In a previous (Feb 4th 2010) blog post about The Law of Exclusivity, a point was made that you can’t own the same word or position that your competitor owns. You must find your own word to own. You must seek out another attribute.
Too often a company attempts to emulate the leader. “They must know what works,” goes the rationale, “so let’s do something similar.” This is not good thinking.
It is much better to search for an opposite attribute that will allow you to play off against the leader. The key word here is opposite so similar will not do.
The leading cola drink was the original and thus the choice of older people. Pepsi successfully positioned itself as the choice of the younger generation.
Since Crest owned the word cavities, other toothpastes avoided cavities and jumped on other attributed like taste, whitening, breath protection, and baking soda.
Marketing is a battle of ideas. So if you are to succeed, you must have an idea or attribute of your own around which to focus your efforts. Without one, you had better have a low price; a very low price.
Some say all attributes are not created equal. Some attributes are more important to customers than others. You must try and own the most important attribute to your target prospects and customers.
For example, cavity prevention is the most important attribute in toothpaste. It is the one to own. But The Law of Exclusivity points to the simple truth that once an attribute is successfully taken by your competition, it is gone. You most move on to a lesser attribute and live with a smaller share of the category. Your job is to seize a different attribute, dramatize the value of your attribute, and thus increase your share.
Here is another example. Burger King was unsuccessful when it tried to take the attribute “fast” from McDonald’s. What should Burger King have done? Use the opposite attribute? The exact opposite attribute, “slow” would not do for a fast food place however the there is an element of slowness in the broiling concept.
To drive the concept into a prospect’s mind, Burger King needed a term or attribute to describe it’s new concept … it came up with the “flame-broiled taste of Burger King.” This new concept for Burger King, at the time, created fear and terror in the boardroom at McDonald’s … this is always a good sign of an effective program.
Marketing is a battle of ideas. If you are to succeed, you must have a unique attribute to focus and describe your value. Without one, you had better have a low price; a very low price.
It takes a while but many Internet Marketing entrepreneurs learn the Law of Attributes. They learn to identify their target market, focus on promoting products that will appeal and add value to their target market.
To accomplish this, they use various methods, tools, and follow a traffic formula to build relationships with their leads and customers. They build websites that create trust. They collect name and email addresses using an Optin form on a Landing Page. They use email systems with both auto-responders and broadcast capabilities in order to send messages to their leads and customers. These email messages frequently send information, provide knowledge, and occasionally promote an offering. Many Internet Marketing entrepreneurs learn that leads and customers do not like to be sold to however they will browse and shop. Over an extended period of time, skilled Internet Marketers are able to use hypnotic writing skills, in their marketing campaigns, to get leads and customers to take the action they want. This is how they learn to identify a target market, stay focused, and add value to their target market. They learn to leverage the equity in their list and be successful in the world that includes the Law of Attributes.
It looks easy but marketing is not a game for amateurs. Marketing is not a battle of products. It is all about the strategy you use to benefit from the Law of Attributes as for every attribute, there is another attribute that is opposite and effective.
You can find out more about Internet Marketing and home-based businesses by reading updates that will be posted at my blog over the next few weeks.
Finally, a great book to read is "The 22 Immutable Laws of Marketing" by Ries & Trout. It is the source of some of the material provided in this article.
In closing, be sure to meet me at my website, WhoIsMikeFarrell, learn some tips about being No 1 on Google at aspenIbiz My Go-To-Market Partners, and learn how to be savvy with your money like the insiders at aspenIbiz The Conspiracy For Your Money Blog.
Finally, I would like to provide Best Wishes for a Happy Holiday Season and a Prosperous New Year!
Thursday, December 30, 2010
Tuesday, November 30, 2010
The Law of Sacrifice – You Have to Give Up Something in Order to Get Something
The Law of Sacrifice is the opposite of the Law of Line Extension. If you want to be successful today, you should give something up.
In the world of business and marketing, there are three areas to sacrifice: product line, target market, and constant change.
The first area to review is the product line.
Where is it written that the more you have to sell, the more you sell?
Marketing is a game of mental warfare. It's a battle of perceptions, not products or services. In the mind of the prospect, Eveready was the long-time leader in batteries and then new technology arrived-as it does in most industries. The first technology to change the battery business was the heavy-duty battery. What would you call your heavy-duty battery if you had the No.1 name in batteries? You'd probably call it the Eveready heavy-duty battery, which is what Eveready did. Soon after, the alkaline battery arrived. Again, Eveready called it the alkaline battery. It seemed to make sense.
Another company, P.R. Mallory then introduced an alkaline batteries only product line and the company gave the line a better name; it called them Duracell.
The power of the sacrifice (meaning it gave up a broad product line) for Duracell was in being able to put the "long-lasting battery" idea in the mind of the customer. Duracell lasts twice as long as Eveready said the advertising.
As a result of this success, Eveready was forced to change the name of its alkaline battery to "the Energizer" but it was too late. Duracell had already become the leader in the battery market.
One more example of the law of sacrifice is from the retail industry. Many retail chains that are successful have a pattern or formula of a narrow focus with in-depth stock. Here are some examples.
In the retail field, generally the big successes are the specialists:
- The Limited - Upscale clothing for working women.
- The Gap - Casual clothing for the young at heart.
- Benetton - Wool and cotton clothing for young swingers.
- Victoria's Secret - Sexy undergarments.
- Foot Locker - Athletic shoes.
- Banana Republic - Safari wear.
(When a clothing chain with a name like Banana Republic can be successful, you know we live in the age of the specialist.)
Let's review the second area of sacrifice which is the target market.
Where is it written that you have to appeal to everybody?
Take the cola field. Coca-Cola got into the prospect's mind first and built a powerful position. In
the late fifties, for example, Coke outsold Pepsi more than five to one. What could Pepsi-Cola do to go against Coke's powerful position?
In the early sixties, Pepsi-Cola finally developed a strategy based on the concept of sacrifice. The company sacrified everything except the teenage market and then it brilliantly exploited this market by hiring its icons: Michael Jackson, Lionel Richie, and Don Johnson.
Within one generation, Pepsi closed the gap and to be within 10 percent of Coca-Cola in total U.S. cola sales. (In the supermarket, Pepsi-Cola actually outsells Coca Cola.)
In spite of Pepsi-Cola’s success the pressure for enlarging the tent is always present. In the mid 80s, it succumbed to the temptation and according to a report in Advertising Age, "Pepsi-Cola Co. had outgrown the Pepsi generation. In a major marketing shift, flagship Pepsi will be pitched as the soft drink for the masses."
"Gotta have lt" became Pepsi's new theme and the advertising promotions showed older people like Yogi Berra and Regis Philbin drinking Pepsi.
According to Fortune magazine, “Coca-Cola is still the world's most powerful trademark. When an also-ran like Pepsi-Cola develops a narrowly focused strategy that puts it within an eyelash of the leader, why would it change its powerful strategy?”
Finally, the third sacrifice area is constant change.
Where is it written that you have to change your strategy every year at budget review time?
If you try to follow the twists and turns of the market, you are bound to wind up off the road. The best way to maintain a consistent position is not to change it in the first place.
A little over 20 years ago, People Express was a startup airline carrier and it had created a brilliant "niche" position. It was the no-frills airline that flew to no-frills cities at no-frills prices. People used to get on a People Express plane and say, "Where are we going?" They didn't care as long as it was cheap enough.
What did People Express do after it became successful? It tried to be all things to all people. It invested in new equipment like 747s. It started to fly the heavily traveled routes to places like Chicago and Denver as well as Europe. It also bought Frontier Airlines. It added frills like first-class sections.
People Express then promptly lost altitude and only escaped bankruptcy court by selling itself to Texas Air which did it for them.
Good things come to those who sacrifice.
It takes a while but many Internet Marketing entrepreneurs learn the Law of Sacrifice. They learn to identify their target market, focus on promoting products that will appeal to the target market, and to stay the course with persistent effort and not have constant change.
To accomplish this, they use various methods, tools, and follow a traffic formula to build relationships with their leads and customers. They build websites that create trust. They collect name and email addresses using an Optin form on a Landing Page. They use email systems with both auto-responders and broadcast capabilities in order to send messages to their leads and customers. These email messages frequently send information, provide knowledge, and occasionally promote an offering. Many Internet Marketing entrepreneurs learn that leads and customers do not like to be sold to however they will browse and shop. Over an extended period of time, skilled Internet Marketers are able to use hypnotic writing skills, in their marketing campaigns, to get leads and customers to take the action they want. This is how they learn to identify a target market, stay focused, and add value to their target market. They learn to leverage the equity in their list and be successful in the world that includes the Law of Sacrifice.
It looks easy but marketing is not a game for amateurs. Marketing is not a battle of products. It is all about the strategy you use to benefit from the Law of Sacrifice as you have to give up something in order to get something.
You can find out more about Internet Marketing and home-based businesses by reading updates that will be posted at my blog over the next few weeks.
Finally, a great book to read is "The 22 Immutable Laws of Marketing" by Ries & Trout. It is the source of some of the material provided in this article.
In closing, be sure to meet me at my website, WhoIsMikeFarrell, learn some tips about being No 1 on Google at aspenIbiz My Go-To-Market Partners, my affiliate website, and learn how to be savvy with your money like the insiders at aspenIbiz The Conspiracy For Your Money Blog.
In the world of business and marketing, there are three areas to sacrifice: product line, target market, and constant change.
The first area to review is the product line.
Where is it written that the more you have to sell, the more you sell?
Marketing is a game of mental warfare. It's a battle of perceptions, not products or services. In the mind of the prospect, Eveready was the long-time leader in batteries and then new technology arrived-as it does in most industries. The first technology to change the battery business was the heavy-duty battery. What would you call your heavy-duty battery if you had the No.1 name in batteries? You'd probably call it the Eveready heavy-duty battery, which is what Eveready did. Soon after, the alkaline battery arrived. Again, Eveready called it the alkaline battery. It seemed to make sense.
Another company, P.R. Mallory then introduced an alkaline batteries only product line and the company gave the line a better name; it called them Duracell.
The power of the sacrifice (meaning it gave up a broad product line) for Duracell was in being able to put the "long-lasting battery" idea in the mind of the customer. Duracell lasts twice as long as Eveready said the advertising.
As a result of this success, Eveready was forced to change the name of its alkaline battery to "the Energizer" but it was too late. Duracell had already become the leader in the battery market.
One more example of the law of sacrifice is from the retail industry. Many retail chains that are successful have a pattern or formula of a narrow focus with in-depth stock. Here are some examples.
In the retail field, generally the big successes are the specialists:
- The Limited - Upscale clothing for working women.
- The Gap - Casual clothing for the young at heart.
- Benetton - Wool and cotton clothing for young swingers.
- Victoria's Secret - Sexy undergarments.
- Foot Locker - Athletic shoes.
- Banana Republic - Safari wear.
(When a clothing chain with a name like Banana Republic can be successful, you know we live in the age of the specialist.)
Let's review the second area of sacrifice which is the target market.
Where is it written that you have to appeal to everybody?
Take the cola field. Coca-Cola got into the prospect's mind first and built a powerful position. In
the late fifties, for example, Coke outsold Pepsi more than five to one. What could Pepsi-Cola do to go against Coke's powerful position?
In the early sixties, Pepsi-Cola finally developed a strategy based on the concept of sacrifice. The company sacrified everything except the teenage market and then it brilliantly exploited this market by hiring its icons: Michael Jackson, Lionel Richie, and Don Johnson.
Within one generation, Pepsi closed the gap and to be within 10 percent of Coca-Cola in total U.S. cola sales. (In the supermarket, Pepsi-Cola actually outsells Coca Cola.)
In spite of Pepsi-Cola’s success the pressure for enlarging the tent is always present. In the mid 80s, it succumbed to the temptation and according to a report in Advertising Age, "Pepsi-Cola Co. had outgrown the Pepsi generation. In a major marketing shift, flagship Pepsi will be pitched as the soft drink for the masses."
"Gotta have lt" became Pepsi's new theme and the advertising promotions showed older people like Yogi Berra and Regis Philbin drinking Pepsi.
According to Fortune magazine, “Coca-Cola is still the world's most powerful trademark. When an also-ran like Pepsi-Cola develops a narrowly focused strategy that puts it within an eyelash of the leader, why would it change its powerful strategy?”
Finally, the third sacrifice area is constant change.
Where is it written that you have to change your strategy every year at budget review time?
If you try to follow the twists and turns of the market, you are bound to wind up off the road. The best way to maintain a consistent position is not to change it in the first place.
A little over 20 years ago, People Express was a startup airline carrier and it had created a brilliant "niche" position. It was the no-frills airline that flew to no-frills cities at no-frills prices. People used to get on a People Express plane and say, "Where are we going?" They didn't care as long as it was cheap enough.
What did People Express do after it became successful? It tried to be all things to all people. It invested in new equipment like 747s. It started to fly the heavily traveled routes to places like Chicago and Denver as well as Europe. It also bought Frontier Airlines. It added frills like first-class sections.
People Express then promptly lost altitude and only escaped bankruptcy court by selling itself to Texas Air which did it for them.
Good things come to those who sacrifice.
It takes a while but many Internet Marketing entrepreneurs learn the Law of Sacrifice. They learn to identify their target market, focus on promoting products that will appeal to the target market, and to stay the course with persistent effort and not have constant change.
To accomplish this, they use various methods, tools, and follow a traffic formula to build relationships with their leads and customers. They build websites that create trust. They collect name and email addresses using an Optin form on a Landing Page. They use email systems with both auto-responders and broadcast capabilities in order to send messages to their leads and customers. These email messages frequently send information, provide knowledge, and occasionally promote an offering. Many Internet Marketing entrepreneurs learn that leads and customers do not like to be sold to however they will browse and shop. Over an extended period of time, skilled Internet Marketers are able to use hypnotic writing skills, in their marketing campaigns, to get leads and customers to take the action they want. This is how they learn to identify a target market, stay focused, and add value to their target market. They learn to leverage the equity in their list and be successful in the world that includes the Law of Sacrifice.
It looks easy but marketing is not a game for amateurs. Marketing is not a battle of products. It is all about the strategy you use to benefit from the Law of Sacrifice as you have to give up something in order to get something.
You can find out more about Internet Marketing and home-based businesses by reading updates that will be posted at my blog over the next few weeks.
Finally, a great book to read is "The 22 Immutable Laws of Marketing" by Ries & Trout. It is the source of some of the material provided in this article.
In closing, be sure to meet me at my website, WhoIsMikeFarrell, learn some tips about being No 1 on Google at aspenIbiz My Go-To-Market Partners, my affiliate website, and learn how to be savvy with your money like the insiders at aspenIbiz The Conspiracy For Your Money Blog.
Saturday, October 30, 2010
The Law of Line Extension – There Is an Irresistible Pressure to Extend the Equity of the Brand
If violating any of the laws of marketing was a punishable offense, a large portion of corporate America would be in jail.
By far the most violated law of marketing is the law of line extension. What’s even more diabolical is that line extension is a process that takes place continuously with almost no conscious effort on the part of the corporation. It’s like a closet or desk drawer that fills up with almost no effort on your part.
One day a company is tightly focused on a single product that is highly profitable. The next day the same company is spread thin over many products and is losing money.
Take IBM. Over the years, IBM has been a mainframe computer company that made a ton of money. Then they evolved into a company that had everything, midrange computers, personal computers, pen computers, workstations, software, networks, telephones, and of course professional services. They even tried to get in the home computer market with the PCjr.
Along the way, IBM spent millions on copiers (later sold to Kodak), Rolm (sold to Siemens), Satellite Business Systems (shut down), the Prodigy network (which evolved into an ESPN website and a Yahoo content portal), as well as software products including SAA, TopView, OfficeVision, and OS2.
In the early 2000s, IBM was close to collapsing under its own weight. It diversified, sold off, or closed down most of these product lines and focused on world wide professional services.
When a company becomes incredibly successful, it invariably plants the seeds for its future problems.
Take Microsoft, without a doubt the most successful company in the software field. Microsoft has been heard to say it intended to aggressively seek the dominant share in every major software applications category in the personal computer field with a goal to have as much as a 70 percent share in every major software category.
Microsoft Corp has continued on its quest in line extension with online products (MSN), games (Xbox), and smart phones and mobile devices (Windows Mobile). Even with challengers in all these categories, as of 2008, MSFT had a global annual revenue over $60B with nearly 90,000 employees in 105 countries. It develops, manufactures, licenses, and supports a wide range of software products for computing devices.
However, there continues to be ominous signs of softness in Microsoft’s overall strategy.
Whom does that sound like – IBM? Microsoft is setting itself up for a collapse along the lines of IBM ten years earlier.
When you try to be all things to all people, you inevitably end up in trouble. “I’d rather be strong somewhere,” said one manager, “than weak everywhere.”
In a narrow sense, line extension involves taking the brand name of a successful product and putting it on a new product you plan to introduce.
It sounds so logical. But marketing is a battle of perception, not product.
There are as many ways to line extend as there are galaxies in the universe. And new ways get invented every day. In the long run and in the presence of serious competition, line extension almost never works.
In spite of evidence that line extensions don’t work, companies continue to pump them out. Here are some examples
Ivory soap. Ivory shampoo?
Life Savers candy. Life Savers gum?
Bic pens. Bic lighters?
Tanqueray gin. Tanqueray vodka?
USA Today. USA Today on TV?
Why does top management believe that line extension works, in spite of the overwhelming evidence to the contrary? One reason is that while line extension is a loser in the long term, it can be a winner in the short term (previous blog post titled The Law of Perspective). Management is also blinded by an intense loyalty to the company or brand.
More is less. The more products, the more markets, the more alliances a company develops, the less money it makes. “Full-speed ahead in all directioins” seems to be the call from the corporate office. When will companies learn that line extension ultimately leads to oblivion?
Less is more. If you want to be successful today, you have to narrow the focus in order to build a position in the prospect’s mind.
In the conventional view, a business strategy usually consists of developing an all-encompassing vision. In other words, what concept or idea is big enough to hold all of a company’s products and services on the market today as well as those that are planned for the future?
In the conventional view, strategy is a tent. You stake out a tent big enough so it can hold everything you might possible want to get into.
For many companies, line extension is the easy way out. Launching a new brand requires not only money, but also an idea or concept. For a new brand to succeed, it needs to be first in a new category (previous post titled The Law of Leadership). Or the new brand needs to be positioned as an alternative to the leader (previous post titled The Law of the Opposite). Companies that wait until a new market has developed often find these two leadership positions already preempted. So they fall back on the old reliable line extension approach.
The antidote for line extension is courage, a commodity in short supply.
It takes a while but many Internet Marketing entrepreneurs resist the pressure to extend the equity of their brand. As a result, they participate in Affiliate Marketing programs. They use various methods, tools, and follow a traffic formula to build relationships with their leads and customers. They build websites that create trust. They collect name and email addresses using an Optin form on a Landing Page. They use email systems with both auto-responders and broadcast capabilities in order to send messages to their leads and customers. These email messages frequently send information, provide knowledge, and occasionally promote an offering. Many Internet Marketing entrepreneurs learn that leads and customers do not like to be sold to however they will browse and shop. Over an extended period of time, skilled Internet Marketers are able to use hypnotic writing skills, in their marketing campaigns, to get leads and customers to take the action they want. This is how they learn to add value and leverage the equity in their list and be successful in the world that includes the Law of Line Extension.
It looks easy but marketing is not a game for amateurs. Marketing is not a battle of products. It is all about the strategy you use to benefit from the Law of Line Extension as there is an irresistible pressure to extend the equity of their brand.
You can find out more about Internet Marketing and home-based businesses by reading updates that will be posted at my blog over the next few weeks.
Finally, a great book to read is "The 22 Immutable Laws of Marketing" by Ries & Trout. It is the source of some of the material provided in this article.
In closing, be sure to meet me at my website, WhoIsMikeFarrell, learn some tips about being No 1 on Google at aspenIbiz My Go-To-Market Partners, my affiliate website, and learn how to be savvy with your money like the insiders at aspenIbiz The Conspiracy For Your Money Blog.
By far the most violated law of marketing is the law of line extension. What’s even more diabolical is that line extension is a process that takes place continuously with almost no conscious effort on the part of the corporation. It’s like a closet or desk drawer that fills up with almost no effort on your part.
One day a company is tightly focused on a single product that is highly profitable. The next day the same company is spread thin over many products and is losing money.
Take IBM. Over the years, IBM has been a mainframe computer company that made a ton of money. Then they evolved into a company that had everything, midrange computers, personal computers, pen computers, workstations, software, networks, telephones, and of course professional services. They even tried to get in the home computer market with the PCjr.
Along the way, IBM spent millions on copiers (later sold to Kodak), Rolm (sold to Siemens), Satellite Business Systems (shut down), the Prodigy network (which evolved into an ESPN website and a Yahoo content portal), as well as software products including SAA, TopView, OfficeVision, and OS2.
In the early 2000s, IBM was close to collapsing under its own weight. It diversified, sold off, or closed down most of these product lines and focused on world wide professional services.
When a company becomes incredibly successful, it invariably plants the seeds for its future problems.
Take Microsoft, without a doubt the most successful company in the software field. Microsoft has been heard to say it intended to aggressively seek the dominant share in every major software applications category in the personal computer field with a goal to have as much as a 70 percent share in every major software category.
Microsoft Corp has continued on its quest in line extension with online products (MSN), games (Xbox), and smart phones and mobile devices (Windows Mobile). Even with challengers in all these categories, as of 2008, MSFT had a global annual revenue over $60B with nearly 90,000 employees in 105 countries. It develops, manufactures, licenses, and supports a wide range of software products for computing devices.
However, there continues to be ominous signs of softness in Microsoft’s overall strategy.
Whom does that sound like – IBM? Microsoft is setting itself up for a collapse along the lines of IBM ten years earlier.
When you try to be all things to all people, you inevitably end up in trouble. “I’d rather be strong somewhere,” said one manager, “than weak everywhere.”
In a narrow sense, line extension involves taking the brand name of a successful product and putting it on a new product you plan to introduce.
It sounds so logical. But marketing is a battle of perception, not product.
There are as many ways to line extend as there are galaxies in the universe. And new ways get invented every day. In the long run and in the presence of serious competition, line extension almost never works.
In spite of evidence that line extensions don’t work, companies continue to pump them out. Here are some examples
Ivory soap. Ivory shampoo?
Life Savers candy. Life Savers gum?
Bic pens. Bic lighters?
Tanqueray gin. Tanqueray vodka?
USA Today. USA Today on TV?
Why does top management believe that line extension works, in spite of the overwhelming evidence to the contrary? One reason is that while line extension is a loser in the long term, it can be a winner in the short term (previous blog post titled The Law of Perspective). Management is also blinded by an intense loyalty to the company or brand.
More is less. The more products, the more markets, the more alliances a company develops, the less money it makes. “Full-speed ahead in all directioins” seems to be the call from the corporate office. When will companies learn that line extension ultimately leads to oblivion?
Less is more. If you want to be successful today, you have to narrow the focus in order to build a position in the prospect’s mind.
In the conventional view, a business strategy usually consists of developing an all-encompassing vision. In other words, what concept or idea is big enough to hold all of a company’s products and services on the market today as well as those that are planned for the future?
In the conventional view, strategy is a tent. You stake out a tent big enough so it can hold everything you might possible want to get into.
For many companies, line extension is the easy way out. Launching a new brand requires not only money, but also an idea or concept. For a new brand to succeed, it needs to be first in a new category (previous post titled The Law of Leadership). Or the new brand needs to be positioned as an alternative to the leader (previous post titled The Law of the Opposite). Companies that wait until a new market has developed often find these two leadership positions already preempted. So they fall back on the old reliable line extension approach.
The antidote for line extension is courage, a commodity in short supply.
It takes a while but many Internet Marketing entrepreneurs resist the pressure to extend the equity of their brand. As a result, they participate in Affiliate Marketing programs. They use various methods, tools, and follow a traffic formula to build relationships with their leads and customers. They build websites that create trust. They collect name and email addresses using an Optin form on a Landing Page. They use email systems with both auto-responders and broadcast capabilities in order to send messages to their leads and customers. These email messages frequently send information, provide knowledge, and occasionally promote an offering. Many Internet Marketing entrepreneurs learn that leads and customers do not like to be sold to however they will browse and shop. Over an extended period of time, skilled Internet Marketers are able to use hypnotic writing skills, in their marketing campaigns, to get leads and customers to take the action they want. This is how they learn to add value and leverage the equity in their list and be successful in the world that includes the Law of Line Extension.
It looks easy but marketing is not a game for amateurs. Marketing is not a battle of products. It is all about the strategy you use to benefit from the Law of Line Extension as there is an irresistible pressure to extend the equity of their brand.
You can find out more about Internet Marketing and home-based businesses by reading updates that will be posted at my blog over the next few weeks.
Finally, a great book to read is "The 22 Immutable Laws of Marketing" by Ries & Trout. It is the source of some of the material provided in this article.
In closing, be sure to meet me at my website, WhoIsMikeFarrell, learn some tips about being No 1 on Google at aspenIbiz My Go-To-Market Partners, my affiliate website, and learn how to be savvy with your money like the insiders at aspenIbiz The Conspiracy For Your Money Blog.
Thursday, September 30, 2010
The Law of Perspective – Marketing Effects Take Place Over an Extended Period of Time
Is alcohol a stimulant or is it a depressant?
If you visit almost any bar and grill on a Friday night after work, you would swear that alcohol was a stimulant. The noise and laughter are strong evidence of alcohol’s stimulating effects. Yet at 4:00 in the morning, when you see a few happy-hour customers sleeping it off in the streets, you would swear that alcohol is a depressant.
Chemically, alcohol is a strong depressant. But in the short term, by depressing a person’s inhibitions, alcohol acts like a stimulant.
Many marketing moves exhibit the same phenomenon. The long-term effects are often the exact opposite of the short term-effects.
Does a sale increase a company’s business or decrease it? Obviously, in the short term, a sale increases business. But there is more and more evidence to show that sales decrease business in the long term by educating customers not to buy at “regular” prices.
Aside from the fact that you can buy something for less, what does a sale say to a prospect? It says that your regular prices are too high. After the sale is over, customer’s tend to avoid a store with a “sale” reputation.
To maintain volume, retail outlets find they have to run almost continuous sales. It is not unusual to walk down a retail block and find a dozen stores in a row with “Sale” signs in their windows.
Have the automobile rebate programs increased sales? The rise of auto rebates has coincided with a decline in auto sales. U.S. vehicle sales have declined for five straight years in a row.
There is no evidence that couponing increases sales in the long run. Many companies find they need a quarterly does of couponing to keep sales on an even keel. Once they stop couponing, sales drop off.
In other words, you keep those coupons rolling out not increase sales but to keep sales from falling off if you stop. Couponing is a drug. You continue to do it because the withdrawal symptoms are just to painful.
Any sort of couponing, discounts, or sales tends to educate consumers to buy only when they can get a deal. What if a company never started couponing in the first place? In the retail field the big winners are the companies that practice “everyday low prices”; companies like Wal-mart and K Mart and the rapidly growing warehouse outlets.
Yet almost everywhere you look you see yo-yo pricing. The airlines and supermarkets are two examples. Recently, however Proctor & Gamble made a bold move to establish uniform pricing which could become the start of a trend.
In everyday life there are many examples of short-term gains and long-term losses, crime being an example. If you a rob a bank for $100,000 and wind up spending 10 years in jail; you either made $100,000 for a day’s work or $10,000 a year for 10 years of labor. It all depends on your point of view.
Inflation, or the recent government stimulus (cash for clunkers comes to mind), can give an economy a short-term jolt but in the long run, inflation leads to recession or a Great Deflation as is being experienced in the U.S. at this time (circa 2010).
In the short term, overeating satisfies the psyche but in the long run it causes obesity and depression.
In many other areas of life (spending money, taking drugs, having sex) the long-term effects of your actions are often the opposite of the short-term effects. Why then is it so hard to comprehend that marketing effects take place over an extended period of time?
Take line extension. In the short term, line extension invariably increases sales. The beer industry clearly illustrates this effect.
Look what happened to Coors. The introduction of Coors Light caused the collapse of Coors regular; which today sells one fourth of the volume it used to sell.
In the short term, both brands can co-exist and do well. But in the long term, line extension was bound to undermine one or the other of the two brands. Once the decline starts, it is almost impossible to stop.
Unless you know what to look for, it is hard to see the effects of line extension, especially for managers focused on their next quarterly report. (If a bullet took five years to reach a target, very few criminals would be convicted of homicide.
In other areas of marketing, the short-term / long-term line extension effects occur much more rapidly. Let’s look at what happened to Donald Trump. At first, The Donald was successful. He then branched out and put his name on anything for which the banks would lend him money; hotels, casinos, condominiums, an airline, and a shopping center. Many asked, what is a Trump? What does Trump mean?
Fortune magazine called Trump an investor with a keen eye for cash flow and asset values, a smart marketer, a cunning wheeler-dealer. The Donald has been on the cover of many magazines.
At various points in time, Trump has declared bankruptcy. What made The Donald successful in the short term is exactly what cause him to fail in the long term – line extension.
It looks easy, but marketing is not a game for amateurs.
It takes a while but many Internet Marketing entrepreneurs recognize marketing effects take place over an extended period of time and as a result, they use various methods and tools to build relationships with their leads and customers. They build websites that create trust. They collect name and email addresses using an Optin form on a Landing Page. They use email systems with both auto-responders and broadcast capabilities in order to send messages to their leads and customers. These email messages frequently send information, provide knowledge, and occasionally promote an offering. Many Internet Marketing entrepreneurs learn that leads and customers do not like to be sold to however they will browse and shop. Over an extended period of time, skilled Internet Marketers are able to use hypnotic writing skills, in their marketing campaigns, to get leads and customers to take the action they want. This is how they learn to add value and be successful in the world that includes the Law of Perspective.
Marketing is not a battle of products. It is all about the strategy you use to benefit from the Law of Perspective as marketing effects take place over an extended period of time and requires not only perspective but also persistence.
You can find out more about Internet Marketing and home-based businesses by reading updates that will be posted at my blog over the next few weeks.
Finally, a great book to read is "The 22 Immutable Laws of Marketing" by Ries & Trout. It is the source of some of the material provided in this article.
In closing, be sure to meet me at my website, WhoIsMikeFarrell, learn some tips about being No 1 on Google at aspenIbiz My Go-To-Market Partners, my affiliate website, and learn how to be savvy with your money like the insiders at aspenIbiz The Conspiracy For Your Money Blog.
If you visit almost any bar and grill on a Friday night after work, you would swear that alcohol was a stimulant. The noise and laughter are strong evidence of alcohol’s stimulating effects. Yet at 4:00 in the morning, when you see a few happy-hour customers sleeping it off in the streets, you would swear that alcohol is a depressant.
Chemically, alcohol is a strong depressant. But in the short term, by depressing a person’s inhibitions, alcohol acts like a stimulant.
Many marketing moves exhibit the same phenomenon. The long-term effects are often the exact opposite of the short term-effects.
Does a sale increase a company’s business or decrease it? Obviously, in the short term, a sale increases business. But there is more and more evidence to show that sales decrease business in the long term by educating customers not to buy at “regular” prices.
Aside from the fact that you can buy something for less, what does a sale say to a prospect? It says that your regular prices are too high. After the sale is over, customer’s tend to avoid a store with a “sale” reputation.
To maintain volume, retail outlets find they have to run almost continuous sales. It is not unusual to walk down a retail block and find a dozen stores in a row with “Sale” signs in their windows.
Have the automobile rebate programs increased sales? The rise of auto rebates has coincided with a decline in auto sales. U.S. vehicle sales have declined for five straight years in a row.
There is no evidence that couponing increases sales in the long run. Many companies find they need a quarterly does of couponing to keep sales on an even keel. Once they stop couponing, sales drop off.
In other words, you keep those coupons rolling out not increase sales but to keep sales from falling off if you stop. Couponing is a drug. You continue to do it because the withdrawal symptoms are just to painful.
Any sort of couponing, discounts, or sales tends to educate consumers to buy only when they can get a deal. What if a company never started couponing in the first place? In the retail field the big winners are the companies that practice “everyday low prices”; companies like Wal-mart and K Mart and the rapidly growing warehouse outlets.
Yet almost everywhere you look you see yo-yo pricing. The airlines and supermarkets are two examples. Recently, however Proctor & Gamble made a bold move to establish uniform pricing which could become the start of a trend.
In everyday life there are many examples of short-term gains and long-term losses, crime being an example. If you a rob a bank for $100,000 and wind up spending 10 years in jail; you either made $100,000 for a day’s work or $10,000 a year for 10 years of labor. It all depends on your point of view.
Inflation, or the recent government stimulus (cash for clunkers comes to mind), can give an economy a short-term jolt but in the long run, inflation leads to recession or a Great Deflation as is being experienced in the U.S. at this time (circa 2010).
In the short term, overeating satisfies the psyche but in the long run it causes obesity and depression.
In many other areas of life (spending money, taking drugs, having sex) the long-term effects of your actions are often the opposite of the short-term effects. Why then is it so hard to comprehend that marketing effects take place over an extended period of time?
Take line extension. In the short term, line extension invariably increases sales. The beer industry clearly illustrates this effect.
Look what happened to Coors. The introduction of Coors Light caused the collapse of Coors regular; which today sells one fourth of the volume it used to sell.
In the short term, both brands can co-exist and do well. But in the long term, line extension was bound to undermine one or the other of the two brands. Once the decline starts, it is almost impossible to stop.
Unless you know what to look for, it is hard to see the effects of line extension, especially for managers focused on their next quarterly report. (If a bullet took five years to reach a target, very few criminals would be convicted of homicide.
In other areas of marketing, the short-term / long-term line extension effects occur much more rapidly. Let’s look at what happened to Donald Trump. At first, The Donald was successful. He then branched out and put his name on anything for which the banks would lend him money; hotels, casinos, condominiums, an airline, and a shopping center. Many asked, what is a Trump? What does Trump mean?
Fortune magazine called Trump an investor with a keen eye for cash flow and asset values, a smart marketer, a cunning wheeler-dealer. The Donald has been on the cover of many magazines.
At various points in time, Trump has declared bankruptcy. What made The Donald successful in the short term is exactly what cause him to fail in the long term – line extension.
It looks easy, but marketing is not a game for amateurs.
It takes a while but many Internet Marketing entrepreneurs recognize marketing effects take place over an extended period of time and as a result, they use various methods and tools to build relationships with their leads and customers. They build websites that create trust. They collect name and email addresses using an Optin form on a Landing Page. They use email systems with both auto-responders and broadcast capabilities in order to send messages to their leads and customers. These email messages frequently send information, provide knowledge, and occasionally promote an offering. Many Internet Marketing entrepreneurs learn that leads and customers do not like to be sold to however they will browse and shop. Over an extended period of time, skilled Internet Marketers are able to use hypnotic writing skills, in their marketing campaigns, to get leads and customers to take the action they want. This is how they learn to add value and be successful in the world that includes the Law of Perspective.
Marketing is not a battle of products. It is all about the strategy you use to benefit from the Law of Perspective as marketing effects take place over an extended period of time and requires not only perspective but also persistence.
You can find out more about Internet Marketing and home-based businesses by reading updates that will be posted at my blog over the next few weeks.
Finally, a great book to read is "The 22 Immutable Laws of Marketing" by Ries & Trout. It is the source of some of the material provided in this article.
In closing, be sure to meet me at my website, WhoIsMikeFarrell, learn some tips about being No 1 on Google at aspenIbiz My Go-To-Market Partners, my affiliate website, and learn how to be savvy with your money like the insiders at aspenIbiz The Conspiracy For Your Money Blog.
Tuesday, August 31, 2010
The Law of Division - Over Time A Category Will Divide Into Two or More Categories
Like an amoeba dividing in a petri dish, the marketplace can be viewed as an ever-expanding sea of categories. During my career as a management consultant with Deloitte, I experienced this Law of Division many times.
I joined Deloitte when the consulting profession, within the Big 4 (Big 8 at that time) Accounting and Consulting firms, was in its formulative stage. At that time, the consulting business was a single entity.
Over time, we divided into Advisory Services, Implementation Services, and Quality Review Services. These various service categories further divided into Strategy, Operations, Organization, and Technology specialties. These categories divided again according to industry specialties such as Telecommunications, Technology, Financial Services, Healthcare, Consumer Product Goods, and so forth.
Another division occurred according to geography in terms of Emerging Markets and the Industrialized Regions; and then there was another layer of specialty in terms of the Americas, EMEA (Europe, Middle East and Americas), as well as APAC (Asia Pacific Countries) regions.
While at times these layers of granularity and focus were done for internal purposes, a majority of the time it was the marketplace valuing expertise according to these categories. Each step of the way, we would face new competitors and had to learn how to adapt to these new entrants to the consulting business.
Like the consulting business, the automobile industry started off as a single category. Three brands (Chevrolet, Ford, and Plymouth) dominated the market. The category then divided and today we have luxury cars, moderately priced cars, and inexpensive cars. We also have full-size cars, intermediates, and compacts. And we have sports cars, four-wheel-drive vehicles, RVs, SUVs, and minivans; another example of the ever-expanding sea of categories.
In the television industry, ABC, CBS, and NBC once accounted for 90 percent of the viewing audience. Now we have network, independent, cable, pay, and public television with both instore, interactive, and even IPTV networks (niche oriented programming streaming across the internet) … ever watch CNBC online? This programming is available on both my cable TV network and on my PC or laptop (at no charge).
Beer started the same way. Today we have imported and domestic beer; premium and popular-priced beers; light, draft, and dry beers; we even have non-alcoholic beer.
Each segment is a separate and distinct entity. Each segment has its own reason for existence. And each segment has its own leader which is rarely the same as the leader of the original category.
In the computing world, IBM is the leader in mainframes; HP in mid-range computers; Dell and Apple in laptops; and Sun, now a part of Oracle has been the leader in workstations.
Instead of understanding this concept of division, many corporate leaders hold the naïve belief that categories are combining. Synergy and its kissing cousin, the corporate alliance, are the buzzwords in the boardrooms around the planet.
We saw AOL and Time Warner combine to take advantage of the convergence of television, music, publishing, and computing. How did that work out?
Benefits from synergy, and mega mergers, are seldom realized. Categories are dividing, not combining, into a sea of niche categories (and this is well described by Chris Anderson in his book The Long Tail: Why the Future of Business is to Sell Less of More).
The riches are in the niches.
The way for the leader to maintain its dominance is to address each emerging category with a different brand name as General Motors did with Chevrolet, Pontiac, Oldsmobile, and Cadillac.
What keeps leaders from launching a different brand to cover a new category is the fear of what will happen to their existing brands. General Motors was slow to react to the super-premium category that Mercedes-Benz and BMW established. One reason was that a new brand on top of Cadillac would enrage GM’s Cadillac dealers.
Contrast this with an operating principle of Andy Grove, former CEO and Chairman of the Board of Intel, the world’s largest semiconductor chip maker and one of the world’s most admired companies, where “only the paranoid survive.” Essentially this principle drove Intel to cycles of survival and leadership based on an ability to cannibalize themselves and make the leap to cross the chasm into the next product area. They were continually dividing successful product areas into new categories generating wildly successful and profitable new markets and avoided joining others at the bottom of the high tech abyss.
As an Internet Marketing professional, you need to understand the Law of Division. As a product category divides, there are leadership opportunities to rush in and become No 1 in one or more of the new categories.
Timing is also important but you have to have the courage or the money to hang in there long enough for the category to develop.
It is better to be early than late. You can not get into the prospect’s mind first (as described in Law No 1 of Leadership) for a category unless you are prepared to spend some time waiting for things to develop.
Many Internet Marketing entrepreneurs are using techniques and tools like mind-mapping, keyword research, Attraction Marketing Formula, Magnetic Sponsoring, and MindMeister to conduct the market research and plan a successful marketing campaign. They then use the power of MyStory marketing, brand You Inc, and hypnotic writing skills, in their marketing campaigns, to deal realistically with the position of their brand and the strategy they want to pursue in the world that includes the Law of Division.
The goals is to not emphasize why their offering is better, feature and function-wise, over a competitor’s but to develop a message that is recognized, accepted, and agreed to so that it will seduce and persuade a customer, in the new category, that what is offered to the target market is real and will work for them.
Marketing is not a battle of products. It is all about the strategy you use to benefit from the Law of Division and if you are not the leader then you must monitor the marketplace and as a category divides, be prepared to rush in to be No 1 in one or more of the new categories.
You can find out more about Internet Marketing and home-based businesses by reading updates that will be posted at my blog over the next few weeks.
Finally, a great book to read is "The 22 Immutable Laws of Marketing" by Ries & Trout. It is the source of some of the material provided in this article.
I joined Deloitte when the consulting profession, within the Big 4 (Big 8 at that time) Accounting and Consulting firms, was in its formulative stage. At that time, the consulting business was a single entity.
Over time, we divided into Advisory Services, Implementation Services, and Quality Review Services. These various service categories further divided into Strategy, Operations, Organization, and Technology specialties. These categories divided again according to industry specialties such as Telecommunications, Technology, Financial Services, Healthcare, Consumer Product Goods, and so forth.
Another division occurred according to geography in terms of Emerging Markets and the Industrialized Regions; and then there was another layer of specialty in terms of the Americas, EMEA (Europe, Middle East and Americas), as well as APAC (Asia Pacific Countries) regions.
While at times these layers of granularity and focus were done for internal purposes, a majority of the time it was the marketplace valuing expertise according to these categories. Each step of the way, we would face new competitors and had to learn how to adapt to these new entrants to the consulting business.
Like the consulting business, the automobile industry started off as a single category. Three brands (Chevrolet, Ford, and Plymouth) dominated the market. The category then divided and today we have luxury cars, moderately priced cars, and inexpensive cars. We also have full-size cars, intermediates, and compacts. And we have sports cars, four-wheel-drive vehicles, RVs, SUVs, and minivans; another example of the ever-expanding sea of categories.
In the television industry, ABC, CBS, and NBC once accounted for 90 percent of the viewing audience. Now we have network, independent, cable, pay, and public television with both instore, interactive, and even IPTV networks (niche oriented programming streaming across the internet) … ever watch CNBC online? This programming is available on both my cable TV network and on my PC or laptop (at no charge).
Beer started the same way. Today we have imported and domestic beer; premium and popular-priced beers; light, draft, and dry beers; we even have non-alcoholic beer.
Each segment is a separate and distinct entity. Each segment has its own reason for existence. And each segment has its own leader which is rarely the same as the leader of the original category.
In the computing world, IBM is the leader in mainframes; HP in mid-range computers; Dell and Apple in laptops; and Sun, now a part of Oracle has been the leader in workstations.
Instead of understanding this concept of division, many corporate leaders hold the naïve belief that categories are combining. Synergy and its kissing cousin, the corporate alliance, are the buzzwords in the boardrooms around the planet.
We saw AOL and Time Warner combine to take advantage of the convergence of television, music, publishing, and computing. How did that work out?
Benefits from synergy, and mega mergers, are seldom realized. Categories are dividing, not combining, into a sea of niche categories (and this is well described by Chris Anderson in his book The Long Tail: Why the Future of Business is to Sell Less of More).
The riches are in the niches.
The way for the leader to maintain its dominance is to address each emerging category with a different brand name as General Motors did with Chevrolet, Pontiac, Oldsmobile, and Cadillac.
What keeps leaders from launching a different brand to cover a new category is the fear of what will happen to their existing brands. General Motors was slow to react to the super-premium category that Mercedes-Benz and BMW established. One reason was that a new brand on top of Cadillac would enrage GM’s Cadillac dealers.
Contrast this with an operating principle of Andy Grove, former CEO and Chairman of the Board of Intel, the world’s largest semiconductor chip maker and one of the world’s most admired companies, where “only the paranoid survive.” Essentially this principle drove Intel to cycles of survival and leadership based on an ability to cannibalize themselves and make the leap to cross the chasm into the next product area. They were continually dividing successful product areas into new categories generating wildly successful and profitable new markets and avoided joining others at the bottom of the high tech abyss.
As an Internet Marketing professional, you need to understand the Law of Division. As a product category divides, there are leadership opportunities to rush in and become No 1 in one or more of the new categories.
Timing is also important but you have to have the courage or the money to hang in there long enough for the category to develop.
It is better to be early than late. You can not get into the prospect’s mind first (as described in Law No 1 of Leadership) for a category unless you are prepared to spend some time waiting for things to develop.
Many Internet Marketing entrepreneurs are using techniques and tools like mind-mapping, keyword research, Attraction Marketing Formula, Magnetic Sponsoring, and MindMeister to conduct the market research and plan a successful marketing campaign. They then use the power of MyStory marketing, brand You Inc, and hypnotic writing skills, in their marketing campaigns, to deal realistically with the position of their brand and the strategy they want to pursue in the world that includes the Law of Division.
The goals is to not emphasize why their offering is better, feature and function-wise, over a competitor’s but to develop a message that is recognized, accepted, and agreed to so that it will seduce and persuade a customer, in the new category, that what is offered to the target market is real and will work for them.
Marketing is not a battle of products. It is all about the strategy you use to benefit from the Law of Division and if you are not the leader then you must monitor the marketplace and as a category divides, be prepared to rush in to be No 1 in one or more of the new categories.
You can find out more about Internet Marketing and home-based businesses by reading updates that will be posted at my blog over the next few weeks.
Finally, a great book to read is "The 22 Immutable Laws of Marketing" by Ries & Trout. It is the source of some of the material provided in this article.
Tuesday, July 13, 2010
Shanghai Is Not What You Would Expect When You Visit the World’s Largest Emerging Market
In 1982, early in my Management Consulting career with Deloitte, a Big 4 (Big 8 at that time) Accounting and Consulting firm, I made my first to trip to China. I was on an engagement in the Middle East at the time and our client was Saudi Arabian Airlines. I was based in Jeddah, Saudi Arabia however worked with clients and traveled extensively throughout the region.
As part of the project, I had the opportunity to visit Hong Kong and Beijing however every one told me to avoid Shanghai as it was dreary and in the dumps. Today, Shanghai is not the kind of city most expect to see when they visit the world’s largest Emerging Market.
Amazingly, the Pudong area, which is ground zero of the hustle and bustle of Shanghai and representative of the China Dream, did not even exist 20 years ago.
Construction on the New Open Economic Development Zone, which has grown to become China’s pulsing financial and commercial hub, only really began in the early 1990s, right around the time the nation’s economy embarked on a two-decade long, double-digit annual growth rate transformation.
This (the unapologetically capitalistic city seems to scream out) is what, Made in China, built for us.
While the Developed world spent the better part of the last few decades buying knick-knacks they didn’t need with money they didn’t have, China Inc. got busy both producing those same products, and lending the world’s consumers the money with which to buy them. The result is one of the largest trade imbalances in modern economic history. At a staggering $2.4 trillion, the Middle Kingdom’s foreign reserve stockpile is by far the largest in the world. And, although a not-insignificant $900 billion of those reserves are held in steadily depreciating greenbacks (not to mention a large euro holding), the Chinese are wasting no time converting those paper cash piles into tangible asset stakes.
Also, China has been on a resource-buying binge over the past ten years, inking deals with major mining companies from Africa to Australia, South America, The Middle East and all over Asia.
Just last month China signed more than $8.8 billion of new commercial and mining deals with resource giant Australia, despite its southern neighbor’s onerous new resource profits tax laws. The Middle Kingdom’s voracious industrialization inhaled around $41.7 billion worth of Australia’s minerals in 2009, including almost $20 billion of iron ore and concentrates.
Last year China also became Brazil’s number one trading partner when it agreed to lend $10 billion to Petrobras in return for guaranteed oil supply over the next decade. I invite you to read here my recent article “Energy is One of the 5Es of the Evaluation Framework” that contains a discussion about this transaction between Brazil and China. Other projects between China and its South American BRIC counterpart included a $5 billion steel plant at the Acu port in Rio de Janeiro. This deal represents China’s largest ever investment in Latin America’s richest resource economy and its biggest foreign steel-plant investment.
The world’s fastest growing economic superpower is also looking closer to home in an effort to feed its unwavering appetite and to divest itself of paper promises.
“Central Asia is rich in mineral resources, particularly rare metals, copper and gold that China needs for economic growth,” President Hu Jintao announced on a recent visit to Central Asia, where he signed gas and nuclear agreements and promised cooperation in port construction and transportation infrastructure. I invite you to read here my recent article on China and rare earths.
Conspicuously absent from these and a slew of other high profile deals were the “emerged” markets. While the Petrobras deal was going down, for instance, politicians in the US were eagerly handing out hundreds of billions of other people’s dollars to Goldman Sachs (via AIG), and bribing its citizens to purchase new kitchen appliances, most of which were probably made in China anyway.
Of course, all this stimulation comes at a terrible cost. Not only must the US economy swallow the opportunity cost (of the goods and services that might have been produced had those trillions not been siphoned off to bailout the nation’s failed banking, insurance, and auto industries), it must also contend with seemingly uncontrollable debt loads.
Barely 9 months into the current financial year, the US in the past few weeks, passed the $1 trillion annual deficit mark. Though marginally smaller than last year’s total at this point, such a figure is hardly a cause for celebration.
The world’s most indebted economy – on a gross basis – is also notching up a worrying tally of single day records.
The Washington Times reports:
- The largest one-day increase in USA national debt was on June 30 (circa 2010) and it totaled $165,931,038,264.30.
- This one day amount is bigger than the entire annual deficit for fiscal year 2007.
- It is larger than the $140 billion in savings the new health care bill will produce over its first 10 years.
- The one day amount works out to nearly $1,500 for every US household, or more than 10 times the median daily household income.
And now that the future demand has been brought forward, through “Cash for Clunkers” and other government stimulus and spending programs, the USA is struggling to keep its economy afloat. The citizens of the USA have allowed their government to essentially spend their personal savings AND their future earnings.
Meanwhile, China is struggling to cool its own economy down. It is all the government can do to keep a lid on growth at 11.9%, the figure recorded in the first quarter of this year. Stronger domestic demand and a rebound in exports forced the International Monetary Fund to upwardly revise its outlook for China’s 2010 GDP, from 10% to 10.5%. Housing prices are still rising by an incredible 12.4% per month, according to the latest available figures, even after Beijing introduced a series of tightening measures aimed at dampening real estate speculation. I invite you to read here one of my recent blog posts about China trying to cool their economy.
Almost nobody expects China to keep such a breakneck pace. In fact, many are warning of sharp corrections ahead. As many are well aware, nothing moves up or down without (sometimes major) corrections. Straight lines are for geometry classes, not markets. Over the long haul, however, the trend is pretty clear. I invite you to read here one of my recent blog posts about the Chinese economy being out of control.
While it may seem like it is Time to Exit the Dragon, it’s difficult to imagine the emerging middle-class consumers of China returning to the lot of lowly-paid factory workers without a struggle. It is almost as difficult to imagine an American working for less than the minimum wage but it might soon be a reality for the American worker. This situation will probably awaken the Free Agent Entrepreneurial desire among many to consider a shift from a W2 wage system to a 1099 ownership system and lifestyle. I invite you to read here an article about Looking to Retool as a Digital Entrepreneur.
Many still see China as a ripe buying opportunity but this is not the kind of wealth creating opportunity that you are likely to see in the headlines of the evening business news and that is why those who know they need to be savvy with their money, like the insiders, belong to a wealth creating community.
They gain the necessary financial education and they obtain association with, access to, and membership in a wealth creation community to regain control over their financial lifestyle. As a result, they obtain examples of alternative wealth creation strategies such as debt reduction, asset protection, and wealth acceleration with investments in items such as precious metals, water rights, oil, natural gas, potash mines, food commodities, or gold mines … perhaps investments in energy assets that are inherently useful like oil rigs, hydropower, or methanol plants … things hard to build, difficult to replace, and costly to substitute … definitely not financial stocks, definitely not retail stocks, definitely not commercial property.
I trust this article provides a little more insight into the global economy and while some may say it is Time to Exit the Dragon, others highlight what may be ripe buying opportunities among a handful of Chinese companies that trade in US Indexes, or as ADRs, and have extremely attractive valuations.
It is wise to monitor world affairs and consider alternative wealth generating strategies. I will provide updates in future articles and at my blog over the next few weeks.
In closing, I want to thank Joel Bowman of Agora Financial as he was the source of some of the materials about the breakneck growth in China mentioned in this post.
As part of the project, I had the opportunity to visit Hong Kong and Beijing however every one told me to avoid Shanghai as it was dreary and in the dumps. Today, Shanghai is not the kind of city most expect to see when they visit the world’s largest Emerging Market.
Amazingly, the Pudong area, which is ground zero of the hustle and bustle of Shanghai and representative of the China Dream, did not even exist 20 years ago.
Construction on the New Open Economic Development Zone, which has grown to become China’s pulsing financial and commercial hub, only really began in the early 1990s, right around the time the nation’s economy embarked on a two-decade long, double-digit annual growth rate transformation.
This (the unapologetically capitalistic city seems to scream out) is what, Made in China, built for us.
While the Developed world spent the better part of the last few decades buying knick-knacks they didn’t need with money they didn’t have, China Inc. got busy both producing those same products, and lending the world’s consumers the money with which to buy them. The result is one of the largest trade imbalances in modern economic history. At a staggering $2.4 trillion, the Middle Kingdom’s foreign reserve stockpile is by far the largest in the world. And, although a not-insignificant $900 billion of those reserves are held in steadily depreciating greenbacks (not to mention a large euro holding), the Chinese are wasting no time converting those paper cash piles into tangible asset stakes.
Also, China has been on a resource-buying binge over the past ten years, inking deals with major mining companies from Africa to Australia, South America, The Middle East and all over Asia.
Just last month China signed more than $8.8 billion of new commercial and mining deals with resource giant Australia, despite its southern neighbor’s onerous new resource profits tax laws. The Middle Kingdom’s voracious industrialization inhaled around $41.7 billion worth of Australia’s minerals in 2009, including almost $20 billion of iron ore and concentrates.
Last year China also became Brazil’s number one trading partner when it agreed to lend $10 billion to Petrobras in return for guaranteed oil supply over the next decade. I invite you to read here my recent article “Energy is One of the 5Es of the Evaluation Framework” that contains a discussion about this transaction between Brazil and China. Other projects between China and its South American BRIC counterpart included a $5 billion steel plant at the Acu port in Rio de Janeiro. This deal represents China’s largest ever investment in Latin America’s richest resource economy and its biggest foreign steel-plant investment.
The world’s fastest growing economic superpower is also looking closer to home in an effort to feed its unwavering appetite and to divest itself of paper promises.
“Central Asia is rich in mineral resources, particularly rare metals, copper and gold that China needs for economic growth,” President Hu Jintao announced on a recent visit to Central Asia, where he signed gas and nuclear agreements and promised cooperation in port construction and transportation infrastructure. I invite you to read here my recent article on China and rare earths.
Conspicuously absent from these and a slew of other high profile deals were the “emerged” markets. While the Petrobras deal was going down, for instance, politicians in the US were eagerly handing out hundreds of billions of other people’s dollars to Goldman Sachs (via AIG), and bribing its citizens to purchase new kitchen appliances, most of which were probably made in China anyway.
Of course, all this stimulation comes at a terrible cost. Not only must the US economy swallow the opportunity cost (of the goods and services that might have been produced had those trillions not been siphoned off to bailout the nation’s failed banking, insurance, and auto industries), it must also contend with seemingly uncontrollable debt loads.
Barely 9 months into the current financial year, the US in the past few weeks, passed the $1 trillion annual deficit mark. Though marginally smaller than last year’s total at this point, such a figure is hardly a cause for celebration.
The world’s most indebted economy – on a gross basis – is also notching up a worrying tally of single day records.
The Washington Times reports:
- The largest one-day increase in USA national debt was on June 30 (circa 2010) and it totaled $165,931,038,264.30.
- This one day amount is bigger than the entire annual deficit for fiscal year 2007.
- It is larger than the $140 billion in savings the new health care bill will produce over its first 10 years.
- The one day amount works out to nearly $1,500 for every US household, or more than 10 times the median daily household income.
And now that the future demand has been brought forward, through “Cash for Clunkers” and other government stimulus and spending programs, the USA is struggling to keep its economy afloat. The citizens of the USA have allowed their government to essentially spend their personal savings AND their future earnings.
Meanwhile, China is struggling to cool its own economy down. It is all the government can do to keep a lid on growth at 11.9%, the figure recorded in the first quarter of this year. Stronger domestic demand and a rebound in exports forced the International Monetary Fund to upwardly revise its outlook for China’s 2010 GDP, from 10% to 10.5%. Housing prices are still rising by an incredible 12.4% per month, according to the latest available figures, even after Beijing introduced a series of tightening measures aimed at dampening real estate speculation. I invite you to read here one of my recent blog posts about China trying to cool their economy.
Almost nobody expects China to keep such a breakneck pace. In fact, many are warning of sharp corrections ahead. As many are well aware, nothing moves up or down without (sometimes major) corrections. Straight lines are for geometry classes, not markets. Over the long haul, however, the trend is pretty clear. I invite you to read here one of my recent blog posts about the Chinese economy being out of control.
While it may seem like it is Time to Exit the Dragon, it’s difficult to imagine the emerging middle-class consumers of China returning to the lot of lowly-paid factory workers without a struggle. It is almost as difficult to imagine an American working for less than the minimum wage but it might soon be a reality for the American worker. This situation will probably awaken the Free Agent Entrepreneurial desire among many to consider a shift from a W2 wage system to a 1099 ownership system and lifestyle. I invite you to read here an article about Looking to Retool as a Digital Entrepreneur.
Many still see China as a ripe buying opportunity but this is not the kind of wealth creating opportunity that you are likely to see in the headlines of the evening business news and that is why those who know they need to be savvy with their money, like the insiders, belong to a wealth creating community.
They gain the necessary financial education and they obtain association with, access to, and membership in a wealth creation community to regain control over their financial lifestyle. As a result, they obtain examples of alternative wealth creation strategies such as debt reduction, asset protection, and wealth acceleration with investments in items such as precious metals, water rights, oil, natural gas, potash mines, food commodities, or gold mines … perhaps investments in energy assets that are inherently useful like oil rigs, hydropower, or methanol plants … things hard to build, difficult to replace, and costly to substitute … definitely not financial stocks, definitely not retail stocks, definitely not commercial property.
I trust this article provides a little more insight into the global economy and while some may say it is Time to Exit the Dragon, others highlight what may be ripe buying opportunities among a handful of Chinese companies that trade in US Indexes, or as ADRs, and have extremely attractive valuations.
It is wise to monitor world affairs and consider alternative wealth generating strategies. I will provide updates in future articles and at my blog over the next few weeks.
In closing, I want to thank Joel Bowman of Agora Financial as he was the source of some of the materials about the breakneck growth in China mentioned in this post.
Monday, June 28, 2010
Internet Marketing for the Digital Entrepreneur, explains Mike Farrell aspenIbiz
As a result of the job loss situation and the poor economy, there are numerous Digital Entrepreneurs considering an Internet Based business where they leverage a suite of best practices, Internet software tools, education, and support in a community of gifting colleagues thereby placing themselves at the center of the New Economy 2.0 & the Ascendancy of the Entrepreneur.
Innovation on the internet is proceeding at a super-fast pace. Phone books are going away … print advertising is disappearing … at any time over 1.5B people are searching for something on the Internet.
When you buy something on the Internet, you want to buy from someone that you believe is an authority and someone that you can trust. As a result, there is certainly innovation occurring on the Internet with the Web 2.0 technologies that include social networking, blogs, video-sharing channels, and micro-blogging … these are being used by agents and representatives with home-based businesses to become a trusted authority.
A few years ago during my career with Deloitte, a Big 4 Accounting and Consulting Firm, I worked on a consulting project with Microsoft in Redmond and lead teams undertaking marketing and advertising activities as part of a very large product launch. Our team was fond of a saying, “a fool with a tool is still a fool.”
In order to be effective and not be foolish by solely emphasizing technology during the product launch, it was important for our team to understand how the rules of marketing and PR (public relations) in the offline world had evolved and merged into a set of new rules for Marketing and PR in the New Economy 2.0 of the Internet.
In the offline world, marketing is a one-way interruption with yesterday’s message. Here is a listing of several of the old rules of marketing and advertising:
- marketing simply meant advertising (and branding);
- advertising needed to appeal to the masses;
- advertising relied on interrupting people to get them to pay attention to a message;
- advertising was one-way – company to consumer;
- advertising was exclusively about selling products;
- advertising was based on campaigns that had a limited life;
- creativity was deemed the most crucial component of advertising;
- it was more important for the ad agency to win advertising awards than for a client to win new customers; and
- advertising and PR were separate disciplines run by different people with separate goals, strategies, and measurement criteria.
In the offline world, PR is a money pit of wasted resources dealing with the journalistic black hole. The following old rules of PR are becoming obsolete:
- the only way to get ink and airtime was through the media;
- companies communicated to journalists via press releases;
- nobody saw the actual release except a small number of reporters and editors;
- companies had to have significant news before they were allowed to write a press release;
- jargon was okay because the journalists all understood it;
- you were not supposed to send a press release unless it included quotes from third parties, such as customers, analysts, and experts;
- the only way buyers would find out about the press release’s content was if the media wrote a story regarding it;
- the only way to measure the effectiveness of press releases was through “clip books” which noted each time the media decided to pick up a company’s release; and
- PR and marketing were separate disciplines run by different people with separate goals, strategies, and measurement techniques.
Marketing in the online world is not about generic banner ads built to trick people with neon colors or wacky movement. It is about understanding the keywords and phrases that buyers in your target market are using, and designing and activating a series of micro-campaigns to drive buyers to pages that are full of the content they seek.
In order to do this effectively, it is best to understand the new rules of Marketing and PR in the online world that are listed below:
- Marketing is more than just advertising;
- PR is for more than just a mainstream media audience;
- Your are what you publish;
- People want authenticity not spin;
- People want participation not propaganda;
- Instead of causing one-way interruption, marketing is all about delivering content at just the precise moment your audience needs it;
- Marketers must shift their thinking from mainstream marketing to the masses to a strategy of reaching vast numbers of underserved audiences via the Web;
- PR is not about your boss seeing your business on TV - it is about your buyers seeing your company on the internet;
- Marketing is about your organization winning business - not about your ad agency winning awards;
- The Internet makes public relations public again, after years of almost exclusive focus on media;
- Companies must drive people into the purchasing process with great online content;
- Blogs, online video, ebooks, news releases, and other forms of online content let organizations communicate directly with buyers in a form they appreciate; and
- In the internet, the lines between marketing and PR have blurred.
In the offline world, marketing and PR are separate departments with different people and different skill sets. In the online world, marketing, advertising, and PR are converging hence there is just one set of Internet Marketing rules for the Digital Entrepreneur to follow.
People do not like to be sold to, however people want to shop and buy.
Great content helps potential buyers see you, relate to your brand, and understand and value what you have to offer (your products).
By utilizing hypnotic writing, your content will drive a (lead and/or) customer to take the action you want!
Internet Marketing for the Digital Entrepreneur is not a battle of products … it is about using multiple online tools all directed toward increasing the visibility of brand You Inc, generating viral and word-of-mouth online awareness, and utilizing key tactics to ensure success in the knowledge economy.
The Internet provides opportunities you never had before. Internet Marketing is all about selling anything, to anyone, at any time, anywhere in the world!
Finally, a great book to read is "The NEW RULES of MARKETING & PR" by David Meerman Scott. It is the source of a majority of the old rules and new rules listed in this article. This book also contains an action plan that can be followed to harness the power of the NEW RULES!
In closing, be sure to meet me at my website, WhoIsMikeFarrell, learn some tips about being No 1 on Google at apenIbiz My Go-To-Market Partners, my affiliate website, and learn how to be savvy with your money like the insiders at aspenIbiz The Conspiracy For Your Money blog.
Innovation on the internet is proceeding at a super-fast pace. Phone books are going away … print advertising is disappearing … at any time over 1.5B people are searching for something on the Internet.
When you buy something on the Internet, you want to buy from someone that you believe is an authority and someone that you can trust. As a result, there is certainly innovation occurring on the Internet with the Web 2.0 technologies that include social networking, blogs, video-sharing channels, and micro-blogging … these are being used by agents and representatives with home-based businesses to become a trusted authority.
A few years ago during my career with Deloitte, a Big 4 Accounting and Consulting Firm, I worked on a consulting project with Microsoft in Redmond and lead teams undertaking marketing and advertising activities as part of a very large product launch. Our team was fond of a saying, “a fool with a tool is still a fool.”
In order to be effective and not be foolish by solely emphasizing technology during the product launch, it was important for our team to understand how the rules of marketing and PR (public relations) in the offline world had evolved and merged into a set of new rules for Marketing and PR in the New Economy 2.0 of the Internet.
In the offline world, marketing is a one-way interruption with yesterday’s message. Here is a listing of several of the old rules of marketing and advertising:
- marketing simply meant advertising (and branding);
- advertising needed to appeal to the masses;
- advertising relied on interrupting people to get them to pay attention to a message;
- advertising was one-way – company to consumer;
- advertising was exclusively about selling products;
- advertising was based on campaigns that had a limited life;
- creativity was deemed the most crucial component of advertising;
- it was more important for the ad agency to win advertising awards than for a client to win new customers; and
- advertising and PR were separate disciplines run by different people with separate goals, strategies, and measurement criteria.
In the offline world, PR is a money pit of wasted resources dealing with the journalistic black hole. The following old rules of PR are becoming obsolete:
- the only way to get ink and airtime was through the media;
- companies communicated to journalists via press releases;
- nobody saw the actual release except a small number of reporters and editors;
- companies had to have significant news before they were allowed to write a press release;
- jargon was okay because the journalists all understood it;
- you were not supposed to send a press release unless it included quotes from third parties, such as customers, analysts, and experts;
- the only way buyers would find out about the press release’s content was if the media wrote a story regarding it;
- the only way to measure the effectiveness of press releases was through “clip books” which noted each time the media decided to pick up a company’s release; and
- PR and marketing were separate disciplines run by different people with separate goals, strategies, and measurement techniques.
Marketing in the online world is not about generic banner ads built to trick people with neon colors or wacky movement. It is about understanding the keywords and phrases that buyers in your target market are using, and designing and activating a series of micro-campaigns to drive buyers to pages that are full of the content they seek.
In order to do this effectively, it is best to understand the new rules of Marketing and PR in the online world that are listed below:
- Marketing is more than just advertising;
- PR is for more than just a mainstream media audience;
- Your are what you publish;
- People want authenticity not spin;
- People want participation not propaganda;
- Instead of causing one-way interruption, marketing is all about delivering content at just the precise moment your audience needs it;
- Marketers must shift their thinking from mainstream marketing to the masses to a strategy of reaching vast numbers of underserved audiences via the Web;
- PR is not about your boss seeing your business on TV - it is about your buyers seeing your company on the internet;
- Marketing is about your organization winning business - not about your ad agency winning awards;
- The Internet makes public relations public again, after years of almost exclusive focus on media;
- Companies must drive people into the purchasing process with great online content;
- Blogs, online video, ebooks, news releases, and other forms of online content let organizations communicate directly with buyers in a form they appreciate; and
- In the internet, the lines between marketing and PR have blurred.
In the offline world, marketing and PR are separate departments with different people and different skill sets. In the online world, marketing, advertising, and PR are converging hence there is just one set of Internet Marketing rules for the Digital Entrepreneur to follow.
People do not like to be sold to, however people want to shop and buy.
Great content helps potential buyers see you, relate to your brand, and understand and value what you have to offer (your products).
By utilizing hypnotic writing, your content will drive a (lead and/or) customer to take the action you want!
Internet Marketing for the Digital Entrepreneur is not a battle of products … it is about using multiple online tools all directed toward increasing the visibility of brand You Inc, generating viral and word-of-mouth online awareness, and utilizing key tactics to ensure success in the knowledge economy.
The Internet provides opportunities you never had before. Internet Marketing is all about selling anything, to anyone, at any time, anywhere in the world!
Finally, a great book to read is "The NEW RULES of MARKETING & PR" by David Meerman Scott. It is the source of a majority of the old rules and new rules listed in this article. This book also contains an action plan that can be followed to harness the power of the NEW RULES!
In closing, be sure to meet me at my website, WhoIsMikeFarrell, learn some tips about being No 1 on Google at apenIbiz My Go-To-Market Partners, my affiliate website, and learn how to be savvy with your money like the insiders at aspenIbiz The Conspiracy For Your Money blog.
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