Among other victims of the recession, brands have taken a beating. Private labels have gained market share. Consumers are cutting back. Retailers are turning up the heat. According to panelists who gathered to discuss brand strategy at a recent Wharton Marketing Conference titled, “Connecting with the Evolving Consumer,” marketers need to be especially innovative when it comes to making sense of the shifting economy—and profiting from it.
What does a down economy do to consumer behavior? Most obviously, it makes people less eager to open up their wallets. According to Janelle James, vice president for global marketing at advertising agency Leo Burnett Worldwide, recent research shows that 80% to 90% of people are willing to trade off or trade down when it comes to shopping. Moreover, said Chris Kuenne, CEO of the marketing strategy firm Rosetta, many of those customers might not bounce back with the economy. He likened the effect to “a one-way membrane—it’s not like everyone’s going to go back to work [when the recession ends] and become much less value-sensitive.”
But the general consumer pullback masks some interesting dynamics that marketers could benefit from. “In addition to assessing brands and whether [they are] going to trade off or trade down, people are starting to change what they’re doing with their time,” James said. That means less going out and more focus on home and family. One firm that has responded to this trend in its messaging is Walmart, whose advertisements go beyond just touting low prices and instead seek to show how those savings can contribute to customers’ lives. That’s an especially important emphasis at a time when economic reversals have led to a “trust deficit” between citizens and corporations, James noted.
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