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Tuesday, February 24, 2009

Diagnosing opportunities caused by health care funding issues

Long before any of this current economic turmoil began, the baby boom generation was already moving toward retirement like a pig through a python. As this group ages, common sense presumes their health care needs will increase… and that will put significant additional pressure on our health care infrastructure, as well as Social Security, Medicare and probably Medicaid.

Add to this mix the fact that in a world flush with layoffs, there are plenty of people who are at risk of losing access to their employer-paid (or subsidized) insurance or other health plans.

Now, pressure from other areas is being added to the mix. A recent story in USA Today suggests that local governments have not set aside enough funding to satisfy their commitments to retired civil servants. Meanwhile, a number of industries are making every effort to cut operating costs, and health care is an attractive target (for example, see this recent story in the NY Times about General Motors).

Implications: I don’t know enough about the topic to have a personal opinion about health care policy, and if I did, I would not share that opinion here. But I raise the health care issue because it has the capacity to impact so many different industry categories.

Retailers. If you sell sporting goods, should they be positioned as toys, or is there a fitness angle? If you’re a fitness center, can you partner with a local clinic to offer tips/expertise that might enhance the workout? If you are virtually any other company… could you benefit from providing a place where free screenings, advice, inoculations or other preventative care could be offered?

Food producers. Have you fully capitalized on any health benefits associated with the product you sell? Is your health benefit authentic? (Just as consumers familiar with true environmental issues introduced the term “green washing” to tarnish companies with unsubstantiated eco-claims, anticipate that consumers will be increasingly smart about health matters… and they’ll know a placebo—powered slogan when they see it.)

Health care providers. How will you compete with the infusion of minute-clinics now available at so many retail locations? There is obviously a demand for quicker, cheaper health care; do you supply any kind of options to meet that demand? Do you have a storefront? (That storefront might be a building, but it could also be a web site, publicity, or other outreach efforts.) If you have this “retail” presence, will the “docs in a box” image hamper your efforts to communicate professionalism and expertise?

Employers. If you’re in an industry where insurance has been an assumed benefit for decades, and now you’re being forced to reduce or eliminate those benefits, what will be the response from your current workforce? Your future workforce (will this impact your recruiting capabilities)? If you cut long-promised benefits to retirees, how will that impact your current employees (will they worry that you don’t keep your commitments)?

Employees. Realizing you will almost certainly bear a more significant share of your own medical expenses in the future, will you change your lifestyle? Will you begin to see the fitness club membership as an investment, capable of off-setting future medical costs? Will you read product packages more carefully, realizing that diet has a big impact on your well being?

Politicians. If you thought debate on matters of health care have been intense the past few years, you ain’t seen nothin’ yet.

At times like this, we are reminded that there are no good answers… until we ask really good questions.

Mike Anderson

The payoff for hitting a moving target

There are a lot people on the move right now. There are families moving from their owned homes to rental properties as a result of the foreclosure crisis. Others are moving from one town (or part of town) to another because of a change in employment. And there are even some folks who are taking this opportunity to “upgrade” their homes because of the great values available right now. Not to mention the seasonal- and stimulus-related movers: People entering the career job market for the first time, and first-time home buyers who are discovering attractive incentives to home ownership.

The reason you should be thinking about this? The first reason is that relocation, itself, creates somewhat of its own economic ecosystem. And we’re not just talking about the folks who dine out frequently during the days leading up to and following the move (the appliances are on a truck, so you can’t cook!). A recent story in Marketing Daily suggests that families will spend $7,300 on everything from window treatments to takeout meals in the three months following a move. And the spending remains strong long after the move: They spend an average of 52% more than non-movers on home d├ęcor and furnishings in the first year in their new digs.

There is another, even more important reason you should think about these folks: They’re moving away from lots of stores and service providers they used to do business with. In effect, they’re “up for grabs.”

Implications: There are significant challenges to “hitting a moving target.” But for the companies who succeed, there are significant rewards. If you’re a restaurant, grocer or convenience store, you can replace the needs once met by a kitchen whose utensils have been boxed-up. If you sell home improvement supplies, you enjoy the dual-opportunity of people who have a home to touch-up before they depart, and who aspire to make a home of the house or apartment they’re moving into.

But hitting a moving target can hold great opportunity for more than just the restaurant, convenience store, or home improvement warehouse. Because when someone moves into a new home, it is almost always in a new neighborhood: That consumer is no longer as close to their old bank branch, pharmacist, supermarket, convenience store, coffee shop, dry cleaner, hardware, fitness club…

Many of your prospects (consumers) are on the move. Are you keeping up?

Mike Anderson

Absent communication, there is confusion

I read a good story from Marketing Daily recently, which discussed the about-face of financial institutions recently, with regard to their correspondence with consumers. The article cited direct mail activity as tracked by Mintel, which noted that credit card and mortgage and loan offers accounted for 86% of all direct mail offers. No wonder the activity was down 26%.

In another Marketing Daily report, Boston Consulting Group research indicated the importance of communicating with customers, especially in the financial sector. When asked if they were satisfied with their financial institutions, 83% of those who had been contacted by their bank recently said, “Yes.” Those who had not been contacted said they were happy only 53% of the time. Similar satisfaction declines were reported by people who had not been contacted by their investment brokers or insurance companies.

Implications: A while back, I wrote about the importance of transparency and clarity, with regard to financial institutions, insurance carriers and investment counselors (Let us be perfectly clear, 1/20/09). In a confused economy, there can be no clarity without communication. Those in the financial services sector who feel they have bigger fires to focus on right now might not realize the blaze of contempt that is at hand.

Are your clients confused by everything that’s going on? Would they appreciate—or do they expect—a phone call, letter or email from you, providing counsel? Reassurance? A simple report?

Often, what consumers fear most is the unknown. Regardless of the business you’re in, what kind of communication could you offer to relieve that stress?

Mike Anderson

One thing you don't want to cut back on

There was a thought-provoking story in my local newspaper a while back. More of a question, really: The Minneapolis Star Tribune asked some folks, “What’s the one thing you are NOT cutting back on right now?” I’ve been asking questions like that for quite some time, and the answers I’ve heard range from “my daughter’s education” to “Starbucks” (the person I spoke to had cut down, but was not about to cut out her daily caffeine fix). From the newspaper story, one lady was still indulging in fresh cut flowers, three times a month. One gentleman refused to give up on his favorite beverage: “Beer.”

The justifications were as diverse as the sacred cows: “She’s the most important thing in the world to me,” or, “This is like one of the last little indulgences I’m hanging on to.”

Implications: Humans are fascinating people. Our priorities are as diverse as our personalities. And now more than ever, it is incumbent on each of us to know both, when it comes to the consumers we serve.

The irony of economics is that some companies are cutting back on consumer research at a time they need it most. If you work for one of these intelligence-dependent companies that are cutting back on the research budget, sulking does little good. Instead, explore whatever effective, cost-efficient means you can find… to benefit from the feedback of your customers.

A recent story by Marketing Daily offered suggestions for low-cost research methods. But beyond those you’ll find in the article, it might be time to go back to the basics: Subscription-based secondary research, such as Scarborough Research, Nielsen, The Media Audit, or RTS. Maybe you could ask consumers for their input via the good old-fashioned counter-card, or today’s digital cousin, the online survey.

While there are lots of folks out there who can help you with survey design, good research is anything that helps you understand how to retain old customers and obtain new ones. (And sometimes, just asking for a little input from your consumers is a good first step toward both!)

  • Of all their options, why did the consumer choose you?
  • If they’re new to you, whom did they used to buy from before they found you?
  • If they’re a long-time customer, what is it you provide that keeps them coming back?
Since customer loyalty is one of those things you can’t afford to cut back on, listening to the customer is one of the things you can’t afford to stop doing. So think of some questions worth asking… to customers worth keeping.

Mike Anderson

The return of the value proposition

Yes, there are weird things going on with the economy right now. But the essence of business has not changed. Consumers have money, and companies have products and services. It is the burden of a company to explain why consumers should want a product or service... more than they want their money.

Before you call me captain obvious, spend a few minutes flipping through your local paper, or clicking through the channels on your television or radio. Ignore the content or programming; pay attention only to the advertising.

There are the furniture stores that promote “Nothing down, and no payments until 2010,” offering no indication whatsoever as to the product line, style, quality, or function of the furniture they sell. In the wake of so much negative press about credit over-extension, is the chance to rack-up more debt—in and of itself—enough to pull anyone into a furniture store?

There are the clothing stores that shout about price: “10, 20, 50, 75% off and more!” But the fact is, if I don’t buy, I save 100%.

There are the car dealerships who advertise only a payment, apparently certain that price is the only criteria consumers are focused on in an economy like this. Sorry, but most consumers are not attracted to another new payment of any kind right now, no matter how small.

I want to know the vehicle I drive will get me to work reliably in a job market where I can’t afford to show-up late. I want to know the vehicle I drive is a financially predictable alternative to the old clunker that’s been nickel-and-diming me to death, because it needs one repair after another. I want to know that I’m not just buying a car… but I’m buying the loyalty of a dealership that will still be there to help me tomorrow. (I’ve heard a lot of dealerships are going away… are you one of them?) I want plain talk. I want to know I can get the deal done quickly and painlessly… without a bunch of pressure, and fast enough that I can still make my child’s Saturday afternoon hockey game. I don't want a new payment. Not even a low one. The payment is a sacrifice I'm prepared to trade for the value your vehicle and dealership can provide me.

Implications: It is time for companies to re-think how they (and their products and services) add value to the lives of consumers. There has never been a more important time to know who your most important, profitable customers are… and understand what kind of benefits really drive the consumer’s purchase decisions in your category.

This one simple paradigm shift can take the anxiety out of the marketing process for a host of companies: Instead of wondering whether the consumer will respond to your marketing plan, evaluate whether the marketing plan responds to the consumer.

Mike Anderson

Friday, February 13, 2009

The jig is up: Package sizes are down

Over the past year or two, many packages have become either shorter, skinnier, or more narrow. And consumers have figured it out: Partially because they’re hyper-sensitive to how far their grocery budget is going these days, and partially because of whistle-blowing media coverage. (If you’d like to see some examples, visit this story from the Star Tribune in Minneapolis, or watch the coverage by CBS News that began last fall. Commercial pre-roll required.)

Watch CBS Videos Online

This means war. This week, there were hints that a grocery store price war may be developing. (The threat is serious enough that it’s had an impact on some supermarket stock prices, according to Marketwatch.) I found this story at (close to home for Kroger and P&G). Just for the fun of it, I found another version of the story in The Morning News of Springdale (about 19 miles south of Bentonville).

Implications: In any squabble—price wars included—it is natural to wonder, “Who started it?” In this case, I’m not sure we can blame one retailer or the other. I think the conditions were set by a blend of tighter money supply, shrinking value-per-package at the manufacturing level, and a consumer who began to say, “Enough is enough.” They were ready for a price war. And sooner or later, someone was going to oblige.

My wife, Julie, is the procurement director and CFO of the Anderson household (okay, truth be told, she’s the CEO). She’s very good at what she does… and she didn’t need a story on the television news to tell her that our dollars were not going as far at the grocery store.

Last summer, she began to notice food price increases related to higher energy costs. When gas prices fell with the approach of fall, grocery prices didn’t. She noticed. And when recipes call for a “four-ounce package” of a certain ingredient… it doesn’t take long for someone to realize that the package is now 3 or 3.5 ounces. She noticed.

Consumers can be very smart people. If you’re a packaged goods company that is compelled to raise prices or reduce costs, perhaps you should consider coming clean... rather than risk insulting your customer’s intelligence. If you’re a reseller, have the vendors in your category set the stage for a consumer revolt? Are you ready for it? Could you even lead it, as a means of not simply being one of its casualties?

[Thanks to Steve Marx for tipping me off to the recipe size issue!]

Mike Anderson

Shifting gender balance at work and home?

Jobs traditionally held by men appear to be getting hit especially hard when it comes to recession-related layoffs, according to a recent story in the New York Times. So much so, in fact, that this decline in male employment—matched with the steady increase in the number of women who are employed—could result in a workforce that employs more women than men for the first time in history.

But before you focus exclusively on the relative increase in earning power held by women, consider the corresponding impact on spending influence that might now be in the hands of men. Because a recent story in Advertising Age suggests that an equal and opposite shift might be taking place at home. With a greater concentration of women in the workplace, more men are getting involved with the operation of the household, a fact that could have huge ramifications for products and services of all kinds. The essence of the Ad Age story is simple: Ignore men at your peril.

Implications: I’ve said it before and I’ll say it again: Traditional households and traditional families don’t look all that traditional anymore.

If you’re in packaged goods, do you still assume that she’s the one doing the shopping? If you work in a business-to-business company, do you still assume he’s the one making the decisions? If you’re a retailer, is your store designed for all of your shoppers… or only those whom you used to cater to “back when?”

It is never a good time to stop assessing who your customer is… and the how’s and why’s of why those people buy. But in a climate of remarkable change like the one we’re in right now, it is even more important to consider who you’re talking to… lest you succeed at selling to someone who is no longer in charge of buying.

Mike Anderson

Sales cycles: Born to be wild

Which products and services are still strong in a tough economy? Anything that can help consumers live a more economical life!

One example: Motorcycles and scooters. Two-wheelers became more stylish beginning back in 2007, when gas first spiked above $3 for a prolonged period. Sales throttled-up again last summer when fuel peaked above $4 per gallon. And now, even though energy prices have stabilized, cycles and scooters have been recognized as way to control commuting and parking costs. (See the February 9 story from MediaPost.)

We can speculate about why the sales spike has occurred… but it’s also good to know a little about who’s responsible. For 2009, the industry is focusing on college kids for their scooter business. But they’re also catering to women, upscale and older (according to an earlier MediaPost story).

Implications: What are you the economical alternative to? If you sell home theatre systems, perhaps you help the consumer save money compared to frequent nights of going out for dinner and a movie. If you sell movie tickets, perhaps you’re an economical alternative to the theme park. If you run a theme park, perhaps you’re the economic alternative to a weekend vacation.

It is important for you to think of how your product or service delivers, in comparison to other alternatives. Because that’s what your consumer is doing.

Also, ask whether there is opportunity available by looking at less traditional consumers-people who have not historically been attracted to your product in the past, but might be interested now. Last year, according to the Motorcycle Industry Council, 39% of new motorcycle & scooter buyers were women. That’s up from just 8% in 2003. And while the median age of motorcycle riders was 32 in 1990, it is now ten years older.

Mike Anderson

Sunday, February 1, 2009

When it comes to service, less is less

Lucy Rice, a respected friend and colleague, recently shared her eyewitness account of a customer service breakdown at a mobile phone store. Standing in line for several minutes, Lucy watched as a lady with an armful of accessories grew increasingly impatient with the wait. The clerk behind the counter was obviously out-numbered (and overwhelmed), and the line was not moving. Frustrated, the lady-in-waiting shook her head, walked up to the counter (next to the customer that was currently being helped), dropped all of those accessories on the counter, turned, and walked out of the store in a huff.

We buy mobile devices, in part, because they help us manage time. Ironically, this mobile phone store was guilty of wasting time, at least in the opinion of that anxious customer.

Hearing Lucy's story made me recall a number of similar situations I had observed recently. The customer who walked out of a quick service restaurant that wasn’t quick… and still another restaurant where two patrons were served food that had gone cold. (No frustration was voiced to the waiters or managers in either case, but both service lapses were overheard by my wife and me.)

Another case in point: Just last week, I abandoned my place in line at a car rental counter in Seattle, because a clerk was taking way too long (30 minutes) to solve a transaction problem with the customer ahead of me. Note: On this day, I jumped from a company where I have “premium status” in their loyalty club… to one of their competitors, with whom I had never done business before. Since there was nobody to complain to (no sense whining to an already frazzled clerk), the rental car company does not even know that I am gone.

I’m not just picking on one company, here. According to a recent story in Marketing Daily, a lot of CMO’s are not all that tuned-in to what’s going on behind the counter or on the sales floor.

Implications: We have all seen the news about layoffs, and we have all considered how difficult this must be for breadwinners who have been displaced and are seeking new incomes. But have you—has your company—considered the impact of these cuts on the personnel left behind? With more to do, and less in the way of tools and help to get it done, how are your remaining human resources holding up?

Are the difficult working conditions which often result from layoffs creating “silent hostility” among remaining employees? (i.e., “I don’t care if the food is cold, if this crummy restaurant loses another patron, then maybe that’s what they deserve.”)

Further, have you—has your company—considered the impact of these cuts on your customers? What can you do to mitigate problems or delays in the service they receive? Are you inviting feedback, so irritated customers can talk to you—rather than their friends—about a problem? Are your people paying attention, so that important clients don’t slip quietly into the arms of an eager competitor?

Now, more than ever, it is critical for companies to listen to customers. Many things may be beyond your control in these tough economic times. That makes it even more important to be diligent about those things within your control… so you can avoid letting the situation slip from bad to worse.

Mike Anderson

Creating collaborators... or competitors

A lot of people are being laid off in this economy. Many of them are your future competitors. Consider that companies like HP and Microsoft sprang from places like garages and dorm rooms. It takes neither office buildings nor factories to launch a company, or even an entire industry category. (Think Kitty Hawk, for example.)

We are surrounded by all kinds of companies releasing all of types of talent. Of course, these people will not just fade into the abyss; survival demands they adapt to their new condition, using whatever means available. Some might seek work with a competitor across town. Others will go back to school and expand their knowledge base and skill set. But also watch for a significant number of these people to start a business of their own, whether that means joining forces with other victims of the layoff, or simply starting a one-person consulting firm out of their home.

There is an old saying on the matter: In a good economy, many people jump at the chance to start a business; in a bad economy, they are pushed. That is why, although a freelance workforce is certainly not a new trend or idea, it is one that should be revisited.

I am reminded of a book I read several years ago, called Free Agent Nation, by Daniel Pink, which recognized that our workforce is increasingly manned by freelancers and independent consultants; essentially, companies of one. For an overview of the high concept, see this article, which appeared in Fast Company magazine in December, 1997.)

Implications: If you’ve been laid off, is there a way you could work with your former employer in a hybrid work relationship? (Often, your last company can become your first client!) Have you used professional networking (e.g., LinkedIn) to find both prospective clients and potential collaborators? Can you use these contacts to obtain counsel about pricing your services, or to build a support system to replace the one you had in your previous, more conventional, work environment?

If you’re an employer, could an alliance with employees-turned-entrepreneurs allow you to maintain a strong relationship with people whom you’d like to hire back someday? Or, could a hybrid work arrangement allow you continued access to dismissed talent, but on a more cost-efficient, pay-as-you-go basis?

Both for companies that have shed key talent, and for workers who have recently lost jobs, this crisis will demand creative solutions. With the depth and breadth of layoffs occurring in this economy, I think you’ll see the effects of this new “freelance workforce” long into the future. For some, it will mean the difference between creating collaborations… or new competitors.

Mike Anderson

What's new? Not much.

Layoffs and cost cuts are wide-spread during this recession, and the research & development department is certainly not exempt.

From airplanes to technology, the cutbacks have been as broad as they have been deep (there was a good synopsis story in the Baltimore Sun on Tuesday).

Some companies are virtually suspending R&D efforts for the time being. Others are looking at this tumultuous time as an opportunity to consolidate or reconfigure their development efforts. Nissan, for example, in addition to restructuring their North American sales organization, is consolidating their U.S. design team and moving the operation into their San Diego office; a move they believe will bring the team closer to the company's global design projects. (See the Marketing Daily story from 1/30/09.)

Implications: When one looks forward—say, a year, or three, or five—one of the lingering effects of this economic downturn will almost certainly be the dearth of new products the consumer has to choose from. Countless product innovations have been at least altered or delayed—if not scrapped entirely—because the focus of many companies is on near-term survival, rather than long-term product development. Necessarily so. But this absence of innovation could become conspicuous... about the time consumers become ready to begin spending more heavily again.

If you’re in manufacturing, who in your company is watching for the perfect time to crank-up the R&D department? What economic conditions must be present in order for your firm to re-invest in development?

If you’re in retail, can you count on your current suppliers to provide goods that will excite shoppers, once they demonstrate a desire to crank-up their consumption again? Or should you be thinking about adjustments in your product lines?

Today, consumer spending is restrained for a variety of reasons, including a lack of confidence, a tight job market, and diminished access to credit. In the future, their restraint could be a matter of complacency or boredom; their dollars being saved for the day you—or a competitor—once again offer compelling new features or product innovations.

I’m reminded of a fundamental truth: Those who cut back at the right time are more likely to survive a recession. Those who throttle-up at the right time are more likely to survive a recovery.

Mike Anderson

Solo/Simple, Social/Special: Tastes of Gen Y

Not wishing to be cast in a box like the Matures, Baby Boomers, or Gen X members who preceded them, Generation Y seems to defy any attempt to define their participants. It is a group whose only common denominators are their age, their technological prowess… and their diversity.

That said, the Center for Culinary Development recently set-out to study the tastes Generation Y. Among other things, the Center’s research found that “social setting” has a huge influence over the preferences of this group, and that those preferences can swing to wide extremes. Alone, Gen Y is satisfied with “scarfing something on the sofa.” Among friends, members of this group like to explore exotic dishes, global variety, and flavor fusions.

Oh, and, one other thing: Gen Y members love to tell their friends about amazing things they have discovered. Read one synopsis of the report as it appeared in a recent issue of Marketing Daily, or find another take on the topic at Progressive Grocer.

Implications: If you’re a food manufacturer, restaurant or grocer, which “role” do you play within the many preferences of Gen Y? Are you the source of solo sustenance? Or do you provide the makings for a last-minute gathering of friends who want to reconnect, beyond their exchange of text messages? How will you use technology to help this group “discover” the products or experiences you offer… and then inspire them to share that discovery with all of the people in their social network?

Mike Anderson