Click on the banner to visit our new and improved consumer trends blog!

Friday, January 29, 2010

Improvements in the GDP for Q4 2009

This morning, a story in the Washington Post gave details about the nice surprise that was the U.S. economic performance in the fourth quarter: The economy grew, and at a rate better than expected. The Gross Domestic Product (a broad measure of economic performance) rose 5.7%, according to data released by the Commerce Department.

Of this number, analysts suggested that roughly 3.4% in growth came from companies that have dramatically slowed the pace at which they were cutting existing inventories. Companies that were investing in new software or equipment represented 0.8% of the number, and consumer spending contributed 1.4%.

Implications: It’s way too early to proclaim “the recession is over,” for reasons cited in another Washington Post story that explains why the economy is still fragile. Beyond what that “counter-point” story suggests… I’ll toss in the topics of employment and credit. Much of the GDP is driven by simple consumption, and nothing drives consumption (read: spending) like a consumer who feels good about their future prospects for a dependable paycheck. Jobs are a critical economic focus for 2010. Further, many consumers continue to make “reduction of debt” a key priority. That makes jobs even more critical, as people will spend on a paycheck-cycle basis, rather than spending on a whim, using plastic.

That doesn’t mean anyone should take a “wait and see” approach. It means that consumers will continue to be selective, deliberate, judicious; it remains critical to focus on your most ideal prospects, and super-serve the most important benefits and priorities with your marketing efforts. Concentrate on your most important customers, and be prepared to list the reasons (publicly) why you deserve to be at the top—or close to the top—of their consideration list.

I’m delighted at this morning’s news. You should be, too. But I’ll stay tuned to what is likely to be a story with at least a few more twists and turns.

Mike Anderson

Thursday, January 28, 2010

Automotive: A case study in rapidly shifting fortunes

This week, I just happened to be on an assignment which involved working with a number of car dealership owners and managers, with the goal of helping them study industry and consumer trends, and explore ideas to help re-connect with the consumers they serve (that is the essence of Elm Street Economics).

On the flight home last night, I had a chance to think about the events of the week. Could there be a better time or topic in which to study shifting opportunities and challenges… than right now, and the auto industry?

I’ve already written in this space about Toyota’s self-imposed suspension involving (both sales and production of) eight models (see the Elm Street posting from 1/27). But consider where Toyota was just a few short years ago. To me, it seemed like Toyota was about the last major manufacturer to be affected by the recession, having ridden a reputation of quality smoothly through the first signs of economic turmoil. (An economic downturn hit the greater automotive industry earlier than most other sectors.) But recall issues – and the general downward momentum of the overall economy – helped the company catch up (or down) to their rivals, in terms of challenging sales. The events of the week will clearly have an immense impact on local dealerships that carry the line (here’s a story on that topic).

In the other extreme, there is Hyundai. Again, just my opinion, but it was not that long ago that Hyundai wasn’t even on the radar for most consumers. Fueled by awards recognizing their improved quality, however, and further aided by their recession-related “gesture marketing” efforts that began last year (the “Assurance” campaign), the company has recently enjoyed growth in market share, in the face of significant strife in the general economy.

Another example of optimism is Ford. A little over a year ago, the company decided against taking the offer of bailout money from the federal government (see the story), which might have given the company a credibility advantage compared to those who did accept the cash. Today, the company announced that 2009 was a profitable year (see the story). These factors, along with a head-start in digitizing the dashboard and making their vehicles “sync” with the driver’s gadgets, give Ford a sense of momentum, in my view.

Across town at General Motors, the past week has brought a new CEO and perhaps a new sense of direction and optimism, as the company now vows to pay back its bailout obligations earlier than previously planned (here’s the story from the NY Times). Having essentially euthanized Saturn, Pontiac and Hummer, and now having made a deal for Saab, it seems like the company can start looking ahead again, rather than swatting at the flames that were coming up behind them.

Implications: Of greater interest to me than the big headlines about recalls, bailouts, or new CEOs… is the response that will occur at the local level, among both dealerships across North America, and the consumer those dealers serve.

Many dealers look to their manufacturers for a sense of direction, and consider the nameplates they carry an important part of their identity. In a world where the manufacturer’s reputation or product line has become “tainted,” the relationship each dealer has with its customers—and the communication they share—becomes more important than ever. And even those companies that are doing well right now must look at the events of the past two weeks and thing, “Gosh, glad that’s not me.”

The fact is, that might apply to a wide range of categories, products and services, I suppose… as crisis seldom asks any company whether now is a good time to visit.

Mike Anderson

Wednesday, January 27, 2010

Do you recall anything like it: An unprecedented "stop selling" order from Toyota

As a perpetual student of how companies behave and how consumers respond, I am fascinated by everything that is happening right now in the automotive sector. In short, Toyota has ordered their dealers to stop selling eight models, including the very popular Camry and Corolla. Rather than belabor the details here, I’ll provide you with links to a few different places where the story is shared in detail:

The statement from Toyota (PR Newswire).

USA Today: Toyota suspends sales, production, of eight models.

New York Times: Gas pedal flaw leads Toyota to stop building 8 models.

Wall Street Journal: Toyota halts sales over safety issues.

And here’s the story from NBC News (commercial pre-roll required):

Visit for breaking news, world news, and news about the economy

Implications: Many observers are comparing this announcement to the sweeping recall of Tylenol by Johnson and Johnson back in 1982. I’m not so sure that’s a fair comparison: That historic event was related to a sinister plot in which Johnson and Johnson (the maker of Tylenol) was one of the victims; the company was quickly exonerated… as the incident was a matter of package tampering.

This is a case of quality control, involving a company that has long enjoyed a reputation for quality.

In the short term, to say that this hurts Toyota and its dealerships is an understatement. But over the long term, I’m thinking about a number of questions.

  • Will this move be seen as a courageous and decisive move by Toyota; a painful move they were prepared to take in the interest of protecting their valued customers?
  • Will this issue be seen as something that should have been discovered and addressed sooner? It follows a massive recall that was announced last week, and media attention about the gas pedal issue that has been going on even longer.
  • For consumers who were considering one of the Toyota models involved, which competing models might now become favorable alternatives? Or, will those consumers wait, and give
  • Toyota a chance to better define the problem and explain its solution?

If you’re a student of consumer behavior, stay tuned for a fascinating case study.

Mike Anderson

Tuesday, January 26, 2010

A story about some trends in retail

A good story in this morning’s USA Today shares four trends that are likely to be seen at retail stores near you. In short, the article discusses the types of inventory you can expect to see (or not), the prices you can expect to pay, the experiences you can expect to have, and the tendency of retailers to become more “green,” driven more by cost savings than saving the world, but green nonetheless.

Implications: I enjoyed this story because it leave you with at least two common-sense take-aways...

If you offer a commonly-available product in an unimaginative manner, people will expect to pay a generic price.

Because people might go shopping less frequently, they might be more likely to seek-out the special, the experiential, the unique. They can simply “buy goods” online. When they come into a retail store, they are more likely to be seeking an experience. (Again, a return to the simple idea of a value proposition.)

Mike Anderson

Sunday, January 24, 2010

Free Wi-Fi connects with connected consumers

Commuters in the Northeast will enjoy free WiFi on Amtrak trains—at least during a trial period—according to a recent story from USA Today. The move puts Amtrak on an even keel with Delta, US Airways and other airlines with short routes on the East Coast. The train line began experimenting with the offer as early as last October, according to this posting from Business Traveler Online.

All kinds of companies are using WiFi as a “freemium” incentive. Over the holidays, Google sponsored the service at select airports for hurried holiday travelers. And most folks are familiar with the Internet access available at their local coffee shop, like Starbucks or Caribou Coffee.

Implications: I suspect consumers will always find a way to stay connected… with or without you. If your company has cause to make people wait (a dentist office or other health care provider, auto service center, etc.), you have reason to consider providing this service.

Mike Anderson

Friday, January 22, 2010

The Recovery: Optimism among small business owners

In retaliation for all the crummy news we started getting hit with when the recession was gaining steam, I’m taking pleasure in sharing good news when it surfaces.

Citing a report from TD Bank, Media Post Marketing Daily published a story this week about optimism in the small business community. The article indicates that 87% of respondents think their company will perform at least as well—if not better—as it did in 2009.

Implications: It was interesting to note that if they had it to do over again, 35% said they would do nothing differently from their plan in 2009; 24% suggested they might even be more aggressive, in terms of marketing.

Mike Anderson

The Recovery: Slight uptick in pre-owned vehicle prices?

Following a link from the Automotive Digest newsletter yesterday, I was led to this story from Auto Remarketing, a trade resource for folks in the used car business. It indicates a slight rise in prices paid at auction for pre-owned vehicles.

Implications: A while back, I offered a posting at this site about the possibility of rising vehicle prices, resulting from the “Cash for Clunkers” program (“When supplies are crushed,” 8/10/09). The idea was simply that by taking so many used cars “out of the market,” the program could affect the balance of supply and demand in the used vehicle market.

Something else that could affect prices, of course, is if demand is either going up, or is anticipated to be going up. With increasing signs that a recovery is underway, dealers might be preparing for more shoppers walking on to the lot or into the showroom.

Mike Anderson

The Recovery: Room for optimism in the restaurant business

Consider this an update to my posting from January 18 (“How does the consumer define you?”).

In today’s Media Post Marketing Daily, there was an article suggesting gradual improvement in the restaurant business for 2010, citing a report from the National Restaurant Association. While the group acknowledges that more challenges lie ahead, they see good opportunities for restaurants that respond to evolving consumer preferences. If you read the second half of the story (Menu & Marketing Trends), you discover that the issues growing in importance include convenience, sustainability, and healthier eating.

Implications: This Media Post story seems to confirm that the recovery will go faster and farther for some restaurants than others, as determined by how well a company is tuned-in to the desires of their patrons. Convenience, in this article, seems to reflect the velocity at which people are moving right now; they want to be able to call ahead, browse a menu online (often via mobile phone), and have the meal ready for curb-side pickup or home delivery as a means of managing a busy schedule.

It was interesting to see the weight placed on “sustainability” in the story. During the recession, you heard some folks suggesting that “green” priorities would fade away as people placed more focus on their pocketbooks than on the planet (I was not entirely in agreement with that assertion). But it seems that folks continue to favor companies who make it a policy to be energy efficient, use locally-grown products when possible, and take other steps to preserve resources and protect the environment.

Mike Anderson

Thursday, January 21, 2010

Two lessons on the importance of tuning-in to consumer trends

Two or three years ago, you might have called these two companies, "Underdogs."

But by the end of 2009, Forbes magazine called Joel Ewanick of Hyundai the Chief Marketing Officer of the year (click here to see the story). That was icing on the cake; the company had already been named “Marketer of the Year” by the readers of Advertising Age, attributed largely to their “Assurance” and “Assurance Plus” campaigns. Earlier this month, CNN/Fortune ran a story suggesting Hyundai doesn’t just “want” to win in the world market… it “expects to win.” And this week, the company announced that it would double the co-op advertising funds available to dealerships, according to a story in Automotive News… so it looks like they’ll be doing everything they can to maintain their North American momentum.

Ford has things to celebrate, too. According to MarketWatch, it closed 2009 with nice numbers on the most important scorecard: Sales. And the company is doing well with awards, too: CEO Alan Mulally was named “Leader of the Year” at the Detroit Auto show (according to the Detroit Free Press). The company also took top honors in categories like “Car of the Year” and “Truck of the Year,” according to this story from CNN/Money. (It’s the first time in 17 years that one company took top honors in both categories in the same year.)

Implications: Think about this. If I’d have asked you back in say, early 2007—"Which car companies would enjoy the greatest momentum as we moved into 2010"… what might your list have looked like? Would Hyundai be at the top of the list for imports? Ford for domestics? Where would Toyota have been on your list? General Motors?

Ironically, neither of these companies seems to be winning the car wars exclusively because of their cars. Ford has taken a leading-edge approach to incorporating technology into the dashboard, and Hyundai has wooed buyers back into the showroom with a demonstration of empathy. To paraphrase their main campaign, “We know the economy is tough, and we’re going to help; go ahead and buy, and if you lose your income, you can bring back the car without harm to your credit.”

Here’s the best part of the Forbes story on Ewanick: He was surprised how few people actually took advantage of the “Assurance” program; far more people responded to the campaign than actually took Hyundai up on the offer. But the offer was made—and people appreciated it—which gives rise to the term, “gesture marketing.” That’s when a company extends an offer that demonstrates, “We know what you’re going through, and we’re doing what we can to help.” Or, “We know technology is central to your life now, so we’ve loaded the dash board with it.”

Are consumers are responding to Ford and Hyundai… or have these two car makers simply done a good job of responding to consumers?

Mike Anderson

Wednesday, January 20, 2010

Everything but the kitchen sink

One of the reasons I see home improvement as a bellwether category for the recovery: Home destruction was a bellwether of the recession.

My wife and I were among those folks who were able to sell one home (by choice) and buy another during the recession. It was about one year ago we learned that our existing home had sold, so we were shopping the menu of foreclosures and short-sales with considerable intensity… to find our real estate “deal of a lifetime.”

Among the candidates, we saw a remarkable number of homes that had been stripped, if not nearly destroyed, by the people who had recently lost or abandoned their houses. In one of the most extreme examples, we found a beautiful house that had been stripped of kitchen cabinets, water heater, central air conditioner, woodwork, several plumbing fixtures, electrical switches and recepticles, and a fireplace mantle. (The listing price of $199,000 belied its original selling price of $400,000... about a year earlier.) Almost everything had been removed… including the kitchen sink. Not taken but damaged severely in an apparent fit of rage: The furnace, the bathroom fixtures, and the main waterline supplying water to the house (which was smashed below the shut-off valve, resulting in a flooded basement). A recent story in the New York Times shows that our findings were particularly rare... at least, not in recent history.

My wife and I settled on a home that needed a little less repair. But right about now, I’m confident that lots of folks who found their way into a “deal” on a broken-down home are discovering that the repairs involved are over their heads.

Implications: Electricians, plumbers, carpenters and other sub-contractors are less busy with new home construction, due to the over-supply that generally exists in most real estate markets right now. The good news is that existing home services should be a very hot category, fueled, in part, by the number of people who are taking advantage of the current real estate market to take a home from “abandoned,” to “amazing.”

That service sector is further enriched by our departure from the “disposable economy.” More people are hanging-on to appliances, cars and other durable goods for longer periods of time. (Think of it as “stretching the buying cycle.”) This is especially true in the home… where many people might be “upside-down,” owing more against their home than it could be sold for, given current real estate prices. Many homeowners might find it difficult to sell and then buy into their dream home… and are thus more likely to turn to home improvements, as a means of making their current home more closely conform to their dreams.

Various local and federal incentive plans stand to put more buyers into the real estate market throughout 2010. But for now, home improvement (sales, as well as service) is likely to be the category that benefits nicely from the current “fixer-upper” climate.

Mike Anderson

The odds of crashing your computer, literally, are going up

More manufacturers are putting more devices into more cars. We’re not just talking about stereo systems and GPS devices, here… but full display computers with access to the web.

One could argue that consumers were first to bring technology into the vehicle, first with cell phones and then with text messaging via handheld device. In fact, the topic has grown into a major series of columns in the New York Times about the dangers of using technology while behind the wheel, called “Driven to Distraction."

The most recent story focuses on models that make it easy to surf the Internet—from your dashboard—and interact with your smart phone via Blue Tooth. And an "open platform" from some companies invites the development of more and more applications for in-car computing.

Implications: As a marketer, it occurs to me that many web sites are still “built” for that traditional, iconic computer that sits on a desk in the home or office. But increasingly, the consumer is using non-traditional channels to access the web, including very basic mobile phones, sophisticated smart phones, and now, even their cars. Many companies “optimize” their websites for mobile, in terms of programming, but fail to optimize their web sites for a highly mobile consumer. Does your site have an “executive summary” on the home page, which abbreviates your story for the small-screen user? Is there a convenient “click to map” button (so I don’t have to search Google maps to find you, thus giving me the chance to see one of your competitors)?

As a driver, I’m wondering how long it will be before regulators intervene further… with regard to the way technology is offered or used on the road. (Many states already have laws against texting while driving, and the Department of Transportation has launched a web site on the matter, at According to the NY Times series, 11% of drivers are on their phone at any given time; an estimated 2,600 deaths occur each year… in traffic accidents involving drivers who were using a mobile phone. One final tidbit of interest: Half of Americans believe texting while driving should be punished every bit as harshly as driving while drunk.

We already shake our fists at drivers who cut us off, swerve in traffic, or nearly rear-end us while yacking on the phone or checking their email. How will we feel about sharing the road with drivers who are trying to catch the latest funny YouTube video? It conjures an image of people, literally, crashing their computers.

Mike Anderson

Tuesday, January 19, 2010

How does the consumer define you?

One might assume this posting is about the restaurant industry. But I think its implications stretch into many other categories.

Not long ago, Applebee’s was a casual family restaurant. But apparently, they have become a fast food restaurant. What did Applebee’s change? Nothing. Now, they’ll run food out to your car if you call ahead with an order… but they’ve been doing that for years. What has changed is the consumer’s definition of what “fast food” means, according to Technomic research cited by a story in today’s Media Post Marketing Daily.

The article suggests that this shift is self-induced; many fast casual restaurants have long been hitting the consumer with messages about low prices and high velocity service. Those are the keystones of a fast food restaurant, so…

Makes sense, doesn’t it?

Implications: As consumers were down-grading their out-of-home dining costs/consumption during the Great Recession, lots of companies were striving to retain their share of the restaurant dollar, even if that meant competing with the price-oriented burger joint down the street. And in their effort to say, “We can do that, too,” when it comes to speed and value, it looks like many casual sit-down restaurants have succeeded in being compared to standard quick service restaurants (QSRs).

As the recovery unfolds, I wonder if sit-down restaurants will remain happy about that comparison. Low margin product sold in high volume is a model that serves the fast food industry well. But is “fast and cheap” a sustainable model, over the long term, for places like Panera Bread, Applebee’s, or TGIFriday’s? Or will casual, sit-down restaurants need to re-build an identity that is associated more with quality than cost?

Many companies and categories have used extraordinary tactics to protect or gain share during the recession, with price cutting chief among them. But the questions become:

Will the tactics that served you well during recession serve you, also, in the recovery?
Did you adjust so successfully during the recession that your temporary plan became (or confused) your primary identity?
If you’ve spent three years teaching consumers that you’re a discounter, in what ways might you gradually return to sustainable margins? How will you help the consumer reconcile/justify a less discounted price?
Have the efficiency measures and other adjustments to your business helped you discover a new way of doing business
that is sustainable over the long haul?

These questions can be tough to answer, but they can be even more painful to ignore. Start by considering this question first: How does the consumer define you? After all, you are who the customer thinks you are.

Mike Anderson

Generational Economics: An age of diverse fortunes

Having just finished a bit of work-related travel, I find myself going through various stories I have saved from the past month or so. When you compare cultural notes side-by-side, over time, the process can reveal a fascinating, conflicted picture of American life.

For example, a story in the New York Times early last month paints an image of seniors facing tough financial times; especially those living in rural areas. The article shared examples of self-denial and seniors “just getting by” on the most meager of supplies, as a matter of financial necessity. For many older folks, one might conclude, a nest egg either never existed or it shrank in the turmoil of the stock market over the past few years.

Same newspaper, different day: Here’s an article about people who are growing older and engaging in more extreme activities than ever, published by the NY Times earlier this month. From wing-walking on bi-planes to mountain climbing… it seems that experiential vacations are bigger than ever for the boomer generation and beyond.

Somewhere in-between, there is that group of "new age seniors" that are preparing for their next job... retiring from the career they've always had to have (for economic reasons), to take the kind of job they've always wanted to have (for reasons of personal satisfaction and self-actualization... and maybe to supplement their retirement income a bit). A website called illustrates how more people might be retiring from a primary career... but that doesn't mean they are retiring from life!

Implications: The two NY Times articles paint a picture of extremes, and an economic (if not cultural) divide that separates the haves from the have-nots, even when you limit the sample group to senior citizens, specifically.

How dangerous it is, in an environment like this, to suggest that, “Nobody is spending,” or, “People have cut way back.” Within just this pair of stories, one sees a collection of people that are definitely hurting, having been hit by a perfect storm of living on a fixed and falling income, whose nest egg was not helped by the ups and downs of the stock market, and whose remaining savings yield the small return of historic low interest rates. But in contrast, there are seniors who are spending to fly, try and experience things their parents would never have dreamed of; people who are enjoying not just a longer life expectancy, but the expectation of a better life, longer. And if I might be so bold: People who are growing older, but who refuse to grow up.

Marketing to traditional, ambiguous targets like, “Persons 35+,” or, “Adults 25-54” is done to a company’s peril. It’s more important than ever to study the target consumer in specific, granular terms; go beyond their age, income and education levels to study the lifestyle, predispositions, household composition, and aspirations of your target consumer.

Mike Anderson

Monday, January 18, 2010

How to avoid being killed by killer apps

It would have been really cool to be to be the leading manufacturer of Compact Disks back in, say, 1990. Or even 2000. But in 2010, you’d just be the winning player in a losing game. Now, fewer and fewer people buy “albums.” Instead, we buy “mix tapes,” made possible by i-Tunes, the i-Pod, and a host of other online music stores and mp3 players.

Disruptive technologies can be very painful… unless you’re the disruptor; I was reminded as much by a recent story in the New York Times, which cites the App Store itself as a major shift in the way people look at—and use—their mobile phone devices.

Some pundits look at the world of software for smart phones as a novelty. But that might not be a good idea, according to this recent piece by Phil Lempert. From planning recipes to retrieving coupons, smart phones can now help any Consumer Packaged Goods (CPG) company—and even the supermarket—make life easier for the phone owner who won’t leave home without it.

Implications: Okay, I was among the cynics when “apps” were first becoming popular. I assumed most of the available apps would just extend the “texting” experience, or provide ways for teenagers to feed their insatiable appetite for social networking. (Now that so many social networks are so mainstream--and I'm among the users--I confess to dining on a little humble pie.)

Recently, I started carrying a Droid. And while I have a few helpful items on my phone that could be considered “novel” (a “level” for my home improvement work, a compass, a flashlight, etc.), I’ve also discovered some highly functional programs that make my life as a consumer… easier.

I can “search” using voice recognition. When I find something that I’m thinking about buying, I can take a picture of the bar code, upload it, and have a site tell me where to find other stores that carry the same product, at what prices, within walking distances.

But I’m not here to sell smart phones. I’m inviting you, no matter your business, to keep up on the latest technologies… whether accessible from a laptop or a palm-top.

At best, you might find a way to harness the power of those devices to benefit your consumer, and therefore, your company (if you haven’t already). At worst, you will avoid being blind-sided by the latest killer app… and you will realize, again, that in an increasingly web-commoditized world (where the cost per pound of any product or service can be compared from anywhere), it is critical to be diligent about the purchase experience your customers enjoy.

Consumers are increasingly and conveniently able to comparison shop for anything they buy; not true for how they buy it. Outstanding service before, during and after a sale make it both difficult and unnecessary to comparison shop when it comes to purchase experiences.

Mike Anderson

Will governments be digging through the couch cushions?

I intend no political opinion with this story. I’m just sayin’.

If retail sales are down, sales tax revenue is down. If incomes are down, income tax revenue is down. So two recent stories inspired me to wonder whether governments might soon be turning-over the cushions on the sofa, looking for any spare revenue they can find.

A while back, the New York Times ran a story wondering whether companies like Amazon—and other online retailers—will soon be seen by more states as a potential source of sales tax revenue.

Another story—this one from Marketing Daily—indicates that France is looking for ways to gaggle some money from Google. (Again, politics aside, I suppose it’s hard to see a company making so much money without wondering how to get your hands on some of it.)

Implications: Governments world-wide have been hit hard by the Great Recession, due to increased costs for social programs and stimulus packages, as well as falling tax revenues.
As the recovery gains momentum—and as bills for these programs come due—it is only a matter of time before they seek to reclaim—or find alternatives to—the cash required to keep the wheels of government turning.

It will be interesting to watch how consumers respond… in terms of acceptance (or not), household spending, and political ramifications.

Mike Anderson

Happy to have work ≠ happy ABOUT work

Lots of people are thankful to have a job right now. But a recent survey from the Conference Board suggests that only about 45% of Americans are content with their work.See this Associated Press video, courtesy of the USA Today web site. (Or see the written version of their story by clicking here.)

Implications: Let’s divide these implications into two different groups.

Customer satisfaction. Consumers can sense when employees have contempt for a company they work for; it surfaces in the quality of products a company might produce, or in the service a company delivers. Employee discontent leads to customer unease and dissatisfaction. If you have unhappy employees, this issue is a challenge worth solving. If your competitors have unhappy staff, this is an opportunity worth exploiting.

Employee recruitment and retention. The story cites issues like the feeling of job security, opportunities for advancement, and of course, pay and benefits as the leading reasons someone is either happy in their job or not. Most people could accept cutbacks in pay—even in light of added workload—when the economy began to recede. But those same folks will be watching the recovery diligently—anticipating that their full paycheck will be restored and their workload made more reasonable—as evidence of normalcy return to the general economy and the revenue line of their company.

If it will be a while before your company can fund these improvements to employee pay and work style, it will be critical that you communicate with the team about when you anticipate those improvements. (Most folks will be more tolerant, if they’re not left in the dark.)

If you (your company) is in a position to reward the staff for helping you through the tough times, this might also be seen as a great time to position yourself as “an employer of choice,” recruiting top talent from among those competitors whose company is not recovering as quickly as the greater economy. It’s something to watch for over the next twelve to twenty-four months… if not indefinitely.

Mike Anderson

Friday, January 8, 2010

Evidence that the recovery is available, but that it must be sought

I’ll cite three recent New York Times articles… which both fuel a sense of optimism and stress the need for companies to pursue an economic recovery, rather than wait for it to arrive.

This January 4 story about good progress in the manufacturing sector warns that factory-floor employment is still a bit fragile. (Companies could simply be placing orders to restock inventories that had taken two years to grow lean or diminished.)

This story from January 7 indicates that the Grinch did not steal the holiday season; consumers held-out until the last moment, hoping to capture steep discounts similar to those of 2008. But with better inventory management this year, many retailers were able to protect margins and still generate sales. (Bottom line: Consumers spent more than anticipated during the holidays, and more than they spent in the same period in 2008.)

The jobs report released this morning warns that while companies are firing less, they are still not hiring more. We’re in much better shape (in terms of employment) than a year ago, but the road back, in terms of employment, could be a little longer than anyone wants, and hold a few bumps and curves.

Implications: Just as the Great Recession was, in many ways, unlike any recession before it… the economic recovery that follows it may look nothing like we’ve seen before. I have said before—and I am increasingly convinced—that this recovery will not be an equal-opportunity event. Some regions, categories and companies will recover faster than others.

Waiting for the recovery to happen is a bad idea. The more logical approach is to reconsider who your most valuable target customers are, how and why they buy (determine the real benefits they seek when they seek your product or service), and how you can be seen as the best option against the most critical purchasing criteria.

Good things come to those who wait. They come faster to those who grab.

Mike Anderson

Monday, January 4, 2010

The Experience Economy

A weekend story in the New York Times offered validation with regard to one of the most important shifts in consumer behavior we’ve focused on during dozens of Elm Street Economics workshops over the past year: The renewed focus on experiences. The Great Recession caused an economic re-set in many households, during which family incomes declined (or heads-of-household feared such decline), and the use of credit was greatly reduced. Consumer spending went through a contraction, as people set-aside frivolous wants to preserve cash for those things that were perceived to be more important needs.

Just as nature abhors a vacuum, this cessation in the acquisition of “stuff” left a hole in the typical household that needed to be filled. In many homes, that hole was filled by things like a return to more frequent family dinners—around the family’s own table—and playing board games on Friday nights. Many folks became re-acquainted with simple pleasures… and quality time.

For many consumers, this led to an epiphany: What I have is not as important as what I have done.

Implications: Because the recession was so protracted—going from late 2007 deep into 2009—many companies have had the chance to analyze and adjust their inventories to meet changing demand. But it's not enough to consider what people will buy. Consider how and why they want to buy.

If “experiences” have become so important to the consumer…
  • Beyond enhancing the product or service you sell, how can you improve the way you sell it? From the consumer’s point-of-view, what will make this purchase experience enjoyable? What issues could make the transaction frustrating (and how can you fix them)?
  • Should your marketing place less emphasis on buying the product… and focus more on the ease/ enjoyment/satisfaction of owning it? (Buying is an incident. Owning is an experience.)
  • After years of acquiring—much of it on credit—many consumers have come to the realization that their assets can become liabilities. What is your return policy? How likely are your products to retain their value over time? Why will the consumer still be happy with this purchase in a week? A year? Two years?
It is my observation/opinion that consumers have used the Great Recession to send a clear message to marketers: Experience wanted. (Not your experience as a provider. But my experience, as the consumer.)

If the experience and benefits of your product fail to distinguish you from other potential providers, the consumer has little choice but to decide based on price alone.

Mike Anderson

Coming soon: Movies that are virtually portable?

As the entertainment industry looks forward to its interconnected, digital future, one of the biggest challenges they face is content portability. Movie studio execs and entertainment retailers (like Best Buy) fear that consumers will find online-delivered content easy to resist, because it lacks portability. (If I own a DVD of a movie, I can take that disk to a friend’s house, watch it on my own system, or take it with me to be viewed on a plane via laptop. If I download a movie from or i-Tunes, that film must generally be viewed on the system to which it was downloaded.)

During the Computer Electronics Show later this month, a consortium of entertainment and electronics executives will be meeting to explore the development of a standard digital format, which would allow the consumer to access her/his digital content from virtually any device, anywhere. (See more on the matter in this story from the New York Times.)

Implications: Companies have long modified or introduced products and services in response to consumer demand. But the concept of Consumer Control continues to evolve… influencing the very terms of a transaction, and how products and services will be sold.

In what was has your company allowed--or even invited--the consumer to exert their influence over the purchase experience?

Mike Anderson