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Archive for the ‘Economic Crisis’ CategoryNext Entries »To Keep Up, You Must Keep In TouchFriday, May 1st, 2009
In her latest Thursday Night Insight, Chrissie Douglas highlights the sheer pace and scale of economic change in the UK (the so called credit crunch), how this has completely changed our perceptions of things that we have always taken for granted (i.e. that our money is safe in the bank!), and the fact that market research is now perhaps more important than ever to keep in touch with what exactly is going on out there. Let me start by telling you about my banking experience in the last six months. After ten years of riding the property boom we sold our house and put the proceeds in the safe hands of our family bank – Royal Bank of Scotland, whilst waiting for our next dream move. The months passed and as the property market began to decline we felt great in the knowledge that our secure pot would actually buy more as time went on. We thought we were playing it by the book. We’d made some money and we’d put the proceeds away safely in the bank with no risk – just as we’d always been told to do (“after all, your money is always safe in the bank”). This all changed in October last year with news reports that British banking giant Royal Bank of Scotland was about to collapse. The share price had fallen from over £2.50 to 40p (a fall of 84%!) in a matter of days and was on the verge of going under. We had to move quickly. A review of the alternatives revealed that the only 100% safe option for savings was now the Post Office (owned by the Bank of Ireland), following the Irish government’s pledge to guarantee 100% of all savings in Irish Institutions. So the money was safe again, or so we thought. Just after Christmas, amidst continuous press reports of financial doom and gloom, we noticed that the Irish economy was worst hit and on the verge of bankruptcy. The promise of their 100% safety on savings was not worth the paper it was written on (they would not have the funds to back up this guarantee if bankruptcy occurred). With the hysteria surrounding the bankruptcy of the Iceland economy and the loss of savers’ deposits in Icesave still fresh in our minds, we moved the money back to RBS where incidentally it would have been safe all along (in the meantime RBS had become 75% owned by the British government). The point of telling this story is to highlight the rapid scale and pace of change, and that things that you had always taken for granted are not necessarily so in the current climate. The term ‘credit crunch’ has become part of our everyday vocabulary but, until it hits you on a personal level, I don’t think you appreciate the nature of the current financial situation in the UK. Things are changing very quickly and it is difficult to keep up. A quick review of recent headlines highlights this point. For example:
There are many more examples but the common theme is that economic decline seems to be on a bigger scale and is changing faster than ever before. Nobody knows what is going on. Nobody knows what will happen next. All we do know is that we have to carry on and plan for the future as we have always done. This brings me back to the topic of market research. In this current environment it would be understandable to remove market research from your list of top priorities. It may be hard to justify expenditure on something that may be out of date soon after completion (given the pace and scale of change, last year’s market research may already be out of date). However, companies still need to make informed decisions on future direction. I would argue that market research is actually now more important than ever. What we really need is continuous customer monitoring that is cheaper and has a quick turnaround. Luckily with the aid of new technology, market research techniques have come on leaps and bounds and now enable us to keep our nose to the ground. For example, e-surveys, online focus groups, internet panels and bulletin boards are all providing us with the ability to keep up and keep in touch. For more information on how B2B International can help you stay in touch, please call one of the B2B teams on +44 (0)161 440 6000 or +1 914 761 1909.
Marketing Strategies In The Current Economic EnvironmentWednesday, April 22nd, 2009
B2B International recently hosted an online survey for Julia Cupman on marketing strategies in the current economic environment as a part of her further studies. This unique piece of research provided insights into how marketing professionals are responding to today’s recessionary pressures. The survey yielded 396 responses from a plethora of organisations representing all industrial sectors, many b2c sectors and most geographies, and which included some of the largest corporates in the world. The research study provided rich insights on the impact of the recession and how organisations are responding to the current business environment. Four out of ten respondents said the effect of the recession has been very significant. As might be expected, national and overseas sales have been affected, investment has been cut back, plants have surplus capacity and there are cash-flow constraints. Nevertheless, around a half of organisations stated that they are optimistic about the economic outlook over the next 12 months. There is a hint that investment in marketing works, given that 58% of organisations with a higher-than-average spend on marketing were optimistic, versus only 44% with a lower-than-average marketing spend. The most common response to the current economic environment has been cutting costs, followed by organisations (re)aligning their focus from a wider offering to core products and services. 29% of respondents stated that marketing is playing a big role as a weapon to fight the recession and there is currently more emphasis on value marketing, finding new opportunities in different industry sectors and channels to market. Click here to read a full synopsis of this study. Marketing Budgets Show ResilienceThursday, April 9th, 2009
Despite the belief that marketing budgets are among the first to suffer in a recession, a new report from the Chief Marketing Officer Council states that almost a third of global marketers are actually planning to increase their budgets this year. According to the Marketing Outlook report, 29% of marketers questioned plan marketing budget increases, 50% will cut budgets and, for 21%, budgets will remain unchanged this year. The survey also found that overall marketers are not planning major restructuring, significant job cuts or large-scale agency terminations. Top priorities this year are growing/retaining market share (48%), lowering costs and improving efficiencies (44%), and improving customer insight and retention (33%). The two main areas for marketing investment in 2009 were found to be e-mail marketing (45%) and online surveys and research (33%). These findings are symptomatic of a clear shift away from traditional media towards digital. 72% of respondents said they were increasing their interactive spending, 62% spending more on search marketing, and the same number increasing their investment in social media. Meanwhile spending on print media is being cut by 37%, with 19% indicating a drop in their TV spend and 18% investing less in radio. Another interesting finding of the study was the discovery that the principal factors driving this year’s marketing budget allocation are customer anxiety and cutbacks (49%), slower selling cycles (38%), and reduced consumer spending (33%). The CMO Council study was based on an online survey of more than 650 global marketing executives, conducted from mid-January through to early March. Increasing Sales In Challenging Times, part 1 of 3Tuesday, March 31st, 2009
The American Marketing Association’s flagship publication, Marketing News, recently ran an article entitled ‘Look Farther Afield, which described how research should answer certain questions for marketers hoping to expand into new markets. This feature was contributed by B2B International’s very own Julia Cupman. Julia’s full original article is serialized over our next 3 blog entries: The recent economic turmoil involving long established financial pillars has had a resounding impact on business. Many companies have experienced declining sales and confidence in the economy is dwindling. Numerous economists are claiming that it is the worst financial crisis since the Great Depression, but while the seriousness and consequences of the problem cannot be denied, it is only an economic stymie if businesses allow themselves to lose confidence and focus. The fear invoked by the Wall Street tremors has led to a fierce slashing of budgets, in particular marketing budgets. Why are marketers feeling the pinch with decreased spending power when it is such a crucial time to understand customers’ requirements and meet their needs before they potentially defect? Indeed, just a 5% reduction in the rate of customer churn can increase profits by as much as 85%. Given that most businesses lose around half of their customers every five years, it is frightening to think how many customers have been lost in the past few months alone as a result of the faltering economy. The case is already clear: do nothing, and suffer. The drive towards lower costs and consequently lower prices is increasingly resulting in the substitution of value with low price – an area where not everyone can compete as profit margins are squeezed dry. In fact, a company that seeks refuge in cutting its prices may fatally delineate its own downfall as it could devalue its offering and denigrate its brand. It is thus paramount that in times of a weak economy, businesses seek proactive means of remaining competitive, and cutting prices may not be the answer. This begs the question as to what companies – especially their marketers – can do to give their business a welcome lift in times when the only direction appears to be downward. Sell moreThis may seem absurd when it is challenging to simply retain customers and to ensure that turnover and profits do not slip. So how can selling more be possible, and in what way is it a panacea? It is necessary to think outside the box. With sell more, think sell elsewhere, think sell farther afield, think new opportunities. Of course entering new markets is not appropriate for all companies, but it is an option that many companies could consider, particularly if they are faced with stagnating demand domestically. Thus, if growth is not occurring locally, chase it internationally. The growth forecast for China next year, for example, stands at 9.5%, contrary to 1.8% for the EU. Indeed the BRIC countries (Brazil, Russia, India and China) offer a plethora of opportunities as labor is often cheap and readily available, investment is increasing and the prospects look good. Consider Russia and the helicopter industry, for instance. AgustaWestland is currently researching the opportunities in Russia, and Textron Bell has just signed up a new sales representative (Jet Transfer) in Russia which has committed to sales valued at over US$10 million. These two players have recognized an unmet need and a clear opportunity, as only half of Russia’s civil helicopters are in flyable condition and domestic production is limited. This article, which goes on to describe many of the questions that marketers should ask in order to explore, scope and define market expansion opportunities, continues tomorrow. Next Entries » |
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