May 13, 2009 | Marketing
I should comment about the Federal budget handed down on Tuesday night, it is expected, so here goes, on behalf of the small businesses I work with.
The bank is still chasing to reduce the overdraft.
Sales are still hard to get, and getting harder, and margins are being squeezed.
Creditors want their money quicker, and debtors are stretching, cash is very tight, refer to No. 1.
So what if I can get a better tax deal on capital investment decisions I make, I still need the cash to be able to make the purchase. Refer to No.1.
I also need cash to be able to meet the payroll and associated oibligations, including filling in all the b…… forms, from all the “shiny-pants” around the place who deliver me “services” of varying quality and availability. Refer to No.1.
My employees are getting pretty twitchy, and confused. Twitchy with me, because they see that things are tough, and they are concerned, for themselves, and me, and confused because it is the toughest budget in 50 years, but they just got $900 in their bank account, and the are unsure about how it is tough, so they are looking for the time-bombs.
Lets just survive this month, work on next month, then maybe we can worry about the spin if we are still here, not down the CES. As for the long term structural adjustment, etc,etc that was sprouted on Tuesday, it is undoubtably necessary, assuming there is someone left to pay the taxes, but someone should do some restructuring now, it is needed, and I think I know where to start.
Another day, another 1/2 dollar.
May 12, 2009 | Management, Marketing
Category Management is an FMCG term being bandied around so much that is coming to mean nothing in particular, because it is so widely used.
In its genesis, it was an expression used to describe the manner in which retailers managed their limited shelf space and range in such a manner to maximise sales and margins while best meeting their particular customers needs.
However, it has since evolved into another tool in the retailer arsenal to extract “rent” for shelf space from manufacturers, which often has little to do with meeting customers needs. This focus has left suppliers, particularly those to FMCG retailers, building a management and marketing infrastructure that focuses on the demands of the retailers, often to the detriment of their consumers. The rise of housebrands is evidence of the abrogation of FMCG suppliers around the world from the task of innovating to engage consumers, and putting resources into paying retail rent.
In many countries the power of the mass retailers is daunting, but they should not absolutely dictate, after all they are essentially sales orgainsations, not marketing ones, they rely on their suppliers for the bulk of their marketing, and have little interest in developing market and consumer behavioral intelligence .
Focus first on what your consumers need, both today and as their needs evolve, and the rest will follow.
May 11, 2009 | Marketing
Tom Fishburne nails it with this cartoon satirising the target market conversations that occur with monotinous regularity in many marketing/advertising offices. Many just do not get it, that to be “remarkable” to use Seth Godins term, is crucial to attracting an audience that may relate to the offering.
The days of mass marketing are over, now we need to look for the market of one and figure out how to service it. Interesting to hear yesterday on the radio a conversation about the business model of newspapers, (do they read my blogg?) and the pleading for US governmenmt assistance. President Obama indicated that the US required a vibrant, competitive, and diverse news sector, leaving the listeners to think he may subsidise the papers to survive, as he has the auto industry.
What are the newspapers doing that is remarkable, that is attracting the consumer, and therefore offering the advertiser a point of contact? Little that is remarkable!
Somebody should show the president the cartoon.
May 11, 2009 | Marketing, Operations
Feature creep, along with its big brother, range extension, have been mainstays of marketing activity for 50 years.
Marketers should now start thinking about, and asking consumers about the relative value of new features or variants. Ask them what they must have, and what they would like to have, and do some analysis of the purchase intention at different price points, with differing options.
Consumers will make tougher choices in tougher times, are they really prepared to pay the extra for the cosmetic frill, or would they take a less “optioned up” option at a cheaper price.
Marketers should also be asking their operations people and bean counters about the real cost of adding the “frills” and reflect the savings in the price to consumers were the frills removed. In most cases, the savings are far greater than the purchase cost of the added frill, as manufacturing cycle time, labor, inventory, and freight costs, amongst many others, are all reduced, delivering savings that are often hard to see if you are just using the P&L to monitor performance.
May 10, 2009 | Demand chains
Over many years of being involved in the evolution of demand chains, there appears to be a number of stages through which they evolve. It is almost always iterative, often with many false starts and dead ends, but those that persist, display the following stages:
- Catalyst. At some point, someone yells, “There must be a better way!”. Generally this happens in tough times, about now would be appropriate.
- Pre-chain. This occurs as a few look around at the data, and wider commercial environment trying to identify a better way for them. Most do not go beyond this investigation, as it now starts to get hard.
- Cautious first steps. Generally a relatively simple collaboration centered around something they all use or need, such as carton, transport or service supply, that is essentially non competitive.
- Commitment to a chain as a competitive differentiator. Key here is to collaborate using information that in less enlightened times would have been seen as proprietary.
- Evolution to a demand chain. This takes time, commitment and is a journey with no end, just an evolving chain that continually improves its ability to react to short term changes in consumer demand, as well as being sufficiently adaptable to evolve its business model to accommodate evolution in the commercial environment. Examples of true demand chains are few and far between. Dell computers lauded “build to order” business model is the best known example of a large business that acts as a manager of a demand chain. It is one of the many models around, largely housed in small businesses where the strains of dumping the status quo are more easily managed.
