Jun 13, 2012 | Change, Customers, Management, Marketing, retail
Data mining as it is evolving in retail is a fascinating exercise in identifying behavior characteristics that apply to very small percentages of the shopper population, and doing something with them. Progressively retailers are getting better at leveraging the data, and as the penetration of cards increases past a critical mass, so will the effectiveness of the marketing and promotional programs. Of course, consumers are well aware of this, and have well developed “relevance meters” built in.
Consider the category management of potatoes. Pretty dull stuff? no, fascinating stuff. I am making these numbers up to illustrate the point, but consider, of 100 customers using their cards at the checkout, perhaps 10% have potatoes in their trolleys, and 10% of that 10% have a particular variety, and of that 10% (now down to 0.1%), they also have sour cream and chives in their trolley. Pretty reasonable guess that the potatoes will be cooked in their jackets, with sour cream and chives garnish, particularly if the shopper is single, no kids, and also buys steak. An opportunity to offer the consumer a deal on a bottle of red wine on her way out of the shop, or in the associated retailer across the way? Multiply that by 5 or 6 million cards, and you have a pile of data to mine.
The gold standard of retailer card data mining is Dunhumby, now owned by UK retailer Tesco. They did such a great job in the development stages of the Tesco loyalty card, that the retailer bought them to keep their competitors away from them. In a move that recognises the future, Dunhumby is now crowdsourcing ideas via Kaggle, a fascinating startup that turns data mining into a competition for data nerds.
This is Category Management on steroids, and represents a monumental change in the skills needed by FMCG suppliers deal with dominant retailers. In the Australian context, very few FMCG suppliers have any idea of the power of the data tsunami coming at them, and how this will impact on their brand marketing strategies. It is also the realisation of the vision of category management the few of us who were playing with this stuff 30 years ago had when the data was warehouse withdrawals, we had a bit of U&A consumer research, and managed it all with calculators.
Jun 11, 2012 | Branding, Change, Communication, Management, Marketing
Today in Sydney has been about as miserable as it gets. Rainy, cold, grey, just plain shitty, and not fair for a public holiday.
What a relief it was to find a distracting way to spend the afternoon.
After watching the replay of the unfinished French Open final, assiduously avoiding any media when I “rose” so I did not know the score, I started to clean up the hard drive of my laptop, removing some of the stuff that had accumulated to clog it up.
Amongst the “random savings”, were quite a number of advertisements I had accumulated from various sites, all of which had the common element of having struck me at some time as being enormously creative, funny, engaging, delivering a serious message, or just sufficiently different to really cut through, when flogging stuff from cars and fashion to condoms and computers. They all, in one way or another, rang my creative bell.
It also struck me that we are in the middle of a huge confluence of two enormously powerful forces, technical development, and creativity, that is changing everything. Hardly an original insight.
The technical advances of the last 15 years have reduced the costs of technology, and the distribution of content to relatively miniscule proportions, which has opened up huge new opportunities for creativity to be seen. However, the digital media has become so clogged with content, from the great to the absolutely inane, that being seen is still the greatest challenge, so creativity remains an essential element of all successful communication. It has also offered up the opportunity to focus laser-like on a very small group of individuals, delivering a compelling message that they would have been unlikely to get in the old mass communication days.
I cannot finish without offering my pick as the best ad of all time, at least the best I have seen. Perhaps surprisingly, it comes from my childhood, so is a very old ad, but is a very simple execution delivering a powerful message in unequivocal terms. Pity the companies management was not up to same standard as their communications people.
Jun 7, 2012 | Management, Marketing, Small business, Strategy
Anyone who can read can read a Keats sonnet, but not everyone can “see” the lyrical quality, and feel the passionate introspection most have at their core. Those who can are truly literate in English poetry.
Data Literacy, a term I like, similarly implies not just an analytical capability, but also an intuitive capacity to understand the nuances and hidden gems in data, rather than just the capability to be informed by apparent outcomes.
Have you ever seen people making stupid decisions while pointing out that the data justified them?
I see it all the time. It seems to me that there should be a knowledge building chain here, rather than just a data analytical one:
- Gather data,
- Analyse data,
- Apply healthy skepticism to the outcomes,
- Gather more, preferably counter intuitive data,
- Pursue the trends, outliers, inconsistent data, apply informed analytics rather than statistics,
- Synthesis of the complex, often paradoxical information,
- Informed intuition, and data literacy evolves.
Not all numbers are equal, some are more reliable and informative than others, simply because they are the result of tested assumptions, and more and better informed questioning. The development of literacy takes time, effort, and resources, but is worth it.
Jun 4, 2012 | Change, Innovation, Management, Marketing
On a flight from a regional town last week, the attendant went through the nonsense of the “safety speech”. Instructions on how to do up the seat belt as if nobody knows is pretty dumb, but of total irrelevance is the instructions on how to use the life-jacket. I remain unconvinced that a little whistle and light will do much good if the engine stops at 20,000 feet, and the only water within 100km is in farmer Browns property dam. What about a parachute?
However, it is all taken so seriously, passenger jokes are not appreciated at all. Surely an example of a mould that needs busting.
Another mould more likely to be busted by the avalanche of mobile and electronic payments innovation is the banks credit card and cheque business model.
I have observed the missed opportunity by banks before, and the pace of change is accelerating rapidly picking up as Apple, Google, Paypal, and a host of startups like “Levelup” “Square” see the opportunity in disruption, and are chasing hard, often using technology that evolved in an ecosystem with nothing to do with banking.
These changes pose a huge problem for banks, one that their legacy structures and business models are apparently having big problems addressing. The role and performance of banks around the world over the last decade, and in the current European mess has removed any residual loyalty consumers may have had, and opened them up to non bank competition that will change the nature of banking in the coming decade. Opportunities abound to bust the current mould.
May 30, 2012 | Branding, Innovation, Marketing, Social Media
This new avenue to live broadcast, as distinct from posting a video on Youtube, seems to me to be a game-changer.
Social media lives by interaction, engagement, that is what gives it its power, and to be able to go live to an audience, even if it is just your own family at first, offers the opportunity for the networking capacity of social media to accelerate at a logarithmic rate.
For a while I have wondered at the task facing Google competing against Facebook, which has an established base now of a billion, they have built formidable barriers to exit and entry, but “on air” could just change the equation.
The momentum seemed to be moving slowly towards Google, but this innovation will give it a great big shove, particularly in the light of the facebook IPO, with the shares currently being traded at 10% less than the issue price, and 25% below the peaks reached on the big day. There appears to be a healthy dose of cynicism that has suddenly emerged as a result of the obscene amount of wealth facebook insiders have skimmed, whilst the gullible have done their dough, and this cynicism can only assist Google+ build some much needed competitive momentum.
May 25, 2012 | Change, Management, Marketing, Operations, Personal Rant
Last week speaking to a gathering, I told the group that Australia was now a net importer of food with a $2.7 billion deficit in 2010-2011, according to the AFGC State of the Nation report . Utter disbelief was the primary reaction, “how could that be” being a typical response.
The Australian food industry is dying at a rapid rate, the pressures on local suppliers are heavy, and increasing all through the supply chain. Retail oligopoly, high $A, regulatory impositions that make no sense, costs of supporting local government social initiatives, and all the rest of the stuff that clogs up the wheels of competitiveness and productivity.
Heinz moved to NZ last year, SP exports, Australia’s largest tomato grower in liquidation, a second major grower hitting the wall in April, and this week, fresh tomatoes hit $10/kg in supermarkets. A sign of things to come in many categories.
We are watching the death by a thousand cuts of an industry, small businesses that garner little exposure are hitting the wall all over the place, Golden Circle gone, Goodman Fielder on the skids, growers are going broke across the board, dairy processing almost all owned overseas, about all that is left is meat, because we are amongst the biggest producers, and horticulture, because most fresh produce does not travel well.
Now, if we continue to go the way it seems we are destined to go, housebrand NPD will eventually overtake proprietary NPD as it has now done in the UK, and you need to ask where that NPD will occur. Certainly not here, because not only have we seen off the manufacturing businesses, we have substantially depreciated the technical capabilities necessary for innovation. Even the CSIRO is a shadow of its former self in the food industry, having removed much of the intellectual infrastructure as its masters re-aligned the priorities to other areas, and progressively trimmed the resources.
The recent drop in the $A will help, just a pity there are few businesses left to take up the slack.
