Lines in the sand inspired the modern world's code

Melbourne Herald Sun, Friday 21, 2012 

Your shopping whips down the conveyor belt and into the bag making a little blip! on the way and you don't even think about the massive amount of calculation and technology going on in the background.

The product is individually identified from billions of others around the world by its own unique code, a number that is read in an instant from a jumble of lines in a little square. Scores of different technologies are needed to make this happen, most of them developed and grown in the years since World War II.

Computers, laser scanners, computer printers, fork-lifts and warehousing technology - today's commercial operations are totally different from even a few decades ago, and the quantity of goods and money moved each day would have been unthinkable.

But at the heart is one little graphic invention: the bar code. An idea born in 1948, in its own way it was as important as the invention of Arabic numbers in making the manipulation of figures possible.

Last weekend saw the death of the man who came up with the idea of depicting large complex numbers as a series of thick and thin lines: Joseph Woodland.

Aren't you fascinated by the tiny little thought that can trigger a great idea? Newton's falling apple evoking gravity; Fleming's mouldy dish evoking penicillin; Archimedes understanding water displacement when his bath overflowed, and running naked through Syracuse shouting "eureka!".

In the case of Woodland, he was struggling with how to encode product information in an easily-readable form. He retreated to his grandparents' Miami Beach house and spent months sitting in the sand thinking. One day, making finger ridges in the sand, his schoolboy knowledge of Morse code came to mind. Could a series of thick and thin lines, like the dots and dashes of Morse, be used to depict complex numbers?

By 1949 he and fellow graduate student Bernard Silver had developed the beginnings of what is now officially the International Article Number, expressed by the symbol we call a barcode.

His lines formed a circle, like a target, but the support technology was too expensive and cumbersome so they ended up selling the patent for $15,000 - all they ever made from the invention.

By the 1970s lasers, scanners and computers had arrived and IBM was able to create the scanning system that we know today, using a development team including Joseph Woodland. He and Silver were inducted into the National Inventors Hall of Fame last year.

I learned about barcodes seventeen years ago when I got the task of creating an education display for the numbering authority, EAN - today called GS1. With their marketing manager, Graham McAlpine, we devised a baked bean factory - for simplicity.

Into the factory come beans, labels, cans - all identified by codes. They are cooked, canned, packed, palleted. Every step of the process carries its own code number. The beans are shipped to a "supermarket" and stacked on shelves. As they are sold, every can is accounted for all the way along the supply chain.

The exercise displayed that bar coding is not just an easy way to put prices on packs. It gives the manufacturer and retailer total knowledge and control of the process. What is being made? When will it arrive? What has been sold? Stock position? All the figures are available on the computer screen, instantly.

The baked bean factory is long gone, but its modern incarnation is still active, in Mt Waverley. There are educational tours for businesses, universities and schools contact them through www.GS1au.org. 

ray@ebeatty.com

Ray's going modern - I have now set up this blog to respond to Facebook and Twitter. Ain't I modern?

Try this out - you can now access the Marketeer blog through Facebook and Twitter.

My words are strictly off the record

Melbourne Herald Sun, Friday December 14, 2012 

From a nearby office I hear the booming voice of my colleague: "No, I don't want you to record my call. Turn the thing off."

Moment's silence. "What do you mean you can't turn it off? Call your supervisor and get him to do it!"

I can't help feeling sorry for the call centre operator, though I sympathise with the stand. Why do they need to have everything recorded these days?

Of course you are told in the monotonous recorded message that "calls will be recorded for training or coaching purposes". But how many examples of a bad customer to operator exchange do they need?

When I looked at what industry insiders say, it's a bit different. "I was talking to my manager about a call I had yesterday. I took about 50 yesterday but only 4 were recorded." Most of them just disappear into the ether.

The Australian Information Commissioner says: "An organisation must tell you at the beginning of the conversation so that you have the chance either to end the call, or to ask to be transferred to a line where monitoring does not take place.:"

There are some areas where you'll have an argument getting the recorder turned off. For example, stockbrokers want to get instructions recorded - they happen quickly and a misunderstanding could become a million-dollar law suit. Bookmakers record too, for the same reason. Of course emergency services also need to closely monitor all exchanges, as we have learned in several major cases involving fires, ambulances and police, recently.

However, do you need to record every ordinary phone enquiry? I don't think so. What are the limits of privacy?

A topic that flares up periodically is the so-called Australia Card. Back in 1985 the Hawke government introduced a card which would carry a person's basic information. It was fiercely opposed by the Coalition opposition in the Senate and finally got buried as a topic.

That is, until six years ago when the Coalition introduced the idea, using an expanded Medicare card - and were faced with fierce opposition from the Labor Party and minorities. After a year of tussle it was re-interred with the 2007 election.

Ironically we have all that information on free display anyway. Your driver's licence gives your name, photo, address, date of birth, signature, and eye-sight condition. All they need to add is your tax-file number to give them more than would have been on your Australia card in the first place.

Then there is the argument of trying to overcome privacy restrictions. A friend needed a separate phone line to his office. Being in a hurry he asked his associate to fix it. All went well till the associate died. Could they arrange for the line to be transferred to my friend? Not till the renter permitted. But he's dead. Then where's his death certificate? We don't have one.... The argument continues - meanwhile the dear departed is regularly fined for not paying his phone bills.

So these privacy regulations can end up being yet another bureaucratic obstacle in our path - you can't ask any questions at the bank about your spouse's account, you can't talk to the gas company or electricity supplier unless your name is on the account. The university wouldn't talk to me about my children's progress.

This is all done for good reasons, but at the time it feels like yet more red tape around us.

You can't even enquire at the hospital about a relative's well-being - unless you are the Queen calling about your daughter-in-law's health. And just see what trouble that can lead to.

ray@ebeatty.com

We must learn to dance the Korean way

Melbourne Herald Sun, Friday December 7, 2012 

Gangnam Style has now officially passed its billion-download mark, to become the most popular online video ever.

Now heads are being raised and notice being taken in high places. It's not about a jaunty tune and a dorky dance. It's about - "What's happening in South Korea and what should we know about it?" A country of 50 million people is making its mark on the world, and we in this country of 20 million need to understand how this has happened.

As well as the roly-poly popster Psy (right), South Korea has developed a flood of valuable pop treasures. Most we do not see much of here, because they are very Asian-flavoured, but if you are making smash hits in the multi-billion markets of China, Japan and South-East Asia, Australia is not missed.

But in the nightclubs of Shanghai, Tokyo or Singapore super groups like Wonder Girls, Girls Generation and Super Junior are instant scream generators. They also happen to be "manufactured" groups, like The Monkees or One Direction. Made to measure for a voracious popular market.

Indeed, manufacturing is Korea's strength. Look at the success of LG televisions, Samsung phones, and Kia and Hyundai cars. And the ones you never hear much about - SK Hynix just happens to be the world's second biggest memory chip maker. Besides cars, Hyundai is the world's largest ship building company, with the world's biggest shipyard. POSCO is the world's fourth-biggest steel maker.

They have nothing compared to the space and resources of Australia, in fact they are one-77th our size. Yet their economy is half as big again as ours.

Having nothing is perhaps the key to Korea's success. They are trapped in a vice by their huge neighbours - China to the west, Russia to the north and east, Japan at their feet, and their lunatic brother making bombs in the attic.

By necessity they had to be clever and they had to sell their products. Now 53 per cent of what they make is exported - far more than China at 31 per cent or - even with all the raw material resources shipped out last year - Australia at 21.

Ever since the end of the Korean war in 1953, the focus has been outside, both in manufacturing and culture. They have a name for it - "Hallyu", the "Korean Wave".

Politically it means millions devoted to pushing the national brand. The Ministry of Culture, Sports and Tourism has a budget of more than $3 billion, with a sizable portion devoted to hallyu.

The Koreans jumped into the smartphone field, produced a better phone than their competitors, and now the Samsung Galaxy range sell twice as many world-wide as the Apple iPhones. Just watch the tablet market. Once again, it is dominated by Apple, the iPad. But already Samsung is galloping into the straight and we will see it pulling ahead over the next couple of years.

However, we all have our burdens to bear and in this case it's the mad brother in the attic. North Korea continues its Stalinist fantasies with a vast standing army and every conceivable weapon up to nuclear.

For the past 20 years we have been expecting it to do an East Germany and collapse under the weight of its own pretension. But somehow despite starvation, isolation, and condemnation - it continues goose-stepping along.

The cracks are showing, though. More and more of their citizens are being jailed for watching South Korean movies and TV serials like the hugely popular Winter Sonata. No doubt the jails will soon be filled to bursting by youngsters doing the Gangnam Style.

ray@ebeatty.com

James Bond, soda pop and Captain Cook

Melbourne Herald Sun, Friday November 30, 2012 

With a seductive smile, James Bond pours two fingers of scotch, picks up the crystal soda siphon and gives a short squeeze to the lever. A surge of foaming water shoots into the glass and he sips. Very elegant. But today you'd have one problem - where do you get the soda siphon?

Those fine Schweppes siphons have long gone and become expensive curiosities on eBay, certainly the company does not market them any more. For that matter Schweppes Australia is now a subsidiary of Asahi Breweries, which makes it as English as wasabi on sushi.

In Australia its competitor is star-spangled Coca-Cola. Between them they share a $4 billion market. The also-rans are way way behind. None of them seem to produce the old glass soda siphons any more.

Meanwhile, a major source of environmentalists pain is raised by the vast quantity of packaging that is generated by the industry - all those bottles and cans and boxes, though much of it is recycled. Then there's the manufacturing plants, warehouses, trucks and fuel. Does the world really need 206 billion litres of water a year, each in its own little plastic bottle?

One company has relaunched itself to take advantage of these green sentiments. Maybe it has been some years since you saw a SodaStream maker on a benchtop.

The unit holds a small cannister of carbon dioxide gas. Using one of the bottles they supply, part fill it with tap water and flavouring, fit it into the machine and press the top. A shot of CO2 surges into the liquid and you have soda water.

SodaStream goes back to 1903, invented by Guy Gilbey of the London gin family. In 1985 it became part of the Cadbury Schweppes empire but gradually lost its fizz. In 1991 Peter Wiseburgh bought the company, by 2003 he closed the original Peterborough factory.

In 2010 SodaStream International launched successfully on the Nasdaq exchange and currently has a market capitalisation of $722 million. Nowadays its main factory is controversially located on Israel's West Bank. They sell in 55,000 stores in 45 countries. And they have come out gunning for the much bigger guys.

Their world-wide campaign commercials show a SodaStream machine gassing a bottle - and then cut to pallets of soft drinks at the warehouse, or bottles on the production line, which explode with a noisy splash. The voice-over simply says: "With SodaStream you save 2000 bottles a year. If you love the bubbles, set them free."

CEO of SodaStream, Daniel Birnbaum, has deliberately chosen a controversial approach. After all how else do you get noticed as a pigmy among giants? His justification is the 460 billion bottles and cans manufactured every year. He claims the vast majority are dumped as waste across parks, oceans and landfills. "We challenge the entire beverage industry," he declares. "There exists a smarter choice."

Carbonated water was invented by English preacher-scientist Joseph Priestley in 1767. He was part of a scientific outpouring called the Midlands Enlightenment which gave us James Watt's steam engines, Samuel Johnson's dictionary, Josiah Wedgewood's ceramics and Erasmus Darwin's evolutionary theories that so influenced his grandson Charles. They were the men whose enquiring minds created the modern industrialised world.

Priestley's experiments interested the admiralty, who thought the pleasant liquid could benefit sailors on long sea voyages, particularly against scurvy. One of Priestley's early experimental devices was taken on the voyages of Captain Cook.

So quite possibly history's first refreshing glasses of soda pop were enjoyed in the waters off the sunny coast of Australia, before it was even Australia.

ray@ebeatty.com

From bloody tears to psycho killers

Melbourne Herald Sun, Friday November 23, 2012 

After years of bloody, tear-soaked TAC commercials, who would have thought that a jaunty little ditty about psycho killers, drug dealers and setting fire to your hair would be the ad to capture the young folks' attention?

The new Metro transport campaign does just that - featuring dismembered figures bouncing along to the tune of "Dumb Ways to Die". The underlying message is "don't stand on the edge of the station platform, don't drive around level crossing boom gates, and don't run across the train tracks." But instead of transport-institution droning, they gave the job to the creative team at McCann Melbourne who thought maybe a fun message was going to cut through, after the much-reported "carnage fatigue" where the realistic crashes and maimings no longer register.

Something is certainly happening - this week the YouTube viewing figure for this commercial is close to ten million, rocketing it up the Australian viral video charts. Maybe the attractions were: "Don't poke a stick at a grizzly bear" or "don't use your private parts as piranha bait".

Until a week ago the chart toppers were Nova FM's Fitzy and Wippa singing their spoof of "Call me maybe". This scored 2.3 million - for a pretty basic production.

Another ad that is doing well - but much more glam - is Sam Kekovich in a garish blue suit at the Australia Day barbecue urging us to eat lamb chops  - and actually singing. The shock value of Sam singing "Barbie Girl" with Melissa Tkautz is irresistible so no wonder it pulled 700,000 hits.

Mind you Sam will have to cook a lot of chops to catch up with our Kylie Minogue. Her new single "Timebomb" scored 12 million views and rising, since it was released earlier this year.

There haven't been many other million-hitter commercials from Australia so far, you have to go overseas for the big numbers. The only stand-out is neither an ad or a song but a speech. To everyone's surprise - and no doubt her delight - it was our PM with her globe-circling "misogyny" speech that made it big. Last time we looked it was hitting two million.

It seems every year we get an unexpected jaw-dropper in the talent shows. This time it was the X Factor discovering Bella Ferraro that generated 2.5 million hits. This huge public exposure bodes well for the teenager's future, even though she didn't win.

Another singer, well ahead of everyone, is that quiet good-looking Australian-Belgian called Gotye. After a decade as one of Melbourne's many struggling young musicians, the gates of success finally parted for him. In two years he has topped the charts in the US, UK, Belgium, Netherlands, Germany - 31 countries. And his biggest success, "Somebody that I used to know" has been viewed 347 million times. That's just up to this week.

On December 8th he is giving a concert at Myer Music Bowl. It comes at the end of a world tour that filled Greek City in LA, Radio City in NY, Hammersmith in London and other great rock venues around the globe. I somehow think the numbers at the Bowl will be higher than he used to get playing the Espie in St Kilda with The Basics. In fact I'll make sure I don't drive through the city that afternoon.

While I love quoting these wonderful social-media figures, I do have to keep reminding my marketeers of some basic realities. Like, that this bundle of print you hold in your hand gets a million and a half "hits" a day. So while new media is great fun, you can't afford to ignore the old.

ray@ebeatty.com

Can Obama's lessons save Gillard?

Melbourne Herald Sun, Friday November 16,2012

The American election is over and you can be sure that in the headquarters of Australia's political parties, the lights are burning late as our own political pundits study the lessons.

Not many months from now, we will be bombarded by TV ads, billboards, leaflets and hearty telephone callers, as election fever crosses the Pacific like a tsunami of persuasion.

0bama's resurrection will inject new hope into the ALP as they see the pendulum swing back their way. Meanwhile the Coalition will be putting a Chinese burn on the arm of every supporter to squeeze out funds.

It's good news for our media owners. Every available TV spot will be snapped up, papers will be able to print extra pages, peak rates will be paid without argument.

But if there's one lesson that has emerged from America it's that content matters more than quantity. What won for President Obama was careful targeting and steely consistency.

In the end, elections are won by a few votes in a few seats. This will be the case here as it was there. In America they spent a billion dollars for what proved to be a few thousand votes.

Just as important was the remorseless door knocking, phoning and election-day voter-fetching. I wondered at the time whether the badly fluffed first debate - when Obama allowed the world to see how sick he was of all the election bull - wasn't deliberate. It scared his supporters out of their complacency, scared him into action too. Perhaps it was a self-inflicted slap in the face.

Where the advertising was needed was in defining the issues. The Democrats carefully controlled much of their media, including the outside support groups, keeping the lid on the crazies. The Republicans had 37 groups, ranging from tea-party to gun associations and anti-abortionists. What the Republicans didn't say is what the public wanted to know: who is Mitt Romney? To the end he remained the enigma, Mr Flip Flop.

Back home the lessons will be closely analysed by Brian Loughnane, a keen student of American politics, and his wife Peta Credlin. They are Tony Abbott's praetorian guard - Loughnane federal director of the Liberal Party and Credlin chief of staff.

They are credited with getting Abbott this close to power and now tasked with giving him the final push over the line.

Their opponent was revealed just last week. Mark Collis has been appointed to assemble an ALP advertising team. As a creative director at both Ogilvy and Leo Burnett, followed by a stint at Telstra, he is well regarded in marketing circles. The campaign will be based in Melbourne, to keep it free of the notorious NSW political machine.

Julia Gillard's senior political strategist, John McTernan, has been spending time with President Obama's pollster, Joel Benenson, learning about fine-tuning data bases and getting messages out to the right people at the right time.

Obama won through clever targeting of women, latinos, young people and auto industry families. All perceived as areas of weakness in Romney's campaign. It's interesting to note that not long after returning from her chat with Obama, the PM inflicted a festering wound on Abbott with her misogyny speech.

Now Loughnane has to find ways to get Abbott out of the "Dr No" cage he made for himself - which will be hard when much of the campaign's resources will be spent on negative advertising.

Because, we have to face it, unpleasant as they are - negative ads work, and we will be seeing lots more of them in the coming year.

ray@ebeatty.com
Blog: themarketeer-raybeatty.blogspot.com

Energy: the greatest economic opportunity of the 21st Century

Melbourne Herald Sun, Friday November 9, 2011

The Indian held up a block of thin ceramic tiles the size of a loaf of bread. "This will give enough energy to power the average US home. Twenty-four hours, 365 days. Put a bunch of these together in a box and you can power a supermarket."

Two years ago K. R. Sridhar unveiled his Bloom Box. And he spearheaded a revolution that is going to change the world as we know it. Its energy needs, anyway.

This revolution will be the largest economic opportunity of the 21st Century. Huge amounts of money are being invested into it right now. Some will fail. But others will generate oceans of wealth. So if you are going to get into the game, pick carefully.

Let me walk you through it. There are plenty of alternative energy sources that can power our world. But they all have problems. Usually they are too expensive compared to existing methods such as coal-fired generation. Or the technology is not quite there yet. Bloom is one that appears to be working.

Sridhar is - literally - a space scientist. He conceived his catalytic cells while working on the Mars mission at NASA. When the project was shelved he set out on his own, later persuading venture capitalist John Doerr to invest in him. To the tune of $100 million. Seems like a lot? Well now it's over $600 million.

But Bloom Energy Servers are real. They have been installed at major hubs of Google, eBay, FedEx, Walmart and other big players. And after the past couple of weeks' events their sales will explode.

What are they you ask? A thin ceramic square, simply baked sand, which acts as the electrolyte. On one side is painted an anode chemical, on the other a cathode. When an energy source passes over these sheets along with oxygen, it generates electricity. One square gives enough for a 25W electric light globe.

What's special is that the source can be almost any energy - natural gas, petrol, methane, solar energy. So potentially you could run it off a tank of cow manure, though now they are using natural gas. It gives off half the emissions of competing technologies. But most importantly, the boxes are self-contained. They don't need a power grid, they do all the generation on the premises.

Currently Bloom boxes are double the cost of equivalent power generators, which is why just the very rich California corporations are their main customers. But after the Hurricane Sandy experience, every big data centre in the world is looking around at ways to secure their power. If only Bloom were a corporation, this would be a great time to buy their shares.

If they need muscle, they have the enthusiastic support of Arnold Schwarznegger who has been behind them since he was The Governator. He made California a vivid green: an investment in Bloom boxes earns a 20 percent cost subsidy, plus 30 percent federal tax break because it's a green technology. Our own politicians could learn a thing or two from America.

There are several other competing fuel cell systems in the running, like Australia's Ceramic Fuel Cells Energy, or Ceres Power or - of course - giants like GE and Siemens. But like I said at the beginning, this will be the century's big economic opportunity - already they are predicting Bloom's IPO at $3 billion, and it will happen soon.

Meanwhile Australia obsesses about cleaning brown coal, cuts back incentives for alternative energy, and may totally miss the boat.

ray@ebeatty.com

Remember: "No" means "No!"

Melbourne Herald Sun, Friday November 2, 2012 

"We want to put out a regular email newsletter for our services, we've got lots of ideas but don't have the database. How do we put one together, Ray? You know about these things."

I was flattered but in my head ran the thought, "Blowed if I know - if I did I'd have done it myself."

So I decided to ask some experts because by now I was curious too. Building my own small list has been a long slow process, while others have done it big and fast and made millions.

One of the first rules hammered home was: get their permission, make sure they "opt in". And believe it, that "no" means "no". Just last week Tiger Airways learned that lesson the expensive way. They failed to respond when customers asked to be deleted from their mailing list. The Australian Communications and Media Authority (ACMA) hit them with the Spam Act and they were fined $110,000. They were fortunate - it allows penalties of up to $1.1 million a day.

In fact Australia has some of the harshest spam legislation in the world. As usual our pompous legislators have created an excessively cast-iron act that is totally ignored by the people who need to be regulated.

While honest Australian businesses are burdened by the yolks and chains, the merry spammers of the world flood our mailboxes. I still get a hundred spam a day promoting growth of hair or sex organs or offering me a five million dollar inheritance, and if you threatened those shadowy spammers with ACMA they'd pull out the pimple cream.

So how do you avoid the traps and reach your audience? I asked Australian Direct Mail Association's CEO Jodie Sangster. "You need consent obtained by another means - not by sending them a spam letter." You can write to existing customers, but non-customers have to give consent first.

Not surprisingly, she recommends using her own association's members, pointing out that they have to subscribe to a code of compliance that spells out the rules.

List brokers like Simon Remington hunt out lists to order. They make it their business to know where to find specific groups, perhaps from professional associations or magazine subscriptions. They are "permission based". That's what you are doing when you check the box, "Would you like to be told about special offers?" when you sign on to a web site.

The lists usually cost between 20 and 40 cents a hit, or a dollar or two to buy, plus a set-up fee of about $200. The broker will connect you with the list vendor, and can arrange graphics and creative.

If you want to make a contact your own, they have to respond and give consent. So you offer something free, an incentive. Ebooks have value but are inexpensive. Alan Kohler has built up his Eureka newsletter with a constant flow of "free" marketing or investment reports to those who subscribe.

Investors' advocate Stephen Mayne built the big circulation for his Crikey.com through the media attention on his news scoops. But he admits the biggest boost was through his standing for board election for the likes of Woolworths, NAB, Telstra, Commonwealth Bank and other giants he slashed.

Each was obliged to send candidate CVs to all their shareholders. And Mayne's always started with: "CEO of Crikey.com". When the shareholders checked him out they were introduced to Crikey.com and its special offer. All 5.6 million of them.

Let's hope he can come up with some equally creative solutions for Melbourne Council's problems, now he's on board. But after this past election, we don't need any more spam.

ray@ebeatty.com
Blog: themarketeer-raybeatty.blogspot.com

Smell the naked demons

Melbourne Herald Sun, Friday October 25, 2012

The tram stop poster caught my eye, with cockroaches running up a nude body. I stopped and focused the morning blur out of my eyes. No, they were black demons with claws digging into the arm pits of a masked woman - presumably Lady Gaga because that's the name on the bottle.

I stared in disbelief. Black perfume? Creepy monsters? What the... At which point I had to remind myself that I was not the market. Far from it. Probably teen and twenty fashion-conscious girls would get a thrill from this repelling sado-erotica. Their parents wouldn't like it, which is a good measure for why it could succeed.

I then remembered how many past perfume campaigns have relied on shocking the elders and giving women a feeling of being naughty just by applying a dab on their skin.

When Guerlain's Shalimar was launched in 1925 it was called scandalous because of its strong fragrance,  its vanilla base note regarded as a powerful aphrodisiac. It was said nice girls don't wear Shalimar. So of course they did.

Your grandmother would have been titillated by Dana's Tabu advertisements using an aroused violinist passionately kissing his piano accompanist. That has a highbrow ancestry - according to the story by Leo Tolstoy, the couple were playing Beethoven's Kreutzer Sonata when overcome by lust. The affair ends when the husband kills the wife. How's that for a passionate perfume?

By the 60s women had a new set of scandals for their perfumes. The women's magazines - the overseas ones anyway - seemed filled with perfumed nudes. Arpege, Corday, Cashmere Bouquet - and of course Guerlain.

Pretty soon nudity became standard fare, so the fragrance folk searched elsewhere, and found drugs. Opium was launched by Yves Saint Laurent in 1977, causing scandal about the name in America. Then a billboard featuring Roald Dahl's sumptuous granddaughter Sophie Dahl lying naked on her back was banned by the British Advertising Standards Authority. World-wide rage and bans! So of course it was a huge success.

Keeping in the groove, Dior now have Addict, featuring Daphne Groeneveld looking like the pubescent clone of Brigitte Bardot, filmed in a 1950s St Tropez. Will wrench a few boys' hearts but the censors are busy elsewhere.

With Madonna, always shocking with her cattle prod. Her new perfume is Truth or Dare, and already America's ABC network have asked for the split-second shots to be retouched and "her bra digitally made bigger, and her corset longer to cover more of her bottom." As if! If I were her agency I'd be leaping with delight.

These days you're no-one if you ain't got your own smell. Rihanna has launched her perfume called - Nude. No prizes for guessing the ads. Beyonce also scored a British ad ban for her Heat commercial in 2010 as she writhed and sang "Fever".

Calvin Klein won't be out-banned by anyone. His Secret Obsessions commercials with slithering Eva Mendes got banned everywhere - and then went on to live a very happy success on YouTube.

Just this month Brad Pitt became the first ever male spokesperson for Chanel No 5. His commercial is a baffling, vacant monologue that everyone loves to hate. But so far it has generated four million YouTube hits and space on every talk show on the planet, so you'd have to rate it a success. Kinda.

Meanwhile Lady Gaga's Fame continues to push the boundaries with a satanic, oily commercial featuring lots of flesh and demons. Ah yes, perfume advertising has evolved, but not really changed.

ray@ebeatty.com
Blog: themarketeer-raybeatty.blogspot.com

They laughed when I showed them my boogie

Melbourne Herald Sun, Friday October 19, 2012

At a teenage birthday party I joined in to show how smoothly I danced. Then I noticed the looks I was getting. Not admiration - more giggles. It was later pointed out that the moves might once have been smooth - but twenty years on they just looked quaint.

It happens to all of us, as you're leading a busy business life, you scarcely notice birthdays. Then one day you're calculating back to an event and stop with shock: what, was that five years ago? I thought it was just a few months back...

Yes the passage of time has a way of catching you unawares. But not just the humans - the products too.

How long ago was Fosters the coolest drink? When was Nine "the one"? Ford the sales leader? Or what happened to cigarettes, with all their jewel-encrusted paraphernalia?

When a product falls off the peaks of fashion, it can be near impossible to retrieve it. Oh it will continue its life, but never with that glittering superiority. And usually without the abundant demand and profits.

So it's important to be aware of your product's age cycle, and that of your customers. Are you still appealing to a buyer who has moved on, is there a generation gap you are not filling?

Think about music. If that's your field, in your time you've seen vinyl records supplanted by tapes which evolved to cds and then dvds and now to iTunes and a total change in the understanding of what a piece of music is.

Already it is morphing again and you don't have a file on your computer, your whole collection is held in the cloud. Quite literally: far out. Some of us still like a piece of plastic on the bookshelf, but then I've already confessed to being quaint.

Perhaps you have to be a genius like Steve Jobs to see the bigger picture of what is going on, and get in front of the advancing waves. He captured the music thing through iTunes and iPods. Then transformed the phone thing, then the tablet thing. Always one step ahead.

The only genius I can compare to Jobs is Ingvar Kamprad. Another slightly nuts ascetic, his unswerving vision built Ikea into the planet's biggest furniture store. His products have housed the whole world of ever-shrinking apartment dwellers with such attractive, low-cost practicality that they never go out of fashion. Because they have never been in it.

In the big-player field, the most successful has to be Nestle and how they have managed coffee. For many years Nescafe dominated the instant coffee market. Then an increasingly affluent middle class adopted espresso coffee, and smaller manufacturers had more of a chance through coffee bars.

So Nestle brought espresso into the home with their Nespresso range. All those beautiful machines, glittering coffee pods, brilliant commercials with George Clooney and John Malkovitch, tasteful sales lounges (you couldn't call them shops). And prices that brought in five times more per weight of the product.

Over a decade sales jumped 30 per cent a year all around the world - from London and Paris to New York, Shanghai, and of course Melbourne.

Competition has become intense, with Sara Lee's L'Or fighting hard and many copycats on the way now that patents are waning. So whether you like it or not, make space on your kitchen bench - by impulse or by gift, there will be a glossy coffee machine coming your way.

Don't threaten birds, they know how to tweet.

Melbourne Herald Sun, Friday October 12, 2012

Tweet tweet. This is the message that is coming loud and clear to American presidential candidate Mitch Romney after last week's TV debate. Certainly a majority of pundits are giving the laurels to his performance. But there is a little slip he made in his enthusiasm that is starting to peck the back of his head. The sharp yellow beak of Big Bird.

You might have seen him joke casually that among the programs he would stop funding once in power, was the Public Broadcasting Service, PBS. This is the employer of moderator Jim Lehrer. "I'm sorry Jim...I like PBS, I like Big Bird, I actually like you too, but I'm not going to...pay for it."

With which millions of middle class moms across America saw their mid-morning coffee break, as the kids watch Sesame Street, go out of the window. Boy did they Tweet.

If you're in business - especially the business of politics - you can't afford to toss out casual statements without thinking through their effectiveness. And without thinking through how far the words may travel.

Twitter spokeswoman Rachael Horwitz says the debate was the most tweeted about political event in U.S. history. Certainly Romney's comment set records: within minutes someone started the @FiredBigBird account on Twitter. Within hours it had 10,000 followers.

I don't have to dwell at length about Alan Jones - everybody else already has - but here is an example of how a casual thought, dropped in after a fine cabernet, can end up costing millions. Literally.

Jones might complain that he was filmed secretly. But in these days when every phone in everybody's hand is a movie camera, and an instant worldwide information distributor, how private can anyone be?

Now our politicians and lawyers are talking about strengthening privacy, libel and slander laws. Sorry folks, I have to tell them that's a joke. In a world where thousands can be contacted in seconds, who you gonna sue?

As for the angry moms, for all their support of free enterprise, Americans still treasure the government subsidised PBS. A recent measure of "public trust" ratings placed them at 26 per cent - way ahead of commercial TV at 8 per cent. Mind you the least trustworthy organisation was Congress at 4 per cent.

To prove that they are actually on the ball, PBS in turn ad-bought the phrase "Big Bird" on Twitter, leading clickers to an ad which says: "PBS is trusted, valued and essential." Then it directs users to a website full of statistics about the network’s reach, public service initiatives and how it only costs taxpayers $1.35 a year.

Here in Australia we are used to this argument - it's a regular complaint to every government, that funding for the ABC is never adequate for what it is expected to deliver.

Now the multiplicity of ABC channels and all the internet and smartphone media they need to service, have created a huge growth in the program time to be created. With our smaller population to pay for it, the head cost is higher - about $52 a head, so now the slogan should be "14 cents a day".

In Australia, surveys reveal over 80 per cent believe the ABC "provides a valuable service to the community". In America, when asked "which type of television is very important", 24 per cent named the commercial networks. But 31 per cent said PBS.

So beware any politician who comes up with the bright idea that cutting state-supported TV would save budget money. They'd risk being pecked to death.

ray@ebeatty.com
Blog: themarketeer-raybeatty.blogspot.com

Don't just be lucky, be smart

Melbourne Herald Sun, Friday October 5,2012

It's hard work buying gifts when I visit my son. They live in Shanghai. So I go to our shops and find a nice baby toy. Look at the label: "Made in China". Oh, not much point taking something all the way back to where it would have cost half the price.

How about a little dress? "Made in China". You scour Bourke Street looking for something not made in China. It's hard work.

I'm rationalist enough to know that we can't build a fence to keep the foreign goods out. It didn't work in the past, it wouldn't work in the future. But we have to be smart about how to respond. We have to work harder on what we can make, to sell back to China and the other rapidly developing economies around us.

For much of the past decade we've had the luxury of sitting pretty in the shelter of the mining boom. Except that Australia has now had six mining booms since settlement and they all came to a painful end. Already we are receiving worrying signals.

The latest comes from futurist Phil Ruthven who warns us about our "Lucky Country" apathy. Even as we enjoy our high standard of living and safety-net comforts, we have one of the slowest growth rates in our region. Three per cent per annum compared with China's 8 or India's 7 per cent.

Of course they are working from a much lower base, but at these rates, growth comes in leaps and bounds. It would not take many years to find ourselves leap-frogged.

So what added value do we have to sell? Basically, our... selves.

Ruthven points to the industries that he calls "Our New Age". Most of them start between the ears.

Financial services, information technology, education, hospitality and tourism, recreation and culture. All businesses that depend on smart people, much more than machines.

Health care and home doctoring. The boom in outsourcing that will grow with the national broadband network. We even have good starting positions in biotechnology and nanotechnology.

But it's also very easy to screw up. The overseas tertiary education industry was slashed by $2.6 billion between 2009 and 2011 because of stupid racial attacks that were played up overseas to look like the Los Angeles riots. This perceived belief  was backed up by government paranoia that led to over-tightening of visa requirements for visiting students.

A couple of bad moves and suddenly a major export industry is in trouble. Now we have our State Government making a successful attempt to wreck our TAFEs. Much-loved institutions like Prahran College are faced with becoming car parks. Both at federal and state level, budget cutters find education a soft target.

We still have our energy minerals: oil, gas, coal, uranium. But what are we going to do, just bottle them and ship them away, as we have done all along? Or can we use them to add value to the resources we are so enthusiastically digging up? As the raw material values decline, we have to apply our brains to making them  worth more.

Can you believe that it was in 1990 that then Prime Minister Bob Hawke said, "No longer content to be just the lucky country, Australia must become the clever country." How many times since have we heard those words, from how many politicians of all political stripes?

But they're still just nice warm words, with little effort to create a sustained reality. Here we still sit, like lotus-eaters. Grown in China of course.

ray@ebeatty.com

Sex and your children's toys

Melbourne Herald Sun, Friday September 28, 2012 

Determined to be equal-opportunity parents, we made sure that my son and daughter had access to gender-free toys right from the start.

But well before they were a year old, my daughter had pushed away the toy car and blocks, clutching for the doll. While my son, on seeing his first truck, drew it to his breast and held on to it for days.

Yep, gender preferences are nature, not just nurture. And anyone who says different has not brought up baby boys and girls.

A recent survey quizzed more than 4,000 children aged six to 12 in Canada, U.K., France, Germany, Spain, Poland, Brazil, Mexico, Japan, China, the U.S., and here in Australia.

It's important that marketers reaching for children understand the differences - and the growing similarities - between boys and girls.

The study, conducted by global brand agency The Marketing Store Worldwide, found that many differences seem cemented into the genes, regardless of geography, language and culture. These tend to be the "traditional" toys.

Nor surprisingly 55 per cent of girls chose a doll as their favourite toy. But less than two percent of boys. On the other hand, sure enough there are the trucks - 40 per cent of the boys chose building and construction toys as their favourites. Girls never found the same soft spot for bricks and wheels with only 10 per cent selecting construction.

Girls tend to arts and crafts, puzzles and board games. Boys want sporting equipment, trading cards and hobby kits.

Where they do come together is in modern technology. Maybe it really is a plot to confound their parents. But their nimble fingers and brains very quickly learn mastery of their gadgets. Initially this tended to be boys playing the games, girls playing the music.

But this has changed too as marketers have grown more savvy in their product developments. Companies like Nintendo Wii have deliberately brought in girl-friendly titles like Just Dancing, Art Academy and Mario Tennis Open. Not a machine gun or jet bomber in sight.

The top three "gender-free" sports are swimming, football and cycling. Educators have widened these choices by deliberately involving boys in cooking and shopping, girls in camping and gardening, so these days they are popular with both.

Renee Weber, of Marketing Store Worldwide, feels the toy industry still has far to go: "The gaps between girls and boys are enormous."

"There's been very little evolution to modify toys to make them interesting to the opposite gender," said Ms. Weber. She said that "there's not a big look at natural play patterns," and that making a toy pink, for instance, isn't going to generate more interest from girls. Colour is not the reason why the genders play differently.

So how do you get girls to play with construction toys? You get them to build things that interest them. Lego has worked at this and earned both praise and smacks for their efforts.

Nearly a year ago they brought out a new range called "Lego Friends" aimed specifically at girls. Still stackable plastic blocks, but with curvy characters called "ladyfigs". The play sets are in purple and yes - pink - with a range of toy girls in charge of beauty shops, horse stables and cafes. Decor includes heart-shaped swimming pools and  and flower pots.

These were not universally welcomed, with critics accusing them of reinforcing stereotypes and focussing on pretty looks.

But the girls do get vehicles - horse boxes - and vets' stethoscopes. There is no sign of male domination in that little Lego universe.

ray@ebeatty.com
Blog: themarketeer-raybeatty.blogspot.com

Has Melbourne lost its elegance?

Melbourne Herald Sun, Friday September 21, 2012

Ah Spring. The sun is beginning to shine, we start to shed our heavy clothes and move into the best fashion season. Spring is still cool enough that you can wear an outfit mixing several fabrics in a layered style. We've just had the Fashion Festival to remind us that here's the time to check out the wardrobe and smarten up.

But recently, leafing through the photographs of my late mother-in-law, I saw something we don't get so much of any more. Elegance.

The shots are of a trio of beautiful young businesswomen, she and her friends, on a conquest of the City's fashion shops. Then coffee in the famous Paris End of Collins Street where you could imagine you were in a boulevard, surrounded by nineteenth century buildings. This was until architect I.M. Pei and the development barbarians turned it into the Chicago End.

In the 50s, a beautiful woman had to be elegant, too.

Their clothes followed the fashion dictates inspired by the Paris masters like Dior and Chanel. The length of the skirt? The shape of the toe? The rake of the hat? The smart young women ensured that although nature put them two seasons behind Paris and Rome, the garments were ready at the turn of the season.

Since then we have had a Cultural Revolution and such dictates would never be tolerated any more. But while freedom was won, what was lost?

You no longer see elegance among the young women of our city centres. Most seem to wear uniform black or jeans or dreary colourless clothing. But it has been strongly pointed out to me that women choose to dress this way.

Style advisor Pam Abeling of Always in Style has no doubt. "If you're looking for elegance you need to find older women. For young women today it's more about sexy."

The grand fashion and slinky hats wait for the Racing Carnival, then all the finery comes out. But it never makes it to the workday. "You love wearing it to the races, but you wouldn't be seen dead dressed like that for the office," said Pam.

So where did elegance go? It just did not fit with the new liberated times, and got pushed aside.

"I always hated gloves because I'd always lose one," Pam recalled the last attempts by the posh schools to keep their young ladies "elegant". "I was fitted for a girdle at 15, though I was as thin as a rake." And there was one particular hate: "Wearing a hat every day was a pain in the arse!"

So now history spins and we come to the slutty era. The likes of Madonna, Lady Gaga and other pop divas have been accused of thrusting it upon us and last month even Target came under attack for their "slutty" children's range, complained some parents.

But wait there is one ray of light for the faded term "elegance". "You're seeing it used more describing men's fashion," noted Pam.

Elegant men? Well if you flip through GQ magazine or Esquire you'll see handsome male models leaning on Parisian lamp-posts or emerging from the latest Lamborghini, in $3000 suits and silk shirts.

Men are increasingly doing their own fashion shopping - men's retail is growing almost twice as fast as women's - and they have deep pockets if there is something they like.

So perhaps elegance is coming back to Collins Street. Not draped on our liberated girls with their jeans and bare midriffs, but on all those cashed-up traders in their Armani suits and Gucci shoes.

ray@ebeatty.com

Blog: themarketeer-raybeatty.blogspot.com

Rowling's wish for magic

Melbourne Herald Sun, Friday September 14, 2012

The higher they climb the harder they fall. So how terrifying to have reached the very peak of success - and then to take another chance.

I don't normally extend a great deal of pity to billionaires, I figure they have their own protection already. But let's spare a moment's thought for J.K. Rowling.

Can Jo Rowling stand up without Harry? Should she care?

Yes she has had vast success both literary - selling half a billion Harry Potter books in 73 languages in ten years - and commercial, from books on Quidditch to eight blockbuster movies that smashed every attendance record. And she has received her share of glory including an OBE, the Legion d'Honneur and the Hans Christian Andersen Award among others.

But what does she do next, five years after Harry's farewell? She wants to write an adult "literary fiction" novel - can she afford to fail?

We will find out on the 27th of this month when The Casual Vacancy will be published world-wide. Will she be acclaimed as a great author after all, or as someone who cannot write above the level of a teenage mind-set? There is a lot of pride riding on this.

From the marketing point of view, international publishing group Hachette have a difficult job. The obvious route is to declare, "At last a new book from J.K. Rowling", blast the news across billboards and TV, and sell millions of copies on the spot. You can see the media buyer's twitching fingers reaching for the keyboard.

But this is not what Jo Rowling wants. The whole launch has been played to a minimum, almost smothered. You'll find a few little placards in bookshops and on the web there is a 120-word synopsis that vaguely talks about events in a quiet English village. Sounds like an episode of Midsomer Murders.

Nevertheless, the publishers have still signed off on a print run of two million, but this is small beer compared to what could be achieved with a little push.

However, marketing has not been totally neglected. For the first time, a Rowling work will be released as an e-book simultaneously. Anyone who has glanced around while strap-hanging on the morning commute will know about the spectacular growth in the use of e-books.

The Pew Research Institute this year showed e-book readership had increased from 17 to 21 per cent of American adults in less than six months. By my observation, we may be growing even faster.

For marketing purposes it gives them the perfect demographic - 34 per cent of these readers are 29 or younger, in other words, the youths who spent their teens lapping up Harry Potter.

So all is ready: the book is written, the warehouses are full, the date is set, we all have to wait for the result - for a book that has been tightly restricted to a few dozen eyes so far.

Her publishing house director, Heather Fain, declared that: "In a lot of ways, we want to think of her as a new author." It's set in the real world, "It's about relationships and how families interact. There is a lot of meat to it," she said.

There are bound to be many reviewers who love it, and many who take the scalpel to it - that's the nature of criticism.

But Ms Rowling should perhaps remember the words of Joseph Heller, author of one of the greatest books of the past century, when he was told by an interviewer that he had never produced anything else as good as Catch-22.

Heller thought, nodded, and then responded: "Who has?"

ray@ebeatty.com
Blog: themarketeer-raybeatty.blogspot.com

Marketing to millions, one by one

Melbourne Herald Sun, Friday 7 September, 2012

In a world of mass production, the customer gets lost in the flow. Can a brand that numbers its products in the millions ever manage to reach an individual? This thought has spurred some of the world's top marketers into searching for ways to touch us one by one.

The most ambitious attempt I've ever heard of will happen this October - with a product displaying four million individual package designs.

Four million bottles, each one different

The idea is Swedish, with that most Swedish of products, Absolut Vodka. They have devised a system where the manufacturing process generates a unique pattern for every single bottle on the line.

They are calling the system "orchestrated randomness", achieved through a combination of 51 patterns, 35 colours and a battery of splash guns.

"It feels a bit mad scientist, a bit street art," says Absolut's Jonas Tahlin. "When the bottles first appeared on the conveyer belt, we cheered. By that point the production line looked more like an artist’s studio than a bottle factory."

How consumers react to their colourful bottles will be thoroughly tested - the promotion will be released world-wide including America, Europe and Australia.

I'm sure over the years you have noticed the little ads for "Hong Kong bespoke tailored suits". The tailor who sets up in a city hotel each year and produces tailor-made suits for our business folk.

Well Nike have their own version of that now - NikeID. You can design your own shoes, based around some of their more popular models, cobbling your thoughts together on their web site and then waiting a month for delivery.

I have no understanding of the fashions or intricacies of runners. A little study has led me to discover that if you are keen you can design your own Life Dunks, Rifts, Air 180s, or whatever you favour. You can select colours for the base, swoosh, collar, laces and midsole, and compose a 'tongue top caption' of up to eight letters. We learn something new every day.

This personalising has evolved its own genre, called Kustom Kicks, and has become an industry in itself. Of course there is now also a web site called MyAdidas.

Another company that's always ready to try something new is Domino's Pizza. They have just launched an iPhone app that allows you to order your pizza as you like it. In their promotion they claim that you can make more than 1.8 billion pizza combinations. Who would have thought there were so many ways to combine cheese, tomato and anchovies?

And of course when there's pizza the Coke can't be far behind. Last summer Coca Cola issued their cans and bottles with 150 different names on them. So you could have a Coca Courtney or a Lola Cola. The prospect of half a dozen teenage boys rummaging through a fridge looking for the "Shane" can troubles me but I'm sure they had their strategy around that.

As an exercise to get their target 12 to 20 year olds talking it worked a treat. I don't know whether the "Share a Coke with your friend" angle as a peace and love activity worked, but it certainly got them talking in the school yards and on Facebook.

Mostly they seemed to be debating about which names were not there, and whether the list was too "Anglo" in its ethnicity. But hey, they were talking about the product and drinking it, so chalk the promotion up as a great success.

Yes you can bring individual personality to a product. But you need lots of money and nerves of steel.

ray@ebeatty.com
Blog: themarketeer-raybeatty.blogspot.com

If it's in the review it must be true

Melbourne Herald Sun, August 31, 2012

It’s Thursday evening and you’re discussing catching a movie on the weekend. Grab the paper, check out the entertainment ads - and those all-important little review grabs: “A drama you can’t miss”, “Funniest comedy of the year”, “Our finest actress”.

Every film seems to be a winner. Then you see where the reviews were written. Names like Silver Slides and Lumination. Can’t quite remember those review sites...
Well, we’ve all had enough disappointments by now to know that reviews have to be taken with caution, and never to rely on just one.

In fact on the Internet, good reviews are up for sale, cheap.
Take hotel accommodation. Accusations have flown around, about invented reviews in the “hotel advice” web sites, and where discounts and incentives have been offered to customers who give glowing reports.
Almost from the start, Amazon’s book reviewing system has been accused of “friends of friends of authors” stacking the feedback responses. Restaurants, theatre, wines - wherever there is room for reviews, a bit of fiddling goes on.
Researcher Bing Liu of the University of Illinois, Chicago, has studied the reality of those opinions and believes that at least a third of them are fake. But the same research also showed that it is almost impossible to pick the difference.
Since the boom of the ereader and ebook, the whole phenomenon of self-publishing has exploded.
Say that great novel in the back of your head is now written. You don’t have to camp on the doorstep of Penguin for six months to just get it read, any more. Now just turn it into ebook format, on your computer, and self-publish the book in days or even hours.
An estimate puts the number of books self-published last year, on line or physically, at 300,000. Now how on earth do you get noticed by those people who like to read?
Enter Tod Rutherford, yet another Internet entrepreneur. Working in a company for self-published authors, he saw how hard it was for them to get noticed, let alone reviewed. So in 2010 he decided to do it for them.

He set up a web site, GettingBookReviews.com, that offered to review your book for $99 - a glowing report, of course. But one was not enough, so he then offered clients 20 reviews for $499. And for those who needed their egos supercharged, $999 would to buy you 50 paeans of praise, though not necessarily the Booker Prize.
The service became a rapid hit. Before long he was making $7000 a week. The work of course was too much for one person but he quickly found a team willing to fast-produce at $15 a review. The one stipulation, of course, was that each had to be a glowing five-star rave.
As one reviewer later reflected, to make ends meet she had to churn the reviews out at a fast pace that allowed her very little time to actually read the book. She just took the time to glance at enough pages to get an inkling of what its contents might be, and then start praising the plot, concept or advice it offered.
She now thinks she might at some stage go back and actually read one or two that looked interesting.
Eventually GettingBookReviews was noticed by Amazon, Google and other big-timers who managed to shut Rutherford down. Now, though, he has self-published his own self-help book - The Publishing Guru on Writing.
It has only just been released so I can’t report on any reviews, but I’m pretty confident that before long they will come - and they will glow.

ray@ebeatty.com

Marketing the Grain of Wheat

Melbourne Herald Sun, August 25, 2012

Birthplace of marketing-
my grain's better than theirs


Marketing is the most ancient profession. When the first farmer took his basket of grain to the village and declared that his was better and cheaper than the other farmers’, markets and marketing were born.

The story told is still the same today, just many layers of complication have been laid over the top. The medium can too-often obscure the message.

Right now the media are going through major changes: the internet and smart phones are challenging the press and the air media, the lines of communication and the channels to market are blurring. That farmer with his grains of wheat risks getting lost in the confusion. This is you, the business person, I’m talking about.

Social media is the buzz today. New marketing companies are popping up, existing advertising agencies have all attached a “social media department” of one sort or another, and a lot of clients are being persuaded to pour more of their budgets into the field.

Which is all fine, you have to stay current. But in all the excitement it’s easy to lose sight of the objective.

Marketing guru Al Ries describes it as the difference between tactics and strategy. Clever web sites, viral commercials, smart phone based competitions, swipe codes on magazines and posters are all tactics in the battle for the consumer’s attention.

But after a couple of successes comes the danger of the tail wagging the dog. Too much energy, money and talent get concentrated on tactics like web apps and generating a few hundred thousand hits on your latest contest, while the main strategy gets neglected.

This is why we see so many campaigns that are poorly put together in their quality and thinking. Dull, unimaginative tv commercials, tombstone newspaper ads (they’re the kind that state the product and very little else. You are assumed to know the product’s qualities and price so they don’t tell you.) Ads that spend more space telling you how to activate their web page than in selling the product.

Certainly listen to the bright young things and their clever ideas, pick and choose. But in front of you, keep focussed on the strategy. What is the objective and where is your customer to be found?

Let me give you the example of a master of strategy. I am awestruck at the cool head that followed this through.

As you know, Facebook has been the most successful of the social media. Their recent Initial Public Offering was huge, raising $38 a share - potentially $75 billion. What it will eventually be worth, will be shaken out by history.

But Peter Thiel, billionaire founder of Pay Pal, saw its potential eight years ago and invested. He patiently waited until the offering was completed and sold a chunk of his shares early, at a strong price. A few days ago he sold most of his remaining shares.

The share price has dropped considerably so he only made $19 a share this time around, but I don’t think he minded. Coming in as a favoured “early investor” he had acquired some 10 per cent.

How much did he pay for this? $500,000. How much have his recent sales netted him? Over one billion dollars. And that’s how the rich get richer.

I doubt you have a billion-dollar idea in your grasp. But you did initially foresee the potential and rewards of what you’re doing now. That’s your grain of wheat. Keep it clear in your mind. Then in the midst of all the excitement and hoopla that invade your business days, you’ll have your strategy to keep you on course.

ray@ebeatty.com

Germany balances on its middle

Melbourne Herlald Sun, Friday August 18, 2012-08-17

Berlin, Germany

The Germans don=t have big resource mines and record prices for their products. In fact they are still the traditional manufacturing economy we have always known.  The kind that fell apart in the industrialised US and west Europe during the GFC.

So how come they are not in financial trouble and in fact are being looked on as the saviour of Italy and maybe even France?

Passing through Berlin during my European trip I was impressed at the calm flow of life and business, not much different from how I remember it in the past. Germans are well fed and contented, their taxis are brand-new Mercedes, and there seem to be a flood of new babies in expensive designer strollers.

Obviously, if we Australians have one answer to the world=s economic malaise of the past four years, they have another. What is it?

They call it the Mittelstand, the solid core of mid-sized companies that employ the majority of German labour. They give the economy, and the nation, the stability to weather any storms.

A Mittelstand company turns over less than $60 million, employs less than 500 people. Most importantly is what it does not have, in general.

It has little debt. Small bank loans. Less than 20% use stock market financing. Most of a company=s machinery and assets it owns outright. It pays its costs as its cash flows, and if they can=t afford something they don=t buy it. Which rather sounds like sacrilege in the high-flying, high-debt world of modern MBA business management.

It is this stubborn, black-hatted protestant ethic that has led Chancellor Angela Merkel into so much strife with the world=s bankers who want to see that stash of cash used to bail the rest of Europe out. Try asking any German whether they are willing to.

But what are the Germans doing to generate all this business, when any item we try to make is available fully imported from China for half of our manufacturing cost?

They do what they have always been good at. Quality. Machinery, engineering, leather goods, software, foods. Made to such a standard of excellence that price does not matter any more. Reliability of delivery, constancy of supply, consistency of quality. Once you=re out of the bargain basement, this is what matters, this will keep the customers coming back.

In recent years they have taken their products out into the booming markets of Asia, where quality, once appreciated, totally overcomes price. And into new territories like South America and Africa.

As a group they are as cautious as ever. They are advised to not allow any single customer more than 10 per cent of their business. Because if this customer departs, for whatever reason, the loss can be withstood. Not when the account takes 20 or 30 per cent, as with many of our companies.

What do you do if a customer wants more? You say, ASorry we have no more we can supply@. Now that=s a business decision worthy of an Iron Cross.

Of course everything I=ve said here is a generalisation. A very broad picture. But there are enough figures and research results to justify this view of the German economic battle ship. It=s going to take a great deal to sink this Bismark.

I=m not so sure of our own economy. Our Mittelstand has shrunk away, companies sold as soon as they start making profits, or destroyed by debt. Our own ship of the economy is faring well now - but is it sailing on shifting dunes of sand and ore? 

ray@ebeatty.com