VI. The Sales Force and Marketing Implementation Oversight

How should a country translate its intangible assets into dollars and cents (or euros)?

Enter its Sales force and marketing intermediaries.

Even poor countries should allocate funds to train and maintain a skilled sales force and pay its wages, expenses, and perks. Salespeople are the human face of the country's promotion efforts. They tailor to individual listeners (potential customers) the message the country wishes to convey about itself, its advantages, and its prospects.

As their title implies, salespersons personalize the sales pitch and enliven the sales process. They are as indispensable in mass-attendance road shows and in retail marketing (e.g., of tourism packages) as they are in one-on-one meetings with important decision-makers and investors.

The country's sales force should be trained to make presentations, respond to queries and objections, close deals, and cope with account growth. Its work should be tightly integrated with other promotional efforts such as mass mailings, telemarketing, media releases, and direct offers. Sales personnel should work hand in hand with marketing intermediaries such as travel agents, financial firms, investment funds, and corporate buyers.

Marketing intermediaries are at least as crucial to the country's success as its sales force. They are trusted links to investors, tourists, businessmen, and other "clients". They constitute repositories of expertise as well as venues of communication, both formal and informal. Though usually decried by populist and ignorant politicians, their role in smoothing the workings of the marketplace is crucial. Countries should nurture and cultivate brokers and go-betweens.

A marketing expert - preferably a former salesperson with relevant experience in the field - should head the country's marketing implementation oversight board or committee. The Marketing Implementation Oversight Board should include representatives of the various state bureaucracies, the country's branding and advertising consultants and agents, its sales force - and collaborating marketing intermediaries.

This body's task is to harmonize and coordinate the country's various efforts at branding, advertising, publicity, and promotion. It is the state's branding headquarters and should enjoy wide supervisory as well as executive powers.

In other words, marketing implementation is about ensuring that the country's message is both timely (synergetic) and coherent and, thus, both credible (consistent) and efficient. Scarce resources are better allocated and deployed if the left hand consults the right one before it moves.

But how can a country judge the efficacy of its attempts to brand or re-brand itself and, consequently, to attract customers?

VII. Marketing Implementation, Evaluation, and Control

How can a country (region, state, city, municipality, or other polity) judge the efficacy of its attempts to brand or re-brand itself and, consequently, to attract customers (investors, tourism operators, bankers, traders, and so on)?

Marketing is not a controlled process in an insulated lab. It is prone to mishaps, last minute changes, conceptual shifts, political upheavals, the volatility of markets, and, in short, to the vagaries of human nature and natural disasters. Some marketing efforts are known to have backfired. Others have yielded lukewarm results. Marketing requires constant fine tuning and adjustments to reflect and respond to the kaleidoscopic environment of our times.

But maximum benefits (under the circumstances) are guaranteed if the client (the country, for instance) implements a rigorous Marketing Implementation, Evaluation, and Control (MIEV) plan.

The first task is to set realistic quantitative and qualitative interim and final targets for the marketing program - and then to constantly measure its actual performance and compare it to the hoped for outcomes. Even nation branding and place marketing require detailed projections of expenditures vs. income (budget and pr-forma financial statements) for monitoring purposes.

The five modules of MIEV are:

This document includes all the government's managerial objectives and (numerical) goals. It is actually a breakdown of the aforementioned pro-forma financial statements into monthly and quarterly figures of "sales" (in terms of foreign direct investment, income from tourism, trade figures, etc.) and profitability.

It comprises at least five performance gauging tools:

I. Sales analysis (comparing sales targets to actual sales and accounting for discrepancies).

II. Market-share analysis (comparing the country's "sales" with those of its competitors). The country should also compare its own sales to the total sales in the global market and to sales within its "market segment" (neighboring countries, countries which share its political ambience, same-size countries, etc.).

III. Expense-to-sales analysis demonstrates the range of costs - both explicit and hidden (implicit) - of  achieving the country's sales goals.

IV. Financial analysis calculates various performance ratios such as profits to sales (profit margin), sales to assets (asset turnover), profits to assets (return on assets), assets to worth (financial leverage), and, finally, profits to worth (return on net worth of infrastructure).

V. Customer satisfaction is the ultimate indicator of tracking goal achievement. The country should actively seek, facilitate, and encourage feedback, both positive and negative by creating friendly and ubiquitous complaint and suggestion systems. Frequent satisfaction and customer loyalty surveys should form an integral part of any marketing drive.

Regrettably, most acceptable systems of national accounts sorely lack the ability to cope with place marketing and nation branding campaigns. Intangibles such as enhanced reputation or investor satisfaction are excluded. There is no clear definition as to what constitute the assets of a country, its "sales", or its "profits".

There is no point in squandering scarce resources on marketing efforts that guarantee nothing except name recognition. Sales, profits, and expenditures should count prominently in any evaluation (and re-evaluation) of on-going campaigns. The country needs to get rid of prejudices, biases, and misconceptions and clearly identify what products and consumer groups yield the most profits (have the highest relative earnings-capacity). Money, time, and manpower should be allocated to cater to the needs and desires of these top-earners. 

The global picture is important. An overview of the marketing and sales efforts and their relative success (or failure) is crucial. But a micro-level analysis is indispensable. What is the sales force doing, where, and how well? What are the localized reactions to the advertising, sales promotion, and distribution drives? Are there appreciable differences between the reactions of various market niches and consumer types?

The complement of efficiency control is strategic control. It weighs the overall and long-term marketing plan in view of the country's basic data: its organization, institutions, strengths, weaknesses, and market opportunities. It is recommended to compare the country's self-assessment (marketing-effectiveness rating review) with an analysis prepared by an objective third party.

 
5. Marketing audit

The marketing audit is, in some respects, the raw material for the strategic control. Its role is to periodically make sure that the marketing plan emphasizes the country's strengths in ways that are compatible with shifting market sentiments, current events, fashions, preferences, needs, and priorities of relevant market players. This helps to identify marketing opportunities and new or potential markets.

VIII. The Psychology and Demographics of the Consumer

The country's "customers" are its investors, tourists, traders, market intermediaries, NGOs, and office-holders in other countries and in multilateral institutions. Understanding their psychology and demographics is crucial. Their interactions with one another take place in a complex environment, affected by governments, social forces, cultural factors, and markets.

The country must clearly identify its clientele: who are they, what motivates them, what do they do and buy (and how, where and when), what are their decision-making processes and priorities, who influences these and how. It is important to remember that people and institutions buy goods and services to satisfy needs. Nation branding is tantamount to casting the country as the superior if not exclusive answer to those needs it can cater to or even create.

The country's brand manager would do well to analyze the purchasing process: how, when, and where transactions are concluded. Understanding consumption and investment habits and patterns allows for better targeting and education of relevant market segments in order to influence and alter the behavior of target customers.

The brand manager must distinguish consumer customers from business customers and from institutional customers.

Consumer customers purchase goods and services from the country for their own consumption. Tourists are consumer customers.

Business customers buy goods and services from the country on behalf of third parties. Tour operators are business customers.

Institutional customers assemble information about the country and analyze it in order to make or to influence political and credit decisions. Banks, governments, NGOs, and lenders evaluate and finance tourism projects based on such data.

Business customers operate on a large scale and are, therefore, less numerous and less dispersed than consumer customers. Consequently, it is easier to foster long-term and close relationships with them. But, being dependent as they are on end-users, theirs is a volatile, demand-driven market. Moreover, business customers are tough negotiators (though some of them seek quality rather than price advantage).

To attract these movers and shakers, the country's brand manager must constantly monitor the global economy as well as the economies of the nation's main partners. Everything, from monetary policy to regulatory and fiscal developments affect purchasing and investment decisions.

The Encyclopedia Britannica 2005 Edition mentions some additional considerations:

Consumer customers are the hardest to predict and "manipulate" because they are influenced not merely by hard-nosed intelligence - but also by rumors, age, education, stage in one's life-cycle, occupation, lifestyle, self-conception, past experiences, pecuniary circumstances, personal predilections and prejudices, as well as by a variety of cultural and social factors such as one's values, perceptions, preferences, one's status, reference groups, family, and role models. Thus, the customer's idiosyncratic background largely determines the economic outcome.

It is here that branding has an often decisive role. The more costly, infrequent, and risky the purchase, the higher the consumer's emotional involvement in the buying task. The more differentiated the country's brand, the less the anxiety provoked by the need to commit resources irrevocably.

New Economic Policy (NEP)

Mikhail Gorbachev (1931- ) was not the first to introduce Perestroika - the economic liberalization of the communist system along capitalistic lines.

During the Russian civil war (1918-1922) the Bolsheviks implemented what they called "War Communism" (1917-1921), the militarization of the economy. Between 1916 and 1920, industrial output plunged by more than four fifths. Grain harvests in both 1920 and 1921 disastrously dwindled, leading to widespread famine, claiming five million lives. A series of rebellions of sailors broke out, most famously in the Krohnstadt naval base.

To counter the party's loosening grip on power, Vladimir Lenin (1870-1924) introduced the New Economic Policy (NEP). Trade was liberalized, as were industrial and agricultural production. Peasants were allowed to sell surplus produce on the open market and taxes were made proportional to net output.

In stark departure from communist ideology, farmers could lease land and hire laborers. The state embarked on an ambitious privatization program of small and medium-size enterprises, though it maintained control of the finance, transportation, heavy industry, and foreign trade sectors (the "commanding heights", as they were called at the time).

In 1921-2, Lenin re-introduced money to re-monetize the economy which consisted of barter, quotas, and centrally issued economic directives. Within less than 7 years, production in many parts of the economy reverted to pre-revolutionary levels. Nor did the NEP die with Lenin. It continued for 4 years after his death in 1924.

But the policy was not without its faults.

NEP was characterized by inflation and the need to cap the prices of non-agricultural goods. Peasants hoarded grain for speculation purposes. A black market in goods was developed by Nepmen - private traders. Communist party General Secretary Joseph Stalin (1879-1953), reinstated agricultural production quotas in 1929, collectivized all arable land, and criminalized private trading in 1930. In 1928, he promulgated the first Five-Year Plan (1928-1932) and central planning replaced market mechanisms. The NEP was dead.

They are the object of thinly disguised envy. They are the raw materials of vulgar jokes and the targets of popular aggression. They are the Newly Rich. Perhaps they should be dealt with more appropriately within the academic discipline of psychology, but then economics in a branch of psychology. To many, they represent a psychopathology or a sociopathology.

The Newly Rich are not a new phenomenon. Every generation has them. They are the upstarts, those who seek to undermine the existing elite, to replace it and, ultimately to join it. Indeed, the Newly Rich can be classified in accordance with their relations with the well-entrenched Old Rich. Every society has its veteran, venerable and aristocratic social classes. In most cases, there was a strong correlation between wealth and social standing. Until the beginning of this century, only property owners could vote and thus participate in the political process. The land gentry secured military and political positions for its off spring, no matter how ill equipped they were to deal with the responsibilities thrust upon them. The privileged access and the insiders mentality ("old boys network" to use a famous British expression) made sure that economic benefits were not spread evenly. This skewed distribution, in turn, served to perpetuate the advantages of the ruling classes.

Only when wealth was detached from the land, was this solidarity broken. Land – being a scarce, non-reproducible resource – fostered a scarce, non-reproducible social elite. Money, on the other hand, could be multiplied, replicated, redistributed, reshuffled, made and lost. It was democratic in the truest sense of a word, otherwise worn thin. With meritocracy in the ascendance, aristocracy was in descent. People made money because they were clever, daring, fortunate, visionary – but not because they were born to the right family or married into one. Money, the greatest of social equalizers, wedded the old elite. Blood mixed and social classes were thus blurred. The aristocracy of capital (and, later, of entrepreneurship) – to which anyone with the right qualifications could belong – trounced the aristocracy of blood and heritage. For some, this was a sad moment. For others, a triumphant one.

The New Rich chose one of three paths: subversion, revolution and emulation. All three modes of reaction were the results of envy, a sense of inferiority and rage at being discriminated against and humiliated.

Some New Rich chose to undermine the existing order. This was perceived by them to be an inevitable, gradual, slow and "historically sanctioned" process. The transfer of wealth (and the power associated with it) from one elite to another constituted the subversive element. The ideological shift (to meritocracy and democracy or to mass- democracy as y Gasset would have put it) served to justify the historical process and put it in context. The successes of the new elite, as a class, and of its members, individually, served to prove the "justice" behind the tectonic shift. Social institutions and mores were adapted to reflect the preferences, inclinations, values, goals and worldview of the new elite. This approach – infinitesimal, graduated, cautious, all accommodating but also inexorable and all pervasive – characterizes Capitalism. The Capitalist Religion, with its temples (shopping malls and banks), clergy (bankers, financiers, bureaucrats) and rituals – was created by the New Rich. It had multiple aims: to bestow some divine or historic importance and meaning upon processes which might have otherwise been perceived as chaotic or threatening. To serve as an ideology in the Althusserian sense (hiding the discordant, the disagreeable and the ugly while accentuating the concordant, conformist and appealing). To provide a historical process framework, to prevent feelings of aimlessness and vacuity, to motivate its adherents and to perpetuate itself and so on.

The second type of New Rich (also known as "Nomenclature" in certain regions of the world) chose to violently and irreversibly uproot and then eradicate the old elite. This was usually done by use of brute force coated with a thin layer of incongruent ideology. The aim was to immediately inherit the wealth and power accumulated by generations of elitist rule. There was a declared intention of an egalitarian redistribution of wealth and assets. But reality was different: a small group – the new elite – scooped up most of the spoils. It amounted to a surgical replacement of one hermetic elite by another. Nothing changed, just the personal identities. A curious dichotomy has formed between the part of the ideology, which dealt with the historical process – and the other part, which elucidated the methods to be employed to facilitate the transfer of wealth and its redistribution. While the first was deterministic, long-term and irreversible (and, therefore, not very pragmatic) – the second was an almost undisguised recipe for pillage and looting of other people' property. Communism and the Eastern European (and, to a lesser extent, the Central European) versions of Socialism suffered from this inherent poisonous seed of deceit. So did Fascism. It is no wonder that these two sister ideologies fought it out in the first half of the twentieth century. Both prescribed the unabashed, unmitigated, unrestrained, forced transfer of wealth from one elite to another. The proletariat enjoyed almost none of the loot.

The third way was that of emulation. The Newly Rich, who chose to adopt it, tried to assimilate the worldview, the values and the behaviour patterns of their predecessors. They walked the same, talked the same, clad themselves in the same fashion, bought the same status symbols, ate the same food. In general, they looked as pale imitations of the real thing. In the process, they became more catholic than the Pope, more Old Rich than the Old Rich. They exaggerated gestures and mannerisms, they transformed refined and delicate art to kitsch, their speech became hyperbole, their social associations dictated by ridiculously rigid codes of propriety and conduct. As in similar psychological situations, patricide and matricide followed. The Newly Rich rebelled against what they perceived to be the tyranny of a dying class. They butchered their objects of emulation – sometimes, physically. Realizing their inability to be what they always aspired to be, the Newly Rich switched from frustration and permanent humiliation to aggression, violence and abuse. These new converts turned against the founders of their newly found religion with the rage and conviction reserved to true but disappointed believers.

Regardless of the method of inheritance adopted by the New Rich, all of them share some common characteristics. Psychologists know that money is a love substitute. People accumulate it as a way to compensate themselves for past hurts and deficiencies. They attach great emotional significance to the amount and availability of their money. They regress: they play with toys (fancy cars, watches, laptops). They fight over property, territory and privileges in a Jungian archetypal manner. Perhaps this is the most important lesson of all: the New Rich are children, aspiring to become adults. Having been deprived of love and possessions in their childhood – they turn to money and to what it can buy as a (albeit poor because never fulfilling) substitute. And as children are – they can be cruel, insensitive, unable to delay the satisfaction of their urges and desires. In many countries (the emerging markets) they are the only capitalists to be found. There, they spun off a malignant, pathological, form of crony capitalism. As time passes, these immature New Rich will become tomorrow's Old Rich and a new class will emerge, the New Rich of the future. This is the only hope – however inadequate and meagre – that developing countries have.

New Trade Theory and Paul Krugman

The Royal Swedish Academy of Sciences has decided to award the 2008 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel to Professor Paul Robin Krugman (born 1953).

Krugman belongs to a generation of "activist" economists, such as Larry Summers, Glen Hubbard, and Ben Bernanke: scholars who held or hold senior positions in various American administrations. As opposed to them, Krugman is more of an intellectual: he constructs mathematical models of real-life economic phenomena and writes and publishes profusely in the media. He is a cherished teacher and author of a textbook on international economics.

When asked why he was never offered a high-ranking job, he answered: