What Does Evan Bayh’s Announcement Tell Us That’s Relevant to Marketing?

As I’m sure you heard, on Presidents Day, February 15, two-term Senator and former governor Evan Bayh, D-Indiana, announced that he would not seek re-election to the Senate this fall.  This was a bombshell in Washington, D.C.  No one saw it coming, Democrat or Republican.  It is unlikely that Democrats can retain Bayh’s Senate seat, something true in North Dakota and Delaware as well.  Republicans are within spitting distance of incumbent Democratic Senators in half a dozen other states, which means that there is a chance that Republicans could win control of the Senate in the mid-term elections.

But the shock of Bayh’s decision and its impact on the balance of power in Washington is not the important part of this story.  In fact, the news is not so great for Republicans either.  The Tea Party movement is rocking the Republican mainstream.  Candidates surfacing from this movement are taking on Republican party standard-bearers in elections all over the country.

What’s going on is not a rejection of one party in favor of another.  Rather, it’s an upswelling rejection of politics in general.  People have had their fill of politics as usual and, in growing numbers, are saying no to the status quo.  Established ways of doing things are falling out of favor.  It’s bad news for politicians, perhaps, but it’s good news for marketers.

A Quick (and Long-Term) Fix for Flailing Media Companies

One quick thought about media.  Two related questions preoccupy media companies and media pundits these days.  What is the role of old media in a new media world?  What is the business model for making money from new media?

These two questions are an odd couple.  Both presume the ascendance of new media even though no one has yet to crack the code on how to make real money from new media.  Maybe there is still a place for old media.  Maybe new media won’t be quite so dominant if they can’t find the right revenue model.

But I’ve got a solution.  In today’s smaller economy – an economic situation that will persist for some time to come – consumers want deals.  They don’t just want deals.  They still want innovative, value-added products.  But in a smaller economy, it is simply a fact that consumers have less money to spend, so even with innovation, good deals are essential.

So that’s the answer for media – be the best place for consumers to find good deals.

What’s Behind P&G’s Strong Quarter

P&G announced strong quarterly results last week.  So did several other CPG businesses.  Notwithstanding all of the worries about the strength and resilience of consumer demand, many of the big CPG companies seem to be doing relatively well.

The question, of course, is why.  What are these companies doing that is working?  What do they know about consumers?  What can be learned from their successes about the recovery consumer value equation?

The answer is innovation.

What Health Care Spending Means for Consumer Goods

The impact of the Great Recession of 2008/2009 is different than it appears just looking at total spending.

From total spending alone, the conclusion might be that while the spike in consumer spending associated bubble will fall back, the new trend line will still be robust.  In other words, there was a bubble in binging, so the bust, when it finally settles out, will be nothing worse than a return to normal.

This is a misreading of the bubble.

As two recent analyses have shown, the boom in consumer spending during the 1990s and 2000s was not the result of binging on consumer goods.  Instead, it was due to skyrocketing health care costs, primarily in the form of insurance premiums.

(Mis-) Interpreting Recovery Consumer Behavior

What to make of consumer behavior these days?

One school of thought argues that behavior speaks for itself.  What consumers have done is the best predictor of what they will do.  Attitudes often misstate actions.  In-market tests can competently craft communications campaigns without attitudinal research.  Managing purchasing behavior is the purpose of marketing, so influencing attitudes is, if anything, nothing but a means to this end, and not always the best.

By this reckoning, consumer behavior is no more complicated than it looks.  If you want to know what to make of it, just look at it.

This is the sort of logic being used by much if not most of the news media in stories being written about the future of the consumer marketplace.  What’s observed is penny-pinching, so what’s ahead must be even more frugality.

These stories are off-base, as discussed in-depth in A Darwinian Gale.  But not only are these stories wrong, they are rooted in two major marketing fallacies.

Add Religion to Your Shopping List (…and Happy Holidays until Jan. 6 when I’ll be back – see you then, thanks)

As I was growing up, this was always the time of year when my mother would insist that my sisters and I stop for a moment and appreciate the true meaning of the season, which, in our Episcopalian househod, meant the story of the birth of Jesus.  This was true for all of my friends whatever their religious tradition or denomination.  The holiday season was a time to bow our heads not just spend our dough.  Our mothers made sure.

But there came a year in my church when the women’s group decided to put up a Chrismon Tree.  It was a wonderful idea.  They put up a huge tree in the front of our church and covered it with white lights and Chrismon decorations.  These many years later, a Chrismon still goes up every year.  It has become a tradition.

Funny thing, though, about that tradition.  It was begun in 1957 at Ascension Lutheran Church in Danville, VA, which is part of the Evangelical Lutheran Church of America, just one of many branches of Lutheranism worldwide.  And in our little Episcopal church in the Piedmont area of North Carolina, we added a bit of local spice to our Chrismon Tree with some original ornaments borrowed from the Moravians in nearby Winston-Salem.  As conservative as a church as it was, it was very cutting edge in its eclectic potpourri of religious influences.  I say cutting edge, but maybe not.  After all, this is precisely what religion in America looks like – nothing with too much of anything, just something with a little bit of everything.

How I Taught Myself What the Whiz Kids on Wall Street and the Crackerjacks in The City Did to My Nest Egg

Do you remember where you were on September 29, 2008?  That’s the day the U.S. House of Representatives voted down the TARP bill to bail out those too-big-to-fail U.S. financial institutions, which resulted in the Dow plunging 778 points.  We thought we were staring at the abyss that day.  But it turns out we were a couple weeks past the abyss.  As James B. Stewart revealed a year later in an adrenaline-racing story entitled “Eight Days” in the September 21, 2009 issue of The New Yorker, we actually skirted the edge of the abyss during the 48 hours of Wednesday and Thursday, September 17 and 18.

The Monday, September 15, bankruptcy of Lehman Brothers set off a chain of events that brought the global financial system to what then-Treasury Secretary Henry Paulson privately called at the time “the precipice.”  Only determined intervention by Paulson and Fed Chairman Ben Bernanke staved off utter collapse.  (Had they not, martial law was next.)  Out of that experience, they surfaced on Friday, September 19, with the original TARP plan.  Knowing what we know now, think back to the looks on their faces as they faced TV cameras that Friday.  As dramatic as the House vote on TARP turned out to be, for those in the know, it paled in comparison to the calamity averted two weeks before.

In September 2008, I knew very little about finance.  But after that month, I resolved to learn more because, apparently, this topic required my attention.  No one else seemed to be watching out for me.  I figured I’d better catch up quickly.  I did, and it turns out that I was amazingly ignorant about something that has affected me enormously.  I may still only know just enough to be dangerous, but dangerous is exactly how the outraged American public views itself these days.

Hepped on “hip”

Paste magazine just published an interactive timeline called “The Evolution of the Hipster 2000-2009.”  Paste magazine was launched in 2002.  It monitors the scene in hip new music and video, including a monthly sampler of new releases.  So looking back on the decade just passed is a retrospective on the pop culture that Paste has been covering all along.

But what exactly does the hipster of the 2000s represent?  Is this scene really the cutting edge of culture?  Or is something missing, something important, that is, from a marketing standpoint?

I’ll Trade Ya…

There is one thing, at least, that consumers are up to these days that speaks clearly to the question of whether frugality has become the overriding ambition in the markeplace – barter.  The day after Black Friday, The New York Times published an interesting piece about the barter clubs and swapping services that have become popular with increasing numbers of consumers.  Indeed, bartering for Christmas gifts is a staple of local news stories about holiday shopping this year.  More small businesses are doing it, too.

There is even a service called Bartercard - launched in Australia in 1991 during the global downturn of that era – that enables consumers to engage in bartering for all kinds of products and services, including high-end real estate.  It’s actually just a barter club, but it links people together internationally and it enables people to provide products or services without a direct trade at the time, thus building up barter credits on their card that can be used later with other Bartercard members.

The growing popularity of barter as a way of coping with the recession shows that consumers are still looking for ways to get what they want even though they have less money and less access to credit.  In other words, instead of accepting the limits of a smaller economy and settling for less, consumers are looking for ways around the limits of a smaller economy in order to continue to enjoy as much as always.  This is not a frugal mindset resigned to living with less.  This is an aspirational mindset undeterred and undaunted by the global economic downturn.  Consumers are fighting back against the recession to continue to realize their dreams and aspirations to better lifestyles.  Or to put it another way, optimism prevails.  As difficult as times are, consumers remain convinced that they can reinvent their consumption styles to satisfy their lifestyle ambitions.

In A Darwinian Gale, the changing relationship of consumers to the brands is discussed as the rise of “dis-ownership,” or the realization of brand benefits without purchasing.  Barter is chief among these forms of “dis-ownership,” but swapping, auctions, leasing and rentals, fractional ownership, sharing and “freecycling,” digitization in place of physical products, and just plain piracy are part of it, too.  More and more, this is what consumers are doing.  Mainstream marketers need to harness some of this activity on behalf of their brands and stores.

Bankrupt the Pirates

Is this the new world economy?

Reuters reported on Tuesday, December 1, that Somali pirates have established a stock exchange in Haradheere to raise capital to fund their piracy.  It seems to be quite an enterprise.  Financiers from near and far are investing.  Shares are traded just like on Wall Street, and 10 of the 72 so-called “maritime companies” currently listed have conducted “successful” (presumably meaning profitable) hijackings.  In other words, they’re generating returns for investors.  And growing returns, too, perhaps.  The Reuters correspondent was told by the wealthy pirate, Mohammed, showing him around that “ransoms have…increased in recent months from between $2-3 million to $4 million because of the increased number of shareholders and the risks.”

Maybe, though, the Somali stock exchange for piracy is the very thing that will put an end to Somali piracy.

Perhaps the stock exchange really represents the emergence of a piracy bubble not the legitimization of piracy.  And if Somali piracy is fueling a financial bubble, when that bubble bursts, as they all do, will it take Somali piracy down with it?

Well, the answer to that question depends upon first recognizing that Somali piracy is not lawless buccaneering.  It is a well-ordered business.