Tag Archives: australian consumer

Westpac damage control goes bananas

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Following its response to the Reserve Bank’s rate rise by posting its own rise of 45 basis points, Westpac Bank has come under fire for sending its customers a video email comparing the rise to buying banana smoothies.

The video explained that the bank’s decision to raise its rates so high was akin to a crisis in banana availability due to bad storms, meaning banana smoothies would be more expensive. It went on to explain that the situation was similar to banks and the global financial crisis.

The comparison has drawn criticism from consumer groups, the ACCC and from prime minister Kevin Rudd.

Westpac’s chief executive Grace Kelly defended the bank’s approach by asserting that everyone would be paying higher rates and that politicians know this is the case.

“I think the politicians really do understand this new environment. They can see the evidence before them that funding costs have gone up materially,” said Kelly.

Consumers have lashed out at the bank’s rise and its attempt to placate customers with the video.

Telcos bow to ACCC pressure

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Telecommunications industry leaders Telstra, Vodafone Hutchison (operating under the Vodafone, 3 and Crazy John’s brands) and Optus (also on behalf of Virgin Mobile) have indicated to the Australian Competition and Consumer Commission (ACCC) that they will improve their advertising practices so that consumers are better informed about the products and services they offer.

The announcement is part of an effort launched by the ACCC earlier this year to clean up telecommunications advertising.

In announcing the acceptance of the undertaking, ACCC chairman Graeme Samuel asserted, “Having the three major carriers on board is a critical step and the management of the major companies should be applauded for taking a stand. The broader telecommunications industry has for some time walked a fine line between compliant and non-compliant advertising.”

The ACCC pointed to 12 of the most prevalent types of misleading conduct made by telcos, with the three industry leaders stressing that their advertising will not make these claims in circumstances where they are likely to be misleading to consumers.

Some of the poor practices the agreement covers include:

  • Use of terms such as ‘free’, ‘unlimited’, ‘no exceptions’, ‘no exclusions’ or ‘no catches’ when this is not the case
  • Headline price offers in the form of ‘price per minute’ for mobile phones and phone cards when there are other fees/charges which are not clearly disclosed, and
  • Headline claims relating to price, data allowances, total time allowances, speeds and network coverage where the claims cannot generally be sustained for all consumers.

“The ultimate test will come as future behaviour in the market is monitored and I remind all companies involved in telecommunications that the ACCC will continue its vigilant monitoring of their advertising practices, and will without hesitation take legal action to deal with any further flouting of the law,” Samuel said.

Great creative salves media budget cuts

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A Millward Brown survey has found alarming consumer sentiment toward discretionary spending.

The survey revealed 67% of Australians are being more careful or actively reducing their spending. Also, 53% of men were more likely to simply buy less, while only 37% of women considered this option. Women were more likely to maintain brand loyalty and wait for price promotions, with 52% describing this behaviour versus only 35% of men.

Less than a third of consumers are switching to cheaper brands or stores’ own brands.

Ben Dixon, managing director of Millward Brown Australia, said the survey illustrates the power of strong brands, as it demonstrates consumers would prefer to wait for their favourite brand to offer ‘specials’.

“Meat and Livestock Australia’s Sam Kekovich Australia Day executions perfectly illustrate the benefit of impactful creative. These ads deliver three times the punch of the average Australian advert and consequently triple the MLA’s effective media spend through great, memorable creative,” Dixon said.

Of the 33% of respondents not actively reducing their spending or being more careful, 30% say the economy has little impact on their spending. However, only 3% feel comfortable increasing their spending.

The GFC has impacted most households, irrespective of income with 71% of low income and 61% of middle income earners being more careful or reducing their spending. Of high income earners, 57% report the same.

Those in their forties were most likely to buy less and those in their thirties were most likely to buy their favourite brands but wait for price promotions. Under thirties were most likely to simply buy cheaper branded products.