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CONSUMER CONFIDENCE

Posted by Tim Bryce on February 13, 2009

As we are now embroiled in a major economic recession, we are hearing a lot about plant closings, worker layoffs, restructuring of companies, tightening of credit, and government stimulus packages. But as you listen to the news and talking heads on television, everything seems to come back to “consumer confidence” or the lack thereof to purchase anything. It appears our disposable income has been disposed of. I don’t hear anyone addressing this problem, so I’ll take a shot at it. I may not be an economist, but as a businessman who has been around the block a few times, I would do the following:

First, the consumer wants confidence that the companies they buy from will stand behind their products; that they will be there tomorrow. This means companies have to do some soul searching and manage themselves better. In other words, take out the bloated bureaucracies, eliminate the inflated salaries and greed, become more organized and systematic in their operations, and offer products at reduced, yet fair, prices.

Companies also have to learn to adapt to the needs of the consumer, not the other way around. Perhaps the best example of this currently is the Hyundai Assurance program whereby the company advertises, “to show you the faith we have in you. Right now, finance or lease any new Hyundai, and if in the next year you lose your income, we’ll let you return it.” There are, of course, restrictions to avoid abuse, but it’s a sharp idea and consumers are beginning to flock to them.

It is time for companies to challenge the marketing status quo and, like Hyundai, devise new programs that will turn the heads of the consumer. Companies can ill-afford to conduct business as usual.

Second, the government has a role here as well, but I balk at the stimulus package being proposed. People do not need pseudo “make work” jobs created by and for the government. Nor do we need more checks from the government which will primarily be used to pay off existing debts, not necessarily to purchase new goods. Instead, they want tax credits that support their way of life, like financing homes and sending kids to school. I realize such things already exist, but the government has to become more aggressive in such programs to allow the consumers to save a buck or two. Wouldn’t it be nice to see the government encourage the saving of money as opposed to spending it? Even better, to invest it in key companies who are trying to conquer our energy crisis, or who perform medical research, or help the environment.

If you really want the consumer to have “disposable income,” arrest inflation NOW! Government can do a lot for companies by simply leading them with a carrot and stick. Give tax credits to companies as incentives to go in new directions, such as research and development, or for companies who promote job security, for companies who help curtail the rising cost of living, and for creating real and meaningful jobs. In other words, reward companies for better management.

Third, the consumer has to learn to regain his own confidence. Instead of waiting for someone else to bail us out, we need to develop an entrepreneurial spirit and take the bull by the horns. Confidence begins in the mirror, not in our government.

Such is my Pet Peeve of the Week.

Note: All trademarks both marked and unmarked belong to their respective companies.

Tim Bryce is the Managing Director of M. Bryce & Associates (MBA) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com

For a listing of Tim’s Pet Peeves, click HERE.

Copyright © 2009 by Tim Bryce. All rights reserved.

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