During the time of crisisA trend watching project: JWT Planning Bangkok

May 2009

A series of bad news

Coup in 2006

The soaring oil price

Collapse of global economy

The rising number of unemployed

Airport shut-down

The continuation of RED/YELLOW

The series of bad news has been bombarding Thais consumers since 2006. Four years of domestic problems have been made worse with bad news from outside like the collapse of the world economy, the so called

“hamburger crisis”.

The various sources of this economic crisis has caused uncertainty which led to increased anxiety among consumers. People are panicking, depressed, worried about their situation. Moreover,

statistics also show that property crimes have increased during the crisis*.

Source: www.anxietyindex.com, www.madconomist.com

The effects of recession on consumers

Consumers are seeking ways to survive through the economic crisis. According to this study, they are doing what we call the (+) and (–) tactic. The cutting down of what they perceive unnecessary while finding ways to earn extra money.

What they have cut

Luxury coffee

Carbonated drinks

Fashion items

Picture printing

Eating out

Real estate

New car

The ripple effect of this economic crisis even reaches temples. A study in a KonKaen temple shows that people visit temples less frequently and now donate less money than ever during the economic crisis.

Source: http://www.phrathai.net/node/1287

The lipstick effect* that surprised marketers during the 90’s crisis has had no effect this time. Some experts say that it is a proof of a worse than ever economic downturn.

Source: http://www.businessthai.co.th/content.php?data=413256_Advertising%20Age

*buying little treats, like lipstick, even in a downturn

And they utilize their money more

They are more carefully selecting ways of saving by trying to find the best offer giving them better interest or investing their money in the least risky methods like buying government bonds or in the government saving lottery.

More examples of recessionary effects from

around the globe

Making lunch box is not longer a female thing anymoreIt used to be a rare sight to see men making bento for themselves—they preferred cheap and easy convenience store options or restaurant lunch specials . That’s all changing as they try to curtail their spending . Since they don’t want to cut back on their interests and hobbies, young men are finding other ways to save . Alcohol consumption is way down compared with men 5 or 10 years older, and dramatically fewer young men own cars (once a prerequisite for dating ).

Repair business grows in Philippines In times of difficulty, consumers count their bles

sings—and count what’s in their closet. Someho w, that old thing can be made new again. Mr. Quickie, the Philippines’ pioneer in shoe

repair, is heavily advertising franchise ownership in commuter-friendly channels like the MRT train radio or PA system, touting the

franchises as “recession proof.” And a growing number of small businesses in Manila are

offering clothes repair and renewal . Carol, a consumer who is a heavy user of the Alterations Plus retailer, says that adding an updated collar or cool button to a beloved old jacket or dress

“makes me feel I have bought a new wardrobe!”

“Shoe me the money”

The coupon momWith a personal interest in saving money, now

Stephanie Nelson has become a celebrity among moms who are seeking way to survive during the economic crisis. She is the owner of what the media calls “strategic shopping” or how to use coupons to save money on buying things. And now she is sharing her secrets to

other moms.

How brands react to the economic crisis

Many brands are struggling during the crisis and all actions that require spending money are often put on hold. Is that a

right decision to make? Many experts say no and provide much evidence that brands should continue their spending to increase share of mind and brand strength when others are

giving it away.

But hey don’t believe in the experts words just yet since there is some caution that needs to be applied before falling into the too optimistic trap!!!

Pepsi wanted to gain back their dollars after the market of carbonated soft drink has been continually

decreasing due to the effect of health-conscious trend and the economic recession. They launched a new

product, Pepsi Green, with the hope that it will somehow catch peoples attention and consequently

help push up their share. Things didn’t work out in the way they expected. Pepsi Green was not only unable to increase share, it was also unable to grab market

attention.

Source: http://www.thannews.th.com/detialnews.php?id=M1724121&issue=2412

However, what the experts say is still right that spending is one of the key successes during a recession. But what really determines the success is the activity the brand chooses to do. One expert says that there are three kinds of brands that can successfully

survive during tough times.

“Brands that help people earn

money”

“Brands that help people save

money”

“Brands that help people access

money”

Makro, the hyper-market, is one example of a brand whose activity resonates with the current consumer’s state of mind. It offers consumers large savings with bulk buying. They also focus their effort on food vending category since they predicted that people will take a food vendor career after been laid off. They have proved their theory and now they are expecting a 20% sales increase at the end of this tough year.

Unemployment set 1

The blooming of economy mobile phone market has been witnessed for the last few years even before the crisis. However, the competition in this market is getting more fierce after recession hit town. Nokia has launched affordable smart phones like E63 while JayMart, the giant mobile phone distributer, launched its own brand jPhone with a 14 days satisfaction guarantee.

Fighting with house brands, Kleenex, the premium facial tissue brand, is trying harder to maintain their market share

during the crisis. They just launched the loyalty campaign with compelling rewards

with the hope that people will still buy their brand instead of others.

The soaring of credit card debt in Thailand has inspired Get 102.5 FM, the popular radio

channel among office workers to launched the 3rd Get Credit Card Clean project. The project will clear all the credit card debt for the lucky winner whatever the sum is. And it is so easy

to join the program by sending SMS to the provided number and listen to Get 102.5

whether your name is chosen or not. The radio get audiences while the audience get freedom.

What a win-win situation.

There were only a few Japanese restaurant chains in Thailand and price per head is about 250 Baht+, at least before the launch of Yayoi, the new age of Japanese chain restaurants that offers affordable price per set (120 Baht including drinks). The opportunity from filling this pricing gap together with the popularity of Japanese foods among Thai people, Yayoi has been easily established in the market and quickly increased the number of meals sold with very little marketing support i.e. only TV Tie-in during the launch.

More examples of brand reaction from global view

The Stop & Shop grocery storeDuring the recession, people are looking for

shopping options in an effort to save, for example, they are changing their shopping locations to

discount stores and wholesalers. This is why the Stop & Shop now teaches people thriftiness ideas

during the economic crisis. They offer “an affordable food summit” in an attempt to help

customers lower their grocery bills. They are trying to make sure that people can afford their products and hence do not take their business somewhere

else.

The Bailout Bitter beer - With government financed corporate bailouts domi

nating North American headlines, Howe Sound Brew ery in British Columbia is selling an ale it’s calling

Bailout Bitter with the slogan “Bitter ale for bitter ti mes.” The beer is usually offered at a lower price th

an other house brands. People do tend to drown their sorrows in a recession

: Alcohol sales are generally resilient in tough times, with people more likely to frequent bars—and some

sectors of the alcoholic beverage industry are curre ntly seeing a spike in sales. While there are serious

socioeconomic implications to this trend, times of cr isis also cry out for humor and a lighthearted view o

n what’s in the news. By doing just this, as well as of - fering a much needed cost incentive, Bailout Bitter

helps remind us that things will invariably get better .

Phones and homes for free!With Egypt’s biggest mobile service providers, MobiNil and Vodafone, neck and neck in the market, a new company is trying to gain a foothold with a

promotion that some consumers might find hard to resist : Etisalat promises to pay customers’ phone

bills every other month for six months.And Palm Hills Developments, one of Egypt’s

real estate giants, has come up with an interesting twist on “free” as competition in the real estate market continues to tighten . The offer is “Free Homes” to customers—the catch is that buyers

actually pay 80 percent more for a property than its going price, receiving an investment certificate with each installment paid . When the installments are completed after seven years, property owners can cash in their certificates, which will be worth

the total property price . At least in the short term, it’s a clever way for Palm Hills to raise cash and

attract investors.

In summary…

Just like the Chinese character for crisis reads, crisis composes of two elements which are danger and opportunity. It depends on how you take it and how you react to it. Great understanding of consumers and how they choose to survive during the crisis opens the way for brands to develop marketing activity that resonates with consumer’s behavior.

The success or sales increase should not be too far to reach after all.

Thank you

Planning Department