Feb 4, 2010 | Branding, Change, Leadership, Marketing
The corporate left brain/right brain conflict is alive and well in Jetstar.
Currently Jetstar is spending on TV advertising their Asian destinations, pushing that they are not just a cut price airline, at the same time they are facing a PR debacle, having left passengers in Penang airport for several days due to mechanical problems with an aircraft. (perhaps they should change their advertising; “an extra 4 days at your expense” not a great idea?)
Gail Kelly at Westpac got it horribly wrong a few weeks before Christmas, raising the banks home mortgage rate beyond the increase in the prime rate, how many advertising dollars did that send down the crapper? Anyone who actually thought about the pricing challenge from a customer perspective would have predicted such an outcome, that the mistake was made by the former CEO of St George whose culture was all about customer care is inexplicable. Even the vaunted Toyota is struggling with a recall in the US of 9 million cars with sticking accelerators, not a good addition to their market positioning.
The list of companies that sacrifice their long term position to get out of a hole in a crises goes on, and on. The corporate “numbers groupthink” takes over, no-one states the obvious, but uncomfortable truth that the P&L needs to take a short term hit for the benefit of the long term.
Very occasionally, someone does it right. The classic is J&J’s recall of Tylenol in 1982, and subsequent leadership in introducing tamper evident packaging. Short term cost was huge, but the long term position was enhanced enormously. Arnotts in Australia had a similar experience in 1993, and came out of it smelling like roses.
Why do most businesses continue to make the same mistake when faced with a crisis, a short term focused response?
My conclusion is that the power of the short term performance metrics overwhelms common sense, and the only antidote to this long term poison is to build a culture that genuinely sees customers as central to the reason for the business existing, and only by serving customers can commercial sustainability be achieved. This commitment to long term customer value needs to be a part of the culture, as fundamental to an organisations shape and actions as DNA.
Feb 3, 2010 | Change, Marketing, Strategy
On the web, you have lost control of the conversations that can impact on you, anyone can say virtually anything they like, and unfortunately because it is “out there” it can gain traction, take on some credibility.
If you cannot control it, you need to be aware and find a way to participate in the conversation as a means to present the facts, alternative views, or a different perspective as a means to debunk the nonsense that can accrue in the absence of facts.
To do this, you need to be an active participant on the web in the forums and communities that talk about your product or service.
In the old days, (and even today) if someone prints lies in a magazine, you could sue, gain a retraction, an apology, some compensation, but on the web, you can do little to force a retraction, the best you can do is enter the debate and point out the nonsense.
Are the skills and aptitudes to effectively debate on line present in your organisation? At the very least, they will be cheaper than lawyers who will be totally ineffective, so look at the cost just as insurance if you cannot see the value in communicating directly with those interested in your product.
Feb 2, 2010 | Leadership, Management
Engaged in a recent discussion about the nature of leadership, I fell back on the old chestnut that managers manage things, but leaders decide what to manage, which got me through until a “smartie” asked “what about entrepreneurs”?
Took a while, and a bit of filling, but it came to me that entrepreneurs recognise, leverage and manage opportunity.
Apart from being an acceptable answer on the day, when I thought about it later, I still liked it.
Feb 1, 2010 | Leadership, Personal Rant, Strategy
The emerging reality of the emerging “carbon economy” irrespective of the regulatory regime that emerges is not only an operational and regulatory management issue, but a strategic one because of its potential to create and destroy asset value.
Over time, emissions intensive assets will be replaced by those that create the same outcome without the emissions, and new businesses will emerge that provide the technical tools.
This is not an ideological view, it is based on 250 years of commercial history. The same way the internal combustion engine replaced the hay driven horse transport, the telephone finished off the telegraph, the silicon chip finished off vacuum tubes, and the net is in the process of finishing off the CD, renewable/low emissions energy source will finish off coal fired power stations.
As Australia’s politicians, today, start again the wrangling, point scoring, verbal gymnastics, hubris, personal views paraded as facts, dissembling, and plain untruths in the debate about the regulatory framework to be built in this country to supposedly “manage” climate change, they would do well to leaven the mix with some commercial and strategic reality.
Feb 1, 2010 | Branding, Marketing, Sales
Most products have a range of alternatives that the buyer can purchase and use in relative certainty that it will deliver pretty much as promised.
Consumers when in a supermarket have a basket of products in a category they buy, usually with a first and second choice, and sometimes a third choice. On any trip to the supermarket, the purchase decision is made at POS based on a whole range of factors, of which price is only one.
Our task as FMCG brand marketers is to find the means to reduce the importance of price in the purchase decision, in an environment where the supermarket is hell bent on convincing us that price is the only factor that matters, and they have all the power of the channel at their disposal.
The power of data mining techniques that have evolved in the last decade is stunning, but they do not remove the basic dilemma for FMCG marketers, who must find the balance between price, stock velocity, retail margin, and brand building that has to be funded from their margins and long term returns, and which carries substantial risk.
Only building a brand that consumers have as their first choice in the basket of acceptable choices, where price sensitivity is less than the category norm will offer longevity, the rest just contributes to retailer profitability at the expense of the supplier margin.
