Marketing in a Downturn

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Seth Godin writes about "marketing in a recession" :

The challenge for marketers is to figure out how to change the story they are living so that their customers can change the story they tell themselves. What you make, where you make it, who makes it, how it's priced and sold and ... it all adds up to a perception. If you change these elements the story will change too.

His point is that Starbucks becomes the indulgence of someone who has just traded down to a small rental apartment. Gone are the days of $4.00 coffee just for the heck of it.

I think Starbucks is busy changing their story. They're trying to be a new, upscale McDonald's - rapidly working to add in a "drive-in have a happy meal" component to their business model. The trouble is in the demographics. Bill Tancer at TIME tells us that "the Big Mac customer base has remained relatively stable, while Starbucks' coffee-drinkers have diversified. It used to be that Starbucks attracted customers from a small, elite segment of the country; now, its visitors pervade many more segments across America."

From my own observations at the local Target, I see far more customer buying ICEEs rather than Starbucks coffees. This is the "threat of substitution" that is always around the corner, no matter how good your product is. Seems like the days of mass-luxury are over.

So where does retail find its consumer, er, citizen? Turns out they're not citizens at all - you've got to sell overseas. India and China are experiencing a huge boom in luxury, thanks to an explosion in middle class prosperity. The fortune is in the middle and the bottom of the pyramid.

And if you can't reach those consumers? I wrote about that in an earlier post about advertising in a recession.

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Christian,

In a bull market, whether it be real estate investing, dot com stocks, computer consulting services (our niche), or upscale coffee sales, "everyone" is a genius.

When things get rough, the dreaded R word helps to figure out who's got a strong business model and who was just riding the waves in good times.

Thanks for the great post.

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This page contains a single entry by Christian Sarkar published on February 24, 2008 11:45 AM.

Jeffrey Immelt: India versus China - Trust is a Global Issue for GE was the previous entry in this blog.

C. K. Prahalad: Democratizing Opportunity is the next entry in this blog.

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