The New Value: Going Way Beyond Price

The Landscape


In this time of near double-digit unemployment, rampant underemployment, sky-rocketing home foreclosures and other adverse economic factors, the emergence of the tightfisted consumer was totally predictable. What was spawned from necessity does not appear to be a short-term strategy. Rather, it is becoming a way of life for a majority of Americans.

Harris Interactive reports that American consumers continue to hold the line on spending, with 63% purchasing more generic (private label) branded products. This behavior is consistent across generations.

A recent study from Decitica, Marketing to the Post-Recession Consumers posits that consumer spending patterns have been profoundly altered by the current recession and we are now entering a period of “new normal.” Decitica has identified four distinct consumer segments – Steadfast Frugalists, Involuntary Penny-Pinchers, Pragmatic Spenders, and Apathetic Materialists.

While consumers’ commitment and focus on finding the lowest prices vary, it’s clear that price-related value is no longer a competitive advantage. Rather, it has become an expected attribute for many purchasers.

The traditional retail “fix” of offering discounts is no longer (or is fast becoming) like email SPAM. In other words, buyers are applying their own mental filters to these offers, going for the lowest price point across many product categories. But, this approach has resulted in store brands in some categories becoming category leaders – suggesting that lower pricing as a strategy is a form of value that brand marketers cannot sustain.

Given these conditions, it is clear that the days of price discounts as the sole expression of value are over.

As consumers navigate the new economic world order, more than ever, they want to feel they are getting the best value for their money. Marketers will need to be more inventive in their offers and create products as well as marketing messaging that imbue brands with discernible value. So the question is this:

In what ways might marketers re-create brand value in today’s environment?

It begins with looking at value through an entirely new lens.

A New View of Value

In recent years, companies have begun to enhance brand value with what might be described as product-driven, functional value strategies.

Some brands, many in the Procter & Gamble stable, are combining well-recognized attributes of premium brands such as Dawn Hand Renewal with Olay Beauty, Mr. Clean with Febreze Freshness, Tide with a Touch of Downy to offer consumers an assurance of product performance and desirable attributes. This brand-combining strategy has enabled P&G to maintain its premium priced edge.

In the current new campaign for 1800 Tequila, the commercial’s protagonist points to the functionality of the cap as a point-of-difference with Patron.

Clearly, if there are product elements that can be leveraged as these examples demonstrate, marketers should naturally capitalize on these product advantages. But, there is also a consumer-driven factor that is likely to strengthen this trend towards a new value paradigm and we believe this is an attitude of responsibility. Specifically, people are becoming more responsible when it comes to the ‘stuff’ they acquire.

When you layer on facts like declining disposable income or postponing retirement out of financial necessity, it is inevitable that the purchase decision process will be more conscious, even introspective as buyers weigh their choices. And, the factors weighed are likely to reflect factors that might not have considered in the past. With these shifting attitudes, we believe there are new value areas to be mined-areas that people will resonate to more deeply-a higher order level of value.

As we look to redefine value in this new era, it is important to look at areas that are likely to have an enduring impact on consumers’ purchase decision process. We believe these reflect what used to be incidental benefits but now are more at the forefront that ever before. By tapping into these avenues of opportunity, brand perceptions will be enhanced and companies will have a chance to make a new impression in the marketplace.

In subsequent posts, we will feature the New Value opportunities. Stay tuned to our first discussion – the Green Value opportunity.

The Green Evolution

As far as I knew, going green used to be linked solely to the environment and energy conservation. An Inconvenient Truth did much to universalize awareness of this issue and personally, I do my best to be mindful, though I was recently reminded that I could do better.

The green movement has become all-inclusive, spreading to all areas of life such as: our homes, our food, our clothes, how we clean, and so on. In fact, if marketers ever wondered whether consumers would embrace green marketing, research suggests a resounding yes!

Recently I noticed the term going green being applied to a aspect of food marketing I have a lot of heart for-removing questionable ingredients from every day foods. The ingredients I am referring to are two of the most ubiquitous-high fructose corn sugar and hydrogenated oils.

Making the connection between going green and wellness is something I am totally in favor of as it will no doubt improve our quality of life exponentially. Any efforts to get rid of these culprits in the pursuit of health & wellness will make a huge difference in the quality of life. According to Phil Lempert, The Supermarket Guru®, some of the products that are going this kind of green include ketchup, soda, snacks.

Good riddance I say!

This news got me thinking about a time not so long ago, the time of free, when diet foods-fat free, sugar free, lite, low-were all the rage. We welcomed the chance to have more of the foods we loved more often and feel we were doing something good for our bodies in the process. Then came some controversial facts about free. Here’s how Wikipedia talks about this dispute:

In many low-fat and fat-free foods the fat is replaced with sugar, flour, or other full-calorie ingredients, and the reduction in caloric value is small, if any.[4]Furthermore, excess, digestible sugar, as well as an excess of any macronutrient, can be stored as fat.

As a consumer advocate, it is my wish that companies go green responsibly-not simply to make a buck, but to reflect a new value to consumers-where the health & wellness of consumers is at the heart of the decision to bring green products to market. Only time will telll!

What’s up for 2010!

2010
We’ve had fun bringing our twist to those trends that got our juices flowing in 2009. And now we cast our attention to 2010. There are so many happenings that are showing up and we think they will be changing the way we all look at the world.

In addition to updating past posts when it makes sense, here are a few themes we are following:

  1. The New Value, it’s not just about price. It’s experiential, it involves conscious decision-making – so marketers might have new chances to make a first impression. For established brands, could this development be a boon?
  2. Transparency. The 2008 election highlighted how critical it was to voters to be authentic. Now we see marketers like Domino’s Pizza jumping on board, taking “truth in advertising” to a whole new level. What else is next?
  3. Has outreach to Ethnic & Urban consumers become yesterday’s news? The economics of advertising and promotion is giving companies pause and there have to be casualties. How will this dollars and cents issue affect marketing decision-making?
  4. The End of Civility. If 2009 told us anything, political correctness seems to have taken a back seat. You remember Kanye West’s public dissing of Taylor Swift at the MTV Awards and Representative Joe Wilson calling President Obama a liar during the live broadcast of his health care speech to Congress and the American people. How far is this going?
  5. Career Path, meet Career Streams. Distrust of corporations has been growing for some time. Mergers and acquisitions, unemployment, job attrition, to name a few factors, are forcing us to think of new sources of earning potential. Could single payer income sources be a thing of the past?
  6. A New Twist on the “Water Cooler.” With more people moving to flexible work schedules and with work teams comprising people from different locations and time zones, the pop culture discussion around the “water cooler” has practically disappeared. What will drive the mass culture word-of-mouth when mass culture seems to have fragmented completely?

We look forward to bringing our take on these ideas and more so keep an eye out for some new views from New-Take in 2010!