First, the bad news which I’ve shared before here. With waning consumer confidence, house values below mortgage costs, and massive personal debt, don’t expect any significant uptick in consumer spending any time soon. Tight belts and thinner wallets are the new consumer reality. Get use to it. Oh, and in the face of tighter consumer spending coupled with increasing commodity costs, businesses will have to do more with less, too. So what’s the good news?
All is not gloom and doom. There are things you can do to reset your strategies and the design of your business to adjust to the new reality. Here are a few.
Rebalance Your Value Proposition– Your value proposition is your bundle of benefits (tangible and intangible) that you promise to provide to me if I buy your product. I weigh those benefits on my own mental scale against the negatives. In this economy, consumers have changed what they want in their benefit bundles and the criteria for assessing the negatives. You need to rebalance your value proposition for these new realities.
Stretch Your Marketing Dollars– I’ve written about this before. There is an inordinate amount of waste in merchandising and promotional spending. I don’t know why companies have put up with 30% of their in-store spend going to waste, but times won’t allow it any longer. You’re going to be pricing. You’ll need the marketing dollars to deal with the elasticity issues. And another consideration: you need to work harder to make the new emerging marketing tactics like social media and mobile work. It’s a lot cheaper than buying a 30 second spot during the Superbowl.
Breakthrough for Greater Efficiency– It’s going to take getting more output from less input. Sorry, but that’s the way it is. I just spoke with the president of a business this week that has to find a way to deal with $180 million in increased commodity costs this year. Pricing is part of the answer but he’s going to need more productivity… much more… and will likely be cutting marketing spending in the back half of the year anyway. It’s time to augment those continuous improvement efforts with some serious business redesign and breakthrough.
There are going to be plenty of tales and war stories to share when times get better and things pick up. I can imagine a lot of “remember when we had to do such and such just to get through those years?” What’s your story going to be? Time to make them happen. Let’s discuss it at the 2011 Shopper Insights in Action conference sponsored by IIR USA this July. See you there.