Your SlideShare is downloading. ×
Credit Crunch Presentation
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Credit Crunch Presentation

375
views

Published on

Base line presentation reviewing credit crunch in the UK and impact on UK consumers

Base line presentation reviewing credit crunch in the UK and impact on UK consumers

Published in: Economy & Finance, Business

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
375
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. CREDIT CRUNCH: WHERE YOUR CONSUMERS ARE AT TODAY EXPR ESSIO N S B R A N D P LA N N IN G 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: julian@expressionz.com February 2009
  • 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. A YEAR LONG REVIEW  Expressions conducted 4 pilot groups in January 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 was 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 base line study we explore 2 status symbol categories - holidays & motoring • And 2 fmcg categories – dog food & sausages  We invite you to submit categories to be explored during these monthly interviews  This will be a free service Expressions Planning Credit Crunch - 2
  • 4. RECESSIONARY MINDSETS: RECREATIONAL TO REALITY Expressions Planning Credit Crunch - 3
  • 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. 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 - 5
  • 7. 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 - 6
  • 8. 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 - 7
  • 9. 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 - 8
  • 10. 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 - 9
  • 11. 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 - 10
  • 12. 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 - 11
  • 13. 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 - 12
  • 14. 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 - 13
  • 15. 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 - 14
  • 16. 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 - 15
  • 17. 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 - 16
  • 18. 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 - 17
  • 19. APPLIED TYPOLOGIES: SAUSAGES Expressions Planning Credit Crunch - 18
  • 20. APPLICATION OF TYPOLOGIES ON CATEGORIES: SAUSAGES Recreational Reserved Believe in buying best they can afford Some consideration given to down trading: Avoidance of cheap ‘adulterated fillings’ - from top end to branded or mid market Attracted to top end speciality, premium offers: Some driven by lower cost attraction - Finest, Taste the Difference, etc Resistors do not want to compromise on eat Served up as ‘economy meal’; entering the spirit quality; concern over content & health: “…paying to distance yourself from the bits & Haggis a topical January dish for entertaining pieces & fat & grease…” Demonstration of credit crunch participation Reality Retrenchers Perceived as a cheap & traditional meal option Perceived as a relative cheap meal with fresh vegetables & potatoes Serving versatility to suit family: Concern over ingredients of cheap sausages - chips & beans or potatoes & vegetables Resist cheap offers as poor value Happy to buy economy from trusted supermarket Pay ‘bit extra’ for reassurance of taste & quality Or look for promotions or discounted offers Make savings up on quantity or on other less Like sausages as no waste; can be eaten cold sensitive items Acceptance of economy range & meat content Temptation to serve more regularly Will not compromise on cooking; don’t want burst Exploit offers & buy promotional packs (freezer) sausages & reject fatty sausages Expressions Planning Credit Crunch - 19
  • 21. APPLIED TYPOLOGIES: DOG FOOD AND CARE Expressions Planning Credit Crunch - 20
  • 22. APPLICATION OF TYPOLOGIES ON CATEGORIES: DOG FOOD AND CARE Reserved Recreational Dog virtually ring fenced from cut backs Prepared to make savings with family food bill: Changing diet deemed a difficult process: - but not cut down on pet care: “…need to find one that suits him…only “…I’d rather buy one bottle of wine less than something I’d do if he was ill…” change her diet…” Even resistance to reviewing pet insurance Still buying treats and snacks premium Retrenchers Reality Pet insurance payments questioned Dog last to experience cut back for most: Nervous about cancellation vs cost of illness: - still buying same mainstream brand(s) “…if we stop it you can guarantee we’ll need it, First option is to change buying strategy: then it would be very expensive…” - wholesale rather than retail, promotional offers Consider buying in bulk rather than switch brands: Last measure: experiment with cheaper brands “…I’m now buying bigger bags from Pets At Belief that own brands are interchangeable Home, it’s slightly cheaper…” nutritionally; concern is digestibility Resistance to switching from mainstream brands More likely to make savings on snacks & treats: Reluctance to cut back on treats & snacks - substituting leftovers & titbits Some switching from specialist vet brands Expressions Planning Credit Crunch - 21
  • 23. APPLIED TYPOLOGIES: HOLIDAYS Expressions Planning Credit Crunch - 22
  • 24. APPLICATION OF TYPOLOGIES ON CATEGORIES: HOLIDAYS Reserved Recreational Many mistrustful of British summer Mild embarrassment over extravagant holidays Believe they need to travel to guarantee sun: Value of £ impacted on European travel “…stayed in the UK last year, it was expensive & Believe they have earned & deserve a good a wash out…” holiday Prepared to consider cheap(er) options: May consolidate 2 annual holidays into one “…French campsites have improved a lot…” Looking for bargain holidays, exploiting market Open minded to look beyond € zone, eg Turkey, Will travel & compromise to avoid disappointment Egypt Expect to pay less this year despite exchange rate Reality Retrenchers Accept holiday would be tight, but don’t want to Avoidance of planning too far ahead deny family Difficult to justify expense of holiday but argue the Thinking of creative options: camping, staying need for break for self & family with family/friends Some adopt the attitude: family holiday non Holiday out of peak season; kids missing school negotiable, only severe crisis will prevent Even home swaps & house sitting Prepared to consider different destinations Some argue going away is a cheaper option: Holidaying abroad cheaper than staying at home: “…we can stay in Spain cheaper than staying at “…even with the exchange rate it’s cheaper to home” enjoy yourself in Spain or Greece than at home…” Exploit cheap flights, packages & hospitality Expressions Planning Credit Crunch - 23
  • 25. APPLIED TYPOLOGIES: MOTORING Expressions Planning Credit Crunch - 24
  • 26. APPLICATION OF TYPOLOGIES ON CATEGORIES: MOTORING Reserved Recreational Cautious & conservative anxious over fuel price Aware of attractive offers on new & second hand cars Adopt status quo mentality Manufacturers desperate to sell Expect prices to rise with falling £ Chance to trade in & enjoy a bargain: Could be motivated to invest in smaller car - buy a more economic small car or trade across Economy of running cost now a priority or up as fuel prices have dropped Less strict about service & authorised dealer: Able to justify new car as helping economy “…a friend knows someone who can service it & programme the onboard computer…” Vague idea over the cost of fuel Reality Retrenchers Car a family luxury & a job seeker necessity: Debate over need for 2 cars “…sold my wife’s car when she left work…” Opportunity to consolidate “…public transport’s too unreliable for work…” Adopt a pessimistic attitude; low trade in value: Valued asset that is selectively used; nurtured “…wouldn’t be worth much. I’ll keep it for as long rather than serviced as I can…” Becoming aware of alternative service & parts Concern over increasing running costs: suppliers: “…the insurance is more than the car’s worth…” “…dismantlers have websites where you can get Shop around for deals: service, parts & insurance parts at a fraction of the cost of new ones…” Restrict use & use discounted petrol from Appreciate cost of car & its importance supermarkets Know how much fuel costs locally & the cheapest Expressions Planning Credit Crunch - 25
  • 27. OBSERVATIONS AND ANOMOLIES  For many recessionary reaction did not impact on the household until January  Evident desire to enjoy Christmas before embarking on a belt tightening regime  Possibly due to New Year resolutions and/or job anxiety, there was a noticeable health undercurrent  Some respondents thought survival of the recession was about being fit: • Presenting a younger and more active person • This possibly accounts for the rise in male toiletries and tans  Whilst belt tightening began in January, the sales proved too tempting an opportunity for many: • An opportunity to shop and save • Hence the rise in January of retail sales  Despite banks being perceived as the perpetrators of the situation: • None had switched banks  View that the economic world may change after Barack Obama’s inauguration Expressions Planning Credit Crunch - 26
  • 28. OBSERVATIONS AND ANOMOLIES (Cont’d)  Interestingly green issues appear to have been subjugated by economic concerns: • Perceived as short term vs long term interests  Seeds of a changing form of consumerism from ‘want’ to ‘need’: • With some even challenging ‘need’  Signs of entrenchment to home for entertainment  Also exploiting community facilities: • Museums, libraries, parks, pools, gyms, etc Expressions Planning Credit Crunch - 27
  • 29. 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  Consumers need to be able to justify paying premiums: • need greater belief in product delivery, physically or psychologically  Economy sausages and cheap dog food are regarded as false economies by many  Holidays and motoring are high expense items where significant savings can be made  Even amongst the most vulnerable consumers reluctance to be too puritanical  Reluctance to markedly concede family living standards despite their situation Living through the recession, even for vulnerables, is initially about adjusting, not abstaining… (yet) Expressions Planning Credit Crunch - 28
  • 30. ECONOMICS AND RECESSION: ACCORDING TO THE CUL-DE-SAC CONSUMER Expressions Planning Credit Crunch - 29
  • 31. 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; Brazil, Empire 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 - 30
  • 32. 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 - 31
  • 33. 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 - 32
  • 34. 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 - 33