The Musings Of An Opinionated Sod [Help Me Grow!]

Q: Was Mick Hucknell Right When He Sang ‘Money’s Too Tight To Mention’? A: No.
December 30, 2008, 9:48 am
Filed under: Comment

So we’ve recently been doing some work – like every other agency – regarding how the recession [or as we like to say it, ‘how life is today’] affects consumer attitudes and spending.

However our research has got quite different results to that of the JWT’s, O&M’s of this World …

Without doubt consumer spending has been hit … you’d have to be an idiot not to realise that … however we believe it’s more a case of the redistribution of spend than the complete reduction of it.

In places like Hong Kong, the culture is seemingly hot-wired to spend … so whilst there are a few there who have morphed into the ultimate frugal machine … the majority are still seeking out emotional ‘highs’ from material acquisition each and every day.

Now as I said, because of the economy, people’s choices are being influenced in different ways … however rather than staying at home and putting their cash under beds, the reality is each and every day many people are out there seeking out brands/products that can give them a similar emotional high as they achieved when times were good and they could embrace more ‘big ticket items’.

Ironically, that doesn’t always mean they end up spending less …

What we’ve discovered is that short-term memory plays a very important part in how people define ‘value for money’.

Photo: Doris & Rocque

Sticking with HK for a moment …

The price of bread has recently experienced inflation rates not seen since Russia circa 1980 …

Given the price of bread is relatively cheap, these high inflation rates means prices have gone from approx 60 cents to around $2 … which admittedly is alot in percentage terms, but still quite manageable for the average person.

Now here’s the thing …

Because people can still remember when bread was much cheaper, they no longer define it as being ‘good value for money’ so they are seeking out breakfast alternatives that can provide them with both functional and emotional benefits – of which Macca’s breakfasts [starting at $3.50] is proving to be exceptionally popular.

Yes, you read that right … people in their thousands are spending MORE money than they did before [on breakfast] because they see the ‘base level food group’ [ie: bread] as being too expensive when for a little bit more, they can enjoy a breakfast that helps them feel more indulgent and upmarket.

[No, I’m not joking]

I’m sure Freud would claim these are the actions of people looking to delude themselves that they are still successful when all around them the news is acting like its 1929 again … but for brands like Macca’s, this ability to capitalise on the increased costs of fundamental food groups is a boom.

Of course not every person is acting this way …. and their actions and attitudes are continually changing [even down to their behaviour by daypart] … however this recession is proving a boom for the shopaholic culture because now they can now indulge in their favourite activities and actually buy more for less.

Photo: Shutterberry

Yes brands are claiming their profits are being badly hit … but you only have to look at and see that people are still spending cash … and the only reason this might not translate to an equal rise in profits is because they’ve either [1] already discounted their prices in a sheep-following act and/or [2] people are choosing different types of brand/products to give them their rational/emotional high.

Hell, there is a whole group of people who have never had it so good …

No, I’m not talking about the uber-wealthy, I’m talking about Mr & Mrs Average … the one’s who’ve lived within their means … because suddenly their mortgages are cheaper, their food at the supermarket is cheaper and the petrol to run their 2 cars is cheaper. Infact, if they don’t get made redundant in 09, this economic downturn could be one of the greatest periods for financial stability and advancement in their life.

Don’t get me wrong … times are tough, consumer spending has been hit and hopefully people are getting a better perspective of what really is important in life … however this blanket attitude of commercial doom & gloom should not be applied across all segments because for every car and house industry that is suffering, there is a fast food or holiday category that is booming.

Believe it or not, this post was not written in an attempt to say brands should keep advertising [I find it ironic agencies keep putting out that argument when they openly express they are doing all they can to cut back on their own spending … though I do think they should continue communicating, they just need to do it in new and relevant ways, of which TV ads is not one of the most effective] … it is simply to say there is still money is out there and if companies spent the time to truly understand the changing attitudes of people in the current climate, they may find they can survive without having to automatically rely on price reduction.

Saying that, if you are a car manufacturer, you’re fucked and if further proof was needed, have a look at this …

Yep, some Sydney Police Forces are buying Fiat’s as their squad cars.

Sure it’s funny but think of the poor communities that these Police are meant to protect. You can bet your bottom dollar the crime rates in those suburbs are going to go through the roof because crims will know there’s not a cat in hell’s chance they’ll be caught by some copper in a Noddy car. I’d laugh too if this photo wasn’t taken in the locality of where we’ve just bought a house. ARGH!

Right, that really is the last post till I move countries, so till then … happy new year, though I don’t know how happy we can be about it, not unless you own the Macca’s breakfast franchise in HK, ha!

[PS: Read Faris’ view on the economy … I particularly like [and agree with] his bottom up, not top down approach … though how long that will last is anyones guess]

[PPS: Our full report will be coming out soonish, so if you want a copy, let me know – it has some very interesting findings even if I say it myself, including why ‘recession is good for marriage’, you heard it here first, ha!]

[PPPS: I realise this post conflicts with what I said yesterday. Can’t a man change his mind or is that only the right of the female population, ha!]

20 Comments so far
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Very interesting post Robert. Could I ask which countries your research covered because I am not sure your findings would be valid across all international markets.

When the research has been completed and compiled, could I ask you to send me a copy because despite my previous comment I know I will find it very interesting reading.

Excellent having you pop back, I was expecting to wait till February.

Comment by Lee Hill

You were going to get a copy whether you liked it or not 🙂

The findings I mentioned were focused on HK … however we’re doing the research in China, UK, Australia, India and HK.

Without doubt there are many differences in attitude and behaviour [to the recession] in each market … and this is driven by things suchs as culture, age, environment and wealth stage … however you’ll also be surprised at the number of commonalities that exist as well.

Don’t get me wrong, people are being much more careful with their cash than previously [as has been detailed by other agencies reports] it’s just that we have found many people [and in Asia, it is the dominant group] are spending cash in different channels rather than not spending it at all.

Of course not everyone is like this [we have identified 7 segments] but it’s an interesting finding given the standard report is saying the end is nigh when it’s more linked to specific industries than commerce as a whole.

Comment by Rob

I’ll have a copy as well, cheers

Comment by niko

just because im on holiday doesnt mean you can get away with writing some smart ass blog post bollocks. now keep your promise and fuck off till next year, youre close to ruining the fucking festive season for everyone you selfish sadistic shit

love andy

Comment by andy@cynic

For my view on this post I ask you to take Andrew’s comment and reverse it in its entirety. It’s great to have you back Robert, especially when you write things like this. Happy new year to all.

Comment by George

get a room or get me a fucking bucket

Comment by andy@cynic

Great post. Got me thinking. I bet we’re just scratching the surface of economic opportunities.

…And yes Happy New year to all. 2009. It’s going to be a definitive year. Define it or be defined.

Comment by Charles Frith

I think at the moment we are still in the “phoney war” stage and most people have not been touched by the recession.

Even if UK unemployment eventually reaches 10% or even 15% (which is very high) that still leaves 90% or 85% employed, which is enough to keep capitalist-consumerist society ticking over in theory.

However, even if the vast majority remain employed and earning good money they will start to get scared and shut down spending when people in their extended friends/family lose their jobs or have their houses repossessed.

My guess is that this will be when unemployment reaches two and a half million or house repossessions reach 100,000.

Comment by andrew

How many UK house repossessions will be those bought on buy to let speculation? That won’t worry the people on tracker mortgages whose monthly repayments are lower than they were paying on their first homes back in 92. There may be a recession, but the overall standard of living is still a lot higher than it was ten years ago and it is that fact which will ultimately dawn on the fortunate majority and maybe even the media.

Comment by John

I think the key words there are ‘fortunate masses’ … though we shouldn’t forget that in many countries, the majority are not fortunate at all.

At the end of the day, people will still spend. Sure they might substitute their favourite brand/product/category for a cheaper alternative, but it’ll still see them spending money on things that are not really neccassary but purchased because they help maintain the illusion of personal success/status or they help people simply forget the real problems going on in their lives … which Andy refers to as ‘Prozac Purchases’.

The biggest issue will be unemployment – because if that happens in big numbers, real chaos theory stuff could start to happen which could result in the economy achieving it’s doom and gloom self fulfilling prophecy – and given in many cases companies make redundncies based on confidence for the future rather than economies of the present, this sense of ‘hope’ has got to be injected back into the marketplce … even though it’s the people and companies who need it more, not the bloody financial institutions.

Comment by Rob

Typical Campbell – quoting phrases that weren’t actually there and making them more emotive too.

The reality is that people are paying down housing debt at a record rate and intuitively that suggests to me an increase in the value-purchase mentality. That doesn’t contradict anything you’ve said and it just might encourage execs to think about shifting their product focus in the direction we here keep shouting about.

Comment by John

Majority … masses … nice to see you keep your pedantic skills in tip-top form even over the festive period. What a man …

Comment by Rob

Hi Rob,
Interesting points of view.
I’d love to get a copy of your research when it’s compiled.

Cheers & have a great 2k9!

Comment by Stefan

No probs Stefan … if you send me your info I’ll sort it once it’s finalised which should be in about a month, at least the HK/S.E. Asia paper.

rob at cynical-world dot com

Comment by Rob

please tell me that you wrote this 2 weeks before you posted it. please tell me that you weren’t spending your summer holidays thinking about The Economy and coming up with some planning solutions around financial crises. Please tell me that actually, at 9:48am, you were, in fact, fast asleep and/or lying on the couch reading a book (otherwise known as playing MarioKart). i know that time is money, etc, etc. but surely having a break is good for business to? right?

although, from the brief low-concentration scan i did of the post, that thing you said about values changing, rather than recession and/or depression, (or something) is right – black markets still exist in warfare zones, so people will still hand money over for shit they want. but i’m still on holidays so can’t offer any more than that.

i hope your hols have been ace – see ya when you’re really back. like february – as promised 🙂

PS – you take the piss out of aussie fiat policecars when The Bill drive around in the equivalent of a Micra? And besides, Balmain is full of middle-class whitebreads where nobody rocks the boat in anymore, so they don’t need divvy vans – in fact they’re thinkin’ of turning the front room of the cop shop into a cafe, don’t you know. ;P

Comment by lauren

1/ Yes I am that sad actually Lauren

2/ Balmain had a carjacking a while ago so it’s the ‘hood’

3/ Errrrrm, I don’t have a 3

Hope you’re having a toptastic break and speak soon …

Comment by Rob

hehehe.. you too lovely – catch up soon.

Comment by lauren

If yo haven’t already, read Predictable Irrationality; this sounds very similar in terms of people and their weird responses.

Comment by Rob Mortimer

read it? we practically invented the fucking thing

Comment by andy@cynic

[…] Q: Was Mick Hucknell Right When He Sang ‘Money’s Too Tight To Mention’? A: No. « The Musings … "Without doubt consumer spending has been hit … you’d have to be an idiot not to realise that … however we believe it’s more a case of the redistribution of spend than the complete reduction of it. In places like Hong Kong, the culture is seemingly hot-wired to spend … so whilst there are a few there who have morphed into the ultimate frugal machine … the majority are still seeking out emotional ‘highs’ from material acquisition each and every day." (tags: consumers shopping recession) […]

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