"The question is whether [March retail sales] are a trend or a blip, and my guess is that this is more of a blip." — Ken Goldstein, economist for Conference Board
He is not alone. That seems to be the assessment from many economists despite the sudden strength of consumer spending across several categories. In addition to an upturn in the auto industry, consumers are eating out more, buying more apparel, and are less likely to wait for coupons or price promotions to buy cosmetics and toiletries than they were a few months ago.
Understanding A New Economy And Slow Recovery
However, not all data is so rosy. Consumer confidence remains at levels typically seen in the depth of recessions, reports Advertising Age. Even in a recovery, sentiment will likely lag behind. Bruce Kasman, JPMorgan Chase, suggests it is indicative of a shift in the U.S. economy from a debt and consumption economy to a savings and export economy, not all that dissimilar from what The Futures Company suggested last year in its Darwinian Gale white paper.
So what's the hold up on recovery? The Associated Press Economy Survey, released today, tells the story. Most of it is related to what many consider the pillars of the financial security — jobs and the housing market.
• Unemployment will remain high over the next two years, perhaps 8.4 in 2011.
• Home prices will remain flat, with no gain this year and only a 2.3 gain the next.
• The economy will grow 3 percent this year, which means a very slow recovery.
• The Federal Reserve will begin raising short-term interest rates in the fourth quarter.
What this means for marketers is settling in on a new but smaller base of consumers, those people who are employed but operating with a much more conservative approach to spending. More than likely, the uptick in some sectors indicates that this group is tired of waiting, waiting, and waiting for the economy to improve on its own.
It also means marketers need to get back to the basic tenets of marketing and rethink strategies that used to work in an optimistic growth economy. Michael Shepherd, owner of The Shepherd Group, will be one of those who can help. Like our firm, Shepherd believes a marketing message must be tied to a business strategy to succeed.
The New Rules Of Marketing Are Old Again
In some ways, this better explains why consumers pushed back against brands as social media became mainstream. It wasn't because brands needed to give up control over their marketing messages to consumers as much as consumers finally having the opportunity to tell companies that their marketing messages were out of sync with their business strategy (and some companies didn't even have sound business strategies).
Specifically, when marketing messages are aligned, things tend to work. Apple provides a great example, selling 300,000 iPads on its first day. The iPad is not a must-own product, but it represents something Americans haven't seen enough of lately — innovation, even if that innovation is a first step toward fully functioning tablets that may one day replace laptops (trust me on this, it all depends on what such technology can dock to and not what many critics keep crying about).
Selling the iPad was only the tip of the iceberg for Apple. Three hundred thousand iPads means a surge in application purchases, no matter what anyone thinks about the product. But this isn't an iPad post. It's just an example of what sound marketing does despite the economy, shift toward a more cautious consumer, and how marketing tied to business strategy syncs with social media.
It also represents a better tact for marketers than the new mood of government, one that opens: "Over the past year, the Recovery Board has received its share of gratuitous criticism from some journalists and Internet grouches." It then goes on to explain that it didn't waste $18 million on a site redesign. The site only cost $6.8 million to date.
This isn't about politics. It's about contrast. Apple accepted the criticism and still stayed true to its marketing message. Government has been leaning heavily on push back public relations, feeling secure in winning a shrinking percentage.
Successful marketers in the near future are best served if they understand the difference. Marketers can no longer rely on mass media alone to reach the optimistic spenders made up of the sons and daughters of the generation that survived the great depression. The new consumer is looking for innovation, authenticity, and value. Count on it.
