Credit Crunch March 09

Julian Rodway

Expressions Planning Limited

416a King’s Road

London SW10 OLJ

Tel: +44 (0)20 7376 3356

Fax: +44 (0)20 7376 3447

Email: [email protected]

April 2009

CREDIT CRUNCH:

WHERE YOUR CONSUMERS ARE AT TODAY

PHASE 3 [FULL REPORT]E X P R E S S I O N SB R A N D P L A N N I N G

mailto:[email protected]

CREDIT CRUNCH CONTEXT

The last quarter of 2008 was a dress rehearsal for 2009

The UK economy experienced record rises in fuel, impacting on:• Home heating• Transport costs• Production costs

Compounding these fundamental costs was the credit crunch

From a consumer perspective the world was changing:• Mortgage companies were failing

Icons of consumerism were crumbling:• High street shops were closing

Banks were bailed out:• Motor manufacturers were looking for economic support

Consumers were experiencing the cold winds of change

Expressions Planning Credit Crunch - 2

A YEAR LONG REVIEW

Expressions conducted 4 groups in March 2009:• 2 in Birmingham• 2 in London

In each location one group was conducted amongst:• Consumers confident about their economic future• Consumers experiencing recent economic difficulties and concern over jobs

The aim is to understand the current environment:• Select 8 households for an ethnographical study

The intent is to follow the fortunes of these 8 families monthly over the year

In this third phase we explored 4 categories • Utilities• Finance and savings• Luxury food and flowers – in home• Cars

We invite you to submit other categories and specific questions to be explored during the subsequent monthly interviews

This is a free service


RECESSIONARY MINDSETS: RECREATIONAL TO REALITY


RECESSIONARY CONSUMER TYPOLOGIES

Expressions Planning Credit Crunch - 5Prominence

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Recreational

Reserved

Retrenchers

Not overly concerned about serious economic issuesRecognise situation as an opportunity to review

& reduce household expenditureElements of regaining control of expenses

Participation is about cutting back:- not cutting out

Perceive household as vulnerable to unemploymentNeed to be proactive, manage their household expenses

Matter of prioritising expenditureCutting back & out without being too puritanical

Experiencing economic difficulties; adjusting & adaptingDesperate measures need to be enforced by many

Optimistic belief means some adopt a progressive cut back/out policy

Learning to adjust to a different set of priorities

Driven by a need to conform to situationConscious that conspicuous consumption is

not socially or politically correctSelectively join in but will also exploit opportunitiesRelatively confident they will not be impacted on

Reality

DYNAMICS OF RECESSION TO DEPRESSION


Recreational

Reserved

Retrenchers

Reality

Recreational

Reserved

Retrenchers

Reality

The economy is fuelled by individuals spendingWhen this necessary impetus is slowed or restricted

recession spirals downwardsAs more consumers lose confidence the economy is

disproportionately impactedRecreational & Reserved need to retain their sense

of buoyancy & optimism

RECESSIONARY CONSUMER TYPOLOGIES: SUMMARY


Recreational SummaryNeed to conformSelectively join in

Exploit opportunitiesRelatively confident

Reality SummaryExperiencing economic

difficultiesDesperate measures

Progressive cut out policyLearning to adjust

Retrenchers SummaryVulnerable to unemployment

Need to be proactivePrioritising expenditure

Cutting out & back

Reserved SummaryNot overly concerned

Opportunity to review & reduce expenditure

Regaining control Cutting back, not cutting out

RECREATIONAL MINDSET


Context

Crisis

Voyeurs of crisis; a topic of discussion not an imminent threat Opportunity for some to carefully and covertly exploit:

“…at least you can now negotiate over prices…”

“…you can now get a builder and at a reasonable price…” Critical of the ‘doom & gloom’ of economic news; considered an

irritant:

“…the media don’t help, full of depressing stories…”

“…stopped listening to Radio 4…too depressing…”

Economically comfortable; adopt a secure attitude to employment Typically working in public sector or companies supporting

essential services Boast about low mortgages or tracker mortgages Perceive themselves as financially astute Not prepared to alter their lifestyle but less overt about it:

“…we’re still going skiing but feeling a bit guilty about it…”

RECREATIONAL MINDSET (Cont’d)


Considerations

Brands

Feel an opportunity to review household expenditure More about exploiting offers than consolidating:

- minimizing expenditure & getting greater value:

“…Sky are doing some good offers…” Concern over value of sterling & foreign holidays For the brave an opportunity for investments:

“…house prices are going to fall…they’ll be some bargains about…”

Belief in buying brands unshaken; not going to compromise Conversely, many aware of brands being discounted:

- from chocolate biscuits to BMWs Resist changing established and efficient shopping habits Recession more about being seduced to remain loyal to

existing suppliers:- exploiting an opportunity

RECREATIONAL MINDSET (Cont’d)


Summary

Confident, to an extent complacent

Perceive situation as an opportunity to exploit

Voyeuristic and vulture mentality

Not prepared to compromise on lifestyle

Respect need to be less conspicuous consumers

More likely to buy a bigger car at reduced rate:- than a smaller more economical car

Crisis is about selectively joining in when it suits them

RESERVED MINDSET


Context

Younger couples, some professionals (teachers, librarian, IT workers)

Feel relatively secure in job; unemployment not an issue Focus is on maintaining lifestyle by efficient finances Concern is about the future and future planning

Crisis

Impact is by association; house prices have fallen Constraining plans for family improvements:

“…we wanted to move to a bigger house this year…” Talk about friends and relatives being affected; second hand

experience:

“…my brother-in-law’s badly hit, he’s a builder…” Period of reconsidering financial situation, reviewing expenses Sensitive to the plight of others; cutting back part of conformity:

“…you see people buying more economy lines…so you think you might too…”

RESERVED MINDSET (Cont’d)


Considerations

Brands

Still remaining loyal to ‘icon’ brands (washing products, butter, cereals, etc):

- switching where deemed less important:

“…I’m not down to buying the economy own labels but cutting back where possible…it is a sign of the times…”

Challenge mentality towards expenditure:

“…I feel as if I have to justify what I buy to myself…”

Reference the need to budget and consider expenditure carefully Future plans involving big ticket items or household improvements put

on ice Holiday plans have become less extravagant & UK based due to the £:

- no longer able to enjoy cheap € Looking to make savings where possible without sacrifice Mood of being prepared for worse times:

- preparing a plan to cope- a phased strategy from cutting back to cutting out

RESERVED MINDSET (Cont’d)


Summary

Feeling of being prepared

Gaining control of expenditure

Prioritising values

Refreshing attitude to extravagant consumerism

Adopting more family and free entertainment

Turning from consumerism to culture

Need to justify purchases; element of guilt over extravagance

Seeking to compensate when cut back:- indulgent meal in rather than a night out

Initiating family values and appreciating of money management

RETRENCHERS MINDSET


Context

Crisis

Driven by the need to be prepared Having a sort of plan, campaign management Unspoken expectation of at least one partner’s income being

affected Have often reviewed household finances and cut down and out:

“…we haven’t pared back to the bones …but should it happen we know we can be more ruthless…”

Concerned about unemployment Experience of friends, family and colleagues who have been

made redundant Work in sectors vulnerable to downturn (building related,

catering, manufacturing, etc) Anxiety about surviving through meeting essential commitments

RETRENCHERS MINDSET (Cont’d)


Considerations

Brands

Some brands non negotiable (coffee, cereal, shampoo, toothpaste, etc) Perceived as false economy All discretionary expenses cut back Experiment with other stores and own label products:

“…I’ve always driven past Morrison’s to get to Sainsbury’s but now I’m converted…excellent fresh fruit and veg…”

A period of redefining household tastes and expectations Trading down whenever possible and practical

Staged reduction in unnecessary expenditure and lifestyle Desire to implement drastic cuts after Christmas:

“…we knew we had to do it but wanted to have a good Christmas first for everybody…”

All household bills and outgoings reviewed:- some subscriptions cut out (mobile phones, Sky, etc)- some services switched to exploit offers (dual fuel discounts,

cheaper suppliers, etc)- some cut back (basic Sky package, selling 1 car, etc)

Desire to revisit mortgage but concern about ‘opening a can of worms’ Want to be living as expediently as possible; weaning themselves off credit

RETRENCHERS MINDSET (Cont’d)


Summary

Planning for the worst

Learning to live on a reduced budget

Challenging past consumer aspirations

Acclimatising the family; changing tastes and expectation

Learning different shopping regimes

Seek non extravagant rewards and treats

Family based activities evident

Parental concern on children not being the innocent victims

Prepared to compensate children and family with small shared indulgences

REALITY MINDSET


Context

One or both partners made redundant or hours shortened Immediately impacting on household finances and emotions Take desperate and immediate expenditure decisions:

- driven by necessity Pride prevents consideration of outside financial planning and help Reluctance to talk to mortgage provider or landlord

Crisis

Living through economic turmoil Perceived themselves as victims, want to apportion blame Government and banks cited as being responsible for ‘the mess’:

“…it’s about people in power playing with our lives…” Adopt a pessimistic view of the future:

“…I’m 48, I’m not likely to get another job in engineering again…or at all!”

REALITY MINDSET (Cont’d)


Considerations

Brands

Radical change of life Minimising expenditure and impact on family:

“…you know there are plenty of us out there and there will be plenty more but you don’t want your kids to be affected…”

Evident psychological impact

Brands are luxuries that need to be justified:

“…it’s only a few pence more for Heinz and they can tell the difference even if I hide the tin…”

Challenge is to survive on a reduced budget Economies are essential, not optional:

“…heating or eating…” Significant change in shopping and eating habits:

“…now buying more vegetables and cooking from scratch…found some really good recipes…”

Discount stores now offer a shopping relevance:

“…now go to Aldi first…what I can’t get there I get at Tesco’s…”

REALITY MINDSET (Cont’d)


Summary

Challenges and changes family life

Learning to cope with circumstances

For some adoption of different value systems

Different coping strategies; resignation to optimism

In a changing world brand loyalty perceived as a luxury

Consumers looking for survival strategies

However cheap does not always represent value

Need to treat themselves and family

Distractions deemed important; family outings, gaming consoles

Discovery of a different set of values and consuming experiences:

- eg swapping culture or exchanging items on EBay

UTILITIES


UTILITIES


Recreational

Have previous experience of switching:- incentivised by offer of savings

Prompted by a personal call (door 2 door or phone)

Disappointing experience for most

Problems of having to pay 2 bills & admin errors

Promised reductions only short lived:“…after 6 months wrote to us...direct debit needed adjusting…more than we were paying before…”

Poor switching experience made customers loyal by default; avoidance of mechanics of switching

Comfortable & confident about utilities generally

Aware of fuel costs escalating last year but could appreciate why (world energy costs)

Increases did not really impact on household

Need to maintain comfort of home

Only switch(ed) supplier due to moving home

Conservative about utility companies, looking for comfort, believe in tried & trusted

Interest distracted by conservation & ecology messaging

UTILITIES (Cont’d)


Retrenchers

Struggling with paying utility bills, monthly problem to meet direct debit

Have considered pay as go & charge cards:- rejection over added cost & stigma

Reluctance to switch due to cost implications & losing perceived loyalty credits for current suppliers

New supplier maybe less sympathetic if situation worsened

Implementing tough conservation strategies

Turning down thermostats, shutting off radiators, nothing left on standby

Reluctant & embarrassed to ask for help from utilities

One of the most considered items of household expenditureEasier to switch than other direct debits, eg mortgageSome serial switchers looking for cheapest/cheaper

supplierTend to review utilities relatively regularly anyway:

But prompted by threat of reduced incomeMore inclined to adopt an immediate & commodity

perspective:- want savings today, less concerned about tomorrow

Attempt to save on energy usage, implement economy programmes & strategies

Have considered insulation as part of thisSome switched to water meters to reduce bills (where

perceived as viable)



Switching Strategies

Most respondents aware of U-Switch and similar websites Internet sites considered objective and often the first port of call Reluctance to accept cheapest quote due to concerns over service and

administrative efficiencies Consumers wanted a degree of brand reassurance with their utility

company

Water

Whilst consumers were confident they could switch gas & electricity supplier they were less confident about water

Many liked the idea of taking control over the cost of water rates Some had looked into water meters Water meters were only thought appropriate where there were 1 or 2 in the

household; for many water meters were perceived as a consumer gamble Did have the halo of environmental considerations Against this they were considered to be another meter requiring supplier

intervention to regularly read & monitor



Switching

Generally utilities were perceived as a commodity item Offers were seen as ‘much of a muchness’ with only minor cost differences

between suppliers However, there were considered to be distinct service differences British Gas & previously deregulated companies still believed to offer

superior tangible service (LEB, MEB) Past experience tended to dissuade many:

- perceived as disappointing & too much hassle for too little saving Believed to be a passé activity Moreover past experience prompted concerns over need to pay 2 bills:

- disincentive for financially concerned



Savings

Savings by energy conservation were of more interest Savings could be implemented through greater efficiency via insulation

(Recreational & Reserved) Or savings could be imposed on the household through greater

consideration of usage (Retrenchers & Reality) Consumers relatively blasé about insulation & home efficiency Most believed greater economies could be made through greater control

of energy usage For many energy was perceived as an invisible cost & a cost which could

not credibly or readily be controlled Consumers generally interested in all aspects of energy savings, either

due to ecological responsibility or their financial positioning Prospect of meters to enable them to gauge consumption was a powerful

attraction

UTLITIES (Cont’d)


Utility Attitude

Utilities were thought to have profiteered from rising fuel prices in the recent past

Consumers were aware through the media about increased domestic fuel costs

Some were appreciative that the utilities needed to increase their costs However many were critical over utilities still maintaining inflated costs

after market prices had returned to near normality Many considered utility companies to be opportunistically exploiting rising

fuel prices

UTILITIES: LEARNING

Utilities perceived as a household necessity

Often the first point of call when consumers are looking at household budgeting

The vogue of switching supplier was approached with caution

Experience of switching, both personal and through family and friends, was one of disappointment through:

• Process• Long term savings

Consumers were more interested in reducing energy costs by conservation through either insulation or reducing usage

Most consumers were relatively complacent about the level of insulation of their home

There was an evident reluctance to invest in insulation to save money

Consequently conservation was of more general interest

Energy conservation in a household often prompted tension between partners or parents and children

Consumers consider themselves relatively ignorant over conservation strategies beyond basic procedures

Consumers believe they need to work in partnership with the utilities to save energy

The incentive varied dependent upon consumer typology and circumstance, with the incentive being either ecological or financial


FINANCE AND SAVINGS


FINANCE AND SAVINGS


Recreational

Had not experienced any significant financial impact

Considered it more prudent or acceptable to be more financially discreet

Frustrated over savings/low interest; look for other investments

Often have reviewed finances prompted by media exposes & interest rates

Become less apathetic over switching accounts:- beginning to appreciate minor rate differences

Concern more about exploiting a better product offer than changing bank/building society

Expected & wanted more imaginative products to encourage investment

Some positively impacted by recession:- tracker mortgages = cheaper monthly outgoings

Some saving the residual, others investing it in the home on improvements & extensions

These consumers considered it a good time for household improvements & investment:- too precarious to move

- supply of cheap(cheaper) buildersInterest rates considered a disincentive to save:

- consequently a desire to spend was evidentConcern over interest rates eventually rising caused a

restriction on big ticket spending: - less long term investments, eg cars

- more short term enjoyment, eg holidays

FINANCE AND SAVINGS (Cont’d)


Retrenchers

Undergoing a financial crisisFamily’s financial rhythms are completely disrupted:- however large outgoings can be negotiated &

reorganisedLiaising with building society about mortgage options:

- extending, interest only, holidayDesire to ‘make ends meet’ without using now valued

savingsDespite desperate finances relatively optimistic about

finding a new job or temp employment (black economy)No surplus cash to top up savings

However want savings to work hard to earn interest

Have reviewed savings to see how long they could survive redundancy or reduced income

Past savings have become current security:- appreciation of their financial prudence

Despite reduced income (for some) still subscribe to saving ethic, particularly for children’s savings

Some considering using savings to compensate for reduced income (inherent reluctance)

Savings have become a war chest to fight the threat of recessionary impact

Undergoing a balancing of reducing household expenditure & increasing savings to protect from

redundancy



Spending

For some, especially those on tracker mortgages, the financial impact has been positive

These consumers stated they had more money at the end of the month Allied to this there was a perceived opportunity to exploit cheaper

services & trades:- thus an opportunity to indulge in home extensions & improvements

Others were less confident about long term or high ticket investments Generally there was reluctance to save by Recreational & Reserved

who saw saving as unnecessary:- wanted to indulge themselves and exploit spending opportunities

on holidays etc



Savings

Interest Apathy

Low interest rates acted as a disincentive for those who could to save Acting as an incentive amongst the financially concerned (Retrenchers)

was the imminent threat or redundancy or reduced income In a time of economic uncertainty these consumers wanted to build up a

war chest: Motivation was survival rather than interest

Low rate of interest had prompted many savers to review product conditions & options

Consumers spoke of managing their savings more carefully Savings becoming more important to their short to medium term security



Savings vs Loans

Realisation that savings were false economy where they had loans Perceived as financially astute to use savings to pay back loans General reluctance to acquire short term debt either on credit cards or

loans if unnecessary Many households talking of reducing collective loans For some in preparation of the possibility of reduced income

Financial Optimism

Despite experiencing or the imminent threat of redundancy there was a degree of financial optimism

Retrenchers & Reality consumers believed they would weather the recession

Major household expenses such as mortgage & utilities were perceived as negotiable

Thought that lending institutions & utilities were & would be sympathetic to the current situation

Most believed that should redundancy happen then it would only be a temporary situation

General view of ‘something will turn up’ & that they needed to be flexible & versatile about future employment

FINANCE AND SAVINGS: LEARNING

For some the recession has been favourable (tracker mortgages)

These consumers are experiencing monthly surpluses

These are being invested in either home improvements or personal indulgences

For these consumers the interest rates are a disincentive to save

Where saving was evident it was as a safety net against the recession and redundancy

These savers were less incentivised by interest rates as survival

The sense of saving apathy previously experienced had been replaced by an interest and proactive concern over managing savings

Consumers were likely to be more involved and interrogate saving options

Propensity to switch existing savings to capitalise on recession oriented offers

General frustration over lack of imaginative savings products

Evident need for savings products to accommodate redundancy payments and consequential need to draw down on these


LUXURY FOOD AND FLOWERS IN HOME


LUXURY FOOD AND FLOWERS IN HOME


Recreational

Appreciate a number of tempting offersLack of budget constraints means tempted to trade up

Encouragement to experiment with:- promotional offers

- value mealsPerceive themselves as positively exploiting the situation

Spread of instore bargains on premium lines such as meat, fish & flowers

Restriction is not financial but family acceptanceConflicting emotions evident:

- indulgence in a period of public prudence

Share many of the values of above

However, justify trading up to superior cuts or more expensive items; home entertaining replacing going out

Emotional justification also given; light relief in a period of gloom:

“…need something to brighten our lives up…why not treat ourselves…it’s cheaper than it’s been for a long time…”

Believe they are making certain longterm or larger sacrifices & home indulgences compensate for these

Element of rewarding & indulging the family:- asserting or reaffirming their economic positioning

Encouraged to regularly take advantage of such promotions

LUXURY FOOD AND FLOWERS IN HOME (Cont’d)


Retrenchers

Need to reward & indulge still evident

However, excuse needed; special occasion, Mother’s Day, etc

Perceived as treating self & family consequently infrequent

For some a quality cut of meat or fish serves as compensation:

“…if we’ve had an economical week of casseroles & sausage then I don’t feel too bad about splashing out at the weekend…”

Prawns considered a typical example of a family indulgence

Often bought on promotion & stored for an occasion (formal or informal)

Considered a reassuring token to the family

Extravagant cuts of meat/fish only for very special occasions:“…you can’t economise forever…you have to eat good food…

it’s a way of the whole family joining in…”While good food could be justified as a family treat:

- flowers were a housewife indulgence- consequently perceived as selfish unless a gift

Shopper extremely conscious of shopping on a budget but always susceptible to a bargain:

“…they always have some fish on promotion…it’s even cheaper if it’s getting close to the sell by date…”

Tend to be cautious over unusual cuts of meat (uncertainty over cooking) & experimenting with fish (don’t want wastage)



Meat

Evident attempts to cut back on meat from Retrenchers & Reality Cuts/joints of meat being replaced with other dishes Occasionally substitutes were meat oriented, eg sausages, burgers, etc Often consumers trying different proteins (fish & fowl) & pasta Looking for bargains when shopping & did tend to shop the meat fixture

looking for promotions or special offers A few had tried substitute meat; found it okay to extend but not to

replace Believe these consumers lacked the vegetarian conviction Moreover several found substitute as expensive as the real thing When shopping for meat consumers tended to be selective:

- resisting overly fatty looking pieces Market would appear to be polarising with Recreational & Reserved

consumers looking for adventurous & indulgent cuts of meat:- Retrenchers & Reality tended to look for economy offers



Fish

Similar motivations & mechanics were happening in the fish market A few felt they were eating more fish nowadays:

- health & price imperative Retrenchers especially believed that fish offered a cheap alternative:

- especially for active families where a ‘proper’ protein was seen as essential:

“…my husband’s a manual worker, I can’t expect him to come home to a bowl of pasta, he needs meat and veg or fish…”

The more financially challenged were prepared to experiment with more economic fish options

However some concern over family acceptance & wastage Incentivising some to the fish counter was the popularity of fish recipes,

particularly for the spring weather



Prawns

Perceived as polarising:- some consumers resisted them as being bottom feeders &

potentially problematic Amongst prawn advocates they were seen as adult oriented indulgence Usage of prawns was not thought to have been too adversely affected

by the recession, even amongst the Retrenchers Frozen prawns were considered to be an item often on promotion and

when on promotion were bought in quantity & stored in the freezer Fresh prawns were considered more of an indulgence & were less likely

to be promoted Amongst many frozen was seen as not just an expedient substitute for

fresh but a comparable product Apparent that when considering prawns many spontaneously referenced

the larger, king prawns Smaller (coldwater prawns) were thought to be less of an indulgence &

more of an ingredient Usage of coldwater prawns tended to be more for sandwiches or to bulk

out king prawns in Mediterranean dishes Suggested that whilst king prawns had indulgent status & believed worth

‘splashing out on’, coldwater prawns lacked this sense of occasion



Flowers

Research coincided with Mother’s Day & for some the beginning of Easter Fresh flowers were seen as a treat more for the housewife than the

household Recreational & Reserved still enjoyed the notion of fresh flowers in the

home Believed flowers complemented the home in terms of aesthetics &

fragrance:- an icon of home comfort

Retrenchers & Reality believed fresh cut flowers were unaffordable luxuries at the moment

Exception of this was if they were bought as a present which was welcomed or hand picked when their intrinsic value was even greater

The earlier work on flowers was around Valentine’s Day, here women expected both flowers & wine/chocolates as a measured token of affection

For Mother’s Day flowers alone were deemed acceptable



Dips

Perceived as part of the in-home entertaining process Entertaining friends at home rather than going out was a recessionary

benefit Consumers enjoyed entertaining at home & the ability to indulge Indulgence was justified due to comparative economy Even family entertainment at home was often valued when it replaced a

more conventional meal or evening out Thus consumers were prepared to spend more on such occasions This included trading up in terms of wine:

“…if I’m staying in rather than going out I think I can afford to pay £5 for a bottle of wine…that wouldn’t buy you even half a glass in the pub…”

This compensatory extravagance extended to other snack products:

“…a bag of crisps in the pub would cost you 75p, for £1 you can buy a rather nice big bag…”

“…if you go out & get stung for a round it’s easily £10-12 and for that you can get a nice bottle of wine and some snacks to go with it…”

When buying such snacks consumers were looking for adventurous recipes to complement known & acceptable favourites


Credit Crunch - 43

Smoothies

For families, especially those with teenagers, smoothies were enjoyed:- however they were seen as expensive

Against this perception smoothies were acknowledged as being healthy Mothers argued a smoothie was a good way of ensuring their growing

teenagers or younger children approached their 5 a day target Smoothie acceptance was believed to be due to the taste combinations Mothers approved of the blends, combining unusual fruits & occasionally

super fruits A litre of smoothie was thought relatively economical compared to buying

the same quantity of fruit:- notion of producing own smoothies was ruled out



Vegetable Juice

Consumers perceived a vegetable juice to be something like tomato juice Several referenced V8 Some did make a connection between a vegetable juice & a fruit smoothie The concept was highly polarising It was only those who regularly bought into tomato juice who found it to

have any intrigue Concept currently suffers from a lack of intrigue with consumers believing

a vegetable juice will comprise a blend of conventional vegetables:- carrots and tomatoes

Careful consideration needs to be given to the development of this Concept needs to arouse taste curiosity & motivate consumers primarily

on a taste platform and secondly on health Evident need to entice on taste intrigue:

- breakdown resistance of vegetable juice prejudice

LUXURY FOOD AND FLOWERS IN HOME: LEARNING

Consumers want to indulge in quality foods whenever possible or whenever they can justify

Quality food was something the family could share

Respondents aware of supermarkets promoting cuts of meat & selected fish, enabling them to take advantage

Slight resistance to buying unusual cuts of meat as consumers were not confident about recipes and promised economy

Similar considerations occurred with fish with consumers needing fish to have family acceptance:

• Acted as a barrier to experimentation

Consumers could be incentivised to buy into more adventurous foods if seduced by appealing, convenient recipes

In terms of luxury food consumers are now going through a transformation and more diligently shopping fixtures

Certain consumers are looking for value not necessarily bargains

Equally some consumers are looking for indulgence whilst others are looking for expedient meal solutions

A bargain hunter on one occasion could be an indulgent purchaser on another


LUXURY FOOD AND FLOWERS IN HOME: LEARNING (Cont’d)

Whilst luxury food has the potential to be a treat for the family to enjoy, bought flowers were seen as an indulgence for the housewife

Many financially constrained believed this to be selfish, unless the flowers could be justified as a present or reward


CARS: BUYING, SERVICING AND REPAIRING




Recreational

Most in this sector were at least 2 car householdsSeveral were considering replacing their car:

- incentivised by downturn & hope of a bargain, esp. used carsExpectations fuelled by media coverage were that the trade

was desperate:- respondents motivated by price rather than auto altruism

Experience proved anticipated bargains were not available:“…I didn’t think they’d fill the glove box with fifty pound notes

but I was expected a better offer than I got…”Adding to the new car draw was the low level of interest:

- again actual experience proved disappointing:“…I get 1% on my savings…4-5% on a car loan…”

Less enthusiastic to enter into a major purchase

More keen to maintain status quo until economy more stable

Adding to consumer uncertainty were recent fuel cost fluctuations; uncertainty to go for economy or performance

Emission charging, company parking & impending budget acted as further barriers to progressing

Current cars were likely to be relatively new, thus serviced at main dealer:

- older cars (3+ years) did not warrant the extra expense



Retrenchers

Despite redundancy threat & financial impact reluctance to get rid of car or cutting back to 1 car

Respondents argued car(s) a necessity for household routineLittle consideration given to alternatives

Public transport, bikes, motor bikes dismissed as impracticalConsumers argued the car or second car was worth so little as

to be not worth sellingBelief they could manage to significantly reduce running costs

Saving on service by using cheaper source, insurance by online quote, some even considered 6 month tax

Economic running was a critical issue to these respondentsEven having been made redundant the car was rationalised as

a necessity:“…I need it to get around for job interviews…you couldn’t

depend on public transport…you’d turn up later & how would that look…”

For these respondents the car was an expensive household item but deemed essential

Consequently all associated costs need to be pared backFriends or family encouraged to service when absolutely

necessary; deals were done for mechanical expertiseCheap parts were sought rather than branded replacements

CARS: BUYING, SERVICING AND REPAIRING (Cont’d)


Bikes

Bikes were believed only appropriate for children Evident resistance to using a bike in place of a car for daily transport Bikes were associated more with leisure activity & exercise than a

practical means of transport Respondents in urban areas resisted the use of bikes, considering them

a danger for commuting & an inconvenience:

“…you’d have to turn up to work & have a shower before you could do anything…”

“…you’d have to carry wet weather gear & set off an hour earlier…” As a substitute for the car bikes were resisted Conversely as a leisure activity bikes were encouraged Biking was a good means of getting exercise & family involvement Purchase of a bike was still perceived as a present to mark a birthday or

Christmas For some buying a bike was a rite of passage, marking the child as:

- old enough to ride a bike- responsible enough to ride a bike to school- independent



Acquiring a Bike

For most Halfords was the first point of call when acquiring a bike Some believed a more personalised service would be available from a

local bike shop These consumers liked the idea of more personalised service attention

when buying:- and later when servicing the bike



Cars: Servicing

Irrespective of consumer category new cars were thought to warrant main deal servicing

This was believed to be part of the guarantee for the first 3 years Consumers were contractually obliged in these circumstances to fit

branded parts and had little say in the service Once car was out of manufacturer’s warranty then consumers were on

their own This necessitate them being selective about how they serviced the car For economic reasons many believed an older car did not warrant main

dealer servicing:- and could be more cheaply serviced at a generic garage- or by a competent friend, mechanic, mate of a mate, etc

When the car was out of warranty consumers were less concerned about the quality of the parts used & more focused on costs

Consumers stated they would find it difficult to judge the value of parts, even if they were asked

It was a desire to abrogate all responsibility to the garage or mechanic:- in terms of sourcing, selecting and fitting parts

Most of these consumers wanted to keep at arm’s length, with car mechanics being perceived as ‘too complicated’



Cars: Oil

Engine oil was something that was rarely checked by all motorists we spoke to

Prompting a check would be a long journey or a specific concern, such as drops of oil under the car or loud noises

Many (men & women) said they did not know where the oil would go Consumers accepted the logic that a serviced car could save significant

amounts of money in terms of fuel efficiency Extending this logic some believed an engine oil could also contribute to

economy through greater efficiency:- however many felt this would be marginal

For such a claim to be credible it would need to be endorsed or reinforced by an objective mechanically respected body:

- or the mechanic trusted to service the car The message of an oil with an economy dimension needs to be primarily

directed at the mechanic and secondarily at the consumer

CARS: BUYING, SERVICING AND REPAIRING - LEARNING

Evident reluctance to cut down or consolidate on cars

Consumers argued household routine and status quo is dependent on use of the car(s)

A car was seen as a necessity, even for the redundant for job interviews

General awareness of economic impact on car industry arouses expectations of bargains

Disappointment that manufacturers not promoting more deals

Additional disappointment over car finance not reflecting the low bank rate

Concern amongst some over future fuel fluctuations

Adds uncertainty as to what type of car would suit them in the future (fuel efficiency vs comfort)

Allied to this there were other Government uncertainties which detracted from progressing a car purchase:

• Emission charges• Taxing company parking


CARS: BUYING, SERVICING AND REPAIRING – LEARNING (Cont’d)

Those with new cars (under 3 years) believed they needed to service their car at a reputed dealer in order to ensure continuity of warranty

Those with older cars felt they had more latitude to select a garage, but whilst selecting a garage did not want to select spares

These consumers wanted to abrogate complete responsibility to the mechanic

Thus the choice of spares was largely dependent on the mechanic with consumers briefing the mechanic as to the standard of service expected

Economy was seen as a benefit of regular servicing

Notion of an oil which would contribute to economy & greater mileage was considered credible but possibly only marginal in terms of its financial impact


OBSERVATIONS


OBSERVATIONS AND ANOMOLIES

The fieldwork for this phase took place during the mid to end of March

At the time the media was still bleak about the world economy:• Unemployment and Government bail outs dominated the headlines

Despite this consumers were adopting a resigned attitude

Even those who fell into the Retrenchers and Reality categories were not overly despondent

Many believed they had already put in place or formed economic initiatives and contingency plans

There was an evident sense of ‘wait and see’

It is believed this month was a pivotal moment with Obama’s policies being put in place and the prospect of the G20 Summit

It would appear that March was about holding consumers’ economic breath


PRINCIPAL LESSONS

Economic recession is about a collective consciousness

Individuals will be affected but react differently

Marketing opportunities are about understanding different consumers’ needs and desires

An economic recession need not result in consumer psychological depression and brand pessimism

Indulgences and rewards are sought as displacements and distractions

Consumers are more open to experiment with different regimes and behavioural patterns

Status quo is challenged by many wanting to make economies and efficiencies

Many had already put in place economic contingencies

Household funds had already been scrutinised

Utilities, where desirable, had been either switched or bills interrogated in terms of conservation

Household plans had been drawn up, but with an optimistic accent

Evident reluctance to dramatically alter household’s economic patterns and rhythms unless desperate

This extended to cars:• With even the unemployed maintaining their car was a necessity


PRINCIPAL LESSONS (Cont’d)

Luxury items were also found to have a significant role:• Either in reassuring consumers of their economic comfort• Or serving as small rewards and tokens the whole family could share in

Consumers were becoming acutely aware of value and were prepared to change behavioural patterns in order to achieve value

At one level in phase 1 we saw this impacted on shopping and their selected retailers

This also equates to shopping per se with some consumers actively choosing to opt out of leisure and pleasure shopping and only shopping when necessary

Others adopted more stringent shopping strategies, seeking out value

Exploitation of the current situation seems to lessened in terms of retail shopping

Exploitation however was still evident in considering household improvements

In addition to the recession impacting on behaviour, the economic situation has shaken many out of monetary apathy

Consumers were becoming more interested in household financing and reviewing interest rates on savings vs loans

There was an apparent sense of household accounting acumen


PRINCIPAL LESSONS (Cont’d)

Despite some families being close to their limits there was an evident sense of optimism about the future

Most believed they had not pared their household finances completely down

No one wanted to be too puritanical about the current situation

Belief that an optimistic approach was appropriate

Perception that the economic situation was a short term problem which would be overcome… eventually


ECONOMICS AND RECESSION: ACCORDING TO THE CUL-DE-SAC CONSUMER


APPORTIONING BLAME

Banks and bankers

America & George W Bush

UK & Gordon Brown

Empire building entities


Inherent greed of banksShort term profit at whatever cost

Individuals driven by the incentives of banking bonus

OPEC& energy

companies

Lack of regulation & control of banking marketExploitation of naïve market & investors:

- Bernard MadoffBush’s support for oil industry

Courting & lack of control of financial marketUK economy dependent on service & financeBrown’s denial of the boom & bust economic

cycle & lack of preparation

Specifically oil related companiesInability to regulate demand & supply &

consequently:- control retail price of energy

Exploitation of developing economies; Brazil, Russia, India & China (BRIC)

Moving production & HQs from UK to source & benefit from cheap production & tax opportunities

PROBLEM RESOLUTION AND CONSUMER REACTIONS


US & UK Governments bail out banks

Tax payers’ money used to ‘bank aid’ the system

Radical reduction of bank rate to ‘defibrillate’ chronic economic solutions

A sop to the UK consumer with a reduction of VAT

Resentment that perceived catalyst should be reactively supported

Frustration that first trench of funds not distributed:- banking paralysis, risk aversion or greed

Perceived as nationalisation of high street financesSavings & mortgages now state dependent

International, some foreign owned, monolithic businesses looking for hand outs

Retrenchment of foreign companies perceived as exploiting UK; workers & government economic hospitality

Perception of companies having lost interest in UK:- emerging BRIC economies

View these companies were profiteering by escalating retail fuel costs

Recently confirmed by record profits for Shell & BPCall for windfall tax on energy companies displaced by

complexity of the economic situation

Banks & bankers

Energy companies

BANK AID: TOP DOWN ECONOMICS


Government intervention focussed on:

“…helping the perpetrators…”

“…rewarding the guilty…”

Undermines consumers’ faith in credible solutions

Compounding this mistrust is ineffectiveness of Government intervention:

“…lent the banks billions but not doing anything with it…”

“…lowest bank rate for 100 years but I’m still being charged 6% on my mortgage…”

From a consumer perspective recent measures have been:

- reactionary and restricted- ill conceived and executed

Emphasis has been on securing the status quo:

- saving the decrepit system that caused the problem

Shoring-up the System

CONSUMER CENTRIC: BOTTOM UP ECONOMICS


Lack of trust in banking systems & bankers

Concern over security of savings & honouring loans

Disillusioned with structures & regulations

Disappointment of banks parental positioning & control and exposed management

Resentment over public monies bailing out banking system

Impact on consumer is to inflate uncertainty & insecurity

Most consumers perceive themselves as victims of the crisis & still vulnerable to unforeseen events

Causes many consumers to consolidate & reduce spending:

“…it’s like a rabbit caught in the headlights… freezes…”

Rather than kick-starting the economy the measures cause consumer economic paralysis

Belief consumers being excluded from economic considerations – fundamental flaw:

“…we are the economy…”

“…they shouldn’t have given billions to the banks but thousands to each family…that’s the way to start the

recovery…”

Economy & Finance

Credit Crunch March 09