Guest Column: Sure thing: Consumers are uncertain

It does not matter if you believe consumer anxiety is perceived or real. The question for business owners is, “How do I succeed in the coming months until consumer spending shifts positive?” Below are eight thoughts that deserve consideration.

1. The old axiom that humans, like animals, run in herds is very true. Humans in a positive economic beat will keep up with the Joneses. If their neighbor just lost his job, spending switches to a cautionary mode.

A business response to a tightening economy can be best understood in a joke:

Two hunters in the northern Minnesota woods heard a giant bear breaking down the door. One hunter immediately started putting on his tennis shoes. The second hunter quipped, “You’re not going to outrun a bear!” The quick reply was “You’re right; all I have to do is outrun you.”

Businesses are in a sprint for market share. If a business is weak or disabled, there is cause for alarm. After consumer spending tightens, some businesses fold, sell or come out weaker when the economy turns around.

2. The sales strategy for 2008 is probably not the sales strategy that you employed for 2005 and 2006. To begin, look around to see if the changed economy has potentially opened up new customers to your product or service.

For example, men’s sales in 2008 have risen compared to 2007. A possible understanding of this is that men may be returning to the “dress for success” model in order to be more competitive.

From a marketing standpoint, there are two questions that need to be explored. The first is a change in the core customer. Do you have fewer core customers? Do they purchase less frequently? Are they spending less with each transaction? The correct answers to these questions will help you with both your messaging and distribution of message.

The next question: Is now the time to invest in technology? Many businesses are pushing this investment in an attempt to target core customers at a lower cost.

3. A business owner is either a long-term or short-term player. Decide realistically where you are in your business plan and adjust accordingly.

4. How has your business model changed? A big change has come to the mortgage brokerage business. A once active business sector is finding fewer financial resources to offer its customers. There also is renewed and tightening scrutiny on the industry.

During times of change, macro decisions impact the local marketplace. Another example is Ford Motor Co., which in an effort to improve vehicle sales has introduced a dealer advertising co-op plan to encourage more local spending.

These changes in relationships with suppliers, franchisors, etc. can greatly impact your business decisions.

5. The consumer is investing in values. When times become tight, buyers strengthen their ties to family, places of worship and self-values. How does your product or service fit into this process?

6. Take a look at your products, and price them accordingly. Each business has three different products from a pricing standpoint. There are products you sell – core products that must have good price and value scores to compete. There are products you advertise to motivate customers to visit the business now. And there are products that generate strong profits, generally in-store add-on purchases. Knowing the differences in these products helps a business maximize its return on investment.

7. Leaders emerge during slow economic times. Which individual or outside firm is consistently adding value to your business with acumen, discipline and attitude?

8. Reputations are made in soft times. The business that continues to promote will come out of the slower times with an improved market share. Those who apply themselves diligently during slower times earn respect.

Paul Wannenmacher is owner of Springfield-based Wannenmacher Advertising Co. Inc. He can be reached at paul@wannenmacher.com.