Cheap Housebrand or guarantors of quality

confused consumer

Consumers make purchase choices for a whole range of reasons, quality, size, experience, brand, price, freshness, produce provenance, and so on.

Supermarkets in Europe have for years been marketing their housebrands as much more than cheapo versions of branded products, they are brands themselves, with all the attributes of proprietary brands.

In Australia there have been housebrands for 35 years, I know, as I peripherally s involved in the launch of the first one, the now defunct  Franklins “No Frills” margarine, in about 1978. For most of the 35 years since, Australian Housebrands were little more than cheap products, where the manufactures pulled out as much ingredient and packaging cost  as possible, apart from the few regulated categories like milk where Housebrands did not appear until de-regulation of the distribution system, and ice cream where the dairy fat level is proscribed at 10%.

More recently, Housebrands have been repositioned to be more like “Brands” than cheap substitutes, and retailers are actively seeking to add product quality to the parameters, while still being extremely aggressive about product cost from the manufacturer, difference now is that the world is the potential source, not just Australian manufacturers.

However, the  efforts appear to be flagging, as price remains the primary consumer purchase reason for Housebrands, but the consumers choice is being reduced as retailers allocate their shelf-space to their own brands in an effort to both build Housebrand sales and the enhanced margins they can deliver. Perhaps this is a contributor to the apparent renewed growth of specialty and niche retail, and the decision of many SME’s to avoid the two major retailers, and pursue alternative channels.

Housebrands are failing to be either guarantors of quality, as  “proper” proprietary brands would be, and they are often no longer as cheap as they were, so consumers are getting confused.

In consumer confusion lies  opportunity for innovative marketers.

 

The client made me do it!

no birds

People instinctively like consistency and predictability, it allows them to be comfortable, and make judgments without too much risk of being wrong because the status quo has been maintained.

Helping out with a competitive pitch recently I was shown a list of the things that had to be covered, a checklist for the expected content of the presentations, a list of largely irrelevant , administrative crap, and we had only 45 minutes.

With some trepidation, we threw out the list, and built a presentation that demonstrated that the agency I was working with had the experience, and capabilities  to break the challenges faced by the “pitchee” down into manageable chunks that could be addressed creatively, responsibly, and with a budget that was less than the one nominated, (which we knew was not gong to be forthcoming in any event)

We knew during the conversation that followed that the business had been won, despite the ignoring of the stated ground-rules. The sorts of comments that were made were that our approach had been “fresh” and “creative” and that we had “thought outside the box” all cliché’s, but nice nevertheless. However, what it really demonstrates is the we won because we were different.

Our competitors had followed the rules, and been boring as a result, we were not boring, had taken a risk that with hindsight was not a risk at all, so we won.

So, any time you hear something that sounds like “the client made me do it” translate it as “I did not have the balls or imagination to be original, different, and interesting”.

6 trends shaping semi urban agriculture

community gardens

A couple of days ago I did a presentation at the University of Western Sydney to a group of academics, farming advocates and farmers. The presentation addressed the challenges of agriculture in Australia close to the major cities, specifically Sydney. Peri-urban agriculture to invoke the jargon.

In preparing the presentation, it seemed sensible to define the genesis of the challenges faced by peri-urban agriculture to ensure that we were addressing the right problems, not the symptoms of the problem. I came to the conclusion that there are 6 forces at play here that need to be considered as we deliberate about any remedial action:

Retailer power. Australian food retailing is the most centralised in the world, effectively a duopoly. This scale of operations enables considerable efficiency, and coupled with an aggressive strategy to reduce transaction costs in the supply chain, small suppliers have been squeezed into the 25% not controlled by the majors, and alternative channels like food service.

Food security. This is not just some jingoistic response to  Chinese ownership of land, although you are forgiven for thinking that,  it is more about the capacity of Australia to feed itself in the face of a dying industry sector. When you look at the data, we export lots of “food”, but look closer and most of it is commodity grains and meat, the other side of the equation, processed food, we are a net importer, reflecting the decimation of the processing industry, and what is left is largely owned internationally.

Urbanisation. Our cities are sprawling, gobbling up land that has fed us for 200 years, and the pace in increasing. To my mind, it is at its roots, an economic argument between the immediate value of a series of short term transactions that turn land into housing estates, and the long term value of land as a productive asset that just keeps on producing. This equation, the data driven ROI calculations of the developers Vs the more qualitative long term value of land as a producer of food for decades and longer, usually falls on the side of the developers. We really need an analytical framework that does a better job of  putting a quantitative floor underneath the long term value of being able to feed ourselves, and that value is reflected in the somehow. It is not just a matter of price, Value is a much wider, more encompassing term. Perhaps the current debate around Coal Seam gas ripping into agricultural land will drive some of this analysis.

Agricultural land as a social asset. This notion can be a bit controversial, but bear with me. Humans evolved over millions of years to live on, and “off” the land in small groups, not congregating in cities disconnected from agriculture and foraging. 200 years ago this changed pretty rapidly in the now developed world, and the trend is accelerating. In the developing world, 2/3rds of the world, the move has been explosive for the last 50 years. What anthropological impacts this is having we can only speculate, but my contention is that this disconnection is at the root of much of the social dislocation we are seeing around us. Assuming this notion has any validity, it gives a social perspective to the use of the land around us.

Emerging consumer concerns. Consumers are the beneficiary of the huge amounts of information now available to them, and they are using that information to make their own decisions in defiance of much marketing orthodoxy. They  are informed, cynical, and self reliant, and we now see a strong undercurrent of individual decision making based on freshness, product provenance, sustainability of farming practices, taste, and an individual view of value. This is requiring a revolution in marketing thinking, and is being reflected in the growth of channels outside the retail duopoly, farmers markets, farm to home delivery, and resurgence of specialist fresh retailers. The 25% left over after the duopoly share is taken appears to be reversing, and rather than becoming 24%, is more likely to become 26%.

Information transparency.  The explosion of our capacity to capture, organise, analyse, and transmit data is as significant a development as the printing press, and harnessing of steam in the impact on our lives. That capacity has turned supply chains where growers simply grow, and throw the produce over the fence, hoping someone buys it and pays them a fair price, to a demand chain where the drivers of demand, what consumers want, is now transparent. The whole chain can be now reconfigured to reflect that demand, and costs are only incurred where that add value is greater than the cost.

 The strategies to be employed if you want to navigate through he shoals of the 6 forces outlined above can be broken into three:

  1. Increase the perceived “value”  of products in consumers eyes.
  2. Engage consumers.
  3. Outflank the retail duopoly.

In other words, build a brand.

Easy to say, hard to do, and to be done, it needs to be commercially sustainable, not something that relies on public funding.

Thinking “Lean” is instinctive.

 SONY DSC

It is amazing how people adopt to “lean” instinctively, without any planning, or knowledge of the cliches and tools spruiked by consultants (including myself). People are pretty sensible when left to themselves, they do not build waste into a system deliberately. Usually when failure occurs, there is a system in place that fails under pressure, or someones ego is  involved.

On Sunday my local tennis club took our turn to have a BBQ at the local chain hardware store (Thanks Bunnings) in an effort to raise the funds to keep our historic grass courts going. Most grass courts have been beaten by the maintanence costs, and have been replaced by various low maintanence surfaces, but there is still nothing like grass, so we hang in there!

It takes about 10 minutes to cook a sausage (cycle time) so when we got going, the cooks organised themselves so that sausages were progressively rolled across the hotplate so that they were cooked by the time they got to the end, at about the time they were stuffed into a bun for a customer.  They  had a lean JIT process going.

As the morning progressed, and demand increased, the cooks responded by adding a second row to the hotplate, and varying the number of sausages being  cooked (WIP)at any time in the second row according to the demand. It still took 10 minutes to cook a sausage, but only a few minutes to adjust the number being cooked as demand changed. This increase in the demand is reflected in what is called, in Lean parlance, Takt time, or the amount of time you have to allocate to a process so that it meets the demand from the market.

Nobody was directing this evolution of this simple BBQ production line, it was just common sense, so sensible people just made it happen. It occurred to me, not for the first time,  that the various forms of waste that end up in operational systems are there largely because the demand is not clearly communicated to those running the systems, and so they just cover their arses with inventory, and allow silly practices to evolve and get in the way of demand transparency.

Left on their own, people will instinctively respond to the apparent demand, so why not just give them the information and let them get on with it.

Social media as “chips”.

SM imagesCAN3Y950

During the week, I did a short explanatory presentation on social media to a group of busy, skeptical SME operators whose typical  age meant that they came to computers generally and social media in particular “a bit later” in their commercial lives.

In other words, their typical response to social media is something like WTF!.

I sought a metaphor that would explain the different characteristics and role of social media platforms having defined Social Media sufficiently widely to include, as well as the obvious, the emerging collaborative platforms like Airbnb, and established e-businesses like E-Bay. Whilst some of these may not be seen strictly as  “Social Media”, they are nevertheless social platforms, so I felt they warranted inclusion. 

I like “chips” French Fries to some of you, so they were the core of describing the role of various social media platforms.

Here are some of the examples, were I to describe my chip habits on each platform:

Facebook:” I like chips”

Twitter: “I am eating chips”

4 Square: “This is where I buy my chips”

Instagram: “Here is a picture of my chip”

Youtube: “Here I am, eating chips”

Pinterest: “Here is my favorite chip recipe”

Linkedin: “My skills include advanced chip eating”

Google +:” I am a Google employee who likes chips”

Slideshare: “The development of the chip market”

E-Bay: “What will you pay me for my chip”

Kickstarter: “I’ve invented this super-cool thing called a “chip”, wanna invest?”

You get the idea, and so did my audience.