Positive thinking makes a return
The panic that gripped the nation when signs of recession appeared last summer is being replaced by a more optimistic mood among consumers – and marketers would be wise to take advantage
The nation is split over the recession. The country has divided itself into eight “tribes” to cope with the effects of the downturn. Shoppers are falling into patterns of behaviour as a response to the financial constraints they are now under, according to a study carried out by Clear branding consultancy.
These tribes range from those who fall into the “cutting back” mentality, who are cautious and risk-averse in all their actions, to those in the “on the up” camp, who think they are spending more than ever before. In between these extremes are those in the “trading down”, “life on hold”, “trading off”, “occasional treats”, “it’s worth it” and “life goes on” categories.
The research across all the tribes suggests that less people feel the need to cut back this year in comparison with last summer. Many people have decided that life really does go on and despite being pessimistic about how long the recession will last, the attitude appears to have moved from a feeling of panic last July to a more optimistic mood.
In July 2008, 20% of respondents were cutting back but the latest figures show this has fallen to 11%. The “life goes on” category has seen a rise to 22% of people from 13%.
The most extreme group that has emerged is those who are “cutting back”. Despite the fact this group has shrunk, members of this tribe – who tend to be older females on a lower income – have changed their behaviour the most compared with any other group.
Many in this group scrutinise every penny, and brands and retailers need to make them feel good about spending less. For example, frozen food brands might be able to tap into this group by emphasising the value and minimum waste of their products.
However, some marketers are targeting this group alone and are failing to recognise the different ways that consumers are dealing with the recession. Many brands are simply dropping their prices, which is not a tactic that works for a lot of people.
Other consumers that are living more cautiously are joining the “life on hold” tribe. These people are staying in more and cutting out big-ticket purchases such as cars. More than half (61%) say they won’t be buying furniture and electrical goods.
Marketers need to start easing the fears of this tribe, who are generally in the 35 to 54 age bracket. Vauxhall’s “You pay we pay” redundancy marketing initiative offers credit and a cash back payment to those who want a car but feel they can afford one.
The next set of tribes that have been identified in the study have a slightly less pessimistic frame of mind. The groups have been divided into those who are trading off, those who are trading down and those who have the occasional treats. These groups have been fairly stable in their reactions from the first wave of research last July to the current findings.
Those who are “trading off” tend to be between 25 and 44 years old and might decide not to buy a new car in order to jet off for an annual holiday.
Those who are “trading down” are still buying the same types of goods but looking for cheaper options, such as own-brand or searching for bargains in less pricey shops. Another piece of behaviour seen in this group is people looking to reward themselves for their prudence by treating themselves on the odd occasion.
Chocolate retailer Thorntons is tapping into this group by putting cheaper lines in its windows. Almost half (48%) of those who are buying the occasional treat confess that they buy things they don’t need.
All of the tribal groups in the research are showing some form of pessimistic behaviour, but the group that is probably least targeted by marketers – despite making up 42% of the population – is those that are still spending money and feeling positive about their own financial situation. This group has been sub-divided into three segments – “it’s worth it”, “life goes on” and “on the up”.
Those in the “it’s worth it” group have to hear more clear rational reasons before parting with their cash. They are looking for messages around quality rather than price and are happy to spend what they were spending before the recession but they want to get something even better.
People from higher income groups are pessimistic about the economy as a whole, but they believe they have enough money to see them through the recession.
More people have moved into this group as the initial fear and panic about the recession has moved on to acceptance of the situation. The positive mood following the US election and fall in interest rates have also helped to bolster the mood of these more sunny-natured tribes.
Marketers need to take note of these groups, which are largely made up of male high earners. Of the “on the up” group, 37% bought a new car in the past two years and claim they won’t put off replacing it.
Consumers still need reasons to spend but marketers need not fall victim to doom and gloom; their target tribe might be willing to shop if given the right encouragement.
James Osmond, founding director of Clear, contributed to this week’s Trends Insight