Scott Galloway. L2 Thinktank.
Mitch Joel may have flogged his Twist Image agency to WPP, but hopefully he keeps on writing his blog and alerting us to terrific stuff like this presentation Winners and Losers in the Digital age, by Scott Galloway.
Read the post, watch the presentation, have a squizz at Galloways L2 site, and apply it to your business and situation.
Businesses spend many millions trying to understand the way consumers consider the choices confronting them in a supermarket. With up to 30,000 items on shelf, and some categories having hundreds of choices, it is a key consideration.
A mix of psychology, data science, habitual behaviour, discretionary spending dollars available, and individual preferences all play a role.
A complicated mix.
However, there is a way to at least clarify part of the mix.
Consumers use decision trees, usually without thinking about them when they are in a supermarket making their purchases.
Some purchases are automatic, a habitual choice, others are made after a considered set of choices on a range of factors important to the individual are made, and there are, obviously, many shades of this continuum that apply to a highly personal process.
Imagine a consumer approaching the dairy case looking for fruited yoghurt. Some may just buy their usual brand, flavour and size irrespective of everything else. Others will make a series of choices that will vary for every person, and may look something like the decision tree below.
It will differ for each individual, some will choose the brand first, others the flavour, or the size and price, and a whole range of variations on these factors, but based on the total sales, supermarkets will range products, and give them shelf positions and space based on sales, gross margins, delivered margins, and various promotional strategies. They also use a decision tree.
Retailers and suppliers spend huge amounts of effort, and resources. on this category management exercise, trying to read the consumers mind, and anticipate their reactions to various combinations that are available to them.
It is a data intensive exercise, well suited to the “big data” techniques that are evolving around us. Combining checkout data with store loyalty cards is now becoming commonplace, what is emerging currently is the integration of mobile and social media data into the mix.
As you walk into the store to buy something, there has already been lots of effort gone into reading your mind, and there will be lots of effort and money expended in store in an effort to manage your purchase decisions.
My early days of marketing were as a minor part of the team that created Meadow Lea, the brand that completely changed then dominated the margarine markets for the following 25 years. I was really just a young gopher, but the lessons that came with those successes, and the trials in between, were scorched onto my brain.
10 years later I joined a major dairy company as marketing manager, and the first thing on my list was to do to ourselves in the milk business what Meadow Lea had done to the butter market.
Shock, horror, Sacrilege!!.
It was even illegal.
Pulling the dairy fat out of milk and replacing it with vegetable fat had been enshrined as illegal in legislation, which was not about to change because some marketing bloke thought it was stupid, and could see a commercial opportunity.
Even the technical staff of the business thought I had gone stark mad, or at least drunk too much at lunch with the agency (it was the eighties after all) and refused point blank to do any development.
It took eight years, but eventually Farmers Best was launched, and whilst not becoming anything like the Meadow Lea blockbuster I had envisaged, certainly prevented anyone else having a go.
My point, not all the good ideas come from the domain you inhabit, from your people, or even your branch of technology.
Looking outside for ideas, technology, and innovation in all its forms, is not just sensible, but in these days of homogeneity and rapid dispersion of ideas and techniques, it is essential.
And the law? well, it was quietly changed as it had became obvious that consumers did not give a fig what sort of fat it was, they wanted the benefit of lower cholesterol and resulting longer life.
Personal branding seems to be a popular topic around the pub, even the brickie who lives a few streets away, and is not known for his new age sensitivities, has got a hold of it.
It is not new, Julius Caesar had a personal brand well before Bill Shakespeare wrote a play about him, and they killed him for it.
Tom Peters, who was really “hot” in the nineties wrote a prescient Fast Company article about personal branding, but missed the point, at least to my mind. This Roger Duncan e-book does it much better, listing 8 behaviors that build a personal brand, and if you followed the list, no doubt you would make a mark.
However, I think it can be summarised better, in a few words.
“Always deliver greater value than is expected”. Simple, but complicated at the same time.
A mate of mine was offered a bundle, just to meet with someone he knew vaguely for a coffee. If asked nicely, he probably would have made the 20 minutes, but being offered money????. He did not have the coffee, and it turned out that the supplicant did want something from him, and had my friend taken the money, it would have set up an obligation to deliver something he may rather not have.
There is never something for nothing in business, when it seems too good to be true, it usually is.
Doing something unexpected for others, over delivering in the parlance, builds a bank of goodwill that at some point will be repaid.
Perhaps not today, or tomorrow, but it will come back to you. That is the way you build a persona brand, based on honesty, transparency, and over-delivery.
Walking into chain retailers these days you are inevitably confronted by displays of product, usually at a discount.
Most people seem to think that it is the retailer doing the promotion as a means to attract added sales, which is true, but the reality is that the promotion is funded by the suppliers, and it is a competition for the retail space that is generally won by those suppliers with the deepest pockets, and best information.
Retailers are in two businesses, selling stuff to consumers, and renting retail space to suppliers. Chain retailers business model relies on a formula that accommodates volume, revenue, and total margin over the space allocated. This can get very complicated, as the number of variables is enormous.
For a supplier to a chain retailer, the challenge is to balance the complex and competing demands of enterprise profitability and investment in the future against the need to meet retailer margin demands necessary to retain access to the consumer via the distribution controlled by the retailer.
Of real significance is the difference between sales that would have been made irrespective of promotional activity the “base sales rate” and sales made in a period as a result of promotional activity, “incremental sales”.
The need to fund retailer margin via promotional allowances is universal, but the sales that occur as a result of the activity may not be there when there is no activity, and are therefore” rented” sales. The effectiveness of the activity has many measures, but to the supplier two measures only are of any real use.
If you are not making these calculations, and adjusting the mix of your expenditure programs accordingly, and are prepared to make some very tough choices on the basis of the information gathered, chances are you are going broke being successful, a very common complaint in the Australian FMCG market.
Talking with a couple of mates over a beer recently, one of whom has a successful boutique recruitment agency, we found ourselves reflecting on the changes in word usage that had occurred over the last 20 years, and how we had contributed to the changes, most of which we did not feel were improvements.
A few examples.
“Gay”. A friend of mine at school was named Gaye, lovely girl, great fun, bet she has changed her name.
“Like”. It actually used to mean something, rather than acting as a tool of verbal punctuation.
“Green” used to be a really nice colour, not a political label.
The kicker for me was “passion”.
I have been guilty, there are several posts over the years talking about how important passion is, so I have made a contribution to turning this word into a management cliché
Do we have to be passionate about everything? Cooking. Suddenly we have to be passionate about cooking, when sometimes cooking is just to refuel, and jobs. A quick look at any jobs site will tell you that to be considered you must be passionate about your job, the mission of the enterprise, collaborating with others, and so on, Sometimes, a job is just a job, it pays the bills, keeps the kids occupied , and with luck delivers some intellectual and emotional support.
“Passion” has become a cliche, and has an unfortunate simile, Pretentious.
If you really want someone to be passionate, to make the emotional investment you are seeking, you had better give them a very good reason, because passion is a very private emotion, not given easily.