UPDATE: The implications of higher debt without completing higher education

Observation:  Two weeks ago, I posted a story about the higher debt load required of people who pursue higher education (click here to see “An Educated Risk.”)   Today’s Washington Post considers that issue from another perspective:  People who pursue but do not complete their higher education; ultimately, the problem of having huge debt is compounded by the fact that they do not have the degree that could lead to a higher-paying job.  Click here to see the Post story.

Implications:   One must wonder whether we are approaching a tipping point, of sorts; one that imposes adjustments to the way college educations are sought, delivered, and paid for. 

This may not seem like a consumer-trend issue, at first glance, but I think it definitely is one.  For decades (perhaps centuries), there has been a close correlation between education and future earning power.  If an economy is such that less educated people are likely to earn less money, a fundamental shift in consumption is likely to occur if large numbers of people decide college is either financially out-of-reach, or not worth the risk.   

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

An educated risk: Higher ed requires higher debt

Observation:  Last weekend, the New York Times published an in-depth story about the rising costs—and tremendous loans—many students are having to consider when pursuing a college degree.  Click here to see it.

Implications:   Deep in the story, these writers compare the current student loan crisis to the mortgage bubble… not because it holds the same potential to harm our greater economy, but because of the “education at any price” mentality that has prevailed in recent years, and because many students fail to realize the long-term consequences of tuition debt.

As I finished this story, I was left with several questions.  Is the U.S. at risk of a downgrade, in terms of its leadership position in education?  What kinds of jobs (indeed, what kind of an economy) await the less educated working population?  Will the academic world correct itself, creating more schools that focus on a specialty and fewer that offer deep programs in all subject categories?

This is a category that seems to be poised for a shake-up.

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

Finances contribute to a new education gap

Observation:   In recent months, I’ve used the term Dumb Bell Economy to explain an economic landscape that is filled with extremes.  I don’t use the term as a reference of intelligence… but to point out that there are lots of people who enjoy abundance, lots of people who are suffering, and fewer people than ever who feel like they’re in the middle (class).  (Click here to see that series.)

Today’s New York Times explains that the chasm between those who have and those who do not has also visited education.  Click here to see that story.

Implications:   There are a couple of reasons I think this story is important.  First of all, education influences the future.  But secondly, I’m interested in chasms that could expand—or be established—between various economic classes.

Companies generally thrive by super-serving a core consumer group.  Is your customer base making progress in their quest to build a future, or are they facing challenges?  Are they increasingly upscale, or financially challenged?  (By the way, there is great opportunity for businesses that succeed in super-serving almost any core audience.)

By the way, how does this issue impact educators… or the people responsible for selling education to incoming or prospective students?

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

The class of 2015: Wired and well branded

One of the more popular stories from Marketing Daily this week provided a glance at today’s freshmen class as they arrive on campus.  The article gives this new generation of college students a lot of credit for the way they’re using social network to build their personal brands.  Click here to see the story.

Implications:    Whether you’re a neighborhood bar and grille where friends can gather, or a home furnishings store that helps folks choose the kind of goods that make entertaining a little more fun… you might be in the business of helping your customers “brand” their lifestyles.

Don’t just think in terms of the brands you sell.  Think of the personal brand your customer would like to build.  I bet you can help them.

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

Schools are hurting and you can help (and do well as you do good!)

The Engage:  Teens blog from Media Post launched a three-part series today about the state of education and school budgets.  While the opening premise seems to focus on the challenges that schools are facing (slashed budgets, too few teachers, and greater than ever scrutiny, for example), you’re also wise to consider how these issues might represent opportunities for your company, product or service.  Click here to see the story.

Implications:    If you’ve ever considered a cause marketing initiative that benefits education, now might be a great time to revisit the issue.  Parents are less likely to assume that government (even at the local level) can solve all of the fiscal challenges their communities are facing.

Could you sponsor a section of the local school library?  Provide snacks to after-hours school sessions?  Does your product advance the goal of education?  Could you run a promotion that generates cash for your local school district?

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

When states cut, can your company gain?

From education to unemployment services and benefits, states are cutting costs.  That’s according to this story from today’s New York Times (click to link).

Implications:  What could your company do to step in and provide solutions and alternatives to reduced or eliminated government services? 

For example, does more children in the classroom equate to an opportunity for Sylvan, Huntington Learning Centers or other professional tutoring services?  If re-employment counseling and job-hunting services are less available in your state, does that represent an opportunity for private head-hunting firms, local colleges and tech schools, or even temp agencies?

When one provider leaves the market, consumers often seek an alternate provider.  Could your product or service be an alternative to something a government agency once provided?

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

New attitudes toward generosity and gifting

My wife recently encouraged me to buy an expensive D-SLR camera, to replace one that I had irreparably damaged on a kayak trip last fall. I agreed, under the condition that she might go easy on my birthday and Christmas gifts this year (the camera would do the job).

Not long after that, I encouraged my wife to purchase a painting that she fell in love with while we were on vacation. She consented, under the condition that the trip and the painting would be considered her holiday present.

I thought that our behavior might be unique, but within an article in Saturday’s New York Times I found evidence that we might simply be part of a growing trend… where gifting has moved toward giving someone permission to spend on a themselves, to fulfill an expensive hobby or passion. It was a fascinating story, and you can read it by clicking here.

Implications: The great recession taught us to avoid waste. The trend that his hinted at by this story takes the pressure—and the risk of potential waste—off of those who toil and stew about what the perfect gift might be for someone they love. Instead of trying to be mind-readers—knowing what the absolute perfect give might be—we are becoming facilitators… encouraging our spouse or significant other to fulfill a dream or desire (and not feel guilty about it).

Is your product or service too complex for someone to give as a gift? (Julie may have been intimidated to know what kind of lens capability, speed, storage and connectivity I would look for in a camera… and I don’t have a clue when it comes to choosing a painting or any other decorative decision.) Perhaps the solution is not to market your product or service as a gift that someone gives, but as a dream to be encouraged.

In this scenario, I can imagine a whole new range of things (aspirations) that begin to compete for the gift dollar. Travel? Higher education? Anything which, purchased for oneself, might feel selfish… but when purchased with the encouragement of a loved one, could be the most generous gift of all.

PS: It’s Valentine’s Day. Still need a great, last-minute gift idea?

[Note: For a counter trend to this posting, see the story that follows—Financial Infidelity—immediately above.]

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

An educated guess: Cost of higher education going higher

Last week, Research Brief published an analysis of National Center for Education Statistics data done by the Pew Research Center. The analysis suggests that college students are borrowing much more money in recent years. (Click here to read the full article.)

The following day, the New York Times published a story that points to a cloudy future for the funding of Pell Grants. (Click here to see that story.)

Implications: Think about book stores, back-to-school clothing, wireless phones, laptops, local pizza delivery shops… right down to the beer vendors: There are lots of business categories that rely on college student spending for their livelihood. But this trend stands to impact more than just the companies who build or sell those small dorm-room-sized refrigerators. These reports suggest that we might be wise to look for fundamental changes in the way some people seek education.

Could increasing costs lead more people to online classrooms, or at least to down-grade from a distant, private college to a hometown, public university? Or, could these costs inspire students to take classes with the idea of gaining specific collection of knowledge, a skill, or ability… instead of seeking a broad degree?

Mike Anderson

Consumers are operating on a need-to-know basis

This morning’s Research Brief features a Pew Research report about People and the Press. The study was designed to examine how much—or how little—people know about the balance of power in their own government and other high-profile topics, such as the recession, TARP, and more.

Click here to read the full article.

Implications: After first reading this report, it would be easy (and a bit unnerving) to assume that a lot of people are generally idiots. But thankfully, I don’t think that is the case, and I don’t think that’s what this data implies. In my humble opinion, the report might indicate that people are operating on a need-to-know basis.

They’re very busy trying to get or keep a job, raise families, make payments, catch-up on retirement, go to PTA meetings, take care of aging parents… et al. Political rhetoric has turned government into something that would often be more compatible with Entertainment Tonight than C-SPAN, and people don’t have time for it. Bailouts and recovery plans seem like out-of-reach topics that are decided behind closed doors and topics over which the consumer (voter) has little influence… so why pay attention? They have plenty of other things to worry about.

Certainly, ignorance about how our country works is a fundamental problem, and it needs to be addressed. But lack of education is only one cause; a greater cause might be lack of interest.

When it comes to your business, how complicated has life become for the consumer? Is you marketing message focused on things you want people to know? Or does it focus on what consumers need to know?

An important question to ask… when so many consumers are operating on a need-to-know basis.

Mike Anderson

Trend watching with Mintel

Colleague and friend Jim Hopes sent me this morning’s Research Brief, which quoted a consumer trend summary published by Mintel. Click here to see the briefing, or, if you’d like to see the Mintel press release, click here.

Implications: Many of the observations offered in this trend briefing support the idea that many consumers have taken economic matters into their own hands. Fortifying their savings, planning to work beyond traditional retirement years, making greater use of digital tools, and considering the ROI of their higher education choices are just a few examples.

Always fun to share these trend-watching summaries when they become available. One might not agree with all of the thought… but use these reports to stimulate consumer trend thinking of your own.

Mike Anderson

Are women still hitting a glass ceiling? (And can that last much longer?)

Earlier this week, there was a story in the New York Times about a GAO report that women are still not on equal footing in terms of holding management jobs. Click here to see the story.

Implications: Sorry to hear that the playing field has not yet been “leveled” effectively, according to this report. But I think the next couple of years are going to be very interesting to watch, in terms of employment.

Men, after all, took a bigger hit than women during the recession, at least in terms of job loss (according to this story from the NY Times back in February). I’ve heard from a lot of business owners during the past few years… and I’m also under the impression that companies did not cut people during the recession, they cut payroll. (Companies were not targeting people, they were targeting paychecks.) If that assertion is reasonably accurate, and if men were earning more as we entered the recession, it would only follow that men were a more attractive target in management reductions during the great recession.

Could the recession have served as an equalizing force, in terms of gender balance in the workplace? That might be important to think about… because employees (whether line-level or C-suite) are also influential consumers.

Mike Anderson

Cleaning some story ideas off my desk...

Here are some stories I haven’t had the chance to write about yet… but didn’t want to discard until I shared them with you.

This is a story from Marketing Daily (click for link) on the topic of call center quality. Lots of companies are shipping their customer service capacity overseas, at least with regard to telephone interaction. But use any out-sourced customer service entity with caution… lest you ship your customers to a competitor that’s easier to communicate with.

Mom, Dad: It’s time for you to go. A recent story from the NY Times (click for link) discussed the separation anxiety some parents have when dropping their kids off for school… at college. What kinds of products or services do you sell that could help parents stay in touch with their kids (in a thoughtful way), or celebrate homecoming on weekends or holidays?

Speaking of call centers, Target indicates that it is expanding tech support services for electronics. The article was in Marketing Daily last week (click for link). Granted, the big-box discounter might not sell goods as “complex” as large computer- or electronics-specialty stores, but this moves help keep people from feeling “stranded” after a tech purchase. And perhaps it hints that Target will be selling more sophisticated electronics sometime soon.

If you’re eating it, wouldn’t you like to know where it came from? Last week’s Springwise newsletter offered a story about Lay’s potato chips. The package now features a code to help you learn where the potatoes were grown, produced and packaged. Snack foods for loca-vores! (Click here to see the story.)

Here’s another Marketing Daily story (click for link) about relationship marketing and the role it plays in helping banks develop “fee tolerance” among its customers. Based on research from Mintel, the article suggests that customers see honesty and transparency as important in their banking relationship. (Early dialogue might make the consumer less likely to see a fee increase as a knee-jerk price hike. - MA)

Mike Anderson

The law (even for lawyers) of supply and demand

There was an interesting story in USA Today today. The front-page headline suggested there are some graduates who now object to the way their law school oversold the future (now current) job market. Click here to read the story.

Implications: If you’re the marketing director for a vocational/technical college—or the admissions officer for a major university—now might be a good time to be thinking about the end game for the programs your school is offering. Because it appears that’s what your students are thinking about.

When a labor market has taken the kind of hit the Great Recession dealt it, people might start paying less attention to things like prestige, tradition and glitter… and more attention to the career (and paycheck) they could realistically anticipate upon graduation. (“Am I gaining knowledge/skills that an employer will find valuable and attractive?”)

Mike Anderson

Consumers head back-to-school a little smarter (kind of)

Back-to-school sales are a little sluggish, according to a story from today’s Media Post Marketing Daily. Click here to read the story.

You might also enjoy this article about the more “strategic” mom: Insights into the way parents are making ends meet with the influx of BTS expenses. This story appeared yesterday in Engage: Moms.

Implications: A few years ago, consumers would see something on a store shelf, and say, “Why not?” Post-recession, the consumer still seems to be scrutinizing every purchase with a shorter question: “Why!?”

Do I really need it? Can I live without it? Could the purchase of X serve two purposes, so that I can avoid buying Y? What function does this purchase help with?

Now… let’s go back to that first question: Do I really need it? Be careful about how consumers define “needs” and “wants.” What might seem like a want to you might be an inescapable need in the mind of your consumer. I was fascinated by this portion of the Marketing Daily story about weak back-to-school sales: “One exception… is likely to be consumer electronics, including next-generation cell phones, iPads, and new computers. …not because parents see themselves as splurging, but that these are now viewed as necessary, not discretionary."

What do you sell that is a back-to-school need, and what do you sell that is a back-to-school want? Do your consumers agree?

Mike Anderson

"Fit" aggravates job market

A significant of the manual labor manufacturing jobs have fled overseas, and the jobs left behind are more specialized in nature... according to this story in today’s New York Times.

Implications: I’ve heard a new term recently with increasing frequency: Up-skilling. A lot of people are realizing that the abilities required in their last job (or last career) are not the abilities that will be required in their next job (or next career).

If you’re a college or technical school, the opportunities here are obvious: Position your wares not as “courses” but as “occupational prep.” If you’re a company that might be hiring anytime soon, training might be an important consideration… whether that training is provided by your company or something you expect each applicant to gain before/during their employment. (Do you offer flexible hours to facilitate coursework?)

The “new economy” brings with it some new challenges and realities to consider.

Mike Anderson

Comparing apples to oranges

Throughout the Great Recession, a lot of businesses were perplexed about how to make lemonade out of the lemons they had been given. Unable to influence the amount of money coming in (revenue), it only made sense that companies would focus on the amount of money going out (expenses). Many enterprises went into “survival mode,” where cost control was the name of the game... and every expense was on the table, from reducing inventory to cutting payroll. Ultimately, many consumers noticed—and accepted—that a reduction in selection and service would be a natural by-product of the Great Recession.

Now, as the recovery gains momentum, it seems like more companies are going on “offense” again… with advertising campaigns and marketing efforts designed to ensure that, “If consumers are going to start spending again, we better darn well get our share.” If the car business is starting to pick up, each dealer wants to make sure they get their share of car sales. If home improvement is beginning to improve, then each hardware store, lumber yard and contractor wants to make sure they are considered for that purchase. In other words, many companies have gone from thinking about lemons they’ve been dealt… to standing-out among the bunches of other contenders in their category.

I’m thinking about something else.

There are residual effects that are likely to last far beyond the recession that gave rise to them. I’m not just talking about the now-cliché concept that, “the new frugality could stick.” I’m referring to the specific issues that drive that frugality. For example, the credit market is still tight, and more consumers are avoiding debt even if they qualify for financing; that means more people will be living, literally, from paycheck to paycheck. Also, the job market has not fully recovered; a household that had two incomes in 2006 might be living on 1.4 incomes right now. (Or, a person that had one great full-time career might now be living on two or more part-time jobs… and that might include stepping a rung or two lower on their corporate ladder.)

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:

“I can still afford to buy almost anything. It’s just that I can’t afford to have everything.”

Implication:

Get ready for consumers who will be comparing apples to oranges.

Right now, many consumers are moving ahead with one purchase, knowing that it means a number of other purchases might have to wait. So, should the family move ahead with the new appliances, or the major home improvement? Should they pull the trigger on a new car, or put that expense off for a while and instead replace the tired furniture in their living room? Would it be smart to plan a family vacation this summer… or is that money better spent sending one of the heads-of-household back to school, so as to gain skills that would be more attractive in the current job market?

In a nutshell, consumers used to think in terms of “one of each.” Now, they’re thinking “one or the other.” That means, if you’re a furniture store, you don’t just compete with other stores that sell furniture. If you’re an appliance store, you don’t just compete with other stores that sell appliances.

It means that, in addition to worrying about competitors in your category, you might find it necessary to think about other categories you compete with. The “consideration list” might not be limited to other providers of the product or service you sell. It might look more like a set of diverse and competing priorities.

In some industries, it will be like comparing apples to oranges.

Mike Anderson

Trends (and predictions) offered by the National Retail Federation

STORES magazine (the periodical of the NRF) offered a number of consumer and retail trends for 2010. The website headline suggested that, “Surviving retailers will see less competition in 2010.” Click here to see the online version of the story.

Implications: Reading the STORES piece, I am reminded that the line between a “trend” and a “prediction” can sometimes seem a bit blurry; that the whole topic of “trends” can be subjective... and subject to spin.

For example, the rash of store closings in 2009—and the anticipated mergers taking shape right now—are optimistically interpreted as leading to “…less competition in 2010.”

The coming year might leave fewer players on the retail battlefield. But I doubt there will be less competition. In a world where consumers are trimming entire product categories from their consideration list (less self-indulgent purchasing, less out-of-home dining, reduced use of credit) compared to a few years ago… retailers are likely to find themselves competing not only with other vendors in their category.

They’ll be competing with other categories.

People are not just deciding which GPS device to buy. They’re deciding whether to buy a GPS or a new mobile phone. Instead of which restaurant to go to, they’re trying to decide whether to dine out… or dine at home instead so they can afford to go out to a theatre or nightclub later in the week. They’re weighing whether to invest in their retirement fund… or put that money toward a couple of college courses to help the, deal with urgent changes in their career.

I’ll break with tradition, and offer this prediction (note that I make no attempt to disguise it as a trend):

In my opinion, 2010 will see apples competing with oranges.

Mike Anderson

Who's getting credit for all the bad press?

In case you haven’t noticed, banks have been getting some heavy criticism about their credit card practices. From rising interest rates and late fees to falling credit lines, it has become popular to “charge” financial institutions with abusive practices. In addition to scrutiny, the industry faces the prospect of tighter regulation, according to a story in yesterday’s New York Times.

So, what if you’re not a bank—but your name is synonymous with the credit card business?

VISA is launching a “credit literacy” project in the form of an online video game, according to this recent story from Marketing Daily. They’re promoting the project everywhere from traditional advertising and online channels… to the floor of the New York Stock Exchange.

Implications: I’m not sure whether this “financial football” game will either attract young people in numbers sufficient to meet expectations, or whether those people will be successfully educated about responsible use of credit. But it’s worth noting that the people at VISA know their fortunes and reputation are inextricably linked to the bad press about banking practices… even though they’re not a bank.

Consumers often indict entire categories with their favorable or unfavorable opinion. (With a little help from the media and/or politicians, perhaps.) Think “big oil.” Investment banks. Health care. And now, of course, “credit card companies.” If your company operates in one of these (or many other) fields, you might be getting credit for issues gone awry… even if you don’t deserve to.

Is your company part of a category or group that is suffering from some type of collective bad press? Is there anything you could do to stand apart from others in your category? Think “cause marketing,” consumer education, or other goodwill-building effort. In their campaign, VISA is not likely to make wholesale changes in the way banks—or consumers—use credit cards. Some might see this as a veneer-level public relations campaign, created to help build a case against further regulation. But the company is demonstrating an effort. And for some consumers, that will be enough to sway opinion.

Mike Anderson

Can't find the job you want? Make one.

I’ve written here before that a recession tends to precipitate a lot of start-up companies (see “Me, Inc.” from August 22, 2009). Well, a recent study from Pew Research suggests that folks who are self-employed are significantly more satisfied with their careers.

Earlier this month, Pew Research published another story about the changing (and aging) workforce: Fewer jobs are available for younger workers, now that older employees are less likely to give-up their positions. A number of motives contribute to this “graying” of the workforce. First, people are living longer, and that means having an income to supplement retirement savings can be important. But also, having a job—for the older employee—is a matter of fulfillment and self-actualization.

For example, just 17% of workers 65+ said they had a job because, “They need the money.” Of the remaining workforce, aged 16-64 49% said they worked because, “They need the money.”
In contrast, 20% of 16-64 year-olds said, “They want to work.” But among 65+ employees, 54% said simply, “They want to work.”

Implications: I’m wondering if a new variation on “the generation gap” might be in the offing. Could the younger pool of workforce candidates begin to resent the older, asserting that, “It’s my turn?” (This is a particularly valid question, given the high rate of teen unemployment, as reported this fall by the New York Times.)

Could the older workforce be pressured out of the labor market when the competition heats up?

Does a company like yours respect the differing motivations required to attract and retain the kind of talent you’re looking for? For some workers, the emphasis might be on service and self-actualization. For others, money talks louder than anything. I found it interesting that this study drew a generational line in the difference between the two.

And if these demographic extremes will be competing for hot jobs... how long will it be before there are changes in the appearance of the student body at your local college or university... as workers young and old seek the skill sets to compete more effectively?

Mike Anderson

Back to School 2.0

A rough economy can be good for business… if what you sell is a way for people to enhance their skills and gain advantage in the job market. Schools all over report strong demand from a wide variety of constituents.

Discovering a tight entry-level job market, more high school graduates are heading to campus rather than the help-wanted section… and even students who had dropped out of school are dropping back in (see this story from MSNBC). Fighting to stay relevant in a more competitive workplace, even middle-aged and older workers are heading back to the classroom in a search for advantage… either to help them preserve their current job or make themselves marketable for the next opportunity.

Implications: This new student body isn’t necessarily buying education. It is buying relevance. It strives to be marketable in a more competitive workplace. In some cases, it sees education as a save haven while the economy shakes out. It seeks to discover what new demands the economy will place on its available workforce… and it seeks to acquire the skills that can supply that demand.

Think of the power behind this mentality… and ask how your company, product or service might harness that power.

If you’re an automotive service center, recognize that people cannot afford to be sitting on the side of the road, late for work, due to a breakdown; this labor market may not show mercy, regardless for the reason an employee is late.

If you sell clothing, realize that the incentive for looking sharp is very strong right now. (In a world where layoffs are being decided, I don’t want to be seen as the least best dressed.)
If you sell technology tools (laptops, mobile phones, PDAs), realize that the promise of doing more—and in less time—is a promise that may get my attention.

And regardless of what you sell… if you can offer expertise or know-how as a value-added component to my purchase, that is an advantage I’ll be interested in.

We’re not just going back to school. We’re gravitating to anything that might give us a competitive edge.