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.

Wednesday, November 09, 2016

The enduring power of images, logos and symbols

It is not just commercial brands that recognise the power of an image, logo or symbol to re-inforce loyalty to their products. But who would have thought that the poppy emblem could be considered a political statement?

And who would have imagined that an organisation like the international football association of all people would rule that players in the England v Scotland international taking place on 11th November should be banned from wearing a poppy on their shirts. Leave aside the alleged web of corruption that the world's footballing bosses have created in their own affairs which must give little credibility to this particular edict and think about the reasons why the poppy is so powerful a symbol. Football is a big money sport. Some years ago we provided the on-shirt branding artwork for a newly promoted Premier League club. I  don't recall the detail or the sponsor, but the concern was very much about size! But Remembrance Day is a time for just that - remembrance, where we stop for a minute of silence. Anyone who has attended a major football game will testify to the sudden and complete silence observed by an otherwise noisy crowd of tens of thousands. Although stopping at 11 am on the 11th day of November owes its origins to the end of the First World War today we think about casualties from both the world wars and casualties in more recent conflicts. And interestingly today the event is probably marked by more people than it was twenty or thirty years ago. November is often a cold damp month which we dubbed the 'Shiver Parade' when assembled around the local war memorial on the nearest Sunday to the 11th.

The poppy has come to symbolise all of this and more in a very powerful way. We were fortunate in our family that none of my grandfather's or father's generation who served in WW1 and WW2 incurred casualties. They were termed as 'volunteers' which was a generous interpretation of the meaning of the word suggesting as it does there was some other option. My grandfather some how survived the front line trenches of WW1. My father was recruited to the Royal Air Force Volunteer Reserve during the Second World  War. And conflict still goes on. My own children have opted for service careers.

This Friday we shall be thinking of those still serving in active roles not just those from the past, including an RAF officer serving somewhere in the world united by the wearing of the poppy wherever we are.

Tuesday, November 01, 2016

The power of the right picture to a news story

The right picture can often often considerably enhance a news story. As the old saying goes, a picture is worth a thousand words.

For most b-2-b marketing people hiring a professional photographer to create an image to accompany every press release is often beyond the budget. Usually clients supply  a photograph to accompany a press release which has been taken by someone in the company and only occasionally a professionally taken photograph is available. With the quality available from digital cameras and iPhones, pictures often destined for publication on a  news web site there should be no problems in taking and providing a good picture. The pictures to go with the story are often the first thing I look at. And often I  am disappointed although my assessment is not as a professional photographer, but selecting a picture for its contribution to the news story.

There are some basic 'technical' issues that should be avoided in taking your own photos. The main concerns are when the subject is out of focus, the lighting is all wrong and obscures the subject, the image is crooked and especially when a load of junk is prominently displayed in the foreground. I  don't want to spend a lot of time trying to fix the picture and anyway some can't really be fixed. Basic errors can be avoided, most cameras have an automatic focus, so submitting fuzzy , out of focus pictures should not be happening. Generally avoid shooting against the light, or taking a picture where light sources dominate the field of view and the subject is somewhere in the shadows.

Then when taking pictures of completed projects for example, at least make sure that left over building materials are not in shot. It is surprising how often discarded plastic cups feature in the foreground of pictures. And what about people? Exhibition stands pose something of a dilemma. Should we show empty stands as one manager of a German company I worked with, cleared the stand of people, had it clean and shiny which kind of sent the wrong message that it attracted no traffic. Should people be posed on the stand, or photos taken of people talking, so you get the back of a lot of heads. What it does need to be is interesting.

Some other things to think about are; is it relevant? Is it interesting? Is it appealing?

In some cases the mundane photo can be cropped to put the subject of the image centre stage, in other words, the eye is drawn to the subject the news story ids covering.

Finally is it free to use, have royalties to be paid and have you got to make credits to the copyright holder?

Thursday, October 27, 2016

Where do you go for news these days?

Not that long ago a popular source of news was the daily newspaper. Supplemented by radio, and later television.

Most homes had the daily paper delivered to the door by a local paper boy. A newspaper round was probably the first introduction to work for many. Those who went out and bought a paper did so at a news agents where it was also handy to buy the day's cigarettes at the same time. When I commuted to London a huge majority of passengers (now called customers in pc terms) hid behind their morning paper. They also would pick up an evening paper on the way home and listen avidly to the news on the BBC at 6 o'clock. Interestingly newspapers said a lot about you, particularly about your political preference, by the title you chose to read. At the tender age of 11, I  attended an interview at a public school in the next town. Each year 3 scholarships were awarded for free tuition to common kids like me whose parents could not afford to send their son to a public school, or probably even want to. It was an interesting experience in so far I  had never been interviewed before. Our expectation was that the interview would take the form of mental arithmetic tests, general knowledge, spelling and our hobbies or interests. Instead we were asked what papers our parents read and our batting average.

Then along came rolling 24 hours TV news and the Internet. It's wall to wall news 24 hours a day. What soon became obvious is that most days there is just not sufficient news of interest to justify the airtime available and here is the problem. If the readers, viewers or listeners switch off, what about the advertiser? When I was young, the news was regarded as both serious and important. The freedom of the press a cherished right of democracy and essential in keeping people informed. The 3rd September 1939 was probably the biggest news day for years, with the prime minister making a radio broadcast at 11 o'clock, the King too and the newspaper headlines announcing that Britain had declared war on Germany, published the next day incidentally, were typically restrained. Typical statements of fact. 'Britain and Germany are at war' or 'Britain Declares war on Germany'. We can't imagine The Sun would be so reserved. Judging from the headlines from the only recent British war over protection of the Falkland Islands when invaded by the Argentine military junta, The Sun's headline screamed 'Stick it up you junta' as Britain declared war. No talk of curteous reference as when British papers referred to the German leader as 'Herr Hitler'. And when the British Navy promptly sunk the Argentine's (or Argies in media parlance) capital ship their only aircraft carrier,  the headline 'Gotcha' and sub head 'Our lads sink gun boat' filled the whole front page.

The habit of reading news spilled over to individual interests with magazines a popular format for those interested in news of a more specialised nature, such as gardening, cooking, knitting, pets, woodwork, music, politics and hundreds or thousands more - anywhere publishers could identify an audience. Not surprisingly business publications provided a source of news and in depth review of their specialisation too.

The trade press that informed the business communities did actually carry 'news' at one time along with articles written by experts in their chosen field. It seems odd now that, something could be a month or so in preparation and still be 'news' when the magazine arrived in the office. The habit of appending a circulation list to the cover ensured that by the time it reached the end of the circulation it could be very old news indeed. In fact trade magazines spent days or weeks sitting in one in-tray or another. News is hardly the role of the trade press anymore. That has all gone out on emails, web sites, text messages, tweets and the rest.

Perhaps what surprised me recently was actual proof that a lot of people don't actually read the contents of the messages they receive. Think about this for a moment. The way we consume news is not to read a publication from cover to cover, but to skim the headlines, glance at photos and move rapidly progress on through the publication. They have to be pretty interesting headlines or images to stop you long enough to recognise the article might be worth reading. The piece has to be a show stopper and promise and of course deliver information of value to you. So how do I know most online content and messages are not read is because people say so. Our youngest is in his late 20's and appears to have an iPhone grafted to his hand. He works in an IT environment complete with all the trappings expected these days of computer games and beanbags and works strange hours. Now he is the process of buying a house with his girl friend he is getting emails from his solicitor. It is the old world intruding into the new, but because the email subject lines from his traditional solicitor seem boring he doesn't go on to read the piece. Apparently he applies the same criteria to most of his messages received. So no action happens. Asking around it appears he is not alone.

Likewise I  get forwarded emails from clients who fairly evidently have not read what they are sending on to me. Somewhere in the scroll down to origins sent from somewhere deep in their organisation lurks the original question, brief or instruction. The intermediaries can presumably offer no answer - their skill lies in figuring out where it should go next.

It all comes back to the same thing. There are more news channels than ever before, you can be informed in a instant, but you have to promise content of value, importance and interest to the recipient of your news item if you are to stand a chance of it being read and acted upon!

Thursday, October 20, 2016

UK Manufacturing moves back into top 10

News this week that Britain has climbed to 9th place in world global manufacturing rankings is welcome. With annual output worth $247 billion annually this represents 10% Of Gross Added Value to the UK economy. Manufacturing accounts for 14% of business investment and 68% of R & D. And according to the OECD UK manufacturers have outperformed any country except the United States for job creation since 2010. As the UK prepares to re-engage directly with the wider world it seems manufacturing is in good shape.

Thursday, October 13, 2016

What you can learn from a walk round the warehouse

The picture given by the state of a company's warehouse can reveal more than the management accounts.

A lot of mistakes end up in a warehouse. Products that didn't sell in the numbers expected for example. Are the best sellers in stock, or is there just an empty space where they should be? Look at the labels to see where the goods are being shipped to. Why are some covered in dust - have they been there a long time? Then ask the warehouse manager which stuff moves off the shelf quickest. And in the LA  warehouse why were there so many garbage cans in stock? The company wasn't in the hardware business, but the presidents wife was!

The order book had plenty of surprises of its own.  Some of the products I  had reviewed in the R & D labs - major new lighting controls were booked as sold. Controls were the exciting front end to a load of boring looking dimmer racks. Some jobs had been booked in twice and one project listed under 3 different aliases. It was interesting that the president's renumeration had a bonus clause based on bookings, not sales! It was that Enron business model all over again.