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The Sudden Return of the Rational Consumer

It had to happen. For years now, we’ve been blathering about Starbucks, the $3 cup of coffee, and the mass-marketing of upscale luxury in small, accessible sips. I’ve been in dozens of meeting where the Seattle caffeine pusher has been held up as the Holy Grail of an experiential brand that understands how to get consumers to pay a whopping premium for perceived value. Here’s how the meta-argument goes, whether it applies to Starbucks or Apple or Target:

It had to happen. For years now, we’ve been blathering about Starbucks, the $3 cup of coffee, and the mass-marketing of upscale luxury in small, accessible sips.

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I’ve been in dozens of meeting where the Seattle caffeine pusher has been held up as the Holy Grail of an experiential brand that understands how to get consumers to pay a whopping premium for perceived value.

Here’s how the meta-argument goes, whether it applies to Starbucks or Apple or Target:

Consumers are willing, if not anxious, to spend more for brands that transcend the narrow benefits of functional utility – see Virginia Postrel’s “The Substance of Style.”
Price sensitivity is out. Sensibility sensitivity is in. Consumers seek to wrap themselves in brands that offer up a cozy, self-reinforcing blanket of hipness and coolness. It’s a co-dependency of cues and semaphores, a mutual acknowledgement that brand and user are in on the game.

Well guess what? You’ve seen what happened to Starbucks sales and its stock during the last quarter. It was more than a mere froth of bad news, bringing Howard Schultz back into the CEO position to recover the missing mojo. Meanwhile, McDonalds is getting into the pricey coffee space, with their own McBaristas. And just last week, I read that — sacre bleue – Starbucks is testing a $1 cup of Joe, a stunning capitulation

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And Christmas sales were dismal at Tiffany, while Wal-Mart, long the object of retail mockery for its experience-less shopping environment (and for its heavy-gestured attempts to get more fashionable) led the pack. Apple’s stock was crushed this week on the expectation of disappointing 2nd quarter sales.

No doubt the economy is what’s operating here. But is that all that’s working in the great whirling and clanking of the consumer machinery? After all, the theory has been that small indulgences, like the artisanal beer or the imported chocolate bar that’s high in the newly-desirable cacao, are recession-proof. (And hey, we’re not even officially in one yet.)

I suspect that something else is afoot, though. I think that we could very well be seeing the re-emergence of a species long thought extinct by our marketplace paleontologists: the Rational Consumer. Which is to say that the economic situation could be revealing a level of Coolness Fatigue that’s gathering steam below the surface of our maniacal capitalism.

If the downturn provokes a recalibration of values, then what might happen when the economy regains its footing? We can’t expect the newly Rational Consumer to rush back in a giddy state of latte deprivation. In fact, what if the mutterings of the consumer start sounding like this: I’ve gotten used to my McDonalds coffee. I’ve learned to live without arugula. The Gucci bag was gauche, anyway.

To be fair, the Rational Consumer has never totally vanished, as anyone who’s ever seen the value hordes at Costco can attest. But Costco sells Apple, porcini mushrooms, and other leaders of the Hip Parade – that’s one of the reasons it does so well. I think it’s undeniable that overall, there’s been a powerful gravitational force in the consumer market that’s driving apart the Bauhausian nexus of form and function.

I have an additional hypothesis. Beyond fiscal woes, something deep is changing in the consumer mindset, and it’s driven by a combination of factors. They include the focus on global warming, the election, and more specifically, the Obama factor.

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His message is profoundly resonating with many, and that has real consumer implications. We’re starting to recognize that perhaps, just perhaps, the universe doesn’t revolve around the next shiny, micro-processor powered toy. As we start thinking outside ourselves — about the way America is perceived in the world, about immigration and the chasm between rich and poor – spending $3 for a cup of coffee may seem less like a gesture of self-reward and more like a gesture of self-aggrandizement.

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About the author

Adam is a brand strategist--he runs Hanft Projects, a NYC-based firm--and is a frequently-published marketing authority and cultural critic. He sits on the Board of Scotts Miracle-Gro, and has consulted for companies that include Microsoft, McKinsey, Fidelity and Match.com, as well as many early and mid-stage digital companies

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