“Reset. We’ve been hearing that term in the news and elsewhere a lot lately. It took me a couple of weeks to figure out what was bothering me about the “reset” idea in the context of marketing. Sure, in tough economic times, we tighten our belts. The recent Time magazine cover with the red “reset” button entitled “The End of Excess: Why this crisis is good for America” really brought this point home.
Yet, the subliminal message of the “reset” concept is that we can press the (magic) button and we’ll get out of this mess. As the Time article says: “[W]e just have to teach ourselves to buy and borrow in moderate, healthier ways. The new America must be about financial temperance, not abstinence.”
And that’s where the marketing perspective becomes critical. How do companies capture their share of market dollars in this more temperate climate? Two truisms will continue to be in play:
First: Consumers won’t change their attitudes and/or behaviors unless they have a compelling reason for doing so.
Second: Consumers will continue to be motivated in the purchase decision process by “value.”
Classically, the value equation has always been a derivative of the relationship between benefits and price. The Time article supports this traditional idea, even as we move into a new era “We don’t need to turn ourselves into tedious, zero-body-fat, zero-carbon-footprint ascetics, but even after the economy recovers, deciding to forgo that third car or fifth TV or imperial master bathroom or marginally cooler laptop will come more naturally.”
If people are more conscious about living within their means, products and services will need to recognize that consumers may be placing less value on what others think and more value on how they see themselves and what’s important to them.
If “household spending pies” get smaller (because consumers are deciding to save more or they simply have less to spend), consumers only have one of two ways to respond: spend less on everything or give up spending as much (or at all) in some areas in order to continue spending at past levels in areas of higher importance.
It’s the trade-offs that consumers are likely to make in this era of “financial temperance” that are of greatest interest to me and, I believe, to businesses in general. I thought of three fairly different sectors to use as an example of why marketers need to be exploring beyond traditional segmentation approaches when looking for a way to pull themselves out of this economy:
Out-of-home entertainment. Theme parks, movies, theater, concerts. Consumers cutting back in this area might decide to go less often and/or might trade-down from a more expensive option to a less expensive one (e.g., theme parks to movies, major theater productions to local theater). Typical value mindset might include such things as: “I work hard and I deserve to play at times.” “It helps me forget my worries.” “It’s a small treat – less caloric than an ice-cream cone.” “It keeps me in touch with popular culture.” Consumers who never placed much value in this area might opt for in-home entertainment instead.
Private schools/education. An area where there’s really no good way to “cut back,” unless the decision is made to send one child to private school and one to public. Typical value statements might include: “Nothing is more important that giving my child every advantage.” “My child has a special need and private school is the best way for that need to be handled.” ” It was hard enough when both of us were working, but now, there’s just no way to send him to private school.” “Being together in our house is more important than where he goes to school.” “My parents were paying for private school, but now that the stock market is down, I can’t take any money from them for this. They need the money to live on.”
Nutritional supplements. Vitamins, minerals, herbal and non-herbal supplements, homeopathic remedies. Among those who had taken supplements before, the mindset associated with cutting back might include not taking the suggested amount of a supplement (“I’ll take two vs. four”), not taking as many products as they had before (“I’m not sure if that one was working or not, so I’ll give it up”) or they might try a less expensive brand. This is an interesting category, because among those who hadn’t been taking supplements before, there are likely at least two groups we’re seeing being discussed who might take supplements: those who value keeping themselves in shape might proactively start taking supplements during these harder times and those who may try a supplement rather than making an expensive trip to the doctor.
On their own, these are interesting insights. However, again, it’s the inter-relationship between these mindsets that are of interest, especially during this “reset” period. Hypothetically, we can see in this extremely simplified example how consumers’ personal values may play a role in resetting their purchase behaviors.
Whatever your industry, now is a very good time to look at your consumers and immerse yourself in how they’re making trade-offs and market choices in their lives. Explore how their personal values can impact your business and the value equation supporting it.
“Resetting” isn’t as easy as pressing a button, but for those who make understanding their customers and prospects a top priority, “resetting” is likely to be a very good thing.