There is an old joke about economists that goes, “If you have six economists in a room, you will have 7 opinions.”  Recognizing this phenomenon, the Associated Press seeks to derive a consensus by surveying up to 50 economists on a quarterly basis. The most recent report suggests that economic growth for the next 12 months will be relatively low, and that unemployment will remain where it is today.  Significant factors in developing this prognostication are the continued high unemployment, State budget shortfalls, European debt situation, and the weak housing market.

On the positive side, the economists think that we are growing, i.e., that the recession has ended, and reports show that Americans are saving more than they have in the recent past.

Good information, but how does this relate to the CMO or Product Management struggling with making the year and forecasting 2011?

First is the necessity to face reality.  Unless you have a game changing product like an iPhone, it is unlikely that you will see double-digit growth.  High single digit projections should be viewed as the optimistic forecast.

Second, Marketing budgets will be flat to down over the period.  The 2008 guidance, “You will have to make do with less” will come back or be reinforced.  For the CMO this means expanding on those tools and tactics that work, ruthlessly cutting those that don’t and exploring new, lower cost ways of reaching potential customers.

Third, your customer base is the lowest cost way to generate new and/or incremental sales.  Add-on features, new services, and related products should all be developed and directed to the customer base.

Fourth, product differentiation and market segmentation have to be foremost in all product development activity.  The more that you can differentiate your product, to the key target market segments, the more you insulate yourself from price competition and commoditization of your product/services.

Fifth, if you have not done so, now is the time to reduce the number of products and services that you offer to only a few.  Sunsetting products is never easy and is often emotional as the different stakeholders (Sales, Management, Key Customers) weigh in.  But, reducing the number of products and focusing on the key ones has the potential to reduce costs and increase profitability.

Like the economist’s opinions, these suggestions are at a high level. Every company is different and will embrace different tactics.  The key to remember is that it appears that for the next 12-18 months economic growth will be slow, and to act accordingly.

How are you integrating macro economic forecasts in your planning for the balance of 2010 and 2011?

RHM  7/29/2010