Aug 26, 2013 | Branding, Change, Demand chains, Marketing
Lean thinking, evolving from the Toyota Production System is changing manufacturing world, but agriculture has a long way to go.
Just as building cars used to be a production oriented operation until Toyota turned it on its head, so too is agriculture production led. Grow it, then try and find a market.
Well the world has changed, and demand is as big a pull factor in the world of agricultural produce as it is in cars, so the challenge is to leverage it. Just grow it and they will not necessarily come.
This does not mean that you have to find a way to manipulate the genes of an apple tree to give peak production in 2 or 3 years instead of seven, remove the impact of the seasons, or grow product out of its natural environment, which we can do for some products in greenhouses, but it does mean that change is urgent.
There are some things we can do much better that will help:
- Collect inventory data, and make it transparent and available. Agricultural inventory is not just what is ready for sale, but what is in the ground and likely available in the future days, weeks, months and years. Understanding the dynamics of agricultural inventory is even more important than manufacturing inventory because the cycle times are often so long, and the shelf life is limited, in some cases to days.
- Remove price as the purchase determinant. Sellers of produce have lost sight of the value that fresh produce delivers, and have lost any semblance of control of the chain, and the opportunity to brand. As a result, price is the overriding determinant of a sale, it is a race to the bottom, a race that does not have a happy ending for anyone. Having lost the initiative, it will not be easy to get it back, and any progress will take years, but it is a crucial challenge.
- Energise marketing. Easy to say, but extraordinarily hard to do. The agricultural “marketing” bodies that exist via levies have demonstrably failed in the marketing part of their charter. All that is left is for producers to take back some responsibility for marketing, and start to build their own branding and business models. Logically this can happen at the fringes, in the corners, rather than in the mainstream. The emergence of Farmers Markets is to my mind an precursor of this activity.
- Create new business models to accommodate the points above. Existing structures have led to the current poor situation, so it is unreasonable to expect them to be able to change into something radically different. These new business models have great challenges, great opportunities, and the cost of failure will significantly impact on our food security, and cultural roots.
Without the evolution of an agricultural version of a lean value/demand chain, the volume and value of our agricultural output will decline over the long term. Increasingly we are becoming uncompetitive in global markets, we currently import more than half our packaged food and groceries, our capability base built up over generations is leaving, and once gone, will not return.
We appear to be at some sort of inflexion point, getting it wrong over the next decade will leave our grandchildren poorer than we have been, reversing 250 years of improvement.
Aug 15, 2013 | Branding, Change, Marketing
I talk to a lot of farmers, and have done so for a long time. Not much has changed over that time, it is just that there are less farmers, bigger farms, and corporatised farming, with deep capital resources is taking over from the family farming enterprise.
The topics of conversation however remain the same:
The weather
The banks
Cost increases imposed by shiny-pants in office towers who never see a farm
The Aussie $
Regulatory and interest group interference
The value chain duopolies: grain handlers, logistics providers, processing works, and supermarkets.
How little they get from the value of the end product.
When you lay it all out, there are some things a farmer cannot control, but there are others that they could, should they choose to do so. However, to date, they have largely chosen not to, or paid a levy so some industry body can do it for them. Generally the results of this strategy have been pretty poor, the biggest beneficiaries being researchers, bureaucrats, those who control a choke point in the supply chain, and paper bag manufacturers.
Now however, the time has come for farmers to take control of the supply chains that they feed, and turn them into something different where they can extract the margins that accrue to those who make markets.
Not an easy task, not a short term task, and not one without cost and risk, but one that must be done if Australian farming beyond corporatised broad acre grain and perhaps beef, is to remain commercially sustainable. The tools and capabilities are now far more easily available, it just takes the vision, guts, determination and patience to make it happen.
Aug 6, 2013 | Branding, Customers, Marketing, Social Media
Many SME’s do not engage with Social media, or do so at a very superficial level, having a facebook page, and wondering why people do not flock to them with their wallets open.
These are the most common I hear:
• Not enough time
• Just for the kids
• Do not know how to use it
• Waste of effort
• Why would I put my business in the same place as all those stupid cat photos
• I have been successful doing this for a long time, why change now
• I hate sitting in front of a computer, much more important stuff to do
• My neighbor went on it, and she got stalked, why would I want to risk that?
• Nobody I know uses it
• My customers all know about me anyway
• It is just a fad
• My employees will waste the time I am paying them to work for me talking on facebook
I am sure you can think of many more.
Now, here are a four things that will happen as a result of the above:
• Others will control what is said about your brand and business
• You will be failing to communicate with a substantial proportion of (most) products markets. Leaving aside incontinence pads for ageing baby boomers, every product is being discussed on social media, somewhere by your potential customers.
• You will be seen, when you are seen (refer below) as “behind the curve”
• Invisibility equals commercial death, and visibility these days is all about Social media
If that is what you want, easy, do nothing, but Social media is not going away. Many of the ways we communicated last century are, by contrast, going away, so if commercial survival is on your bucket list, you had better get with the program.
Jul 9, 2013 | Branding, Change, Marketing, Social Media, Strategy
To talk to consumers, you used to stick an ad on TV, in one of the main mags, on maybe a few radio stations, a shotgun effort informed by some pretty rudimentary demographic data.
Then we migrated to the web, in the late 90’s, and advertisers transferred the techniques of mass marketing to this new medium. The cost of banner ads, in the early days calculated on a similar reach basis as mass advertising, has plummeted to perhaps 1% of that cost, and much better targeted, as we realised they simply did not work. Mass media consumption necessitated being interrupted by ads, we expected it as the price to be paid, but the web, we do not need to be interrupted, as we have the option to ignore. Increasingly, advertising became about direct response, as we can now count it.
Now the next shift is on, to mobile, where the “rules of engagement” have dramatically moved again, and we are figuring out how best to leverage the move. Customers need to be wooed, as shouting at them no longer works, you have access to mountains of data (using it is another whole challenge) that enable targeting at behavior rather than simple demographics, and you can count the effectiveness of tactics, one by one, person by person, directly.
Not only is the practice of marketing radically shifted to accommodate these moves by consumers and the tools to hand, but the organisation of the marketing function needs to have changed to reflect the immediacy of direct response, and the disconnect that has existed between the strategy held in the minds of the senior group, and those who by default spend the marketing dollars, often without any real authority beyond budget expenditure with little accountability for the outcomes.
It seems to me as I poke around that organisational inertia that is the greatest impediment to the potential productivity gains from this explosion of accountability of marketing investments that is now possible.
Jul 3, 2013 | Branding, Communication, Sales
Price is always a sticky subject.
In most cases, sales people have been trained to slide over answering the inevitable, and often first question about price, until the value of the sales proposition has been established with the potential buyer.
That is the way it was.
Now, we all seek information on specification, availability, options and list price using the net, all information that in an earlier time, the salesperson could dole out as the sales process evolved. Therefore the decision is often almost made before a salesman has the opportunity to become engaged in the process.
When your sales prospect types “Widget prices” into Google, because that is their last question, the top 10 results, which is all most of us look at, are the ones that have “widgets from $100” or “Worlds cheapest widgets” in the headline.
You have just lost control of the conversation if you are not there.
Web sites are different to face to face, the emotion, the human interaction and the potential that humanity brings to the process has been removed, and you need to replace it with something that creates the opportunity for a conversation.
If you are on the web to sell, and the product is such that potential customers will ask the price early in the game, don’t be afraid, be proud, and put your pricing up front, along with your value proposition, so at least you might get a chance to talk about it.
Jun 21, 2013 | Branding, Marketing, Small business
We pay a fortune for lobster, it is a delicacy, but it is not long ago that lobster was poor peoples food. If you had nothing else to eat in New England in the 18th or 19th centuries, you would go to the beach and scrounge some lobster, and rules were in place to limit the amount of lobster masters could feed their indentured servants.
I remember as a kid that chicken was a delicacy, an occasional festive meal, Mum fed the Roberts tribe rabbit in a variety of ways as a cheap staple, bought from a bloke who went door to door down the street selling the previous nights haul.
How things have changed. Chicken is a commodity, flogged in supermarket specials, and rabbit is on the menus of the top end of town restaurants, attracting very high prices.
Marketing is all about managing the context and expectations a customer has of the value that can be delivered by your product offering. Preparing and consuming rabbit at home is now uncommon, but change the context to a restaurant, and suddenly the expectation changes, and rabbit is a sexy, modern dish that has attracted the chefs attention and skill, so is something very different to the skinned offering at the backdoor of my childhood.
Setting out to change expectations, often by changing the context as well, is at the core of the marketing challenge. Changing nothing, and competing on the existing commercial battlefield is just flogging stuff, and becomes a contest of price, not value.
Update: March 2015. This article from Entrepreneur magazine tells a similar story about lobster, and the way context and time changes perception, plus a very useful infographic.
