Evolution of Value

August 3, 2009

It’s important to understand how consumers are thinking about value when it comes to your products and categories. Our Frugality 2.0 research sought to uncover how consumers are redefining value during this recession. But before we can reveal the new meaning of value, we first must understand how it has evolved over the years.

Let’s rewind for a minute back to a time when people were grateful for everything they had because the future was uncertain. People were concerned about getting enough food on the table at dinner instead of purchasing the latest gadget for their kids. The not-so-distant reality I’m talking about is the Great Depression. A time when value meant Survival.

These behaviors and values continued into the ‘40s and ‘50s. With World War II came the need for control – controlling budgets, portions and waste. Consumers repaired torn pants, ate everything on their plate and planted victory gardens. Value meant Frugality.

It wasn’t until the ‘60s and ‘70s when “need” became “want.” Parents wanted to provide their children with everything they couldn’t have growing up – think large families gathering in the living room to watch the new black and white TV. Value meant Prosperity.

These behaviors continued as the US started to enjoy a new found wealth that went over the top in the “go-go” ’80s and the dot com ‘90s. Consumes didn’t want one black and white TV for the family room, they wanted a color TV in every room. Take it from Gordon Gekko, Greed was Good! (link Gordon Gekko to – http://www.youtube.com/watch?v=7upG01-XWbY). Value meant Excess.

These excessive buying behaviors continued into the new millennium as the idea of personalization emerged. Consumers still wanted the designer jeans and gym shoes, but they wanted to put their own stamp on the purchase (Both M&Ms and Nike capitalized on this trend). Value meant Individuality.

And then a year ago, the bubble burst. Consumers started re-evaluating everything including the definition of value (once again). So what does value mean today?

Our Frugality 2.0 findings indicate that there are three factors contributing to the new definition of value –

1.) Trading – consumers aren’t just trading up and down; they are also trading off and out. Yes they are making sacrifices, but they are still indulging. It may be less often, but they are savoring the experience even more.

2.) Creative Living – consumers are reverting back to childhood traditions and finding new ways to entertain. Grocery shopping (once considered a chore) has now become a weekend family outing.

3.) Responsible Living – consumers are seeking control in this uncontrollable environment. They are making smarter decisions, searching for deals and are asking others for recommendations before making a purchase.

Consumers are making changes every day. Some are sacrifices, some are rewarding. The common thread in everything we heard is that consumers have opened their eyes and realized their previous spending habits were reckless. A new day has dawned and the consumer is more mindful of each purchase made (both small and large). They are planning purchases, seeking deals, asking for advice and buying cheaper options when it doesn’t matter and splurging a little when it does. Value today means Mindfulness.

In my next few posts I’ll share specific examples of how consumers are trading up, down, off and out, how they are becoming more creative and responsible with their entertainment and purchases and finally we’ll talk about the value equation and what it means for your portfolio of brands.

posted by Northlich August 3, 2009 in cultural storms

comments

Clyde says: August 17, 2009 at 2:31 pm Hi Ashley, Does the study indicate if consumers are more or less likely to try new brands or to stick with old brands and use them more often? Thanks, Clyde Reply Ashley says: August 26, 2009 at 7:22 am Hey Clyde, Our research did uncover some insights here. We found that consumers are returning to brands they grew up with. We heard many consumers say, “My parents used that when I was a kid, so I know it’s good.” There’s security in knowing a product will perform up to its expectations – your expectations. It minimizes risk and waste, both of which are important during this economic downturn. In the next phase of research, which we will start in mid to late September, we will focus more on which behaviors related to grocery shopping will stick when the economic situation improves and which behaviors will revert back to pre-recession patterns. We are also looking to identify the functional and emotional drivers of brands that will be resilient going forward. I’ll keep you posted. Thanks! Ashley Reply Kate says: September 4, 2009 at 2:59 pm Ashley, How will your next phase of research be different than the work from earlier in the year? Are consumer behaviors continuing to shift as the economic slow down continues? is there a means to correlate the continuing rise in unemployment to shifts in purchasing behavior. Kate Reply Ashley says: September 14, 2009 at 2:35 pm Hi Kate, We are conducting both a quant and qual study to identify behavior modifications that consumers have made during the recession and pinpoint sets of brands that consumers have not been willing to sacrifice, and why this is so. Specifically, we are interested in behavior modifications consumers are satisfied with and will continue practicing post-recession. We want to understand underlying values that make these changes satisfactory. We also want to uncover which behaviors consumers deem as dissatisfying and are eager to shed when the economy rebounds. We hope to have most of these answers before the end of the year. Talk to you soon, Ashley Reply