What is happening in the global financial markets is stunning, surely. I am more stunned, however, by the complete absence of dialogue in the marketing community about this historic moment. Like most stockbrokers who fell into success as markets expanded, most marketers only know how to carnival-call their offerings to cash-flush consumers. Say goodbye to that easy effort. The age of true strategy is at hand. It is make or break, to be sure.
This past weekend, the Wall Street Journal included a neatly illustrated article by Joe Queenan on the dearth of imagination in Hollywood in 2010. The Worst Movie Year Ever? lamented recent storytelling efforts in Tinstletown, painting a picture of movie theaters around the country where audiences sit “listlessly through a series of lame, mechanical trailers for upcoming films that look exactly like the DOA movies audiences avoided last week.” I’m familiar with the feeling that the popcorn is the only thing to be happy about in theaters this summer. But as I was thinking about it, I started to wonder: is Queenan simply describing the state of entertainment, or is he actually providing a metaphor for the state of business lately?
After years of disappointing design, quality and performance, GAP seems tapped into the American cultural pulse once again. The company's holiday advertising campaign announces that the country is "Ready for Holiday Cheer." Like many retailers, GAP is spending more and launching earlier this year, including a major Vanity Fair insert and back cover. Whether these efforts end up translating to sales, of course, remains to be seen. Still, the campaign does more than any other to date to declare a shift in attitude. Consumers will decide for themselves to celebrate in ways "modest" or "all out," but either way, GAP gives permission "to liberate" from the dark clouds of the past 18 months. A holiday declaration of independence -- "This holiday, it's up to us" -- makes the empowerment message abundantly clear: Yes, Virginia, there is an American spirit of hope, even joy, that will not be silenced. The recession is over.
The inevitable economic recovery is arguably just around the corner. Yes, it’s always too far ahead. But at least there is light at the end of the tunnel. Obama says it’s a “long way off,” likely to cover his own posterior. However, the IMF and the Fed are cautiously optimistic. And, with few exceptions, the Dow has been relatively flat in recent weeks. I don’t want to jinx it, but it feels like we’re at the bottom of a very steep hill to climb rather than falling off of a cliff. The recovery -- albeit likely a slow one -- is coming. It’s just a matter of when. And the world, including marketing, may never be the same.
Why can the U.S. government borrow at some of the lowest interest rates ever, while Spain can only borrow at exorbitant rates that threaten to drive it into bankruptcy? The difference isn't their debt and deficits. In 2011, U.S. debt was 98% of GDP, its deficit 10% of GDP; Spanish debt was 69% of GDP, its deficit 8.5% of GDP. The difference is that the United States has its own money, the dollar, while Spain operates on foreign money, the euro.
The economy is faltering and consumers are scared, but you wouldn’t know it by watching television, where advertisers are still pouring in money.
“The recession has been good for us,” says Steve Cannon, Mercedes-Benz’s vice president of marketing, only half kidding. While this quintessential luxury brand faced a more challenging environment, Mercedes still managed to emerge from the recession with renewed momentum, launching five new models and building share of market, as it is looking to its 14th consecutive year of sales growth in 2011.
The recession isn't new to the mill towns of the Northeast; they hit the skids long ago. Decades before the most recent economic collapse, proud, river-encircled cities from Maine to Pennsylvania had faded to mere shadows of the engines of productivity they were during the Industrial Revolution. In place of idle smokestacks and shattered windows, Shoe Town to Brew Town--billed as "a friendly forum over food and drink" to be held at New York's Brooklyn Brewery--imagines another scene: historic manufacturies throbbing with the yeasty vapors of craft beer, and producing not only brew but sustainably raised fish, hydroponic produce, and enough natural gas to meet their own energy demands.
As the world faces recession, climate change, inequity and more, Tim Jackson delivers a piercing challenge to established economic principles, explaining how we might stop feeding the crises and start investing in our future.
The recession has given retail a swift kick in the butt -- but in the case of Target, it's done so in a good way. Using the recession as a catalyst, Target has made fairly radical shifts to its agency structure, marketing and media approach and overall business operations.
The figures for August are in. Home sales rose 7.6%, pulling out of a steep decline in July. Many sectors are flat or sinking. Auto sales figures are horrible but nonstore retailers' sales are up 10.5%. The data are all over the place. So there is comfort for the "new normal" crowd who believe we are looking at a big change on how and how much consumers spend. But there is also data to support the position I prefer, the one that says when capital, credit, and confidence return, Americans will go back to spending like sailors home on leave.
Responding to the sharp decline in rates consumers will pay for luxury hotels during economic hard times, Ritz-Carlton will join airlines, credit-card companies, many other hotel chains and even lowly sandwich shops Tuesday in offering a loyalty program to its customers. The high-end chain had long held that its customers weren't interested in anything as pedestrian as "points." But the recession has hit luxury hotels even harder than the rest of the industry.
If for one reason or another, you’d slept through the past five years, only to find yourself suddenly awake in August 2010, you’d quickly realize the world of advertising and marketing has fundamentally changed in three major ways. First, subconscious or subliminal communication (and research) has become part of the vocabulary of most marketers. Second, power has shifted from brand owners to consumers - even the most powerful brands know that successful campaigns have to systematically engage consumers, who will in turn use their mighty word of mouth to spread the messages opposed to relying on big media budgets do the work. Third, 2010 is shaping up to be dominated by guilt. Guilt for spending money in the midst of a debilitating global recession, guilt for polluting the world, and finally, parental guilt, as kids increasingly engage in their own online world, far removed from traditional values that were previously the exclusive domain of the family. So what does this mean for a marketer in 2010?
Mark Anderson, the high-tech industry’s most accurate prognosticator, foresees an economic landscape still under the stress of too much liquidity — and decision makers still in denial.
Did you cut costs during the recession? Thankfully, no one was standing in bread lines or rationing goods, but maybe you refinanced your mortgage as rates dropped. Or you canceled that premium channel you never watch, drove to work a little less, packed a lunch you used to pick up at the Subway near the office or cut back on entertainment spending. If so, you might not be alone. In a new study, Pew Research Center asked participants about household spending since the recession began in 2007. Via telephone interviews, nearly two thirds of respondents said they had cut back on spending, and only 6% said they had increased spending. In the same survey, 54% said they thought we are still in the recession, and 63% said it will take at least three years before their families recover from the financial effects.
After the dogged recession and uncertainty of recent years, it seems we're coming out of it in a more hopeful, optimistic mood. So why not focus on positive emotion and happiness in marketing? We've always believed in leveraging "enjoyment" for the consumer brands we work with. Nothing elicits more of an emotional response from people than associations of "enjoyment" with brands.
The Authenticity Trend has been fully infiltrated into mainstream culture for years. We see its implications from politics to household products. Consumers are attracted to "the real." This is evident in the rise of farmers markets and the dislike of preservatives like parabens, for example. As if through a prism, when the recession hit, the Authenticity Trend evolved to that of "Imperfection." We still want "the real" but, now, we don't believe the hype. We sense when something is fishy and want to see behind the curtain. Think of those great Ally Bank ads with the pony. If nothing else, we learned from the recession that there is no such thing as "perfect."
Executives are paying more attention to customer service in an effort to increase sales and gain market share in the economic recovery. Drug-store chain Walgreen Co. is training pharmacists to spend more time helping patients with chronic illnesses. Comcast Corp. is putting call-center agents through new training and instructing supervisors to coach their agents more. American Express Co. is expanding a program aimed at getting agents to build better relationships with customers. Just over a quarter of the 1,405 companies surveyed by Accenture late last year said customer service would be the first area they'd increase funding for as the economy recovers. Some companies have begun that practice this year.
Sometimes, too much of a good thing is just too much. There’s an argument to be made concerning over-assortments of consumer products in one category after the other. A recent article in Toronto’s Globe and Mail notes, “In store aisles, less is more, but customers can still be particular” and examined this problem at retail.
By all official indications, the Great Recession has very likely ended. But as marketers, we know better than to interpret this to mean we can pick up right where we left off prior to the steep economic slide. Many consumers have readjusted their budgets and some continue to cope with concerns about the security of their jobs. Even those who have not been directly touched are still anxious about the future. Things that once mattered to our customers no longer seem so important to them. That's why we have to reconnect with them in a way that reflects their new reality.
Despite all kinds of mixed economic tea leaves, a new study of consumer perception from Deloitte indicates that most Americans do believe financial recovery has arrived, and that view is especially strong among affluents. "Consumer confidence is really strengthening," Scott Erickson, a partner in the firm's retail practice, tells Marketing Daily. "And people with higher incomes are more likely to believe we are in recovery."
The environment for marketers is changing dramatically. Marketing's leadership in driving business success has never been more in demand, and those who have demonstrably begun to expand mindsets, skills and capabilities are setting the standard. The difference this shift makes has never been more evident than during the bleakness of the lingering recession. Businesses whose marketing leaders have embraced its components may not have emerged unscathed, but they at least have found themselves entering 2010 with substantial positive momentum.
Last year was the worst year ever for global luxury goods, with worldwide sales falling 8%. But in a look at the world's most valuable luxury brands, Forbes identifies 10 that are poised to thrive in better economic times. These brands, including BMW and Louis Vuitton, share some qualities that help keep them strong even when wealthy consumers are curtailing spending.
Starbucks (SBUX) is on a mission to turn its Frappuccino into much more than a pricey drink. Hit by the recession and increased competition from Dunkin' Donuts and smoothie chains, sales of the Frappuccino brand have slid the past few years. Executives won't say how steep the slide has been for the blended ice drink that became a $2 billion juggernaut for Starbucks. But any decline is seen as serious for the 15-year-old beverage that accounts for an estimated 15% to 20% of sales at Starbucks stores.
The reality facing American newspaper publishers continues to look stark, as figures released Monday show deep circulation declines, with average weekday sales down almost 9 percent since last year. In the six-month period ending March 31, the Audit Bureau of Circulations reported Sunday sales dropping 6.5 percent and weekday sales 8.7 percent. The figures are based on reports filed by hundreds of individual papers.
The baleful consequences of the Great Recession cannot be resolved by maintaining the same approaches as when we created it. The "new normal" in business means many brand owners need to leverage something much larger than a re-take on marketing. They need to accelerate their collaboration with consumers, so that principles such as "for people, for planet, for profit," combined with tools of the web and next-generation media, can transform brands' role in the economy, society and business.
New ad campaigns suggest marketers are eager to shake off the gloom of tough economic times--and they hope consumers will do the same. While some economists aren't sure the tough times are history, advertisers don't seem to care. Companies are rolling out carefree ads that use humor, colorful images and upbeat language to get consumers to lighten up--and open up their wallets.
Looks like affluent people are feeling safe about spending again: Coach says its fiscal third-quarter sales jumped 12%, and Burberry says that its retail sales gained 15% in the second half. Patricia Pao -- head of the Pao Principle, a New York-based consulting company -- says she isn't surprised, and that the strong pickup some luxury retailers saw over the holidays is building steam. "The Chanel boutique in Houston basically was out of merchandise four days before Christmas," she tells Marketing Daily. "During the recession, it was not considered 'cool' to shop. So right now, people with money are spending because of that pent-up demand. And interestingly, so are people with less money, not just because of pent-up demand, but also due to the new merchandising direction of prints and bright colors."
Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates. That, economists say, is the inevitable outcome of the nation’s ballooning debt and the renewed prospect of inflation as the economy recovers from the depths of the recent recession.
The wealthy are cautiously opening their wallets again. Some experts contend that much of the high-end spending before the recession was fueled by money borrowed by people who were trying to live beyond their means. Today there is a trend to reducing risk by cutting debt. But even people who came out of the financial crisis relatively unscathed are pulling back. The possibility of losing their wealth has become more real.
Welcome to...the Roaring Teens? More than a few investors I've spoken to recently think that because consumption appears to be skyrocketing upwards again, all's well that end's well. And on the basis of that conclusion, they're ready to pump capital back into the same old industrial era assets and businesses. Would that it were so. A slightly deeper logic suggests a very different conclusion.
American consumers are finally coming out of hiding. After months of penny-pinching amid the recession, new figures — showing an improving job market, rising factory output and increased retail sales — suggest that consumers are no longer restricting their budgets to necessities like food and medicine. They are starting to buy clothes, jewelry and even cars again.
In and around last week's New York International Auto Show, Ad Age got in front of marketing leaders at some of the world's major car brands, including Jim Farley, group VP-global marketing and Canada, Mexico and South America operations, Ford Motor Co.; Scott Keogh, CMO, Audi of America; Chris Perry, director-marketing and acting head of marketing, Hyundai Motor America; John Maloney, VP-marketing and product planning, Volvo Cars of North America; and Jack Pitney, VP-marketing, BMW of North America. We asked them how they intend to market through the economic recovery, how they are evolving their global-marketing strategies and what's yet to come.
Today’s consumer is emerging from the recession with a radically new definition of the American Dream and a renewed sense in their own resourcefulness and priorities according to a just released quantitative study of 1200 consumers and qualitative research with nearly 700, conducted by Ogilvy & Mather Chicago in partnership with leading consumer insight company Communispace.
Fortified waters and sports drinks saw steep volume declines last year, while the carbonated soft-drink category saw some rebound amid declines as consumers continue to shun packaged beverages. Overall, the beverage category declined 3.1% in volume in 2009. A year ago, the beverage category saw volume drop by 2.1%, the first decline on record. "The challenged economy is undoubtedly the single greatest factor that's impacted the performance of refreshment beverages in each of the last two years," said Gary Hemphill, managing director-chief operating officer at Beverage Marketing Corp. "It's possible this could continue into 2010. It's a little bit premature to say, but it's not beyond the realm of possibility."
The recession, while not officially declared over, is over in the minds of many consumers. For marketers, this means it's time to pay more attention to what the consumer is saying and not what the media is reporting. For while the media feeds the country a steady diet of anxiety-inducing news of record job losses, mortgage defaults, out-of-control credit-card debt, the collapse and corruptions of financial institutions, and a host of other economic doom-and-gloom scenarios, consumers surprisingly are moving forward.
As US equity markets recover and consumers regain a bit of their swagger, shoppers are abandoning Wal-Mart's US stores in droves. The discount giant, which posted healthy US same-store sales gains in four of the first six quarters of the Great Recession as millions of cash-strapped shoppers traded down from department stores and other higher-priced chains, was considered to be among the biggest beneficiaries of the economic slowdown. Now shoppers are dropping Wal-Mart like a bad habit. In fact, the Bentonville, Ark.-based chain is likely to post, for the first time in its history, four straight quarters of same-store sales drops. Coincidentally, the S&P 500 Index is up in each of those quarters. It's an odd relationship America has had recently with the low-price titan.
A new survey of 2,000 U.S. consumers, the second issued by Booz & Company since the early days of the recession in October 2008, confirms that a “new frugality,” born of the Great Recession and evidenced by two consecutive years of declining per capita consumption, is now becoming entrenched among U.S. consumers and is reshaping their consumption patterns in ways that will persist even as the economy starts to recover.
The recession is forcing cash-poor consumers to stick to the basics when they shop, according to a list of the most valuable U.S. retail brands as ranked by Interbrand. In its 2010 list no-frills retailers, including Dollar General, Family Dollar, AutoZone and other retailers that sell necessities, rose in this annual ranking of 50 brands. Many top retail brands that sell niceties consumers can do without in hard times, including Avon and Polo Ralph Lauren, fell on the Interbrand list.
The budding, 3D light-emitting diode (LED) TV category is about to get a blast of advertising from Samsung. The leading TV maker this week unveiled its largest marketing campaign for the launch of new 3D LED television sets. (Rival Panasonic rolls out a similar product this week.) Samsung's ads, by CHI & Partners, London, will run globally. They show a street team installing TVs in unexpected public places, and consumers, as a result, cherishing the depictions of real life as they're captured on the screens. The U.S. version of the campaign, via Leo Burnett, kicked off with a spot called “Wonder,” during Sunday’s Academy Awards. It shows a family bringing home the “wonder” of 3D entertainment. Brandweek chatted with Samsung CMO Sue Shim, who explained why a downturn is actually a good time to launch pricey, but innovative products. (Samsung's 3D LED TVs start at $1,700.) Excerpts from that conversation are below.
Many chief executives are looking to hire again, but cautiously. Defense conglomerate ITT Corp. is hiring workers for nine new plants in emerging markets, but is limiting hiring at home. General Mills Inc. is hiring, but more slowly than pre-recession. Accounting firm Plante & Moran is hiring more auditors and tax staffers, but fewer consultants. Ninety-two percent of U.S. companies plan to hire in 2010, but half plan to do so more slowly than in pre-recession years, according to a January study by human resources consultancy Towers Watson. Friday's jobless report underlined that caution, as the unemployment rate held steady at 9.7%
Consumers appear to be slowly returning to big-name brands after fleeing to lower-cost, private labels in the past year. Store brands rose 3.2% at retailers for the four-week period ended Feb. 20, according to a Thursday report released by Credit Suisse analyst Robert Moskow. Such brands account for about 20% of unit sales of food. Figures exclude sales at Wal-Mart Stores Inc. But the increase is down from a 4% gain in January and an about 6% gain, excluding dairy, last July. At the same time, branded-food unit sales rose 2.4% for the February period compared to a 0.2% decline for the four weeks ended Jan. 23. Mr. Moskow said the gains in part could be due to shoppers stocking up on items before and during the recent winter storms.
Corporate America is emerging from the worst downturn since the Great Depression smaller and thriftier. To survive, companies have laid off millions of workers, closed hundreds of factories and vacated acres of office space. Like those who grew up in the Depression and still reuse sheets of aluminum foil, the experience has left them financially conservative and wary of risk. The road to recovery will likely be marked by slow and steady acceleration, rather than speed. Some companies will see opportunities to amass undervalued assets or steal customers. But it is unclear if their efforts will create enough new jobs to spark broader economic growth
The Quiznos sandwich chain, known for its hot-from-the-oven creations, is making a big push to offer convenience-store patrons an alternative to the usual microwaved fare. As consumers have gotten busier and thriftier amid the recession, they have been increasing their visits to convenience stores while reducing their visits to restaurants. Restaurant visits began slowing in 2007 and then fell 3% last year while trips to convenience stores to buy food have been increasing at a year-over-year rate of 1% since 2007, according to the NPD Group.
Remember Superman's slogan? Let me remind you. "Truth, Justice, and The American Way." Corny, sure. But doesn't it get you a little bit? It sounds funnily evocative right now: a reminder of something deeper, something that we lost.
Almost 75 years ago, the fashion editor Diana Vreeland began captivating, puzzling and amusing a Depression-weary nation with a column in Harper’s Bazaar magazine called “Why Don’t You ... ” She offered suggestions that were breezy — “Why don’t you tie black tulle bows on your wrists?” — or profligate — “Why don’t you turn your old ermine coat into a bathrobe?” Now, during times deemed almost as hard as those, Saks Fifth Avenue is introducing a campaign inspired by Ms. Vreeland’s maxims, although more grounded in the practical. The campaign, which carries the theme “Think about ... ,” includes print and online advertisements, catalogs, signs in stores, e-mail marketing, events, direct mail and social media like Facebook.
Financial crises stink. In their wake, public debt explodes. Nations default. Economic growth falters. Taxes rise. Unemployment lingers. The current financial crisis is no different. The U.S. will have to produce 10 million new jobs just to get back to the unemployment levels of 2007. There’s no sign that that is going to happen soon, so we’re looking at an extended period of above 8 percent unemployment. The biggest impact is on men.
It goes without saying that the Great Recession has been a time for companies to pull back and retrench. But the recessionary downswing has also become a remarkable opportunity for re-imagining and reinventing brands. Some marketers have been forced to rethink their brands because of competitive pressures; when things are good, it's easy to put aside the marketer's responsibility to continually re-excite its consumers (and stun gun the competition). Too many marketers leave that quest to Apple, Nike and Marc Jacobs.
Fashion designer Carolina Herrera says she was "shocked" a few months ago when she noticed her $7,990 gray sequined tulle gowns were "selling like hotcakes," relatively speaking. During the downturn, she has had to walk a fine line, trying to cater to frugal consumers without damaging quality or image. But in December, she also opened an elaborate high-end boutique in Las Vegas that sells what she's known for: $3,000 cocktail frocks, $10,000-plus ball gowns and $1,800 skirts. Women who used to buy three dresses at a time and had cut down to one or none have started to spend again, she says.
Americans, we the people, have become a distrustful lot of late, hardly surprising news given our Recessionary new world order that is rammed home daily in headlines detailing the failures, cover-ups, and worse, of corporate America and its leaders. Enter the 10th annual Edelman Trust Barometer 2010, not co-incidentally published (Jan. 26) during Davos, which found that, "Trust is now an essential line of business to be developed and delivered. Trust in business has improved, but the patient has a long road to go for a full recovery," according to Richard Edelman, president and CEO, Edelman Public Relations. "The increase in trust in business belies its fragility."
"A fool and his money are soon parted" is an old expression that has never been more true than it is today. Consumers and investors are not quick to let the moths out of their wallets. With unemployment figures high, every penny counts. So how do marketers make their brands relevant and indispensable?
Media companies have predicted a bounce back in their advertising revenue. Now, investors say, they have to come through for shares to resume their run. The economic downturn led companies to slash advertising on TV, radio, newspapers and magazines. In recent months, slower declines in ad spending fueled stock prices for U.S. media companies, including the Big Five conglomerates. Investors will get a good read this week on advertising activity. News Corp., owner of The Wall Street Journal, is expected on Tuesday afternoon to post fiscal second-quarter earnings of 20 cents a share, according to Thomson Reuters, higher than the 12 cents a share from a year earlier. Before Wednesday's opening bell, Time Warner is expected to pull in fourth-quarter profit of 51 cents a share, up from 23 cents a share. The rest of the Big Five—Walt Disney, Viacom and CBS—will report earnings later this month.
For five years, Burger King Holdings Inc. was on a roll, successfully courting its "super fans"—18- to 34-year-olds who account for half of all visits to Burger King restaurants. Thanks to high unemployment and healthier eating habits, those super fans haven't been so super lately. Burger King has felt the impact more acutely than its main rival, McDonald's Corp., whose sales are growing. As Burger King prepares to report earnings this week after two straight quarters of same-store sales declines, the question is whether the chain has relied too heavily on customers that may be permanently changing habits.
Though there's still widespread disagreement of just when the industry will put the recession firmly behind it, one thing's clear: Whenever it happens, marketers had better be ready. Forward thinkers such as Allstate, Walmart, New Balance, Macy's, Procter & Gamble, McDonald's and Bank of America are already paving the way to recovery by spending on marketing and product innovation, cementing relationships with new consumers and rewarding loyalists who stuck by their brands during the bad times. They are also creating products and messaging that bridge from recession to recovery.
As we focus our attention on 2010, clearly the global marketplace is redefining itself. Not only in economic terms but more importantly in consumer terms. Consumers are more diverse, demanding and connected than ever before. To help give you a clearer look into what’s ahead, Nielsen has assembled videos from our global team to deliver insights into what consumers watch and what they buy. With evidence of a recovery emerging, understanding the global trends and local conditions is essential to success.
Hyundai Motor, the biggest South Korean auto maker, said Thursday that its quarterly profit had almost quadrupled as its small cars proved popular with recession-weary buyers. Fourth-quarter net profit reached 945.5 billion won, or $819.7 million, considerably more than analysts’ forecasts. That total compared with profit of 243.5 billion won in the fourth quarter of 2008 and profit of 979.1 billion won in the third quarter of 2009. Sales in the October-December quarter grew 9.3 percent from the same period a year earlier, to 9.65 trillion won. Hyundai also posted a record quarterly operating profit of 837.2 billion won, up 44 percent from a year earlier.
It's a simple formula: Recession requires more tactical spending. This year's budget = + online spend + social activity + lead generation campaigns - brand investment. When the dollars get tight, spend shifts to more tangible, less expensive marketing programs with the promise of shorter-term returns (or at least lower costs). Not that there's anything wrong with saving a few bucks wherever you can get the job done more efficiently. But when saving money becomes the goal instead of a guideline, something big always suffers -- and it's usually the brand.
Those entering the workforce now will likely make less and save more—not just in the short term but for the rest of their lives.
Most of the marketing rules we lived by just five years ago are practically obsolete. The industry has faced more changes in the last five years than in the previous 50. Let's face it, there's no point in improving broken legacy models. Since necessity is the mother of invention, let's not waste this recession and instead use it to rethink how we go about branding in this new decade.
Cadbury reported increases in 2009 revenue and dividends Tuesday and highlighted a strong forecast for 2010 as it seeks to persuade shareholders to reject a hostile takeover bid from Kraft. “We generated good revenue growth despite the weakest economic conditions in 80 years,” Todd Stitzer, chief executive of Cadbury, said in a statement.
Procter & Gamble is taking a nontraditional tack to help Tide, the best-selling detergent in America, fend off challenges from lower-priced rivals as strapped consumers continue to ponder practically every purchase. An image campaign for Tide, now under way, eschews the brand’s long-time pitches celebrating its ability to get clothes clean. The most recent such ads, which began appearing in 2007, carried the theme “Tide knows fabrics best.”
Still struggling after its worst recession in generations, Japan announced a long-term growth strategy Wednesday that seeks to tap into the dynamism of its Asian neighbors, create millions of jobs in new industries and fuel economic expansion of at least 2 percent a year over the next decade.
The economy may continue its gradual recovery next year, but advertising is expected to show the influence of the recession through 2010. Don't expect a letup in the rough-and-tumble sales pitches that hit the airwaves, Web and magazines this year, as advertisers like Campbell Soup and Verizon Wireless, owned by Verizon Communications and Vodafone Group, took direct aim at their competitors. Advertising executives expect such barbed comparison ads to continue. Other companies, meanwhile, will be showing their softer sides. In the bleak aftermath of the recession, many marketers think consumers will respond to brands they perceive as giving back to the community.
Retailers won the closely watched holiday skirmish with shoppers, who opened their wallets a little bit despite a still struggling economy, fewer discounts than last year and limited variety on store shelves, according to newly released data.
Last year, most Americans felt as if they had been hit in the head by a 4-iron. Wall Street nearly collapsed. The economy plunged into its deepest recession in decades. As housing prices sank, many homeowners realized that they owed more on their mortgages than their homes were worth. Millions lost their jobs, and even those who didn’t hunkered down, burying their wallets in the backyard. This year — with more than a few bumps along the way — the situation brightened. With that, here’s a look back at five of the biggest business stories of this year — and what to look for in the next 12 months.
During a recession, virtue can be a major asset, especially for toys. Lego Group says virtue is part of the formula that has allowed the small, Danish company to buck the downtrend in toy sales. In addition to cutting costs and outsourcing some production, the company has worked to combine the demand for movie-related products with the creative-play foundation that has made its plastic building bricks popular with parents for decades.
What's the best business reaction to a recession? How about none at all. Unlike many outfits in the struggling restaurant industry, Panera, the soup and sandwich chain with more than 1,300 stores in 38 states, has stayed strong by standing still. "The key to Panera's success lies in what the company hasn't done," says Nicole Miller Regan, an analyst at Piper Jaffray. "Panera hasn't fallen victim to discounting. It hasn't levered up the balance sheet. It hasn't tried to change." Such calm amidst the storm has paid off for shareholders. Panera stock is up 26% this year: in fact, it's one of the best performing stocks of the decade, having generated a whopping 1,560.65% return.
This was the year that Hollywood hit the jackpot by informing us that Mike Tyson keeps a pet tiger, Spock had a fling with Uhura, Hogwarts School needs a new head, the world will end in 2012, and even George Clooney is up in the air when it comes to women. By year’s end, it was enough to make Daniel Day-Lewis break into song. Hollywood will ride premium-price tickets for 3-D movies, big-budget sequels and — counterintuitively — the recession to more than $10 billion in ticket sales by the end of 2009, a near-record that is helping to offset a steep drop in DVD revenue.
The global downturn put some U.S. theme parks into bankruptcy and upended grand plans for new ones in the Middle East. But in Asia, a development boomlet is under way, as operators race to roll out parks and add attractions to draw in the region’s growing middle class. A Universal Studios is set to open early next year in Singapore at Resorts World at Sentosa, a sprawling development that includes a casino. Over the border in Malaysia, ground has just been broken on the first Legoland in Asia, due to open in 2012. In Hong Kong, the $750 million redevelopment of Ocean Park is to be completed in 2013, while Hong Kong Disneyland Resort recently began a $465 million expansion project that is to add three areas by 2014. And last month, Disney finally won approval from the Chinese government to build a theme park in Shanghai; it is expected to open in five to six years.
"We do have a conscious say in selecting the narrative we will use to make sense of the world," writes New York Times columnist David Brooks. "Individual responsibility is contained in the act of selecting and constantly revising the master narrative we tell about ourselves." Brooks' explanation about choice of narrative can apply to leaders seeking ways to navigate our recession. The relentless tide of bad news may tempt those in charge to adopt a pessimistic view point, but leaders owe it to their followers to spread optimism. Without excluding reality, leaders need to inspire not simply hope, but also resilience. Storytelling can help in this effort. Here are some suggestions for crafting your own story to make sense of adversity.
Cash-strapped consumers looking for cheap meals helped push cereal maker General Mills Inc.'s fiscal second-quarter profit 50 percent higher. The maker of Cheerios and Yoplait yogurt also boosted its full-year earnings guidance for the second time in three months following the strong quarter.
After a difficult year battling the recession, the airline industry appears to be headed toward a recovery as fuller planes, fewer discounted fares, lower fuel prices and revenue from a variety of formerly free services start to pay off. The signs of improvement are most advanced at low-fare carriers that focus on domestic flights. Passenger miles and unit revenue—the money taken in for each seat flown one mile—at discount king Southwest Airlines Co. soared 12% last month from a year ago.
The "new normal" — the idea that when income, credit and confidence return, Americans will not return to our free-spending ways — is an idea on the march, recruiting everyone from PIMCO CEO Mohamed El-Erian to Wal-Mart CEO Mike Duke. It's spreading so fast it threatens to become the new orthodoxy. I believe the argument is flawed.
Major retailers including Target Corp., J.C. Penney Co. and Best Buy Co. are cranking up promotions to avoid a slump after Black Friday and keep customers shopping through what promises to be a difficult season. The weak economy and growing clout of online sellers is upending carefully calculated promotions and positioning retailers' Web sites as the frontline in this year's competition.
In Times Square, the nation’s most high-octane shopping day of the year began earlier than ever. At the stroke of midnight on Thanksgiving, amid the worst recession since the 1930s, hundreds of deal-seekers began streaming into Toys “R” Us, surpassing last year’s throngs.
For some auto makers, the global recession has spelled bankruptcy or near extinction. For Volkswagen AG's Audi unit, it could be the biggest break in decades. Audi, founded a century ago, counts as one of the world's leading luxury brands. Yet it has failed to become a major player in the U.S. Now, the German car maker, based in this small city in Bavaria, is redoubling efforts to break out of its rut in the world's largest car market. Audi has invested heavily in the U.S. this year, a counterintuitive approach at a time when its chief rivals are cutting costs. The car maker increased 2009 marketing spending by 20%, pouring millions of dollars into Super Bowl and other high-impact ads, and has unveiled eight new models in the U.S. this year.
Many small businesses have found themselves treading water, at best, during the recession. But, that is not true for everyone. In fact, a significant minority of resilient companies have been able to do the seemingly impossible and increase revenue in these troubled times. According to a recent survey of 300 small-business clients conducted by SurePayroll, a payroll service based in Chicago, about 30 percent of respondents said their sales increased over the last year. How have they done it?
How much longer will marketers accept "just a little down" as the new "up?" While many of us understand why this maxim provided comfort in the emerging days of the recession, we can't lose sight that "up" is good and any amount of "down" is bad. Perhaps a better question for all of us to consider is "how do we achieve 'up'?" For many retailers and the companies whose goods they are selling, December can make or break the year from a profitability perspective. That's why the Friday after Thanksgiving is called Black Friday, an indicator of when profitability begins. In fact, the National Retail Federation recently identified six categories -- clothing/accessories stores, department stores, discount stores, jewelry stores, sporting goods/book/hobby/ music stores and electronics/appliance stores -- where holiday shopping represents nearly a quarter of their annual sales.
Two powerful forces are combining to push businesses to catch up with Peter Drucker's ideas about them serving a higher purpose--just in time for his 100th birthday (which would have been today). Drucker was a strong proponent of businesses going beyond maximizing quarterly profits for shareholder benefit. Why? In his words (from this HBR tribute): "Most people need to feel that they are here for a purpose, and unless an organization can connect to this need to leave something behind that makes this a better world, or at least a different one, it won’t be successful over time.”
By all standard economic indicators, it appears that the U.S. is finally emerging from the worst recession in several decades. Even consumers have begun, albeit timidly, to venture out, shopping for non-essential items. So, it was fitting that the theme of this year's Idea Conference, presented by Creativity and Advertising Age, last Thursday focused on reinvention across a number of industries, e.g., automotive, technology, financial services, art, design, food, music. The notion of re-invention -- the act of making as if for the first time something already invented whether in a different form or reviving -- is no new concept to marketers. There is a never-ending list of new, reformulated products or services. But, the roster of presenters, for the most part, were unique in how they re-invented or re-imagined their products, during a particularly difficult economic time.
At a time when many consumers are drinking tap water rather than bottled water, shopping at Wal-Mart rather than department stores and eating in rather than dining out, a high-end chocolatier is making over its marketing to better fit in with the new mood. The Godiva brand of chocolate is introducing a campaign that carries the theme “the golden moment.” The campaign, with a budget estimated at $3.5 million to $4 million, is the first work for Godiva from its new agency, Lipman in New York. The campaign, composed of print and out-of-home advertising, does not seek to reposition Godiva as an alternative to Hershey or other mass-market candy brands. Nor does it suggest, as so many ads for upscale products do these days, that Godiva is a good value. Rather, the campaign seeks to explain why Godiva is still worth buying during tough times, using an emotional appeal to make the case that a brief respite to indulge oneself — “the golden moment,” as it were — is as desirable now as it was when the Dow was at 14,000.
General business strategy dictates that there are two ways a business responds to a dramatic downturn in consumer spending. They cut costs and/or discount heavily to drive traffic and lure beaten consumers out of their malaise. Both approaches are easy levers to pull because they have a salient short-term impact. The rub lies in not knowing what the long-term impact of these short-term decisions will be. While the long-term implications of cost-cutting is an article in itself, today many retailers find that their most immediate issue is working their way back out of discount-driven brand-price erosion.
The recession may be over but companies that cater to consumers believe people are digging in for a long, frugal winter. That's why Clorox Co. is keeping the price steady on a new improved trash bag that grips the top of the garbage can. Clorox says it wants to highlight the bags' "greater value." Similarly, Campbell Soup Co. recently reduced the promoted price of its V8 beverages in some markets to 2 for $5 from 2 for $6. Burger King Holdings Inc. is selling double cheeseburgers for just a dollar. Glimmers of recovery in housing starts, manufacturing and auto sales have yet to reassure many consumers who are spooked by 10.2% unemployment, determined to save more and skeptical of sunny forecasts. The Conference Board recently said its consumer confidence index fell almost six points in October from September.
A group of 1,200 marketing and advertising executives at the 99th annual conference of the Association of National Advertisers in Phoenix are anxious about the economy--but many see opportunity as they look toward 2010. Executives from Walmart ( WMT - news - people ), McDonald's ( MCD - news - people ) and MillerCoors on Friday spoke about how their companies, which sell "value" products, have profited from the recession and changes in their businesses. The takeaway message from these executives: Don't be too distracted by fads and trends--stay focused on customers and the brand basics.
There's constant pressure in business to make things as efficient as possible. In every project, the fat is trimmed, the edges are sanded, and the processes are streamlined. It’s how you bring scale to ideas. It’s how you improve margins over time. But far too often, the uniqueness of an idea gets lost in all the efficiency. I was reminded of this recently when evaluating a couple different bottle designs. One was incredibly unique and differentiated, but inefficient all the way through the supply chain to the retail shelf. Another was über-efficient, but, not surprisingly, too close to the rest of the category.
A broken brand is a business that has no idea where it’s going; has no way of communicating its purpose (since none exists); and therefore cannot align its activities nor inspire its people. It’s in disorder. And this disorder leads to people walking around concluding that no one cares and that no one is in charge. Employees may see problems or opportunities, but they stop complaining and suggesting ideas, since they’re convinced management can’t do anything, or won’t. I’ve read the results of recent surveys, which showed that fewer than 10 percent of employees believe their daily activities are actually related to corporate goals. That’s pitiful.
A year ago, 1,200 executives in marketing, advertising and the media attended an annual conference that by coincidence took place a month after the financial crisis began. Together, they stared into the abyss, wondering what conditions would be when — or if — they met again. The sky has not fallen, at least so far, and most of those executives are now gathering for the 2009 conference. Many of them are saying, “What a difference a year makes.” Others, however, are wondering, “What difference does a year make?”
The folks at McKinsey, Bain, and BCG should be happy that Roger Martin likes his job. Otherwise, he could cause them a heap of trouble. As it is, the dean of the Rotman School of Management at the University of Toronto is traveling the country, throwing down the gauntlet to companies who hope to analyze and strategize their way out of a recession by bringing in armies of management consultants. You'll get what you pay for, he warns, and it won't be innovation. "The business world is tired of having armies of analysts descend on their companies," he says. "You can't send a 28-year-old with a calculator to solve your problems." The problem, says Martin, author of a new book, The Design of Business: Why Design Thinking is the Next Competitive Advantage, is that corporations have pushed analytical thinking so far that it's unproductive. "No idea in the world has been proved in advance with inductive or deductive reasoning," he says.
Leading retailers say October turned out to be unexpectedly solid, with consumers spending more freely than expected. The International Council of Shopping Centers, which tracks leading chains around the U.S., says its index gained 2.1% for the month, the strongest gain in 15 months. And Retail Forward, a consulting company that tracks a slightly different group of stores, says its index saw a pop of 2.3% compared with a 0.9% gain last month and the 3.8% decline in October of 2008.
The important question during a downturn is not whether or not the economy will recover -- it will; it always does. What's important to ask is whether your company will be in position to surge as the economy begins to grow. To a large degree, the level of your success will depend on your marketing efforts and capabilities -- what you have done during the downturn and what you put in place now to win business during the recovery. You will need to make strategic decisions about choosing new media, entering new markets, and positioning products.
The recession has battered some of the nation's biggest companies. Even so, top marketing executives believe social media and behavioral targeting technologies will help them boost business as the economy stabilizes and consumer sentiment improves. A cautiously optimistic group of marketing executives from big companies, including Bank of America, Dell, Hewlett-Packard, IBM, Mercedes-Benz USA and Xerox, gathered in Palm Beach, Fla., at the Fifth annual Forbes CMO Summit late last week. There they discussed ways they can rebuild trust and boost sales at their companies as the economy stabilizes.
As Coco Chanel once remarked, "Luxury must be comfortable, otherwise it is not luxury." These words ring true in today's lackluster global luxury market and business environment. As we shift from recession into recovery mode, it is important for marketers to take a step back and evaluate what worked and what failed for luxury marketers during this economic crisis. With recognized brands, such as Versace, shuttering stores around the world, LVMH sales plummeting 20% in the first half of the year and the luxury car market struggling to stay above water, branding and how we build and communicate luxury brands, will become even more relevant as we move into 2010 and beyond.
Diageo Plc Chief Executive Officer Paul Walsh said the world’s largest liquor maker will see a “long and slow” recovery from recession in its biggest markets, and plans to compensate by expanding in emerging economies. The U.S. and Europe will take more time than Asia to rebound, Walsh, 54, said in an interview at Diageo’s London offices. Countries such as Mexico and Brazil have been “almost business as usual” through the slowdown, the CEO said, adding that China has seen a “sharp, V-shaped recovery” as a result of the country’s $586 billion stimulus package.
A recession seems like a funny time to move your product mix upscale, but Kimberly-Clark Corp. has been doing just that of late, focusing more on premium and super-premium offerings and brands such as Cottonelle, Viva and Huggies Pure and Natural, while watching distribution of its Scott value brand shrink. It's a bold strategy to zag upscale as most of the market, including archrival Procter & Gamble Co., have been zigging more toward value products and private-label sales have been rising.
Kellogg Co. bested industry expectations with third-quarter earnings released this morning, thanks in part to higher ad spending. Sales slipped slightly on currency conversion, to $3.3 billion, but the company's earnings per share grew 5% during the quarter, as it also boosted advertising by a whopping 17%. The company also forecast another double-digit increase for ad spending for the fourth quarter. "Our commitment to investing in advertising continues to be a key to our business model and to achieving our goals," Kellogg Chief Financial Officer John Bryant said during the call. "Rather than take advantage of lower rates to reduce the cost of our advertising investment, we see this as a great opportunity to increase our investment and build even stronger brands in the future. Higher spend combined with media deflation and a push on efficiency is driving a significant increase in advertising pressure."
FedEx has begun a global ad campaign touting its reliability and expertise in helping consumers navigate a fast-changing economic landscape, a move that comes as the package shipping industry faces weaker sales brought on by the recession. FedEx and its competitor -- UPS, the world's largest package shipper -- have battled recent earnings slumps as tight-fisted consumers and businesses cut back on spending. The former reported an earnings drop of 53 percent for its most recent quarter, while UPS saw a 43 percent quarterly decrease.
Walgreens chief innovation officer Colin Watts was in town this week to host a jury preview of the upcoming Product of the Year awards, an annual consumer-driven competition. This year’s entrants include packaged goods giants like Procter & Gamble, Colgate and Dr Pepper Snapple Group. Contestants are judged on the innovativeness of their packaging, design and function. Winners will be announced at a gala in February, and recipients typically tout the honor in new marketing and packaging. According to Product of the Year, the organization that gives out the awards, brands usually see a 10 to 15 percent sales lift just from incorporating the award in in-store and on-air marketing. Watts, who serves as this year’s jury chair, spoke with Brandweek about some of the new product trends among the current round of recipients, how the recession has impacted new product development, and also what the drug store chain has been up to recently.
For some time, the advertising industry seemed ready to write off the fourth quarter, convinced that marketers could not wait to close the books on an annus horribilis. Now, there appears to be hope that things have stopped getting worse — but are they starting to get better? “Client sentiment has stabilized, but remains cautious,” Michael I. Roth, chairman and chief executive at the Interpublic Group of Companies, the giant agency holding company, said on Wednesday. Among the signs of improvement, or at least a bottoming out, are reports in trade publications like Advertising Age that demand for commercial time on television networks is increasing, even if slightly.
These days, lots of people ask me: "Phew! So, the crisis is over, right?" Wrong. The real crisis is in the DNA of the industrial economy — and it's just as lethal as ever. Most businesses are socially useless. They're about as useful to society (to paraphrase Gloria Steinem) as bicycles are to fish. Sound controversial? If it does, it only underscores just how out totally of touch with real value we've gotten. (Here, for example, are Paul Krugman, Simon Johnson, and Lord Turner all discussing social uselessness.) What has socially useless business cost just over the last five years? $12 trillion at a minimum. Those are the costs of the various bailout packages for socially useless banks.
7-Eleven is diving further into the private label sector. The convenience chain this week announced the expansion of its 7-Select private label line to include 15 bakery-type snack products. The new products include mini-donuts: Powdered sugar (six-pack and 10-ounce bag), chocolate frosted (six-pack and 10-ounce bag), and crunch (six-pack). The other additions are chocolate cupcakes, gold creme cakes, apple snack pies, cherry snack pies, iced honey buns and glazed honey buns. Several kinds of danishes round off the lineup, including iced cheese, iced cherry cheese, iced apple, and bear claw varieties.
While the year 2009 was marked as the 'great recession', we won't feel its full effects until 2010. Both marketers and their marketing services agency partners are dealing with reduced resources in terms of head-count and budgets. We won't likely see enough breakthroughs in the marketplace, simply because marketers and agencies alike have to remain focused on 'getting the work out the door'. The only way to 'do more with less' is to align resources toward a single and powerful integrated marketing solution. Individual marketing tactics will simply become marginalized and highly tactical with 'less'.
Throughout the recession, many marketers have relied on so-called "recession-survival" lessons to drive their strategies. Unfortunately, these aren't always lessons as much as they are myths. We thought we would help dispel some of them and share a few tips to spur positive momentum.
A long list of major marketers, including General Motors, Yum Brands and Emirates Airlines, are on the prowl for new advertising firms, a signal that the ad recession may be easing but not necessarily a herald of better days for Madison Avenue. During the economic downturn, many companies held off on searching for new ad partners. Reviews to select a new ad agency can be disruptive—and expensive. The process can run a marketer $50,000 to $100,000 for a domestic review and several hundred thousand dollars for a global one involving many regions, industry executives say. But the hunt appears to be on again. "Clearly we are seeing the beginnings of an ad recovery. The volume of ad reviews is way up," says Russell Wohlwerth, principal of Ark Advisors, a consulting firm that matches ad firms with marketers.
While much has been made of America's newfound thriftiness, a new study suggests that shoppers are less focused on price than most marketers think. "Marketers are very focused on the word value, but have very little sense of what that actually means to consumers," says Jarrett Paschel, VP at The Hartman Group, tells Marketing Daily. "Everyone assumes it must be something about the way consumers are trying to save money. But that doesn't mean we've entered a new era of frugality."
Big companies that sell to corporate customers are growing more bullish about their prospects for 2010, a sign that a revival of business investment could buoy the sluggish U.S. economy in coming quarters. Reporting on results for the latest quarter, bulldozer maker Caterpillar Inc. and hydraulic-parts maker Parker Hannifin Corp. on Tuesday joined a chorus of companies that are saying the worst of the recession is past and customers are buying anew rather than simply drawing down inventories.
We believe marketing communications are already being forced to become increasingly agile, particularly for more youth-oriented brands. In such a fast-paced and dynamic media environment, relevance is increasingly determined in the moment. Recency matters. Audience and attention are fleeting. Fame spikes -- even for the famous. For brands to achieve and maintain fame in this context, communications for certain types of them must make a dramatic shift from highly polished epic launches to a continuous and diverse stream of messaging and content designed to ride hyper-current cultural trends, consumer attitudes and competitive maneuvering. The performance of this diverse activity is continuously monitored and optimized like a portfolio of stocks -- kill the under-performers and reinvest in the ones showing returns. However, this "continuous beta" mentality is a big leap from 18-month planning cycles and dogmatic, rigid testing protocols, despite its more real-time and real-world feedback.
John Gerzema says there's an upside to the recent financial crisis -- the opportunity for positive change. Speaking at TEDxKC, he identifies four major cultural shifts driving new consumer behavior and shows how businesses are evolving to connect with thoughtful spending.
Settling into adulthood amid the Great Recession, today's 20somethings are a practical-minded bunch, according to a J.D. Power and Associates study. Examining the online discussions of 22-29-year-olds, the research firm found them particularly focused (relative to other age groups) on "value brands," which are "competing with trendy brands for share of mind."
Google reported a 27% increase in profit in the third quarter, signaling the beginning of a recovery in the search-advertising market. And CEO Eric Schmidt sounded almost emphatic about the worst of the economic downturn being over. Because it is bought in near real-time, search advertising is considered a good real-time proxy for marketer sentiment. The impact of search spending is also extremely measurable; cautious marketers that believe the market hit bottom earlier this year are slowly increasing their search spending as they return to the market.
When Salesforce.com Inc. Chief Executive Officer Marc Benioff wanted ideas about how to run his business during the technology recession of 2001, he turned to his friend Michael Dell. Dell’s advice: “Economic difficulties are a time when companies can reassess where they are in the market and rebuild themselves rapidly,” says Benioff, who has known Dell Inc.’s founder and CEO for 20 years. Now Dell is trying to follow his own advice.
It's one year into the Great Recession, and brands are trying to be "closer to the consumer" -- not by offering minute feature enhancements, esoteric benefits, or badge value, but seemingly by reverting to basic needs and simpler messages. By claiming to be Real. True. Grounded. Authentic. I began to wonder if being seen this way is really a good thing. Is being grounded and down-to-earth an essential component of a strong brand? Or are those more grounded brands really just dated and undifferentiated -- will the return to basics end up hurting their business?
The American economy is back — or so some of the country’s biggest advertisers are saying in new campaigns. It may be a sign that the recession is ending, or it may be a sign that consumers are sick of hearing about it. While economists and investors study housing starts and gross domestic product predictions to measure economic vibrancy, General Electric, Bank of America and other companies are using commercials to proclaim that America’s future is bright. And that may be something of a self-fulfilling prophecy.
Smartphones are not only revolutionising the mobile phone industry. They are also about to change the way we use computers.
Senior business executives have lost trust in a wide array of service providers in the past year of economic turmoil, according to a survey by the Financial Times and Doremus Decision Dynamics. The online survey, which has been conducted annually since 2003, queried 470 senior executives around the world in July.
As the economy shows signs of a recovery, marketers are wondering if consumers will revert to pre-recessionary behavior. Consumers are trying to figure that out too. Many people are reevaluating their spending because they never again want to feel as vulnerable as they have over the past 12 months. But our society is contending with another significant change. For many people, the new determining factor for success is no longer pure profitability, but responsibility. That shift in perspective takes the form of a simple question: Am I doing the right thing--for my family, our nation, the planet?
A year after the U.S. economy was brought to its knees by the bursting of the housing bubble, credit for consumers is still being aggressively ratcheted back. Total consumer credit outstanding, which includes everything from credit-card debt to loans for recreational vehicles, fell $12 billion in August, or at a 5.8% seasonally adjusted annual rate, the Federal Reserve reported Wednesday. It was the seventh straight month of declines, the longest stretch since 1991. The drop is a stark demonstration of how banks and other lenders are scaling back, owing to their own exposure to the struggling real-estate market. But it also reflects a reluctance by Americans to hold big loads of debt at a time when the job market remains in bad shape and the value of their homes has fallen.
Pizza Hut, one of the largest US pizza restaurant and home delivery chains, has been hit by a sharp slump in orders as competitors tout the lower cost of their frozen, heat-at-home alternatives. Yum Brands, owner of the Pizza Hut brand, said on Tuesday that comparable sales at its more than 6,000 US franchised and company owned locations had dropped 13 per cent during its third quarter, compared with the same period last year.
Readers of this week’s People magazine could be excused for believing they were leafing through a Look magazine from 1959. Of the 44 full-page ads in the issue, half are for brands like Campbell’s, Jell-O, Kraft cheese, Lipton tea and Post cereal. Familiar packaged foods that were once dismissed as dowdy or out of date are regaining their puissance as Americans spend less and eat at home more. While marketers in fields like automobiles, financial services and luxury goods are slashing ad budgets — among them, Chrysler and Citi — advertising is being maintained, and in some cases increased, for prosaic mealtime products like Heinz ketchup (up 967.1 percent in the first half of this year, according to TNS Media Intelligence), Hellmann’s mayonnaise (up 165.6 percent) and Jif peanut butter (up 39.8 percent).
A year after the brand played a major role in a meltdown that prompted a federal bailout and a worldwide economic downturn, Merrill Lynch and its bull are back, with a $20 million campaign offering consumers “help.” Bank of America, Merrill Lynch’s new owner, is launching the campaign, themed “help2,” to reintroduce its newly acquired Merrill Lynch Wealth Management group. The latter is BofA’s brokerage and wealth management division, which it purchased as part of its rescue of Merrill Lynch last September. Print,TV and online ads feature the classic Merrill bull—a mascot that was first introduced in 1974. The target: affluent Americans. Research, however, showed that their goals differed depending on age, which is why the campaign addresses different notions of help, said Claire Huang, head of marketing for BofA’s global wealth management, global banking and global markets units.
Consumers are back in banking. After many months of marketing messages that tout safety and stability precipitated by last fall's financial meltdown, banks both big and small are refocusing their marketing on solutions and services targeted specifically at the wants and needs of more fiscally conservative consumers.
Chili's Grill & Bar, battered by the recession and a crowd of rivals, is trying to remake its image by revamping some of its most-popular menu items and reviving an old ad campaign. The moves are part of a strategy shift at the chain, a unit of Brinker International Inc. that has posted declining same-store sales for the past four quarters. Like a lot of restaurants during boom times, Chili's grew by opening new outlets, but the recession has forced it to reconsider its formula.
Fear and savings are up. Consumer confidence teeters. We turn on the TV and hear media talk of the shame of the luxury goods buyer hiding newly purchased high-end extravagances in discount store shopping bags. If marketers looked closer and listened harder, they would realize that something else is afoot: Frugality is not antithetical with luxury. Let me explain.
Heather Hernandez walked into a supermarket with a stack of coupons last month and walked out with $160 worth of groceries, for which she paid $30. “With the economy right now everyone wants to make their dollars go further,” said Ms. Hernandez, a stay-at-home mother in Houston who clips and files coupons with the meticulousness of an accountant. “I see all kinds of people using coupons. I see teenagers using coupons. I see grandfathers using coupons.” It may be the digital age, but when it comes to pinching pennies, most consumers are opting for a method that is well over a 100 years old: the paper coupon.
Craig Calder is the first to admit that his company's marketing is far from flashy. But in Travelzoo's case, flashy marketing doesn't ring the cash register. That's because the travel-deals publisher has found success with very simple strategies: word of mouth and targeted online campaigns. "We haven't been tempted by the latest fads that have come through; we're almost the model for the next generation of online marketing, because I think that a lot of brands could benefit from taking a similar approach," said the company's VP-marketing. "It's not sexy, but it's very effective and profitable."
In these tight times, teen-clothing retailers are focusing on their core clientele: moms. Aeropostale Inc. is designing new stores with wider aisles to accommodate parents with strollers and more seats to keep them in the store longer. Aeropostale staff also is exhorted to "TTM," or target the mom. Buckle Inc. is offering personal-shopping appointments outside of store hours to work around parents' schedules. Old Navy is slanting its assortment to stress value as much as glamour. "You need to make that mom feel comfortable, because ultimately she's writing the check," says Richard Jaffe, managing director of apparel and softlines retail at brokerage firm Stifel Nicolaus & Co. "She is the one who is responding to the economic uncertainty, the employment uncertainty."
Corporations engaged in recession-driven cost-cutting are trimming or eliminating corporate responsibility initiatives. Though corporate survival is key and consumer skepticism of business CR initiatives at an all-time high, such actions are short-sighted. Now more than ever, businesses need to be saying "yes" rather than "no" to their social responsibilities.There are five key reasons.
In the latest ad for Ketel One, a group of Rat Pack wannabes hoist their glasses as a narrator celebrates a return to "when men were men." New creative for Chivas Regal urges men to live by a "code" of chivalry. And 1800 Tequila has an actor best known for playing a mobster all but calling Patron a phony little priss. Spirits marketing has certainly come a long way from "Sex and the City" and its signature pink cocktails. And, amid a recession, challenger brands are attempting to paint their rivals as relics of a freer-spending, less-sensible time.
Corporate social responsibility is a hybrid PR/branding program that attempts to convert compliance into goodwill. Often CSR lives outside the marketing function, somewhere deep in the bowels of legal or operations. Once a year, the company's varied social achievements are collected by the investor relations department for the now-compulsory CSR addendum to the annual report. CSR attempts to align corporate needs (profits, revenue, growth) with social needs (people, community, planet). Themes such as "we're being less bad" or "we're trying to give back" dominate the subtext and water down the potential marketing value of the exercise. In the end, CSR is a compulsory exercise designed to limit liability, boost morale and add to the branding story of the company. From 2003 to 2008, CSR grew along with other nice-to-haves such as corporate meetings, green buildings and skunkworks programs. When the recession slammed the economy last fall, only the profit center programs survived. As a movement, CSR is either dead or on life support.
The recession, fewer travelers and rising fuel prices haven't dampened the "LUV" at Southwest Airlines. The carrier with a notable stock market ticker symbol has weathered the industry's downturn with a determined focus on customer service and its well-known spirited attitude, although it has faced challenges and bumps along the way. "In September, things feel like they have stabilized, and it feels like our business is picking up some," Southwest Chief Executive Gary Kelly said.
Pabst Blue Ribbon is a recession juggernaut, but not just because it's cheap. Sales of PBR are up an astounding 25% this year, according to Information Resources Inc. And while cheaper beers -- a group within which PBR has long been something of a mascot -- are outperforming their more expensive peers as consumers look for low-cost options these days, there's clearly more than pricing at work here.
The economic shocks that reverberated through the economy a year ago could easily have marked the end of the nascent "Innovation Movement." After all, how could companies prioritize developing innovation programs in the face of very real questions of fundamental survival? A year later, it is clear that innovation has never been more important. And, in a strange way, the scarcity forced on many companies has been a hidden accelerator of efforts to systematize innovation.
"My Administration is the only thing between you and the pitchforks." U.S. President Barack Obama felt compelled to speak these words to the leading U.S. bank CEOs at a White House gathering to which they had been summoned on April 9, 2009. Driven by public anger at the financial crisis, the President employed a metaphor invoking images of "peasants with pitchforks" rising up to demand better treatment. That Iranian students, indigenous Peruvians and Somali pirates feel similarly inspired to take violent actions affecting global businesses reinforces the point. Based on recent polling data, it is would seem that his uncharacteristic use of alarmist imagery was not misplaced. According to the 2009 Edelman Trust Barometer, 49% -- or fewer than half of the people surveyed in an annual assessment of US attitudes -- support an independently functioning free market.
When I spoke to a group of advertisers last Wednesday, there were a few stalwarts who wouldn't have anything to do with my premise that the traditional model of branding is broken. The next day, P&G's CEO Robert McDonald weighed in on my side of the debate. Well, not on purpose, but the steps he outlined that P&G is taking to salvage its brands clearly evidence a response to the fact that all is not right in the world of branding. Sales are down for its storied, premium brands, as consumers skip buying products like Tide that can cost almost twice the price of comparable store versions. McDonald's strategy is to cut prices, up promotional spending (i.e.cut prices temporarily), and sell new, cheaper products.
It's been a rough few years for Sears Holdings, even before the recession took hold and consumers fled stores. Cut budgets, fierce competition and management shifts all have dogged the organization's flagship retailers, Sears and Kmart, which continue to fight to prove their relevance to consumers. Same-store sales were down 13% at Sears and 4% at Kmart in the last quarter. And Sears Holdings' annual advertising budget was cut from $2.2 billion in 2007 to $2.1 billion in 2008. Meanwhile, Chairman Eddie Lampert, a self-made billionaire investor who had been anointed as the next Warren Buffet, has proven to be an endless source of fascination. Plenty are keen to see how his grand experiment -- the retail novice took over Kmart in 2003 and purchased Sears in 2004 -- will turn out.
No doubt, a bad economy sucks. A bad economy is tough on a company's bottom line and even tougher on those individuals that have to struggle to make ends meet. But when it comes to the design profession, I would argue otherwise. Not because the industry is immune from a bad economy--far from it--but because negative economic conditions are often a catalyst for change. It also forces designers to create with more care.
In this new era of frugality, well-to-do shoppers have gone into hiding and stowed away their splashy logos. But they may hold the key to a consumer recovery. Affluent shoppers are the most important segment of consumer spending, which in turn drives the national economy. The top 20 percent of the nation's households -- with income of at least $150,000 -- account for 40 percent of all spending, according to government data. That makes them a crucial spoke to any turnaround.
When Jack Taylor founded Enterprise Rent-A-Car in St. Louis back in 1957, he started out with a fleet of only seven cars. Now, withmore than 1 million cars and revenue in the neighborhood of $13 million, Enterprise is one of the largest car-rental companies in the U.S. Two years ago the company purchased Vanguard Car Rental, the parent company of National and Alamo. "For the first time in our history we had become an operator of multiple brands within the same category," said Patrick Farrell, VP-marketing and communications for Enterprise. And with that came a search for a new company name.
As most of you know, Sharper Image, home of innovative products like the Razor scooter, the robotic dog, the Ionic Breeze, the StressEraser and the R2-D2 interactive droid, filed for Chapter 11 bankruptcy. What remains is an important lesson. Innovation is not a strategy and companies which depend on a constant flow of new, innovative products will someday find themselves in deep trouble. As Sharper Image did. Every successful company needs a branding strategy, which may or may not include innovation. Yet many marketing gurus have elevated innovation to a point where it is widely perceived as the single, most-important function of a corporation. Witness the raft of recent articles on the subject, including an editorial in my favorite publication with the theme, Forget the recession and innovate.
It’s easy to blame a brand bankruptcy on the economy, but it may be more complicated than that. “The brutality of this economy is not only exposing toxic assets, but poorly differentiated brands,” says John Gerzema, author of the best-selling book The Brand Bubble. “Many had a common inability to build strong brand differentiation and lead the consumer forward. Deficits that became that much more apparent in times like these”. Gerzema’s point is well taken. In his book, Gerzema addresses the changing role of the consumer when it comes to assessing brands. He says consumers “are increasingly acting like investors. They have heightened expectations for brands to continuously surprise, adapt, and evolve.” Brands that go bankrupt, Gerzema says, “aren’t evolving, or aren’t different enough to begin with.”
Matthieu Coppet has a word of hope for the world’s beleaguered media companies, reeling from the deepest advertising slump in memory. All signs point to a relatively robust recovery in ad spending, beginning next year, Mr. Coppet, an analyst at UBS, said in a recent report. His enthusiasm is far from universal. Gerhard Zeiler, chief executive of the RTL Group, the biggest commercial television broadcaster in Europe, reflects another view in the industry: the good times will not return anytime soon.
Restaurants trying to get more families to dine out have a new recipe: Get rid of the French toast sticks. Put more broccoli and carrots on the menu. Let the kids eat free.
For one answer to the nation's most pressing economic question -- when will the recession end? -- just take a peek inside the American man's underwear drawer. There may be some new pairs there, judging by recent reports from retailers and analysts, and that could mean better days ahead for everyone. Here's the theory, briefly: Sales of men's underwear typically are stable because they rank as a necessity. But during times of severe financial strain, men will try to stretch the time between buying new pairs, causing underwear sales to dip.
A few years ago, when cheap real estate was scarce, pop-up stores were a major investment for marketers. Now temporary stores have emerged as a perfect solution for cash-strapped brands, commission-hungry brokers and landlords faced with a glut of commercial real-estate space. Brands are using these interim spaces as a means to create buzz, test new concepts or even evaluate a new neighborhood or city. While temporary stores first began popping up with some regularity in 2003, sky-high rents and a lack of available space made them a massive undertaking for brands. Now, in the midst of the recession, the shops are being viewed as a logical, and even inexpensive, marketing tool.
I'm sure I'm not the first one to tell you: We're in a recession. The doom has advertisers hanging signs along the lines of "Will Work For Food" on their agency walls, and marketers continue to face facts and figures like these, from Forrester's 2009 Global CMO Recession Survey: 71% of marketing budgets have been reduced this year, and more than half reported reductions greater than 20%. Now here comes the curveball: I think this might be the best thing that has happened to our industry in decades.
Sales of luxury cars, once considered resistant to recessions, fell almost 21% last year -- double the decline in overall car sales -- and continue to slide this year. That raises a disturbing question for auto makers: Is it merely a reaction to the downturn, or a long-term change in consumer behavior?
On Monday, Sept. 15, 2008, Lehman Brothers imploded, the world tilted and all the Fiji Artesian water came tumbling off the table, crashing along with the stock market. Suddenly the conspicuous consumer became the conspicuous coupon clipper. Bad if you own a Hummer dealership. Good if you own a real value proposition.
The economic crisis appears to be abating as indicators suggest the worst may be past. Yet with each new release of data, the market is subject to impacts which produce varying opinion of the health of the global economy. It is widely agreed that the recovery will be long and trying. In the fall of 2008 when the severity of the downturn was being realized, DDB published a paper called, Capturing Opportunities in Challenging Times. The response was overwhelming with the paper downloaded over 50,000 times and referenced in numerous articles online and offline.
After nearly 20 years with California Pizza Kitchen, CMO Sarah Grover knows exactly what the company's co-CEOs are looking for. Lawyers Rick Rosenfield and Larry Flax established California Pizza Kitchen in Beverly Hills in 1985, eyeing celebrity chef Wolfgang Puck's phenomenal success as he codified California cuisine. The pair developed a casual-dining version of Spago, creating gourmet pizzas with then-surprising toppings such as barbecue chicken. CPK has built a cult following through the years with powerful word-of-mouth marketing.
Most companies have turned from feeling paralyzed by the economic shocks of 2008 to plotting response strategies appropriate for today's tough markets. One thing companies need to carefully consider is how to confront the new reality of increasingly value-conscious customers.
As the recession wears on and fewer people are splurging at Starbucks, the coffee chain’s response is to raise prices. On Thursday, Starbucks stores in several cities started charging up to 30 cents more for some specialty beverages, though the company is charging less for some basic drinks.
With market uncertainty, rampant budget cutting and corporate retrenching, it's safe to say most businesses are content to lay low, stick with the status quo, and go with what they know works. Bold initiatives? Let's save 'em for when the going's really good. Once things turn around, we'll turn our brains back on. Till then, automatic pilot is just fine, thank you very much. Once our balance sheets return to black, that's when we'll once again let our freak flag fly. In other words, most companies are going to be content to focus on tactics aimed at defending market share. Nonsense. Now is the THE perfect time for big ideas.
While other recession-wracked restaurant chains offer meals for as little as $5, Panera Bread Co. has this deal on its menu: a lobster sandwich for $16.99. Panera has been bucking conventional industry wisdom during the downturn by eschewing discounts and instead targeting customers who can still afford to shell out an average of about $8.50 for lunch.
Japan’s trend-chasing office workers and ladies who lunch are giving up Louis Vuitton handbags and Chanel jackets for Zara dresses and Gap jeans, making what was a favourite market for luxury manufacturers into one of their biggest headaches. The downturn is forcing customers in Japan to scale back purchases of luxury goods, accelerating a long-term shift in consumer attitudes, according to a report by McKinsey, the consultants.
When it comes to this recession, Microsoft CEO Steve Ballmer says it best: "Maybe we should think of today as normal ... as opposed [to] today as the tough times, and yesterday as normal." The pre-2007 economy is gone for years, and some elements might be gone for good. And that means that marketers must adapt to four new, here-to-stay realities.
There are as many opinions about what got us into economic trouble as there are pundits in the world. Most blame the economic debacle on Wall Street, poor regulatory oversight or aggressive no-money-down mortgage lenders. However, what remains overlooked in the financial blame game is not a particular of "who," but "what."
The liberating thing about value as money is that it's "colorless." It carries no meaning. When value is "at rest," it is culture free, non denominational, undeclared, so to speak. It will become cultureful when used to buy a Hummer or a Prius. But for the moment it is value that is value free. All value is the same. (Until it isn't.)
Now that the recession is most likely over, it's time to start looking at which companies, institutions, and individuals thrived during this grim period. In the harsh downturn that began in December 2007, success was redefined—flat became the new up, and muddling through became a triumph. In a recession that hit all rungs of the income ladder and ravaged the wealthiest consumer markets—the United States, Europe, Japan—there were very few safe havens. But some countries, such as Peru, managed to grow right through the global recession. And some companies arranged their business so that they resisted the contraction and benefited from trends affecting their industry. Some even managed to make decisions during the trough that brought in more business.
The deep recession and financial meltdown we are experiencing have put consumer-goods marketers into an enterprise-threatening economic environment. How long it will last, of course, is anyone's guess. As we well know, a market for a product must meet three conditions before consumer spending occurs. First, there must be a need or want in the consumer's mind. Marketers are trained to stimulate existing wants and create new ones.
Starbucks' iconoclastic founder has gone through a reeducation in the rigors of running a more typical company. That doesn't mean he has to like it.
To survive during multiple economic downturns, America's most resilient brands have diverse portfolios, lean organizational structures and inexpensive products.
Procter & Gamble Co., under assault by penny-pinching consumers, has quietly rolled out a version of Tide detergent that the company freely admits isn't "new and improved." The product, Tide Basic, is currently for sale in about 100 stores throughout the South. It lacks some of the cleaning capabilities of the iconic brand -- and costs about 20% less. Its very existence is one of the most telling signs to date of how the sour U.S. economy is forcing mass marketers to shift course.
Companies from Boeing to Sepracor are retaining innovation consultants to get a head start on economic recovery
The dollar just isn't what it used to be. But that doesn't mean you can let your competitors and online "entrepreneurs" debase the value of your company's most priceless assets. When the chips are down, brand owners must shore up the foundation of what connects them most with consumers -- the brand -- and not let it crash and crumble in hopes of future -- and costly -- repair.
The global recession has turned cash-hungry Western companies into takeover targets for Chinese marketers, and foreign countries into tempting new markets for Chinese brands and retail stores. Chinese companies haven't been hit to the same extent by the economic crisis as those in the U.S. and other major countries.
Reckitt Benckiser. The maker of Lysol and Mucinex in the U.S. today (Wednesday) reported a 20 percent increase in second quarter sales to 1.9 billion pounds ($3.1 billion); profits were up 31 percent to 310 million pounds ($507.5 million). The increase, the company claims, was fueled by innovation and marketing investments behind its 17 global “power brands.” Reckitt has unleashed new product extensions like Spray ‘N Wash Bright & White, Resolve Deep Clean Powder and concentrated versions of its fabric care brand, Woolite. Rob de Groot, executive vp of North America and Australia, said there is a lot of room for growth. (Reckitt is a $40 billion company, compared to P&G at $83.5 billion.) The company has an opportunity to increase its presence in the U.S.—such as with the rebranding of Electrasol to Finish, and growing the Mucinex brand, which has only tapped into 25 percent of the U.S. population.
Some brands are cutting prices in the face of decline, but those with real style are raising the stakes. After a decade of unprecedented global demand for luxury, the storm clouds of recession now provide a fascinating backdrop to luxury brand strategy. Conservative estimates, such as that issued by global management consultant Bain & Co, forecast a drop of 7% in sales of luxury goods in 2009, but others predict much steeper declines before years end.
How's this for bad timing? Staples (SPLS) just introduced 25 co-branded office products from OXO Good Grips that cost up to five times more than Staples' own brand. The retailer's customers are in no mood to spend, however. Staples' same-store sales dropped 8% in North America in its most recent quarter. As Ronald L. Sargent, its chairman and chief executive officer noted recently, the chain is "in a very tough sales environment." But the Staples-OXO partnership is something more: It shows how companies can collaborate for mutual benefit and how to do that cheaply and quickly. As the recession forces businesses to reevaluate their priorities and spending, the development of the office products line could become a model for others.
How companies are finding creative ways to come up with new products and services faster and more efficiently—with fewer resources.
A new study offers insights on changing grocery shopping behaviors as a result of the recession, including which food and beverage categories are proving most and least susceptible to brand abandonment and which consumer segments have been most and least affected.
Crocs were born of the economic boom. The colorful foam clogs appeared in 2002, just as the country was recovering from a recession. Brash and bright, they were a cheap investment (about $30) that felt good and promised to last forever. Then the boom times went bust, and Crocs went to the back of the closet.
The deep discounts that restaurant chains have been offering to lure cash-strapped customers out of their kitchens are coming back to bite them. Restaurant chains ranging from Denny's to Applebee's this year have been giving away food or offering deals to boost traffic slowed by the recession.
In these difficult economic times, chief marketing officers seeking to help their companies grow revenue and remain viable in an unstable market need to pull out all the stops. One often overlooked and underused yet highly effective tool is brand licensing. Brand licensing can help provide some real financial relief during tough times and help marketers replenish and energize their brands, positioning them for even greater success when the economic engine starts whirring again and we start using the word "upturn" instead of "downturn."
Chris Anderson’s new book, Free: The Future of a Radical Price, is on the top of my to-read list. Based on BusinessWeek’s review, it sounds like a provocative read about the how economy and technology have evolved the concept of Free.
While trying to manage the recession, marketers -- particularly those with health and wellness, technology or financial products -- may want to look at targeting male Baby Boomers.
It would be profoundly reassuring to view the current economic crisis as simply another rough spell that we need to get through. Unfortunately, though, today’s mix of urgency, high stakes, and uncertainty will continue as the norm even after the recession ends. Economies cannot erect a firewall against intensifying global competition, energy constraints, climate change, and political instability. The immediate crisis—which we will get through, with the help of policy makers’ expert technical adjustments—merely sets the stage for a sustained or even permanent crisis of serious and unfamiliar challenges.
Let’s face it: Your regular customers are on autopilot. When a purchase is repeated enough times, it becomes habit. However, market shifts can disrupt even the most powerful habits, and the current financial meltdown is the single biggest market disruption we’ve ever lived through. Customers are altering their behavior because of uncertainty about the future: laying off employees (maybe even your contacts), hoarding cash and postponing routine purchases. All purchase decisions are now up for conscious review. This is a daunting challenge, but it also creates opportunities.
While the state of the economy is having a negative effect on most areas of the retail sector, more than a few industries are experiencing an uptick. Time examines recent trends in consumer spending, discovering that products and services that fulfill needs like escapism, inexpensive luxury and stress relief are reaping the most benefits.
Offering some relief to recession-stricken consumers, Sears Holding Corp. this week announced a buyer protection plan that allows customers to keep their LG, GE or Kenmore appliance in the event of a job loss. Kevin Brown, vp and CMO for Sears Holding’s home appliance division, said the company will test out the offer (running through Aug. 1) on his department first, possibly extending it to other merchandise categories. Brown said the idea stemmed from consumer anxiety over making big-ticket purchases in a recession.
It's almost impossible to escape the constant reminder that we are in a recession. While it's easy to criticize the media for playing up the downturn, marketers in general--and technology marketers specifically--feel obligated to lead with the message, "In these tough economic times..." Enough already!
Marketers love Gen Yers. They've got roughly $200 billion in disposable income, and they aren't afraid to spend it on clothes, designer sneakers, alcohol, fast food, cellphones and video games. I'm familiar with the lackadaisical spending habits of Gen Yers, because I am one, and until last fall, I, too, splurged on things such as a Wii and an iPhone.
For almost 65 years, Smokey Bear has been reminding Americans, “Only you can prevent forest fires” (and, more recently, wildfires). As the economy faltered, it turned out, Smokey was sharing screen time — and exposure in other media — with pro bono advertising intended to prevent home foreclosures, encourage financial literacy and keep students from dropping out of high school.
There is a lot of talk about "green shoots" lately. Is prosperity just around the corner, or is the worst still ahead? For marketers, uncertainty about what's next for the economy poses a conundrum: how to plan for the future when the only thing forecasters can agree on is that the future is murky?
Along with all the other ways it's wounded marketers, the global recession is greatly exacerbating the problem of counterfeit products. Citing data from its latest study of the issue, the CMO Council warns that global rings of brand pirates have moved far beyond luxury goods into even the most mundane sort of branded items. Council VP-Operations Liz Miller estimates that U.S. marketers are losing from 5% to 8% of their profits to brand fakers.
It's been said over and over: There's no time like recession, when competitors are retreating, to ramp up innovation and marketing to grab share.
Big brands’ best customers have been defecting in droves since the beginning of the US recession, according to a study. By this year, more than half of a typical US brand’s most loyal shoppers in 2007 had switched to rival products. A two-year analysis of 685 grocery and pharmacy-stocked brands, using data from 32m consumers’ supermarket loyalty cards, found that in 2008 the average brand lost a third of its formerly highly loyal customers. The study will alarm packaged goods groups, as the most loyal customers – those choosing one brand for more than 70 per cent of their purchases in a category – should also be their most lucrative.
The consumer-driven economy will survive the current recession. But it will look different afterward. How different? For starters, it'll likely be smaller. Home ownership will be less widespread; anxieties about paying for health care, retirement and college will run high; and purchase financing will change.
Brand loyalty appears to have taken a beating in the recession, at least in package goods. A study from Catalina Marketing and the CMO Council finds that for the average brand, more than half of consumers -- 52% -- who were highly loyal to certain package-goods brands in 2007 became markedly less so last year.
Customer databases, which cull years of spending and behavioral information to try to boost conversion and revenue, have long been a staple for marketers in industries such as travel, hospitality, retail and financial. But what happens when a massive disruption -- say, a meltdown of the economy -- alters consumer behavior so dramatically that it renders historical data useless?
I can remember three major downturns during my career. Each hit most agencies like one of those thunderstorms where everyone makes a mad dash for shelter. Agencies ultimately adapt and develop new business models and positions, but not before embracing more cautious versions of themselves rarely seen in good times. Pretty soon that caution becomes a reality that everybody accepts. What we forget is that there's a flip side to a bad economy. This may be counterintuitive, but just as you must retool your business during a recession, you need to plan for an economic recovery. I think it's time to start planning.
Car companies like Hyundai and Ford have been showing solidarity with consumers recently, running ads promising that the companies will help them should they lose their jobs. Mercedes-Benz USA is trying a different way to get customers to buy cars as it introduces its updated E-Class Series.
New Zealand-based Derek Lockwood is in charge of design for Publicis Groupe's Saatchi & Saatchi. As such he has a different take on the future of global creativity.
As recession-racked companies search for ways to cut costs, some are rediscovering automated innovation. In the early 2000s, auto-innovation was trumpeted as the Next Big Thing. Instead of relying on engineers and designers, HAL-like computers would create goods on their own by exhaustively combining bits and pieces of previously successful products.
Harris Interactive’s latest EquiTrend study bears out conventional marketing wisdom in a recent MediaPost article: Poor Economy Heightens Brand Equity. The gist: when the economy turns sour, consumers “tighten their grip on brands they are loyal to; they don’t run to the label with the lowest price.” Couldn’t have stated this more succinctly if I tried.
Trident is giving recession-addled consumers something new to chew on: “A little piece of happy.” As the economy forces consumers to downshift their materialism a bit, a TV and online push for the brand, launching this month, focuses on small moments of happiness delivered by the brand.
Mary Dillon, CMO of McDonald's, one of the few companies to thrive during the recession, talks marketing in a downturn, advertising to kids, and niche promotions within the context of one global message. While the chain continues to boost digital as a percentage of spend, she's also focusing on "old media," like outdoor.
As marketing budgets shrink and tip in favor of value messaging and cost incentives rather than brand-building, the absence of the latter in favor of the former is acutely dangerous. This type of price-driven activity has historically been considered a generic, low-level marketing practice, and normal branding rules have not applied. While that may have worked well enough during flush times—when larger branding efforts acted as a halo and compensated for generic activity—today all communications must incorporate brand-building. Otherwise,brands risk coming across as interchangeable, schizophrenic, watered-down and reactionary.
In the first part of my article on Post Consumerism, I touched on the drivers of the “Citizen Renaissance,” as Jules Peck coins it. My hypothesis is that there are emerging citizen values, and a shift away from consumerism towards citizens who are actively engaged in behaviors of business, the decisions of government and of involved in communities of interest. In this second part, I attempt to outline the market need and opportunity, and some examples that attempt to address post consumerism.
In today’s recession-racked economy, penny-pinching is a national pastime. But people are still opening their wallets for smartphones. Sales of BlackBerrys, iPhones and other smartphone models are rising smartly and are projected to increase 25 percent this year, according to Gartner, a research business. Widely anticipated new models like the Palm Pre, which went on sale nationwide on Saturday, will help fuel that growth. Meanwhile, total cellphone sales are expected to fall.
The word bailout has gone from descriptive to derogatory. In a multimillion-dollar marketing campaign introduced Tuesday, FedEx objected to legislation that would make it easier to unionize the company by accusing its rival, United Parcel Service, of taking a government bailout.
When the economic winds are howling and the weather gets ugly, consumers tighten their grip on brands they are loyal to; they don't run to the label with the lowest price. Brand equity does not lose potency when money is tight. So says Harris Interactive in its latest EquiTrend study.
From ready-to-eat meals to eco-friendly offerings, food retailers are finding more ways to distinguish themselves and win customers
There is Ally Bank: “A better kind of bank.” And A.I.U.: “A unique franchise.” And — really — Redneck Bank: “Where bankin’s funner!” All are new names and new slogans for old companies with big worries and, in some cases, even bigger image problems.
As the recession keeps depressing, luxury brands are experiencing a wake-up call from this nasty cycle and from chastened luxury buyers.
It's marketing's time at Walmart. It's easy to become complacent when you are a $401 billion company whose shareholder meeting gets teen idol Miley Cyrus out of bed before 8 a.m. to perform for more than 15,000 employees as a warm-up act for American Idol Kris Allen. But Walmart executives know that if the recession abates, they will face a challenge holding onto shoppers who've been introduced, or reintroduced, to the retailer as they've traded down to save money.
Undeterred by recession or getting into a retail business with which it has little experience, Procter & Gamble Co. is buying the Art of Shaving, seller of pricey men's shaving products at upscale shopping malls.
Although consumers may be cutting back on their consumer electronics purchases, they may be more willing to pay a premium for devices with clear innovative benefits, according to online electronics resource Retrevo.
Southwest Airlines has launched a new ad campaign encouraging customers to travel despite the current economic recession.
Spend on marketing, capital investment and innovation or risk losing your business within the next five years. That tough talk came from Del Monte Foods Co. Senior VP-CMO Bill Pearce at the Argyle Executive Forum's CMO Leadership Forum, where his keynote offered bold advice for navigating the titanic shifts that have resulted from the worst economic crisis since the Depression. In an environment where the name of the game is to manage risks, he challenged marketers to take them and offered eight tips for marketing in the downturn.
The biggest challenge confronting marketers is how to deal with the Meineke mind-set consumers have adopted as a result of the recession.
It was recently suggested by Barack Obama that we should borrow and spend less and save more, not rebuilding the economy on the same sand but instead lay a new foundation for prosperity. It’s not the message consumers, this country, or the rest of the world is used to, particularly in a recession.
Mary Pryor was doing pretty well until January, when she got laid off from her web-project-management job at cable channel Fuse. Now she's replenishing her wardrobe at clothing swaps, eating on $25 a week, living without cable TV and doing her laundry in the bathtub. "My gym membership is gone," she said, "so I'm running around outside and doing jumping jacks in my living room."
Seeking to marry a ubiquitous device with a time-tested marketing technique in a sour economy, Unilever plans to begin a trial run Sunday of a new technology that lets consumers redeem digital coupons by having a supermarket cashier scan their cellphones.
Advertising almost always wants to be upbeat, the better to jolly consumers into, well, consuming. So it is startling to see a spate of campaigns invoking some of the most downbeat times America has ever endured: the desperate decade that began when the stock market crashed in 1929 and continued through the Great Depression.
When life seems bleak, is the chance to win big money enough to spark hope for a brighter future? I think quite a few food companies are tapping into this idea, because I've gotten a lot of contest notices lately. Dreyer's "Taste of Recovery" contest has some Great Depression history behind it, too.
Restaurants are facing challenging times and are reacting by offering more for less, which results in a spin off effect on naming and branding.
With money tight these days, Julie Liu shops only when she needs a specific item -- a dress for a work event or a replacement tube of mascara.
No doubt about it. The economy is contracting, and it’s a painful process. Businesses, large and small, are going under, impacting jobs and revenues in communities. Brands, even well established ones, are vanishing from the map, leaving us to wonder what’s coming next.
Almost everywhere you look now you'll find arguments, analyses, and advice for marketers on how to market in today's economic abyss. And rightfully so, because consumers are spending a whole lot less, making successful marketing a whole lot harder. Time magazine recently reported, for example, that 61% of people are spending less - and will continue to spend less - than they did before. Knowing, as we do, that women represent 85% of consumer spending and translate into a $5 trillion market, it's very clear that knowing how to market to women in this recession is the gold pot at the end of the rainbow.
If there has ever been a time for brands to stop selling product and start acting like a company, it’s now. This is the time to prove to one’s loyalists – the family of customers, vendors and stakeholders - that brands feel their pain. A ‘grown up’ brand needs to sympathize and recognize that it understands people aren’t living their lives in a ‘business as usual’ mode. These times are business most unusual. It’s time for brands to remind their fan base that everyone is in this together. Brands need to be leaders with a voice that inspires.
A new survey by the Pew Research Center's project on social and demographic trends found that 60 percent of all younger and middle-aged adults say they are doing more shopping at discount stores or avoiding more expensive brands.Pew said nearly a quarter of younger adults say they plan to plant a "recession garden" to trim their food bills. Another Pew study released in April found that from the kitchen to the laundry room to home entertainment, consumers are paring down the list of things they can't live without. I loved the title of that report: "Luxury or Necessity? The Public Makes a U-Turn." Is this dawning age of frugality here to stay?
Retailers like OfficeMax are opening scaled-down versions of their stores or inventing outlets entirely to test new concepts without a hefty investment. The stores are a relatively safe bet despite the recession because the space is cheaper and the stores require less inventory, fewer employees and smaller spaces.
If today's frugality and shrinking markets are the new normal, are marketers ready for it?
As the economy swoons, companies are cutting back on marketing. For proof, just ask the U.S. Patent & Trademark Office, where the demand to register new brand names, logotypes and taglines has taken a steep slide.
At this point, no one needs reminding that the recession has changed the way people shop. But a new study from the Food Marketing Institute paints an intriguing picture of the stages consumers go through as they continue to cut back. And to be sure, the study finds, they are cutting back.
Cisco, Corning, IBM, Intel, and Schwab have weathered worse economic storms. Five strategies to come out of this one even stronger.
Luxury goods consumers in China rank third in the world behind the Americans and Japanese, spending an average of US$ 6.5 billion a year. While the financial crisis has convinced many in the US and Japan that they can do without that Fendi bag, similar decreases in consumption of luxury goods in China have yet to appear.
Dial CEO Brad Casper has picked a funny time to go on a spending spree: the deepest recession in a half century. For the first time since he became CEO of the notoriously thrifty unit of Germany's Henkel four years ago, all five of Dial's largest brands will simultaneously have substantial consumer marketing campaigns this year -- including TV, print and digital -- led by Energy BBDO, Chicago.
If you page through The Wall Street Journal or New York Times, you might discover a few surprises. FedEx, General Electric and IBM have recently launched corporate branding campaigns, and tech power SAP made a splash just last week with a global push from Ogilvy themed "Time for a clear new world."
Entering the toughest job market in the past 25 years, Gen Y finds the future's not so bright, resulting in the kind of anxiety that even Eli Lilly can't tame. Surveys of current college students conducted this spring provide increasing evidence that, as we transition away from plenty, members of Gen Y feel ill-equipped to deal with scarcity.
In a PR masterstroke for the world's largest drug maker, Pfizer today said it will provide free select prescription drugs to Americans and their families who lose their jobs and -- as a result -- their health insurance.
The mad men of Madison Avenue are really mad these days, creating a spate of angry advertising campaigns that seek to channel the outrage, frustration and fear felt by consumers hit hard by what some are calling the Great Recession.
Nothing in America is so brilliant a symbol of the nation’s wealth as New York’s Times Square, that dazzling ad-scape, where each sunset gives way to a neon-and-tungsten gloaming that lasts until dawn. But a recession could dim the lights. Nowadays, more and more billboards are going blank, and the Wall Street Journal has reported a drop in shares of outdoor advertisers. Clear Channel Outdoor Holdings, a big billboard company, announced a 25% decrease in revenues during the first quarter of the year. Advertisers are now looking to more creative, less costly ways to reach the public.
What do guns, burglar alarms and condoms have in common? Their sales all boomed in 2009, with condom sales jumping 22 per cent over the same period in 2008. But why? The answer can perhaps be found in Nigeria and Chile – two countries I visited on my world tour promoting Buyology. Surprisingly neither of the two countries was familiar with the “R” word. When asking government officials why that was the case, the explanation was simple – the media hadn’t paid that much attention to it, and as such no one had effectively read about the Recession, so the Recession simply had not yet arrived.
The alcoholic beverage category may suffer an economic hangover, according to new research released today by the Nielsen Company at the Nielsen's Consumer 360 Conference. While consumers aren't necessarily going on the wagon, their consumption habits have changed significantly. With 56 percent of consumers dining in and 37 percent frequenting bars and clubs less often, buyers of alcoholic beverages now have an increased focus on value and price.
Amid the worst falloff in consumer spending in decades and a sharp decline in its own results, retailer Macy's Inc. is chasing customers of fallen competitors to rebuild its sales. The Cincinnati, Ohio, retailer expanded its inventory of china and other gifts and heavily promoted its bridal registry to snare Fortunoff Inc.'s bridal business after the New York jewelry and home furnishings retailer filed for Chapter 11 in February. Following the disclosure that 58 Gottschalks and 177 Mervyn's stores on the West Coast would close, Macy's boosted its stocks of cosmetics from Estée Lauder, Clinique and Lancôme, anticipating increased traffic from the rival store closings.
The world is changing. The current economic crisis is causing people around the globe to reevaluate their priorities. Several themes are taking shape, and brands that can most quickly embrace them will be the ones best poised to prosper, even during hard times.
High- and middle-income shoppers are increasingly turning to dollar stores, according to Nielsen Co. research presented today at Nielsen’s Consumer 360 conference.
Car Body Design reports on the BMW Design Talk held recently at the Concorso d`Eleganza historic car show in Italy. The theme of the panel was “Art and Design: Is Modesty the new Luxury?”
I'm trying to come up with a convincing argument for why we might eventually be able to claim that economic recovery was marketing-led. I'm promoting that very idea at the Debating Group's MCCA sponsored event at the House of Commons next Monday. There's plenty to fuel such an argument. Any other organs that one might argue are capable of, or even responsible for, pumping life back into our financial system are currently failing.
One of the most interesting consequences of the economic downturn is the depth of soul-searching triggered among adults of all ages. Everyone feels guilty about consuming so much with so little thought---buying things we didn't need with money we didn't have. While the recession may not give us much choice in the matter, spending less and saving more--and living within our means--actually feels like the natural course. It's time for grown-ups to grow up. In his Inaugural address, Obama pretty much ordered us to set a new path with a verbal finger wag: "The time has come to set aside childish things."
According to a new study from Harris Interactive, 66% of consumers believe advertising agencies bear at least some responsibility for the recession because they “caused people to buy things they couldn’t afford.” Segue to AAAA's chieftain, Nancy Hill, who had this to say in our AAAA's leadership conference address in response to the above findings: "Now imagine that: Advertising agencies causing the crippling of the economy because we stimulate consumer desire and consumer demand. Who says advertising doesn't work?"
By now, virtually everyone has chimed in on how innovation is the only way out of the recession. So instead of adding more theory, let’s have a look at actual B2C innovations from recession-defying entrepreneurs and brands around the world.
The economy and environment are causing U.S. car buyers to adopt European values: They will buy gas misers and keep them longer.
I am constantly asked for "strategies/'secrets' for surviving the recession." I try to appear wise and informed—and parade original, sophisticated thoughts. But if you want to know what's going through my head, read the list below:
As the recession drags on, more retailers are finding they cannot get consumers to buy much of anything unless they offer huge sales, symbolized by significantly high double-digit percentage discounts.
For the next few days I plan to explore what I am calling the Age of Involvement: the role of participation in an information society and how it leads to an expanded view of our economy. I am not an economist and have never studied economics. I am approaching this as someone who believes that innovation is redefining everything around us, including the ways that we measure human achievement.
With American consumers reluctant to pry open their wallets for retail spending, a greater percentage plan to spend more at longtime discount giant Walmart than at Target, a new survey finds.
One thing this recession hasn't knocked out is the power of brands. Despite the pounding global business is taking, the $2 trillion value of the top 100 brands has held steady, according to Millward Brown's annual BrandZ report.
Del Monte Foods chose the right time to unleash the largest marketing push behind its canned fruits and vegetables in ten years. New ads center on a value message that tells consumers if they're looking to stretch their food dollars, Del Monte's canned goods are the way to go.
As the recession deepens and stretches out quarter after quarter, more companies will close or will shut divisions. More brands will disappear because their parent firms fold or can no longer afford to support them. Other brands will be obliterated by mergers. We have compiled a list of 12 brands that we believe will not survive until the end of next year. Each brand and the major reasons for its demise are listed along with some of the public information 24/7 Wall St. examined.
When it comes to assigning blame for the current economic crisis, two-thirds of Americans are pointing the finger at ad agencies and more than half are singling out the media.
Lowe's says U.S. consumers are wielding hammers and pruning saws with a vengeance -- and that the new do-it-yourself derring-do is not all about the recession.
Genius, Thomas Edison said long ago, is 1 percent inspiration and 99 percent perspiration. Now, the geniuses on Madison Avenue are recalculating the formula to add a lot of stimulation. As marketers remake campaigns to address the recession, advertising copywriters are liberally peppering prose with financial words and phrases, particularly “stimulus” and “stimulus package.”
After years of double-digit increases, bottled water sales have stopped rising. Industry analysts say the economy is driving the change, but they also say environmentalists may be having an effect.
One way to read these studies is simply that recessions make the strong stronger and the weak weaker, since the strong can afford to keep investing while the weak have to devote all their energies to staying afloat. But although deep pockets help in a downturn, recessions nonetheless create more opportunity for challengers, not less. That may be why during the 1990-91 recession, according to a Bain & Company study, twice as many companies leaped from the bottom of their industries to the top as did so in the years before and after.
A diaper war is brewing as the titans of the diaper aisle prepare to duke it out for their most prized consumers: new moms. Under pressure to make earlier price increases stick, Kimberly-Clark's Huggies and Procter & Gamble's Pampers, are rolling out marketing messages designed to keep recession-stressed new mothers from reaching for cheaper options. The idea is to make them feel they are doing good deeds as they keep their babies dry.
Perhaps no word in the marketing lexicon has been abused as much in the past six months or so as “value.” Marketing messages of this stripe are one strategy for addressing the fact that consumers are loath to open their wallets these days. But they’re also only one alternative to cutting prices. It seems like marketers aren’t exploring others.
Not so long ago, innovation was a must-do priority for business. Now research and development might seem more like vacation homes and new cars—luxuries that will have to wait for better times. In an annual survey of top executives by Boston Consulting Group, which provides the foundation of BusinessWeek's Most Innovative Companies list, more respondents said that innovation spending will be flat or down than since the ranking began in 2005. But recession and market meltdown aside, many on the 2009 ranking are finding ways to forge ahead.
Millions of Americans have trimmed expenses because they have had their jobs or hours cut, or fear they will. But a subset of savers are reducing costs not just with purpose, but with relish. These are the gleefully frugal.
Corona Extra's formidable brand was built, in part, on crackerjack marketing campaigns equating the Mexican brew with tranquil vacations on pristine beaches. But Corona's falling sales have some beer business watchers wondering whether there's trouble in paradise. A tough economy and intense competition are weighing on some of the higher-priced imports. Their future, and whether beer drinkers' habits have permanently changed, are being closely watched in the $26 billion-a-year industry.
Fueled by a combination of popularity, curiosity, necessity, strategy, and trendiness, marketers are embracing a new recipe that injects a proactive, social approach to outbound communications and engagement – with or without all of the answers before they jump in. This approach, while courageous, has required faith, conviction, and champions who didn’t necessarily have access to metrics and case studies at the SMB and enterprise level. Many of the most and also least effective campaigns were implemented as a way of learning. As we all know, some Social Media campaigns have excelled while others have publicly flopped and contributed to the cynicism and fear of embracing a transparent form of open and public dialogue.
Prepaid-wireless carrier Virgin Mobile USA is throwing a lifeline to customers who get laid off.
One of Harvard Business Review’s pieces on marketing in these tough economic times left me feeling ambivalent. In “Five Rules for Retailing in a Recession,” the authors outline how retailers can discover that “a larger universe of growth and productivity opportunities is open to them than they might believe.”
As the recession dramatically alters where and how Americans spend their money, there is an emerging consensus on the likely profile of the “new” US consumer who will emerge on the other side of the crisis.
Marketers trying to see where consumers are heading might consult Maslow's hierarchy of needs. This ubiquitous pyramid explains our psychic slide in needs (and hence consumption behavior) resulting from the liquidity crisis strangling most Americans. The run up Maslow's ladder coincided with America's wealth creation in the mid-'80s. Many people became so secure in having food, clothing, shelter and in feeling safe and secure, they spent time and energy pursuing more ambitious goals that consumerism satisfies, such as belonging, status and self-actualization. Economist Thorstein Veblen coined it the leisure class. We saw a marketing opportunity.
If the "backlash against bling" is real, then we really have to ask ourselves, what on earth is marketing going to look like to millions of people who don't want to buy like they used to—who are marketing weary? People just like my dad, only more digitally savvy. Not only that, but beyond marketing, what's the effect on companies who make their profits by continually producing new products? Bigger, better faster—guaranteed to make your life meaningful. Business and brands have a problem.
If music hath charm to soothe the savage breast, what can calm worried consumers during an economic crisis? Madison Avenue believes one answer is nostalgia. As the recession continues taking its toll, marketers are trying to tap into fond memories to help sell what few products shoppers are still buying. The time-machine tactics are primarily evoking four decades — the 1950s through the 1980s.
I have good career news for those of you on the recession front: When the economy improves, the skills and approaches you perfect during these troubled times will better position you for greater riches and fame. The trick will be surviving until then.
With their jobs less secure, their houses worth less and their stock-market portfolios shrunken, Americans are saving more now. But will they still be thrifty when the recession ends? No one will know for sure for years, but there's good reason to believe Americans will be saving more in the next decade than they did in the last one.
Sturdy old Sears might seem a bit tone deaf when it comes to fashion, but when it comes to recession, it's speaking a language consumers understand.
On its face, the rationale behind value-based advertising seems to make sense. It's a recession, and consumers are watching what they spend. But assuming everyone really is only out for the best deal during this recession, at what point does it all become one big blur? That is, if everything is a value, then what's the value of being a value?
Marketing is a long-term proposition. A company can get in trouble if it changes its marketing strategy to cope with a short-term problem.
A recession-induced need for cash, and an ever-growing infrastructure enabling individuals to act as (part-time) entrepreneurs, are fueling concepts that help ordinary consumers make money instead of just spending it.
Some guys express their anger about the recession by tussling with London bobbies outside the G20 meeting. Some guys protest more silently -- by letting their beards grow.
AT&T is addressing the economic gloom head on with a campaign that references the current hard times, but notes that the country has emerged from stronger from similar trials in the past.
Is "Blue Ocean Strategy" obsolete? No. Instead, its lessons need to be reinterpreted in relation to new economic realities. It offers many useful insights, whether a category is ripe for transformation or not.
The economy's in the tank. Consumers have no spare cash. And the financial outlook is bleak. So, guess what the savviest consumer product makers are rolling out these days: happy stuff. That's right, products that make folks smile.
A new study by London-based market research firm Hall and Partners that examines how the economy is affecting consumer trends in the U.S., the U.K. and mainland China finds few surprises -- the UK and U.S. are pessimistic, while Chinese citizens see a bright future once the economy goes through short-term turmoil.
Efforts in advertising to pay attention to the disabled are accelerating even as the business of many marketers is slowing.
Consumers may be eating more at home, but when they do go out many are opting for so-called fast-casual restaurants -- the kind of place where they walk up to order and pay but the food is brought to their table. The benefit, of course, is to save money, as most are priced between fast-feeders such as Burger King and casual-dining chains such as Applebee's -- and there's no tip necessary.
Apprehension, with an enduring edge to it. That's the general mood among the twentysomethings I've heard from during the last several weeks in response to a question I asked about how the recession is making them feel. The fear isn't just about the present but about the long-term future. Octopuslike, it has many tentacles. But the most strangling aspect, I think, is the perception of my Gen Y e-mailers that they dutifully set up their lives based on assumptions that suddenly no longer apply. They're anxious because they can't tell what the new rules of the game will be—or because they think they can tell, and they don't like what they see coming at them.
It's no surprise that in this down economy, sales at dollar stores are up. As affluent shoppers "trade down" to buy items priced under a buck, dollar stores are rising to meet demand, stocking fancier goods and even adding food.
It looks like America's growing willingness to roll up its sleeves and get its hands dirty is due to more than the recession, as marketers like the Clorox Co., Church & Dwight, and SC Johnson continue to roll out products that appeal to the moment's perfect trifecta of values: Cleanliness, thriftiness, and transparency.
They say money is the mother’s milk of politics. In marketing, it is new products, meant to pique the interest of consumers and thereby stimulate demand at stores, restaurants and dealer showrooms.
US households are continuing to pay more for "green", environmentally friendly household products, defying a broad trend of shoppers "trading down" to lower priced goods and retailers' own-label brands
Companies risk making the same mistakes as in the previous recession by cutting too many jobs and by taking ineffective short-term measures that could harm them in the long run, a new report has said.
Last year, marketers seemed to be slow to change their messaging in response to the yet-to-be-formally-declared recession. During the holidays, retailers responded to slowing sales largely by promoting deep discounts in email after email. However, since the turn of the calendar, I've seen retailers adopting a variety of tactics to coax sales from their recession-wary customers:
Earlier this year, the American subsidiary of the South Korean carmaker Hyundai began promoting a program it called Hyundai Assurance: buy one of our vehicles, the ads explained, and “if in the next year you lose your income, we’ll let you return it.” One of these decidedly unfestive spots ran during the Super Bowl. And while that sounds like a horrible idea — the big game is one of the few moments when we can get together and not think about being canned — Hyundai can point to results. Its sales for the year are up about 4.9 percent over the same period in 2008. That compared with about a 40 percent drop for car sales overall.
In recession, as in war — and also, conveniently, in times of peace or prosperity — the movies we evidently need are the ones that offer us the possibility, however fanciful or temporary, of escape. Maybe so. But what if, at least some of the time, we feel an urge to escape from escapism?
To spend or not to spend, that is the question that a lot of people find themselves asking more and more these days. And while people’s purchase decisions often change when they’re on a budget, the decisions are not always as simple as just comparing price tags. There are two sides to the customer value equation: what you pay and what you get. And though slashing prices can be a quick way to close the sale, most people are still willing to pay for the brands that add value by adding the extras that make it worth it—the assurance that they are spending wisely.
The New York Times. TV Guide. Clear Channel. NBC, Boxee, Yahoo. They tell the story. There is no longer a need to warn of a gathering Chaos Scenario, in which the yin of media and yang of marketing fly apart, symbiotic no more. There is no need to seed doubt about the internet's prospects as an advertising medium, nor otherwise be a prophet of doom.
When the business pages make no sense, it's time to turn to a philosopher. I recently returned to the HBR articles of Charles Handy, vicar's son-turned-oilman-turned-business-school-professor-turned philosopher, who has raised many questions and made many accurate prognostications about the future of business. Consider what he said, post-Enron, about the erosion of trust.
Declining retail sales and dramatic markdowns took their toll on Perry Ellis' earnings, but the Miami apparel company looks to rebound.
As the economic crisis continues, so does the hibernating. We are becoming more of a "hiber-nation" as families hunker down to weather the storm with more time spent at home and less out spending at malls and restaurants. (Movie sales are up but that's an annex of the hibernation cave that helps us to escape for a few hours). With families spending more time together at home, they are slowing down, bonding differently and discovering joy in spending real time together. Moms are enjoying the experience of a stronger family unit. And, as head of domestic purchasing, Moms are finding strength and are taking pride in not buying.
Consumers are cooling to cable. And they're not very satisfied with satellite TV. In fact, according to consumer research firm GfK Roper Consulting, about 40% of those surveyed during mid-2008 and early 2009 said they'd be willing to do without cable or satellite TV.
With the economy going to the dogs, meatpacking giant Tyson Foods Inc. is forming an alliance to make a product its executives think is recession-proof: deli-like food for pets.
A broad series of changes at Starbucks Corp., from instant coffee to new menu boards that leave off drink prices, show how the company is adjusting its upscale formula to the economic downturn.
From David Letterman to Jon Stewart to Mike Barnacle to the guy in the cube next to you, more Americans are sporting a simmering anger some have termed "vengeful populism." Consumers are angry with bankers, Wall Street and any other cultural elite that has stolen from them lately. Because our pain is not felt equally, class conflict is a near certainty. While populism comes in many flavors, it is, at its core, anti-elitist, and there are plenty of elites to dislike. Income distribution in the U.S. is approaching an L-curve, with a vanishing (and angry) middle class. Because social standing is in so many ways marked through consumption, brands that are "on the wrong side of history" had better watch out. On the other hand, just as in the Great Depression, smart brands will have an opportunity for greatness.
Today’s brand leaders would be wise to consider and follow these 7Ps of Branding as a guide for the recession and beyond
As if unemployment rates, home foreclosures and the deepening recession weren't enough, the beleaguered casual-dining industry has to fend off new, formidable competition: fast-food chains.
The souring economy has shifted the advertising spotlight from higher-end, premium-priced products to less flashy, mass-market offerings that do not require buyers to cash in their 201(k)’s, as in the retirement accounts formerly known as 401(k)’s. That is particularly true in the automotive category, in which brands known for sensible pricing — Hyundai, Kia, Subaru — have recently been outperforming more expensive competitors. So the timing may be right for a hybrid car with a suggested retail price starting under $20,000 — the first in the American market in that price range.
Some good news for marketing heads: Chief marketing officers are holding on to their jobs longer. Spencer Stuart's annual survey of CMO tenure at the 100 most advertised brands in the U.S. reveals average time on the job has risen to 28.4 months from 26.8 months in 2007 and 23.2 months in 2006.
If the fundamental approach to brand positioning is to work with what is foremost in people's minds, then we can safely say this recession, depression, collapse -- whichever label the economic pundits eventually agree on for this crisis -- should be understood and appreciated for what it is: a systemic change in peoples' value systems as consumers.
A tough economy is forcing marketers to defend their marketing, which is leading to less satisfaction with their agencies and even more emphasis on ROI, per two separate studies.
We are constantly on a quest to conquer the next big thing. Mountain. Ocean. Planet. “Conversion Buster.” The next million dollar opportunity. Not that there’s anything fundamentally wrong with that quest. The challenge is that frequently in that quest we ignore the immediately achievable. And that tradeoff is a crime.
Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”
Back when I was a young media reporter fueled by indignation and suspicion, I often pictured the dark overlords of the newspaper industry gathering at a secret location to collude over cigars and Cognac, deciding how to set prices and the news agenda at the same time. It probably never happened, but now that I fear for the future of the world that they made, I’m hoping that meeting takes place. I’ll even buy the cigars.
In a few weeks we will learn the ultimate fate of GM's Saturn brand. A number of options are on the table, but it is now clear that Saturn is no longer part of GM's long-term future. How did a business-school case study, and a rare moment of GM shining brilliance, fall so far so fast? Yet, while Saturn has lost its trajectory in GM's orbit, it continues to point the way car companies and many other brands need to go in these challenging times.
Well, we're a quarter of the way into 2009, and I think it's all but official: The marketplace has morphed into Bizarro World. Nothing works like it should, so everything is up for grabs, including the fundamentals of marketing and brand strategy.
Barclays Bank Delaware is running full-page newspaper ads for its VISA Black Card, a carbon card offering 24-hour concierge services for a $495/year fee, and targeted at about 1% of U.S. residents. I can't decide if this strategy makes sense, or it's absolutely nuts.
Hi-def TV screens in bathroom mirrors. Celebrity chefs. Three of the most expensive sports arenas in history are about to open, and the timing couldn't be worse.
Hip-hop's decade of bling is popping, and it looks more like the housing bubble than a champagne cork. So why, at this point, would anyone take financial cues from a culture marked by conspicuous consumption? Honda Motor Co. thinks it has an answer.
To provide relief at the meat case during these challenging economic times, Cargill is teaming with grocery retailers to meet consumer need and demand for value with a new promotional program focused on budget-friendly, ground beef family meal solutions.
The world's financial system has had its guts torn out. The U.S. unemployment rate is on the express train to double-digit land. And Apple's biggest rivals--Hewlett-Packard and Dell--are racing to grab whatever business is left with dirt-cheap laptop computers.
Marketing effectively to baby boomers now requires understanding how distinct segments have been affected by the drop in retirement fund and housing values and other economic fallout, and what messages resonate with each.
To cope with slumping sales, toy makers are trying to breathe new life into some old brands. This year, Zizzle LLC is rolling out a doll called P.J. Sparkles that has a tiara that lights up and a dress that can be transformed into pajamas. But the line isn't new: It was retired by Mattel Inc., its original manufacturer, nearly 20 years ago.
People are scared. Have you finally figured that out? They want to make sure that their marketplace decisions are "good" ones; that they'll receive "value" for their exchange of precious time and money. So how do you help them do that? The first step is to think and feel what your audience is feeling.
Hollywood could get used to this recession thing. While much of the economy is teetering between bust and bailout, the movie industry has been startled by a box-office surge that has little precedent in the modern era.
While most of America is shopping less these days, a new study finds that there's no sign of a slow-down among mall-loving teens. It finds they're still spending plenty of time sashaying through their favorite stores.
As the economic meltdown continues to challenge our very premises about brands and selling, I'm intrigued to watch two well-known names respond to our dire circumstances in somewhat similar ways.
In the midst of recession, marketers must focus on the core needs of consumers and take a long-term approach to brand-building to weather the global economic downturn. Advocating that corporations adopt morally informed marketing strategies in tough times was one of the main themes emphasized by David Kenny, managing partner of Publicis Groupe's VivaKi unit, during a keynote presentation at the Jefferies 5th Annual Internet and Media Conference Wednesday in New York.
Some of us are lowering our expectations when it comes to appearance. Maybe that's not such a bad thing.
Yesterday, comScore released a survey that tracked an increase in searchers using terms related to the economic crisis in the major search engines. The premise of the research was that the current economic situation is impacting search behavior, and is a direct reflection of important issues to searchers. Overall, this research, along with data from Google Trends, makes a good case that the U.S. mindset really is changing.
Two months into 2009 we're learning the first things about marketing strategies this year. And while there might be one global reason for a crisis it becomes more and more obvious that what's going on differs a lot from country to country, market to market. In Germany the first statistics on consumer and marketing behavior have been published. What is most striking is that current marketing thinking is not driven by consumer behavior but rather by internal company factors -- and marketers might be unwillingly firing up consumer crisis behavior.
Why should anyone care about brands in times like these? Because it's during these times of transition, internally or through market shifts, that businesses simultaneously have the highest level of vulnerability and opportunity. Those responsible for shaping and maintaining a brand have much more influence over whether the current news climate weakens or strengthens their brand than they may realize.
After presenting his third of four Oscars, Will Smith looked into the camera and the audience and said something to the effect of "yes, I'm still here." That essentially sums up this year's Oscar telecast, a bloated and overdone spectacle that left us bewildered, unenthusiastic and exhausted to the point where only "Randy The Ram" could have saved the show by laying the smackdown on the all-schmaltz affair. Sadly, he never entered the ring.
Businesses in all sectors are struggling in today's tough economic climate. The retail industry looks particularly grim. AlixPartners, a Michigan turnaround-consulting firm, estimates that more than a quarter of all large retailers are at significant risk of filing for bankruptcy or facing financial distress.
As the economy plunges deeper into recession, many companies are confronting brutal choices. While businesses may feel forced to trim costs, cutting too deeply can drive away customers.
As the economy gets uglier, logos are getting prettier. The stolid, angular look of visual trademarks like IBM’s and Bank of America are being supplanted by ones that sport softer, more approachable fonts; multiple colors and natural, child-like symbols.
This new environment is shaping spending patterns in ways we've never seen before. Cash, not credit, is the new currency. A trip to the local cobbler is replacing one to the shoe store. And nail polish from the drug store is supplanting the spa manicure. Shoppers are finding there is plenty they can live without, and few things once considered untouchable are safe. So what's a marketer to do? Get to know the recession shopper.
McDonald's in the U.K. has just had its best ever year and despite -- or perhaps because of -- the economic climate, its chief marketing officer for U.K. and Northern Europe, Jill McDonald, is in a bullish mood: She's expecting to come out of the recession serving more customers than going in.
The drumbeat of doom for TV advertising has sounded for more than a decade -- DVRs, channel surfing, fragmentation, clutter, the flight to digital media ... Jay Leno moving to prime time. Now the recession has e's most reliable moneybags of yore, such as Procter & Gamble and General Motors, yanking big wads of cash off the table. Yet a growing body of evidence suggests not only that TV advertising still works, but that it may be working better than ever.
This all makes me wonder, when it comes to product naming and branding, has the recession put an end to silly spellings for good? Dunkin' Donuts... better watch out.
As an industry, golf has a lot of factors working against it—the economy, a growing public distaste for executive junkets, tighter schedules that make a four-hour game untenable—but it doesn’t suffer from a lack of equipment.
They gave out Oscars during previous recessions. They even gave out Oscars during each year of the Great Depression. But the way Madison Avenue is behaving toward the 81st annual Academy Awards, to be broadcast by ABC on Sunday, one could be excused for believing that the ceremony was actually for the Razzie Awards, which mock the worst Hollywood movies. Several Oscar sponsors from last year — among them General Motors, L’Oréal and the Bertolli food line sold by Unilever — are forgoing the program.
The current recession may be most serious since the 1930s, but these are boom times at Nespresso — the seemingly omnipresent brand of coffee and coffee makers owned by the Swiss food giant Nestlé.
It's a smaller world after all at Disney's theme parks. Grappling with the deepening recession, Walt Disney Co. announced plans Wednesday to shake up its parks and resorts operation, setting the stage for job cuts in the coming weeks.
Sally Singer, Vogue magazine's fashion news and features director, says the need for fashion and style don't disappear — even in rough economic times.
Given the worldwide economic decline, the once seemingly-recession-proof luxury sector is under siege. It's no longer just the aspirational customer--families with household incomes of $250,000 to $500,000--that are pulling back. It's the buyers of couture products and services: people with liquid portfolios, investible assets of $1,000,000 and more.
For years, prosaic consumer products sought to puff up their appeal by boasting they contained “secret” ingredients that improved their performance. Colgate toothpaste had Gardol, for instance, while Dial soap had AT-7 and Certs breath mints had Retsyn. Now, confronting consumer anxiety over the economy, the giant insurer Geico is for the first time rolling out a secret ingredient of its own: Warren E. Buffett. The financier controls Berkshire Hathaway, the company that has owned Geico for more than a decade.
With President Obama's signing of the “American Recovery and Reinvestment Act,” better known as our national Hail Mary stimulus bill, billions will be ladled for infrastructure projects ranging from roads to mass transit to rural broadband. But the law also contains a measure promoting a less-noted type of economic infrastructure: government data. In the name of transparency, all the Fed’s stimulus-spending data will be posted at a new government site, Recovery.gov. That step may be more than a minor victory for the democracy. It could be a stimulus in and of itself.
The store was empty, although a handful of tourists were seen milling around the entrance, looking around in awe, and taking photographs. They smiled politely but shuttled off when one of the well-groomed members of the Armani staff approached them. The 12-storey Armani House, so perfectly situated in the centre of the Ginza district in the heart of Tokyo, reflected the current state of almost every luxury brand you can think of - sleek, stylish and…silent.
If you want to see how the nation's foodmakers are weathering the recession, the proof is in the pudding. Kraft Foods, the nation's largest food maker, will no longer sell Handi-Snacks pudding to retail customers. Food companies from Sara Lee Food to H.J. Heinz are trimming their offerings to focus marketing dollars on their higher-margin, best-selling brands and retain consumers, who are trading down in the recession.
You may not know it to look at them, but urban planners are human and have dreams. One dream many share is that Americans will give up their love affair with suburban sprawl and will rediscover denser, more environmentally friendly, less auto-dependent ways of living. Those dreams have been aroused over the past few months. The economic crisis has devastated the fast-growing developments on the far suburban fringe. Americans now taste the bitter fruit of their overconsumption. The time has finally come, some writers are predicting, when Americans will finally repent.
It’s tempting to blame the downturn for all the bad news hitting tech in 2009, but downturns have a healthy impact too. They burn away the brush of businesses that looked good enough on paper to keep raising money, but never quite worked in reality. Consider two stories in the news today: The possible bankruptcy of Sirius XM Radio in the next 24 hours, and the slumping DVD sales that the so-called “winning” BluRay format is doing little to boost.
The savviest entrepreneurs right now aren't hunkering down. They're rethinking their business models and hunting for new strategies based on the assumption that consumer spending won't be rebounding to prerecession levels and that the types of products and services people want will be much different from before.
Even in these tough times, surprising and extraordinary efforts are under way in businesses across the globe. From politics to technology, energy, and transportation; from marketing to retail, health care, and design, each company on the following pages illustrates the power and potential of innovative ideas and creative execution. These are the kinds of enterprises that will redefine our future and point the way to a better tomorrow.
Since the world became aware in the summer of 2007 of an imminent financial crisis, people have asked why so few experts saw it coming. There have been many calls for an early warning system for the world economy – but little has been said about how to build one.
Agent Provocateur, the opulent lingerie brand, has ruffled some feathers with their latest promotional escapade. In a series of events leading up to Valentine’s Day, Agent Provocateur has partnered with the private equity group 3i to host some men-only preview “presentations.” The hush-hush events are targeted at investment bankers and give the securely wealthy a chance to brush elbows (amongst other body parts) with lingerie models.
As marketers rein in spending on everything from national TV to the Super Bowl, whither branded entertainment?
The bad economy is hitting America right in the stomach. Consumers have cut back sharply on food spending, shunning restaurants, opting for generic products over brand names, trading in lattes for home-brewed coffee and shopping for bargains. That is hurting sales and profits at many food processors, grocery chains and restaurants.
At Thursday's TV & Everything Video Forum, Unilever's VP of American media, Luis Di Como, told the crowd that in the spirit of the times, he would give three speeches for the price of one. That comic bit aligned with his broader theme: If marketers want to save money, they need to create partnerships that transcend the up-front orientation around the 30-second spot, and they need to remember what people have cared about for eons: a good story.
Since the day's news brought us a bit of a bounce in retail sales, and Revlon just reported that while its total net sales are off, sales of color cosmetics are up, we decided it's time to take a closer look at the Lipstick Effect--the theory that holds that in rough economic times, a woman may not buy shoes, diamonds, or sofas, but she will comfort herself with lipstick and other affordable splurges.
Japanese electronics maker Pioneer Corp said it would cut 10,000 jobs and pull the plug on its loss-making flat TV business, a move that could signal a further shake-out in the battered sector.
A big grocery chain has removed from its Belgian stores about 300 Unilever products that it says are priced too high, a sign of mounting tension between retailers and suppliers as the recession grinds on.
This Sunday's Daytona 500 kicks off the 2009 Nascar season. Stock-car racing's premier series has oddly always started the season with its equivalent of the Super Bowl or the World Series. This year is no different. What is different is the business press that Nascar has received since the past season ended in November. To read some of these hyperventilating reports, you'd think Nascar were on the verge of bankruptcy.
For the first time, J.C. Penney Co.'s spring advertising campaign will focus only on its most fashion-forward clothing lines, designed by trendy names such as Kimora Lee Simmons and Nicole Miller. The move is part of a bid by the midtier retailer to appeal to shoppers who in the past have turned to high-end stores and boutiques for the latest looks in fashion but have cut back on spending.
Perhaps you're thinking, "So what if the economy is tanking? At least we've got love!" Alas, the former may be impinging on the latter, if a pre-Valentine's Day Brand Keys survey is any indication.
One of the newest news sites has a novel business plan: it hopes to go out of business as soon as possible. Laura Rich and Sara Clemence, two former editors who were recently laid off from Condé Nast’s Portfolio and author and freelance writer Lynn Parramore are hoping to target and bring some positive news to victims of the economy with the launch Monday of a new and hopefully temporary news site called Recessionwire.com.
Struggling Starbucks is about to seriously enter the "value" zone. On Monday, the gourmet coffee chain that's been losing business at quite a clip of late, will unveil plans for its first value menu: $3.95 will get you a latte with coffee cake or drip coffee with hot sandwich.
When Saks Fifth Avenue slashed prices by 70% on designer clothes before the holiday season even began, shoppers stampeded. Saks' deep, mid-November markdowns were the first tug on a thread that's now unraveling long-established rules of the luxury-goods industry. The changes are bankrupting some firms, toppling longstanding agreements on pricing and distribution, and destroying the very air of exclusivity that designers are trying to sell.
Michael Adams doesn't claim to be the equal of famed Depression-era songwriters like Woody Guthrie. Still, the 39-year-old from Tucson, Ariz., aims to leave his musical mark on the current economic crisis. Editor of the nutrition-oriented Web site naturalnews.com, Mr. Adams says his personal outrage about all the federal funds being shoveled to crippled corporations prompted him to write a hip-hop song called "I Want My Bailout Money."
In the marketing and media industries, it's widely believed that advertising, done right, is an investment in future business results. But the question today is whether the rest of the country can be persuaded to see it that way.
Despite its looming demise, the American auto industry dismissed demands for brand reduction in December 2008. Forced by the federal government into a mea culpa that was supposed to include plans for drastic cost-cutting and other reformative measures, GM was expected to agree to eliminate a handful of its brands. But GM went no further than admitting it should streamline Pontiac, keep Hummer for sale and maybe ditch Saab.
The first official speaker at TED 2009 was Juan Enriquez, whose biography made him a perfect choice. During his tenure as chief of staff for Mexico’s secretary of state, he brokered a cease-fire with Zapatista rebels. He founded a Life Sciences Institute for Harvard Business School. Now he’s involved in a plan to create biofuels out of synthetic life forms. A truly TED resume.
Bad news, celebs: The era of simply slapping your name on your own fashion brand and waiting for royalties to roll in is over.
Recession and changes in consumer habits lead to surprising 32% drop in quarterly earnings.
I write this as I reel from all of the Monday-morning quarterbacking after yesterday's Super Bowl...only the media coverage isn't focused on the game, but rather on the ads. Nary a hint of reality intrudes on the coverage. It's as if the ads exist in some absolute, ethereal world of creativity, wherein consumption amounts to little more than reactions registered during game breaks. Nevermind that the marketplace is tanking, and even the bestest branded products are rotting on store shelves. NBC still broke records for what it charged for the spots, and lots of reporters and bloggers are talking about them now.
Although there are some things that each financial crisis has in common (e.g. a bubble in a commodity that bursts spreading problems across the whole economy), each crisis also has its new elements. Jerry Muller, writing in The American, says that what's new about this particular crisis is the role of "opacity" and "pseudo-objectivity."
With no sign the economy will improve anytime soon, fast feeders are rolling out the value offerings thick and fast. But by relentlessly reminding consumers about its 6-year-old dollar menu, McDonald's has managed to own the space.
Consumers seem risk-averse and hunkered down at the moment, and spending on the nonutilitarian is getting a bad reputation. But before you consign the venturesome consumer to the remainder bin of history, consider the surprisingly vibrant market for iPhone applications — the downloadable mini-programs that can be added to Apple’s famous mobile device.
In an economic crisis, the weak die first. So it was no real surprise that the first sports casualties of the current recession came from minor professional leagues: Last month the WNBA shuttered its premier franchise, the Houston Comets, and the Arena Football League, which had been scratching out a living since 1987, canceled its 2009 season. Were these failures part of a normal, recessionary, thinning of the herd? Or were they the early warning signs of a pro-sports bubble that may be about to burst?
Is “broadband for all” a recipe for recovery, or a boondoggle?
For television viewers, the Super Bowl offers an annual midwinter spectacle. On Sunday, in addition to a football game and a halftime show, they can watch Madison Avenue try to walk a tightrope. The advertisers, which are spending up to $3 million for each 30-second commercial during Super Bowl XLIII, have a tricky task before them. They must figure out the right way to speak to consumers worried about the wretched economy while at the same time not ignore the long-standing appeal of Super Bowl Sunday as a night of escapist fare.
While it's no surprise that consumers plan to cut way back on how much they will spend on their sweetie this Valentine's Day, a new survey from the National Retail Federation shows that people will be surprisingly sentimental, despite the grim economy.
In meetings with almost all our clients the same topic comes up: Will our relevant market be hit by the crisis and if so, how hard? While the specific answer differs according to the different scenarios, of course, there is one element all these discussions have in common. It is a growing sense of family, community, society or "We." It will be the most important positive word for 2009.
Starbucks, hammered by the contracting global economy, is taking the ax to its once unstoppable coffee empire. Equally unthinkable: Breakfast value meals are on tap.
To survive, retailers are battling to convince these new, mindful spenders that their products deliver long-term value, not just empty calories.
People long have taken for granted that some categories, such as toilet paper, truly are recession-proof. Turns out that, like many assumptions, is wrong.
Add Coach and Burberry to the list of luxury retailers feeling the pains of the pinched upper crust. Coach, Inc. says its net income fell 14% for its second fiscal quarter to $217 million, while sales slipped 4% to $960 million.
If marketers and retailers are feeling at loose ends about how to adapt to consumer behavior, there's very good reason. Consumer attitudes are shifting noticeably within short time frames, heavily influenced by key events such as the financial meltdown of early October and the presidential election.
Americans appear to be cutting back on their Starbucks. After reporters in several different cities noticed much shorter lines at their coffee outlets, Ad Age decided to commission Lightspeed Research to find out whether either New Year's resolutions or a tough economy were turning latte sippers into bean counters.
Even the brewing industry is starting to go flat in the worldwide economic slump. SABMiller PLC, the London-based brewer of Grolsch, Miller Genuine Draft and Peroni Nastro Azzurro lagers, said on Thursday its beer shipments fell unexpectedly in the third quarter as consumers pulled back on their demand.
So what do you remember about recess when were you in school? For me it was a time to reconnect with friends and share really important stuff, like who likes who. My gut is telling me the brands who take advantage of this “recess” to reconnect emotionally with their customers will be the ones who are the long term winners.
How does design respond to a bleak economic landscape? Philippe Starck, Sir Terence Conran and Kirstie Allsopp debate the future of their industries in these lean times.
With retailing executives desperate for economic tea-leaves, Lee Scott, Wal-Mart Stores' outgoing chairman, made it short and not-so-sweet: The world's largest company isn't looking for a retail rebound any time soon.
As a marketer, you may be asking yourself: Are there any consumers out there who will be shopping this year? The answer is a resounding yes. Moms will keep shopping. They have to. Your efforts to understand their purchase behavior are more important than ever.
While many companies are firing staff, shelving renovation plans and pinching pennies, the owners of Raj Manufacturing in Tustin are expanding. The swimwear maker is betting that it can boost its market share while its competitors are cutting back -- and the hot sales of its daring Animal Instinct swimsuits seem to support the move.
Most American consumers are simply too young to remember the Great Depression, and for a quarter century they've lived without extended economic hardship, becoming ever more acquisitive in a world of instant gratification and easy credit. The circumstances of the current recession are unprecedented in the history of modern consumerism. Factor in the loss of confidence in financial institutions and an investing world where even the very rich can be wiped out through Ponzi schemes, and you have consumers who are reconsidering long-held spending habits.
You've read the bad news, and no one's denying that it's grim, but surely there are some bright spots out there somewhere? Ad Age decided to go digging for some areas that might provide opportunities for the marketing and media industries to not only survive, but even thrive in 2009. Here are a handful, and we'll be bringing you more throughout 2009.
Actually, it's been very hard to judge the effect of the recession on this show, which in the past has been one of the largest in the world. Ask five different CES veterans what they thought, and you get five very different answers.
As with every year, the week between Christmas and New Year's is prime time for weight loss brands. But this year, some are wondering if consumers will put their wallets before their stomachs.
As the auto industry prepares to turn its back on a year it would rather forget -- November sales alone were the worst in half a century -- BMW of North America is getting ready to raise prices.
The current economic climate -- some might call it a financial crisis -- will likely have a far-reaching effect when it comes to Generation Y and the way it views financial services marketing in the future.
Small firms and those that use natural materials say the costs of testing toys for lead and other harmful substances may put them out of business.
Feeling the pinch of the economic downturn, some holiday gift-givers are saving money this year by making their own presents or — for those who lack the time or talent — buying handmade gifts from others.
Recessions naturally inject fear and panic, which is only heightened by every discussion of market losses, layoffs, bailouts, and somber predictions. We’re only human after all; of course everything affects us personally and emotionally. Fear is not a catalyst for productivity however.
Domestic ad spending is expected to drop 10% next year--dramatically worse than the declines felt in both the 1991 and 2001 recessions, according to Barclays Capital. In a signal of just how bleak the 2009 outlook has become in such a short time, the 10% figure comes a little over two months after Barclays pegged next year's decline at the considerably lesser 5.5%.
Around the world, marketing and sales executives are being asked to do more with less. It’s a demand many have heard in previous hard times, and most managers muddled through then. But the nature of the current downturn—and of the changes the marketing and sales environment has undergone since the 2001–02 recession—suggests that those who follow the survival techniques of past slowdowns risk betting on the wrong markets, customers, advertising vehicles, or sales approaches.
It's no secret that as Americans have cut way back on restaurant spending, they are cooking more meals at home than they have in years. But as restaurant dining nears historic lows, a less obvious trend is emerging: high levels of food boredom.
In a time of growing unemployment, tumbling stocks and rising foreclosures, people are finding comfort on social networking sites.
As the financial crisis snowballed this year, retail sales fell sharply, and government figures showed the first across-the-board decline in consumer spending since 1991. Curiously, many assessments of this development treated it as an exciting new trend — and maybe even an overnight realignment of where and how Americans find meaning and satisfaction in life.
A couple of folk suggested that games & social virtual worlds especially will really suffer in this economic downturn and may not survive. Which leads to the point of this post to put things in a little perspective: there is no decline happening.
From ditching their cable subscriptions to opting for "staycations," many Americans found ways to cut back during the past year.
Recent turmoil in global financial markets and its spillover into the real economy have generated considerable interest in the Great Depression. Can the business practices of the 1930s yield useful lessons for executives setting priorities in today’s uncertain and evolving environment?
Asked if he feared that advertising agencies might become disintermediated by big digital media players such as Google, Microsoft and Yahoo that are accruing powerful consumer data streams and efficient systems for serving and measuring advertising results, Roth indicated that Madison Avenue's strength was not media per se, but the kind of "big idea" normally associated by creative departments.
The video game industry appears to be alone in bucking a retail recession as consumers turn to fitness workouts, musical jam sessions and fantasy worlds to take their minds off the credit crunch.
In the most economically depressing holiday season in decades, there's one buzzword — besides cheap — that's still got game at retail: color.
The move by 17 companies, with nearly $1,000bn in sales, to commit to key principles of good business conduct comes as the financial crisis and recession are fueling a political and public backlash against the corporate world.
Steve Forbes believes "capitalism will save us." You know he speaks on behalf of a generation of businessmen who believe that there's nothing fundamentally wrong with the system; that what we're seeing right now is simply another of those cyclical periods of correction and Darwinian winnowing of the weak.
Nearly three months ago, coming off the fabulous ratings success of the Olympics, the Peacock boldly asserted that it could get as much as $3 million for a 30-second spot in the Super Bowl. The strategy largely worked: NBC said in mid-September that it had already sold more than 80% of its spots in the big game. Now that the economy has taken a drastic turn for the worse, the network may have to change its strategy to unload the remaining inventory.
The faltering economy could mean renewed interest in coupons as shoppers refocus on the cost of the products they buy — that is, if they do actually buy anything these days.
A recession is a hangover from excessive spending. Combine that with the November 2008 elections, which signified that most Americans crave big change, and it's a perfect time for non-traditional marketing people to make their moves.
I have been asked several times of late whether managers (and management students) should be expected to invest in design and design thinking during an economic downturn. There are at least two kinds of answers to this question.
All optimism aside, the future may not be so bright. It's true that sales may be up in the short term, and look good for the holidays, but Wall Street doesn't appear to be impressed.
Ask a dozen advertising agencies for advice on marketing in a downturn and the chances are that each will begin with a lecture on the dangers of cutting budgets. Even for those having to do more with less, however, there are lessons to be learned about how to return stronger.
Taking risk is also almost certainly what will get us out of this mess--at least according to a passel of neuroscientists and behavioral economists.
Competition? Sure. Rotten economy? No doubt. But there's a larger, deeper reason the green giant is drinking the dregs: It ignored everything that made its customers loyal.
It is no secret that consumers are cutting back, anxious about jobs, plummeting home values and shrinking retirement savings. But that belt-tightening seems to have also prompted a reconsideration of what is acceptable consumerism even for those relatively unaffected by the economic cataclysm.