Saturday, 28 March 2009

Inactive sponsorship

I am sure i am setting myself up for a fall and will be accused of being too left brain about this but I don't really get a sponsorship. What do Samsung get out of sponsoring Chelsea? What return on investment does Vodafone get from England Cricket. I think they call this passive sponsorship.

I definitely understand sponsorship when there is a shared relevance so Flora sponsoring the London Marathon and, is it, Pedigree sponosoring Crufts Dog Show. And it is even better when a sponsorship is active or strategic, where the sponsorship showcases the product or service. So I am thinking IBM and Wimbledon, Ariel and Championship Whites, SAP and HP in F1.

Can anyone explain what they get out of logo sponsorship?

Sunday, 22 March 2009

Gordon Brown - not a banker

The title is a bit direct, and i have gone a bit off piste but i think i can relate it to the general themes in the blog. Consumer behaviour.

Gordon Brown is concerned about regulation of mortgage providers - good. He has expressed a view that in future they limit borrowers to three times salary - bad. Stupid idea, too late.

Free markets tend to be more efficient, this recession is a painful adjustment. But it is a bit late to interfere. The horse has bolted, gone 300 miles down the road, turned into a soap factory and has gone a bit Shergar.

If you create rules then people readjust their behaviour accordingly (Goodhart the deputy governor of the Bank of England pointed this out in the 1990's). What will householders do if we we limit them to three times salary? Panic or get poorer. Everyone remortgaging will be at the mercy of the lenders, paying higher rates because they cant get a mortgage. More people will try to sell find they can't. Result house prices go down further.

It is a bit late but if the banks had been regulated in the same we restricted householders (don't lend more than 4 times income or assets) much of this would not have happened. We all knew house prices were too high in 2003 and 2004, what we did not know was the banks would lend recklessly.

Sunday, 15 March 2009

The threat of thrift

We did some market research the other day and observed some new consumer attitudes. Consumers - thats you an me - are cutting back their spending. However a few months ago it would have been something they would have rationalised with 'we didn't need it' or 'the old one is still working fine'. But now they are happy to say 'we haven't got the money', 'we can't afford it'. Expenditure is not just being postponed, it is being cancelled. And being wealthy isn't quite as cool as it was.

Economists call this the paradox of thrift, to get out of a recession you need money to be circulating - in other words we should all spend money - but the rational choice of an individual is not to spend but to save for a rainy day.

What does this mean for producers and marketers? Not sure but ostentatious wealth and consumption is off the agenda and it sounds like the recession could get a whole lot worse.

Next week i am going to look for some sunnier news.

Monday, 2 March 2009

Googleators and market concentration

I read earlier today that there are 133 website aggregators. Sorry, I don't know whether that is UK, Worldwide, Western civilisation or one specific category. The article made the point that they are having to spend more and more on marketing to maintain traffic levels. But you can't help but wonder why there isn't just one great big googleator to aggregate the aggregators. It would save them all that marketing spend. Seems pretty obvious logic that a winner (or a very few) could potentially take all. All they are doing is delivering information. The economies of scale or more to the point the dis-economies of scale seem clear. Big is better. Small is nowhere.

Market domination in information services, but why not other markets? The Internet has essentially just giving us access to much much more information so you would expect the 'good products' to float to the top and the bad ones to suffer accordingly. I would be fascinated to know whether we are observing greater market concentration so a fewer number but albeit bigger companies dominating markets. And before you ask, surrounded by lots of smaller organisations focusing on specific segments and niches. Why be medium sized - whatever that is?

The Internet has made it easier for companies to enter markets and also provides them with greater reach quicker. But on the flip side better access to information for consumers may have resulted in any brand with inferior products or services struggling to maintain customers and share.

Sounds like a PHD topic.

About Me

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United Kingdom
Just curious about marketing, psychology, economics, business, irrational behaviour, people, models, communications, advertising, market imperfections, b2b marketing. I work in the marketing communications industry for OgilvyOne.