Posts Tagged ‘recession’
Sustainable opportunity in a ‘culture of thrift’
A “culture of thrift” may be taking hold in the US. That scares the many businesses that depend on Americans resuming their profligate ways. But if you’re a business leading the way in sustainability, this consumer shift could be just the opportunity you’ve been waiting for.
A Pew Research Center survey in April found Americans of all stripes are reconsidering the luxuries and necessities in their lives. For instance, fewer of us consider microwave ovens, TVs, air conditioners and clothes dryers necessities. In addition, 80 percent of adults have made moves to economize one way or another in this recession, such as shopping at discount stores, eschewing name brands for cheaper alternatives and opting for lower-cost cell phone and cable/satellite TV plans.
Not surprisingly, those respondents hit hardest by the recession, such as losing their jobs or their retirement savings, are more apt to have taken cost-saving steps than those less affected. Even so, Pew Research says:
(T)his distinction doesn’t apply to changing perceptions about what’s a luxury and what’s a necessity. These shifts have occurred across-the-board, among adults in all income groups and economic circumstances — perhaps suggesting that consumer reaction to the recession is being driven by specific personal economic hardships as well as by a more pervasive new creed of thrift that has taken hold both among those who’ve been personally affected and those who haven’t.
Pew doesn’t speculate on whether this new consumer ethic is a long-term shift. The New York Times, however, says we shouldn’t be looking for Americans to return to spending like drunken sailors anytime soon. “The economic downturn is forcing a return to a culture of thrift that many economists say could last well beyond the inevitable recovery,” the paper reports.
Where the New York Times cites the pain this could cause businesses reliant on consumer spending, TIME magazine finds a silver lining for individual Americans:
A consumer culture invites us to want more than we can ever have; a culture of thrift invites us to be grateful for whatever we can get. So we pass the time by tending our gardens and patching our safety nets and debating whether, years from now, this season will be remembered for what we lost, or all that we found.
And what many people are finding in this painful recession is what’s really important in thelr lives: time, family, friends, community, learning, the security of living within their means, doing meaningful work. For businesses down the road to sustainability, this is your silver lining: You’re already where many of your customers are coming to and where they will expect businesses to be in the future.
Marketing consultant Avi Dan, addressing marketing strategists in Ad Age, says the period we are in now “represents a complete social and economic reset.” He writes:
As consumers learn to live within their means and frugality replaces an abundantly wasteful consumerism, sustainability will become an essential benefit to your customers. Customers will uncompromisingly penalize products and brands that are perceived as wasteful of scarce resources and harmful to the environment, from SUVs to bottled water.
Many, perhaps most, businesses are frightened by this prospect because they have so much catching up to do. Avi Dan is speaking to them when he says, “Marketers will risk being left behind if they don’t rethink everything.”
If you’re among those firms that got serious about sustainability some time ago, you’ve not only rethought — you’ve acted. So smile. The times are now on your side.
Tags: Ad Age, culture of thrift, luxuries vs. necessities, Marketing, Pew Research, recession, Sustainability
Posted in Business & Economics, Communications, Consumerism, Current Affairs, Marketing, Sustainability | No Comments »
Marketers look over their shoulders as recession hits
So we’re officially in a recession. That explains those paranoid marketers looking nervously over their shoulders. They know what’s coming.
Most businesses treat marketing as a discretionary expense, making it an easy target for budget cutters. It’s as if marketing is a luxury afforded only when times are flush. Less customer demand, less we can afford marketing, or so conventional thinking goes.
But really, can we ever afford not to market?
It’s natural to want to preserve cash during a downturn. I was an employer for nearly 14 years, so I’m sympathetic. But the tendency is to make deep cuts in marketing when sales head south. Companies often start by reducing or eliminating outside expenses, such as advertising, events, sponsorships, research. And when that’s not enough, they lay off marketing employees, sometimes the entire department.
The net effect of gutting marketing is to stifle generation of customer awareness, demand and retention just when these things are needed most. It’s a penny-wise, pound-foolish decision.
Management guru Peter Drucker contended, “There is only one valid definition of business purpose: to create a customer…Because its purpose is to create a customer, the business enterprise has two-and only these two-basic functions: marketing and innovation.”
Drucker believed “true marketing” starts with customers, including their demographics, realities, needs, values. “It does not ask, What do we want to sell,” Drucker writes. “It asks, What does the customer want to buy? It does not say, This is what our product or service does. It says, These are the satisfactions the customer looks for, values, and needs.”
Notice, he doesn’t equate marketing with branding, advertising and promotion, as it has come to be broadly perceived and practiced today. Above all else, the marketing function is about engaging, understanding and pleasing our customers. It involves deep listening to customer needs and then helping the business respond with innovative products and solutions that satisfy those needs better than the competition. A recession might curtail how much you spend on marketing, but the function remains essential under all economic conditions.
If you’re contemplating cuts to your marketing program, ask yourself this: Do I truly understand my customers, their needs, their values? And is my company converting that understanding into innovative products and services that my customers value over other choices in the marketplace?
If the answer is no on both accounts, then it’s time to restructure and refocus your marketing efforts so they perform their function. Sure, you may need to trim spending here and there in marketing. Taking an ax to it, however, is your worst move. You’ll only sever connections with customers when you can least afford to lose touch.
If you answer yes to the questions, pat yourself on the back. Your marketing is doing its job. So why mess with what’s working? Find ways to preserve the people and the processes you use to market. They are more valuable than ever as the recession tightens its grip and each customer becomes more precious.
Devotion to sustainability as a company doesn’t exempt you from the fundamental need to market in bad times as well as good. In fact, there’s never been a better time to distinguish your company from the competition and prove your relevance to customers. You’re part of the solution to what ails us. Time to let the world know!
Tags: advertising, layoffs, Marketing, Peter Drucker, recession, Sustainability
Posted in Business & Economics, Current Affairs, Marketing, Sustainability | No Comments »
Financial crisis tests sustainability commitment
I remember July 2001 well. It was the month someone pressed the dimmer switch on the high tech marketing business I co-owned. For the first six months of the year, our business soared. It was the best financial stretch in our eight years as a firm.
In July, it was as if the previous half year became an instant, distant memory. We’d become a victim of the tech implosion that followed the dotcom bubble burst. Virtually all of our clients slashed their marketing budgets in unison when it became apparent their revenues were falling far short of annual targets.
The summer outlook turned bleak. And then came 9/11. Suddenly any hope for a soft landing for the economy and our firm vanished. The next two and half years became little more than an exercise in survival. But eventually we got through it. And happily, by 2006 we had nearly grown back to our pre-recession peak.
I left my firm and high tech two years ago to work with companies on the sustainability path. Even so, memories of 2001 and after are still fresh. As bad as things became then, this moment is even more worrisome. Are we in for the Big One: the Category 5 hurricane, the 9.0 earthquake?
My rational voice reminds me my worst fears never materialize. They didn’t a half dozen years ago. My insecure voice replies, “Yes, but maybe this time they will.” And so it goes, back and forth.
You may have a method for keeping fears and insecurities at bay. Mine is to move outside myself, to become more aware of the needs of others. I have the good fortune of health, home, family, friends and financial savings. As this recession tightens its grip, more Americans are losing their jobs, homes and nest eggs. And it appears things will get worse before they get better.
A turn of events like this tests our commitments to sustainability. Are sustainability values only to be embraced during economic prosperity? The answer is obvious. There’s no escape clause from sustainable business practices when recessions hit. It’s true we may have less money to invest in environmental initiatives, employee benefits or community programs. But we can still make a difference through our time, ideas and creativity.
I’ve seen enough from the unrestrained capitalism of the last 25 years to conclude this: Humans acting in their own self-interest in free market economies do not produce a massive trickle-down flow of goodwill to those less fortunate. Nor do they automatically protect and preserve our natural resources. If they did, we’d have no need for a sustainability movement.
A recession teaches us the invisible hand of the market isn’t a helping hand. It’s incapable of caring about anyone or anything. A commitment to sustainability asks us to do the caring. Now would be a good time to renew our vows.
Tags: dotcom bubble, invisible hand, recession, sustainability commitment, sustainable business practices
Posted in Business & Economics, Current Affairs, Sustainability | No Comments »
Recession or no, climate change can’t be put on hold
Here’s a silver lining in the existing or pending US recession: Chances are consumption and production will slow, meaning less fossil fuel expended and fewer greenhouse gases emitted. Feel better? I didn’t think so. None of us wants to see the inevitable wrenching loss of jobs, income and personal security that comes during a major economic slowdown.
The attention of government and business leaders, as well as the public, is increasingly fixed on the economy. And while that’s understandable, every other public concern will likely take a back seat to the economy. Including climate change. America, the largest source of CO2 emissions in the world, will be telling the world that we can only afford to focus on climate change as long as our economy is growing (and spewing growing amounts of CO2).
The effects of a recession are painfully real. I started my career in the early 1980s when Oregon was in the midst of a miserable recession — depression, really. I was fortunate to find a job. Some of my friends, meanwhile, lost their homes. Earlier this decade, I felt the tech implosion in a very personal way. The marketing business I co-founded lost half of our revenue in just a couple months in 2001. Within a year we had laid off nearly half our staff. It doesn’t get much worse than that as an employer.
For those of us who believe global warming is real and human-caused, this recession — if that’s what we’re in — poses a vexing question: Can we or how do we keep the very real concerns of recession from overwhelming the equally real threats of climate change?
We may be entering a very nasty period of job and income loss for millions of Americans — and perhaps for many others around the globe dependent upon our economy. A recession is one of those clear and present dangers experienced at the personal level. It’s difficult to think about much else when you’re faced with the prospect of losing your livelihood or your home.
And yet, climate change is no less urgent of a matter than the health of the US economy. The UN Human Development Report 2007/2008 calls climate change “the greatest challenge humankind has ever faced.” Its authors warn:
(Climate change) is still a preventable crisis — but only just. The world has less than a decade to change course. No issue merits more urgent attention — or more immediate action.
Try telling that to someone who’s lost his or her job or home. Or to the political candidate who can’t get the words “It’s the economy, stupid” out of his or her head. To them, global warming is a faraway worry. Unfortunately, it’s not. When we get through this recession — and we will, as history shows — the issue of climate change will still be with us. Every year our political leaders back burner the issue draws us that much closer to irreversible harm. As the UN report makes clear, “The world’s poor will suffer the earliest and most damaging impacts.” They have no political voice in America. And neither do future generations.
If the world is going to avoid the worst of global warming, America and Americans must be completely engaged and leading the way. We’re about to find out whether we’re up to the challenge.
Tags: Climate Change, consumption, fossil fuel, global warming, greenhouse gases, recession, UN Human Development Report
Posted in Business & Economics, Climate Change, Politics | No Comments »