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

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.

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

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 TheDetroitBureau.com, 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

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

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

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

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

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

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

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 CarGurus.com… 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

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

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

"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.

Implications:

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