Shoppers are cutting back as they grow increasingly concerned about the international recession. According to data from the Ipsos Global Advisor study from Ipsos MORI, 56% of British consumers have already started to buy less and 55% agree that price is now the decisive factor in purchase decisions.
But is this the same story around the world? For companies with an international reach, a different picture emerges, suggesting that brands need to adjust their marketing messages carefully for each region, tuning up or down the focus on the economy and price depending on anxiety levels.
Consumers in the Netherlands are reasonably resilient, with just 40% saying they are spending less as food prices outstrip their incomes. German and Swedish shoppers are also reasonably confident, with 42% and 47% agreeing respectively. This may be because the recession has not yet had a massive impact in these nations or because, culturally, cutting back on food is not a personal priority for people in these areas.
By contrast, the French are extremely anxious about their spending on food, with a massive 83% claiming they are cutting back in that area. Other countries where a similar mood can be observed include Brazil at 75% and Mexico at 74%.
The region as a whole where most people claim to be spending less due to high food prices is Latin America, where 74% agree with this policy. Europe is less affected overall, with just 55% of people claiming that they have been forced to cut their spending because they are finding the cost of food too high.
But even if you can get people to buy your products, how should you be marketing them? This does not seem to be a time to focus on ephemeral brand attributes as it is clearly cost that strikes the biggest chord with shoppers. They are more convinced by the impact on their pocket than the environment where they can buy products.
This does depend on the geographic region, however. In Germany, for example, just 40% of consumers claim that they feel price is the decisive factor in their choices over what goods to buy. The Czech Republic’s shoppers are also remaining relatively focused on areas other than price, with 44% agreeing that price is the main element affecting what they purchase. Swedish shoppers are also willing to overlook pure price concerns, with just 45% claiming this is the overriding concern for them.
The most price-focused buyers can be found in France, where 66% buy with price as the key element. In Belgium, 61% of consumers feel the same way. China and India also have a large proportion of cost-conscious shoppers, with 63% and 64% respectively admitting that price is the top factor in their buying choices.
The global regions where price is most important to shoppers are the BRIC countries – Brazil, Russia, India and China. This is closely followed by Asia Pacific. This may be because of traditionally low wages in these areas, making thriftiness a necessity rather than a choice. It may also be an important cultural trend for companies operating there to understand.
While North America and Europe see slightly lower numbers of people citing price as their deciding factor in purchases, it is the main focus for more than half of all people there. No brand operating in these regions should ignore the clear message that price is a very important focus for all consumers and the primary concern for more than 50% of them.
This data presents marketers with a problem in creating successful strategies to target consumers in more than one country. Focusing heavily on developing new retail formats encouraging people to spend may be fruitless in countries such as Brazil, China, India and France. These consumers are more likely to be convinced by offers that focus on the price of products than where they are buying or the shopping experience.
In some of northern Europe, however, such as Sweden and Germany, more than half of shoppers don’t feel that price is the ultimate deciding factor for them. So there many be more scope in those regions to emphasise such issues as product quality and the shopping experience.
The message for international marketers is clear; now, more than ever, it is vital to respond to regional differences. Simply adopting one strategy for the whole of a region, for example Europe, could prove costly. While French shoppers might be looking for price promotions, Germans might be convinced by other marketing methods.
The smartest marketers should look at making sure any international operations take into account regional sensitivities. While this information is important in good times, in a recession it can make the difference between profit and loss.