Now, until recently in the United Kingdom, the construction industry for example is in massive, massive growth. If you’ve gone out of bed in the morning you get rich if you went to a customer and said “Boo” you got mega-rich. You didn’t have to use your brains. And I not so long ago did 60 managing directors from a construction industry and they’re all sitting with their arms fold and low laid back in their seats because the company have just achieved a 65% increase in their net profit. So you could imagine, I was sitting there again thinking who is this guy and what he’s going to tell us, professor of what, professor of marketing.
Anyway so they can’t go on for two days like this, when I picked on the first person whose name I can read, I said John, I said “What was your net profit increase last year John?” And he pulled himself up to a 6’12” height and he said, “A 185%!” And I said “A 185% increase in net profits, wow!” And I said “Any of the other managing directors in the room, the 59 of you with a better net profit increase in that?” And there wasn’t. So I said, “Let’s give John a round of applause!”
So you can imagine how enthusiastically they did that. I gave John a round of applause. And I said “Okay, John,” I said your peers have congratulated you. Would you like to explain to them the source of your success?” And he thought deeply and intellectual about it for a half a second then he said, “We had a mild winter.” And I said why? “My next book John is going to be called barometer marketing” and he didn’t like that. So what do you mean, so when you look at the barometer in the morning, you said we’re going to get rich or whatever the barometer says were not.
He said “Well, did you mean?” And I said, “Well, did your own market grow last year John? If your market grew by how much did your market grow and how much of your net profit growth came from market growth?” And he couldn’t answer it. I mean, any fool would know the answer to that question, if you’re a big player.
So I said “Okay John, let me ask you an easier question.” I said, “Did you increase your market share last year John? If you did, by how much did you increase your market share and how much of your net profit growth came from increased market share?” And of course if he couldn’t answer the first question, he couldn’t answer the second one, could he? So a bit of a silence.
So I said “Okay John let me ask an easier question, did you have any price increases and also a net of inflation? How much of your net profit growth came from that price increases?” Again, he couldn’t answer, Donald duck would know the answer to that question. I said “Okay John let me ask you an easier question, did you have any productivity improvements last year? How much were your net profit growth came from productivity improvements?”
Now, by now he noticed that the other 59 managing directors were all sitting both upright thinking I hope this old little toad doesn’t ask many questions like that because it was bindingly obvious that they have the foggiest idea what they were doing to make money out of them being in the growth market.
Now, in the United Kingdom as we all know suddenly, this has really coming to a crushing halt hasn’t it? And guess what? Those people are suddenly going to start paying attention to markets and customers and segments and the kind of thing I’m going to talk to about this morning in this particular session.
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