Farming Incomes Increase By Over £1.3m

Total income from farming for 2011 was estimated to have reached £5,693m compared with 2010, an increase of £1,352m or 25%. The return per annual work unit of entrepreneurial labour is estimated to have been £30,900 in real terms, an increase of 24%. Looking at the longer term, 2011 represents the best performance of the UK agricultural industry since the mid-1990s. Gross value added at basic prices increased by £1,748m to £8,845m which more than offset the increase in intermediate consumption which rose by £1,321m to £14,806m.

GDP Down 0.3%

GDP fell by 0.3% in Q4 2011 according to the quarterly national accounts (QNA) bulletin from the ONS. In volume terms GDP increased by 0.7%.

Production output fell by 1.3%, services output by 0.1%. Household consumption increased by 0.4%. Compensation of employees increased by 0.9%. Agricultural output fell by 1.5% in Q4 2011 compared with a decrease of 0.5% in Q3. Services output decreased by 0.1% compared with an increase of 0.8% in Q3. Services output increased by 1.6% over 2011.

Analysed in term of expenditure, GDP decreased by 0.5% in Q4 2011. Household final consumption increased by 0.4% compared with a decrease of 0.3% in Q3. The largest increase in spending was in miscellaneous services driven by life assurance and other services. Recreation and culture increased during the quarter but rises were offset by falls in spending on housing with electricity, gas and other fuels reporting the largest fall. Over the year of 2011, household final consumption fell by 1.2%.

Income categories analysis shows GDP at current market prices rose by 0.6% compared with a 0.9% increase in Q3. While compensation of employees rose by 0.9% in Q4 over the year 2011 it increased by 2.1%. The gross operating surplus of corporations fell by 1.3% over the quarter and grew by 0.2% over 2011, private non-financial corporations rose by 2% over the quarter but financial corporations operating surplus fell by 15%.

GDP Grows By 0.5% In Q3

The second estimate of GDP for the third quarter of 2011 was published by the ONS recently. The headline figure for GDP in Q3 2011 increased by 0.5%.

Analyzed by output, the production industries rose by 0.4% compared with a fall of 1.2% in Q2, mining and quarrying increased by 0.4% and manufacturing output rose by 0.2%. According to the income analysis GDP at current market prices rose by 1.5% and compensation of employees increased by 1.2%. The expenditure analysis suggests that GDP increased by 0.9% in Q3. Household final consumption expenditure remained unchanged. The level of household expenditure is 1.5% lower than Q3 2010.

Fall In Balance Of Payments Deficit

The current account reported a deficit of £9.4bn for the first quarter of 2011 equivalent to -2.5% of GDP. The deficit for Q4 2010 was £13bn. There was a deficit of £15bn with the EU compared with £16.9bn in Q4 2010. Trade in goods was -£22.2, trade in services showed a surplus of £13.8bn. Income fell from £7.4bn in Q4 2010 to £4.6bn in Q1 2011. The capital account balance was £0.6bn.

No Increase In GDP Estimate

The second estimate of GDP in volume terms remained as in April as an increase of 0.5% in Q1 2011. Output increased by 0.2% within which manufacturing increased by 1.1% and services by 0.9% but construction decreased by 4%. Output is now 2.4% higher than Q1 2010.

Employee income increased by 1.3% in Q1 2011 compared with 0.3% in Q4 2010. The operating surplus of companies increased by 1.4% in the first quarter of 2011. Taxes less subsidies on production increased by 7% but the VAT increase in January should be noted.

Household expenditure fell by 0.6% in the first quarter of 2011 and the level is now lower than in the same quarter last year by 0.3%. Government expenditure increased by 1% in the quarter and 1.1% over the year. Gross fixed capital formation decreased by 4.4% in Q1 2011 following a decrease of 1.8% in Q4 2010. Inventories' levels rose by £1.4bn in the last quarter.

The GDP deflator for Q1 2011 is 2.8% above the sdame quarter last year. Nominal GDP is up by 2.2% in Q1 compared with 0.5% in Q4 2010.

Real Agricultural Income In Europe

The first estimates on real agricultural income from Eurostat show that real agricultural income per worker in the EU27 increased by 12.3% in 2010 after a decrease of 10.7% in 2009. The cause of the increase in the index was a combination of an increase in real agricultural income and a fall in agricultural labour input.

Real agricultural income per worker is estimated to have increased by 10% between 2005 and 2010 while agricultural labour input has decreased by 12.7%.

The value of EU27 agricultural output at producer prices increased by an estimated 4.3% due mainly to an increase in the value of both crop production and animal production by 6.3% and 2.4% respectively.

Poverty And Social Exclusion In Europe

Eurostat has released details of a new publication 'Income and living conditions in Europe' issued in connection with the closing conference of the European Year for Combating Poverty and Social Exclusion due to take place 16-17 December 2010. It is based on data from the EU-SILC survey.

One of the key targets of the Europe 2020 strategy is to lift at least 20m people in the EU27 out of the risk of poverty or social exclusion. Progress towards this is measured using a combination of three measures: persons at risk of poverty; severely materially deprived persons and persons living in households with very low work intensity. In 2008 nearly 116m people in the EU27 were affected by at least one of the three criteria of social exclusion and nearly 7m fall under all three criteria.

In the EU27 16.5% of the population, a total of 81m people, were at risk of poverty after social transfers. The country with the highest percentage of the total population in this category was Latvia (25.6%), the lowest percentage was in the Czech Republic (9%). In the UK 18.8% of the population or 11.4m people fell into this category.

Bulgaria (41.2%) had the highest percentage of severely materially deprived persons and lowest percentage was in Luxembourg (0.7%). In the EU27 8.5% of the population or 41.5m people fell into this category. The UK figure was 4.5% or 2.7m people.

Ireland (13.6%) had the highest percentage of people living in households with very low work intensity. The lowest percentage was in Cyprus (4.1%). In the UK 4.8m people, 10.2% of the population, were in this category. The EU27 percentage was 9%. The total number of people in this category in the EU27 was 34.2m.

No Change In Income Inequality

Statistics covering the years 2008/9 suggest that income inequality remained stable during that time. The focus of the analysis published by the ONS is on the effect taxes and benefits have on disposable income. For the years covered by the study income for the top quintile (top fifth) was £73,800 on average compared with £5,000 for the bottom quintile. The top fifth received 15 times more than the bottom fifth. It is slightly down on the analysis of the years 2007/8 when it was 16 times more. When the effects of taxes and benefits are taken into consideration it is a slightly different picture. The ratio between the top and bottom is 4:1 with average final incomes of £53,900 compared with £13,600. However, the redistribution of income affects households in different ways. The effects of taxes and benefits include benefits in kind, cash benefits, direct taxes and indirect taxes which may or may not affect people individually with some 'doing better' than others such as houses with children and retired households and the cash benefits and benefits in kind like health and education.

The inequality of income can be measured by the Gini Coefficient which expresses, as a percentage, the extent of inequality where higher values indicate higher inequality. In 2008/9 the Gini Coefficient for UK was 34% for all UK households. Over the past few decades the Gini Coefficient has increased a lot from 28% in 1983 to 34 in 2008/9. It has remained almost unchanged since 2005/6. In retired households it has fallen slightly from 27 to 26%. Changes in inequality can be related to changes in the overall economy with the Gini Coefficient rising and falling during periods of growth and recession and households at the top benefiting more from growth in incomes and investments while others tend to remain stable.

GDP Decline Revised Upwards

GDP fell by 0.7%, revised from 0.8%, in the second quarter of 2009 compared with the previous quarter. GDP is 5.5% lower than Q2 2008. It is the biggest four quarter fall on record accoring to the ONS. Nominal GDP showed no growth for the quarter. The GDP deflator rose by 1.3% compared with Q2 2008.

The slowdown in output from Q1 to Q2 is due to the services, production and construction sectors. Services fell by 0.6%, production by 0.6% and construction by 2.2%.

Household expenditure fell by 0.7%. An increase in spending on motor vehicles, food and drink was offset by the continued edcline of spending abroad. Government expenditure rose by 0.8%. The volume of spending is 2.5% higher than Q2 2008. The net trade deficit fell to £7.3bn as imports fell faster than exports at 3.7% and 2.6% respectively. The export of services fell by 2.6% and the import of services by 1.9%. Gross fixed capital formation fell by 4.5%.

Employee compensation increased by 1% in the quarter, but still 1.2% below the same quarter last year. The gross operating surplus of corporations decreased by 3.6% following a 4.5% fall in Q1 2009. Taxes less subsidies increased by 3.6%. There was no change in the growth of nominal GDP at market prices.

Winning Hearts And Minds

The changes that have taken place in advertising over recent years has been amazing. Television, radio, the Internet and other new media have added so many different dimensions to advertising that it bears little resemblance to the paper notices and lineage of the past. That is not to say that the adverts and advertisers of earlier days were not good. They still inspire marketers today but the new techniques and media have added so much and so many different kinds to the panoply of practitioners in a short space of time that it could be described as kind of revolution.

The media have increased but that is no guarantee that the offering will be successful and bring in lots of new customers. The message has to be right. You have to be satisfied that the message you put out is the one you want the consumer to get. The response to the right message will tell you if the market is there for your product. Consumers are only human and if the marketing mix isn't quite right it will be reflected in sales. Each element of the marketing, advertising and promotion mixes is crucially important. Consumers respond to stimuli and behave accordingly. The number of things to be borne in mind when designing a campaign is staggering. The marketer has to know the product well enough to be able to sell it and the learning and memory abilities of the public. Consumer motivation will affect buying decisions.

We all have our values, core values taught by socialisation agents and value systems ranking things according to relative importance will ultimately have a lot to do with if we buy or not. Values are also incorporated into the means-end chain model which links product attributes according to increasing levels of abstraction to our terminal values (Solomon, Bamossy and Askegaard, 2002).

On the abstract level, many different product forms compete for our attention in any given category. Consumers must make a choice using their own decision rules. Marketing campaigns that are well integrated can do much to educate the public about your product and the choice they have to make. Consumers also have their own internal information system. Heuristic rules of thumb help a consumer to shorten information processing. Consumers develop assumptions about companies and products. These market beliefs can act as mental shortcuts whether they are accurate or not (Solomon et al., 2002).

Then there's the competition. The marketing concept says that competitive advantage is gained by satisfying target customers' needs better than the competition. First comes analysis then strategy development. Product category must be the first thing to consider. Companies in the same industry compete for customers in the market. Once a company enters a strategic group the members of that group become its main competitors. The more a company knows about its competitors' products, prices, marketing and sales plans, distribution coverage and so on the more competitive it will be (Kotler, 1999). Research and development and finance are other key strategies of which to be aware. Competitors can be of any number of classifications. If a competitor comes up with a more attractive rival product you may lose customers. Market orientation is a method that combines efforts to focus on both consumers and competition. You may want to win the hearts and minds of consumers.

Political consumers can use their buying patterns in ways that reflect their values in the same sort of way green consumers once did (Solomon et al, 2002). They are not the only people to say that businesses have too much political power. Pressures from the political and regulatory environment may also affect consumer decisions. They determine and maintain the framework within which business must be done (Brassington and Pettitt, 2000). Knowledge of local practices may be crucial in achieving sales (Kotler, 1999).

Income, social class and age will be factors that affect purchase decisions. Ability and willingness to buy depends on demand for products. Demand for necessities is stable over time. Many other products are frequently used as status symbols and often reflect the amount of discretionary income and conspicuous consumption or parody display that tries to avoid status (Solomon et al., 2002). Engel's Law suggests that such products may always find a market (Kotler, 1999). Money worries and anxieties about self-image and reference groups will have their effects and marketers should remember that if the price is not right consumers will look for substitutes.

Once gained, as many customers as possible should be retained. Retaining customers is more cost-effective than gaining new ones (Brassington and Pettitt, 2000). Customer retention will depend on how well needs have been satisfied. The focus was once on transactions now customer satisfaction also demands relationship marketing techniques like financial and social benefits and structural ties to turn customers into clients (Kotler, 1999).