True Christmas Spirit Thrives in Recession Battered Brand Britain

Last year we published a qualitative research study that showed how Britons were rejecting traditional consumption and wanted to use Christmas to reconnect with the things and people that mattered most and are closest to them. A year on and the evidence suggests that this remains the case as Britons look more to the simple things that encapsulate the spirit of the season, rather than a more naked, commercial approach to Christmas. It is interesting to see how brands and retailers have been using these insights to inform their product and marketing campaigns. Consumers continue to view this Christmas as a buffer against a painful present, a time to recharge batteries, and to reconnect with matters they view as genuinely important. While they do this, they are perhaps thinking more about practicality, planning and early budgeting than last minute magic and spontaneity, at a time when thrift has become more than merely a lifestyle choice. Such insights are also reflected in Christmas advertising this year as Waitrose presents us with a stripped-back television advertisement, for which Delia Smith and Heston Blumenthal have both waived their appearance fees (instead the cash will be spent on Waitrose’s Community Matters charity scheme). John Lewis’s advert, which follows last year’s epic, features the tag line "Give a little more love this Christmas", features a snowman searching for the perfect present for a mystery recipient whose identity is not revealed until the final scene (whilst the choice of “The Power of Love” for the soundtrack should not be overlooked), and ASDA, which supports the contribution of mothers, with the strapline ‘Christmas doesn’t just happen by magic’. ASDA said that the ad reflected the fact that for mums, despite the pressure, their big reward is looking back at the end of Christmas day, at a happy and smiling family, and thinking ‘I did that’. So the themes of Christmas this year are modesty & homeliness, intimacy & love. In the midst of all this Christmas spirit, consumers are making savvy decisions and feeling good about it. Greater effort will surely be invested this year in finding a bargain or in doubling up vouchers, finding a discount code, collecting and using points across all purchases, really checking deals in order to make hard earned money work harder and go further. Recent research by first direct found that 58% of people are looking to save money on the perfect party outfit over the festive period with women more likely than men to shop for a clothes bargain (60% versus 49%) - and more than three-fifths of them get thrifty when it comes to their party attire compared to half of men. The most common ways of saving money, according to the research, are shopping around more than before (46%), using discount codes or vouchers (31%) and retail reward points (29%). Christmas is still about enjoyment and escape, and a certain degree of excess is traditional but, in keeping with the subdued times, the sense of modesty and restraint reported by our respondents last year remains the order of the season. In spite of the jubilympic summer (or perhaps because of it), Christmas 2012 will be a contained affair in many families and so The conclusions for brands appear to be the same a year on: articulate hope and a positive long term vision as consumers are looking for inspirational light at the end of the tunnel; reflect the way that consumers have, in some ways, temporarily lost faith in materialism and focus on values rather than things; focus on the local, facilitate family, be active in communities and, at very least, continue to overtly support the British economy with products created and built locally. Brands should continue to tap into rituals which offer familiarity, comfort and trust for consumers and create promotions which reward planning and effort, as well as “hard to ignore” deals.

Is government plan really a green light for healthy food?

The government has announced that a ‘consistent’ system of front-of-pack food labelling will be introduced next year. This will be based on a traffic-light system showing consumers a combination of guideline daily amounts, colour coding and "high, medium or low" wording to show how much fat, salt and sugar and how many calories are in each product. The move comes after years of opposition from the multiples to a standardised labelling system. Their argument was that labelling was too simplistic and maybe unfairly critical of some products. However, some, including Asda, Sainsbury's and Waitrose, already had their own versions, which others claimed were causing confusion in the market. The government has said, though, that the new scheme will help people choose healthier food options and make more sensible decisions about what to buy. Their hope is that small changes will help reduce the scourge of obesity and improve the health of the nation. But will it? Traffic light labelling is a small step in a positive direction and there is plenty of data to show that grocery shoppers like this style of labelling and find it helpful. Research published last year by DEFRA showed that 80 per cent of people rated health as the most important factor affecting their buying decisions. Most shoppers – 82% - said they actively sought to buy healthy foods. The figures also indicated, though, that people’s preferences don’t always match what they ultimately buy, with price being a major factor in many people’s buying decisions, especially in the current climate. In practise, though, anecdotally it would seem to be further down our list of priorities. However, too much research focuses on one issue - such as labeling - in isolation, rather than looking at it as a whole. One of my colleagues undertook research some time ago with housewives, where each was asked to compare their last supermarket shop. With all of the produce on the table, they discussed what they had bought and why. They became quite competitive and in their efforts to win their impromptu 'supermum' competition, they became strong advocates for their products and the discussion was highly revealing. Health was rarely part of the argument. Price, offers, quantity, shelf-life, convenience came first. And then even when health is considered, the consumer definition of health is still poorly defined. In recent research we undertook, mum spent far more time than you would think possible trying to decide whether potatoes counted as one of your five a day. Milk - vital for child health - is too often restricted because it is seen as a high fat food (even though full fat milk is still only 4% fat). Most of them end up aiming for a balanced plate and call it a day. It is going to be important to ensure that the consumer is educated to understand the information behind the labelling. A knee-jerk reaction to a product with a red label on it could be counter-productive. The word ‘fat’ on a product could turn off the consumer, even though some fat in a diet is essential. Similarly, most products will contain an element of sugar, but some from natural sources like tomatoes rather than synthetic additives. Brands are going to have to adopt a more holistic approach to health; ingredients may not be enough. Brands and retailers may have to work together to create a well-being experience which may involve the in-store experience - display, promotion, training and product presentation – as well as the brand itself. There is evidence of this in some areas. Many multiples have revamped the way they display fresh produce so that it has a more market-like, natural feel and there has also been a move in the UK to balance the consumer’s desire for prepared meals with "semi ready-to-eat" meals. These products, with fresh ingredients that you can see when you buy them, are ready to take home and cook rather than just warm up. Tesco’s has had success with pre-prepared vegetables and meals in its Finest range as well as its City Kitchen prepared meals. However, Finest, City Kitchen and those like them remain premium brands. So now that we are finally getting a universal and comprehensible labelling system, maybe it's time for brands to look at the wider context of healthy eating and be able to demonstrate to consumers that you can buy and eat healthy products on a budget.

Deck The Malls….It’s October!

Are you in the Yuletide mood yet? Thought not. Christmas decorations and lights have already gone up in Nottingham’s Old Market Square this week and it’s still a good fortnight until Halloween; Christmas Trees have been available in John Lewis since the start of the month, whilst the BBC will film its “Songs of Praise” Christmas special on October 24th. And if you thought that was early, they will film the Easter special the following day. As Loudon Wainwright III sang: “Suddenly it's Christmas, right after Halloween. Forget about Thanksgiving; It's just a buffet in between.” So has Christmas arrived earlier to fill the post-Jubilympic gap? Are retailers trying to keep a low level of celebratory consumption bubbling in the background with crackers & cauldrons competing? Whether Christmas is indeed arriving earlier or not, one thing is for certain. Throughout the recession, talk of an austerity Christmas has never really come to reality as families have saved and stockpiled to ensure they have the best Yuletide season they can. The same will be the case this year. During what has been an undeniably tough few years, many people have clung like limpets to calendar staples like Christmas and Halloween as opportunities for an escape from everyday drudgery. It’s arguably one of the reasons why both the Jubilee and the Olympic Games inspired such overt public enthusiasm and excitement. But if we have clung to such events, so have brands and retailers, placing most of their hopes on a consequent economic bounce. That may be misplaced given that any post Jubilee/Olympic lift seems to have been transitory. Alternatively we may be heading towards an economy that simply bases itself on lurching from one special occasion or set-piece event to the next and just takes the economic benefit of each as they come along. The challenge for brands is to understand who is buying and for whom, what is influencing those purchasing decisions and to be able to respond to changing attitudes and behaviours in a way that enables them exploit whatever potential exists. This is where the use of online research and its ability to deliver insights quickly can assist brands in re-pointing activity fast, rather than having to wait ‘til the following season to implement slower moving research findings. Engage has also been creating more “experiential” qualitative research to transport consumers to a different mindset – useful for “out of season” research. Understanding how, where and why the shopper is buying is should be central to a merry Christmas for brands. The multi-channel shopping environment, of course, could also mean that Christmas may be less evident than when we shopped in a purely bricks and mortar world. Royal Mail reports that 40 million people shop online for Christmas gifts. This, coupled with the efficiency of high street retailers in terms of getting stock into store, also means we seem more comfortable buying later in the year than ever before. The propensity for retailers to start their January sales pre-Christmas means that more and more people are waiting as late as possible in order to bag a bargain. That also means it’s harder and harder for brands to calculate their own Christmas figures, particularly if they are forced into promotional or discounting programmes. Figures from 2009 found that nearly one fifth of Britons left at least part of their Christmas shopping until Christmas Eve, with Selfridges saying that around 80 per cent of its customers on Christmas Eve were men. So in these uncertain times it’s nice to see that some things don’t change.

Is Crowd Clout here to stay?

In the last few months I’ve joined the Groupon crowd. I used the discount voucher site to treat my wife and daughter to a pamper day and sent my son off drift racing at Brands Hatch and all, I’m told, at a fraction of the cost of booking it independently. They were happy and so was I, enjoying the benefits of crowd purchasing or ‘crowd clout’ which delivers compelling offers to consumers on a daily basis. And it’s big business as the rise of rivals Living Social and Wowcher has proven. Even Amazon has now launched its own daily deal website in the UK, beginning with London, where AmazonLocal will email geographically-relevant offers to users every morning, and offer reward points to those using an Amazon credit card. What’s more interesting, though, is whether this is a passing trend or one which will redefine the way we, as consumers, begin to purchase any number of items. In this, though, the signs are not positive. To do so, the benefit has to be as evident to the supplier as it is to the consumer and the intermediary and that is where the jury remains out. We know it’s big business – so far. Sales at Groupon exceeded $750 million in its first two and half years, whilst the company’s activities cross four continents and reach nearly 40 million subscribers. However, after the publication of worse than expected financials recently, an analyst at Citi Investment Research suggested “a rapidly deteriorating core business - ie the daily deals business - and Groupon needs to act fast to fill up this hole with new initiatives”. The company believes that growth may likely come from new services including an instant mobile deal feature; Groupon Goods, for deals with national retailers; and Groupon Getaways, for high-end travel deals, but only time will tell if the model will serve vendors as well as it serves consumers. The interesting thing about daily deal sites is also the extent to which they change not just the products that we buy, but the classic decision making processes we use - does the increase of impulse buying of things that we hadn't previously thought we needed, just because they are a bargain make us more rational and careful in our regular grocery shop, to balance our frivolity; or less so, because we have a taste of bargain spontaneity? What is sure is that now the initial excitement of daily deals has died down, they are going to have to be much smarter to survive. At the moment, they feel a bit like a particularly manic jumble sale, where you have to rummage endlessly though rubbish to come across the odd, only slightly soiled, bargain. And who wants to do that? Classic example of this is the juxtaposition of increasingly unlikely products - I saw cheap wills being offered just above bikini line lasering the other day - that is crazy. And some things should just not be offered on a special deal. Long-term it could impact on the service industries in particular. Services that pre-Groupon were too expensive for the majority have now decreased radically in price, because of the number of Groupon offers available. Daily deals could continue to stimulate consumer spending and help businesses - but they need to start working in a more sophisticated, thought-through way, if they are to do it. But, and it’s a big but, a study by Rice University in Houston, Texas, found that 40% of companies which had used Groupon to promote their goods or services said they would not consider using Groupon again. Presumably, although suppliers pay a significant premium for the service, they would be happy to do so if it were delivering sustainable custom. The findings from the study are interesting. Two thirds of customers won’t buy more goods and services than are offered in the deal; only one in five Groupon users becomes a repeat buyer, and 80% of Groupon users are using the site for the first time. Like me, they are often for sporadic, opportunistic purposes as treats or for gifts and I, like many I suspect, pay little attention to the name and nature of the business I am buying the services from. I pay even less attention to the torrent of emails that rain down on me and others and which actively turn me away from becoming more engaged with the site – more grouped-off than group-on! All this seems to suggest a pattern of short-term relationships between the vendor and the consumer and, consequently, short-term relationships between Groupon and the vendor. And, if the old adage is correct, that it costs five times as much to win a new customer than to retain an existing one, crowdpurchasing sites like Groupon are failing to secure long term relationships with vendors because they are not yet delivering enough sticky, repeat business for them. Increasing and broadening the opportunities for consumers, which would then in turn increase and broaden the benefits for suppliers would likely increase sales and embed crowdpurchasing as a way of moving forward, even for opportunists like me.

Will short term discounting harm brands?

Heavy vouchering and discounting have helped end 18 consecutive months of declining volumes for retailers whilst promotional activity has remained unchanged at 35% of FMCG sales, following continual use of money-off vouchers and coupons. Although this is primarily a retailer initiative what are the implications for brands in being discounted? How can brands maintain perceptions of quality if you're being discounted? What are consumer views? Is this the thin end of the wedge where the only way to sell is going to be heavily promoted or discounted? All of us, of course, have brands that we are likely to buy no matter what; discount or no discount those products will continue to find their way into our baskets. But they are probably in the minority. We are in a phase where brands will need a compelling proposition for not discounting or for remaining at a premium within their category. However whilst discounting may persuade consumers to try something new, it is unlikely to lead to sustainable business unless the products deliver as well as offer a better experience than their competitors. The challenge for brands is to retain those consumers without retaining the price reductions. Discounting, of course, doesn’t need to be quite so overt. There are 'brands' that discount more discretely but equally successfully. The secret hotels on lastminute.com, the 'shopping clubs' or Groupon style offerings can help bridge the gap between getting sales and occupancy up whilst avoiding brand equity erosion that accompanies continual overt promotion. This works online too with sites offering large discounts on higher end fashion brands. To many, this makes premium brands more accessible without feeling like they are compromising on quality. Whilst it doesn't necessarily impact on how they feel about the brand it may elevate how they feel about themselves. This can rub off on the brand by association. There is also, though, a more pragmatic view of discounting. Whilst if you are a premium brand, being constantly discounted might eventually tarnish the premium positioning, this will (in the current climate) be more than balanced by consumers' delight at bagging themselves a bargain. In fact to not be discounted could be perceived as brand arrogance, as if you are out of touch with the problems of your audience. For FMCG brands, premium often equals a touch of affordable luxury, a small treat to brighten your day so frankly the danger of undermining your quality perception through careful promotion is probably quite low. What might be an issue is who the discount is attributed to - as a brand you will be paying for the promotion, but the retailer will probably get the accolades and be seen as the shopper’s friend. So it might be important to communicate to consumers that the brand is responsible for the promotion rather than the retailer. Brands should perhaps take note from politics - it is important to demonstrate to people how you share their pain, rather than telling them we are all in this together and retreating to your ivory tower of price premium.

When branding becomes more than just a game

Picture the scene. You’re relaxing at home, catching up with friends on Facebook, playing a game, doing your best to escape from the realities of the outside world. You need to earn a bonus to move yourself up to the next level and just as you’re about to do so, a brand pops up on screen and offers to provide it for you. Irritating or inspired? Well, soon we may have the opportunity to find out because the move into the gaming sphere represents the latest response by advertisers to embrace new techniques to ensure that their advertisements are noticed. Not only has Amazon announced that it is going to start creating games in a bid to earn itself a slice of the $6.2bn social gaming sector, but one of its competitors in the field, King, is to introduce a new in-game ad format that will allow brands to pay to associate themselves with boosts or extra lives. It is easy to see why this could be tempting for brands. King claims that advertising across its gaming network could help brands reach over 30 million, predominantly female game players across Europe and the United States. But how will we, as consumers, feel towards this latest potential move by brands into another area of our private lives and leisure time? We have become accustomed to using technology to bypass advertisements and sponsorship messages, most obviously through the ability to digitally record television and then fast forward. However, when it comes to television or radio, consumers are generally passive, compared to gaming, when they are arguably at their most active. The key, I suspect, will be in the role played by the brand in-game and how heavy-handed that branding might be. Relevant in-game branding - for example a sports brand being represented within a sports stadium environment would seem to be a pertinent even subliminal fit (though the advertiser may argue “too subliminal”). With exposure this subtle and fitting, we would anticipate that it would enhance consumer perceptions of the brand. Research has, in the past, supported this view. An IAB survey in 2007 found that 86% of gamers were happy to see ads placed within games if it brought down the prices they had to pay, whilst a third said they would be either quite likely or very likely to buy a product they had seen advertised while playing.Only 14% said that ads ruined the gaming experience. Interestingly, 40% said that ads in games made them more realistic while 27% said that interacting with a brand during the game, such as gaining more energy by drinking a can of an energy drink, did not constitute advertising. However, if the brand is repeatedly associated with an event within the game that itself becomes frustrating, the player’s perception of the brand is likely to suffer by association. If in-game advertising is realistic, contextual and non-intrusive, it offers great potential to brands. But, beware, because if you get the context wrong, the downside for the brand could be significant.

Do we need an Olympic ideal for business?

Tell the truth, you must have taken a step away from your work for a few minutes at some point over the past week to cheer on Bradley Wiggins, Chris Hoy, Mo Farrah or Jessica Ennis, or perhaps just as importantly to cheer on and admire the athletes who may have missed out on medals but have achieved personal bests. But does it, can it and should it have the power to inspire us in our business lives and, if so, are we harnessing it to best effect? It has clearly had an effect on one of my colleagues at Engage Research who admitted having Bradley Wiggins firmly in mind as she cycled to work, achieving a personal best by knocking a couple of minutes off of her usual commuting time. The reality, of course, is that the Olympics are transient and, come September, will be little more than a happy summer memory. Many brands will already have found ways to tap into the current mood of hope and inspiration, to promote the Olympic ideal of being the best you can be. However, soon we will return to the reality of our economic circumstances, in which case some of the traits that set an Olympian aside could be transferrable to a business environment and could have a positive impact on the way we work. · Leave no stone unturned in your preparation – research is critical to the way brands and businesses function. As the saying goes, if you fail to prepare, you prepare to fail. Securing the customer insights your brand or business needs will be central to your chances of success. · Take a risk – the great athletes, like the most successful businesses, take calculated risks. They know the importance of seeing the main chance when it presents itself and then going for it. · Relentless self belief and enthusiasm – the top athletes will not allow themselves to be battered by negativity. If we don’t believe in our brands, nobody else will either. · A desire to stand out from the crowd – nothing will undermine your brand more than becoming ‘wallpaper’. Creating a distinctive identity with which your market can relate is crucial. · Agility – there is ample evidence of successful brands recognising early that something isn't working and then changing their strategy accordingly. · Being part of a team – you only need to watch a successful relay or rowing team to see the importance of assembling the right team and then playing to the strengths of each of the members. · Get used to disappointment – whether you’re an athlete or a brand, get used to the ups and downs and learn how to ride both to stay ahead of the competition. It’s always been very clear to us that you get out what you put in, if you simply let things happen then you'll get left behind. So be inspired and, when it comes to your own business, hopefully you won’t have to wait four more years to enjoy the fruits of your labour.