Taking A Pulse '09 by Sterling Brands

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overview

predictions for key themes influencing branding for 2009

snapshot of consumer mindset today

− hopes, frustrations, feelings, values

how societal shifts may influence relationships with brands

raw hypotheses vs proven phenomena

our inspiration

qualitative assessment by sterling strategy team made upof our “road warriors” - brand strategists, researchers andplanners

− 1,000’s of consumer, client, employee interviews

− multiple categories and businesses

year end download of common themes and patternsthey’ve seen in the marketplace which serve as ourfoundation for our predictions the following year

Introduction

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new york san francisco london singapore

we’re a leading marketing and branding agency,formed in 1992, and a member of the OmnicomGroup of agencies

we deliver inspiring solutions that drive brandgrowth for our clients

we are catalysts that stimulate your brand in orderto create real impact in the marketplace

we work with corporate and consumer brands andoperate nationally and globally

we have a staff of 90 professionals in the US

Who we are

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market research

ethnography, qualitative, focus groups,quali-quant, quantitative, online, offline

brand design

design intelligence, corporate and brandidentity, collateral, packaging graphics andstructure, naming, web site design

strategic consulting

positioning and innovation

The path of our practice

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entertainment

media

retail

cpg

household

In a wide array of industries

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1,035on-locationconsumerdiscussions

6,800consumersinterviewedface to face

600in-facility consumerdiscussions

80+industry, categoryand competitiveanalyses

2008

We know brands andconsumers really, really well!

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From conspicuous consumption to serious re-evaluation…be prepared for fundamental andradical new thinking about brands.

2009 marks the first year after 30 years ofconspicuous consumption and consumers areseriously re-evaluating EVERYTHING

cataclysmic series of events brings us to oursenses - energy crisis, environmental instability,economic meltdown and ethics in shambles

as a country, we have been left financiallyoverstretched and this causes the ultimateanxiety and stress

a coming back down to earth…this is “not alifestyle for me anymore”

President Obama has called for “a new look atourselves”

many forced into re-evaluation given the loss ofa job/home

everyone is going through “mid-life crisis”, nomatter what age you are

this is a paradigm shift from spending tosimplicity

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implication for brands expect and respond to real and

permanent behavioral change

those who are waiting forthings to return to ‘normal’ arein for a serious disappointment

we’re in this all together

remember that RELAXING isnow what is EXCITING

keep your consumer closerthan every

Calvin Klein’s new “one” campaignis perfect for these times”:

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“Brandicide” = brands that bringabout their own demise. inevitable by-product of recessions

those that lack the strength, skills andsmarts to survive…Darwinism in action forbrands

much “brandicide” is self imposed – becausethe brands are undifferentiated, mismanagedand using the same management style in badtimes that they did in good ones:

− Lehman Brothers, Merrill

− Chrysler/GM

− United

− Budget

− Circuit City

− Fortunoff

discriminating consumers are outing brandfakes and, as in human nature, moving awayfrom sinking ships

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implication for brands have passion in your craft

have genuinely differentthings to say

focus and differentiation isparamount to brandsurvival…just look at Apple

Page from Lehman Brothers websiteannouncing bankruptcy:

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Brands must align themselves withthe mood of the nation. the consumer is more sophisticated than ever

and knows instinctually what a brand can andcan’t be

align though positioning and overall ALLmarketing activity

the good:

Wal-Mart’s “save money, live better”message… “ live better” along wouldn’t work

Target’s ironic take on surviving the economiccrisis

Hyundai’s Assurance campaign

the bad:

Citi’s “live richly” campaign…out of tune, veryquickly

AIG $500K retreat at a posh Californianbeach resort

LG tagline “life’s good” has already beenback-burned

“Life is Good” clothing brand might want toconsider renaming themselves “Life is NotGood”!

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implications for brands constantly check in with

the marketplace moodbecause it is changingdaily

consumers will weed outbrands that aren’t in syncwith the country…so getin sync!

Wal-Mart has its day in the sun andtheir new logo supports a justifiedoptimism:

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Consumers are starting from a place ofmistrust and scrutinize claims, promisesand benefits…thanks to the internet.

this is an entire generation that has beenbombarded with ads and brand messagestheir entire life…they simply don’t believe ortrust what brands say about themselves

fuelled by rampant fraud (Bernard Madoff)

fuelled by quality scares (China)

fuelled by greater access to opinions andcritiques (Yelp.com, Twitter)

skepticism about bold claims without specificsupport data (greenwashing)

consumer doing even more research

less reliance on company created marketing

− third party endorsements easy to accessand more credible such as ConsumerReports, AMA and Good Housekeeping

− peer group endorsement becomingmore important

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implication for brands this is a PERMANENT consumer

change, so house-clean to stripout the “claim-fluff”

delight your brandchampions…your bestadvertisement (but you haveto find them!)

be transparent, focus onmaking your product excellentand be passionate about yourbrand because this is infection

Benjamin Moore’s green standard badgeexudes quality assurance andtransparency:

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Economic crisis encourages morepatriotism in our purchasing behavior. this is a common reaction in times like this:

recession, jobloss my the millions, new party,new president

what is different this time around is access toinformation on the internet…and this haschanged EVERYTHING

growing apprehension about our dependenceon China

deep desire to make cars…in America forAmerica…BUT only if the product is as good asit is overseas

steel is the latest industry to seek help (expecta rise in “protectionism”)

− asked for “buy American” clause to beadded to every provision

promise of massive domestic infrastructureinvestment

President Obama: “the best thing in America iswhen we come together as a society in timesof crisis”

economic and environmental incentive

− supporting local industry

− reducing carbon footprint

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implications for brands leverage domestic

credentials where we can

do not exploit patriotism…aform of emotionalblackmail

the finished product mustbe as good as the bestfrom abroad

Love it or leave it, Pepsi’s new logoand tag line celebrates America andchange:

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Faith Popcorn’s concept of “cocooning” inthe 90s has resurfaced 20 years later as“incubating”…the new “wired safe house”allows us to hunker down, retreat, conserveand be productive. learn new skills online shopping self-education building stronger social networks and family

connections (facebook)

The passive pursuit of cocooning is beingreplaced by more active incubating. growth of educational brand Rosetta Stone is a

prime example popularity of games like Wii that develop skills

as well as friendships growth of “from scratch” and gourmet

cooking…self-trained connoisseurship success in instructional websites, university

course, videos and magazines and DIY growth of the slow food movement and the

return of the pot luck dinner party careers are born - learn a skill, order the

supplies, sell on etsy.com or ebay

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implications for brands consumer’s new activity

of “incubating” presentsextraordinaryopportunities for brandgrowth

so explore and promoteyour role in “home-living& learning”

Explosion of activities andeducation for the home:

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When consumers fully understood thegravity of the economic crisis in the fall of‘08, longtime established spending habitsand patterns literally changed overnight,taking experts completely by surprise.

Now we’re embracing a culture of thrift,out of necessity and fear, and we’reseeing this evolve into fun.

opting even more for store brand products

sticking with the previous model of shortcycle tech products for longer

seeking out pre-owned products more thanever taking business models such as ebayand craigslist to a new level

endorsing new no-frills dining from famouschefs

being fulfilled by spending less and enjoyingthe thrill of being smart about money…we arebuying cheap and used

“Smart Cookies” book franchise is taking off

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implications for brands consumers shifting shopping

habits focus from wants toneeds

brands should addressstrategic positioning andexecutional messaging

intellectual power will bechanneled by marketers into abetter understanding of “thescience of NEEDS”

Ina Garten gets “back to basics” withher her new cookbook:

Magazines take pride in helping readersfind deals in mass market:

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All roads are pointing to local, and thisis the purchasing decision that allowsconsumers to really make a difference.

culturally: consumers are more committed to supporting

their local communities in every whichway…just look at the explosion of farmer’smarkets

consumers are opting to support their localshops over chains (wine shop, book store, etc.)

economically: this will become even more prevalent when we

experience the next upward spiral in gas pricesmaking the cost difference from Amazon to alocal book store smaller

environmentally: carbon footprint more universally understood

concept with disasters like Katrina makeconsumers realize global warming is here now

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implications for brands defining and celebrating your

connection to the community

− local production

− local grown

− local social causes

huge opportunity for retail toconnect and nurture theircommunity:

− Classes at Apple

− Baby Gap recently hadOlivia and Cat and theHat appear live for bookreadings

Climate Counts helps consumersvote with their dollar:

Retail stores plug into the communitywith classes:

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Discounting looks like a good thing –consumers get their bargains and retailersshift their stock, but this short term willessentially reposition a brand.

“60% off” is the norm

“buy one, get two free” is the latest favoritepromotion

discounting battle could permanently scarbrands

− some could be “de-positioned” bydownward pricing activity

− for example, Gap, Saks, Circuit City andDenny’s

effect should be minimal for those alreadycommitted to the strategy (e.g. Wal-Mart)

we admire courage of premium brands whooffer no discounts (Coach and Patagonia)

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implications for brands for apparel, food, electronics

and auto businesses,desperate discounting poses areal (and potentiallypermanent) threat to manybrands

focus on long-term positioningversus short-term solutions

we believe it is critical forbrand owners to support yourbrand’s true positioning in themarketplace

Quiznos’ new ads (what happened to thetoasted buns?) - positioning themselvesas a value meal vs a quality meal:

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This is, fundamentally, a new consumer erawill take root in 2009 driven by consumerresponse and attitudes towards economics,ethics, energy and the environment(ironically these are the same four pillarsthat failed us in 2008).

quality of life rather than possessions inlife…choosing a family vacation over shopping

being community-driven and not soindividually-driven…“we” vs “me”

new innovative thinking will replace (failed)historical approaches (the ‘08 election reflectsour collective attitudes)

a calmness and simplicity rather than stressand complexity…choosing time with our familiesover a time zapping promotion

human health as opposed to corporatewealth…putting our personal well being andhealth above corporate success (“health iswealth” is back)

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implications for brands the birth of “accountable branding,

accountable marketing”

this is paramount to keep in mind forbrand success, not to mention brandsurvival

accountability for products (doingwhat they say), accountability formessaging (saying what they do),accountability for the environment,for communities, for employees…the list goes on and on

The upper middleclass reclaims thepre-fab home:

Axiom Legal allows lawyers to work fromhome and consult with their clients:

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2008 will be seen as a watershed year whenfundamental consumer behavior changed.

this fact alone should inspire us all

new eras are always exciting and exhilarating

Over the many years that we have done thisreport, 2009, in every way, is by far the mostcomplex and challenging years we’ve seen.

hard to find anything positive in the constant flood ofterrible news coming from the marketplace

but we believe markets and consumers will find newhigh ground and new solutions from the currentmarketplace mess

let's hope that this is no exception

A few final thoughts

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for consumers, it’s re-evaluation time

brandicide – a trend on the rise

brands out of sync are brands out of favor

consumer skepticism – now on steroids

make it in america…but make it great

at-home incubating – it’s all the rage

local – the connection that matters

addiction to discounting can hurt a brand

the next consumer revolution has begun

from frivolity to frugality

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A summary of our predictions for ‘09

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Clara [email protected]

415-891-8879

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