The war in Iraq may have had an impact on consumer confidence, but it wasn’t a catalyst. Even without it, lingering anxieties from 9/11, proposed changed to retirement programs, the worsening economic and job security pictures, layoffs, stock market declines and a host of other occurrences have caused changes in consumer outlooks, according to J. Walker Smith, president of research firm Yankelovich.
As a result, consumer spending priorities have shifted. Marketers that once were able to position creature comforts such as new clothes every season, cable or satellite TV, a vacation every year and a new car every two to three years as necessities now need to realize that their prospects view them as luxuries.
Items that top consumers’ lists of necessities now include time with family and friends, respect from peers, the ability to take a day off, charitable contributions – and a microwave oven, according to Yankelovich’s Monitor survey.
Surprisingly, the war in Iraq caused only slight, temporary bumps in – admittedly already elevated – anxiety levels. In April, 17% of those surveyed said they had been less tolerant of marketing and advertising during wartime, up only slightly from 14% in February.
While consumers may be anxious, they are not pessimistic, which is an important distinction for marketers to note. But they have slipped from active optimism to a more passive state. This means that they are still able to be motivated, but will take a bit more outreach than was previously necessary.
“The missing ingredient is a vision and an emotional boost to give people confidence, inspiration and direction, and to reenergize people’s involvement and participation in the marketplace,” Smith said during a teleconference yesterday.
Smith doesn’t advocate waiting for government actions to boost consumer confidence. The federal government is preoccupied with its focus on security, and state and local governments don’t have the fiscal resources to make the necessary significant investments, he said.
“Responsibility for motivating and inspiring consumers in our laps. If we remain cautious, than our caution will make consumers even more cautious, creating a vicious cycle to a self-fulfilling prophecy,” Smith added.
The messages consumers are primed to respond to include those that reflect their increased focus on reducing their risk and their desire for information. The current environment is ripe for discount and promotional items that enable consumers to test without too much initial investment. Anything that promotes the family and security is likely to be received well.
To that end, advertising needs to reflect that consumers are moving toward “hiving” – using their homes as a central command, “abuzz” (as Smith put it) with activity and engagement, as opposed to the self-indulgent, self-directed cocooning of the 1990s.
Conversely, offers that stress quantity, tangible items and money are less important. With consumers reevaluating their priorities, the need to blindly acquire is falling by the wayside. People are less likely to give up time for money, according to Smith.
“It does not take very many people shifting behavior to fundamentally change a business,” he said. “Just look at the airlines. They in trouble these days not because not because there has been a wholesale abandonment of travel, but because there has been but because there has been some small shifts in travel by a small percentage of travelers. That can have a big impact on the marketplace.
“These are the kind of behavior shifts that anxious people do,” Smith said.
Yankelovich and Direct are partners on a joint research study on consumer attitudes toward direct response marketing.
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