A Slightly Watered Down Can-Do Spirit
March 2009
Last week’s Inside Marketing began reporting the results of a 20-country survey conducted by Synovate, asking people around the world about their thoughts and behaviours concerning the economic recession.
Nonetheless, with 31% of New Zealanders expecting their personal situations to worsen, and 51% expecting the country’s situation to deteriorate, people can be forgiven for being concerned. When asked exactly what concerned them, the main issue facing people around the world is job security. Some 29% of New Zealanders cited this concern, slightly below the international survey average of 32%. Amongst some of our key trading partners, such concerns were echoed by 18% of Australians, 17% of the English, 39% in Hong Kong; and 25% of Americans. Other key concerns for New Zealanders are inability to pay the mortgage or rent (20%); inability to keep food on the table (14%); and losing money from investments (8%).
Being able to assess these concerns country by country would be worth doing for many marketers. For example, food exporters should note that the markets most concerned about food affordability are Mexico (30% concerned) and Brazil (21%); and that such concerns are still evident in key markets such as the UK (15%) and Australia (12%). The tourism industry should note that those in the UK are more likely on average, at 11%, to be worried about the affordability of holidays and other luxuries (e.g. trips to New Zealand!).
Worry is one thing though, actual action is another. So the survey included a question asking respondents whether they had already made spending cuts in the previous six months. At 73%, New Zealanders are amongst the most likely to have made such cuts, presumably as we were experiencing high fuel and cheese prices well before the stock market slumped. Only Turkey, the US, Greece and Bulgaria reported higher rates of spending cuts. Explaining why 80% of Turkish people have already made such cuts, Ali Muharemoglu, Managing Director of Synovate in Turkey, says the speed of the Turkish response to the financial crisis comes from practice: "In the past 15 years, Turkey has seen three major economic crises. This means that Turkish people are fast to react to these conditions and their first response is to claw back on spending; all spending, even necessities."
When asked how they were making spending cuts, New Zealanders’ actions were notably different to people elsewhere. The first place where we are cutting back is treat foods (19%), especially if cheaper housebrands are available (17%). This differs markedly to those in the wider international sample who were most likely to cite cutbacks in holidays and leisure travel instead (15%). The local tourism industry has certainly already noticed reductions in long-haul tourists, and retail analysts Synovate Aztec report significant growth in housebrand sales, especially in the areas of meal-makers (sauces, packet meals), canned goods, cleaning products, confectionary and cheese.
When asked specifically what foods they were cutting back on, whether through brand-swapping or fewer purchases, and New Zealanders were notably more likely to cite alcohol, with 40% cutting back compared to 25% of the international sample. New Zealanders are also more likely to have reduced spending on soft drinks (38%); cosmetics (34%), healthcare products (32%) and especially dairy products (34% compared to just 15% of the total sample).
Perhaps justifiably considering their economic situations, the nations which have cut back on luxury spending the most are the US and the UK. The same two countries are changing their habits the most in terms of impulse buying as well, showing people are coming to grips with living on a tighter budget. Just over half of all respondents say they are now comparing prices before making a decision, led by Greece, Belgium, France, the UK and the US.
All this can be confusing for marketers – do they chase the value-end of the market, or position themselves as a treat that can be forgiven when cutbacks are being made elsewhere? Synovate's Global Director of Knowledge Management and Insights, Mike Sherman, makes the point that as consumer compromises may be made in quantity, quality or both, so too do marketers have to consider all the motivations that can support or undermine their brand performance:
"Take alcohol as an example: The people who have compromised their spending the most are the French and the Brits. These are both countries where drinking is part of the culture, albeit in differing ways. I suspect the story behind these numbers is that people are choosing to drink cheaper, rather than drink less. Then there are the people who will still allow themselves little luxuries like perfume or new music or whatever. These consumers may compromise across categories, for example preferring own-brand groceries so they can still treat themselves to personal items. Marketers really need to understand the motivations of the people they are trying to sell to, to get inside their heads. This is always the case, but never more so than when times are tough. The mistake would be to assume that everyone will respond in the same way.”
Further survey details can be obtained from