Back To Basics

Do lower prices mean lower standards?

Related Links

He's Not Special, He's Marco-Pierre White - Unconventional wisdom of chef who thinks recession is obvious time to open restaurants

Can Recession Clouds Have Silver Linings? - We speak to two local companies about opportunities the economic downturn presents

Michelin Warns Of Challenging Times For 2009 - And urges customers to continue to support their local pub or restaurant

Participate,,,,,,,, and

You hear the phrase as often as your hear ‘credit crunch’ but the real meaning of ‘back to basics’ is actually ‘a return to previously held values of decency’.

Not sure about decency, but household names in every sector are looking at ways of going back to basics by launching new ranges of products or services focusing on low-value variants.

Starbucks recently launched an instant coffee, Via, which claims to offer the “same flavour and value” as its in-store drinks. According to Marketing Week, the decision to launch the instant product, which will be stocked in supermarkets as well as Starbucks branches, is a sign that the coffee company wants to be perceived as less premium to attract people who are turned off by the company’s high prices. Chief executive Howard Schultz admits it is a “considered bet for us”.

The restaurant sector is the one where some of the biggest consumer migration is being seen, away from upmarket eateries to those offering value for money. Marketing Week states that ‘While most business sectors are slashing jobs to survive in the recession, fast food restaurants are adding jobs. As consumers trade down from gourmet burgers and premium pizzas, fast food companies are taking advantage by offering vouchers for cheap meal incentives in newspapers and promoting “value saver” options in stores.

Jill McDonald, senior vice-president and chief marketing officer for McDonald’s, says, “McDonald’s has captured the mood of the moment because we are seen as an affordable and accessible brand, which makes us well-placed to help consumers get through the recession.”

McDonald argues, however, that if other brands are going downmarket in a recession, this cannot be said of her own company. As consumers lower their expectations of what they can afford, she says that McDonald’s is succeeding by improving its products and services.
“Rather than going downmarket, we’ve upgraded the restaurants, the customer experience and the menu. The investment we’ve made makes for a rather potent cocktail of success. We’ve upgraded our brand if anything,” she claims.

But rival KFC argues that focusing on basics and value is the way to go. Chief executive Martin Shuker says that the company is lucky enough to have the right products at the right price to appeal to cash-strapped consumers. “It’s not any different to the usual offering but it provides consumers with a form of comfort when they are out and about,” he says. “In these difficult times, the focus has to be on value and helping out consumers.”

April 30, 2009