The Ghost of Xmas present

For most marketing professionals, 1998 will be the year of digital television. Retailers are rubbing their hands with glee at the Christmas prospect (exceptionally – in every other category they are wringing them with despair). And the profound longer-term consequences of digital on our viewing habits can scarcely be doubted.

But there are plenty of other subtler, ramifications to the 1998 marketing scene worth noting for future reference. ITV may well look back on the year as a watershed, in more than one sense. The agreeable conclusion of the News at Ten affair will have given advertisers new faith in the ITV brand.

Perhaps more than they will have found in reviewing their own. True, all is not gloom. Lever Bros, for example, made an innovative and apparently successful breakthrough with the launch of its Persil detergent tablets early in the year. Certainly, it has turned the tables on P&G, which has encountered launch problems with its own product.

Yet P&G’s problems are only marginally, if at all, a reflection of its rival’s resurgence. They reflect a policy of drift which for corporate political reasons has been laid at the door of John Pepper – who will be replaced as ceo in the New Year by the more abrasive Durk Jager.

But the affliction is more profound, and by no means confined to P&G. Coca-Cola, perhaps the world’s greatest brand, has issued three profit warnings. Judging from the Schweppes acquisition last week, organic growth will not be the motor for earnings growth in the near future.

Broadening the picture to take in Kraft, Kimberly-Clark, Heinz and Kellogg, all of which are undergoing radical restructuring, a pattern emerges. They are mature packaged goods companies operating in mature markets where growth by market efficiency can no longer be taken for granted. Genuine product innovation – the only way out – is a difficult alternative.

Naturally, these are not the only issues affecting the industry, nor is packaged goods the only sector to suffer. Fashion brands have taken a nasty bashing. With hindsight, the 1998 World Cup may be seen as the highwater mark of Nike and Adidas. Certainly, the news has not been encouraging since.

Cynics may say that nothing dates as fast as fashion: the trainer brands have failed to innovate in time. But Tesco and its ilk have hardly helped matters. Products sourced in the grey market (often the US) have exposed what must seem, to many consumers, a massive pricing scam perpetrated by manufacturers. When does premium pricing become unacceptable resale price maintenance? We’ll find out when Levi’s – another fashion brand experiencing difficulties – brings litigation against Tesco to a conclusion.

On that bitter-sweet note, a prosperous New Year…

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