So by now you may have heard about the government shutting down. Like most people, you probably think that it isn't going to really affect you, that this is just another example of a distant, ineffectual body politic squabbling with itself. Life will go on as normal, and no one who isn't being directly furloughed will even notice. That's the general feeling, anyhow.
We are now solidly a week into this problem, and for the most part, the world continues to turn as it did before. Take a walk down Main Street, USA and you will still see people walking dogs, eating at restaurants, and shopping. Nothing has changed, right?
Well, actually, wrong. While the gears of the economy have not ground to a halt, this shut down is contributing to a pretty substantial slow down. Let's think on a few things.
About 800,000 federal workers and contractors have been straight up shelved, told not to come to work because they can't get paid.
Assuming a very modest average salary for these people (let's say about $40,000 per year, to be very conservative), regular taxation and bi-weekly pay schedules, that would give us about a $1,250 paycheck.
So off the bat, that is a billion (with a 'B') dollars that won't be going into the economy next week.
But the much, much bigger issue comes from a general disconnect in terms of how the average American thinks about the budget and government spending. We hear a lot about deficits and huge numbers that make it sound like those fat cats in Washington are literally just burning piles of freshly printed currency to keep warm. The reality though, is that the deficit in Washington is money in the pockets of Americans.
Over $3.5 Trillion. That was the 2012 budget. Now, a bit of that went to paying the interest on government debt (a good thing), and a very small portion of it went to foreign aid of various types (questionable), but the majority of it goes to domestic programs, in agriculture, energy, education, infrastructure, etc..
Now, you can argue, correctly, that there is a lot of waste in government spending, but again, how we talk about "waste" is a big part of the problem. You can say that the inefficiency in government contract sourcing means that they pay above-market rates for projects, and often be right, but that money doesn't disappear because it wasn't used in the most cost-effective way. Here is an example:
Government spends $22.5 million for bridge repairs that should have only cost $18 million. So where does that extra $4.5 million dollars go? Based on the general conversation around budgets, it is "wasted."
Reality:
Extra $4k in overtime and holiday pay for construction workers who normally aren't supposed to put in for over 40 hrs a week to keep costs down for their employer, Dave's construction
- They spend this money on shoes for their kids, a mortgage, gas, and maybe a few dinners out
Extra $800k for John's Concrete, who normally has to low-ball material costs in a tough market just to get contracts, hurting his margin
- Not having to give a bottom-dollar quote allows Dave to also pay a fair price for his lime, stone, etc., sharing that money with his suppliers, who again spend that money down the line
Extra $20k for Steve the architect, who is going to finally get to put those new cabinets and floors into his kitchen
- Meaning a bunch of that money is going to pay the woodworkers and wholesalers who fix
kitchens...
You get the point. Senators aren't just keeping all that money, it doesn't get shot into space or disappeared in an accounting trick. That "waste" becomes walking around money for the average American. Think of the government as a rich drunken sailor on a port call; it may
not spend its money wisely, but when that ship pulls in, everyone in
town knows that it's going to be a good week for business.
Too abstract? How about this:
My company, like a lot of small businesses, relies on government contracts for a large portion of our revenue.
Because of the shut down, contracts that were due to be renewed the first week of October, or new contracts that were about to be signed and processed, could not be finalized. Our customer contacts in the government don't have the freedom to spend their budgets now.
This hurts our bottom line. We are making less money as a company because of the shutdown, directly.
Moreover, we as employees, get compensated in large part based on the performance of the company, in the form of bonuses. When the company does well. we get paid well. When the company doesn't do well, our paychecks shrink.
This government shutdown is costing not just the collective taxpayers money, or costing just corporations money, it is costing regular people, who don't work for the government.
I don't work for the government, but the shutdown is affecting my paycheck. In turn, I am not going out to eat as much, I am not buying the things I normally would, and I am not going to the movies. In short, I, and millions like me, are not 'paying it forward,' as it were. Consumer spending is still what drives the economy, and government spending is still a very large part of the liquidity that allows consumers to prosper.
Let's get this government open again, shall we? I want to go back to supporting the economy.
Wednesday, October 9, 2013
Wednesday, October 2, 2013
Ballmer Doesn't Get Microsoft/Bing's Problem
So, outgoing (as in leaving, not friendly) Microsoft CEO Steve Ballmer fired off some parting shots while unveiling the new Bing logo and design during the company's financial analysts meeting, aimed primarily at Google. Unfortunately, despite the fact that he was addressing a very pertinent topic with a lot of room for discussion, he came off as simply bitter and out of ideas.
[edit: I didn't get around to finishing this post in time, so I am going to focus on some of the less time-sensitive aspects]
Basically, the problem boils down to a lack of identity and direction. On one hand, Microsoft is asking people to switch from their default search engine, without realizing what a big thing that is. In terms of customer loyalty, most CPG, QSR, or durable goods manufacturers would KILL to get the kind of consumer loyalty that Google has. So saying, "come on, just switch search engines" isn't such a casual request. Thus, in order to tempt those users and get them to break away from a product that has served them well, you would think that Microsoft would work hard to differentiate themselves from the competition, and hammer their USP (unique selling proposition).
Does Microsoft do that? No! They consistently, including in this recent rant by Ballmer, point out that their algorithms are pretty similar to Googles, and can usually return almost the same results.
Okay, and...
Oh, you were done?
So their big pitch to break entrenched consumers out of their searching habits boils down to, "We're pretty much as good as the one you are using now." Very compelling. Maybe you want to try that again?
Remember the recent commercials (part of a huge (and largely unsuccessful) advertising blitz over the last few years by Microsoft to steal market share from Google), during which a catchy song plays while comparing the boring Google homepage skin to the awesome, 'picture-a-day' element of the Bing homepage? Yeah, that's better. Use Bing for reasons that have nothing to do with the service it provides, but because it has a better background. Fail.
What else ya got?
Perhaps the most absurd thing about Ballmer's recent comments was his attack against Google for having a monopoly, and suggesting that anti-trust action should be taken against them by the government. For one thing, Microsoft accusing anyone else of using monopolistic business practices, or having effective control of too large a portion of any market, is just ridiculous on its face, given their own past in that respect.
But it also speaks again to the company's, and Ballmer's, complete 'forest-for-the-trees' lack of understanding of the environment they are in. Google doesn't control the end-to-end supply chain the way that Microsoft did, nor have they forced adoption of their service by setting up harmful deals with all of the hardware suppliers, or abused foreign markets. Google separated themselves early on in a crowded marketplace and have given users a reason to stay with them along the way.
Google has given us a search engine, e-mail service, cloud storage and collaboration capacities, blogging platform (this one), video hosting service, maps, calendars, site analytics, and so much more, all free to the user (depending on how you value things like user data and captivity). Microsoft has given us Bing, and then a bunch of products that they want to sell us (operating systems, phones, etc.), all while doing very little to actually entice me to spend time on their platform.
Instead of improving their product though, Microsoft has decided to just stamp their feet and declare the whole system to be unfair. Now, as a marketer, I have had my problems with Google (especially as they hide organic search keywords), but as a user and observer, I wouldn't say that fairness is the issue in terms of the search product. Maybe their marketing practices are heading in that direction, but as a search business they have been pretty heavily scrutinized by governments in North America and Europe, and haven't been hit too hard yet.
Microsoft assumed that just being their huge selves would be enough to climb into the search market and succeed, and they have done nothing but miscalculate at every juncture.
Since they are facing a leadership vacuum right now, here is a little free advice (consider this my application for Steve's position):
- Offer something of value to the consumers you want to court.
- Being an alternative is not, in isolation, a value proposition.
- Understand that a single platform isn't enough anymore, you aren't competing with Google as a search engine, you are competing with Google as a service provider.
- Provide a range of free services, even if you have to buy them.
- Along those lines, buy Intuit and link Bing to Mint. Or buy Twitter, and expand your partnership with Facebook. Or buy Hulu, and make it free (get rid of premium) to signed in Bing users. Or buy LinkedIn. Get the picture?
- If you are going to compete for marketing dollars, you need reach across platforms, and a broader range of ad formats that you can bundle.
Maybe not all of those are feasible, but you have to do something, since your current strategy of doing nothing isn't working, and whining about it turns people off.
You know that when Google releases their OS (and it's a 'when,' not an 'if'), it's going to be free. Think about that the next time you try to give my computer what is basically a virus and charge me $499 for it.
[edit: I didn't get around to finishing this post in time, so I am going to focus on some of the less time-sensitive aspects]
Basically, the problem boils down to a lack of identity and direction. On one hand, Microsoft is asking people to switch from their default search engine, without realizing what a big thing that is. In terms of customer loyalty, most CPG, QSR, or durable goods manufacturers would KILL to get the kind of consumer loyalty that Google has. So saying, "come on, just switch search engines" isn't such a casual request. Thus, in order to tempt those users and get them to break away from a product that has served them well, you would think that Microsoft would work hard to differentiate themselves from the competition, and hammer their USP (unique selling proposition).
Does Microsoft do that? No! They consistently, including in this recent rant by Ballmer, point out that their algorithms are pretty similar to Googles, and can usually return almost the same results.
Okay, and...
Oh, you were done?
So their big pitch to break entrenched consumers out of their searching habits boils down to, "We're pretty much as good as the one you are using now." Very compelling. Maybe you want to try that again?
Remember the recent commercials (part of a huge (and largely unsuccessful) advertising blitz over the last few years by Microsoft to steal market share from Google), during which a catchy song plays while comparing the boring Google homepage skin to the awesome, 'picture-a-day' element of the Bing homepage? Yeah, that's better. Use Bing for reasons that have nothing to do with the service it provides, but because it has a better background. Fail.
What else ya got?
Perhaps the most absurd thing about Ballmer's recent comments was his attack against Google for having a monopoly, and suggesting that anti-trust action should be taken against them by the government. For one thing, Microsoft accusing anyone else of using monopolistic business practices, or having effective control of too large a portion of any market, is just ridiculous on its face, given their own past in that respect.
But it also speaks again to the company's, and Ballmer's, complete 'forest-for-the-trees' lack of understanding of the environment they are in. Google doesn't control the end-to-end supply chain the way that Microsoft did, nor have they forced adoption of their service by setting up harmful deals with all of the hardware suppliers, or abused foreign markets. Google separated themselves early on in a crowded marketplace and have given users a reason to stay with them along the way.
Google has given us a search engine, e-mail service, cloud storage and collaboration capacities, blogging platform (this one), video hosting service, maps, calendars, site analytics, and so much more, all free to the user (depending on how you value things like user data and captivity). Microsoft has given us Bing, and then a bunch of products that they want to sell us (operating systems, phones, etc.), all while doing very little to actually entice me to spend time on their platform.
Instead of improving their product though, Microsoft has decided to just stamp their feet and declare the whole system to be unfair. Now, as a marketer, I have had my problems with Google (especially as they hide organic search keywords), but as a user and observer, I wouldn't say that fairness is the issue in terms of the search product. Maybe their marketing practices are heading in that direction, but as a search business they have been pretty heavily scrutinized by governments in North America and Europe, and haven't been hit too hard yet.
Microsoft assumed that just being their huge selves would be enough to climb into the search market and succeed, and they have done nothing but miscalculate at every juncture.
Since they are facing a leadership vacuum right now, here is a little free advice (consider this my application for Steve's position):
- Offer something of value to the consumers you want to court.
- Being an alternative is not, in isolation, a value proposition.
- Understand that a single platform isn't enough anymore, you aren't competing with Google as a search engine, you are competing with Google as a service provider.
- Provide a range of free services, even if you have to buy them.
- Along those lines, buy Intuit and link Bing to Mint. Or buy Twitter, and expand your partnership with Facebook. Or buy Hulu, and make it free (get rid of premium) to signed in Bing users. Or buy LinkedIn. Get the picture?
- If you are going to compete for marketing dollars, you need reach across platforms, and a broader range of ad formats that you can bundle.
Maybe not all of those are feasible, but you have to do something, since your current strategy of doing nothing isn't working, and whining about it turns people off.
You know that when Google releases their OS (and it's a 'when,' not an 'if'), it's going to be free. Think about that the next time you try to give my computer what is basically a virus and charge me $499 for it.
Friday, September 20, 2013
Chipotle Takes a Stand, And No One Saw it Coming
So first, here is the video that I will be talking about: "The Scarecrow"
Here is a reaction to it: MediaPost Blog
Now, I'm sure that opinions will be mixed with regards to the question of the tone of the video, and whether it make the viewer think more highly of Chipotle or not. You can argue that the video is overly aggressive, ominous, or preachy, but you can't say that it is refusing to take sides.
Here are a few things to keep in mind that set this video apart though, while you think about it. This video has over five million views, but it is hardly an advertisement. It's over three minutes long, which means that it can't really be run as an ad in any traditional format (not tv, not pre-roll, not any standard OLV inventory), and it isn't written in a way that would allow a short version for distribution through these channels.
It doesn't really try to sell the product, other than by contrast and innuendo. The only tangible thing it really seems to promote is a game that I have never heard of, and that I don't think they really need to support the business case for this video The Chipotle branding/logo doesn't even appear until the "credits" at the very end, except for one second where they imply it with an image of pepper that requires a previous familiarity with the brand.
For all of the things this creative isn't doing though, there is no question about the statement that they are making, or how they are looking to differentiate the brand. The thing that is so stunning about this piece is that in a single stroke, they are not only creating a new brand identity, but cementing it. Normally it takes a company years of subtle branding to get consumers to identify them with a concept, movement, ideology, or ephemeral 'value.' After this though, can you name another corporation that will be more identified with the "real food" movement?
To put this in context, we also need to look at what other brands have done along these lines. Think about Walmart's recent campaign, in which they show customers reacting to what they think is farm stand produce, only to find out that it is Walmart produce, or when they do the same thing with steaks at a steakhouse. The implication is that you can get high quality, fresh food from a mega-mart at low prices, but it is being compared to food of equally questionable provenance when it comes to the evils of large scale agri-business practices and quality. They are just saying, "our food isn't WORSE" than that.
Also relevant would be the McDonalds commercials that show multi-generational farmers lovingly caressing potatoes in a bucolic, perfectly imagined setting. Father and son, real salt-of-the-earth types, marveling at this (implicitly) natural and organic creation they have raised. Then letting you know that they only put the very best things into their french fries. You can close your eyes and imagine that some McDonalds truck is driving around the heartland, going to different farms, interacting with gnarled old farmers, and finally paying them a good price for their perfect free-range potatoes. You certainly don't want to close your eyes and think about chicken nuggets, and whatever goes on behind THAT scene.
The point is that these other companies are trying to make a similar point by omission, rather than addressing the issue directly, because they don't really have a leg to stand on. Walmart can't go trashing Monsanto, and McDonalds can't complain about livestock conditions, because it just wouldn't hold up to scrutiny. These companies have long, well-known histories of PR problems in their supply chains, and it is going to take a long time to subtly shift that perception without being blatantly disingenuous.
This leaves a big opportunity for a company like Chipotle to step in and position themselves as a fast food company with a soul, an option in a marketplace crowded with villains that you can feel good about. This video makes me think hard about eating there, and I am normally a Qdoba guy from way back.
Of course, this opportunity is also fraught with peril, because they are writing an awfully big check with this video. All of the goodwill this might generate will be countered two-fold if it turns out that they source their food in roughly the same way as everyone else. By throwing this gauntlet down and shifting the conversation in the competitive QSR arena to the ingredients, they are begging for more scrutiny into where their food is coming from, so I really hope that their house is in order.
Here is a reaction to it: MediaPost Blog
Now, I'm sure that opinions will be mixed with regards to the question of the tone of the video, and whether it make the viewer think more highly of Chipotle or not. You can argue that the video is overly aggressive, ominous, or preachy, but you can't say that it is refusing to take sides.
Here are a few things to keep in mind that set this video apart though, while you think about it. This video has over five million views, but it is hardly an advertisement. It's over three minutes long, which means that it can't really be run as an ad in any traditional format (not tv, not pre-roll, not any standard OLV inventory), and it isn't written in a way that would allow a short version for distribution through these channels.
It doesn't really try to sell the product, other than by contrast and innuendo. The only tangible thing it really seems to promote is a game that I have never heard of, and that I don't think they really need to support the business case for this video The Chipotle branding/logo doesn't even appear until the "credits" at the very end, except for one second where they imply it with an image of pepper that requires a previous familiarity with the brand.
For all of the things this creative isn't doing though, there is no question about the statement that they are making, or how they are looking to differentiate the brand. The thing that is so stunning about this piece is that in a single stroke, they are not only creating a new brand identity, but cementing it. Normally it takes a company years of subtle branding to get consumers to identify them with a concept, movement, ideology, or ephemeral 'value.' After this though, can you name another corporation that will be more identified with the "real food" movement?
To put this in context, we also need to look at what other brands have done along these lines. Think about Walmart's recent campaign, in which they show customers reacting to what they think is farm stand produce, only to find out that it is Walmart produce, or when they do the same thing with steaks at a steakhouse. The implication is that you can get high quality, fresh food from a mega-mart at low prices, but it is being compared to food of equally questionable provenance when it comes to the evils of large scale agri-business practices and quality. They are just saying, "our food isn't WORSE" than that.
Also relevant would be the McDonalds commercials that show multi-generational farmers lovingly caressing potatoes in a bucolic, perfectly imagined setting. Father and son, real salt-of-the-earth types, marveling at this (implicitly) natural and organic creation they have raised. Then letting you know that they only put the very best things into their french fries. You can close your eyes and imagine that some McDonalds truck is driving around the heartland, going to different farms, interacting with gnarled old farmers, and finally paying them a good price for their perfect free-range potatoes. You certainly don't want to close your eyes and think about chicken nuggets, and whatever goes on behind THAT scene.
The point is that these other companies are trying to make a similar point by omission, rather than addressing the issue directly, because they don't really have a leg to stand on. Walmart can't go trashing Monsanto, and McDonalds can't complain about livestock conditions, because it just wouldn't hold up to scrutiny. These companies have long, well-known histories of PR problems in their supply chains, and it is going to take a long time to subtly shift that perception without being blatantly disingenuous.
This leaves a big opportunity for a company like Chipotle to step in and position themselves as a fast food company with a soul, an option in a marketplace crowded with villains that you can feel good about. This video makes me think hard about eating there, and I am normally a Qdoba guy from way back.
Of course, this opportunity is also fraught with peril, because they are writing an awfully big check with this video. All of the goodwill this might generate will be countered two-fold if it turns out that they source their food in roughly the same way as everyone else. By throwing this gauntlet down and shifting the conversation in the competitive QSR arena to the ingredients, they are begging for more scrutiny into where their food is coming from, so I really hope that their house is in order.
Thursday, February 14, 2013
Baseball is Almost Back!
So, the first Vegas lines for the baseball season
are out, from the Atlantis. Obviously, it's a long season and probably
the hardest sport to predict in terms of wins losses, but here are some
obvious stand-outs at this point (wins over/under):
Nationals: 90 wins. I would take the over, hard. This team won 98 last year and improved, and while the Braves should be better, the rest of that division stood still or got worse. Leading to...
Marlins: 64 wins. It might be close, but under is a better bet. They won 69 last year, and while bad chemistry might have hurt them, that team had a half year of Reyes, Hanley, Buehrle, and Johnson. Now they have Stanton and... Seriously, name other players on this team.
Red Sox: 79.5 wins. I admit to being biased, but I say over. Now, I know this team was awful last year, but that was a perfect storm of such epic proportions that I don't think that the 10-win bump this opening line is giving them is enough. This should be at least a .500 team on paper, so you are basically getting 3 wins on the house here.
Royals and Pirates: 79 wins. Tempted by the over? People have been predicting youth movements on both of these teams to propel them to big leaps forward for several years now, only to see them disappoint each year. This could be the year, right? Eventually, it has to be for one of them. The AL central, outside of Detroit, is going to have a lot of winnable games with Cleveland, and the White Sox in limbo, and the Twins in full rebuilding mode. The NL Central will be more competitive, with the Cubs improved and no more Astros to beat up on, but Pittsburgh can't fade so badly in the second half again, can they?
Nationals: 90 wins. I would take the over, hard. This team won 98 last year and improved, and while the Braves should be better, the rest of that division stood still or got worse. Leading to...
Marlins: 64 wins. It might be close, but under is a better bet. They won 69 last year, and while bad chemistry might have hurt them, that team had a half year of Reyes, Hanley, Buehrle, and Johnson. Now they have Stanton and... Seriously, name other players on this team.
Red Sox: 79.5 wins. I admit to being biased, but I say over. Now, I know this team was awful last year, but that was a perfect storm of such epic proportions that I don't think that the 10-win bump this opening line is giving them is enough. This should be at least a .500 team on paper, so you are basically getting 3 wins on the house here.
Royals and Pirates: 79 wins. Tempted by the over? People have been predicting youth movements on both of these teams to propel them to big leaps forward for several years now, only to see them disappoint each year. This could be the year, right? Eventually, it has to be for one of them. The AL central, outside of Detroit, is going to have a lot of winnable games with Cleveland, and the White Sox in limbo, and the Twins in full rebuilding mode. The NL Central will be more competitive, with the Cubs improved and no more Astros to beat up on, but Pittsburgh can't fade so badly in the second half again, can they?
Tuesday, December 25, 2012
Gun(s out of) Control
Ok, forget "watch this space."
The second amendment is a legitimate thing.
However, we can amend the Constitution. Remember how black people couldn't vote, or that booze was once illegal, and is now legal again? Just fix the amendment, if it isn't working. The NRA, who represents the main obstacle to such a change, doesn't represent the majority of gun owners, but there isn't a current alternative. The politicians and the American people need to break the back of the NRA and create a more moderate group.
That said, just banning assault weapons would not have necessarily stopped many of the mass shootings in American history. Handguns are responsible for most US killings, assault weapons just happen to be used in some of the more high profile killings of white people. That comment aside, don't consider this a race argument (though the perpetrators of mass shootings also tend to be white). My point is just that $200 .32 caliber pistols flood the streets, while $1,200 bushmaster rifles tend to be a bit more rare (and not concealable enough for every day crimes)
Understand the following caveats:
1.) I am a gun owner, and I enjoy hunting and target shooting
2.) If the government said that they were banning handguns, I would turn mine in.
A heavily armed society isn't good or bad in a vacuum, but it will lead to more violence. Period. For some reason people seem to think that "leveling the playing field" will cause criminals to think twice. Of course, if they were thinking twice about consequences, they wouldn't be criminals in the first place. This is an Occam's Razor situation. More guns means more people being shot. While it may not be true in every society, it is true in ours.
We need to do a lot of things to reduce gun violence, and obviously a lot of those things have nothing to do with the guns themselves, but solving social issues. Still, there are a few things that just make sense:
1.) Make it harder to get a gun legally. We have to take multiple tests and have a learner's permit for months and demonstrate responsibility to drive cars, because they are dangerous. Why is a gun any different? Make a person take shooting lessons, pass a written and practical exam, and interview with the police in order to have the ability to buy a gun.
2.) Close the gun show loopholes. This should be self-evident.
3.) Ban the assault rifles (or at least the high-capacity magazines) because it makes sense, not as an emotional reaction to a particular incident. On this note, it is important to recognize that it really is the magazine that's the issue here, not the gun itself. Which looks scarier?
or
But both can take a 30-round clip and are semi-automatic rifles. Appearance should have nothing to do with the debate, aside from the psychological make-up of people who feel the need to own a "military-style" weapon as civilians.
4.) Get rid of guns that are out there now. By the best scientific estimates out currently, there are about a zillion guns in America, give or take a few. Changing any existing laws about new ownership or purchase won't change that. We need to get guns back out of circulation. One of the best ways to deal with that is the Japanese model, under which the right to ownership of a firearm isn't something you inherit. If a man dies, his kids don't inherit his guns (for which only he was licensed), they get turned in by the estate. Tie the specific gun to a specific license.
5.) Limit the number of guns you can own/purchase. Again, this is about angering the few to protect the vast, vast majority. I'm not suggesting an unreasonable limit, how about 6? 8? 10? Let the people decide, who make up this new non-NRA gun owner's group. But don't let the extreme members of the community hold common sense hostage. This goes for clip size as well. Hunting and target shooting don't require more than 5-7 shots (in fact, most ranges and fish & game departments don't allow more than that). Let the nuts make a compelling argument for why they would need more.
There's a lot more that could/should be done, but that's a reasonable start.
Update: Off topic, but I solved America's taxation and economic problems. I have a solution that will address both the revenue generating and spending problems. The solution will appear here shortly.
p.s. - Happy Holidays
The second amendment is a legitimate thing.
However, we can amend the Constitution. Remember how black people couldn't vote, or that booze was once illegal, and is now legal again? Just fix the amendment, if it isn't working. The NRA, who represents the main obstacle to such a change, doesn't represent the majority of gun owners, but there isn't a current alternative. The politicians and the American people need to break the back of the NRA and create a more moderate group.
That said, just banning assault weapons would not have necessarily stopped many of the mass shootings in American history. Handguns are responsible for most US killings, assault weapons just happen to be used in some of the more high profile killings of white people. That comment aside, don't consider this a race argument (though the perpetrators of mass shootings also tend to be white). My point is just that $200 .32 caliber pistols flood the streets, while $1,200 bushmaster rifles tend to be a bit more rare (and not concealable enough for every day crimes)
Understand the following caveats:
1.) I am a gun owner, and I enjoy hunting and target shooting
2.) If the government said that they were banning handguns, I would turn mine in.
A heavily armed society isn't good or bad in a vacuum, but it will lead to more violence. Period. For some reason people seem to think that "leveling the playing field" will cause criminals to think twice. Of course, if they were thinking twice about consequences, they wouldn't be criminals in the first place. This is an Occam's Razor situation. More guns means more people being shot. While it may not be true in every society, it is true in ours.
We need to do a lot of things to reduce gun violence, and obviously a lot of those things have nothing to do with the guns themselves, but solving social issues. Still, there are a few things that just make sense:
1.) Make it harder to get a gun legally. We have to take multiple tests and have a learner's permit for months and demonstrate responsibility to drive cars, because they are dangerous. Why is a gun any different? Make a person take shooting lessons, pass a written and practical exam, and interview with the police in order to have the ability to buy a gun.
2.) Close the gun show loopholes. This should be self-evident.
3.) Ban the assault rifles (or at least the high-capacity magazines) because it makes sense, not as an emotional reaction to a particular incident. On this note, it is important to recognize that it really is the magazine that's the issue here, not the gun itself. Which looks scarier?
or
But both can take a 30-round clip and are semi-automatic rifles. Appearance should have nothing to do with the debate, aside from the psychological make-up of people who feel the need to own a "military-style" weapon as civilians.
4.) Get rid of guns that are out there now. By the best scientific estimates out currently, there are about a zillion guns in America, give or take a few. Changing any existing laws about new ownership or purchase won't change that. We need to get guns back out of circulation. One of the best ways to deal with that is the Japanese model, under which the right to ownership of a firearm isn't something you inherit. If a man dies, his kids don't inherit his guns (for which only he was licensed), they get turned in by the estate. Tie the specific gun to a specific license.
5.) Limit the number of guns you can own/purchase. Again, this is about angering the few to protect the vast, vast majority. I'm not suggesting an unreasonable limit, how about 6? 8? 10? Let the people decide, who make up this new non-NRA gun owner's group. But don't let the extreme members of the community hold common sense hostage. This goes for clip size as well. Hunting and target shooting don't require more than 5-7 shots (in fact, most ranges and fish & game departments don't allow more than that). Let the nuts make a compelling argument for why they would need more.
There's a lot more that could/should be done, but that's a reasonable start.
Update: Off topic, but I solved America's taxation and economic problems. I have a solution that will address both the revenue generating and spending problems. The solution will appear here shortly.
p.s. - Happy Holidays
Thursday, February 2, 2012
Income Inequality is the New Market Inefficiency (aka "Marketing Moneyball")
I think that there is a good chance that the new market inefficiency is income inequality.
There is no question that the distribution of wealth, as well as income in this country has grown more uneven over the last couple of decades. Whether or not you care about this or find it “bad” is irrelevant to this discussion and a topic I am not going to touch, but the fact that the gap is widening is not a debate, it’s a matter of public record (the government is good at keeping track of other people’s money). All I care about here is what the effect is on brands and advertisers.
Here is a table of income distribution in the US over the last 30 years:
Top 1% | Next 19% | Bottom 80% | |
1982 | 12.80% | 39.10% | 48.10% |
1988 | 16.60% | 38.90% | 44.50% |
1991 | 15.70% | 40.70% | 43.70% |
1994 | 14.40% | 40.80% | 44.90% |
1997 | 16.60% | 39.60% | 43.80% |
2000 | 20.00% | 38.70% | 41.40% |
2003 | 17.00% | 40.80% | 42.20% |
2006 | 21.30% | 40.10% | 38.60% |
What we are seeing is that the bottom 80% of the country has seen their share of income decrease by 20% over a period when the US as a whole saw strong economic growth as well as a population increase. The amount of purchasing power lost when over 200 million people see their relative income decline is staggering.
Before you say that it is misleading because it is relative to the total growth in wealth, the answer is that it’s not. Professor G. William Domhoff of UC Santa Cruz pointed out that from 1983 – 2004:
“Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%. A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the '80s, '90s, and early 2000s (Wolff, 2007).”
How does this all tie back to brands? I mean, there is more money in the country, so does it matter who is spending it? Well, that depends on your brand.
BMW is going to be just fine. The number of people who had the buying power to get a luxury car remains the same as before, even in a down economy. If you are a brand that relies on a broad consumer base from the upper-middle class and down however, there is a good chance that this is a paradigm shift, rather than just a short-term cycle.
Brand managers are not economists, so it is understandable that a lot of them would look at poor sales data over the last few years and think, “Well, the economy is down, so everyone hurts, but we will come back with the recovery.” There are several problems with this though, and the biggest being that despite what the man on the street might think, there has been positive, though slow, growth for the last several quarters. Like our hypothetical brand manager though, this assumes that the growth is evenly distributed, but the reality is that it is focused on several sectors.
The recent market troubles provided a volatility that muddied the economic waters to a degree, obscuring long-term trends by drawing focus to the post-2008 environment, focused on housing and finance. The problem is that overall GDP growth and wealth creation is no longer increasing the buying power of the widest part of the consumer base in this country, and brands need to recognize this.
Think about it this way: You make Tide, or Gain, or some other name brand laundry detergent. Total amount of money in the system is increasing, but primarily flowing towards a small number of people who already hold a disproportionate amount. The vast majority of your consumers have actually seen their real buying power (based on income levels pegged to an inflation index) decrease, so they move to cheaper store brands, or buy your product only when there is a coupon/discount offer.
For your brand to just break even, the top 20% of earners in America would have to suddenly start consuming more of the same product, without adding any new consumers. So the well-to-do family, which has gone through 1 bottle of Tide per week forever, suddenly has to start using 3 of them per week. Rich babies will need to start dirtying their diapers at a much higher rate inexplicably. This isn’t going to happen.
We have seen an explosion in interest in savings, discounts, and couponing. There are huge blogs dealing with the subject, and even multiple television shows. Cable subscriber rates fall along with telephone landlines, lagging by ten years. The important thing is realizing that this behavior is not symptomatic of short-term economic slowdown, but long-term trends that started well before the banking crisis.
Growth will slowly increase over the next 6-12 quarters, and unemployment will slowly drop, but probably not to pre-2008 levels any time soon. Meanwhile, population continues to increase, almost entirely in the bottom 80% of the income scale, which still possesses the lion’s share of purchasing power in this country. For a lot of brands, krazycouponlady.com is more relevant to their consumers than BMW, and they need to embrace that. When the economy comes back, they can’t be surprised that their sales never fully returned, and that their profit margins actually shrank.
The flipside of this is that there is a huge opportunity for brands that recognize the shift and respond to it first. If General Mills stubbornly tries to stay the same, and cover their cereal boxes with QR codes that drive to an altered-reality experience (which is not cheap), while Kellogg suddenly cuts overhead and production costs, accepts a slimmer margin but positions themselves as the middle ground between store brands and premium brands, they will reap the benefits.
The majority of buying power as a market group has shifted down a step, roughly 20%, compared to the post-WWII era which saw the growth of the middle class and a large industrial/manufacturing sector when many marketing practices and brand identities were established. We have entered a new reality, and the brands that accept this first will have a vital head-start in dominating the “new middle-class.” Advantage is gained by exploiting market inefficiency, and failure to differentiate between overall economic market conditions versus buying power demographic shifts is that inefficiency.
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