"Credit Crunch"

Have there been 2 words more over used since the millennium bug? Everyone from my taxi driver to my barber has suddenly become a financial expert. "Business is tough...it's the credit crunch you know" These words were spoken by a man who charges me $10 for a 2 minute hair cut. I guess he genuinely believes it too having read all of the hype in the newspapers. Perhaps people's hair stops growing with the worry of their Super falling faster than a bride's nightie...

It does make you wonder though how much of the current economic problems (or should that be recovery?) are/will be due to people changing their behaviour in reaction to what the press say they should be doing rather than living their own life as they previously managed.

Firstly, it was "sub-prime" and now "credit crunch" is the favourite. The list of companies going under in 2008 looks like continuing in to 2009 with many high street favourites in the UK teetering on the brink. For some it is unfortunate circumstances and an inability to renew their loan positions with the banks. Undoubtedly for others it has been an excuse to clear out some dead wood or cover up bad management. Woolworth's in the UK went under after a proud 100 year trading history blaming the credit crunch. I have a suspicion that their long term growth plan of charging more for an ounce of pic and mix than gold may have had something to do with it...

From a marketing point of view it will be interesting to see which brands step up and embrace the new market conditions as an opportunity and which will cut their advertising budgets as the first of a range of savings measures. These savings are no doubt introduced by the beancounters as a short term solution with no thought for what it will do to the brand in the long run.

There was a great quote in BRW recently from Gregory Will, private companies partner at PricewaterhouseCoopers which says it all - "One lesson from the survivors of the downturn of the early 1990s is not to slash marketing and advertising or research and development. Customers will always look for confident companies. If regular advertising or marketing stops suddenly, companies lose sales by not being front of mind and they undermine confidence. Advertising signals to the market that all is going well and there will be no issues."

It remains to be seen whether Australia can talk itself in or indeed out of a recession and which companies will grow stronger as a result but in the meantime I am going for a hair cut. I might get some advice on my margin loan position while I am there...