Consumer changes outlined in a nationwide research study of U.S. consumers — Resultant Research
Introduction to Consumer changes
It all seemed to happen in a blink, but the causes of the current economic downturn was years in the making. Consumer spending grew and grew until some of us were living outside our means. Lenders got deeper and deeper into questionable loans like an addicted gambler. And then it came crashing down.
The value of our homes, the security of our jobs and the price of our investments sunk along with it. Today, the U.S. consumer has made adjustments, altering their spending habits, and many of the nation’s largest companies are struggling as a result. Many companies are receiving federal bailout money, others are declaring bankruptcy – and others are looking for ways to win.
Those aiming higher than the rest understand that, no matter the economic situation or the category, a few always emerge as the victors. For that reason, Stealing Share commissioned a national research study of U.S. consumers to get a snapshot of what consumers were thinking and how it affects their actions now and in the future. The survey asked consumers about their habits, decision-making processes and beliefs about themselves and the world at large.
They are also asked questions about many specific industries, from banking to the media to automobiles. The following is the result of that study along with analysis of what the data means and how companies can use the knowledge to do more than just survive in today’s economy.
The research demonstrates that humans are remarkably adaptable to change and companies can be too. As Kurt Anderson recently pointed out in Time magazine, it’s often during times of turmoil when the most progress and innovation is made. One example he notes is that Microsoft and Apple emerged after we suffered through an oil crisis, a recession and the “national malaise” of recovery from the turbulent 60s and 70s.
We may be upon such an era now. The research uncovered many hard truths companies must understand if they are to be the winners going forward. Among them:
- Americans are generally optimistic, but they have changed their habits, views of the world at large and America’s role in it.
- To gain acceptance in the new economy, you must capture the attention of women. They are the drivers of any economic growth as they have become the most cautious today. That means women represent where the most opportunity exists.
- Old technologies and business models are fading because they are not catching up with the needs of consumers who see relatively new technologies as accepted, everyday occurrences, and remain open to new ideas.
The bottom line is that the consumer has changed and not just by spending less. They are staying at home more often, waiting for the winds to change. It may very well be that there is no better time for companies to take a leadership position now since the Industrial Revolution. (Read about the changes in human motivations in tough economic times vs. uneventful economic times here)
For many Americans, the idea of achievement has driven our national identity. It’s been such a strong motif that it’s filtered into the marketing of many of our most effective brands. Think of Nike and its “Just Do It” brand, which is about achievement and winning, without all the meaningless nonsense that gets in the way.
But Americans are beginning to see a new world order in which the U.S. may not be quite the global power it once was and, therefore, our own desires have been altered as well. As you’ll see, 70% of Americans believe the U.S. is “falling behind,” which speaks to both a new place for America in a world in which China, India and other countries are emerging as both economic and military powers – and also to how it affects our own self-identity as individuals. Conclusion: Where the Future is Brightest Americans have hunkered down because, in part, they believe recovery is going to be a long haul. They realize they have to work longer than before and, because that thought is emotionally related to their current actions, they are staying home more often.
They realize they have pay closer attention to the signs, such as the stock market and their own jobs, with a third of them – 25% higher than the unemployment rate – worrying about losing their jobs. With that in mind, let’s ask ourselves, “What is it we’re all seeking now that things are changing?”
The bottom line is that Americans have readjusted their expectations and believe they have become more realistic.
To more closely examine what emotional ties Americans are seeking, let’s step back for a moment. In previous research, we’ve seen that, even in good times, we look for “comfort.” It’s taken as a given. Because there are less risks – or, at least, there are less risks perceived – we yearn more to achieve in whatever way we define that. (Twenty-five years ago, that produced the “Greed is Good” generation of the 80s and the eventual lead-up to the lending grab of the last decade.) However, in tough times, comfort is something that is actively sought.
The risks are perceived to be greater so we tend to seek refuge, which is why we’re staying at home more now and spending less. In addition, if Americans see the world order being shifted, that’s a change we can feel under our feet.
To ride that wave, we look to remain as stable as possible and seek the kinds of things that are known (which is why market leaders tend to hold market share) and even become nostalgic. (Watch. There will be resurgence in things retro in the coming years.)
One of the most effective brands is McDonalds, which in addition to selling “fun” to children, is also selling that notions of the familiar, the predictable and having enough to simply be comfortable rather than outstanding. It’s not the “best” we seek anymore, but what feels the most “right.”
“Comfort” is just one part of it, however. There’s also the additional element of “Control,” which has always played well with consumers but has a higher intensity now. It’s almost like The Who singing, “Won’t Get Fooled Again,” in the 60s. We are paying attention. Think of how involved we all were in the past presidential election. Paying closer attention to the stock market is one way we are seeking more control, but there are other signs. We aren’t catering to what has been directed at us, such as the major TV networks or large music retailers. Even as vacationers, half of us are going where we’ve been before.
Certainly, watching TV other than the big four networks speaks to “choice,” but taken altogether, the picture is of Americans taking back control. But consider all that in the context of today, especially in terms of technology.
We are no longer beholden to the major TV networks when it comes to our viewing as the remote control, cable TV and satellite TV along with DVRs, DVD players, laptop computers and even iPads have enabled us to decide what we want to watch and, most importantly, when.
The same situation exists with music, which is why most Americans did not buy a CD at a store over the last year. We downloaded it. We’re in a retail world in which consumers now demand control and believe it is expected, especially when there is an emotional perception that the current economic situation is the fault of others (so, therefore, I’ll watch the stock market more often).
In essence, Americans have taken refuge but they will re-emerge when they believe something new is available to them. Right now, though, the world has not changed along with their own attitudes, as we’ll see. Think of this: When asked if they agree with this statement – “I am less open to new things than I used to be” – only 29.8% agreed. That means nearly 3 out of every 4 Americans remain open to new things. That’s good news for companies brave enough to become leaders. To dig deeper into what has changed with consumers and how they will react going forward, let’s look at individual segments that give us a sharper view of what is taking place.
For decades, men have been the economic drivers in the U.S. and around the world. But as WWII ended, women gained a larger presence in the workforce and women’s rights in the 60s encouraged it even further. We have now reached the point in which women are the most powerful brokers in the rise and fall of a global economy.
As consumers are spending less – amidst signs of a rebound – the ones keeping it in our pockets are women. While 54.2% of Americans said they have “permanently changed many of my bad spending habits,” the difference between men and women is more striking. Nearly two out of three women (57.1%) said they have permanently changed their spending habits, while less than half of men (49.5%) said the same thing. Couple that with other indicators and you begin to see a pattern. For the economy to rebound, women must be at the forefront because they, despite the less optimistic view, still have a need for change and a belief in expertise.
As you can see, there are significant differences between men and women when it comes to the economy and the nation at large. The difference in spending habits is a significant 7.6% – greater than the study’s margin of error (4.65%). But look how much different they are with other issues.
The margin is a whopping 14% between the percentage of women who buy purely based on price and whether they are optimistic about the future of the economy.
When you consider the overriding statement – “I think the U.S. is falling behind,” which was agreed with by nearly 10% more women – you understand that women have become much more cautious as a result of the economic downturn – a primary reason why retail sales continue to fall. But it also suggests that appealing to women is where the most opportunity exists for brands looking to win today and future.
They are the toughest audience, but the one most likely to move the needle. To accomplish that, however, you have to understand what motivates them into action, especially in light of what has taken place over the last six months. Most tellingly, women see the differences between need vs. want more than any other demographic group (race, income, education, etc.).
According to this study, they eat less fast food than they used to, buy less on entertainment, describe themselves as “less open to new things than I used to be” (although a majority are still open), read more than men and believe that movie ratings and TV content have become too relaxed. Yet they still believe in the value of expertise.
What we see is how female consumers are making choices. Things that fulfill a need (a CD does not count, but a book does) are allowed but lack of control is not (movie ratings, TV content).
How effective have brands been in appealing to the female consumer? Not well. Here are two representative ads typical of the industry. They come from Macy’s, which recently announced a four-year low in sales. The spots basically say you can be glamorous and romantic – just like Gwyneth Paltrow or Kate Winslet.
Instead, the research demonstrates that women have changed. They have a desire to be more in control, to be empowered. They are seeking more of a take-charge attitude and refusing to compromise because so much recently has let them down.
You don’t have to look far to see how much technology has changed us – and how easily we have adapted to it all. Just look around you right now. We’ve gone from fax machines to email to cell phones to Twitter in a matter of just a few years, while we also have gained our control of our choices by deciding when we listen to our music (iTunes), watch TV (DVR, TiVo) or watch a movie (Netflix, OnDemand). But change is coming in many other areas, not the least of which is media. Currently, the newspaper industry is in great flux with newspapers slimming down staff to the bare minimum or threatening to close down. Or they’re closing altogether.
Ad revenue and circulation have dropped, costs are up and mainstream media is desperately trying to figure it all out. Many are looking to charge for content on the Internet to save their bottom lines. The Tucson (Az.) Citizen is now completely online, although it doesn’t charge for its content. Yet. Charging for online content, however, is putting the cat back into the bag after it’s already escaped.
Only the Wall Street Journal has made it work because it charged an online subscription fee right from the start. For the rest, it’s going to be a long haul to nowhere. In this research study, respondents were asked several questions about the media and only 11.2% said they would pay a subscription fee to read their local newspaper online.
If newspapers think online fees are the answer, they’re wrong. Many of those running our newspapers believe the situation is strictly economic. But that’s not the case. There is an emotional reality at play mainstream media must face: They have become irrelevant.
The simple truth is that, while the fourth estate has been traditionally vitally important in our society, many Americans view it as one color in the rainbow, and a not a very important one at that. Nearly half of American say their “life would be unaffected if my local newspaper were to fold,” a far cry from the bygone days of reading the paper each morning while having a cup of coffee.
Even the perception of what news is has changed. Two of every three Americans view news networks as entertainment. Gone are the days of Walter Cronkite. They’ve been replaced by Katie Couric and Wolf Blitzer’s The Situation Room. Consider this: Yahoo posts its most viewed news stories of the day. Recently, the top 10 were:
- The secret life of penguins revealed
- Surprise! Daydreaming Really Works the Brain
- Rare blue diamond sells for record $9.5 million
- Texas museum acquires Michelangelo’s 1st painting
- Rotten office fridge cleanup sends 7 to hospital
- Dick Cheney: Why So Chatty All of a Sudden?
- Parasitic flies turn fire ants into zombies
- Craigslist to drop “erotic services” ads
- White House advises senators on health care bill
- Depeche Mode lead singer in hospital in Athens
The “Latest News” section on CNN.com on May 18 included stories on a mayor mowing city’s parks to save money, an eighth grader earning a degree, an eight-year-old boy living life as a girl and women finding friends at a roller derby. What new media emerges as is still uncertain, but the research signifies that the audience for the mainstream media has changed and the industry has not changed along with it. Which brings us to the automobile and banking industries.
Few industries have been as shaken by the economic situation than automobiles and banks, with the airlines coming in a close third. The research certainly bears that out. Half of Americans (an even 50%) said all automobile manufacturers are out of touch, while even more than that (59.8%) said they were angry at the banking industry as a whole.
There are several reasons for this, many of which are well-known: Auto manufacturers, especially the Big Three in the U.S., were too slow to react to consumer preference for more economically and environmentally friendly vehicles and banks are blamed for causing the economic downturn in the first place. There’s another factor, though.
From the point of view of consumers, those industries have become old-fashioned and complacent. An analysis of the marketing in both industries, for example, reveals the same conclusion: There is no difference between the brands and, therefore, few choices are truly made. Couple that with the rise of emotional intensity of “control” and you can conclude it’s no wonder consumers are less than empathic about the situations of automakers and bankers. Autos and banks look like the least innovative industries on the planet. Consider the following two spots:
Is there really any difference between them? Have either Ford or Dodge given the consumer a reason to choose? These two spots are simply representative of the whole. We could have picked side-by-side hybrid car spots or even print ads of sports cars and you still see couldn’t slide a piece of paper between their differences. It’s no wonder consumers see auto manufacturers and bankers as being behind the times. And yet they are the ones who have permission to try new things in the minds of consumers. Nearly 65% of Americans believe automakers, for example, will get it right.
What you see here is a general optimism coupled with the highest emotional intensities in the market – Being out of touch with realities of life in automobiles, anger in banking. In banking, safety and security are not the issues.
Many banks talk about the kinds of things consumers already have or believe they have at their current bank – Safety, security, free checking, good rates, low fees, friendly service, etc. No wonder less than 3% of the market switches primary financial institutions each year.
In autos, the economic situation is worse, even though Americans are optimistic enough to give automakers permission to take a leadership role. By believing automakers will get it right, consumers are looking for innovation and believe the manufacturers can accomplish it.
In both of these industries, where status quo is king, the field is wide open for a brand to take a leadership role that can only be accomplished by being different and better. The important thing to remember is that conclusion is true for any industry. Remember, nearly 70% of Americans say they remain open to new things but are waiting (staying at home, spending less) for it to happen.
The world has changed and the consumer has changed along with it. Consumers have become more cautious. They want more control because they’ve been conditioned to expect it from technology and things have gone wrong when it hasn’t been on their watch. But there is reason for optimism because consumers are, no matter how you cut it, open to new ideas.
What’s even more encouraging for brands is that the youth of America is even more optimistic, wise to the changes developing in our world and still savvy enough to know when things are going wrong. Consider this: When asked whether they agree with this statement – “I think kids are more poorly educated today than in years past” – 59.5% of those under the age of 29 agreed. That, of course, doesn’t speak well for the U.S. educational system, but combined with other attitudes you can see that younger consumers are grounded in the new reality.
In other words, if the economic downturn is a correction of sorts, then Generation Y has already adapted and will for the long term. What does this mean for brands? It’s simple really. They have to fight harder in order to compete and become more meaningful in order to survive.
We have all seen that most marketers waste their money. Pick just about any category and the marketing is nearly identical from brand to brand. How many of us have seen a commercial and either gotten it wrong about whom it was for minutes later or simply got it wrong? Do you, for example, see a difference between Staples and Office Depot? Quick, which one uses the “easy button” motif?
The effect of the economy has certainly crippled companies, often negatively. But they haven’t done themselves any favors by failing to differentiate themselves emotionally or in tone from their competitors and they haven’t responded correctly to the changing consumer.
We are different consumers than we used to be; in effect, taking back control of the issue by spending less, staying home more, paying more attention while remaining optimistic, open to new technologies and understanding that change happens. It’s the ones who should know better who haven’t caught up.