Richard Meyer

  Economists fear that the recovery will leave more people behind than in past recessions.

  Large companies are increasingly owned by institutional investors who crave swift profits, a feat often achieved by cutting payroll.

  Consumers remain reluctant to open their wallets with unemployment stubbornly high and home prices falling.

  The consumer-confidence index fell to 46.0 in February, from 56.5 a month earlier, its lowest point in 10 months.

  In terms of consumer spending, it's not really a strong recovery," said Brian Bethune, an IHS Global Insight economist, adding, "We continue to set ourselves up for disappointment."

1.  The economic outlook will improve slightly but the consumer economy will remain weak.

2.  Rebuilding brand and company reputations is going to be a critical component to new business models.

3.  Brands need to change the mind shift from “market share” to “profitable market share”. (Smaller markets that are more profitable).

4.  Pricing will put more pressure on brands to clearly communicate their value to frugal consumers.

  Six in 10 Americans (62%) now say they more enjoy saving than spending.

  Nearly six in 10 Americans (57%) now say they are spending less money in recent months than they used to, up from 50% last July and 53% last April.

  Thirty-eight percent of all Americans say this reduced spending will be their new, normal spending pattern.

  Almost half (45%) say they are brown bagging lunch instead of purchasing it.

  Two in five (39%) are going to the hairdresser/barber/stylist less often and 8% have considered doing so.

  One-third of Americans (34%) have switched to refillable water bottles instead of purchasing bottles of water while 10% have considered doing so.

  The media is also taking a hit as 33% of U.S. adults have cancelled one of more magazine subscriptions, one in five (19%) have cancelled a newspaper subscription and 22% have cancelled or cut back on cable television service with an additional one in five (20%) having considered doing so.

Results of The Harris Poll of 2,576 adults surveyed online between January 18 and 25, 2010 by Harris Interactive

  Consumers can instantly find a profusion of brands or products to meet their needs but would just as quickly abandon any choices that somehow fell short.

  The recession has increased and spotlighted this behavior leading to a challenge for traditional branding elements. Starbucks  found  regular  

customers,  fatigued  by  $4  coffees,  began  defecting  to  cheaper,  good-­‐enough  competitors  like  Dunkin’  

Donuts.  

  Essential to the "go forward" economic outlook is whether consumer spending will return to pre-recession levels or reflect a "new normal" spending pattern.

  The significant shift to saving in American preferences, as opposed to spending, suggests an important change in consumer psychology.

  More than half of the nation's consumers across socioeconomic groups say they are continuing to spend less, despite the claims of many economic observers that things are getting better and recovery is underway.

  Two-thirds of consumers who are spending less -- and 38% of all Americans -- say their current reduced level of spending is their new, normal spending pattern. And significant percentages of Americans across all major demographic groups say this is their new normal.

Increasingly even affluent consumers are economizing;

  Research among more affluent consumers has revealed mounting dissatisfaction with excessive consumption.

  Many desire a more wholesome and less wasteful life.

  They’re recycling more, buying used goods, and imbuing their children with traditional values—behaviors that dovetail with the growing demand for simplicity and a solid, though currently slowing, interest in green consumerism.

Recent research from Nielsen on top CPG trends for 2010;

 Consumers are seeking value for the dollar and brand differentiation.

 Consumer constraint will become the “new normal”

 Consumers will also focus on value, with widespread discounting forcing brands to differentiate themselves beyond simple low price.

  While the new normal means the economy will have a financially firmer consumer base to build on going forward, it also suggests American business will need to make some significant adjustments.

  That is, businesses will have to join their consumer counterparts in adopting a new normal -- not only in terms of spending, borrowing, investing, and fortifying their balance sheets, but also in terms of product design, strategic positioning, and customer/employee engagement, as well as organic and acquisition growth.

1.  Reduce costs by focusing on operational efficiency.

2.  Use real-time data to spot new opportunities.

3.  Translate corporate objectives into aligned actions by employees.

4.  Reward top performers

5.  Ensure core values have meaning

6.  Employee ambitious, flexible and adventurous managers in key positions throughout the organization.

7.  Measure, optimize and improve all business metrics continually.

  Companies that attend to improving operational efficiencies fare better than those that focus on reducing the number of employees.   Employees feel management is

committed to them and they are more creative in reducing costs.

  They don’t spend their time worrying about job security.

  As companies try to rehire, costs tend to increase and quality suffers.

  Executives and employees start approaching every decision through a loss-minimizing lens.

  The organization tries to do more with less which results in lower customer satisfaction and thus loss in customers.

  Cost-cutting becomes centralized with finance cutting costs across the board without regard to initiatives that may spur growth.

  Pessimism permeates the organization and employees feel disempowered.

  Many companies continue to miss market shifts that rivals exploit.

  To indentify gaps in the market you need real-time data and a process to distribute it through the organization.

  Supplement with feedback from employees who are in contact with consumers/customers.

  One of the best sources of real-time data is social media but too many companies are using social media as a push channel and not listening to what consumers are saying.

  Ensure that every executive within the organization understands the corporate objectives.

  Ask how executives are translating corporate objectives to the rank and file ?

  How are you going to measure each departments alignment with corporate objectives ?

  A passionate employee is worth 3 mediocre employees.

  Reward calculated risk.

  Learn what incentives work best for your employees.

  Get rid of people who are always saying the “sky is falling”.

  Get feedback on your key managers, ensure they are in the right positions.

  Rather than print posters listing company values and them put them up in conference rooms and the lobby executives should breathe life into the corporate values by hiring and promoting individuals who demonstrate adherence to those values.

  One big inning does not mean that you are going to win the game. The business environment is changing too rapidly.

  Your competitors are always going to be in your review mirror. You need to keep one step ahead of them.

  Technology can help you become more responsive but don’t discount the “human connection” of determining what data means and making the right assumptions to leverage business objectives.

Hard Realities

  Companies waiting for a return to normality following the recession may be disappointed. Their customers have tried cheaper products—and actually like them.

  85% of market leaders get dislodged during a recession.

  Buzz means nothing today, engagement means everything.

Progressive  companies  stay  closely  connected  to  customer  needs  and  use  customer  needs  as  

a  filter  to  make  investment  decisions.  

Things executives can do to achieve self-awareness and personal mastery in leadership;

  Monitor your performance. Note areas in which you excel and need improvement.

  Realize that failures and mistakes are just one step on the road to success.

  Recognize that being aware of the impact that your behavior has on other people is a critical leadership skill.

  Remember that when criticism is difficult to accept, there is probably some truth to it.

  And, finally, learn to give yourself and others credit for improving.

  The economy has changed consumer behavior.   Even consumers with good jobs are stressed about the future and

one way to eliminate that stress is to save more and spend less.

  The elements of branding and marketing have also changed.

  Operational efficiency coupled with cautious cost cutting can improve business metrics but a careful balance must be weighed.

  Executives need to examine their leadership principles and guide employees with actionable priorities.

  Reward passionate employees who are willing to take risks to benefit your customers.

  Real-time data is invaluable to your company find a way to listen to the market, competitors and consumers.

  Measure, optimize and improve all business processes.

  Richard Meyer   My CV http://www.richardameyer.com   My marketing BLOG http://www.richsblog.com   MY DTC BLOG http://www.worldofdtcmarketing.com

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