Is affordable luxury really gone?

Goodbye Seduction, Hello Coupons
By STEPHANIE CLIFFORD and STUART ELLIOTT
SASHA TSYRLIN is a location scout who has spent decades finding sites to film television commercials. He used to spend his days in mansions and gated estates.
“You would go to big houses and pretend this is how the average American lived,” he said.
These days, his job is significantly less glamorous. Now, advertisers want their commercials filmed in homes meant for middle-class or even blue-collar families, Mr. Tsyrlin said.
“The client always seems to have an emphasis on, ‘A house is too fancy,’ ” he added. “They say, ‘Well, we don’t want the audience to think that only rich people can afford our product.’ ”
As the economy rapidly deteriorates from flourishing to floundering, marketers are scrambling to remake their advertising so products seem affordable and sensible rather than indulgent and fabulous. For many big marketers, including automakers, retailers, consumer product companies and even financial services, a major shift in consumer psychology spells an end to the aspirational advertising that has dominated their campaigns for the last decade.
There is a sense that expensive purchases — even if consumers can afford them — have become gauche, said Stephen J. Hoch, professor of marketing and director of the Jay H. Baker Retailing Initiative at the Wharton School of the University of Pennsylvania.
“At times like this, you don’t want to be as conspicuous,” Mr. Hoch said. “It’s really rude.”
“Since when is overpaying a status symbol?” asks a magazine ad for the 2009 Borrego sport utility sold by Kia Motors America. Prices for the Borrego, proclaimed to be “a new kind of luxury S.U.V.,” begin at under $27,000.
A campaign from Procter & Gamble compares a product that is part of its Olay line of skin care products with more costly alternatives.
Olay Regenerist Micro-Sculpting Cream, which costs less than $30, is “more effective than the department store cream costing $350,” an ad asserts. “(You just don’t get a chic shopping bag.)”
In the recent boom times, Mr. Hoch said, “marketers were hesitant to bring up value overtly because they were worried about it diluting the aspirational aspect of the product,” he added, but now they “have to try something, because nothing else is really working.”
That was a reference to economic data that included the reports last week from the nation’s largest retailers for sales in October. Almost every chain, from purveyors of haute couture to practitioners of the philosophy of piling it high and selling it cheaply, suffered percentage declines that reached double digits.
“We’re starting to see people trade down, cut back on quantities, cut back on quality,” said George John, the chairman of the marketing department at the Carlson School of Management at the University of Minnesota.
Some brands seem to recognize their plight. The Target retail chain, for instance, is striving to play up the “Pay less” part of its long-time slogan, “Expect more. Pay less.”
New television commercials look like the familiar Target spots that feature chic consumers reveling in their cool Target purchases. Now, though, there are paeans to the new reality, complete with price tags.
Watching a $13 DVD on the living room sofa is celebrated as “the new movie night.” A $59.99 bicycle is presented as “the new commute.” There are similar salutes to people who eat in rather than dine out, cut their children’s hair and turn a backyard tent into “the new family room.”
Consumer Reports magazine plans to take advantage of that behavioral shift by running ads on Nov. 24 — timed for the start of the holiday shopping season — that will offer a blunt warning about how much times have changed.
“Dear shopper,” the ads will begin, “There is no ‘bailout clause’ in your credit card contract.” The ads are to conclude by urging consumers to avoid “credit card trouble” by consulting the magazine’s Web site (consumerreports.org).
The trend toward frugality is sweeping along even wealthier Americans, or those Americans who still consider themselves wealthy after the last few months.
The well-to-do are “making lists, they’re planning, they’re comparison shopping, they’re starting to think more strategically,” said Pam Danziger, president of Unity Marketing, a market research company in Stevens, Pa.
Even so, she added, “many are simply staying out of the stores.”
So rather than pitch seduction, the perfume Tabu Forbidden is pitching a coupon for $5 off the purchase price. The drugstore remedy Emergen-C is not only about staying “healthy year-round,” it’s about a $1 coupon. Reddi-wip is no longer about creamy indulgence, it’s about saving 75 cents.
On the higher end, Bloomingdale’s is advertising 50 percent off furs. Lord & Taylor is taking 60 percent off the price of diamonds. Expedia is offering a $200 discount to people taking trips around Christmas.
Another sign of the new austerity is a campaign for New York Life that began on Sunday. The ads strongly suggest that the perfect gift for the holidays is not mink or jewelry or a vacation, but rather life insurance, which the ads call “the selfless gift.”
For example, a print ad shows a range of gifts from an ice cream cone (“I like you”) to a necklace (“I love you”) to a wedding ring (“I will always love you”). Under them all is the square blue and white logo of New York Life, wrapped like a present with a ribbon, and these words: “You mean more to me than anything else in the world.”
“As your love has evolved, so have your gifts,” the ad says. “One hundred sixty-three years of experience and the highest possible ratings for financial strength help ensure that your loved ones will always be taken care of.”
In “uncertain times, you stop and think about what matters to you,” said Steven Rautenberg, senior vice president for corporate communications at the New York Life Insurance Company. “People are looking for safety and protection and security and long-term guarantees.”
The campaign, which includes television, radio, print, online and outdoor ads, promotes life insurance “in a way that doesn’t denigrate the other nice things you can do for your family,” Mr. Rautenberg said, but presents it as better than more material gifts.
“This is a message that has special value in times like these,” he added, “but does not fade when the economic clouds clear.”
New York Life plans to increase its ad budget by 25 percent in 2009 compared with what will be spent this year, Mr. Rautenberg said, to get across the idea of “the selfless gift.” The company will probably spend almost $30 million in 2008.
“Consumers right now are feeling very insecure,” said Daniel Rabinowicz, president of the New York office of Taxi, the agency for New York Life.
“We don’t expect President-elect Obama to come out and say, ‘C’mon, America, go shopping for life insurance,’ ” he added. “But we think they’ll be receptive because it has to do with one of the pillars of a family’s financial security.”
To spread the concept of giving life insurance as a gift, Mr. Rabinowicz said, New York Life will do something it has not done before: buy space to run the campaign in the holiday gift guide advertising sections that magazines and newspapers carry in December.
Not all brands can play up value and thrift and expect good results, academics warned.
“Consumers are feeling very differently about their purchases, and they’re feeling very differently about their economic situation, than they did months ago,” said Tim Calkins, clinical professor of marketing at Northwestern University’s Kellogg School of Management.
“The brands that will do well in this environment are your low-priced brands, brands that are very cheap and value-driven,” he added. “The brands that will struggle are the brands that ask people to step up, because people are not inspired to do that right now.”
That means brands hovering between cheap and luxe are “in a really tough spot,” Mr. Calkins said. He and other marketing professors pointed to Coach, Macy’s, Target and Whole Foods Market.
“It’s easy to compete on the low end because you just focus on very aggressive pricing and selling a fairly good product,” he explained. “The top will be O.K., too, because there’s always people in this world with a lot of money.”
“If you’re in the middle, though, that’s where people are going to get crunched,” he added, because “that’s where it gets pretty easy to trade down to the lower-end stuff.”
Will this new mood on Madison Avenue become permanent? After all, ads turned austere during previous recessions, and even during the Great Depression, and subsequently bounced back when better times returned.
“I don’t think that’ll last,” said Professor Hoch of the Wharton School. “We live in a very commercial, consumption-oriented world today, for good and bad, and I think it’ll come back.”