Columnists George Prout Applied Marketing 101: The view from England

Applied Marketing 101: The view from England

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As a student of history, it has always seemed a bit surprising to me that American society has enjoyed such extraordinary tranquility, given the fact that our country was founded on two mutually incompatible principles: Liberty and Equality. There has always been a natural tension in our politics that arises from the fact that government initiatives that make us more free make us less equal, while conversely, those that make us more equal make us less free. The political lubricant allowing these contradictory principles to peacefully co-exist has been the uniquely Jeffersonian idea that the government’s power comes at the will of the people, such that we derive our individual rights not from the government, but rather from our humanity. And in turn, our government derives its power from the governed. 

But the Founders’ extraordinary insight wasn’t conceived in a vacuum. Instead, their formulation was a natural evolution of a process that began with sixteenth century English political agreements like the Charter of Liberties and the Magna Carta, urged on by incredibly brave - and occasionally insolent - renegades who demanded the redistribution of power from elites to the citizenry. As such, we owe an extraordinary debt to the Brits, a fact that I reconsider each time I fly to the UK.

As I write this, I’m on a flight from Washington to London so that I can support our UK office at the IJL Show (their national equivalent of our JCK Las Vegas Show). I visited the UK earlier in the year to engage in research so that I could morph our current US marketing platform into a workable model for the UK, and my sales team in Britain has gained tremendous traction selling the resulting programs. As so often happens when I study alternate retailing scenarios, the insights that I have gained from studying their market has interesting applications across a broad retailing spectrum.

As in America, there is a market share war going on in the UK between the Majors (who are referred to in Britain as the “Multiples”) and the Independents. Sadly, as is the case in the US, the Majors are winning, but as I have also come to believe in the States, I suspect that there is a natural “defensive perimeter” at about a 30 percent market share level, where it becomes difficult for chain stores to continue to penetrate.

I find it interesting that this 30 percent barrier also applies in other industries in our country. For example, for the past two generations, about 70 percent of Americans have had their hair cut in mass merchant environments like the Hair Cuttery, or low cost “bare bones” barber shops, while the remaining 30 percent have chosen to spend more for the same service (although one might argue that the outcome is more desirable) in more expensive Independent salons. Is this a function of demographics, where older, more affluent consumers can afford to spend more, or is it psychographics, where a pre-determined set of attitudes creates a different purchasing imperative for those who choose to pay more? I’m actually not sure, but I think it’s a question worth asking. The good news is that, regardless of the core cause, Independent Jewelers in both countries possess a sustainable long-term business model, as a result of this predisposition on the part of consumers.

I suspect that the UK and the US are on very different economic courses for the upcoming Holiday Season. The poor Brits are not unaffected by the contagion of European economic sickness, and as I looked into the eyes of the retailers in the UK, I could sense their apprehension over their short term economic future. They are almost certainly headed back into recession, a circumstance that they can ill afford, given the very modest nature of their recent recovery.

Here in the US, on the other hand, I suspect that we may be in for a pretty good Christmas. I have been reading the results of focus group studies for most of the past year suggesting that the upcoming presidential elections may have a profound impact on consumer behavior. Should the President get re-elected, you should expect Christmas of 2012 to be very much like Christmas of 2011... same price points, same traffic levels. But if Mr. Romney wins, the shopping scenario may be markedly different. There is reason to believe that affluent and hyper-affluent males will view Mr. Romney’s election as an invitation to start consuming again, and our industry will be a significant beneficiary. The challenge for most of you will be to have two very different strategies in place - an Obama plan, and a Nobama plan - ready to launch the day after the election. Here are a few tips for maximizing this election year fourth quarter:

1) The period from Oct. 15 through Nov. 6 will be a sales wasteland. Expect extremely limited consumer demand, especially for big ticket items, as consumers sit on their wallets waiting for the election to unfold. Hold off on advertising expenditures during this period, and instead advertise after the election to get considerably higher ROI. In fact, this would be a great time to take a vacation, because - count on it - nothing’s going to be happening in your stores until after the election.

2.) Affluent males buy luxury watches for themselves as a treat when they feel good about things. Unfortunately, most men have not felt particularly good about things for the past four years. A Romney win may change this sentiment. Be ready with some certified pre-owned Rolex ads in case Mr. Romney is elected.

3.) Affluent males have underperformed as gift-givers since the start of the recession, a fact of life that has created considerable pent-up demand in the minds of their spouses and girlfriends. Recognize that the most powerful salesperson in any affluent man’s life is the woman he sleeps with. In the event of a Romney win, this would be an especially good year to focus on using an early December Ladies Night as a clienteling opportunity. Take footage of each gal “Vogueing” with the piece of jewelry she wants him to put under the Christmas tree, post the video on Youtube, and then e-mail the link to her Santa. Set the stage so that she becomes your salesperson, and you can reliably expect her to close the sale.

As you watch the election season unfold, pay close attention to the 11 battleground states. The other 39 states are already solidly in either the Red or Blue camps, so when you see national polling data, take it with a grain of salt. Pay especially close attention to the number of undecided voters in the battleground states, and recognize that historically, about 80 percent of those who are undecided late in the game will break away from the incumbent at the last minute.  If the undecided vote is hovering at 5-6 percent in the key states as the election draws nigh, and Mr. Obama is still at less than 48 percent in those states, it’s going to be a pretty good night for Mr. Romney.

Class Dismissed!

George Prout is Vice President of Sales and Marketing for Gems One Corporation, and can be reached via e-mail at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or at Gems One’s office at 800-436-7787.

 
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