Good marketing for bad times.


The economy's going south, but your sales don't have to follow the trend. Some thoughts on surviving and thriving in bad times.

The economy and consumer confidence are experiencing a massive correction from the "irrational exuberance" of the Greenspan years. And, as usual, the impact is hitting middle-class families first.

· Housing starts are down 48% from January, 2006, and there's a ten-month supply of existing homes on the market in most American cities.

· In September, same-store sales at Macy's were down 3%, and Dillard's and the Gap dropped 7%. In October Norstrom's sales were off 2.4%.

· Deloitte's annual holiday survey predicts flat sales despite an extra week between Thanksgiving and Christmas this year. (They predict a slight increase in gift spending offset by a decrease in personal spending.)

· Maritz Research forecasts strong Black Friday sales, but an overall 10% decline in holiday spending.

· Casual dining is hurting across the board: Steak 'n' Shake is down 4.3%; Ruby Tuesday - 3.9%; Chili's -1.6%; Applebee's -1.2%.

The super rich are still keeping their heads above water.

· There's a multi-year waiting list for Oceanco to lay down the keel of a 300-foot megayacht.

· Over the last year, the price of a meal at a top New York restaurant increased 11% to a $143 average (if you can get a reservation).

· Bulgari's third-quarter '07 sales were up 20% over '06, and Harry Winston, Hermès, Van Cleef & Arpels and other top-tier luxury brands reported an average increase of 9%.

· Airbus just delivered a "Flying Palace" personal jet version of their new A-380 jumbo to an über-wealthy customer. It was $320 million just for the plane. The fancy interior will doubtlessly add millions more.

· This Fall's art auctions at Christie's and Sotheby's saw 258 pieces go for a million or more.

But there are signs that even the rich are feeling the pinch.

· Although many high-ticket pieces were sold at their Fall auction, Sotheby's couldn't sell works by Picasso, Matisse and Braque. Amazingly, even van Gogh's "The Fields" or "Wheat Fields" (depends which curator you listen to), originally estimated to fetch $35 million, didn't get a single bid.

· Many areas report a five year supply of $1-million-and-up homes on the market at present sales rates.

· The London International Vintners Exchange 100 Index, which tracks prices of one hundred grands crus classés wines, fell 3.4% from July to October. That's the first time it's gone anywhere but up in years.

· The Wall Street Journal reports weak sales of "accessible" luxury products. (Things like Channel sunglasses, Coach bags and Tiffany's lower-priced merchandise. Stuff that folks with a couple hundred dollars of headroom on their credit cards can buy.)

· Retail Traffic reports that upscale stores are cancelling orders from Gucci, Hugo Boss and Versace.

Historically, a market like the one we're experiencing right now would see a migration to lower-tier brands, as $3.00-a-gallon gasoline and doubled home heating oil prices ravage middle class disposable income.

There's been some of that. For example, in meals outside the home, families have downgraded from casual dining restaurants to Burger King's Value Menu. (BK sales are up 4.8%.)

But there's even softness at the price-driven end of the market. Wal-Mart's same-store sales increase has slowed from 3.4% in December '05 to 1.8% in December '06, then 1.3% in July '07 and now 0.4% in October '07. At that rate they may be in negative numbers before the year is out. And The Wall Street Journal recently reported that Target is forecasting materially weaker fourth-quarter '07 sales.

So what's a marketer to do?

Not what many have done in the past: cut prices, cut product quality or cut advertising. In other words, cut their brands' throats. Read more at www.brainposse.com.


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