1999 will be a better year for biz-to-biz firms
When the economic outlook turns cloudy, many business-to-business companies grow overly cautious and cut back on their marketing efforts in an attempt to protect profits. With layoffs by several high-profile firms, economic problems overseas, and the uneven performance of the stock market, some caution is certainly called for. "However, a play-it-safe, try-not-to-lose strategy can backfire," says Ken Long, director of Penton Research Services. "If you expect the worst in business, as in life, you often get it." Cleveland-based Penton Research Services is the research arm of Penton Media, Inc., a business media company.
But for the foreseeable future, prospects look good for business-tobusiness firms. Here's a countdown of the top 10 reasons business marketers should look forward to the year ahead:
10. The U.S. economy remains fundamentally sound. The country is entering its ninth year of expansion. That's old by historical standards, but expansions don't die of old age. Real gross domestic product will climb 2.2 percent in 1999, according to Blue Chip Economic Indicators. Only 6 percent of the economists recently surveyed by Blue Chip expect the next recession to begin in 1999. Almost two-thirds (63 percent) expect growth to continue until at least 2001, making the current expansion the longest in American history.
9. Other countries are beginning to pull out of recession. One-fifth of the world (measured by GDP) was in recession last year, reports Zenith Media Worldwide, but only 6 percent will remain so in 1999. The World Bank is predicting that global GDP will increase 1.9 percent in 1999. An increase in overseas demand will help boost U.S. exports, which Standard & Poor's DRI is forecasting will rise a similar 1.8 percent this year.
8. Industrial production, which began to fall more than a year before the last recession officially started, continues to grow. Industrial output climbed 3.3 percent in 1998, and according to Blue Chip, will rise 9 percent this year. Two-thirds (68 percent) of the manufacturing purchasing executives surveyed by the National Association of Purchasing Management expect their company's 1999 revenues to be greater than in 1998, with a 5.2 percent net increase in overall revenues.
7. The U.S. has near-full employment. The unemployment rate hit a 29-year low of 4.5 percent in 1998. More than 2.8 million new jobs were created last year, and DRI is projecting that an additional 1.6 million jobs will be created in ]999.
6. Consumer confidence remains strong, and with increasing income levels, consumer spending will keep rising. Personal consumption expenditures, which grew 4.8 percent last year, are expected to increase 3.0 percent in' 1999, according to Blue Chip.
5. Companies can borrow at favorable interest rates, allowing them to invest in their business to fuel future growth. The Federal Reserve Bank of Philadelphia's Livingston Survey is forecasting that the prime interest rate will edge down from 7.8 percent in December 1998 to 7.5 percent by the end of this year.
4. Business investment in durable equipment will continue to climb, rising 7.6 percent in rea] terms in 1999, according to DRI.
3. Despite high employment levels, inflation remains low. The GDP price index increased 1.0 percent in 1998, and Blue Chip predicts that it will climb only 1.5 percent this year.
2. Marketing communications spending by business-to-business companies is rising, which will help drive future sales - and growth. The investment bank Veronis, Suhler & Associates is predicting that advertising spending in business magazines will increase 9.0 percent in 1999, and trade show and exhibit expenditures will climb 10.2 percent. Forrester Research is forecasting that Internet ad spending by business-to-business firms will grow even faster, a whopping 58.6 percent, this year.
1. Great opportunities will remain even if the country does slide into recession sometime during 1999. During the last downturn, real gross domestic output only fell 2.0 percent, manufacturing output declined 6.2 percent, and business investment in equipment dropped 8.3 percent in real terms. Sales of some products and services fell 10 percent or more. Many firms focused on the drop in sales, seeing the glass as being 10 percent empty. Other companies saw that it remained 90 percent full and took market share - and profits - away from more conservative firms.
A study conducted by PricewaterhouseCoopers in conjunction with Business Science International found that businesses that maintained aggressive marketing programs during the 1990-91 recession outperformed companies that relied more on cost-cutting measures to cope with the downturn. In 1999, a firm will need to boost its communications budget just to maintain its current share of voice in the marketplace.
No one knows what kind of year 1999 will turn out to be for the U.S. economy, but key indicators remain positive. "History shows that even if economic conditions turn sour, business-to-business firms that have a solid marketing game plan – and stay with it - will have a good year," says Long.
Internet helps form brand opinions
More than a third (36 percent) of Internet users say that their opinions of one or more product brands has changed as a result of using the Internet, according to the report "Online Branding - The Internet's Impact on Branding," released by New York-based Cyber Dialogue. In addition, the report found that "brand impressionable" users are more likely to shop both on-line and off-line as a result of using the Internet.
"We found that the Internet is both color- , gender- , and age-blind, helping to neutralize obstacles some shoppers experience in the conventional marketplace," says Thomas E. Miller, Cyber Dialogue vice president and author of the report. "For example, women and ethnic minorities, while still under-represented on-line, are among those most likely to say the Internet helps them form brand opinions because they can get unbiased answers to their product questions."
The Internet can also influence store traffic, direct mail purchases, and even TV shopping, as well as drive on-line sales, according to Miller. "Brand managers must keep in mind that branding on the Internet is about much more than just capturing eyeballs," he says.
The report recommends that brand managers use mass media to create general brand impressions and drive motivated prospects to their Web sites, where the brand can foster deeper customer relationships. Citing recent survey data, the report shows that most on-line shoppers are destination shoppers who go directly to Web sites that interest them. Still, portals such as search engines and active Web sites in certain product categories like cars, airlines and financial services are clearly emerging as important hubs for directing shoppers in search of product and service information. The report makes specific marketing recommendations for the following industries: autos, airlines, household products, investment services, banking, insurance, and health/medicine.
The report is designed to provide in-depth understanding of how consumers perceive and use the Internet for shopping. It also helps brand managers identify and target on-line shoppers who are most brand impressionable. The report answers the following questions: Which segments of the Internet user population are most likely to change their brand impressions? Which search engines are used by brandiimpressionable Internet users? What three attributes leverage the interactive capabil,i,ties of the Web and lead to more favorable impressions of on-line brands? Where are Internet users most likely to notice on-line ads? How can brand managers improve their chances of creating positive brand impressions via on-line advertising?
The report uses data from the American Internet User Survey, a large telephone survey of Internet users and non-users.
Workers say no boundaries, no problem
Workers under the age of 40 are twice as likely as their older counterparts to see fewer problems and more benefits in boundaryless work arrangements, according to a national research study released by Ceridian Employer Services, Minneapolis. For purposes of this study, the boundaryless workforce was defined as work arrangements that include one of the following practices: telecommuting, virtual teams, flexible time and pay plans, and temporary, project -based professionals.
According to the study, younger workers are substantially more likely to believe boundaryless work is valuable for rewarding employees, beneficial for all types of work and a good way to increase job satisfaction.
These results on generational differences are just one of eight themes and findings identified in Ceridian's original research, "The Boundaryless Workforce." The study surveyed senior executives, human resource managers, boundaryless workers and their direct managers on the challenges and benefits of the new work arrangements.
"With 91 percent of companies using some form of boundary less work practice and most planning on increasing their usage in the future, it's clear that boundaryless work is here to stay," says Robert Digby, senior vice president of marketing for Ceridian Employer Services. "The study shows that the successful use of these arrangements depends on the technology tools that are put in place and the overall planning related to the effort."
Some key themes and findings:
- Current and future practices: Ninety-one percent of respondents currently are using boundary less arrangements, and many plan to increase their usage in the next two years.
- Technology tools and resources: Boundaryless workers and their managers are two to three times more likely than senior executives to endorse investing in technology tools and training to make boundaryless work arrangements successful.
Forty-seven percent of workers and 41 percent of managers support providing boundaryless workers with employee self-service software, compared to only 14 percent of senior executives. Self-service lets employees access personal information such as home addresses, benefits declarations and W-2 forms from remote locations by using the Internet or a company intranet. - Attracting and retaining workers: Half of respondents said boundaryless work arrangements are highly successful in attracting workers, and 60 percent said they are highly successful in retaining employees.
- Generational differences: Younger workers are twice as likely as older workers to see more benefits and fewer problems with boundary less work arrangements.
Thirty-one percent of workers and managers over the age of 50 believe boundaryless workers are less respected than their traditional counterparts, compared to 10 percent of workers and managers ages 19-29 and 13 percent of workers and managers ages 30-39. - Professional growth and work-life balance: Workers ages 30-39 are almost twice as likely as other age groups to say that boundaryless work arrangements contribute to greater job satisfaction and work-life balance.
- Productivity: Approximately half of all respondents said that boundaryless work arrangements increase employee productivity. This contrasts sharply with the opinions of boundaryless workers and their managersonly 17 percent believe they are more productive than traditional workers.
- Employee and job success factors: Twenty-four percent of managers believe boundary less work has a negative impact on an employee's career, compared to only 10 percent of workers.
- Company preferences: Larger companies and multi-site companies are more likely to use boundary less work practices than smaller companies and single-site companies. Fifty-two percent of companies with more than 5,000 employees currently offer telecommuting, compared to 27 percent of companies with less than 100 employees.
"The study shows that younger workers - the future of the workforce - believe they can use technology to maintain a strong connection with the office, regardless of where they are," Digby says. "With so many workers saying they are comfortable using resources like intranets, automated time and attendance, and employee self-service, boundaryless work will only become more important in the coming years. Companies that find the right ways to use boundaryless work today stand to gain a great competitive advantage in the future."
The study compared and contrasted the perceptions of 401 randomly selected senior executives, human resource managers, boundary less workers and their direct managers on issues arising from the use of these arrangements. It also examined the current and projected use of boundary less workforces, implementation challenges, effects on productivity and worker careers, and technology and resources needed to support these new work arrangements. An independent research firm conducted the survey in the third quarter of 1998. The sampling error is ±5 percentage points at the 95 percent confidence level.
The boundaryless workforce study booklet and detailed information on all findings can be accessed on the Ceridian Employer Services Web site at http://ces.ceridian.com.
Omnibus looks at Hispanic ownership of technology products
While most Hispanics (61 percent) own cellular telephones, Hispanic ownership of pagers, personal computers and faxes is much lower, reports Hispanic Express, Taylor Nelson Sofres lntersearch's (TNS lntersearch) monthly five-market omnibus survey of 1,200 Hispanic consumers released in January. One-third of Hispanics (31 percent) have pagers, and one-fourth (25 percent) use personal computers at home. One-fourth (26 percent) do not use any of these.
Hispanic men are more likely than Hispanic women to have pagers, fax machines and personal computers. There is no significant difference between Hispanic men and Hispanic women owning cellular telephones.
Penetration for communications devices is highest among Miami Hispanics and lowest among Los Angeles Hispanics. These products also display stronger penetration among younger and more acculturated Hispanics.
Only one-fourth of Hispanics use personal computers at home. Slightly more than one-tenth of Hispanics access e-mail (12 percent) or the Internet (11 percent) at home.
Miami Hispanics are slightly more likely than Hispanics in the other four markets to use a home PC, access email or access the Internet.
Very few Hispanics who only speak Spanish use personal computers at home (3 percent). Hispanics who are English-dominant or speak English only are the most frequent users of personal computers at home (38 percent).
Each month Hispanic Express covers New York, Miami, Los Angeles, San Antonio and one additional market. Each sample contains an equal number of male and female respondents. Hispanic Express is a product of Taylor Nelson Sofres Intersearch, located in suburban Philadelphia.
I am not a child
More than two thirds (68 percent) of eight-to-12-year-olds overwhelmingly prefer calling themselves "kids." There is no majority view among teenagers as to their favorite moniker, according to the 1998 Roper Youth Report, a syndicated annual report from New Yorkbased Roper Starch Worldwide. Four in ten (40 percent) 13-to-17 -year-olds refer to people their own age as "teenagers," but three in ten (29 percent) call them "teens." Next most popular is "kid" at 19 percent, followed by "person" at 15 percent.
Least popular among this age group is "child" (2 percent). Eight-to-12year-olds choose "person" as a distant second (15 percent) to "kid," followed by "child" at 13 percent. Interestingly, 11 percent of this pre-teen age group vote for "teen." Bringing up the rear is "adolescent" (3 percent).
"It makes sense that the eight-to-12 group is more homogenous while the answer is a bit murkier for teens," says Joan Chiaramonte, vice president of Roper Starch Worldwide, who headed up the study. "Given their midway status between child and adulthood, teens have a hard time categorizing themselves because it's such a transitional age."
The 1998 Roper Youth Report is based on in-home face-to-face interviews with a nationwide cross-section of 1,189 children age six to 17. The study, conducted in April and May 1998, has a margin of sampling error of ±3 percent.