Aventine Partners

Revisiting Scenarios and Tracking Tools

As the first year of the current administration is unfolding, and especially as we embark upon the second Christmas shopping season after last year's economic meltdown, it is interesting to reconsider the four scenarios we constructed in the spring to describe possible future worlds.  After the distractions of a raging stock market this summer, our future path now seems just as unclear as six months ago.

We proposed two dimensions to describe out country's future.  The first was the degree of government involvement, the second the degree of consumerism.  The four scenarios that result -- Lever Lever Land, Euro-America, Do-Over, and Back to Basics -- describe very different futures that can help shape strategy and risk management.

Tipping Point for Online Banks?

Wingspan Bank.  Remember the short-lived online-only bank launched by BankOne in the late 1990s? 

A recent post at Bankwatch called attention to an American Bankers Association survey showing that online had become the most-favored channel for bank customers for the first time. Memories of Wingspan, Telebank, Jupiter Bank, and others that made a go at the online-only business model came flooding back along with the unanswered questions.  Was online-only banking the wrong idea, or was it just the wrong time?  With changing consumer preferences, might we expect a new breed of online-only banks to emerge soon?

Who's Your Customer?

Has the general business and commercial environment become more or less humane in the past years and decades? 

Whatever your thoughts about the current tenor of the marketplace, our language has certainly become nicer.  I remember being comforted when my first employer announced that it would be rightsizing its workforce.  No more heartless downsizings for them.  Of course employees are now associates or partners, and most job descriptions seem to have been upgraded, even if everything else has gotten worse for the poor employee/associate/partner.

So if you believe, as I do, that the reality for workers and consumers has coarsened while our labels have gotten nicer, you might wonder to what extent these phenomena are related.

I was therefore heartened to see a recent announcement by the FAA (as reported in the Wall Street Journal) that they would no longer call airlines, the entities they are chartered to regulate, customers.  Apparently someone there realized that feel-good labels can get in the way of getting the job done right.

Terminology matters, and choices that feel good sometimes obscure the truth.

Using Scenarios to Spot Opportunity, Risk in Crisis

I recently had the opportunity to speak at a seminar for privately held businesses.  The seminar was about ways to use the economic downturn as an opportunity to prepare for the potential future sale of a business.  My topic was how to spot new opportunities created by the crisis.  I suggested scenario analysis as a good tool for generating and evaluating ideas and offered four specific scenarios to consider

Aventine Scenarios Pres May09

View more OpenOffice presentations from aventine.

Topgrading Marketing Spend

As I noted in my post To Cut or Not to Cut?, this is a smart time for most companies to reduce marketing spend, notwithstanding desperate pleas from marketing services providers that you double-down in the downturn.

Is there a smart, systematic way to do this?  Probably, but it's elusive, as confirmed by the many stories I hear of the across-the-board, arbitrary 10%, 15%, 25% cuts many marketers are trying to cope with.

A recent white paper from former colleagues at Deloitte Consulting prompted my writing this post, so let's look at their approach, which they call Structural Cost Cutting.  

The premise of the Deloitte's Structural Cost Cutting is that the big opportunities for big near-term reductions in spend come from challenging basic assumptions about the business and how marketing supports it.  The savings will emerge from multiple categories of marketing spend.  The Deloitte hit list of areas to examine are:

To Cut or Not to Cut?

As has been in the case during every downturn I've lived through as a professional (this is my third), many observers of the marketing discipline are quick to remind us that "studies show" successful companies increase advertising spend during downturns and reap great rewards from having done so during recoveries.  Of course, those most emphatic in offering this counsel are those peddling media and marketing services.

One of many possible examples can be found in a September blog post by John Quelch offering advice on "How to Market in a Recession".  Quelch is a director at WPP, so there may be some bias when he counsels: "Maintain marketing spending.  This is not the time to cut advertising.  It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times."

Even though we also peddle marketing services, I question the wisdom of this line of thinking.  More to the point, we need to be mindful that what was true in the past may not longer hold.

What's different now?

The Shifting Consumer

Identifying how consumer attitudes are shifting in this downturn and which shifts will stick is an important, but tricky, task.  John A. Quelch and Katherine E. Jocz tackled this issue in the Financial Times with their Managing in a Downturn.  

I can recommend this article as thought provoking, and it contains some good insights.  But there's some bad mixed in with the good.  First the good.

Key takeaways:

"What is certain is that the market segmentation scheme you were using to plan your marketing budget and programmes this time last year is obsolete. You need to listen to your customers and possibly develop a new segmentation approach."  

Very true.  The authors recommend an overlay segmentation that adds insights to how consumers are reacting to the current environment.  This is likely a good first step.  

Bubble Charts, Good or Bad?

I like bubble charts.  It seems many others don't.  This is a quick review of bubble charts as a tool, with thoughts about why I like them, why others don't, and how best to use them.

At Aventine, our focus is marketing analytics, but we have a strong commitment to the related discipline of Information (or Data) Visualization, InfoVis for short.  By using good InfoVis techniques, we are able to create better graphical presentations of the analyses we do for clients.

I've watched with some interest recurring discussions in InfoVis circles about the use of bubble charts, including one recently on a site we like, Junk Charts, panning a graphic in the Financial Times using bubbles.  By and large, the InfoVis experts hate bubble charts, feeling people can't do a good job distinguishing differences of bubble size. 

The interesting, parallel development is that motion charts, which are just a type of animated bubble chart, are getting increasing attention thanks to Google and a remarkable presentation at a TED Conference in 2006.  These motion charts are getting traction despite the criticisms.