It’s not over yet, says Hermann Simon

September 9, 2009

Hermann SimonIt’s all over then? Economists certainly think so. Data published by the National Institute for Economic and Social Research, a think tank, suggest the recession ended in May. There’s plenty of circumstantial evidence as well. House prices are apparently stabilising and the City seems to have been gripped with merger fever as the FTSE 100 brushes 5000 for the first time since Lehman’s collapse last year.

Not everyone agrees, however. One eminent dissenter, whom I met this week, is Hermann Simon, co-founder of international strategy and marketing consultancy Simon-Kucher & Partners. He’s not impressed by the uptick in economic activity and warns of a ‘W-shaped’ – or double-dip  – recession. In his opinion, a lot of credit failures have yet to materialise. He’s also suspicious of the economic statistics coming out of China. Exports are 40% of China’s GDP – and in June they dipped 26%. The state says it will make up the deficit from internal growth, but Simon is not convinced.

“There’s no easy way out of this recession,” he says. “We won’t get back to where we were merely by cost-side solutions. What we need are revenue-side solutions.”

Handily enough, he has some; 33 in fact, which form the core of his new book Beat the Crisis – 33 Quick Solutions for Your Company. That’s too many to enumerate here. But the gist is, whatever you do, don’t get involved in slashing prices because of a reduction in demand. By all means offer added value, as Hyundai did in the USA with its 3-month guarantee against job loss, or give a discount on bundled products, but don’t cut the price of individual items. One arresting example of  price support is the champagne industry. In 2008, it sold 340 million bottles of French bubbly. This year, it reckons on selling only 260 million, so it has taken the extraordinary step of destroying excess volume. Simon says this has worked. Prices have remained stable, despite champagne being a luxury, discretionary item associated with the good times.


Why did BMW really pull out of F1?

July 29, 2009

BMW: Odd timing

A wry thought crossed my mind after I heard that BMW was going to pull out of Formula One. Yes, all right, they’re bad losers. They’ve frittered squillions of pounds a year on a sport that has brought them no glory. Their shareholders are upset, their workforce is incandescent – especially those now facing redundancy as a result of the worldwide squeeze on the car industry. Toyota and Renault will surely follow suit, etc…

But the timing of the announcement seems a little odd. After all, wasn’t BMW one of the leading lights in the prospective Fota championship breakaway? And wasn’t that, ironically, all about stymying FIA president Max Mosley’s plan to impose sensible, manageable budgets on the racing teams?

Now for the thought. Perhaps the increasingly “inappropriate” behaviour of F1 ringmasters Mosley and Bernie Ecclestone played a role, ever so small, in the framing of BMW’s decision?

Why is the head of Cadbury Europe quitting?

June 30, 2009

Tamara Minick-ScokaloTamara Minick-Scokalo, head of Cadbury Europe, is leaving the company at the end of July. That much we know for a fact. The more interesting question is why.

According to Cadbury ceo Todd Stitzer, the departure is no more than a delayering exercise aimed at surmounting the “cost challenge” belabouring us all in these straitened times. Ignasi Ricou, currently head of Cadbury commercial operations Europe, looks like being the gainer. He will become president while retaining his commercial functions.

But wait a minute, wasn’t Minick-Scokalo Todd’s blue-eyed girl? That’s certainly what the P&G-bred marketing executive was billed as. She joined only two and a half years ago, from Elizabeth Arden, as global commercial chief and was catapulted to president of Europe last January.

It’s strange, even careless, to let your head of Europe go after six months in the post. Perhaps there were personal reasons? Perhaps she wanted to move on? Maybe. In which case it’s a curious coincidence that her departure has been wrapped up in a management reshuffle that also involves the legal department.

At any event, Fallon London (of ‘Gorilla’ and twitching eyebrows fame) should watch its back. She was the agency’s biggest champion.

Phil Kotler prepares for a bumpy ride

June 29, 2009

KotlerSuppose the world around us, political and economic, is irrevocably changing. Imagine, instead of long periods of uninterrupted prosperity, punctuated by sudden but short-lived economic contractions, an era in which the management of crisis has become the new normality. Only it’s not a piece of dystopian scenario planning, but a fast-developing fact.

That at least is the belief of marketing guru Philip Kotler who, with co-author John Caslione, has just published a book called Chaotics, The Business of Managing and Marketing in the Age of Turbulence. If their vision is borne out by reality, it will make a nonsense of many of the assumptions which govern current marketing and management strategy.

It’s meant as a short read for C-suite executives on a mid-haul flight. If air turbulence doesn’t  cause them to fasten their safety belts, the book certainly ought to.

For more, see this week’s column in the magazine, out on Wednesday.

Small cheer for businessmen over politicians’ discomfort

June 5, 2009

At last, the silver lining in the cloud hanging over Parliament that we’ve all been looking for. Apparently, it’s great for business, especially small businesses, according to an article in the FT. The bizarre reasoning runs as follows. Politicians are attracting all the flak. That means the media is no longer saturated with gloom-filled stories about rising unemployment and companies going bust. Which in turn is persuading consumers that the worst is over and that they can now start spending freely again.

I’m not entirely convinced. And more importantly, nor is Stephen Alambritis, spokesman for the Federation of Small Businesses. If there really is good news about the economy, the preoccupation with politicians and their misdeeds is probably preventing it from trickling through. “We may be pleasantly surprised when the expenses debacle subsides that the recession is not getting any worse,” he concludes. That good, eh?

Freddie Forsyth will turn you into a hero

May 26, 2009

Psst! Want to achieve immortality as a character in the next Frederick Forsyth thriller?

I hear the best-selling author of The Day of the Jackal, The Odessa File and The Dogs of War has come up with a novel way of raising money for his favoured charity, Leonard Cheshire Disability.

For a price, you can star in his next book, which is expected to be published in September 2010. I’m afraid there’s no hint of the subject matter, yet. But he does assure us, oh lucky one, that you will a force for the good. “The character can be male or female and will definitely ‘be a goodie rather than a baddie’, representing the forces of law and order! ”

The price is what your name achieves in auction, end date September 1 this year. The opening bid is £2,200, and it is being raised in increments of £100.

Interested? Here’s the link:

Think of the Hollywood possibilities.

Is Sainsbury’s King’s crowning achievement?

May 19, 2009


Justin time?

Justin time?

Another set of dreadful results from Marks & Spencer: annual pre-tax profits down nearly 40%, and the dividend sliced by a third.

Could anyone else, in the circumstances, be doing a better job than executive chairman and retail doyen Sir Stuart Rose, who must shortly retire from M&S? Headhunters are actively putting together a list of potential successors. Strongly favoured is Justin King, who has turned around the once-hopeless case of Sainsbury’s. King says he’s not for sale, at the moment. All the same, he’s beginning to look like the uncrowned monarch of British retail.

More on King’s reputation in this week’s column, out tomorrow.

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