insights on an evolving consumerSeptember 2009

the good things in life

2 Values are the new value.

3Values are the new value.

4We live in times of major uncertainty. The doom and gloom of the economic crisis, the deterioration of mass

markets, the pervasiveness of the digital lifestyle, and the fragmentation of traditional societal institutions are not

only inducing anxiety but also inspiring a search for simplicity and noneconomic value systems. Consumption-

driven wealth and status are being replaced by identity, belonging, and a strong desire to contribute to or

to experience something meaningful rather than to acquire more things. Trust and reputation are no longer

enablers for the exchange of goods, services, and information; they are replacements for them. Values are the new

value. Meaning is succeeding customer satisfaction.[i]

While exorbitant spending has been thwarted, many consumers are selectively not-trading down and in some cases are actually trading up. These items

vary with each consumer and the common link across consumers and categories is passion. These are the purchases that people care about.

Consumers are connected; connected to brands, to each other, to information like never before. The connection allows brands to form communities or

more precisely, communities have formed around these brands. The communities celebrate them, develop them, share them, sometimes criticize them,

but are always passionate about them. Consumers can be found engaging with the brand and others using a number of media, traditional and social.

The most powerful brands are built on more than product attributes. They are the badges of a community that has aligned values with the company.

They represent a relationship, not a purchase. Many of these items are sold with a back-story about the materials sourcing or the worker who made

it. With the tough economy, consumers support local farmers, merchants, and craftsman as a way to keep dollars in their community. To the contrary,

consumers are also willing to support global commerce from a distant village under the principles of fair trade. This is often for products that arent

readily available in their own community. In both cases, there is a common thread of responsible commerce consumers feel empowered to actually

change the world, one small purchase at a time.

The Internet has narrowed the gap of information knowledge of seemingly anything and everything is at our fingertips. The gap between manufacturers,

sellers, and consumers appears no different. Nothing can be hidden from the consumer pool, so transparency is a must.[ii] A brand image cannot be

manufactured, so there is no point in a brand manager trying to create or protect an inauthentic brand image. The true brand meaning will be discovered

and brought to light and is ultimately owned by the consumer and the community. Thus, the brand manager must work to drive real community value

into the brand and engage the consumer to discover it. Below is a chart from the global consumer research firm Yankelovich. This table reports the

change in consumer perception of themselves versus 2002:

I always know how to get the information I need to

make decisions

Important in your personal life today: Researching

a product before buying it

I know more about the products being sold in

stores than the people selling them

Agree more with: Following own instincts over

listening to experts

Extremely/very important to the way others

see you: Someone who can always see through

exaggeration and hype

Grab a pen and, choosing from the numbers on the opposite page, take a guess what these percentages are today.

Check mark the letter that represents the corresponding statement.

A

B

C

D

E

Source: Yankerovich Monitor Perspective 10-21.2008 [iii]

61%

44%

48%

61%

38%

2002

Match today with 2002

5Match today with 2002

Today

75%

61%

53%

74% 56%A B C D E

A B C D E

A B C D E

A B C D E

A B C D E

6

7Recently, social media networks have added layers of connectivity. Access has increased with smart phones offering real-time constant connectivity. Now there are communities of passionate people gathering and

sharing information, instantly from virtually anywhere, or everywhere. Consumers are turning to their network of friends and

colleagues to gather information through their communitys experience. Part of the discussion, of course, are the brands they

love. They claim to be anti-commercialized though effective advertising that connects rather than intending to influence/

persuade/affect can still penetrate consumer filters without rejection. Beyond the filter, the best messages are spread to

other users and even other networks, a new, extremely fast and efficient form of word of mouth.

This system of information sharing brings us back to an imperative mentioned above. The need for an authentic story. Brand

content, not just product attributes, represent the fuel for this word of mouth wildfire. The good things in life represent

products, lifestyles and brand stories that people care about and want to engage and participate in the evolving story and

communities that thrive around this interest, hobby, lifestyle, etc.

8* Consumer utility is broader and more complex than before.

* Consumers look at multiple vectors, tradeoffs, and meaning seeking a more holistic value.

2oth Century Capitalism Good Capitalism

A new value equationqu

ality

qual

ity

price price

cons

umer va

lue

local

sust

aina

bilit

y

responsibility

micro scale

commu

nityparticipatory/engaging

9IT WAS:

How much money can I make?

Best price (corporate economies of scale)

Brand Image

Bigger is better (more)

Sprawl

Me (ravenous capitalism)

Income

Transactions

Productivity

IT IS NOW:

How much meaning can I cultivate?

Local price (localized economies)

Brand Story

Human is better (meaning)

Community

Us (responsibility)

Outcomes

Connections

Creativity

Consumer values have shifted

10

NOT ABOUT FACTORY EFFICIENCY

11

NOT ABOUT FACTORY EFFICIENCY

12

13

Consumers seek an alternative value exchange to the profit-maximizing capitalistic model of the 20th Century. Consumer utility includes the product itself and a

specific personal need it might fulfill. But, it doesnt stop there. The value equation is now driven by a broad list of meta issues, a community value. This broader

sense of value is linked to responsibility and includes sustainability, durability, value chain location (local economy), personal connection, design, and from the

old model, quality. Its not about the factory efficiency, but about care and thought and design. That doesnt preclude a good factory product it must still be

of high quality, but also have higher design aesthetics and add global valuerather than extract it. Fortunately, consumers can rely on third parties to help

sort through the complexity from so many choices. For example, Whole Foods helps consumers find the good things in life that are sustainable, of quality,

and healthy. This has great implication on brands and their strategies for reaching consumers within the market.[iv]

Further evidence can be found in a recent survey of 5000 consumers representative of the US/Canada population.[v] This survey segmented the population based

on their level of interest in sustainable and green issues such as pollution, global warming, fair trade and local products and services. Interestingly, 60% of the

population is actively taking steps towards making a difference with respect to these issues.

The trends we have observed have influenced the marketplace. Consumers identify with meaning from experiences more than they do the products themselves.

The good news for manufacturers is that they often need products to create these experiences. In an online survey of consumers we discovered deeper insights

into consumers that value the good things in life.

8% The Self Serving Non Believer

8% The Pragmatic Believer

19% The Hyper Local

24% The Casual Spectator

41% The Vocal Globalist8% The Self Serving Non Believer

8% The Pragmatic Believer

19% The Hyper Local

24% The Casual Spectator

41% The Vocal Globalist

Options Strongly Agree Agree Disagree Strongly Disagree

I try to eat healthy

I try to exercise or be active

Prefer the indoors over the outdoors

I put more emphasis on my career than on recreation

Options Strongly Agree Agree Disagree Strongly Disagree

Buying local is more important today than it was 5 years ago

If I am passionate about a product, I want to know the story behind its production

I can slowly change the world by making responsible purchases

The environment and green initiatives are important to me

I seek a greater connection with people that like the same products as me

I prefer having more things to having more meaningful experiences

I value craftmanship and will pay more for it

Values and beliefs of the Good Things consumer

14

Consumers validate the trends observed in the marketplace. The affirmation of the beliefs and values above lead to

purchases and trends outlined. When asked what kinds of products they are unwilling to compromise for, despite these

difficult times, they responded with a broad list of items. Those that resonated the most are brought forward in this graphic

from www.wordle.net:

foodor

gani

cgood

shoes

comfortable

ctrl.esc

faith

toilet

anywhereclothing

one

fruitschool

drink

health

child

eatingless

safe

ty

entertainment

carsetc

furniture

groceries

cleaningeq

uipm

entdentists

love

meat

gravity

gin

going

specialty

time

giftsfacial

now

cleaning

fishing

beerfa

mily

still

flypaying

goals

15

Marketing products within this watershed event can be confusing, unsettling, and challenging. The shift in technologies combined

with the evolving value systems of the consumers create both unprecedented uncertainty and at the same time opportunity. As

leaders, we all must be willing to operate within a suspended state of beta testing. Marketing mistakes will be made, but in this

environment, there will also be great discoveries and success. Consumers interested in the good things in life will embrace and

buy the brands that step forward and participate in the evolution. They are looking for connection, engagement, authenticity,

broader value sets, and ultimately, meaning.

foodwinegoodshoes

electronics

faithanywhereclothing

fruittiresdrink

kids

paper

paying

buyappliances

carsetc

flight

furniture

deal

s

giftsbeer

productsrunning

coffe

eco

mpu

ters

make

goals

www.tbdagency.com

[i] Source: Wanted: Chief Meaning OfficerHow the new social power of marketing can transform business. By Tim Liberechthttp://designmind.frogdesign.com/articles/power/wanted-chief-meaning-officer.html [ii] Freakonomics. Stephen Levitt and Stephen Dubner. 2005. New York. Pp. 66-70. [iii] Yankelovich MONITOR Perspective. Rolling Out Responsibility. Consumer Empowerment and the Nature of Participation in Tomorrows Consumer Economy. J. Walker Smith. 10 21 08. [iv] Madison Mount at Influx 2009.http://www.youtube.com/watch?v=AAm--lV-Thw&feature=channel_page [v] Conscientious Innovation, Ltc. The Shift Report. Sustainability Passion Index (SPI). http://ow.ly/d/3E

P H O T O C R E D I T S

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