Nov 19, 2013 | Branding, Communication, Marketing
Advertising gets a lot of bad press, TV, radio, magazines, the backbone of advertising all last century have been supplanted by various digital platforms that accepts and places advertising, supposedly direct to a highly targeted audience, when they are looking for something.
Or do they?
Digital advertising has largely failed to live up to the hype, even while advertisers throw up to 50% of their budgets at it, and are often being at best gamed, at worst, ripped off.
Over a long period, I have found that whilst the tools of marketing have changed radically, the behaviour that drives those who use the tools, consumers, has not. This is a true now post digital, as it was when TV was the new bloke on the block.
A letter written by Bill Bernback in 1952 to the owners of Grey advertising worrying that the technicians were taking over from the “creatives” .
Great stuff.
Bill Bernbach’s contemporary David Ogilvy had a lot to say, his book “Confessions of an Advertising Man” first published in 1963 has a prominent place on my shelf. Even as the nature and mediums of advertising have changed completely, the foundations remain the same. Five of Davids “Ogilvayisms” have been put into Don Drapers mouth, and they all still hold true.
Great advertising still needs to tell a story that gets into your head somehow.
In a world bombarded by messages of all types, our visual and audio senses are grossly overworked, so how good it is on the very rare occasions when you see an ad that also engages our emotions to tell a story? This Guiness advertisement is such a piece of communication, an ad that tells a story, engages, brings a smile, and says something memorable, important about us and the brand.
As good as the Guiness ad is, I still think this Union Carbide ad for insulation is the best ad I have ever seen, and it comes from the 60’s by a company that did not survive its own stupidity.
Nov 6, 2013 | Alliance management, Branding, Marketing, retail, Small business
The agricultural supply chain that has dominated the way we get our food has evolved as a fragmented, opaque series of transactions that occur to fill the gap between the producer and the consumer. Many of these transactions add no value to the consumer, rather, they serve to capture value for some link in the supply chain.
As they add no value, it is fair to ask “are they necessary”, and in many cases the answer will be “No”, in others it will be that whilst it may add no value, it is a necessary cost, like transport.
Were we to set out to re-engineer the supply chain with consumer value as the driving force, what would we change?
Well, a fair bit, much of it as a result of the communication and data transfer capabilities that have exploded in the last decade. There is now absolutely no reason a grower cannot see where his product goes, each transformational stage, every point at which it is moved, and the costs and margins involved.
Whilst there are sensitive commercial implications in all this, the technical capability is there, and using those capabilities to eliminate costs and margins that do not serve the consumer will increasingly become the focus of competitive activity and innovation.
Wool is the archetypal Australian commodity, and it is also representative of the worst of commodity “marketing” where each link in a very complicated operational chain is a set of strand-alone transactions. However, even in this conservative, institutionalised chain, there are rays of light, enterprises like WoolConnect that have evolved over a considerable period, to deliver a transparent, collaborative chain that has eliminated much of the cost that adds no consumer value, becoming far more productive in the process.
I am working with a small group of horticulture growers and specialist retailers in Sydney on a pilot, a transparent, demand driven chain that responds to consumers, not what growers have on the floor, or what wholesalers think they can squeeze a good margin out of, but real demand. It is a fascinating exercise, one that is hopefully successful and commercially scalable.
This will deliver tree ripened fruit to consumers the day after it has been picked, and similarly, veggies harvested this morning, on your plate tomorrow.
“Sydney Harvest” brand, get used to seeing it in your greengrocer.
Innovation in a horticulture supply chain, who would have thought??
Oct 25, 2013 | Branding, Customers, Marketing, Social Media
Sick of the avalanche of unsolicited email coming in to your inbox? Most of us are, and my kids have reacted by virtually turning email off, and using social media to communicate with those in their circles. The volumes however, continue to go up, as email simply works as a marketing medium when done well.
Clearly, there is a “Trinity” that is evolving in marketing as the 21st century progresses.
Social media
Email
Content.
All are different, all have a place, all require different skills to be successful.
Social media is a “pull” tool, voluntary, people are free to dip in and out at their discretion. The task of the marketer is to make it interesting, engaging, and provide the reasons for people to keep on coming back.
Email is a “push” tool. Find a mailing list, and send stuff out. However, with an open rate for unsolicited emails in the low single figures, the challenge is to not just get the mail opened, but to get the recipient to do something with it.
Content is the stuff that has to be interesting, and targeted to the concerns, problems, and competitive environment of the recipient, and is glue that holds email and social media together. Neither are likely to be any good without the glue of effective content.
So, to be effective, spend lots of effort getting the right glue, then making sure you use it properly.
Oct 17, 2013 | Branding, Category, Customers, Innovation, Marketing
Cottage cheese is a pretty dull category in supermarkets. A relatively tasteless, low calorie (therefore it must taste crappy, right?), price competitive, group of products.
Yes, so we thought.
Years ago, 25 years in fact, I was the GM Marketing of a major Australian diary company with the leading brand of Cottage cheese. I thought all of the above, and we struggled to make any return, let alone one that was a competitive use of the capital tied up.
We had very good data, for the time, remembering this is pre-internet. We knew who sold our, and competitive brands in what quantities, and pretty much to whom, as we had good U&A (usage and attitude) data. As a result we were able to segment the market pretty well by usage, demographics, geography, and basket. However, whatever we did, we had trouble moving the sales needle.
Almost as a last resort, we ran a small recipe competition on the side of the packs, easy, low cost, a prize draw of a holiday at a health resort on the Gold Coast. We got a few hundred entries, a failure by our pre-agreed metrics, so we thought we knew something else that did not work. However, because there were so few, we took the time (there was a young work experience person to utilise at the time) to write back to all the entrants saying thanks for entering, and sending them a few of the top recipes we had received, just to be polite.
The response astonished us.
A very high number wrote back saying thanks for the recipes, and telling us how they used the products, what was right and wrong about them, all sorts of information we did not have, or had not thought was relevant.
Turned out, cottage cheese was not a “calorie avoidance food” it had uses in all sorts of areas by all sorts of people we had not seen as in our market, in fact, had not considered. The job we assumed was being done by cottage cheese, deduced by looking at our data, from our perspective, was not the job that consumers were hiring the product to do.
Long story short, we slowly built a database, all done by hand and snail mail, so it was a significant resource sink, a cottage cheese club in effect that shared recipes, stories, and funny events. All pretty mundane these days with the tools available, but a major undertaking in 1988.
Our sales went up, our promotional spend with retailers dropped, our price sensitivity reduced significantly, and had several successful range extensions, and we suddenly were making very good returns.
The moral is, make sure you understand the job that consumers hire your product to do, make sure you see it through the consumers eyes, not yours.
Oh, and two more lessons,
1. Social media marketing is not new, just the tools now availabel make it easier, so now everybody is doing it.
2. Cottage cheese is really very nice, 20 years after leaving the company, i still buy and use the product, in all sorts of odd ways, learnt from the “clubbies”. Brand building by another name.
Sep 30, 2013 | Branding, Category, Marketing, retail, Small business
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.
Sep 26, 2013 | Branding, Demand chains, Marketing, Strategy
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:
- Increase the perceived “value” of products in consumers eyes.
- Engage consumers.
- 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.
