Melanie Howard looks at how the necessity for companies to offer value for money during the recession has developed into the trend of ‘maximising’
These days trends are everywhere. They range from the London Evening Standard telling readers what kind of scarves to wear to deep-rooted change taking place across society – such as the much-contested functioning of the British family.
Last year we were told that recession parties were all the rage and that everyone was staying in to drink cava with friends and eat pizza.
Journalists love these short-hand attempts at capturing contemporary preoccupations and they have their place – not least if you are in the home-delivery pizza market, which flourished – but the language to distinguish one from the other is sadly lacking.
For the marketer, it is essential to assess the scope and scale of any so-called trend rather than buying into the hyperbole that tends to accompany each new arrival. First, this requires getting a quantitative handle on how many people in your market it will affect for how long and in what ways. Most brands have consumer insight teams. But more critical is responding fast enough to give you a competitive edge.
This is even more essential in times of uncertainty, such as the recession that we have just come limping out of. Most supermarkets did particularly well: within weeks they were offering eye-catching deals, such as Morrisons' Price Crunch campaign, and have effectively defended their place in consumer affections and wallets. Other sectors have some ground to make up.
Any trend worth its salt will have been gathering strength for a while before hitting the big time, pointing to the importance of effective early warning systems. Maximising is one such trend. Defined as behaviour designed to optimise the value-for-money equation of every purchase decision, it entails thorough checking and evaluation of competitive products.
Maximising provides a perfect example of how a behavioural tendency – itself a consequence of proliferating choice in consumer markets – can be consigned to a particular segment, but has the potential to become absolutely mainstream as circumstances change. Ethical consumerism is another that may follow a similar path.
Maximising behaviour was articulated by American psychologist Barry Schwartz in his 2004 book, The Paradox of Choice – Why More Is Less (HarperCollins). In this he identified how 'maximisers' and their opposite 'satisficers' (never a good word) were both groups developed by consumers in response to the burden of too much choice. Maximisers need to be reassured that they are making absolutely the right purchasing decision. Satisficers conversely settle for 'good enough' decisions as a means of saving time, using short cuts to reassure themselves, but also accepting that they will make mistakes.
First researched in the UK by the Future Foundation at the time of Schwartz's book, this showed that the principle applied to most sectors – from cars to financial services – splitting respondents into these two groups.
For some time, we monitored this behaviour to find that satisficing-type behaviour was steadily winning out as easy credit and stable prices apparently reduced the risk of getting it wrong.
No surprise, then, when the recession picked up speed, that our research showed the barometer moving rapidly in the other direction. By October 2009, nearly 70% of respondents claimed to be carefully budgeting all household spending and two thirds were spending more time on comparing prices. Maximising was no longer a minority segment but the mainstream behaviour, The New Normal (www.futurefoundation.net/newnormal).
Every brand in every market must cater for the rigour of maximising. This means demonstrating how you offer the best value for money and outstrip all competitive deals. It explains the enormous success of price comparison websites. This has now spread into the mobile environment with the ShopSawy app that will point you to the best deal available when you scan in the barcode of a product in front of you.
What does this mean for brands in 2010 and beyond? First, build an assumption of maximising behaviour into how you present your offer, reassuring customers that they really can't get better if they go elsewhere. Essential Waitrose has got it right – branding everyday items as 'quality you would expect at prices you wouldn't'. And at the low-cost end you need to impress that you have the quality as well. Thus Lidl's rallying cry is now 'luxury for all'. Both chains saw year-on-year sales growth in the pre-Christmas period. Knowing your customers remains vital to long-term brand success.
ABOUT THE AUTHOR
Melanie Howard is the chair of the independent Future Foundation