THE RISE OF THE PAUPER

The consumer world is becoming poorer, and it has nothing to do with the economy. It has everything to do with the fact that there are 4 billion poor people who are yearning to join the consuming ranks, and those who are emerging into the middle class in countries like India, China, Brazil, Russia, Vietnam, Hungary and Mexico are recreating the way we are shop for and value brands.

This New York Times article takes a look at an emerging consumer in the US. The title of the article probably says it all: "Trying to Pitch Products to the Savers."

The reluctance of consumers to spend — coupled with a sudden sharp rise in the savings rate — has left even the savviest marketers scrambling to reconsider their strategies.

For instance, the Procter & Gamble Company, the nation’s largest advertiser, announced last month that it would adopt a “surgical” approach to reducing prices in categories in which Procter brands are being perceived as costing too much compared with competitive products.

In the same article, the notion of value is underscored and how experiential approaches are at the heart of a brand's positioning on the value spectrum. 03adco01-190

And at Procter & Gamble, a line featuring new products that cost $42 to $62 each — a far cry from the price of a bar of Ivory soap — is getting a value designation because, ads assert, it performs like product lines costing much more.

The line is called Olay Professional Pro-X, part of the Olay skin-care brand. A print campaign from Saatchi & Saatchi in New York, part of the Publicis Groupe, that is scheduled to begin in July for the Intensive Wrinkle Protocol — a regimen kit of three products — will carry this headline: “As effective at wrinkle reduction as what the doctor prescribed. At half the price.”

The Pro-X items cost two or three times as much as the products in another Olay line, Total Effects, which cost about $20 to $25 apiece.

“It is getting into higher price points,” said Tim Bunch, Olay Pro-X brand manager at Procter in Cincinnati. So “if you’re going to lay down that type of money,” he added, “it ought to be for a brand you believe in.”

And this article in Ad Age will drive the point home:

The heavy betting — and it goes well beyond Cincinnati — is that
America will eventually shake off recession but keep saving and
spending more responsibly. We'll borrow only when we must. We'll pay
bills and debts immediately. We'll save up before we buy big things.
New England Consulting Group reported last week that people buying more
store brands now don't have any plans to trade back up, and that
recession-induced shopping habits are likely to persist "long after
it's gone." All that has left many marketers trying to adapt with
strategies such as lowering some prices, offering multiple product
lines at varying price points and giving reluctant consumers reasons to
buy by tying into causes such as environmentalism.

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