Like any other loss, people progress through difficult times like a recession in stages. The first stage is “Distress” which includes feelings of anger and sadness. I think we are past that.
The next stage is “Acceptance” which is eventually followed by the third stage: “Moving On”. While my colleagues and I would assert that consumers are in stage two, we don’t believe anyone will be “Moving On” anytime soon. Given that, marketers should consider how they position themselves for today’s mindset.
“Acceptance” means consumers are now feeling less anxious and more in control. They feel less wealthy but also less helpless. They know what they want, what it really costs, and where to get the best price. Wallets no longer expand to fit their wants but rather consumers have reduced their spending to fit their wallets.
In fact, according to The Futures Company, consumers are rationalizing their purchases to fit within four strategies:
Daily life must go on and to cover the basics like rent and food, consumers are adopting strategies to make their money stretch further. They are looking for the best “value” and are willing to shift to alternatives including private label products where necessary.
At the same time, consumers are gravitating to the safe and familiar, which means all things being equal, they prefer the emotional comfort they derive from their favorite brands. Starting the day with a bowl of the store brand cereal may deliver the same nutritional benefit as their favorite national brand, but with less of a psychological lift.
These days, escape does not mean a well-planned holiday in some exotic location. More often, escape is an affordable luxury that liberates the mind, at least for a moment, from daily pressure and financial stress.
Most purchasing of durables is on hold. But when consumers need to purchase a
big-ticket item, they are looking to minimize and share the risk. To stimulate the moribund car market, for example, some companies reassured prospective buyers with the promise of a full refund if the customer were to become unemployed.
With plenty for people to still worry about like unemployment, troubled mortgages and diminished investments, we won’t be moving into Stage 3 anytime soon. To grow share and win loyalty, manufacturers need to ask themselves how to best position their products and services against these four strategies.