Saturday, February 27, 2010
To see previous Elm Street consumer trend postings about Pervasive Technology, click here.
Friday, February 26, 2010
I was interested by this recent story from Marketing Daily, which explains a voluntary program that Ford is encouraging among dealerships… to help their entire brand be more environmentally friendly and sustainable.
See the story by clicking here.
Implications: Greenwashing is a term for companies who claim to be good environmental stewards, but might not quite live up to the claims made in their marketing. That has to be what Ford is thinking about as it promotes a more fuel-efficient and “green” line-up as it moves forward.
Consumers increasingly realize that a product cannot be truly “eco-friendly” unless the vendor is environmentally aware throughout their operation. (Many consumers may never notice… but those who are concerned with the environment are often VERY concerned, and will pay attention to what’s happening in the background.)
Somebody at Ford knows the environmentally-savvy consumer can be very demanding: The deep green consumer knows the car cannot be something the dealership is not.
If you’re making a “green” claim… are you green through-and-through?
Thursday, February 25, 2010
A recent story from the New York Times offers a particularly outstanding example of this phenomenon: People are retiring from the job they’ve always HAD to have (for economic reasons), and taking the kind of job they’ve always WANTED to have (even for little or no pay). Click here to read the story, or, visit this sub-site to view an audio slide show.
Implications: If you’ll be expanding your workforce anytime soon, I think seniors might be a very smart labor pool to consider. Or, if you have a product, service or experience to sell, remember that many seniors have now created an extra stream of revenue to supplement their retirement plan, pension, and/or social security.
Wednesday, February 24, 2010
Click here to read the story from the St. Paul Pioneer Press. It's about the ultimate dress-rehearsal.
Implications: From test kitchens to soft-opening trials, all kinds of companies are innovating the way they prepare for a consumer engagement. And why shouldn’t they? In a world where disappointment is Tweeted or announced on Facebook in near real-time, the restaurant, grocer or retailer seldom gets the chance to explain why something went wrong.
I was recently invited to the private soft-opening of a restaurant. This wasn’t the typical soft-open, where the store was opened to the public but not yet advertised. It was an invitation-only affair… which allowed the staff to get some “real-world experience,” among customers who were friendly to the organization. “Customers” enjoyed a free or greatly discounted meal, in exchange for comments about what went right or what could be improved.
The rehearsal virtually assured the store--the first of its kind for this chain--would be stage-ready for its real grand opening the following week.
Just as FedEx and McDonald’s re-defined “fast” for virtually every company out there (even those involved with something other than shipping or fast food), some companies are re-defining preparation… and consumer expectation. Are you one of them?
Read more on the matter in yesterday’s New York Times.
Implications: I’ve long held that a sound marketing campaign addresses three fundamental elements: Motive, means and opportunity. The consumer must have a want or need for the item being sold (motive), they must have the money to spend (means), and the consumer must be in a position to commit the purchase (opportunity). This application of mobile marketing clearly creates opportunity for both the consumer and the marketer.
Of course, there’s a catch: Customers must opt-in to be approached in this way. In other words, they must invite you to send marketing messages to them. Is your store/product/service that important to them? Are your offers compelling enough that I will invite you to invite me in?
This posting might seem to be more about marketing and mobile technology than it is about consumer trends. But the issue also demonstrates the “consensual nature” of digital marketing. The consumer can use their devices to welcome you into their lives… or they can use those tools to shut you out.
Tuesday, February 23, 2010
But now—even though the long road toward recovery seems to be at hand—this trend toward nostalgia has been noticeably stronger. Last month, Media Post ran a story on the topic. Even the Super Bowl was loaded with nostalgia-based commercials this year, as summarized in this story from the New York Times. (The Times story fails to mention the nostalgia-based halftime show.) And it’s not just the old-timers who are digging-in to the “good ol’ days.” Last week, another Media Post story by Joseph Kessler suggested that Gen Y is creating its own set of flashbacks.
Implications: You’ve heard that sometimes, when someone has a near-death experience, a type of movie with scenes from their life begins to flash before the victim's eyes. Long ago, when I was training in a first responder program, a doctor gave me his explanation for why that movie trailer is such a common occurrence.
A near-death experience is often associated with a trauma that is the “first of its kind” for the person involved. So, the victim’s brain—attempting to make sense of this new and unusual trauma—sifts quickly through all of its records, looking for some kind of similar situation that has been experienced in the past. If a similar experience can be found, the brain might then remember what was done to cope with the trauma… thus equipping itself to deal with the current experience. That’s what people might remember seeing when they describe “their life flashing before their eyes”: Their mind flipping through innumerable visual images, looking for a comparable experience, so as to find a means of coping.
Maybe that doc was crazy… but I don’t think so.
The Great Recession was a traumatic experience, financially, for a good many people. And as those folks gravitate to nostalgia—or replay a movie of their life—perhaps they are, in some ways, looking for a means to cope with that economic trauma.
When you enjoy comfort food, you reflect on the enjoyment of a home cooked meal (when your parents perhaps couldn’t afford to go out to restaurants as often, but you were still happy).
When you think of the music you loved through high school and college, you’re thinking back to the days before you had a nice, fancy car (or big, anxiety-inducing car payment).
When you reminisce about the styles of yesterday, you’re making it “okay” to go shopping in your closet for a new look—one that is both comfortable and cost-efficient, compared with going shopping.
From a first kiss to a favorite movie, consumers are thinking back to a time when life was more simple and fun, even though they might have had less. Perhaps it is a way of coping… at a time when they’re learning to do with less in the aftermath of the Great Recession.
Do you offer a product, service, or experience… that takes the consumer back in time? Have you mentioned to the consumer how good it makes her feel?
In a story from this morning's New York Times, analysts consider state revenues from the most recent quarter, which continue to look bleak. (In fact, the author of the story actually refers to states "looking for loose change under the sofa cushions.") Click here to read the story.
Monday, February 22, 2010
Most people whose work involves travel have plenty of stories about their flying experiences, some funny and some not-so-funny. But last week, a story in the New York Times took a deeper look at the delicate relationship between commercial airlines and their passengers. As you review the article, put yourself in the place of the airline, and assume your customers will take the role of the traveling public. That way, you might discover why this industry presents us with such a great learning opportunity. Click here to read the story.
Implications: Not long ago, my wife presented me with a stunning observation which demonstrates how astute the consumer can be. She had arrived home from a trip to the supermarket, and was irritated by the amount of money she had spent.
“You know, when the price of gas was up around five dollars a gallon a couple of years ago, everyone blamed their price increases on the cost of oil. But when gas prices fell back down to reality… you sure didn’t hear about companies who were going to lower their prices because their costs had gone down.”
It wasn’t really the higher prices that frustrated her. It was that the justification for higher prices had elapsed, and nothing was presented to take its place. She wanted rationale.
I was struck by the number of passengers/customers in the NY Times story who said, in one way or another, “I think the airlines should make a fair profit.” I certainly agree with that group. But most of those customers also have expectations with regard to safe travels, good customer service, and a pleasant traveling experience… either in comparison to past experience or when compared to other travel alternatives.
Consumers harbor few illusions about whether a company should earn a profit. They will only ever question whether that profit was earned in a manner they perceive as fair. To form that opinion, they will consider the value and satisfaction they have received, in contrast to the money they have spent and in comparison to other alternatives (your competitors, or not buying at all).
Should your consumer know more about your business model? Would they be more inclined to accept a future price increase, or a potential reduction in service?
Update: Here's a link directly to the Harris briefing.
Implications: In some categories and companies, the economic downturn was not so much a message, but a messenger. Rather than creating a new set of problems, the great recession served to reveal, aggravate or amplify challenges that already existed.
This is another story crediting social and generational shifts for fundamental changes to a category. Among other factors, the formerly reliable restaurant customer is now growing older and dining away from home less frequently, and their younger counterparts not as likely to make restaurant dining a natural part of their week.
It might be time for the restaurant owner/manager to re-examine the motives that lead to an out-of-home dining occasion. Family bonding time? Special occasions? Social networking face-to-face? Convenience? Flavor? An experience that is difficult or impossible to cook-up at home? Certainly, each successful organization will have found and served those benefits which their customers most enthusiastically want.
To me, either statement is too general. I want to know more about the how and why of frugality. That’s why I appreciated the Research Brief report this morning, from Media Post.
In what could be considered an update to last week’s story about “Name brands versus un-brands” (Elm Street consumer trends, 2/19/10), the Harris Poll cited in the story estimates that 63% of adults have started using some generic products, and another 12% have considered doing so.
But the article goes on to explain how many people have taken—or are considering—other specific cost-cutting measures… like cancelling their land-line phone service, reducing their number of visits to a hairdresser, other cost-cutting measures, or reducing the number of stops at the specialty coffee shop. The findings come from a January Harris Poll study, and also shed some light on generational differences when it comes to how consumers are cutting back.
Implications: I’ve said this before, but I’ll say it again. Just a few years ago, it seemed like money was no object for a lot of families. Driven by a comparatively robust economy and the relative wealth of a two-income household, many U.S. families could afford to spend on lots of different things. The Great Recession has reminded people that money is indeed an object, and it has caused families to re-consider purchases that were once nearly thoughtless.
In a world where there is more contemplation, discussion and deliberation, how are you equipping the consumer to move forward with this purchase? How are you helping the customer that is more prudent and judicious to find in favor of moving forward with the purchase?
If your marketing materials look like they did in 2006, you might be missing the mark when it comes to the current consumer mindset. (For more, see “Apples and Oranges,” Elm Street consumer trends 2/4/10.)
Sunday, February 21, 2010
A rate increase of 30% or more is enough to get anyone’s attention, when inflation is running somewhere under 3%. So it’s not surprising that Anthem was on the receiving end of media coverage last week, from the New York Times to ABC News.
Implications: Healthcare reform was already an ill-defined concept. It was popular, early-on, because voters were told simply that, “somebody is making too much money, and we’re going to find out who it is and put a stop to it.” But in recent months—not surprisingly—the issue has attracted more confusion rather than clarity… as differing interests seem to be positioning the matter in different ways. (Healthcare providers would like it to be an insurance and drug company issue… insurance providers would like all of this to be positioned as a care provider and pharmaceutical issue… and drug companies are quick to respond that strong profits fuel research and development of new and better treatments.)
Healthcare reform is not confusing because consumers are easily confused. It is confusing because many players have competing interests, and they all seem to be talking at once. From a trend-watching point-of-view, I’m wondering how long the consumer will be tolerant of all this noise.
Examples like this media story about Anthem seem to lay bare both the greed (record profits, accompanied by selective rate increases of nearly forty percent), as well as the complex challenges facing the insurance sector (like healthy patients canceling policies while sick patients tap insurance company resources). In either event, I’d watch for consumers to be increasingly hungry for point-blank stories that bring clarity to this issue, whether the target is drug companies, doctors, insurers… or politicians who attempt to profit from the dilemma in votes, while contributing little in the way of solutions.
Whether you are a healthcare provider, drug company, politician, or an insurance company...
This week, Marketing Daily provided another story which adds evidence to the shift.
Saturday, February 20, 2010
Click here to read last Tuesday's story from Marketing Daily about the collision between retail, e-tail, and mobile.
Click here to visit the February 9 posting on Comparison Shopping (Elm Street consumer trends, 2/9/10).
And click here for more thoughts about changes in the digital world (Elm Street consumer trends, 2/19).
Friday, February 19, 2010
This week, a story from CNN/Money explained how many consumer packaged goods companies are losing their shelf space in major retail stores. Read the story to grasp the full explanation of causes and effects, but much of this change can be attributed to the trend that consumers are favoring store brands, in their ongoing quest to extract more value from each dollar. Further, the store brand is often a more profitable product for the retailer to sell. Having done the math, retailers are open to dropping certain “brand” lines, in favor of private-label goods that are both more popular among consumers and profitable for the store.
Implications: Once upon a time, money was no object… and people would by the famous name brand simply because it was the famous name brand. “It was for your family, and you didn’t want to cut corners when it comes to that!” Back then, store brands (often thought of as “generics”) were the preference of only the most frugal shoppers.
During the Great Recession, however, the consumer discovered that store-brands were often as good or better than the brand product… or any difference went un-detected when presented to their family at the dinner table. Store brands became acceptable… and the post-recession consumer has shown no “hurry” about going back to brands now that the recovery is said to be underway. Further evidence of that is found in this recent Marketing Daily story, which indicates that private label goods are out-pacing "name brands" in terms of growth.
Other changes made by the consumer seem to be sticking-around for the post-recession economy. In a Wall Street Journal story this week, the CEO of Heinz suggested that coupon clipping is back to stay. And a story from the most recent Brandweek explains that at a conference in Florida this week, executives from companies like General Mills, ConAgra, Unilever and others seemed to be in agreement that “value” was the prevailing mood for consumers.
In my opinion, all of this does NOT mean people won’t buy brands. It just means they won’t buy brands simply because they are brands. They want to know the value proposition behind any product which makes that item distinct and special in comparison to their other alternatives.
Alas, money is an object after all.
[Note: Special thanks to friend and fellow trendwatcher JoAnne Naganawa of Seattle for contributing to this story!]Mike Anderson
As one example, note that online purchasing of books and magazines were up 12% in 2009. Yes, I realize this impressive number could be attributed to the Kindle (Amazon), Nook (Barnes & Noble) and other e-book devices and applications. But that number—for any reason—sounds pretty good, in comparison to same store sales for bricks-and-mortar book stores. In today’s Research Brief, you’ll find other trends with regard to e-commerce, search, online video and web advertising.
But more and more, the concept of “digital” is moving away from the desktop. Another report, published by PR firm Rudder-Finn and cited in Media Post Marketing Daily, suggests that smart phone users are going online nearly three hours per day… and that much of their social networking is now happening “from the street.”
Implication: The Internet used to be so easy to define! A web site with a home page, and either dial-up or broadband… pretty simple! But now, that online interaction may involve no line at all. And as I wrote earlier this month, digital devices move ever closer to the point of sale for almost any retail product, store, or service (see “Comparison shopping” from February 9, 2010).
How does your web site look on the small screen? Is your online presence easy—and worthwhile—for someone to “forward you to a friend?” Have your digital assets moved from “novelty” (a web version of a yellow pages ad) to “utilitarian” (useful, meaningful, and actionable)?
Thursday, February 11, 2010
A while back, I wrote about all of the technology that goes into today’s new cars (see “Crashing your computer, literally,” 1/20/10). Well, a story from yesterday’s Wall Street Journal made me consider the same issue from a different perspective. Because rather than focusing on the blue tooth, blue ray, or GPS devices that are typically found in today’s cars, the WSJ story was more about the onboard computer systems that manage things like gas pedals and brakes.
Driven by the demand for energy efficiency and lower emissions, cars were equipped with onboard computers beginning back in the 1970s. Now, fueled by competition and cost efficiencies, the average vehicle seems to be more “high-tech” than horsepower. As we’ve seen recently, that has put auto dealership service departments in the awkward position of explaining complex problems to recall victims, “It’s not really a brake problem… it’s a software problem.”
Implications: What innovations have occurred in your products, services, company, or category… that you might take for granted and which consumers might not know about? Does part of your innovation occur so far “behind the scenes” that the customer is unaware of how a product may have changed?
When you’re so close to the forest, it can be easy to overlook small improvements that a potential buyer or product owner might like to know about. Perhaps by sharing more information about your innovation process, you would enhance the sales effort of your company as well as the confidence level of your consumer. And if, heaven forbid, something should ever go wrong with a product or service you provide… perhaps it would be easier for the customer to both understand the problem and accept the remedy.
On the other hand, there will always be those customers who don’t care about why something works… or whether a problem is caused by hardware, software or human error. They just know that when they step on the brakes, the darn thing better stop.
Wednesday, February 10, 2010
Instead, some folks who had already purchased the device started “seething” (according to an article from Wired) that they had over-paid for the product. For some, the pride that came with being an “early adopter” of the device was quickly replaced by the sense that they had been exploited. After all, the price cut came less than 70 days after the product lanch.
In what many called "a shrewd lesson in damage control," Apple offered rebates to early i-Phone customers. (See this subsequent story from Wired.)
Still, it should come as no surprise that some watchdog groups are scrutinizing the latest product roll-out from Apple: the i-Pad. According to this article from Digital Trends, one market research company has taken-apart the i-Pad and found components and estimated manufacturing costs that add-up to around $230… a bit shy of the $499 retail price of the device.
Implication: I’m not here to judge. After all, I have no idea what it cost Apple, in terms of research and development, marketing, etc., to launch the new i-Pad. The opening price of about $499 could be totally justified, as far as I'm concerned. (And anyway, I'm all for products and companies that know how to earn a profit.)
That said, I'll use this opportunity to point-out how long it has been since the angst was caused by that i-Phone price adjustment. And now—nearly two and a half years later—some people remain super-sensitive about whether the price they’re asked to pay for an item manufactured by that company is acceptable… or excessive.
How about your company, product or service? Is the right price of your goods “whatever the market will bear?” Or do today’s research-savvy consumers demand a price that is more closely aligned with the value received? Are any outside influences just waiting to expose any discrepancy between your wholesale cost and the retail price? And finally, if (when) the consumer asks, will you be able to tell her why the price of your goods and services is fair and justified?
Sometimes, that’s all people need… even in a world where consumers are more cautious with their money.
Tuesday, February 9, 2010
Something has changed with the way some consumers are conducting these “recon” shopping trips. They’re shopping your competitors before they even leave your dealership, office or store.
Even if you aren’t a car dealer, see this story from yesterday’s Media Post Marketing Daily, and ask how the behavior explained in that article could impact a company like yours. Because Cars.com isn’t the only “App” that helps consumers do their “virtual comparison shopping.” Now, consumers can download tools to turn their smart phones into barcode scanners… and compare your prices to the store(s) across town without leaving your location.
Implication: Surfing your competitor’s website was only the beginning. Now, people can do a price-check on aisle nine… while standing in aisle four of a competitive store.
That means it’s a good time to compete on the basis of more than just price.
Think in terms of comfort, quality, convenience, or special services that add pleasure to the purchase experience. How about customer service or follow-up after the sale? How about experience, expertise, or factory-trained technicians? (Brainstorm a list of benefits your company offers which might be less tangible but no less important than “low price.”)
We repeat: Absent a unique selling proposition, price becomes the default influence over virtually every purchase decision. If you can beat all comers on price, that’s no problem. But if you cannot be cheaper, you had better be better.
A company which knows their unique value proposition—and can communicate it well to the consumer—makes itself difficult to compare.
Friday, February 5, 2010
The same thing happens when you collect ideas and consumer trends. Here are seven trend thoughts that were too good to throw away…
Observation 1: Nostalgia is making a comeback. It’s not surprising that in times of extended stress, humans like to think of happier times.
Implication: Consider how your product or service “brings back the good ol’ days.” Whether you’re selling cars (“Remember your very first car? You’re going to feel that good about driving your new 2010 _____”)… or if you’re selling pancakes (“Remember sleeping over at grandma’s house? When you woke up in the morning, she’d have _______”). People are enjoying a look back at the good old days; an emotion you should consider tapping into. (I was reminded of this by a recent article in Media Post.) Note: I also saw an interesting Research Brief, not long ago, that suggested people are taking comfort in focusing on the future, too.
Observation 2: Mobile is going to be a very crowded space. A good friend of mine, Joseph Naylor, recently suggested that I create an “Elm Street App” for people who use an i-Phone or Droid. Today, I set-out to give it a try, using the site Joseph suggested. But the company had temporary suspended accepting new customers, due to overwhelming response. (How would you like to have that problem!?)
Implication: Just building an “App” won’t make you a winner in the mobile space. There are well over 100,000 apps available for the i-Phone, and another 30,000 or so available for the Android. (Surely, the Nexus One will also command the attention of developers. Just as having a website does not insure success on the Internet… your mobile app must be designed with relevance in mind.
Observation 3: Less window shopping, more closet shopping. With frugality in mind, consumers are less inclined to “browse the mall” as a means of killing time; they know that unless a specific item is needed, window shopping risks the temptation of buying things we don’t need (and who has money for that?!). Instead, consumers are “shopping” their own closets… looking around to see what new combinations of clothes and accessories can be mixed and matched… in an effort to come up with a new look.
Implication: If you’re in the apparel business, consider suggesting accessories—or separates—that can help create a whole new look (at a modest price). My thanks to friend Gene Vidler in Tulsa for sending the Yahoo Finance article that held this suggestion; he received it from morning host Joe Kelley at KRMG/Tulsa. Same place this next idea came from…
Observation 4: We’re volunteering more, and re-defining success. People might not be able to write as big a check as they used to for the charity of their choice… but that doesn’t mean they don’t want to give. These days, they might be more likely to give of their time, through volunteerism (something I’ve also referred to as “experiential philanthropy”). I’ve been writing about the consumer’s search for authenticity for quite some time, now… and that doesn’t just refer to the things they buy. People would like to live a life that is deeper than “veneer.” Same goes for their career; with paychecks cut or frozen in some cases, people are more likely evaluate their job based on whether it is personally satisfying, intellectually stimulating and emotionally gratifying.
Implications: What are the “core” benefits of the product or service you sell? Beyond the tangible attributes, are there ways your goods speak to matters of self-esteem, giving back, or a greater good? Once upon a time, marketers could sell their wares as if they were trophies… in a world that was trying to keep up with the Jones’. In a climate like this one, however, it might be more important to sell the authentic, values-based benefits of your product line. (i.e., “It’s not a mini-van, it’s a discovery vessel that will take you to new places together.”)
Observation 5: Hand-me-ups are hip. Okay, at first I thought it was kind of strange… when my oldest son walked up to me and gave me a pair of jeans he had grown out of. “They’re still perfectly good,” he said, “they just don’t fit me.” Turns out I was on the cutting-edge of fashion, according to JWT.
Implication: Same as item #3, above. Read about it in this Media Post story from last month, along with…
Observation 6: Indulgence off-setting. One might think of this as a new phrase meaning “pent-up demand,” courtesy of Icono-culture. It basically means a family can go only so far when it comes to cutting back. Eventually, all of that self-denial actually becomes the rational for a splurge.
Implication: Keep listening to the consumer, and be ready to position yourself as “a long over-due reward or treat.”
Observation 7: More torches and pitchforks. Consumers want to yell at someone… for everything from government bailouts to bank bonuses to unemployment to… whatever. All of this has to be someone’s fault, right!?
Implication: In the past, I've referred to this as "the retaliatory consumer." If you’re close-by when they’re in the mood to be cranky—and you make a mistake—don’t be surprised if the consumer channels their general frustration toward you. Or, you can be pro-active, and present your goods (or your company) as the empathetic listener, or, “The one thing you can count on.” (Also from the Media Post story.)
Thanks for letting me clean-up my consumer trend desk. I feel much better now.
Thursday, February 4, 2010
Household incomes are still amazing, when compared to most of the rest of the world. But ultimately, these conditions (and others) have led many consumers to this epiphany:
In some industries, it will be like comparing apples to oranges.
Recently, I was invited to speak at an Elm Street Economics event in Columbus, Ohio, which would be attended exclusively by owners and managers from car dealerships. I wanted to conduct some basic market research before the event, so the sponsoring television station allowed me to write a number of questions to be used in a survey of their loyal viewer database.
I didn’t want to dig for the same information that might be available through J.D. Power, Edmunds, or a manufacturer’s CSI reports. Among other things, I wanted to see how consumers might be thinking about setting their purchase priorities. I won’t bore you with all the results here, but I will give you two examples of what we asked and what we heard in response. (Note: The question format was multiple-choice. The survey received more than 1,800 responses; roughly 71% of participants were female, and the age balance was heavily skewed toward 35-64.) In this non-scientific study, we asked:
In these economic times, some people might choose to defer or delay one purchase, in order to afford another. What major purchase(s) might you delay in order to move forward with a vehicle purchase? (Check all that apply.)
28.7% said they might delay a furniture purchase
15.0% said Appliance(s) might have to wait
32.8% said Home Improvements
43.9% said they might defer a Vacation
17.6% said a New Home purchase
19.4% said, “Other”
Of course, the converse could be true; other priorities might keep someone from making a vehicle purchase. So we also asked the question in reverse:
What major purchase(s) might force you to delay the vehicle purchase you’d like to make, due to overall budget considerations? (Check all that apply.)
12.2% said an new Furniture is a bigger priority
26.4% said Appliance(s) need to come first
42.4% said Home Improvement is ahead of the car
17.0% said a Vacation was more important
16.4% indicated a New Home will happen first
29.4% said, “Other”
Implications: Here’s what I’m thinking about, based on this input. 32.5% of these respondents might have to delay a home improvement if they move forward with a vehicle purchase. On the other hand, 42.4% might not buy a vehicle right now… because they have a home improvement expense coming up.
Would now be a good time for the car dealership to partner with a home improvement retailer, to build an offer that could help the consumer move forward with both? For example: Take a test drive this week and receive a (modest) gift card to The Home Depot. Or, buy a truck and we’ll fill it with 2x4s (a gift card redeemable at the local lumber outlet). Or, “Invest in a family car right now, and we’ll throw in everything… even the kitchen sink.” The offers could be commensurate; a discount on Formica countertop with a mid-size car, or a discount on granite countertops with the purchase of a luxury car.
(I singled-out home improvement because lots of folks will be living in their current home for a long time to come, as they wait for home values to catch-up with the size of their mortgage. You might find out-of-home dining, day-trip vacations or some other category to be a more logical partner, depending on the input of the target consumer.)
In case you don’t have it yet, here’s the point: Your entire product or service category sits among other purchase priorities the consumer might have… not just among other competitors.
How can you make sure yours is the most important priority, or partner with compatible companies/categories to make the decision easier for the consumer?
Wednesday, February 3, 2010
Implications: In my personal opinion, four factors will influence the pace and efficiency of Toyota's brand re-building effort.
Chief among these might be the way local dealerships court and care for their current Toyota customers. If the repair is swift, and the customer feels reassured by this important touch point, Toyota’s odds for returning to “business as usual” are greatly enhanced. (This is an important lesson for any company that depends on franchisees for customer service; remember that your survival may depend on those folks in a future crisis.)
Second, Toyota’s candor in the coming weeks and months will be critical. Most consumers are pretty smart people. Level with them, and they’ll continue to listen to you. But if they find out you’re just trying to cover your… um, tracks, they’re likely to just get mad.
Third, I expect we’ll begin to hear references to “plausible deniability.” When, exactly, did Toyota begin to suspect there was a major problem with the accelerator component? Was there any delay—and if so, how long—between the time executives suspected a major problem and the time they acted on it? Did they ignore any conspicuous signs? Recent stories have been investigating that question (see this story from the New York Times). I’m not convinced yet, either way.
Factor number four: The competition, and other voices that will enter the mix. When I first heard about the recall last Tuesday night, I suggested to a colleague that it was only a matter of time before the congressional hearings would begin; what I did not expect is that they would happen almost immediately (see this story from Fox News). Sometimes, these hearings can deteriorate quickly, eroding from fact-finding events to witch-hunt. Politicians (aka “candidates”) can see a moment like this as an opportunity to create sound-bites for future campaigns. On top of this, add a list of companies that are licking their chops at the prospect of taking market share from a leading competitor. This week, Ford announced a jump of 25% in January sales, an increase that many pundits believe will correlate with Toyota’s declines.
Here's another perspective on the competitive landscape:
I did a quick Google search using the words, “Toyota” and “recall” this week. At the top of the page, the first option I was offered was a link to Toyota’s official page—a sponsored link, of course—about the recall (www.Toyota.com/recall).
Beneath that, I was offered a variety of news stories and articles in the “organic results” section of the page.
On the right margin, there were four other “paid” search results “above the fold” (the part of the screen I could see without scrolling down):
1) “May the best car win” (an ad/link for Buick),
2) “May the best car win” (an ad/link for Chevrolet),
3) “May the best car win” (an ad/link for GMC), and finally,
4) “Toyota Recall Accident?” (which was an ad for a personal injury law firm at www.ToyotaJustice.com).
In the marketing world, as in nature, the wolves don’t feel sorry for an injured deer. They are too busy trying to eat him.
The story suggests that by June of this year, more than five million mortgage holders will be living in a home that is worth 75% of the remaining mortgage against it (that represents roughly 1 in 10 homes); the industry now refers to this condition as, "House Arrest." Click here to see the story.
We’ve all heard about the consumer’s return to fiscal responsibility: Using credit less, looking for bargains more, and living with one’s means. But in contrast to those folks who are being more cautious with credit, there is a significant rise, too, among folks who’ve decided to throw in the financial towel, and walk away from their debt.
This week, a story from CNN caught my attention, which focused on the matter of “walking away from the mortgage.” Frequently, the decision is made by people who feel foreclosure is inevitable, and they’re tired of fretting about it. But for others, it can be a simple business matter: Do I keep paying for an asset that is worth far less than the mortgage balance… or is it more fiscally prudent to simply walk away?
This topic is getting more and more attention, recently. A recent NY Times Magazine story referred to the phenomenon as “Voluntary Default.” An excerpt from the article offers perspective: “Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their home is worth.”
Implications: There’s been a lot of talk, recently, about how banks are still not very eager to lend money. I would submit that if the consequences to credit abuse remain meager, this conservative lending mentality can be expected to continue.
I’m wondering what the “new” qualified buyer looks like. How will “credit worthy” be defined as we move forward. In the past, someone who had a home and a family was considered a pretty safe bet. And if you were in good standing with the “big three” credit watchdogs, you could expect attractive terms and a long leash. But folks with homes, and families, and good credit ratings are scattered throughout the Great Recession… having either over-extended for the first time (or having it catch-up with them for the first time), having lost a job, or for some other reason, finding themselves on the receiving end of a late payment notice.
I'm not in the business of making predictions, but I'll make one here: The term “qualified buyer” will be given a higher profile in the marketing effort, rather than being relegated to the fine-print disclosure at the bottom of a print ad or the throw-away disclaimer at the end of a commercial.
Ironically, it seems to me that consumers who are most freely offered credit in the future might be those who are most likely to avoid it. (But then, I suppose that has long been the case.) For more insight about the way many consumers strive to use credit more responsibly, see this May 2009 story from CNN, or visit the “implications” section of this Elm Street posting from last December.
Tuesday, February 2, 2010
Some concern has been voiced about whether such "opportunity" sales might be extinguished in the absence of incentive programs. (See this story from Bloomberg.)
People still selling homes here could fit into two distinct categories. First, those who have owned a home for many years and did not withdraw significant equity from their property through refinancing or home equity loans (these folks can still look at this real estate market as an opportunity to upgrade). Second, those who are essentially forced to sell by changes in life stage or circumstance (such as a job change or job loss, change in marital status or family composition, a relocation inspired by health- or age-related issues, etc.)
Traveling and communicating with folks across the U.S. as a part of my work, I am reminded that some markets remain more deeply affected than others, when it comes to the real estate category. It’s easy to find evidence in the headlines: A December story in the New York Times explained how the migration of people to the Sun Belt has slowed dramatically. More recently, this in-depth report from CNN Money explained how the real estate downturn was created—and has impacted—the state of Colorado. (Watch the video immediately below, or click here for the link.)
Implications: I found the story from CNN particularly interesting because of the way it focused on cause and effect. It suggests a combination of three issues behind most foreclosures: 1) Buyers assumed (wrongly) the value of their property would continue to appreciate, 2) Buyers were not educated enough about the type and terms of the adjustable mortgages they were getting themselves into, and 3) Some folks just bought a home that was out of their financial reach.
Going forward, one could easily assume that folks will be cautious about the extent to which a property might appreciate over the length of anticipated ownership… even driving more people to rent longer before buying, or put-off their home purchase until they know they’re sure they will be living in an area for a long time. (Thus, issues like neighborhood quality, schools, and jobs become even more important.) One might also assume that future buyers will be more careful and educated in the future; beyond someone who’s willing to drive around and show houses, future buyers might expect much more expertise from their realtor or mortgage broker, as well as a more transparent buying process. And finally, one could expect more consumers to buy within their reach, drive either by their own sense of caution or one imposed by their financial institution.
Monday, February 1, 2010
According to a story in the New York Times, Amazon has succumbed to pressure from large publishers—and the leverage of Apple—in allowing e-books to be sold at prices higher than $9.99 for the Kindle.
Not long ago, Kindle swiftly became a leader in the e-book category, both in terms of device sales, and thus, in dictating the way paperless versions of books would be sold. But with last week’s introduction of the Apple i-Pad, another serious contender entered the arena, giving publishers an alternative—and some leverage—in the way e-books will be sold.
Implications: In the world of near-exclusive supply, a provider is able to dictate the terms by which demands can be made and how they will be met. As soon as that exclusivity is gone, so is the leverage.
The world has seen what i-Pod and i-Tunes did to the music distribution business, and what the i-Phone did to the wireless business. Would you have bet against the i-Pad, if you were in Amazon’s shoes?
An aside: Isn’t it interesting that in music, Apple used its leverage to force prices down (most songs sell for 99¢), and that in music, it is using its leverage to push the price consumers will pay… up?
Implications: It’s too early to suggest a comeback for the credit card business, as the quantity of offers are still nowhere near the level of earlier this decade. But apparently, having had some time to clean up their balance sheets, and having had the opportunity to now see what is involved with credit reform legislation, credit card companies are back in the business of looking for new customers.
Not that interest rates are typically higher and more card offers require the payment of an annual fee. Many of these changes can be attributed to the transparency and consistency required from the recently passed CARD Act, which reforms several credit card banking practices.
Even if in the form of “e-cash”—whether reloadable gift-cards, ATM cards or other forms of debit card—cash seems to be making a comeback. In a few years, “paying with plastic” might not necessarily mean incurring debt.