Credit culture

Americans and the "Lake Wobegone Effect"

“Where the women are strong, the men are good-looking, and all the children are above average.”

- Garrison Keillor

According to the Federal Reserve’s G-19 statistical release, revolving credit (which consists primarily of credit card debt) rose at an annualized rate of almost 6.8% in June of 2008, and 7.6% in May. Retail sales (as measured by the Department of Commerce) have also increased each month thus far in 2008, with the exception of May and June, in which they held essentially steady. If auto sales are taken out of the mix, retail numbers for both months would have been up 1% or more.

What does this mean? People are spending less on automobiles in reaction to the escalating price of gasoline, but discretionary spending in almost every other category is either steady or increasing. Part of this increase can be attributed to the effects of the distribution of government stimulus checks in this time period, but much of the ongoing increase in these numbers is probably due to more permanent factors.

Are people cutting back on spending as much as the press would lead you to believe? These numbers indicate that this is probably not the case. How can this be so with all of the “doom and gloom” media coverage about the economy in the last few months?

This is likely due in part to the fact that the last several decades have seen a rise in the “credit culture” in which societal mores have changed from debt aversion to a reliance on debt. Freer lending standards and increasing property values obviously contributed, but some of the reasons for this are more basic.

Over-confidence

For instance, Americans tend to score much higher on optimism scales than other countries do. In one survey of drivers, 80% rated themselves to be in the top 30% of all drivers, with some drivers obviously overestimating their driving skills. Eight in ten (81%) new business owners think their business has at least a 70% chance of succeeding, but only 39% think a business similar to theirs is likely to succeed.

According to a creditcards.com survey conducted June of 2007, over 90% of respondents believe that they have the same amount or less debt than the average American. In other words, they are over-estimating their own situation or capabilities in relation to other members of their reference group – the most important determinant humans use to guide behavior. Confidence is a positive trait and helps to bolster self-esteem, but the over-confidence evidenced here can lead to distorted financial decision-making.

Time is money

The expression “time is money” is a very western concept. Many other cultures do not look at time in the same way Europeans and Americans do. For instance, money is not something to be “spent” or “wasted”. This means that the way that we look at time is culturally specific, rather than universal.

This leads to another difference between Americans and other cultures, which can help to explain Americans lack of aversion to using credit. Americans tend to have shorter than average time horizons. In other words, on average we think in terms of a shorter period in to the future than other cultures, i.e. the consequences of our actions are factored into our decision making process for a much shorter period of time. Researchers theorize this is because we are a newer culture than others, but the end result is that we have less of a tendency to not only disregard negative consequences (overconfidence), but also to discount the domino effect that theses actions will have on our situation in the more distant future (short time horizon). Both of these factors can be used to rationalize the choice to live on credit now, and ignore the long-term consequences of that decision.

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Good Clean Fun

Vacuum cleaners remains a rather dull replacement market and although users get satisfaction in seeing the results of vacuuming, few consider vacuuming itself as time well spent. What scope is there to inject an element of fun and greater involvement in the sector?

Could men be encouraged to do vacuuming more regularly by making the vacuum cleaner more of a ‘boy’s toy’? After all, all those bachelor pads need a vacuum cleaner. What about making a vac more like a racing car (eg Porsche vac) or a motorbike with throttle-like controls?

What about also getting the kids more involved in vacuuming as part of doing household chores for their pocket money? This could make vacuuming more of a game (ie vacuum cleaner as virtual pet. Tamavaki?). What about buy one adult vacuum cleaner and get kids’ version free deals?

Vacuum cleaning could also become part of a household cleaning game for adults where there is a network of vacuum cleaners and a competition with prizes for the cleanest home. Also, what about adding a bit of fun with a vacuum cleaner with lights that luminate dust for vacuuming after dark?

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Sweet corn for children's lunchboxes

Green Giant sweet corn from  General Mills is a familiar brand to many, traditionally sold in metal cans. The company is now attempting to encourage more consumption with a simple yet novel pack format - a single serve plastic tub designed to fit into children's lunch boxes.

Described as " Lunch Box Fuel ", the product is said to provide one of the five recommended daily portions of fruit and vegetables. The sweet corn contains no added salt or sugar and no artificial additives or preservatives. For extra convenience, it can be microwaved and retails with a fork.

Parents are constantly looking for food that their kids will not only enjoy, but also be good for them. Several leading companies have developed such foods, for example, Heinz's Hidden Veg range (ID 786708), where extra vegetables were hidden within a sauce. General Mills' attempt is more focused on the lunch box market, offering one of its most well known products in a convenient plastic tub with a fork, whilst capitalising on the popular 5-a-day campaign.

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Scalp care to move men's haircare forward

Aveda extends exfoliating haircare into men’s category to encourage men to apply the same principles to their scalps as they do to their skin.

Aveda ’s  exfoliating shampoo (£16.50) under the Men Pure-Formance brand is not the first exfoliating haircare product on the market, but it is unique in that it specifically targets men. Men are taking a growing interest in maintaining their skin, and use of hair products is on the rise amongst younger men. The build-up of styling agents may mean that men are looking for products that offer a deep clean feeling and are beginning to apply their skincare regimes to rid their scalps of product build up. The formula is enriched with organic essential oils claims to deep cleanse the hair whilst also exfoliating the scalp to remove dead skin cells, excess oil and product build-up. The spearmint will provide the scalp with a refreshed feeling to further support the clean hair feeling.

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Collision of Extremes

DC Mountain Lab, the privately-owned snowboard park run by footwear brand DC Shoes, has seen the introduction of a Subaru rallying car to the snow, with riders and driver performing stunts together in promos designed to showcase the brand's innovation.

Pushing the Boundaries

Extreme sports are an eye-catching way for a brand to grab consumer attention and showcase dynamism and vibrancy.

Snowboarding has moved from being an outsider sport to a mainstay of ads for everything from Pepsi Max to Visa, and although it still has a high 'cool' factor, there is also a less thrilling association with corporate sponsorship and luxury holidays.

• Introducing the rally car highlights the skill levels, rather than the stylishness, of snowboarding, and invigorates perceptions.
• The footage - posted on YouTube - has an air of authenticity, too, which also helps to move the sport from glossy magazine spreads to 'real' competition.

By bringing too high-energy sports together, boundaries are pulled down as regards what is 'standard', positioning DC as an innovative, perhaps rebellious, brand.

While extremes in advertising are not new, being able to bring in a genuine sense of innovation - rather than carefully choreographed, big-money adverts - benefits the footwear label. Will other brands follow suit, pushing the envelope even further?

• After Honda's live skydiving ad, where next?
• Will we see limits tested in advertising content as well as form, so that imagery becomes more graphic, slogans become more domineering, content becomes more carefully designed to increase the viewer's heart rate?
• Where does this leave more 'cultural' advertising?

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Special Offer from Chase

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Face Lotion

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