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Recessionary State of Mind

Forrest Gump

“Recession is as recession does,”

This was the reported response (according to About.com:Retail Industry) from the fictitious Forrest Gump Worldwide Management Consortium to an October 2008 AlixPartners survey of consumers on the prospects of a recession:

  • 86% believed the U.S. was in a recession or depression.
  • 64% said they would spend less in retail stores to prepare for the hard economic times
  • 46% predicted hard times would last three years.

The point of the article is that consumer response to recessionary news determines the level of recession at retail. More important, the response by retailers determines how well they do. The article cites cases during previous recessions where companies and brands such as Chrysler, Ivory Soap, Kellogg’s, Pizza Hut, and Taco Bell successfully introduced new strategies that brought them greater market share both during and post recession. Time and again history has shown that retailers that respond with aggressive marketing of innovative strategies come through and out of troubled times better than those who do not.

Beginning of the End?

Response to the current recession is already beginning to show winners and losers. Click here to read the About.com article, and be sure to take note of the response by Toyota to claim a self and consumer proclaimed position as the “official car of the 2009 recession”, claiming market share even while car sales drastically declined. Toyota is selling fewer cars while also gaining a higher percent of the market. Take special note that their strategy is to market aggressively but to focus on cost-savings to maintain margin rather than eroding long-term value by raising prices higher in order to introduce even greater discounts, rebates, and deals than the other car makers.

Chances are that you have already heard you should market more aggressively and find a strategy for innovation during these times.

What should your marketing message be? First take time to understand the marketplace:

Why Luxury Consumers Became FrugalA Reuters interview with Pamela Danziger of Unity Marketing reveals that many high income and net worth consumers are now living off of their income rather than growth of their investments and home values. This doesn’t mean however that they have stopped spending – just that they are spending wisely on what they perceive they need.  They will of course take a deal on what they know they will purchase, but the savvy marketer will work harder to develop the need and position their products and services as a smart investment rather than jumping ahead and destroying their brand by breaking price before they establish the relationship of trust and lasting value of the products they sell.

Is it a Deal if You Don’t Need It? – To protect the image of a non-discount brand you must avoid the temptation to advertise prices and deals on stuff that most of your consumers don’t believe they need. Home Channel News reported on research by the Freedonia Group that confirms a continued increase demand for landscaping products needed to support the consumer refocus discretionary spending on the home and home gardening in particular as well as backyard living. So I ask, if demand in our direction is increasing why would you focus on deals instead of building on the value and helping consumers understand that you understand them?

Customer Service ComebackIconowatch from Iconoculture posted about the customer service comeback they are seeing. Fatigue over frugality may be taking a toll. Saving money the frugal way can be taxing. It takes more time to do the research to be a savvy DIYS – Do It Yourself Shopper.  Nowhere has research shown that people have more time to invest in making wise purchase decisions. We are all still as time-crunched as before and at the same time we feel an increased need to be savvy shoppers. Are consumers coming first to the stores they trust to do the research in the market and stock the products they know them well enough to know they’ll want to buy? This isn’t new, revolutionary, or even innovative to most independent garden centers although we can strive to do it better, but more importantly we need to make sure that our consumers know we understand and are here to help them be successful garden shoppers as well as successful gardeners.

The annual Spring Surge is over. It is time to focus on being a Meaningful Marketer, and that means developing a meaningful marketing message, and a communication strategy to get it into the marketplace. That is what Marketplace Advantage is all about.

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