Marketing Mojo With Stephanie Fierman

Let’s talk about Audi and the choices it seems to have made regarding its newest advertising work.

Audi USA’s new campaign is based on the “Green Police,” a band of roving law enforcers who try to protect the environment.  “You picked the wrong day to mess with the ecosystem, plastic boy,” says a Green Police enforcer to a clueless grocery shopper in Audi’s Super Bowl ad. “A man has just been arrested… for possession of an incandescent light bulb,” says a reporter.  Here’s the ad:

There are even educational YouTube videos, like this one that tells you how many napkins to take per sandwich.

Hoo-HOO! Hilarious.

But if your brand had a history that was, you know, linked to the largest human massacre of all time, how funny would an ad have to be for you to go ahead anyway?

Audi’s problem is that there’s already one Green Police in history - a Nazi organization associated with the forced labor and extermination of millions of innocent people.  Audi is one of the companies that converted its factories to make automobiles and heavy artillery for the Nazis.  Both Audi and Volkswagen have been named in multiple lawsuits filed by Holocaust survivors and their families over the years.

So the social media campaign and the TV ad comes out… and some people are upset.  Others race to defend Audi’s advertising process, e.g. Audi did lots of research prior to launching the campaign, and it showed the ad to Jewish organizations and Holocaust survivors who were not offended.

These comments just reinforce Audi’s deafness.  Did Audi know in advance or not?  Which would be worse?  And as for the defense that the company showed the ad to some Jewish people… there were thousands of people of multiple faiths caught up in what happened during WWII, and there are human beings of all faiths who could be offended by such a reminder.  We are all citizens of the world - and we are all consumers with money to spend on new cars.  And if I’m not in the market for a car, I can assure you that I talk to someone on Facebook or Twitter or at work who is - someone who values my opinion.

This isn’t about religion, it’s about brand.  It’s about judgment.  It’s about customers.

What was the judgment that Audi made here? As PR flak Melanie Lockhart says on her blog, “Lockstep on PR, “Even if you don’t personally think so, from a PR strategy perspective, it doesn’t matter.  As soon as someone takes reasonable exception to anything an organization does (and especially if that someone has an audience), you’ve got a potential issue on your hands.  Can you reasonably predict that a campaign with resonances of the Holocaust will offend people? I think so.”

Others on the Web haven’t been so charitable.

Audi volunteered for a big kick in the gut. Why - for a social media campaign? To spend $3 million on a single :30 Super Bowl ad insertion, when said ad drags so much negative baggage with it?  If I were CMO, I’d like to think that I never would have seen the concept in the first place, because my agency would have considered and rejected it. But if it had gotten to my desk and I’d reflexively typed “[Fill in the Blank] Nazis” into Google, it’d have been lights out.  No chance to debate whether or not an ad may or may not offend anyone.  Why take the chance? 

In this case, there simply isn’t enough funny in the world to balance the scale. It’s not as if there’s “another side” to the Holocaust.  This isn’t the same as being “offended” by a bunch of guys farting in a TV ad.  Even if you are one of these folks - in the words of Help A Reporter Out Founder Peter Shankman on Twitter, “Nothing good can EVER come from a PR campaign involving Nazis.”  

In a world where trust is a brand’s greatest asset, one’s very first filter has to be good taste.  Audi had no reason to take this kind of risk.  It makes cars that people love - one guy calls  his Audi TT “lovable and charismatic.” The company doesn’t have any controversial point to prove, and the brand doesn’t need shock value. Why take this road?

And in case you think I’m being overly sensitive, or perhaps that killing the campaign would have been tantamount to censorship, you may have a tin ear.  It’s not about us.  It’s about the audience and the message you want them to receive.

Be tough.  Put ideas to the test.  If one person can “reasonably predict” a problem, don’t hogtie the work and your reputation by asking for a punch in the face. There are plenty of great ideas out there that won’t generate over 100,000* negative mentions on Google.  Go find one.

* On February 14, 2010 a Google search on “Audi Nazis Super Bowl” yielded 107,000 results.

Is Santa the best marketer ever?

Think about it:

Long-term reputation management: No Tiger Woods problems here. Ever.  Do you think that Coca-Cola worries that it might go to sleep one night and wake up to find a sex tape of Santa on the Web? Have you ever noticed that the whole “Mommy kissing Santa Claus” business never seems to go past a certain point (paging Charlie Sheen…)?  Nope, not gonna happen.  Santa is one reliable dude.

Brand promise and channel integration: No matter where you go, you receive the same disciplined message.  Movies, television, email, radio, social media, Web, snail mail, music, retail… You get the same message everywhere and each channel builds upon and reinforces the others.  He’s big, he’s fat, he wears a red suit and he gives you what you ask for on Christmas Eve. Not December 23. Not December 25. It’s December 24. Every year. The end.

Never any hidden charges:  There are no Congressional committees convening to discuss whether Santa is taking advantage of consumers.  There is no small print.  You are not likely to be subscribed “accidentally” to a magazine simply by unwrapping a gift beneath the tree.  Santa’s pricing appears to be entirely above board. And somehow, shipping is always free.

Brand advocacy: Think of all the parents who read stories about Santa, take their children to see Santa, tuck said children into bed on Christmas Eve with the promise that Santa will soon arrive with presents… Santa has a virtual army of adults carrying his message each and every year, in the exact way that will have the greatest positive impact on each individual child.  Wow!

Long-term view of the customer relationship: Santa is committed to NPV, and everyone’s NPV is BIG.  If you’re a  kid, he wants you to tell other kids what he gave you.  He wants you to talk to your parents and grandparents about what you want.  He wants you to bring your friends to meet him.  And when you grow up, he encourages you to invite him into your home and buy extravagant gifts in his name.  Santa: the ultimate “cycle of life” promoter.

Customer targeting and personalization: If you ask Santa for a bicycle, you’re going to get a bicycle.  You might also get socks, but if a bike is your preferred method of transportation, you won’t get a wagon by mistake. Further, Santa is very likely to build the bike in the exact color you specify. 

A message of “giving back” that’s attainable and not too sanctimonious:  Be nice, get your gift.  Be naughty, and you’re on your own.  No chest-beating, no lectures, no threatening.  Everyone knows the rules, and the rules don’t change.
 
Attributes powerful enough to overcome controversy: Santa has a problem that I don’t think any other brand has ever experienced - that is, some people don’t even believe he exists! You may not like a brand like Reebok, or Microsoft, or Hanes, or whatever, but you wouldn’t think of denying their very existence on the planet. And yet, the core attributes represented by Santa transcend even this existential challenge. Even those who ”know” he doesn’t exist still enjoy the gestalt of the brand.  Name me a pizza chain or a department store or TV manufacturer who can say the same.

I could go on (ultimate loyalty program, no channel conflict, efficient manufacturing, distribution and customer service support…), but you get the idea.

Though another Christmas has past, perhaps we should all look to Santa for guidance in 2010.  After all, his operation is well-loved, profitable, always in growth mode and he never loses customers.  I’d be happy with that.

For more marketing thoughts and ideas, check out my second blog at Marketing Observations Grown Daily.

So I walked around all last week, turning the Tiger Woods debacle over in my head, wondering if I had anything to add.  Hadn’t everyone already piled on?  Probably.  And even the thoughts I want to share with you aren’t particularly new, but that doesn’t mean they’re not worth saying.  Again. And again.

Thought #1: what should be public is now private, and what should be private has been made public.  This is an expression borrowed from Ellen Hume, currently an Annenberg Fellow and a world-renowned journalist, teacher and television commentator, among other things. 

Ellen was also the founder of PBS’s Democracy Project, which focused on citizen involvement in public affairs and was, in part, an effort to more fully leverage all the channels beyond television (that were available even in the late 90’s) in ways that tapped in to those channels’ special capabilities.  The Web is great for providing more in-depth detail than one can deliver on television, for example.

When Hume made this public/private statement, she was making the point that we seem to prefer using 24-hour channels, like the Web, to dredge up every salacious, personal detail about everything and everyone, no matter how ultimately truthful or additive to the story such details may be. By the time we beat said details to death, who even knows what was true or not but, man, what a ride.  Think Tiger here: private details that are now gruesomely public, like a neighbor claiming the golfer was snoring on the lawn and the 911 call heard ’round the world.

Contrast all this with TARP.  Could you explain what TARP is in 25 words or less? How many beneficiaries can you name? How many of them have paid back the money? What is the name of the popular American economist and Nobel Prize winner who has been particularly outspoken and critical of the program? Do you know approximately how much the U.S. government has handed out to date?

I could not answer all of these questions, but I do know that Tiger Woods’ wife used a wedge to smash in his car windows.

After you include Fannie Mae and Freddie Mac, the U.S. government has doled out over $1 TRILLION in our money. The state of the financial markets has an impact on this country, and an impact on you.  Tiger’s mistresses? Not so much. But dang it all if some knucklehead isn’t updating this story every 20 seconds. 

What is public is private and what should be private is public.  Conduct yourself accordingly.

Related Thought #2: The math doesn’t work anymore. Once something is brewing you can hope for the best, but act, please, assuming the worst.

Just this past week, a smart person I know looked at a situation in which it was possible that Company X might encounter negative press if information having nothing to do with the company was misinterpreted in the media. So this smart person did what smart people are trained to do: s/he attempted to thoughtfully quantify Company X’s exposure - for example, how many individuals might actually be impacted by the event. Everyone comfortably concluded that the answer was not very many.

That used to be a good answer. Not anymore. Now it only takes one person with a high-speed Internet connection and a beef to let millions of people know what he knows or what he thinks he knows. Dell poo-pooed Jeff Jarvis.  United ignored Dave Carroll. Comcast disregarded Mona Shaw.  One blogger with an agenda attempted to trash a model’s reputation.   An anonymous jerk on JuicyCampus.com started a vicious tirade about female Yale Law School students.  Are you next?

It takes one person to start a fire you will not be able to control.  And some form of this content will remain on the Web forever. For-e-ver.

Forget about intelligent, rational assessments of how big something might become.  By the time it’s big, it’s too late.  It could be one anonymous email, or an angry spouse or a dissatisfied customer.  Move quickly when a crisis arises, or else.

So what I hope Tiger, you and I now have in common is an understanding of the gigantic reputational risks that now exist, given the Web and a 24 hour news cycle.  My advice to normal people is to build a positive reputation online before something happens, so it’s there as a counterbalance to any threat that might arise.  I never thought I needed to recommend that one should also attempt to avoid totally avoidable, stupid acts that could unravel everything a person has built, but hey - a fresh reminder never hurt anyone.

A recent article made me think back to a post I wrote last summer titled “Stephanie Fierman Likes Plastic Gucci Sunglasses - And Is OK With It.” The post says that experts who say that not-rich consumers are essentially duped into buying luxury goods are missing a large swath of buyers who know exactly what they’re doing: that is, buying fun, knowing full well that they could buy functionality at a far lower price. Hence, Gucci vs. $10 plastic sunglasses I can buy on the street. Plastic is plastic. But that dopey logo represents an indulgence – a reward – for which I am sometimes willing to pay full freight.

BusinessWeek outlines the efforts of Dan Ariely, a behavioral economist and author of the book Predictably Irrational, who has spent the past year trying to figure out the forces that drive people to cheat (paging Bernie Madoff…)

Ariely’s very very boiled down conclusion is that individuals who are not directly faced with evidence or reminders that what they are doing is wrong are more likely to plow ahead and conversely, those who are reminded are less likely to do so. He describes a couple of experiments he used to try to measure “deception’s slippery slope.”
* Subjects who knowingly wore faux designer sunglasses later cheated twice as often on an unrelated task than those wearing authentic goods – take the first step and it’s that much easier to take the second.
* Get an auto insurance applicant to sign his name on the top of the application rather than the bottom, and he will be more honest about his driving habits – put the consequences right in someone’s face and you’re likely to get “better” behavior.

Here’s a TED video of Ariely talking about why people think it’s ok to cheat:

This has extreme ramifications – and potential opportunities – for luxury goods manufacturers like LVMH who spend a lot of money and time drawing attention to the costs of counterfeit goods.

Part of the problem is the arguments these companies use. Does the average woman – out with her friends to have a little fun on a Saturday afternoon without a lot of money – have any sympathy when the luxury companies are described as the chief victims of counterfeit buying? I don’t think so.

But what if these manufactures took a different tack, promoting the fact that buying faux fuels organized crime and following it through with stories of what these same criminals did with the $30 I paid for a fake Chloe bag? It certainly wouldn’t be possible in all venues, but could some of these firms visit places like Canal Street in New York and engage directly with potential buyers about the consequences of buying fakes? I don’t think I’ve ever seen this happen. I’ve seen local TV and newspaper stories about how a luxury company has done a raid with local law enforcement… but never a company interacting directly with consumers at the street-level point of purchase.

If was looking at a table full of fake Tiffany merchandise and given proof of the spot that my money goes to fund terrorist groups, what would I do? Would I stand there and think of the two friends I lost on American Airlines Flight 11? I believe I would – and I think I’d walk away from the table, and tell my friends about the experience.

The Guccis and Tod’s and Burberrys of the world need to find a way to debunk the idea that buying fakes is a victimless crime, and they need to do it as close to the moment of impact – the moment I’m about to buy that fake Cartier watch as possible.

Mojo readers know that I truly enjoy the work of two wonderful marketing/business cartoonists and like to share it now and then.  On my second blog, Marketing Observations Grown Daily, it’s David Jones’ Adland.  Here, it’s Tom Fishburne’s Brand Camp. 

I have to say that – ever since I found out that tweets carry a number of legal risks – I’ve been waiting for someone to deliver this painfully true characterization of what a meeting between Marketing and Legal just might be like… Enjoy!

Yesterday’s New York Times book review of Ellen Ruppel Shell’s Cheap: The High Cost of Discount Culture was, I thought, wonderful and terrifying at the same time. [If you cannot see a video about the book below, click HERE.]

The author’s well-researched hypothesis is that we are either ignorant of or - in many cases - simply choose to ignore the profoundly negative, corrosive effects of needing to have everything cheap, cheap, cheap.  The article’s primary example from the book is shrimp, which went from an expensive treat to something you can get at any cheesy seafood chain restaurant nearly any night of the week on the “all you can eat” menu: a phenom fueled by so much greed and artificial chemicals that what they should serve at our tables is the resulting ”pollution and toxic waste,” with a side of the “ruinous debt, environmental degradation, horrifying human rights abuses and violence that left millions destitute” in Thailand and other countries.

Yummm.  Pass the garlic bread.

But do Americans care?  Lower food prices at Wal-Mart are impressive because, even if you never set foot in one of its stores, its mere presence drives down food prices in the surrounding area.  Hurray!  Forget about the fact Wal-Mart’s brand-name food items aren’t all that much cheaper, in fact, and how do you know that that chicken isn’t cheaper because it’s of lower quality?  What we do know is, well, all the things we know about how Wal-Mart has historically kept its prices down. 

These practices are why I do not shop at Wal-Mart.  But I’m in the minority.

And has this obsession American’s have with inexpensive goods damaged us in macro ways that are now coming home to roost?  When prices are too low, innovation is nearly impossible, reports a Harvard economist. 

Paging General Motors. Oh, and this moribund company is already “out of bankruptcy?!” Paging the U.S. government…

The only true major American innovation outside of Apple that’s gotten any real attention… has occurred on Wall Street.  And we all know how well that’s going for millions of people.

So I’m worried.  There are a lot of executives who have generated a lot of shareholder value by sticking the low-price needle into our arms… and consumers like it.  Now we’re in a recession, which is likely to compound the effect: many now have no alternative but to shop for the least expensive goods - and others use it as a sadly understandable reason to reverse course and cut back.  People are worried, and conserving:  I’ve seen several studies where people say they’re cutting back on “values” purchases, such as “green” and organic goods for example.

Where does it end?  What do we care about the most?  The U.S. is consistently on the wrong side of global lists of developed countries ranked for homelessness, obesity, high school graduation, health care quality… and we’re the biggest polluter in the world.   

There’s a lot of chest-beating on television about the national debt.  “We’re saddling our grandchildren with crippling debt! Gahhh!”  What about what we’re doing right now - what we care about today? 

I am disheartened by GM’s new adverting campaign. And the fact that they even have one.

Oh, you say you didn’t know that GM was advertising again with your money? Exactly.

But putting aside the “taxpayer money” piece… what could the company possibly know yet that’s different from what it’s been saying (not doing, necessarily, but saying) for years? “We’re starting over, we hear you, we’re building ‘em small, we’re going green, we’re gonna be competitive on a global scale.”

The company’s been bankrupt for 20 minutes. No one’s ever run or worked for or invested in a bankrupt GM. Why not take a breath and think about the very first words you want the American public to hear from you?

But instead the company moved forward with ads that were obviously made prior to the bankruptcy announcement. They already knew what they were supposed to say (see above rebirth, small, green, etc.), so they put some ads out there and paid Donny Deustch a bunch of money to go on Morning Joe and say great things… just as they might have done for any big new happening.

And there’s the rub. This advertising - who knows, maybe any advertising right now - IMHO says “business as usual” for this car company. With a tinge of humility (see hockey player land on his face), it’s all good feelings and autos and rah-rah.

In World War II, auto plants retooled to make planes, tanks and munitions. Michael Moore has said that “the only way to save GM is to kill GM” and that the U.S. must seize this moment in history to re-envision the corporation on nearly the same scale.

Whatever one thinks of Michael Moore, I believe we can all agree that radical change is in order. And maybe GM will shine once again in some new incarnation. I hope so. But by instantly and reflexively pushing out the standard flag-waving, sun-rising, children-playing advertising, GM has sent that first all-important signal to the marketplace: and it looks eerily like the old one.

Have you ever had anything in your life that you really liked - loved, even - and so when it went bad you raged, you beat your fists, you cried out in angst?!?

Then at some point, finally, you had to accept that whatever was to be, would be. As with the 7 stages of mourning, you had no choice but to find acceptance?

Well that it what I am trying to do, as a coffee-drinker and long-time sales and marketing executive, with respect to:

STARBUCKS.

Yes, Starbucks. I give up. I do. Seriously. I started writing about Starbuck’s travails on a whole other blog, for cryin’ out loud, and things have only deteriorated.

Yes yes, I can hear you counter with a reminder that I like the Pike Place and the oatmeal, or that maybe the $4 breakfast combo isn’t too bad. Neither could balance a series of seemingly endless missteps that I did not think could get any worse. Then Howard Schultz rode back into town on his “You ‘executives’ need help; I’m back to bring this place back to its roots” horse and the place went entirely over the edge.

Seriously – I am like this because I love Starbucks coffee.

The problem with Schultz’s naked arrogance is that the world around this company has changed forever. The “roots” from which this company originally drew sustenance are long gone. We can all see that the company over-extended itself with respect to both its geographic footprint and prices… but where is the leadership?? Schultz has been back in that seat for nearly 2 years.

Just as I can’t blame Obama for AIG’s 2008 bonuses, I’m not going to pin firings and store closings on Schultz. He had to clean up a mess that he found upon his return. But beyond that… he spent part of his comeback interview in last July’s Portfolio magazine lavishing praise on a “magical” blended drink from Italy that was “going to be the next Frappuccino.”

Meanwhile, I can’t get a cup of coffee in under 15 minutes in the morning and have to wait for the milk to be refilled.

Since the Portfolio interview last summer, the company’s made a number of “puzzling” moves, including:
- launching the new Vivanno (starting at $2.79)
- reversing its decision to kill the breakfast sandwiches that were difficult for staff and smelly for customers
- maintaining prices despite the worst recession in living memory
- laying off staff with no accompanying attempts to address the stores’ painfully long lines
- creating a new rewards program that was minimally rewarding (Costco had a better deal)
- promising to eliminate the music program that remains in full swing in New York (where the music rack is often neater and more stocked than the condiments counter)
- announcing a new instant coffee

Earlier this week, I cut to the middle of a WSJ article about Starbucks in which I spotted a quote from Schultz: “The issue at hand… is the cost of losing your core customer. It’s very hard to get them back.” I saw a spark of hope - at last, maybe the chain was going back the basics. Was it possible??

Nope.  Instead, the article says that Frappuccinos will come off the menu boards altogether, only to be hand-sold by a salesperson in what will undoubtedly be a lengthier, more harried transaction.  And in a world headed toward greater transparency, where restaurants are being forced to post calorie counts on their menu boards, Starbucks is headed in the other direction with a plan to remove prices (prices!) from their menu boards.  If you want to know what your order actually costs, a staff member will have to stock and point you to a new paper menu somewhere on the jammed counter next to the CDs. 

Ironically, Schultz’s response to all this is to start running a new ad campaign that counters the “myth” (his word) that Starbucks coffee is too expensive.  Unfortunately, nothing reinforces an existing impression that your products are probably too expensive than you deciding to hide your prices from me.

But, hey: new, “more sophisticated” test stores will have wood decor and a big wood table.

Saving core customers, making a store feel “more like a coffeehouse” - these are worthy ideas rooted in the company’s past that should remain. The thing is, a brand must sometimes re-envision its execution of such fundamental values based on the contemporary circumstances surrounding it.  Let’s say Ford had “Get a customer safely from here to there” as one of its original tenets.  Back then, that might have involved horses and buggy whips.  Today? Same concept, updated execution.

Starbucks is unquestionably struggling to see its external circumstances in a clear and honest light.  If it did, it would understand that it has so weakened its own brand that it must re-earn its customers’ trust by truly going back to square one: a good cup of coffee, at a decent price, delivered in a timely fashion. Hold the wood table. Period. The company must remind us that it is first capable of delivering on this primal promise before it can have our psychic ”permission” to explore any of these pet projects (e.g. fruit drinks made from powder).

Until then, all these Vivanno-like moves will not only deepen the company’s failure, they’ll also remind us every day that the company cares more about itself than it does about its customers.

As for the 7 stages of mourning, I am trying to get my head around the possibility of reaching the final stage – Acceptance - while standing in a Dunkin Donuts, holding a latte.

Despite a massive media focus on the event, there’s not a lot one can one say about a photograph of Michael Phelps smoking marijuana from a bong.

Did he do so on his own time?  Definitely.  And is there a near-100% likelihood that Phelps’ was and is entirely in control of his athletic performance?  Absolutely.  Will this matter to some people? Not at all. 

South Carolina, after all, is pondering filing criminal charges.  

Putting aside the criminality of smoking marijuana… there is no question that this is a hit to Phelps as a revenue-producing business. Whether fair or not, Phelp’s representation and sponsors are placed in a tough spot: kid-focused McDonald’s and Kellogg’s Frosted Flakes, for example, have both counted on Phelps to project a wholesome, healthy All-American image.  Yes that’s right kids, your gold-medal idol is smoking grass. Weed. Ganja. He’s inhaled. And it looks like he’s done it before, too. Yikes.

Phelps has issued a statement and apology using the “I’m young and dumb” approach and, as Fox Sports has already reported, this event is likely to fade in the memory of the public. The question is whether sponsors will stick with him and help mend his reputation permanently.

The Mojo believes that Phelps’ fortunes are likely to survive long-term if this side of him never sees daylight again. But if there’s more to come – if this episode turns out to be only Strike 2 following his arrest for drunk driving in 2004 – his sponsorship potential may not recover for decades, if ever.

———————————-

UPDATE:  A version of this post is available on www.reputationgarage.com, where a frustrated fan imagines a hypothetical “Dear America” letter from Phelps: “I work my a** off 10 months a year. It’s that hard work that gave you all those gooey feelings of patriotism last summer. If during my brief window of down time I want to relax… you can spare me the lecture.” 

The Mojo could definitely understand, even sympathize, with Phelps if he’s having these thoughts.  There are, however, two relevant concepts here: (1) When the “institution” in question is an individual, it can be challenging to separate the person from his or her behavior.  As a matter of cold, hard cash, Phelps damaged his sponsorship machine.  It doesn’t mean he is a “bad person.” (2) Life is not fair.  The bank bailout debacle has, in particular, brought out the fact that how society measures behavior – whether it be personal indulgement or taking “deserving” bank executives to Vegas – is not always rational or fair. If there is heat around an issue (like illegal drugs), people may vote in a way that is not entirely logical.  An institution can subsequently correct its behavior, or continue on and accept the consequences.

Michael_Phelps

As my readers know, I’ve been fixated on the concept of value for quite some time. Any random post may not seem to fit this theme, but just about all of them do: turning store returns into a great shopping experience; Visa offering upscale bathrooms to attendees at a festival; a company that lets you leave a voicemail for a person without running the risk of actually having to speak to the person (eww!).  All of these are examples of real, observable value.

For all intents and purposes, this is my first post on the general state of marketing since the US economy imploded. I haven’t said a whole lot because I’m still forming my own opinion on what brands need to do to survive and maintain consumer loyalty. What I am ready to say is that the key is value.

I believe the key distinction now, however, is between real and perceived value. Perceived value is what I talked about when I happily acknowledge(d) buying $250 Gucci sunglasses. I am fully aware that I could derive the same amount of real value from $10 shades bought on Canal Street.  Shield eyes from sun? Check.  but I saw a level of psychic value in the brand for which I was willing to pay an enormous premium. I measured that psychic value by how the world around me recognized that value. Looking at myself in the mirror wearing Gucci sunglasses gets old quickly. But having people reinforce my purchase - every day - as I walk around the city? Priceless. Value has two ingredients: (1) the real value that delivers functionality, and (2) the “psychic premium” I’m willing to pile on top so that the world sees me (and I see myself) in a certain way.

It turns out that it is not just beauty – but also value – that is in the eye of the beholder.

This is why even people “with money” have slowed their spending… why even luxury goods are seeing a decline in sales. It’s no longer fashionable to display the same brand names that only months ago were a mark of prosperity. Those marks are now seen as an indication of greed, of phony superiority, of foolishness. It’s not cool to show you have lots of discretionary income when everyone else is suffering. That’s why Mrs. Dick Fuld is still shopping at Hermes but now demands the store place her purchases in a plain white bag. It’s why Danny Meyer says his restaurants are actually selling the same amount of wine (as before the crash) but fewer bottles, his supposition being that people have decided that a bottle sitting on the table is an unwanted signal of wealth. It’s why DeBeers’ new ad campaign attempts to position diamonds as something to be kept forever in a world filled with “disposable distractions.”

Don’t get me wrong: there will always be rich people who wear big big diamonds in environments where everyone else is doing the same. That’s not going to change, but that’s also not what fueled the success of Coach and Vuitton and even Starbucks in the US: what did was millions more not-so-rich people over-extending themselves to buy that Vuitton bag (or Gucci sunglasses) because they liked the world’s reaction. These behaviors are at the heart of the “trading up” phenomenon in America. Take away both (a) the people who couldn’t afford their purchases in the first place, and (b) those who can afford expensive things but who will no longer get the thrill of everyone else’s desire, and you’ve got major, major problems. Products and services that run on perceived value need to make a new plan, Stan, and fast.

This will not happen overnight. As I said, some people who can still afford to buy status-driven things will continue to do so. Others will wean themselves off instead of going cold turkey. Read the Wall Street Journal editorial, “I Once was Chic, But Now I’m Cheap,” written by an Apple buyer who vows that his family’s next computer purchases will be PCs. The piece reads like a therapy session. The writer’s preparing for the DT’s.

I’m also not particularly convinced that this is some sort of seismic global shift in values; the current economic situation may simply repress luxury consumption for awhile. But until that happens, consumers will either live without or discover products and services that deliver more real value: and once a shopper discovers that a store brand whitens his teeth as well as your brand, he may never come back.

Draw your loyal customers closer, now.  Add value, if you can.  Remind your customers why they buy from you.  Get them to tell others, and you may just be able to stay flat (which is, after all, the new up).  The water level is going down, gentle readers, and all that’s underneath are the brands that deliver enough usefulness to hang tough until the next tide comes in. And that could take quite some time.

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