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If you look at the data on credit, it's clear there's a massive shift underway. Consumers have become fanatical about cutting back on debt. October credit fell by $3.5 billion (-1.7% year over year). September's decline was dramatic, $8.7 billion. October marked the ninth month of declines, a trend that has not been seen in 66 years. This is unlikely to change until consumers feel more confident about the economy and their own personal situation. It remains unclear if the recession is well and truly over, although indicators suggest unemployment has peaked, it's likely consumers remain unconvinced.




Posted by Ed Cotton The recent NYT article on sales trends at Home Depot and Wal Mart has some great clues into how consumers are changing habits in the light of economic downturn.

1. Food stays on the list, clothes and furniture don't
2. People are trading down to private label
3. People trading down the protein ladder from steak to ground beef, others moving from beef to chicken and others moving from protein to carbs
4. The home is the focal point- cheap take out pizza and movies is the new form of entertainment- people aren't going out and they are not cutting back on their entertainment tech. Sales of the more affordable flat screen are holding up
5. Vegetable gardens are booming
6. People are trying to stay healthy on their own with out resorting to experts- this means increased sales of vitamins and OTC medicines.
7. They need relief for these troubled times so they are buying more sleep aids, pain relievers and antacids
8. Home repair is on the increase
9. People are not buying new cars, they are repairing and maintaining the ones they have
10. Parents are not transitioning their kids between diapers and underwear with pull ups, instead they are going straight to underwear


Posted by Ed Cotton Nice piece from James Surowiecki in this weeks' New Yorker on how companies behave in recession. He cites Kellogg as an example of a company that gained ground because of actions taken during the Great Depression.

"In the late nineteen-twenties, two companies—Kellogg and Post—dominated the market for packaged cereal. It was still a relatively new market: ready-to-eat cereal had been around for decades, but Americans didn’t see it as a real alternative to oatmeal or cream of wheat until the twenties. So, when the Depression hit, no one knew what would happen to consumer demand. Post did the predictable thing: it reined in expenses and cut back on advertising. But Kellogg doubled its ad budget, moved aggressively into radio advertising, and heavily pushed its new cereal, Rice Krispies. (Snap, Crackle, and Pop first appeared in the thirties.) By 1933, even as the economy cratered, Kellogg’s profits had risen almost thirty per cent and it had become what it remains today: the industry’s dominant player."




Posted by Ed Cotton While most of the leading applications on Apple's 30,000 plus store are games, the company is keen to inform us that there's lots of meaningful things you can do with your iPhone.



This ad? (below) does a great job at highlighting all the recession-busting applications that you can get for your phone.

It's a nice example of a brand not only connecting with the current zeitgeist, but explaining how their products can provide real utility and benefits to help.

Via Down The Avenue.


Posted by Ed Cotton Bank of America is a bank that seems to have benefited from the crisis on Wall Street, picking up the brand asset of Merrill Lynch for the bargain price of $50 billion.

However, despite the purchase, B of A's CEO is very skittish about the implications of the current crisis.

Fortune has a good story on Ken Lewis, B of A's CEO, in its latest issue, which includes this quote...

" For Lewis the biggest problem is the plight of the consumer. He sees the credit pie shrinking as Americans, stretched by high mortgage payments and gas prices, their jobs frequently in jeopardy, recognize that they can't afford the debt they already have, let alone add more. "The consumer is deleveraging, just like many of the banks," says Lewis.

I am now expecting to see Planners going off now and start writing their "Deleveraged Consumer" presentations.

Trying to fathom out what this all means and how the consumer is going to be impacted is occupying the finest marketing minds at the moment.

Clearly, the consumer is in no mood to spend as witnessed by the recent spending numbers, but they still have to live and brands are going to still play a role.

There are two critical questions.

1. Who are the brands that are going to persuade the consumer that they matter and are essential to their lives?

2. How are they going to do that?


Posted by Ed Cotton Picking up a copy of USA Today this morning it was easy to be struck by the negativity of the content.

- Nelson Mandela is a terrorist

- Jet fuel prices set to make air travel a luxury item

- Fed rate cut does nothing to change Wall St. sentiment

Basically, doom and gloom all around.

Then there was this Harley ad, which offered a contrary point of view.

It reminded us that America is a strong nation and it's bounced back from tough times before.

It took the long view and reminded us not to be fearful with the simple statement:

"We don't do fear"

Some might say this irresponsible, but I say it's brilliant to seize on the moment and offer a counter point that's so true to the brand and its ridership.

It's brave and gutsy, just like the brand.

I don't have the ad, but there's a taste of it on the Harley web site.



Posted by Ed Cotton