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WTF is a counterfactual? In short, it’s the power of the question: what if?
This week on the podcast, and in the pages of Insiders, we unpacked how “counterfactual thinking” can be a powerful lever for your business.
“What if” is a question that is top of mind right now, as we all face broad economic challenges. The powerful “what if” question helps us to build marketing playbooks, harden security infrastructure, surprise and delight customers, and even sell customers — not on the promise of a better future, but the idea of who you’d be if you had already started.
Times of economic hardship strengthen the power of “what if”. In an April 2009 article in Harvard Business Review, How to Market in a Downturn, authors Quelch and Jocz outline the types of products that are susceptible to re-prioritization by a consumer whose bank accounts are feeling the pinch. Those products fall into four categories: Essentials, Treats, Postponables, and Expendables.
Curiously, brand-switching is at its highest during economic recession. Essentials and treats benefit the most from this heightened price sensitivity, where store brands tend to over-perform with a consumer who is trying to achieve a similar lifestyle at a lower cost of living. This is where “what if” comes into play — a consumer is always considering the counterfactual, and pleasantly surprised when a switch to a lower-priced alternative goes well. This phenomenon results in heightened satisfaction, because the consumer reconsiders why they were spending so much to begin with.
This makes for a pivotal moment for DTC micro-brands, who tend to sell on the counterfactual of a “better life”, but usually comes with small margins and a large cost to the consumer. Challengers, especially those at a lower cost, or better distribution in big-box retail, may very well weather the storm.
If you want to hear more about how marketers, operators, and customers use counterfactuals, read the full post over here.
Micro Machines (by Galoob). A flea-sized remote-controlled robot resembling a crab was recently put on display. Built by researchers at Northwestern University, the robot crab measures just a half-millimeter wide, and it can walk, bend, twist, turn, and jump. “My immediate thought was that this reminded me of R.A.L.P.H., the robot bug that Junie built in Spy Kids” says Kaylee.
Retail Renaissance? This past week saw strong earnings from Macys and Nordstrom, both increasing their outlook for the year on the back of strong Q1 growth. But the victory lap may be a bit premature. “Just look at growth over the pre-pandemic 2019 period. Macy’s sales down 2.8%, Nordstrom up just 3.5%. Department stores continue to lose market share! Meanwhile, Target sales over that same period are up 42%” says retail analyst Neal Saunders. Tales of retail’s return may have been premature. Also having a maybe-moment? Off-price and dollar-store retail.
More Sights & Sounds. Apple is increasing starting pay for workers to $22 an hour. Activist Carl Icahn’s fight with McDonald’s concerning treatment of pigs ended quietly when only 1% of investors voted for his two board nominees. Winnie the Pooh recently entered public domain and yuck — where's the mindbleach? Justin Timberlake has sold the rights to his song catalog, including NSYNC songs, for over $100 million. Everyone sells out eventually — Anti Social Social Club has been acquired by Marquee Brands. And Adam Neumann gets another at-bat with a new crypto startup. Broadcom will acquire VMware in a $61 billion deal. Twitter’s shareholders are suing Elong Musk. Mark Zuckerberg announced that Meta’s metaverse will basically be hemorrhaging money for the first 5 years or so. And Jif’s recall has extended to over 100 products containing its peanut butter.
It’s Officially Time to Party. Fashion is changing again, and apparel retailers are trying to keep up amidst inflation and supply chain issues. After banking on comfy at-home wear during pandemic times, a rapid shift is occurring as in-office mandates kick back in and events begin to reemerge. The results are clear: people want party-wear — and retailers who didn’t forecast this have been forced to discount athleisure apparel as demand quickly shifts in favor of LBDs.
Salty & Sweet Snack Stack. Ritz and Oreo seem to have had a mixup at the factory, and now there is this new limited edition mashup crookie. It honestly sounds like a weird and gross combination, but like… not in the fun ironic way. Our team responses to this new tantalizing treat include both: “NO,” and “I can not and will not get behind this.”
“I’ll Have the Dolly” Influencer-inspired menus are nothing new, but “The Full Dolly” at Taco Bell is the latest in the absurd off-menu celeb-inspired fast food orders. We may not have pegged Dolly as one to run for the border in her cowboy boots, but “taco bell date night” is a regular occurrence for Dolly and husband, Carl Dean.
The Real World: Metaverse. Jimmy John’s recently worked with Anomaly to give users the ability to build a “Metasandwich” in the virtual world which they can then pick up at a real world location.
A Peek into our Shitty Robot Future. A recent study has shown that our future could look like a type of hybrid culture made up both of humans learning from other humans and also humans learning from AI algorithms, leading to “long-lasting effects on human culture” as we evolve together cumulatively.