This post goes way beyond investing from my perspective. Tom highlights something far too many companies are falling in the trap of: fast following. The river is getting so easy to follow. Specifically, the data flow is so robust that tracking the latest news is becoming a widely followed business model. As Mauldin would say, when there’s too many people on one side of a trade, the trade is going to fall apart as a bubble at some point. The river is increasingly a bubble.

What isn’t a river? A cave where people develop independent from the rush of the river trends.

Both the cave and the flow are important, but as important is realizing just how many folks are lined up on each side.

The hunt for income dollars are coming in all areas. As we’ve covered, distressing times are when business models are broken [Hint: Amazon quietly gets into private labels after buying and selling, then charging a commission for its marketplace, now house brands...]

Here’s my bet: Stock market lifts and better #s compared to LY’s melt down will lead to a slightly positive holiday, but capped by unemployment and the lack of credit.

In fact, many companies and industries are digging into themselves to find what makes them unique and whether that means anything in this new market. Consumers have changed what they are buying and companies are having to shift gears to line up with those new needs and expectations. For the nimble and lower engineering development companies, shifting product and service programs can be done on the fly. For higher tech companies, shifting gears will take months if not years.

What has happened is a downshift to value based products and consumption, v. premium products and upselling. Having a role in value retail is showing me that the market is hot in sectors. Family Dollar and WalMart can thrive, while Abercrombie hopes teens can get jobs this summer so they can continue to buy $80+ jeans.

Get the word out with your customers that you’re on your toes (and still in business). Use SEO to get found for free. Find the products that you can add on to previous sales. At a time when everybody is struggling to justify buying anything, those that are trusted are going to survive.

First, The Conference Board posts a month survey of consumer sentiment:

The trend line where the US consumer stands is more important than the single points each month. While not perfect, retail sales and consumer shopping tie into this pretty well.

I’ve also learned over time who to trust when it comes to where the stock market and the consumer divide. Even though the consumer feels better when the stock market goes up, it isn’t the only factor in driving up confidence, thus consumer behavior. Top of the list is Mauldin primarily because he doesn’t post every day, provides analysis instead of reposting of news and is not truly main stream.

I’m believing more and more that the 24×7 news cycle is creating momentum swings faster. We’re getting to the same end point, but are facing a lot more churn in the process. Turn all the noise off, watch the long term trends and stay sane.

While many older parts of the US are not as well penetrated as younger ones, what we’re starting to see is the likes of Facebook gain the benefit of network effects and is likely the gateway to deeper use of such tools. The adoption of these tools will create a chance for business models to shift to the much written about referral based, pull demand from consumers instead of push marketing to the masses. In short, conversations, positive experiences and then sales instead of a shotgun and a falling bird.

“Intel has weathered difficult times in the past, and we know what needs to be done to drive our success moving forward,” Paul S. Otellini, chief executive at Intel, said in a statement.

Most companies focus on both strategic and financial goals. This year is different and all but the most basic financial goals (=positive cash flow) are out the window. For managers, we’ve reached a time to focus on the strategic, non-financial targets like picking the right fields of play, ROMI, innovation relevance, organizational alignment and market share.

In a product marketing class we took in undergrad, we played a simulation game each week that was supposed to replicate a market with consumers that had shifting preferences over time. All of our teams were given comparative advantages and then had to determine where we fit today in the market, and had to read the tea leaves of only a handful of data points to understand where consumers’ interest would be for the future weeks and make changes accordingly. The game proved to be educational in its interactivity as well as the point it relayed: things change and companies have to think ahead to be where consumers shifting preferences will be. Sort of throwing the ball to where the receiver will be, not where he is.

A great example was Porsche’s choice of getting into the SUV market with its Cayenne. Generally regarded as a huge bet on the company’s future, the Cayenne has been a very profitable move by a savvy company in touch with what its clientele wanted. While its 911 sports car was a icon, it had spent too many years trying to create a ‘mini-911′ which never seemed to carry the same weight. In the past 15 years, the company saw SUV’s grow wildly and put its own spin on one. While not revolutionary in design, it offered those interested in a Porsche a chance to get one in the right flavor.

What happens to the other SUV manufacturers as Porsche enters is where the real problem develops. Customers’ choices increase, volume at each legacy player decreases and old less desirable lines die. Chrysler started the minivan category and Ford owns the truck category with its F-series yet both companies are not profitable. In time, competitors new and old can shift to meet consumers’ preferences and hone offerings.  In fact, automobiles are no different than any category in Wal*Mart. Why are so many auto companies in trouble? Over time other players targeted all the right features of the best products while very little new technology (read: alt energy vehicles) emerged.

Avoiding strategy decay requires looking through the crystal ball and charting a course. Here are some general areas to consider when placing time into the marketing strategy mix:

1. Innovation over time is unpredictable, but measuring innovative successes has greatly improved making ‘fast following’ or copying features/products a profitable venture with a far lower cost structure. Additionally, as fast following becomes a norm in society, rules protecting unique properties have been weakened to allow consumers access to more manufacturer options.

2. Optimized business models for fast following strip away needless innovation and hone product offerings by all companies to the most successful options. Value chain leaders integrate or contractually lock up fast followers stripping costs out of identifying consumer preferences and integrating them into the product mix.

3. Traditional innovators unable to sustain multi-year investments must move downstream into being fast followers (being locked up or bought) or upstream into core technology developers that are harder to replicate. [Note that Apple continues to buy small technology companies to ensure its edge on core technologies over its suppliers.]

4. Supply chains are adapting into mass market, large scale ‘best product mix at lowest cost’ v. ‘newest technology / design at premium or value-for-features price’. In automobiles, think BMW and Porsche v. GM and Kia. In grocery, think Whole Foods and Harris Teeter v. Wal*Mart and Kroger. [Along this case, I'd note that Hulu v. YouTube is sorting this out where Hulu is the lowest cost distribution point for content producers like NBC while YouTube will need to differentiate by being a value-for-features option (begs the question: what are those features?)]

The next two years will mark a very difficult time across the board. Consumers will push for value and a purpose forcing companies to think about where they fit. Only a few like Apple are lucky enough to have its consumers next gen versions of its products for them.

As people hunker down, lose their jobs, see iconic corporations change dramatically, and face a new reality of a more fundamental lifestyle, we’re going to see a shift of importance in creating value. Value in 2007 was about trading up the ladder by adding features that offered more for slightly less more money.

If you’ve got a brand that’s about creating something of value, then you better focus on it. If you’ve got a brand that has lived on being a lifestyle, then you better find a meaning or plan on being smaller for quite a while. Brands that were making money by being slightly better for slightly less, be aware of the old strategic phrase: getting stuck in the middle.

Brands and companies in the middle will shrink in 2009 and companies that aren’t able to shift down, or hone a premium message, shrink and stay on the top (of mind) will not fair well.

Isn’t the idea that a store employee died today proof enough that door busters have gone too long and too far? In fact, the use of ultra-low priced items to draw traffic has gotten earlier and earlier (Kohl’s went to 4 AM to beat most other retailers this year) with ever more participating members (Old Navy with a door buster?; TigerDirect.com doesn’t even have doors!). Along with the hype, a whole new information economy is being built on top of Black Friday.

A great example of your massive success in creating Black Friday is shown by bfads.net, a website that aggregates all retailer’s information at one site and approaches the popularity of the NY Times:

Retailers, your success is measurable: One estimate puts expected shoppers this weekend at 128MM which is almost half of all US citizens.

Being transparent (as consumers, we’re growing to like this idea more and more), this tactic has one main goal for you: Get the total basket of my purchases high enough to justify the loss on the Door Buster. Sure, sometimes you can partner with a manufacturer to make money on the product being used to lure me in, but most consumer electronics, including highly popular LCD TV’s and digital cameras, earn retailers less than 10% for you and most manufacturers already live on razor thin margins. I’m on to these games and would rather just shop for the hot price on the hot shopping day leaving my other purchases for other times. Sorry.

Like BOGO’s and other high-low pricing strategies of the past, the door buster is becoming its own enemy. When we consumers get the weekend circulars for Black Friday, like Pavlov’s dog, we focus on what hot items will be almost given away for our attention. The earlier the better, as we may go somewhere else with our credit cards. In these value marketing times, how many of this weekend’s customers will buy enough in that store visit to cover the lost margin on a $600 TV that was marked down $300? I stress ‘this visit’ because these busters aren’t building loyalty, they are training us to jump at low prices.

Here’s an alternative use for those margin dollars: Use all that consumer data you’ve been accumulating on us and offer up a customized Black Friday event for us, your most loyal customers, via an exclusive invitation at an exclusive time that doesn’t have obnoxious shoppers and the stress that goes along with it. If you feel you need to give us more incentives to show up, then hand us a coupon that gives us a target for a reasonable spend level based on what we’ve bought throughout the year (instead of skewing to the ‘go big’ incentives for everyone that walks in the door like “busters” do today). All of you, major national retailers with names like Target, Wal*Mart, Home Depot, Lowe’s, Safeway and Kroger, know how often we come in, what categories we buy and how much on average we’re spending. Use a scalpel for our dollars instead of a mallet.

Even better, once you create an experience that isn’t about everyone, then you’ve built an experience for us, the ones that you want to build your relationship with. While all those faceless shoppers that storm through the stores seeking the latest super-deal won’t show up, what needs to be asked is this: How many of those shoppers are buying your door busters at ultra-low prices and then just reposting the item on eBay to profit from a your lost margin?

This year is over, but most of you retailers will be planning for 2009 soon. Take a stand, end Door Busters this year and try something completely different. Who knows, we may actually look forward to shopping again.