“Are we in a Recession?” – It this the right question?

Hmm….I don’t think Main Street is asking that question anymore. How about this - what measures do we have to take during Recession? – Is this the correct question? – YES!!!!

By now my readers got the answer on whether we are in a recession or not, Definition of Recession – “Some economists and journalists define a recession as two consecutive quarters (three-month financial periods in the year) in which the gross domestic product (GDP) decreases.” (Source – Internet), but I believe recession definition is much more beyond than looking at GDP numbers that is calculated every 3-months. We might be already in a recession, but our “economists” cannot confirm right now because GDP numbers are not in yet. Let’s look at current market – Increase in unemployment (Oct, 2006: 4.4%, now Oct, 2008: 6.5%. Source – “U.S Department of Labor”), Consumer Price Index is negative (Oct, 2005: 0.2%, now Oct, 2008: -0.1%. Source – “U.S Department of Labor”), Auto sales are down, Housing industry is down, Oil demand is low, Big Companies are disappearing – looking at this disappointing and heart breaking numbers, its time to redefine Recession.

I came-up with a list of recommendations that can help us to survive during this tough period.

Cut down your expenses – Buy things that you need the most and avoid unnecessary expenses.
Cash is God – Always keep liquid cash in hand; make sure you have sufficient cash to survive for next 8-12months without a job.
Bank accounts – I “strongly” recommend to close your accounts in banks that are not protected by FDIC (Federal Deposit Insurance Corporation). FDIC provides/protects consumer account deposits that are less than or equal to $100,000, anything more than that amount is not insured. Move your extra savings into another FDIC insured bank so that in case your bank is out of business you are still protected.
Credit Card Payments – Don’t pay your credit cards in full amounts; make sure you have enough cash in your hands all the time. And also, avoid late payments.
Online shopping –Online shopping provides a good relief during this holiday season. Its offers a wide variety of products, competitive price and free shipping options.
Gift Cards – Almost every retailer offer Gift Cards, but many are closing down or at the verge of collapse. Before that happens please use these gift cards completely.

As the old joke goes: "When your neighbor loses his job, it is called an economic slowdown. When you lose your job, it is a recession. But when an economist loses his job, it becomes a depression. Economists who ignore the recent rise in unemployment deserve to lose their jobs." Good Luck and Play Safe!

Recession, Boon or Bane for Online Retailers?

Recently, majority of economists (Wall Street) agreed that we are already in a recession (according to the survey), and predicted that economy will continue to deter further. This obviously is a very bad news for everyone, but not so for online retailers. Recent survey concluded that online shopping has increased in this period (recession). Internet usage has increased tremendously in a short period of time (it’s reported that 80% of the current population has broadband, and more than 70% of the population is online), there is no more a question or debate on whether retailers should start investing in online shopping stores.

With the help of internet, customers are getting more options to choose from various online shopping websites, and they are also cost effective (saving gas prices to drive to the store, free shipping), than walking into a regular store. What this means to online retailers? They should anticipate this shift and now look at other opinions to attract customers than online ads alone. It’s not a viable option for them to cut down the quality and reduce prize to attract customers. Customers are not only looking at the price but also learning more about the product and the company through reviews of the product, and read blogs about the company. Even the slightest error by the online retailers can create repel effects to the product and company. Apart from that, customers have lots of choices to choose from as everything is on the internet.

From brick-and-mortar retailers to the “mom and pops” stores, virtually everything is available on the internet. Anyone who is in the online retailing business has to follow two fundamental rules, “Maintain quality & don’t over promise” and “keep a close eye on the pricing”. If product is not up to the quality or standards claimed by the retailer, then it can ruin his business in a short span of time. Customers are quick to share this information in form of reviews, blogs or networking groups, which are readily available to everyone on the internet. Online shopping has given customers many more options to choose from than any regular store where they have limited options to choose from what is available in that store. There are different websites that give price comparison of the same product, which makes customer to visit different online stores in a matter of seconds. Online retailers need to be vigilant all the time to make sure that they are not losing customers, and have come-up with a pricing model that very competitive.

Compared to the previous US recession, this recession gives some relief to consumers as they can take advantage of internet to shop around. Inspite the recession fears growing, online retailers are still seeing new customers who are interested to shop online to manage their shrinking budgets.

Online Branding Secrets

Whenever a customer thinks about a product they always tend to relate it to a company, for example – First thing that comes to mind when I think about cool drink is “Pepsi” or “Coke”. Branding helps to identify products or services, which sets it apart from competitors that offer the same. There are different forms of medium to reach the customer, idea remains the same but medium is different. Research indicated that consumers who shop online prefer brand names, so it’s important for any firm to not only just build a website for shopping online, but also present it in a way that customers cannot forget the experience. There are many ways to achieve online branding and learning-styles strategy is one of them.

Visual Learners – the TV Infomercial Watchers, This category of customers often believe in “see to believe” approach before buying a product. They’ll find it hard to surf a website that has too much of content and graphics. Not only it takes more time to load but also makes it difficult for customers to locate the product. To avoid these issues, try to keep the website simple with less content and few products on display for every page. Embedding videos with-in the display to highlight specific product (Youtube, Podcast can be good source of putting on videos on the web) works extremely well. In the case of offering services, we can use slide show tutorial with graphs and explanation. This kind of approach will lead to increase response to the online brands.

Auditory Learners – the Talk Radio Fans, They like to “hear to believe” before buying the product. Online-retailers should be very careful before adding clustered noises in their websites; they can annoy and distract customers. Instead of forcing them to listening everything, websites should be designed in a way that customers can ask questions and hear the response. And also, set-up a decent customer service that doesn’t mind answering questions/queries that are repetitive. To increase response to your online brand, it’s important to speak to the customers.

Kinesthetic learners – the Do It Yourselfers, This category likes to learn through their own experiences. Websites should allow the users to customize the information they want to see. Websites should contain information that is interactive, and also interesting to the customers. Some of examples of being interactive are – holding question and answer sessions, online forums, creating networks, choosing their own templates or suggesting matching items based on the items select in the shopping cart.

Today we see every company using rich media (TV, Radio, and Newspaper ads.) to promote their brand. Customers who visit these websites are coming on their own interest, so it is very important for online-retailers to offer rich user experience which will not only helps to promote their brand but also increase of return user traffic.

Online Networks - The New Focus Groups

I came across an article recently on Wall Street Journal about "Online Networks" and how companies are utilizing them to perform market research for their products. This article inspired me so much that I decided to write a blog on this topic - Hope you'll find it interesting!!!.

Initially, online communities were first launched by tech and video game firms to do their market research, but over the period of time many companies from different industries have started using online communities to understand customer needs. These sites are very similar to any social-networking sites where users interact and socialize. "Del Monte Foods", a food company has created an online community called “I Love My Dog", which consists of nearly 400 members/customers of Del Monte Foods. Market research team is using it actively to interact with customers and share their experiences about the existing products, and also get some insights on what they want in their products. Recently, Del Monte Foods planned to launch a new Breakfast product for dogs, instead of conducting a typical full length survey it sent out a post to the online community on what the dog owners most wanted to feed their pets for Breakfast. Based on their response it developed a product that reflects the needs of the customer.

Many companies are working towards developing online communities, and they are growing at a faster rate. With the help of these communities, marketing team can chat with the customers and get their feedback on newly launched and existing core products. They are creating profiles on well know social-networking sites like Facebook.com and myspace.com, and others like P&G have created their own networking site. These kinds of communities help focus groups to work with the customer directly and also build a strong relationship, which is very important.

One of the common challenges faced by many companies is – consumers in general visit these places to socialize and interact with people but not talk about the brands/products. To ensure that the users participate actively and not lose interest, companies are offering users free coupons, adding online games, sneak peak at new products and many other incentives. They are also working with private firms (MarketTools and Passenger) on how to use Web to assess and shape the way consumers think about the products. For example, Sylvan is planning to launch a new advertising campaign for which it is working with MarketTools to survey a group of mothers.

These kinds of networks reduce the guesswork for marketers, and help them to understand customers better. Companies like Del Monte foods are launching new products by reducing the product-development life cycle (Typically it takes 12months to launch a new product, now it takes 6 months). Apart from that, creating and maintaining online communities requires a small piece of total investment that goes in Market-research spending. According to the firm Inside Research, in the year 2006, the over-all investment to build online network communities by the companies in US was approximately $40 million, and projected to grow $69 million the following year.