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Frugality Is the New Black

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NEW YORK Parents and families are shifting to a new value system where keeping up with the Joneses is out and teaching the kids about responsible spending is in. Also in, according to a recent report from Starcom and Nickelodeon: putting brands' feet to the fire and demanding they prove their worth to consumers who increasingly buy generic products in a hunt for deals.

Those are some of the key findings in a joint research effort that explored how the recession has affected family dynamics, relationships to brands and spending patterns.

The research -- which is being shared with clients but not released widely -- was conducted over fourth-quarter 2008 and first-quarter 2009, and included nationally representative online surveys of 1,000 parents with kids aged 2 to 17 and 700 children aged 8 to 17. Qualitative parental responses were culled from blogs.

"Frugality is cool, or the new black if you will," said Ron Geraci, svp, research at Viacom-owned Nickelodeon. Parents, he said, indicated that they had become "stressed out" by the pressure of having to keep up with "neighbors and friends in the acquisition of cars, trips and homes." The recession, he added, has provided relief from that burden.

According to the survey, 72 percent of those polled said they agreed with the statement, "It's no longer important to keep up with the Joneses," while 48 percent said that as a result of cutbacks in the family budget "we have redefined what's truly meaningful in our lives."

Over 60 percent of those polled said they were buying more store brands than previously, while 73 percent said they had started using coupons more. Almost half (46 percent) said they would take a "staycation" and spend time at home as opposed to traveling.

According to Geraci, the survey indicates that for premium brands "long-standing relationships with consumers are now being questioned. Brands have to prove themselves all over again, passing a test that goes through the filter of this new consumer mind-set."

Kathy Kline, svp, director of consumer context planning at Publicis Groupe's Starcom, added that "brands have to understand that things have changed. They need to earn their place at the table by understanding their targets, providing value and demonstrating the fundamental benefits they offer to consumers."
 
Kline said the behavioral shifts happened quickly -- in the span of just six months -- and are likely to be long lasting. "What we're seeing is a pretty dramatic shift in how people are thinking about money and finances and needs versus wants," she said.

While brands are still important, Kline said, blind loyalty to premium products is out, particularly if a competitor appears to offer more.

"Parents are asking different questions about value and when it's appropriate to pay a premium for a brand," she said.

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