Faux Frugality: Are Consumers Really Any Different?

by , Oct 23, 2009, 4:48 PM
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While much has been made of America's newfound thriftiness, a new study suggests that shoppers are less focused on price than most marketers think.

"Marketers are very focused on the word value, but have very little sense of what that actually means to consumers," says Jarrett Paschel, VP at The Hartman Group, tells Marketing Daily. "Everyone assumes it must be something about the way consumers are trying to save money. But that doesn't mean we've entered a new era of frugality."

As part of its study, "The New Value Paradigm: Theatrics of Thrift," the Bellevue, Wash.-based market research company asked consumers to rank 25 different statements about grocery store products. "It works well/tastes good," came in No. 1, he says, followed by concerns about waste, such as "Will this product actually be consumed in its entirety by my family?" "Price only came in at No. 6," he says.

For example, one of the items that ranked poorly in its research was a Costco multipack of chips. "While everyone said their family ate the BBQ and other flavors, no one ate the blue cheese or ranch. Although the price was very low, consumers saw it as having a poor value."

That means marketers have to take a closer look at consumers who say they are more than willing to trade down, but don't actually do so. "We found they are even willing to pay a little more for a product they believe they will use fully," adds SVP Michelle Barry. "Waste is something they see as costly."

Barry believes that while consumers are managing their economic anxieties with the pretense of saving at supermarkets, by using shopping lists and coupons, the actual amount they are spending on groceries, and the items they purchase, aren't all that different than what they tossed into their baskets before the slump started.

As a result, while marketers all around them are predicting that these sweeping changes will stick, "we think, in terms of food, that consumers will come out of this recession with little in the way of changed habits," she says.

Certainly, families are spending a bit less, but often in ways that are not related to the recession. A big example, says Paschel, is the sharp decline in bottled water purchases. "It's not that shoppers see the product as overpriced. They say they are no longer buying it because they see it as unnecessary, and out of fashion, neither of which are related to the economy."

The company's research also revealed consumer fatigue about all things economic. "They don't want to hear any more that companies understand how worried they are, and that they'll lower prices," he adds. "What they are responding very well to are marketing efforts that surprise and delight them," he says.

One example, he says, is the "Feel Good Ripple" created by Servus, a Canadian credit union. The bank recently gave away $200,000 to customers in $10 increments, with the admonition that the money had to be used to make someone else feel good. At the same time, it launched a contest, in which people could share their "Feel Good" stories and win prize money for their charities.

Another example is the way Burger King introduced its Apple Fries, by delivering samples to bloggers. "So many other companies would have sent a coupon," Barry says. "But smart marketers are looking for unusual promotions to spark excitement, and really evangelize people."

3 comments on "Faux Frugality: Are Consumers Really Any Different? ".

  1. Allyson Hugley from MS&L
    commented on: October 26, 2009 at 12:15 p.m.

    While the headline is attention-grabbing, I think the idea of "faux frugality" as presented in this article misses the mark. Consumers have changed how they manage household income and price is only a small part of how purchase criteria have evolved since the start of the recession. Frugality has more to do with not being wasteful and spending smart, than price. Waste is the issue. And, consumer "frugality" (as defined by Webster -- "not wasteful") is far from faux. Consumer want to get the most for their money and that goes well beyond purchasing the cheapest product.

  2. Amy Fanter from Odds On Promotions
    commented on: October 26, 2009 at 12:24 p.m.

    Well put Allyson! Frugal shopping is smart shopping = not being wasteful. So yes, consumers are being frugal ... they are being smarter with their money. Dont confuse frugal with cheap/tight.

  3. Nina Lentini from MediaPost Communications
    commented on: October 26, 2009 at 5:19 p.m.

    Point well taken, Allyson! Thanks.

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