FEBRUARY 27, 2008
Consumer watchdog group, Conference Board reported this morning the consumer confidence index has plunged to the lowest point since the onset of the Iraq war in 2003, while wholesale inflation surged to the highest yearly rate in a quarter-century, indicating the threat of recession continues to grow stronger.
A Change in Cultural Mindset
With home prices down an additional 9% and a continued credit crunch, consumers are pinching pennies, beginning with luxury items like Starbucks, bottled waters and entertainment. According to Ian Shepherdson, Chief U.S. Economist, “whether a household earns $200 or $200,000 a year, families are cutting back in small ways that will have a major impact long term … Small cuts can have a big effect on the economy. If cutting back becomes a cultural mindset, it can be very hard to turnaround.”
USA Today reported an informal survey on how some folks are cutting back already, interviewing people who brew their own coffee instead of going to Starbucks or who eat peanut butter out of the jar instead of expensive protein bars. The article also includes interesting quotes from trendswatchers with funny names:
Watts Wacker says, “The new status isn’t how much you’ve got, but your ability to show what you don’t spend. This is a seminal moment. It’s not a fad that will die out when the economy picks up.”
“For years, we had the opposite. It was all about keeping up with the Joneses. Now, the Joneses are starting to cut back,” says Ellie Kay.
And trends guru Faith Popcorn adds, “It’s cooler not to spend.”
Not All Bad News For the Creative PR Pro.
Much like the trend in healthy junk food alternatives (as if anything at McDonald’s can really be healthy), smart strategists can turn this shift in our spending to a brand loyalty advantage.
As does nearly everything in my life, this situation reminds me of a movie: Mr. Mom. Remember when Teri Garr convinces the big tuna fish client to announce they will cut back on their prices because they support their customers in these trying economic times? We support your need to support your family. Cue the national anthem.
Well, as funny as those scenes were, there is a solid strategy behind that idea. The message of being “on your side” is one that can foster long-term loyalty.
Clearly Starbucks is looking ahead as they’ve already launched $1 regular coffees and free refills in select stores to combat their first decline in sales since they launched. I imagine we’ll see more and more strategies aimed at winning over the customer with lower prices or by simply comparing their brand to pricey alternatives.
Not Just a B2C Play, B2Bs Can Pick Low-Hanging Fruit.
Many companies are putting vendors on hiatus, or cutting ties altogether, as they attempt to brace themselves for the worst. According to B2B Magazine, companies are seeking more creative ways to achieve goals, particularly in marketing and PR. There is a lot of low-hanging fruit to be picked by those who can offer less expensive new media alternatives to marketing and promotion.
My former employer used to call me “The Bright Side” because I always seek the good news in any given situation. Well, the good news here is I believe smart strategies that speak to the times can win loyalties that might not otherwise be achieved.