Farnaz on Featured, New World People, New World Companies, New World Strategies, New World Trends, New Realities

3 key issues to address in 2013 (yea, just 3)

Happy new year.  I really don’t know of anyone who is sad 2012 is over—are you?  We’ve had another tough economic year filled with so many predictions and prophecies that didn’t come true–and some did.  As we start 2013, pundits with crystal balls start forecasting trends everywhere…top 10, bottom10 …hey, I did my own last year.  But this year, I realized that I’ve been among many reading and analyzing trends all year.  What am I expecting or forecasting to happen as the clock turned at midnight on January 1st?  Are we confusing trends and forecasts with new year’s resolutions, or simply creating a marketing need?

Unlike new year’s resolutions, most meaningful trends are long lasting, creating long term evolutionary changes.  So this year, instead of adding to your long list of bookmarks of what’s hot and new, I’d like to give you 3 simple key issues that have been of critical importance these last few years that were ignored by most….and still remain critically important in 2013 and beyond.  That isn’t to say that you should ignore trends and forecasts, but instead of staying glued to your rear-view mirror, you need to start using your peripheral vision and address these 3 key issues for your company in a meaningful way in 2013. What better way to predict the future than to create it yourself.  Ignore and blow off at your own peril, but at least take a quick look:

Economy trumps other emotional needs:  The world has been in an epic economic crisis since 2008.  Economic forecasts may vary slightly from year to year, but a full recovery is still far away.  More importantly, economy continues to be top of mind issue for people in general—not just business people concerned about taxes and fiscal cliff, but also consumers who want to know what your company can do to pitch in and make their lives a little easier.  Unless you represent a luxury brand, you should get moving.  You don’t have to be the giant Starbucks focusing on driving job creation through small business loans and housing financing…I don’t know how that program is working for them, but it’s highly visible and talked about.  But at the very least, your marketing campaign should tie-in and relate to your consumers’ needs and expectations during tough economic times.  Economy and price are no longer rational decisions, they are very much an emotional need and decision that needs to be addressed in a meaningful way in your marketing campaign.  Simply dropping your price is as just as dangerous as passing all your operational cost increases to your customers.  Price relative to your competition is a strategic decision that should not only accompany a re-evaluation of your delivery systems, but also a marketing communication strategy that tells the story of your brand relationship to your customers.

Step into The New World Marketplace:  If you’ve ignored my top 3 major macro trends so far, you no longer can afford to do so in 2013.  Women, youth and multiculturalism are shaping our future.  If you were following our recent Presidential election closely, you’d know that despite our tough economy, these 3 macro trends led to President Obama’s re-election.  Women are 50% of work force, 51% of population and control 85% of consumer buying decisions…Gen Y is 3x the size of Gen X, soon to be the majority of work force and your consumers, and the most diverse generation in human history….for every 2 men graduating from college, 3 women are and with better GPAs….1 out of 4 kids being born in the US has a parent who is an immigrant…multicultural population accounted for ALL of the US under-18 population growth in the last decade and in just 12 years (2025) more than half of US families will be multicultural (excerpts from The New World Marketplace).  If you haven’t re-evaluated your target yet, do so now. Are you still treating women, youth and multiculturalism as a marketing niche or segmentation add-on?

Differentiate authentically: Growth of digital communications and technologies have changed the marketing game for some time now.  We are continuing along that path, and there will always be something new every hour–and that’s not a new trend in 2013.  Your consumers have so many choices, so many alternatives, and so much control, and they see the world so noisy that they can’t hear or see you.  They are in hot pursuit of truth and authenticity and willing to engage with you if you are.  Differentiation is always a strategic gate keeper for success, but it is no longer enough just to differentiate—because people and companies spin, exaggerate and lie.  So the consumers may not believe you when you say you are better or different.  Proof is only useful if it leads to belief.  You have to gain their trust, attention and engagement by holding true to core values and principles through authenticity and transparency.  Only then, you can change your customers’ beliefs and consumption behaviors…and are ready to chew gum and do social media at the same time.

I know…I know…. I gave you a list too, because I’m a marketer at heart and I want you to open and read my blogs (see I’m being authentic and transparent).  But it’s only 3 things that you should remember….3 key issues that should’ve been addressed by now, and are critical for your success in 2013.

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The Emerging Middle Class Culture In America

We are about to redefine the culture of middle class in the US, and most people and companies are not aware.  Some of us who are, ignore it or simply not happy about it.  Just the word “multicultural” draws in polarized reactions.  This is one of the three macro trends that I define as imperatives for business and social success in the future.  And it is shaping the emerging middle class in America.

I remember the marketing days when Latinos were primarily segmented into the lower income category.  But that is no longer the case, is it?  According to a new Nielsen report published last month, Latino’s income growth during the past decade has significantly surpassed the nation’s average.  Although 43% of Latino’s still earn below $35k/year (versus 35% total), 36% earn $35-75k (at par with 34% total) and growing at a higher rate.  What may be even more surprising to most is that 10% earn $75-100k, which is a 31% growth since 2000…. and 11% over $100k per year, which is a dramatic 71% increase.

Over 52 million strong, or 1 in 6, Latino buying power of $1 trillion in 2010 will change to $1.5 trillion by 2015.  You can expect Latino population and buying power to continue growing even with the decline in the immigration numbers.

Let’s put this into context… There are more Latinos in the US than Canadians in Canada, Malaysians in Malaysia, or South Africans in South Africa.  Latinos in the US represent second-largest Latino nation, right after Mexico, and before Spain, Columbia and Argentina.  If a standalone country, the buying power would be one of the top 20 economies in the world.

In my November blog, how to reach the fastest growing Asian market, I explained how the Asian market is over-indexing the US national average in just about every meaningful consumer category—specially in income, education and family size.  With this recent study showing Latino income on the rise, we can safely say that the landscape of American middle class is rapidly changing into a multicultural mosaic.  We are about to redefine the culture of middle class in America, which will in turn redefine every aspect of the pop culture, consumerism, politics, economy and business.  Just think of how branding strategies will have to shift for retail, residential buying, food, education, financial services, transportation, entertainment and media.

American marketers have never relied on a broad-stroke depiction of White consumers.  They should keep the same mindset when it comes to Latinos and other racial/ethnic groups.  Stereotyping the Latinos or Asians in the US will not be any different than stereotyping Caucasians.

According to Census, among US children, Hispanics are already 1 in 4 of all newborns.  Hispanics, Asians and multi-racial children accounted for all the US youth growth in the last decade.  Think of how this will define the next generation of our country.  The multi-racial children are clearly the result of inter-racial marriages.  Marriage across racial and ethnic lines has doubled since 1980, with 41% of all intermarriages in 2008 between Hispanics and whites, 15% between Asians and Whites, 11% between blacks and whites, and 16% in which both parties are non-white.

Contrary to the popular belief on language barrier, Neilsen particularly notes that Latino consumers’ usage rates of smartphones, TV, online video and social networking/entertainment makes this group one of the most engaged in the digital space.  During February 2012, Latinos increased their visits to social networks/blogs by 14% from a year ago.  This is also true for all multicultural population as Gen Y is the most racially and ethnically diverse generation in American history.  Unlike the ethnic groups in previous generations assimilating in the mainstream culture, the new and young multicultural populations take big pride in their ethnic and cultural backgrounds, and are considered acculturated.

This article is not intended to be an advertising campaign for Hispanic media and agencies.  For me, it is critical to add that older, white males are just as much part of the multicultural societies as any other ethnic groups.  I define Multiculturalism by a mosaic of different cultures in one platform, and a society that is ethnically and culturally diverse.  That does not mean excluding Caucasians or implying ethnic minorities only.

So, how are you defining or stereotyping your multicultural initiatives?

 

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My 2012 Trend Predictions

In the process of final editing & proofing of my book, I realized a lot of my forecasts and predictions pertain to the future.  But how about 2012? There are so many exhuastive predictions on surveys, blogs and conversations.  Many believe that 2012 prophecies have already happened in 2011.  So I decided to devote a blog to my own 2012 trend predictions before we’re too far into it.

Any one of these can easily have its own blog.  But here’s a quick recap:

  • Economy will get better.  We’re already seeing this in financial market, regardless of the bitter political debate on media.  Not sure how long it will last, but we will see consumer confidence and business revenues go up this year.  With the mild winter that we’re having (rolling over a bad one from prior year), if your business is not up, something is wrong internally.
  • The buzz about women controlling 85% of all buying decision will get louder and finally get Corporate attention–with seminars, conferences & media coverage, including my own book.
  • Racism & Sexism will be far more intolerable than previous years.   Gender lines & roles will blur even more.  You will see manifestation of this in politics, marketing/advertising and all social conversations–online and off line.  Get ready to embrace an androgyneous mind.
  • You will start hearing “Asia” a lot more….just as strong as the Latin craze we’ve had these past few years.  (Read this blog)
  • And it’s no longer just China & India–you’ll hear more about Vietnam, Indonesia & other Asian countries.
  • Luxury brands will start targeting China & India.  Even Middle East.
  • Asian and African countries grow their middle class, while US share of global middle class keeps declining.
  • Muslims will go under marketer’s radar in the US, and globally.
  • Green & social responsibility will be included in all successful Corporate strategies.  It is no longer just about products & services–it’s also about making this world a better place to live.
  • Marketers & advertisers will focus more on authenticity, keeping it real, brand heritage, eco chic, and more is less.
  • Savvy marketers will target savvy customers who are social consumers–ie 20% high sharere on internet to reach the other 80%–aka early adopters.  A bigger shift in social media towards branding.
  • Last two years have been all about social media.  This will be the year of the Mobile platform.  The capabilities of phones & tablets will grow immensely.  Remote work is on the rise…!!!
  • Get ready for social TV.  All media & social devices will come together to offer us TV experiences wherever and whenever we want.
  • Multiculturalism will rise beyond a racial discussion and will extend into fashion, colors, food, music…all lifestyle pillars.
  • Focus on food health will shift from low fat or high protein to gluton-free, wheat-free, less processed, and going LOCAL.
  • With boomers staying younger & more fit, expect to see a higher % of ad dollars for them.
  • Multigenerational households will become common with boomers retiring and Gen Y moving back home.

Are you seeing or hearing any other major trends for 2012 that I should add to this list?  Love to hear your thoughts.

I’ll end this by telling you how excited I am that we finished all the final editing of my book–I even proofed a printed sample last week.  I realized how much information I packed in a very small book–you could finish it in 1-3 settings.  I’m sure the content will resonate with you.  We should be going to print in a week or so, and my next blog will give you the timing and ordering details.

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Middle Class Shrinking More, Is The American Dream Dying?

We are living in a country with increasing income inequality and politically dividing in a bitter debate.  Is the growing wealth gap in America a race to the bottom with wages?  Can we blame China or India for this ongoing shrinkage of middle class?  Is it a multicultural or immigration issue – or is the American Dream dying?  Everyone is frustrated, but what do American leaders need to do?

Let’s start with some sobering facts recently published:

  •  The top 1% of Americans control nearly a quarter of all the country’s income, the highest since 1928 (The Stanford Center for the Study of Poverty and Inequality.)
  • The US ranks #3 among all the advanced economies in income inequality.
  • In 2007, the top 10% of American earners pulled in 49.7% of total wages, the highest since 1917.
  • The share of middle-income jobs in the United States has fallen from 52% in 1980 to 42% in 2010.
  • Middle-income jobs have been replaced by low-income jobs, which now make up 41% of total employment.
  • Wages and salaries have fallen from 60% of personal income in 1980 to 51% in 2010.
  • On Tuesday, the Census Bureau reported the U.S. poverty rate rose to 15.1% in 2010, up from 14.3% in 2009 and its highest level since 1993.
  • 22-million, or 19% of, people have wages below poverty line.  That’s $20k/yr for a family of four.

We can’t blame China or India for this.  The low wage jobs are in service sectors not going overseas:  healthcare, hospitality, restaurants, entertainment…not just agriculture. Is multiculturalism and immigration growth a part of this?  Yes.  That’s the labor force who is willing to do the jobs no one else wants to do for less pay and degrading quality. American businesses are heavily dependant on consumption dollars of the less affluent consumers.  So cut spending, cut more labor, raise prices….you are only declining your own revenues and market share by increasing hollowness in the middle.

It’s true that the rich got richer, the poor got poorer.  Professor G. William Domhoff at University of California reports that although overall income had grown by 27% since 1979, 33% of the gain went to the top 1%.  Meanwhile, the bottom 60% were making less: about 95 cents for each dollar.  20% made $1.02 for each dollar, but top 5% made $1.53 for each 1979 dollar.  Norton & Ariely reported in 2010 that about 85% of all wealth is concentrated among 20% of the population, and over 95% of all wealth among 40% of the population.  The lowest two quintils (bottom 20% & second-lowest 20%) hold just 0.3% of the wealth.

The reality is that this type of income polarization is leading to retail changes.  Proctor & Gamble is adopting an “Hour Glass” marketing strategy, designing and selling products aimed at high-and-low consumers, with not much in the middle.  Of course, that is easy to do for a brand that owns at least one product in 98% of US households.  Heinz is following P&G, but high end brands like Saks and Mercedes continue with their focus on high end ‘aspirational’ shoppers, they never targeted the middle class to being with.  More affluent customers are likely to continue at their consumption levels, but they will not make up any slack caused by declines among less affluent.  Marketers must seek new ways to increase product sales among the more affluent, or find successful new offerings for their existing patronage.

There is something to be said about engineering low price products for the low-end consumers, but that’s at the risk of trading down the middle class even more and compromising quality.  As long as all operating cost increases are passed on to consumers for the benefit of the top 1% with short term margin focus, there will be no shifts to the disaster we are facing.

We are living in a debt-valued country, and the poor owe more.  This is partially reflected in the movie Too Big To Fail on HBO, but we didn’t hear that the bottom 80% of Americans account for 73% of all debt with only 15% of net worth and 7% of all financial wealth (source: Edward N. Wolff, Economist, 2010).  The burden of debt will limit the purchase decisions of goods and services….or foregoing purchases altogether.

I think we all can agree that we are still looking at a homogeneous business leadership in majority of the big US companies that can not possibly relate emotionally on how their decisions are impacting customer’s lives, and ultimately their profits long term.  They loathe quotas for gender and racial equality because that means they have to forsake their own biases and prejudices.  And I am not suggesting to put the money in the hands of the unqualified.  But maybe it is time to redefine the qualifications of business leaders.

I always believed that American Dream is far beyond owning a new car or very first home.  It is about grabbing life by the bootstraps and lifting up, out, and beyond whatever class, cast, gender, race, role, economic and lifestyle existence that we have or were born into.  It is all about the spirit’s deep desire for freedom, self-determination, and self-expressed achievements.  Then why can’t we start by having a better representation in Corporate leadership of the society we live in, for better checks and balances.  Putting more emphasis on Character than just IQ.  Truly understanding the multicultural shared values.  Lead by examples, and be the leaders people want to follow.  Exchange our short-term EBITDA obsession for the long-term success of our companies…or at least have a better balance.  Think profit sharing, and maybe then, and only then, we will gain talents and customers that will help our companies and economy succeed, and keep the American Dream alive!

 

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