Re: The Wall Street Journal, July 11, 2008, “US Consumers Trade Down As Economic Angst Grows”
Focus on consumers buying less expensive things is missing the point. Price alone is not the issue. The questions for the brand marketer are: 1. Is the consumer redefining the “value proposition” he desires, 2. How can we deliver that “value”; and, 3. Is the consumer willing to trade up to acquire that “value”.
In our desire to identify indicators to predict consumer behavior in the economic downturn, we instinctively revert to pulling out the tired lists of full priced retailers, discounters, club (warehouse) discounters and comparing sales figures over like periods. But what these gross figures don’t reveal is why the consumer is making the choices reflected in the comparisons.
From the point of view of the product manager or the marketing strategist, it is very different whether the consumer is merely seeking the refuge of “lowest price” or whether traditional notions of value factor into the buying equation. Is the consumer asking “will this item last longer?, “will it cost less to maintain” “is the style likely to survive the shifts in fads or trends and be wearable longer?” Clearly if the consumer is taking value propositions, other than pure price, into account, this is information that is highly useful to the brand driven business, particularly in times of economic duress.
When utilizing this information, though, the company should be very careful not to treat this entirely, or even principally, as a marketing challenge. Value starts with the product and the value proposition being offered to the consumer must be product or service driven if it is to be real. Inventing a great story, launching a great marketing message for inferior products, or products that don’t meet the consumers’ expectations, are flawed strategies and will not work.
This a moment for brand driven companies to reassess their product lines, to edit those items that may have crept in during the sloppy, frothy, high rolling times, and to ask themselves, "What do we stand for? and "What do we want to stand for?" To the extent there is a difference, a realignment is in order.
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