Aug 19, 2010 | Customers, Marketing, Sales, Small business
Commodity markets have two things in common:
- There is plenty of business to go around, that is why it is a commodity market. In a mature, saturated market, the challenge is to attract some of the business that is around, not build a new market.
- Customers focus aggressively on price, usually because none of the suppliers in the market give them a reason to focus on anything else, and it is an easy common denominator.
Finding a sustainable point of differentiation is never easy, if it was, everyone would be doing it. The starting point is to understand what the commodity you sell is used for, understand how the product adds value to the customer, and restructure the offering around the source of value.
For example, hiring a car is an exercise in price comparison and the convenience of pick-up and drop-off, not much else. A hirer wants a car to give them mobility, flexibility, and economy of time, and money (compared to taxis). Why doesn’t someone charge by the Km after a small base charge to cover insurance and availability. Suddenly, the game is changed! Same with car insurance, we all pay the same differentiated only by the age and location of the driver, and type of car, but cars are about offering mobility, and logically the more you drive, the greater the chance of a claim, so charge by the Km driven after a small base charge to acknowledge the other variables. What about advertising, why not charge by the response, putting some responsibility on the medium to deliver what it promises, even something as basic as printing services, differential pricing based on turnaround times, response rates (even for printed leaflets, brochures, and so on) is possible.
When you charge for the value delivered, as seen by the customer, rather than just the production, the market loses the second of the characteristics noted above, and differentiation has emerged.
Aug 15, 2010 | Branding, Customers, Innovation, Marketing, Social Media
How do you compare prices in a range of stores when standing in the aisle of your local supermarket?
The easy answer now, is “on your iphone“. A crowd called Red Laser have an app that scans the code, compares the product/price to others scanned (presumably there is a data base somewhere out in the cloud) and using google maps is able to compare prices in your general location.
This development has the potential to re-write the equation between brands, the value of things like location and parking, and price in the retail space, and with effectively an FMCG retail duopoly in Australia, it will consume some headspace in Co-op castle in Melbourne, and the Taj in Sydney.
It is a “pity” we wasted millions on a “Grocery Watch” white elephant, a technology/populist bet in the early days of the Rudd government, when a couple of years down the track, a similar thing can be done better on your phone. We now have the same sort of thinking making a 45 billion dollar bet on the NBN, a bet that will impact on generations. Hope they get it right this time!
Aug 3, 2010 | Branding, Communication, Customers, Marketing, Sales, Social Media
Social network marketing is a fundamentally different beast to “traditional “marketing. When talking to marketers, they usually see social media as being in effect free, the challenge is to get the message spread, often by being outrageous, generating awareness for little money compared to traditional media.
To my mind, it is much more complicated than that. “Word of Mouse” on social media has to be earned, and that is really challenging, requiring intimate knowledge of the marketplace, customers, their behaviour, and what is likely to positively engage them. Traditional marketing makes it easy to gain a general level of awareness, you just have to pay for it, but like most things that are easy, the return is very low.
Aug 2, 2010 | Communication, Customers
We have all heard the term, anyone who has ever read anything about negotiation will have it burned into their brains, but what does it really mean in this age of digital collaboration?.
The rules have changed, the old days when you saw an opportunity as a potential benefit, without much consideration of the outcome for the other party are over. As a retailer once said to me in the middle of a very difficult negotiation, when I asked where was the win win in his proposal “we will win today, and we will win again tomorrow”! Not a comment that could build any sort of sense that it was worth my being there.
Recently coaching a client going into a negotiation with a potential customer who had arrived via the website, and so had an idea of the value we could bring to him, we defined the optimum outcome of the first face-to-face meeting not as a sale, but as the creation of trust as a precursor to building a relationship that may involve the specific product on the table at that time, but not necessarily. There were plenty of other opportunities we could see, and assumed there were many we could not. Our objective was to present ourselves as a potential long term partner who could bring far more than just a good product range, customer service, and competitive pricing to the table.
Worked a treat, and will prove to be a real winner all round!
Jul 27, 2010 | Customers, Management, Sales
Independent produce retailers appear to be resurgent, based on the quality of their offer to consumers.
For years anybody who has been involved with FMCG has known about the challenge of the “last 10 yards“, the distance between a supermarkets back dock and the selling face. Retailers talk about out of stocks, and lost sales, suppliers struggle with short lead times, demanding delivery schedules and the lack of accurate and collaborative forecasting.
Added to these are these challenges presented by fresh food, perishability, appearance, consumers determination to handle and “cherry-pick” the produce, and the nightly put-away. The major supermarkets would appear to be losing share to resurgent independents, as they have responded to the supply chain challenges with greener fruit, more resistant to damage, and offering a longer period to maximise the opportunities for sale. Downside is that green fruit is not much good to eat.
Produce is a difficult category where training and product knowledge is more important than in any dry grocery category by a mile. Why then are there casuals in produce? Last week I saw, not for the first time, a seventeen year old tipping a box of tomatoes onto a display like they were Lego bricks, surely some training would be useful? In this case, it was the last 10 inches that stuffed the tomato.
No wonder specialists who know their business, and can manage the challenges particular to a category are doing a better job than generalists, and consumers are responding.
Jul 21, 2010 | Category, Customers, Sales
So much choice in everything we do, isn’t that great?
Maybe not.
There is so much choice in most things that now we are running the risk of paralysis, procrastination, and often, we just walk away.
Barry Schwartz, a psychologist and terrific communicator puts the hypothesis that in western societies, less choice would make us happier, a view somewhat at odds with the conventional wisdom that greater choice is one of the great benefits of economic and social development.
Consider what is happening in supermarkets. Retailers are setting out to drive category growth, suppliers are fighting each other for a share of the existing, and the growth, usually by line extensions, and each wonder why all the activity leads to the same sized cake being cut up a bit differently but at great cost to all parties.
Perhaps the array of choice is causing the potential growth to turn around and walk out the door, confused and uncertain?
