Not Everyone Shares Kiwi Angst
February 2009
As financial analysts and investors struggle to understand the current economic situation, the similarities to marketing are clearly apparent. Just as financial markets must provide enough certainty to investors to give them the confidence to invest, so too must marketers instil enough confidence in their products and services to attract their consumers. Failure to deliver in either area makes future usage less likely, hence the current lack of cash in financial and consumer-focused markets alike.
To continue the comparisons, it’s worth noting that just as judging the predicted performance of a product or service is a somewhat qualitative decision, so too are many investments. And, for better or for worse, the opinions of others always hold some influence. When a customer hears of job layoffs and recession, spending patterns cannot help but be influenced.
So to help shed light on what consumers are doing and thinking in relation to the current economic climate, Synovate recently surveyed over 12,000 people across 20 countries. We asked them what they’re feeling, thinking and doing about the economic crisis or whether they even think it’s a crisis at all, and the resultant report is a fascinating insight into what New Zealanders are thinking and doing about the crisis, and how we compare with the rest of the world. These insights will be shared with NBR readers over coming weeks.
To begin with, Synovate asked people in all the markets how they felt about their local economies – whether they were strong; in a bad patch but soon to improve; as bad as it’s going to get; or going downhill, getting worse before getting better.
Then results showed that New Zealanders are certainly pessimistic about the local economy, with 55% of the 402 New Zealanders surveyed believing that the economy is going to continue getting worse, and just 1% believing it to be strong. Australians are fractionally more optimistic, although the survey was conducted prior to the infamous ‘buggered’ summary of their situation. As might be expected, those in the most volatile and exposed economies, the UK and US, are the most pessimistic. Whilst the economic problems these countries face are more entrenched and problematic than New Zealand’s, it’s worth pointing out that these countries have a disproportionately high prominence in our cultural and news coverage, thus spreading their negativity to everyday New Zealanders to a greater extent than would purely financially news items. As a result, New Zealanders could be excused for feeling more financially at risk than necessary.
The results also show how the financial doom and gloom is not universally felt. People in Brazil, Denmark and Malaysia were notably more upbeat about their countries’ economies. Manuel Lopes, MD of Synovate in Brazil, says that while the global economy is suffering, Brazil's is still growing: "Our optimism comes from the last very strong 5 years of economic growth and the fact that our Govt continually reassures us that the economy will continue to grow in 2009. So Brazilians feel somewhat cushioned from the global situation at the moment."
In the case of Denmark, the relatively favourable position is due to a small public debt and a very low unemployment rate, says MD of Synovate Denmark, Klaus Mikkelsen: "As a result, the room to manoeuvre for the Danish Government is quite large — for instance some tax reductions became effective 1 January 2009. Of course this has a knock-on effect on the attitudes of the Danish consumers."
We also asked people about their personal economic situations; whether they felt things were going to get better, worse, or remain unchanged at a personal level. New Zealanders were somewhat balanced on this issue, with 27% believing their personal situation will improve, and 31% expecting it to worsen.
In contrast, those in Australia, the US and UK being notably more negative.
Certainly people in different parts of society and in different situations will regard the economy differently, and it is here that marketers really have to take note – particularly in order to track how their customer bases are likely to be affected. Not surprisingly, those on low incomes are more likely to be pessimistic, especially those aged 55-65 and no doubt having to rethink retirement plans. The grey market has become highly attractive of late, but retirement holidays, golf clubs, expensive scooter sales and even businesses such as rest homes will all be suffering, particularly due to the ailing real estate market.
In contrast, younger people are most likely to remain optimistic, especially those in part-time work and aged 35-54 years, who are perhaps seeing personal opportunity arising from any growth in part-time jobs that may arise from a drop-off in full-time ones; or from the increased affordability of first houses.
So given these concerns, what exactly are people doing differently? Next week's Inside Marketing will examine what consumers’ biggest concerns are, and what goods and services they’re giving up to manage the squeeze.