Act now or bad things will happen and it will be YOUR fault ~ Brand Mix

Tuesday, September 23, 2008

Act now or bad things will happen and it will be YOUR fault

Treasury Secretary Henry Paulson and Chairman of the Federal Reserve Ben Bernanke are calling on Congress to hurry up and approve the $700 billion bailout plan. Congress is not know for the speed of its decision making but Paulson and Bernanke are likely to prevail since they have unleashed the most powerful of all weapons: The Fear Sell. When used in the right circumstances it can move even the slowest of institutions.

Ben Bernanke: "Global financial markets remain under extraordinary stress. Action by the Congress is required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and our economy."

Note the ingredients required for this weapon to work: 1) It's a big problem 2) It needs action immediately 3) No action spells disaster and 4) If there is a disaster, those who fail to act will be the ones that get the blame.

Bernanke and Paulson are trying to save the world from financial ruin but the same technique can also be applied in relatively less monumental situations. Back in my Nestlé days, the Coffee-mate brand team had developed what we thought was a real winner: Coffee-mate flavors (in delicious Amaretto, French Vanilla and Irish Creme (although, truthfully, the Irish Creme wasn't that good)). But there was a lot of foot-dragging going on. Could we run some more market research? When would the project breakeven? Did we really need TV or would coupons be OK?

Then, one day, we got a call from the field saying that Cremora, our hated competitor, was about to launch its own range of flavors. Panic in the cubes of Nestlé. The green light to launch came within hours, the product was launched and consumers everywhere got to savor those delicious flavors. Funny now I think about it--Cremora never did launch any flavors after all. I wonder how that rumor got started.

2 comments:

Tim Tyrell-Smith said...

Great post, Martin. Your Coffee-Mate analogy is a good one.

Like most of America, I was also thinking about the approaching financial pains today. Until I thought, "hey, why don't they bail me out?". After all, I have my mortgage with WAMU - who happened to crumble today.

What kind of a spending surge could I represent if I no longer had a mortgage - wouldn't that help the economy if I could add another $3,250 in revenue to my local community? What if my whole street (22 houses) also got bailed out? And so on. Instead of fat cats, we'd have fat kittens in the suburbs. Would the country be better off I had more money to spend . . . or the bankers?

Hmmm.

Martin Bishop said...

The problem the bailout seems intended to solve is that the money markets are close to completely seizing up.

The availability of short term money is the oil that keeps the economic engine running. If there's no credit available, all companies (not just banks) will struggle to continue operations (like paying their employees).

So, although I agree it would be much better for you and I to have more money (especialy me!), that wouldn't help much at the moment vs. this particular issue.

 
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