Plain Vanilla’s The Flavour Of The Times
March 2009
In this week’s Inside Marketing we complete our examination of Synovate’s recent 20-country survey which asked people about their thoughts and behaviours in the current recession.
Synovate's Global Director of Knowledge Management and Insights, Mike Sherman confirms that many consumers are open to change in times of crisis: "There are more changes in brand leadership in a downturn than in good times. Clearly there are good opportunities for generic or cheaper brands; and for the more expensive brands it is a time to build on loyalty and protect, maintain and build on position. Either way, the brands that market themselves the most appropriately during this time will do the best."
The cheaper brands being adopted are not always housebrands such as Tescos, Budget, Pams or Signature, but they frequently are, and the figures supplied by retail analysts Synovate Aztec confirm this. Synovate Aztec reported late last year that the four-weekly dollar growth in the New Zealand housebrand sector had grown from around 1% to a peak of 27% over the previous 52 weeks, representing massive growth in spending on private label brands. Categories experiencing the greatest private label growth are ‘meal makers’ such as noodles and recipe mixes, confectionary, cheese, biscuits, flour and mixes.
From the survey data, categories most likely to be seeing cutbacks and brand switching are alcohol (cited by 40% of the New Zealanders surveyed); soft drinks (38%); cosmetics (34%); dairy products (34%) and healthcare products (32%).
Marketers who are feeling the pinch and seeing their sales ebb away to these cheaper brands can feel at least a little reassured in that the bulk of such switches has already happened – or feel depressed to realise that the pain has not stopped. For example, while 34% have switched to cheaper brands of dairy products, a further 17% of New Zealanders in the survey said that they hadn’t – but expect to do so. Other categories where we revealed high latent customer churn were canned goods (13%); laundry and cleaning products, hot beverages and healthcare products (all at 11%). Of particular interest amongst the New Zealand survey data is that there are no significant demographic differences behind who is and who is not switching. This means that marketers with products at the high end of the market should not feel complacent – the rich may be less exposed to real poverty, but they still know when it’s prudent to cut back a bit – even if just for looks, now that conspicuous consumption is frowned upon.
Finally, the survey asked consumers for their views on a variety of economically related lifestyle factors, and we found that New Zealanders are comparatively more at ease than those overseas. New Zealanders are less likely to have delayed a major life decision due to the recession (23% compared to 35% of the total international sample); less likely to feel unable to stop spending (14% vs 32%); and be less worried about what our partners are spending (14% vs 32%). However, we aren’t completely in denial, as New Zealanders were found to be much more likely to be storing food in case prices rise even more (25% vs 18%).
What is intriguing when noting all this brand switching activity is the degree to which it reveals the true depth (or lack thereof) of the relationships many marketers have been able to establish with their consumers. Marketing has never before been more sophisticated, the power of the brand never before more respected. But if such high-involvement, heavily-marketed categories such as alcohol, soft drinks and cosmetics are the first to suffer brand switching, what does that say for the respective marketers’ abilities to have developed genuinely strong, recession-proof relationships with their market? The answer of course lies in the observation that brands do not lose customers at an equal rate – some will have suffered from the switch to cheaper brands much more than others – and this is where marketers are revealed for wearing the emperors new clothes – or bullet proof vests.
Further survey details can be obtained from