England Cricket success boosts sales of chocolate

England Cricket success is good for England cricket supporters! Is it linked to sales of chocolate?

The answer is unknown to me - however for businesses the key question in the coming year is "what is my formulae for increasing sales?"

If you do what everyone else does you may earn industry standard profits. If you add in your own factors that add value or improve exclusivity then you can attract more customers and possibly increase prices.

Consider the work that a franchisee does in getting their formulae for success right. For McDonalds key factors include location, layout of their stores, the cooking process, the supply chain, promotion activities by franchisees as well as the cleaning of the toilets - all this before you consider the advertising. For Kwikfit it is all about location, speed of service, customer support, and monitoring of their daily operational statistics.

One one hand franchises achieve their formulae during the early part of their formation and continually improve as they develop. If they do not then as the market changes then their formulae ceases to work.

How do they achieve their formulae? Experience shows that it is a mix of:

• Investigating and taking decisions based on ambiguous  information
• Being growth orientated
• Establishing base data to collect on a regular basis
• Reviewing information and tweaking strategies

Key to the success of this is the investigation of ambiguous information. This closes the gap between what is already known and what is not known. In large companies this work is done by market analysists. In small companies it is often not done.

As part of every business or strategic plan you are supposed to do a PESTLE or STEEP analysis. You match this to what you are good at in order to take advantage of opportunities available (SWOT). What is often missed out is developing the information already known ie it is easy to write down information you already have rather than investigate new areas to possibly develop your products or markets.

For reference:

Political
Economic
Social
Technological
Legal
Environmental

"Plugging into your Market" is a process that helps a company establish a base of data from which they can make decisions. It establishes some data that the company can collect on a regular basis.

From this base the company can establish competitive advantage over their rivals without just reducing prices or advertising more. Consider the following case

A struggling grocer has a high street store and sells locally sourced fruit and vegetables. They have tried lots of things to promote and change their product mix but every which way they turn they scrape by. They notice a delivery van in a local village delivering organic vegetables in boxes and they decide to do the same. They do distribute leaflets offering the service and they get some customers. Unfortunately like other strategies it fails over a 6 month period. Standing back from the problem they did not focus enough on quality, they ended up sending out the non display items from the shop as it was "what was left". The ordering system was complicated and difficult to manage. They did not have a website to do ordering on or keep in contact with their customers. They also had no real idea who their customers were.

Much of the problem arises as the customers who want organic fruit and vegetables are a different set to the ones that buy regularly on the high street. They behave differently. They are more likely to shop online and less likely to go into town. Therefore some research would have helped establish their perception of what they want. Rather than offering lots of goods at a cheap price they could try selling a new variety of goods at a more expensive price. Key to making this work is to communicate in the language of their new customer base. This may mean an online presence, online ordering, and having customer support. This may also mean that there needs to be a critical size of business to support this operation and make it successful. Here is the risk and commitment of the business. Have they the resources to really make it work?

This case transfers to many situations that are business to business as well as business to consumer. Some research, some commitment, some resources and a little risk.

It is easy to write statements that are in newspapers and trade journals linking factors together - such as cricket and chocolate. The danger businesses have is adopting these factors without doing their own research and seeing how applicable it is for them.

If your business would like to discuss a research plan and an approach that will reduce risk of failure then simple contact us

Telecomm's pricing - price discrimination

Price discrimination is the strategy where you offer different customer the same product at a different price.

Where the product expires due to time e.g. sell by date on a plane ticket, there is a location factor e.g. London vs Bristol, or bulk quantities are involved the practice is very common and accepted.

With utilities companies such as ISP's or telecomms it is a bit more tricky. The market has a few competitors that probably on the face of things compete on price. However underneath the price there will be a package that you purchase. It is very common that a company will have a current offer that is offered to new customers that seems to be the same as the one offered to existing customers - its just that it costs less. Existing customers can transfer if they ring up and sign a new contract - but otherwise they continue to pay higher prices.

For instance Eclipse Internet offer £29.95 for their "Home Pro" product. This is very similar to their "Home Pro" product that existing customers have and are paying £31 for. In addition they are offering 100 gb download per month rather than 50 gb that existing customers have. Each extra gb costs £1.25. If you ring up you can transfer as long as you sign up to another 12 months.

When an airline company offer cheap seats to fill the plane at the last minute - we think it is OK. When you offer new customers a better deal and do not inform you existing customers of that deal - we may feel that it is sharp practice. However as long as it is "different" e.g. Eclipse call their new product "Home Pro X", then it is fine.

Whilst monopolies have a position of "dominance" smaller companies do not. If you can manage your customer loyalty effectively you can use price discrimination to increase your profits.

Small firms are often seen as the victims of price discrimination rather than users of it. Perhaps they see an ethical consideration or they are too close to their customers. Alternatively their systems are not well enough developed to be able to manage campaigns.

As we are in turbulent times most companies need to consider pricing very carefully. Fixed transparent pricing is easy to sell. Equally not issuing your pricing at all and quoting has its weakness.

Why does the price of energy go up?

Energy prices increase on a daily basis. We have peak prices and off peak prices.

Energy prices increase on a seasonal basis. When its cold, prices go up.

Energy prices are also subject to long term shocks. E.g. Oil Crisis

Why is this?

Each day our demand changes, but the amount of energy available to us does not. So if we ask for lots more the price has to go up (p to p1 in above diagram). During seasons such as winter the energy companies have to forecast what to produce and again if winters are much worse, then price is the only tool that they have to compensate.

Energy companies are large and regulated in the UK. That said they are a classic Oligopoly structure. This means that as companies if they raise prices it is unlikely that everyone else in the industry will follow and raise theirs. If they cut prices then everyone will follow. We do not buy on energy quality. We have only one grid connection for electricity or for gas.

 In other words it is not in the interest of energy companies to compete on price. They tend to use complex tariffs and lots of advertising that are hard to understand.

In the UK we have been "lucky" as we have had cheap energy from the North Sea. This has given the UK cheap energy compared to Europe.

In the recent "end of term report" the coalition government outline that there are various new shocks that we as consumers are open to in the future:

• Coal fired power stations are to be taken offline as they emit lots of carbon (2016)
• Older Nuclear power stations are being decommissioned
• We have little or do not want large storage facilities for gas in the UK
• Our energy needs continue to grow (When we have a growing economy)
• Alternatives for purchasing Oil and gas supplies will be more limited in the future
• We have some tough carbon reduction targets to meet

In other words our demand may be quite predictable in the future, but supply is less certain. There is a danger that our supply will shift (supply to new supply as below) unless there is replacement investment in the present power stations with a considerable green tinge.

For consumers this will mean fluctuations between P2 and P3 rather than P and P1 on the graph above.

Estimates on the replacement capital needed are about £200bn. Investments in energy are very long term and very expensive. The case for (Energy companies) continuing as normal is quite strong. Indeed the now listed companies have to respond to the short term demands of the stock market and investors rather than the distant future.

Clearly this leaves consumers with some issues:

Fuel poverty. For the less well off fuel will become more expensive. The less well off may also have less well insulated or energy efficient houses.

Energy security. Everyone may become concerned that we do not have enough energy. Rather than prices going up "a bit" we may be subject to "a lot" due to market conditions.

Carbon targets. Love them or hate them, we have them. As individuals or organisations there will probably be penalties to ensure that we collectively meet the targets.

The solutions are a little less clear. Simply replacing existing power stations leaves the UK prone to the same shocks from energy supplies such as gas. It also does not solve the carbon problem. At the moment the proposals look something like:

1 Carbon Capture and Storage

This is a big hole where you "bury" your carbon. This will happen on new power stations. (My personal reaction is not good as I do not like burying problems - there are examples of explosions and it could mean a raft of disaster movies - seriously, it only builds up a problem for the future). This does not seem to be an immediate solution, but once the model has been proven the government will want retrofitting within 5 years. For more information see http://www.co2storage.org.uk/ . As this method will increase the cost of production the industry will need to be induced into doing this. This in turn will increase prices to consumers.

2 Nuclear Power

Nuclear power is carbon friendly. In the past the full cost of the power has not been past onto energy companies. Each year the tax payer spends an estimated £1.8bn cleaning up nuclear waste. If the full cost of nuclear power is taken into consideration it is "hard" to make the figures work (apparently!). The coalition government are split on this issue with the present minister being against nuclear unless it can be made to work on cost grounds. Bearing in mind nuclear power takes some time to build and not all the energy companies have made up their minds this may help reduce carbon emissions and add to electrical energy in the longer term future.

3 Use less energy

A simple policy in essence but harder in practice. There have been energy savings policies around for some time and they have limited effectiveness. EPC's to rate homes will be rolled out and loans to help upgrade homes with insulation are nothing new but are being given more marketing space by this government. Clearly as energy becomes more expensive it makes more sense to use more insulation. Government buildings are also being rated in a more stringent way. "the greenest government yet" is not hard. In the last 100 years we have only had Labour and Conservative governments (since 1916 and excluding the war), it is not a long list. However many of the buildings programmes of yesteryear did not have their eye on energy efficiency. It was more on cost of build.

Whilst new buildings will be more energy efficient. Today many government buildings programmes (e.g. schools) have been cut. Budgets have also been cut. Some energy efficiency measures do cost money - so councils up and down the land have issues. They cannot borrow, they have cuts and fines.

This policy may well cost more money than it first seems. There is a lot of campaigning needed, surveys, monitoring etc across millions of buildings. For the general public we have seen it all before. There have been insulation packages around for some years now. There has not been the uptake. Even from those households that could have got it for free. Will we listen this time?

4 Smart Meters

Smart meters have been talked about a lot. A cost to the energy companies, and they will have to be installed by 2020. More user friendly and accurate they will enable the consumer to see how much energy they are using. More information may mean better choices and a reduction in energy costs.

5 A green investment bank

Potentially confusing. An investment bank is normally found in the city and deals in finance for large companies. As such it supports (generally) low risk infrastructure or asset based investments rather than the research and development of new technology that venture capitalists support. Therefore it is logical that it will support wind power (if the figures add up). This bank is not a high street bank. Whilst it has been remitted to support loans to individuals to insulate their homes the bankers concerned have not really warmed to the idea. It is a "challenge". It also will not support renewable energy at the micro level  it is not what an investment bank does - however green it may become. The costs are estimated at £2bn to set up. They are hoping to divert funds from other places to do this. The initial spend is hoped to induce further capital spending (to meet the £200bn needed). I have no idea whether this will work. It is focussed on big infrastructure improvements for reducing carbon. Rumours of this plan being cut have surfaced. There will be a debate amongst the coalition in October. Should the money stay in its present use, fund debt, or be used in this way. Perhaps there is not a united front on this one.

6 Renewables Obligation

This is an obligation placed on electricity companies to use renewable sources to produce power. This targets carbon reduction. It also expands the supply chain to include fuels other than oil, coal and gas. It helps the business case for wind power, biomass power stations, or simply burning biomass in older power stations.

As with other policies this has been debated heavily. Debates are around efficiency rather than intent. In particular RO will help the wind farm development and biomass power plants.

Comment

Much of the strategy concerning energy is around grids and electricity. This is partly because electricity generation is not currently carbon friendly and partly as there have always been economies of scale in production.

Forward thinking economists acknowledge that power is both electricity and heat. As we move away from fossil fuels (including gas) - how do we heat our homes in the future? Projections indicate that oil will be phased out. Gas will be restricted to existing buildings. The National Grid believe that the gap will be largely met with a reduction in energy consumption. They believe there will be an increase in the use of electricity for heat. This was at the heart of the thinking in the Green Investment Bank proposals. Since then the government have committed to 12% of domestic heat being produced by micro renewables by 2020 clearly in conflict with their own "think tank". Another debate to be had?

7 Microgeneration

The cited difficulties with all micro generation are the following:

A high outlay followed by much cheaper low carbon heat and electricity
Attractive to middle classes if subsidised - so a tax on the poor
Complicated - how do we understand what we need?
Open to abuse by salesmen
Unregulated industry

MCS accreditation was introduced last year to improve the quality of service, products and installers. There is now a database of accredited products and installers of a variety of different renewable energies e.g. solar or biomass. This deals with much of the regulation and sales issues. The quality of the products, the procedures that all companies have to go through guarantee service to the customer but at a possibly higher price. The companies identify themselves with a logo and commit to a consumer based scheme which ensures that items are not miss-sold.

Adverts of Bristish Gas selling.... gas abound at the moment. There is very little advertising renewable items other than on the web and at "green" shows. Most companies selling biomass,for instance, are small. Companies selling air source heat pumps are larger e.g. Worcester Bosch leaving an imbalance between potential performance and advertising power.

The present government are consulting on the consulting on the consulting about how best to do this. The MCS accreditation is much of the answer. Providing advice in the same central place where there is already information on all the products and installers is logical. There has already been research completed on the support needed for the market called the Renewable Heat Incentive . The present position on this is

"This Government is fully committed to taking action on renewable heat; this is a crucial part of ensuring we meet our renewables targets, cutting carbon and ensuring energy security. The Government is considering responses to the Renewable Heat Incentive consultation and will set out detailed proposals on how to take forward action on renewable heat through the Spending Review."


Conclusion


There is not much clarity on energy when you read between the lines. There is very little actual progress with respect to energy security or carbon reduction. Some aspects can be achieved short term e.g. renewable energy is ready to go. Each heating season lost means targets will be more difficult to reach. Companies have geared up several times for false horizons and are now questioning the green credentials of this government. 


To quote Johnathon Porrit 


"Substantial reductions (of more than £30 million) in some of the grant schemes for renewable energy; the deferment until 2013 of the much-hyped ‘Pay-as-you-Save Green Deal’ for retrofitting existing housing; and Treasury gearing up to make it impossible for Mr Huhne to bring in the critically important Renewable Heat Initiative in April next year." means that much of the above will not happen quickly. Either large scale infrastructure improvements take a long time. Alternatively the small scale improvements at a home level are not popular with the city (or the treasury (or are they the same?)) in the same way that they were not a real winner with the unions (or Mr Darling). 


To answer the earlier question of "why do energy prices go up?". As it is our energy supply will shift to the left and our prices will go up. The government is not committed to developing the supply either through infrastructure improvements or renewables. Simple inactivity will push prices up. 

Economic analysis

When businesses construct a business plan part of the analysis required is undertaking an overview of the most important factors that relate to their business. To make this easier some people use PEST or PESTLE or STEEP.

This stands for:

Social
Technological
Environmental
Economic
Political

Looking at the economic and political for a local area:

There is a new government in the UK and their clear mission is to adjust the GDP balance between public and private sectors. Locally this will affect some areas more than others.

Since 2000 public spending has risen from 34% to 46%.  During the same time about 0.5m jobs have been created in the public sector. In the South West there are about 2 million people in employment of which over 50% of women in employment work in the public sector.

Within Devizes - as a small market town - where 46 thousand people live (Constituency). Employment in public service e.g. Police, Health, Education, Local government is higher than the national average due to the location of PCT, Police Headquarters, Kennet Local Authority (now part of Wiltshire) and Fire Brigade all being locally located. Over 40% of jobs are in the public sector (35.5% in Wiltshire) compared to a national figure of 29.7%.

The government has not concluded its review of government spending but figures of 20-25% have been banded about a lot. Whilst local authority spending represents only 25% of the national budget, funds for local services are raised through a mixture of direct government provision and administered from central government. It may be quite likely that this 20-25% figure hits the regions. Whilst it may not be for direct provision ie doctors, nurses, teachers etc, there is no doubt that non core services will be hit.

How this affects Devizes is not known - but a 20% figure represents 9 thousand jobs of which the vast majority may well be women e.g. 6-7 thousand.

All things have checks and balances. Devizes is a Conservative constituency and a recently elected "new" MP will fight hard for jobs. Wiltshire Council has not prioritised Devizes as a "Vision" town, so perhaps their cuts may be less severe than other prioritised towns. Devizes does not have space for a corporate business to move in and employ thousands of people. Devizes does have a good base for small businesses. There are notable entrepreneurs who have managed to grow good "Middle England" businesses e.g. Mark Wilkinson, Smallbone, Wadworth, and  Omitec.

The expectation of central government is to let markets decide rather than government interference. In this situation it will be up to some of the people displaced by the cuts to set up businesses. Whilst many of these may be micro or self employed businesses, some of them may well grow and fill the void left by the cuts.

Alternatively there may be other affects:

Higher unemployment
More out-commuting
Migration out of the area
House price falls
Local recession
Secondary business closure e.g. retail

Other noticeable cuts may be regional development support for Salisbury Plain as the Military prepare to move out. Stonehenge has had its visitor centre cut (again). Yet within this in the UK people may choose to holiday more in the UK as foreign holidays become more expensive and overtly less environmentally friendly. It may be that the Devizes area has lots to offer the leisure and tourism market if it can keep its major assets such as the Kennet and Avon Canal, the Caen Hill Locks and its visitor centre in tact. Smaller employers may find the location attractive in terms of affordable housing, landscape, affordable labour, lifestyle and still in easy reach of London.

Support services such as Business Link may be phased out during the next 5 years. Generally during "turmoil" in the public sector the result is confusion. Support and direction locally may well be lacking and it may have to be up to individuals to take responsibility for what they want to achieve. (There wont be any help)

Does all of this matter?

It does depend on your business (or your future business). Some businesses are more tied into local economies than others. Most businesses have to employ people, and many sell locally. A secondary analysis of an area and looking ahead helps identify possible issues going forward. This then helps identify areas for further investigation - where some primary research is needed. For instance you may like to know "how certain" something is. e.g. Will the Police Headquarters in Devizes close? It may help you to listen to relevant conversations.

Every business needs to know what is going on. Particularly at the moment. There are a lot of changes and tomorrow will probably not be the same as last year. Those businesses that plan and take action have always been better placed for survival and growth.

Most statistical information can be mined online. When you look for it it can often be "hiding"! A clear focus and intent is often the key to success.

Psychometrics and market research

We are all different. We think differently and we find different tasks more or less easy to do.

For instance someone who is very confident may rely on their intuition. In an area where they have lots of good experience this may be fine. If they want to do something new they are exposing themselves to risk.

Someone who loves people and motivating or enthusing others may well talk to people they know to get information. The risk is that the information may not be objective, ie influenced by the person asking questions.

Someone who loves figures may analyse what has gone on before - but may find it difficult to be confident on predicting the future.

Other people prefer to become very knowledgeable about their product - and other products or services in the market.

All approaches are valid, but incomplete. You may find that you do one or two of the above, but not all.

In order to make good decisions, especially where investing time and money it is important to develop an approach that encompasses a variety of approaches. You may find this hard - perhaps working with a colleague that enjoys the bits you do not is a good way forward.

If you are a small business owner you may not want to spend more time and effort on research - however it does not have to take a long time - and does reduce your risk of failure.

Does customer service matter?

Customer service clearly matters. Companies like Kwikfit are more about customer service than mending cars and are more successful as a consequence. McDonalds is about service, as are most fast food companies.

What about hotels?

Somewhere in the list of "why we buy" is enjoyment, rather than convenience or necessity. Sometimes we stay in a hotel because it is in a nice place, nice building, and we can do things we like. A comment got me thinking recently.

We stayed in 2 hotels - in one they got our booking wrong, the UHT milk was off in the coffee, it always took 10 minutes to serve, and nothing matched. In the other, everything matched and service was almost like Pizzahut, timely, friendly, and very organised. A straw poll was taken and the first hotel was chosen. We felt able to relax, and actually we were able to overcome two small issues.

In the first hotel it was probably no accident that there were only 3 people staying. In the other, it was full. If that was the pattern - then customer service matters.

The question is why do we as customers go for the better marketed, more easy to find, better serviced offering? Are we always that lazy? Whilst both hotels were in the same village, both lovely buildings, and similar locations. What if the choice had been between one of them and an "express" chain? Similar price, similar everything, other than one building would have been functional and process orientated, and the other traditional English.

Then the answer is more about risk avoidance. e.g. If abroad - would you go to a McDonalds or a local restaurant?

Something to investigate.... As individuals are we in the business of limiting our disappointment, even on holiday? (its not about delighting your customers - is it more about the perception of risk)

If this was your project to investigate how general this was - and then how it applied to individual cases... what would you do?

Picking winners - hypothesis testing

Many people who start businesses for the first time do it for a whole host of reasons. Getting out of corporate life, inventing something and falling in love with it, or simply just wanting to have their own business. Possibly down the list of reasons is the opportunity they have identified has a real chance of making good money for them.

People who start new businesses who already have a business understand what is involved in setting one up and making it work. Perhaps the opportunity appraisal is at the top of their list of drivers.

Does the combination of experience and appraisal mean that existing business owners are more likely to be successful?

Statistics suggest that this is true - hence having someone in your team who has previous business experience is very valuable.

It is not foolproof - methods that work for one business do not always repeat. There is just a greater likelihood of them working.

We are interested in collecting data at the moment about drivers to start up new businesses and then monitoring how key decisions are being made. If you are interested in being part of the study - do get in touch.

Research on the hoof

The Bath and West Show June 2010

I have a love of coffee and could remember that previously there have been lots of stalls selling ground coffee. Whilst you can find every "difficult" product under the sun - ie those that do not sell on the high street, there was no ground coffee to be seen. I was there for 4 days and looked pretty hard.

4 years ago there was lots of coffee ground by individuals hoping to catch the eye of supermarkets.

During this time the market has matured and the supply chain settled down. Ground coffee or even coffee shops are no longer "growth" markets in the same way as they were and to some extend consumers have made their choices on brand.

Breaking this down - it is useful to research things over time - you get a picture of how things are changing. This is an example of longitudinal research.

I was working with a wood pellet supplier - Energy2burn - and with a bit of questioning it was a good opportunity to look at the competitive landscape. It was possible to work out margins, concentration ratios, marketing strategies, and predict behaviour. It helped match what I already knew about some companies to reality. This is called cross referencing.

Understanding influence - what do you vote for?

If you go to http://voteforpolicies.org.uk you can read policies and vote on which ones you like. You are then told which party you have voted for. Over 200,000 people have voted and the results at the moment show:

Green party policies are the most popular with 25% of the vote
Labour second with 19% of the vote

Whilst the conclusion to the voting results is that everyone actually had to read the policies (or at least skim read them). What percentage of the population is able or will to do this?

Much of the media attention is on people and what they say. Yougov.co.uk suggests:

34% Conservatives
28% Labour
28% Libdem

The conclusion must be that it is not about policies. So what is it about?

There is the "Leeds United" syndrome. From supporting them since the age of 3 I will never choose another team. Whilst some float as voters, many do not. Many of the "safe seats" are simply that - they are safe seats containing enough people who simply could not vote for anyone else. This guarantees a certain number of seats for each party and a certain share of the popular vote. These people may be interested in policies, but they do not vote for them. Creeping into this section is also the "local" candidate, where you may vote for a good local MP. As long as they are still standing you continue to vote for them.

We also like to vote for "winners" - or the people with a chance of winning. Underpinning this there is some "critical mass" to the size of a party, so the Greens may have the policies - but they have not got the advertising or presence to make an impact. Its a bit like an Oligopoly - we all know there is choice, but due to market power we buy from the most available.

As part of the "critical mass" - exposure and advertising are important, but do remember bias. Different papers "come out"  and back particular parties. To what extent are we influenced by this? Whether you like Gordon Brown or not - it was interesting listening to Max Hastings (Former Sun editor) suggest that Gordon Brown has had a really hard bashing by the press. Partly this is "because they can", and whoever gets into power will get what's coming to them sooner or later. Does this influence the floating voters? This is simply a "replacing strategy" either locally or nationally.

If you are into Game theory there is the "hawkes and doves" argument. All parties have finite resources and focus them on the seats that are marginal and where there is "hope". In some seats parties will choose to be "hawkes" and really try and get your vote, hoping that the other parties will not put their resources into the same seat. In other areas you may be a "dove" and not put any resources in. For instance in Chippenham, due to the boundary changes it could be likely that the Libdems take the seat ahead of the Conservative party. Whilst the Libdem leader has visited the Chippenham - David Cameron has not (as yet). If the Conservatives want to win the election they need 118 new seats. In a list of key marginals Chippenham is the 43rd. So why the "no show"?

Finally we do not all vote. Indeed a turnout of 60% is expected. Who doesn't vote? The "don't cares", "too busy", or simply unable to fill in the form and register. The reasons be be very simple, or very complex, but not everyone votes.

If you relate this to products and services sold by SME's it helps explain why businesses and consumers do not buy the logically "best" product or service. Perhaps it is the easiest, the "Leeds United", the "winner", or where tactical marketing has been effective. As a way forward tactical marketing is an available choice, but you must know your market to know that you have a chance of success. This suggests some research and analysis that is followed by some targeted action.

To understand further about "plugging into" your market - visit our main site and download a free worksheet.

plugged into politics

I am sure some politicians do their research.

From the UKIP manifesto on the environment they suggest "control the environment by controlling immigration".

Simple things to get right:

Facts:

You would have thought that they had worked out that "the environment" is a world thing rather than a UK thing. If cows release methane in the UK rather than France - cows still release methane.....

Opinion:

Are the people who are Eurosceptic also Envirosceptic? Are they broadening their vote by extending their hit on Europe to the environment. It is true that there is some clear blue water between them and everyone else.

Interestingly enough the topic of UKIP is very relevant as their manifesto is riddled with the word "sceptic". They do not believe much of the research that other people have done. They have not done their own either.

For instance they believe that the UK must increase nuclear power to 50% of output in the country. A quick mention of this to someone from RWE had them in stitches.

When you vote - what are the chances that the politician you vote for a) understands what they are talking about b) has some affinity with your personal views c) actually stands a chance of being elected?

Plugging into music

What would you like to listen to today? There are (were in 2007) more than 4,300,000 hip hop and rock acts registered on MySpace alone. Major labels have a mere 4000 signed and this will have a churn of perhaps 25% every 12 months or so.


Major labels are about using broad media to "break" an artist or single track e.g. the most popular music stations, or TV. The emphasis is on BROAD. They do have their "cash cows" that continue to earn profits. EMI own the Beatles back catalogue and have issued it in vinyl, cd, and then remaster. Pink Floyd have recently taken EMI to court as they have been selling "single tracks" on iTunes and Pink Floyd want to retain their artistic integrity. EMI would argue that the 1/2 a million £'s they spend per new artist distances them from the rest of the digital "noise". 


Broad is not necessarily best. The Beatles back catalogue may have something of "best" about it, but a new artist has something more about broad. Would EMI sign a budding Pink Floyd today?


On the other hand the potential for small niche markets to flourish must be higher. If I were into Mongolian folk rock I would be able to listen to Altan Urag on Youtube and be quite content. If I went into Chippenham I am no longer aware of a CD or record store. The nearest is in Bath. I doubt whether even in a "Megastore" whether they would stock Altan Urag. You do need to know your "tag" though - otherwise who will find you? This may not be best, but it gives more choice than you need. Nick Harper related recently at a concert that he was labelled as "folk music". Clearly unhappy with this tag, and not actually knowing what else to call himself, he also commented on his stalled career.


As a market it is peculiar. It is mature, there are the big music companies that control the largest percentage of the industry. Most types of music have been tried. Since the electric guitar, the synth, and various recording methods most permutations have been tried. My daughters listen to AC/DC, Queen, Abba, Beatles, Genesis, (and Don Mclean!) asking carefully who is dead before they ask to go and see them play. The structure of the industry is going through technical changes, but the product "music" has not changed.


Digital music in itself is different. Vinyl was recorded with a fairly standard frequency range but had some playback issues. CD's were a compressed format and whilst cleaner were also a standard frequency range. MP3's are a nightmare. iPOD's are a nightmare. Unless you work it out - do you know the quality of the music you download or record from your cd? 


It does make a difference, and possibly enough of a difference to change your mind on whether you like something. Super audio CD format is tonnes better, but you wont fit many of the tracks on an iPOD, the format works well for classical music, but not for hip hop. The market seems to have chosen form over function. iPODs look good. Most docking stations also look good. Music "looks good". 


One of the issues of digital music is synchronising.  If you are not careful you will end up with lots of copies of the same thing. Evolution suggests that there will be a jukebox in your house that you can use in and out of your house that contains all your music rather than lots of different computers, cd's and mp3 players with different things on them. This may be a server, that also contains your pictures, films, and all your admin. One of my network is just installing one of these for a customer who wants his system "the same" in both his houses.


Recorded music has been valued at $15bn and the music equipment and related markets $160bn. Much of this is in the control of large businesses, but much also appears to be broken, or imperfect. This attracts new entrants into the market who want to improve or mend what they see. From artists who believe they write better songs to engineers who want to provide better quality sounds. 


This light research suggests that music must look good and sound good enough to be successful. How true is this for other markets - indeed your market? Many small businesses discuss being "best of breed", implying quality. There is an interesting parallel here.


10 artists that are "really good" but will you hear them in 2010?  Perhaps it is easy to rate them in terms of 2010 sales, perhaps its more difficult.


Robyn Hitchcock - countless albums, very credible, but no hits in nearly 30 years


Espers - psych folk - where would hear their music being played


Eluveitie - viking metal. They have had a hit in Switzerland, but limited outlets in large markets. Is singing in Gaulish (a dead language) a drawback? 


Monsters of Folk - very talented and much talked about!


M.Ward - performs with Zooey Deschanel which may help


Shearwater - explorer with an interest in rare birds


Emilie Autumn - child prodigy violin player turned goth.


Vampire Weekend - Indie afro pop 


Euro Childs - Welsh, has given his whole album away for frreeee.

Creative research

"Lies, damned lies, and statistics" was originally referred to by Mark Twain. He attributed it to Benjamin Disraeli, however this is disputed. How appropriate!


Do you think "creative research" was simply a way of disguising the complete unknown or a lack of work?


If you are "looking for something" new e.g. growth markets, new products, new markets, then you are looking for a "NEW" and useful position. e.g. market position. If you indeed find this place then you have been creative whether it was trial and error or using a psychic to get you there. 


The difficulty with anything new or creative is that it is difficult to know where to start. Actually starting and getting somewhere can be "creative".  Academics that study entrepreneurs talk about "heuristics". By this they are suggesting that entrepreneurs have experiences and when they meet new situations they instinctively can process that information and make a good decision in the knowledge that they will be more right than wrong.


Plugging into your market is about deep involvement in your market place and being observant. When you have studied lots of markets you learn how to tune in and look for the significant information, to analyse, to synthesise and make decisions.  


"I would stand on the pavement outside the empty shop with a recording counter. I checked the number of people walking by. I counted the numbers in the queues at the nearby bus stop; I counted the students and teachers coming in and out of the nearby polytechnic; and became increasingly convinced that this was the site for me." Charles Forte on his first site in upper Regent Street


Quite simply this act of market research coupled with his vision for what he wanted to create gave him the confidence that he had chosen the right site and the right service.


There is nothing creative about sitting outside a shop with a counter. If you read his statement again Forte was doing more. He was being observant, analytical, he did not simply "click" to measure customer footfall.


Some hard questions:


Just how much information do you require before you make a decision and stick with it?
How comfortable are you with the results?
If you had to part with your cash to "bet" on this decision. How much can you afford to bet?
What are the cash needs to do what you are considering doing? (Including hidden costs of marketing etc)?


We find particular forms of "hell" in unsuccessful start ups. They have mostly done a plan and put in it what they want to. They have not assessed the market and what it takes to become a successful business in the market. It might be that they want to do everything themselves, rely on "buzz" marketing, yet they are prepared to start and they believe they will succeed. This leaves them under resourced and struggling to survive. 


The creative research is finding out new things that are relevant even if they are difficult for the business. So whilst it is possible to hide behind statistics, it is possible to hide behind almost anything. It is the hiding that should be called into question, not the statistics. For more information contact us.

Plugging into gender

Demographics are essential for consumer products. They are also interesting for business to business marketing. Gender is one of the more clear distinctions that you can make between people. It does affect your marketing mix decisions, and therefore a good question to ask is whether your service or product is going to a market that is dominated by women, men or is it gender neutral.

Websites collect data on who uses them. This is widely available for well used websites.

For instance Facebook is used more extensively by females than males.


Get Facebook Buttons

Youtube is gender neutral

PinkFloyd.com is white males aged 35-49. Interestingly they have a broader profile than David Bowie - who pulls in a more caucasion audience.

Pink Floyd are the first group to get a Royal Mail stamp - fantastic marketing!

In a business to business market personal sales are important. If you look back through your list of clients that you have got would you be able to type them by character or gender? My suspicion is that you would. If your company stayed the same, but you changed the sales and marketing process and either feminised it or made it more masculine, would you get different customers? Again my suspicion is that you would.

Gender in itself is not the "answer" to a particular question, but it is an influence as a part of the character sales approach that most small businesses have. What can you do?

Ceteris Paribus is the economic principle of holding everything else constant. Whilst this is quite difficult in a practical situation, it is a starting point. Try the following:

Change one or two small things on your website and notice if you get a different pattern of visitors.
Reflect on things your stock phrases, change one or two, and then look for differences in responses from people.
Change colour on marketing materials (or even how you dress) and consider whether you get a different response by taking careful note of reactions.

The above 3 things are relatively a quick fix. All of the customer facing activities have an influence on sales and gender therefore influences everything.

This idea of testing and measuring abstract things does require personal focus. For more information - contact us

Fraudulent behaviour

Budding inventors or entrepreneurs can want to make the world a better place. "I want to offer double glazing without the hard sell". Motives aside how would a double glazing company get along if they did not deploy a full range of direct marketing communications? Behaviour has traditionally been about market concentration, pricing, barriers to entry and exit, or information. In addition it is also about character.

Homeguard Direct ( http://www.homeguarddirect.co.uk/) sell insurance. In one case they managed to sell insurance to a 97 year old man without his signature. This then came up as a direct debate mandate with his bank. His bank were unwilling to stop the direct debit as it was a mandate - and being 97 he may have forgotten. The company refused to withdraw the direct debit without a letter in the full knowledge that he was unable to write through severe arthritis. Homeguard Direct also sell insurance for SKY TV. Issues over direct debate mandates have arisen http://whocallsme.com/Phone-Number.aspx/08006226710. They had previously been called hygiene eclispe and sold protection for drains and plumbing. They also had a reputation for making false or misleading statements on the phone. 

In this situation Homeguard direct are selling insurance in the Worthing/ Littlehampton area of the country. There are a large number of elderly people. If you set up an ethical insurance company and lined the companies up together - which one would make the most sales? If "snake oil" sales was the winner, starting up an ethical insurance company would only be making a stand rather than making the most of an opportunity. If you are unwilling to adopt the "strategies of the market" do not enter.

Do your values matter?

Our values are drawn from ourselves and our culture. A well defined set of values could be a "moral code". Do these matter in business and more specifically marketing?

There is a sweet point for your business - where your market opportunity matches some of your values and some of your resources.

Some of your values will not match your resources and some of your values will not match your market opportunity.

For instance someone with strong religious beliefs may find that including all of their beliefs does get an amount of business. Religions are networks and this may have a good or a not so good match with the market.

Having the religious beliefs in the first place has little to do with business, but the decision of including it as a focal part of how you target people in your market is.

The difficulty with values are that they are very personal. It is therefore difficult to make decisions about which personal values are and which are not included in your business. Without values your business may lack personality. If you choose the values that the largest part of the market has - but you do not actually share in, then you may appear false.

Some individuals have issues with including some of their values but ignoring others. A selective moral code may be dangerous, but this is a business, not an individual.

Plugging into your market is not just about market analysis. It is also about people and how they can be involved in taking the opportunity to market.

Resources - are they important?

Lots of people have dreams and business owners are no different. Business owners dream of the large or very profitable customer, or lots of very large and profitable customers.

Some business owners chase dreams without sufficient resources. There are examples where a business can improve its credibility superficially to get meetings with a large customer, and sometimes you hear stories of the business succeeding with a large order.

Unfortunately this is not the most common occurrence. To get orders there are benchmarks or rules of thumb on the resources needed not only to gain a customer, but to get repeat business.

For instance look at high street shops. Shops work on 3 key principles:

• They get lots of people walking past
• They get the right people walking past
• They have an attractive offer that entices people to walk in

If you are very specialist you may get away with a location that is a long way away from the centre of a city or a town, but in general, location is important to gain awareness and sales.

Whilst we do not all own shops - the shop and the location are resources. If you were a jeweller and wanted to attract the rich and famous then a location in central London, possibly Regent Street would be good.

Taking another example - if you want to tender for government work they will ask you to fill in a tender document for work of any size. The difficulty with this is that your business may be too small, or your track record to insignificant to even get an interview.

Can you improve your credibility artificially?

The short answer is no. However there are things that you can do right that make effective use of the resources at your disposal. In other words you match the resources to the best market opportunity available to you.

Plugging into your market is about focussing on key potential clients, working out what they need from you in terms of service, appearance, capability and your long term future. They must see you as a good bet and feel better about trading with you rather than someone else.

Don't Operate In The Dark - Plug In To Your Market NOW

Have you ever tried to plug in a lamp in the dark? You grab the plug and then thrust your hand towards the wall. Maybe you find the socket but by then you have scraped away a strip of wallpaper and you are getting increasingly anxious as you try to fit the three pins of the plug into the three holes that you know are there. Darkness ensures that the orientation of the plug is pure guesswork. You know it should all fit but somehow it does not.

This is not unlike the approach taken by many small businesses to the markets that they operate in. They have great products or services which they just KNOW will be bought by people. Somehow business just has not been booming - why?

The marketplace is huge so you need to focus quite a bit. What area of the market should you be aiming at, how do you identify it, what resources do you need to exploit it? If you can identify this niche clearly (think of being able to use a torch in the lamp example above), and you have the right product or service (think compatible plug and socket) then you are almost there. You still might need some help in actually delivering but the guesswork has gone and you can actually focus on making money.

Plug into your market - Why is it useful?

Henry Ford had a 57% share of the car market in 1918, but by 1936 this was down to 26%.

Ford's issues were around his dedication to mass production whilst his competitors offered colour and customisation. 

Ford's issues were that he did not listen or respond to critical factors evident in his market. In 1922 he said “you can have any colour you want as long as its black” in response to General Motors's range of colours. He did not like things that he could not control, like advertising. He did not understand it, possibly as he did not listen to other people.

This issue of listening to your market and acting on it is highlighted by many inventors by evident in many small companies. Getting good quality information is perceived as difficult and acting on it may conflict with what the company is about.

In producing lots of business plans we have found that items such as cashflow forecasting or marketing planning can be difficult to get right unless care and attention is placed on the research and analysis. Making decisions can also be difficult, especially if the solution represents new ground.

Out of deperation companies can react and “advertise”, but without the backgroun where they spend their promotional budget may have more to do with the attraction of the advertising company rather than an overall strategy. This may mean that the returns from a campaign may not work or may not work as well as they might.

Plug into your market is a service offered by the PRD Partnership Ltd that focuses on locating and analysing the critical factors relevant to a particular market and then supporting the business in developing appropriate marketing approaches. This is suitable for new products and services, companies wishing to grow, or companies who are finding their market share or sales diminishing.

..... not plugged in

The internet is full of advertising blunders where basic research was not carried out. For instance:

When Parker Pen marketed a ball-point pen in Mexico, its ads were supposed to have read, "it won't leak in your pocket and embarrass you." Instead, the ad read: "It won't leak in your pocket and make you pregnant."

Checking out messages that you use with your customer does make sense, clearly the language used may vary over a geographic area, but it could be more than this.

Plugging into your market involves matching your resources, capabilities and values to an appropriate market position. It is a 2 way process that may mean changing your focus to take advantage of a particular segment of the market place.

Research is not just knowledge of the customer, but the broader themes that surround the customers world. This includes your competition, but also substitute products, government influence, and general trends.

For instance you may feel that there is a gap for a male clothing shop in a small town. There are enough men of sufficient income, and a straw poll says they would like a shop in town. Significant trends suggest that choice and price are important. Larger cities have lots of alternatives, as does the internet. Would you be able to supply the choice required at the right price to make a go of things? There are reasons why a lot of high street clothing stores have moved out of small towns.

Plugging into your market reduces your risk of making costly mistakes. It increases the chances of developing successful strategies that match the needs of your intended customers. For more information please contact us.

..... not plugged in

CNET voted the C5 top of its list of "terrible tech products" in 2007.

The initial idea was a good one, but all the development came from a very small pool of people, possibly one, Clive Sinclair.

The car was exposed to the elements, had a top speed of 15 mph, and overheated going up hills. When you were sat it in it you felt very small and vulnerable next to other cars, lorries or vans.

It did not sell.

From a good idea it is very easy to "muck it up". Did he research and get feedback from the market as he went along? (possibly not). If the market said "make it bigger" and the engineer said "the engine will never take the strain captain", then an electric car was not commercially possible (yet). They could have put the project on hold until battery technology was improved.