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: #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: #3. Direct Marketing will be in vogue

In 2009, Direct Marketing will become critical to an organization’s marketing success.

What is Direct Marketing? DM sends its messages straight at a prospective customer typically with media that is sent "personally" to the intended target. The goal of a DM piece is unabashedly to drive a purchase. Examples of Direct Marketing include direct mail, e-mail, telemarketing, desktop applications, mobile marketing, and RSS feeds. While traditionally it is unsolicited (e.g. that junk mail in your old fashioned mail box, or that phone call at supper time), on the internet DM is moving away from the "porn spam" and is tending to quality in-house opt-in lists or programs.

Why will Direct Marketing be hot in 2009? Two simple reasons. (1) It is cheap. (2) It works. In a tight economy, you NEED to get the bang from your advertising buck. DM does that and it is also uniquely trackable. Act now!

In 2008 the best DM was done by ... Barak Obama. His campaign forged a direct communication link between the candidate and the voter through multiple Direct Means, including mobile text messages, email and Twitter.

Things to focus on in 2009:

• Creating targeted and relevant campaigns that can be executed on multiple DM channels
• Tuning existing DM campaigns
• Ensuring your lists are opt-in and accurate
• Personalizing DM campaigns based on profile, preferences, and interactions
• Treat your email list like gold. Use it carefully. Don't abuse it.
• Focus on your existing customers. Mine your customer databases and create appropriate personalized direct offers
  
• Look at each DM media and look for new opportunities.
  

By the way ... for a few years a common industry prediction has been that RSS will replace email. Email still rules. People still won't know what the hell RSS is. However, if you aren't doing RSS, it is a good time to start. First things first, is to figure out for your customers how they can easily understand the technology and use it. RSS does have slow but solid growth as a strong medium of distributing marketing information.

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.

In today's economy, The Low Cost Strategy will Win

It is time to invest in technology and do a marketing project that will both:

• drive costs out of your business, and
  
• serve your prospects and customers better.
  

Why? Well - there's an "old" book by Michael Porter that is simply titled Competitive Strategy. In it, he talks about the three generic business strategies. Once you've read the three, you find you sit back and say to yourself, "Well, that was kind of obvious." But it is kind of like Newton and gravity. Sure, everyone knows that an apple will fall. But, making the observation and then learning from that is what gives you the advantage moving forward. So, the three strategies are:

1. 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.
2. Differentiation: Making things "special" will satisfy the needs of a segment of customers and create a sustainable competitive advantage that will make customers less price sensitive. It will also allow a producer to charge a premium. Some of that premium will need to be used to pay for the additional costs in making the product or service "special".
3. Focus or Niche strategy: The producer focuses on a narrowly defined target market. Inside the Niche strategy, a company can either focus on a sub-strategy of differentiation or low cost. Typically, a Niche strategy is adopted by a small firm.

(As a side-note, it is important that a producer chooses ONE of these three strategies only. If a firm attempts to pursue two or more of these strategies, they end up stuck in the middle and are DOOMED to failure.)

So ... let's look at this in practice. As the recession takes grip on shoppers, they are heading to the low-cost alternatives. Want to buy electronics? Where will you go?

• Will you go to a specialty TV Home Theatre store? Not likely. There are few, if any, stand-alone home theatre stores anymore. You will find some Service Providers (not even Retailers really) in the Yellow Pages who can help you out if you are spending $50k on a home theatre. Where they do exist, these Service Providers are purusing the Niche strategy
• Will you go to a big-box electronics store? Maybe. These Retailers are struggling, and while they want to be Differntiating their services, Electronics are getting much easier and much cheaper. Plus, the price concious consumer is really shopping around. And where they are finding themselves is in the Electronics department of ...
• THE LOW COST SUPPLIER. That's right, the place you are likely to end up now to buy your Electronics is Wal-Mart. Reuters reported today that Wal-Mart is about to sell an iPhone for $99. $99!. In that article they make special note of:

"Wal-Mart has been gaining market share and clout in the recession as cash-strapped shoppers seek out its low prices."

What does all this mean for you? First of all, you will need to really understand your brand, and the business strategy you are pursuing. Also, you will need to understand the maturity of your industry and your positioning in the group. Subsequently, you will need to look at how you manage your brand to gain competitive advantage in an economy that appears to be slumping for the next year or more. Finally, you will need to launch Marketing Projects that will help you achieve your Brand and Strategy goals.

Be sure to check back tomorrow for "part 2" of this post, and more thoughts about Low Cost Business Strategies, and what you can do to win!

The Renaissance of Web Advertising?

"Renaissance" according to Wikipedia comes the French and means "rebirth".

Since about 2001 when the big internet bust took place it has been hard to convince hard-core traditional marketing people that they should be turning their hard-won advertising dollars to advertising "experiments" on the web. Even in the face of grossly successful tests, hard-core traditional advertising people still believed that their dollars were better spent on out-of-home bill-boards, prime-time TV spots (plus production, etc.), and weekend newspaper inserts.

But, new research from MarketingProfs.com shows that the tide might be turning. The renaissance for Online Marketing could be the current Financial Crisis. In the MarketingProfs research report Benchmark Research on Marketing in the Economic Crisis ($199 for members, and free for Premium Members (the Premium Membership pretty much pays for the research report)), they note that 16-26% of firms are looking to reallocate their marketing budgets among alternatives. The big winner stands to be Web Marketing. From their report ...

Digital marketing vehicles may provide an opportunity to stretch a marketing budget. Those marketers who can best position themselves vis-à-vis the competition and can capitalize on creative and innovative use of online marketing tactics may be able to reap the greatest return on the shift in allocation to this new media.

So - the time is right to plan your web marketing and advertising strategy.

• If you are a traditional advertising person ... don't delay, get online now.
• If you are an online advertising person ... the time is right. Strike while the iron is hot.