Is Marketing Moderation the New Consumerism?
Posted 22 June 2021.
Written by Rupert Price, Chief Strategy Officer at DDB.
Consumerism, the driving force of any capitalist economy, relies on the encouragement of consumers to consume more to deliver growth. Whatever was achieved last year has to be exceeded this year. If a business and therefore an economy isn’t growing then there’s trouble ahead.
Economic growth has always relied on the following conditions:
1) Tomorrow will always be better than today.
2) Those who benefit most from economic growth will re-invest that benefit back into the economy.
3) Resources are infinite and will never run out.
However, as we stand here in a Covid/Post Covid World all three of these principles must be called into question. First, if 2020 has taught us anything, for reasons beyond our control we can’t rely on tomorrow being better than today. Whereas most recessions of the past are caused by a major drop in demand, in 2021 the world is contemplating a global recession caused by a downturn in supply. With factories and supply chains still in and out of lockdowns across the globe, there remains a significant drop in productivity which in turn delivers a significant lag in getting product and services to consumers. For example, the worldwide demand for computer microchips is currently out stripping supply. In turn consumers might just have to get used to going without.
To the second driver of growth, the trickledown effect of those most benefiting then re-investing in the economy is another cause for concern. In the last twelve months here in New Zealand we have seen a flight to invest in property that even exceeds even our (in)famous Kiwi obsession with homeownership. As any first-time buyer will tell you the property supply is not increasing to keep up with demand, so as prices rise more money is taken out of the economy. Unfortunately, that is the money that could have been invested in developing new products, services, technology, innovation and beyond; all things that genuinely grow GDP rather than just move money around. We are in danger of creating a ‘rent’ economy, whereby no real organic growth in economic productivity is generated but instead the inflating value of existing assets masks the underlying problem – a lack of topline growth.
To the third point. Of course, sustainability has been dominant theme in business for over a decade now but with acute issues in the constraints on supply of products and services, finite resources will come under even greater pressure than ever before. Businesses may be forced to take ‘short cuts’ in the integrity of supply in order to keep their operations moving.
So, as we marketers contemplate a second year of a global pandemic and beyond, do we see only trouble ahead or is this perhaps an opportunity to change the conversation? Instead of relying on ever increasing consumption to drive topline growth, perhaps we can create value in the concept of consuming less? Have we now truly entered the era of marketing moderation?
Brands have always been based on intangible value. It’s the intangible difference between one brand and another that separates the tangible product from another. 2021 might be the tipping point that creates the opportunity to step away from relying on the demonstrable differences in products and services and instead create even more intangible value for brands. Could built in responsible ‘prudence’ of a product or service give a brand greater desirability as opposed to its irresponsible imprudence?
For a long time, brand owners have admired the audacity of a brand like Patagonia which encourages its customers to recondition old products instead of buying new and in doing so increases the desirability of the brand. IKEA has just opened its inaugural second-hand store in Sweden, is this another example of a brand that has cracked the ‘moderation’ code? Will we soon get to a point where goods in the IKEA second-hand store hold a greater intangible value than brand new products in the established stores and in doing so can charge a price premium? Imagine what that means for marketers.
As we enter a world where scarcity and irregularity of supply might become a regular occurrence, (an inconceivable thought for most people who have grown up in a consumer landscape of abundance) should brands be thinking how they can imbue greater value for consumers in having less rather than having more? In doing so can they grow brand value without having to grow brand volume?
Let’s hope so.