Information Planning and Management Services

The ad business has hard times now. When you see a TV program scheduled to start at 9:00 actually starts at 8:57, you can understand the distressed condition of the ad business. When economy goes down, advertising expenses and social expenses are the first to be reduced.

The ad business is intrinsically prospect-based business. Ad agencies make money by selling hours and places in which clients advertise their products. If advertising volume decreases, empty media increase and sales fall. It is vital to offer hours and places attractive to clients. That is, products are the key to the growth of the prospect-based business. The same is true of most industrial products including vehicles and home electric appliances. In this sense, constant product innovation is a must for every company doing the prospect-based business. In exchange for the uncertainty about future prospect, sales will be enormous and profit will be handsome if the product hits the mark.

In contrast, the printing industry is intrinsically order-based business. Even if you print 1,100 posters for an order of 1,000 posters, you can get payment for 1,000 posters. You cannot get payment for the extra 100 posters. That is, the ability to execute an order correctly, faithfully, and sincerely is the decisive factor. Companies in the order-based business do not have as many customers as those in the prospect-based business. In this sense, constant contacts with clients are very important. Although the order-based business does not give as much profit rate as the prospect-based business, the former is not affected as much as the latter by economic fluctuations.

When you classify business into these two categories, you can understand that companies capable of offering products in the two categories are strong even though economy grows stagnant. This is why ad agencies try to get long-term big projects and department stores try to hold long-term big exhibitions. The products in these cases are the ability to create ideas and the ability to plan and design. In whatever industry a company is doing business, it needs to think about the critical factor for success on a routine basis. Classifying business into the above two categories may help you formulate a strategy for success.