Affluent Consumers in the New Economy

The economic turmoil that reached crisis level in the fall of 2008 has been a bull in the china shop of American consumer behavior, even for a market as fundamental as food. Food spending, fueled by price increases but dampened by consumer cutbacks, took on a volatility that matched the chaotic economic trajectories of American consumers. Even within the affluent cohort of upscale-to-affluent U.S. adults ($75K+ individuals; $100K+ households), as of first quarter 2009, nearly a fifth described themselves as significantly worse off than they were a year ago, and nearly a fourth described themselves as somewhat worse off. Focusing on this upscale-to-affluent U.S. cohort, Affluent Consumers in the New Economy: Food and Food Service study examines how responses to economic turmoil are affecting consumer demand for food products and chain restaurant services. Notably, for example, affluent consumers who have taken a financial hit are more likely to shop for organic and natural foods, and are more sensitized to ethical consumerism issues. In addition, affluent consumers whose financial situation has recently worsened or improved show higher levels of health and nutrition consciousness, as well as a keener taste for food adventure. In an era of widespread economic turmoil, such psychographic responses to financial setback and financial recovery will shape and transform consumer spending on food. The effects of economic turmoil are being seen not only in which types of food products consumers are buying, but in which retail channels and chains they are flocking to. Although affluent consumers remain less likely than the rest of the population to shop at Walmart supercenters, they are shifting to Walmart at above-average rates, making supercenters an ever-bigger part of the equation for marketers of affluent foods. At the same time, shopping patterns for Trader Joe’s and warehouse clubs show the heightened potential for adventurous but value-priced store brands among the affluent cohort. The effects of economic turmoil are also presenting broadly felt and widely reported challenges to the food service industry. Even within the current environment, however, specific segments of affluent consumers are more receptive to healthy fast food and more likely to find that fast food fits their current lifestyles. Therefore, the true task for restaurants is to match supply to demand, rather than to create or maintain it. Successful food service strategies must accommodate generationally and regionally inflected economic contexts, food landscapes, nutritional psychographics, and consumer lifestyles. Overall, consumers who have been set back or thrust forward financially are more likely to be thinking and rethinking about what they need, what they want, and how and where best to find it. For marketing and customer communications, more is now more.

A Look Back at the Trials and Tribulations of 2009 and the Future of Print Media in 2010

In 2009, the media bled as reporters from all four traditional parts of the industry found themselves jobless, while predictions of its imminent demise blared from headlines. According to Vocus Media Research Group, approximately 293 newspapers folded, with nearly 100 of those shuttering in the year’s first quarter alone. Meanwhile, eight magazines with a circulation of 1 million or more ceased publication, and 600 staff members were laid off from top tier publications. Including print and online, a startling number of magazines shuttered this year, totaling 1,126. Newspapers Back in the late 1990’s and continuing into the early part of the decade, Web sites and the Internet were considered a “fad” – a place where editors could post a story for early morning viewers. In their minds, nothing could replace the feeling of having an actual newspaper in your hands, and as a result the newspaper business was late to the party when it came to taking advantage of the Internet for news distribution. Ten years later, it is obvious that digital is the future. In 2009, the Seattle PostIntelligencer dropped its print edition entirely, while the storied Christian Science Monitor went primarily online. Advance Newspapers shuttered the Ann Arbor News and in its place launched AnnArbor.com. Meanwhile, the blogosphere swelled. Blogs offered more opinions and provided more water cooler discussions. Never mind that the skill of reporting quickly became a lost art. Once, three or four sources were required for a newspaper to go with a story, now just one source is enough for a blogger to put it on the Web site and spur a heated debate. In 2009, newspapers dropped like flies as corporate-owned community newspapers folded – many of them Journal Register Company-owned – while the Rocky Mountain News and Baltimore Examiner said their final goodbyes. Approximately 293 papers folded and 45 launched – nine of those being online or Web-first. Meanwhile, major newspapers, including the Wall Street Journal, USA Today, New York Times, Los Angeles Times, Washington Post, Chicago Tribune, and Houston Chronicle, had a combined number of approximately 421 layoffs and buyouts in the newsroom alone. Will the gutting continue? Papers can’t afford to. The major newspapers have cut as much as they can cut and they need to figure out what to do with what they have. As it is, many journalists are performing dual roles, splitting up the duties of a person who was laid off and adding extra duties to remaining staff. And while jobs on the print side will continue to be low in 2010, editorial job openings on the digital side may become more common. Looking ahead to 2010, we will probably see large papers continue to form content sharing partnerships like the Dallas Morning News and Fort Worth StarTelegram, which began sharing sports coverage at the onset of 2009, and the Tulsa World and The Oklahoman, which share selected stories and news content across both print and online mediums. The Washington Post and Baltimore Sun also formed a similar agreement in late 2008/early 2009 when they agreed to share suburban coverage. While combining resources cuts costs for an ailing industry, there is a breakdown in competition. Propublica, Chicago News Coop, Voice of San Diego, Voice of the OC, and the Seattle PostGlobe are just a few examples of the nonprofit, investigative journalism sector of online journalism gaining popularity. In December, the Illinois Statehouse News launched, and in early 2010, another nonprofit called Bay Area News Project is slated to debut. Paywalls will continue to dominate headlines and more newspapers will join that model, but while the controversy among analysts and industry heads continues to be split down the middle, it will not stick, at least not for general news outlets, because people are used to getting things for free. For instance, Newsday went behind a paywall in October and by November had seen a drop in unique users to 1.7 million from 2.2 million. Meanwhile, niche products utilizing paywalls may have a chance since their content is more audience-targeted. Magazines A decade ago, journalism was a profession where media professionals could make a living. Today, it’s an unstable environment where more than 600 reporters from the magazine industry alone can find themselves jobless in a matter of a year. Just between Newsweek and Bloomberg’s BusinessWeek, hundreds were laid off in 2009. Meanwhile, approximately 1,126 magazines folded and publishers took a hard look at the figures, eliminating magazines that just weren’t making the grade. Among those to go were Condé Nast’s Gourmet, Cookie, Elegant Bride, Modern Bride and Domino. One magazine tragically slated for closure was the illustrious Editor & Publisher, which ceased to be at the end of 2009. Only two weeks later, it was brought back from the abyss when California-based Duncan McIntosh Co. Inc. purchased the publication from Nielsen Business Media. As the economy recovers, it will be hard to believe the magazine industry will do the same. The current recession was like a naturally occurring brush fire. It got rid of dead wood. The green shoots we’ll see will be from online trade and association publications. Ad revenue bled while publishers selling titles became a common theme. The Washington Post Company recently announced that it would sell Budget Travel magazine, while Nielsen’s Business Media sold off Adweek, Backstage, Billboard, Brandweek, The Hollywood Reporter, and Mediaweek to e5 Global Media, a company formed by Pluribus Capital Management LLC and Guggenheim Partners. BusinessWeek became Bloomberg’s BusinessWeek as it underwent new ownership. Meanwhile, Playboy joined the chopping block but was saved from purchase when the deal between the magazine and Iconix Brand Group Inc. fell through. In the coming year, duplicate or competing consumer titles that cater to similar audiences will most likely fold, while online magazines will continue to launch but will not have the staying power to outlast the three-to-five-year magazine mortality rate. Many magazines will decrease their publication frequency and more will develop editions “reimagined” for digital distribution, such as electronic readers, which will continue to launch in 2010. But in this medium the magazine tablet will tank because the technology is not ready, but iPhone versions of magazines will do well. Magazines that struggled in 2009 will cease to be in 2010. While the online sector of magazines will continue to grow, it will not be sustainable because getting profitable advertising on these sites is not easy. Publishers will continue to try to grow readership. Only brands that figure out how to package themselves will thrive, becoming the new industry giants. There will be no in-between; all other publications will struggle to keep afloat. Meanwhile, printing on paper beyond 2010 will be a luxury many publishers cannot afford. However, for many magazine brands, printing will be totally unnecessary in order to provide in-demand content their readers want. The question will be whether that content is strong enough to now compete against brands that were “born” on the Web. What still belongs in print is long form journalism and tactile graphic experiences. Kindle didn’t kill book publishing; it made it smaller. Ereaders just provided an alternative. With more alternatives come more fractionalizing of audiences. Because these audiences are fractionalizing, it is becoming harder to reach ‘the masses.’ In a sense, this is actually good news for magazines because they are better at targeting ‘niches.’ As the media struggled to survive during a tumultuous year, business models were experimented with and new marketing endeavors were undertaken. In print, industry heads and analysts debated over the effectiveness of paywalls, while a slew of ereaders geared at books, newspapers and magazines were set to release in 2010. In the case of magazines, almost all the top publishers are launching an electronic tablet meant for reading their content – Time Inc., Hearst and Meredith included. In addition, some publishers have advertised phone applications for about $2.00 a piece. Each company needs to really brand themselves as a content company – then go back and realize the best medium through which to distribute their content to be successful. InStyle and Esquire magazine delved into “augmented reality” as a marketing gimmick. If you hold the magazine cover to your computer’s Web camera, the computer screen will read the bar code and launch a flashy video clip. Some magazines even have a bar code on advertisements that allows you to order it instantly just by taking a picture with your camera. Anything that takes their print product and brings an ‘immediacy’ factor to it has been very popular in 2009. However, other than receiving a lot of press, there’s no proof this has increased subscriptions or newsstand sales. In a drastic departure from the traditional newspaper business model, the Dallas Morning News announced in December that section editors would start reporting to the paper’s sales managers. In addition, newspapers continued to outsource staff, including copy editors, to cut costs. The nonprofit, online news source rose in popularity, based on the Voice of San Diego model, which was a pioneer when it launched back in 2005. Since then we have seen the rise of MinnPost, ProPublica, Investigative Voice and the Seattle PostGlobe, as well as the Texas Tribune, which launched in November and provides research and statistics for reporters and the general public interested in information from Texas. Slated to launch in coming months is the Bay Area News Project and the Voice of the OC, also nonprofit ventures that tout a focus on investigative journalism. These news organizations will continue to pop up, not replacing metro dailies, but supplementing the void left as those dailies cut staff and publication frequency.

A Look Back at the Trials and Tribulations of 2009 and the Future of the Media in 2010

In 2009, the media bled as reporters from all four traditional parts of the industry found themselves jobless, while predictions of its imminent demise blared from headlines. According to Vocus Media Research Group, in broadcast, radio stations are down from the previous year, and more than 10,000 jobs were lost. Print media’s downward spiral contributed to the television industry’s woes when the Tribune Company (parent of the Chicago Tribune) filed Chapter 11, affecting its 23 stations. In fact, bankruptcies were the hardest thing to hit the industry. In addition to the Tribune Company, both Pappas Telecasting and Michigan-based Young Broadcasting also filed, resulting in the closure of multiple stations. Sinclair Broadcasting, which owns 58 stations, said in July that it may not be far off from filing as well but so far has yet to do so. As newspapers diminish, look for more joint ventures between surviving papers and broadcast outlets and an increase in media integration. About 100 television stations were affected by the mass bankruptcies. The interesting thing we are noticing is that remaining stations – or their owners in most cases – are filing Chapter 11, which allows for reorganizations, so stations are continuing to broadcast through the bankruptcy while the parent organization gets back on its feet, meaning there is no obvious effect on what the viewers see. In the first and second quarters, stations around the country pooled resources and started sharing news footage. Initially, it started at smaller stations but eventually hit major markets. Some stations that formed these partnerships eventually dropped out while stations like WLSTV in Chicago publicly stated the content agreements were hurting news coverage. Meanwhile, stations cut costs by eliminating veteran newscasters from their payrolls and hiring green reporters for lower wages. Along with many smaller stations, metro stations such as D.C.’s WJLATV and Baltimore’s WMARTV cut their weekend morning news. While in other areas of the media the volume of staff has fallen significantly in recent years, television stations have been working with skeleton crews for the past decade as they compete against the Internet. Even when the economy was at its best, positions vacated years before were left unfilled, resulting in more work for fewer people. In record number, stations are trying to make some of their reporters’ one-man bands so they will not have to pay for a photographer. The result is sloppier broadcasts: The number of on-air mistakes has really risen over the years. Not to mention the morale of TV station employees has been on a steady decline. In 2010, television will continue toward an “every-man-for-himself” mentality as on-air talent, which once was valued for generating viewer loyalty, will be cut to make room for low-cost staff. Stations will also continue to work with diminished crews, as they have for the last 10 years. When the economy was good, stations filled up air time with local news. But as newscasts are cancelled to save money, stations are hard-pressed to fill that time with other content. Small stations and those without major network affiliations that have cancelled newscasts will probably fill the time slot with infomercials. Bigger market stations may fill the empty slots with syndicated programming such as talk shows and old sitcoms. There will continue to be a pooling of resources as bigger market stations continue to try to concentrate on local news in any way they can. To retain more viewers, local stations will gravitate to a less news-based format. In February, Chicago-based WBBMTV will debut a morning show that replaces its morning newscast, called “Monsters & Money in the Morning.” Meanwhile in Philadelphia, KYWTV premiered a new morning show called “Talk Philly,” which is a talk show featuring minimal news updates. The radio industry also felt the recession this year as revenues for radio stations dropped from the previous year, with estimates ranging from 15 to 20 percent. Meanwhile, 10,000 jobs were lost, the majority coming from the largest owner of radio stations in the country: Clear Channel. Citadel Broadcasting, which is the third largest radio group, filed for Chapter 11 in December. While many analysts believe there is an upturn on the horizon, it may also be an indication that radio needs to make changes in terms of how it brings in advertising revenue and how it distributes its programming. To keep costs low, stations have been forced to run nationally syndicated shows like Don Imus and Rush Limbaugh in favor of original programming. But syndication takes away one of the primary aspects of radio that allowed it to weather previous competitive storms, including television, cable and the music video era: localism. Like the other mediums, program directors, who used to be able to focus their energy on improving the on-air talent, have ventured into promotional efforts, branding and online. Technology has played a big part in these changes since people are not as dependent on traditional radio to get news, music and entertainment. This includes satellite radio, iPods/MP3 players, streamed audio, CD players and other audio. So while terrestrial radio is still the main way people listen, it is losing its stranglehold. In the coming year, more radio stations are likely to continue to stream on-air signals on their Web sites and provide links to previous material, making the industry well placed to move into the digital future. In addition, there will be more interplay between radio and portable music devices, such as the fusion of FM radio with the iPod Nano and Zune. There will also be an increase in applications, allowing users to tune into a specific radio station. Perhaps 2010 will merge old and new technologies with a combination of FM tuners on cell phones. Radio has always been known as a survivor. When television, and later, cable TV came about, radio’s demise was widely predicted. But radio adapted, became more specialized, and differentiated itself with a sense of localism. Now there is another challenge with satellite, iPods, Internet radio and other media devices attracting listeners. Radio is currently in a state of flux, and the question is whether it will decline like newspapers, or embrace the technology that could allow it to expand its reach and scope. As the media struggled to survive during a tumultuous year, business models were experimented with and new marketing endeavors were undertaken. Marketing and interactivity dominated the year as platforms like Twitter went from semi-obscurity to a tool heavily utilized by the media. Facebook, which has been widely used by the general public in past years, was embraced by the media. In some cases, a little-known newspaper or radio station may not even have an official Web site but will have a Facebook page or a reporter who can be followed on Twitter. Here’s to a brighter 2010 for the media.

Marketing Blunders You Can Avoid

Joel Sussman, President at Optimal Marketing Communications, says marketing blunders can cost a business thousands (if not millions) of dollars — or they can sometimes just be responsible for a minor setback; but one thing’s for sure about marketing blunders: most of them are preventable. Here are eleven of some of the most common marketing blunders that are committed: Marketing blunder #1: Using an untested advertising message or concept on an expensive print, broadcast, or pay-per-click campaign. Marketing blunder #2: Trying to sell your products and services to everyone and their brother, rather than directing your marketing message to a targeted audience. Marketing blunder #3: One of the most pervasive marketing blunders in the business world is being too passive. In ads, that translates into not having any ‘calls to action.’ In direct sales, that means not asking for the sale. If your sales letters, flyers, brochures, and ads are producing no results, the reason might be that they’re boring, poorly laid out, or offer the prospect no solid reason to take action. Some sales letters and ads don’t even tell the prospect specifically what they should do to respond to the offer: call, visit, log-in, or whatever. Marketing blunder #4: Another common marketing blunder is not staying competitive. If your competition is doing TV advertising or newspaper advertising or coupon distribution, then you might want to seriously consider whether those forms of marketing would benefit your business. Whether it would realistically fit into your budget is, of course, another question which must be carefully weighed…. Marketing blunder #5: A marketing error which is rampant throughout the business community is attempting to create an effective ad, brochure, or web site by yourself. Unless you’re an experienced copywriter and/or graphic designer, you’re setting yourself up for failure by attempting a DYI approach. The possibilities for committing a major marketing blunder are immense. In the vast majority of cases, you’ll save yourself disappointment, wasted money, and lost opportunities by hiring a competent marketing professional. Marketing blunder #6: An all-too-frequent marketing blunder that will condemn a small business to mediocrity or failure is not taking the time to develop what’s called a ‘unique selling proposition.’ If you don’t offer customers and prospects one or more distinctive reasons to choose your company over the competition, you can be sure they won’t feel compelled to try your products and services. Marketing blunders #7: One of the biggest marketing mistakes businesses of all sizes make is to focus their marketing message on what a magnificent company they are, how many awards they’ve won, and how much they’ve grown over the past few years. While that’s all well and good, and there’s certainly a place and time to brag a little bit — the reality of the situation is that customers are really only interested in one thing: “How is this product or service going to make my life better?” (What’s in it for ME?) The reason they’re considering your product or service is because they want you to solve a problem, make their life easier, improve their quality of living, make their lives more secure and safer, help bring more admiration or love into their experience, or increase their enjoyment of life. If you can help them imagine or visualize the benefits that may accompany the use of your product or service, then your powers of persuasion will have multiplied exponentially. As sales and advertising pioneer Elmer Wheeler once said, “Sell the sizzle, NOT the steak”. In other words, help your prospects imagine the enjoyment they’ll experience or the benefits of your product or service that they’ll receive, rather than just telling them about the dimensions, weight, color, size, functions, or other features. Marketing blunders #8: The ‘dot com bust’ of several years ago seems like ancient history, but those who forget the lessons of history are doomed to repeat it. One of the great marketing blunders of our generation, as illustrated by the series of dot-com failures at the turn of the millennium, was the practice of spending obscene amounts of money on advertising and unrestrained growth, despite that fact that it violated the principles of traditional business wisdom. Slow, steady, gradual growth is a strategy that has lifted many a small business to the top of the heap. Marketing blunders #9: Ignoring the ‘out of sight, out of mind’ principle can be a fatal marketing blunder for small businesses. Being visible can mean anything from making sure that your web site can be found on the search engines (through SEO) to emailing a well written press release to the appropriate media to help keep your business name before the public. Marketing blunders #10: Since loyal, repeat customers are one of the cornerstones of a profitable, growing business, then why do many business owners ignore or forget about their existing or past customers? In the rush to find new clients and to continually sign up new accounts, do you ever find yourself looking past the low-hanging fruit? Not asking for referrals from satisfied customers or developing a referral incentive program could be standing in the way of more sales, higher profits, and increased revenue. Marketing blunder #11: The road to small business failure is paved with a negative attitude and a closed mind! Just because a marketing method didn’t work in the past doesn’t mean you can’t pinpoint what went wrong and give it another try. Sometimes changing the headline of an ad or including a testimonial of a satisfied customer or hiring a professional copywriter to devise a harder hitting message can make the difference between success and failure. Before giving up on a marketing idea, ask yourself “What can we do differently to make this work?”