2. “ Over the past few weeks, I’ve had a chance to speak with senior economic policy makers in America and Germany and I think I’ve figured out where we are. It’s like this: Things are getting better, except where they aren’t. The bailouts are working, except where they’re not. “ Things will slowly get better, unless they slowly get worse. We should know soon, unless we don’t. (“Really Unusually Uncertain, “ Thomas Friedman, The New York Times, 08.18.10) 2

3. 3 An Uncertain New World Conventional Wisdom Upended Divergence and Consensus The Future Will Be Social In Search of Fairness Implications for Capella

4. 4 An Uncertain New World Conventional Wisdom Upended Divergence and Consensus The Future Will Be Social In Search of Fairness Implications for Capella

6. Consumers rethinking what motivates them

7. Brings everything into question

8. Including lifestyle and product/service choices that may be working fine

9. New trajectories/paths to success

11. 7 Uncertainty unleashed 38% Today 52% 52% (Among work full/part time) Could easily find a new job if you discovered you no longer had a job with current employer 2009 2008 Agree: “feel more exposed to the possibility of losing everything than I did a year ago” Capella Segments Total CLE 38% 43% TAUA EATS 38% 38% HATS 37%

12. 8 The Era of Responsibility is here What may have worked during an era of indulgence can no longer work today Every buying decision has a consequence associated with it; consumers realize they must make tradeoffs in order to survive Consumers realize we all played a part in the overindulgent world in which we lived, and now it’s time to pay the piper Since 2008, consumers have focused on Responsibility as the watchword of their lives Living within their means, not above (or below) them Thinking big picture, longer-term Separating needs from wants Assessing consequences of all decisions Rethinking their appropriate path forward

13. This is unlike previous recessions “Consumers are returning to the marketplace in ways that defy simplistic conventional wisdom… Prioritization has replaced accumulation as consumer’s primary shopping style…consumers do not have the financial wherewithal they used to have, but they have not given up their aspirations to the good life…most of their expenditures are fixed, so there is no financial adjustment that can free up significant additional funds…prioritization is the only financial strategy that can simultaneously enable consumers to spend to stay afloat.” (“First Things First,” The Futures Company Finance and Spending View, 05.27.10)

14. 10 Prioritization requires tradeoffs, and the CLE segment leads the way on this more disciplined approach Partial list

15. Do not mistake Prioritization for Frugality, however There have been two popular views on the Recovery put forth by “experts”...we don’t happen to agree with either one The New Frugality Ready to Rebound Penny-pinching and thrift will define the consumer mindset Acquisitive, materialistic consumers will pick up where they left off Consumers will spend money when they deem a marketplace offering to be of value, but will manage and monitor their spending given the new context of Responsibility and Prioritization

16. The ‘schizophrenic economy’ “ Americans are broke – and depressed – and also swilling $3 lattes and waiting in line for iPhones. Welcome to the schizophrenic economy (“The New Abnormal,” Business Week. 07.29.10) 68% “ Today Agree: “Sometimes I just need to treat myself to something nice/fun even if I have to tighten up my budget in other places” 12 (Yankelovich MONITOR 2010 Finances & Spending Lens)

17. 13 Luxury shoppers return to stores in surprising numbers “On October 14th Moët Hennessy Louis Vuitton (LVMH), the world’s biggest luxury-goods company by sales, reported a 14% increase in sales in the first nine months of the year, after correcting for such factors as currency fluctuation. Burberry, a British clothing firm, also reported double-digit sales growth in the six months to the end of the September. On October 28th, PPR, a French retail and luxury group, is expected to report strong results. “The strength of the recovery was a surprise,” says Claudia D’Arpizio, a luxury-goods expert in the Milan office of Bain & Company, a consultancy. Big brands such as Louis Vuitton and Hermès are the main winners. With their deep pockets, they were able to continue to open new shops and invest in the business during the crisis.” (“Bling is Back: A Surprising Recovery in Luxury Goods”, The Economist, 10.21.2010)

18. Prioritization: electronics a winner 14 “After pouring money into all aspects of their homes during the previous decade, consumers are redirecting their purchases to eye-grabbing technology and socking away more of what's left over into savings. Apparel company executives are worried the lure of electronics will eat into their sales as the back-to-school season gets under way. Outlays for televisions, computers, video and telephone equipment grew 1.8% in the first six months of this year, compared to the first half of pre-recession 2007, the Commerce Department said Tuesday. By comparison, spending on appliances decreased 3.6% during the same period, and spending on furniture decreased 11% during that time." (“Tech Gadgets Steal Sales from Appliances, Clothes”, Wall Street Journal Online, 08.03.2010)

19. ‘Haves’ and ‘have nots’ creating a disjointed recovery “Purchases of TVs, jewelry, recreational vehicles and pet supplies are growing robustly, government data show. At the same time, spending on medical care, day care and education is down in the dumps. ‘The rising tide isn't lifting all boats,’ says Carl Steidtmann, chief economist at the Deloitte accounting and consulting firm and author of an index tracking consumer spending. [M]ore than one-third of the 350 spending categories tracked by the government remain in decline, as if the recession that technically ended in June 2009 was still underway. Consumers are spending less on prescription drugs, life insurance and a wide range of everyday essentials while spending more on watches, wine and toys. (“Luxury Buying on Rise, As Jobless Not Spending,” USA Today, 10.27.10)

20. Consumers Seek Luxury at Home but Want “Bang for the Buck” with Wine Purchases 16 Millions of Gallons Billions of $ Year Year *Source: Wine Institute - http://www.wineinstitute.org/resources/pressroom/04082010 While overall consumption rose, “Bang for the buck has clearly become a more important consideration for thewine-buying public…The only big losers in 2009 were those wineries that depended on restaurants for much of their business. Their sales decreased up to 9 percent as more consumers stayed home and fewer business trips were taken." (U.S. Wine Sales Decrease Despite Bad Economy, The Orange County Register - http://fastfood.ocregister.com/2010/08/13/u-s-wine-sales-increase-despite-bad-economy/69777/)

21. A risky, uncertain world means a more deliberate, thoughtful, ‘prove it to me’ consumer evaluating Capella in the context of all other buying decisions Consumers are scrutinizing all aspects of their lives — particularly any decision with a high level of risk, importance, or uncertainty Provide a guaranteed return; eliminate the risk of a bad choice Consumers are increasingly looking for certainty and safety How can Capella make a prospective student feel like they’re mitigating the risk associated with such an important decision? Expect the Free Online Seminar to be heavily tested You’re not just competing against other online programs; your competing across categories Consumers in Prioritization mode realize they cannot have it all and may be trading off one category for another

22. 18 An Uncertain New World Conventional Wisdom Upended Divergence and Consensus The Future Will Be Social In Search of Fairness Implications for Capella

23. Conventional wisdom upended Economic hardship is only one catalyst at work; many rules seem designed for a different era 19

24. Conventional wisdom upended Children not required 41 percent of Americans say having children is necessary to a good marriage, compared to 65 percent in 1990 (Pew Research Center, 2007) 20

25. Conventional wisdom upended Women “out-earning and out-learning” men “In 1970, 28% of wives in this age range (30-44) had husbands who were better educated than they were, outnumbering the 20% whose husbands had less education. By 2007, these patterns had reversed: 19% of wives had husbands with more education, versus 28% whose husbands had less education. In the remaining couples — about half in 1970 and 2007 — spouses have similar education levels.” (“Women Out-earning and Out-learning Men in More Couples,”The Los Angeles Times. 01.20.10) 21

26. Conventional wisdom upended (Among 30-44) Share of husbands whose wives’ income tops theirs (Among 30-44) Among married women, which spouse has more education? Notes: Includes only native-born 30-44 year-olds. Source: Pew Center and Decennial Censuses and 2007 American Community Survey (ACS) Integrated Public Use Micro Samples (IPUMS) 22

27. 23 An Uncertain New World Conventional Wisdom Upended Divergence and Consensus The Future Will Be Social In Search of Fairness Implications for Capella

28. 24 The future will be social With people more and more deeply embedded in narrowly drawn networks of information and influences, contextual reference points play a bigger, frequently dominating role, in shaping opinions and choices

29. The future will be social Top 10 sectors by share of internet time Source: The Nielsen Company. 25

30. 26 The future will be social Redefining the objective The digital future… The analog past… Marketers must strive to get talked about Marketers strove to be heard Share of conversation Share of voice

32. Edited

33. Limited access

34. Participatory

35. Customization

36. Universal access

37. Still controlled by authority

38. More open

39. More democratized access

40. Specialized, tailored, filtered

41. Vetting info through close personal connections

42. Social stream**” ‘Information is becoming less of a destination that we seek on line’,” says Anthony J.Rotolo, assistant professor of practice in the School of Information Studies at Syracuse University. “Instead we are expecting it to come to us in a social stream’,”The New York Times, 08.12.10)