Market Positioning: Our Economic Pink Elephant
The big news last quarter was a point one percent (.1%) growth rate in our “robust” economy. The news has been similar for the past year and always enthusiastically reported. That’s one one-hundredth of a point; almost the same thing as one tenth of a penny on the dollar raise for a three month period. The politicians describing this robust economy are the same guys who buy their cashmere sweaters by the dozen from Neimann Marcus. The same policy makers who enjoy free manicures and bad dye jobs at public expense, disallow rent and utilities as legitimate deductions on food stamp applications for the poor, elderly and disabled. Indeed, one senate pay raise was quietly tucked inside an obscure appropriation bill for the Post Office and other agencies. There were no public hearings, no debates, and no media coverage – just a silent maneuver to put another $3,800 a year into the senators’ paychecks, bringing their total annual take to $145,100 plus those fabulous benefits at the salon. In 2002, they got another pay hike of $4,900 raising their pay from $145,100 to $150,000.
Marketing involves product, position, promotion and price. Politicians market themselves on past performance to get rehired; hey, it’s a cushy job with a fat pension. Think of our economic pink elephant as the white lie on their resume. It’s just positioning – how they describe results. Here’s a different perspective: One insurance company “positions” itself as a low-cost, high-efficiency car insurance provider. It only takes one example of low cost comparison to make a full spectrum advertising truth. Lots of people don’t comparison shop and the reptilian marketing group knows their “story” will corner that part of the market. Snap out of it – it’s advertising. If you compare prices, you’ll find their prices hundreds of dollars higher than more traditional providers. Positioning succeeds when a well-built, believable reality seemingly supports fact. At the end of the last quarter, the president of the National Association of Home Builders said that his industry remains upbeat and confident; “new home sales and starts will continue to be brisk” according to U.S. News and World Reports*. Yet insider selling within the industry has reached peak levels despite strong “buy” recommendations by analysts. Shades of shocking pink – remember the technology sector just before the bubble burst in 2000?
Our robust economy has other shades of pink, too. In order to cut costs and maintain margins, companies who want to survive current economic circumstances are consolidating operations. That’s just smart operating procedure, but the end result adds further cogs in economic growth. Consolidation played a major part in the 49,000 fewer permanent payroll positions in the state of Michigan. How are those 49,000 families going to survive? Statistics show they won’t be relying on corporate America for their livelihoods – 42,000 new self-employment accounts have opened with the state treasurer. Nationwide, companies are having trouble attracting enthusiastic college graduates because people have lost faith in traditional career paths and have a firm desire to start their own enterprise to overcome this lack of faith in corporate cultures.
How close to vermilion is that elephant when two major airlines file bankruptcy in the same week? Our robust economy has pushed Northwest, Delta, United and US Airways into bankruptcy, pushed 467,000 people to file bankruptcy so far this quarter (and that almost doubled with the deadline for more stringent requirements passing) and millions to despair each time they fill their gas tanks and buy groceries on credit cards. Time to take off the rose-colored glasses and deal with Pinkie.
*U.S. News & World Reports, September 12, 2005; pp 58
