viewpoint


Ali Mafi 50 Fifty Gifts


It’s illogical


I have just endured a two-hour train journey with two changes and a mile-long walk in the freezing cold at both ends, but the walk at the arrival end gave me time to reflect on some odd business practices.


Why is a cheap day return from Chatham to


Putney £19.50, but a single one-way more than £42? I cannot think of a single logical reason why the rail company would want to encourage me to take space on overcrowded trains? It’s a bit like courier companies who charge less for two-day deliveries than next-day when it actually costs them more to store the items overnight. Actually, I know the answer to that: it’s a marketing ploy to charge us more for express delivery. I know where dumb schmuck ideas in business come from: detached managers or non-executive directors who, allegedly, specialise in broad- brush decisions. That, in case you haven’t understood, is a euphemism for decisions entirely based on conjecture and devoid of a sense of reality (something which can only be obtained on the front line). I have, on a number of occasions, employed or considered employing outsiders as consultants on the basis that they would be able to see the wood despite the trees, overlooking the reality that without the trees there would be no wood. This is what chairmen, consultants and non-executive directors do; they sit in boring meetings and come up with really wild suggestions such as: “to increase your profits you need to sell more, spend less and increase your margin.” Gosh, really? Here is a cheque for £10,000 for that, and thank you ever so much for pointing that out to me. In my opinion consultants are like rabbits without a ‘whatsit’; they can’t perform so they may as well consult. Come on, how complicated can it be? The art of good business is to spend X on products or services, sell them for Y, and make sure that your expenses are less than Y-X, and that you end up with your profits in cash or tangible assets and not dead stock. I love it in Hong Kong when you go into a shop, choose a couple of shirts and a pair of trousers and just as you are paying they inform you of a


totally unadvertised offer of 20% off. Well thank you very much, I was not expecting that, and it played no part in my buying decision, but thanks. These days, now more than ever, we need to find ways of enticing the consumer to buy our product, and the best people to ask are store staff, not consultants. In my opinion, every buyer should spend at least 30 days out of every year in different stores serving customers. That’s how you find out what the consumer will buy and why they do so. The Government position is that we have to have encountered negative growth for two consecutive quarters in order to be in a recession. If I ever heard of a case of ‘playing with words’, that is it. The dictionary definition of a recession is “a period of economic contraction”, which we clearly are experiencing. Fiddling with numbers is something we all do, but to do it to con yourself is beyond stupidity. A perfect example is a sales graph; you have sales value on the vertical axis and time period on the horizontal, so the closer you place the months or weeks together, the steeper the slope. It’s the oldest trick in the book: keep them close to show growth, and further apart to make the downward slope less steep. At this stage I would like to apologise to all sales directors and managers for queering their pitch, but in reality a historic sales graph is about as much use as a snooze button on a fire alarm. Really, it should be called the ‘ego graph’. I think I have said it a hundred times, that what


you did last year, how much your competitors do, what share of the market you have, are all ridiculous obsessions that only cloud our judgement. What you need to measure your performance against is the maximum you can do. Every business has constraints such as staff, space, finances in wholesale and distribution, and number of customers you can physically serve in retail businesses. If you run a café, and you are mobbed at lunch times, your only hope for growth is higher spend per customer, higher margin and more sales at quieter times. Trying to entice more people at lunch time will just lead to pissing off and losing the customers you have. I know, I know, I’m stating the obvious, but it is a fact often ignored (ask your consultant if you don’t believe me). How many times have I heard a wholesale company wanting to double sales? “How are you going to finance it?”, is a question often met with a look of total bewilderment. If you don’t believe me go to your bank and ask for a facility to double sales. They will, if you are lucky, just refuse you, or, if they are sensible, withdraw what facility you have (banks hate rapid growth and overtrading). There is no short cut; to survive these conditions we need great product, good prices and hard grafting. Sorry, but that is the reality of it. And do ask your people on the front line, and stop making ‘executive’ decisions alone.


Dan


Salem Prism Digital


Solutions


Collaboration – the secret to success?


Calm has now returned to the toy world after the whirlwind of fairs across the globe. There was a time, not so long ago, when


every stand would have media plans velcroed to the wall above all the key lines. Each plan would highlight television ratings and promotional partners lined up to help drive sales across the year, and although online impressions have now slowly been added to the mix, with the economy crawling along the sea bottom, media commitments are being made later and later; thus many of the stand walls were shy of plans. Instead of luring the retailers with


guaranteed TVRS, more and more owners are calculating their spend on media plans once they have more firm commitments from retailers. And this means that media plans are being confirmed later and later, as well as becoming more reactive than proactive, leaving little opportunity for risk taking. There are some benefits, especially in the late Autumn period where TV channel underperformance can lead to some good deals for advertisers as money moves between stations. But one of the key driving forces behind


reactivity is data, and now, as technology advances ever quicker, we are getting to a state of data overload. As marketing from the major fast-moving consumer goods is driven as much by procurement than by creativity, the amount of data driving decisions is somewhat restrictive when it comes to trying new things in the world of media. And, with so much data from retailers themselves, NPD, media owners, Facebook friends, etc, media, planning and the creativity required to support it has become as much about science as it has an art form. And science is also as much about investigation and taking risks as it is about measured and certain outcomes. In order to get the results to justify a hypothesis, one first has to experiment then use the results


Toyworld 31


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