Wednesday, January 18, 2017

News is in the News

Fake news is making the news.

Perhaps the rise of fake news sites owes much to the gullible nature of followers of significant areas of the Internet. People who count their 'friends' by the hundred and followers by the 'thousands' might well be susceptible to the lures of fake news simply due to lack of exposure to more genuine content. It seems too that Donald Trump is a serial tweeter and there are suggestions that the US presidential election was helped in part by sites peddling fake news. Facebook and Google are reported to be concerned for the advertising that fake news seem to be able to carry.

At times it seems social media  is beginning to become a significant in influencing events, decisions, elections and fund raising. Many businesses noting this have moved into the swamp of social media which some might argue by inviting people to 'like' their brand has generally lowered the quality of content. What's more without editorial oversight it has opened the doors to anyone having access to write whatever they like - including fake news.

Are those who questioned the value of social media as being unsuited media for serious b-2-b marketing now being vindicated? If the medium looses credibility, then why would you want your product associated with it any way? Maybe time to focus marketing resources through professional and credible publication channels and leave the social media to deal with the gossip and dross.

Friday, January 13, 2017

Goodbye yellow brick road

Today we pay tribute to the sad and sudden death of Graham Taylor, former manager of Watford Football Club.

Graham Taylor's arrival at Watford's Vicarage Road ground in 1977 was the beginning of a golden era in the history of the club. Hired by Elton John following GT's early management success with Lincoln City, it heralded an incredibly successful partnership between the music super star and the football manager. 

Back then the English Football League was divide into four divisions, simply labelled as First Division through to Fourth Division. At the time of GT's appointment, Watford FC had been relegated to the fourth division and finished 8th in the 1974/75 season with Taylor's Lincoln City gaining top spot and promotion. Five years later following successive promotions Watford finished as runners up of the First Division, just behind Liverpool - a club at the pinnacle of their success. European football followed. By any standard this was an amazing achievement and tribute to the planning, attention to detail and motivation which was the hall mark of GT.  While he went on to manage England 'Elton John's Taylor made Army'  dropped back to the third tier of English football then once again GT and Elton returned and worked the magic getting Watford back to the top flight and what was by now the Premier League.

In November 2010 I was to meet Graham Taylor during the course of my work, interviewing him on video for one of our clients. Once the camera was switched off I  chatted to Graham Taylor about his family, home life and media work and admitted to being a Watford fan since a young boy. I  told GT  what an inspiration he had shown us. That we could all dream the impossible dream. And to my amazement his response was to thank me for being a Watford supporter.

Today the upgraded Watford stadium has stands named after Graham Taylor and Sir Elton John complete with lyrics from Elton's songs.  Sadly there can now be no third time reprise for the Elton John, Graham Taylor partnership.

Thursday, January 12, 2017

Home and away

How trading has changed. The phrase that 'trade follows the flag' summed up the British attitude to exports in the days of the  Empire. With the world's largest navy and control of the oceans, the union flag was planted at all corners of the earth for merchants and commerce to follow. Trading posts established and in due course along came the salesmen. Britain generally preferred to stay out of Europe apart from supporting a balance of power via changing alliances. As an island nation, the sea beckoned the British who were content to leave European governments occupied by problems on the continent and the expense of large armies while there was less likelihood of interference with British maritime trade.

It seemed to me that many large companies arranged their sales organisations to first of all address the UK, usually referred to as the 'home' market, which was well supported by a network of salesmen. Back in the 1950s and onwards a sales position was seen as a well rewarded job. At my father's firm moving from a clerical role to a salesman was seen as a great step forward and known as 'going on the road'. It seemed he was frequently reporting news of yet another example of a colleague who had 'gone on the road' during the course of our evening meal. Before the War (WW2) a great uncle of mine held a sales role for a Dundee based manufacturer of post cards. His role was selling to key accounts, particularly the major stores in London. As part of his renumeration he enjoyed the benefits of a chauffeur-driven car to make his sales calls. Other references to chauffeurs for important salesmen suggest this was not unusual. Post war, with more people trained to drive, the salesman became his own chauffeur and had full use of his own Austin motor car. A salesman was still a good job when I  started work, until the government started taxing the use of a car and petrol. Fleet cars were operated by many firms and with the Ford Cortina becoming a stereo-type of the salesman..

The export market was treated very differently. Although it might not have been expressly stated, the home market was the core on which the business depended. Export effectively was a bit of a bonus. The management rationale was explained by a simple graphic model. The usual graph shows cost on the y axis and production volume on the x axis. A straight line covers all fixed costs and from this a rising line shows variable costs for producing more product. Export sales tended to fit into this marginal or opportunity costs which in turn effectively lowered unit costs for all production. Export salesmen were quite different to the home salesmen and some made occasional sales trips to the territories they were assigned, mainly to visit subsidiaries and dealers.

Tuesday, December 20, 2016

Trade in the era of steam and sealing wax.

Only a small portion of the UK  work force will have had direct experience of trade and commerce before  we joined the EU over 40 years ago. Those with that experience will now be retired or approaching retirement.

It is reported that staying with the status quo of EU  membership was a factor for many voters expressing a preference to remain, rather than face the risks of the unknown future in the world beyond the borders of the trading bloc.

Trade and commerce has evolved over the centuries from the caravan routes of the 'Silk Road,' to the maritime ferrying of goods between countries from the Romans and Phoenicians - bringing prosperity, knowledge, education and long periods of peace, such as Pax Romana, were enjoyed.

Ultimately the British Empire, an Empire that at its peak accounted for 23% of the world's land mass and 24% of the world population, provided a vast market. Manufactured goods from Britain were sold to all corners of the world - the British world that is - in exchange for agricultural products and commodities. The infra structure of many countries benefitted from the building of railways, ports, roads and modern cities, with legal systems, education and healthier conditions. It was the 'greatest empire the world had ever seen' and ushered in a period of Pax Britannica. The British Empire trading model was still largely operational during the working lives of people of my parent's generation. In the days of steam power before rapid communications by telephone, Internet and jet travel became possible, businesses traded throughout the world. So why the sense of foreboding now that the UK is returning to trade with the world?

 Maps of the world placed the British Isles top centre and the Empire countries were coloured pink. It was a simple graphic symbolism of the British Empire.  Communications with offices scattered across the Empire, or pink bits, were by mail or cable. Letters were written with great formality, ensuring the correct form of address and salutation were applied, the sign off too with the name, title and position of the writer, even the date was quaintly referred to as the '12th instant'. The stationery, letterhead and quality of paper were all prepared with extreme care. The business letter spoke for the brand. It was a world away from the universal 'Hi' that is commonly used for email greetings.

My parents both worked for the same company which had its head quarters in the City of London, a manufacturing facility in Hertfordshire  and offices in countries like South Africa, India, Australia,  New Zealand, Canada and more. My grandfather had worked there too, but that's another story. Not surprisingly stories from work often cropped up as we sat around the kitchen table eating a modest evening meal, which had probably stretched the post war ration coupons to provide. A favourite of mine was the 'mail train' story. For some reason, one that didn't matter to me at the time, the company sent out letters or documents to the offices of Empire which began their journey with the evening 'Boat' train which left Waterloo Station at 6pm promptly. Junior office staff generally delivered the company's mail around the City, but the the evening mail train was handled differently because the letters and packages were not ready until quite late in the day. It is approximately one and a quarter miles from the City office, across Blackfriars Bridge to Waterloo and to speed up the delivery process from office to train, a team of young clerks was assembled to run a relay race - not against other teams, but against the clock, coping with the evening rush hour traffic, the tardiness of the letter writers and the immovable timetable of the Southern Railway Company. Waiting anxiously for the packets to be sealed and secured with sealing wax, by a clerk apparently oblivious of any urgency, the seals of the business house were carefully applied and scrutinized  before being handed to the first runner. Dashing through traffic and crowds the precious package was passed to the last runner to deliver. One particular evening the package was later than usual and my father was running the last leg. As he entered Waterloo Station the guard was already blowing his whistle, steam was applied to the locomotive as its wheels searched for traction. Running up the platform to the outstretched hand of the  Guard it was safely delivered to an understated "left it a bit late tonight, son" to which my father had no breath to reply.

Tuesday, December 13, 2016

Single market or world market?

Euro Realist Newsletter / photo on flickr
Despite the British electorate voting to leave the EU, some politicians still seem to think that somehow this excludes the so called single market.

Since the outcome of the vote to leave the European Union on  June 23rd, remarkably little seems to have happened. Something called Article 50 has emerged as a mechanism for starting the process and this has yet to be 'triggered' by someone. Some individual has taken the UK government to court to sort out whether the Prime Minister should or indeed can, press the exit button or does Parliament have the right. It doesn't inspire much confidence in much happening.

I  suspect that the voters who voted to leave the EU expected the UK government to do just that and leave lock, stick and barrel. I  doubt whether many voting to leave thought it would take much more than posting a letter of resignation and cancelling the membership cheque. Maybe to add a note that in future we would make our own laws, spend our taxes on our projects, take the EU starry flag off of everything from car number plates to passports ... oh and reclaim our assets such as fish in our territorial waters.

Remarkably little seems to have been planned for an 'out' vote; our government like the rest of the EU   probably regarded the referendum as 'rubber-stamping' the continuation of EU membership so there was no plan B.

So where do we go from here. Well the rest of the world is not a bad start. In the next few blogs we will outline some options.


Wednesday, December 07, 2016

Marketing in a post globalisation world

Recent political events might suggest that globalisation has passed its high-water mark and is now in retreat.  Events such as the British voting to quit Europe and Americans voting for Dr Donald Trump - in short for a major change, turning away from big business and big government. So what is in store for marketing managers and how will marketers respond to a changing economic environment?

Hold on, what's this all about and why is it relevant to a b-2-b marketing manager for example? OK. Turn the clock back several decades to the situation in post war Britain. Before that and after the Wall Street crash and  economic depression of the late 1920's into the 1930's the pre-war period (post WW1 that is) had been a time of slow recovery and high unemployment. One of my grandfathers like many of his generation, had been unemployed for most of the 1930's and it was only the Second World War that brought him employment, working on fitting out vehicles for the military. The post war reconstruction continued the demand for product that had started around 1940 and boomed throughout the 1950's and 1960's as Britain re-built. Then, there were few 'luxuries' to buy, even if there were some available and you had sufficient coupons. It signalled the end of post war austerity.

Each year the big electrical enterprise I worked for  - everything from TVs, radios and cookers to lighting - held a sales conference, sometimes at a West End theatrical venue. It  was more of a celebration and rally, than a conference. As sales growth that continued to beat targets year on year and even bigger targets set for the coming year.

When I  entered the world of product management in the early 1970's the telephone never stopped ringing. The reason was always the same - it was someone needing more product and looking for me to jump their claim up the list. Strange as it might seem now, pretty much everything was made in our own factories, designed by our own R and D teams, delivered in our own liveried trucks. As product managers, our time was divided between development meetings, working with the development and test engineers, visiting factories, training sales teams and above all working with planners to get product shipped. In the end it was all about delivering the goods. As market leader in many sectors of electrical goods industry, our product philosophy came down to one key marketing issue - identify which product was to be the big runner in the sector then invest in tooling and manufacturing capability to be the lowest cost producer for that class of product. With the the ability to provide stock into the wholesalers and costs that enabled any contract to be won by steep discounting,  it all came down to designing, making and shipping the stuff.

As product managers we were less enthused by the sub-contractors the company chose to knock out 'specials' and low volume product and we were dubious about the correctness of some of the granting of purchase orders. But I digress. By the early 1970's it was all about to change. When your big strategy is built on lowest cost supplier [see pages 87 to 90 of Technical Marketing - Ideas for Engineers] it calls, or did then, for high volume production. What happened in the early 1970s was the long post war boom ended. OPEC, an organisation of oil producing countries restricted oil production which in turn caused prices to quadruple and with oil and derivatives critical to most western economies the annual growth driven by the build in construction came to an abrupt halt. The high volume production lines had switched from our biggest asset to our biggest liability. Lamp making lines producing millions of fluorescent tubes had to continue running as a continuous process as glass tubes came into the factory and shipped out at the other end as finished packed tubes. Discounts got steeper, up to 98 per cent at one time and red ink on the P  and L account led to redundancies for the first time in our experience.

With British industry now generally uncompetitive in production and with lower productivity than many other countries, great swathes of the once mighty industrial heartlands turned into a derelict reminder of better times. Innovators turned to lower cost producers, not the metal bashing 'sub contractors' that made lower volume product - they were even less productive. Soon the product designs were taken off shore until China became the world's factory. Big companies set up head quarters in tiny countries mainly full of banks and low tax regimes. So what happens now? One thing is sure - it will not be a return to the type of boom of the 60s and 70s. What it will be depends on the new era in politics that may be emerging. 

Monday, November 14, 2016

Has globalisation gone too far?

Some years ago we came up with the tag line - 'Think globally, market locally'. At least we thought we had come up with that statement ourselves, but it now seems widely used . We used it to explain how we were developing products to achieve high volumes, but to wrap them up with  the finishing detail that made then acceptable to the local markets and above all sell through a local presence, with local post sales support. Today it is called 'globalisation' and guess what, suddenly its a bad thing.

The enabling technologies were the reality of global communications and container ships with automated container handling ports, making manufacture in far away and low cost locations not only possible, but the cheapest option.  So the Far East, the tiger economies and China became the cheapest places to make the products that the western markets desired. But the situation is changing as robotics and AI evolve so that the cost of labour becomes a much smaller factor in the product cost. The benefit of high volumes to achieve lowest unit cost became not only less relevant but as the offshore locations become wealthier, so the pressure on labour costs led to wage rises and the savings from making off shore became a lot less attractive.

Soon the attraction of low cost labour achieved by manufacturing offshore that it once offered when labour was, say 80% of product cost, becomes even less attractive when robotics eliminate much of the unskilled labour. Goods that still have to be shipped halfway round the world, with quantity forecasts made 6 months or more in advance, quality remotely monitored and then local manufacture seems attractive again. Local manufacture can also deliver greater product customisation without large stockholding over heads.

One of the biggest issues with free trade is political intervention.  Political pressures to improve worker conditions in offshore locations raise manufacturing costs too. But the liberal, free trade philosophy demands free movement of labour and here is a major problem.  Millions of 'economic' migrants head towards the UK, Europe and USA to join in the wealth created by globalisation. Think about what has happened over the last ten to twenty years. Many large manufacturers and service industries such as call centres moved that part of their operation to off shore locations, because when all sums were done it saved money. But it ignored workers' conditions, environmental regard for which the west legislated. Western countries to a large extent ceased to be manufacturing nations, with instead products now made anywhere it was cheap to do so. Global brands added another twist by locating their head offices in low tax environments and often avoiding paying any tax at all in the markets where the sales were made. Huge profits were made, but the wealth was not evenly distributed.

And all the time the political classes seemed to be content as the west moved to a post industrial society. Technology was changing the idea that manufacturing provided jobs for large sectors of the population. When I was a student in Birmingham in the 1970s, thousands walked, cycled or took a bus to feed the labour needs of industry. Same in north London where I  worked, the Great Cambridge Road in  Enfield was lined with factories, most long since demolished and replaced by supermarkets and retail outlets. In the post industrial era the work force  is to a large extent in low paid service jobs, often on zero hours contracts.

All this change has had a profound impact on the populations who once their desire for low cost electronics goods, fashion and pre-packaed food is met wonder what the political classes are actually doing for them.  They can't go offshore to drive down costs and avoid taxes. Small businesses such as ours pay more corporation tax than many global businesses sheltering in tax havens. And small businesses are 99% of UK businesses, employing staff with all the on-costs of EU legislation, paying taxes and also being the seeds for future employment. And as the old class divides between employer and employee breakdown and while the political elite focus on big multi-national businesses, the traditional political parties seem to no longer represent a growing constituency of worker-owners, so is it surprising they vote in the UK to leave the EU and in America elect Donald Trump precisely because there is no political baggage.