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Monday, December 21, 2009

A positive sign--albeit temporary--that employment is heading in the right direction

Today’s New York Times had a story about the surge in temporary employment. Whether through temporary employment agencies, extending the hours of part-time employees, or hiring freelance help… more companies are expanding their labor force in a way that allows for a “wait and see” approach to the recovery.

Implications: Similar moves have been made following recessions over the past couple of decades, and have become somewhat of an early indicator that a recovery has begun in the labor market; more “committed” full-time employment and call-backs for laid-off workers typically follow. You might look at these employment alternatives as one example of what McKinsey calls, “Organizational Agility.”

Quite some time ago, I read a book called “Free Agent Nation” by Daniel Pink. As the name implies, it suggested that employment in the future might not look like the traditional labor-worker relationship of the past, where a worker had one employer and companies had their own labor force. Rather, the author suggested that in the future, many people might look more like independent contractors than employees… moving from company to company as their skills suited an organization’s current need.

Tomorrow’s job seeker might not look for a place to work. She/he might be looking for clients. Tomorrow’s company might not look for employees… but rather, they might be seeking short-term specialists for a specific project, or limited-time production run.

Mike Anderson

Friday, December 18, 2009

UPDATE: Food Trends 2010

Phil Lempert (the Supermarket Guru) published the results of a survey asking participants to share their thoughts about what lies ahead with regard to food, supermarkets and packaged goods. Click here to see an article that holds some of the findings.

Thursday, December 17, 2009

They're not just buying the car. They're buying the road ahead.

A story in yesterday’s Marketing Daily cited a report from J.D. Power and Associates… not about why people will buy a particular vehicle… but why they won’t. Called the “Avoider” report, the findings indicate that one in five people will avoid a particular vehicle because of the perceived health of the brand.

Implications: It’s a very good time to tell consumers why your company, brand and product are stable… and offer proof that you have a future. And that might be true for any company that sells a big-ticket (long-term) product or service. Home builders, appliance manufacturers, furniture factories, insurance companies. It might be said that if you sell a big-ticket (long-term) item, you're selling people on the idea of their--and your--future.

Whether it’s your heritage, your track record, testimonials from satisfied customers, or a demonstration that you’re investing in the future… find a way of communicating your strength and resilience. People want to do business with companies that have a future.

Mike Anderson

Wednesday, December 16, 2009

UPDATE: Inflation prospects for the grocery category in 2010

Moments after I published an entry this morning on the topic of inflation (see "Inflation 101"), I received an email newsletter from Phil Lempert about the prospects for inflation in the packaged goods and grocery store categories. Click here to see the article at Supermarket Guru, which quotes Michael Swanson, a senior economist from Wells Fargo.

Mike Anderson

Re-defining the "qualified buyer"

Talk about an interesting case of corporate soul-searching.

In this morning’s Automotive Digest, there was a link to an interesting story from, which focused on the impact of the recent recession on the luxury car market.

Supporting his thesis with brief quotes from Mercedes marketing chief Steve Cannon, the author of the story, Paul Eisenstein, suggests that the recession has “forced manufacturers like Mercedes to rethink the way they pitch potential buyers. Over the last several decades, the luxury segment has increasingly turned to incentives and, in particular, subsidized leasing, to attract buyers who really didn’t belong in the luxury segment.”

Implications: Consumers are widely reported to have pushed a re-set button, when it comes to the way they invest their resources. In the recent past—and probably for the foreseeable future—most purchases will be accompanied by more than one “second thought.”

Instead of “Why shouldn’t we buy this,” people will ask, “Why do we need this?”

Instead of “How much does it cost,” people will ask, “How much is it worth?”

Instead of “Buy now, pay later,” people will consider, “How long do we want to live with this (financing) burden?”

Different people will have different answers to these questions, based on their age, life stage, desires, needs, and means. But people from all walks of life will be asking these—or similar—questions.

Just as consumers are re-evaluating the way they buy, companies are wise to do a gut-check about the way they sell. Specifically, are you talking to the right people (the most appropriate target consumers), and is your offer an attractive option to them, based on their desires, needs and means?

In particular, I was struck by this thought from the Mercedes story: “[In the past, companies have sought] … to attract buyers who didn’t really belong in the luxury segment.”

If you sell in the “big ticket” market, it’s a smart time to be thinking about who your “qualified buyers” really are; those people who authentically BELONG on your list of target consumers. After all, your consumers are thinking about that, too.

Mike Anderson

Inflation 101

Yesterday, it was announced that wholesale prices jumped a full percentage point higher than expected (see the Washington Post story from 12/15/09). That stoked some fears that inflation was gaining steam, and caused the stock markets to drop throughout the day. On top of everything else consumers are going through… nobody wants to see inflation get out of control.

But today, it was announced that consumer prices did not rise as much as expected (see the Washington Post story from 12/16/09). Yes, prices are up a little, but only a little, suggesting that inflation is still at a modest and acceptable level.

Implications: What does it mean… if producer prices are up considerably, but consumer prices are up only modestly? I’m no economist, but I suspect it means somewhere between the producer and the consumer, people are feeling the squeeze… and margins are getting smaller.

Because almost every recession is followed by a period of at least a little inflation, it might be a good time to get your head around this fundamental economic concept. You have to start by realizing that inflation can be both good and bad.

A little inflation can be a good thing… because it can be a signal of economic recovery. Stockpiles have been depleted as companies have avoided warehousing goods in response to weak consumer demand throughout the recession. When the recession fades and demand resumes, there is often too little supply to meet that demand… and prices are forced upward.

Inflation can be bad because it means the same dollar will purchase fewer goods… either because the same goods are worth more, or the dollars that buy those goods are worth less. That can scare the consumer. (A consumer that is already a bit skittish right now.) The dollar can rise or fall in value for the same reason anything else does: the laws of supply and demand. If the money supply grows too far too fast (and there is not enough gold in the treasury to support those dollars), the value of a dollar can fall. The money supply is largely controlled by the Federal Reserve, and influenced by interest rates. That’s why a lot of folks will be watching whether the Fed’s “board of governors” signals an interest rate increase when they announce economic policy changes later today.

This morning’s news would indicate that, for now, inflation is not problematic. But before long, it could become a topic of conversation. So here are a few tools to help you brush-up on the basics:

Here’s a link to
the Wikipedia article about inflation.

Here’s a link to some information about “the Fed” from
“How Stuff Works.”

And here’s a link to
The Federal Reserve website where you’ll find several options to gain more information, including an interactive tour of the Fed’s history.

Mike Anderson

Tuesday, December 15, 2009

One must wonder if blogging is about to "Boom"

For anyone who still thinks blogging is a young person’s game… now hear this:

· 8.2% of all social network and blog visitors are 65+.

· That compares to the 8.3% that are teens.

These numbers were offered in today’s edition of the Research Brief by Media Post, citing data from Nielsen Wire Online.

Implications: So much for the idea that people who post to blogs, “friend” at Facebook, or update their profile at MySpace are all pimply-faced teenagers.

Could it be that the archiving nature of social networks is helping seniors inventory their life, share their stories, and enjoy pictures of their grand kids?

What happens when the balance of the baby boom heads into the 65+ life stage? Are they even more likely to be technologically savvy, and more likely to make the web a place to enjoy retirement? They’re heading squarely into their golden years… just as they have moved through every other demographic cell before it, like a pig moving through a python.

Mike Anderson

Some customers are simply worth more than others

Beware: This is not just a story about grocery stores.

The top 10% of grocery store shoppers make 2.41 visits per week, and spend an average of $39.96 on each visit. They spend an average of $6,260 per year.

The bottom 10% of supermarket visitors make 0.18 visits per week—which equates to one visit every 30.2 days—and spend an average of $9.15 per visit… or $1,607 per year.

These are among the findings of a study by Concept Shopping, Inc., in a survey of more than 2 million shoppers. (Click here to see the story from Business Wire.)

Implications: If you think about it, the operational costs to a supermarket for serving an infrequent, low-spending customer are not much different than for serving a more frequent, big-spending one (either way, you have to keep the lights on and pay the staff). But obviously, the more “top ten” customers you can acquire, the more profitable you’ll be.

Isn't the same true for home improvement? Home electronics? Automotive? Banking? Jewelry? Health care? Yes… In virtually every business category, it would be fair to say that some consumers are worth more than others… because they are heavy users of that product or service.

As the economic recovery unfolds, it is quite likely that some consumers will recover faster and farther than others. Likewise, some companies will recover faster and farther than others. Because while some vendors settle for chasing simply, “new customers,” more strategic companies will focus on courting the heavy users of the product or service they sell.

If you focus on serving everyone, you focus on no one.

[Author’s note:
Vilfredo Pareto, the Italian economist, suggested that “...a predictable imbalance exists, in which a minority of people control a majority of the wealth.” This later became known as the Pareto Principle, or the 80/20 Theory. There is probably a “predictable imbalance” in your industry or category, too. Can you identify the minority of customers that spend the majority in your category?]

Mike Anderson

Not so fast!

Auto maker moves to regain share of service market.

Beware: This is not just a story about tires and oil changes.

Ford Motor Company is on schedule to open their 600th Quick Lane service center in 2010. Click here to see a story about the project from the Detroit Free Press… or visit the Quick Lane site to see how they compare to your local quick-oil-change store or repair center.

Implications: Yes, consumers are holding on to their cars longer… and that trend bodes well for the automotive service sector. But consumers also continue to live in a time-starved world… which is one reason car dealerships can be frustrated by their share of the service market.

Lots of people perceive going to a fast-lube store as both quicker and easier than going to a car dealership for an oil change or small repair. After all, getting service at some dealerships has traditionally involved making an appointment, dropping-off your car, and then making a return trip later to pick the vehicle up; not to mention the headaches of finding a friend to give you a ride (or two) to the dealership, renting a car, or waiting for a courtesy van.

In a difficult economy, the revenue stream of the service department might be particularly attractive and important for car dealerships and manufacturers alike. (Revenue from vehicle sales has not been quite as robust over the past few years, as you may have heard!)

The rapid oil-change market has seen many new entrants since the 1980s. But with Quick Lane, Ford is positioning itself to say, “Not so fast… we can provide quick service, too.”

How does “service after the sale” stack-up in your industry? Do you find yourself in an industry where people are stretching the buying cycle, and holding on to older models longer? Does the current climate support greater attention to service? Is this a function that you can profitably provide… or are you prepared to leave that revenue to someone else?

Mike Anderson

Surviving the injury or disease, but not the debt

Playing into the hands of the health care debate this year has been the idea that many bankruptcy and foreclosure problems have not hit families because of the housing bubble, the recession or the volatile job market; the financial woes, for many folks, have been brought on by the cost of health care. For reference, see this story from the New York Times.

Implications: News stories like this, or the idea that many elected officials are granted health coverage that is beyond the reach of their constituents, help to elevate the perceived need for health care reform of some kind. I’m among those who are not sure what the right answer is. Only that the current system probably needs attention.

Politics aside, in what ways might the cost of health care impact the way you do business? Do you offer a product or service that might deliver healthy or preventive benefits? From safety devices to fitness centers—and of course, health providers and drug companies—the elevated profile of health care might influence many consumer decisions over the next few years.

In an era where much about the future of health care is unknown, consumers might be more likely to control what they can, in terms of diet, exercise, and self-health.

Mike Anderson

Monday, December 14, 2009

Evidence that the greater good continues to influence purchase decisions

Recently, I’ve seen more than a few stories that remind me of the power of Cause Marketing. For example, charitable tie-ins always have a high profile during the holidays, but a recent story in Marketing Daily explained that such campaigns were even more evident this year. From gathering gently used coats, to matching charitable contributions at the check-out, to accepting donations for the local food shelf… giving and selflessness have resonated with a lot of people this year.

Another story, this one from Research Brief, suggests that the compassion for “cause-related campaigns” is not limited to the U.S.; indeed, consumers around the globe are more likely to give their business to a company that gives back.

Implications: I’ve written about “The Purpose-Driven Purchase” on more than one occasion here (see this posting from early November). It’s the idea that consumers are less likely to buy the frivolous—as if money were no object—and more likely to buy the meaningful and useful.

These articles remind me that “meaningful” doesn’t always start with “me.” By supporting a cause that resonates with your consumers, you make it easier for the consumer to support you.

Mike Anderson

Saturday, December 12, 2009

The Government, brought to you by...

I’m probably playing with fire by noting these two issues in a consumer trends forum like this… but what the heck. It’s the weekend, and I have to believe that, eventually, both of these issues will spark a consumer (voter) response.

Healthy debate? During the recent debate on health care reform, legislators on both sides of the issue have accepted what are essentially “scripts” from lobbyists, which are then used on the floor of congress during the course of debate. (Not to mention doling-out the same sound-bites for the benefit of eager television cameras.) In case you missed it, refer to this story from the New York Times.

Balance due. The U.S. government has been spending a lot of money over the past few years… and some significant payments are coming due. For reference on the matter, see this story from the NY Times. Since that money has to come from somewhere, consumers can expect either reductions in government services or increases in taxes. Both consumers and future candidates for public office will likely feel the tension, and sooner rather than later.

Implications: It is not my intent to take either side of either political issue. But coverage of both matters is likely to continue, if not expand… and the impact of both issues will likely draw the attention of the consumers you serve.

Interests on either side of the health care debate are doing what they can to influence the outcome (private sector stakeholders like drug companies, insurance companies and healthcare providers, as well as public sector stakeholders like government agencies, non-profit organizations, etc.) If and when voters learn that reform is more suited to special interests than the public well-being, this debate could take a nasty turn.

With regard to balances coming due on government debt, I’m curious. Whether you were for or against the investments of waging two wars, and regardless of how you feel about the various economic stimulus programs… you can expect sentiment to shift once bills begin to arrive for the spending that’s been going on for most of this decade.

We cannot know, with certainty and clarity, the impact of these issues on consumer spending. Only that there will be one.

Mike Anderson

Friday, December 11, 2009

Trends (and predictions) offered by the National Retail Federation

STORES magazine (the periodical of the NRF) offered a number of consumer and retail trends for 2010. The website headline suggested that, “Surviving retailers will see less competition in 2010.” Click here to see the online version of the story.

Implications: Reading the STORES piece, I am reminded that the line between a “trend” and a “prediction” can sometimes seem a bit blurry; that the whole topic of “trends” can be subjective... and subject to spin.

For example, the rash of store closings in 2009—and the anticipated mergers taking shape right now—are optimistically interpreted as leading to “…less competition in 2010.”

The coming year might leave fewer players on the retail battlefield. But I doubt there will be less competition. In a world where consumers are trimming entire product categories from their consideration list (less self-indulgent purchasing, less out-of-home dining, reduced use of credit) compared to a few years ago… retailers are likely to find themselves competing not only with other vendors in their category.

They’ll be competing with other categories.

People are not just deciding which GPS device to buy. They’re deciding whether to buy a GPS or a new mobile phone. Instead of which restaurant to go to, they’re trying to decide whether to dine out… or dine at home instead so they can afford to go out to a theatre or nightclub later in the week. They’re weighing whether to invest in their retirement fund… or put that money toward a couple of college courses to help the, deal with urgent changes in their career.

I’ll break with tradition, and offer this prediction (note that I make no attempt to disguise it as a trend):

In my opinion, 2010 will see apples competing with oranges.

Mike Anderson

UPDATE: "Where" marketing

A few days ago, I wrote about the changing expectations consumers have with regard to marketing messages... that in addition to "what or why" they should buy, consumers prefer messages that involve "where." In other words, consumers appreciate messaging that is relevant based on their proximity to a business. (See the post from 12/8/09).

In this morning's Springwise newsletter, I learned of an effort do expand on that idea. But instead of using a website or mobile messaging to drive consumers to a store, this idea uses the store to drive people to a website.

See the story about Google's effort to help businesses expand their relationship with customers, by migrating their bricks-and-mortar visitors to the mobile web.

Mike Anderson

A difficult-to-define real estate market

It seems that good news and bad news often compete for our attention.

A recent story in the New York Times suggests that an early chill has come to the real estate market, ahead of the winter schedule.

Meanwhile—the day before the Times story—the National Association of Realtors announced that sales for homes were up again in the month of October. Click here to see their take on the matter.

Implications: Perhaps the safest conclusion here is that, again, the economic recovery will happen more quickly for than others, varying by country, region, state, city, and even by company. Proof of that is offered in the original Times story cited above. (Click here to see an interesting “Top 20” city-by-city graphic.)

Perhaps it would also be wise to not wait for the recovery to happen to you, but to ask what you can do to make the recovery happen faster and go farther than it might for your competitors.

Mike Anderson

Thursday, December 10, 2009

More signs that consumer confidence is on the mend

Colleague Jim Hopes led me to an article in today’s Radio Business Report and Television Business Report citing Deloitte and RBC opinions that consumers are regaining their confidence in the economy and the future. Click here to see the RBR/TVBR report.

Implications: A significant share of our economy is powered by consumer spending. When those consumers are feeling more confident, the likelihood of spending increases.

Mike Anderson

Rediscovering the consequences of credit

Over-extended credit and turmoil in the banking industry played a major role in the Great Recession of 2007 – 2009. That’s why these two stories from Media Post caught my eye quickly this morning.

Driving auto delinquencies down. This article cites data from Experian in suggesting that late payments are falling for automotive. Further, the average new loan term has dropped from 63 months to 62 months, year over year.

Mortgage paper… or plastic? This story highlights a report by Cardbeat/ACG, indicating that many consumers are now more likely to pay their credit card bills first, and their mortgage second.

Implications: First, while the automotive story suggests that one cause of the falling delinquency rate is greater scrutiny on the part of companies who are writing loans, perhaps consumer efforts to pare-down debt are also a factor in the reduction of tardy car loans. As recently as 2007, 45% of all car loans came with a payback term of six years or more. More troubling, the average car owner owed $4,221 more on their vehicle than it was worth at the time it was sold. [Source: The Los Angeles Times and Edmunds, 12.30.07.] It’s not surprising that consumers would be recalibrating their use of credit.

Second, many protections are built-in to the typical mortgage, which make it comparatively difficult for a lender to take action against a borrower. Less so for a credit card relationship; penalties (ranging from late fees to higher interest rates and impact on credit scores) can be swift and severe. It only makes sense that bills with consequences that hurt first and worst would be paid ahead of those with friendlier terms; terms that might be interpretted by some folks as a built-in bonus grace period... during times of financial distress.

Mike Anderson

Three post-recession reflections

It’s easy to understand why most of us would be eager to move the conversation away from recession and toward recovery. Recovery is more fun to talk about. But several components of the recession are likely to impact their participants long-term. In addition to publishing full stories here on various issues, I’ve been collecting examples of these issues over the past couple of months. Here are a few examples, offered in capsule form:

Observation 1: If you lost the place you live, where do you live now? This October story in the NY Times took an extended look at people who had gone through home foreclosure.

Implications: How have family dynamics changed in your market, and in what ways might you respond? With winter’s most brutal months just ahead, what resources might be available for people in your community who are living out of vehicles? Can you help? Do you serve households that now hold multiple families in a single dwelling? What products or services do you sell that might be appreciated because of their small size—both physically and economically—for folks who are now apartment renters instead of home owners? From furniture to appliances to home electronics, there is room for sales to go up, as some people continue to scale down.

Observation 2: Income declines which are deferred, but imminent. This story from the Wall Street Journal offers a glimpse at earners that enjoyed sometimes generous severance packages after losing a job, but have since seen that cushion of cash run-out.

Implications: While very recent unemployment numbers have shown improvement, beware of those households which remain impacted by a difficult job market. There are people who have fallen from the ranks of the unemployment numbers simply because they’ve given-up on their job hunt; when taking those folks into account, true unemployment has reportedly been as high as 17.5% (see this 11/6/09 story from the NY Times). And as the WSJ story points out, some families are only now feeling the hurt from a household income that may have fallen months ago. This is one of the reasons that “the new frugality” could stick around for a while… and the recession could bounce a couple of times before taking a steadily upward trajectory. BTW: Unemployment is not an equal-opportunity experience. See this graphic from the NY Times to see how folks in your target demographic are faring.

Observation 3: Microwave cooking is way up, other forms of cooking at home are down. That’s according to this story from Media Post’s Marketing Daily.

Implications: Are you still hitting consumers with a message of convenience and time savings? I think this story indicates that just because consumers are cooking at home with greater frequency doesn’t necessarily mean they have more time on their hands. On the contrary, many folks are working harder but earning less. That bodes well for anyone offering heat-to-complete meal solutions… and it makes the recent surge in Quick Service Restaurant sales easy to understand.

As I've said before, the effects of the recession are likely to out-last the recession itself.

Mike Anderson

Wednesday, December 9, 2009

OMG! I H8U! (Getting caught having casual text.)

Okay, it might seem like I’m just having fun with this. (And I am.) But it seems to me this story from today’s New York Times is illustrative of the trend toward the pervasive use of technology. It’s a story about the trail of text messages that can show up in a courtroom… during a divorce or other legal proceeding.

Implications: Old black-and-white movies gave us that time-honored image of the private detective, working late nights, sleuthing through telephone records, hotel bills and credit card statements to prove “wrong doing.” This story demonstrates just how mainstream text messaging and instant messaging have become.

Speaking of texting—and related matters of risk, law and liability—read more about the issue of text messaging in the NY Times series,
“Driven to Distraction.”

Mike Anderson

Is this "the New Normal?"

(Or are we simply getting away from ten or twelve years of “Abnormal?”)

Within the latest edition of a newsletter that I receive from McKinsey, there was an interesting conversation about “the New Normal.” The dialogue included “Chief Strategy Officers from Boeing, Estee Lauder, Visa, and Smith International.

I’ll skip the usual “Implications” commentary, as each guest essentially provides their own thoughts on current events, as well as some speculation on the future. See the video immediately below, click here to obtain an Adobe PDF transcript, or click here to see the complete newsletter contents. Enjoy.

Mike Anderson

Food trends for 2010

Mining for trends can be a cumbersome task. Among other things, it involves everyday observations about human behavior, and sifting through piles of consumer research, industry newsletters, media reports, websites and blogs. But it is my good fortune to also have a great network of friends who might see something from time to time, and drop me a note about it. One example is JoAnne Naganawa from Bellevue, Washington, whom I met through the Association for Consumer Trends.

Recently, JoAnne sent me a list of food trends for 2010, offered by Phil Lempert (“the Supermarket Guru”). Since we’re approaching that time of year when a variety of folks offer their predictions for the coming year, I thought this might be a good time to share the info. The reports are offered in the form of two videos, both available below, If you prefer, click here to see a written version of Phil’s top food trends for 2010.

Implications: Sometimes, it’s hard to distinguish between an industry trend and a consumer trend. (Like a fashion show; is the style driven by consumer demand… or what the designer hopes consumers will demand!?) But I’ve seen enough of Phil’s commentary to know he is informed on matters of grocery store operations and consumer packaged goods… so enjoy his take on “what’s to come.”

[Thanks to JoAnne Naganawa for sending me these trend topics.]

Mike Anderson

Video 1:

Video #2:

Social vs. Personal... and Connection vs. Clutter

Recently, I read a story from Media Post’s “Engage: Teens” newsletter that inspired some thought beyond what the story intended. The article was headlined, “Friends endure, acquaintances are forgotten,” and essentially warned companies about the hazards of sending frequent and irrelevant brand messages through the various social media platforms.

There’s a reason why my thinking went beyond the gist of the story. In November, the Washington Post ran a story announcing that Oxford University Press had named their 2009 “word of the year,” selected from the various new additions to be found in future additions of the dictionary.

And the winner is: Unfriend.

Social media has grown at a dizzying pace. Whether you’re a fan of Facebook, a tweeter on Twitter, a connection on LinkedIn, or among friends on MySpace… you’ve likely spent the past year or two gathering “friends.” The problem is, many of those connections think of your “friendship” as a license to spam you about every little thing, from the latte you just bought, the latest personality test they’d like you to take, the change they just made to their status or profile, or the newest goofy “hug” or “quote of the day” they feel compelled to send you. So many of us are doing what we do when someone abuses the relationship: We’re firing friends. Whether by out-right disconnecting online (I hope nobody does that to me), or by blocking messages from various senders from being displayed, we’re using our digital defenses to stop the overload of social media spam.

Implications: Social media is like mass media in this way: Being given access to an audience (acquaintance) does not guarantee you will generate a deeper or more meaningful relationship (friendship) with that audience. In fact, having access to an audience doesn’t even mean you will receive the attention of that audience. The message must be relevant, timely, and presented in the context of what’s important to the recipient(s) with whom you are communicating.

Digital marketing tools—from email blasts to websites to social media—can be powerful, cost-efficient weapons and should absolutely be considered. But proceed with caution, and get help from folks who are familiar with how to use those tools effectively. Not just in technical terms, but in the way a message should engage the consumer. (Don't drown the recipient with what matters to you; express your offer based on what's important to them.)

I haven’t looked it up in the new Oxford Dictionary yet, but I’m guessing “Unfriend” could be defined as lasting a long, long time.

Mike Anderson

Tuesday, December 8, 2009

Distance tolerance differs for automotive sales and service

I saw a brief but fascinating report in today’s Automotive Digest:

The majority of potential car buyers are willing to travel an average of 125 miles when shopping for a car.

But they’re only willing to travel 27 miles for warranty service, after the sale.

The story was distributed by PR Newswire, citing research from… and it reveals just one conundrum in the vast set of challenges facing a scaled-back automotive industry.

Implications: Picture the “new car supermarket” that attracts people from a hundred miles away, based on volume-driven low prices. What kind of service-based offer (or loyalty program) could help them bring customers back for their service needs?

Picture the local, service-oriented car dealership, which seems to be always the bridesmaid (providing service to owners of the brand they carry), but never the bride (the place where the customer buys the car). In what ways might they leverage the higher-frequency relationship they have with service customers… in a way that yield more vehicle sales opportunities? (One might need vehicle service several times a year, but a new vehicle only every few years.)

Picture the manufacturer caught between these two different constituents. In a world where you’re dramatically reducing the number of dealerships where your product is sold, how can you maintain a service relationship who’s accustomed to dropping their vehicle off “just down the street” when it needs service? If the dealership is now (more than 27) miles away, how might you avoid losing that business to a local Pep Boys, Precision Tune, or independent car service company?

If you're the local independent service provider, how can you capitolize on the churn that will result from all of these dealership closures? (Lots of service customers might be up-for-grabs right now!)

While many dealerships have vanished completely, might they be replaced by “service-only” satellite locations that carry the name plates of major manufacturers? (Chevrolet, Toyota, or Ford service centers… which provide service after the sale or warranty repairs, but which do not sell cars?)

Sometimes, consumer trends can influence corporate decisions. In this case, perhaps the converse is true; corporate decisions (the closure of so many auto dealerships) will be a spark a change in the way people consume automotive products and services.

Mike Anderson

Not just what or why... consumers increasingly decide based on "where"

It has never been more important to be close to the consumer… and to be able to let them know how close you are.

A recent article from Media Post’s “Engage: Gen Y” points-out how digital tools like GPS systems, GPS-equipped smart phones, and even location-based Twitter exchanges are making it ever easier for the consumer to find more than just a good deal. They can find the closest good deal.

Implications: As the Gen Y story points out, proximity marketing is “where it’s at.” And it’s been that way since the first sandwich-board toting ad man stood in the village square… advertising for the shopkeeper just steps away.

Consumers—and not just the young ones—are increasingly drawn to tools that make life management easier. (A trend that will only increase if/when petroleum prices rise again.) Have you studied your core customers… to know which tools they’re likely to use? From click-to-map buttons on web sites, to geo-based targeting of coupons, it’s important to stay tuned to these emerging habits… so you can deliver your offer in a way that hits close-to-home, or where ever the consumer might be.

Mike Anderson

Thursday, December 3, 2009

Gift cards losing ground

More evidence about the declining popularity of gift cards appeared in a Media Post issue this week (see “Gift cards are the new fruitcake,” 11-30-09). The Tower Group research, cited in the article, suggests that one of the reasons the cards are not as popular with shoppers this year… is that they’re not as popular with the ultimate recipients.

Implications: There could be several explanations behind the decline of gift cards, there are two issues that I think play a significant role.

#1: People want to give with a splash. In an economy like this, I can shop around and find someone a nice cashmere sweater that looks like it’s worth $150 or more… for $50. If I spend that same $50 on a gift card, it looks like it's worth about $50. Which gift is more impressive to receive (and therefore, more fun to give)? You got it. The sweater--or any other hot deal--makes a bigger splash for the buck.

#2: Consumers still have trust issues. I wrote about this back in April (see “Things are not always as they seem,” 4-28-09). What is a $50 gift card worth, if it can be redeemed only at Bombay Trading Company? Or Sharper Image? Or Linens n Things? According to the Media Post story, more than $100 million in consumer-held value was lost when cards went un-redeemed because of business closures in 2008. A few more laws have been passed with the intent of greater consumer protection, but many won't go into effect until August, 2010.

If you’re trying to sell gift cards—or any other version of a promise to deliver product or render service at a later time—the first think you have to sell is trust. Why should I believe you’ll be around? Tell me about your history, your strength, your dedicated staff, your expertise, your competence.

The second thing you have to sell… is splash. What special “extra” is the holder of your store card entitled to? What are the perks I get for buying-in?

Not so long ago, “money was no object” and consumers would seemingly buy things for no reason. Now, every product and every service needs a reason (or specific value proposition). Gift cards included.

Mike Anderson

Wednesday, December 2, 2009

The holiday selling season, re-defined

This morning, a story in the New York Times indicates that overall retail sales for November show positive movement compared to last year… an indication that the holiday season might turn out better than some had hoped. That is interesting, in light of the fact that shoppers—whether combined or individually—spent less money over the Black Friday weekend. More information on the matter will be available later today as major retailers report their sales for the month.

Implications: There’s been quite a bit of coverage about how both retailers and shoppers started this holiday season earlier than usual. With stores offering “Black Friday discounts” long before Thanksgiving, it seems consumers helped change the chronology of the holiday shopping season. All of a sudden, “the biggest shopping day of the year” is not the make-or-break proposition it was a few years ago. Retailers seem to have successfully flattened-out the peaks—and filled-in the valleys—for a more consistent sales landscape.

Mike Anderson

Hotel chain gives a plug for electric cars

Element Hotels, owned by the Starwood group of hotels and resorts, will provide parking spaces that are charging stations for electric cars according to a report in today’s Marketing Daily.

Implications: This move is as much symbolic as it is substantive, since there are only six properties in the Elements chain, with five more locations planned. (Hardly a broad enough impact to alter the course of global warming.) But I commend the move… because the company is putting actions, not just words, toward the idea of environmental responsibility.

More importantly, the move reminds us to stop and think about the consequence of fundamental change in the automotive industry. What will a gas station look like, when vehicles no longer use gas? Will there be plug-ins at the workplace so cars can re-charge after their morning commute? How will “the Grid” need to be modified? Who will pay for it? What price will petroleum have to hit… before paying for the shift to electricity becomes economically attractive? And, will there be a backlash against electric cars, if/when people realize just how much of our electricity is created through the burning of fossil fuels? (I’m just sayin.’)

Long term, few trends will be more fascinating to watch than
“The Fuel Economy.”

Mike Anderson

Tuesday, December 1, 2009

"I didn't know my computer (or phone, or car) could do that!"

A story in today’s Marketing Daily covered the success that resulted in a partnership between Ford and Best Buy… whereby consumers were basically invited to a hands-on demo of the Ford Sync system. Because of the results they enjoyed during the pilot project in Dallas, Ford is expanding the program to select markets in California and Pennsylvania.

Implications: Once upon a time, when you bought something complicated—say, like a computer—it came with an owner’s manual. I confess to seldom reading one… but it was nice to have a point of reference if you ever ran into a question. Today, when you buy a computer, you generally get an over-zealous web support link which provides all of the answers… except the one you’re looking for.

It seems to me that we’re buying increasingly complex products, with a decreasing level of explanation about how those products work. In contrast, Ford has presented Sync with context and clarity.

Context. Sync is not an automotive product. It’s a technology product, which lets you make phone calls on your cell phone, play songs from your music library, get directions to where you’re going, and run diagnostics on your engine… all through the “dashboard” of your vehicle. Heretofore, they had shown-off the system at their car dealerships. But now, they’ve started showing it off at a technology store—Best Buy—which benefits tremendously from the traffic generated by Sync clinics… as well as the relative position of “authority” they gain by helping show-off leading-edge technology. But another very important thing is happening here.

Clarity. In a world absent of “owner’s manuals,” Ford has found another way to invite people—er, um, I mean, Consumers—to stop in, put their hands-on, and play-around with the system. Test-drive the technology, just as you would test-drive the car. Eliminate the fear factor, and help folks realize the value proposition. This is experiential marketing at work: Prior to the pilot owner clinics, a combined average of 28% of Ford owners said they knew the ins and outs of Sync’s features. After the clinics, nearly 69% of Ford owners reported that they would use these features. And when you think about it, in an age when consumers are trending away from “what I have,” and trending toward “what I have done,” Ford and Best Buy are offering an experience.

These days, it is not uncommon for someone to discover a new feature on the computer or mobile phone they’ve owned for years. Their first reaction is often delight: “Wow! I didn’t know it could do that!” But almost immediately, their face falls to a frown, and they say something like, “I wish I’d have known it had that capability sooner!”

In an economy where consumers are being more judicious about every dollar they spend, are you giving justice to all of the benefits your product or service provides? Or do you just hope customers will figure it out for themselves? Would a clinic be in order? Or simply… an owner’s manual?

The owner’s manual was never as sexy as a technical support website, but it was consistent: Almost any manual had a table of contents at the front, and an index in the back.

Mike Anderson

The obligatory story about Black Friday and Cyber Monday

Much ink has already been spilled on this pair of retail benchmarks, so I won’t drone on about it here. Suffice it to say that more people went shopping on the Friday after Thanksgiving that might have been expected—good news, of course—but the spending-per-person was a bit down (symptomatic of consumers who are still in a cautious mindset.) Down, too, was overall retail spending for this date, formerly known as the kick-off of holiday shopping. (I say that because many retailers were offering “Black Friday” prices long before Black Friday.)

The consolation prize for retailers—or at least, those with successful websites—is that online activity met or exceeded expectations on the following Monday (symptomatic of consumers that are more likely to do plenty of research before making a purchase decision).

For more details on either retail benchmark, click to see the stories offered by Media Post on both Black Friday and Cyber Monday.


While the recession is widely reported to be over, the effects of the recession are not. No surprises there. Lots of consumers have suffered some kind of economic trauma—or know someone who has—whether that trauma came in the form of a job loss, a drop in the equity of their home, declining investment portfolio, or just from being inundated with a slew of negative headlines over the past year.

People will purchase more cautiously for a while. As we have written in this space before (on numerous occasions), they are likely to be more deliberate, methodical, and careful.

This second-consecutive “down to earth” holiday season, success will find retailers who understand what shoppers are trying to accomplish… and help them achieve it.

Mike Anderson

Friday, November 20, 2009

How fast can you re-train a consumer mindset?

Last year, deep discounts were available almost everywhere, including most luxury retail stores. At the time, merchants knew they were taking a calculated risk: If an item is promoted as “on sale” for a long period of time, it’s not really a special discount at all… but a new everyday low price. Many retailers had little choice; the Great Recession hit fast and hard enough that many business categories were stunned, including luxury retail.

In yesterday’s New York Times, there is a story about the strategy many luxury retailers are pinning their hopes on for the holiday season of 2009: Scarcity. Last year, they had a lot of inventory when the glitz hit the fan. This year, many luxury stores have kept inventories lean—even at the risk of running short of some goods—hoping that the threat of missing-out on popular items might inspire shoppers to pay closer-to-full price. (See the NY Times story here.)

Implications: Forgive the longer-than-usual analysis I’ll offer here, but there are a lot of moving parts to this issue.

The recession was officially announced on 12/1/08, and when the announcement was made, economists indicated that we had indeed been in recession for about a year. It may have taken the experts that long to figure out there was a problem… but the consumers who live on Elm Street sensed a problem far earlier, tightening their wallets by early- to mid-2007. Retailers noticed a shift in the economy, too… and in response, many began changing their tactics to woo ever-more-elusive shoppers. Often, those tactics involved some kind of a discount.

Think about that. For nearly three years now, a host of retailers have been training people of all kinds—including luxury customers—to not buy at the regular price. How quickly do you think that can be undone? Do you think price sensitivity can be unlearned in a single season, or will it take a while?

A good friend caught me off-guard, recently, while explaining the great deal she got on an item she bought at a major department store. I thought she was simply going to brag about getting the item at 60% off. But instead, she expressed anxiety… and posited this question:
“If they can afford to sell it at that price… just think how many years I spent getting gouged at the regular price!”

Of course, that is an over-simplified analysis of the experience. There are matters of floor planning, carrying costs and overhead which drive most retailers’ decisions about when to offer discounts, even if it means losing money on an item. But it’s not the consumer’s job to understand how retailers think. It’s the other way around.

While the luxury customer might be quite different than a regular shopper (in socio-economic terms), the idea that “it’s fashionable to be frugal” is very widespread right now. Rest assured that during the first quarter of 2010 (and maybe sooner), lots of people will be using hindsight to get a better picture of how the recent recession has impacted consumer behavior… and I’ll be among those people.

Have consumers learned there are a lot of things they can do without? Or will “pent-up demand” drive them to splurge on goods they haven’t been able to enjoy for a while? Will this semi-artificial scarcity drive people to pay full price? Is there a risk that the manufacturers of luxury goods will turn to alternate (even discount) retail outlets—instead of the luxury stores—out of desperation to move product? Or will alternate manufacturers come-up with even more and better "knock-offs” that can satisfy the consumer… at prices lower than the real thing? Or, is the much-heralded “experience” of shopping at a luxury retail store sufficient to justify the higher price?

Thankfully, it is not my job to have all the answers… just good questions.

[See also:
“Selling upscale when so many people have scaled back,” 10/13/09, and “Saving on one thing to subsidize another,” 11/5/09.]

Mike Anderson

Thursday, November 19, 2009

UPDATE: Caught with their hands in the cookie jar?

On Tuesday, I shared a piece here about companies that are making adjustments now, in anticipation of new rules or legislation that could limit such actions later (see, "Grabbing cookies while the lid is off the jar," 11/17/09). As one example, I focused on pharmaceutical companies that were raising prices on prescription drugs... ahead of anticipated health care reform.

This morning, the New York Times ran a story indicating that a group of lawmakers have noticed what's going on (due to widespread media reports), and are launching an inquiry. (See the story here.)

Mike Anderson

A new lease on life... for leasing?

Back in 2008, most car companies greatly reduced or eliminated leasing as an alternative; a response to free-falling consumer demand.

It’s ba-aack.

Different forces have conspired to make leasing more attractive for the industry. First, fewer people are trading old cars in for a new car purchase… and the recent “clunkers” program might also have contributed to a reduction in used vehicle inventory. So… when a leased car is turned back in at the end of the term, a more profitable price can be set on the vehicle as a “used car.” That’s according to a weekend story from Bloomberg, which you can review by clicking here.
But one might further speculate that consumers are likely to be focused on “payment size” than “price of car.”

Implications: Do you think this renaissance of leasing will begin and end at the automotive showroom?

I’m wondering about other big-ticket purchases, like furniture, appliances, computers, boats, RVs, and the like. In a world where credit is tight, terms are less favorable, and traditional debt is out of fashion… could leasing enjoy a resurgence of popularity in other business categories?

How about other non-traditional ownership methods? Rent-to-own plans, for example, or even “fractional ownership,” where several families might pool their funds to buy a vacation home, or several guys going through a mid-life crisis work together to buy a sports car. (Don’t laugh. It’s happening.)

People who don’t want to own a car are buying the use of one, including electric cars… and even buying fractional ownership in jets. In fact, the next time your dog wets the rug, show him this story.

For lots of people, and for a long time, credit has been the American way to buy anything “just out of reach.” In the future, I bet folks will find all kinds of creative ways to afford what they can’t.

Mike Anderson

In yet another venue, cash is obsolete

Just a few years ago, the idea that a business would not accept cash for a major purchase seemed unthinkable. But my monthly newsletter from Delta Airlines (also announced at their web site), I was advised that for on-board snack boxes or adult beverages, only plastic would be accepted as of December 1, 2009. (Not true of Delta Connection routes, by the way.)

Implications: Just because a lot of people are shunning debt in favor of a pay-as-you-go lifestyle, don’t expect credit cards to become extinct. Because of the convenience, the “nice to have in an emergency” factor, and because of our increasing propensity to buy online, they remain a financial utility we can’t live without. (And Delta knows it.)

Mike Anderson

Tuesday, November 17, 2009

Another take on "post-recession consumer characteristics"

A lot of people have opinions—and survey results to support those opinions—about how the consumers we serve now are wildly different than the consumers we served before the recession.

This week, I was sent another such report by Lucy Rice at Comcast Spotlight in Portland. The study groups consumers into four basic types. I’ll offer those categories here, (along with my paraphrased understanding of who those people are).

Steadfast Frugalists (composed of people who demonstrate extraordinary self-discipline and spending restraint; might have considered themselves to be tightwads even before the recession).

Involuntary Penny-Pinchers (this group contains people whose new thrift habits have been imposed by circumstance, not necessarily because they are thrifty by nature).

Pragmatic Spenders (people who are cautious, but who know a good deal when they see it, and are most likely to return to their pre-recession spending patterns).

Apathetic Materialists (folks who were least impacted by the recession, and are therefore the least changed with regard to spending habits and future intentions).

But don’t settle for my interpretation of the terms. Take a look at the free version of the report (the full version is available for a fee): Just click here to nab the report from

Implications: This is another fascinating report which provides us with yet another group of terms to describe how consumers have been impacted by the recession. What I like about these kinds of reports is that they expand our perspective—especially when informed by research—which continues the dialogue of how consumer trends will be influenced, long-term, by the Great Recession. (I have long held that the recession will be over long before the effects of it.)

At the same time, many of these studies measure consumer sentiment. And since most consumers are also humans, that sentiment can change quickly. (I applaud this particular report for noting pre-recession behaviors, in addition to measures of sentiment.)

As I’ve written in this space previously, the effects of the recession could last a while. Some people could feel the pain for a long while. Others will recover in a shorter while.

But history suggests that neither recessions nor human behavior are permanent.

Mike Anderson

Grabbing cookies while the lid is off the jar

Recently, I’ve noticed that two seemingly unrelated stories… that are very much alike.

First, much coverage has been given to the way some drug makers seem to be hiking prices now, fearing they won’t be able to later, if current healthcare reform efforts indeed become law. (See a version of the story that appeared in Raleigh’s News & Observer online.)

Second, a number of banks are hurrying to adjust the terms and rates for credit cards, as a seemingly pre-emptive move before new rules are put into place for the industry. (See a version of the story that appeared in the New York Times.)

Implications: When a company rushes to alter prices and terms—which might be prohibited or more difficult later—is essentially a way of circumventing anticipated regulation. It will be interesting to see whether and how consumers react. Will they see these price hikes as evidence that government should never get involved with the private sector? Or will they perceive these moves as evidence that the pricing strategies of these industries have been abusive, and their recent behaviors justify the anticipated new regulations?

What if you’re a pharmaceutical or credit card company that has not raised prices or changed terms? Will your organization continue to be clumped-in with the rest of the “bad guy” industry? Or is this an opportunity for your company to ride in with a white hat… ready to rescue the consumer?

What if you’re a pharmacy retailer—a drug store—who must break the news about price hikes to the consumer, over which you had no control? How will you explain the changes to customers, in a way that keeps you from bearing the brunt of their frustration?

Often, when circumstances that might change the status quo can be anticipated by the players involved, those players move to protect their status, before anyone changes their quo. Moves like this can spark some interesting consumer responses… so stay tuned.

Mike Anderson

Friday, November 13, 2009

Down-sizing the dream home

In this morning’s Wall Street Journal, an article indicates that the average size of new homes is falling, in response to an economic frame-of-mind that has people (and builders) re-thinking what they can live without.

Implications: There are some super-sized implications for smaller living spaces. Some of the potential impact: Smaller rooms, smaller furniture, and the expectation that furnishings and appliances will be expected to do more than one thing or satisfy more than one need to earn a place in the space.

Mike Anderson

From dangerous spectacle to manageable rush

A story in the New York Times this week illustrates an interesting paradox for retailers hoping to attract throngs of people on the biggest shopping day of the year: How do they keep the crowd from hurting itself and their employees on "black Friday?"

We approach the first anniversary of a tragic stampede, in which shoppers at a major discount store trampled an employee in their rush to grab limited quantities of sale items.

Implications: Competition for retail sales is very high right now. But as a backdrop to all of their strategic planning about "lost leaders" and door-buster savings... wise companies are also asking, "What if we get the crowds we hope for? Are we prepared to handle all those people in such a short time?"

Aggravating the risk of “extreme shopping” is that in an economy like this, stores will be even more compelled to sell, and shoppers will be even more compelled to save. So both vendors and buyers could be seen as “motivated” to offer/pursue door buster deals this year. Also, retailers have been learning to manage the recession for more than a year now,* so inventories have been kept low, and popular items could be in short supply. Rarity can contribute to the “rush” mentality.

Mitigating the problem: Economics have driven consumers to spread their holiday expenses over a longer period of time… easing the pain of working through those gift lists. By “black Friday,” at least some consumers will be far along with their holiday shopping… less driven by the urge to grab hours-only bargains. Their desire to start the holiday shopping season early has been answered by many retailers, who have been discounting heavily prior to Thanksgiving. Another element that could have a calming effect on shoppers on "big Friday morning:" The likelihood of press reports that will remind shoppers of last year's tragedy.

Catastrophe is not the only risk of getting massive response to an offer. If the marketer cannot fulfill on the offer in the manner consumers were led to expect, it doesn't take long for the "big event" to go from high drama... to customer service trauma.

Mike Anderson

Wednesday, November 11, 2009

The good news/bad news dilemma that could affect your recovery

Not long ago, a story in the New York Times announced that union members had voted-down Ford Motor Company’s request for help in achieving further cost savings. Essentially, the union membership said, “Sorry, but we’ve given enough.”

As a backdrop for this development, recent marketing messages for the company have celebrated increasing quality and customer satisfaction scores, increasing sales, and increasing profits. It all sounds like a lot of great news… in an industry that’s been going through a very tough time.

Implications: I write this blog entry not to single-out Ford… but to recognize it as perhaps an indicator of things we might expect, as (hopefully) the recovery continues to build momentum. On some scale, many companies will eventually go through the conundrum that Ford is now facing.

Lots of companies asked their labor pool to “share the pain” as they navigated the deep recession of 2008-2009. That pain was distributed in the form of pay cuts, furloughs, reductions in staff (resulting in a higher workload for remaining employees at the same or often lower pay), and the trimming or elimination of employment benefits.

As the turn-around grows, companies might find their labor relations tested… if renewed prosperity for the corporation fails to trickle-down to the employment population.

One should note that in The Times story, Ford warns that failure to accept additional cuts could result in more outsourcing, and further reductions in domestic factory employment. These possibilities notwithstanding, union members have drawn a line in the sand. Perhaps that conflict can be attributed to a company whose workers have heard woeful news internally, compared with messages of prosperity and hope in external marketing… and are now having difficulty reconciling the two.

Because the employees of a company ultimately determine the quality of goods produced, or the quality of the service customers receive... this could be an imminently relevant consumer trend. Happy customers are seldom produced by unhappy companies.

Mike Anderson

Monday, November 9, 2009

The purpose-driven purchase

Remember “keeping up with the Jones',” or the idea of buying something as a “status symbol?”

How ironic that seems now, in an age of Conspicuous Responsibility, where so many consumers have realized that money is indeed an object. Now, the idea of an impulse purchase (at least, of any meaningful size) seems a distant memory.

I’m going to offer a link to a story that I’ve shared before, having to do with the back-to-basics, brown-bag lunch attitude being demonstrated by so many consumers; it came in a Research Brief from Media Post. Among other illustrations of thrift, the story cited research showing more people are trading in bottled water for the very similar product that comes out of their faucet.

Implications: There’s a reason I’m coming back to this issue, beyond the attention I gave it in last week’s posting (“Saving money on one thing to subsidize another”). And that is to offer a reminder that price is never the only issue--and that it is seldom the most important issue--affecting the purchase decisions consumers make.

If I sold bottled water, the period from the 1980’s to 2007 treated me pretty well. People thought of bottled water as pure, healthy, delicious… and maybe even sporty. But among all of the reasons people bought bottled water, this was one of the biggest: Why not?

Allow me to over-simplify. During periods of relative wealth, people didn’t need a really good reason to buy stuff. In fact, they really only needed an absence of reasons to not buy stuff.
These days, we need sound, justifiable reasons to make a purchase.

If I sold bottled water today, I’d be analyzing whether my marketing was more style (hip, sexy, cool) than substance (benefits associated with the product, such as purity, flavor, etc.)

One of the big reasons for bottled water is convenience, and I’d be talking about that. Walking, running, hiking, driving… let me count the ways where carrying a “glass” of tap water is inconvenient. If my water was packaged in a recyclable, environmentally-friendly bottle (aren’t they all?), I’d be talking about that. If my bottle of water provided essential vitamins, I’d be talking about that. And since thrift is one of the big reasons, currently, to NOT buy bottled water… I would give thrift a new context. “When you break for your brown bag lunch at the office, why buy your soda or bottled water out of a machine (which usually comes at a higher unit cost)? Instead, buy [name] bottled water by the case, where ever you buy groceries… so you can have a convenient supply at a reasonable price.”

Whatever you sell—from bottled water to backrubs, from automobiles to education, from furniture to sportswear—realize that the economy has provided consumers with a very big “why not” to buy your offering. Fewer people are in a position to buy for no reason. It’s time to get re-acquainted with the real benefits that are satisfied by the product or service you sell.
Mike Anderson

Friday, November 6, 2009

UPDATE: Don't be surprised by economic mood swings

This morning’s news is filled with evidence to support a notion we’ve offered here on several occasions: Just as the recession hit some people (and companies) harder than others, economic recovery will move farther and faster for some people (and companies) than others. (See “Saving money on one thing to subsidize another,” or “The (effect of) the recession is (not) over.”)

Last night, there were several reports of improved retail sales for the month of October, primarily at discount, club, and mass-merchandise stores… but also for some more upscale retailers. (Click here to see the story that ran in the Wall Street Journal last night; to see a graphic about monthly year-to-date sales comparisons, click on this link to the New York Times.)

This morning, though, news that unemployment had hit 10.2% in the U.S. dampened that positivity, though. By 8:15 a.m., the Minneapolis Star Tribune had published an Associated Press story about a resulting drop in worldwide stock prices.

Implications: First, with regard to retail sales, October sales results indicate that the middle might be a tough place to live, for a while. Sales were up first and continue to perform at discount retail… and now, there are finally signs of improvement at many upscale stores, too. (If you live in the middle, with a less defined position, it seems like the verdict is still out.)
Secondly, this collection of news reports reinforces that an economic recovery will likely include numerous ups-and-downs (as we have offered here
as early as last June and as recently as last month.)

That said, I’m surprised at the stock market reaction to the unemployment news today; the double-digit number had been predicted for months. People knew it was coming. Hopefully, an “Oh yes, we’ve talked about that already” attitude will prevail soon… allowing investors to calm and markets to rebound quickly.

For those who are unemployed, or whose incomes are otherwise impacted, times are still tough. For those families who have been doing fine all along, it seems like they’re finally starting to feel like they can return to shopping, to some extent, and not feel bad about it.

Mike Anderson

The walking unwell

A rough economy can make some companies cut benefits… like the amount of paid sick leave their employees receive. A rough economy can also make people nervous about taking advantage of the paid sick leave they have earned; either because they don’t want to been seen as a slacker in an extremely competitive job market… or because they know times are tough and their company needs them.

I was inspired to think about this issue after reading a recent story in the New York Times which raised serious questions about the consequences (and complications) of people who work while sick… during the H1N1 pandemic (aka “swine flu”).

Implications: Employees who strive to courageously “play through the pain” for the good of themselves or their company could actually be doing far more harm than good. First of all, the H1N1 virus is to be taken seriously for your personal welfare. And you’re not doing the boss or the company any good by helping the virus spread farther and more quickly through the company workforce. So what are the alternatives?

I can’t believe that I haven’t seen this topic addressed, somehow, by companies who sell personal and home office equipment such as computers, networks, smart phones, etc. H1N1 presents a great argument in favor of telecommuting.

It has seemed particularly difficult, this year, to find out where and when vaccines are available (for both the seasonal and H1N1 inoculations). With so many pipelines of communication open these days (traditional media, the web, social networking), I cannot imagine why that information is so hard to come by… except that the vaccines are simply not available in enough locations. But one solution might be having the HR team at your company do some research about where employees can become protected against these illnesses, and post that information conspicuously throughout the workplace. (This isn’t too tough. Just visit

Another might be to partner with a local healthcare organization to bring the vaccines right to your workplace.

In an upcoming staff meeting, tell the workforce you take their well-being seriously… and you hope other workers will help pick up the slack, as you encourage sick employees to stay home.

Mike Anderson

Thursday, November 5, 2009

Saving money on one thing... to subsidize another

Sure, “frugality is in fashion.” But is it the only thing people are wearing this year? The aggregate of media reports might even lead one to believe that thrift has become absolute.

I don’t think so.

Among my morning mail today, there was a Research Brief from Media Post, noting that consumers have been brown-bagging for lunch at work, and trading in bottled water for tap water with remarkable frequency. The newsletter from Phil Lempert (see The Supermarket Guru site) indicated that if-and-when people entertain this holiday season, they’re more likely to have a pot-luck party, and more likely to use generic or store-branded ingredients when they bake or cook. So people are cutting back at every turn, right?

Not so fast.

The same Lempert report indicates that more than two-thirds of people said they will contribute to a party they attend, just to help out the host.

And this week, a New York Times story cited evidence that retail sales began to rebound in October.

Implications: At first, this set of observations seems to be at odds with each other. But upon further review, I think it is greater evidence that people are more likely to be judicious, deliberate, and calculating when they spend. One might say they are cutting-back in lower priority (commodity) purchases, to subsidize the spending that is seen as more important or of higher priority.

Have you noticed how, recently, when someone tells you of an item they bought, they feel obliged to tell you why it was such a good deal? (Translation: “I’m an astute shopper or negotiator, who knows how to find a great deal.”) Or, when that same friend tells you of an “indulgence” they recently purchased, they’ll justify it by also telling you how they’ve saved in another area of their life, so as to afford the car, trip, TV or other indulgence? (Translation: “I’ve earned this item through self-denial and sacrifice in other areas in my life.”)

Whatever business you’re in, it might be smart to ask, “Is my product or service as the affordable alternative that helps her subsidize a more important purchase, elsewhere in her life?” Or, “Is my product or service the one she is prepared to save for, wait for, or stretch to afford?”

There is no shame in either position. In fact, regardless of the state of the economy, there are companies that will profit in either role.

Before I close this posting, I’ll also ask you to consider how people are talking about their spending, more than ever, amongst themselves. Whether bragging about a long-awaited indulgence, or sharing tips about where they found the latest, greatest deal on something… there’s a lot of person-to-person marketing going on right now. Are you doing anything to harness that marketing power (i.e., electronic coupons that are easy to forward to a friend, two-part coupons--one to use, another to share--that reward one customer for bringing you another, taking a digital picture of the customer with their new product that they can then post of Facebook, etc.)?

Mike Anderson

UPDATE: Giving credit... a little differently

Last Wednesday, I wrote about “Giving credit where credit is… making people nervous.” The article suggested that while financing remains an important resource for consumers—and an important profit center for many businesses—the way credit is offered should be placed under review. (Some folks are just plain tired of having credit cards thrust upon them through offers that seem too pushy.)

Over the weekend, Marketing Daily published a story citing research from Mintel… indicating that direct mailings from credit card companies were down more than 70% in the third quarter, compared to last year.

I just found that interesting, and wanted to share it.

Mike Anderson

Friday, October 30, 2009

Hot for the holidays: Gifts that satisfy needs, and togetherness

Some families could use the upcoming holiday season as an excuse to buy items they’ve been putting off for a while, according to a story in today’s Marketing Daily. Citing Deloitte's 24th Annual Holiday Survey, the article also suggested that spending will be strong in categories that bring people together (such as entertaining and family get-togethers).

Implications: I keep waiting for pundits to start using the phrase, “pent-up demand.” Perhaps this story is one example of that; evidence that purchasing, for now, will follow (long-term) trends, rather than (short-term) fads.

Have you noticed a more calculated, methodical consumer buying your products and services? Have you noticed that purchasing is motivated less by conspicuous consumption or extravagance, and more by authenticity, experiential value, and the enjoyment of family and friends?

I’d love to hear about any observations you may have from your category of business. Drop me an email, and share your thoughts.

Mike Anderson

The (effect of the) recession is (not) over!

Last night, news reports across America heralded the news: The GDP grew 3.5% in the third quarter of 2009, a signal that the deepest recession since the Great Depression was over. (See the New York Times version of the story by clicking here.) But today, those reports were countered by news that general consumer spending is still anemic… leading to a nasty drop in the stock market today (see the Washington Post version of the story by clicking here.)

In yet another story that supports Elm Street Economics thinking, a video segment from this morning’s Wall Street Journal suggests that consumers and investors lack confidence in what’s happening on Wall Street or Pennsylvania Avenue. See the video here (commercial pre-roll required).

Implications: Not all companies will exit the recession in unison; some companies will begin their recovery sooner, move through it faster, and rebuild revenue higher than others. Whether your company is on the fast track to recovery—or parked on the side of the road—depends on how well your company has nurtured its relationships among its most important customers.

Do you know—for sure—who your very best customers are (the really heavy users of your product or service)? Do you know—for sure—what benefits they hope to satisfy when they buy what you sell? Do you know who else your potential customer might consider shopping… in the hopes of satisfying that set of benefits?

Yes, there are still consumers who are spending, albeit in a more strategic, methodical, calculating way. Whether those consumers will respond to your marketing campaign may depend… on how well your marketing responds to consumers.

Mike Anderson

UPDATE: Is Social Purpose the new social status?

An interesting follow-up to our recent posting about Social Purpose (see immediately below, dated 10/29/09).

In today's "Engage: Teens" column, Media Post suggests that youth, especially, respect companies with a genuine connection to a cause they support. See the piece by clicking here.

Mike Anderson

Thursday, October 29, 2009

Is social purpose the new social status?

A recent study of 6,000 consumers in ten countries reveals that 57% of those surveyed have purchased a brand in support of a cause or charity, according to a story published by Marketing Daily.

A majority of consumers assert that they have chosen a brand—even though it wasn’t the cheapest option—because of the social responsibility or cause supported by that company.

Implications: Even in a volatile economy, it may not be enough to fine-tune the values offered by your company; it is always important to consider the values held by your consumers. Which causes are inherently supported by your company’s customers and prospects? In what ways might you support the charities that are near and dear to your customer’s hearts?

Remember, not all cause marketing has to focus on fund-raising or charitable contributions of cash; we suggested that you consider “Experiential Philanthropy” in an Elm Street Trends blog posting earlier this year.

When your company considers its’ value proposition, are you considering the values of the constituents you serve?

Mike Anderson

Wednesday, October 28, 2009

Giving credit where credit is... making people nervous

Credit has fueled much of the consumption-driven economy over the past several years. But since we’ve entered an age where credit is seen differently—compared to, say, three or four years ago—it might be time to evaluate the types and timing of your credit offer.

I’m thinking about a popular department store that my wife and I visit, occasion. When you first walk in the door, you are greeted by someone whose job is to offer you a credit line: “Welcome to [store]! Would you like to save 15% on today’s purchase by offering a [store] charge card!?” (I’ve actually seen people cowl, slightly, in response to the sometimes aggressive way the greeter approaches.)

Then, if you find something you’d like to buy from the retailer, you get the same offer from the cashier. “Would you like to save 15% on your purchase today… by opening a [store] charge card?” The way the question is asked, one might feel a little stupid for declining the discount (whether you already have a card, or because you don’t want one).

At various Elm Street Economics workshops around the country, I’ve told the story of a little old lady who we saw offered a store charge card… who replied by nearly lecturing the poor clerk behind the counter. Wagging her finger, she said, “I don’t see a lot of customers in your store shopping today. Why don’t you give me a discount because I’m shopping and giving you my money!?”

Whether because of the sub-prime mortgage meltdown, an aggregate credit card balance that currently tops $900+ billion, or because of all the press given in favor of responsible consumption (or against abusive use of credit), the U.S. consumer could be said to have (at least) a mild aversion to credit right now.

Implications: I don’t mean to suggest that credit should not be offered. But I would submit that the current climate of “credit aversion” should at least affect the way financing is offered, and perhaps encourage companies to offer alternatives to credit.

For retailers who offer credit, is it wise to be as aggressive as the (anonymous) retailer I’ve mentioned above? Should “charge card” really be the first and last impression a customer has of your store? I might be more inclined to under-state the offer, knowing that people who really want to finance the purchase will inquire or find the information on their own (would conspicuous point-of-purchase signage be sufficient?).

When credit is offered, I would avoid the “indulge now, pay later” attitude at all costs. It is fashionable to be frugal right now; by extension, it is unstylish to be a spendthrift. Instead, perhaps an offer of financing could empathize with the consumer: “We know you have a lot to accomplish surrounding the holidays, and our [store] credit card can help you make those expenses a little easier to manage.”

It might also be smart to respect that much coverage has been given to the fact that fewer consumers will qualify for financing. With that in mind, does the consumer really want to apply for instant credit, right there at the check-out stand, with a half-dozen shoppers in line behind her, looking on? Retailers would be smart to consider a more discreet area for the customer to apply for credit, where the outcome is learned in a place of relative privacy.

Next, maybe that little old lady had a point: Should you offer an incentive to have people pay in cash? (It’s my job to not overlook the obvious.)

Another possibility: Should you offer alternatives to credit? Last week, Kids “R” Us announced that they were bringing back layaway for big-ticket purchases, according to this story from AOL Money & Finance. I wonder if people would also respond to “Pay now, enjoy later” offers similar to the Christmas Club Accounts that became popular during The Great Depression (see the Wiki-Pedia entry on the topic).

The first credit card was introduced less than 60 years ago (the Diners Club card, 1950). Now, many consumers are learning how to live on less—or without—credit. If your target consumer is among that group, it is critical to make sure you’re doing business the way they want it done.

Mike Anderson