Archive: November 2009

Black Friday effect: Weekend sees rise in shoppers
More shoppers hit stores, but spend less each
Shoppers fill streets if not their bags
Shopping’s up, spending’s down

This is a sampling of headlines from reports on Black Friday consumer shopping activity (USA Today, NYT, WSJ and Washington Post). Just from the headlines, you get the idea. As anticipated, there were lots of people out shopping over the weekend - NRF estimates 195 million people shopped in stores or online during the four day weekend up from 172 million last year.

But, they were spending less than last year. Consumers spent an average of around $343 this year vs. $373 a year ago. Total spending was on par with last year at $41.2 billion.

What were they buying? Well at Walmart.com, one of the biggest sellers was the  Bissell Steam Mop Hard Floor Cleaner, indicating that this may well be the year of practical gifts. Consumer electronics, especially flat screen TVs, digital cameras, e-readers and game consoles were also big sellers.

If this news seems anti-climactic, take heart in the fact that the forecasting models predicted this behavior.  Expectations are set, and consumers are generally incredibly predictable. Short of money falling from the sky, we’re probably not going to have any surprises this holiday shopping season.

Makes one wonder if the notion of pent-up demand is a thing of the past, or if we’re going to see a post-holiday spending spree? President’s Day shopping forecasts anyone?   

Last week, Hyundai was named Marketer of the Year by the readers of AdAge.com. The primary reason for this award was their approach to selling cars during a recession; specifically their strategy of addressing the consumer fear of job loss, which was understandably suppressing consumer spending. We blogged about their approach here, comparing it to the Schooner Tuna approach adopted by the marketer of premium priced tuna in the movie Mr. Mom.

Turns out, the approach was worth more than a laugh over at Hyundai HQ.  In the article on AdAge.com (which unfortunately we can’t link to, but it is on their home page today), Hyundai shares some metrics showing the increase in sales and market share, at a time when other car manufacturers were struggling. So we say yay! Congratulations to Hyundai for developing a truly relevant offer - one that is based on a consumer insight, that was delivered in a way that caused prospect relevance and attention. 

This is a lesson in understanding your customers and prospects not only behaviorally but also attitudinally - the combination of both will inform approaches that cause transactions.  

French fries. Gnocchi. Kugel. Pierogi. Europeans love them some potato. But it wasn’t long ago when this Peruvian import was viewed as hog feed that caused leprosy in humans.

This all changed thanks to research and savvy marketing by the French scientist Antoine-Augustin Parmentier. It was the mid-18th century and Parmentier was serving as an army pharmacist in the Seven Years’ War. The Prussians captured the big thinker and forced him to eat potatoes. He survived (with all limbs and digits intact) and returned to France determined to promote the potato as a viable food source.

Parmentier conducted experiments that proved potatoes were nourishing and helped cure dysenteric patients. He was showered with praises and awards from the scientific community. The French Parliament even lifted the national ban on potato cultivation. Yet his countrymen couldn’t seem to shake the hog feed stigma and continued in their non-potato eating ways.

When support from the government and academia failed his efforts, Parmentier turned to marketing. He hosted dinners for dignitaries (including Benjamin Franklin) with potato dishes proudly served. He delivered beautiful bouquets of potato blossoms to the King and Queen. But perhaps his most ingenious tactic was placing guards around his potato patch with explicit instructions to accept all bribes and look the other way when people tried to steal the crop.

Parmentier understood the basic human condition and marketed against our weaknesses. He sought celebrity endorsements, influenced the influencers, and created a high perceived value among consumers. After the potato saved France from famine in 1785 and 1795, the hearty tuber officially made the jump from feared to revered.

So the next time you order steak frites, take a moment to thank Monsieur Parmentier.

[Source: Wikipedia]

The TEDxKC conference was held in Kansas City in August, sort of a mini-TED, featuring several speakers in one evening. John Gerzema, Chief Insights Officer at Young & Rubicam, gave a talk about the post-crisis consumer. He shared his thinking on four major cultural shifts driving new consumer behavior and importantly, how businesses are evolving to connect with the post-crisis consumer.

Two of the trends that seem particularly relevant for direct marketers are: 

1. Consumers are looking for value and values. In direct marketing, we excel at articulating the value of a product or service. We deploy proven techniques for closing the sale based on years of testing and research. Most of the techniques revolve around the notion of value, convincing prospects that they are going to get the most for their money if they buy product X from brand X. This concept is core to our business. And it has worked! Especially pre-financial crisis, when consumers were engaged in conspicuous consumption.

However, if Mr. Gerzema’s trend plays out, if it is true that post-crisis consumers are looking for value and values as they move from mindless to mindful consumption, then our direct marketing techniques will need to accommodate this shift. In addition to our urgent messages touting the best value, will we also include at the same volume a sustainability message? Indicate that brand X’s facilities are all LEED certified? That the products are Fair Trade? 

Mr. Gerzema presented some compelling data to show this trend is well underway; as consumers are saving more and buying less, they are becoming more discriminating with the purchases they make. They are aligning values with spending. As such, if your company has values to tout that align with the values your core prospects and customers are looking for, maybe you shouldn’t ignore them in your direct marketing. It is probably worth testing a value + values message vs. a stand-alone value message. 

2. Durability. According to Mr. Gerzama’s research, consumers are looking for durability in the goods they’re purchasing. For example, people are keeping their cars longer than ever before - 9.4 years on average as of March. You can imagine this plays out amongst many product categories. So, what’s a marketer to do? This is where a CRM strategy comes in to play. If marketers can no longer primarily count on acquisition, engagement & contact with existing customers will be critical. We will all need to commit to analyzing data to learn customer preferences, understand what else we might sell them that will maintain and enhance their primary purchase (new tires? a service plan?), and what we can offer them to earn their loyalty and their next big-ticket purchase (a car-care workshop?). In the not-too-distant past, many marketers considered a CRM program a nice-to-have, favoring acquisition marketing. If this durability trend plays out, it may finally force the tables to turn.