Give 'Em What They Want

There's an old marketing adage about success being dependent upon giving customers what they want.  Indeed, a friend who was a senior marketing executive with a huge convenience store company told me that "figuring out what customers were likely to buy" was one of the most energizing parts of his career.

In a strange twist, CKE Enterprises, operator of the Carl's Jr. chain in the West and Hardees in the East has carried that maxim to a whole new level. They have given up on thinking that people are driven to buy what is good for them – nutritious food that is low in calories and fat.  They offered those choices to consumers but people seem not to like these products and, while they are still on the menu, they aren't popular.

What people prefer to buy, and thus what CKE will offer, are traditional fast foods, hamburgers, fries, and soft drinks that are, relatively speaking, high in calories and fat. The newest entrant is the Monster Thickburger that has 1,400 calories, 107 grams of fat, and 2,740 mg of sodium. Zounds!

It seems to me that the mortgage business is just the same. We sell people whatever they will agree to, not what is good for them. Experts agree that the low payment negative amortization mortgages are not good for people.  Yet people keep buying them, and in record numbers.  Some are headed for disaster, others just for a severe headache, sort of the mortgage equivalent of a dangerous build-up of arterial plaque.