The new abnormal.
Sometimes, the more you know, the less you know.
Such is the state right now of the mindset of the American consumer. Several research studies released over the past month seem to paint conflicting pictures of what’s going on with consumers, their shopping habits and their view on spending. Given that 70% of our economy is based on consumer spending, you can see how important it is to get a handle on what consumers are thinking.
Many an economist has talked about the current state of the economy as being “the new normal.” But given actual consumer behavior, we may want to rename it “the new abnormal.”
Their houses are being foreclosed. Their retirement plans are gutted. But they’re lining up for iPads and $3 coffees.
Wal-Mart and Target are in the doldrums, but Mercedes Benz is having a record sales year. Procter & Gamble is struggling to keep people from abandoning its Ivory soap and Crest toothpaste brands for generics, but Starbuck’s just announced its most profitable quarter in more than four years. And while consumers self-report that they are being “cautious” about spending, a Consumer Reports study shows retail spending per household has actually gone up $40 a month.
As marketers, what are we to make of this schizophrenia? I consulted my Magic 8-Ball, and it reported that, “The answer is murky.”
No doubt the severity of the economic downturn and how it affected American households is going to have some long-term effects. What we know for sure is that there’s less credit out there and that consumers are no longer able to use their houses as ATM machines. So their spending is going to be scrutinized. My belief is that consumers will continue to splurge on “affordable luxuries” such as $3 coffee drinks and moderately-priced electronic doo-dads because of the “highs” they experience from them. But I do believe the recession is making people think they need “post-rational” justifications for their extravagant purchases.
In dealing with an uncertain future such as this, it helps to approach the situation as a baseball team who has lost 100 games would approach the coming season: focus first on the fundamentals. And the fundamental concern for every marketer (in any economy, really) should be about demonstrated value.
Know your customer better than your competitors know theirs. Find out what they expect from you, and the real reason they buy from you. Then set about amplifying that, giving them more, and giving them reason to talk about you in their circles. Find out where you have the opportunity to surprise them. And for crying out loud, don’t scrimp when it comes to creating that positive experience.
For more in depth look into some of the most recent customer surveys, check out the Alix Partners study or the Deloitte “American Pantry Study”.
A rising economy can be forgiving of a lot of marketing laziness. But in an economy where, literally, anything goes, stick to the basics.
Posted by Mickey
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