Advertise, Advertise, Advertise

An economic downturn brings opportunity for those who are willing to take a leap of faith and who have a cash cow they can use to buy advertising when times get tough.  When you go looking for success stories - or survival stories - from the Great Depression, you read that there are a number of examples of brands becoming successful through the trying times. 
The most widely quoted are Chevrolet cars, Camel cigarettes and Procter & Gamble.  Each of these relied heavily on advertising because they realized that they needed advertising to create and maintain brand loyalty.

In 2008, Dave Chase wrote "How brands thrived during the Great Depression", and provided a good rundown on these three:

• Procter & Gamble. To this day, P&G maintains a philosophy of not reducing advertising budgets during times of recession, and the company certainly did not make any such reduction during the Depression. It's not a coincidence that P&G has made progress during every one of the major recessions. While competitors cut ad budgets, P&G increased its spending. While the Depression caused problems for many, P&G came out of it unscathed. Radio took P&G's message into more homes than ever, and P&G became a pioneer in effective use of that medium, including its role in creating the notion of soap operas.
• Chevrolet. During the 1920s, Fords were outselling Chevrolets by 10 to 1. In spite of the Depression, Chevrolet continued to expand its advertising budget and, by 1931, Chevrolet took the lead in its field. It is believed that Ford's weaker balance sheet entering the Depression rendered it unable to respond to Chevrolet.
• Camel Cigarettes. In 1920, Camel was the top-selling tobacco product. American Tobacco Co. then struck back with the Lucky Strike brand, and by 1929 Lucky had overtaken Camel as the No. 1 brand. Two years later, in the heart of the Depression, Chesterfield also overtook Camel. Camel countered with a dramatic increase in ad spend and, by doing so, demonstrated the power of advertising during depressed times. By 1935, it was back on top.

Advertising Lesson #5 from the Great Depression: Advertise ... Hard.

This is my final installment on Depression Marketing.  Hope you enjoyed it, and found it uplifting.

SCARE Them

Fear is a very powerful motivator.  In an economic downturn, people are particularly vulnerable.  Preying upon those fears is a food way to sell your product (questions about ethical considerations aside, perhaps).  To use fear, you need to understand individual's fears and how your product can solve those:

• Will I lose my job?
• Will I be able to buy groceries?
• Can I keep my house?
• What if something happens to me?  What will happen to my kids?
• Can I afford to buy that car?
• Should I cut-back my cable service?

Robert Bruce Donald in his article "Buying the Dream" wrote about advertising in Life Magazine:
"Another reaction within the advertising community was to insinuate guilt for products such as insurance, which, when not purchased, put family in an unreasonable situation in "these times"."

Russell Johnston in his article "Opportunity Knocks" wrote: "Many agents turned to fear campaigns to sell their goods, admonishing consumers not to let themselves get yellow teeth, bad breath, unsightly clothing, or a host of other socially disagreeable ailments that might lead to lost opportunities. For instance, in 1934, Gillette ran a series of ads for its Blue Blade line suggesting that men who were careless about their appearance were more likely to lose their jobs."

Advertising Lesson #5 from the Great Depression - Fear Sells.

 

The sun will come out, tomorrow

When you are in the depth of a financial crisis it is hard to believe thing will ever get better.  You have to know that they will.  They always do.
 
How long is a recession?  The average length of the ten recessions since World War II has been 10.4 months, with a range of 6 months in the 1980 to 16 months in the 1981-82 recession.  Of course, the big Depression is the thing that everyone worries about.  The Great Depression lasted from 1929 to 1941.  US GDP contracted by 28% between 1930 and 1932 and hit the bottom in 1933.  The Great Depression featured global impacts of massive bank and business failures, and crazy unemployment.  Not a fun time.

When a recession hits, adjust your strategy to the future.  Robert Bruce Donald looked at advertising in Life Magazine between 1936 and 1939, in his article "Buying the Dream"

… In truth it seems that 30s consumers must have needed to have one foot in a "dream world" of aspiration while one foot remained firmly on the planet, with the pendulum swinging toward the dream as the duration of the hardship lengthened.

In summary about the Great Depression:

What was illusion and what was fact?

Advertising twisted the message to serve an admittedly self-serving, yet useful purpose. Many of the products advertised were just beyond the reach of the consumer who read Life. That was absolutely as it should be and Life along with its advertisers knew it. Striving toward a better grade of whiskey, a smoother smoke, and even down the road perhaps a new automobile, served a very useful purpose: it reinforced the cultural imperative that if you were not climbing the ladder of success, you were not buying into the American Dream.

If you were not buying into the American Dream, weren't you just fooling yourself?

Advertising Lesson #4 from the Great Depression ... Remember that the economy and prosperity will improve.  When it does, you want to be sure that your products are top-of-mind and something for which your prospects have a yearning.  Give them something to need.

They still need to buy things ... make sure they are your things

Over on Profy.com, back in 2008, Svetlana Gladkova wrote “Are We Sure About Pending Collapse of Ad-Supported Internet?” 

Svetlana wrote a great story about the impacts of the depression on companies and how they responded to it.  Svetlana found that advertising remained a relatively healthy industry through the depression.  Why?  Given the very bad economy, why would companies continue to advertise?

Simple answer really when you think about it.  People still need things.  Those things may be pretty basic.  Those things need to be really cheap.  Those things must be the things you are selling.

The first thing to keep in mind is that people will not stop buying products that are essential to them. True, people will hardly buy luxury products when they need to make decisions on what is really important and what they could live without given limited resources. But that does not mean people will not buy anything at all - it simply means the focus will change for them. So the first conclusion is that we will obviously see less luxury brands advertised. But it does not mean that manufacturers of those essential products will stop advertising as well. What’s more, they will have to compete with each other for those scarce money people will have in their disposal.

What’s more, in a bad environment consumers will be actively looking for better deals to spend those scarce money wisely. And if a company can offer a better deal to a consumer, it should advertise this opportunity because if no one knows you have something better to offer when compared to your competitor, how will you manage to make consumers make a choice in favor of your product.

So ... Lesson #3 from the Depression is ... be a value-product and make sure your target market knows about your value through clear and concise advertising.

The dirty 30s and advertising your way through 2011+

Back in April 2008, Russell Johnston wrote a great article on "Marketing". The article - Opportunity Knocks - tells a great story about the horrors of the Great Depression, and the actions of advertisers.

At its worst point, in 1933, more than one in four Canadians was out of work and the average farm income dropped to less than half its peak from the 1920s.

... radio experienced phenomenal growth despite the hard economic times. From 1928 to 1933-the year before the crash to the depth of the Depression-the number of licensed sets in Canada almost tripled to 763,000. ... the actual number of sets might have been closer to one million ... Radio offered one winning advantage during the depression: once a set was purchased, the programs were free. If you could build a crystal radio, the sets themselves were free.

... the trick of radio advertising lay not in the medium itself but in the careful pairing of product with program.

Fast forward a few years (okay about 80 years), and here we are with more new media in our hands.  The web is getting old, and it is being quickly eclipsed by the small-screen  (a.k.a. the third screen) mobile browsing.  Is this the radio of our generation?  It's a great place to be (and generally pretty cheap) in this economic time.  There is also plenty of opportunity to pair with a product with a "program" - also known as an "app".

Lesson #2 from the Great Depression - Look for opportunities and be relevant.

How to advertise in 2011, based on lessons from the Great Depression – Public Relations

To understand the Great Depression and how it affected people, it is important to understand some of the psyche at the time. Travis Scott Luther, President of Luther Media wrote a really good piece a few years ago which described the economic climate:

During the Great Depression of the 1930’s, a backlash against corporate America gained more traction than the bull of the 20’s market ever had. Citizens displaced and bankrupted by the financial fallout of the markets came to call on government for strict regulation and oversight. …

Understanding the increased challenges they faced in earning not only the populations’ business, but their trust, corporations were forced to find ways to bridge the widening gap between themselves and the consumers they so desperately needed to continue to operate. Deconstructing a world-view of large corporations as anti-person, evil teeth gnashing machines grew a new industry usually retained by government, “public relations.” One PR man told Standard Oil Company it would have to alter fundamentally the way it explained itself, saying “Identify yourself not with bondholders,…Wall Street, but with labor, with Americans.”

Public Relations is an element of marketing which is used to build relationships with customers, employees, investors, and other stakeholders. Public Relations may be called corporate communications, media relations, investor relations, or community investment.

Community Investment is perhaps the most visible form of Public Relations. This includes financial sponsorship or active involvement in community programs.This typically works best when it is closely aligned with the corporation’s target market and their interests.

For instance – McDonald’s Restaurants involvement with the Ronald McDonald House has very close alignment with their target market (families) and their interests (their kid’s health).

Lesson #1 from the Great Depression … Public Relations is important.

Where's the economy going ... and what can you do about it

The current noise is that the economy is teetering on disaster once more.

What is the best marketing strategy when the economy is in the dumps? Cut back? Well, yes, in some areas of your business you should cut costs to the bare bones. But, history of “tough times” has shown that companies that invest in marketing and selling value will come out the other end of an economic slump as the champions.

I'll see what I can dig up as evidence over the next few days.

Thank you Forrester Research! U.S. e-commerce comeback seen by 2010

Reuters reported last week that a Forrester Research report indicates:

• E-commerce in the United States is expected to climb back to last year's levels by 2010 after experiencing slowing growth in 2009 due to the recession, a research group said on Monday.
• Online sales in 2010 could reach approximately $176.9 billion, representing 13 percent growth, said Forrester Research in its five-year e-commerce forecast.
• Last week, the group released data saying the online retail channel was expected to grow 11 percent to $156 billion in 2009, below the 13 percent growth seen in 2008, and the 15 percent growth it had earlier predicted for 2009.

Historically there have been few recessions that have lasted for much more than a year. So, get ready for next year now! It's a GREAT time to figure out your e-commerce strategies and put them into action. Service providers are hungry for your business, and your competitors may be battening down the hatches rather than setting sail.

Have a look at Market GoGo's website to see how we can help you get your e-commerce ship in order.

Trends for 2009: #18. Survival of the fittest (i.e. cheapest)

Over the last 10-20 years it has been relatively easy to get into business and stay in business. In general the North American economies have been running in overdrive. To be profitable almost all you had to do was actually produce something of reasonable quality at a reasonable cost.

In 2009 that isn't enough. The two types of companies that will prosper in 2009 are:

1. Those who have low-cost in their cultural DNA. You are already thinking "Wal-Mart", "Costco", "Ryanair", "Southwest Airlines", and perhaps some Indian call centers or IT development shops. AND,
   
2. Companies who can provide innovative ways to deliver greater productivity to other businesses.
   

Today, I'm blogging about the LOW COST STRATEGY.
If you look back at the classic definition of a low-cost strategy by Michael Porter, you look at business tactics like:

• Opportunity to capture considerable market share
  
• Natural advantage or preferential access to inputs
• Process engineering skills - which grind every wasted nickel out of product design, manufacturing, and distribution
  
• "Standard" products with relatively little differentiation that are easy to manufacature
• And also that are perfectly acceptable to the majority of customers
• Technology that will reduce costs
• Sustained access to inexpensive capital
• Close supervision of labour
• Tight cost control
• Incentives based on quantitative targets.
  
• Efficient distribution channels.
  

It is very important to note that Low-Cost does not necessarily equal Low-Price or Low-Quality. Low-Cost only means that a low-cost provider can produce the same product as another supplier at a lower cost. They can still sell it at the same cost and therefore make a bigger margin, or they can get into a price war, sell above their cost while their competitors are forced to sell at a loss, and consequently come out the winner.

What is a Marketer to do in 2009? Strategies to follow include:

• BE a Low-Cost company. If you are already a low-cost company, get reacquainted with the strategy basics. If you aren't a low-cost company and you haven't already memorized the list above, then I suggest you buy Michael Porter's book. You can't become Low-Cost overnight. It requires a fundamental change in business strategy and culture. If you are prepared to go this route, be prepared for a challenging yet ultimately rewarding journey.
• DISCOUNT your wares, and prepare to eat your margin. Why? Because your low-cost competitor is about to stick it to you!
  

Will I be right? The year will tell!

• Follow this blog and watch for the next marketing trends I'm forecasting for 2009.
• Feel free to contact Market GoGo to discuss this further.

Trends for 2009: #11. "Do It Yourself" and Free will be music to consumers' ears

I know that I said this was my "Top 10 Marketing Trends for 2009" ... but there is just so much to think about, I've got a few more trends that need to be covered. So this is now the "Top 10 + a few Marketing Trends for 2009."

Along with "Value" as a word that consumers will gravitate to in 2009, two other important phrases that consumers will glom onto are:

• Do It Yourself (or DIY), and
  
• Free
  

Through an economic trough people tend to stay close to home (witness the "staycation" concept that started in 2008). People will still spend, but they will look for ways to save. If they can do things themselves and save some money, they will do it. If they can get something of value for free, they will want it. What sorts of things:

• Cooking at home vs. Eating out,
• Movie and popcorn at home vs. Going to the movie,
• Fixing up the bathroom yourself vs. Renovating your bathroom,
• Free online guides vs. Buying a "How To" book,
• Etc.
  

But, a word of caution ... Whatever you do, don't make "Free" a main strength of your service or product. If the only selling price you can demand for your product is "free", then the demand must be pretty low. Make sure that your product has great value, and people will pay for it. The things you give out for free should be "value adds", not your core product or service.

So, what's a Marketer to do in 2009?

• Look for opportunities to give away for free value-added complementary products and services that will entice consumers to buy from you,
• Look for places where you can have your customer lower the cost of your product or service by doing some of the work themselves. Ensure that you make your product or service a "must have" item to do the work. (E.g. your product must be the essential item to make the outcome work),
  
• Advertise that the value-add is free, but ensure that the value of your product or service stands out on its own.
  

Will I be right? The year will tell!

• Follow this blog and watch for the next marketing trends I'm forecasting for 2009.
• Feel free to contact Market GoGo to discuss this further.

Trends for 2009: #9. RFP Responses will be critical

There's a lot of Government money lining up to be spent in 2009. The buzz word for the year may well be "Infrastructure". If you are in a position to deliver products or services through some of these programs, then you will probably need to craft great RFP responses to get noticed to help do the work.

Of course, RFP Responses only impacts a small sub-set of the Marketing World - that is, Marketing and Sales folks who work in the B2B (or the B2G) space.

What's a B2B / B2G Marketer to do in 2009?

• Sharpen your pencil and fill up your printer with new toner and good quality printing stock
• Get to know the purchasing people in Government offices at all levels, and get on their RFP lists
  
• Search long and hard for RFPs that suit your business
• Fully understand each RFP and what problem it really seeks to solve
• Create a compelling RFP response that clearly shows the client you understand their problem, and clearly tells the story of how you will help them resolve that problem.
  

Will I be right? The year will tell!

• Follow this blog and watch for the next marketing trends I'm forecasting for 2009.
• Feel free to contact Market GoGo to discuss this further.

Trends for 2009: #8. Online Advertising will Continue to Grow

As Marketers (perhaps like you) struggle with a tightened budget and getting the best bang for your buck, it will be time for Advertisers to look more closely at the multitude of advertising media that is part of Online Advertising. Consequently, online advertising will grow in 2009. In contrast, almost all other media will shrink dramatically.

During the Great Depression, the "new media" of radio took off. In fact, in every recession since then Radio advertising has fared very well. Expect similar this time around - except in Radio's place, you will see innovations and growth in online advertising.

Now, that said, if you are a Publisher or an Advertising Network it isn't time to start counting your coins yet. While online advertising will grow in 2009, budgets will still be tight, and it may not even grow as much as it did in 2008. Relative to other advertising media however, it will be glowing. Why? Well, the equation might look something like this for an Advertiser:

This Year's advertising budget = Last Year's Budget / 2.
Where do I put that little bit of money?

• Print 2009 = Print 2008 x 1/3
  
• TV 2009 = TV 2008 x 1/2
• Radio 2009 = Radio 2008 x 3/4
  
• Out of Home 2009 = Out of Home 2008 x 2/3
• Online 2009 = Online 2008 x 1.1

Okay ... the math may not make sense, and those numbers are all just a WAG, but the concept stands. Budgets will get cut, and the increase in online spending is going to come at the expense of other media.

What online advertising is going to grow? All of it. Paid search (probably more than the rest), Banner Ads, Video, Online Games and Contests, etc., etc., etc.. Some people are forecasting that this will lead to an overall increase in Cost Per Acquisition (CPA). Maybe, but maybe not. The content and opportunities on the internet are almost limitless, but there are only a small handfull of really popular sites. The CPM (thousand impressions) or CPC (click) will increase on those sites. But as an Advertiser, if you focus on conversions and use an outlet like an Advertising Network that leverages the power of the long-tail, then you may actually come out with a low and stable CPA.

What's a Marketer to do in 2009?

• Do review your traditional advertising spend VERY closely. What worked? What didn't? What is dubious? Slash and burn anything but that which worked. Figure out how you can build on those things that worked.
  
• Do online advertising. Look at how you can be creative with it. Also, look at how you can integrate with traditional advertising that is working. Similarly, look at how you can integrate it with Direct Marketing opportunities.
• Focus on your Cost Per Acquisition. Use analytics and look at all of your online advertising and its performance (including creative, message, placement, etc.). Use this information to tune your ads and your media buys in order to lower your CPA. To lower your media buys, look at options like bulk buys, advertising networks, or even changing the type or mix of ads you are running entirely (e.g. maybe increase your search spend, and reduce your banner ad spend).
  

Will I be right? The year will tell!

• Follow this blog and watch for the next marketing trends I'm forecasting for 2009.
• Feel free to contact Market GoGo to discuss this further.

Trends for 2009: #7. Online commerce will continue to increase (shocking ... I know)

Online commerce will grow as a net number of transactions, but maybe not dramatically in total dollars sales. The three reasons this will happen are:

1. Online traffic will increase organically. More and more people continue to get connected to the web world, even when cash is tight.
2. Online shopping will increase as people look for bargains in this down economy. More and more people will look to the internet as the place where they can find deals.
   
3. So, while the gross number of online sales will increase, the average purchase price will be lower and consequently the actual dollar value of all those sales may not be much higher than it has been in the past.

What's a Marketer to do?

• Know that more people will be hitting your site looking for deals,
• Make sure your best deals are present on your home page, and
  
• Ensure that throughout your check-out process you have GREAT and SIMPLE up-sell and cross-sell options.

Will I be right? The year will tell!

• Follow this blog and watch for the next marketing trends I'm forecasting for 2009.
• Feel free to contact Market GoGo to discuss this further.

Even Wal-Mart is setting up to be LOWER Cost

In times of financial turmoil, the thinking goes that the company with the lowest cost strategy "wins". Typically, Walmart is seen as the company with the ultimate low cost strategy. Company lore includes stories of Sam Walton and other Executives sharing rooms when they went on business trips.

Conventional wisdom is that companies should be looking at ways to reduce their costs dramatically in a time like the current recession. If you can believe it, it looks like even Walmart is looking at how it can trim costs!

Report on Business (via Reuters) reports that Walmart is set to slash prices and unveil changes to its branding (probably that blue background and yellow sun that we've been exposed to from US commercials over the recent past, as well as the new slogan "Save Money. Live Better.").

In fact, Reuters is also reporting that in the US, Wal-Mart is continuing to cut prices 10-30 pct on many items.

As the low-cost and low-price retailer, Wal-Mart expects to to win sales and new customers in the current economic environment. Wal-Mart's message will focus on value, value, and more value.

In fact, the slumping economy is helping Wal-Mart in two ways:

• They are playing on the fragile confidence of the consumer, and
  
• Negotiating lower prices from vendors.
  

So - watch for Wal-Mart to thump their competitors hard this year. At the same time, their's is a great strategy to copy regardless of what business you are in.

Trends for 2009: #5. Simple Strategies ... Back to the Basics

When times were good things were easy. It was easy to get a new customer. Consequently, it was easy to ignore a customer, since there was always at least one (and likely many more) new customers waiting to take their place.

2009 brings an entirely different playing field. As an example, I heard an interview on the radio in late 2008 of a couple of Realtors. It appears that they are actually having to learn how to market and sell again. In their "good old days" all they needed was a listing and potential buyers would flock to the property to participate in a bidding war. Those glory days are long gone.

What are the basic strategies to focus on in 2009?

• Branding - What is your brand promise? How does your company support it? (Does your company support it?)
• Retail Ads - To paraphrase David Ogilvy, a good ad is one that sells your product. 2009 is not the time for airy fairy branding ads. 2009 is the time for simple and honest ads that educate people about the value of your product and scream out at them to take action.
• Customer Retention - The cheapest customer to sell to is an existing customer. It is time to revisit and work your current customers to remind them that you are a low-risk and well-known value for them (of course, I'm expecting that you really are). Reselling, upselling, and cross-selling are all ways that you can make ends meet (and maybe even eke out a profit) in 2009.
• Customer Satisfaction - It is almost like hearing the same message twice. If you are going to revisit your current customers, then you better ensure that they are happy with your product or service, and make real steps to bolster your customer satisfaction.
• Real Return on Investment - Projects you undertake in 2009 better have real and demonstrable ROI (and they better have it fast). The Accountants will be watching every project nickle like hawks (except, of course, their own International GAAP projects which will likely be "non-discretionary", unlike keeping their company in business which is, of course, discretionary ... ooops, did I write that out loud).

Will I be right? The year will tell!

• Follow this blog and watch for the next marketing trends I'm forecasting for 2009.
• Feel free to contact Market GoGo to discuss this further.

Trends for 2009: #4. Focus on the green in your pocket ... not the green in your forests.

Environmental issues had a good run from about the time of Al Gore's 2006 smash hit An Inconvenient Truth to late 2008. As the economy was driving hard and people thought they had money to burn (pun intended), they were happy to believe they would pay more for environmentally sound consumerism. Look at the success of premium priced economy vehicles like the Prius. Leading up to late 2008 everyone has been trying to figure out ways to "green" their product.

Remember the oil crisis in the 70s? Everyone dumped their big cars and headed for "fuel misers". Everyone started to look at solar electricity and tide-generated electricity. I heard of someone selling a brand new Pontiac Parisienne for $500 (I remember telling my Grade 6 teacher this (he owned one himself)). Well, what happened? Our "environmental memories" are short. As soon as the fuel prices dropped, North Americans ran back to car dealerships and Detroit started making some of the biggest gas guzzlers to ever hit the road (i.e. SUVs like the Hummer, the Lincoln Navigator, and the Dodge Charger).

There is already evidence to support this will happen. Yahoo! reports that in December sales of the Prius hybrid dropped 45 percent as gas prices fell from their record highs in July. Meanwhile, MSN-BC reports that shrinking gas prices and attractive deals are causing a return by vehicle buyers to big vehicles like SUVs and full-size pick-up trucks.

Goodbye environment. Hello living as cheaply as I can.

But - beware - fuel prices will make a come-back. That is inevitable as there ultimately is a world-wide limited supply of oil. Also as Oil companies search out the harder to get oil (e.g. more of the Tar Sands in Northern Alberta) the cost of getting that oil, and refining it, will be dramatically higher. On top of that, the polar ice caps are still melting and the world is constantly becoming a more toxic place in which to live. So, what goes around comes around. Eventually the environment will be important again, but maybe not for a couple more years.

So, as a good Marketer in 2009, some things to do are:

• Focus on value in the short-term, and
  
• Build a credible and real environmental culture and brand for the long-term.

Will I be right? The year will tell!

• Follow this blog and watch for the next marketing trends I'm forecasting for 2009.
• Feel free to contact Market GoGo to discuss this further.

Trends for 2009: #2. Bankruptcy (the penalty for not advertising)

The second trend in Advertising for 2009 ...

BANKRUPTCY
Wow - that is a strong and scary word. But, bankruptcy for who? I think that firms cut Advertising budgets to be "low cost" are those who are most at risk. If you look way back to the time of the GREAT DEPRESSION, you find that firms who survived that and who built brands that dominated the next decade(s) are those who advertised.

So, while the trend may be to reduce costs throughout the company, if you are in the Marketing Department you should carefully research the history the Great Depression and Advertising and then make a passionate plea to your CEO, CFO, and COO to not axe your Advertising budget. At the same time, you are ultimately responsible for ensuring that the advertising you produce actually works. It better get customers wanting and buying your product, and also build healthy demand for the time when the economy warms up again.

Will I be right? The year will tell!

• Follow this blog and watch for the next 8 trends I'm forecasting for 2009.
• Feel free to contact Market GoGo to discuss this further.

What went wrong with the Big 3?

What went wrong with the "Big 3"? If you think of any company being made of three core functions:

1. Marketing - Determining the target market, determining what products the target wants, communication with the target, and ensuring that they live up to their Brand Promises,
2. Finance - Determining how to pay for the inputs, ensuring that the outputs are produced as efficiently as possible, and making sure that there is enough money in the bank to keep things running, and
   
3. Operations - Producing products that meets the needs of the Marketing Team, and doing so in a way to keep the Finance team happy.

Then, where did the Big 3 go wrong?

1. Marketing - They had no Brand Promise. What does GM stand for? Big cars? Little cars? Big trucks? Cheap? Luxury? They are trying to be everything to everyone. Taking on the Luxury German market and the low-cost Kia market. Yuck. Stuck in the middle. They stink, and thier products suck. Why would I buy a "luxury" Cadillac that was based on the same platform as the "work horse" GM truck? The Big 3 lost a grip on who their target market was, what they wanted, and how to reach them.
   
2. Finance - Was no one watching the books? It is disheartening that in light of recent financial scandals like Enron, and with all the subsequent "SOx" and Governance oversight that is supposed to be in place, that NO ONE from these Big 3 was sounding the horn louder and sooner that they were all headed for bankruptcy. Who is at fault here? The Finance teams in these companies should have hit the big red button several years ago. Surely it was evident that costs were spiralling out of control.
   
3. Operations - Are the unions to blame? They clearly need to share the blame. Mind you, some MORON in the Finance department must have agreed to the ridiculous contracts that the unions have negotiated over the years. Also, the MORONS in Marketing continue to get the Operations team to build products that their market might have wanted 3-10 years ago, but doesn't give a rats ass about now. So, as long as the Operations teams are building out the automobiles that they are told to, and doing it under the agreement of the Finance team, I'd have to think that they should carry less of the weight. That said, responsible Unions and Management teams should be constantly working together to figure out the most efficient and practical way to produce.

My verdict ... The auto sector has to be "bailed out" simply to prevent them from bringing down the entire economy. However, conditions on them being allowed to receive bail-outs should include:

• Bail-outs should be either high-interest loans (they are risky after all), or equity
• Executives should be forced to resign (with no golden parachutes) and should be replaced with people with real vision
• Each company and each sub-brand should have to put a REAL marketing plan in place with a real brand position. Overlapping brands should be eliminated. (E.g. Big-ass Chrysler SUVs and Big-ass Jeeps? Big-ass Chrysler cars and Big-ass Dodge Cars? GM, Pontiac, Buick, and Cadillac? GM Trucks, Cadillac SUVs, and Hummer?)

I'm no expert on Finance matters, so I won't comment on those, except to say that the classic Porter strategies state that these companies should either be low-cost, differentiated, or niche. The automobile market is mass-market, so they had better all be thinking Low-Cost. To review ...

Low Cost: The low cost leader gains competitive advantage by being able to produce at the lowest cost. You can sell things for the same price and have more profit, or more cash to do battle with, or win a price war and still make a profit.

There's my rant for today. If you are from one of the Big-3, and want help doing a Brand Audit in order to get on track with your marketing plans, don't hesitate to contact Market GoGo.

What will happen with your Marketing Budget?

According to a new survey which is featured on BtoBOnline.com most Business-to-Business (b2b) Marketers intend to maintain or grow their budgets next year. This is interesting - even exciting - news when faced with the ongoing reality of the growing recession.

From the article:

"The online survey of 211 b-to-b marketing professionals was conducted in November. It found that 31.1% of marketers plan to boost their marketing budgets next year, while 43.5% plan to keep budgets flat. About one-quarter plan to decrease their marketing budgets next year.

"Significantly, of those planning increases, one-quarter intend to raise them by more than 20%, and nearly 9% plan increases between 15% and 19%."

Echoing the results of a MarketingProfs survey featured in this blog last week, the BtoBOnline study found that marketers will focus on web marketing, with 66.5% of marketers planning to increase their online spending. The reasons are pretty straight forward - online costs less than traditional media and delivers trackable results.

It is time to get started on your online marketing and advertising. Market GoGo can help you plan your Web Strategies to help you attract prospects, convert prospects to customers, upsell and cross-sell, serve your customers online, and get your customers to come back for more.

Contact Market GoGo to get started.

In today's economy, The Low Cost Strategy will Win (Part 2)

Yesterday, you and Market GoGo took some time for some deep thoughts about Porter's generic business strategies, and focused in on the Low Cost Strategy. Today, we will spend some time together thinking about the factors that make up a Low Cost Strategy, and thinking about some things you might consider for some Marketing Projects in the near future.

A Low Cost Business Strategy features tactics which emphasize efficiency, including:

1. Products designed for easy manufacturing
2. Emphasizing low-cost advantages in promotions
3. Efficient distribution channels
4. Incentives based on quantitative targets
5. Process (re-) engineering
6. Investing in technology to reduce costs
7. Standardization, resulting in economies of scale and experience curve effects
8. Tight cost controls and continuous search for cost reductions
9. Sustained access to inexpensive capital
10. Preferential access to inputs such as raw materials, components, labor, and so on
11. Close supervision of labor

• Items 1 to 4 are things that a Marketing Team is responsible for, and which it brings to Finance and Operations.
• Items 8-11 are owned by Finance and Operations they bring these back to the Marketing Team.
• Items 5-7 are things that are universally applicable.

Let's look at items 3, 4, 5, and 6. You can kill these four birds with one stone, and that stone is Web Marketing. Here are examples of each in action:

• Efficient distribution channels - What could be more efficient than the web? For a moment, consider the web exclusively as a sales channel - that is just your website and not the opportunity for advertising. Typically you have a relatively fixed cost for your website. It doesn't matter if you sell one widget or a billion. Once you scale for your sales, the cost will remain fairly consistent, and will be very small relative to the costs you'd need to spend for a similarly sized store-front or sales team. Similarly, go out and price an advertising campaign in the (dying) newspaper industry, and compare that to action-based keyword advertising on Google. The order of magnitude lower cost difference you will find in web-based advertising and the order of magnitude action difference you will find there too is boggling.
• Incentives based on quantitative targets - Imagine you are an airline, and you pay a 10% commission to Travel Agents. If you have $1Billion in sales, you'd be paying your travel agents $100 MILLION. Imaging what you could do with your website for $100 million. Now you can't replace your entire traditional Travel Agent team with your website, but you can go a long way in doing so at a substantially lower cost. Some food for thought ... maybe the budget for your web marketing should be set as an incentive! The better your Web Marketing does, the more cash is available for it do to better.
• Process (re-) engineering - To put your business on the web, one of the first actions you need to take is to map your business processes. This applies to every activity that you are putting on the web. Let's say you are going to reallocate your advertising budget from traditional newspaper and out-of-home media to that new-fangled web stuff. The first thing you should do is figure out how you conceive, create, approve, and publish your ads for the traditional world. The next thing is to look at how you will do that for the web world. Then apply those lessons back to the traditional world and cut out all the fat you can from all processes. In the end you will have processes that are aligned, and engineered for efficiency.
• Investing in technology to reduce costs - If the web isn't technology, what is? It is time to invest in fixed assets to reduce your business costs. Map out business processes for attracting prospects to your site, closing sales, upselling and cross-selling, serving customers, and getting them to come back to your store again. Then turn theses business processes into a technology road-map that will help you automate your business processes for advertising, selling, and serving your customers online.

You and Marketing Team need to get going on Low Cost Business Strategies. Contact Market GoGo to see how we can help you do this.