Friday, January 30, 2009

14 Big Businesses That Starteded in a Recession

Thought you couldn't start a company during a recession? These enterprises made it big by doing just that.

It might seem counterintuitive to start a new business when the economy is in the dumps. But a recession can actually be the ideal time for launching a company. In fact, many well-known and successful organizations were born during an economic slump.

Why do these companies succeed? Usually it's because the founders recognized a market need and filled it. Identifying that need — whether it’s related to entertainment, travel or even streamlining how businesses operate — is the key to any thriving enterprise, regardless of the economic climate in which it begins. The following major corporations made it big during recessions by doing just that.

Hyatt Corp. opened its first hotel’s doors at the Los Angeles International Airport during the Eisenhower recession (1957 to 1958). The chain rose to worldwide fame in the following decades and now operates more than 365 hotels in 25 countries with premium services such as wifi hotspots.

Burger King Corp., with its flame-broiled burgers, is another recession startup. The company began in 1954 when James McLamore and David Edgerton opened a Burger King restaurant in Miami, Fla. During another recession in 1957, the company introduced its successful signature burger — the Whopper. Today, the company operates more than 11,100 locations in 65 countries.

IHOP Corp. is another star from the Eisenhower recession. The first restaurant in the now national chain opened its doors July1958 in Toluca Lake, Calif. Owners Al and Jerry Lapin were at the helm of the fast growing company, which began franchising just three years later. Today, there are more than 1,300 locations across the U.S.

The Jim Henson Company was created by famed puppeteer Jim Henson in 1958. Henson's business was responsible for some of the best-known puppet characters of all time including Miss Piggy, Kermit the Frog and Elmo. Today, the privately held company is managed by Henson's children and continues to thrive by creating popular kids-friendly shows and movies.

LexisNexis is a research hub for the law, media and more. The company, originally a government contractor, began its LexisNexis computerized legal research service during the 1973 oil crisis that rocked the country into steep economic slump. The now Web-based service is used in 100 countries by individuals in law, government, education and business.

FedEx Corp. began operations on April 17, 1973 as Federal Express, a nod to the Federal Reserve, with whom founder Frederick W. Smith had hoped to get a contract. He didn't, but the company that delivered 186 packages to 25 cities on its first night of operations now manages more than 7.5 million shipments everyday worldwide.

Microsoft Corp. wasn't always the jaw-dropping enterprise it is today. In 1975, when it was created by Harvard University dropout Bill Gates, Microsoft was just a little company in Albuquerque, N.M. It dealt in rudimentary computing languages and began its climb to business stardom with the success of MS-DOS, which was sold and marketed to IBM Corp. and then-IBM clones. Today, the company is estimated to earn more than $60 billion in revenue per year and is branching into new areas including VoIP and CRM.

CNN might be a news giant now, but in recession-plagued 1980, it was a little-known station called The Cable Network News. It revolutionized how people received information when it premiered as the first 24-hour all-news channel. Today, 1.5 billion people across the globe watch CNN.

MTV Networks brought something new and different to the music scene when it debuted in the economic slump of 1981. Intended to be an all-music-video channel, MTV used VJs (video jockeys) to host programs and facilitate transitions between videos. Today, MTV is a global brand with dozens of shows, music-related and not.

Trader Joe's started as a chain of convenience stores called Pronto Markets in the slow financial times of 1958. In 1967, the company changed its name to Trader Joe's and began to carry unique grocery items under its own brand. The company now operates more than 280 stores in the U.S.

Wikipedia Foundation Inc. was born during the recent post-9/11 recession. Established in January 2001, the online encyclopedia had more than 100,000 entries by 2003. Today it is home to more than 2.5 million articles and continues to grow.

Sports Illustrated magazine was launched on August 16, 1954, at the tail-end of a recession. The magazine benefitted from fortunate timing as a boom in professional sports exploded soon after its founding. Sports Illustrated now sells about 3 million copies in the U.S. each week.

GE (General Electric Co.) was established in 1876 by famed American inventor Thomas Edison. In the middle of the Panic of 1873, a six-year recession, Edison created one of the best-known inventions of all time — the incandescent light bulb. In terms of market capitalization, GE is now the third largest company in the world. The enterprise has evolved from a manufacturing-strong business to an enterprise earning more than 50 percent of its revenue from its financial services division.

HP (Hewlett-Packard Development Company LP) was inauspiciously born in a Palo Alto garage at the end of the Great Depression. The electronic company, initially supported by a mere $538 investment, has grown into the first technology business to exceed $100 billion in revenue, earning $104 billion in 2007. It now operates in nearly every country in the world.

Recessions, however, aren’t advantageous only to start-ups. Pre-existing companies can also make incredible gains in years where the economy is down. Some of the most recent success stories are those of Google, PayPal and Inc. From 2000 to 2001 each of these companies thrived, leading PayPal to go public in 2002, followed by Google and in 2004.
(source: sarah caron,

Wednesday, January 28, 2009

NADA: Dealers Need To Polish Image

Auto dealers need to tell state and national leaders and the public that dealers are an asset, not a liability. That was the central message from the National Automobile Dealers Association (NADA) incoming chairman John McEleney, an Iowa dealer who sells GM, Toyota and Hyundai vehicles.

Association members hunkered down in New Orleans last weekend trying to stay afloat in a flood of bad news: a frozen credit situation, plummeting consumer confidence this month, massive layoffs, and plunging auto sales that caused some 1,000 GM, Ford and Chrysler dealers to go under last year.

McEleney said dealers and NADA's PR and political efforts helped get GM and Chrysler government loans and Treasury backing for GMAC and Chrysler Financial to offer credit. "Their efforts paid off," he said, while counseling dealers to continue the push, by promoting themselves as pillars of their communities and of the state and national economy. And, he said, dealers have to participate in the debate on how to rebuild the economy and how to create national emission standards--particularly in the next two months, in which GM and Chrysler approach their deadlines for showing the efficacy of government bailouts.

Those deadlines--mid-February for GM and Chrysler to submit viability reports on their efforts to boost revenue and mid-March to demonstrate they have cut their debt by two-thirds in order to get an additional $4 billion--were the subtext of Chrysler Vice-Chairman Jim Press' speech to dealers at NADA. Press and Chrysler executives exhorted Chrysler's 3,300 dealers to order 78,000 new vehicles from Chrysler next month--2% less than last year, but far more than they need, given Chrysler's 53% drop in new-vehicle sales last month (and 31% for the year).

At a NADA meeting last week, Press conceded that Chrysler posted zero revenue in the month after Dec. 19, during which it shut factories. Chrysler launched a new round of incentives last week, called "Employee Pricing Plus Plus," offering both 0% deals, and up to $6,000 off MSRP. One former GM marketing executive, who requested not to be named, said that since Chrysler bases revenue on vehicles delivered to dealers (not sold by dealers), the company is essentially asking dealers to create the impression that Chrysler--with an eye to its date with the government--is in fact turning around.

"They are trying to show the government they have revenue; they are asking dealers to take more inventory even if they can't sell it," he says. "It will look like revenue spiked in January. And the car czar won't have any idea of what transpired. They'll say, 'oh, revenue is up--they're back on track!'"

McEleney said dealers, meanwhile, have to battle the opinion that they are a drag on the economy. "Some pundits characterized dealers as a drain on the books of automakers and suggested it was time to do away with the franchise system," he said. "In a $17 million sales year, it may be enough for us to share that we sponsor Little League teams or that we helped to fund the new wing at the local hospital; in a $12 million sales year, we've got to tell how we contribute to our community's bottom line."

He suggested that dealers inform the public about how the dealer franchise business affects local, state and national economies, including sales taxes, and that auto sales account for 20% of all retail spending in the U.S.

McEleney was ultimately sanguine about the future of the business, saying that the downturn won't last forever. "Our job is to protect and strengthen our dealerships so that as the cycle turns upward, we are in a position to thrive," he said.

NADA's chief economist, Paul Taylor, predicts that sales won't pick up until the third quarter, and that the year will finish with 12.7 million vehicles sold, versus last year's 13.2 million.

Tuesday, January 27, 2009

Things We're Still Buying

Consumer spending may be at all-time low, but there are plenty of things people can't seem to live without.

Hey, Big Spender, are you out there? You must be, since December 2008 sales amounted to $343.2 billion. What did you buy?

Nothing impulsive or lavish, it would seem. Consumer confidence is at its lowest point in history and, according to a Jan. 14 report released by the Commerce Department, retail sales were down 2.7 percent in December 2008 from November 2008 and 9.8 percent from December 2007.

From Wal-Mart to Saks Fifth Avenue, retailers are so desperate to rid themselves of inventory that they're marking down some merchandise by 90 percent.

However, $343.2 billion is still something, not zero, meaning consumers still deem many items worthy of the original price tag, says Martin Lindstrom, a retail marketing expert and author of Buyology: Truth and Lies about What We Buy.

While retailers suffer from shoppers changing their behaviors during recessions (mainly by abandoning brand loyalty), says Lindstrom, "There are certain things people won't give up."

Keeping up appearances
Personal care is one of them. That vast category includes everything from shaving cream to perfume to hairspray. From November 2007 to November 2008, U.S. sales of shampoo, acne treatments, skin care gift sets and grooming products increased by 18 percent, 14 percent, 11 percent and 15 percent, respectively, according to Karen Grant, senior beauty analyst at Port Washington, N.Y.-based market-research firm The NPD Group.

Consumers are even still spending beyond the necessities in the personal-care category, it seems. At Nelson Bach, a North Andover, Mass.-based natural remedy company, year-over-year sales of its Rescue Pastilles have doubled, according to company president Cynthia Batterman.

She believes that in a tough economy, when 7.2 percent unemployment means an increase in those lacking health insurance, many turn to alternative therapies. Nelson Bach's gummy lozenges, made with flower essence of white chestnut, are said to offer natural stress relief. And at $7 a tin, they're a relatively inexpensive way to feel just a little bit better."

When people put off going to the doctor, they're more likely to try self-treatment," says Batterman.

Seeking an escape
Whether used for keeping up appearances or curing minor ailments, personal care is -- ultimately -- about feeling good. Sometimes, that means buying products to escape the reality of the recession."

Even if we can't afford to escape to Paris, we can still afford to buy perfume with 'Paris' on the label," says Lindstrom.

But it's technology, not perfume, which many would say does the best job of providing a sense of escape. Arguably the most accessible form is the videogame, which has seen a 14 percent sales increase in 2008, according to San Diego, Calif.-based Electronic Entertainment Design and Research Group (EEDAR).

In the third quarter of 2008 alone, the two top-selling items -- "Madden NFL '09" and "Wii Fit" -- sold 5 million units combined, according to NPD. And since it was first released in 2005, Guitar Hero has sold 25 million copies, grossing $2 billion.

Smart phones, another way to use videogames and other forms of escapist entertainment -- like podcasts and television shows -- are also in demand. NPD says that from November 2007 to November 2008, the number of smart phones purchased increased from 13 million to 24 million, which resulted in a sales increase of 53 percent, from $2.7 billion to $4.1 billion over the same period.

And while you can't do much more than surf the Internet and write term papers on minute-memory netbooks, the reasonable price -- about $300 -- made mini laptops a winner. Sales in the third quarter of 2008 increased by 160 percent compared with the third quarter of 2007, according to Austin, Texas-based market research firm Display Search.

Keeping fit
Don't let consumers' continued thirst for technology have you thinking everyone will be anchored to the couch through the remainder of the recession, however long it lasts. Gyms, considered by some to be an affordable luxury, aren't completely in the red, as people seem to want to stay healthy in both good and bad times.

In fact, market researchers at St. Louis, Missouri-based firm Stifel Nicolaus say overall gym memberships will increase by 4 percent in 2009. And a nationwide survey conducted by Princeton, N.J.-based Opinion Research Corporation, and sponsored by gym chain Anytime Fitness, found that over 60 percent of the 1,090 (gym-going) participants planned on keeping their current membership plan, while another 23 percent planned on downgrading to a less expensive option.

Aside from bare necessities, the things consumers are still buying have one thing in common: They provide a break from reality. "We want to dream ourselves away," says Lindstrom.

Maybe everything will be fine by the time we wake up.?
(Source:, 01/21/09)

Friday, January 23, 2009

Back To Basics For Marketers

The Marketing Executives Networking Group (MENG) and Anderson Analytics, in its second annual survey of Top Marketing Trends for 2009, report that marketing executives are going back to basics this year, putting renewed focus on satisfying and retaining customers and investing in research and insights, but are sick of hearing about Web 2.0.

Marketers expressed concern on how a recession would impact priorities moving forward, and half of the executives believe their marketing budgets will decrease in 2009, while 56% indicated their staffing plans will either stay the same or increase.

The Top Five Trends:

I Insight and innovation are viewed as keys to combat down economic and business cycles. 72% of respondents indicated that innovation efforts would stay the same or increase, while 39% say their use of market research will increase in the next year. This is significant given that most marketing experts agree it's imperative to innovate and mine insights during a recession, Anderson Analytics said.

II Customer satisfaction and customer retention remained the top two marketing concepts followed by marketing ROI, brand loyalty and segmentation, which represents a "Back to Core Principles" approach to marketing. Of the 62 identified marketing concepts, faith-based marketing, six sigma, game theory, anti-americanism and immigration were viewed as the least important.

Among the marketing concepts rated as important by more executives, Customer Retention, Marketing ROI, Lead Generation and Alternative Energy showed the largest increases from last year.

III The issue of global warming showed the largest decrease in importance (dropping 14 places in the rankings), while green marketing showed a statistically significant 5% drop.

IV Twice as many marketers are "sick" of hearing about Web 2.0 and related buzzwords such as "blogs" and "social networking" compared to last year's survey; however, marketers still admit they don't know enough about it. This was evident in the results of a social media study MENG released on November 6, 2008 showing 67% of executive marketers consider themselves beginners when it comes to using social media for marketing purposes.

V Despite well-publicized quality issues over the last year, China ranked the number one greatest area of opportunity for 53% of the marketers with international responsibility. India was a distant second with only 17% of respondents.

Offshoring, however, has significantly diminished in favor as more executives this year (58% vs. 49% in 2008) agreed that offshoring ‘is not as profitable as others think, and is fraught with risk'. Marketing executives also still feel Boomers represent the best opportunity for customer targeting, while the perceived importance of Generation X and Generation Y grew significantly compared to 2008.

The main sources of marketing inspiration remained practically the same this year. Good to Great remained the most widely read and most recommended book. However, several new books appeared on the reading list this year including: Groundswell, Hot Flat and Crowded, The Black Swan, Predictably Irrational, Mavericks at Work, The New Rules of Marketing and PR, The Art of the Start, Purple Cow, Go Put Your Strengths to Work, and Our Iceberg is Melting.

Similarly to the books, the number one business Guru last year, Seth Godin, remained the favorite marketing guru for 2009. However, Warren Buffet and Malcolm Gladwell increased significantly in popularity and now occupy second and third place, respectively. Jim Stengel also made the Marketing Guru list for the first time this year. Seth Godin was mentioned by most executives as the most important marketing/business Guru for two years in a row


Wednesday, January 21, 2009

What Are Your Top 3 Fundamentals?

If you and your team could focus on being sure that only three fundamental issues were applied to your sales days this year, what would they be?

This is a continual debate at

Here are our thoughts...

1. Establish a relentless focus on talking with prospects and customers at every moment of each sales day. Sales requires contact. Make contact your first priority.

2. Be prepared with one to three absolutely solid statements that communicate the reasons someone should buy from you now – buy from you... now. These should be powerful statements that create a sense of urgency and make it clear why you and your offering are the solution to their situation at this very moment – scripted and rehearsed to a point where you can deliver these benefits with appropriate voice intonation, literally, in your sleep. (please remember: being the biggest, oldest, or "premier" provider is rarely a reason someone should buy from you... in fact, sometimes it could be the reason not to)

3. Be ready with an approachable, non-defensive method of responding to the top three objections you and your team hear each sales day. Again, these should be scripted and rehearsed to be delivered without hesitation.

That's it. This is where it begins. Pure sales discipline for 2009.

Monday, January 19, 2009

Restaurants Share Survival Strategies for 2009

Earlier this week, restaurant operators large and small provided their outlooks for the year ahead -- and most of them were not pretty.

At the seventh annual Cowen & Co. consumer investment conference in New York, which took place Monday and Tuesday, about 20 restaurant firms presented their strategies for 2009, most of which included cutting costs, slashing development plans, retooling menus and tweaking marketing messages.

High-end operator Stephen Hanson, founder and president of B.R. Guest Restaurants, a multiunit operator with concepts in New York, Chicago and Las Vegas, said consumer traffic just about died at the end of the 2008, and he worried that it may not return for some time.

"For 2008, we're going to be like, 'That was a good year,'" he said. "I think the consumer will just shut down, and even when they do go out, they will be thinking differently about how they spend their money É 2009 will be a very, very tough year."

Hanson, whose company boasts brands like Ruby Foo's, Fiamma and Dos Caminos, said chain operators should focus less on the cost side of running the business during these tough times, and more on the customer.

"In general, chains need CRM [customer relationship management]," he said. "Today you need volume; you need to hug the customer."

A laser-like focus on generating customer traffic -- through discounting, improved marketing or retooled menu items -- was an obvious theme throughout the conference.

Domino's Pizza chief executive David Brandon said the pizza delivery chain had neglected consumers who were looking for more value, as individual operators let menu prices increase too much to fight off inflation. The lack of traffic that resulted could have led to the nine Chapter 11 bankruptcy filings by Domino's franchisees in 2008. Domino's new oven-baked sandwiches, priced at $4.99 each, are an answer to customers seeking value, Brandon said.

Sonic Corp. executives said the drive-in chain's new permanent value menu, with items priced at $1, will attract more customers. The company also said it would ramp up its media spending by about 5 percent from a year ago to about $200 million.

Buffalo Wild Wings is promoting its Big Jack Daddy Burger, a burger topped with pulled pork, fried onion rings, cheddar-jack cheese and honey barbeque sauce, while Papa John's Pizza is looking to introduce "non-pizza items," which it would not disclose.

Chipotle Mexican Grill Inc., the operator of the burrito chain that has struggled of late, said it is completely revamping its marketing efforts. A new chief marketing officer and a new advertising agency will bring a more sophisticated advertising approach to the fast-casual chain, said founder and chief executive Steve Ells. The chain just finished in December a systemwide menu price hike of as high as 6 percent in some locations.

Almost all companies said they would slow development in 2009. Bob Evans Farms Inc., for example, said it would open just one location of its namesake family-dining brand this year, and Morton's Restaurants Inc. said it would open only two or three restaurants in 2009. Not only are financing and site selection for new developments not favorable, but returns for new units just won't hit targets with the consumer staying at home, many companies said.

To help cut costs in the face of slowed sales, most restaurant operators said they are looking at labor scheduling that highlights sales per shift or even per hour so that efficiencies are gained. At BJ's Restaurants Inc., for example, executives said new technology will help the casual-dining chain monitor shift progress in real time so that labor decisions can be made immediately.

At Ruby Tuesday Inc., about $60 million in cost saving during the past 12 months has come from labor cutbacks, including field management, corporate staff and executive positions, the company said.

"It's the toughest I've seen out there," said chairman and chief executive Sandy Beall. "It's a good cleansing process, though, and it will benefit us in the long term."
(Source: Nation's Restaurant News, 1/13/09)

Friday, January 16, 2009

Does Your Message Pass The "So What!" Test?

As you are writing your marketing message, it is critical to make sure your message passes the "So What!" test. If you ask it enough, you will get down to the real reason your potential customer should do business with you.

Many marketing messages miss the mark on what is really important to their customer. Digging deeper into some of the stated features will help you really tap into the emotions and need of person hearing your message.

A few things to say "So What!" to:
  • Locally owned & operated
  • In business since ____
  • We are / have the largest
  • We are #1 in ______
  • Lowest prices, guaranteed
  • Just off the freeway

You get the picture. Digging deeper into the the "So What!" statements will help you get to the real story of what makes your business special. You may need to ask "So What!" a couple of times, but when you get down to the real story of your business you will truly see what sets you apart. At that point, you will begin to see stronger results from your marketing efforts.

Wednesday, January 14, 2009

Moms Crack The Whip On Household Spending

While consumers have been drastically reining in spending for months now, a new study shows that women are being downright militant when it comes to policing the family budget.

"We found much sharper differences by gender than we expected," says Steven Skinner, VP of consumer products for Miller Zell, an Atlanta-based retail consulting company, which conducted a recent survey. Among the changes are a much higher level of pre-planning and research, with 45% of women saying they are doing more online research than they have in the past, as well as enforcing greater levels of accountability from all family members. Women say they are now making more joint shopping decisions, and are two times more likely to do so in such "male" categories as furniture, home improvement and electronics.

"Women aren't just being more selective," he says, "they're being more disciplined. The idea of going to a store with $100 gift card, and spending more to get something bigger is gone--she's in the store, spends that $100, and leaves."

Among the most common changes: Eating in more often, with 68% saying they spend less at restaurants; changing channels, with 50% moving from premium grocery stores to discounters; and trading down, with 87% switching brands at the grocery store and a third buying private-label clothing.

One surprising finding from the study, fielded among 800 shoppers just before Christmas, is that the mood was bleakest among the most affluent. "It seems counterintuitive, but this group is so worried about job loss and their income that it's having a profound effect," he says, putting all luxury categories at risk. Right now, furniture and jewelry are the two most vulnerable categories.

To survive, retailers need to step up the value message they send to women shoppers, both in stores and in mass marketing efforts--especially those aimed at women and higher-end shoppers. And they should take a much more proactive role in education, making it easier for shoppers to learn about their products, and investing in training to make sales staff more knowledgeable, he says.

The good news? In every single age, gender and demographic category, respondents agreed that things will be much better in six months. "That tells us that people are more confident and optimistic about their future earnings than we've thought," Skinner says. "That's a very positive sign, and the silver lining in all of this."

(source: sarah mahoney,, 1/13/09)

Tuesday, January 13, 2009

After Sales, Will Shoppers Pay Full Price Again?

An interesting story from AP last week. Sales can be a powerful tool for an immediate impact on cash flow, however there is a price to pay. Be sure that introducing a sale into your business model is something you really want long term.

Shoppers are getting used to those 75 percent off sale signs, and that's bad news for merchants who worry they will also have to quickly slash prices on spring goods to attract customers.

Anxieties about how rampant discounts have affected shoppers' psyches and stores' profits are running high ahead of expected dismal December sales figures. The holiday season is anticipated to be the worst in decades.

Already, retailers including Bebe Stores Inc. and J.Crew Group Inc. are cutting prices on selected spring styles to lure sale-savvy shoppers.

"It is a vicious cycle that no one wants to continue," said Gilbert Harrison, chairman of Financo Inc., an investment banking firm specializing in retailing. The discounts will be a key topic at Financo's annual dinner on Monday for retail chief executives.

In addition, retailers expect competition from a rise in liquidation sales -- the fallout from the horrible holiday period.

Merchants struggling to clear out mounds of deeply discounted coats and sweaters are wondering how they are going to get nervous shoppers to splurge on new spring products.

The deep price cuts are making shoppers question the true value of items. If they can get $200 jeans at 60 percent off, will they be willing to pay the original price next fall?

"Our sense of what is fair and what is a good deal has changed," said Michal Ann Strahilevitz, professor of marketing at the Golden Gate University's Ageno School of Business. She said that a sale has to be at least 70 percent off to be considered a bargain now. Marcia Layton Turner, a mother of two from Rochester, N.Y., recently walked away from an outfit that she spotted at a local Kohl's store that was 50 percent off. "Forty to 50 percent used to excite me," the 43-year-old writer said. "Now, I want at least 70 percent." Turner says she has taken advantage of 75 percent discounts on children's clothes in recent weeks and is willing to wait to get the same type of deals in the coming months. Consumers across the spectrum have been holding back. Overall sales of apparel fell 17.3 percent from Nov. 30 through Jan. 3, while footwear sales dropped 12 percent compared to the same period a year ago, according to figures released Wednesday by SpendingPulse, a data service provided by MasterCard Advisors that estimates U.S. retail sales across all payment forms including cash and checks. Sales of electronics and appliances dropped 21.4 percent, while luxury goods suffered a 27.6 percent drop. Online sales rose 4.6 percent. Fourth-quarter profits are likely to decline more than 19 percent, said Ken Perkins, president of research company RetailMetrics LLC. Excluding Wal-Mart Stores Inc., one of the few bright spots, he said the drop is expected to reach almost 28 percent. Perkins predicts that profits will keep falling into the first quarter, projecting an 11 percent drop; excluding Wal-Mart, that figure is likely to fall more than 17 percent. The financial meltdown in September that led to an abrupt halt in spending came too late for merchants to dramatically adjust spring inventories. Many stores order goods four to seven months in advance. And while spring inventories are estimated to be down as much as 30 percent from year-ago levels, many analysts say that inventories should be down even more. Barclays Capital analyst Jeff Black believes it will take at least until the back-to-school season to get inventories in line with consumer demand, and even then stores will still face the challenge of weaning shoppers away from deals. For those shoppers who could still load up on deeply discounted merchandise, the last few weeks have been paradise. Even before the Thanksgiving weekend, the traditional start of the holiday shopping season, Saks Fifth Avenue marked down shoes by 70 percent.

But earlier deals look measly compared with some current offers as merchants try to get rid of their holiday products by the end of the month. The upscale DKNY store on New York's Madison Avenue is plastered with a sign proclaiming "Up to 90 percent off."

As retailers work to clear out old merchandise, analysts say many are trying to hold back on discounting new winter and spring items. Dan de Grandpre, editor-in-chief of, said he is seeing more bundling deals -- a flat-panel TV that comes with a free Blu-ray system, for example.

But many doubt that such strategies will work and predict early discounts on spring goods. The signs are already there. Bebe has cut certain spring sweaters by 25 percent, while J.Crew has marked some spring items anywhere from 25 to 40 percent off, according to Amy Wilcox Noblin, an analyst at PaliCapital Inc.

It will be years before shoppers are going to be enticed by discounts of less than 50 percent, said C. Britt Beemer, chairman of America's Research Group.

Traditional stores have also had to dump more excess goods at off-price retailers like TJ Maxx, which reduce prices more, said Marshal Cohen, chief industry analyst at market research firm NPD Group Inc.

But a bigger problem is liquidation sales at stores that are either closing specific locations or shutting down the entire business.

Going-out-of-business sales at KB Toys and Linens 'N Things put pressure on other retailers even before Christmas, and analysts expect competition to get fiercer amid a likely spike in bankruptcy filings.

James Schaye, president and CEO of Hudson Capital Partners LLC., which has overseen liquidations of Mervyns LLC, Tweeter Home Entertainment Group Inc. and Steve & Barry's, estimated that his company liquidated about $3 billion in merchandise in the October through December period, compared with about $400 million a year ago.
(Source: Associated Press, 1/7/09)

Monday, January 12, 2009

Most Manufacturing Brands are Missing the Mark Online

Here are Three that Aren't -- and What They're Doing Right

Competition among manufacturing brands is fierce. Televisions, kitchen appliances, flooring, electronics, automotive -- each category is a crowded market. And in a climate where it's unclear whether there's enough to go around, most manufacturers are missing out on a prime opportunity to get ahead in the game: the digital channel.

Digital marketing is the most powerful connector in the business-to-consumer toolkit. The sentiment is there. The conditions are right. In many cases, the money is being allocated. And yet, the branded manufacturing industry continues to lag behind retail and consumer packaged goods in connecting with the all-important web-empowered consumer.

In 2007 Resource Interactive published its findings in a year-long study of branded manufacturers online. Focused on those brands marketing high-ticket items to consumers (greater than $100), more than half of the sites audited made no attempt to establish their brand online. With 81% of web-goers using the internet to research a product before purchase, according to Pew Internet & American Life Project, and 71% of online shoppers reading reviews, according to Forrester, it's more critical than ever a brand use the web to empower purchase decisions in its favor.

There are a few leading examples in the category.

Weber Grills ( continues to be one of the standouts. With a robust online community created exclusively for Weber owners, a recipe section and online operating manuals for each model, the site offers support in the act of grilling itself -- inspiring grill masters and aspiring grillers alike.

Electrolux Appliances ( is staging a comeback. It has seamlessly integrated its online experience to television and print campaigns starring Kelly Ripa. The site uses rich media to showcase its products within landing pages, provides demos and guided navigation, and incorporates some degree of "help me choose" information within the product browsing experience.

Shaw Floors ( makes the decision of selecting flooring simple by offering an upload-your-own visualization tool, allowing customers to try on a floor in their own room before saving it to their profiles and taking it to a dealer. Finding flooring is easy through clear navigation, consistency from offline campaigns to online and design and care recommendations. The rich site experience makes choosing flooring an inspired act, rather than overwhelming and utilitarian. Each of these are shining examples that manufacturing brands can be sexy, inspiring and informative -- both online and off.

The web is both a direct response vehicle and a brand builder. It is a medium that can create value with a smaller budget and establish a connection with the consumer, regardless of brand category. In this web-made world, customers expect 24-7, open access to brands and information. They no longer differentiate between channels and often head to the web first to research a product pre-purchase. Manufacturers can no longer leave them standing in an empty store with no one there to help them. Otherwise, those shoppers will quickly turn to the brand that can.
(Source: Advertising Age, 1/5/09)

Thursday, January 8, 2009

5 Tips for Making The Most of Your Business Plan

5 Tips for Making the Most of Your Business Plan

1. Take the long view and do long-term planning. Map out where you want to be five years from now and how you plan to get there.

2. Write the plan yourself. You will learn more about your business by doing so.

3. Think of your plan as a living document. Review it regularly to make sure you are on track or to adjust it to market changes.

4. Share the plan with others who can help you get where you want to go—such as lenders, key employees and advisors.

5. Understand that you might pay a price in the short run to obtain long-term business growth and health.

(source: SCORE "Counselors to America's Small Business." )

Tuesday, January 6, 2009

Automotive Media Rethink

Possible Automotive Media Rethink

According to a recent analysis of BIGresearch's SIMM database by Prosper Technologies, wide gaps exist between how ad dollars have been spent versus what consumers say works best when it comes to buying a car. The Prosper analysis and media allocation model utilizes the SIMM Survey of 17,231 consumers to determine "what" and "which" media forms are most influential to consumers for buying a car, the consumption of the media, and pricing of various measured media.

Changes demanded by Congress and proposed by the automakers should include a reallocation of advertising dollars, says the BIGresearch summary. The study analysis apparently considers a disproportionate allocation of spending on TV versus other media out of balance with consumer actions.

And, combined with consumer analytics from the SIMM Survey, the report concludes that the amount of radio consumed, its influence to purchase, combined with lower costs makes it a stronger media option for automakers, which, according to consumers, is under-utilized.

Source: Ad Age Domestic Ad Spending by Category (2007)/Measured media from TNS Media Intelligence's Strategy, Prosper Media Allocation Model

Monday, January 5, 2009

Why Local Sports May Pay Off for Marketers During Difficult Times

Investing in Community Events Can Win Consumers.

Marketers have it wrong, according to Richard Luker: In a time when consumers are hunkering down in a bad economy, they yearn for the community of local events rather than the big national ones advertisers gravitate toward. And at a time when people are making and maintaining friends virtually on the internet (and marketers put more spending there), people actually need more social networking the old-fashioned way -- face to face.

As chief strategy officer of TBA Global, an event-marketing agency, Mr. Luker has a vested interest in more money for community events. But that's not the only reason he's proposing that U.S. marketers divert $30 billion of the $300 billion they spend annually on media and marketing into local events such as Minor League Baseball, small-college and high-school sporting venues and local parks. The case for that shift, to be spelled out in his book, "Simple Community," next year is that social, economic and technological factors have been making community events increasingly important -- with smaller arguably meaning better.

Why support local teams when marketers are stretching budgets and may need to allocate what spending they have to big-league sports that command the most eyeballs? "Major League Baseball, while I like it, is not about me," Mr. Luker said. "Minor League Baseball is about me and my neighbors. I can feel like I am with my community. Reality around us is saying we want and need more of that."

Recent backlash
Mr. Luker, who has been tracking people's recreational preferences broadly for more than two decades (in 1994, he launched the ESPN Sports Poll), said one thing that's emerged from recent polls that he's never seen in the past quarter century is a backlash against conspicuous consumption and waste. "There's a general perception in the American population that corporations are less than responsible in the way they spend their money, and it is clearly unacceptable."

So Citibank owning naming rights for the new Mets stadium after getting government bailout money may not go over so well, he said, but support for community events seen as a necessary part of daily life could go over better. "I believe there is a complete misunderstanding of how to play this," Mr. Luker said. "What companies are doing is stopping any kind of investment that has to do with the gathering of people. ... That's a big mistake, because American brands I believe are going to be held accountable for the fact that they withdrew the kinds of things they provided as comfort during good times at the times people needed it the most."

Consider that while attendance for Major League Baseball was down 1.1% to 78.6 million last year, attendance was up 1.1% to 43.3 million for Minor League Baseball. Attendance rebounded to a record not seen since 1949 in 2004 and has continued setting records ever since -- despite there being only half as many Minor League teams today as in 1949.

And while the Arena Football League called off its 2009 season due to financial problems, its minor-league affiliate with 25 teams, Arena Football League 2, continues. Mr. Luker, a consultant to the latter, advised the AFL to get even more local by going with 100 teams. He's also advised the launch of an online portal by which Division II NCAA colleges can attract sponsors and events at their facilities -- -- which he said has surged past initial estimates to attract 300,000 visitors monthly. Now he's advising the National Federation of High Schools in a similar effort to build sponsorship support for high-school sports and theater.

Crises can help
Crises may actually help, not hurt, Minor League Baseball and other largely inexpensive and highly local events, said Mr. Luker, who started tracking attitudes about recreation immediately following 9/11 and continuing through such events as the start of the Iraq War, Hurricane Katrina and most recently the financial collapse.

Following 9/11, strong majorities ranging from 65% to 75% of people said sporting events and sponsorships should continue as planned. "Americans care about and need times of social gathering," he said. "And it's not just sports and entertainment, but also the holiday parties at work."

Even during the Great Depression, he said, spending on recreation didn't decline, remaining at around 2% to 3% of gross domestic product. That has shot up to 5% in the past 10 years, perhaps fueled by greater need, but also financed by a lot of unsecured debt.

Extra opportunities
In fact, he sees more opportunity for marketers to step up funding of events at local parks and recreation centers, which will see budgets slashed by cash-strapped local governments in the next year. His surveys have found 31% of adults ages 18 and up typically have visited a park within the past week, and 70% have visited one within six months, creating a potentially huge audience for marketers. "Invest in the things people need and want right now," Mr. Luker said. "They'll tell the story. And when they do, they'll value you."

Moreover, he said, the virtual gathering of people in social networks is only intensifying the need for real community gathering, not supplanting it. "Kids now are able to see the whole world," he said. "It's worldwide, but it's an inch deep. And there's this pane of glass that separates them from experiencing that entire world."
(Source: Ad Age, 12/29/08)