The Fiscal Cliff and Marketing – Part 1

The current debate over the fiscal cliff and its potential impact has a number of lessons for Marketing people.  This posting, along with the next few, identifies and addresses some of them.

Many decades ago I worked for GE in a consumer product department.  This was when a Monroe adding machine was the highest tech tool available, and it had to handle the computations relating to numerous product lines and hundreds of products. 

Starting in the summer we would begin planning the following year.  The planning, which was done by all departments, started with the sales (revenue) forecast, which was built off the marketing plan for each product, covering those that were going to be introduced, those that were mainstream and those that were going to be retired.  The revenue number and its resultant margin/profitability results drove the planning for the rest of the department, including headcount, programs, allocations, etc.

The GM at the time insisted on two plans being developed.  One was the plan he presented upward to the company.  The second, and higher plan, was the one which he used to manage his team, set objectives and goals, and resulting bonuses.  Obviously this second plan filtered down to the troops.

During the fall revisions were made to both plans, up until after Thanksgiving, when they were cast in concrete.  In this process many reams of large pieces of paper, and several calculators were sacrificed.

With the fiscal cliff fast approaching, astute Marketing managers should have two plans at the ready.  One should be the plan that they feel comfortable with, built off of 2012 experience and the anticipation of 2013 being a “new-normal” year.  The second should reflect the impact of buyer uncertainty/lack of confidence and the potential that there will be less disposable income available. 

Having two plans should allow the CMO to quickly pivot, in the event that there are significant changes to the buying environment caused by changed economic circumstances. 

Were significant changes to occur due to going off the fiscal cliff, are you prepared?  Have you thought through the first 3 things you would do if the Bush era tax cuts are allowed to expire, and the sequester cuts take place?  Note that if you do nothing (no planning), you will probably fall off your own cliff.

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>