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Tuesday, March 24, 2009

Search can help you find... TRENDS

"I have a coupon for that.” Here’s just another predictable effect of the tight economy: People are more likely to use coupons. Evidence supporting that assertion can be found online, according to a recent report by Comscore. Studying the patterns in December, 2008, and comparing those results to the previous year, searches involving the term “coupon” were up 161%.

“Will work for work.” As further evidence that online behaviors are a reflection of real-world life… searches including the term “unemployment” are also up dramatically; better than 8.2 million searches happened in 12/08, compared with under 2.7 million the year prior.

Implications: I started this story by writing about coupons. But it turned out I was writing a story about Search. It occurred to me that thinking about the ways people use “Search” can help you find… if you’re looking for trends, that is. Visit Type the topic you’re interested in into the search bar. And see how (and where) that topic has been searched by others. For example, type in the word “foreclosure” to see when the spikes occurred in the mortgage meltdown. Or, type in the words, “job market” to see when people were studying possible “next steps.” [Try typing in the key words of a major headline next time there is breaking news. You’ll see where that news holds the tightest grip on an audience.]

As online tools—like search—become increasingly ubiquitous, they become an increasingly accurate reflection of our real-world lives.

Now, before I go, a few thoughts on couponing. While printed publications and packaging remain great ways to distribute coupons, remember that the web can put almost any company into the coupon business. Further, online coupons are just waiting to be “forwarded to a friend,” provided you plan that idea in your consumer’s mind.

Mike Anderson

When Hog heaven meets "down to Earth"

A detailed story in the New York Times suggests the road is getting a little bumpy for Harley Davidson. In recent years, the company has done well by targeting aging baby boomers out to “recapture their youth.” But the story points to tight credit markets as a speed bump that could slow the company’s sales. Another curve to prepare for: Many boomers are evaluating the effects of a volatile stock market on their investment portfolio… more concerned with their impending retirement than the purchase of recreational equipment.

Implications: According to the NY Times story, the average age of a Harley rider is 49; it was 42 as recently as five years ago. And the average household income of today’s rider is reportedly $87,000. But the road ahead might not be as clear as the one behind; boomers aren’t as young as they once were, and fewer of them are booming.

The company acknowledges the need to develop products and sales strategies that pull a younger consumer toward their brand.

Is your company selling to the same consumer that it targeted ten years ago? Five years ago? Twelve months ago? Does your current consumer have the same needs they had a year ago? Five years ago? Ten years ago?

Do you sell a solution for a problem which no longer exists (or is no longer a priority)? Does your new target consumer have different reasons for buying than your old customers? I have great confidence in Harley Davidson, as a brand; they've been down recession road a time or two. And as I wrote back on February 13 (Sales Cycles: Born to be Wild), I think this entire category has great potential. But just as many of their customers seek a way of recapturing their youth, I have a hunch the folks at Harley Davidson will focus on capturing the next generation of bikers, not just serving their existing core.

Mike Anderson

Comfort food... and thoughtful people

The headline was sweet: “Tootsie Rolls Soothe Souls.”

I was entertained by this recent New York Times story that cited a spike in sales for candy makers and candy stores. Apparently, people have used this small indulgence—and their sweet tooth—to cheer themselves up from a spate of economic bad news.

Implications: Okay, if you’re already a candy manufacturer or retailer, this is obviously good news. But how can you use this if you sell appliances? Or if you work at the teller window of a drive-through bank? Or if you just have co-workers who walk by, from time to time?

I don’t often make predictions. But I’m banking on the return of an old classic: The desktop candy dish.

On a recent shopping trip, an appliance salesman caught me glancing at the dish of mints sitting on the counter. Intuitively, he offered, “They’re for customers, go ahead and take one.” I grinned.

On my last visit to the auto bank, a teller noticed the beagle sitting in my passenger seat; when she sent the canister holding my receipt, it also held a dog biscuit. I grinned again.

Both experiences struck me as thoughtful. As a consumer, who has treated you “thoughtfully,” lately? As a company, whom have you treated in kind?

Food for thought.

Mike Anderson

Monday, March 16, 2009

For some, a return to "the paycheck cycle"

The current economy has impacted more than just what people buy. In some cases, it has affected how and when they buy it. With credit card companies often trimming the size of credit lines and adjusting terms, “cash is king.” But in an economy like this, the month sometimes lasts longer than the money… so many businesses are seeing a return to the days when consumer spending spikes immediately following a payday.

Read more about the phenomenon in this story from the Wall Street Journal.

Implications: What consequences might our increasingly cash economy have on your business?

If you’re in retail, the paycheck cycle could affect staffing, stocks and more. (Does it make sense to “heavy up” near the first of the month, and run more efficiently toward the end?) Is the same true for people who run restaurants?

If you’re a manufacturer, or involved with merchandising, does it make sense to showcase larger packaging (stock-up sizes) at the beginning of the month, and then dedicate more shelf space to smaller sized packages toward the middle and end of the month (for people who want just enough to “get by until payday”)?

Have you noticed any cyclical mood swings in your customers; seemingly lethargic or “thrifty” in the second half of the month… but smiling and upbeat after payday? If you’re a local company, it might be a good idea to check around with the major employers in your trade area… to see which payroll monthly, which write checks bi-monthly, and which companies call “payday” every week or two weeks.

Mike Anderson

In the red, feeling blue, but not going gray

There have been a few stories about the “salt” that has appeared in Barrack Obama’s hairline lately. Comparisons of current photos to those taken during the early Primary races suggest that gray hair comes with the job of getting elected, and holding the job of President. But don’t expect everyone to gracefully accept the gray.

I started thinking about this when colleague Sophie Fry sent me a Today Show story asserting that, even in a rough economy, hair coloring is one cost that is unlikely to see the chopping block. (You can read the story for yourself at the Today Show web site.)

[Writer’s note: There was another fun story in last week’s NY Times on the evolution of hair coloring. The topic is almost a trend unto itself.]

Implications: There are many aspects of aging that people cannot control. This one, they can. “You’re as young as you feel” has long been the mantra of both middle-age-and-older adults.

But there is a reason this issue caught my attention at this particular time. A lot of pundits are hammering on the idea that people have abandoned their “want” purchasing, and have move strictly to a needs-based buying discipline. I don’t disagree. But I believe the word “need” is open to interpretation.

Artificial hair coloring is another one of those things that is far from having a place on Maslow’s Hierarchy of Needs. But if someone “needs” to cheer herself up, and a lighter shade will do the job, don’t stand between her and the Clairol aisle. If or someone “needs” to feel younger to survive their re-entry into the job market, don’t be surprised when he reaches for a bottle of Just for Men. And don’t be shocked when that coloring comes not from a bottle, but from a high-priced salon. Price is relative… and lots of people are still quite willing to put a premium on perfection.

Is hair coloring a “Need?” That’s arguable... unless you’re screaming into middle-age or beyond.

Mike Anderson

UPDATE: More coverage on "shifting gender balance"

Back in February, I offered some thoughts on Shifting Gender Balance at Work and Home. Consider additional perspective on that topic from this recent story on ABC News, as featured during a Good Morning America segment.

Mike Anderson

When you make the payment, but the landlord doesn't

Much coverage has been given to the anxiety that is suffered when someone loses their home to direct foreclosure. But another anxious issue is arising: Felt by people who are not being foreclosed upon, but who live in an apartment complex owned by a corporation that is having financial trouble.

A recent story on MSNBC explored the chain-reaction—and frustration—imposed on people who rent from landlords that are having trouble. Below, you can watch video of one of the subjects in this story… a young renter who describes problems with upkeep, health hazards, and more (commercial pre-roll required).

Implications: My first thought on this topic is: How long will it take for lawyers specializing in renter/landlord litigation to become very high profile? (Similar to the way many personal injury attorneys now advertise.) There will be a tangled web of obligation to be sorted out; should I pay full rent if my landlord isn’t living up to his end of the deal? If ownership of a property transfers to a bank or trustee, does the responsibility of upkeep also transfer? And if a renter breaks their lease, who, exactly, should attempt to enforce any penalties?

The second--and more universal--thought that occurs to me is this: In an age where so many covenants are being broken, trust will command a premium. Consumers who make their payments will be cherished by companies. And companies who live up to their promises will be cherished by consumers.

Mike Anderson

Wednesday, March 11, 2009

The symptoms of credit withdrawal

At this year’s meeting of the National Retail Federation, Carl Steidtmann of Deloitte Research shared some observations about the impact of the credit crunch on the future behavior of consumers. Among other things, he suggested that consumers will attempt to pay-down their debt load, and that the cash required for this process could have big implications for spending in other areas. (Steidtmann refers to the process as, “de-leveraging.”) Here are the highlights of his remarks, as captured and offered by Advertising Age:

Implications: In our Elm Street conversations, I cite a 2007 story from the Los Angeles Times, in which a couple still owes thousands of dollars on a 2001 SUV, but trades it in on a new truck… paying nothing down, and rolling all of the debt into the new truck payment.

When things like this happen, the consumer is not the only one who mortgages a piece of their future. The auto dealer, too, is effectively rendered incapable of selling to this prospect for years and years to come. Of course, if one dealership were to walk away from this business, another dealership would be there to step in and take it… so competitive forces colluded to perpetuate this “credit over-extension.” Thus, both automobile buyers and sellers share culpability for the circle of credit over-extension.

But that's enough about car dealerships. Think any big-ticket category. What are options to the use of traditional credit? Will we see the return of “collateral” as a precondition of lending? Could your company (or someone in your category) offer layaway as an alternative? Or leasing? Or rental? Is there a way to reward customers who are in a position to pay with cash?

From your current vantage point, perhaps none of these options seems reasonable, because of your historic operating style or infrastructure. But one thing’s for sure: If it’s a good idea and has the potential to be profitable, somebody will do it.

Mike Anderson

Sometimes, the big cheese travels "incognito"

There is a cheese company near Rochester, Minnesota, that you’ve probably never heard of. And that is exactly how Pace Dairy seems to like it. You see, there’s no such thing as Pace brand cheese… at least, not that I know of. The company sells its product under an entirely different name: Kroger.

Pace Dairy is a producer of store-branded products. And they’re doing pretty well, thank you. At a time when so many companies are announcing layoffs, Pace is in the process of adding roughly 30 employees, according to recent stories by and the Rochester Post-Bulletin.

The additional employees will help the company supply increasing demand for store-brand cheese at Kroger stores… driven by consumers who see store brands as another way of hitting the re-set button on their spending patterns. Store brands are given a lot of the credit for the recently impressive performance by Kroger, as reported yesterday in the New York Times.

Implications: Sometimes, fame and fortune have little to do with each other. Here’s a company that is producing a product for which they will not be famous, but through which they are making a fortune! But that fun observation aside, their example inspires some potentially profitable thoughts.

I have long been fascinated by a consumer behavior we refer to as “fill-in purchasing” (also one form of what you could call “Inconspicuous Consumption”). That is when she buys a very expensive (and noticeable) leather jacket from an upscale department store… but pairs it with a $14 tee from T.J. Maxx. Or when a homeowner invests in an ornate sculpture or original painting they’re sure everyone will notice upon arrival in their great room… but then completes the look of the room with accessories from Target.

You can make money selling the leather jacket. Or, you can make money selling the less conspicuous accompaniment; the savings from the latter helping subsidize the former.

Do you represent the marquee product that a consumer will indulge in? Or are you the less expensive alternative which helps the consumer afford one of those luxuries. What is your role… in helping the consumer feel like “the big cheese?”

Mike Anderson

Define "qualified buyer"

I was speaking with a salesperson at a furniture store, recently, who shared a rather ironic story about some “qualified buyers” who had visited her store:

“A family had come into the store with the goal of buying the makings for a wonderful home theatre. They had already purchased the screen and projection system, and were looking for some cabinetry and theatre-style seating. During the course of our conversation, I learned that the family had recently lost their home to foreclosure. When it became clear that they would lose their house within months anyway, they stopped all attempts to make a house payment and started socking that cash away… presumably to help pay for their transition to apartment life. They saw a home theatre as a good investment… cheaper than the weekly dinner and a movie, especially when you consider the cost of a babysitter. ”

“The gentleman confided that they had felt “rejected” by a salesman at another store. When the clerk at the previous store learned of their housing situation, he assumed them to be an unqualified shopper, and became dismissive. As it turns out, they were the biggest cash customer my store had that day.”

Implications: How do you define “qualified buyer?”

Are you sure?

Mike Anderson

Intelligent thoughts on the consumer's future

Visitors to this site know I often get frustrated by pundit commentary. (How can so many experts know where the recession is going, when they didn’t see it coming?) It all reminds me that the smartest people in the room aren’t always those who claim to have the right answers. They’re the people with the right questions.

Lee Scott was the CEO of Wal-Mart up until the first of last month. My hunch is that this guy knows a thing or two about retail. But even from his admirable position, he didn’t claim to have the answers. Instead, he went to consumers with questions. After sharing some of his observations during a keynote speech to the annual meeting of the National Retail Federation recently, he fielded some questions that were captured and published by Advertising Age. This is definitely worth your three or so minutes.

Implications: First, it is important to note that when Mr. Scott describes his observations about consumer temperament, his sample is largely composed of Wal-Mart shoppers. While that’s a lot of people, it is not “everyone.” And it is a market segment that is presumably pre-disposed to being price sensitive.

That having been said, Mr. Scott seems to suggest that people are less likely, going forward, to spend without contemplation. Consumers will be more likely to deliberate, contemplate, compare. I take his comments to suggest that you should once again compare the value you deliver to that of your competition. Because likely, that’s what your customers will be doing in greater numbers.

[Author’s note: Am I the only person so impressed by the humility of this guy, who until last month ran the largest retail company on the planet?]

Mike Anderson

The adverse feedback loop (of marketing)

This week, the Mediabrands division of Interpublic Group is publishing a “proprietary” study of consumer sentiment that uses words like "scary", "dismal", and "depressing." I have not seen the study, but I have read a number of published accounts, published in places like Reuters and MediaPost. Thus, I cannot comment on the research itself… but I am comfortable discussing the parts of it that have been strategically released: To me, it seems less alarming than alarm-ist.

The published excerpts and company sound-bites about this study seem to indicate that, not only is the sky falling, but that it has landed and crushed us all, with such speed and ferocity that most of us are not smart enough to notice that we’re dead. It implies that consumers no longer buy anything that is wanted, and purchase only those items they desperately need. Presumably, the only way to crawl out from under this cataclysmic collapse is to…

I’m not sure. That’s where the publicly-released versions of the report just kind of “end.” I suppose you have to buy the full report… or be a client of one of Interpublic Group’s 90-or-so different advertising-related companies.

Implications: In his semi-annual report to Congress back in February, Fed Chairman Ben Bernanke referred to a phenomenon called the “adverse feedback loop,” in which weak consumer sentiment, an unstable stock market, and contracting job market had essentially become mutually-reinforcing. (See a summary of his remarks at the Federal Reserve Web site, or read one of the press accounts like this one in the Globe and Mail.)

I’m not sure why bad news—like the research mentioned above—seems to get so much coverage. But I do suspect it contributes to an “adverse feedback loop” of consumer behavior. Have consumers begun to re-calibrate their priorities? Absolutely. But have all consumers eliminated all “want-driven” spending? Absolutely not!

Recessions are not equal-opportunity events. The current economy is impacting some folks more than others. In fact, some people (and some companies) actually prosper during an economic downturn. You might not be selling to precisely the same customer you considered your “target consumer” two years ago. And today’s buyer might have different purchasing priorities and buying criteria than last year. The Great Recession is teaching all of us that we need to focus on what the consumer buys and why, rather than what our company might sell.

In our own research, CSS has discovered there are people who think of a new 50-inch television as a need. Others who define a need as going to a movie theatre regularly… because it helps them get away from life for a couple of hours. Are these items considered “foundational” to Maslow’s Hierarchy of Needs? Hardly. And yet, both of these industry categories seem to be doing fairly well right now, thank you. And there are others.

As for me, here’s what I need: A little less sensational reporting (maybe more careful scrutiny of the press releases used as the basis of a story).

Like many consumers, I’d like a little good news. How about the story where gasoline costs half as much as it did last July? Or the one about inflation being under pretty good control? Or the one where tax credits are available for energy-efficient products and first-time home buyers? Or that credit is cheap for those borrowers who qualify? Or that the consumer is diggin’ how there are bargains galore out there, and are taking advantage of this buyer’s market?

It is true that many consumers are re-calibrating their spending habits. But companies would be much smarter listening to some consumers and using that input to redefine their value proposition… rather than spending their time dodging acorns.

Mike Anderson