All Bets Are Off

SAP and BMW have recently announced that they can't forecast what'll happen to their sales or earnings in the last two months of 2008, rendering 2009 as nothing more than a blank cell on their spreadsheets.

Isn't this the corporate corollary of saying the dog ate my homework?

Assessing current trends and then correlating them with past experience is very much a science, with only a pinch of estimation and/or "what if" thrown in.  Some techniques are called demand forecasting.  Others are just a component of what businesses do: at a minimum, you need some context into which to place your inventory levels, prices, staffing requirements, etc.

Or maybe not.  It seems that SAP and BMW are saying that the economic conditions are so unique, and so uniquely volatile, that no such context is visible.  All bets are off.

It's a frightening prospect, if you think about it too much.  What they're effectively saying is that nothing they have ever said about the power of their brands is true. 

There is no reliable consumer preference, and they have no understanding or expectation of their outbound marketing or sales efforts having any dependable effect.  There's no ultimate payoff from those massive expenditures they explained away as "investments in brand equity."

Their brands, and businesses overall, at powerless against the vicissitudes of the marketplace.

We saw a related move by many big-name retailers earlier this year, when they backed away from the tradition of reporting same-store sales each month (also called comp sales).  While this activity was a great insight into the ongoing performance of the businesses, management claimed that it was just the opposite.  Brands perform over time...how much time depends on how long of a period you want to measure.

Whatever it is, the brand requires more, therefore you can't hold it accountable during whatever stretch you considered.  It needs at least a day more...so all bets are off.

I wonder if saying something...anything...is better than saying nothing?

If brand marketing can't be relied upon to deliver any reliable results, maybe it would make sense to pick a number anyway.  Make it terrifically conservative, or some permutation just shy of selling nothing at all.  The lack of information isn't left blank or open in the minds of consumers or stock analysts; no information is the same as bad or negative information, so the businesses get whacked anyway.

And I also wonder how they're planning marketing going forward.  If nothing offers any indication that it’ll work, what components get added to the go-forward '09 budget? 

Since all bets are off, perhaps it's time to experiment with radically new approaches to defining and delivering branding?

Comments

[Christian]

It's times like these where it all seems to come down to the basics. No one cares for marketing blather right now, the only question left for most consumers to ask is:

"Is there any reason to buy product A over it's cheaper competitor product B?"

Or, for the marketer: "Did we promote a great product or did we do great marketing over a mediocre product?"

We face the truth in the crisis. The truth being: You can build a unique (in whatever way) product people will still buy over cheaper, less spectacular competitors. But you can't make an equally good product "better" through huge marketing spendings.

And if it comes down to cars I guess these are the times where people want two things: Go from A to B. Require as less gas as possible. Do I really need a BMW for that?