How could Samsung stuff it up so badly?

How could Samsung stuff it up so badly?

Oct 21, 2016 | Branding, Governance

Once again, we are the observers in what will become another in the great ‘How to manage a marketing cluster****’ course.

I am talking about the public reaction of Samsung to the exploding Galaxy Note 7 phone.

Recent history is littered with lessons on both sides of the equation, how best to handle the meltdown as it happens,  and how to really stuff it up. You would think that an operation with the size and apparent sophistication of Samsung would have learnt, but it seems not.

The Galaxy 7 was launched in August, in a race to beat Apple to the market with their new ‘Apple iPhone 7’. There were almost immediately reports of the batteries blowing up, initially treated with some scepticism, as the fail safe levels built into the design and regulatory testing regimes should have identified any problems. Ooops… Samsung test their own batteries, whereas others all have third party tests done.

At the point of recall, Samsung had produced 2.5 million units, sold about 2 million, and there have been 35 reported explosions. Not quite a 1 in a million chance, but not far off it, so I guess they just thought it a minor glitch.

On October 10, Samsung announced ‘We are temporarily adjusting the Galaxy Note 7 production schedule in order to take further steps to ensure quality and safety matters.’  For the couple of weeks prior, Samsung had been recalling the phones, but calling it an ‘Exchange program’. When a couple of the exchanged phones also went ‘Boom’ they ended production, with the ‘temporary’ announcement above.

From October 11 until October 17,  when the US Federal Aviation Authority put on a blanket ban on carrying the device, describing it as ‘forbidden hazardous material’ airlines had started banning carrying the Note 7 on board off their own bat, recognising the public concern and real safety question.

There is a pretty large gap between ‘forbidden hazardous material’ and an ‘exchange program’.

Samsung’s statements are in competition for the ‘Biggest Blooper-statement in history’ Oscar with then BP Managing Director Tony Hayward who said ‘There is no-one who wants this thing over more than I do. You know I want my life back’  in the days after  Deepwater Horizon blew up in April 2010.

By contrast, when Arnott’s had a recall of Monte Carlo biscuits in 1997 prompted by an extortion bid, MD Chris Roberts was up front, recalling all Arnott’s products from the retail trade, explaining the reason and how Arnott’s was dealing with it. While it cost a lot of money, the Arnott’s brand was probably enhanced in the long term. Similarly, in 1982 Tylenol, the market leading US analgesic brand was found to have caused the death of a young woman after she consumed a poisoned pill. Johnson & Johnson immediately recalled all Tylenol from the shelves, and committed to completely redesigning the packaging to ensure tamper evidence. J&J garnered considerable public support, and Tylenol rapidly regained their market leading position after the relaunch.

These are just a few of the best known but very many examples Samsung should have considered. Had they done so, the short term cost would not have been as high, and the damage to the brand not as severe. Coming on top of the recent exploding washing machine episodes you would have thought they had sufficient practise to get it right.

The cost to Samsung will be huge, in both short term cash losses and longer term damage to the brand. Apple must be loving this!

As an aside, you would think that Samsung would have taken down their digital marketing material on the device, particularly with the tag-line ‘Rethink what a phone can do” but at the time of post publication, had not.

3 things advertising cannot do, despite the claims.

3 things advertising cannot do, despite the claims.

Oct 19, 2016 | Branding, Marketing

Many small and medium sized businesses I interact with seem to have the view that advertising and marketing are synonyms, and if they had a bit more money in their marketing budgets, it would best be spent on advertising.

Rarely is that the case.

Advertising is just a part of a marketing menu, often crucial and a voracious consumer of dollars, but nevertheless often a small part.

Advertising is a great tool, a device to achieve all sorts of commercial ends, but like any tool, there are limits.

The babble that usually  accompanies the sales pitch for advertising is often long on superlatives and short on specifics.

Here is what advertising cannot do:

Advertising weight is no substitute for creativity.

Messages only really get absorbed when they appeal to our hearts, and most advertising appeals to our brains. Like all rules, there are exceptions, such as the advertising of a once only limited time price deal. No heart in that, all head, and it may be seen, and it may also be destructive of the brand, as it is commoditising it.

Advertising cannot make people care about something that has no relevance to them.

Look at all the advertising done for starving kids in Africa, soliciting 10 bucks a month to save a life. If we really cared, rather than felt guilty, the coffers would be running over. It is not that we do not abhor the fact that kids die of malnutrition, it is just that it is removed from us, has no personal impact, and we are cynical about how much of our 10 bucks is actually getting to the people who need it.  Advertising  is best when it defines the WIFM to those seeing it. The best copywriters are usually the direct response writers, they know immediately when their adverting works, and they are always appealing to the prospects top of mind self interest.

Advertising rarely increases the size of a market in the short term.

The purpose of advertising is to attract your competitors existing users, lapsed users, or light users to your products or service. From time to time advertising latches onto a latent need and does create a market, such as the great Apple advertising for the first macs or even better, DeBeers programs to create the tradition of a diamond engagement ring, but those take bucket loads of money, beyond the capacity of any medium advertiser, as well as great timing and a level of creativity rarely seen. Most advertising is aimed at nicking your competitors customers, in one way or another. When I had to turn around Ski yogurt, the target was Yoplait. There was no mistaking what we set out to do by offering a product that was distinctly different, had a different value proposition, but it was still yoghurt. Over time the combined activity increased the size of the market considerably, but our advertising target was Yoplait users and we got them by taking a stance on yogurt that had discernible pieces of fruit in it, rather than being a homogeneous product, and the taste was distinctly different, so there was a choice to be made once we persuaded consumers to trial.

The question of which channel to use for your advertising is a whole set of different questions.

Digital or analogue, is usually the first step, and the logical answer is ‘both’ as there is no one right answer. Each channel and each platform within the channel plays a different role, and has different costs and outcome expectations. It can get very complicated, and the only sensible way to sort out the mess, and conflicting claims is to be very clear about the objectives you have, then assess each advertising option against the objectives, and the value they deliver.

Digital impotence and the Black Knight

Digital impotence and the Black Knight

Oct 16, 2016 | Communication

I am in the middle of a device free week.

Not by choice, my PC took a powder, and is in the ‘hospital’ for surgery. Now, at the close of day 5 I feel like the Black Knight, still kicking, but no arms.

The term digital impotence springs to mind.

It is interesting to reflect at such a time on the dependence we have developed to these things. This post is being done on one of my kids computers, a bit like the Black Knight landing a feeble kick on his opponent. Might make him feel better but is effectively useless.

Ages ago in an effort to retain some control of my time, I decided that I would not connect my phone to my email. Clients who might need me at short notice all have my mobile, so I do not need the constant email alerts going off, they are nothing but an unwelcome distraction, and kill battery life.  However, being disconnected since Wednesday morning is starting to have psychological effects.

Sweating, worrying that I just might have missed a return communication from someone not yet a client, but who is keen to be, a link to something that I would have liked the time to consider, the list drags on, and on, as does the time.

Nir Eyal writes about the habits we form, with some focus on digital products, his book ‘Hooked” is a disturbing, enlightening and fascinating read, but I thought I was largely immune.

No so.

Please give me back my PC before I lose my legs as well.

How to tell if you are selling to the right person.

How to tell if you are selling to the right person.

Oct 13, 2016 | Sales

The early stages of a B2B sales process can be tricky. Few people are happy to admit that they do  not hold the power implied in their role, and those in a corporate purchasing role are particularly reluctant. Rarely will they admit that they are not able to sign a purchase order, or that they are just tyre kicking, price checking, or otherwise filling their time and wasting yours.

How do you know?

That question arose a short while ago while working  with a medium sized business struggling with a wealth of so called leads but a very poor conversion rate.

One of the frameworks that  used to be deployed quite a bit, but seems to have been forgotten is “B.A.N.T.”

Budget: The ability to buy.

Authority: The authority to sign a contract.

Need: The capabilities of the offer matched the clients requirements, and/or solved a problem.

Timeframe: Articulated a sales timeline that accommodated the selection, transaction and implementation of the solution.

It was a simple and pragmatic way of sorting the real leads from the chaff, and enabled simple metrics to be applied.

It was most famously used by IBM in the 80’s who required a documentation of BANT variables , and a positive on three dimension before any significant development resources could be allocated.

The world has moved on a bit since I first saw BANT applied. Sales funnel automation, online selling, relocation of the power of information from the seller to the buyer, consensus decision making, and all the rest, but the foundations of success have not changed at all.

The simple application of the BANT parameters to the prospect list of this business, and the subsequent prioritisation of effort and resources delivered a very quick return.

The world is a more complicated place, but sometimes the simplest ideas are still the best.

Where now for the two big supermarket retailers?

Where now for the two big supermarket retailers?

Oct 10, 2016 | Marketing, retail, Strategy

What a fascinating time to be an observer of FMCG.

The speed of strategic evolution is ramping up, and the risks to the investors in the two retail gorillas must be increasing as a result.

15 years ago FMCG retailing in Australia  was a two horse race. Coles or Woolies, there seemed to be no other options. While there were other options, independent retailers of varying types, particularly in SA and WA, their profile and strategic relevance was generally lower than a dwarf in a game of basketball. They could be annoying, and occasionally useful, but would never change the outcome of a game.

The net result is that Coles and Woolies concentrated on their short term game, with Woolies winning hands down in the shareholder returns stakes until recently. However, in the process, they lost sight of those who made a difference to their strategic numbers as distinct from their immediate financial ones: Customers.

They used their power to belt suppliers, and ignore customers beyond the land grab to put stores in every place where more than a footy team could congregate.

They ignored the opportunity to innovate beyond optimising what was already there, in other words they ensured innovation could not happen, or at least, ensure they carried absolutely no risk in the process.

The world has evolved since then, and panic has set in.

Woolworths botched Hardware in spades, demonstrating an astonishing lack of strategic insight, closed down Thomas Dux after strategically emasculating it just as it was gaining traction, is closing the Metro stores, and now it has been reported over the weekend, that they are considering selling the petrol retailing business. All that and declaring a $1.2 Billion loss for the 2015-6 year.

Meanwhile Coles has renewed itself, and announced a $1.86 billion profit for the year amongst some large write-downs in other parts of the Westfarmers group, particularly worryingly, Target.

Relative newcomer Aldi has upset the comfortable duopoly by grabbing market share and shopper penetration at a rapid and continuing rate. On top of all that you have alternative and web enabled retailers taking an increasing share of mind and attention that will over time convert to sales share. 15 years ago you could not find a Farmers Market, now they seem to be everywhere, and doing great business, and the net retailers seem to be able to actually deliver, sometimes.

For Woolies and Coles to fight each other, and invader Aldi on price makes no sense at all. The logical outcome of a battle on price is that Aldi will win simply because their business model is aligned to accommodate low margins and the gorillas are not, but if they do win that race to the bottom, the real risk is that they will go broke in the process.

No joy there.

So Woolies and Coles are left with where supermarkets started back in the thirties, delivering value to customers.

What an interesting notion for the gorillas, to be competing on the basis of the total value they deliver to customers, not just on price.  They might even have to collaborate in a meaningful way with suppliers, invoking  Joy’s Law, named after  Sun Microsystems co-founder Bill Joy who noted ‘No matter who you are, most of the smartest people work for someone else’.

Clearly, very few of the smartest people work for the gorillas, although there are some more left in their supplier base. However, those suppliers of any real scale who remain locally owned could together just about fill a phone box.

There is plenty of room in the demand chain left for innovation. The first step is to recognise the necessary change from a retail optimised supply chain that implies screwing suppliers for margin in any way you can dream up, while maximising margins at the checkout, to one that puts the consumer front and centre.

A demand chain.

This change requires recognition that the consumer has a reasonably certain amount of money to spend on groceries and household supplies, and will allocate those dollars in the ways  that best suits them and their circumstances.  Economists will call this phenomenon ‘Customer demand”. The name of the game then is to share out those consumer dollars in the best way that serves the whole supply chain based on that actual and latent demand.

Plenty of room for collaboration through the chain, enabling innovation and sustainable profitability. You just have to see the competitive game completely differently. I wonder if the gorillas are capable of that sort of strategic renewal or if I should sell my (very few) shares ASAP.