http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090723/boc_economy_090723/20090723?hub=TopStories
The Bank of Canada is declaring the recession essentially over in Canada and projecting the economy will bounce back at least twice as strongly as in the United States.
Canada is coming out of the deepest and most painful downturn since the Second World War
The bank remains concerned that the fragile financial systems in the United States and Europe may contain more unpleasant surprises
But overall, the new outlook represents a clearly more optimistic view of the Canadian economy
growth is now projected to turn positive in the third quarter (of 2009)," the bank now says.
the central bank adds specifics and context to its new outlook, and almost all are favourable to Canada, especially in relation to the United States.
overall view that it will take until mid-2011 for Canada's economy to return to full capacity.
What is happening, say the economists in the bank's governing council, is that Canadians are responding to low interest rates and growing confidence by pulling the trigger now on such big-ticket items as houses, cars, furniture and appliances they were planning to purchase later.
The U.S. has stopped shrinking, but is still likely not growing. And Europe may still be in recession, along with Japan. Next year, the U.S. will only rebound by 1.4 per cent, less than half Canada's rate, and the European area by a mere 0.7 per cent. The strongest engine of growth globally is China
Just as Canadian exports of autos and wood products were hardest hit during the downturn, they will be boosted more than other industries once demand returns in the U.S.
Showing posts with label market indicators. Show all posts
Showing posts with label market indicators. Show all posts
Thursday, July 23, 2009
Tuesday, July 14, 2009
The Power of Momentum
This is a long one, but certainly worth it. There are 2 key things that I've picked up from this article. The first is that you can use the metric "marketing-sales-ratio" over time (in this case 20 years) to measure your marketing efficiency. The second is the importance of building momentum. As they say in this article "Momentum leaders aren't that passive. They live by this motto: First build your wave, then ride it."
This study looks at the conduct and performance of well-known corporations among the world's 1,000 largest, covering a 20-year period from 1985 to 2004. The authors looked at these firms' marketing behavior and tracked the effect that changes in this behavior had on sales revenue, net earnings, and stock price.
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2033
Introduction
Momentum...Some hold on to it. Most don't. Slowly, imperceptibly, the tailwind turns around and the momentum disappears, without anyone quite realizing what has happened. The company is still growing, but not as strongly as before, not as efficiently. Everyone's maxing out, but it seems like there's molasses in the works. Sound familiar?
The insight came when we realized that if momentum was powering a firm's success, then its relative marketing spend should be decreasing. Contrary to conventional "spend money to make money" wisdom, our hunch was that firms with momentum achieved superior growth while spending a relatively smaller percentage of their revenue on marketing than those pursuing the traditional "push hard" methods.
We divided the firms into three groups according to how their marketing behavior could be described: Pushers, Plodders, and Pioneers. Because we were interested in the effect of extremes in marketing behavior, our three groups were divided in a 25:50:25 split.
The Pushers were those companies that pushed their businesses hard in the traditional way, seeking to drive sales through aggressive increases in relative marketing spend. Then there were the Plodders...Their marketing-to-sales ratio remained more or less constant for 20 years. These middling firms stayed in the safety zone of past behavior and took no drastic action one way or the other. Finally, there was the remaining quarter -- those firms that were, either boldly or foolhardily, heading in the opposite direction from the Pushers, and decreasing their relative marketing spend. Taking these firms' average marketing-to-sales ratio, we see a 4% drop over the timeframe.
Results
remaining in the safety zone of stable marketing spend is not a viable option: The Plodders underperformed the stock market by 28 percent (over a 20 year period)
Pushers managed, on average, to create shareholder value exactly in line with the evolution of the Dow Jones Index, thus demonstrating the soundness of the conventional faith in the power of active marketing spend to contribute to increasing shareholder value
Pioneers. Despite having decreased their advertising-to-sales ratio, these momentum-powered companies created shareholder value 80% above the Dow Jones Index over the 20-year period.
Over the 20-year period, using the Pushers' performance as a reference, the Pioneers' revenue growth was 93% better -- almost twice as high. They achieved this massive revenue growth despite decreasing their advertising ratio. And remember: This is in comparison not to underperforming firms but to firms that actually matched the Dow Jones Index.
If we compare the profitability growth of these two groups, we can see that the Pioneers also did much better, with average earnings growth 58% superior to that of the Pushers.
Analysis & Conclusions
our study shows that the momentum-powered Pioneers actually increased their total marketing expenditures in real terms. But while their marketing budgets were increasing, the proportion of their revenue that this expenditure represented was decreasing. In other words, because of the Pioneers' superior revenue growth, their advertising-to-sales ratio was coming down despite the fact that they were spending more.
The question is: What was improving the efficiency of their marketing investments? This is not simply a case of great marketing, although marketing excellence is a key part of the mix. These firms achieved greater efficiency with their marketing because they found a different path to growth: They exploited the momentum effect.
Momentum Powered Firms
Too often, companies invest more in marketing to compensate for something: an inferior product, a poor pipeline of new products, deterioration of growth prospects, or a general lack of creativity. Firms with such a limited vision compensate for their less-than-spectacular offers by pushing them on an unconvinced market using heavy-handed marketing resources.
The Pioneers show there is an alternative. These momentum-powered firms don't have to push so hard because they have built up a momentum that improves their efficiency. Rather than just better-than-average growth, they deliver exceptional growth. Their growth is exceptional on two counts: It is both higher and more efficient.
Momentum in Action
WALMART
Sam Walton knew about retail, but his main asset was the fact that he knew about customers. When he started out, he related deeply to a very specific kind of customer -- people like him, people from the United States' rural South.
Walton understood that these customers would value his offering, that they would appreciate being able to shop locally, rather than making long journeys to larger towns. He also realized that these shoppers were worth more than they seemed. Although their wallets weren't as full as those of people in large cities, Wal-Mart was able to command a higher share of their spending because there was no competition. The combination of cheaper premises, lower labor costs [and] no competition ... meant that Walton's customers were extremely profitable to service.
Eventually, Wal-Mart was able to glean economies of scale in purchasing to achieve its mantra of "Every Day Low Price" (EDLP) and gain further momentum.
EDLP runs counter to traditional retail promotions that lure customers into stores, hoping that they'll also end up buying more expensive products.
Wal-Mart's competitors, to their discomfort, failed to understand that, although EDLP was jargon on the surface, it expressed a strong, hidden emotional value deeply appreciated by customers: trust. This customer trust powered the company's growth for decades.
Unfortunately, momentum doesn't look after itself. There is a perception that Wal-Mart slowly began to pay less attention to many of the key drivers of its success -- respect for employees, local communities, and suppliers -- and began to lose its momentum as a result. Momentum is dynamic: Unless it is constantly nurtured, it will ebb away.
TOYOTA
Toyota's ability to create new, original, and compelling value in the first place that drives its growth. Its secret is its ability to connect totally with customers' sense of self, to create products that are more than mere goods but complete, perfect, and compelling presentations of value.
Consider the contrasting histories of the U.S. auto industry and Toyota. American car manufacturers are among the best illustrations of the limitations of the Pusher's strategy. They have given everything a try in terms of efficiency drives, but although they are now leaner, they are no fitter.
Its success is based on a number of factors, but underlying its achievement is a deep understanding of its customers. First, Toyota proved that it could consistently deliver reliable, impeccably engineered automobiles. Once this crucial plateau had been achieved, it went on to innovate its range with cars that were somehow more than mere vehicles.
Join the Momentum League
Our research has shown that increases in marketing pressure can lead to significant profitable growth.
Momentum offers an easier, more efficient, and exceptional form of growth. But it requires the ambition to break free from the traditional reflex of using more resources to fuel it. The very things that seem to push you forward are holding you back. Momentum does not happen by chance. Nor can it simply be willed into existence. Achieving momentum requires an understanding of its source, and then the relentless application of a systematic process. It requires a momentum strategy.
This study looks at the conduct and performance of well-known corporations among the world's 1,000 largest, covering a 20-year period from 1985 to 2004. The authors looked at these firms' marketing behavior and tracked the effect that changes in this behavior had on sales revenue, net earnings, and stock price.
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2033
Introduction
Momentum...Some hold on to it. Most don't. Slowly, imperceptibly, the tailwind turns around and the momentum disappears, without anyone quite realizing what has happened. The company is still growing, but not as strongly as before, not as efficiently. Everyone's maxing out, but it seems like there's molasses in the works. Sound familiar?
The insight came when we realized that if momentum was powering a firm's success, then its relative marketing spend should be decreasing. Contrary to conventional "spend money to make money" wisdom, our hunch was that firms with momentum achieved superior growth while spending a relatively smaller percentage of their revenue on marketing than those pursuing the traditional "push hard" methods.
We divided the firms into three groups according to how their marketing behavior could be described: Pushers, Plodders, and Pioneers. Because we were interested in the effect of extremes in marketing behavior, our three groups were divided in a 25:50:25 split.
The Pushers were those companies that pushed their businesses hard in the traditional way, seeking to drive sales through aggressive increases in relative marketing spend. Then there were the Plodders...Their marketing-to-sales ratio remained more or less constant for 20 years. These middling firms stayed in the safety zone of past behavior and took no drastic action one way or the other. Finally, there was the remaining quarter -- those firms that were, either boldly or foolhardily, heading in the opposite direction from the Pushers, and decreasing their relative marketing spend. Taking these firms' average marketing-to-sales ratio, we see a 4% drop over the timeframe.
Results
remaining in the safety zone of stable marketing spend is not a viable option: The Plodders underperformed the stock market by 28 percent (over a 20 year period)
Pushers managed, on average, to create shareholder value exactly in line with the evolution of the Dow Jones Index, thus demonstrating the soundness of the conventional faith in the power of active marketing spend to contribute to increasing shareholder value
Pioneers. Despite having decreased their advertising-to-sales ratio, these momentum-powered companies created shareholder value 80% above the Dow Jones Index over the 20-year period.
Over the 20-year period, using the Pushers' performance as a reference, the Pioneers' revenue growth was 93% better -- almost twice as high. They achieved this massive revenue growth despite decreasing their advertising ratio. And remember: This is in comparison not to underperforming firms but to firms that actually matched the Dow Jones Index.
If we compare the profitability growth of these two groups, we can see that the Pioneers also did much better, with average earnings growth 58% superior to that of the Pushers.
Analysis & Conclusions
our study shows that the momentum-powered Pioneers actually increased their total marketing expenditures in real terms. But while their marketing budgets were increasing, the proportion of their revenue that this expenditure represented was decreasing. In other words, because of the Pioneers' superior revenue growth, their advertising-to-sales ratio was coming down despite the fact that they were spending more.
The question is: What was improving the efficiency of their marketing investments? This is not simply a case of great marketing, although marketing excellence is a key part of the mix. These firms achieved greater efficiency with their marketing because they found a different path to growth: They exploited the momentum effect.
Momentum Powered Firms
Too often, companies invest more in marketing to compensate for something: an inferior product, a poor pipeline of new products, deterioration of growth prospects, or a general lack of creativity. Firms with such a limited vision compensate for their less-than-spectacular offers by pushing them on an unconvinced market using heavy-handed marketing resources.
The Pioneers show there is an alternative. These momentum-powered firms don't have to push so hard because they have built up a momentum that improves their efficiency. Rather than just better-than-average growth, they deliver exceptional growth. Their growth is exceptional on two counts: It is both higher and more efficient.
Momentum in Action
WALMART
Sam Walton knew about retail, but his main asset was the fact that he knew about customers. When he started out, he related deeply to a very specific kind of customer -- people like him, people from the United States' rural South.
Walton understood that these customers would value his offering, that they would appreciate being able to shop locally, rather than making long journeys to larger towns. He also realized that these shoppers were worth more than they seemed. Although their wallets weren't as full as those of people in large cities, Wal-Mart was able to command a higher share of their spending because there was no competition. The combination of cheaper premises, lower labor costs [and] no competition ... meant that Walton's customers were extremely profitable to service.
Eventually, Wal-Mart was able to glean economies of scale in purchasing to achieve its mantra of "Every Day Low Price" (EDLP) and gain further momentum.
EDLP runs counter to traditional retail promotions that lure customers into stores, hoping that they'll also end up buying more expensive products.
Wal-Mart's competitors, to their discomfort, failed to understand that, although EDLP was jargon on the surface, it expressed a strong, hidden emotional value deeply appreciated by customers: trust. This customer trust powered the company's growth for decades.
Unfortunately, momentum doesn't look after itself. There is a perception that Wal-Mart slowly began to pay less attention to many of the key drivers of its success -- respect for employees, local communities, and suppliers -- and began to lose its momentum as a result. Momentum is dynamic: Unless it is constantly nurtured, it will ebb away.
TOYOTA
Toyota's ability to create new, original, and compelling value in the first place that drives its growth. Its secret is its ability to connect totally with customers' sense of self, to create products that are more than mere goods but complete, perfect, and compelling presentations of value.
Consider the contrasting histories of the U.S. auto industry and Toyota. American car manufacturers are among the best illustrations of the limitations of the Pusher's strategy. They have given everything a try in terms of efficiency drives, but although they are now leaner, they are no fitter.
Its success is based on a number of factors, but underlying its achievement is a deep understanding of its customers. First, Toyota proved that it could consistently deliver reliable, impeccably engineered automobiles. Once this crucial plateau had been achieved, it went on to innovate its range with cars that were somehow more than mere vehicles.
Join the Momentum League
Our research has shown that increases in marketing pressure can lead to significant profitable growth.
Momentum offers an easier, more efficient, and exceptional form of growth. But it requires the ambition to break free from the traditional reflex of using more resources to fuel it. The very things that seem to push you forward are holding you back. Momentum does not happen by chance. Nor can it simply be willed into existence. Achieving momentum requires an understanding of its source, and then the relentless application of a systematic process. It requires a momentum strategy.
Wednesday, June 24, 2009
The Pasta Indicator: when is the market going to turn?
Hi There,
Just this week I've had some very positive feedback from clients in both the home and auto industries about their recent campaigns. While business is still not great by most accounts, there seems to be a growing number of positive stories this month over last.
If you're interested to chat about I can help your business grow, please don't hesitate to call me at 403-686-9715 or email marc.binkley@calgaryradio.rogers.com
http://treasure.1x1y.com.cn/useracticles/20090211/20090211083014615.html
recessions don't last forever, and we'll be coming out of this one long before official statistics say so. That's just the way it works. Most economic data — like the quarterly GDP reading — are lagging indicators. What you need are leading indicators that will signal when we've made a turn.
Here are 10 indicators to help you know when times are getting better
1. Home Sales
says Jeoffrey Hall, chief U.S. economist for Thomson Financial. He's watching the National Association of Home Builders House Market Index, which measures recent sales, expected sales, and prospective buyer traffic. "The faster it rises," says Hall, "the faster I'd say we're emerging from recession."
2. Jobs
companies typically cut hours before cutting heads the slide means more layoffs are coming. the key is to just change the direction. You can find private sector average weekly hours worked on the Bureau of Labor Statistics web site.
3. Jobs (again)
monthly temporary employment. In 2002, temporary hiring went from net job losses to net job gains almost to the month that the recession ended. At this moment, the monthly change in temporary employment has been negative for 25 months running. When it swings positive you can be sure that better times will follow. This can be tracked on the BLS web site as well.
4. Car Sales
Cars are one of the first big-ticket items that consumers buy when they start to feel good again. "It's only fear that's holding consumers back," says James Smith, chief economist at Parsec Financial Management. "They have money — $56.5 trillion of net worth — and the products available are attractive and well priced." They just need to start feeling a little better about the economy and their financial future.
5. Retail Sales
For the seventh consecutive month, retail sales fell in January. When that string reverses it will be a positive sign. But more important will be any shift away from discounters like Wal-Mart and Dollar General towards specialty or higher end stores like Nordstrom or Saks. You can track retail sales at http://www.census.gov/.
6. Interest Rate Spreads
Modest signs have begun to emerge suggesting that the credit freeze is thawing. When credit spreads across the spectrum narrow it will signal that money is flowing again, a critical development. Also, and perhaps easiest to follow, look for jumbo mortgages which are now about 1.5 percentage points above conforming mortgages to close to within half a point.
7. The Pasta Indicator
When pasta sales begin to slow you'll know times are getting better. One way to track the trend is by watching financial results at American Italian Pasta Co. (ticker: AIPC), which is North America's largest pasta producer. The stock has soared from $5 to $26 in the past 12 months while just about everything else got hammered.
8. The Cardboard Indicator
Alan Greenspan was fond of tracking liner board prices. The idea is simple: liner board is a main component of cardboard, which is used as packaging to ship just about everything. When liner board prices surge it means that packaging is in demand, which can only be the case if people are buying things, which in turn signals a healthy economy. Liner board isn't easy to track. As a proxy, keep your eye on the stock price of leading cardboard producers Smurfit-Stone Container Corp. (ticker: SSCC) and International Paper (IP). Their shares began falling before the recession started and could turn higher before the recovery begins.
9. Sweet-Talking Bill Collectors
The big card companies are waiving fees, restructuring debt and even accepting payoffs of as little as pennies on the dollar. They're not doing this to be good guys; they are bracing for a continued wave of defaults and want to collect as much as they can right now — before some other bill collector gets to you first and leaves you with empty pockets. You'll know the economy is righting itself when credit card companies stop negotiating with debtors. To monitor this industry, check out creditcard.com. 10. Movie Madness
But where Hollywood storylines tend to lag the economy, movie goers as a group tend to lead the economy. So it was that the number of tickets sold dropped 4% last year, when film buffs collectively concluded that with money so tight they might as well make better use of their high-def home theater system. Watch for that trend to reverse. You can check for year-to-date movie ticket sales comparisons at http://ercboxoffice.com/
Just this week I've had some very positive feedback from clients in both the home and auto industries about their recent campaigns. While business is still not great by most accounts, there seems to be a growing number of positive stories this month over last.
If you're interested to chat about I can help your business grow, please don't hesitate to call me at 403-686-9715 or email marc.binkley@calgaryradio.rogers.com
http://treasure.1x1y.com.cn/useracticles/20090211/20090211083014615.html
recessions don't last forever, and we'll be coming out of this one long before official statistics say so. That's just the way it works. Most economic data — like the quarterly GDP reading — are lagging indicators. What you need are leading indicators that will signal when we've made a turn.
Here are 10 indicators to help you know when times are getting better
1. Home Sales
says Jeoffrey Hall, chief U.S. economist for Thomson Financial. He's watching the National Association of Home Builders House Market Index, which measures recent sales, expected sales, and prospective buyer traffic. "The faster it rises," says Hall, "the faster I'd say we're emerging from recession."
2. Jobs
companies typically cut hours before cutting heads the slide means more layoffs are coming. the key is to just change the direction. You can find private sector average weekly hours worked on the Bureau of Labor Statistics web site.
3. Jobs (again)
monthly temporary employment. In 2002, temporary hiring went from net job losses to net job gains almost to the month that the recession ended. At this moment, the monthly change in temporary employment has been negative for 25 months running. When it swings positive you can be sure that better times will follow. This can be tracked on the BLS web site as well.
4. Car Sales
Cars are one of the first big-ticket items that consumers buy when they start to feel good again. "It's only fear that's holding consumers back," says James Smith, chief economist at Parsec Financial Management. "They have money — $56.5 trillion of net worth — and the products available are attractive and well priced." They just need to start feeling a little better about the economy and their financial future.
5. Retail Sales
For the seventh consecutive month, retail sales fell in January. When that string reverses it will be a positive sign. But more important will be any shift away from discounters like Wal-Mart and Dollar General towards specialty or higher end stores like Nordstrom or Saks. You can track retail sales at http://www.census.gov/.
6. Interest Rate Spreads
Modest signs have begun to emerge suggesting that the credit freeze is thawing. When credit spreads across the spectrum narrow it will signal that money is flowing again, a critical development. Also, and perhaps easiest to follow, look for jumbo mortgages which are now about 1.5 percentage points above conforming mortgages to close to within half a point.
7. The Pasta Indicator
When pasta sales begin to slow you'll know times are getting better. One way to track the trend is by watching financial results at American Italian Pasta Co. (ticker: AIPC), which is North America's largest pasta producer. The stock has soared from $5 to $26 in the past 12 months while just about everything else got hammered.
8. The Cardboard Indicator
Alan Greenspan was fond of tracking liner board prices. The idea is simple: liner board is a main component of cardboard, which is used as packaging to ship just about everything. When liner board prices surge it means that packaging is in demand, which can only be the case if people are buying things, which in turn signals a healthy economy. Liner board isn't easy to track. As a proxy, keep your eye on the stock price of leading cardboard producers Smurfit-Stone Container Corp. (ticker: SSCC) and International Paper (IP). Their shares began falling before the recession started and could turn higher before the recovery begins.
9. Sweet-Talking Bill Collectors
The big card companies are waiving fees, restructuring debt and even accepting payoffs of as little as pennies on the dollar. They're not doing this to be good guys; they are bracing for a continued wave of defaults and want to collect as much as they can right now — before some other bill collector gets to you first and leaves you with empty pockets. You'll know the economy is righting itself when credit card companies stop negotiating with debtors. To monitor this industry, check out creditcard.com. 10. Movie Madness
But where Hollywood storylines tend to lag the economy, movie goers as a group tend to lead the economy. So it was that the number of tickets sold dropped 4% last year, when film buffs collectively concluded that with money so tight they might as well make better use of their high-def home theater system. Watch for that trend to reverse. You can check for year-to-date movie ticket sales comparisons at http://ercboxoffice.com/
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