The irony of the aging Baby Boomer

Trend Observation:  Two interesting (and very contrasting) stories caught my attention today, and both of them were focused on Baby Boomers.  First, USA Today published an article about Boomers that can finally afford the car of their dreams.  The observation is that once parents have emptied their nest of children and paid-down much of the consumer debt, they have more discretion over their income… and more money for toys (click to link).

But then I caught a second story, this one from the Minneapolis Star Tribune, talking about an overhaul of the traffic light system that will accommodate Boomers… who presumably don’t cross the street on foot as fast as they used to (click to link). 

Marketing Implications:  America’s biggest generation (and arguably still the most significant consumer base) is changing.  Does your company, product or service target these consumers?  Are you changing in response to their current life stage?  Boomers are changing in both their physical and financial stature, and those changes are sure to impact their purchasing priorities and preferences.

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

McKinsey: A progress report about the deleveraging process

Trend Observation:  Today’s newsletter from McKinsey takes a look at consumers’ progress in pairing-down their debt, a process widely known as deleveraging.  Click here to see the story.

Marketing Implications:  According to this analysis, consumers in the U.S. are getting a handle on their debt faster than some other parts of the world.  However, the study indicates that roughly 70% of mortgage debt and 80% of this deleveraging has come from default.  In other words, much of this “progress” has come from lenders writing-off the amount, rather than debtor’s paying-down the balance.  Further, up to 35% of defaults could be described as “strategic decisions,” where the debtor elected to walk away from a financial obligation.

The McKinsey paper seems to suggest that our deleveraging process will continue into the middle of 2013, but it might be over-simplifying the situation to suggest that means our storm of credit issues will be over.  Just because a consumer has little or no outstanding debt on their personal balance sheet does not necessarily make him or her a good risk; it could mean that someone else had to write-off an obligation that consumer once held.  If you sell big-ticket items where some form of credit often facilitates the purchase, this matters to you… and it makes qualifying your customers more important than ever.  (A process that can begin with the marketing message you create.)

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy

Generational Economics: Pre-adulthood (Teens and Adolescents)

Trend Observation:  Do you know what the average teenager spends during the course of one week?  Before you settle on a specific number, let me confess that I do not know the answer to that question, at least not as a marketer.  But I do know the answer from the perspective of being a parent.  How much money does a teen spend in a week?  All of it!

In fact, it could be argued that they spend more than 100% of their money.  Because in addition to the income they might generate through a job or allowance, they often spend at least some of their parents’ money, too.  Teenagers are not a wise market to overlook, because the money they have access to could be described as almost entirely discretionary. 

(Caveats and counter-trends:  Many teens are responsible for maintaining their own smartphone contract and paying for their monthly gaming expenses.  Some buy their own clothes, and some even have a car payment.  And post-recession, more teens are helping out with general household expenses when a family has been impacted by job loss.)  

Marketing Implications:  If you’re not convinced just how big the potential is in marketing to pre-adults, just ask some people who sell X-Box or PlayStations, Droids or iPhones, or Abercrombie & Fitch.  In addition to being ravenous about their consumption of entertainment and fun (in-theater movies, theme parks, parties, etc.), they are playing an ever-growing role in procuring goods for the household; grocery and other shopping needs are often delegated to the youth of a household, especially when there is more than one head-of-household that is employed outside the home. 

And by the way, the older-end of this spectrum is also behind the wheel.

Which of your products and services fit into the pre-adult life stage?  Have you found the best ways to connect with these consumers?  (Beyond traditional media, they are fanatics about social networking and micro-blogging; but getting into their group is not always easy and requires both finesse and authenticity.)  And when you think about the life-value potential of gaining customers in their youth… the payoff can be remarkable.    

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

Upside of cautious economy: Lower gas prices

Trend Observation:  A story in today’s edition of USA Today suggests that gasoline prices could stay low—or fall even lower—between now and fall.  That’s a far cry from what we were hearing last winter, when there were concerns about stability in the Middle East and problems with major refineries.  Click here to see the story.

Marketing Implications:  Some businesses might profit from going after this “commuter’s dividend” of lower gas prices.  Many drivers anticipated the kind of peak gas prices we saw in the summer of 2008, when the average price per gallon hit $4.11.  With each commute costing less, the consumer might feel as if they have a windfall of found money in their pocket at the end of each week or month.

Any ideas about what they should spend it on?

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

Automotive rebound continues

Trend Observation:   Automotive was among the hardest-hit categories during the recession of 12/1/07 through 6/1/09.  The contraction was illustrated by the closure of many dealerships, as well as vanishing name plates like Saturn, Hummer, Mercury, Pontiac and Plymouth.  But it seems the pendulum has headed the other way, according to this story from the Detroit News; there are 66 new dealerships, and roughly 2,400 new jobs in the retail automotive sector, and sales are pacing up about 10% year-over-year.  Click here for the full story. 

Marketing Implications:  What does the comeback look like in your category?  Is it as robust as the increases in the automotive, home furnishings and home improvement industry?

While it is critically important for a company to see a downturn coming, and time its’ more conservative approach very carefully… it is just as important to recognize when your category is on the rebound, and time your more assertive plans with equal precision. 

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Is your marketing upwardly mobile?

Observation:   Over the past few days, there has been a flurry of writing about marketing in the mobile space (yes, even more than usual for this popular topic).  For example, today’s Research Brief cites MAG research that up to fifty percent of car buyers will use their smartphone in the research or shopping process (click to link).

In the supermarket category, today’s Facts, Figures and the Future newsletter from Phil Lempert sources NPD Research in saying that 25 million Americans have downloaded some form of coupon-providing apps to their mobile device (click to link).

Implications:  Okay, it’s easy to get excited, but hold on just a minute here.  Before you rush out to spend big money on an “app” for your company, product or service, remember what happened with social media.  Everyone said, “You’ve gotta be on Facebook or you’ll miss the boat.”  So lots of companies created a FB page for no apparent reason, and started inviting their “fans” to “like” them.

Why should I?

As you read both of these two stories (which I selected quite at random), note that the mobile device tactic is designed to satisfy a consumer need… and move the relationship further up the ladder toward a sale or continued loyalty.  Like any other advertising or marketing endeavor, your mobile tactics should support your overall marketing strategy.  So…

In what ways might you enhance your relationship with consumers, as you transcend face-to-face, and move into the mobile space?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Automotive: The market share shuffle continues

Observation:  Over the past few years, Korean brands like Hyundai swooped up impressive market share, just as Toyota was suffering from the angst of a major recall in 2009 and both Toyota and Honda were impacted by the effects of the 2010 Tsunami.  But it seems that those musical chairs are shifting again, according to this recent story from Automotive Week and Automotive News.  (Click to link.)

Implications:  I’m not sharing this story only for the benefit of folks in the auto industry.  Virtually every company wants to grow their business.  But a story like this reminds us to ask some very important marketing questions.

If you expect to grow market share this year, at whose expense will you make those gains?  Where will your new business come from?  What will your marketing message say that is so convincing that people will leave their past provider, and instead, come to you?

Also… which of your competitors intends to grow their own market share at your expense?  How will you defend against that assault, or even grow your own business in the face of that marketplace aggression?   Will that threat come from a competing company within your business category, or is it possible this assault could come from an outside category that you now compete with?  (For an automotive example, see the story immediately below about the increased use of mass transit.)  How will your message help you defend against these new competitive threats?  Should you bother defending (is it really a threat to your core business)?

The answers to all of these questions begin with knowing who your real target consumer is, and the benefits they seek when buying the product or service you sell.  Sure, the competition should be considered!  Absolutely!  But always in the context of what your most important customers want from your product, service, and purchase experience.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Mass transit sees an upswing

Observation:  According to a story in today’s USA Today, more people are taking more trips via mass transit.  The surge is seen as a response to high gas prices (although gasoline prices are a few cents lower than last year at this time).  Click here to see the story.

Implications:  It is interesting to note that for today’s Millennial generation, life does not revolve around automobile ownership the way that it did in the 60s and 70s.

Do you sell a product that can be delivered?  I can think of a lot of things that people cannot take home on a light rail or bus ride.  Simple delivery could be a very important value-added service if this trend grows.

Do you sell cars or light trucks?  It might be time to remind people of the flexibility and convenience that can come with vehicle ownership.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Millennials as the “unbanked” generation. (Could your category face the same fate?)

Observation:  A story from USA Today this morning builds on the body of opinion that banks are losing significant market share to check-cashing services, payday loan operations and other alternatives to traditional banking.  Click here to see the story.

Implications:   As one reviews the stories we’ve posted about banking at this site, this issue has become a frequent topic and an important focal point as the banking industry evolves.

What kinds of tools or services could banks offer to become more relevant to young adults?  While direct payroll deposit and online bill-pay services have become an important service to young adults… they’ve also reduced the face-time bankers used to get with these customers and prospects.  How could banks begin to re-build a personal relationship with their young customers?

By the way, the impact of this issue is not limited to banking.  More and more life tasks are either automated or performed online as time goes by (consider the way people research, shop and buy things like cars, plane tickets, music, personal electronics, etc.)  Is the product or service you sell subject to this same frustration within the next few years?  How will you respond?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Why automotive seems to be trending toward an even more robust recovery

Observation:  A story from Bloomberg explains the three fundamental reasons that automotive seems to be on very solid ground right now, and moving even stronger.  Stated simply, it’s an improving economy, pent-up demand, and loosening consumer credit.  But if you like, you can click here to see the full story.

Implications:   I’m not sure this list is any different than a company in any big-ticket category might share. 

When headed into a recession, it’s important to know when to pull back on expenses.  But it might be even more important, in terms of timing, to know when to get more aggressive when it comes to marketing.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

For now, the laws of supply and demand rule in favor of lower oil prices

Observation:  A story in yesterday’s Wall Street Journal explains that OPEC is operating at greater than their usual production, which should have the effect of continuing our recently stabilized gasoline prices.  The production was increased in response to geo-political issues such as the uneasy situation in Iran.  Click here to see the story.

Implications:   This winter, I think many consumers had braced themselves for higher gas prices in the foreseeable future.  The recently stabilized situation with petroleum raises an interesting question:  What if you prepare for the worst and hope for the best… and the better outcome turns out to happen? 

Does your company, product or service stand to benefit from the “dividend effect” of households that will spend less on their daily commute?  Again, if the consumer is spending less than anticipated on fuel, they have more to spend on…

Whatever.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Prices for used vehicles fell slightly in April

Observation:  Whether it was caused by a tectonic shift in pre-owned inventory after the 2010 Cash for Clunkers stimulus—or because people were holding on to their old vehicles during and after the recession—supply-and-demand has kept used car prices high for quite some time.  But this week, Automotive News reports that prices finally fell for the month of April.  Click here to see the story.

Implications:   Pent-up demand brought buyers back to the showroom last year, and year-over-year sales for new vehicles has been strong.  That helps alleviate a shortage of pre-owned vehicles (buyers brought older cars and trucks to trade in). 

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Small business sentiment seems to be getting stronger

Observation:  A recent story in USA Today suggests that small business owners and operators are feeling a bit more confident.  The article was written based on a study from the National Federation of Independent Business; click here to read the USA Today story, or to access the full report, click here.

Implications:   Clearly, small business confidence rises or falls in response to the confidence of consumers.  While the degree of optimism could still be labeled as “cautious,” it is worth noting that the “Great Recession” lasted for 19 months (December 2007 to June 2009).  While it began in July 2009, nobody refers to the subsequent growth pattern as the “Great Recovery,” because it has not been as fast or robust as recoveries in past recessions. 

That having been said, the recovery has been underway for a full 34 months… which is why we refer to this period as a time of “Reconciliation,” as families continue to manage their household differently, financially, that they might have in the period leading-up to the meltdown.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

UPDATE: Bigger vehicles selling well (used, too)

In this morning's New York Times, there is a story that compliments our post from yesterday about how bigger vehicles are moving better since gasoline prices have stabilized (see immediately below).  The Times story suggests that, generally, this short-term trend is resulting in nice trade-in values for owners that are moving from SUVs to more fuel-efficient cars.  Click here to see that story.

The Fuel Economy: How quickly we forget

Observation:  The Detroit Bureau reports that demand for vehicles of higher fuel consumption has regained some ground, as prices at the pump have stabilized.  Click here to see the story.

Implications:   Are you seeing folks a little less bummed-out about gas prices at your place of business?  If consumers "fear" a little less, are you seeing them spend a little more?  If so, good for you!

But it might not be a great idea to bank on low gas prices over the long haul.  The Middle East has never been a terribly stable place… and you never know when conflict might push prices higher without notice.  And with emerging middle-class economies in China, India and elsewhere, we can expect energy prices to climb based simply on supply and demand.

If you’re a business owner, manager or marketer, how are you exploiting lower (or at least more stable) gas prices right now?  What is your strategy for if (when) prices head the other way?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Consumers accelerate car sales in response to higher gas prices

Observation:   Once upon a time, the high price of gas contributed to a slowdown in vehicle sales.  This time around, it seems, higher gasoline prices are prompting consumers to trade in their older vehicles for something newer and more fuel-efficient.  That’s according to a story in this morning’s USA Today.  Click here to see it.

Implications:   We’ve been anticipating the effects of higher gas prices for a long time, now.  A more expensive commute could cause some consumer to spend less in some discretionary categories (like entertainment, out-of-home dining, etc.), but more in others (automobile sales and service, energy-saving home improvements, etc.) 

How are higher fuel prices impacting consumers when it comes to your product or service?   How will you message to the consumer so that a purchase with you is one of the last things they delay or defer?  Is there a way you can position your offering as a higher priority, when compared to other discretionary purchases?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

UPDATE: GM re-thinking their approach to millennials

Back in March, we offered a post about how millennial consumers think differently toward automobile ownership than earlier generations.  It was based on a story in the New York Times (See ESE “Letting younger consumers drive,” March 26.)

Additional coverage on the topic was given by today’s Marketing Daily; click here to see the story.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

The car comes first when it comes to paying bills

Observation:   An Associated Press story in today’s Minneapolis Star Tribune suggests consumers have re-prioritized the bills they pay.  The article is based on a study from TransUnion, and explains that while consumers used to pay their mortgage first, then the car loan and credit card bills… the vehicle loan has now taken the pole position over the mortgage payment.  Click here to see the story.

Implications:   There are lots of things going on in this story, in the form of lessons learned and adjustments made during the Great Recession.  First, the labor market placed a premium on transportation:  If you had a job, you needed reliable transportation to fulfill it.  If you were looking for a job, you desperately needed transportation to find it.  Even at risk of foreclosure, the car payment had to come first, because it is so directly connected to employment and thus, future prospects.

But coverage about the mortgage meltdown shed light on the whole foreclosure process, and trained many people that the “grace period” on a home loan might be more forgiving than a car loan.  The repossession process on a vehicle moves much more quickly than the foreclosure process on a home.

More than anything, this story does a great job of illustrating “Reconciliation,” the idea that after 19 months of recession—and the 32 months of recovery that have happened since—consumers have adjusted their financial behaviors to reflect their new collection of economic realities.  That’s a very personal process… and might look quite different from one home to another.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Automotive recovery shifts into higher gear

Observation:   A recent story from Automotive News indicates that the car-buying public has moved from “need-based buying (replacing an older car when it becomes unreliable) to “want-based buying” (buying a car because they feel like it).  Click here to see the story.

Implications:   While everyone knows what is meant by the term, “The Great Recession,” few people feel like we ever had the chance to celebrate a “Great Recovery.”  That’s because the turnaround has been very gradual, allowing no great announcement of good tidings.   

But that having been said, the recession lasted (only) 19 months, and at this writing, the recovery has lasted 32 months.  The wariness has, for many people, worn off.  While gradual, the recovery has turned out to be somewhat reliable for many Americans… and they’re ready to get their lives underway again.  That is what we mean when this site references the term, "Reconciliation" (see our other postings on the topic by clicking here).

How are things in your category?  Have consumers begun to return?  Are they coming back so gradually that you’ve failed to notice?  Have they returned to the category, but not your company?  The mindset of many consumers is shifting to the good; has your messaging kept pace?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Letting younger consumers drive: GM prepares for a generational shift

Observation:   A recent story in the New York Times explains how General Motors is adjusting to the needs and preferences of Millennials (people who were born between 1981 and 2000).  The lives of people in this group are not as culturally tied to the automobile as previous generations, the story explains, and GM is trying hard to regain relevance.  Click here to see the story.

Implications:   We’ve posted dozens of stories at this blog under the label of Generational Economics; the term we use for how consumer priorities changes as they move through different life stages.  But clearly, this decade’s “18-34 year-old” is not buying the same way that an 18-34 may have in during the 1960s, 70s or 80s.  And that’s not just true for automotive; it is a reality check for restaurants, supermarkets and furniture stores, too.

Is your company, product or service seeing a change in the way young adults buy?  Indeed, is your category changing in a way that response to shifting consumer preferences?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.