What are the key questions you need to ask to successfully manage your business through the era of austerity?
Try these:
- How far will my sales fall (or, will they fall at all)?
- What expenditures can I cut without undermining the core strength of my business and still making sure we survive the storm?
- How can I use this event as an opportunity to ready my business to meet the needs of a post-era of austerityary, 21st Century-shaped future, instead of a pre-era of austerityary, 20th Century-shaped past?
Understanding what the future looks like
This era of austerity is different to the previous two or three, and this is not simply as a result of the “credit crunch”.
Three fundamental changes have occurred which mean that economic life in Britain after the era of austerity will be conducted on a very different basis to before.
- the very obvious change in the attitudes of financiers to loaning money
- the digital revolution, of which the internet is just part
- the environmental dimension
A new attitude towards financial risk
This will reduce the underlying rate of growth of borrowing – with a knock-on effect into the rate of growth of house prices – for many years to come. Plus there is the tremendous growth in government debt. This will have to be repaid and, ultimately, will either lead to a period of very high inflation or, if the lid is kept on the money supply, much lower levels of disposable income as the debts are gradually reduced. Either way the net effect will be continued low levels of consumer demand due to low income and high uncertainty.
The Digital Revolution
The era of austerity has accelerated the trend towards on-line shopping and even though it’s not ideal for every industry at the moment, this is changing fast.
The internet has also created a market for re-selling “new and nearly new” products at a fraction of their high street prices and opened-up direct imports from many new channels of cheap supply. Consequently, already in one way or another all sectors are feeling the price pressure from the effects of the new “perfect market” that the internet is taking us towards.
And it doesn’t stop there. The digital revolution has produced a massive increase in the world’s productive capacity alongside a massive decrease in the cost of production. Whilst this initially fuelled a boom in demand it has now created a substantial over-supply situation that had already led to the prices of some goods falling in absolute terms long before the era of austerity started.
The upshot for retailers and manufacturers is that to stay relevant they must “innovate, innovate, innovate” – in products, in customer service and in value. Otherwise margins will be continually eroded as the products they sell, and the way they sell them, become totally commoditised. Branding will be key.
The Environmental Dimension
Companies that harness the perceived new need to “consume responsibly” as we move towards a less ‘fossil-fuel-based’ global economy are already finding themselves rewarded with increasing market shares. This need will grow further in the years ahead and will lead to a new generation of goods and services explicitly designed to support it. Knowing how to harness these alongside traditional needs will be a cornerstone of future success.
Fighting for the Future
To help you plan for the future we can:
- Tell you where your current sales will fall to so you can plan now, not just react later
- Use existing industry research, your own data, and our understanding of consumer dynamics to judge how far and how fast sales will recover
- Use the 5 key dimensions of marketing effectiveness to find out how well your business is tuned to meet and profit from the future and to tell you what changes you need to make to be ready for a new dawn
Every business needs to decide how and where to spend it’s money in order to maximise its success. It’s not just about great products, great prices, great service, or great satisfaction. It is all of these, and more, multiplied together.
The enclosed slides explain the 5 key dimensions every business needs to look at, and quantify their performance on, to know they are making the right moves at the right times to get the biggest bang for every £ they spend.
We can evaluate the strengths and weaknesses of a company in the eyes of its customer’s using these 5 dimensions and experience has shown that this is then totally predictive of future underlying sales performance. Moreover, it highlights which aspects are falling short and which ones, if fixed, would provide the greatest dividends. They are not necessarily the same list.
