Credit Crunch Presentation

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Julian RodwayExpressions Planning Limited416a Kings RoadLondon SW10 OLJTel: +44 (0)20 7376 3356Fax: +44 (0)20 7376 3447Email: julian@expressionz.com

February 2009CREDIT CRUNCH:

WHERE YOUR CONSUMERS ARE AT TODAY

0CREDIT CRUNCH CONTEXTThe last quarter of 2008 was a dress rehearsal for 2009The UK economy experienced record rises in fuel, impacting on:Home heatingTransport costsProduction costsCompounding these fundamental costs was the credit crunchFrom a consumer perspective the world was changing:Mortgage companies were failingIcons of consumerism were crumbling:High street shops were closingBanks were bailed out:Motor manufacturers were looking for economic support

Consumers were experiencing the cold winds of changeExpressions Planning Credit Crunch - 1

1A YEAR LONG REVIEWExpressions conducted 4 pilot groups in January 2009:2 in Birmingham2 in LondonIn each location one group was conducted amongst:Consumers confident about their economic futureConsumers experiencing recent economic difficulties and concern over jobsThe aim was to understand the current environment:Select 8 households for an ethnographical studyThe intent is to follow the fortunes of these 8 families monthly over the yearIn this base line study we explore 2 status symbol categories - holidays & motoringAnd 2 fmcg categories dog food & sausagesWe invite you to submit categories to be explored during these monthly interviewsThis will be a free serviceExpressions Planning Credit Crunch - 22RECESSIONARY MINDSETS: RECREATIONAL TO REALITYExpressions Planning Credit Crunch - 33RECESSIONARY CONSUMER TYPOLOGIESExpressions Planning Credit Crunch - 4ProminenceConfidentConcernedRecreationalReservedRetrenchers

Not overly concerned about serious economic issuesRecognise situation as an opportunity to review & reduce household expenditureElements of regaining control of expensesParticipation is about cutting back:- not cutting out

Perceive household as vulnerable to unemploymentNeed to be proactive, manage their household expensesMatter of prioritising expenditureCutting back & out without being too puritanical

Experiencing economic difficulties; adjusting & adaptingDesperate measures need to be enforced by manyOptimistic belief means some adopt a progressive cut back/out policyLearning to adjust to a different set of priorities

Driven by a need to conform to situationConscious that conspicuous consumption is not socially or politically correctSelectively join in but will also exploit opportunitiesRelatively confident they will not be impacted onReality4

RECESSIONARY CONSUMER TYPOLOGIES: SUMMARYExpressions Planning Credit Crunch - 5Recreational SummaryNeed to conformSelectively join inExploit opportunitiesRelatively confidentReality SummaryExperiencing economic difficultiesDesperate measuresProgressive cut out policyLearning to adjustRetrenchers SummaryVulnerable to unemploymentNeed to be proactivePrioritising expenditureCutting out & backReserved SummaryNot overly concernedOpportunity to review & reduce expenditureRegaining control Cutting back, not cutting out5RECREATIONAL MINDSETExpressions Planning Credit Crunch - 6ContextCrisisVoyeurs of crisis; a topic of discussion not an imminent threatOpportunity for some to carefully and covertly exploit:at least you can now negotiate over pricesyou can now get a builder and at a reasonable priceCritical of the doom & gloom of economic news; considered an irritant:the media dont help, full of depressing storiesstopped listening to Radio 4too depressing

Economically comfortable; adopt a secure attitude to employmentTypically working in public sector or companies supporting essential servicesBoast about low mortgages or tracker mortgagesPerceive themselves as financially astuteNot prepared to alter their lifestyle but less overt about it:were still going skiing but feeling a bit guilty about it

6RECREATIONAL MINDSET (Contd)Expressions Planning Credit Crunch - 7ConsiderationsBrands

Feel an opportunity to review household expenditureMore about exploiting offers than consolidating:minimizing expenditure & getting greater value:Sky are doing some good offersConcern over value of sterling & foreign holidaysFor the brave an opportunity for investments:house prices are going to falltheyll be some bargains about

Belief in buying brands unshaken; not going to compromiseConversely, many aware of brands being discounted:from chocolate biscuits to BMWsResist changing established and efficient shopping habitsRecession more about being seduced to remain loyal to existing suppliers:exploiting an opportunity7RECREATIONAL MINDSET (Contd)Expressions Planning Credit Crunch - 8SummaryConfident, to an extent complacentPerceive situation as an opportunity to exploitVoyeuristic and vulture mentalityNot prepared to compromise on lifestyleRespect need to be less conspicuous consumersMore likely to buy a bigger car at reduced rate:than a smaller more economical carCrisis is about selectively joining in when it suits them

8RESERVED MINDSETExpressions Planning Credit Crunch - 9ContextYounger couples, some professionals (teachers, librarian, IT workers)Feel relatively secure in job; unemployment not an issueFocus is on maintaining lifestyle by efficient financesConcern is about the future and future planningCrisis

Impact is by association; house prices have fallenConstraining plans for family improvements:we wanted to move to a bigger house this yearTalk about friends and relatives being affected; second hand experience:my brother-in-laws badly hit, hes a builderPeriod of reconsidering financial situation, reviewing expensesSensitive to the plight of others; cutting back part of conformity:you see people buying more economy linesso you think you might too9RESERVED MINDSET (Contd)Expressions Planning Credit Crunch - 10ConsiderationsBrands

Still remaining loyal to icon brands (washing products, butter, cereals, etc):switching where deemed less important:Im not down to buying the economy own labels but cutting back where possibleit is a sign of the timesChallenge mentality towards expenditure:I feel as if I have to justify what I buy to myself

Reference the need to budget and consider expenditure carefullyFuture plans involving big ticket items or household improvements put on iceHoliday plans have become less extravagant & UK based due to the :no longer able to enjoy cheap Looking to make savings where possible without sacrificeMood of being prepared for worse times:preparing a plan to copea phased strategy from cutting back to cutting out10RESERVED MINDSET (Contd)Expressions Planning Credit Crunch - 11SummaryFeeling of being preparedGaining control of expenditurePrioritising valuesRefreshing attitude to extravagant consumerismAdopting more family and free entertainmentTurning from consumerism to cultureNeed to justify purchases; element of guilt over extravaganceSeeking to compensate when cut back:indulgent meal in rather than a night outInitiating family values and appreciating of money management

11RETRENCHERS MINDSETExpressions Planning Credit Crunch - 12ContextCrisis

Driven by the need to be preparedHaving a sort of plan, campaign managementUnspoken expectation of at least one partners income being affectedHave often reviewed household finances and cut down and out:we havent pared back to the bones but should it happen we know we can be more ruthlessConcerned about unemploymentExperience of friends, family and colleagues who have been made redundantWork in sectors vulnerable to downturn (building related, catering, manufacturing, etc)Anxiety about surviving through meeting essential commitments12RETRENCHERS MINDSET (Contd)Expressions Planning Credit Crunch - 13ConsiderationsBrandsSome brands non negotiable (coffee, cereal, shampoo, toothpaste, etc)Perceived as false economyAll discretionary expenses cut backExperiment with other stores and own label products:Ive always driven past Morrisons to get to Sainsburys but now Im convertedexcellent fresh fruit and vegA period of redefining household tastes and expectationsTrading down whenever possible and practical

Staged reduction in unnecessary expenditure and lifestyleDesire to implement drastic cuts after Christmas:we knew we had to do it but wanted to have a good Christmas first for everybodyAll household bills and outgoings reviewed:some subscriptions cut out (mobile phones, Sky, etc)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 wormsWant to be living as expediently as possible; weaning themselves off credit13RETRENCHERS MINDSET (Contd)Expressions Planning Credit Crunch - 14SummaryPlanning for the worstLearning to live on a reduced budgetChallenging past consumer aspirationsAcclimatising the family; changing tastes and expectationLearning different shopping regimesSeek non extravagant rewards and treatsFamily based activities evidentParental concern on children not being the innocent victimsPrepared to compensate children and family with small shared indulgences

14REALITY MINDSETExpressions Planning Credit Crunch - 15ContextOne or both partners made redundant or hours shortenedImmediately impacting on household finances and emotionsTake desperate and immediate expenditure decisions:driven by necessityPride prevents consideration of outside financial planning and helpReluctance to talk to mortgage provider or landlordCrisisLiving through economic turmoilPerceived themselves as victims, want to apportion blameGovernment and banks cited as being responsible for the mess:its about people in power playing with