Is this the end of greenback?

The greenback has fallen against the euro by nearly 15% since the beginning of the summer.

There are also reports that Gulf Nations shifting the pricing of petroleum away from dollars.

The real causes for further fall…..

American households are saving more in order to rebuild their retirement accounts, which will make the country export more. For this to happen, the American dollar should depreciate further to make American goods more attractive to foreign consumers.

Fewer foreign purchases of US assets again imply a weaker dollar. Now for their sophisticated innovations, that the Americans specialize would mean limited foreign capital inflows.

The question is…..

What is the benchmark: Weakness against what?

Certainly not against the Euro, where it is already expensive and is the currency of an economy with banking and structural problems that are even more serious than those of the US. Whole European Union is reeling under bank restructuring and Bulgaria will be the first to undergo a painful restructuring under the IMF guidance.

Then not against the yen, which is the currency of an economy that refuses to grow.

But, for the dollar to depreciate further, it will have to depreciate against the currencies of China and other emerging markets like India.

Outlook:

In the longer run, OPEC will shift to pricing petroleum in a basket of currencies. Generally, it sells its oil to the US, Europe, Japan, and emerging markets alike, so it hardly makes sense for it to denominate oil prices in the currency of only one of its customers.

The bottom line is………

The dollar isn’t going to be replaced by the euro or the yen either, given that both Europe and Japan has serious economic problems of their own. Maybe, the Renminbi is coming, but not before 2020, by which time Shanghai will have become a first-class international financial center.

Once this zero interest rates episode end, the US Federal Reserve will be anxious to reassert its commitment to price stability then there may be a temptation to inflate away debt held by foreigners. But the fact is that the majority of US debt is held by Americans, who would constitute a strong constituency opposing the policy.

The other scenario is that US budget deficits continue to run out of control. But high debts will mean high taxes. So with the combination of loose fiscal policy and tight monetary policy will mean high interest rates, sluggish investment, and slow growth.

Net-net, the emphasis on the need for the US to export more and on the greater difficulty the economy will have in attracting foreign capital are on the mark. These factors give good grounds for expecting further dollar weakness.

Marketing Strategy: Direct marketing is the buzz word that will gain a new clout

For instance, Danish beer is vying for a slice in Asia’s competitive Lager beer market, a beer stored from six weeks to six months for aging before use.

One will notice the gap between the seller (restaurant owner) and the buyer (customer) narrowed considerably, can see both meeting face to face. And this kind of promotion is useful.

Looking at the growth potential in the region, many more companies are seeking a marketing strategy to suit it, giving new clout to the ages-old tool of bringing products directly to consumers.

Now many more companies, from FMCG firms to delivery firms such as Fedex, are adopting direct marketing methods to sell their products at increasingly crowded markets.

Direct marketing, defined as, any sales technique from pop-up stores or commercial gift bag giveaways to free sample handouts making sellers directly in touch with target customers, compared to indirect marketing such as advertising, product placement or sponsorships.

Traditionally, Asian consumers are accustomed to do business with trusted family or friends to avoid scam. Here, we can see the traders’ ancient way of doing business with direct marketers as safe avenues.

Not to wonder, people still reply to direct mail in this world of E-commerce.

Across the world, majority of firms uses both direct and indirect marketing, with the direct portion growing.

Due to expanding markets such as India where Direct marketing is much prevalent has seen last year direct sales increased 1.25 percent, up from a 0.4 percent increase in 2007, according to data from market research firm Euromonitor International.

Much accredited sectors in Asia's direct marketing are alcoholic beverages, delivery firms such as Fedex with pre-existing address databases and common household goods sold by the likes of Amway.

Apparently, Direct marketing costs far less than mass advertising -- and marketing officials say gives them more bang for their buck.

Online advertising may be a cost effective measure for marketing, but depends on the geography. For example, Sri Lanka Apparel reached 100,000 customers beginning with 300 customers, spending only $150,000, by joining online communities such as student activist groups and the same outreach via conventional advertising would have cost at least $20 million.

Almost 70 percent of consumers in Bangladesh and Sri Lanka bought something in a door-to-door sale last year, according to a study.

Talking about India, taking advantage of the popularity of door-to-door sales in India, 10 years ago Hindustan Unilever Ltd began a direct-sales scheme in rural areas with populations of less than 2,000. About 100,000 villages are involved. Some 45,000 women go door-to-door with Unilever hair oil, soap, shampoo and cream in baskets or cardboard cartons on bicycles. And the turnout to the surprise, they bought Unilever inventory worth 4.5 billion rupees ($94 million) in 2008.

A boom in electronic marketing is expected as Asian consumers adopt the latest technologies faster than peers elsewhere and welcome ads via mobile phone messages or online communities.

About 60 percent of Internet users in the Asia Pacific region have made purchases based on e-mail advertisements, compared with less than half in North America and just over 40 percent in Europe.

Direct plus digital is growing, while conventional advertising is definitely not, in terms of budgets and activity.