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Value Is The New Green

Until recently, being green was the best way for companies to demonstrate a sense of social responsibility, and for consumers to feel good about their purchases. Healthy food, hybrid cars, energy efficiency -- these were the attributes that burnished brands.

But now green is taking a back seat to a new core value -- value. Green hasn't gone away, but companies are having to consider their "value" equation to try to serve the millions of consumers who either can't afford premium experiences, or just don't want them anymore.

The financial crisis we are experiencing changes everything. Like the recent pop song "Hot 'N Cold" that complains, "you're in and you're out, you're up and you're down," the success of products and brands is being reshuffled as consumers re-examine the choices they are making.

So here's a call to all companies: evaluate everything you are offering consumers to see how you can infuse the value of good value into your brand. And get as passionate about it as you've been about becoming green.

Starbucks is a great example of one of the world's greatest success stories being upended by the new times. Its guiding idea was to give consumers not just a cup of coffee but an integrated experience filled with intoxicating aromas that made customers feel great about paying extra for a grande latte. But a new, fearsome competitor has come on the scene -- McDonald's. They say, skip the experience and savor just the coffee and save your cash. Two years ago, Starbucks was flying high. Today it is struggling against the value-based competition.

Or look at the airlines. The ones who have been able to make money have offered more for less, not the opposite. Flagship airlines like United went through bankruptcy emerging in 2006, while value carriers like JetBlue and Southwest have been far more successful. They not only offer the same basic transportation, but actually offer more up-to-date services like satellite TV in every seat, more organized boarding processes and better customer service. The so-called flagships have failed to invest in keeping pace, even while charging higher average fares.

In clothing, Saks Fifth Avenue and Ann Taylor are reporting double digit declines, while Wal-Mart is showing an uptick in sales. A 26% drop in Saks sales at the same time there is a 5% increase in Wal-Mart sales shows that people are not just holding off, they are trading down.

The economic climate also affects people's emotional choices. Designer fashions are facing significant hurdles because even people who can afford them don't want to be seen wearing them at a time of rising unemployment. They want to be seen in simpler, less fancy and less costly clothing. When people get in this mood, a sale is not enough – the brands have to show how they are changing with the times and offering new lines that meet their new tastes. On the men's side, Brooks Brothers has been emphasizing great value for pretty fancy clothes; it will be interesting to see how they do in this new environment.

But beware of being regarded as simply cheap. Target, while holding up well, isn't reaping the same rewards as Wal-Mart. The trick in setting a "value" proposition is that brands need to avoid the trap of simply being less expensive without providing the right level of quality. Those who might be called "swing value shoppers" are looking for just the right blend of quality for less; they want to feel smart and satisfied, not exuberant with a drained wallet.

Hybrid cars sit at the nexus of value and green. They give the consumer a sense of smart satisfaction in buying even a higher-priced car, so long as it saves money in the long run, and the planet, too.

The fast food wars are a good illustration of how some companies have figured out how to infuse their brand with smart value. The dollar menu at McDonald's drives a huge part of not just its sales, but also its image of affordable nutrition for millions in the U.S. and around the world. Even KFC had to compete with its group meals, adding $1 offerings and $3 per-person meals for five.

This is by no means just a North American trend. Hundreds of millions of people in China, India, Brazil and elsewhere are still trying to join the middle class, and companies have been focused on value in these developing markets. They can import that knowledge back to North America.

And companies can compete experience to experience. Bowling could repackage itself to try to make a comeback against the movies, offering a value entertainment experience in a night out for a family. Quality casual restaurants should see a surge while the very high end should see a retreat, especially during the week.

Whole Foods could find renewed challenges from conventional stores and from Trader Joe's. Like Starbucks, Whole Foods provides a high-end experience for more. Trader Joe's also sells organic and natural foods -- but in dingier, offbeat locations and for lower prices. Whole Foods' passionate fans are unlikely to switch, but the "swing" shoppers may reconsider whether they want to pay for all that experience.

This certainly spells trouble for a wide swath of experience and luxury brands for what could be an extended period, unless these brands figure out how to adapt. History shows these trends go in cycles, and luxury always comes back. But we are in a new age of continually declining costs of technology and manufacturing, which could mean the price of luxury will keep declining.

The quest for value is critical in the new world we live in, and it's not just about saving money. It's becoming an issue of social responsibility.

Take some time this week to think about, How green are you?

Have a great week unless you chose otherwise.

Drago

PS - We just finished 10 New TV spots for Mattress Mattress and received the following comment from Eric Buchfink (President & CEO) "We just came off our best MAY ever ... up 8% over May 2008 which was a phenomenal May." You can view three of them at AdamAdGroup.com in our video section.

PPS - With almost 20 projects on the go and several in the pipeline we are beginning to see a trend with our clients preferring 3D as their choice of digital media production. Nowhere is this more apparent than in our new show reel, which we would like to share with you this week.
Click Here!

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