Perhaps you read recently of P&G's decision to test "Tide Basic".  Also Abercrombie & Fitch plans to lower prices after standing firm on premium pricing over the past year.  Travelzoo's recent email headline was "NEWSFLASH: Worldwide Air Sale from Chicago, $49 & up".  And the Wall Street Journal reports that the average home is about a third cheaper than it was at the peak three years ago, a plunge unprecedented since the Great Depression.

What's going on?  Is it capitulation to the economic mood?  Or is something more fundamental - something worth pondering after all these months of lower revenues and squeezed margins?

• "Now, some of the biggest innovations in our company are geared toward making products more affordable," says P&G Chief Technology Officer Bruce Brown.


• "Consumer spending patterns domestically continue to be dictated by cost and value propositions, and this is clearly a headwind for our premium brands," Abercrombie Chief Executive Michael Jeffries said during a conference call.


•  "It's not terrorism this time," said David Swierenga, an aviation economist. "It's a sea change in demand."


• A June 2009 survey commissioned by the National Foundation for Credit Counseling, found a deep-seated pessimism about home ownership.  One third of respondents don't believe that they will ever be able to own a home. And 42% of those who once purchased a home, but don't own one now, believe that they'll never own one again.

I have to admit, I had been secretly cheering for Michael Jeffries.  He was a holdout on discounting and stood firmly confident in Abercrombie's premium brand positioning.  But now I'm no longer a fan.  The message in his last investor call was actually twofold - yes, the consumer spending patterns have changed...and oh by the way they stumbled on the fashions.  A bad time to get the value proposition wrong.

I think globalization and the US economic downturn have intersected to motivate a more selective, more discriminating consumer.  It just might be that economies like China and India are teaching us something important: our deeply held convictions about US consumerism are being challenged.  What we want and what we need are being defined more clearly, and we can no longer afford sloppy behavior.  If we choose to be extravagant, it had better be worth it.  And if we find a lower cost way to get what we need, we feel savvy - not like cheapskates.  And the persistence of the movement to "do without" shouldn't be underestimated.

It's time to face up to the fundamental questions of category relevance and brand value, because in this environment there is nowhere to hide.

I love reading the letter to shareholders that frames up the annual report for public companies.  There is so much to learn about the culture and strategy of the company, and the tone of the CEO.  I also look to the letter to get some insight about the market focus of the corporation...or the apparent lack thereof.  Probably I have always done this, but I began doing it more overtly after Peter Darbee, Chairman & CEO of Pacific Gas & Electric, wrote the following introduction to the 2005 PG&E annual report:

 
DEAR STAKEHOLDERS:

In 2005, PG&E celebrated 100 years of providing gas and electricity to Californians. At the start of our second century, our new focus and direction may best be signaled by this: PG&E's 2005 annual report to shareholders - our 100th - is the first ever to picture a customer on its cover.

Darbee, a former CFO, understood completely the significance of the words and pictures that accompany the financial reporting.  And what a way to establish his leadership and vision at a key milestone in the company's history.

I was curious to see if there's some sort of award for best annual report, and of course they are numerous.  In fact the League of American Communications Professionals (LACP) specifically gives an award for best letter to shareholders.  I wondered if I would agree, and was surprised to find I absolutely agreed with last year's award recipient.  Here's the opening:

To our shareholders, associates and customers:

When I look back over this past year, one thing stands out very clearly. The hard work and exceptional efforts of our two million associates, managers and leaders around the world paid off by year-end.  In fact, the year really took off during the second half. What brought it all together was WalMart living the mission of saving people money so they can live better. Whether it was in the United States, the United Kingdom, Mexico or Brazil, we positioned ourselves as the unbeatable price leader.  Our customers appreciated it and our shareholders understood it.

Lee Scott, President and CEO, WalMart

How cool to have shareholders, associates and customers each called out in the salutation and opening paragraph!  PG&E's "dear stakeholders" covers the same territory, but Scott makes it personal.  And I think we all know that WalMart had a successful 2008.

Just for fun, I took a look at last year's annual report at General Motors.  I expected to be underwhelmed, but I was astounded.  In 3352 words, the 2037^th was customer - and it was the only mention: "We've begun delivering 100 Chevy Equinox Fuel Cell SUVs to customers in the U.S. and Europe, to create the world's largest hydrogen fuel-cell test fleet."  And check out Rick Wagoner's introduction:

DEAR STOCKHOLDERS:

A century is a long time to be in business. For General Motors, it's been a century of leadership and achievements, of challenges and opportunities. A centennial is a great time to reflect on and celebrate the past. But for us, it's more than that...it's an opportunity to look forward to our next 100 years.          

Rick Wagoner, Chairman & CEO, GM

Ouch!  "Dear Stockholders" - and then three sentences focused on the past, and one on looking forward.  Hardly inspiring, and wow, what an omission of the customers and employees that matter.  I was thinking about how hard it would be to write a 3352 word letter and not mention customers or consumers.  You'd think the words would creep in almost by accident, regardless of the strategy of GM.  No one needs to throw more stones at GM, but it is a stunningly inward letter. 

I checked out PG&E's report they just issued - and I'm glad to say that Darbee is staying the course:

The most important thing we provide to our customers doesn't flow through pipes or wires.  It's the confidence that their utility is a company they can count on.  And it flows from our 20,000 men and women, who share a collective commitment to reliability in all we do.

As a leader, as an investor, as an employee - take a look at what your own company is saying, and let me know your thoughts.  And just for fun, here's a link to what may be the only intentionally humorous annual report being published.  https://www4.acuity.com/acuityweb/about/relatedtopics

I had lunch a few weeks ago with Janet Cho in Cleveland.  As we were leaving the restaurant, she pulled her keychain from her purse and I couldn't help but notice that the key ring was loaded with loyalty cards.  I immediately asked her if I could take a picture.  There was something so compelling about the visual of dozens of loyalty cards in a veritable "wheel of fortune" that I knew I wanted to preserve it.

It seems that everywhere I go, sales people and cashiers are asking me if I have their brand of loyalty card.  "It just takes a minute..."  

If I say "no", they immediately invite me to sign up, and sometimes offer me an immediate discount if I'll agree.  If I say "no" again, two things begin to happen.  The store associate starts to sell harder, and I start to feel guilty and often feel obligated to give some explanation about why I'm declining.  My final "no thank you" ends the transaction in an awkward silence.

If I say "yes", the store associate is delighted.  I seem to be a prize, and now I'm special.  I fill out the obligatory sign-up form, growing more hesitant with each additional question - especially the phone number and email address.  I walk out with my loyalty cards - one for my keychain, and one for my wallet.  And then my work begins.  Where do I put the cards?  Will they fit in my wallet?  Do I really want it on my keychain?   Do I give one to my husband?  And what am I really getting for all this effort?

Fast forward to www.shopittome.com - a website and shopping service you may never have heard of, but you will.  From their website: "Shop It To Me began after one too many frustrating trips to on-line retailers. We were tired of finding out about on-line sales too late...Why couldn't we just give someone our preferences and have them search for us?"

So they decided to create a different way to shop.  A quick sign-up to let them know the things you're interested in (handbags - no, shoes - yes, etc.), the brands you want, and your sizes (no worries if you're a different size pant, skirt and top) and you're on your way to having an online personal shopper.  I love it - a Salemail^TM only shows me what I want to see, and I get to choose how often.  You can even pick the retailers you want, and exclude those you don't.

Now why didn't one of my loyalty cards offer me something like that?

The smart marketer will think about marketing programs from the customer's point of view.  It seems we are inundated, however, by programs that have the company's goals in mind.  Loyalty card marketers would be well-served to post a picture of Janet Cho's keychain on their wall.  She covers retail business as a reporter for The Plain Dealer, so her key ring is a symbol of her work.  For the rest of us, loyalty cards are just so yesterday.

I just returned from keynoting the eighth annual Texas MBA Women in Business Leadership Conference held in Austin last week.  It was such a great event - attended by McCombs women, alumni, and friends.  Preparing for the speech gave me a chance to reflect on my career as a woman in business, and it was fascinating to share stories along with the other panelists and speakers.  

The logo for the conference inspired me to reflect on the symbolism that shoes have for women.  And not just any shoes, but elegant and sleek almost-too-high heels.  The ability of shoes like these to instantly communicate to women is undeniable.  You know you're one of us, it says.  An irresistible invitation to connect with other like-minded women.  This is elemental targeted marketing.

I became friends for life with Ann Sulkowski Marsh when she and I were at Kellogg together.  Even today, I remember how her shoes inspired and accelerated my own love of them.  She shopped at Jacobson's in Michigan, and her shoes were beautiful.  I yearned for the budget to own shoes like Ann.
 
The day I got an email from Nordstrom, pairing my favorite clothing brand - Eileen Fisher - with my favorite shoe brand - Stuart Weitzman - was such an interesting day for me.  As a customer, I was thrilled.  As a marketer, I was intrigued.  Did they really understand my purchasing behavior and put that program together?  Or do these brands have an affinity for each other, and they just guessed?  Or a happy accident?  It hasn't happened again, and my disappointing conclusion is that my shopping behavior was not the trigger.  But it gave me hope.
 
I marvel at the missed opportunities to put two and two together in a meaningful way for customers.  How often our favorite brands and companies market to us as if they have no clue about what we buy or how we behave.  My highest levels of exasperation come when my bank spends the money to send me an invitation to use online banking services.  Could it be that hard for them to check and see that I have been a power online banking user for years?
 
McCombs reputation continues to grow as a marketing center and I have to say I was impressed with what I saw.  In this tough economy, campus recruiting is not business as usual, yet several of these talented women were weighing offers from Dell, P&G, General Mills, Dr. Pepper, Essilor and Frito-Lay. 

Special thanks to Kristin Hibner for inviting me to speak, and thanks to Lauren Burton, Andrea Shortell, Marcy Copeland, Caroline Ewing, Lindsay Duran and Melissa Sprinkle for their tireless efforts in putting together an inspirational conference.  Thanks also to Professor Vijay Mahajan, for meeting me for coffee and engaging in a lively conversation about CMOs, and also delighting me with his "intuition" about female CMOs and the special qualities they bring to organizations. 

http://blogs.mccombs.utexas.edu/alumni-news/2009/02/23/alison-heiser-former-cmo-of-banta-and-kimberly-clark-addresses-wblc-%e2%80%9cthere-are-no-rules%e2%80%9d/#more-2219

Consumer packaged goods (CPG) marketers have long been preaching that the mass market no longer exists…yet the trusted toolkit of a CPG marketer continues to be dominated by mass market tools: TV, print, coupons, displays – all virtually the same as the past several decades. Even the terms “non-traditional” and “alternative” media are not-so-subtle references to how marketers view media that includes the internet, mobile technology and entertainment on demand. This is the very media that today drives our news, shopping, and conversations with each other. Isn’t it quite normal? Quite mainstream? Even traditional?

The CMO Council and Pointer Media Network released a study in December 2008 that I found fascinating. They studied purchasing patterns of 1,364 brands to validate the “80/20 rule” – the Pareto principle that suggests that most businesses will derive 80% of their sales from 20% of their customers. Their findings: A very small slice of shoppers are responsible for 80% of brand volume…just 2.5% on average.

Surely the preaching and talk must stop on this news. The inefficiencies of using mass vehicles to attempt to reach 2.5% of shoppers can no longer be supported. Unless the mass program is all about incrementality – the other 97.5% that is mined for 20%. It would be interesting to do the math on that proposition.

I’m reminded of a conversation I had with a direct marketing agency years ago on the most important tenet of relationship marketing. Your customers want you to know who they are, and what they represent to your business. The corollary being to say “thank you.”

Do you?