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The signs of an imminent recession are all around us. The spillover from the subprime mortgage crisis is weakening both consumer confidence and the consumer spending--much of it on credit--that has been buoying the US economy.

Companies should bear eight factors in mind when making their marketing plans for 2008 and 2009:

1. Research the customer. Instead of cutting the market research budget, you need to know more than ever how consumers are redefining value and responding to the recession. Price elasticity curves are changing. Consumers take more time searching for durable goods and negotiate harder at the point of sale. They are more willing to postpone purchases, trade down, or buy less. Must-have features of yesterday are today's can-live-withouts. Trusted brands are especially valued and they can still launch new products successfully but interest in new brands and new categories fades. Conspicuous consumption becomes less prevalent.

2. Focus on family values. When economic hard times loom, we tend to retreat to our village. Look for cozy hearth-and-home family scenes in advertising to replace images of extreme sports, adventure and rugged individualism. Zany humor and appeals on the basis of fear are out. Greeting card sales, telephone use and discretionary spending on home furnishings and home entertainment will hold up well, as uncertainty prompts us to stay at home but also stay connected with family and friends.

3. Maintain marketing spending. This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times. Uncertain consumers need the reassurance of known brands--and more consumers at home watching television can deliver higher than expected audiences at lower cost-per-thousand impressions. Brands with deep pockets may be able to negotiate favourable advertising rates and lock them in for several years. If you have to cut marketing spending, try to maintain the frequency of advertisements by shifting from 30-to-15 second advertisements, substituting radio for television advertising, or increasing the use of direct marketing, which gives more immediate sales impact.

4. Adjust product portfolios. Marketers must reforecast demand for each item in their product lines as consumers trade down to models that stress good value, such as cars with fewer options. Tough times favour multi-purpose goods over specialised products and weaker items in product lines should be pruned. In grocery-products categories, good-quality own-brands gain at the expense of national brands. Industrial customers prefer to see products and services unbundled and priced separately. Gimmicks are out; reliability, durability, safety and performance are in. New products, especially those that address the new consumer reality and thereby put pressure on competitors, should still be introduced but advertising should stress superior price performance, not corporate image.

5. Support distributors. In uncertain times, no one wants to tie up working capital in excess inventories. Early-buy allowances, extended financing and generous return policies motivate distributors to stock your full product line. This is particularly true with unproven new products. Be careful about expanding distribution to lower-priced channels; doing so can jeopardise existing relationships and your brand image. However, now may be the time to drop your weaker distributors and upgrade your sales force by recruiting those sacked by other companies.

6. Adjust pricing tactics. Customers will be shopping around for the best deals. You do not necessarily have to cut list prices but you may need to offer more temporary price promotions, reduce thresholds for quantity discounts, extend credit to long-standing customers and price smaller pack sizes more aggressively. In tough times, price cuts attract more consumer support than promotions such as sweepstakes and mail-in offers.

7. Stress market share. In all but a few technology categories where growth prospects are strong, companies are in a battle for market share and, in some cases, survival. Knowing your cost structure can ensure that any cuts or consolidation initiatives will save the most money with minimum customer impact. Companies such as Wal-Mart and Southwest Airlines, with strong positions and the most productive cost structures in their industries, can expect to gain market share. Other companies with healthy balance sheets can do so by acquiring weak competitors.

8. Emphasise core values. Although most companies are making employees redundant, chief executives can cement the loyalty of those who remain by assuring employees that the company has survived difficult times before, maintaining quality rather than cutting corners and servicing existing customers rather than trying to be all things to all people. CEOs must spend more time with customers and employees. Economic recession can elevate the importance of the finance director's balance sheet over the marketing manager's income statement. Managing working capital can easily dominate managing customer relationships. CEOs must counter this. Successful companies do not abandon their marketing strategies in a recession; they adapt them.

Go to the Complete Downturn Survival Guide

This post is based on an article by John Quelch that appeared in The Financial Times of London on February 19, 2008. Reproduced by permission.

While balancing their own time, CEOs should nevertheless work hard to insure the continuous attention of their people to customers. They should do the following three things:

First, the CEO should spearhead the identification of three or four customer health metrics that are leading indicators of sales or profit performance. These metrics should not be off-the-shelf standbys such as customer satisfaction (which, in any case, is a lagging indicator): they must be specific to the strategy of the business. Company scores on these metrics may be benchmarked against direct competitors and/or outstanding companies in other industries.

Second, CEOs must ensure an adequate pipeline of new product and market opportunities. This requires the investment in uncovering customer insights discussed above, either through business leaders regularly going into the field and through more formal customer research studies.

Third, the CEO has to develop marketing talent throughout the company. This cannot merely mean appointing a high-profile rainmaker as chief marketing officer. It requires the long-term infusion of customer centricity and marketing strategy capability throughout the organization. Over time, this should mean a higher percentage of general managers coming up through the marketing ranks.

Every CEO should spend at least 10 percent of his or her time making sure these three challenges. Running around visiting customers is simply not enough.

On the other hand, the president of Warner Brothers (think Batman etc) aims "to take advantage of what has become a very global market by focusing on bigger films that require a bigger commitment." He believes in blockbusters and his strategy is to create more of them.

The pharmaceutical and entertainment industries are similar. R&D costs in both are high. Results are unpredictable. Drug research initiatives often dead end but occasionally lead in an unexpected direction to a blockbuster result. Some big budget movies are flops, others are sleepers, others meet expectations.

Perhaps the CEO of GSK is really telling us that he sees no promising blockbusters in the drug pipeline. In a globally integrated market, blockbuster brands that address common consumer needs are more important than ever. Consumers around the world are excited to share common experiences. Blockbusters also motivate salespeople, get them access to customers and drive distribution for other products in a company's portfolio. A company's commitment to searching out potential blockbusters and then investing in marketing to convert potential to reality attracts and retains top scientists and creatives.

Of course, any company needs a portfolio of development projects, some with predictable sales results, others more risky. The former pay for the company's daily bread and butter and fund R&D on future blockbusters. Inverness Medical Innovations, for example, is doing exactly that, milking its number one worldwide position in pregnancy test kits to fund frontier research into cardio diagnostics.

More risky than pursuing blockbusters is not to pursue them, to condemn your enterprise to a lifetime of slave labor harvesting the long tail of micro-opportunities rather than imagining, pursuing and marketing the global solution to an important, widely shared problem.

What then makes a blockbuster? Here are the Five S's, the five defining characteristics of blockbusters. How does your brand stack up?

1. Sheer size. A blockbuster has a transformational impact on a company and an industry, often opening up new markets worldwide. Blockbusters break sales records and exceed expectations. Around 100 pharmaceutical brands exceed $1 billion in annual sales. Procter & Gamble has 23 such brands.
2. Speed. It's not just the sales volume, it's the speed of the sales trajectory. Remember that the original blockbuster was a bomb that could destroy an entire city block. Blockbuster brands address pressing consumer needs so well that they often enjoy vertical sales lift-off. Think Viagra.
3. Scarcity. A blockbuster brand is often in such high demand that stock-outs and shortages occur in the market. Remember the consumer lines to buy the new i-Phone As imitation is the sincerest form of flattery, the speedy availability of counterfeits is another indicator of popularity.
4. Sustainability. A blockbuster brand is not a one hit wonder. It is a gift that keeps on giving. Remember Intel's Pentium chip. Or look at the seven Harry Potter books and the five companion movies. Adding DVD and merchandise sales, and theme parks etc., Advertising Age valued the Potter economy at $15 billion.
5. Sizzle. A blockbuster does not just address an important need. It does so in an exciting and accessible way. Pfizer's Lipitor was not the first cholesterol reducer but superior marketing and sales made Lipitor number one. And, in the movie world, remember the magical and memorable special effects in the Star Wars series.

Are there additional criteria that define a blockbuster in your mind?

Read more on the Olympics:

• 8 Simple Steps to Winning Eyeballs in Beijing
• The 3 Levels of Branding at Beijing

This post is based on Professor Quelch's August 11, 2008 article in the Financial Times entitled "Brands Act Local To Woo A Billion Chinese Consumers"

In February 2007, a leaked internal memo written by founder Howard Schultz showed that he recognized the problem that his own growth strategy had created: "Stores no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood store." Starbucks tried to add value through innovation, offering wi-fi service, creating and selling its own music. More recently, Starbucks attempted to put the focus back on coffee, revitalizing the quality of its standard beverages. But none of these moves addressed the fundamental problem: Starbucks is a mass brand attempting to command a premium price for an experience that is no longer special. Either you have to cut price (and that implies a commensurate cut in the cost structure) or you have to cut distribution to restore the exclusivity of the brand. Expect the 600 store closings to be the first of a series of downsizing announcements. Sometimes, in the world of marketing, less is more.

Schultz sought, admirably, to bring good coffee and the Italian coffee house experience to the American mass market. Wall Street bought into the vision of Starbucks as the "third place" after home and work. New store openings and new product launches fueled the stock price. But sooner or later chasing quarterly earnings growth targets undermined the Starbucks brand in three ways.

First, the early adopters who valued the club-like atmosphere of relaxing over a quality cup of coffee found themselves in a minority. To grow, Starbucks increasingly appealed to grab and go customers for whom service meant speed of order delivery rather than recognition by and conversation with a barista. Starbucks introduced new store formats like Express to try to cater to this second segment without undermining the first. But many Starbucks veterans have now switched to Peets, Caribou and other more exclusive brands.

Second, Starbucks introduced many new products to broaden its appeal. These new products undercut the integrity of the Starbucks brand for coffee purists. They also challenged the baristas who had to wrestle with an ever-more-complicated menu of drinks. With over half of customers customizing their drinks, baristas hired for their social skills and passion for coffee, no longer had time to dialogue with customers. The brand experience declined as waiting times increased. Moreover, the price premium for a Starbucks coffee seemed less justifiable for grab and go customers as McDonald's and Dunkin Donuts improved their coffee offerings at much lower prices.

Third, opening new stores and launching a blizzard of new products create only superficial growth. Such strategies take top management's eye off of improving same store sales year-on-year. This is the heavy lifting of retailing, where a local store manager has to earn brand loyalty and increase purchase frequency in his neighborhood one customer at a time. That store manager's efforts are undercut when additional stores are opened nearby. Eventually, the point of saturation is reached and cannibalization of existing store sales undermines not just brand health but also manager morale.

None of this need have happened if Starbucks had stayed private and grown at a more controlled pace. To continue to be a premium-priced brand while trading as a public company is very challenging. Tiffany faces a similar problem. That's why many luxury brands like Prada remain family businesses or are controlled by private investors. They can stay small, exclusive and premium-priced by limiting their distribution to selected stores in the major international cities.

5. Unbundle. Customers who previously welcomed the convenience of buying product, options, and services rolled into one may now ask for a detailed price breakdown. Make it easy for your more price-sensitive customers to better cherry-pick the options and services that they truly need by giving them an unbundled menu of options.

6. Monitor Trade Terms. Beware of powerful distributors paying you more slowly than they turn the inventory they buy from you. In an inflationary environment, they're making money on the float by stretching their payables. Manage your inventory on a last-in, first-out basis to insure that increases in your realized selling prices do not trail the increases in your input costs.

7. Increase Relevance. You need to persuade customers to cut back their expenditures on other products, not on yours. In tough times, consumers more than ever need and deserve the occasional treat. So, if you are Haagen Dazs, tell the consumer to substitute private label peas for the name brand but to not forego the comfort of curling up on the sofa with a tub of her favorite ice cream. Strong brands can hold consumer loyalty while increasing retail price points. Weaker brands risk private label and generic substitution.

Clearly, not all marketers are equally affected by price inflation. Commodities like gasoline, where the manufacturer adds little value before the product reaches the end consumer, are more vulnerable, while sales of the most exclusive global luxury brands hold up pretty well regardless of price. Especially challenged are marketers of goods and services for which consumers don't necessarily understand the input costs: decorative candles, for example, are highly sensitive to oil prices and the purchases are discretionary. The key here is to educate the consumer, apologize for the uncontrollable price increases, give price-sensitive consumers some promotional options, and reemphasize product benefits.

Choice sells, in politics and in the supermarket. Distinct choices on the shelf attract our attention to a product category, engage and involve us, and increase the chances that we'll make a purchase. In other words, choice drives consumption.

The same is true of the political marketplace. With no incumbent running in the United States, the unprecedented turnouts in primary states reflect the genuine choice that voters see on the ballot. The level of choice and the uncertainty about who will prevail has fueled heavy media coverage and grassroots activism that add to voter interest.

Choice and uncertainty also spawn fierce competition. The result of the winner-take-all political system is that politicians trailing in the polls become more desperate as the day of reckoning approaches. They flood the airwaves with negative ads, especially in closely fought states like Pennsylvania and Indiana where the margin of victory was as important as who wins.

Negative ads ask us to vote against someone rather than for someone. This lesser-of-two-evils approach to political marketing inevitably breeds cynicism and sometimes backfires but it often works against new candidates who haven't yet locked down their supporters firmly enough to withstand the barrage. And, with no prospect of another debate to score points, and with Obama trying to stay positive and clinging to the moral high ground by staying positive, the underdog Clinton campaign will remain relentless in its advertising attacks on Obama.

Here are the four types of negative advertisements we've seen from the Clinton campaign:

"Fear appeal" ads, such as the 3am phone call, designed to worry voters about Obama's lack of experience.

Guilt-by-association ads that include footage of Pastor Wright.

The roll-your-own ads that exploit gaffes or contradictions using the candidate's own words.

Finally, there is the occasional policy comparison ad that contrasts the two candidates' points of view. But, with minimal policy differences separating Clinton and Obama, the emphasis is inevitably on character and emotion, experience versus change.

In the Republican race, the better-known John McCain used negative ads effectively to bury the better financed Mitt Romney in Florida. These negative ads were complimented by positive ads burnishing McCain's record. The ads ran in the final days before the Florida primary, leaving Romney little time to respond. Finally, McCain used high profile surrogates such as Governor Crist to reinforce concerns about his opponent.

Unlike politicians, companies hardly ever run negative ads. Pepsi ads don't tear down Coke; they build the brand image of Pepsi. Why? Because a tit-for-tat war of words would turn off consumers of both brands. And sales growth, not just market share, is what puts money in shareholders' pockets.

As the market leader, Coke would never give the underdog Pepsi the benefit of a mention in its ads. For its part, Pepsi would worry that negative ads against Coke would say more to consumers about the character of Pepsi than Coke. And when Pepsi did famously "challenge" Coke twenty years ago, it was with blindfolded consumers choosing between two unlabeled samples, as close as you could get to a scientific test.

The Coke and Pepsi formulas are different and they appeal to different consumers but they are what they are. A Pepsi today is the same as a Pepsi tomorrow. A Pepsi in Boston is the same as a Pepsi in LA. Political brands, on the other hand, are works in progress and consistency is not always their strong suit. Nor, based on past evidence, is their ability to deliver on the brand promise, once elected. So, no matter how many voters are turned off, no matter how much ammunition they provide the Republicans in the general election, negative ads will rule the airwaves until the Democrats select their nominee.

This year, however, concerns over the Chinese government's role in Tibet, Sudan and other alleged human rights abuses threaten to derail its plans to stage the Olympics as China’s coming out party. Tight security in Beijing may take some of the fun out of the Games, not just for the sports fans and athletes but also for the sponsors.

Take Lenovo, for example. The fourth largest personal computer manufacturer in the world is the first and only Chinese company to be a global sponsor of an Olympics. Lenovo's investment in the Games is around $100 million. The company paid millions, along with Samsung and Coca-Cola, to sponsor the torch relay. Lenovo’s sponsorship will doubtless reinforce its brand preference rankings in China. However, around the world, Lenovo hardly wishes to be known as the Chinese PC company that consumers find convenient to boycott.

Here are some trends I'm seeing among sponsoring companies:

First-time sponsors have a lot more to lose than long-term investors.
Lenovo, as a first-time global sponsor whose future depends heavily on success this year, has much more at stake than veteran Olympics sponsors such as Coca-Cola, Visa and McDonald’s. These companies are long-term investors in the Olympics; if Beijing fails to realize earlier commercial expectations, London in 2012 can make up for it. Around the world, the veteran sponsors may be careful not to over-identify with Beijing. They will emphasize sponsorships of national athletes and national teams rather than focus on the Olympic rings. But, in China, the Western multinationals will pursue a much more aggressive strategy. They will build goodwill for their brands by creating China-specific advertising and promotion programs that tap Chinese pride in hosting the Games.

"Two-faced" approaches.
Those companies that are not global sponsors of the Games will also take a two-faced approach, supporting the Games in China while being disinclined to associate with them in North American and European markets. Given the prominence of China as a supplier and customer, it is unlikely that we will witness grandstanding boycotts of the Games by any company. Most consumers around the world do not let their political views affect their purchase decisions. However, we are likely to see websites promoting boycotts of Chinese brands such as Haier, TCL and Lenovo.

Late campaign purchasing as a safety hedge.
The International Olympic Committee continues to argue that the Games and the aspirations and achievements of individual athletes should be independent of politics. The reality is that the Chinese government has always intended to use the Games to its political advantage and that further escalations of violence in Tibet could diminish public support and lead to national team and individual athlete boycotts, as occurred in Moscow following the Soviet Union's invasion of Afghanistan. As a result, marketers are not over-committing funds to Olympics-related brand advertising and promotions and the normal Olympics year advertising boost may be less than expected. Instead of long-term preset media advertising buys, many companies are planning short-term promotional bursts that they can activate as late as July and August if all appears to be in place for a successful, trouble-free Games.

The market size of the US makes it important target but, in addition, foreign companies often feel they have to crack the US market in order to gain respect. No CEO can lead a global company if that company does not have a strong presence in the USA.

So how do you penetrate the US market? The annals of business are littered with foreign companies that have never quite succeeded in the USA. But here are four companies that have managed to crack the US market. Each carries a special lesson.

1. Royal Bank of Scotland. This company built up a strong retail market share in the US, not under the RBS brand, but through a series of acquisitions of regional (not national) banks. RBS is adding value for its shareholders by letting these banks retain their individual brand identities, by focusing on improving back office efficiencies and by having the highly respected CEO of one of the acquired entities lead the combined US organization. Meanwhile, RBS is building its B2B brand with institutional clients on Wall Street.

2. IKEA. IKEA offers a furniture retailing value proposition and experience unparalleled in the US market. IKEA’s location selection expertise and their established global supply chains enable them to offer exceptional category-killer prices that are further keys to success.

3. ING. The Dutch bank converted its weakness (no retail branches in the US) into a strength. Following a successful Canadian market test, ING gave its entrepreneurial general manager the green light to offer retail banking services to US consumers but exclusively on an on-line basis. Taking advantage of its low no-bricks-and-mortar cost structure, ING was able to offer generous rates on certificates of deposit. Just four years on, ING is the third-largest holder of consumer CD investments in the US.

4. Dyson. The British home appliance maker earned a break when it managed to get a Best Buy buyer to take one of its vacuum cleaners home to test. The buyer was impressed. Fortunately for Dyson, Best Buy became the first US retailer to stock Dyson vacuum cleaners--other US retailers invariably follow Best Buy’s lead. Electronics retailing in the US is concentrated (10 chains control 60% of the market) and tough to penetrate. But Dyson could not have succeeded had its products not been superior to other vacuum cleaners already in US stores.

A current case, well worth watching, is the effort of Tesco, the British retailer, to enter the US market with the new Fresh & Easy chain of discount grocery stores. Avoiding geographies where Wal-Mart is entrenched, Tesco has so far opened 50 stores in the growth markets of California, Nevada and Arizona. The question is whether Tesco’s assortment and value proposition will be appreciated by enough consumers fast enough for weekly store sales to reach profitable levels. Stay tuned.

In business, it's not fashionable to concentrate on midfield. Focus, we are told, is essential. But you either have to be a specialist niche provider of premium-priced products tailored to a particular customer segment, or you have to shoot for scale, using low prices and volume purchasing to attract a mass market and drive down your cost structure. Midfield has been characterized as a "ditch" populated by companies with lower returns on investment than those pursuing the first two strategies. The woes of once great retailers like Sears Roebuck are cited as evidence.

But midfield is critical. It represents the middle of the market, to which one end of the market aspires to trade up and the other end of the market may have to (for economic reasons) or decide to (for lifestyle reasons) to trade down. General Motors and Ford used to control midfield in the US auto market with the Chevrolet Malibu and the Ford Taurus. Nowadays, the Toyota Camry controls midfield. That control is critical to Toyota's product line strategy.

It's not that Toyota only sells in the middle market. Far from it. They sell to all segments (except the luxury segment which they address with Lexus). But midfield is where the Bell-curve distribution of auto buyers by price of car reaches its peak. Sales of midfield product are a bellwether for dealers and consumers alike. The other products in the line - and their relative prices - hinge on the midfield entry.

A company controls midfield by fielding a complete product line that includes backs and forwards. In its supermarkets, Tesco, the successful UK retailer, offers consumers three options - good, better and best - in most high turnover product categories. In addition, Tesco, doesn't just sell groceries through one-size-fits-all supermarkets. Recognizing the need to shape as well as respond to an increasingly segmented market, Tesco reaches its consumers through at least seven different store formats, from convenient Tesco Express outlets at one end of the spectrum to full assortment hypermarkets at the other. But, within all its stores, Tesco implements the same merchandising principles: Better, Simpler, Cheaper.

The question arises: Can a company control midfield by playing only in midfield? The answer is "yes" but only if there is a precise and persuasive value proposition. Until three years ago, Charles Schwab had lost its way. The former king of discount brokerage had let its cost structure drift upwards and its prices had been undercut by Ameritrade and E*trade. Research identified a large middle market of investors, bruised by the end of the dot com bubble, in need of more advice and brand assurance than Vanguard and Fidelity provided but without enough investable assets to be important to Merrill Lynch. The successful "Talk to Chuck" campaign appealed to this group, presenting Charles Schwab as an approachable partner serving the best interests of investors. Charles Schwab's asset growth over the past two years has topped the industry charts.

Midfield is a moving target. If Charles Schwab serves its customers well, their assets will grow to the point that they'll need more sophisticated services and advice. To control midfield, companies like Charles Schwab must stay consistent in their positioning but also respond to the evolving needs of their existing customers with new products and services. Very careful cost and service tradeoffs are required of companies that continue to dominate the middle ground.

Nowhere is controlling midfield more important than politics. With just two mainstream political parties evenly balanced, the winner is invariably the party that appeals best to "middle class values" and "middle America" and that captures a majority of the independents in the middle. The middle may not be as clearcut or exciting as the left or the right. It is a fuzzy zone that requires constant compromise. Yet midfield is where the votes are.

Do you agree that controlling midfield is a viable strategy? Can you think of other success stories?

Marketing is often dismissed. CEOs and CFOs claim it isn't rigorous. Consumer advocates find it deceptive and intrusive. Sociologists contend it encourages self-centered materialism. Marketers, preoccupied with individual campaigns, do a pitiful job of understanding and marketing the importance of their profession.

Marketing contributes enormously to economic development -- and it is also a force for social good. The billions of mutually satisfying exchanges that occur daily in the commercial marketplace are part of the glue that builds the trust and respect that hold society together. The practice consumers gain choosing products makes them smarter citizens when they come to choose among political candidates. A world without marketing would be a wasteland of sameness, commoditization, and inertia. Marketing fuels the creative industries that bring us entertainment. Marketing know-how helps public policy makers change citizen behaviors by, for example, encouraging seat-belt usage or good nutrition.

Of course, marketing can be abused. A small minority of marketers deceive people. But the vast majority know that respecting the customer is key to a profitable long-term relationship. Customers, with all their cumulative experience in the marketplace, are rarely gullible. Yet a high percentage of consumers believe that marketing deceives people, even though a much lower percentage agrees to ever having been deceived themselves. That's one of the democratic niceties of marketing. Everyone can have an opinion about the latest product or this year's SuperBowl ads.

We compared the political marketplace and the commercial marketplace and asked the question: "Which is more democratic?" We discovered that the benefits that marketing and democracy deliver to society are remarkably similar.

Marketers give consumers information. They offer consumers choice. They want to engage consumers, to earn their interest and loyalty. Most marketers seek to be inclusive, to bring good quality to the masses. Finally, a marketer's success depends on an exchange occurring with a customer and subsequent consumption of the goods and services purchased. These benefits are equally relevant in the political marketplace.

But which is more democratic? The answer is, surely, the commercial marketplace, where solutions can be customized for specific market segments, even for individual consumers. Diversity is addressed readily by marketers while public policymakers still struggle to find one-size-fits-all compromise solutions.

The political marketplace is winner takes all. Citizens who vote for the losing candidate have to live with the winner. In the commercial marketplace, consumers do not have to choose a single brand. They can drink Miller High Life during the week and Michelob on weekends.

Political democracies therefore require citizens to accept the collective judgment of the majority of voters. They get to make a purchase (i.e. cast a ballot) only once every two, four or six years, depending on the office. And the candidates only have to worry about achieving market share leadership on polling day, whereas commercial marketers are keen to increase market size as well as market share and they have to count consumers' votes every single day.

So, if the commercial marketplace is more democratic than the political marketplace, why all the criticism? The answer is that commercial marketing is becoming too successful. For the 80% of American adults who are not political junkies, relationships with brands like Starbucks and BMW are more rewarding than associations with political parties. For most citizens, neither Democrat nor Republican is a trusted brand with a consistent, differentiated, and relevant positioning in the marketplace of ideas.

To respond, our politicians and parties must do a better job of marketing themselves. The development of grass roots campaign websites allowing voters to question candidates and engage in online debate can help. But a more fundamental shift in attitudes is called for. Instead of treating citizens merely as taxpayers, donors and voters, politicians must engage citizens as effectively as marketers engage consumers.

Which do you think is more democratic, politics or marketing?

There are five structural reasons why this is the case.

First, in U.S. general elections, voters usually see only two viable candidates on the ballot. That’s one reason turnout is low. In any other product category, there are many more choices. As a result, consumer interest – and consumption – is higher.

Second, in representative democracies, the consumer has to live with the majority decision. That also dampens enthusiasm. Not so in commerce. You can buy or own whichever brand, or suite of brands, you wish.

Third, in U.S. politics, citizens vote on a specified date once every two, four or six years. Maybe they have to register in advance, wait in line at the polling station, and use an out-of-date polling machine to do so. The commercial marketplace is much more convenient. Consumers can cast their votes at millions of points-of-purchase every day.

Fourth, some politicians understand that Branding 101 requires the development of a distinctive, appealing message, delivered consistently over time. But politicians can’t win by targeting a single niche segment. They have to win a majority on election day, and doing so often means parsing words, trying to have it both ways, and allegedly flip-flopping on issues. In addition, the winner-takes-all system often leads candidates to desperate tactics such as negative advertising to tear down their opponents rather than promoting their own virtues. Citizens can be forgiven for being cynical.

A final reason for consumer indifference to politics may be the effectiveness of commercial marketing. Most consumers have stronger relationships with brands like Starbucks (the “third place” after home and work) than with their elected representatives or the umbrella political brands, Democrat or Republican.

Yet there are reasons for hope. Citizen interest in this year’s primaries is high because there is no obvious winner and genuinely different candidates are competing on both sides. The Internet has greatly increased the opportunity for non-establishment, underfunded candidates to develop viable grass-roots campaigns. Voter questions and candidate answers in town meetings are now the standard. In other words, this year’s election process so far seems more open and democratic than ever.

Around $20 per vote will be spent on political advertising in this year’s presidential campaign. By commercial standards, and given the importance of the purchase decision, that doesn’t seem high.

What’s needed in politics is not less marketing but better marketing: focusing on current and emerging customer needs, developing product and service solutions, informing interested citizens about them and making them easily accessible. I remember Leonard Marsh, one of the three founders of Snapple, explaining the brand’s success: “We never thought of ourselves as any better than our customers.” Politicians need to view citizens not as occasional voters, donors and taxpayers but as their customers.

What do you think?

Google threatens the traditional agency model in several ways. First, Google collects money from advertisers on the basis of performance, not promise. As Sergey Brin says: “We are able to demonstrate value to advertisers in a way that has never been done before.” Second, Google is selling direct to advertisers as well as through the agencies who traditionally have charged clients a commission on their media purchases. Third, Google is running experiments that involve it gathering up unsold advertising inventory of magazine ad space or television ad time and auctioning it off electronically. Fourth, Google gives away advertising services (such as templates for creating ads) that agencies traditionally charge for and also enables advertisers to change ad copy easily and at low cost online. Finally, Google looks well-poised to take advantage of the next new frontier in advertising – mobile.

In 2008, traditional advertising companies will stop seeing Google as an enemy and learn to embrace it.

Many ad agency executives are already sanguine about Google, but for the wrong reasons. Some expect to retire before Google changes the world, then it will be someone else’s problem. Others point out that Google’s share of US advertising is barely 3 percent; the world never changes as quickly as the pundits project.

But the main reason why ad agency executives should not be concerned is that Google is great news for advertising, and that will become more apparent in 2008. Here’s why: First, Google’s business model is a great advertisement for the power of advertising; it generates ad revenues to fund the services it delivers to consumers for free. As a result, the Microsoft business model – charging licensing fees for software – is in rapid decline and Microsoft is scrambling to compete with Google. Second, by making advertising more accountable and pay-for-performance driven, Google is helping sustain ad expenditures against hard-nosed CFOs looking for proven returns on their marketing investments. Third, Google is not just succeeding by stealing advertising from traditional media – though there is some of that – but making it easy for a new wave of small- and medium-sized businesses to invest in advertising for the first time.

Recent data show that the average US consumer is online about one-quarter of the time he or she spends with media (ie watching TV, reading magazines etc.). Yet, in 2007, only 6% of all US advertising expenditures went to online search and banner ads. This gap has to close. And it will, as major advertisers become more comfortable with the accountability and micro-targeting involved in online advertising. Google promises to lead this transition, and in 2008, smart advertising firms will learn to follow.

Some of the salient remarks you made: Ann Sathasivam emphasized the need to respect suppliers' advice. Simi Situ argued that, if the customer is king, the customer must treat vendors with respect and walk in their shoes. Raj Bose cautioned that, as a customer, one "should also respect oneself while trying to be respectful" because too much intimacy between buyer and seller can undermine professionalism. Likewise, Biodun Soyombo pointed out succinctly that "respect is reciprocal."

Since there was so much interest in the topic of how to be a customer and, in particular, respect, I thought I'd honor your interest by discussing it further.

At its core, marketing depends on mutually satisfying exchanges. Yet most marketing advice focuses on what the seller should do, not what the customer should do. In the same way, almost all the leadership literature focuses on what leaders should do, while followers are all but ignored. In looking all the literature, there’s one word that appears very rarely yet is of supreme importance: respect. Marketers and salespeople have to respect their customers to succeed.

At a recent global marketing meeting of a quick-serve restaurant chain, a manager presented a slide showing the customer base split into thirds: a loyal, heavy-user segment, a mid-range segment and a price and promotion sensitive segment. The third segment was named “the bottom feeders.” This drew a chuckle from the audience, but one manager asked this question: “What if our consumers whom you are calling bottom-feeders knew that that’s how the company where they spend their hard-earned dollars thinks of them?” All present immediately saw the point: if you have contempt for your customers, you cannot be their servant.

Consider the case of Gerald Ratner. He built the largest jewelry chain in Britain in the 1980s, before famously destroying 500 million pounds in shareholder value in 1991 by describing a decanter and glassware set that his chain sold for 9.99 pounds as “total crap.” He further commented that a pair of earrings were “cheaper than a Marks & Spencer prawn sandwich but probably wouldn’t last as long.” The message these remarks conveyed, intended or not, was that his chain’s customers were “suckers.”

Respect for your customers is essential to marketing success. Respect requires listening and it requires humility. One of the New York window washers who founded Snapple put it like this: “We never thought of ourselves as any better than our customers.” Sam Walton lived to this same standard his whole life. But how many successful entrepreneurs move on to lavish lifestyles, try to drag their brands to higher price points to improve their respectability, and in the process lose touch with the customers that brought them to the dance?

That’s why it is so important for CEOs to set an example to their organizations and get out into the field face-to-face not just with their immediate business customers but also with their end consumers. A.G. Lafley, CEO of Procter & Gamble, is in consumer homes at least once a quarter. Terry Leahy, CEO of Tesco plc, the global UK retail chain, is in stores two days each week, listening to customers and motivating his front-line employees. It would be all too easy to sit behind a desk reviewing consumer research data on a computer screen – but, to develop new consumer insights, there’s no substitute for spending time at the customer coalface. And, if the CEO sets the example, the rest of the organization will follow.

Consider the situation at Starbucks. Starbucks was flying high in 2002, with the stock reaching an all-time high and new outlets opening every day. Yet the loyalty of Starbucks’ core customers was eroding as waiting times increased in ever more crowded stores. And the baristas’ ability to engage customers in conversation, to show them the respect that they felt they deserved for paying $3.50 for a cappuccino, was strained to the limit. Starbucks was collecting consumer research data that highlighted these emerging problems, but the message took didn’t get through to the boardroom. Everyone owned the customer at Starbucks; as a result, noone owned the customer. Starbucks reacted in time, adding extra store personnel to relieve the bottlenecks. But, to this day, Starbucks wrestles with how to balance respect for its original customers who value a relaxing ambience in which to drink their coffee and at the same time satisfy a new set of convenience-oriented take-out customers for whom service means speed rather than conversation.

My last example is personal. Two years ago, I dented my car and took it to a body shop for an estimate. A large tattoo-covered man stood behind the counter. And behind him, on the wall, hung a sign that did not inspire confidence in the respect that this establishment had for its customers. The sign read: “We rip off the other guy and pass the savings on to you.” I inquired meekly: “I hope I’m not ‘the other guy’?”

The golden rule of respect applies in both directions in all successful marketing exchanges.