I recently came across a report through RetailWire called "Generating Uplift With the Downturn Generation". It is published by IRI and is based on consumer research conducted by them in March 2009. The research strongly supports the trend of post-materialism that we have been discussing on this blog for the last couple of months. However I do, with all due respect, differ with the author on the conclusions drawn from the research.
Some of the strategies suggested by the report essentially suggest marketers to:
- Focus on line extensions, as the environment for new product development has soured so much.
- Shave off features and offer "good enough" products as consumers are so focused on price.
- Offer deals as brand and retailer loyalty is so substantially eroded.
We believe that if marketers follow such advice they will only be dishing out me-too watered-down products at discounts. When combined with a highly aggressive retail trade that is cutting assortment and investing in private label, this could serve as the death knell for brands.
It is indeed true that consumers are looking for more value. But that does not automatically mean that they are looking only for cheaper products. Brands, especially premium priced ones, need to work harder to prove the additional value that they bring over alternatives to justify the premium. This could be in a variety of ways, one of which is higher priced products that end up saving the consumer less money on a per use basis.
Marketers need to listen to consumer's needs and pain points but they should not let the market dictate what the solution should be. This is the time for leadership and not succumbing to panic. The need for innovation is even greater today. Brands need to fight harder today to preserve their equity and maintain trusted relationships with consumers. Offering barely distinguishable products is a highly dangerous path to take – one that leads to brand oblivion.