Judgment time

One of the great things about blogging is that you can read back over your own posts and remind yourself how you were feeling at any point in time.

Looking back over last week's posts I can see that I was in a rather tetchy mood (my wife confirms this to be the case). Condoning cuts in the marketing budget and dismissing tweaks to marketing messages as a finger in the dam are the sort of statements that will get me drummed out of my professional institute.

Thinking about what I was doing last week, I recall spending time with a luxury hotel, a retailer of safari holidays and a London estate agent, all businesses that are at the sharp end of the new normal. I guess I was feeling their pain. These businesses don't need tired cliches or fiddling while Rome burns, they need practical advice and hands on support to help them quickly generate more sales.

16 years of constant growth in the UK has provided marketers with the breathing space and investment to try new ideas and promulgate new principles (never a bad thing). The new normal will be the judge of which of these ideas really contribute to bottom line profit. To see which marketing myths are dispelled and how often the emperor is stripped of his new clothes will be fascinating.

Not a recession, it's the new normal

According to Sir John Gieve, the outgoing Deputy Governor of the Bank of England, Britain is at risk of being in recession for the next 10 years.

That being the case, it's about time we adjusted our language and stopped thinking about it as a recession and more as 'the new normal'. If we look back on the last 10 years as exceptional (and let's be fair, not universally enjoyable - the whole process of keeping up with the Jones's and comparing house prices was pretty draining after a while) then we might have more chance of getting on with life.

In the 'new normal' things will not be worse, just different.

The way our customers think will be different, they way they act will be different and they will care about different things. They might even be different people.

Armed with this new mind-set we can set about acquiring the knowledge and insight we need to market effectively.

Here are 9 thoughts for the new normal (it was going to be 10, but one was cut in honour of the new climate). We must:

1. Make sure that our relationships with customers, suppliers and staff are in excellent shape


2. Identify changing needs and wants and adapt our propositions accordingly


3. Stay true to the quality of our brands. Price promotions might hold up volumes in the short term, but will reduce profits and brand value over time


4. Continue to invest in new products and services. Try new things. Cutting back on investment, innovation, product quality and customer service will result in a loss of market share that will be impossible to recapture


5. Reduce our key objectives to a 'vital few' and focus all of our marketing energy on these


6. Review our marketing budgets, invest where we need to and make sure we are running tight ships


7. Take advantage of falling media prices to steal a march on the competition


8. Recognise what we are very good at and build on it


9. Be noticed and stand out from the crowd.
   

The bottom line is we musn't panic and throw our business strategies out of the window. Customers won't go into hiding. The desire for holidays, new houses, financial services, sales training or whatever it is we offer will still exist, we will just have to work harder to convert that desire into a purchase. Put another way, we will need to give people more and better reasons to make the commitment.

Daily Telegraph 19 Feb 09: Britain at risk of 10 year recession

and here is another interesting post, almost a parable

It's not the economy

Irrational marketing for rational customers won't work

Seth Godin is a well respected blogger and talks good sense on a variety of marketing related issues. In his post on The rational marketer (and the irrational customer), however, he misses an important point.

Seth expresses frustration at marketers who can't work out why more people won't buy their products or services and suggests the answer is to stop focusing on rational benefits and instead to tune-in to irrational drivers, for example, the hassle of making the change or concern about what the boss will think.

We have clients who find it hard to accept that people aren’t buying their products or services in sufficient quantities too. The first step, is not in messaging or sales techniques, but to establish if there is still an adequate market for the product or service in the first place.

We are in a recession, which means that demand for all but the most essential purchases falls. The response to falling sales is to identify and understand the market. This might mean exploring new markets or establishing a proper basis of aggressive competition in existing ones: normally by differentiation or focusing on a niche. If necessary, costs and processes have to be reviewed to maintain profitability while price competition takes place.

The decision making process might meander through irrational steps, but the ultimate decision to sign a cheque in these straitened times is still a very rational one. Businesses have to accept that their market might be shrinking and adapt accordingly. To try and stave off falling demand by simply tweaking the message is equivilant to putting a finger in a broken dam.

It’s OK to cut the budget

The adage that the businesses which maintain their marketing expenditure during a down-turn will be the ones that prosper in the end is backed by evidence.

As a statement, however, it was coined at a time when the marketing options were fewer than they are today. Short term adjustments to expenditure are not damaging and may indeed be exactly the right thing to do.

The extent to which a business is reliant on tactical marketing to drive sales volumes will influence the amount that needs to be spent during a down-turn. A business that relies on internet sales, for example, may have to increase its expenditure to generate a greater number of visits to the website and compensate for a drop in the conversion rate. To cut the marketing budget now would be to accept an immediate reduction in sales.

For many other businesses, a switch out of cash-hungry promotional activity and into a greater focus on looking after existing customers and using on-line and off-line networking and PR to attract new ones, could be a good idea and may even lead to a re-appraisal of the type of activity the company does over the longer term.

Marketing, through its own failings, will of course always be associated with promotional activity. The full marketing mix is much broader than this and a reduction in promotional activity could be more than compensated for by taking the time to identify a new product, a new niche or an improvement in the customer experience.

The mantra ‘don’t cut the marketing budget’ needs to be re-written as ‘don’t cut the marketing activity’: it’s not what you spend, but how you spend it that matters.

Gorilla marketing (sic!)

This post is by Bryony Saunders, Marketing Executive with The Marketing Eye.

Advertising is not about simply promoting a product. We are no longer satisfied with companies telling us how good their products are or how unbeatable their price is, these days we expect to be entertained as well.

A perfect example of a company that has managed to entertain us is Cadbury’s.

Cadbury’s recent run of adverts has both bemused and entertained us. I mean, a gorilla playing the drums along to a Phil Collins track?!!

‘Gorilla’ has quickly become one of the most popular and critically acclaimed TV ads of recent years. This has been followed by trucks racing each other to a Queen soundtrack and, most recently, children with dancing eyebrows!

But where is the chocolate? Not once is the chocolate bar shown or mentioned.

The adverts help us form a relationship with the brand. They make us smile and implant a sense of, not how the chocolate tastes or looks, but how it and Cadbury's make us feel: happy and ready to go...just great. The adverts are so different, so obscure that everybody is talking about them.

We have all seen Cadbury's chocolate, we know what it looks like and we know what it tastes like, we don't need telling again. The marketing people at Cadbury's have seen this and have had the courage to stand out from the crowd and do something different.

Update - There is a good article on the BBC website on the same topic.

6 Nations

The RBS 6 Nations starts this weekend, providing husbands and partners up and down the land with an excuse to drink beer and not go shopping for the next 6 weeks. The Eye will definitely be among them.

Amidst the cheers for heroic tackles and groans for missed penalties, there will no doubt be much wailing and gnashing of teeth over why RBS (or the taxpayer) is spending £20million to sponsor the tournament for another four years.

RBS remains a commercial organisation and, whatever we might think about how it got into the current mess, it is in the tax-payers interests that it returns to profit as soon as possible. This means the bank must continue competing for business and give businesses and consumers a reason to choose it.

There are sound commercial reasons for the sponsorship. International rugby, especially the six nations, has always attracted a strong corporate and ABC1 consumer audience, providing a very close fit with the bank's target markets, not only in the UK and Ireland, but also in Asia where RBS has a significant presence. As the TV audience and ticket sales show, demand for the game remains high and it is, therefore, an ideal platform for the brand to re-establish some measure of corporate success.

The balance of the bank’s sports sponsorship portfolio may not be so lucky, particularly the F1 sponsorship, which always had a whiff of the chief executives whim about it. Positioned as part of the strategy to build a global brand, RBS selected Williams as its team, only to watch it go backwards on the grid almost as fast as the RBS share price has done since - perhaps it was an omen.

Andy Murray, Luke Donald, The European Tour and NatWest Cricket will all be wondering whether they will be the next victims of a 'strategic review'.

But let's get back to the rugby. Scotland play Wales at Murrayfield and the latest news is that Gavin Henson is out injured. Will anybody notice or will all eyes be on who is occupying the hospitality seats? Our guess is that Sir Fred will elect to watch it on the telly.

The Card Awards

We were at The Card Awards last night, the annual awards event for the payment card industry, and were delighted to see a project that we were involved in last year being short listed for an award.

The Zenix Card Alliance, an alliance of RBS and 4 partner banks, serves large corporates with payment needs in multiple countries. The Alliance was nominated for best industry innovation of the year.

The Marketing Eye helped RBS Commercial Cards develop and write the marketing strategy for this proposition.

The event, held at the Evolution Centre in Battersea Park, was attended by more than 1200 people from across the payments industry. Host, John Humphreys, combined witty insights on the intellect of certain political interviewees (and a rather dodgy impression of Gordon Brown) with pointed comments on the role of the media in the current credit crisis. He made his view clear that the role of an independent media was to bring the truth of the situation to the attention of the public and not to be complicit in creating an orchestrated feel good factor.

Congratulations to Martin Fielding, CEO of the Card Awards and his team for putting on an excellent event and for raising £28,000 for Mencap in the process. Martin Fielding is also a client of The Marketing Eye.

Woolworths re-launch

We wake up this morning, not only to snow, but to news that Woolworths is to be re-launched as an online business.

As we predicted in our post in December, somebody would see value in the name awareness of the Woolworths brand and it seems that the Barclay twins, owners of the Shop Direct Group, which includes Great Universal and Marshall Ward, are the ones to give it a go. The amount that they have paid for the brand is so far undisclosed.

One of the main reasons for the demise of Woolworths as a high-street store was the fact that there was no real understanding of what it stood for anymore. The new owners seem to be of the same opinion and are asking people to tell them what they should sell.

"Essentially we will sell children's clothing ....and other products, but what we're looking to do is encourage customers to come to us and tell us what they would like to see from Woolworths and what they liked and disliked (about the old business)"

Mark Newton-Jones, Chief Executive

Asking for and listening to customer opinion is commendable. We only hope that this general uncertainty about what the business is and what the market will be has been reflected in the purchase price.

To make the new business a success, Newton-Jones and his team will have to give people a reason to choose Woolworths again. One imagines that it will pitch itself into competition with Argos, Tesco and the mighty Amazon amongst others. So what reason will it give us? Price?

To be truly successful, the new owners will need to be more innovative than this and develop the Woolworths brand around quality, customer service and strength in certain niches. The Ladybird and Chad Valley brands provide good initial opportunities to do this and there could be others. We'll see.

The new business is due to launch in the summer and we will watch developments with interest. In the meantime, hats-off to the Barclay twins, not only for trying to save a high-street icon, but for getting on and doing business despite the recession. We need a few more like them.