Winning Strategies in a Recession

A Millward Brown Pan-European Social Media Project Powered by IDEABLOG™

Winning Strategies in a Recession Recession has taken hold across Europe. Daily media coverage focuses on its effects in the corporate world and the European economy. But how does the current economic climate affect the average European as a consumer?

Cécile Conaré European Qualitative Manager Millward Brown cecile.conare@millwardbrown.com

How are they coping? Are they changing their behaviour and if so how? What can brands do right now to make the best of it? To explore these themes Millward Brown ran parallel studies in 11 European countries using IDEABLOG™ (a Web-based research qual-quant research platform tool that builds on the dynamics of social networking). This allowed participants to share and debate their experiences of the current financial climate, comment on stimulus materials and upload items that they felt were relevant to the topics being examined. The study revealed examples of how recession was impacting people’s lives not only economically, but also in terms of their life values.

Not An Equal Opportunities Recession Most participants know someone who has been directly affected by the recession and on the whole, everyone is feeling worse off than they were 12 months ago. What differs dramatically by country across Europe is the perceived intensity of the current crisis and the levels of optimism respondents exhibit when IDEABLOG™ Discussion Board thinking about the future. Looking at participants’ views towards their country’s economic outlook, how they feel versus 12 months ago and their attitudes towards the next 12 months gives interesting insight into the perceived intensity of the current crisis by country and whether they feel there is better or worse still to come.

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As the chart below illustrates, UK consumers feel hardest hit by the crisis so far and feel that there is worse to come.

Although UK participants feel positive that the country will start to recover over the next 12 months, most feel it will take time for the effects of this to filter down to individuals making the next 12 months difficult for them and their families. In contrast, the perceived intensity of the crisis in Poland is lower and this is the only country to see the coming 12 months as an opportunity to invest and if possible increase planned spending.

Across Europe, the majority of consumers (61 percent) plan to do what they can to maintain their current levels of spending over the next 12 months, relatively few (8 percent) plan to increase and a significant minority (31 percent) plan to decrease their spending.

The strong desire to maintain spending levels is driven by a variety of reasons: • • • •

To maintain their current lifestyle (particularly younger people) To compensate and treat themselves to get through difficult times A realisation that if they stop spending the recession will get worse For some it is a great opportunity to purchase more goods at cheaper prices.

©2009 Millward Brown

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Coping Strategies - As Much About the Past as the Future Examining how people are coping with the recession in different European countries reveals four attitudinal clusters. Interestingly, while they are somewhat shaped by the perceived scale of the recession in each country, they also appear to be driven as much by memories of historical crises, the level of economic growth prior to this most recent crisis, and other broader cultural values.

FUTURE-FOCUSED

DISORIENTATION

PRAGMATIC COPING

STAND-BY MODE

Poland, Spain and Turkey

Italy, Portugal

France, Netherlands and UK

Czech, Germany, Romania

“It is the perfect time to start up my own business.”

Polish participant

“Portuguese people who are already pessimists by nature are demoralised. Our creativity and will to find new solutions is lost in a mountain of fears.”

Portuguese participant

People have relied too heavily on credit and now in these times of insecurity you have to think, will I be able to pay off loans, debts, mortgage etc if I lose my job? We all have to be careful with money as essentials are getting harder to pay for, never mind luxuries.”

UK participant

I’ve heard about the recession on radio and on TV, though honestly I wasn’t aware of it — it seemed like something too far away, from another world.”

Romanian participant

These markets are generally looking to the future, but in different ways. Poland is the only country in Europe where people are likely to increase spending in the next 12 months. They see the recession as an opportunity to invest or implement life changes (e.g. outdoor activities, parties with friends, starting a business).

At the same time, Poles are focusing more strongly on family values. In Spain and Turkey there is a realization that the party is over, as there are clear signs of economic recession (e.g. rising unemployment) after years blessed by strong growth.

Here the crisis is seen as an opportunity to cut down on unnecessary spending, and take advantage of sales and price promotions.

In Spain there’s more emphasis on private label brands, while in Turkey they are looking for bargains among trustworthy or new brands. There is also a stronger focus on career and work in Turkey.

Even though the overall scale of the recession is no greater here, people in Italy and Portugal feel destabilised and powerless to control this external crisis which they believe is now quite pervasive. They feel it is not just economic, but also impacting their social system, their values and identity. This is resulting in great apprehension and anxiety, and criticism of a materialistic, consumerist society.

It is expressed via a wide variety of different attitudes and behaviours; some individuals are depressed or enraged while others may be more rational, cautious or confident.

They are attempting to cope by simplifying their lives; in Italy this means a focus on the family and in Portugal a greater sense of community. Portuguese people are also looking to find value via sales, price promotions, private label and cheaper brands.

All three markets are exhibiting stronger group cohesiveness: a “we can make it together” attitude.

Consumers in these markets are looking very hard at what they spend, and questioning the value of everything they buy.

Even though UK consumers are reasonably positive about the broader economic outlook, they feel badly hit by the past year and are particularly likely to decrease personal spending in the coming 12 months; many people will do this by varying their purchasing between different brands.

In France consumers see this as part of a never-ending crisis, following on from post-euro inflation which had already decreased their individual spending power. They feel things have got even worse in the past year and are pessimistic about the future.

Most consumers in the Netherlands have been less impacted to date, but they acknowledge this is largely good fortune in a game of Russian roulette - everyone is aware of someone who has been affected by the recession (by job losses, reduced working for example).

Culturally this is resulting in a heightened sense of consciousness in all three markets, as people aim to enjoy life without spending too much money.

There is an emphasis on greater self-responsibility, and a “keep calm and carry on” attitude.

©2009 Millward Brown

Consumers in these markets are all relatively pessimistic about the economic outlook for the next 12 months, and generally plan to spend slightly less. However, they are mostly avoiding the need to make major changes to their consumption habits or living standards.

They still want to treat themselves now and again, but may buy smaller quantities of quality items, or more products on promotions. In Czech and Romania they are sticking to trustworthy brands, while in Germany they are more open to buying different brands to achieve this.

In Czech and Romania they still feel this is mainly an “external” crisis that comes from the West and exists more in the media and a few specific sectors (auto and finance) than their own lives.

Mindful of the uncertain future, there is a stronger focus on career and work in both Germany and Romania.

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European Lifestyle Trends - Key Highlights

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Scrutinising Consumption

While consumers in different countries are coping in different People are also looking very ways there are some broader trends which are evident across hard at what they spend all countries. and questioning everything to ensure it actually does Cocooning 2.0 give them the value they seek. Restraint appears to As a coping strategy, many be the new mantra amongst consumers are retreating to consumers and in contrast “Although it is quite cold, I have their homes for the stability and cut down the heating to save some with the past where people money. I stay home and don’t go out reassurance of their families may have bought on impulse any longer as you have to pay for evand their communities. People or for status reasons, they erything, even to go to the toilets!” have rediscovered simple, often are now more cautious and Turkish Participant free, pleasures like gardening, entertaining at home, cooking “I enjoy being pampered when I’m at are scrutinizing price and benefits to find the best deal for them. my mother’s” For some, cheap is definitely the new chic, whether for financial and spending more time with Dutch Participant reasons, ethical reasons such as avoiding being too ostentatious or friends and relatives. ideological reasons as they rebel against consumerism. However, Out of home activities such as concerts, eating out and trips to the for most value isn’t just determined by price so trusted brands still cinema are being cut back as people substitute them with simpler provide reassurance and command great loyalty. closer-to-home pleasures such as watching DVDs, playing games or walking.The cocooning trend typifies the modern age with consumers viewing the internet as indispensable to their daily lives (more so than television) using it for entertainment, extra sources of income and to research the best deals for items they need to buy.

Little Treats In line with the above trend, people are treating themselves to small, often relatively low cost “treats” to help them get through these challenging times smiling. They recognise somethings are too frivolous but small things can go a long “Personal luxury is something you way to helping people feel can give to yourself to enjoy, to indulge yourself. It doesn’t have better. Good quality chocolate, to be a new Mercedes, it can be a coffee, cake, a good book bath or an ice cream or a drink, just or DVD, ice-cream, even to relax and forget about everyday cosmetics and fragrances are chores” UK Participant all regularly mentioned and often referred to as a “luxury”. A new concept of luxury is emerging for many, related to immediate, simple, accessible gratification rather than possession.

©2009 Millward Brown

New Sense of Consciousness Although some consumers are pointing their fingers at governments and banks, the majority expressed their sense of self-responsibility, acknowledging mistakes of the past and are now changing their habits to safeguard the future for their families.

There is also a strong realisation that there is no longer an abundance of free credit. Many comment on appreciating what they have in terms of friends, family, health and happiness. A return to original values of not needing to spend to enjoy themselves and consciously adopting a back-to-basics attitude prevail.

“There is an unruly consumerism, living above one’s capacity, a life of appearances, of wanting to be better than your neighbour. We just need to stop and think. My grandparents were farmers, didn’t have a car and branded clothes, but they were happy living according to their capabilities!

Portuguese Participant

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The “New” Shopping List These common trends have given rise to a “new” shopping list which consumers are now using to screen all their purchases.

Learnings for Brand Owners The results of this pan-European study contain vital insight for brand managers and marketers on how people across the region are coping with and responding to the recession. Marketing and branding activities can be adjusted to maximise the opportunities afforded by the recession and also to position the brand in the most appropriate way so that it will continue to appeal to consumers.

Brands can be successful during and following this recession in several ways: • • • •

•

They can help consumers reduce tension by providing reassurance, being calm, positive, helpful and hopeful More so than ever, be honest — and deliver on what you promise Affordable luxury brands may be able to position themselves as little treats to appeal to the need for small rewards Emphasise the VALUE of your brand. It does not have to compete on price. The research shows that consumers are looking for the best combination of price and benefits for them, not just the cheapest solution Consider adjusting your communications — your brand messaging could include some of the feelings and emotions that people are yearning for — back-to-basics, family values, honesty, sincerity, no-nonsense.

©2009 Millward Brown

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In addition, there are various tonalities which consumers may be more receptive to within marketing communications. The following montage reflects the kind of images uploaded by participants as they expressed the things they are currently yearning for:

Conclusions Recession is a reality throughout Europe. Although many consumers are continuing to maintain a sense of normality, many are trying to trim spending levels by screening their purchases for value and reclassifying what they define as luxury items. Marketers should be sensitive to the ways different countries are being impacted, and the coping mechanisms each is using and adapt their marketing strategies accordingly to keep consumers loyal to their brands.

Participants clearly found this opportunity to discuss how the recession has affected them quite cathartic. We will leave the final word in this report to one of our contributors:

“This is a very interesting piece of research. It helps us collectively to focus on what the main priorities are before, during and after a recession. We cannot disregard this crisis, because it impacts everyone, but that’s not a reason to stop living life to the full”.

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Which countries participated in the study?

The IDEABLOG recession study involved 11 countries: the Czech Republic, France, Germany, Italy, Netherlands, Poland, Portugal, Romania, Spain, Turkey and UK. There were 1700 participants in the age range 18-55, excluding those who have been seriously affected by the recession.

Research took place during Q2 2009.

What is IDEABLOG™ and how does it change the game?

IDEABLOG™ is a new qual-quant research tool from Millward Brown that builds on the dynamics of social networking to result in proactive and collaborative research participants. It does this by allowing them to explore concepts, interact with each other and share their ideas — alongside marketers, planners and creatives. Participants can develop ideas via blog discussions, mini-polls and surveys, and they can upload their own concepts (images, videos and Web links). The solution also includes a unique image mapping tool — to enable virtual sorting exercises.

Participants interact in an environment that transcends factors such as age and gender. This leads to a depth, honesty and frankness to the responses as this quote demonstrates:

“I don’t want to be too narcissistic but I will talk about my own private experience. Recession has led me to change my habits. We are a family of three with an 18 year old child. I am the only one to get a salary. We don’t go out any longer; don’t treat ourselves so that our child can have a good standard of living. We would like to pamper him much more but that’s something we cannot afford right now. As a simple example, let’s take the oil price, it has increased a lot, I drive an 18 year old car to go to work and this part of my budget is now preventing me from buying other things”.

French Participant

©2009 Millward Brown

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