Osborne navigates the South East economy across thin ice

Chancellor George Osborne was optimistic in his update to MPs on the health of the UK economy during his autumn statement today, but life is likely to remain unpredictable for businesses for some time to come.

George Osborne is only offering the lightest hand to businesses as he gingerly navigates the economy across thin ice. He is gambling that net export income and new investment will percolate its way through the system before domestic demand drops due to the cuts in public spending and the impending increases in VAT and employees’ National Insurance.

While his statistics might look encouraging at a macro level, I wonder if he truly appreciates how finely balanced it is on the front line.

The uncertainty, even among those of us that are doing relatively well, makes it very difficult for any business owner to commit to significant new investment or employment. Most businesses don’t have the option of suddenly opening up markets in China and India if demand falls at home.

The availability of finance will remain another significant inhibitor to growth. Osborne shouldn't believe the bank's spin when they say they are supporting small businesses. I have it on good authority that despite what the leaders and PR people might be saying, the people who work in the dark offices behind the scenes are scared rigid of making a mistake: credit is extremely tight as a result. If we need finance to grow in 2011, we will need to look elsewhere for the investment we need.

One of the best things George Osborne could do in the next Budget is to make it even easier and more attractive for private individuals to invest in small businesses. If the banks won’t do it, somebody else has to fill the gap.

While he is at it, Mr Osborne should also look at increasing incentives to employ people by extending the National Insurance concession for new businesses that was announced in the last Budget to the whole of the UK (the South East, London and the East where notably excluded). He should also stop limiting the allowance to start-ups, as it is the established businesses that will offer the most secure employment opportunities - particularly for young people.

Finally, it is time to update the concession on VAT for marketing materials. At the present time, printed promotional materials are zero rated for VAT. This needs bringing into the 21st century by extending it to websites, email marketing and pay-per-click advertising. Any disincentive to businesses marketing themselves effectively needs to be urgently removed.

Give the kids a chance

I attended a meeting organised by the local board of Young Enterprise in the week.

Designed to bring local businesses and local schools together to put renewed energy into the Young Enterprise Scheme, it was, in fact, a rather dowdy, curly sandwich affair with an abysmal turnout and little to suggest it was a pivotal moment in the future of the scheme.

The sad fact is that Young Enterprise in the Eastbourne and Wealden area is dead. Lacking the support of both businesses and schools, this once great mainstay of extra-curricular activity has withered on the vine. The question is why?

Entrepreneurship has never been so 'cool' amongst young people. Programmes like the Apprentice and Dragons' Den top the ratings and the young founders of FaceBook, Twitter and Skype are global icons to the digital native generation. In schools, Business Studies is now a popular choice at A-level with students recognising that it is more likely to enhance their employment prospects than some of the more esoteric options will ever do.

Local businesses too are keen to put something back. Even in a time of recession, many businesses are still looking for opportunities to develop their staff and build a corporate social responsibility agenda - particularly if it can be achieved without writing a cheque.

So what is wrong?

The mission of Young Enterprise is sound: 'To ignite the spirit of enterprise in young people throughout the UK'.

The operation of the scheme, however, is cumbersome. There is too much emphasis on producing useless tat to foist on sympathetic grandparents at Christmas and too little on great ideas and vision.

The management infrastructure is top heavy and weak too. UK Boards, Regional Boards, Development Managers, Link Managers, Finance operations and Administrative support all layer on cost and bureaucracy which has to be borne by the participating schools in the first instance and the tax payer eventually. The local representatives, while undeniably well intentioned, looked tired and out of touch.

Vitally, the schools in the region are disengaged and it is a sign of the inherent weakness of the current operation that there seems to be little understanding of why this should be the case. Is it as simple as the £500 fee that schools have to pay each year to enter the programme, or is there a deeper cause in the lack of fit with the national curriculum, or a lack of teacher time and commitment? These questions need to be asked and answered.

The Young Enterprise brand is established, but faded. The future of our young people and the spirit of enterprise in our economy is too valuable to be allowed to fade in the same way.

With university places at a premium and the job market increasingly hostile for young people, there is surely no more important time to be putting fire in the bellies of our young entrepreneurs. Small businesses employ 57% of the working population and if we don't ensure a constant supply of new ventures, we will be destined to a permanent spiral of high unemployment and decline.

Can the existing infrastructure and brand of Young Enterprise be turned around and made into something good, or is it now time to re-engage with businesses and schools, understand what is really needed in the 21st Century, and launch something new and fresh?

I tend towards the latter.

Real Business #6 - Tester & Jones

While many companies have had a difficult time recently, Crowborough-based Tester and Jones is a business which has been truly recession-proof - funeral services.

Both Stephen Tester and Glenys Jones had a number of years of experience in the funeral business before launching Tester & Jones in January 2005. Stephen admits that the first year, as with any new business, was hard.

“There were times during the first year when we wondered if we’d made the right decision, but we stuck at it and after about 12 months, our hard work paid off. We started to see the business growing,” says Stephen.

“Like any business, networking is important,” he explains. “We went along to meetings of the Crowborough Business Partnership and made sure that local professionals and places like care homes knew we were there.”

Adds Glenys: “We also took part in community events – such as the Crowborough Hospital Fete – as well as fundraising for charities such as Cancer Research UK and Hospice in the Weald.”

Over the five years, the number of funerals Tester & Jones has conducted has increased four-fold and its reputation is spreading outside of Crowborough – with services being conducted in places including Mayfield, Eastbourne and Tunbridge Wells and as far afield as London, Margate and Chichester.

Customer service has played its part in the company’s steady growth.

“We have developed strong bonds with the families who we have helped through difficult times and we are passionate about looking after people,” says Stephen.

Around 18 months after establishing the business, the team launched a bereavement support group and this has been really well received. The group meets once a month and goes on trips and organises other socials.

“Nowadays, the group almost runs itself and they are even talking about arranging a holiday” says Glenys. “It gives people the chance to sit and talk with others in the same situation.”

Moving forward, while networking has done a lot to build business locally, Tester & Jones is looking at ways of continuing to build its presence outside of Crowborough. It has recently ‘refreshed’ its advertising and is now thinking about launching a website which, so far, it has survived without.

“We appreciate that people search for a lot of things online nowadays – including funeral directors,” says Stephen.

The Marketing Eye says:

Choosing a funeral director is often a spontaneous decision made amidst a maelstrom of emotion.

The bereaved don’t spend a lot of time comparing providers and are rarely in the mood to shop around, which means word-of-mouth recommendations and being front of mind when the time comes, are paramount.

The work that Stephen and Glenys have done to raise their profile locally is excellent. They have placed themselves at the heart of the community and shown real innovation with the bereavement support group. The fact that the group is starting to run itself is positive, but Stephen and Glenys need to make sure that their brand remains associated with it. A regular communication, such as a newsletter, will help with this.

Generating awareness further afield is more difficult. Stephen and Glenys need to decide on the areas they want to target if they are going to use their marketing budget effectively.

Searching for a funeral director online is most likely to happen when the responsibility for organising the funeral falls to relatives who are in a different part of the country, or if a particular type of funeral is wanted. A website will provide the ability to explain the various services on offer and reassure potential clients that their requirements will be dealt with professionally and compasionately.

If the business is specialist in certain types of funeral, it could look into search engine optimisation and paid search to maximise visitors to the website. This can be centred on geographic locations and will make sure that the Tester & Jones name comes up when people are looking for funerals of a particular type.

Forget digital domicile, it's social domicile that counts

Earlier this month Matt White posted on the topic of digital natives and digital immigrants and sparked some lively discussion from people born on both sides of the age divide. (I am, by some considerable margin, a digital immigrant).

In many respects, Prensky’s concept can be applied to any period in modern history. We have been adapting to the constant march of technology since the days of the industrial revolution and one has to ask if there is anything fundamentally different about this latest evolution in our development.

The identification of a new socio-demographic group is, after all, only useful if it gives us fresh insight into behaviours or likely future trends.

Norman Tebbit once famously argued that the test of how well one has adopted a new homeland is which cricket team is supported when the current meet the former. To apply the analogy here, how many digital immigrants would support a fax over email or a set of encyclopedias over the Internet? By this test, immigrants we may be, but our longing for a distant digital place of birth has long since been left behind.

As immigrants too, those of us born before 1980 have become naturally attuned to finding information on a website or working out how a new mobile phone works with little or no need for instruction. Partly a victory for good design, this also demonstrates our rapid naturalisation.

To see any fundamental differences in the natives and immigrants of Prensky’s study, therefore, is difficult. Those of us born before 1980 have become so comprehensively naturalised to a digital world that there is little to be gained by treating us differently for marketing purposes – or certainly no more than traditional demographic groupings would provide.

While the date is wrong, the concept does, however, provide some insight if it is brought forward a number of years.

The evolution of Prensky’s analysis would be to set the dividing line at around 1995 and ask whether one is a social native or social immigrant. The real generational gap is not in the use of digital technology per se, but in its use for communication, file sharing and networking.

When I left school, I had about a dozen friends that I could be readily in touch with. I knew where they lived and it was possible, but unlikely, that I had their telephone numbers written down. The passage of time has meant that this dozen has dwindled away to only one (I hasten to add that I’ve made some new friends along the way!).

As my daughter now reaches an age when she could technically leave school, she has more than 1,000 friends of Facebook. Some of these contacts will be a lot closer than others, but the point remains that she can follow their movements and get in touch with any one of them at a moment’s notice.

I doubt my daughter recognises the power of her network and certainly hasn’t built it with any sense of the future in mind, but imagine how useful this could be as these contacts become the lawyers, teachers, politicians and entrepreneurs of tomorrow: people she can turn to for jobs, advice, referrals or social interaction in a very speedy and natural way.

But we immigrants have not stood frozen in the lights. As social immigrants, we have not only strived to catch up, but have developed or monopolised certain networks and free resources of our own.

LinkedIn is positioned unashamedly for professionals that want to keep in touch and Twitter is dominated by 35 – 50 year olds who want to promote their businesses or demonstrate their pithy wit to a set of followers. Now we see new geo-location facilities such as Foursquare being harnessed by a more mature audience than their creators might have anticipated.

The immigrants’ use of these facilities might lack the natural behaviour of the social native, but we are embracing the technology and adapting it for our own purposes.

Which brings us to the terminology, for it is often the immigrant that recognises the opportunity in a new land and works hardest to prosper from it, while the native watches in the wings taking for granted what has always been around them.

So what does all this mean for marketers?

For marketers and businesses in general, the principle challenge when dealing with the social native is going to be how to make a commercial gain from a group that has come to expect so much for free.

Communications, music, video, news, research and games are all now accessible entirely free of charge. This is already proving itself to be unsustainable and we wait to see who is going to be brave enough to break the mould and how they will do it. With the notable exception of Google, advertising is not proving itself to be the answer.

Secondly, marketers shouldn’t forget that we have an aging population in the UK, in which the social immigrants are the largest group and the holders of the wealth. We need to continue to focus on this group and use available media appropriately to ensure its engagement with our brands.

Woolies to expand

In an update to our post of February 2009 about the re-launch of Woolworths, it was interesting to read in Retail Week this week that Woolworths.co.uk has 'delivered on target' after one year of trading.

Now its owner, Shop Direct, plans to expand the ladybird brand to include toys, nursery and toiletry ranges. It is also considering selling through shop franchises or under licence.

Toys and a nursery range make perfect sense for the ladybird brand, but toiletries? Surely this is a brand stretch too far.

We correctly predicted in 2009 that the future for Woolworths was on-line and yet the owners seemingly can't resist a return to the High Street. The difference this time is that they're not doing it at their risk, but at the risk of franchisees. This should be a clue.

Potential franchise holders must take a serious look at why Woolworths failed on the High Street and have a strategy for avoiding the same pitfalls before parting with their cash. (They can read our post of December 2008 if they need a reminder).

Real Business #5 - ITM Soil

Real Business is a series of posts that analyses the marketing opportunities and challenges of real businesses in the South East. The articles are also appearing in The Courier.

The ITM-Soil Group specialises in the manufacture and installation of instrumentation to monitor ground and structural movement that occurs during major civil engineering projects worldwide.

The company manufactures a large range of instruments for monitoring earth, rock and concrete structures, including dams, tunnels, embankments, retaining walls, piles and steel work.

Since 2002, the Group has launched in Australia and it also has a presence in China and Germany.

The recession has bought significant challenges, but the group is confident that it can achieve its ambitious growth targets.

“The marketplace has become increasingly competitive,” says Jeremy Scott, General Manager. “There are fewer projects to go round and we now have to compete with suppliers offering cheaper products, particularly from India and the Far East.”

He continues: “We need to continue positioning ourselves as offering quality products and services – as we simply can’t compete on price alone. It’s a case of reminding customers that they need a really robust and reliable product – as it might have to work under the ground for many years – and for that peace of mind, you may need to pay a little more.”

In the future, the Group is looking to continue growing its presence in Australia – particularly focusing on the mining industry. In the meantime, countries in which ITM-Soil is particularly busy include Morocco, Spain, Brazil, Singapore and Germany.

The company is currently on the verge of launching a new wireless sensor system.

“Up until now, the majority of our products have been cabled – so to offer customers a wireless solution for our specialised sensors will be a major step forward,” says Jeremy.

For more information, visit: www.itm-soil.com

The Marketing Eye says:

As the number of infrastructure projects in the UK falls and competition from abroad increases, ITM needs an international marketing strategy to support its expansion.

Marketing needs to be localised to the different target markets. This goes beyond simple translation of materials and should extend to cultural and regulatory differences as well: even colour choices can have different connotations in different regions. Mistakes can be damaging to the brand, so it is important to avoid them.

Localisation could start by translating the website into several languages. This will make the site more accessible to local decision makers and will improve its performance in search engines. Localised domain names could also be bought.

The choice of marketing method needs to be made with each market in mind.

European markets are mature and media consumption remains high. Impactful design is important to achieve cut through and give the brand its desired quality positioning.

Brazil on the other hand is young and social. Mobile and broadband penetration is very high making online marketing effective.

In Asia, getting a contract relies on connections and face-to-face contact. The good news is that half of the population is below the age of 30 and very open to new ideas.

Building the brand on quality rather than price will be achieved through the superiority of service, the ability to innovate and the effectiveness of the marketing. The introduction of the wireless sensors is an important step and needs a launch strategy in its own right, not just to ensure its success as a revenue generator, but also as a contributor to the brand.

Are you a digital native or a digital immigrant?

This post is written by Marketing Executive, Matthew White.

“It wasn’t like that in my day” is something often said by the older generation to the new one.

There is probably no greater example of 'it not being like that in my day' than the digital revolution that has taken place over the past 20 years - a revolution that has entwined digital technology such as the internet, mobile phones, video games and digital radio into our daily lives.

A growing number of scholars, academics and visionaries have started to believe this latest digital generation is not only different from the last one on a behavioural and social level, but that it thinks and learns differently too.

The new generation are widely known as ‘digital natives’ - a term coined by visionary Marc Prensky. Prensky claims that anybody born after the year 1980 has grown up so immersed in digital technology that it comes completely naturally to them.

Prensky defines anybody born before 1980 as a ‘digital immigrant’. These immigrants have known life before digital technology and, while adjusting well to their new surroundings, never lose their ‘past accent’.

But is it really that clear cut?

Many scholars challenge the claim on the grounds of gender, social demography and the scope of accessibility of digital technology.

They say that boys use digital technology more than girls; people from poorer backgrounds do not have the disposable income to use it; and arguably the most prominent catalyst for the digital revolution, the internet, is still not available in 10 million UK homes. Can the 10-year old socially disadvantaged girl without internet access still be defined as a ‘digital native’?

The debate is broadened by questioning the age-groups. A child born in 1980 was 12 when the internet was invented, a teenager when mobile phones took off and 21 before broadband became widely available. This compared with a child born in 2008 who plays with ‘toy’ laptops (that are actually real laptops), toddler i-phone apps and who can now interact with the cartoons on the internet.

Can both generations really have the same level of digital expertise?

I was born in 1985 and from my own recollection did not grow up immersed in digital technology. This technology, however, undoubtedly now plays a very important role in my daily life, in fact, I cannot imagine life without it. Does this make me a digital immigrant or a digital native?

Perhaps we should be questioning the very existence of the ‘digital natives’. Maybe we are all just immigrants constantly adjusting to the rapid pace of digital evolution.

Do you see yourself as a digital native or a digital immigrant? More importantly, what does it all mean for marketers?