In the current economic climate, there’s a lot of speculation about how our economy might affect marketing. Fair enough. Marketing exists to try and turn prospects into customers, or more specifically, trying to get people to part with their money. Therein, as they say, lies the rub. When the economy goes South, people naturally pull in their horns financially, eliminating all but essential purchases. Sales are down all over – so what’s a marketer to do?

The Obama administration would have us all believe that stimulus is the key. If we spend close to a trillion dollars on government programs, we’ll create jobs and get people to buy stuff. Problem is, so far (at least), this stimulus stuff has been a huge flop. The $350 billion allocated under the TARP (Troubled Asset Relief Program) funds to financial institutions has gone from the Federal Reserve to the banks, who in turn, sent it right back to the Fed for safekeeping. Think of it as those bunch of squirrels storing their nuts for a long winter. The banks don’t want to lend the money (the original idea behind the bailout) because they are putting it away for a rainy day. This, in a nutshell (no pun intended) is why stimulus doesn’t work. It’s no surprise that the stats on personal savings show a dramatic uptick for savings accounts in the last quarter of 2008.

So how do we, as marketers, figure out what’s making people tick in this environment? The programs the Dems are pitching are (no matter what anybody says) socialism. It’s all about the government taking over and running things. Those on the right believe that Capitalism dictates when you free up the money supply, people will start buying things. While I am a capitalist, I can tell you, both sides are wrong. The answer? Objectivism.

Objectivism (a philosophy established by author Ayn Rand) holds that people will act in their own rational self-interest. Unstable economy? People will horde assets. Give them a handout? They’ll hang on to it for dear life. Companies act the same way. It’s human nature, and you can’t win against human nature…it’s like swimming upstream. Hard to do, and not much profit in it.

So what’s the answer? Well, I can tell you that the pork-laden “stimulus” bill before the Senate won’t work. When you see line items like $866,000 for Austin, Texas to build a 36-hole Frisbee golf course and $6 million to build  three aquatic centers (with water slides!) in my home town of Shreveport, Louisiana, you gotta figure this is one big government handout. Will projects like that create jobs? Nope.

What will work (but the government will be loathe to do) is to cut taxes. Permanently, and spend less. Government budgets aren’t really that different than personal budgets…when you’re in a hole, the first thing you should do is to stop digging. We don’t need to spend more – we need to have the government cut all non-essential spending. (The sticking point, of course, is what constitutes “non-essential.”)

Okay, but what does this mean for marketing? I mean, if you can’t buck human nature, and human nature is such that people want to horde their money rather than spend it, how can you market around that?

Simple. You either position your product or service as a necessity, you position it as something that will save people money to afford other essentials, or (if your product is strictly a luxury) you position it as a guilty pleasure, and pitch the idea that, every now and then, you owe it to yourself to splurge – just a little – and this is the guilty pleasure to buy as a diversion.

That’s it. That’s my advice. Oh, sure, there’s more to it than that – you have to flesh out the details. But essentially, you have to adapt if you’re going to survive. Recognize the reality of the New Economy, and go with the flow. And that, campers is how to market objectively. Class dismissed.

This entry was posted on Thursday, February 5th, 2009 at 1:49 am and is filed under marketing.You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.