CNSN Digest: Mervyn's marketing conundrum

[Neil Davidson]

This is the first Cambridge Network Social Network digest, summarising recent activity on the CNSN. Each digest will also have a short editorial.

Mervyn Davies has a problem.

Davies is the man the UK government has asked to turn around the state of UK business. As Minister of State for Trade and Investment, his first task will be to persuade, or force, the banks to start lending again.

Davies, who was in Cambridge last week, thinks the biggest problem is one of confidence. Although this recession was caused by real, structural, problems - by greedy bankers doing dumb things - it’s being sustained by pessimism. A giant blanket of national self-pity will smother any spark of recovery. And, being British, we love being miserable. And we love being told about it. Right now, bad news - “Black Monday”, “2,500 jobs lost”, “The worst recession since the 1930s” - sells newspapers.

Davies thinks that if he could persuade us all to be more optimistic, companies would plan differently, hire more people and make more stuff. We, as consumers, would buy that stuff. Banks would lend businesses the money to make the stuff, and to us to buy it.

But nobody’s listening. And even if we were, there’s no way he can get his message to us. The only way the media will mention “green shoots of recovery” or “the light at the end of the tunnel” is so they can slap the messenger.

This is a classic marketing problem. Davies has a product - in this case, his message - that he believes in. His customers - us - should, in theory, buy that product since we would benefit. But he has no channel to connect his product to his market, and, apart from a few unconnected early adopters, the majority of his market is unconvinced about his product. They want to wait and see what everybody else does first.

Davies’s problem is the same as that of the man who’s built a better mousetrap, but who finds that the world is not beating a path to his door. How would you advise him to solve it? Post here.

On the CNSN, Waclaw Slezak asks what happened to Library House? And why the silence?

Peter Hewkin, CEO of the CN, gives his three tips for dealing with a downturn, and asks for yours.

Peter also wonders if we could persuade companies to put 1% of their pension funds and investments into a scheme to invest in Cambridge.

If you’ve got any other questions you’d like to ask then post them on the forums.

There are some interesting events coming up. For example, there’s a special Café Networking event focussing on jobs. You can read more and sign up online.

At the next Cambridge Business Lecture, Louise Makin will be talking about how, as CEO of BTG plc, she turned around a sprawling, stodgy, public sector organisation into a focussed pharmaceutical business, in the face of extreme cultural inertia. You can read more here.

You can see more upcoming events here.

There are 321 members of the CNSN. But we need more, relevant people. Invite your friends and colleagues to join

Got any comments about this digest? Ideas of how it can be improved? Post here ...

[Martin Kendall]

Somehow I know I should be wearing a flame-proof suit when reading the response to this but the "stone throwing" at the consultancies should be subject to a deeper understanding of government department negotiation strategies. The short of it is this: the consultancies want the business but they usually have to adopt an approach based on bounded rationality when bidding for the opportunity. The market dictates and the nagging conscience is placed out of earshot...

[David Morgan]

I tend to agree unless I worked for one of the big five consultancies which I do not.

[Waclaw Slezak]

'what may happen and how it may happen' - Ahhh MAY is the big word
New labour has paid billions to the big five consultancies to help them make it happen.
No one single initiative has brough value for money or a completed project on time. on target and witth the desired result. Big Five are useless save for their six figure invoices.
GB as chancelleor has been a disaster as no real wealth has been created in 11 years.
Paper money is not wealth especailly if it is wealth through inflated house values, inflated share prices, borrowed money from India, China, russian oligarchs or laundered drug money through London. Real wealth lies in a truly skilled workforce, an ambitious and well educated generation of school leavers/Uni Graduates, innovative products the world needs, etc. MAY happen is no longer an option. IT MUST HAPPEN, but not with the recycled mediocraties on the gravy train or changing of chairs of senior position occupiers. We can do it but without THEM of old.

[Martin Kendall]

Waclaw, it's a tricky one for all of us: the point at which 'need' merges with 'want' :-)

There is much talk of returning to the "Capt. Mainwaring" style of banking and mutual saving societies. In some ways this is a return to how it all started - which is fine. But we will still want to "better ourselves" in the long run...

One could argue that one needs a certain amount to be financially independent for life (I am told it may be £6,000,000 currently) but how does one explain wanting significantly more than that.

We should turn to looking at what may happen and how it may happen as it is as interesting as it has been cruel to some people. People will still need a roof over their heads, they will still need to eat and clothe themselves. Will we all become artisan shoppe keepers and live in closely knit communities ? Will we at last know the names of our neighbours ?!?!?

[Waclaw Slezak]

Martin it is more serious for the wealthy than hiding behind brown paper bags.
think of the suicides of very rich people who think they have lost everything even though they need not work ever again. What I find so depressing is that some rich people have no sense of values other than money. The story of the 5th richest Geramn who threw himself under a train because he lost a billion Euro, but left behind 5 billion. Yes you are right 'greed' is a driving force but a force leading to nowhere, ultimately.

[Martin Kendall]

Referring to Neil's last comment and Waclaw's: we all share one particular trait and that is a basic greed. I don't mean this in a derogatory way but more an innate disposition. Unfortunately the globalised nature of our trading practices spreads the risk to such an extent. We are also very good ad marketing "realities" to others who start believing in them if they have other supporting beliefs (such as "my job is secure" , "house prices will always go up", "my bank is a safe organisation"). The added concern over "missing out" (greed) will usually ensure that people accept the presented realities.

The problem for "marketing" now is that people don't have many of the supporting realities to assure them.

As Waclaw says, we could be in a state of "buy only what you need & afford". The fun of "keeping up with the Jones'" has become a luxury for a lot of people.

It is interesting to note that in the US, even those who have wealth are now feeling peculiar. There are stories of such people asking for plain wrapping when they make purchases from fashionable stores.

[Waclaw Slezak]

'This is a classic marketing problem' - Is it?
It is not a marketing problem but something much deeper.
The Credit Ouch and banking disaster were made by clever marketing in packaging up worthless assets as good value, getting the right agencies to say 'yes it is a good asset', getting trusted financial advisors to say yes ( to their own commissions) and voila, we have what we have.
Good old Madeoff was brilliant at marketing a worthless product by making it accessible only to a selected few and by personal recommendation.
Marketing is just marketing and represents no substance or content , it is all about packaging and intangibles, maybe greed or buying into illusions.
So where does that leave 'us'?
Firstly do not believe the messenger or the message. They have their own agenda, not yours.
Secondly avoid personal financial recommendations
Thirdly, buy only what you need and can afford

[Elwyn Wakefield]

I wonder why the government hasn't used the tax system to encouraged employees to invest in their own companies, where they might have some degree of control over the long term profitability, rather than overpay a bunch of greedy middlemen to gamble their savings in companies where they'll have no control whatsoever.

[Neil Davidson]

Fergus,

"It's a hugely complex network of billions of irrational individuals with incomplete information"

Isn't that a problem that psychology, and marketing, are equipped (or at least should be) to confront?

- Neil

[Fergus Ross Ferrier]

Unfortunately, I doubt many of the people in power understand the neoclassical economics they spout, let alone the fact that practical economics has moved on.

Plenty of models [that borrow from physics paradigms] demonstrate that the wonders of the economy are much more complicated than we realise. It's a hugely complex network of billions of irrational individuals with incomplete information, and feedback cycles that cause investment bubbles.

So, this recession wasn't caused by greedy bankers - it's endogenous to the trading system, and human nature - and it can't be solved by simply asking for people to think more positively - it can't really be controlled at all.

No amount of marketing thinking is going to help the poor chap to do what he's trying to do - he should give up on the idea that the British government can control or reinvent trade in a way that will prevent these inevitable downturns, and resign before he loses all his hair.