As we all know, Wall Street got drunk…and most Americans have a hangover. The intervention process is taking a little longer than expected. When asked, “When do you see it starting to turn around?” we answer it two ways.
In the fall of 2008 we stated “We’re in the sixth inning…but it looks like it could be a 20-inning contest”.
Let’s jump to spring 2009. The new administration has a stimulus package out there. The key will be mortgage relief, a private-public program for buying up toxic assets, plus (I know you don’t want to hear this) a huge capital injection into our banking system that will lower interest rates and hopefully get credit moving again. These are some of the experimentation that we did in 1932 to get us moving again.
All this is being done with the hope that we will not have to nationalize the banks. Can we heal these banks without nationalization? That is the $64,000 question that will be answered shortly.
In the 1930s, it took some time, but the USA turned it around. Other countries, like Argentina, which were in the same economic depression buried their heads in the sand, became isolationists, closed their borders and still haven’t recovered 75 years later, while the United States has been the “Shining city on the hill.”
If we can keep unemployment below 10%, and get consumer confidence moving upward for at least three months, this will give the new administration a boost in the economy that will get us on the road to recovery. Whoever is clairvoyant, please step forward and lead us out of the darkness.
One thing is for sure: our clients need to do business in all seasons, even when the consumer has his foot on the brake. WE need to show them how to take a bigger piece of a smaller pie. It’s about market share today, and I believe if you’re not out there with an Extreme Value message today, you’re whistling down a well!
Case in point: Joseph A. Banks, November 2008 – “Buy one suit – Get two free”; December – “Buy one suit-get one free” (I guess business got better) March 2009 – “Buy our $119.00 suit, if you lose your job, you don’t have to pay for it”. Someone at that company has been listening to the voice of the consumer! There are many other examples: Ruth’s Chris – “3 course meal with wine for $89.” Hyundai – “Lose your job…We’ll take it back”. GM & Ford now following suit. In fact, GM is rolling out the rally caps to present a Buy Now approach, and using baseball as the metaphor for buying an American car. Sears has a great concept: Kid Advantage. They’ll replace clothing that wears out before the child outgrows it. Many companies are bringing back layaways. (Is there a message here? Loud and clear…Extreme Value!)
We’ve been telling our retail clients that you have to make an offer today that makes you feel a little uncomfortable, and then you know you just might have it right. There’s always the vulnerability to the next innovator who catches on with the public … But why can’t you be that innovator?
Today, besides finding ways to reduce your cost of doing business, you still have to provide “extreme service” along with the value message. I often show a simple jewelry ad that states, “Retail price $859…On your wrist for $189…In your pocket $670” You don’t have to think about it…you get it. Extreme value is a must today and it does have to be price sensitive. Sears’ Kid Advantage message is all value.
Others will state that branding and imaging can reduce price sensitivity and creates an enduring sense of brand differentiation. If you are Proctor & Gamble, it might work, but we all know in today’s marketplace it’s a hard sell. Be persuasive with your extreme values message and follow our six retail disciplines. They are more important than ever. Remember, this isn’t rocket science, it’s getting people to buy stuff.
So when your retailer wants to do branding imaging marketing, just tell him, “In today’s economy, branding only works on cattle!”
During these turbulent times one thing has remained very consistent, and that is that families still spend over 8 hours daily watching television. They turn to it every day to be informed, to be educated, and of course, to be entertained. The late Norman Mailer once said, “Television is for the mindless region of the proletariat.” Not today, Norman. Television is where the middle class now spends more time … than with every other media combined!
We have the most powerful medium ever invented. We shouldn’t even have to sell it…just explain it properly. Look at all the successful companies who have built their brand equity with television. It is no longer a question of Why Television…or Why more television, but how do you harness its awesome power and make it work on a local level.
And remember the Noah theory…Our job is not predicting rain…its building arks. The more arks you build, the more successful your clients will be, not only in the short term, but in the longer road back to profitable sales and market share.
Gerry Summers is President of ESA & Company, an independent association of retail and advertising strategists based in Red Bank, New Jersey. His retail intelligence and passion have been shared with thousands of local businesses across the US over the past quarter century.