Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts

Wednesday, July 8

Emerging Markets And Wealth Are Changing Consumer Behavior

While some luxury brands continue to express interest in courting Generation Y, a demographic loosely defined as those born between 1977 and 1994 in the United States, other brands are setting their sights on another segment all together. They see the next surge in luxury consumers not confined to American Millennials but driven by emerging markets such as India and South Africa.

One new study, Wealth X, sees India producing as many as 437,000 millionaires by 2018 (and doubling again by 2023).The nation also has a young, well-educated population with high levels of entrepreneurship and business ownership, underpinned by a well-developed legal system.

Wealth growth in Africa — especially markets such as South Africa, Nigeria and Kenya — continues to be driven by a naturally entrepreneurial population at an annual rate of over 10 percent. Not only are those markets rich in natural resources, but they also have a new foundation for technological innovation.

In addition, the study predicts Iran, Turkey, and Mexico will become economic bright spots among global markets. These markets will continue to be influenced by western European and North American definitions of luxury (including a shift from physical luxury to experiential luxury.)

Five behavioral shifts expected from emerging markets. 

Hyper-Localization. Although the world is shrinking, wealthy consumers are identifying with the cities where they work and live (and not necessarily their countries). As a result, brands need to prepare for an increasingly nonlinear development of economies and wealth creation as well as the important role proximity advertising and marketing will play in reaching those new millionaires.

New Frontiers. An increase in new wealth will continue to drive a growing early adopter segment hungry for new experiences. In addition to new frontier experiences such as space tourism and global investment opportunities cited in the study, pay attention to augmented and virtual reality space.

Luxury Experiences. Millennials are not the only population segment that is more interested in experience over products. The rich in emerging markets are increasingly shifting luxury consumption away from product purchases to lavish experiences like extreme locations and underwater holidays.

Hyper-Personalization. As well as fundamental rarity, personalization is expected to become the second major driver of exclusivity in the next decade. This will continue to manifest in tailored and unique products as well as one-off experiences.

Privacy and Intimacy. There will be an increasing desire for privacy among the wealthy in the future, yet at the same time a desire for greater intimacy among the select providers they trust. As a brand is truly defined by the relationship between itself and its customers, the newly rich will look for near flawless experiences from a shrinking pool of brands they trust.

These behavioral shifts will have a profound effect on brands. 

These are not the only shifts expected in the attitudes and psychology of the emerging wealthy. The study predicts those joining the ranks of the wealthy will become increasingly concerned about the economy, geopolitics, wealth preservation, privacy, and health care options.

With the recent financial crisis still fresh in their minds, they will be keenly sensitive to issues such as wealth preservation and the return on investment in every area of their lives from financial holdings to how they spend family holidays. At the same time, as wealth continues to become globalized, there will be an increased demand for personalization with design eclipsing technology and exclusivity defined by something other than price point alone.

The Wealth-X Part II study, which covers the next 10 years of wealth and luxury, is currently available without a registration barrier. In review, many of the concepts presented in the study are not confined to having an impact on luxury brands alone. As an emerging class of globalized rich continues to emerge, their behaviors will have a significant influence over consumer expectation on all organizations — especially in hyper-localized minded cities with increasingly unique identities.

Marketers hoping to find opportunities in behavioral shifts ahead need to begin focusing on proximity, flexibility, exclusivity, and improving the customer experience. Entrepreneurs need to look toward new frontiers that create entirely new markets — space travel, oceanic exploration, virtual reality, near-invisible energy production, and biotechnology among them.

Monday, October 22

Changing Conversations: Can We End Partisanship?

Because of the presidential race and recent debates, there has been plenty of conversation about the role of government. And frankly, it seems to me the national discussion often causes more confusion than clarity for anyone attempting to follow it.

Part of the problem is that there doesn't seem to be any real authority in reconciling the federal budget. If you want to give it a go, start with Wikipedia. Otherwise, you will find different sets of numbers that categorize how the government spends its money. Almost all Americans know is that the federal government spends more than it collects.

They also know that we can't keep doing that. It's a lose-lose proposition because not only do we continually lose every month, but the interest rates on debt erodes purchasing power. Ergo, if you have $100 and spend $110, borrow $10 to cover the difference, and then pay back $10 plus $5 in interest, you'll only have $85 the following month. So to maintain $110 of spending, you'll have to borrow $25 next time. And so on.

Except, in the case of the U.S. government, it's worse. It is more likely to ask for $115 the following month, thereby increasing the rate of the debt and its inability to catch up. We all know it has to stop.

Why what should be simple math becomes partisan and complicated.

The simple math problem illustrated above becomes complicated because in order to solve the debt spiral, the conversation centers around the question "how does the government find more money?" In other words, both parties want to find a way to collect the $110 it needs (maybe $112.50 to pay for past debt) so it doesn't have to borrow any more money.

Two partisan positions eventually surface: raise taxes (and who to raise them on) or increase the number of the employed people who pay taxes while decreasing the number of people who need help (via economic growth). Both have risks.

The risks associated with the first is that if you try collect $112.50 instead of $100, then the number of contributors might diminish revenue to $98. The risks associated with the latter are related to the speed of recovery. For every month more contributors aren't added to the labor pool, the debt spiral continues (perhaps at a faster rate if you temporarily reduce taxes to $98 in order to stimulate growth).

What is even more difficult is attempting to talk about the other side of the coin. Maybe you don't have to collect $110. Maybe you can collect $100. Most politicians don't like to talk about it because cutting $10 means that somebody will lose something. For example, some people think if $450 million is cut from PBS, then there might not be PBS. (The federal funds represent 15 percent of its budget.)

Although PBS would likely weather such a cut, the outcry is generally emotional. There are dozens (maybe hundreds) of expenditures just like PBS. All together, some estimates place federal, state and local governments near $1 trillion in welfare and social programs (more than $700 from the federal level and $210 billion on the state level). Depending on where you look, some consider it to be significantly higher and others significantly lower. Regardless, it's a big number and there is outcry with each program cut.

We need to change the conversation and evolve our culture.

I am not sure that we can change the conversation. In the last decade, politics has become overwhelming partisan — enough so that I avoid most political conversations unless I can tie it to a teaching opportunity for communication. (Political mistakes tend to make for pronounced examples on both sides.)

And yet, the conversation needs to change. We need to find ways to move more welfare and social programs away from government and make corporate and individual giving part of our culture.

This isn't partisan. It's math and morality. The return on investment for government-funded social and welfare programs is paltry compared to direct giving to fiscally responsible nonprofit organizations.

When people give $1 direct to a nonprofit, 80-90 percent of that dollar directly benefits the person in need (assuming the nonprofit is fiscally prudent). When we pay taxes, the value of that same dollar is diminished by bureaucracy and oversight on the federal side and nonprofit expenditures related to pursuing grants, lobbying efforts, and administration costs.

I'm not sure if there has been a study, but I wouldn't be surprised if the value of that $1 drops to 50 cents before reaching the program (and then another 10-30 cents is deducted by the nonprofit), leaving 20 to 40 cents for the people who need it. If we found out a nonprofit was delivering 30 cents for every dollar raised, it would be a scandal. When it's government, we expect someone else to pay more — even if government further erodes the benefit by borrowing to cover the loss of value.

It's also not uncommon for many government-reliant programs to think differently about government funding. They don't think of it as taxpayer money. They look at it as earned money. Earned money doesn't inspire the same frugality as charitable donations. It tends to be spent in the least efficient areas.

At the same time, for every tax dollar increased, people have less to give. It's not a coincidence that tax increases tend to reduce charitable donations, thereby driving more people to government programs.

Still, we won't see it during this election cycle, and maybe not ever. But it would make a lot more sense if the so-called millionaires for higher taxes started writing checks for social and welfare programs instead of insisting other people write checks to the government for a lower return on social investment.

If you can afford more taxes, then you aren't giving enough to charity.

If they and others started to donate more, maybe we really could reduce spending to a hypothetical monthly budget of government to $95 or $85 instead of $110, with $10 borrowed. And maybe, if other people follow by example, we could start to make charitable giving such a strong presence in our culture it would lower the need and demand on government.

As much as I like PBS, that might even be a good place to start. The $450 million in tax dollars it received is nothing compared to the $1.5 trillion or more that was spent on political campaigns this cycle. Maybe the government could ask the private sector (that already donates 60 percent of the PBS budget) to cover it. Or maybe consumers can just buy an extra Elmo. There is some very big money in Sesame Street merchandising. I've been an avid contributor over the years.

The more programs we could take off the government books with affluent individuals and corporations agreeing to adopt in lieu of tax increases makes much more sense. It would also empower people to prioritize their own giving instead of entrusting a third party to take some and spread it around.

Monday, September 24

Thinking Different: New Ideas For Solar

Sometimes watching the various communication gaffes and tit-for-tat soundbite stalking during campaign season is almost unnerving. It makes for a case study example of all the most basic public relations rules (e.g., there is no such thing as private communication) and sometimes entertainment, but it really doesn't move much forward. It's an exercise in attempting to drive up negatives. That's about it.

But what the nation really needs are solutions, and I don't mean some of the solutions that are typically presented as contrasts during the political season. I mean the kind of solutions that don't subscribe to red-blue ideas. Here's one example of what we ought to be hearing from a presidential candidate.

How to make alternative energy work without the nonsense. 

There have been many schemes cooked up around solar energy. The worst of them, probably, was Solyndra. It received at least $70 million from a Department of Energy loan guarantee without much of a business model, proving why government is best left out of corporate investments based on preferred policy and not profitability. Government could have created the market instead of the company.

What might have worked is a government program that gave distressed homeowners (and then later expanded to other homeowners) guaranteed loans to have solar panels installed on their homes. They could make the purchases from any U.S. owned and operated solar panel company, creating jobs fueled not by government directly but by consumer choices in the new market.

The loans would be paid back, plus a modest interest rate, from any excess energy sold back to power companies (not the already distressed homeowners). The immediate benefit for the homeowner would be a reduced power bill, thereby either increasing their disposable income or stretching any benefits from local, state and federal programs. The immediate benefit for the power company is that it can sell any excess back on the open market. And then it gets better.

Once the solar panels are paid off, the distressed homeowner could collect excess income from the power the solar panels generate. If they are on a federal program, half of the energy sold could be deducted from what they normally receive in government aid (giving them a modest boost and freeing up government program money) and move them closer to independence, not further away from it.

It would also reduce the environmental impact of solar farm schemes that aim to turn large parcels of land into solar wastelands (and displacing whatever ecosystem that exists there). Instead, it moves solar panels where they belong — on real estate already wasted (e.g., roofs). At the same time, the guaranteed increase in demand would eventually lead to cheaper solar panels, opening the market to people who can purchase them outright without having to wait 25-35 years to see a return on investment or seek government assistance.

This kind of program wouldn't necessarily work everywhere, but it would in Nevada and many other states with a similar climate. It would have been especially worthwhile to Nevada because the state doesn't currently export any significant energy (fossil or otherwise). Indirectly, however, it would benefit every state because this idea would lead to energy independence and possibly rein in volatile energy prices.

Diatribe is dangerous because it depresses new ideas. 

What does this have to do with communication? Everything. As long as people are polarized between moving toward alternative energy (without a clear understanding of it or its economics) and tapping traditional energy solutions, everybody is too busy trying to sell their plan without looking for new ideas. How can they? They are too busy selling whatever is on the table.

While I am certain that my little idea isn't perfect and would probably need some fine tuning (thousands of pages if it is a government job), it's an illustration of what might be possible if people invested their time in solutions rather than whose idea and ideology it might be or what they can get out it.

Instead of politics, it produces a win for every stakeholder, while stimulating the economy, protecting the environment, and nurturing energy independence. It helps people in need, opens a new market, lifts the economy, and brings in private enterprise (without looking like a payoff to past campaign donors). It is absolutely ridiculous these things need to be at odds. At least, I think so. What do you think?

Wednesday, September 19

Interesting Opinions: Wi-Fi Is Not Enough?

When I read the article with Glenn Lurie, an AT&T executive who sees every new consumer device before they are released, I was surprised. Although it is not his call alone, he has taken the position that Wi-Fi is not enough.

"We try to look for all the opportunities in the world to get the OEMs to understand that they shouldn’t be building two devices," he said in the All Things D interview. "They should be building one device with Wi-Fi and 4G. It’s more efficient for them than having two [product] lines."

He believes it is a simple matter of education. Consumers must learn that they need always-on connectivity, he said. Naturally, eliminating Wi-Fi only would serve AT&T too. More connections means more subscribers and more subscribers means a better revenue model if they choose AT&T.

I appreciate his candor, but the comments immediately following the story tell another story. Even with the best of intentions, Lurie is out of touch with the customer. People see subscriptions as traps.

Understanding the consumer mindset and product usage. 

It really isn't that hard to understand. People opt for Wi-Fi only iPads and tablets so they don't have to pay for another cellular subscription. Many of them believe the phone subscription is enough.

From the consumer perspective, it makes sense. It even has an historic context. The number one reason that newspaper and magazine subscriptions dwindled is because people are genuinely tired of subscriptions that eventually begin to feel like utilities — fees you have to pay for the basic services.

Among monthly fees, publications are frequently the first to go. Especially if your income is unstable (tip workers, etc.), elective subscriptions go twice as fast. So you have to pick and choose from a long list of fundamental and elective expenses.

For most people, mandatories include: electric, gas, water, municipal services, mortgage payments, car leases or payments, car insurance, telecommunications, mobile telecommunications, cable or satellite, and taxes. Now add health insurance (especially with new government requirements) and life insurance. Immediately following those payments are the electives, ranging from gamer accounts and clubs to gym memberships and lawn care. All of them cause a dwindling supply of disposable income.

Where do iPads and tablets fit? For many but not all consumers, it's closer to the bottom because those who opt for Wi-Fi only are satisfied with using their smart phones when they are on the go and Wi-Fi only when they have access at home, work, the hotel, and a growing number of other venues (both public and private hot spots). In fact, given how many places are adding Wi-Fi and AT&T's support of such hot spots to cut down on system overload, it seems more likely Wi-Fi is preferred (doubly so because some functions require Wi-Fi access to work). All things considered, why pay more?

Obviously, some people do have a need. The split between the products is generally 60 percent Wi-Fi only and 40 percent 4G. The slight advantage Wi-Fi has is a lower model price and no subscription fee after you purchase the product. But there is even more to the story.

AT&T and other providers have contributed to Wi-Fi only sales with usage throttling, data usage caps, service issues, roaming charges, high overage changes, etc. Maybe it's not the consumer who needs to be educated. AT&T could learn something about consumers and make 4G more tempting.

Making a better future to marry Wi-Fi and 4G. 

I'm not one of the many people who equate AT&T with the evil empire. I genuinely prefer them as my phone provider, think they have better customer service, and they recently did us right by offering advice on how to handle our phone service (for three phones) while traveling in a foreign country.

So how do carriers sell always-on connectivity? For starters, they could break away from device subscription models and replace them with account subscriptions instead. If you already have an iPhone, your iPad subscription is, gasp, inclusive because you're less likely to use both at the same time.

Or, they could implement lifetime plans built into the product price much like they did for Amazon Kindle (with a better fallback for usage overages). Or, they could give people the option of buying 4G-ready devices without a subscription, allowing them to add it (or drop it) at their leisure.

Of course, they could improve their system so it isn't affected by high-usage customers (thereby killing the throttle concept). And, if they are among those who want to regulate Internet traffic and bandwidths, they could give it up and stay focused on their core service to provide a better experience.

Simply put, it's not education that consumers need. They need an incentive, especially those who get along fine without 4G connectivity, using their iPad mostly around their already Wi-Fi friendly home.

Remember. AT&T is pushing "Think Possible." And right now, people think Wi-Fi everywhere, which is a better fit with Steve Jobs's old vision to make a contribution to the world by making tools for the mind that advance humankind. Something like that makes subscriptions optional.

Monday, September 3

Dueling Studies: Labor Day Blues Or Silver Lining?

According to the New York-based Conference Board, consumer confidence fell to 60.6 in August, down from a revised 65.4 in July and the 66 level analysts were expecting. As published by USA Today, the index now stands at the lowest it has been since November 2011 at 55.2.

But according to the Thomson Reuters/University of Michigan, the final sentiment index climbed to 74.3, a three-month high, from 72.3 in July. As published by Bloomberg, this gauge averaged 89 in the five years leading up to the recession. (Bloomberg reported confidence was down a few days earlier.)

The causes are easier to understand. The economy is struggling under the weight of rising gas prices, economic uncertainty among business owners facing more regulatory burdens, and the high unemployment rate that remains above 8 percent (but is even higher when people who have stopped looking for a job are factored into the equation). There are other factors too.

Sentiment, on the other hand, is not only elusive but also relative to who you are, where you live, and what you read. We live in a world with too much information for its own good, and some of it is suspect.

How media selection can dictate consumer confidence and economic perception.

When you look at headlines from various news outlets, the message is as mixed as the reality. "Consumer sentiment is a bit brighter in August," reads one. "Consumer confidence takes unexpected fall," reads another. "U.S. consumer confidence rises but outlook still grim," claims one. "Consumer confidence crash stifles gains from housing report," states another.

None are wrong or right. The variations in reporting are dictated by which studies are reported, how they are reported, headline semantics, and in-story sources. It's kind of a mess.

But the point here is that dueling studies and sources, along with what people share across social networks, can skew how people see the world. People are more likely than ever to self-select the reality they want and then see all of the other media outlets as biased.

At the same time, the media have increased its own online analytics, carefully tracking what people are looking for and then delivering based on those results. If one story gets more attention than another, someone is sure to say "we need more like that." This isn't really new, but it does seemed pronounced.

How individuals can navigate the influx of communication overload.

Without a doubt, relying on affirmation media will bias an individual's perspective even if the media stories themselves are not intensionally biased. Instead, it's best to develop a slate of media outlets that challenge ideas as much as confirm them. Once you focus in on a story, check up on the sources.

When most people read news stories, there is an assumption that the newspaper has already vetted the source. This isn't always the case. So when it comes to business stories in particular, take a few minutes to look up the sources. Even if the journalist isn't biased, the sources within the story might be. If they are, you can weight their contributions accordingly.

Along with those sources, find a few more on your own as well as any your social connections might turn to from time to time (preferably with ideas that confirm and challenge your own). This composite of information can be augmented and adjusted based on your geographical location, industry, company, and individual anecdotal observations (adjusting for your own bias).

When it comes to the economy today, nobody really agrees. Most of it depends on what indicators people want to focus in on to prove their point. The real tells are a little bit different. Most people don't feel better off than they were four years ago, which is what continues to shake consumer confidence. Even those who might be better off on paper, feel pinched because the same money doesn't go as far.

At the same time, this doesn't necessarily mean that the news stories ought to influence individual and business decisions. Some companies do very well in a recession while other do not. Some local economies are recovering and some are not. In other words, while individuals and small business owners can think of the news as the canvas they paint their story on — the story is still their own.

Monday, August 27

Dropping Confidence: Marketers Need To Adjust Expectations

One recent survey by an online coupon site doesn't see the holidays shaping up to be as strong as last year. In researching shopping attitudes and behaviors, its results revealed more than 7 in 10 consumers (71 percent) have a dismal view of the economy. One in four are worried about being able to make all the necessary purchases. Only three percent felt the economy was in "good shape."

The survey from coincides with deeper studies, including one published by Bloomberg. The latest decline marks the longest series of declines since 2008. Part of the problem is that gasoline and grocery prices have risen, but there is no real job growth.

The first study mentioned was designed to look at how consumers plan to shop for the remainder of the year. And RetailMeNot concluded that the lackluster economy has helped to create a demand for discount shopping (namely coupons). We have another tip for marketers following study highlights.

Highlights from the RetailMeNot consumer sentiment study. 

• Women (46 percent) are more likely than men (31 percent) to start shopping earlier than November.
• Most (23 percent) will start shopping in early November; Some (12 percent) on Black Friday/Cyber Monday.
• An increasing amount of people (15 percent) plan to wait until after Cyber Monday to begin shopping.
• 54 percent of respondents will finish between Black Friday and their gift-giving holiday.
• 31 percent said that they will be done with their holiday shopping by the end of Cyber Monday.
• Women (58 percent) are more likely than men (50 percent) to finish shopping after Cyber Monday.
• Nearly a third of respondents (31 percent) intend to do their holiday shopping online.
• More than 70 percent of consumers (71 percent) think the economy is in "bad" or "terrible" shape.
• A quarter (25 percent) believe the economy is "okay;" fewer than 1 in 20 think that it is "good" (3 percent).

One of the most compelling statistics is that 4 in 10 respondents (40 percent) say that they should be able to get most of what they want, but cannot afford it all. Only about a third of respondents (36 percent) are not worried about being able to buy all the things they need in the coming months. Nearly 1 in 4 feel it will be difficult to purchase things they need over the next several months, let alone what they want.

Marketers might have to try something new if sentiment doesn't shift. 

What is most concerning about consumer confidence is that what was once called the "new normal" is beginning to erode into a self-fulfilling acceptance that things might get worse. There is little faith that the existing administration can do anything.

Marketers might be able to help consumers (and themselves) three-fold. Market first (people will be making shopping decisions earlier), market online (people are making decisions online even if they are planning to shop offline), and market fair (offer discounts that might help stretch the budget). All three might seem like common sense, which is why there are two more worth consideration.

Marketers could make a lasting impression by making purchases more experienced based. Shopping for experiences is one of the few types of purchases that hasn't slowed down (e.g., travel is up). The reason is pretty simple. People are looking for distractions that give them a chance to breathe.

Second, although this might sound like contrarian advice, is to ease up on push and plus marketing. If there has ever been a time to help consumers find exactly what they need as opposed to padding sales, this might be it. The trade off is an exchange of short-term gain for long-term loyalty.

When consumers are in a slump, customer satisfaction becomes too important in establishing long-term relationships. Given how many marketers claim they want long-term relationships online, it only makes sense that they adjust their objectives accordingly. Too much urgency or attempting to plus sell the transaction could pressure consumers into making an unexpected decision — buy nothing at all.

Wednesday, June 20

Facebook Screening: Executive Mistake In The Making

Hat tip to David Svet and Shelly Kramer for sharing Mark Story's rebut to bad career advice from Forbes. The original article, Social Media And The Job Hunt: Squeaky-Clean Profiles Need Not Apply, alludes to an idea that some headhunters and human resources pros want to be psychoanalysts.

Meghan Casserly warns that people who scrub their Facebook pages of unflattering poses or risqué postings run the risk of being labeled as having "no social skills." Her advice runs contrary to the other extreme, which is that every Facebook account ought to be polished, protected, and controlled.

Casserly also tells a story about her friend, a 21-year-old screener, who looks for the right "personality match" as conveyed by Facebook, along with the usual qualifications that might make a candidate shine. Her advice, much like Story concludes, is bad. Maybe even more than he might suspect.

Facebook is not your personality in print. Facebook is merely a crude character sketch. 

The comments are akin to Peter Shankman, who said after he reads a LinkedIn profile, he immediately visits Facebook to see what they are really like. His comment inspired me to write "Why I Stopped Worrying About Being Batman." I was equally inspired by Story's debut, but for the right reasons.

What Shankman and Casserly both fail to realize is two-fold. Facebook does not capture who people "really are." And, more importantly, people don't draw the same conclusions from what might be there. For every company looking for a free-sprited socialite, another wants someone buttoned down. For everyone scratching their head about an old college photo, someone else is holding it in admiration.

Nobody can really guess these things. So it's best not to play games with them. You neither have to scrub your Facebook nor plant an appropriate amount of embarrassing moments or poor judgements. All you really need to do is be comfortable with who you are, share what you are comfortable sharing, and always remember that old adage that eventually creeps up in public relations classes. What's that?

Never do anything you wouldn't want to see on the front page of The New York Times.

In fairness to Casserly, it seems she was mostly trying to vet the other extreme and built an article around people who subscribe to the notion of letting it all hang out. She cites the ugly survey: "One in five executives say that a candidate's social media profile has caused them not to hire that person."

What is less clear, as always, is the reason why. Few surveys delve into the reason that people decide not to hire someone because of a Facebook account. And even fewer delve into the reason some companies have taken to screening them.

Sure, there has always been the "X factor" in job placement. Candidates who do everything right but are ultimately passed over because of intangible gut instincts. And some, although human resources hopes it will never show up, for anything and everything ranging from haircuts to political affiliations.

But my thought on that is pretty clear. If someone won't hire you based on social differences or a social media profile, then be glad they didn't hire you. There is a good chance you weren't a good fit, but for exactly the opposite reason. They weren't a good fit for you.

Better yet, ask if they would be willing to marry someone based on nothing but a Facebook account. And if they say they are already married, then ask for their spouse's Facebook address. When they ask why, tell them his or her account will tell you everything you need to know about their judgement. Ridiculous? Exactly right.

Friday, March 23

Making Decisions: Do Anything But Wait

Despite the potential for market recovery, 48 percent of American investors believe they will run out of money in their lifetime. Ten years ago, only 30 percent believed they would run out of money.

These statistics are among the findings from a survey commissioned by BNY Mellon Wealth Management. CEO Larry Hughes went as far to say that "bleak is the new black" among investors.

He could be right. The same survey, taken in February, shows that more than six in ten investors (61 percent) say Americans are pessimistic about the markets compared to the balance who are optimistic. The outcome of the anxiety has slowed investments in the private sector, with 59 percent saying they are waiting for conditions to improve before taking any real action in their investment strategy.

How psychology and external pressures play a role in communication. 

As many as four in ten investors said they are holding off on making investment decisions until after the upcoming presidential election. Their trepidation includes the potential for tax increases and interest rates. But in general, shaky employment numbers (with many people removed from the work force), fear over the growing debt, and ultra high gas and energy prices are all baring down.

Part of the problem goes beyond hard numbers. Some of it is tied to an unwillingness to accept what's temporary and resign themselves to complacency. People are more likely to wait during good times and bad times. They are less likely to wait when they are in periods of innovation or adoption.

Unless a company is innovating new products that demand attention, it is likely deciding between identifying the shrinking pool of optimists or attempting to adopt new programs or approaches designed to change the the behavior of the pessimists. Common problem-solution communication is one strategy.

For example, a car dealership might emphasize more energy efficient vehicles as an economic alternative. They might even increase the trade-in incentive for less fuel efficient vehicles. Rental companies might offer a free tank of gas, assuming it is built into the rental price. Resorts with higher drive-in traffic might create an incentive with gas vouchers. Educational institutions might be more aggressive in providing online courses that do not require students (and instructors) to commute.

Any of these programs are short term, but represent how companies need to remain responsive to environmental conditions as much as operational improvements and/or competitive pressures. Companies have to be more responsive in eliminating the pressure or increasing the product/service value to exceed the perceived cost of acquisition.

When external pressures become too high, even communication can't help. 

In terms of gas prices, some people are now predicting that they will eclipse $5 per gallon this year. If that happens, even consumers with fuel efficient cars will be impacted. But they are not alone. Businesses will be forced either to absorb high fuel costs or increase prices to compensate, leaving consumers to face both higher fuel prices and inflation.

The prospect seems daunting given that 9 percent of Americans are unemployed, more than one in five Americans are underemployed, and several million were written off from the ranks of the work force. On a macro scale, all of it is contributing to shrinking optimism and slowing down economic recovery.

In such instances, unless it is innovation driven, companies and communicators are best served looking for smaller scale successes, perhaps in regional or even local markets that are less impacted by a continued downturn. While some people might think this goes beyond the scope of a communicator, it really doesn't. Whether marketing or public relations, well-intentioned professionals ought to be able to provide keen insight from the various publics served by the company every day.

The worst thing to do, however, is resign to a wait-and-see attitude that might permeate the rest of the market. If you are merely defending what you have, then there is a good chance you might already be losing. The same can be true for some who are unemployed; waiting for the 'right opportunity' often carries more risk than seizing temporary opportunities.

Wednesday, February 15

Engineering Entrepreneurs: Start With Education

A few days ago, Anthony Delmedicofounder of The Little Green Money Machine and author of Kids In Business Around The World, gave a speech that he calls an "E2" during a Future of Entrepreneurship Education (FEE) Summit, which was held at the White House. His topic centered on an interesting idea: add entrepreneurship education as a core curriculum in our K-12 schools.

"While the nation's unemployment rate wavers close to 10 percent, for young adults, 16 to 30, the unemployment is closer to 26 percent. And in some cities, close to 40 percent," said Delmedico. "For those fortunate enough to earn a high school or college degree, very few are prepared for today's job market. Currently there are 2.4 million college graduates who cannot find jobs in their fields of study ... that's 80 percent."

Delmedico went on to say that America will need to create a net 21 million new jobs by 2020 in order to return to full employment. These jobs are unlikely to come from large companies. He rightly pointed out 75 percent of all jobs come from entrepreneurs with small companies. So, in order to create 21 million new jobs, Americans have be serious about creating new entrepreneurs, businesspeople whom he believes are sitting in classrooms today.

Delmedico is largely right. Early entrepreneurship is needed. 

While Delmedico's own marketing efforts sometimes seem tired and his book might be classified as motivational as much as it is business-minded, his heart and head are in the right place. Most curriculum is geared toward rudimentary skills to pass tests, perhaps prepare for college, and then on to learn theories that are supposed to help college graduates enter the job market and compete for jobs that don't exist.

The net result: a majority of young adults are unprepared to do anything except work for someone else. And, of those who are unprepared, most of them have never considered that they might be able to start their own businesses. It is very likely fewer young adults have entrepreneurial spirit because they have less experience given the government's ongoing war against lemonade stands, cupcake vendors, and other kid businesses.  

There is indeed an irony in that kids are allowed to peddle candy bars and merchandise for public schools or sports teams, but not themselves. And, right now, the Department of Labor continues to expand labor laws to prevent children from doing any work until the age of 16. Even then, there is a mountain of information to consider. 

Public education could be the right place to develop and rekindle the entrepreneurial spirit instead of ratcheting up legislation that nurtures dependency (e.g., young adults under the age of 21 must have proof of income or an adult co-signer; health insurance is poised to be extended until young adults turn 26). It might even be a catalyst to make a startup venture easier across the board. A turnkey program at public schools, perhaps as an elective to start, could even open the doors to make starting a business easier for young adults. Consider the possibilities. 

How introducing entrepreneurship reinvigorates students. 

By introducing an elective program into public education with various tracks, schools could provide a one-stop exemption for students to automatically receive all licenses, permits, etc. needed to start their own businesses.

Tracks could include a variety of alternatives such as invention (science and technology), service provision (for sales, like lemonade), arts and crafts (with an online component), engineering and architecture (manufacturing), etc. along with core components for bookkeeping, basic marketing, etc. In some cases, students with businesses that intersect could work together or create larger ventures that might be managed by several kids with a vested interest. And for the first time, many of these students will begin to understand why some basic information is important and applicable in their world.

More importantly, such a program could nurture what everyone wants these kids to exhibit despite not always being given the opportunity to learn: critical thinking and leadership skills. They can do it. Any student can. 

There are many studies that support the case that anyone can become a leader. In fact, most studies have concluded that no common traits (intelligence, birth order, socioeconomic status) nor characteristics (capacity, responsibility, participation) can distinguish non-leaders from leaders. What can be critical, however, is giving students leadership opportunities as early as possible so they develop confidence in becoming leaders later, people who can develop a vision, share that vision, value human resources, and become self-motivated.

Even if students who engage in an entrepreneurial program decide they do not want to start or manage a business as a result, such early experiences could still be beneficial to their future employers. At the same time, they might also gain an appreciation for small business employers.

Right. Starting a business can be challenging and rewarding, but it's also no easy task. It might even erase some of the growing disconnect between employers and employees if more people understood how taxes and regulations aimed at large employers tend to hinder small businesses the most.

Monday, February 13

Recognizing Data: Passive Analysis Pays Off

There are dozens of ways for marketers to gain insight and better understand the general public. And most marketers actively engage in such research, which means they conduct one (or more) of four traditional marketing research techniques (observational, focus group, survey research, experimental), many of which can be and are being applied online.

Where marketers miss, however, is in not conducting periodic off-topic research or considering what other studies, surveys, and experiments might reveal (passive analysis). Sometimes the biggest insights are not found in an organization's own research (products, services, etc.) but in the research being conducted by others.

Why The Better Homes and Gardens survey is important. 

As part of our ongoing study of shifting attitudes toward a new economy, we've been following dozens of studies to create a generalized composite of consumer sentiment. And one of the latest surveys by Better Homes and Gardens bears out the concept that the public is undergoing a shift, from spontaneous consumption to long-term value. Here are some of the most interesting findings from the survey.

• Consumers are taking more time to plan for home improvements (from 33% to 39%). 
• Consumers are shopping around for more deals and bargains (from 40% to 42%). 
• Consumers want value for every dollar they invest in their homes (from 56% to 61%). 
• Consumers will get rid of excess stuff before paying for more storage (31%, no change). 
• Consumers are less interested in "bonus rooms" as opposed to "multipurpose rooms" (not specified).
• Consumers are interested in some feature upgrades (facets, fixtures, etc.) (from 51% to 55%). 
• Consumers are not more interested in remodeling projects, with all types of projects remaining flat.

There was one survey point that we dismissed. According to the survey, owning a home is still an important part of the American dream (80%). But we dismissed this finding because the survey was conducted on the Better Homes and Gardens site. Obviously, people who do not value home ownership are less likely to visit Better Homes and Gardens.

The real insight in this survey (when compared to other research) follows trends toward a new economy. People are becoming more value driven (not necessarily direct response or sales driven), less consumption driven, consider flexibility more important than status, and place a greater emphasis on long-term purchases that will help them avoid more repairs, replacements, and remodels in the future. 

What does this mean for non-housing related marketers? 

Throughout the 1990s, most consumers banked on a rapidly changing future that would allow them to upgrade everything in their lives at a quick pace. People changed jobs for more opportunity, flipped homes as they advanced, refinanced for status remodels, traded in leased vehicles at a quicker pace, etc. 

In a slow economy, people are more concerned that whatever purchases they make will fit within their budgets and last considerably longer. They know their lifestyles may change, which means flexibility becomes increasingly important. They want increased reliability and security over change because they recognize that not all change is for the better. They place more value on intangible qualities of life (more time to do something meaningful) as opposed to tangible qualities of life (consumption). 

If an organization recognizes how such trends affect their niche, they can make modifications not only to their communication (highlighting long term over short term), but also apply it to research and development, with an emphasis on creating products and services that promise long-term value over short-term trades. How about your organization? Is it still catering to the shrinking pool of consumers who value consumption? Or is it trading in a short-term sales message for something better?  

Friday, February 3

Talking Complexity: So What About The One Percent?

There are dozens of economic models, formulas, and ideas that people share and cite. I tend to read many of them because I have interests outside communication. At the same time, I'm also always thinking about how these non-communication subjects intersect with communication because the ability to communicate them is equally important, if not more important, than the ideas themselves.

Yesterday, Andrew Smith reminded me about one by Dani Rodrik. The non-communication idea is sharp enough, but what's especially refreshing is the way in which two students at the Unversidade Nova de Lisboa in Portugal wrote it. They used the Simpsons to convert the idea into a fun presentation. You can find a link to the presentation in Rodrik's introduction to Disruptive Politics and Economic Growth.

What the presentation reminded me is what a terrible job Republicans do in explaining their economic position to a majority of Americans. And, until they get it together, the message will never resonate.

Communicating about complex topics can derail companies and break nations. 

There is a very good reason why the current administration's message tends to perform better than their opponent's message. Income inequality has created a lower median income, and the people who fall below that median have an increased propensity to vote for higher taxes to make up their shortfalls.

The downside, however, is that the opposition is right in actuality, if not popularity. Increasing taxes on capital endowments (which the administration wants to do) has an adverse affect on growth, which increases unemployment, which in turn moves the median income even lower. Eventually, the pattern repeats with even more people who favor higher taxes. And eventually, the economy collapses.

This economic principle is one of the primary reasons Republicans want to hold the line on all taxes. But they have trouble communicating it. They struggle with it because it is generally reframed into the sound bite that "they represent and want to protect the rich."

Of course, that isn't true either. Wealthy people call the shots in both parties, and one side is not more altruistic than the other. If they were, we wouldn't need more taxes because they would donate what's needed as opposed to raising taxes.

Sure, the current administration likes to talk about how they have extended certain "tax breaks" and nothing has happened. While this is true, they omit the psychological impact of increased regulations and the constant threat of new taxes on people with capital. In other words, it would be like your power company telling you that next month your energy bill will be ten times as much for the indefinite future. You would probably hold on to any cash you had. They are holding.

Frankly, the dynamic of all this is remarkably acidic. And I'm not sure there is a good message.

What a capitalistic model might look like if all parties rethought politics. 

A better approach might to be realign the overarching goal into objectives that are obtainable and much more easily communicated. For illustrative purposes only, consider four fundamentals as examples.

• Government. There is no question the government should never directly invest in private companies. It is especially bad at it. If it is going to invest, it ought to invest in government-owned infrastructure, with most funding in research and development (and then contracting out labor).

This is one of the reasons I am a proponent of the moon colony concept. It would be the modern equivalent of Hoover Dam. (That, and I know too much about small grant awards and waste.)

• Business. As much as many people appreciate Ayn Rand, many more misunderstand her. They must, because the takeaway that some people seem to have is that she places a high value on the individual, which is somehow selfish. When I read Rand, I take away something different.

Businesses, regardless of size, ought to invest in communities, states, and countries, not because government forces them to do it but because it is in their best interest. If businesses want an educated workforce, better infrastructure, and safeguards against taxation, then a capital investment in the communities that help them succeed is commonsense. Businesses used to do it all the time before the government took over charity. As a backgrounder, see the comment in this post, written 10 years ago.

• People. A higher standard of living might be desirable, but a society built on overconsumption is equality problematic. If the early movement toward a more meaningful economy is valid, then we might nurture it along by measuring the merit of our lives not by the cars we drive but by the values we leave behind. Legacies are not built on mountains of discarded stuff.

As long as social media remains relatively free of social scoring and continues to lift people up as opposed to protecting the higher ground, its early success can be carried forward. It has proven invaluable in finding new talent and discovering otherwise hidden thoughts from great people who make the world a better place with both inspirational and tangible results.

• Nonprofits. As long as nonprofit organizations set sustainable action in motion rather than aiming to increase their own case loads to pad budgetary need, they are vital. In many cases, they can replace the need for some government funded services, assuming they stay away from the infusion of politics that usually comes with government grants.

In fact, had someone considered it 20 years ago, a nonprofit health insurance alternative might have helped this country avoid any pressure to create an intrusive national model. And that touches on one of the key areas we need to improve because overlapping nonprofits can dilute impact while leaving other needs underserved (like health care). General guidelines might not be bad either; some nonprofits love to pad executive salaries, upgrade training packages, and receive transportation perks.

While not everyone would necessarily agree with these illustrative ideas, all four represent nonpartisan objectives that can be understood. Smart government sets the stage for success and protects it. Purpose-driven businesses make profits and then invest them. Conscientious people value education and find meaning in their lives regardless of their titles. Nonprofits help organize groups to meet unmet critical needs.

If we had all that, then most people wouldn't care about the one percent or 99 percent. I think that would be a good thing too. Because at the end of the day, we still need 100 percent to work.

Monday, December 12

Splitting The Difference: Consumer Confidence

If you are looking for evidence that demonstrates what people think and what people do are two different things, December's Consumer Reports Index tells the tale. Consumer confidence remains extremely low and confidence in job market shaky. Yet, the holiday spending index last month was up 13.9 from 12.4 a year ago, with December looking better than last year.

According to Ed Farrell, director of the Consumer Reports Sentiment Index, consumers are shopping because they are tired of demonstrating restraint year after year. So even if their economic outlook remains unchanged, they are spending more in a stable but negative economy.

The mixed bag of data from the Consumer Reports Sentiment Index. 

What's most interesting about the economic climate and consumer sentiment is how fractured the nation seems to be. Different income groups, different age groups, and different regions are experiencing different economic realities and expressing different consumer sentiment.

For example, people have reported more job losses than job gains in the first time in four months, with the Northeast hardest hit. People living in the West are experiencing the most economic stress, due to the economic uncertainty of jobs and the economy. Consumer confidence among people, ages 18-34 and 65+, has remained unchanged or lost ground (career starters and fixed incomes).

People with a current household income over $100,000 have slightly higher consumer confidence whereas people with a household income under $50,000 have slightly less consumer confidence. But it's middle income families that are under the most economic stress.

The report shows that people are most concerned with medical bills and medications, missing payments on major bills, and health care coverage reductions. Whereas the higher household incomes are seeing more stability, middle income families are barely making ends meet. For households under $50,000, 20 percent could not afford medical treatment or medications, 13.5 percent missed a major bill payment (but not a mortgage), and 12.5 percent lost or reduced their health care coverage in the last 30 days.

Irregular economic climates drag consumer confidence down.

One of the reasons national leaders are struggling in developing a solution is because the current economic climate is not allowing for a one-size fix all for the nation. Specifically, some areas of the country believe taxation is the only way out of the current crisis because they need relief while those in less depressed areas know increased tax burdens may erode their marginal economic foothold.

But avoiding the politicized nature of the economic climate, let's consider what this means for marketers. The three key areas where some companies are winning is by focusing on location, confidence, and relevance.

Location, because some regions of the country are outperforming others. Confidence, because some consumers, even in depressed areas, are making purchases. And relevance, because consumers will purchase meaningful products regardless of their financial situation.

While holiday spending has increased, personal electronics is the only segment of the economy that has successfully demonstrated it can deliver meaningful products. In fact, the increases in spending this year are largely tied to personal electronics, which is up 31.4 percent (up 21.2 percent from last month).

According to the Daily Finance, six of the top ten product purchases are related to electronics. Only Pillow Pets, Australian short boots (that cross a boot with a moccasin look), a Fisher Price dancing Mickey Mouse and indoor remote controlled helicopters can compete (you might notice the latter two rely on electronics).

In fact, even Toys "R" Us reported that the LeapPad Explorer is the most sought-after purchase for young children. It makes sense. The LeapPad Explorer is like a tablet for kids, with an education-entertainment bent.

The long and short of it in making marketing decisions into 2012. 

Unless Farrell's one cautionary concern is right — that strong holiday sales could set the economy up for a weak first quarter — marketers have to do a better a job focusing on proximity (financially stable areas), demographics (select incomes), and psychographics (specific interests and positive outlooks). That means segmenting markets, targeting people who can actually buy the product (instead of blasting everyone), and making meaningful connections to the product or service offering.

Those are the questions to ask. Are you in the right markets? Are you reaching the right people? And are you demonstrating that your product can add tangible value beyond status? Because if anything has changed, status products just don't cut it anymore.

Monday, December 5

Peeking Inside Their Minds: Shopper Profiles

According to a new study by Integer Group and its research partner Decision Analyst, there are four primary behavioral patterns that consumers adopt when shopping for big ticket items that range from home remodels and furniture to automobiles and vacation packages.

Assuming the study has merit, it may also reveal that recessionary pressures have shifted consumers away from status shopping and more toward being conscientious or frugal. I've parsed some of the study results along with four personality styles that have been identified in previous marketing efforts.

Four Predominant Shopping Behaviors. 

• Fretting Frugals (31 percent). They find shopping as enjoyable as a root canal. They are nervous about making the right and wrong choices, are extremely price conscious, and easily overwhelmed. They are the most likely to delay big purchases, not over price but because they want to make the right decision.

For years in marketing, I was taught to consider this behavior style as consistent with analysts, people who pore over lists and make comparisons based on detailed decisions. Price isn't what holds up the purchase as much as making a decision. They are also the least likely to share purchasing decisions to avoid criticism, preferring to look for information that affirms their choices.

• Experience Lovers (29 percent). They consider shopping a labor of love. They are also the most likely to become brand loyalists, convinced that the decisions they make are the right ones and will always be the right ones. The experience is as important as the products they buy.

This might be a new take on the modernized supporter, people who consider everyone's feelings in the household before making what they believe is the right decision. They value their role as making the decisions, carefully balancing the needs of everyone.

• Passive Purchaser (25 percent). They are the most convenience-driven consumers, looking for quick and easy purchases. They do not waste time researching products and are not loyal to brands, but rather make their purchasing decisions based upon intuition.

This most closely resembles a controller, someone who is especially adept at making decisions not because they enjoy it but rather because it needs to be done. They want to know the bottom-line price and benefits without wasting any time.

• Social Adventurer (15 percent). They believe that everything bought is a reflection of style and personality. They are also most likely to tell others about their purchases, mostly because their purchases reflect who they are as a person.

Based upon previous marketing models, they are most like promotors, people who are always looking for the newest ideas, products, and services. They are not brand loyal, but do take more time shopping to find products that seem to be one step ahead. With social networking only recently earning mass adoption, they are well-experienced in letting others know about positive and negative experiences.

Why The Research Might Matter.

Although I'm never fond of the label approach to marketing, the study could be significant in that shopping behaviors have remained relatively equal as a percentage of the population. This study suggests that the social adventurers (promotors) are diminished, perhaps being driven toward conscious or frugal behaviors due to economic pressures.

Such a shift in behavior would be consistent with other studies. Both frugal and conscientious buyers are more likely to seek stability and security, more likely to embrace a new economy, and more likely to appreciate the shopping experience. However, focusing on these behaviors might not be as useful as considering attitude or other psychographics that can help make marketing decisions.

For too long, marketers have been focused on demographics and reach as the two primary indicators in determining their marketing decisions. While such methods can work, they tend to be subservient to focusing on topical interests and attitudes that transcend age, gender, and other demographic bias.

Monday, November 7

Targeting Attitude: Trends In Marketing

While most online attention has been skewed toward "influence," offline attention is beginning to consider attitude as a much more significant measure. It makes sense. Attitude, more than many demographic data and certainly more than online activity, can make or break a potential client.

Affinity AMS/Experian Simmons recently conducted a study that found most consumer opinions about the U.S. economy are mixed. Almost 32 percent expect economic conditions to get worse over the next 12 months and 38 percent foresee no significant change in the economic health of the country over the same period.

The suggested theory by AMS/Experian Simmons is that the smaller group — those who are optimistic about the economy — is more likely to be in the market to make certain purchases. Those who are pessimistic are not.

There is some truth to the thinking. Anyone who works for B2B businesses knows that their best clients tend to be more optimistic about the future (regardless of the economy). It's the reason they make purchases ahead of their growth curves, stock greater amounts of inventory, and ramp up marketing campaigns. Those who are pessimistic are more inclined to be overly cautious, even adversarial.

Some interesting findings from the AMS/Experian Simmons study. 

AMS/Experian Simmons researchers went deeper into the data, organizing print and digital magazine subscribers by publications and they found that the readers of certain magazines tend to be more optimistic than others.

Specifically, among website readers, Bridal Guide (55 percent), Harvard Business Reviews (49 percent), Dwell (48 percent), Outside (46 percent), Bicycling (46 percent), and Parenting (46 percent) all scored higher in optimism. Among print, Essence (50 percent), Ebony (46 percent), Jet (44 percent), Elle Decor (43 percent), New York Magazine (39 percent), and Men's Journal (39 percent) all scored higher.

To be clear, with the exception of Bridal Guide, optimism is generally not a majority. However, in comparing this data to the greater population, readers of these magazines (online or off) are beating the national average. And that may very well be significant.

The AMS/Experian Simmons study also broke out magazine subscribers in other ways too. For example, when they asked respondents whether they feel financially secure, Barron's (print), Bicycling (web), Wine Spectator (mobile), and Conde Nast Traveler (social networks) rose to the top of the list. When asked if they teach their children to be safe with money, Parenting (print), The Family Handyman (web), Country Light (mobile), and Cooking Light (social networks) rose to the top. And finally, when asked if they are good at managing money, Architectural Digest (print), Dwell (web), Kiplinger's (mobile), and Conde Nast Traveler (social networks) ranked higher than others.

Human traits and attitudes are becoming more important to marketers. 

Currently, most social media measures are designed to measure volume and mass as the two more important qualifiers of success. However, volume and mass may be the least important measures if marketers are reaching people who feel insecure about their own positions.

For example, with exception of those who have an expressed need, a car manufacturer whose message reaches an economic pessimist might as well be a wasted impression. After all, people who are pessimistic about the economy are less likely to purchase a car, especially a new one.

That doesn't necessarily mean that all of those impressions are lost, depending on the message. Car dealers convincing people that they would save money by exchanging for a lower lease, trading in a car for a lower interest rate, or stressing gas pump savings might win over some pessimists.

The point here isn't to ignore pessimistic consumers, but to get back to the businesses of matching better messages that communicate to the needs of specific consumers. Doing so removes the random mass approach and realigns sales to niche — specifically qualifying leads as opposed to assuming everyone is qualified. More importantly, it distinguishes qualified leads because even those with the same household income may have very different conclusions about any purchase based on their attitudes.

While I did not see the study published on its site, AMS has several interesting studies available. It tracks about 175 magazine brands that garner the dominant share of the marketplace.

Monday, October 31

Seeking Stability: Consumers

With many economies still struggling to find a foothold toward recovery, Americans are looking for increased stability and security in their lives — even if they have to make it up. One recent study conducted by Zillow discovered that as many as 42 percent of prospective home buyers believe that homes typically appreciate by seven percent a year.

Historically, home values in a normal market appreciate by 2-5 percent a year. And during the last five years, home prices have been extremely volatile with many homeowners having upside-down mortgages, owing more on the house than its current valuation.

Zillow uncovers where homebuyers are confused. 

• 41 percent think they are required to buy private mortgage insurance (PMI) regardless of their down payment. PMI is typically required only when buyers put down less than 20 percent.

• 56 percent confuse appraisals and inspections, with most believing that appraisals determine whether or not a home is in good condition.

• 37 percent believe that homeowner's insurance is optional and do not budget it into their monthly payments. In reality, lenders require that borrowers purchase homeowner's insurance that protects the lender more than the home buyer.

"It's troubling that we're still in the midst of one of the worst housing recessions in history," said Dr. Stan Humphries, chief economist at Zillow. "And yet, prospective buyers continue to have such high expectations for home value appreciation."

Upbeat about home appreciation, but downbeat on the economy.

According to another poll, this one conducted by Harris Interactive, 67 percent of Americans rate the job market as bad in their region of the nation. Only nine percent would rate it as good.

Currently, Southerners seem to be more optimistic (62 percent say the economy is bad) and Westerners less optimistic (74 percent say the economy is bad). When asked what would help increase jobs in the United States, 44 percent said cutting government spending and 40 percent said cutting taxes for Americans.

Only 12 percent believe more government spending would increase jobs. While Harris noted some partisan differences, only 29 percent of Democrats believe that more government spending will increase jobs. Almost 22 percent of respondents said nothing will increase jobs.

Retailers are not convinced there will be an economic recovery either. The Journal of Commerce/PIERS reported that toy imports were cut nine percent, which indicates that retailers are being especially cautious. Most toy imports (82 percent) come from China.

What marketers and employers could do to step up. 

A few weeks ago, we alluded that the best economic recovery could be spurred by a new concept of economy. Customers are looking for more meaningful purchases (quality over quantity) and stable working conditions (protective sentiment). This may require companies to consider strategies that strengthen internal communication (employee morale) and honest, up front communication and customer service (external communication).

The worst moves that companies can make are sweeping changes or over promising and under delivering. Consumers and employees are not in the mood, and their level of frustration is likely to materialize in national protests or public relations nightmares for companies that raise fees or implement sweeping service changes (unless they are truly looking out for the consumer).

Monday, October 10

Creating A New Economy: Are Marketers Ready?

Watching economic indicators can be daunting at times. On the one hand, organizations like the ManpowerGroup are encouraging companies to start employing people. On the other hand, PNC reports that four out of five small businesses will reduce or maintain their employees over the next six months.

Job incentives will not turn the tide, they say. But the reasons for their decision go deeper than the surface argument of weak sales. There is some evidence to support that the economy is changing.

Wealthier countries in the world are beginning to question whether rising incomes equal happiness. It's an idea the Futures Company suggested two years ago. It came up yet again in a recent study conducted by Experian. People are looking for something different from the brands they once consumed, and it may point to a context that has been recently presented by Umair Haque, director of the Havas Media Lab, author, and frequent contributor to the Harvard Business Review.

Building a 21st Century Economy from Umair Haque on Vimeo.

The future is more formative than many marketers might think. 

Most business measurements for success are linked to more customers, more leads, more sales. And yet, consumers seem to want less: less consumption, less brand status, and less sameness. The purchasing decisions they make tend to be more meaningful. And the mandatories (how they define basic necessities) seem to be more encompassing.

Is it any wonder that there is more divisiveness over what constitutes happiness, left and right, both with relatively equal economic demographics and both unhappy with the establishment. The key difference is security vs. freedom. But this identification has nothing to do with politics. It's a symptom of change.  

It hints at the shift of how companies might interact with the consumers they serve. Sometimes it surfaces in small ways, like pushback over policy changes or how people respond to quality over consumption. And other times in big ways, with companies volunteering to be attacked (as they attempt to make up for losses caused by questionable regulation) or others undone by their own taxpayer-funded extravagance, delivering a black eye to the entire industry. 

The marketers of the future will consider their customers stockholders. 

On some level, consumers are not much different than they were two decades ago. There are still segments that make decisions based on how they prioritize four considerations: the bottom line, immediate social impact, minute details, and cutting edge advancements. 

But what has changed is a greater need for acceptance and participation, possibly encouraged by the empowerment of social media and the Internet. People don't have to vote with their dollars outright; they can express their dissatisfaction publicly. And then, if the company expresses no desire to change, they vote with their wallets while lobbying for others to do so too. 

Many marketers are frightened by it. But they need not be so terrified. 

One of the most fascinating aspects of Kickstarter is that it taps into the change that is occurring in the marketplace. The people who participate are readily engaged with the people who have some smart and creative ideas.

This doesn't mean that the creator gives up any control of their project, although some do collaborate with backers. It simply means that they create an opportunity for consumers to share in their success, much like Donors Choose does for education. 

Status, brand, and big budgets all become secondary considerations to delivering a fulfilling and meaningful experience. Consumption is replaced by consideration. More messages are replaced by the right messages. Impulse shopping is replaced by purchaser fulfillment. 

It seems very unlikely that some companies will measure up in the decades ahead, especially if consumers become aware of a better choice. You can even see it in the most mundane of places. Facebook pages that have enticed the most likes are not the most talked about

So the questions are pretty simple for marketers. How do you align your company with the near future consumer? And if you cannot, then what will your company's exit strategy be in this decade?

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