency plans  There was an evident sense of ‘wait and see’  It is believed this month was a pivotal moment with Obama’s policies being put in place and the prospect of the G20 Summit  It would appear that March was about holding consumers’ economic breath Expressions Planning Credit Crunch - 56
  58. 58. PRINCIPAL LESSONS  Economic recession is about a collective consciousness  Individuals will be affected but react differently  Marketing opportunities are about understanding different consumers’ needs and desires  An economic recession need not result in consumer psychological depression and brand pessimism  Indulgences and rewards are sought as displacements and distractions  Consumers are more open to experiment with different regimes and behavioural patterns  Status quo is challenged by many wanting to make economies and efficiencies  Many had already put in place economic contingencies  Household funds had already been scrutinised  Utilities, where desirable, had been either switched or bills interrogated in terms of conservation  Household plans had been drawn up, but with an optimistic accent  Evident reluctance to dramatically alter household’s economic patterns and rhythms unless desperate  This extended to cars: • With even the unemployed maintaining their car was a necessity Expressions Planning Credit Crunch - 57
  59. 59. PRINCIPAL LESSONS (Cont’d)  Luxury items were also found to have a significant role: • Either in reassuring consumers of their economic comfort • Or serving as small rewards and tokens the whole family could share in  Consumers were becoming acutely aware of value and were prepared to change behavioural patterns in order to achieve value  At one level in phase 1 we saw this impacted on shopping and their selected retailers  This also equates to shopping per se with some consumers actively choosing to opt out of leisure and pleasure shopping and only shopping when necessary  Others adopted more stringent shopping strategies, seeking out value  Exploitation of the current situation seems to lessened in terms of retail shopping  Exploitation however was still evident in considering household improvements  In addition to the recession impacting on behaviour, the economic situation has shaken many out of monetary apathy  Consumers were becoming more interested in household financing and reviewing interest rates on savings vs loans  There was an apparent sense of household accounting acumen Expressions Planning Credit Crunch - 58
  60. 60. PRINCIPAL LESSONS (Cont’d)  Despite some families being close to their limits there was an evident sense of optimism about the future  Most believed they had not pared their household finances completely down  No one wanted to be too puritanical about the current situation Belief that an optimistic approach was appropriate Perception that the economic situation was a short term problem which would be overcome… eventually Expressions Planning Credit Crunch - 59
  61. 61. ECONOMICS AND RECESSION: ACCORDING TO THE CUL-DE-SAC CONSUMER Expressions Planning Credit Crunch - 60
  62. 62. APPORTIONING BLAME Inherent greed of banks Short term profit at whatever cost Banks and bankers Individuals driven by the incentives of banking bonus Lack of regulation & control of banking market Exploitation of naïve market & investors: America & George W - Bernard Madoff Bush Bush’s support for oil industry Courting & lack of control of financial market UK economy dependent on service & finance UK & Gordon Brown’s denial of the boom & bust economic Brown cycle & lack of preparation Exploitation of developing economies; Empire Brazil, Russia, India & China (BRIC) building Moving production & HQs from UK to source & entities benefit from cheap production & tax opportunities Specifically oil related companies OPEC Inability to regulate demand & supply & & energy consequently: companies - control retail price of energy Expressions Planning Credit Crunch - 61
  63. 63. PROBLEM RESOLUTION AND CONSUMER REACTIONS US & UK Governments bail out banks Tax payers’ money used to ‘bank aid’ the system Radical reduction of bank rate to ‘defibrillate’ chronic economic solutions A sop to the UK consumer with a reduction of VAT Resentment that perceived catalyst should be reactively supported Frustration that first trench of funds not distributed: Banks & bankers - banking paralysis, risk aversion or greed Perceived as nationalisation of high street finances Savings & mortgages now state dependent International, some foreign owned, monolithic businesses looking for hand outs Empire building Retrenchment of foreign companies perceived as exploiting entities UK; workers & government economic hospitality Perception of companies having lost interest in UK: - emerging BRIC economies View these companies were profiteering by escalating retail fuel costs Energy Recently confirmed by record profits for Shell & BP companies Call for windfall tax on energy companies displaced by complexity of the economic situation Expressions Planning Credit Crunch - 62
  64. 64. BANK AID: TOP DOWN ECONOMICS Government intervention focussed on: “…helping the perpetrators…” “…rewarding the guilty…” Undermines consumers’ faith in credible solutions Shoring-up the Compounding this mistrust is ineffectiveness of System Government intervention: “…lent the banks billions but not doing anything with it…” “…lowest bank rate for 100 years but I’m still being charged 6% on my mortgage…” From a consumer perspective recent measures have been: - reactionary and restricted - ill conceived and executed Emphasis has been on securing the status quo: - saving the decrepit system that caused the problem Expressions Planning Credit Crunch - 63
  65. 65. CONSUMER CENTRIC: BOTTOM UP ECONOMICS Lack of trust in banking systems & bankers Concern over security of savings & honouring loans Disillusioned with structures & regulations Disappointment of banks parental positioning & control and exposed management Resentment over public monies bailing out banking system Re-engineering & gearing Impact on consumer is to inflate uncertainty & insecurity Most consumers perceive themselves as victims of the crisis & still vulnerable to unforeseen events Causes many consumers to consolidate & reduce spending: “…it’s like a rabbit caught in the headlights… freezes…” Rather than kick-starting the economy the measures cause consumer economic paralysis “…they shouldn’t have given billions to Belief consumers being excluded from economic the banks but thousands to each considerations – fundamental flaw: family…that’s the way to start the “…we are the economy…” recovery…” Expressions Planning Credit Crunch - 64