Credit Crunch March 09

CREDIT CRUNCH:

WHERE YOUR CONSUMERS ARE AT TODAY
EXPR ESSIO N S
B R A N D P LA N N IN G
PHASE 3 [FULL REPORT]

Julian Rodway
Expressions Planning Limited
416a King’s Road
London SW10 OLJ
Tel: +44 (0)20 7376 3356
Fax: +44 (0)20 7376 3447
Email: julian@expressionz.com

April 2009

CREDIT CRUNCH CONTEXT

 The last quarter of 2008 was a dress rehearsal for 2009
 The UK economy experienced record rises in fuel, impacting on:
• Home heating
• Transport costs
• Production costs
 Compounding these fundamental costs was the credit crunch
 From a consumer perspective the world was changing:
• Mortgage companies were failing
 Icons of consumerism were crumbling:
• High street shops were closing
 Banks were bailed out:
• Motor manufacturers were looking for economic support

Consumers were experiencing the cold winds of change

Expressions Planning Credit Crunch - 1

A YEAR LONG REVIEW

 Expressions conducted 4 groups in March 2009:
• 2 in Birmingham
• 2 in London
 In each location one group was conducted amongst:
• Consumers confident about their economic future
• Consumers experiencing recent economic difficulties and concern over jobs
 The aim is to understand the current environment:
• Select 8 households for an ethnographical study
 The intent is to follow the fortunes of these 8 families monthly over the year
 In this third phase we explored 4 categories
• Utilities
• Finance and savings
• Luxury food and flowers – in home
• Cars
 We invite you to submit other categories and specific questions to be explored during the
subsequent monthly interviews
 This is a free service


RECESSIONARY MINDSETS: RECREATIONAL TO REALITY


RECESSIONARY CONSUMER TYPOLOGIES

Driven by a need to conform to situation
Confident

Conscious that conspicuous consumption is
not socially or politically correct
Selectively join in but will also exploit opportunities
Recreational Relatively confident they will not be impacted on
Not overly concerned about serious economic issues
Recognise situation as an opportunity to review
& reduce household expenditure
Reserved
Elements of regaining control of expenses
Participation is about cutting back:
- not cutting out

Perceive household as vulnerable to unemployment
Need to be proactive, manage their household expenses
Retrenchers Matter of prioritising expenditure
Cutting back & out without being too puritanical
Concerned

Experiencing economic difficulties; adjusting & adapting
Reality
Desperate measures need to be enforced by many
Optimistic belief means some adopt a
progressive cut back/out policy
Learning to adjust to a different set of priorities

Prominence

DYNAMICS OF RECESSION TO DEPRESSION

The economy is fuelled by individuals spending
When this necessary impetus is slowed or restricted
recession spirals downwards
As more consumers lose confidence the economy is
disproportionately impacted
Recreational Recreational & Reserved need to retain their
sense of buoyancy & optimism

Reserved Recreational

Reserved

Retrenchers Retrenchers

Reality
Reality


RECESSIONARY CONSUMER TYPOLOGIES: SUMMARY

Reserved Summary
Recreational Summary
Not overly concerned
Need to conform
Opportunity to review & reduce
Selectively join in
expenditure
Exploit opportunities
Regaining control
Relatively confident
Cutting back, not cutting out

Reality Summary
Retrenchers Summary
Experiencing economic
Vulnerable to unemployment
difficulties
Need to be proactive
Desperate measures
Prioritising expenditure
Progressive cut out policy
Cutting out & back
Learning to adjust


RECREATIONAL MINDSET

 Economically comfortable; adopt a secure attitude to employment
 Typically working in public sector or companies supporting essential
services
 Boast about low mortgages or tracker mortgages
Context
 Perceive themselves as financially astute
 Not prepared to alter their lifestyle but less overt about it:
“…we’re still going skiing but feeling a bit guilty about it…”

 Voyeurs of crisis; a topic of discussion not an imminent threat
 Opportunity for some to carefully and covertly exploit:
“…at least you can now negotiate over prices…”
“…you can now get a builder and at a reasonable price…”
Crisis
 Critical of the ‘doom & gloom’ of economic news; considered an
irritant:
“…the media don’t help, full of depressing stories…”
“…stopped listening to Radio 4…too depressing…”


RECREATIONAL MINDSET (Cont’d)

 Feel an opportunity to review household expenditure
 More about exploiting offers than consolidating:
- minimizing expenditure & getting greater value:
“…Sky are doing some good offers…”
Considerations
 Concern over value of sterling & foreign holidays
 For the brave an opportunity for investments:
“…house prices are going to fall…they’ll be some bargains
about…”

 Belief in buying brands unshaken; not going to compromise
 Conversely, many aware of brands being discounted:
- from chocolate biscuits to BMWs
 Resist changing established and efficient shopping habits
Brands
 Recession more about being seduced to remain loyal to
existing suppliers:
- exploiting an opportunity


RECREATIONAL MINDSET (Cont’d)

 Confident, to an extent complacent
 Perceive situation as an opportunity to exploit
 Voyeuristic and vulture mentality
 Not prepared to compromise on lifestyle
Summary
 Respect need to be less conspicuous consumers
 More likely to buy a bigger car at reduced rate:
- than a smaller more economical car
 Crisis is about selectively joining in when it suits them


RESERVED MINDSET

 Younger couples, some professionals (teachers, librarian, IT
workers)
 Feel relatively secure in job; unemployment not an issue
Context
 Focus is on maintaining lifestyle by efficient finances
 Concern is about the future and future planning

 Impact is by association; house prices have fallen
 Constraining plans for family improvements:
“…we wanted to move to a bigger house this year…”
 Talk about friends and relatives being affected; second hand
experience:
Crisis
“…my brother-in-law’s badly hit, he’s a builder…”
 Period of reconsidering financial situation, reviewing expenses
 Sensitive to the plight of others; cutting back part of conformity:
“…you see people buying more economy lines…so you
think you might too…”


RESERVED MINDSET (Cont’d)

 Reference the need to budget and consider expenditure carefully
 Future plans involving big ticket items or household improvements put
on ice
 Holiday plans have become less extravagant & UK based due to the £:
- no longer able to enjoy cheap €
Considerations
 Looking to make savings where possible without sacrifice
 Mood of being prepared for worse times:
- preparing a plan to cope
- a phased strategy from cutting back to cutting out

 Still remaining loyal to ‘icon’ brands (washing
products, butter, cereals, etc):
- switching where deemed less important:
“…I’m not down to buying the economy own labels but
Brands
cutting back where possible…it is a sign of the times…”
 Challenge mentality towards expenditure:
“…I feel as if I have to justify what I buy to myself…”


RESERVED MINDSET (Cont’d)

 Feeling of being prepared
 Gaining control of expenditure
 Prioritising values
 Refreshing attitude to extravagant consumerism
 Adopting more family and free entertainment
Summary
 Turning from consumerism to culture
 Need to justify purchases; element of guilt over extravagance
 Seeking to compensate when cut back:
- indulgent meal in rather than a night out
 Initiating family values and appreciating of money management


RETRENCHERS MINDSET

 Concerned about unemployment
 Experience of friends, family and colleagues who have been
made redundant
Context
 Work in sectors vulnerable to downturn (building
related, catering, manufacturing, etc)
 Anxiety about surviving through meeting essential commitments

 Driven by the need to be prepared
 Having a sort of plan, campaign management
 Unspoken expectation of at least one partner’s income being
affected
Crisis
 Have often reviewed household finances and cut down and out:
“…we haven’t pared back to the bones …but should it happen
we know we can be more ruthless…”


RETRENCHERS MINDSET (Cont’d)

 Staged reduction in unnecessary expenditure and lifestyle
 Desire to implement drastic cuts after Christmas:
“…we knew we had to do it but wanted to have a good
Christmas first for everybody…”
 All household bills and outgoings reviewed:
- some subscriptions cut out (mobile phones, Sky, etc)
Considerations
- some services switched to exploit offers (dual fuel discounts, cheaper
suppliers, etc)
- some cut back (basic Sky package, selling 1 car, etc)
 Desire to revisit mortgage but concern about ‘opening a can of worms’
 Want to be living as expediently as possible; weaning themselves off credit

 Some brands non negotiable (coffee, cereal, shampoo, toothpaste, etc)
 Perceived as false economy
 All discretionary expenses cut back
 Experiment with other stores and own label products:
Brands
“…I’ve always driven past Morrison’s to get to Sainsbury’s but now I’m
converted…excellent fresh fruit and veg…”
 A period of redefining household tastes and expectations
 Trading down whenever possible and practical


RETRENCHERS MINDSET (Cont’d)

 Planning for the worst
 Learning to live on a reduced budget
 Challenging past consumer aspirations
 Acclimatising the family; changing tastes and expectation
 Learning different shopping regimes
Summary
 Seek non extravagant rewards and treats
 Family based activities evident
 Parental concern on children not being the innocent victims
 Prepared to compensate children and family with small shared
indulgences


REALITY MINDSET

 One or both partners made redundant or hours shortened
 Immediately impacting on household finances and emotions
 Take desperate and immediate expenditure decisions:
Context
- driven by necessity
 Pride prevents consideration of outside financial planning and help
 Reluctance to talk to mortgage provider or landlord

 Living through economic turmoil
 Perceived themselves as victims, want to apportion blame
 Government and banks cited as being responsible for ‘the mess’:
“…it’s about people in power playing with our lives…”
Crisis
 Adopt a pessimistic view of the future:
“…I’m 48, I’m not likely to get another job in engineering
again…or at all!”


REALITY MINDSET (Cont’d)

 Radical change of life
 Minimising expenditure and impact on family:
“…you know there are plenty of us out there and there will be plenty
Considerations
more but you don’t want your kids to be affected…”
 Evident psychological impact

 Brands are luxuries that need to be justified:
“…it’s only a few pence more for Heinz and they can tell
the difference even if I hide the tin…”
 Challenge is to survive on a reduced budget
 Economies are essential, not optional:
“…heating or eating…”
Brands
 Significant change in shopping and eating habits:
“…now buying more vegetables and cooking from
scratch…found some really good recipes…”
 Discount stores now offer a shopping relevance:
“…now go to Aldi first…what I can’t get there I get at Tesco’s…”


REALITY MINDSET (Cont’d)

 Challenges and changes family life
 Learning to cope with circumstances
 For some adoption of different value systems
 Different coping strategies; resignation to optimism
 In a changing world brand loyalty perceived as a luxury
 Consumers looking for survival strategies
Summary
 However cheap does not always represent value
 Need to treat themselves and family
 Distractions deemed important; family outings, gaming consoles
 Discovery of a different set of values and consuming
experiences:
- eg swapping culture or exchanging items on EBay


UTILITIES


UTILITIES

Comfortable & confident about utilities generally
Aware of fuel costs escalating last year but could
appreciate why (world energy costs)
Increases did not really impact on household
Need to maintain comfort of home
Recreational
Only switch(ed) supplier due to moving home
Conservative about utility companies, looking for
comfort, believe in tried & trusted
Interest distracted by conservation & ecology
messaging
Have previous experience of switching:
- incentivised by offer of savings
Prompted by a personal call (door 2 door or phone)
Disappointing experience for most
Problems of having to pay 2 bills & admin errors
Reserved
Promised reductions only short lived:
“…after 6 months wrote to us...direct debit needed
adjusting…more than we were paying before…”
Poor switching experience made customers loyal by
default; avoidance of mechanics of switching


UTILITIES (Cont’d)

One of the most considered items of household expenditure
Easier to switch than other direct debits, eg mortgage
Some serial switchers looking for cheapest/cheaper supplier
Tend to review utilities relatively regularly anyway:
But prompted by threat of reduced income
More inclined to adopt an immediate & commodity
Retrenchers perspective:
- want savings today, less concerned about tomorrow
Attempt to save on energy usage, implement economy
programmes & strategies
Have considered insulation as part of this
Some switched to water meters to reduce bills (where
perceived as viable)

Struggling with paying utility bills, monthly problem to meet
direct debit
Have considered pay as go & charge cards:
- rejection over added cost & stigma
Reluctance to switch due to cost implications & losing
Reality perceived loyalty credits for current suppliers
New supplier maybe less sympathetic if situation worsened
Implementing tough conservation strategies
Turning down thermostats, shutting off radiators, nothing left
on standby
Reluctant & embarrassed to ask for help from utilities



 Most respondents aware of U-Switch and similar websites
Switching
 Internet sites considered objective and often the first port of call
Strategies
 Reluctance to accept cheapest quote due to concerns over service and
administrative efficiencies
 Consumers wanted a degree of brand reassurance with their utility
company

 Whilst consumers were confident they could switch gas & electricity
supplier they were less confident about water
 Many liked the idea of taking control over the cost of water rates
Water
 Some had looked into water meters
 Water meters were only thought appropriate where there were 1 or 2 in the
household; for many water meters were perceived as a consumer gamble
 Did have the halo of environmental considerations
 Against this they were considered to be another meter requiring supplier
intervention to regularly read & monitor



 Generally utilities were perceived as a commodity item
 Offers were seen as ‘much of a muchness’ with only minor cost differences
between suppliers
 However, there were considered to be distinct service differences
 British Gas & previously deregulated companies still believed to offer
superior tangible service (LEB, MEB)
Switching
 Past experience tended to dissuade many:
- perceived as disappointing & too much hassle for too little saving
 Believed to be a passé activity
 Moreover past experience prompted concerns over need to pay 2 bills:
- disincentive for financially concerned



 Savings by energy conservation were of more interest
 Savings could be implemented through greater efficiency via insulation
(Recreational & Reserved)
 Or savings could be imposed on the household through greater
Savings
consideration of usage (Retrenchers & Reality)
 Consumers relatively blasé about insulation & home efficiency
 Most believed greater economies could be made through greater control
of energy usage
 For many energy was perceived as an invisible cost & a cost which could
not credibly or readily be controlled
 Consumers generally interested in all aspects of energy savings, either
due to ecological responsibility or their financial positioning
 Prospect of meters to enable them to gauge consumption was a powerful
attraction


UTLITIES (Cont’d)

 Utilities were thought to have profiteered from rising fuel prices in the
recent past
 Consumers were aware through the media about increased domestic fuel
Utility Attitude
costs
 Some were appreciative that the utilities needed to increase their costs
 However many were critical over utilities still maintaining inflated costs after
market prices had returned to near normality
 Many considered utility companies to be opportunistically exploiting rising
fuel prices


UTILITIES: LEARNING

 Utilities perceived as a household necessity
 Often the first point of call when consumers are looking at household budgeting
 The vogue of switching supplier was approached with caution
 Experience of switching, both personal and through family and friends, was one of
disappointment through:
• Process
• Long term savings
 Consumers were more interested in reducing energy costs by conservation through
either insulation or reducing usage
 Most consumers were relatively complacent about the level of insulation of their home
 There was an evident reluctance to invest in insulation to save money
 Consequently conservation was of more general interest
 Energy conservation in a household often prompted tension between partners or parents
and children
 Consumers consider themselves relatively ignorant over conservation strategies beyond
basic procedures
 Consumers believe they need to work in partnership with the utilities to save energy
 The incentive varied dependent upon consumer typology and circumstance, with the
incentive being either ecological or financial


FINANCE AND SAVINGS


FINANCE AND SAVINGS

Some positively impacted by recession:
- tracker mortgages = cheaper monthly outgoings
Some saving the residual, others investing it in the home on
improvements & extensions
These consumers considered it a good time for household
improvements & investment:
- too precarious to move
Recreational
- supply of cheap(cheaper) builders
Interest rates considered a disincentive to save:
- consequently a desire to spend was evident
Concern over interest rates eventually rising caused a
restriction on big ticket spending:
- less long term investments, eg cars
- more short term enjoyment, eg holidays

Had not experienced any significant financial impact
Considered it more prudent or acceptable to be more
financially discreet
Frustrated over savings/low interest; look for other investments
Often have reviewed finances prompted by media exposes &
interest rates
Reserved
Become less apathetic over switching accounts:
- beginning to appreciate minor rate differences
Concern more about exploiting a better product offer than
changing bank/building society
Expected & wanted more imaginative products to encourage
investment


FINANCE AND SAVINGS (Cont’d)

Have reviewed savings to see how long they could survive
redundancy or reduced income
Past savings have become current security:
- appreciation of their financial prudence
Despite reduced income (for some) still subscribe to
saving ethic, particularly for children’s savings
Retrenchers Some considering using savings to compensate for
reduced income (inherent reluctance)
Savings have become a war chest to fight the threat of
recessionary impact
Undergoing a balancing of reducing household
expenditure & increasing savings to protect from
redundancy

Undergoing a financial crisis
Family’s financial rhythms are completely disrupted:
- however large outgoings can be negotiated &
reorganised
Liaising with building society about mortgage options:
- extending, interest only, holiday
Reality
Desire to ‘make ends meet’ without using now valued
savings
Despite desperate finances relatively optimistic about
finding a new job or temp employment (black economy)
No surplus cash to top up savings
However want savings to work hard to earn interest



 For some, especially those on tracker mortgages, the financial impact
has been positive
 These consumers stated they had more money at the end of the month
 Allied to this there was a perceived opportunity to exploit cheaper
services & trades:
Spending
- thus an opportunity to indulge in home extensions & improvements
 Others were less confident about long term or high ticket investments
 Generally there was reluctance to save by Recreational & Reserved
who saw saving as unnecessary:
- wanted to indulge themselves and exploit spending opportunities
on holidays etc



 Low interest rates acted as a disincentive for those who could to save
Savings  Acting as an incentive amongst the financially concerned (Retrenchers)
was the imminent threat or redundancy or reduced income
 In a time of economic uncertainty these consumers wanted to build up a
war chest:
 Motivation was survival rather than interest

Interest Apathy  Low rate of interest had prompted many savers to review product
conditions & options
 Consumers spoke of managing their savings more carefully
 Savings becoming more important to their short to medium term security



Savings vs
 Realisation that savings were false economy where they had loans
Loans
 Perceived as financially astute to use savings to pay back loans
 General reluctance to acquire short term debt either on credit cards or
loans if unnecessary
 Many households talking of reducing collective loans
 For some in preparation of the possibility of reduced income

 Despite experiencing or the imminent threat of redundancy there was a
degree of financial optimism
 Retrenchers & Reality consumers believed they would weather the
recession
 Major household expenses such as mortgage & utilities were perceived as
negotiable
Financial
 Thought that lending institutions & utilities were & would be sympathetic to
Optimism
the current situation
 Most believed that should redundancy happen then it would only be a
temporary situation
 General view of ‘something will turn up’ & that they needed to be flexible &
versatile about future employment


FINANCE AND SAVINGS: LEARNING

 For some the recession has been favourable (tracker mortgages)
 These consumers are experiencing monthly surpluses
 These are being invested in either home improvements or personal indulgences
 For these consumers the interest rates are a disincentive to save
 Where saving was evident it was as a safety net against the recession and redundancy
 These savers were less incentivised by interest rates as survival
 The sense of saving apathy previously experienced had been replaced by an interest
and proactive concern over managing savings
 Consumers were likely to be more involved and interrogate saving options
 Propensity to switch existing savings to capitalise on recession oriented offers
 General frustration over lack of imaginative savings products
 Evident need for savings products to accommodate redundancy payments and
consequential need to draw down on these


LUXURY FOOD AND FLOWERS IN HOME


LUXURY FOOD AND FLOWERS IN HOME

Appreciate a number of tempting offers
Lack of budget constraints means tempted to trade up
Encouragement to experiment with:
- promotional offers
- value meals
Perceive themselves as positively exploiting the situation
Recreational
Spread of instore bargains on premium lines such as
meat, fish & flowers
Restriction is not financial but family acceptance
Conflicting emotions evident:
- indulgence in a period of public prudence

Share many of the values of above
However, justify trading up to superior cuts or more expensive
items; home entertaining replacing going out
Emotional justification also given; light relief in a period of
gloom:
“…need something to brighten our lives up…why not treat
Reserved
ourselves…it’s cheaper than it’s been for a long time…”
Believe they are making certain longterm or larger sacrifices &
home indulgences compensate for these
Element of rewarding & indulging the family:
- asserting or reaffirming their economic positioning
Encouraged to regularly take advantage of such promotions

LUXURY FOOD AND FLOWERS IN HOME (Cont’d)

Need to reward & indulge still evident
However, excuse needed; special occasion, Mother’s Day, etc
Perceived as treating self & family consequently infrequent
For some a quality cut of meat or fish serves as compensation:
“…if we’ve had an economical week of casseroles & sausage
Retrenchers
then I don’t feel too bad about splashing out at the weekend…”
Prawns considered a typical example of a family indulgence
Often bought on promotion & stored for an occasion (formal or
informal)
Considered a reassuring token to the family

Extravagant cuts of meat/fish only for very special occasions:
“…you can’t economise forever…you have to eat good
food…it’s a way of the whole family joining in…”
While good food could be justified as a family treat:
- flowers were a housewife indulgence
- consequently perceived as selfish unless a gift
Reality
Shopper extremely conscious of shopping on a budget but
always susceptible to a bargain:
“…they always have some fish on promotion…it’s even
cheaper if it’s getting close to the sell by date…”
Tend to be cautious over unusual cuts of meat (uncertainty
over cooking) & experimenting with fish (don’t want wastage)



 Evident attempts to cut back on meat from Retrenchers & Reality
 Cuts/joints of meat being replaced with other dishes
 Occasionally substitutes were meat oriented, eg sausages, burgers, etc
 Often consumers trying different proteins (fish & fowl) & pasta
 Looking for bargains when shopping & did tend to shop the meat fixture
looking for promotions or special offers
 A few had tried substitute meat; found it okay to extend but not to replace
Meat  Believe these consumers lacked the vegetarian conviction
 Moreover several found substitute as expensive as the real thing
 When shopping for meat consumers tended to be selective:
- resisting overly fatty looking pieces
 Market would appear to be polarising with Recreational & Reserved
consumers looking for adventurous & indulgent cuts of meat:
- Retrenchers & Reality tended to look for economy offers



 Similar motivations & mechanics were happening in the fish market
 A few felt they were eating more fish nowadays:
- health & price imperative
 Retrenchers especially believed that fish offered a cheap alternative:
- especially for active families where a ‘proper’ protein was seen as
essential:
“…my husband’s a manual worker, I can’t expect him to come home
Fish
to a bowl of pasta, he needs meat and veg or fish…”
 The more financially challenged were prepared to experiment with more
economic fish options
 However some concern over family acceptance & wastage
 Incentivising some to the fish counter was the popularity of fish
recipes, particularly for the spring weather



 Perceived as polarising:
- some consumers resisted them as being bottom feeders &
potentially problematic
 Amongst prawn advocates they were seen as adult oriented indulgence
 Usage of prawns was not thought to have been too adversely affected by
the recession, even amongst the Retrenchers
 Frozen prawns were considered to be an item often on promotion and
when on promotion were bought in quantity & stored in the freezer
 Fresh prawns were considered more of an indulgence & were less likely
to be promoted
Prawns
 Amongst many frozen was seen as not just an expedient substitute for
fresh but a comparable product
 Apparent that when considering prawns many spontaneously referenced
the larger, king prawns
 Smaller (coldwater prawns) were thought to be less of an indulgence &
more of an ingredient
 Usage of coldwater prawns tended to be more for sandwiches or to bulk
out king prawns in Mediterranean dishes
 Suggested that whilst king prawns had indulgent status & believed worth
‘splashing out on’, coldwater prawns lacked this sense of occasion



 Research coincided with Mother’s Day & for some the beginning of Easter
 Fresh flowers were seen as a treat more for the housewife than the
household
 Recreational & Reserved still enjoyed the notion of fresh flowers in the
home
 Believed flowers complemented the home in terms of aesthetics &
fragrance:
- an icon of home comfort
Flowers
 Retrenchers & Reality believed fresh cut flowers were unaffordable
luxuries at the moment
 Exception of this was if they were bought as a present which was
welcomed or hand picked when their intrinsic value was even greater
 The earlier work on flowers was around Valentine’s Day, here women
expected both flowers & wine/chocolates as a measured token of affection
 For Mother’s Day flowers alone were deemed acceptable



 Perceived as part of the in-home entertaining process
 Entertaining friends at home rather than going out was a recessionary
benefit
 Consumers enjoyed entertaining at home & the ability to indulge
 Indulgence was justified due to comparative economy
 Even family entertainment at home was often valued when it replaced a
more conventional meal or evening out
 Thus consumers were prepared to spend more on such occasions
 This included trading up in terms of wine:
“…if I’m staying in rather than going out I think I can afford to pay £5 for
Dips
a bottle of wine…that wouldn’t buy you even half a glass in the
pub…”
 This compensatory extravagance extended to other snack products:
“…a bag of crisps in the pub would cost you 75p, for £1 you can buy a
rather nice big bag…”
“…if you go out & get stung for a round it’s easily £10-12 and for that
you can get a nice bottle of wine and some snacks to go with it…”
 When buying such snacks consumers were looking for adventurous
recipes to complement known & acceptable favourites



 For families, especially those with teenagers, smoothies were enjoyed:
- however they were seen as expensive
 Against this perception smoothies were acknowledged as being healthy
 Mothers argued a smoothie was a good way of ensuring their growing
teenagers or younger children approached their 5 a day target
Smoothies  Smoothie acceptance was believed to be due to the taste combinations
 Mothers approved of the blends, combining unusual fruits & occasionally
super fruits
 A litre of smoothie was thought relatively economical compared to buying
the same quantity of fruit:
- notion of producing own smoothies was ruled out

Credit Crunch - 42


 Consumers perceived a vegetable juice to be something like tomato juice
 Several referenced V8
 Some did make a connection between a vegetable juice & a fruit smoothie
 The concept was highly polarising
 It was only those who regularly bought into tomato juice who found it to
have any intrigue
 Concept currently suffers from a lack of intrigue with consumers believing
Vegetable Juice a vegetable juice will comprise a blend of conventional vegetables:
- carrots and tomatoes
 Careful consideration needs to be given to the development of this
 Concept needs to arouse taste curiosity & motivate consumers primarily
on a taste platform and secondly on health
 Evident need to entice on taste intrigue:
- breakdown resistance of vegetable juice prejudice


LUXURY FOOD AND FLOWERS IN HOME: LEARNING

 Consumers want to indulge in quality foods whenever possible or whenever they can
justify
 Quality food was something the family could share
 Respondents aware of supermarkets promoting cuts of meat & selected fish, enabling
them to take advantage
 Slight resistance to buying unusual cuts of meat as consumers were not confident about
recipes and promised economy
 Similar considerations occurred with fish with consumers needing fish to have family
acceptance:
• Acted as a barrier to experimentation
 Consumers could be incentivised to buy into more adventurous foods if seduced by
appealing, convenient recipes
 In terms of luxury food consumers are now going through a transformation and more
diligently shopping fixtures
 Certain consumers are looking for value not necessarily bargains
 Equally some consumers are looking for indulgence whilst others are looking for
expedient meal solutions
 A bargain hunter on one occasion could be an indulgent purchaser on another


LUXURY FOOD AND FLOWERS IN HOME: LEARNING (Cont’d)

 Whilst luxury food has the potential to be a treat for the family to enjoy, bought flowers
were seen as an indulgence for the housewife
 Many financially constrained believed this to be selfish, unless the flowers could be
justified as a present or reward


CARS: BUYING, SERVICING AND REPAIRING



Most in this sector were at least 2 car households
Several were considering replacing their car:
- incentivised by downturn & hope of a bargain, esp. used
cars
Expectations fuelled by media coverage were that the trade
was desperate:
Recreational
- respondents motivated by price rather than auto altruism
Experience proved anticipated bargains were not available:
“…I didn’t think they’d fill the glove box with fifty pound notes
but I was expected a better offer than I got…”
Adding to the new car draw was the low level of interest:
- again actual experience proved disappointing:
“…I get 1% on my savings…4-5% on a car loan…”
Less enthusiastic to enter into a major purchase
More keen to maintain status quo until economy more stable
Adding to consumer uncertainty were recent fuel cost
fluctuations; uncertainty to go for economy or performance
Emission charging, company parking & impending budget
Reserved
acted as further barriers to progressing
Current cars were likely to be relatively new, thus serviced at
main dealer:
- older cars (3+ years) did not warrant the extra expense



Despite redundancy threat & financial impact reluctance to get
rid of car or cutting back to 1 car
Respondents argued car(s) a necessity for household routine
Little consideration given to alternatives
Public transport, bikes, motor bikes dismissed as impractical
Retrenchers
Consumers argued the car or second car was worth so little as
to be not worth selling
Belief they could manage to significantly reduce running costs
Saving on service by using cheaper source, insurance by
online quote, some even considered 6 month tax

Economic running was a critical issue to these respondents
Even having been made redundant the car was rationalised as
a necessity:
“…I need it to get around for job interviews…you couldn’t
depend on public transport…you’d turn up later & how would
that look…”
Reality
For these respondents the car was an expensive household
item but deemed essential
Consequently all associated costs need to be pared back
Friends or family encouraged to service when absolutely
necessary; deals were done for mechanical expertise
Cheap parts were sought rather than branded replacements


CARS: BUYING, SERVICING AND REPAIRING (Cont’d)

 Bikes were believed only appropriate for children
 Evident resistance to using a bike in place of a car for daily transport
 Bikes were associated more with leisure activity & exercise than a
practical means of transport
 Respondents in urban areas resisted the use of bikes, considering them
a danger for commuting & an inconvenience:
“…you’d have to turn up to work & have a shower before you could do
anything…”
“…you’d have to carry wet weather gear & set off an hour earlier…”
Bikes  As a substitute for the car bikes were resisted
 Conversely as a leisure activity bikes were encouraged
 Biking was a good means of getting exercise & family involvement
 Purchase of a bike was still perceived as a present to mark a birthday or
Christmas
 For some buying a bike was a rite of passage, marking the child as:
- old enough to ride a bike
- responsible enough to ride a bike to school
- independent



Acquiring a  For most Halfords was the first point of call when acquiring a bike
Bike
 Some believed a more personalised service would be available from a
local bike shop
 These consumers liked the idea of more personalised service attention
when buying:
- and later when servicing the bike



 Irrespective of consumer category new cars were thought to warrant
main deal servicing
 This was believed to be part of the guarantee for the first 3 years
 Consumers were contractually obliged in these circumstances to fit
branded parts and had little say in the service
 Once car was out of manufacturer’s warranty then consumers were on
their own
 This necessitate them being selective about how they serviced the car
 For economic reasons many believed an older car did not warrant main
dealer servicing:
- and could be more cheaply serviced at a generic garage
Cars: Servicing
- or by a competent friend, mechanic, mate of a mate, etc
 When the car was out of warranty consumers were less concerned about
the quality of the parts used & more focused on costs
 Consumers stated they would find it difficult to judge the value of
parts, even if they were asked
 It was a desire to abrogate all responsibility to the garage or mechanic:
- in terms of sourcing, selecting and fitting parts
 Most of these consumers wanted to keep at arm’s length, with car
mechanics being perceived as ‘too complicated’



 Engine oil was something that was rarely checked by all motorists we
spoke to
 Prompting a check would be a long journey or a specific concern, such
as drops of oil under the car or loud noises
 Many (men & women) said they did not know where the oil would go
 Consumers accepted the logic that a serviced car could save significant
amounts of money in terms of fuel efficiency
 Extending this logic some believed an engine oil could also contribute to
Cars: Oil
economy through greater efficiency:
- however many felt this would be marginal
 For such a claim to be credible it would need to be endorsed or
reinforced by an objective mechanically respected body:
- or the mechanic trusted to service the car
 The message of an oil with an economy dimension needs to be primarily
directed at the mechanic and secondarily at the consumer


CARS: BUYING, SERVICING AND REPAIRING - LEARNING

 Evident reluctance to cut down or consolidate on cars
 Consumers argued household routine and status quo is dependent on use of the car(s)
 A car was seen as a necessity, even for the redundant for job interviews
 General awareness of economic impact on car industry arouses expectations of
bargains
 Disappointment that manufacturers not promoting more deals
 Additional disappointment over car finance not reflecting the low bank rate
 Concern amongst some over future fuel fluctuations
 Adds uncertainty as to what type of car would suit them in the future (fuel efficiency vs
comfort)
 Allied to this there were other Government uncertainties which detracted from
progressing a car purchase:
• Emission charges
• Taxing company parking


CARS: BUYING, SERVICING AND REPAIRING – LEARNING (Cont’d)

 Those with new cars (under 3 years) believed they needed to service their car at a
reputed dealer in order to ensure continuity of warranty
 Those with older cars felt they had more latitude to select a garage, but whilst selecting
a garage did not want to select spares
 These consumers wanted to abrogate complete responsibility to the mechanic
 Thus the choice of spares was largely dependent on the mechanic with consumers
briefing the mechanic as to the standard of service expected
 Economy was seen as a benefit of regular servicing
 Notion of an oil which would contribute to economy & greater mileage was considered
credible but possibly only marginal in terms of its financial impact


OBSERVATIONS


OBSERVATIONS AND ANOMOLIES

 The fieldwork for this phase took place during the mid to end of March
 At the time the media was still bleak about the world economy:
• Unemployment and Government bail outs dominated the headlines
 Despite this consumers were adopting a resigned attitude
 Even those who fell into the Retrenchers and Reality categories were not overly
despondent
 Many believed they had already put in place or formed economic initiatives and
contingency plans
 There was an evident sense of ‘wait and see’
 It is believed this month was a pivotal moment with Obama’s policies being put in place
and the prospect of the G20 Summit
 It would appear that March was about holding consumers’ economic breath


PRINCIPAL LESSONS

 Economic recession is about a collective consciousness
 Individuals will be affected but react differently
 Marketing opportunities are about understanding different consumers’ needs and desires
 An economic recession need not result in consumer psychological depression and brand
pessimism
 Indulgences and rewards are sought as displacements and distractions
 Consumers are more open to experiment with different regimes and behavioural patterns
 Status quo is challenged by many wanting to make economies and efficiencies
 Many had already put in place economic contingencies
 Household funds had already been scrutinised
 Utilities, where desirable, had been either switched or bills interrogated in terms of
conservation
 Household plans had been drawn up, but with an optimistic accent
 Evident reluctance to dramatically alter household’s economic patterns and rhythms
unless desperate
 This extended to cars:
• With even the unemployed maintaining their car was a necessity


PRINCIPAL LESSONS (Cont’d)

 Luxury items were also found to have a significant role:
• Either in reassuring consumers of their economic comfort
• Or serving as small rewards and tokens the whole family could share in
 Consumers were becoming acutely aware of value and were prepared to change
behavioural patterns in order to achieve value
 At one level in phase 1 we saw this impacted on shopping and their selected retailers
 This also equates to shopping per se with some consumers actively choosing to opt out
of leisure and pleasure shopping and only shopping when necessary
 Others adopted more stringent shopping strategies, seeking out value
 Exploitation of the current situation seems to lessened in terms of retail shopping
 Exploitation however was still evident in considering household improvements
 In addition to the recession impacting on behaviour, the economic situation has shaken
many out of monetary apathy
 Consumers were becoming more interested in household financing and reviewing
interest rates on savings vs loans
 There was an apparent sense of household accounting acumen


PRINCIPAL LESSONS (Cont’d)

 Despite some families being close to their limits there was an evident sense of optimism
about the future
 Most believed they had not pared their household finances completely down
 No one wanted to be too puritanical about the current situation

Belief that an optimistic approach was appropriate
Perception that the economic situation was a short term problem which would be
overcome… eventually


ECONOMICS AND RECESSION: ACCORDING TO THE CUL-DE-SAC CONSUMER


APPORTIONING BLAME

Inherent greed of banks
Short term profit at whatever cost
Banks and bankers
Individuals driven by the incentives of banking
bonus
Lack of regulation & control of banking market
Exploitation of naïve market & investors:
America & George W
- Bernard Madoff
Bush
Bush’s support for oil industry

Courting & lack of control of financial market
UK economy dependent on service & finance
UK & Gordon
Brown’s denial of the boom & bust economic
Brown
cycle & lack of preparation

Exploitation of developing economies;
Empire
Brazil, Russia, India & China (BRIC)
building
Moving production & HQs from UK to source &
entities
benefit from cheap production & tax opportunities

Specifically oil related companies
OPEC
Inability to regulate demand & supply &
& energy
consequently:
companies
- control retail price of energy

PROBLEM RESOLUTION AND CONSUMER REACTIONS

US & UK Governments bail out banks
Tax payers’ money used to ‘bank aid’ the system
Radical reduction of bank rate to ‘defibrillate’
chronic economic solutions
A sop to the UK consumer with a reduction of VAT

Resentment that perceived catalyst should be reactively
supported
Frustration that first trench of funds not distributed:
Banks & bankers
- banking paralysis, risk aversion or greed
Perceived as nationalisation of high street finances
Savings & mortgages now state dependent
International, some foreign owned, monolithic businesses
looking for hand outs
Empire building Retrenchment of foreign companies perceived as exploiting
entities UK; workers & government economic hospitality
Perception of companies having lost interest in UK:
- emerging BRIC economies
View these companies were profiteering by escalating retail
fuel costs
Energy Recently confirmed by record profits for Shell & BP
companies Call for windfall tax on energy companies displaced by
complexity of the economic situation


BANK AID: TOP DOWN ECONOMICS

Government intervention focussed on:
“…helping the perpetrators…”
“…rewarding the guilty…”
Undermines consumers’ faith in credible solutions
Shoring-up the Compounding this mistrust is ineffectiveness of
System Government intervention:
“…lent the banks billions but not doing anything
with it…”
“…lowest bank rate for 100 years but I’m still being
charged 6% on my mortgage…”

From a consumer perspective recent measures
have been:
- reactionary and restricted
- ill conceived and executed
Emphasis has been on securing the status quo:
- saving the decrepit system that caused the
problem


CONSUMER CENTRIC: BOTTOM UP ECONOMICS

Lack of trust in banking systems & bankers
Concern over security of savings & honouring loans
Disillusioned with structures & regulations
Disappointment of banks parental positioning & control
and exposed management
Resentment over public monies bailing out banking
system
Re-engineering & gearing

Impact on consumer is to inflate uncertainty & insecurity
Most consumers perceive themselves as victims of the
crisis & still vulnerable to unforeseen events
Causes many consumers to consolidate & reduce
spending:
“…it’s like a rabbit caught in the headlights… freezes…”
Rather than kick-starting the economy the measures
cause consumer economic paralysis
“…they shouldn’t have given billions to
Belief consumers being excluded from economic
the banks but thousands to each
considerations – fundamental flaw:
family…that’s the way to start the
“…we are the economy…”
recovery…”


Credit Crunch March 09

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