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This Land of Strangers - Robert E Hall

This Land of Strangers

"..the most important book of the decade." — Richard Boyatzis, co-author of best seller Primal Leadership

Relationships, in all their varied forms, have been the lifetime study of Robert Hall. He brings a rare combination of experience as a researcher, consultant, writer, teacher and CEO in dealing with the real-world relationship challenges of modern organizations. When coupled with a decade of hands-on experience in the gritty world of inner-city homeless families it translates into a tapestry of vivid stories, well-researched and oft startling facts, and strategic insights that weave together the yet untold narrative of society's gravest risk and most stellar opportunity.

The Curse and the Opportunity of Living in Interesting Times

May you live in interesting times. May you come to the attention of those in authority. May you find what you are looking for.- According to Chinese legend, three ancient curses of increasing severity.

• • •

Oh, the curse of living in interesting times. Business in general is challenging these days and the questions about marketing strategies and budgets are particularly tricky. In the banking industry a number of organizations have gotten adverse publicity for spending marketing dollars on high profile ads, naming rights for sports stadiums, and junkets for their high value customers. At a time when taxpayer bailouts combined with executive bonuses on Wall Street have created a lethal mix, marketing directors inherit the second curse: They are coming to the attention of those in authority, or at least in a position to criticize.

In retrospect, some suffer the consequences of the this most severe curse. It turns out that finding what they were looking for – like strong mortgage growth, innovative products with high margins, and mergers that vastly increased their size – was not all it was cracked up to be. Yet we can all probably look back at our plans and budgets (created in the last half of 2008) for 2009 and question the strategic assumptions. As we near the mid-year mark of 2009 and attempt to determine how to proceed in the second half of this year and to plan for 2010, it is useful to ask again: How has the changing landscape altered what we are looking to accomplish? Should we be looking to lower marketing cost, gain market share, take advantage of weakened competitors, avoid competitive encroachment or something else? It is instructive to look at what others are doing.

According to Nielsen, media ad spending fell 2.6% in 2008 and most estimate that it will fall in the five to eight percent range in 2009 – a historic decline not seen in decades. Many of the larger ad firms have cut headcount 10 percent. It certainly appears to be a time when marketing departments will be required to do more with less – some may even settle to do less with less. These moves seem to reflect a marketplace that projects less revenue in the near term, the need for lowering cost and the likelihood of less business and consumer potential.

Not everyone sees it this way. There are organizations that see this downturn as a strategic opportunity given their unique circumstances, and they are moving strategically to exploit the opportunity. While Starbucks and Target are down, Wal-Mart’s revenue for its 2008 fourth quarter (ending February 2009) was up 6 percent domestically even though profits were down. The market downturn allowed the low cost provider to pick up market share. While Amazon and Netflix revenues are up about 18 percent, Barnes and Noble ended its fourth quarter down 30%. Innovative delivery that lowers the cost of selling books and movies seems to be doing well and Netflix has chosen to spend significant adverting dollars to promote their new, better mousetrap.

But there is more to it than innovative delivery. According to the New York Times, in-theatre movie attendance is up nearly 16 percent thus far in 2009. Their explanation is simple: “People want to forget their troubles, and they want to be with other people.” Changing times lead to changing tastes.

Sales for luxury stores like Neiman Marcus are down (24.2 percent February 2009) but discretionary spending for such things as candy is holding up. According to Newsweek, Hershey’s has seen a large profit increase on a small increase in sales by raising prices when cocoa prices went up last year and then holding prices with little customer resistance when cocoa prices declined in recent months. AT&T, Qwest, and Sprint Nextel all wound up 2008 in varying degrees of financial decline while in the final quarter Verizon wound up with a 15 percent increase in revenue and over the year grew its subscriber base 1.4 million by investing in its fiber optic network and unrelenting advertising to spread the word.

In the midst of the automotive industry downturn, Audi has announced it is increasing its U.S. marketing budget by 15 to 20 percent to transform this crisis into an opportunity. Audi’s efforts are paying off so far with an increase in market share of the high-end import segment from 6.7 to 7.2 percent in January 2009.

Notice the different strategies – lower cost, higher price, cheaper delivery, better technology, and attacking weakened competitors. Each requires a very unique marketing strategy and investment. If you are in a strong position – with an economic, technology, product, or delivery advantage – these tough times provide special opportunities to gain market share, strengthen the brand and to enhance your competitive position. Not everyone is in a position to act but for those who are, these are more than interesting times. These are times of opportunity. The trick is knowing what to look for and then acting boldly to find it.

(Column appeared originally in ABA Bank Marketing magazine – May 2009)

By ROBERT E. HALL

Not to be reproduced without written permission. All rights reserved. © Copyright Robert E. Hall 2009

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