The recovery continues, officially (but it varies by geography, category, and company)

This morning, breaking news from the Washington Post cited a 3.2% expansion in the Gross Domestic Product of the United States, the third consecutive quarter of positive news on the topic. Depending on your journalistic preference, a similar story was posted by the New York Times.

You already know how I love to perpetuate any positive news I can get my hands on, but I am also a realist. So let me season our enthusiasm with a few cautionary thoughts (and maybe some words of encouragement).

Implications: In its most simplistic form, two consecutive quarters of growth in the GDP should represent an end to the recession and the beginning of a recovery. (More complex measures, though, include growth in employment, housing and various categories of consumer spending.)

Earlier this month, too, The Economist published an article suggesting that the recovery actually commenced in June, 2009. (I loved seeing that, because I had offered a similar speculation… but way back in June, 2009. See “Dateline 2010: The recession is over,” 6/20/09.)

But with many miles traveled this year to conduct Elm Street Economics workshops and other consumer trend programs, I know that the recovery will not be uniform in all parts of the country. Having worked in South Florida this past week, I know that Miami and Ft. Lauderdale still have a long way to go; much of their economy is driven by tourism, which was hit particularly hard by the great recession. Further, the real estate meltdown was particularly severe there.

I started April started with a trip to Houston, where the overall tone was much more optimistic. With a diverse economy supported by the energy sector (exploration, recovery, refining and shipping), several local business folks I spoke with there seemed to think that their Texas city was about a year late getting into the recession—and about a year early stepping out of it—compared to the rest of the country.

What’s important to focus on is this: In spite of their local economies, there are still companies doing VERY well in South Florida, and there are companies still having a VERY tough time in Houston.

While the Great Recession impacted virtually all of us, it remains unlikely that a “Great Recovery” will simultaneously impact all companies, all categories, or all regions at the same time or in the same manner. So rather than focusing on the recession or the recovery, it remains important to focus on your response to the needs of your customers, and the benefits they hope to enjoy through the purchase of your product or service.

Mike Anderson

Sorry... but more optimism

My apologies for running behind this week, but I'm working from the road. Catching-up on email tonight, I stumbled across this Monday story from the New York Times.

Can't help but share the optimism.

Mike Anderson

More reasons for optimism

A few moments ago, my email in-box chimed with the arrival of this story from the Washington Post, indicating that home sales are doing even better than anticipated, nudged along by the final weeks of government incentives and warmer weather in most parts of the country.

Orders for durable goods are up, according to this story from the New York Times.

This blend of positive signs has helped boost the stock market today, according to this story from Forbes. Furthermore, citing data from J.D. Power, this Yahoo finance story suggests that automotives sales remain strong as we move through April.

Implications: Home sales are important to more than just the realtor and mortgage broker; a good month in housing can lead to sales for home furnishings, home improvements and much more. Factory orders suggest more manufacturing jobs, as well as confidence among both consumers and companies.

I have a lot of respect for surveys and research. But all of this positive news—based on actual activity—is nice “physical evidence” to counter the poor consumer confidence index that ended last week, as explained in this story from Reuters.

Mike Anderson

Store brands enjoy the dividends of frugality

And they might not be just for groceries anymore.

Evidence suggests that use of private-label (or “store brand”) goods is one of the recession-induced behaviors that is likely to remain strong long into the recovery.

In a recent Media Post Marketing Daily article, a survey (of 800 supermarket shoppers) by GfK Research indicated that 62% of consumers intend to purchase more private-label products going forward. 43% of those polled said they had recently ditched a national brand in favor of a generic purchase… up from 35% a year ago.

Another story focused on the topic of store brands just last week, this time in the Research Brief
from Media Post. One conclusion drawn by the article is that the idea of "lesser performance" by store brands, compared to name brands, is beginning to fade.

Implications: What interests me about this issue is the idea that store brands are no longer limited to backaged goods. Recently, I’ve noticed greater creativity and diversity when it comes to the idea of “store brands.” For example, I love to go camping and kayaking. So over the past year or so, it’s been easy to notice the new “store brand” at Dick’s Sporting Goods: Field and Stream. Specifically, I’ve been tempted by a Field and Stream hybrid solo canoe… and I’ve studied it closely enough to know that it was actually manufactured by Old Towne, a reputable boat maker. (I already own a larger Old Towne.)

If you abide by the laws of supply and demand, you will likely be giving your private-label goods a higher profile than you did before the recession… at least for the foreseeable future. But I’m wondering what other “next creative steps” might be in the realm of store-brand merchandise.

For smaller retailers, would it make sense to form (or grow their) buying groups to create greater leverage with manufacturers, so that more and diverse private label goods can be offered, even among smaller stores?

For packaged goods companies, does it make sense to partner with certain retailers to focus on specific products that can be sold as if they were store-brands? (For example, “Bounty, now the official store-brand paper towel of ____ supermarkets. And that means greater value for you.”)

[My thanks to friend and fellow trend watcher JoAnne Naganawa in Seattle, for emailing the Media Post story to me!]

Mike Anderson

Online shopping: The path of least resistance?

Remember the anxiety people had during the early days of online shopping? Yes, there were pictures. But even still, retailers were convinced that shoppers would never give-up the chance to pick-up the product, hold it in their hands, sense the tangible worth of a product before buying it. The psychological entry fee of buying something online seemed far too high… especially when matters of comfort, fit and feel were involved.

I raise the issue because of a recent story I read in the Engage: Boomers newsletter from Media Post, which suggested that many boomer women find buying their clothes online—yes, their clothes—to be easier than buying those fashions in-store.

Implications: While this may not be what the story was trying to imply, here are a couple of the thoughts which I elected to infer…

• Before webmasters start celebrating about their retail prowess, it might be smart to accept that sometimes, online shopping is fueled not by a website that is intuitive, but by an in-store experience that is not.
• If part of your business is e-commerce, it might be a good idea to survey those customers, to see if they are using the site because it is awesome, or because their in-store experience was not.
• Many consumers continue to use their online tools to do research and make advance decisions… in other words, to abbreviate the face-time you get with them. Are you training your floor personnel to make the most of that shortened face-time they have with customers?
• Do you offer a browser-equipped computer somewhere in your store, so customers don’t have to leave to check a competitor’s offering? (If they're in your store, you have the advantage. Don’t make them leave your place of business to compare… because then you lost the advantage.)

Just a little brainstorming.

Mike Anderson

Are you running a sticky business?

Cleaning off my desk this morning, I came across a Campaign Spotlight from a couple weeks ago (it was in the April 5 New York Times). It focused on a product we’re all familiar with: Elmer’s Glue. It’s a great day to be Elmer’s, since so many folks are trying to repair instead of replace.

Anyway… the writer used this quote to describe one mindset created by the recent recession: “Use it up, wear it out, make it do or do without.”

Implications: Sometimes, the simple things matter most. It’s a good time to reflect on these kind of questions…

Do you have a service department? Is it getting its fair share of your marketing effort?
Is your product durable? Can that durability be proven, and is it being touted as an important attribute?

Beyond its “primary purpose,” does your product or service satisfy any secondary needs? (People are used to multi-tasking, and appreciate products that serve more than one function, too.)

Sometimes, the simple things are the easiest to overlook. If people are trying to re-use, re-fill, retain and re-purpose many of the products they own. Is that causing your company sales problems.. or service opportunities? Helping folks get more value from the products or services you offer is one way of making sure they come back.

Mike Anderson

Coupons remain strong... among companies as well as consumers

Thirty percent of consumers said they had used more coupons in 2009 than ever before, according to a report by NCH Marketing Services cited at the Supermarket Guru website.

The story also suggested that while internet coupons only represent about 1% of coupon distribution, they represent about 10% of coupon redemption. (In other words, if consumers go to the trouble of downloading and printing it, they’re more likely to use it.)

Implications: While the data cited in this story largely focuses on 2009 behaviors, coupon use could likely be one of those “frugal measures” that consumers will hold on to well into the recovery (and maybe beyond).

Mike Anderson

Priorities in conflict: Swift versus thrift

Quite some time ago, colleague Jim Hopes sent me a story that he had read in the RBR/TVBR newsletter. The story (from last March) suggested that consumers were switching away from time savings—and toward cost savings—in response to the effects of the Great Recession. The opinion was based on research by AlixPartners LLP.

As if to raise the counter-point, I came across this story from Media Post Marketing Daily, which suggested that price is not the only thing that matters to shoppers. Quoting Todd Hale, Nielsen's SVP/Consumer & Shopper Insights, the story asserted that, “…consumers are getting tired of all the work it takes to save money, so stores need to remember that shoppers value other things, too, whether it's convenience, variety and assortment, or a focus on health and wellness."

Implications: I didn’t pass the RBR story along immediately after receiving it, because I wasn’t convinced that “price is now the only thing” that matters to consumers. I don’t think all consumers choose price above all else. I think that when financial conditions require it, many consumers are attracted by price. And I believe that in the absence of any other unique selling proposition, price becomes the default influence over most purchase decisions.

I was conducting an Elm Street Economics workshop in Houston last week, which had about fifty business owners, managers, and marketers in the room. I asked the room to indicate, by show of hands, who among us was expected to do less in their jobs today than they were expected to do three or four years ago. Not one hand went up.

Now, that’s far from a scientific survey, but the point is that a lot of people are working harder—and over more hours per week—than they ever have before. None of those folks have decided that price is more important than convenience. Perhaps, for a time, many have been forced to give price extra consideration. But don’t expect convenience to lie down for long, in a world where people are so time-stressed.

More important than price… is value. People often use the two words as if they are interchangeable, and they are not. Price is what the consumer puts into a product. Value is what they take out of it.

[My thanks to Jim Hopes for sparking this important topic. Jim is the CEO at The Center for Sales Strategy, Inc.]

Mike Anderson

Mastercard Marketplace: Part commerce, part research

In the digital age, it has become easy for companies to track the behaviors and preferences of their customers. Every swipe of the debit or credit card leaves a record of the purchase, and every keystroke of online shopping leaves your digital fingerprint on the visit.

Learning to mine that information for actionable data is one of the motives behind a new retail “store” being launched by Mastercard, according to this recent story from the New York Times.

Implications: This story was worth the read, not just to gain a better understanding of the kind of data that might be available through your various retail partners, but also because it provokes thought about the degree of monitoring consumers might tolerate… or not.

If sharing my information will help a company serve me better, I’m generally open to it. But if that information is not held securely, or if it is abused by the very company I’ve shared it with, or if it results in my being disqualified from purchase opportunities I would feel entitled to… my opinion could change in a big hurry.

What kinds of consumer intelligence might be available to you through various business alliances? Have you asked those allies? Are they protecting your customers’ information and interests adequately? (You know who will suffer if the customer is angered.) How could you gain more insights from the customers you serve… with their consent, and in the hopes of serving them better?

Mike Anderson

Multi-generational households on the rise

In today’s Research Brief, a study by Pew Research Center was sourced for the estimate that nearly one in six Americans is living in multi-generational household. The study, based partly on analysis of Census data, suggests that 16.1% of Americans—about 49 million people—are living in a home that included more than one adult generation.

The rise in multi-generational housing is related to recent economic conditions (job losses, home foreclosures, and families seeking more economically efficient living arrangements). But the increase is also a reflection of immigration; many people moving to the U.S.—particularly from Latin America and Asia—are accustomed to living in multi-generational households, according to the story.

To see the Research Brief article, click here.

To read the summary of findings from Pew Research, click here.

To see a similar, previously published article from Engage: Boomers, click here.

Implications: If your company targets “families,” it’s important to accept that traditional families don’t look very traditional anymore. On recent market visits to study “Consumer DNA” in places like New York, Houston, and even Tulsa, I’ve been reminded of just how dramatically the family portrait has changed; the description “Married with Children” often describes about 25% of the adults in a given community, give-or-take a few percentage points.

In recent decades, the non-traditional household has been fueled by many things, including the tendency for couples to marry later in life (or live together and not get married at all), blended families, single-parent households where the child is 18 years or older, and more. In more recent times, modern economic realities are a driving force, as are traditional homeland values (in the case of immigrants). But whatever the cause, the families you reach today could very well be extended.

Is your offer?

Mike Anderson

The state of branding: "I'm aware, it's just that I don't care"

In this morning’s Media Post Marketing Daily, there was a story about “brands making a comeback,” penned by Sarah Mahoney. The article cites a study by Brand Keys with regard to how important brands are in the apparel business; significant because of the way consumers abandoned brands, for a time, focusing instead on things like cost.

Implications: When I finished this story, I was left with the idea that brands are still important, but they’re not the same brands that were important four or five years ago. Brands that are associated with things like status or prestige have lost ground to those brands that reflect common sense, durability, and value for the dollar (and by that, I don’t necessarily mean “cheap”).

More importantly, the story hints at the idea that brand awareness is simply not enough. Robert Passikoff, the founder and president of Brand Keys, is quoted as putting it this way: "Everyone is aware of brands like The Gap," he says. "It just isn't important to them."

Just because people are aware of you doesn’t mean they won’t ignore you. Your target consumers must associate your brand or identity with a value proposition they consider important or attractive.

Mike Anderson

UPDATE: More optimism in the restaurant business

In a story cleverly titled, “The tables turn,” today’s New York Times is reporting signs of recovery in the restaurant business. media.

Implications: The article suggests that people are both feeling more optimistic (daring celebrate that the economic outlook for their family has begun to stabilize), and acting on the positive mood that comes with nicer weather and the end of winter.

If you're in the entertainment business (night clubs, theme parks, movie theatres, casinos, et al), you're a big fan of this kind of mood swing.

As people remember what it's like to get out and have a little fun, are you taking steps to make sure they remember you?

Mike Anderson

The "Great Recovery," or many individual recoveries?

We launched this blog more than two years ago, with the hopes of helping companies re-connect with consumers, and find a road through The Great Recession. Since day one, I’ve been looking forward to writing a story about The Great Recovery.

But it seems like this particular recession was enough of a shock to the system that few people are prepared to declare it over (according to this story from the New York Times last weekend). This, in spite of retail sales that seem to be regaining consciousness (see this story from Media Post), the stock market closed above 11,000 for the first time since 2008 last Monday (see this story from the NY Times), and employment numbers are getting stronger.

Implications: Few prognosticators saw this recession coming… or at least, many professional pundits grossly underestimated the severity and velocity of its’ arrival. Being late to predict the arrival of an economic decline is one thing, but following that error by prematurely announcing its departure would be about enough to make folks doubt your “seer” capabilities. (I’m not the only one who’s thinking that way. See this NY Times business/opinion piece.)

From the perspective of the White House, the Federal Reserve, or the Treasury, I suspect this “contained enthusiasm” for the recovery is also a product of setting realistic expectations. (Remember when a President declared major battle operations to be over in a recent war? In his eagerness to celebrate, it set the wrong expectations.) It takes up to fifteen months for history to shed factual light on all of the numbers that go into determining that either a recession or recovery has taken a significant turn. That’s one of the reasons that a recession which started in December, 2007, was not officially announced until one year later.

If you live in the “Jones” household, the recession will end when the Jones’ are earning a household income that they can be comfortable with (either because it is strong and stable, or the family has learned to live with one that is not). The recovery will be underway when you can afford a lifestyle that is better than the one you experienced during the recession, if not the one you enjoyed before it.

There’s a good chance that no “Great Recovery” will happen in the near term. There will not be one date we can mark on the calendar that marks a time when everyone stopped being in a recession and started living in a recovery.

Instead, be watching your customers and prospects… and be prepared to help them celebrate the millions of individual and family recoveries that are either underway… or coming soon.

Mike Anderson

UPDATE: Industry trends related to the use of gift cards

A while back, I came across this Research Brief article about trends for the gift card industry. I'm sharing it with you because it's a nice companion to two previous Elm Street Consumer Trends postings.

First, the RB story suggests that gift cards (or "pay now, spend later" cards) are one way that companies might build a trusting financial relationship with those people who are either "unbanked" or "under-banked." Interesting perspective, especially following the story we recently offered on the un-banked (see "Courting the un-banked," April 6, 2010).

Secondly, the Research Brief suggests that while 2009 gift card use was down, there were signs of a turnaround toward year-end. That might represent a reversal of the outlook that we offered back in December (see "Gift cards losing ground," December 3, 2009).

The gap between package size and the product inside

We’ve been reading this disclaimer on cereal boxes since we were kids: “Some settling of contents may have occurred during shipping.” Well now, the Center for Science in the Public Interest (CSPI) is asking the Food and Drug Administration—along with state attorneys general—to investigate the difference between package size and the product inside.

Read this story from Media Post for more details.

Implications: When everything seemed “plentiful” for most folks (circa 2002-2006), we were less likely to pay attention to these kinds of things. But now, CSPI is likely to get a sympathetic ear with consumers and a response from the FDA. Between shrinking packages (see this Elm Street blog posting from February, 2009) and volumes that seem to be dramatically smaller than a package implies, consumers are a bit less likely to tolerate a presentation that sets the wrong expectation of what’s inside.

You don't have to be a CPG company to sour consumers by setting the wrong expectations. Does your company live up to the atmosphere implied by the menu? The values promised by your advertising? The selection implied by your massive storefront? Beware that consumers arrive in your place of business with a set of expectations. Are you positioned to delight, or disappoint? (And should your response be to adjust the experience... or the expectation?)

[My thanks to JoAnne Naganawa for suggesting this story.]

Mike Anderson

Evolving target consumers: The New Affluents

During our on-location Elm Street Economics workshop events, one of the things we spend a lot of time thinking about is the idea that the target market you have today could look quite different than it three years ago… and the benefits sought by that market when they buy your product or service could be quite different than the benefits they were hoping to satisfy before the recession.

A colleague recently sent me this link to a story from Advertising Age that seems to support that theology. To read “Is Luxury Dead,” just click here.

Implications: In the ESE workshop, one of the examples we use is the Buick Lucerne as an example. Three years ago, it might have been an upgrade from a Malibu… and today, it might be an economic alternative to a high-end luxury car.

Who do you think you’re talking to? Is your prime consumer today the same person it was a few years ago? This is no time to over-stereotype your most important customers. Not all boomers are booming… and not all Gen Y’s are comfortable with technology. Based on the needs you products and services you offer, and the needs they can satisfy, you might discover a whole new pool of customers that include Gen Y’s of affluence, and blue-tooth-using boomers.

[Thanks to Jim Hopes for sending the AdAge story along. Jim is the CEO at The Center for Sales Strategy, Inc.]

Mike Anderson

Small groups, big change: A conversation about social responsibility

Today’s announcement that Michelle Obama had made a surprise visit to Haiti serves as a reminder that, as large as the problems that we faced during the Great Recession may have seemed, there are still people who face much larger challenges.

Recently, a McKinsey & Company newsletter that I subscribe was composed of a variety of essays about the idea of social responsibility, and helping local efforts create a global impact (my words, not theirs). You can get to the collection of essays by clicking here.

Implications: These writings provoke thought about how to maximize the outcome of people who are trying to do some good. Two common denominators seem to be funding, and giving higher profile to both causes and the efforts of individuals and groups who are trying to support those causes.

I have written before, in this space, about experiential philanthropy; the idea that while charitable giving may be down, peoples’ desire to give is not. It’s just that they might not be able to write as big a check now as they did a few years ago… but they might still be eager to give of themselves through volunteerism.

Can your company do well by doing good… by harnessing this source of power (supporting a group with a cause)? Where there is passion, there is often power, and the makings of a strong cause marketing campaign.

Mike Anderson

Preparing for the likelihood of more expensive credit

This week, an article in the New York Times suggested that interest rates (and therefore the cost of credit) are likely to move higher over the next several years, reversing a nearly thirty-year trend. This increased cost of credit is likely to have a broad effect, due to the more pervasive use of credit by American consumers in recent years; according to one passage in the story, “…total household debt is now nine times what it was in 1981 — rising twice as fast as disposable income over the same period.”

Implications: While the U.S. economy has by many accounts entered a period of recovery, challenges posed by the volume (and high cost) of credit is emblematic of how the effects of the recession could outlast the recession itself.

The most dramatic part of this NY Times story is a side-by-side chart, which illustrates the extent to which credit has shot-up over the past ten years, indeed faster than the growth of incomes.

If you sell any big-ticket item (for which financing has been an important tool in recent years), this issue is likely to impact your business. Consumers, already prone to cut-back on their use of credit in recent years, are likely to remain cautious about credit in coming years if financing becomes more expensive.

So, for everything from automobiles to furniture to home improvements… an already more prudent consumer is likely to become even more deliberate, judicious, and careful. Are the days of “saving up” for a purchase about to enjoy a renaissance? Will the practice of “layaway” enjoy an increased profile? Instead of “indulge now, pay later,” will companies see an increase in customers who prefer to pay cash? When it comes to major purchases in which credit is used, are you going to get more aggressive about fighting for your share? How?

Mike Anderson

A trend toward reduced anonymity online

According to a story in today’s New York Times, more news organizations are moving away—or considering moving away—from the practice of allowing hidden-identity “commentary” on their websites.

Implications: I, for one, have been paying much less attention to the comment section of my local newspaper, as it fails to create the healthy debate and public dialogue one might hope for in such a space. (Perhaps this is an unfair opinion, but it seems to me that the commentary page is frequently taken-over by small groups of people who use the space to argue amongst themselves—even argue with each other—or engage in the sometimes rude practice of commenting on other comments, rather than the story itself.)

Perhaps by requiring people to take public credit for their opinions—or by giving a higher profile to contributors that do—these websites can thin the rhetoric a bit… and lead to a more thoughtful, relevant exchange. But perhaps the move could also make people with a legitimate opinion reluctant to join the conversation. (And who decides what is or is not a relevant opinion?)

Does your company allow or even encourage customers to leave comments about their experience with your products or services? Are consumers allowed to leave their remarks anonymously? Are those which are signed/identified given more credence than remarks offered anonymously? Comments can be a valuable way of gauging customer sentiment and improving your service or product line, or the overall purchase experience.

Mike Anderson

The story of your (customer's) life

This is going to start-out sounding like a rant, but it isn’t one, I promise. Today, I was informed by more than a dozen people that they are unbelievably busy. Swamped. Under-helped and overloaded. Moving at light speed. Overwhelmed. Overbooked. Not two seconds to themselves. How did I learn about the high velocity these people are living in?

Each of them said so… on Facebook.

Implications: The first thing I’d like to ask is, “If you’re so busy, what in the heck are you doing on Facebook?” (Or for that matter, let’s include MySpace, Twitter, LinkedIn, Yammer, or any other two-syllable time-sucking social networking website.) But that's just me.

Most of the world can’t seem to get—or give—enough information. So how do you take advantage of this tendency of some people to want to share every aspect of their life?

• If you sell cars, why not ask each shopper/customer if they’re carrying a cell phone equipped with a digital camera. If they are, offer to snap a picture of them, standing in front of the vehicle they’re considering (or just bought), so they can SMS or email it to their friends or post it on their Facebook page.
  
• If you’re a realtor, snap a shot of the happy family standing in front of the top two or three houses they’re considering. They can send it to friends and invite comments about “which one looks best.”
  
• If you’re a carpenter, contractor or interior decorator, grab some “before and after” pictures that your clients can share with their friends.

Why watch consumer trends… if you can’t harvest some revenue ideas along the way? People are inclined to archive and share every aspect of their lives. Help them… and add your product, service or company to the storyline.

As for me, I gotta run. I am really busy.

Mike Anderson

The government helped people get into housing... but can it get out?

As the deadline looms for home-buyer incentive programs, many pundits are wondering whether the real estate business will be able to maintain any sense of momentum or sales success once the consumer payoffs are gone. (See this story as one example, from a recent edition of the New York Times.)

Implications: I offer no political viewpoint about whether the various home-buyer incentive plans were a good idea or not. But the programs designed to help first-time buyers and certain upgrade buyers will soon be over. Granted, any program could enjoy an extension… but it can’t last forever.

What kind of market conditions—and creative marketing—will help real estate brokers, bankers, builders and developers pick-up where these programs leave off?

Can privately created incentives (and partnerships) replace those public funds?

I’m thinking a gift card from _______ home improvement store with the purchase of your new house (so you can make it feel like a home of your own). Or, perhaps the living room set of your choice from ______ furniture. Or, perhaps a two-night stay at ______ hotel, presented at the time of closing… so you don’t have to live in a messy house on move-in day. Or maybe your brainstorming will lead to _______ home electronics store… so you can advertise this as “the house that comes with a free home theatre.”

The government has been a helpful partner to the real estate business over the past several months. Perhaps one takeaway should be that partnerships are a smart idea… even if you have to create them on your own.

Mike Anderson

Defining the market for mobile (and mobile marketing)

Media Post Marketing Daily recently ran a story with one perspective on the different categories of mobile phone users, based on things like age, frequency of use, and comfort with smart phone applications. The article cited research from Experian Simmons. (Click here to read it.)

Implications: You don’t have to sell mobile phones to make use of the insights in this article… just a marketer. Like any medium, marketing with mobile will require companies to recognize the nuances and needs of the audience reached. This Experian Simmons study cited in this story helps give clarity to the differing comfort zones among mobile users.

That has implications beyond those of interest to a phone company. It might inform or influence the complexity of your mobile marketing campaign.

Mike Anderson

Courting the "unbanked"

Note: The focal point of this story is financial services. But the essence of the story could have implications for a wide variety of business categories.

Recently, a number of issues and stories in the trade press have ignited my curiosity about the banking business, and more specifically, those people who do not use banks or do not use them with regularity.

The first of these articles was from McKinsey Quarterly, “Counting the world’s unbanked.” If you enjoy lofty articles about global issues, click here to read the story. (I found it to be one of those stories that was interesting, but in the context of Elm Street Economics, not entirely useful.)

Of greater interest to me is that pool of local folks who don’t use a traditional bank or credit union… and evidence suggests that the number is growing. These “unbanked” consumers might be living in a mainly cash economy, or sating their basic financial service needs through emerging, non-traditional providers like check cashing services.

If you work for a bank or credit union, this headline will get your attention: Wal-Mart is expanding their focus on financial services, according to this story from Media Post Marketing Daily. The article cites a recent survey by the Federal Deposit Insurance Corp. that found 25.6% of all U.S. households are unbanked or “under-banked.” When I did a Google search on the topic, I actually came across this one-page fact sheet—on Wal-Mart letterhead, dated 2008—gauging the depth and opportunity of this market.

Here's a more recent story on the matter, from CNN/Money.

Implications: When every fourth household in the U.S. is undecided or uncommitted with regard to their banking relationships, it’s a category worth thinking about. And if you’re in any category of retail service, you might ask whether similar conditions exist in your industry/business:

Has the industry focused on “blue chip” consumers for so long than an entire generation of emerging customers has not been sought after or fought over? If you’re a bank, does your marketing welcome consideration by the unbanked or under-banked consumer?

Has the consumer changed in ways that are not matched by changes in the banking industry?

With the fiscal meltdown and bank bailouts that were symptomatic of The Great Recession, has the credibility and stature of this category been further diminished? (Let’s face it: Even if you run the most solvent bank on the planet, you’re still a bank… and the banking industry has received a lot of bad press over the past few years.)

Insurance companies now sell investments, car dealerships offer auto loans, employers offer retirement plans, a plethora of companies (including numerous dot-coms) sell mortgages, and home improvement stores offer credit cards that can conveniently replace a home improvement loan. How do banks regain their standing as the chief financial service provider for the household, amidst all of this diverse competition? (Especially when a company like Wal-Mart is has decided to become another of those competitors.)

With all of those diverse financial resources to compete with, which niche could provide the most significant opportunity—a place for the financial institution to gain a foothold in their quest to re-acquire customers?

Sometimes, the value in trend watching is not to have all the right answers, but to begin asking all the right questions.

Mike Anderson

Falling walls and rising opportunities

Recently, I caught myself taking an inventory of personal capacity, where a conservation-related hobby of mine is concerned. Over the years, I’ve assembled a pretty nice tool shed, including a couple of laptops, film and digital SLR cameras, now-old video cameras (which at the time cost five-fold the price of a “Flip HD”). With those tools, modest as they are, I have unwittingly become a researcher, writer, photographer, videographer, producer and publisher.

Just for the fun of it.

I was reminded of the significance of this evolution last week, when I read an article about the falling “barrier to entry” in the photography business, which was published by the New York Times. The story explains how a woman turned her picture-taking hobby into a way of making extra cash… using a $99 Kodak camera, at first. That sounds wonderful, doesn’t it?

Unless you are a professional photographer, and the digital age has brought new “competition,” raining down on you by the millions.

When these things happen—and they are happening in many categories of business, in one way or another—we tend to focus on the companies or industries that have been victimized by the falling “barriers to entry.” After all, if tasks that once required expensively trained, highly skilled workers can suddenly be done with an automated device, software package or advanced algorithm… high-paying jobs will be lost, lives will be upset, and entire industries could evaporate.

But I’m thinking about it from the other direction: While falling “barriers to entry” can take some people out of their comfort zone, it puts other people into one. In the Times story, one man traveled many years and many educational miles toward his capacity as a photographer. For the female hobbyist, that capacity came to her.

Implications: It occurs to me that many B to C (business to consumer) marketing campaigns could benefit from having a B to B (business to business) angle. After all, many of the consumers you sell to could be hedging their current job—or supplement their current income—through some type of moonlighting or freelance. Or, in the absence of work, they could be launching ventures on their own, which they may not have had the resources to think about just a few short years ago. [See “Make the job you want” from 9/23/09, or “Me, Inc.” from 8/22/09.]

Among these people, you might find many Baby Boom workers, who are of retirement age, but who do not have the financial means to quit work entirely. Having seen their investments battered by the stock market in recent years, more and more would-be retirees are seeking “next life” employment which not only provides supplemental income, but also delivers personal satisfaction and self-actualization. [See “Retirement, re-defined” from 9/16/10.]
Perhaps instead of taking a job they can enjoy, they will decide to make a job they can enjoy, using tools and technology that have seemingly made almost anything possible.

Mike Anderson

Changing the way you think about "value-added"

Very often, “value-added” is just a hyphenated way of saying, “giving your product away.” (Gift with purchase, rewards programs, BOGOs, etc.)

Before I go further, let’s clarify the meaning of value. Many people use the words “value” and “price” as if they are interchangeable… and in my opinion, they’re not. A price is what people put into the purchase; the amount they spend. Value is what the consumer gets out of your product or service; the satisfaction, benefit, or payoff they get for having made that purchase.

By “value-added,” I don’t mean slashing your price, reducing your margins, giving two for the price of one, or taking a loss on the sale. I mean increasing the satisfaction that comes with owning the products or using the services that you sell. How does your product or service add value to the consumer’s life?

Implications: This week, I received a particularly strong newsletter from Trendwatching.com, under the title of Brand Butlers. Much of the issue has to do with mobile technology, and that’s fine. But iPhone apps and mobile technology are not the only ways to enrich the way you add value to a customer’s life. Use this article to stimulate your thinking about how you can enhance the benefits and increase the satisfaction you provide when consumer buys whatever you sell.

Price is what the consumer puts into your product or service.

Value is what they get out of it.

You can add value to the consumer's life before the sale (by enhancing the process of shopping or researching the purchase), at the point of sale (by enhancing the transaction experience), or after the sale (by enhancing the ownership experience).

Mike Anderson

Give or take: Like it or not, paying down debt

Some of the coverage about mortgage debt has focused on people who have, by choice, simply decided to walk away from a mortgage (often because the borrower owes far more than a property is worth). In this morning’s New York Times, there was a story that looks at the other extreme: The number of debts which are being forcibly repaid through legal action and garnishment of wages.

Implications: In some situations, it appeared as if a cultural shift had taken place, in which it was all-of-a-sudden acceptable—if not routine—for debtors to not repay the money they owe. (Whether it’s a person walking-away from a mortgage or a company going through reorganization, we’ve seen a lot of commitments “modified” or ignored over the past several years.)

In other situations—and this NY Times story is a good example—payment is still quite expected.
Could companies and consumers see changes in the credit system as one result of the great recession? What might those trends look like?

• A more distinguished difference in price or payment plan between well-qualified buyers and less qualified?
  
• More incentives/discounts for cash?
  
• More “saving up” to purchase a big-ticket item, versus “enjoy now, pay later?”

What else?

Mike Anderson

From unemployment to under employment

Over the past two weeks, I’ve conducted a number of casual interviews with people about the state of the economy. Among other things, I’ve been asking whether people believe the widely-acknowledged recovery is impacting their lives yet, the degree to which changes in spending behavior could out-last the recession, and how they—or people close to them—have been impacted by the volatile job market.

“…the aspirations of many workers have been recalibrated amid the recession…”

With surprising frequency, the people I’ve spoken to have either been directly impacted, or have a close friend or family member that has been directly impacted by job loss. In some cases, that impact might be juggling two or more part-time, entry-level jobs in an effort to make ends meet until a slot can be found that lets the person resume a career in their chosen field. In one case, outright free-agency (freelance work) has replaced the idea of having a job.

Earlier this week in the New York Times, there was a story about a third condition that I have found to be more common, these days: People accepting work in a position that is well beneath their level of education or experience.

Implications: First, it is obviously a great time for companies to go shopping for talent, if they’re in a position to do that. But thinking of the labor pool as a consumer group, rather than just a workforce, is there anything you could do to serve or satisfy these people?

When people work beneath their education or experience, the job can often lack the challenge or stimulation the employee might be accustomed to. Whether related to a hobby, a form of entertainment, or other type of experience, do the products or services you sell provide the kind of satisfaction that is no longer found for some people in the workplace? (Or, do you offer a form of escapism?)

For more than half the working-age population in the U.S., there are often more than two incomes in the home. Have you noticed that “the breadwinner” is defined differently today, among your customers, than it might have been defined just a few years ago? Likewise, is there a new “procurement director” in the household? (Have shopping responsibilities been dispersed among the family members, rather than being relegated to traditional roles?)

Being under-employed almost always means getting a paycheck that is less than one was accustomed to. Does the product or service you sell offer the kind of value that respects the importance of every dollar?

When you see changes in the workforce, note that workers are also consumers. What you’re really seeing is not just a labor trend, but a consumer trend.

Mike Anderson