Sustained restraint, or re-defining value?

Stories about a new era of conservative spending have been plentiful. In this week’s Advertising Age, there was another story about the new “Consumer Frugality.” It explained how companies like Proctor & Gamble and The Home Depot are reading—and responding to—what they perceive to be a new consumer mindset. (Click here to read the AdAge story.)

Implications: Pardon me, but I’d like to pick a fight over this issue… because once again, too many people are trying to over-simplify and over-generalize “consumers” as one clump of people who move through life, single-file, all the same, like a bunch of lemmings. And anyway… people have not gone “frugal” as much as they’ve simply come to their senses.

A few years ago, lots of people spent as if money was no object, jobs were easy to come by, and we can live like there’s no tomorrow. Now, lots of people have realized that today is that tomorrow, money is an object, and their jobs are worth protecting.

That does not mean they won’t buy anything if it's not on sale, or that anything on sale is worth buying.

Consumers—acting individually—are revisiting how they define “value.” Is this product worth the price? Should I spend more so I might have to replace this item less often? If I “do it myself” instead of calling a contractor, could I save money for use on one of our family’s other priorities? Is there an economic alternative to taking a trip on our vacation this year? Am I choosing this product because it’s really better, or simply out of habit?

Increasingly, companies need to communicate the Unique Selling Proposition (value) of their product. How it enriches the consumer’s life (or family, or job…). How it makes life easier, or better, or more rewarding… in a way that competitive products, services, or options do not. Absent a Unique Selling Proposition, price becomes the default influence over every purchase decision.

Maslow (the hierarchy of needs guy) once said, “If a hammer is the only tool you have, you tend to see every problem as a nail.” Likewise, if the only weapon you have is a discount or sale price… you tend to assume that is what every consumer is after. But today at the mall, grocery store or dealership, everything on sale will not be sold. And everything bought will not be on sale.

Forget about "all consumers." Focus on your customers. Research what matters, why they buy, and why they don't. When you focus on your best customers, and deliver on the benefits they seek, you're not solving the world's economic problems. Just your own.

Mike Anderson