Bookmark & Share
New markets, new media and consumer insight will be key areas for companies to focus on - especially in the media industry, said Martin Sorrell, group chief executive of WPP Group, at the AmCham Global Leaders Series lunch yesterday.
New markets refer to the growing economies of the Asia-Pacific, Latin America, Africa, the Middle East, and central and eastern Europe.
Asia, in particular, will benefit from a large and growing population - which is projected to reach two-thirds of the world's population by 2014, up from half currently.
China alone has 1.3-1.5 billion people - or 4-5 times the population of America - currently. Combined with the 1.2 billion people in India, the sheer size of the population in Asia will provide sufficient talent for a creative force to be reckoned with.
Mr Sorrell also drew reference to two centuries ago, in 1820 when China and India accounted for about half of the global gross domestic product (GDP) - which he believes, will be the scenario again in 2025.
Thus, a shift in the balance of economic power in favour of Asia is underway. Consequently, companies should rebalance the proportion of locals and expatriates in senior management positions to reflect that shift. Appointing a country manager will also deepen management's understanding of local work culture and consumers.
Mr Sorrell also sees new media, which includes the Internet and mobile communications, transforming businesses.
There is still a 'disconnect' between the way companies allocate their advertising budgets and the consumer's lifestyle - consumers spend 20 per cent of their time online but Mr Sorrell's clients spend only 12-13 per cent of their budgets on online advertising.
Marketing services will be increasingly digitised. He also highlighted that new media would help to gather consumer insight - which his clients continue to rate as being one of the more important aspects of business.
Citing the example of the car-and-truck industry that produces 80 million units, of which consumers purchase only 60 million units, Mr Sorrell said that companies should build product differentiation and branding to encourage consumer spending. But this would require deeper consumer insight.
Typically, retailers will have deeper consumer insight as manufacturers tend to mistakenly believe their consumers to be the retailers. They will also need to grapple with the growing dominance of retailers in the distribution chain. Wal-Mart accounts for 8 per cent of US retail sales while its counterpart in UK, Tesco, accounts for 13 per cent of UK retail sales.
Looking ahead, Mr Sorrell does not see any green shoots as most of the recent positive earnings results stemmed more from cost reductions than revenue increases.
However, he cautioned that the problem does not lie in the short-term. 'We will get out of this (crisis) in the short-term. I think the worry is the longer term. I think we will inflate our way out of this like we did in the 1970s.'
Search Property News
