By the end of 2008 marketing and our economy had changed significantly. Let’s assess the changes going on 5 years removed from the “Great Recession”. Consumers are still repairing their balance sheets. What does that mean?
The typical middle class household was totally unprepared for the changes that came along in 2008. They thought they were doing OK. Their homes were appreciating and that allowed them to feel wealth was accumulating. Their 401K plans were appreciating. They had jobs and prospects for future advancement.
Almost 5 years removed from the “Great Recession” 25% of homeowners owe more on their homes than the homes are worth. Couples are approaching retirement age without the assets they thought they would have and are faced with tough choices because their largest asset is worth on average about 25% less than it was in 2008. Many of these same couples panicked when the market cratered and have only reluctantly and slowly put assets back into equities which means they likely have not recovered much of their lost 401K value. They may have had to raid their retirement funds to cover living expenses if they lost their job.
People that lost jobs were likely to take an extended period of time to find new jobs and the jobs found paid less and may have come without benefits. Raises have been small and tough to come by in the new economy.
I participated in a Linkedin discussion on how marketing has changed and I was amazed at the disconnect between the participants and myself. I pointed out that the information I listed above had changed consumer behavior and that was the driving factor in marketing. Not so I was told. It was a lack of understanding of social media. It was the drive by management for short term results instead of building long term brand equity.
I also participated in a trade show that linked retailers with sellers in a particular category. I got a few minutes with each buyer and put together a presentation showing how consumer behavior had changed. Then the presentation gave them ideas on how to overcome a reluctant consumer. My impression was the information I presented to them was wanted and not seen previously.
I have come to the conclusion that our economy has changed and the participants in that economy are still reluctantly adjusting to the changes. People that want to sell into the economy are trying to do business the same way with less than satisfactory results. Consumers purchasing in the economy have changed their purchasing patterns in profound ways not completely understood.
We have created a massive market for substitution. Store brands are preferred over name brands in many cases. SymphonyIRI has data showing that upwards of 80% of consumers now believe store brands to be the equivalent of name brands. Sporting events that depend on live participants have seen a 10-20% drop in attendance as fans have substituted TV viewing for actually being in the stands. Lower end restaurants are out performing higher end restaurants and all of them are running deep “buy this special for only this amount of money”.
There are strategies to adopt to market into this trend. If your market is smaller now than it was you can steal market share from competitors. Can you market a less expensive product than the product you were marketing before? Regardless, you’re probably feeling compelled to adapt and the strategies you employ will determine your ability to survive and even prosper in this environment.