Thursday, July 08, 2010

The elephant in the room has been replaced by a herd of woolly mammoths

I know that I have been “going on” about the perilous state of the European economies and why planning for the consequences should be the first, second and third priority for marketers.

I think that a lot of marketers are deluded and think that now the credit crunch initiated recession is out of the news that things will get better. This was just the first round, the main course is about to be served.

Yesterday I attended a conference about “Reducing the deficit and improving public services”. The speakers included senior members of the new government and a lot of well informed people who know about the reality of the austerity measures that are about to sweep through UK.

Francis Maude MP, the keynote speaker, announced that he intends to ask (I think tell is a more accurate word) the 20 biggest suppliers of services to government – from IT to custodial services to medical tests for benefit claimants –to cut their prices in order to help reduce the nation’s deficit.

He said: “he would be renegotiating with them across everything they do for the government to get costs down and will want to have something off their margins.”

Even a pessimist like me was shocked. As I left the conference, and looked at the smiling faces of crowds in Central London I wondered if they had any idea what is about the happen.

Please don’t take my word for it – have a read of these articles from Wharton and McKinsey .
Reading the Business Sections of the newspapers would be another good idea.

Sure there are going to be opportunities, lots of them, but continuing as normal is not one of the options.

As I have already written today, one of the biggest issues is going to be the disproportional way in which young people are going to be hit by the downturn.

Deciding which groups of consumers are going to be the least affected is a good place to start. Dick Stroud

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