‘Upgrade and save’ messages strike a chord
Despite our choice of media growing ever wider, research by Mintel shows the uptake of new technology is governed by consumers’ desire to make their money stretch further.
A desire to save money, coupled with an explosion in advances in technology, has had a dramatic effect on media consumption.
These changes may be a long-term trend, suggests exclusive research by agency Mintel, which looked at how people consumed media during the recession, as well as purchasing habits for big-ticket purchases such as laptops and televisions. The after-effects of the recent recession mean that many of consumers’ new media consumption habits may become permanent.
Using newspapers’ websites rather than buying a copy has been the most popular way for people to save money, in terms of media consumption, according to the study.
Buying magazines, newspapers and music saw the biggest declines during the recession, with 43% of respondents saying they were reading free newspapers online instead of paid-for publications.
Similarly, downloading free rather than paid-for music and podcasts was cited by 20% and 13% of consumers respectively as a way to save money.
For marketers, this creates a tricky problem. How do you keep your brand alive when there is so much available for free? News International, which publishes The Times and The Sunday Times, will charge for online access to the two broadsheet titles in June.
Report author Michael Oliver, Mintel’s senior leisure analyst, says Rupert Murdoch has made a brave move. “The New York Times has started charging web users and I think people are waiting to see what is happening in that area. A lot of research shows that people are very resistant to paying for access to online news sources.”
The switch from paid-for to free media has coincided with the downturn, adds Oliver, and this attitude doesn’t appear to be changing as the recovery sets in. “It’s hard to see how much was driven by the recession. I don’t think the trend will be reversed. It depends on the quality of the content. Paid-for media is going to have to offer something that you can’t get for free to retain custom.”
The free model is something that isn’t limited to newspaper content. Many more people are downloading music and film for free, with the under-45 age group most likely to do this. “They are really into personalising their music purchases, buying single tracks rather than albums. It fits in very well with trends towards generating your own content,” adds Oliver.
Retailers have also noted this trend (see Frontline, above). High street retailer HMV says it will concentrate on music venues, fashion and festivals for the next three years in response to the trend towards downloading free music.
Shopping for hardware for media consumption has also changed as people re-evaluate their spending habits. During the recession, many consumers decided to make do with their existing models of laptop or TV rather than splash out on new technology.
High-definition TVs have been the most delayed hardware purchase in the recession, with one in five people putting off buying one. People have also delayed buying smart phones (15%) and 14% put off buying a home cinema system (see chart, p24). Buying a digital radio has also been put off by 14% of people, perhaps a reflection of the fact that the digital switchover is not due to happen until 2015.
But not every new consumer habit is here to stay. Oliver suggests that this widespread frugality will change as new products tempt people back to spending on hardware. Similarly, the proliferation of new products in this area will drive down price and make them more popular.
While 15% of people have been put off buying smartphones, as prices come down people will go out and get one, he adds. “The iPhone has become much more widely available and the Google Android product is coming in. The price will get more competitive and more people will be able to afford them.”
The aspirations among consumers to buy hardware items are still there, according to Jim Clark, senior technology analyst at Mintel. “It is not that consumers do not want to own new technology, it is just that they are happy to put off purchases when times are hard.”
But some media hardware was deemed too important even during the recession to do without, with 31% of respondents buying laptops, 29% purchasing Freeview set top boxes and 25% splashing out on HD TVs.
Indeed, the economic downturn may have even benefitted laptop sales. Oliver points out that the flexibility given by this piece of media hardware has been important to people as they try to save cash.
Sporting events such as the World Cup and the 2012 Olympics are also likely to help drive media hardware purchases. With so many broadcast, print and online communications based around these events, staying connected will be very important to consumers.
“You can bet that with the World Cup coming up, retailers will be giving shoppers maximum incentive to buy HD TVs,” adds Oliver.
Ultimately, however, marketers will need to ensure that they keep abreast of permanent changes in media consumption and where there is room for persuasion. Oliver says/ “It’s about making your money go further. The recession has put value to the forefront of consumers’ minds, even more than new product features. We do expect it to carry on even if the economic pressure is beginning to ease.”
thefrontline
MARKETERS TELL MARKETING WEEK WHAT TECHNOLOGY BUYING TRENDS THEY’RE NOTING ON THE GROUND
Jeremy Fennell
Category director hardware, DSG International
The upgrade market is pretty healthy and the replacement cycle in a number of categories – including laptops and televisions – is shortening as the pace of technology development accelerates.
There is strong demand for free downloadable music, but iTunes still boasts massive market share and our iPod and MP3 ranges are still very popular, even though customers are now using a wide range of products to access music, podcasts and films.
It’s good news for us if some people have deferred buying HD TVs because we can expect a spike in sales during the World Cup. The first 3D televisions will be in customers’ households within the next few weeks.
Penetration of flatscreen televisions is now 60%-70%, but with prices coming down, we are seeing plenty of appetite for upgrades from flatscreens to HD TVs. The arrival of LED technology continues to boost the market, as does the roll-out of the digital switchover.
There are now TVs with access to the internet and applications such as BBC iPlayer, and it is clear that customers value facilities that allow them to choose their viewing time.
Price deflation for home cinema systems hasn’t been as rapid as in televisions, but they are still cheaper than a year ago though and the systems are better.
The popularity of laptops demonstrates the shift in computer ownership – people desire more flexible access to internet, email and documents. You could argue that access to the internet, and therefore to a laptop or netbook, is crucial during a recession.
Matt Button
Head of CRM, HMV
HMV is moving away from the idea of being a one-dimensional high street retailer to becoming a multichannel entertainment hub, catering to fans however they wish to buy and consume entertainment.
Technology is driving many of the changes, but we’re also seeing expenditure on Blu-ray, DVD and music box sets plus premium editions of recordings.
People consume entertainment in an increasing number of ways, but we’re finding they also like to mix and match between formats. This means they’re still buying CDs, DVDs and box sets as well as downloads.
Younger consumers in particular are buying less physical music content as they download and file share – and if you were selling just music, you could really struggle as a business. However, HMV has extended its offer over the last few years to cover popular culture in a much wider sense.
During the recession…
14%
Have stopped buying national newspapers and use their websites instead
11%
Have stopped buying magazines and use their websites instead
10%
Intend switching to a cheaper satellite/cable TV package
9%
Have stopped buying magazines and use specialist websites instead
8%
Have stopped buying regional/local papers and use website instead
8%
Are thinking of cancelling their satellite/cable TV subscription
5%
Have cancelled their satellite/cable TV subscription recently
2%
Have stopped watching TV through a set, they now use a computer
