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UK Insights

Learning from the Greek economic crisis

Helena Chari

Executive Vice President, North America

Economy 25.03.2014 / 10:30

Greek economic crisis

The impact of a deeply ingrained recession mentality on brands

Since the Greek debt crisis erupted in 2009, a recession mentality has now become deeply ingrained in the Greek psyche. This 'non-recovery mindset' translates into a crisis of confidence which, coupled with severe cutbacks in household incomes, directly affects consumer behavior in very specific ways: consumers are decreasing their frequency of purchase, spending less, and buying less. Average basket value (or spend/trip) has been on a steady decrease, reaching 17.6 euro. There is now an on-going hunt for value. Consumers are choosing cheaper options - either on promotion or 'downtrading' to less expensive branded or private label options. This presents a huge challenge, brands must redefine how they market their products, extending far beyond advertising, to understand consumers' desire for greater and more broadly defined value.

The mindset and behavioral change of Greek consumers has also brought to the forefront the concept of 'loyalty' (or lack thereof) to brands and retailers alike. Loyalty is a measure that is less and less relevant in the FMCG (fast moving consumer goods) world, and even more so in crisis-stricken Greece as consumers seek value every day. This puts further pressure on FMCG brands and retailers alike and forces them to shift the lens to driving penetration and frequency of purchase.

Top tips for brands looking to learn from the Greek economic crisis:

  1. Do your research. There isn't one recession; there are 11 million recessions, as each individual reacts differently. You're not marketing to the crisis; you're marketing to people's reaction to it. Understand people and their needs.
  2. Shopper marketing is important. Recognising the importance of reaching consumers when they're filling their baskets is hardly rocket science, but it is still often overlooked.
  3. Do not slash marketing spend, instead use the opportunity to try to change and influence people's behaviour while they are reassessing it.
  4. Loyalty is out; penetration and frequency are in.
  5. Continual price undercutting undermines brand equity. It's not about clever positioning; it's about building trust and credibility. Provide consumers with something they want and sell it to them in a way that they will want it from you.
  6. Innovate to create value and innovate your marketing.
  7. Low cost is not cheap innovation, it's not low quality and it's not unbranded. Low cost is a new value proposition.
  8. Open innovation is an opportunity to innovate and increase competitive advantage. Look beyond your boundaries for ideas, partnering with small companies is one obvious source.
  9. Firms have a tendency to utilise information technologies primarily for the limited purposes of automation, cost savings and control. Technology is an enabler to transform your business.

Download the full presentation below.

Source : Kantar TNS

Editor's Notes

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