Getting to grips with a new consumer
Orlaith Blaney on why 'the new normal' buzzword has definite implications for Irish marketers

We're not big fan of buzzwords at McCann. We like simple, smart insights into consumers and stuff we can use to influence our efforts to drive demand for our client brands and business. Our PulseTM team at McCann has been studying ‘the new normal'. In simple terms, this just means that we are behaving and shopping in a different way than we did when times were good. If you are trying to sell things I suggest, modestly of course, that you grab yourself a cup of Nescafe Gold Blend coffee or a chilled bottle of Heineken (she said unashamedly) or a glass of ice cold Diet Coke with ice and ask yourself: are your marketing efforts really tackling the new environment in which we are all working?

UNDERLYING CAUSES FOR CHANGE IN CONSUMER BEHAVIOUR

What are the underlying causes for this change in consumer behaviour? We all know that recession is the cause of a change in consumer behaviour. But what specific factors within the recession have brought about this change?

• 1. The fear. We have increasing unemployment which is reaching alarming levels, but we still have 86 per cent of the adult population working, albeit earning less than they would have been before the recession hit. While loss of earning has reduced spending, the loss of stability and fear of further wage cuts have also had an impact. In a sense, the fear of what might happen is impacting our behavior before any loss occurs. Data from the Eurobarometer published in March shows that worries about our finances in the past year is far greater than the European average despite having experienced less of an impact than other European countries.
• 2. The pressure. There is pressure on people to openly appear to be more frugal. Reckless spending is becoming socially frowned upon and there is a trend towards being openly restrained in our buying behaviour. As the realisation that our spending was ill-advised and irresponsible dawns, people engage in money-saving behaviour for its appearance as well as the discounts.
• 3. The realisation. The realisation of “rip off” nature of the cost of living in Ireland which preceded the recession has had an impact on consumer spending. The €3.90 tall skinny cappucino was a joke then and it still is now. Dublin was once counted as one of the most expensive cities in Europe and even in 2009, was rated in the top 15 by ECA International, ahead of London, Stockholm and Amsterdam. The realisation is compounded by an awareness that our spending habits were foolish. A report by PWC in January claimed that consumer felt not only guilty but stupid about their purchasing behaviours before the recession.
• 4. The atmosphere. Reports of recession, corruption, bailouts, flooding, bad weather and volcanic ash have spun us into a downward spiral of negativity that seems to get worse every time it looks like there might be light at the end of the tunnel. It is typified by the heralding of Ireland's Six Nations win in 2009 as the only piece of good news that year, news which has failed to be repeated in 2010. This constant negativity affects confidence and spending.
• 5. The new attitude. There is a new “get on with it” attitude prevalent in the Irish people.It is a re-emerging stubbornness in people from a realisation that we need to move ahead and get through this recession. The shock is over and it is time to just get past it, people are learning to manage, they are changing their behaviour and they are pulling together go get past bad times. This new attitude sees people operating at a more practical and matter-of-fact level.

‘The 70% sale sign is now a reality' – Blaney

WHAT ARE THE SYMPTOMS?

It is important that we understand not just that a shift has occurred, but the indicators behind the shift. What are the visible symptoms of this change?

1. Rise of the bargain hunter. People have become more conscious of seeking out bargains and maximizing value by putting more time into comparing price and it is not surprising given the economic circumstances. But it is more than people looking for more bargains that is important. Bargain hunting is a point of pride and social kudos. Keeping up with the Joneses is now about getting a better deal than them rather than getting bigger car. The ‘70% off' sale sign is now a reality and something we haven't seen until more recent times.
2. Loss of shopping taboos. In a survey by PWC in January, 90 per cent of people claimed to have gotten as good or better quality by switching to cheaper products and services. People are realising (or post rationalising) that by changing what they buy and where they buy it, they can spend less money and hold on to their previous lifestyles. The ground gained by discount retailers and the rise in own label products reflects a new comfort with low cost unbranded solutions.
3. Home as the centre of everything. Some 35 per cent of people claimed to have reduced the amount that they drank out of the home in 2009 and 34 per cent ate out less (Behaviour & Attitudes 2010). This does not mean they ate and drank any less, but it highlights that the home has gone beyond a refuge from the world and has become an alternative event centre. Group entertainment has re-entered the home and everything from X-Factor to the Nintendo Wii, to the rise in popularity of live poker – as opposed to the online variety – has become the basis for a entertaining at home. Not only is this a consequence of wanting to save money on going out but is also down to the fact that people have put a lot of money into their homes (some of which they will never get back) and want to get the most out of them.
4. Power of word of mouth. The new openness around where we shop and what we shop for and the growing social popularity of frugality means that word of mouth has become far more important as a source of purchasing advice. People learn most of what they do from others, directly or indirectly. In the National Consumer Agency (NCA) switcher survey from February, the second most popular reason for switching after cost was because of recommendations from friends and family (accounting for 15 per cent of all switching).
5. Switching creeping up on inertia. People are losing their fear of switching. The NCA switcher survey shows a rate of 21 per cent of people actively switching mobile phone and car insurance providers. More importantly, the survey indicates that 81 per cent of all switchers found it to be a relatively easy process. It means their new learned behaviour is being positively reinforced.

WHAT DOES IT MEAN FOR BRANDS?

As these new behaviors become more widespread, they will be adopted by more and more people, and as they lead to more positive outcomes and experiences in consumers they will begin to become more permanent. How permanent they become remains to be seen, but there are implications for brands.

1. Redefinition of luxury and what it means. Firstly and unsurprisingly recessions cause us to drop some treat behaviours and adopt other, more manageable ones. Dropping the number of trips away in the year may mean adopting a new hobby. Eating out less may mean buying more expensive eat-at-home food. ot only does treat behavior change, but the interpretation of what is luxury. People are spending on priorities rather than frivolities and visible luxuries no longer fit.
2. Slipping brand loyalty in some sectors. An obvious consequence in the loss of former shopping and consumption taboos is an impact on brand loyalty. We are seeing people opening up to new brands based on economic necessity, a cultural permission, through word of mouth encouragement and a feeling of new opportunity based on deflation.
3. Hunger for happy endings and positivity. People are tired of gloom. They are actively looking for ways to escape reality. The levels of cinema attendance and DVD rental are soaring and show how anxious people are to immerse themselves in worlds other than their own.

‘When Mr Tayto launched his book, people loved the novelty and fun he had'

WHAT CAN WE DO ABOUT IT?

If you aren't taking this ‘new consumer' into your communications approach, think again.

1. Be generous. Consumers need to feel brands are being generous to them and that this generosity is useful. Brands need to provide their service and product in a way that seems to be good value, but also to go above and beyond this to look at how they help and add to consumers lives.
2. Frame your value in the best light. Brands need to frame their relative value in the best possible light. Considering the shifting in treat behaviour, it might make more sense to compare your product or service with the costs of those outside of your category, rather than within it.
3. Make them a part of it. Consumers value something more if they feel they have some ownership of it. If you involve them in the brand, there is a better chance of them valuing it. It increases the chances of loyalty and margin remaining stable in a difficult market. Brands that can make themselves part of the reference point people use to express themselves have much to gain.
4. Be positive. In a market like Ireland, there is room for positivity everywhere. Consumers are tired of hearing about what has gone wrong and what they cannot do. With people desperate for good news and hope, a simple positive optimism – grounded in reality – can make the difference. When Mr Tayto launched his book, people loved the novelty and the fun he had.
5. Be flexible and move quickly. Things are changing quickly and with openness to new brands on the rise, consumers will not wait around from brands to adapt to their needs. Brands need to evolve and respond to consumers as quickly as they are changing.
6. Give the people what they want. It may sound simple, but finding out what people really want and how they can positively use your brand is often ignored. Brands that go beyond their primary offerings to bring people things they want without having to sift through the digital ether to find it, can gain a lot. This ‘brand butlering' works most best in sponsorship and in the digital arena. If you know what your target wants, help it, even if it is beyond the scope of your offering.

If you don't know, find out.

Orlaith Blaney (orlaith.blaney@europe.mccann.com) is chief executive of McCann Erickson Dublin