Thursday, 9 April 2009

Needs and wants

Economic growth is primarily caused by sales managers. They drive their sales forces to sell more, and more, and more. To hit the sales target and exceed it in the next quarter. They prepare graphs moving inexorably upwards. Whether it’s expensive watches, loaves of bread, winter sports equipment, painkillers, software, bank loans, bathroom fittings or cars – everyone – the managers, their bosses, the shareholders to whom they report – everyone expects Growth. If they fail to deliver growth, sales managers lose their job.

Traditionally, growth has been fuelled by need. The entrepreneur, spotting a gap in the market, delivers goods or services to assuage that need. As one market becomes saturated with bread or transistor radios, businesses moves on to meet needs in markets emerging. Today’s bonus-driven managers and shareholders are not content with flat markets. So when a need has run out, create a new one. Really smart entrepreneurs invent a need - for Post-It notes or a Sony Walkman. The intensity of modern human living is a spiral of wanting to cram in as much pleasurable experience in one's life-span. Anything that can reduce time spent on non-pleasurable activities - washing dishes for example - gives you time to spend on doing what you want rather than what you have to do.

The sales manager is supported by advertising and marketing, which exists to generate new demand. Look at the ads all around – indeed even those small, targeted ads that pay for the Google and allow me to blog to you for free. Those billboards and TV ads urging you to buy that brand new car even though your old one is fine.

And if you can't afford it - don't worry - the sales manager is also supported by the consumer credit function who will ensure that the wanting customer is extended a loan to help him or her purchase whatever it is the sales manager is selling.

Now here's the problem - American and British consumers went so far into debt to buy the things they wanted (rather than needed) that the whole system ground to a halt. People who'd once told me "well, if the banks want to lend me the money, I'll take it!" are now in deep trouble.

No one wants a return to a primitivist lifestyle – a Pol Pot-style Year Zero in which shopping malls are torn down and replaced by Grain Enfactorment Sectors (fields). And yet the world against which such visions are a backlash, a world of consumer excess, seems to have run its course.

The pendulum must swing back before we return to some kind of stability. Note - stability not growth. The phrase 'sustainable development', which once meant 'focusing on the medium term rather than the short term' will have to take on a meaning more absolute.

Historically, Lent occurred in the lean period of the year in Europe, when much of the harvested food stocks from the last autumn had been consumed, and when there was still some time to go before the first fruits of spring would appear. It was a lean time for all, and a good time to contemplate the Eternal. We're in an economic Lent - one that will not be over for an eighth of a year but for an eighth of a lifetime. We must learn from enforced astheticism; self-denial, deferred gratification. A time to stand away from the treadmill and focus on what life is really about.

Global corporations that pride themselves on their corporate social responsibility should adopt responsible marketing. Selling things that people need (rather than merely want), to people who can afford them (without having to go into debt).

1 comment:

Bartek Usniacki said...

but what if the sales manager is obsessed with sales figures and sets his subordinates exorbitant targets? Employees try out various tricks, sometimes just not to be sacked, sometimes to get higher bonuses About salespeople. Setting sales targets brings similar results to the effects of plans in planned economy - executives in factories lowe their capacities to be able to exceed the plan. The comparison is a bit exgerrated but shows up shortcomings of such solutions...

Lent? In the world of consumerism? I do go along with your proposals and reflections but who's to go for it? Imagine how would our living standard change if we'd be allowed to spend, conditioned that we obey one rules - we stay in the black - no credit cards, no cash loans, even no mortgages... (house prices would be back considerable!). It would clamp down on the economy but maybe "be" would be finally more important than "have"

CSR is nothing but the PR stunt. Companies do not give a shit (sorry for the expletive) about the poor orphans, environment protection, famine in the Third World etc. They care about their image, if being socially responsible is up-to-date and may bring additional profits, they commit in it - just a cool calculation...

Views are subjective and slightly brutal, but it's better not to have illusions about it...