There’s been no turning back since Charles Revson, the founder of global mass market cosmetics manufacturer Revlon, stopped selling makeup and started selling hope in a bottle. Today, brands in almost every category sell more than just the stuff their products are made of. Cigarette manufacturers, for example, no longer peddle mere puffs of smoke but advertise clouds of self esteem instead.
What were once commodities now serve a “greater purpose.” Sanitary napkins give teens confidence, diapers offer parents the feeling of responsible and successful parenthood, and dog food provides our new canine family members with long and healthy lives.
What’s happened is a change in the shopper’s mindset. They don’t just buy stuff anymore. They buy meta-stuff (i.e., the stuff behind the stuff). And, contrary to popular belief, these philosophical shoppers are the best bet for manufacturers and retailers to profit during the global economic slowdown.
Two Kinds of Shoppers
Things have changed since the crisis came to town. Jobs have been lost. Houses have been foreclosed; retirement and savings accounts, decimated. For many, life today just isn’t as pretty as it was 18 months ago.
So, aren’t shoppers the world over gathering up what remains of their fortunes, rolling them up neatly into rubber-banded bundles, and burying them underground? The answer is yes and no.
Recessions have a polarizing effect on shoppers. These tough times make everyone more value-conscious, but in two distinct ways. On one hand, you have those who become penny-pinchers. These are shoppers who want products that deliver basic benefits at rock-bottom prices. At their worst, they are promotion-chasing, purely price-driven shoppers who have little or no brand loyalty. They say, “A peso saved, is a peso earned.”
On the other hand, there are those equally value-conscious shoppers who, instead of struggling to reduce the amount of pesos spent, look to maximize the value of every peso on the price tag. These shoppers don’t ask retailers and manufacturers for the best price, they ask for the best, more meaningful benefits. In other words, the meta-stuff. They say, “Price is what you pay, value is what you get.”
Why Not a Penny’s Worth?
So, why not chase the penny-pinchers? There’s always a lot of them anyway and, as the crisis continues to spread and deepen, there’ll be many more to go around.
Well, for most manufacturers and retailers, it’s a bad idea for several reasons. First, more often than not, penny-pinchers are won over by price. And remember, unlike winning in value terms, there’s one (and only one) way to win the pricing game: figuring out how you can consistently maintain the lowest (or close to lowest) price in the market.
Unless you’re equipped with Wal-Mart-esque cost-saving innovations, it would be pretty difficult to sustain competitive advantage on that front. Not impossible, surely, but downright difficult.
Secondly, penny-pinchers have little or no loyalty. They’re fair players in the purest sense. They go for the lowest price tag irrespective of race, color, religion, or brand name. So, what’s wrong with that? Well, think 50 First Dates, the 2004 Hollywood film with Adam Sandler and Drew Barrymore. Wouldn’t it be nice if you didn’t have to win them over and over again?
Lastly, penny-pinchers are, quite literally, a dime a dozen! Because they look for the best (Read: cheapest) prices, winning over 10 penny-pinchers will often be equivalent in peso-terms to winning over only, say, two of our more philosophical shoppers.
While many businesses excel in this game of mass marketing and manufacturing, those who succeed and become category leaders are often mid-tier (rather than low- or bottom-tier) players. In other words, working the penny-pincher circles is often not enough to win in the broader scheme of things.
Keep It Real
Economic uncertainty breeds many ill feelings, such as anxiety, insecurity, mistrust, regret, doubt, self-doubt, to name a few. Such crises challenge some of our shoppers’ most fundamental assumptions about themselves and how they live their lives. It raises questions like: Who am I? What do I stand for? Am I happy? What is the meaning of life? Am I wasting my life? Am I wasting my time? My money?
While these questions will, at first glance, seem irrelevant to an individual’s decisions as a shopper, they truly aren’t. Shopping is a very personal activity. By choosing to buy a product, a shopper reaffirms the value of the purchased object. And they do so not in the absolute sense (As in “This brand is the best. Everyone should buy it.”) but in a more relative, personal sense (“This brand is for me. It satisfies my needs and reaffirms my sense of self.”)
Winning among the shopper-philosophers requires brands to stay personally relevant. This is true now more than ever. While selling hope in a bottle worked well in normal times, during a crisis, the strategy becomes downright indispensable.
To survive, brands have got to keep it real and go deep. Shoppers ask serious questions and, to win their scarce pesos, we will have to give them serious answers. Think about the fundamentals of your brand and answer this frankly: Are you just selling stuff or are you selling meta-stuff?
Print ed: 04/09