J Walker Smith writes:
It’s dangerous to take the news of late at face value. While a Greek deal appears to be in place and the Council of Economic Advisors, headed by Alan Krueger, is opining that the US recovery is stronger and faster than expected, there is some way to go.
To put it bluntly, the developed West is in for a long slog. Slow growth is the new normal for Western developed economies.
The implications of this slow-growth West for brand marketers and business strategists are explored in our latest Future Perspective, Quickening the Pace. For most business leaders, it’s a new situation. They came of age during the ‘Great Moderation’, a period of relative stability, greater predictability and virtually uninterrupted growth. What marketers and strategists learned as they began their careers offers little guidance for the marketplace they face today.
The Great Recession has left the marketplace smaller and more polarized than ever. Consumer confidence has reset at a lower baseline and frustration and anger have boiled over into the street. Every corner of the world is on edge about the trade implications of weak, stagnant demand in the developed West.
There are still growth opportunities for smart companies. But only the smart companies will grow, for there is no longer a rising tide to lift all boats. Quickening the Pace reviews seven ways in which brands can revive their value propositions for economically challenged consumers. Three are worth special mention.
First, consumer reference points have changed from high to low. Aspiration now seems risky, even out of reach. Worse, the prospect of losing it all seems closer than ever. As a result, consumers no longer compare themselves to those with more; instead, they worry about winding up like those with less.
Surrounded by so many who have hit the bottom, consumers are worried that they might wind up there themselves. So rather than being attracted by those with more, consumers now live in fear over those with less. While this is different for brands, it is not impossible for brands able to take the risk out of buying.
Second, debt has become a more important marker of financial well-being than income. It is a better targeting criterion. It is a more predictive of spending. It is more strongly correlated with confidence. The overhang of debt is keeping consumer spending in check, so contrary to conventional wisdom, growth opportunities are to be found by analyzing what people owe, not what they earn.
Finally, lifestage assumptions are being turned on their head. The traditional focus of marketers on young people and their lifestage transitions has been undercut. A suffocating job market has kept younger consumers from even getting started.
But the same economy that has made young people less attractive to marketers has made older consumers more attractive. Battered by economic losses, many older consumers have changed their retirement plans and are planning now to work longer, which will extend their peak consumption years. Marketers will have to change, too.
The brands which lrearn these new rules – and adapt to them – could have breakout success. Not every ship is grounded by an ebbing tide. Some brands will find the enduring pockets of dynamic spending potential. There is less spending to go around, and not all brands will succeed. The battle for share will go to the savviest, those best able to take advantage of the principles for success in a slow-growth West discussed in Quickening the Pace.
The image at the top of the post is from 123RF.com, and is used with thanks. Quickening the pace, and another economics report, The future of the eurozone, also published this week, can be downloaded from our website.