Friday, April 13, 2007

Mortgage Meltdown?

Abundant Crises are but Opportunities in Disguise!

As most readers of this newsletter are no doubt likely already aware, there seems to be trouble in the mortgage industry. More specifically, there seems to be trouble in the sub-prime mortgage industry.
The way we here at Jay Standish, Inc. LLC see it, this appears to be a classic case of losing a little on each sale, but trying to make it up in volume. While that may or may not work in the floor-covering industry, it seems to have run its course in the financial sector.
With mortgage foreclosures out-pacing mortgage closings, it might not be long before every home in America (!) is owned by a bank, but with no one to whom they can sell them - hardly an optimal outcome, at least in our view.
Accordingly, we here at Jay Standish, Inc. LLC have done some research, put pen to paper (or rather, keyboard to screen!), and come up with some opportunities which we, rather humbly, believe may be the way forward in the economic malaise engendered by high energy prices and low mortgage rates.
First - amazing though it may seem - it appears that folks who buy homes tend also to buy new cars and trucks soon after. The theory we are currently using is that they've saved up for a down-payment on the house for so long that the old jalopy is just that - an old jalopy!
Secondly, and in a similar vein, these folks seem also to buy major home appliances at an increased rate. One supposes that cooking on someone else's stove may seem somewhat unhygienic. That theory was hatched by my partner, Pat, based upon a move into a house some years ago which seemed to have been occupied by serial deep-fryers, but I digress.
Thirdly, and finally (at least for this newsletter - more research is available upon request!), they seem also to be above-average buyers of new insurance policies. This (perhaps!) ought not to be terribly surprising, but still well worth noting - well worth it indeed.

"Jay," I hear you cry, "tell us how this all results in an opportunity, rather than in cause for macro-economic doom-and-gloomery!" And so I shall.

Imagine the plight of the typical new homeowner: he's (or she's!) in over his (or her!) head, financially speaking. What with a mortgage payment, a car payment, new appliances, and increased insurance, it would be amazing were he (or she!) not. Here's where opportunity raises its marketing head, as it were.
Keeping in mind that fiscal plight, what response might a savvy marketer at, say, Kenmore® expect if he (or she!) offered said homeowner a subsidy on the interest rate of his (or her!) mortgage? Exactly - he (or she!) would wonder about the attached strings, and rightly so.
In exchange for a half-point subsidy in the mortgage interest rate (this is for discussion purposes only, the actual level of subsidy will be determined at a future date), the homeowner agrees to purchase a certain number of Kenmore® appliances, and to accept certain marketing communications - right on the monthly mortgage statement!
Who makes out in this? Why, Everyone Involved! The homeowner is saving his (or her!) hard earned money each month, in exchange for making purchases which he (or she!) was likely to make anyway. Kenmore® has an immediate sale, and a channel of communication which should lead to a long-term loyal customer, and the mortgage company has avoided having to foreclose on another potentially unsaleable piece of real estate.
Of course, you may rest assured that similar scenarios can be (and have been!) imagined for insurance and automotive marketers.

Interested? We here at Jay Standish, Inc. LLC certainly expect that you are - otherwise you're simply not the savvy, forward-thinking marketing professionals that we've come to believe you to be. Let us know how we can assist you in this new venture.


Last week, Jay wrote about the results of his Josh Groban drawing:
Scott Barshay responded:
"My IT folks have told me that this was a total fluke. They claim that the Y2K7 problem shouldn't have affected my chances of winning. I guess I believe that it's not their fault, but I'm still going to drown my sorrows in a bottomless stack of onion rings ..."

Scott, Scott, Scott, don't take it out on your IT folks, and more importantly, don't take it out on your soon-to-be- cholesterol-clogged arteries! Have a Pepsi or a LiptonIce and chill, my man!

-- Jay

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