Despite the gloom and doom the media portrays about the economy, nobody knows where we are headed and how strong the economy is. The US economy is at a crossroads: It could continue on a path of low demand, turn right toward improvement, or turn left into a severe recession. We don’t know right now.
The media loves negative headlines, especially when it comes to the economy. The economy, in some aspects, continues to defy predictions. In some areas, consumers are still spending, while in others, they are trading down to more economical products, as demonstrated by the growth of private labels.
There are some things to be alarmed about:
1ne: Credit card debt is soaring, and younger demographics are falling behind even though 56% pay off their balances every month.
2wo: The average price of a new car has exceeded $48,000.
3hree: Too many brands have announced price increases despite reporting record profits.
4our: Wage growth has been largely offset by inflation.
5ive: Retailers are reporting that their private label sales are increasing.
On the flip side, consumers are booking many vacations, and some destinations and cruises are sold out for this year. In addition, more people are eating out as restaurant sales continue to increase, and in some areas of the country, new home sales are still robust.
What’s a marketer to do?
First, don’t overreact to news about the economy. Listen to your salespeople, buyers, and customers. Stop focus group research, leave the office, and visit retailers where your products are sold. Watch the way consumers make choices and how your products are displayed.
If a recession comes remember consumers in a recession can be divided into four groups:
The slam-on-the-brakes segment, which feels the hardest hit, reduces all types of spending.
Pained-but-patient consumers, who constitute the largest segment, also economize in each area, though less aggressively.
Comfortably well-off individuals consume at near-prerecession levels but become more selective (and less conspicuous) about their purchases.
Live-for-today consumers carry on as usual, responding to the recession mainly by extending their timetables for significant purchases. People may switch segments if their economic situations change for the worse.
Every business and industry is facing its own obstacles and challenges in this unknown—economic, social, and political—environment. That means your customers and potential customers are also trying to figure out how they will navigate what’s ahead. As an expert in your own corner of the world, you are uniquely positioned to help them plan for and get through the next 12 months (and beyond).
One of the worst things you can do is stop your efforts and go dark. People have short attention spans, and when we get to the other side (of whatever economic reality we end up with), you want your product or service to be included in people’s budgets. If you all but disappear and your competitor serves as a valuable resource and tells a better story, guess who will be listed as a line item and who won’t?
All this means is that your company/brand needs to be more flexible and implement new marketing initiatives quickly. Ditch the meetings that take too long and listen to what’s happening within your category.