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May 12, 2013

Marketing Maven: All politics is local? All marketing is local!

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Written by: Robin Itzler
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Gallup's Trend in Self-Reported U.S. Average Daily Spending, Monthly Averages by Income Since January 2008.

You could have the best product in the world and it wouldn’t help…

You could have the best advertising agency in the world to create the best marketing campaign for the best product in the world and it wouldn’t help…

You could have the most famous celebrity in the world as a spokesperson for your marketing campaign and it still wouldn’t help…

None of this would help, if people lack the money to purchase what you are selling!

Here are three leading reasons why people have less discretionary money:

1. Couldn’t find a job; went on disability
The economy is not growing and more people than ever are not working. In March, we went back to the Jimmy Carter era with the labor force participation rate falling to 63.3 percent. In April, the labor-force participation rate remained the same – the lowest in 35 years. For Americans who once cringed at the idea of a second Carter Administration, we are living it with President Obama.

The unemployment rate has come down primarily due to people giving up looking for work or accepting part-time jobs when they need full-time employment.

While the April labor participation rate remained the same as March, another statistic keeps going up: Americans enrolling in the Social Security Disability program. The program hit a record-breaking high of 8.9 million in March. Since President Obama was sworn into office in January 2009, more people have gone onto disability than have joined the workforce.

Nowadays almost any medical issue can be labeled a disability, which only hurts those who are truly disabled. The Marketing Maven asks: If someone can’t perform job “A,” can’t they get job “B” rather than collect a government check?

The answer to that question comes from Gary Bauer, president of American Values:

America’s changing attitude toward work. There used to be a powerful stigma against idleness. That stigma has largely vanished.

…Industriousness is no longer extolled as a virtue in America. Many disability claimants are men who in previous eras would have been either employed or spending all their time looking for any work they could get. Now they simply don’t have enough incentive to work — the government is there to finance their inactivity.

2. Obamacare reducing workers’ hours

The Affordable Care Act requires employers to offer health coverage to all their full-time employees. The only way to get around the law is by making your employees part-timers (30 hours or less a week).

With a reduced salary, part-timers must still find the money to purchase health coverage as required by the new law.

In his article, “Will the health care law put full-time jobs on life support? Obamacare & Business,” John Luciew wrote –

Among all the possible business side effects of Obamacare, the increased trend toward part-time work could be one of the biggest. It’s already happening, and the employer rules of the healthcare law don’t even kick in until 2014.

…It could set the stage for a two-tiered employment system, with only skilled workers enjoying full-time work and benefits — while many others are shunted to part-time status.

The Marketing Maven predicts that once the law’s tentacles become embedded in our landscape, 30 hours per week will become the new normal, reducing many more middle-class salaries.

No matter how good your marketing campaign, if potential customers are working fewer hours and still must purchase health insurance, they’ll have fewer discretionary dollars for whatever you are selling.

3. Boomers are retiring

Many Boomers are retiring, some to the good life. Others are forced to apply for early Social Security since they were unable to find employment in today’s lifeless economy. Retirees who are petrified about living longer than their money will hesitate to spend beyond the necessities.

According to an April 8, 2013 report released by the Insured Retirement Institute (IRI), just 37 percent of Boomers surveyed said they were confident in their retirement preparation, down from 44 percent in 2011. The annual report found that 61 percent don’t anticipate their financial situation improving anytime soon.

Ronald P. O’Hanley, president of Fidelity Investments which provides asset management and corporate services, recently gave a speech in Washington at the “Capital Markets Summit” sponsored by the U.S. Chamber of Commerce of the “looming catastrophe” –

If tens of millions of Americans reach retirement with insufficient savings, the impact on our citizens, our economy and our national security could be catastrophic — and not something we could solve for most retirees after the fact.

I’m not sure what would be worse, millions of elderly unable to house and feed themselves, or the intergenerational strife that surely would erupt if young people are forced to lower their standard of living to pay for our failure to act in a timely manner to avert this crisis.

All marketing is local

The lackluster economy is not going to improve in the near future, but you can improve your business’s opportunities with the right marketing campaign. To paraphrase former U.S. Speaker of the House Tip O’Neill, “all marketing is local.”

Knowing consumers have fewer discretionary dollars, focus on local marketing campaigns that reach your primary customer base. There are dozens of archived Marketing Maven columns that highlight specific marketing promotions.

Also consider the local media. Every morning northwest Orange Countians start their day with news and information from Orange County Breeze. Each month, nearly 90,000 readers receive its print magazine.

The Marketing Maven can’t get any more local than sitting with her laptop reading the Breeze while sipping her morning coffee.

Featured photo

The featured photo for this Marketing Maven article is a reduced copy of Gallup’s Trend in Self-Reported U.S. Average Daily Spending, Monthly Averages by Income Since Janary 2008. A full-sized version of the same graph appears below.

Gallup's Trend in Self-Reported U.S. Average Daily Spending, Monthly Averages by Income Since January 2008.

Gallup’s Trend in Self-Reported U.S. Average Daily Spending, Monthly Averages by Income Since January 2008.

Gallup’s analysis of the data (emphasis added):

Gallup’s self-reported consumer spending measure suggests an absence of the usual seasonal spending increases seen in March and April. This is consistent with the slow sales many retailers reported and the overall slowing of the economy in recent months. It may also reflect the delayed impact on consumer spending of the elimination of the payroll tax holiday. It is also possible that the weak March jobs report is playing a role.

While one might expect falling gas prices at the pump to provide consumers with the ability to spend in other areas, this does not appear to be the case as of yet. Gallup does find that increased consumer optimism about housing prices has a “wealth effect”: that is, as Americans see that the value of their home has increased, they feel their personal balance sheet or wealth has also increased, leaving them in a stronger financial position — having higher net worth — and thereby making them more comfortable spending. In turn, financially comfortable consumers may have a positive impact on consumer spending over time.

Consumer spending remains key to the growth of the U.S. economy, particularly upper-income discretionary spending. While economic confidence has been on the rise, such an increase in confidence may be a necessary, though perhaps not sufficient, condition for increased spending. Real improvement in the economy is more likely to be based on a real improvement in the job market.

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About the Author

Robin Itzler
Robin Marlena Itzler has worked in some facet of marketing, communications or training throughout her career. Recognized for her marketing expertise, Robin is theMarketing Maven for the “Orange County Breeze,” where her columns intertwine marketing and politics. She also authors the Pet Tails feature in the monthly “Breeze” print edition and Market My Words in Pet Sitters International's "World" magazine. As a training coordinator and public speaker, Robin is involved with a variety of projects – facilitating public speaking, writing and generational differences workshops. She and her husband own Royal Care Pet Sitting, which has been serving pet owners since 1998. Their love for animals began as humane shelter volunteers where for nearly 20 years they walked and bathed rescued dogs. A former NASD licensed securities representative, Robin once served as president of the Animal Assistance League of Orange County In 2011, she founded Motivate Your Something. Along with her autobiography, Life Is an Open Seating, Robin promotes her belief that everyone has at least one challenge in life that makes getting to the starting line harder. What is Robin's something? She is legally deaf.


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