The new normal

The graph of UK consumer confidence produced by GfK NOP for the European Commission provides a startling illustration of how the recession has affected consumers. The line moves along fairly steadily through the 2000s, then plummets in 2007-08, reaching the lowest point in the tracker’s 36-year history. Had things got much worse they might have had to start printing the graph on bigger paper.

It’s the job of market research to help businesses grasp the implications of unexpected events like this. But is research, an industry so rooted in the consumer culture of the second half of the twentieth century, equipped to understand changing behaviour in the wake of a shock this profound? Or does it need to rethink some of its fundamental assumptions?

The Chartered Institute of Marketing’s latest trends study found that seven out of ten marketers believe there has been a “fundamental shift” in their customers’ behaviour and spending patterns since the start of the recession. In a 2009 article for the Harvard Business Review, Paul Flatters and Michael Willmott of Trajectory outlined trends they had seen propelled or knocked off course, and said that younger consumers who were coming of age in this period may carry the new attitudes and behaviours with them all their lives.

The trend set
Changes that are accelerating among consumers include a demand for simplicity, a tendency toward thrift (even among those who remain affluent), a sharpened focus on business governance and a mercurial approach to consumption (in other words people are switching more readily between products and services). Meanwhile green and ethical consumption is declining, but expected to pick up again post-recovery.

Some of these trends are straightforward for researchers and marketers to respond to, while others cut to the heart of how companies relate to the people using their products and services. Clearly consumers are becoming more demanding and choosier, as well as, in some cases, less enamoured with excessive consumption. Still, the early success of the iPad shows that people are willing to pay a high price for something they see as exciting and high-quality.

The desire for simplicity shows the limits of the belief that greater choice leads to greater freedom and wellbeing. A new product, almost by definition, adds to the clutter and complexity of consumers’ lives, making it increasingly difficult for marketers to persuade people that their efforts are part of the solution rather than part of the problem. Meanwhile word-of-mouth recommendations via social media and price comparison sites offer new ways to filter the options and simplify choices.

Companies operating in sectors where consumers have historically not engaged much with brands or purchases will be hit hard by the evaporation of loyalty, as people take more care over their choices, and reassess them constantly. Ben Steer of GfK Financial has observed this phenomenon in the financial services sector. “With the amazing rise of price comparison sites and things like MoneySavingExpert.com, there’s been a feeling that people have the ability to take more control over financial services, and we’ve certainly seen an increase in the last few years in people switching products,” he said.

Others in the research industry speak of seeing more profound shifts in consumers’ orientation. It once seemed almost a given that marketing was about change, dynamism and the individual, but Vaughan Flood, joint managing director of brand researcher Voodoo, says that it is now having to become more about security, comfort and belonging.

Flood sees a consequent change in focus from ‘me the consumer’ to ‘you the provider’, who is expected to communicate what tangible value they can offer, rather than just grabbing attention. “To me this is one of the tectonic plates of marketing shifting,” says Flood. “People are minded to think more thoroughly about what they might be buying into.”

The family way
Charu Harish, communications planning director for Grey Group in Asia Pacific, has noticed a similar trend in the agency’s regular ‘Eye on Asia’ study. She has seen an increasing need for consumers to feel in control of their lives, which has led to a renewed focus on family and community. The assumption that we should seek to understand and target people as individuals has given way to a sense that we have also to think about families.

“As Asians we were very family- and community-oriented,” says Harish, “but there came a time before the recession when individualism started to take precedence and we were very much following the west, but because the recession shook the roots of everything individualism stood for, there is a tendency now to go back to the roots, back to family, back to community. Our research for 2010 seems to suggest it is continuing – the figure stands at 80% for the statement ‘I want closer contact with my community.’”

Marketers and researchers also need to get used to an increasingly clued-up consumer, who understands the role that they themselves play in business (and research), and asks informed questions about the organisations they deal with. As the internet breaks down barriers between companies and customers, business is being increasingly popularised as a topic in books and TV shows. The effect of the digital world on industries like music, film and the news has made ‘business models’ a topic for casual conversation.

Tamar Kasriel, who runs trends consultancy Futureal, has watched consumers get savvier over the years. She told Research: “I know I’ve been in focus groups listening to consumers and seeing clients scribbling down their brilliant strategic ideas.” The impact of the recession on top of this, Kasriel says, has led to a ‘renegotiation’ of what business is for. “Consumer awareness of how businesses operate has been growing for years, and now as an individual consumer there are a lot of ways you can make and sell your own stuff,” she says. “That now gets combined with people asking themselves, ‘Why do these chief executives get paid so much when they’ve messed up so thoroughly?’”

No moral message
Amid the rhetoric of turmoil and transformation, it’s worth keeping in mind what hasn’t happened as a result of the recession, as well as what has. The experience has not, for instance, served as a moral fable for consumers to the extent that it could have. Kasriel says: “The way the recession has been post-rationalised and deconstructed, the moral fault is seen to lie with the people who were over-lending rather than the people who were over-spending.” As a result, consumers do not feel morally compelled to behave differently next time someone offers them cheap credit.

More generally, the crisis has not been enough to shake “the idea that consumption is at the heart of what we are”, says Kasriel. She reminds critics who might characterise rampant consumerism as a distinctly late twentieth to early twenty-first century blip that Zola was writing on the topic in 1883, in his novel The Ladies’ Paradise. The idea that we are what we buy may be more difficult to come back from than some have imagined, a situation summed up for Kasriel in the famous L’Oréal slogan ‘Because you’re worth it.’ “Once you’ve told people that,” she says, “it’s impossible to say, ‘Well actually, you’re not.’”

Ben Page, CEO of Ipsos Mori, says that while there have clearly been big changes in consumer behaviour as a result of the recession, underlying attitudes have shifted “much less than some of the rhetoric that was around at the end of 2008 and the beginning of 2009 might suggest”. Obviously people are being more careful about what they buy, but “the idea that somehow we’ve become more caring, sharing and averse to bling as a result of the crunch is probably overstated,” Page says. “Certainly in terms of people’s social values we haven’t seen any major shifts.”

How much has changed?
Ben Steer, too, believes the recession’s impact has sometimes been overstated by researchers looking for answers. “I question how much people have changed in the sense that they think, ‘I shouldn’t be doing this,’ and how much they’ve changed because the financial services industry has imposed change upon them,” Steer told Research. “I think the way people’s choices are forced, either because things aren’t presented to people or because things are actually removed from availability, probably has had quite an effect, and yet we’ve not had much of a way of measuring that.”

Researchers also risk tripping up on consumers’ surprising ability to divorce their own personal experience from their views about what’s happening on a larger scale. A study done this year by BDRC found that while the number of people to have suffered economic adversity varied between demographic groups, the percentage who felt ‘cautious’ is remarkably consistent across all groups at around 50% - showing how the psychological impact of recession can be independent of personal experience.

“One of the anecdotes we always tell,” says Steer, “is that when we conduct qual research, it’s very easy to get people started on how they feel about the banks, and they’ll all sit there and agree, but when you flip it over and say, ‘Who do you bank with? How’s your bank?’ then they say, ‘I’ve had wonderful service, my local branch are wonderful.’”

It’s not over yet
In the UK, the next challenge will be to understand the impact of impending public spending cuts on an ageing population. Ben Page describes the events of late 2008 as “almost like a nuclear bomb went off, that nobody noticed very much because the government reflated the economy”. But the effects of that explosion will be felt now, as the government scrabbles for the savings required to service its colossal debt. Page believes the consequences for consumers “might have every bit as much impact as the recession itself”.

The build-up to the spending cuts is already providing us with more examples of rhetoric that needs to be weighed up against reality – critics might say, for instance, that David Cameron’s talk of cuts “changing British life” and chancellor George Osborne’s claim (not supported by official forecasts) that the country’s economic situation is “worse than we thought” were self-serving.

Perhaps the best way to put the post-recession world into perspective is to consider that the situation now is no less ‘normal’ than it was before the credit crunch. “One way to look at it,” says Page, “is simply to see the ten years before 2008 as an odd decade, and now we’re going back to Britain as it normally is: a bit dirtier, a bit shabbier, perhaps a bit mouthier, and perhaps that’s just how we are.”