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Boomers Caught in Squeeze Play

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As the country's excesses were laid bare with the collapse of its debt culture and layoffs mounted, a new sense of back-to-basics frugality and common sense has taken hold. It's as much an attitudinal backlash as it reflects diminished assets, and it didn't take long for advertising to appropriate the mood in everything from coffee to gems. Last month, for instance, a Seattle McDonald's franchise operator taunted Starbucks in its hometown with billboards proclaiming: "Large is the new grande" and "Four bucks is dumb." In its fourth-quarter pitch, De Beers positioned diamonds as something to be passed down among generations in a world of "disposable distractions." Whether bling-seeking consumers buy into copy like "here's to less," the sentiments seem to sum up the larger mood of the country.

"The last cataclysmic event was 9/11, caused by a terrorist attack. It was patriotic to get out and shop," says Alison Burns, global client services director, JWT, New York. "This downfall is of our own making -- greed, mismanagement and all sorts of things much closer to home. Now it's not patriotic to go shopping. It's all about being prudent, back to basics, valuing the things we have more highly."

Allstate Insurance addresses the economy head-on in new work with spokesman Dennis Haysbert standing in front of Depression-era photos while talking about how in tough times "people start enjoying the small things in life: a home-cooked meal, time with loved ones, appreciating the things we do have..."

"There's rapid change under way. Consumers seem to be right-sizing and looking for smart money management," says Lisa Cochrane, Allstate's vp, marketing.

Ben Kline, chief strategy officer at Allstate agency Leo Burnett, says that for consumers it's not just a matter of cutting back, it's about their reassessing what's important.

"We're seeing a shift from a trade-up culture to a trade-off culture," he explains. "'What brands are going to be part of my life, which ones are indispensable or dispensable?' Value alone is not a differentiator; there will be value or there won't be a sale. Marketers will do well in understanding how to frame the trade off and reintroduce themselves."

Kline, whose agency works for McDonald's, adds: "The 'apex predators' of categories that didn't add enough value as consumers traded up are going to be in trouble. People are realizing they don't need a $4 latte; $4 goes further at McDonald's."

Which may go some way in explaining the disparate results of the two iconic brands: In the fiscal fourth quarter, ended Sept. 28, Starbucks reported a 96 percent drop in quarterly earnings growth while McDonald's reported an 11 percent increase in its Sept. 30th third quarter. The definition of value may have less to do with increased unit sales and more with actual consumer benefits.

"In the industrial era, we were good at creating perceived value. But now people are getting back to basics and the future of marketing is to create real value," says Haque of Havas' Media Lab. "Perceived value is for consumers; real value is for people. Perceived value is about how much can we get people to consume and that is patently at odds with the new realities of the economy. Real value delivers long-term outcomes, making people smarter, better off, healthier."

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