Meaning still matters in a cost of living crisis
Cost of items is of course key, but so is understanding what people care about
At this point when we are in a severe cost of living crisis, then understanding ‘value’ is perhaps more important than ever. Of course, constrained budgets mean we will seek out low prices, but how should we understand what economists call ‘utility’, the usefulness or enjoyment we get from a product or service.
Does a cash constrained environment inevitably mean that utility takes a back seat to pricing? And what do we really mean by utility and how is that changing? Understanding the meaning and psychology of value seems an important topic to get right at this difficult time.
If an item is of acceptable quality at a lower cost than other comparable items, then we would consider it to be ‘good value for money’. For many people, value will often necessarily have to be about price. The cost side of the value equation is clearly under a great deal of pressure which is only going to increase.
Brands are having to deal with huge inflationary pressures on the cost of raw materials and manufacturing while at the same time being aware that people have reduced spending power. The cost side of the value equation is one where there will be less room for manoeuvre.
So looking at the utility side of the equation, it is surely the case that in a less cost constrained environment then we can make choices which offer us hedonic outcomes (such as exciting, pleasurable). This is classic marketing operating in a way that shows the hedonic payoff from making certain choices. We can choose between different options for slightly different flavours of pleasurable outcomes. I can browse the aisle for different types of chocolate bar to deliver a hedonic ‘hit’.
However, for many segments of the population, a key change due to increase in cost of living is having to make choices that are less desirable: in other words, we are in a position where we are less able to buy items that satisfy our functional needs. Scarcity of time and money means that more substantive needs, such as basic food and heating, necessarily taking priority.
Of course, some things endure (the so called ‘lipstick effect’ where a few low-cost items are retained for pleasurable outcomes) but, overall, affect based purchases are likely to be under pressure.
Perhaps the environment is leading us to rethink what we mean by utility. One route is to consider it is now less about delivering hedonic outcomes, and more about a means reflecting what we care about, what is significant for us.
To explain what we mean by this - I may decide to buy soup and look for comparable items to find the cheapest option available – on that basis then value is driven by cost. But if I care about natural ingredients then, budget allowing, I will be more likely to consider the value of my soup as being greater if it is made from organic produce. Of course, for another person, they may not care about natural ingredients and as such there is little or no utility for them in this choice.
And regardless of how much or little money we have, of course we all continue to have things that are important to us, that we care about. For example, we all want to be seen as a person of significance, regardless of our social position. An example of this is the way that teenage mothers can have a very careful marshalling of resources, in relation to their spending choices to purchase visibly high value baby items (such as high-end buggies) to avoid public further scrutiny and negative evaluation, as such working to secure a legitimate maternal identity.
So it is important for brands to think carefully about what we care about – because this then reflects how we ascribe value. But what types of things do people care about and therefore value, outside of cost?
The utility of purpose
In many ways this is linked to a wider set of considerations about ‘purpose’, a topic that has been met with a fair amount of controversy it is fair to say. We can take a broad definition of purpose to reflect the things that people are concerned about and for which engagement with gives their life meaning. From the above example, showing people that you have a legitimate maternal identity is an example of what we mean by this.
Of course, there are more familiar ‘purpose’ themes relating to sustainability, gender equality, BLM, LGBTQ+ to name a few. But what is important is understanding how these relate to the way that consumers understand the world and what they care about. They may care about these topics but other issues may have a more immediate and higher priority. Or there maybe articulations of these topics that make sense and they care about.
The overarching point is that we need to think carefully about what people care about, understand what offers meaning to them and how brands can go about meeting this. People seek to make sense of their lives, are motivated to have a meaningful existence and not simply survive.
As such we see a new era of ‘meaning based marketing’ in which we start to use tools such as ‘WISE interventions’, techniques for delivering meaning by facilitating people’s understanding, sense of personal competence and sense of connection to others. We consider that this new era in marketing will require a much more purposeful approach which is highly centred around a deep sensitivity towards the very real issues that are the focus of what people care about and give meaning to their lives.
Brands looking to find ways to create value will inevitably be focused on cost but inflationary pressures are reducing room for manoeuvre. So, we are thrust onto the ‘utility’ side of value which has often been looked at in terms of hedonic ‘rewards’.
If conditions are such that the hedonic elements of utility are also limited, then we argue the importance of seeking to understand what people care about. This is a subtle but important reformulation of the ‘purpose’ agenda. What are the things that help give people’s lives meaning and significance? Do we know enough about what these are and how we can meet them? In many ways this is linked to a broader ‘Wellbeing’ agenda that we will be discussing in future posts.