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 homelessnessobesity, 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? 

Now more than ever, consumers want to feel good about the things they do and buy.  I’ve written a couple posts about the phenomenon on aspirational purchasing and making something groovy out of pretty much nothing and, recently, I saw the most fascinating example of turning a cruddy experience into something swanky.

Witness:  Cash4Gold.  You have to be living under a rock to not have seen their commercials, but just to be sure… Here’s the company’s weird Super Bowl ad, in which Ed McMahon and MC Hammer talk while a disembodied hand holds money (“Call toll free now!”):

And here is one of Cash4Gold’s standard ads (“Turn your unwanted or broken jewelry into cold hard cash!“)

Do these ads make you feel like a sharp cookie, or like you’re about to lose your house and have already checked the couch for loose change?  Given McMahon’s humiliating mortage disaster and Hammer’s personal woes, Cash4Gold comes across as a last resort for the truly pitiful and desperate.  Hardly something I’d be sharing over dinner with my girlfriends.

Contrast this to OutofYourLife.com.  It’s the exact same concept, but take a look at the company’s television ad:

I can identify with the woman in the ad because, unlike Ed McMahon, she’s “like me” (or like the woman I’d like to be) – attractive, secure and, of course, smart for unloading jewels from her past relationships.  And fyi, all of these ex boyfriends and their golden effluvia don’t mean she’s a loser: it means she dumped them and now has the perfect man, whom she (you), of course, deserve(s). 

Study the ad’s details:  the way the script weaves in the personal “stories” related to each piece, the sexy voiceover, the website’s design – even the box you use to ship off your jewels.  Everything about the ad is intended to reinforce that you are a sexy, beautiful, enticing, clever woman and that this is what such a person does. 

So virtually the same product, but with a message that permits the customer to create a transformational, positive story out of the fact that she’s got to hock her own jewelry to pay the rent. 

This is an unusually overt example of advertising’s ability to shape not only a message, but an entire experience… even the kind of person you are for being a customer.  ‘Love it!

What other self-worth-threatening activities could be transformed in the same manner? How about selling your car, or buying a used car? Ditto for “gently-worn” clothing. Foreclosure auction advertising?

 

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.

Readers know that I’m partial to a couple cartoonists and I like to share their work now and then.  On Stephanie Fierman – Marketing Observations Grown Daily, it’s David Jones‘ Adland.  Here, it’s Tom Fishburne’s Brand Camp.

On his blog, Tom points out that last year’s “green briefs” have been replaced with “value briefs.”  Or how about… bailout briefs? Obama briefs?  Enjoy!

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A recession landmine is like a real landmine. It’s going to kill or maim whomever steps on it. The guilty, the innocent, the oblivious… it doesn’t matter. A landmine does not discriminate. You just explode.

And so it was with a recent Pepsi ad for G2 (low-calorie Gatorade).

When you watch the ad, you can see what Pepsi was trying to do almost immediately, then BLAM: it hits some wrong notes that have got people accusing the company of insensitivity and worse.  This means Pepsi now have something in common with AIG, but more on later.

The shots move back and forth between NBA player Kevin Garnett and a normal, suburban-looking guy – also named Kevin – who loves to swim. The voiceover also switches back and forth between the two men, and herein lies the problem. In trying to write a Nike-reminiscent “athletic striving” ad, statements that are meant to be inspiring appear instead to mock and insult people who have lost their jobs or are otherwise suffering due to the economic crisis. See for yourself (if you cannot already see the ad on your screen, click HERE).

When I first heard about this controversy, I’ll admit it: I really, really wanted to support Pepsi.  Pepsi’s a great brand.  But this spot was not well-considered in light of current circumstances.

Its lines are being called “arrogant and insensitive” and a “cruel” “slap in the face“:

Garnett: “I’ve never been handed a pink slip…” “I’ve never had to tell me wife ‘We can’t pay the mortgage.’” (Kevin “The Big Ticket” Garnett has a $24.75 million contract with the NBA)

Normal Kevin: “I’ve never had to fill the holes in my sneakers with cardboard.”

Garnett: “I’ve never used the backstroke as a ‘coping mechanism.’

And with these statements, my professional armor fell away and I became a father who can’t pay for food, a mother who cannot afford health insurance, a student who has to drop out of school. The sneaker comment IMHO hit a particularly dissonant note.  Suburban Kevin pushes us swiftly down the road, past unemployment, with homelessness straight ahead.

How did this happen? The financial services companies got into trouble for how they handled their (financial services) business. They made endemic mistakes, in their own backyards. This energy drink runs right into a buzz saw for no reason at all.

And so let us come back to how Pepsi now shares something with AIG. Both companies failed to grasp how people are feeling today… how “business as usual” no longer applies. 1.3 million children in the United States are homeless at some time every year – and that was before the recession started. One could assume that some of these children must use cardboard to fill the holes in their shoes.

If you think I’m being overly dramatic, please don’t.  A seemingly-benign or joking comment, on the job or at a cocktail party, can drop you on your own personal landmine, damaging your own personal brand.  Do not underestimate millions of people in pain.

Personally, I am counseling clients today to look hard at their messaging right now. If you are running ads, for example, make sure they are seen and tested with a much broader swath of consumers and experts – people who may not be in your target audience – because it’s not just about saleability anymore. Put campaigns through the mill. Have linguists and child advocates and food bank directors mull every word, every off- and online image.

Is all this fair? Fairness is not at play; raw nerve endings are. We are all in the business of selling, of course, but at what risk at this very moment? The news and current events are swinging wildly from one day to the next: are you comfortable deciding what positioning won’t spark an undesirable (albeit inadvertent) reaction? Think long-term. If you’re not 100% secure in next week’s flight, cancel it.  Because getting this wrong could negatively affect your brand’s reputation for years, if not a lifetime.


A version of this post is available at www.ReputationGarage.com.

Leave it to the Mojo’s favorite cartoonist, Tom Fishburne, to put his finger on something that’s been giving me a headache:  the economic concept known as “the paradox of thrift.”

First posited by John Maynard Keynes, the paradox of thrift (or paradox of saving) states that if everyone saves more money during a recession, then overall demand will fall, which leads to further unemployment and downsizing, decreased consumption and even slower economic growth.

In other words…

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So what’s a consumer to do?  Is ING Direct the hero, with its We the Savers campaign, or is it “unpatriotic” not to go out and spend?  Eventually, the theory says that prices decline due to lower demand and the business community and society reset.  Note the “eventually” element, unfortunately.

One note:  Keynes advocated an active and interventionalist government, using fiscal and monetary levers to help mitigate the effect of economic cycles.  Obama is following this lead, trying to inject additional activity and employment into the system so that demand can stay at some manageable level while all of our other problems are addressed.

As for marketers, there can be no fancy footwork here.

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I’ve written several posts on value, the most recent of which is HERE. The only play is to deliver what your customers define as value at the highest acceptable price, which may or may not reflect the cost of continued R&D and long-term planning, and to manage expenses agressively.  I was reminded a few nights ago of my first day in Year 1 Corporate Finance at business school.  The professor wrote on the board, “Don’t run out of cash.”  That seems to be the whole of it. 

This is playing out in front of us all.  “One foot in front of the other” appears to be good albeit wholly unsatisfactory advice not only for individuals but many companies, as well.