I understand that these are tough economic times in general; that Americans are cutting back on spending and buying less expensive versions of consumables and staples. In general, we are forgoing the $5 toothpaste for the $3 stuff, and opting out of the GPS, sunroof and mud-flap package on our new cars. It's quite a contrast from just five years ago when Paul Nunes and Brian Johnson wrote Mass Affluence: 7 New Rules of Marketing to Today's Consumer. The $5 toothpaste that we all used, it was gateway product to get us all to go for $40 tooth-whitening stuff; the GPS that we had to have might have been only worth $300 to us, but to get it, we had to spend $1100 for a whole package. We got rid of our brooms and mops and replaced them with Swiffers. And when was the last time you saw a single-bladed safety razor? We may be trying to cut back on our cost of living, but in many cases, the products that fit an economical lifestyle have disappeared, like the $2 single-bladed razor, and our only option now is the $12 five-bladed razor and its $8 refills. And do they even make printed street maps anymore? Can we get by without built-in GPS? So how did this happen?
Nunes' and Johnson's research gives a clue: in one of their surveys they found that the majority of people would be willing to spend more for their purchases if they could find ones that better fit their needs. In fact 68% of people earning less than $50,000 made this claim and this rose to 87% for people making over $150,000. The point, according to the authors, is that companies were failing to innovate and thus were leaving money on the table. Some companies, like Proctor & Gamble and Gillette, found ways to get pick up some of that money with their teeth whiteners and five-bladed razors: they gave us stuff that we wanted and were willing to spend money on. The next question though, is whether or not these marketing practices will hold true in the post-9/2008 economy. My feeling is that they will.
Nunes' and Johnson's rules simply put in writing a few things that we have been experiencing for the past decade. We've gotten accustomed to the up-sell and the conveniences that come with it, whether that is the GPS or the disposable mop. Convenience, and the time savings that come with it, plus a certain essence of luxury in our consumables and services will continue to be attractive attributes. Beyond that, though are the other new rules: Nunes and Johnson recommend that companies market goods and services that are positioned to get more people to spend more not only consumables but lifestyle products. An example of this is the introduction of the $500 upgrade to first-class on a flight and paying 10 times the price for a lift ticket at some ski resorts just to be among the first in line for the fresh snow. Companies should also offer occasional use items and alternate use items. An example for these would include offering an urban bicycle, a mountain bike, and a road bike each so distinctive for their use that one wouldn't mix uses. Another offering is to make your customers feel like investors in your company: these may be in the form of annual 'dividends' based on the amount of their purchases or some other reward points program.
There is another rule or two and a look into the future. Unfortunately it’s a future very different what are actually experiencing. Nevertheless, much of what Mass Affluence has to offer is a lot of good ideas that provide a base for what could be your next great idea.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.