Yes, the economy is crap. We know. And while it's very cathartic to throw poop at the probable causes of our current meltdown, from a big picture pretend-you're-not-part-of-it-for-a-second standpoint, we were way overdue. "New economy" my ass. We were riding a huge bubble and it was awesome and then it burst and holy crap it hurts now that it burst, but while we try to eat our shoes for dinner, let's be realistic about our situation and make what we can out of what we have. That's what crafters and DIYers do, after all, no?
Luxury is out except in very small quantities. If you make $500,000 chandeliers, you might want to work on switching your product line. Think like your buyers: when times are tough, the first things you stop buying are the things that you least "need."
Suggestion of the day, which I am giving away, free of charge:
Be a need!
To be a need, it helps to start off as a more practical product. Soap, children's clothing, dog collars, and chairs are all fairly easy to justify purchasing even when times are hard. But a little creativity can go a long way for making all sorts of things seem necessary; just think of how many people can't live without their daily lattes or Blackberries or personal trainers. Art can be a need because you need to fill that spot on the wall that you just can't fill with anything you currently own and it's turned into a hole in your life that eats away at you every time you look at it. (85% of my apartment is a spot on the wall that needs art, but I'm buying a condo soon and then it'll be a nice lifelong process filling it up! But I know many many people have that nagging wall space.) And if you're flexible about what you're making, try looking for a version of what you do that is considered more "necessary." If you work in glass or ceramics, try more practical but artfully minded cups and bowls and dishes and things instead of huge ornamental vases. You get the idea.
I'm pushing the business card sized envelopes because it's more important than ever that your particular business card get noticed instead of lost in the shuffle! I just started handing them out to Realtors because Realtors need them because the envelopes are wallpaper and that goes along with the whole buying and selling houses thing. Anybody in the handmade/crafting/arts world needs them becaues they are recycled/handmade and give your business card a memorable, beautiful and artistic presentation that won't soon be lost. Need need need need need!
In cases where the economic downturn means people are more likely to buy from Wal-Mart because handmade is pricey, you've got to market the message hard that handmade lasts and is higher quality so it's actually a better value. If shoppers are on Etsy and cruising handmade universe they already kind of know it, so drive that home right into their shopping carts. You need my product and you need to buy handmade.
I have more things poking about my brain, but that's enough for today.
POST SCRIPT: I started a "Be a NEED: why is your product a NEED?" thread on the Etsy forums as a sort of marketing exercise and people are writing in all kinds of fabulous creative stuff. Feel free to join in the conversation there or post your response in the comments.