Marketing in a post globalisation world
David Brooks 08.12.2016
Recent political events might suggest that globalisation has passed its high-water mark and is now in retreat. Events such as the British voting to quit Europe and Americans voting for Donald Trump - in short for a major change, turning away from big business and big government. So what is in store for marketing managers and how will marketers respond to a changing economic environment?
Hold on, what's this all about and why is it relevant to a b-2-b marketing manager for example? OK. Turn the clock back several decades to the situation in post war Britain. Before that and after the Wall Street crash and economic depression of the late 1920's into the 1930's the pre-war period (post WW1 that is) had been a time of slow recovery and high unemployment. One of my grandfathers like many of his generation, had been unemployed for most of the 1930's and it was only the Second World War that brought him employment, working on fitting out vehicles for the military. The post war reconstruction continued the demand for product that had started around 1940 and boomed throughout the 1950's and 1960's as Britain re-built. Then, there were few 'luxuries' to buy, even if there were some available and you had sufficient coupons. It signalled the end of post war austerity.
Each year the big electrical enterprise I worked for - everything from TVs, radios and cookers to lighting - held a sales conference, sometimes at a West End theatrical venue. It was more of a celebration and rally, than a conference. As sales growth that continued to beat targets year on year and even bigger targets set for the coming year.
When I entered the world of product management in the early 1970's the telephone never stopped ringing. The reason was always the same - it was someone needing more product and looking for me to jump their claim up the list. Strange as it might seem now, pretty much everything was made in our own factories, designed by our own R and D teams, delivered in our own liveried trucks. As product managers, our time was divided between development meetings, working with the development and test engineers, visiting factories, training sales teams and above all working with planners to get product shipped. In the end it was all about delivering the goods. As market leader in many sectors of electrical goods industry, our product philosophy came down to one key marketing issue - identify which product was to be the big runner in the sector then invest in tooling and manufacturing capability to be the lowest cost producer for that class of product. With the the ability to provide stock into the wholesalers and costs that enabled any contract to be won by steep discounting, it all came down to designing, making and shipping the stuff.
As product managers we were less enthused by the sub-contractors the company chose to knock out 'specials' and low volume product and we were dubious about the correctness of some of the granting of purchase orders. But I digress. By the early 1970's it was all about to change. When your big strategy is built on lowest cost supplier [see pages 87 to 90 of Technical Marketing - Ideas for Engineers] it calls, or did then, for high volume production. What happened in the early 1970s was the long post war boom ended. OPEC, an organisation of oil producing countries restricted oil production which in turn caused prices to quadruple and with oil and derivatives critical to most western economies the annual growth driven by the build in construction came to an abrupt halt. The high volume production lines had switched from our biggest asset to our biggest liability. Lamp making lines producing millions of fluorescent tubes had to continue running as a continuous process as glass tubes came into the factory and shipped out at the other end as finished packed tubes. Discounts got steeper, up to 98 per cent at one time and red ink on the P and L account led to redundancies for the first time in our experience.
With British industry now generally uncompetitive in production and with lower productivity than many other countries, great swathes of the once mighty industrial heartlands turned into a derelict reminder of better times. Innovators turned to lower cost producers, not the metal bashing 'sub contractors' that made lower volume product - they were even less productive. Soon the product designs were taken off shore until China became the world's factory. Big companies set up head quarters in tiny countries mainly full of banks and low tax regimes. So what happens now? One thing is sure - it will not be a return to the type of boom of the 60s and 70s. What it will be depends on the new era in politics that may be emerging.
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