Maslow Upended

This is a recession that doesn’t discriminate. Each of America’s 50 states faces rising unemployment and declining home values. Millionaires have lost one-third of their net worth, according to Iconoculture. The percentage of delinquent jumbo loans jumped threefold over conforming loans between 2006 and 2008. And DYG Scan found only 15 percent of people making over $150,000 and under $35,000 feel they’re “very certain about what lies ahead in the nation’s economy.” As John Kenneth Galbraith famously said, “The only function of economic forecasting is to make astrology look respectable.”
Every business knows that to manage through a recession, superior cash flow and sustainable growth is key. Yet that’s also the strategy of your customers. American households are unwinding their own leverage, while at the same time reappraising their values and their future. IRI reports coupon usage of 51 percent among 18-24-year-olds. Keyword searches on unemployment benefits are up 223 percent in the past year, according to comScore. But also reports a 30 percent increase in February alone. And 68 percent of Americans now carry a library card, the highest percentage ever, according to Marketing Charts. Anxiety has turned into action.
Marketers trying to see where consumers are heading might consult Maslow’s hierarchy of needs. This ubiquitous pyramid explains our psychic slide in needs (and hence consumption behavior) resulting from the liquidity crisis strangling most Americans. The run up Maslow’s ladder coincided with America’s wealth creation in the mid-’80s. Many people became so secure in having food, clothing, shelter and in feeling safe and secure, they spent time and energy pursuing more ambitious goals that consumerism satisfies, such as belonging, status and self-actualization. Economist Thorstein Veblen coined it the leisure class. We saw a marketing opportunity.
We encouraged the masses they could “just do it.” Credit was cheap and easy, so why not “live unbuttoned?” Second homes were plausible. After all, “impossible is nothing.” Then by cause or correlation, consumers bought $125 Air Jordans and $5 organic tomatoes. People consumed to discriminate, or to “think different,” becoming more inward and individualistic in the process. The pyramid gets smaller at the top by design.
But food, clothing and shelter aren’t so certain when American homes have lost $3.3 trillion in 2008, or half their value in less than three years. Faced with 40 percent devaluation of our 401ks, rising credit exposure and the third straight month of 650,000-plus jobs lost, everyone feels confused and vulnerable. Each day, 14,000 Americans lose their health insurance. Executives are working as janitors. Couples are delaying having children. Still others are giving away their household pets. In Y&R’s BrandAsset Valuator, “trust” is at its lowest point in the history of data collection. And a “trust virus” has infected not only financial services, but automotive, fashion, travel and even packaged goods. AIG, peanuts and Moody’s ratings slides have rocked consumers.

The smallest signs of a few hundred Dow points remind us recessions end eventually. But having been thrown from the height of the precipice, consumers are understandably sky shy. “Living well” is now just about living. We’ve moved from a Gilded to a Guilted Age. Déclassé consumption is in as the appearance of spending recklessly is passé. Consumers are prideful to conduct forensic audits of their budgets and replacing cable TV with During Fashion Week, Duckie Brown models received coupons for McDonald’s Happy Meals.
We may get our 401ks back into the black, but cultural values influencing consumerism have fundamentally changed for years to come. Fear and uncertainty (whether real or imagined) have slid like lava down Mt. Maslow, forcing us to return and face basic wants and needs. Perhaps this explains the recent melee during the casting call for America’s Next Top Model. Maybe frustration is sinking in, or simply reality.

Publish date: April 7, 2009 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT