“The next consumer revolution has begun,” states Clara Hendon of Sterling Brands (http://sterlingbrands.com). This is one of the trends that she presented to attendees of the Destination Design Management conference this month in Huntington Beach, California. Ms. Hendon highlights the following trends: 1. for consumers, it’s re-evaluation time 2. brandicide – a trend on the rise 3. brands out of sync are brands out of favor 4. consumer skepticism – now on steroids 5. make it in america…but make it great 6. at-home incubating – it’s all the rage 7. local – the connection that matters 8. addiction to discounting can hurt a brand 9. the next consumer revolution has begun 10. from frivolity to frugality

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2. Introduction
overview
 predictions for key themes influencing branding for 2009
 snapshot of consumer mindset today
− hopes, frustrations, feelings, values
 how societal shifts may influence relationships with brands
 raw hypotheses vs proven phenomena
our inspiration
 qualitative assessment by sterling strategy team made up
of our “road warriors” - brand strategists, researchers and
planners
− 1,000’s of consumer, client, employee interviews
− multiple categories and businesses
 year end download of common themes and patterns
they’ve seen in the marketplace which serve as our
foundation for our predictions the following year
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3. Who we are
we’re a leading marketing and branding agency,
formed in 1992, and a member of the Omnicom
Group of agencies
we deliver inspiring solutions that drive brand
growth for our clients
we are catalysts that stimulate your brand in order
to create real impact in the marketplace
we work with corporate and consumer brands and
operate nationally and globally
we have a staff of 90 professionals in the US
new york san francisco london singapore
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4. The path of our practice
strategic consulting
 positioning and innovation
market research
 ethnography, qualitative, focus groups,
quali-quant, quantitative, online, offline
brand design
 design intelligence, corporate and brand
identity, collateral, packaging graphics and
structure, naming, web site design
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5. In a wide array of industries
household
cpg
retail
media
entertainment
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6. We know brands and
consumers really, really well!
2008
600 80+
in-facility consumer industry, category
6,800 1,035
discussions and competitive
analyses
consumers on-location
interviewed consumer
face to face discussions
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9. From conspicuous consumption to serious re-
evaluation…be prepared for fundamental and
radical new thinking about brands.
 2009 marks the first year after 30 years of
conspicuous consumption and consumers are
seriously re-evaluating EVERYTHING
 cataclysmic series of events brings us to our
senses - energy crisis, environmental instability,
economic meltdown and ethics in shambles
 as a country, we have been left financially
overstretched and this causes the ultimate
anxiety and stress
 a coming back down to earth…this is “not a
lifestyle for me anymore”
 President Obama has called for “a new look at
ourselves”
 many forced into re-evaluation given the loss of
a job/home
 everyone is going through “mid-life crisis”, no
matter what age you are
 this is a paradigm shift from spending to
simplicity
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10. Calvin Klein’s new “one” campaign
is perfect for these times”:
implication for brands
 expect and respond to real and
permanent behavioral change
 those who are waiting for
things to return to ‘normal’ are
in for a serious disappointment
 we’re in this all together
 remember that RELAXING is
now what is EXCITING
 keep your consumer closer
than every
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12. “Brandicide” = brands that bring
about their own demise.
 inevitable by-product of recessions
 those that lack the strength, skills and
smarts to survive…Darwinism in action for
brands
 much “brandicide” is self imposed – because
the brands are undifferentiated, mismanaged
and using the same management style in bad
times that they did in good ones:
− Lehman Brothers, Merrill
− Chrysler/GM
− United
− Budget
− Circuit City
− Fortunoff
 discriminating consumers are outing brand
fakes and, as in human nature, moving away
from sinking ships
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13. Page from Lehman Brothers website
announcing bankruptcy:
implication for brands
 have passion in your craft
 have genuinely different
things to say
 focus and differentiation is
paramount to brand
survival…just look at Apple
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15. Brands must align themselves with
the mood of the nation.
 the consumer is more sophisticated than ever
and knows instinctually what a brand can and
can’t be
 align though positioning and overall ALL
marketing activity
the good:
 Wal-Mart’s “save money, live better”
message… “ live better” along wouldn’t work
 Target’s ironic take on surviving the economic
crisis
 Hyundai’s Assurance campaign
the bad:
 Citi’s “live richly” campaign…out of tune, very
quickly
 AIG $500K retreat at a posh Californian
beach resort
 LG tagline “life’s good” has already been
back-burned
 “Life is Good” clothing brand might want to
consider renaming themselves “Life is Not
Good”!
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16. Wal-Mart has its day in the sun and
their new logo supports a justified
optimism:
implications for brands
 constantly check in with
the marketplace mood
because it is changing
daily
 consumers will weed out
brands that aren’t in sync
with the country…so get
in sync!
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18. Consumers are starting from a place of
mistrust and scrutinize claims, promises
and benefits…thanks to the internet.
 this is an entire generation that has been
bombarded with ads and brand messages
their entire life…they simply don’t believe or
trust what brands say about themselves
 fuelled by rampant fraud (Bernard Madoff)
 fuelled by quality scares (China)
 fuelled by greater access to opinions and
critiques (Yelp.com, Twitter)
 skepticism about bold claims without specific
support data (greenwashing)
 consumer doing even more research
 less reliance on company created marketing
− third party endorsements easy to access
and more credible such as Consumer
Reports, AMA and Good Housekeeping
− peer group endorsement becoming
more important
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19. Benjamin Moore’s green standard badge
exudes quality assurance and
transparency:
implication for brands
 this is a PERMANENT consumer
change, so house-clean to strip
out the “claim-fluff”
 delight your brand
champions…your best
advertisement (but you have
to find them!)
 be transparent, focus on
making your product excellent
and be passionate about your
brand because this is infection
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21. Economic crisis encourages more
patriotism in our purchasing behavior.
 this is a common reaction in times like this:
recession, jobloss my the millions, new party,
new president
 what is different this time around is access to
information on the internet…and this has
changed EVERYTHING
 growing apprehension about our dependence
on China
 deep desire to make cars…in America for
America…BUT only if the product is as good as
it is overseas
 steel is the latest industry to seek help (expect
a rise in “protectionism”)
− asked for “buy American” clause to be
added to every provision
 promise of massive domestic infrastructure
investment
 President Obama: “the best thing in America is
when we come together as a society in times
of crisis”
 economic and environmental incentive
− supporting local industry
− reducing carbon footprint
21

22. Love it or leave it, Pepsi’s new logo
and tag line celebrates America and
change:
implications for brands
 leverage domestic
credentials where we can
 do not exploit patriotism…a
form of emotional
blackmail
 the finished product must
be as good as the best
from abroad
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24. Faith Popcorn’s concept of “cocooning” in
the 90s has resurfaced 20 years later as
“incubating”…the new “wired safe house”
allows us to hunker down, retreat, conserve
and be productive.
 learn new skills
 online shopping
 self-education
 building stronger social networks and family
connections (facebook)
The passive pursuit of cocooning is being
replaced by more active incubating.
 growth of educational brand Rosetta Stone is a
prime example
popularity of games like Wii that develop skills

as well as friendships
growth of “from scratch” and gourmet

cooking…self-trained connoisseurship
success in instructional websites, university

course, videos and magazines and DIY
growth of the slow food movement and the

return of the pot luck dinner party
careers are born - learn a skill, order the

supplies, sell on etsy.com or ebay
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25. Explosion of activities and
education for the home:
implications for brands
 consumer’s new activity
of “incubating” presents
extraordinary
opportunities for brand
growth
 so explore and promote
your role in “home-living
& learning”
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27. When consumers fully understood the
gravity of the economic crisis in the fall of
‘08, longtime established spending habits
and patterns literally changed overnight,
taking experts completely by surprise.
Now we’re embracing a culture of thrift,
out of necessity and fear, and we’re
seeing this evolve into fun.
 opting even more for store brand products
 sticking with the previous model of short
cycle tech products for longer
 seeking out pre-owned products more than
ever taking business models such as ebay
and craigslist to a new level
 endorsing new no-frills dining from famous
chefs
 being fulfilled by spending less and enjoying
the thrill of being smart about money…we are
buying cheap and used
 “Smart Cookies” book franchise is taking off
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28. Ina Garten gets “back to basics” with
her her new cookbook:
implications for brands
 consumers shifting shopping
habits focus from wants to
Magazines take pride in helping readers
needs
find deals in mass market:
 brands should address
strategic positioning and
executional messaging
 intellectual power will be
channeled by marketers into a
better understanding of “the
science of NEEDS”
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30. All roads are pointing to local, and this
is the purchasing decision that allows
consumers to really make a difference.
culturally:
 consumers are more committed to supporting
their local communities in every which
way…just look at the explosion of farmer’s
markets
 consumers are opting to support their local
shops over chains (wine shop, book store, etc.)
economically:
 this will become even more prevalent when we
experience the next upward spiral in gas prices
making the cost difference from Amazon to a
local book store smaller
environmentally:
 carbon footprint more universally understood
concept with disasters like Katrina make
consumers realize global warming is here now
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31. Climate Counts helps consumers
vote with their dollar:
Retail stores plug into the community
with classes:
implications for brands
 defining and celebrating your
connection to the community
− local production
− local grown
− local social causes
 huge opportunity for retail to
connect and nurture their
community:
− Classes at Apple
− Baby Gap recently had
Olivia and Cat and the
Hat appear live for book
readings
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33. Discounting looks like a good thing –
consumers get their bargains and retailers
shift their stock, but this short term will
essentially reposition a brand.
 “60% off” is the norm
 “buy one, get two free” is the latest favorite
promotion
 discounting battle could permanently scar
brands
− some could be “de-positioned” by
downward pricing activity
− for example, Gap, Saks, Circuit City and
Denny’s
 effect should be minimal for those already
committed to the strategy (e.g. Wal-Mart)
 we admire courage of premium brands who
offer no discounts (Coach and Patagonia)
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34. Quiznos’ new ads (what happened to the
toasted buns?) - positioning themselves
as a value meal vs a quality meal:
implications for brands
 for apparel, food, electronics
and auto businesses,
desperate discounting poses a
real (and potentially
permanent) threat to many
brands
 focus on long-term positioning
versus short-term solutions
 we believe it is critical for
brand owners to support your
brand’s true positioning in the
marketplace
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36. This is, fundamentally, a new consumer era
will take root in 2009 driven by consumer
response and attitudes towards economics,
ethics, energy and the environment
(ironically these are the same four pillars
that failed us in 2008).
 quality of life rather than possessions in
life…choosing a family vacation over shopping
 being community-driven and not so
individually-driven…“we” vs “me”
 new innovative thinking will replace (failed)
historical approaches (the ‘08 election reflects
our collective attitudes)
 a calmness and simplicity rather than stress
and complexity…choosing time with our families
over a time zapping promotion
 human health as opposed to corporate
wealth…putting our personal well being and
health above corporate success (“health is
wealth” is back)
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37. Axiom Legal allows lawyers to work from
home and consult with their clients:
implications for brands
 the birth of “accountable branding,
accountable marketing”
 this is paramount to keep in mind for
brand success, not to mention brand
survival
The upper middle
 accountability for products (doing
class reclaims the
what they say), accountability for
pre-fab home:
messaging (saying what they do),
accountability for the environment,
for communities, for employees…
the list goes on and on
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38. A few final thoughts
Over the many years that we have done this
report, 2009, in every way, is by far the most
complex and challenging years we’ve seen.
 hard to find anything positive in the constant flood of
terrible news coming from the marketplace
 but we believe markets and consumers will find new
high ground and new solutions from the current
marketplace mess
2008 will be seen as a watershed year when
fundamental consumer behavior changed.
 this fact alone should inspire us all
 new eras are always exciting and exhilarating
let's hope that this is no exception
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39. A summary of our predictions for ‘09
1 for consumers, it’s re-evaluation time
2 brandicide – a trend on the rise
3 brands out of sync are brands out of favor
4 consumer skepticism – now on steroids
5 make it in america…but make it great
6 at-home incubating – it’s all the rage
7 from frivolity to frugality
8 local – the connection that matters
9 addiction to discounting can hurt a brand
10 the next consumer revolution has begun
39

40. Clara Hendon
clara.h@sterlingbrands.com
415-891-8879
40

41. sterling brands
sterling brands.com 350 fifth avenue 41 grant avenue
new york ny 10118 san francisco ca 94108
v 212 329 4600 v 415 248 7900
f 212 329 4700 f 415 248 7979