As identified in the OTO Research report about consumer reaction to the crisis, 80% of consumers are going to change their spending habits. 89% of consumers are going to systematically check online what and where the best products are, and what their value for money is. These are impressive proportions, indicating radical and disruptive changes. But when you dig further, consumers are getting savvy in the way they cut their spending. They will continue to spend on some categories, while cutting on others. They will accept lower quality for a better price on some categories and not on others. 84 % of consumers will cut heavily on less than two categories.
Cut heavily on one or two categories, reduce price and quality on some others to maintain or increase spending on one or two “protected categories”. Category behavior depends on each and every single consumer, but most consumers are polarizing their choices. So the key challenge for brands is to escape from the middle market. Choose between targeting the heavy spenders and offer them premium products, or target the “quality traders” and go to them with a low cost offering. Where there will not be any drive is the mid quality, mid priced offers, because consumers will use digital to compare. How does one convince a consumer that an average $20,000 berline has a stronger emotional benefit than a $10,000 sedan? Considering what one can do with $10,000…
Escaping from the middle means focusing budgets on the high and low end, but also heavily on customer intelligence and delivering the right offer and message to the right consumer at the appropriate moment. This approach can usually make a 30% difference in performance on every Dollar invested.
THIBAUT PORTAL - International Partner FullSIX Group
Thibaut has started is professional career in Asia, as an international buyer for a French retail chain store – The Casino Group.
In 1999, he has joined the FullSIX Group, in the early days of its creation and has been manager in FullSIX Paris for 4 years, working for clients such as Vodafone, the FIAT group and the Mars Group.
In 2003, he has left France for Italy, joining FullSIX Italy as a managing partner. He was in charge of business and new innovative marketing ideas development, meanly working for Bulgari, Alfa Romeo, the Mars Group, Telecom Italia.
In April 2008, he has joined Six and Co UK as CEO & international partner for the FullSIX Group
Main photo: © A Different Perspective
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