Jun 6, 2013 | Branding, Demand chains, Innovation, Marketing, Small business
Coles limited engagement in an “anti factory farming” campaign is indicative of the strategic and marketing tightrope the food industry in this country is walking.
On the one hand we have an effective duopoly of FMCG retailing exercising their power to increase their returns to shareholders, and service their customers by both maximising margin and minimising costs. A core part of this strategy is to absorb the proprietary brand margin by aggressively allocating shelf space to housebrand products that are just globally sourced copies of the proprietary Australian products.
On the other hand we have an Australian dollar that has effectively given a 50% price subsidy to the international competitors to the Australian supply chain, at a time when all other domestically sourced input and overhead costs from labour, power, various rates and taxes, freight, and risk costs have all increased substantially. Double whammy!
An added complication is often that the (usually young) buyers in the retailers take the “fast moving” part of the FMCG literally, and fail to recognise the time and investment often required to reflect even a minor change in their product specifications through the supply chain. The consumer end may be fast moving, but when it takes 7 years to mature a fruit tree, and many generations of animals to reflect spec change in the end product, it can be anything but fast moving.
Now Coles have, quite legitimately, moved to build a sort of “animal provenance” into their produce supply chains, as a competitive positioning strategy against Woolworths, increasing the costs of their suppliers, as well as requiring added investment by suppliers for which they need a reasonable chance of a competitive return. This is at the same time they have reduced consumer prices substantially (consumers have been very grateful) in some markets like milk. Whilst Coles, and Woolworths who followed them, may have sacrificed a bit of margin, the supply chain has borne the brunt of it, despite some spin to the contrary.
The small guy has little chance of succeeding against these odds unless he is very smart, and does not have all his eggs in the chain basket, as just competing on the grounds dictated by the chains is a no-win choice.
There are however, strategies that can be deployed to succeed, but they require a re-engineering of the supply chain into a new beast, a Demand Chain that is driven by consumer demand, not supply, and is managed through a chain “community” where information is shared, and is agnostic in some way of the power of the big chains.
Having been a bit gloomy so far, it is however encouraging that the big two retailers are now differentiating themselves competitively, as consumer niches that can be accessed by agile and innovative suppliers. will evolve.
PS. Just after posting, it was announced that Simplot had put its Bathurst and Devenport plants into a wind-down for closure, and McCains had cancelled potato contracts with three big growers. if we needed more evidence of the parlous state of food processing, it just arrived.
May 21, 2013 | Branding, Category, Marketing, retail, Sales, Small business
I am old enough to remember doing warehouse withdrawals by hand. Heavens.
Then we had early data managers automate the process, an evolution that pottered on for 25 years, through to category management based on scan data, some of which can dive remarkably deep.
However, we ain’t seen nothing yet!.
The combination of retail data, personal card data, social media and the proximity capabilities of mobile applications will set off another revolution promotional and sales strategies.
Some of the technology is becoming pretty standard, the components of so called Big Data, and there is plenty around to tell you what to do, like this McKinsey article.
However, it takes resources and deep capabilities to effectively leverage the emerging possibilities, so how do SME’s compete?
It seems there are a few strategies that will become mandatory for those who actually want to survive:
- Develop scale. This does not just mean individual enterprises, which is by definition not possible for SME’s, but I see the emergence of “data co-operatives” groups of category marketers (some may even be competitors) who contribute to resourcing the necessary data science.
- Develop deep domain knowledge. This is like suggesting breathing is good for health, but the transitory and superficial culture surrounding product and brand management counters deep knowledge. This is a challenge of leadership, and personnel management, difficult topics for most businesses up to a substantial size. It is however, an opportunity to absorb the skills of the baby boomer marketers that are around, whose Intellectual Capital is becoming available for hire, as a contractor, consultant or often as a Director.
- Do extensive “Environmental Research“, and learn from what is happening elsewhere. For 30 years I have pretty well predicted what will happen in the Australian market by deeply engaging with 2 sources. Firstly the trends originating in the UK, which almost inevitably translate to the Australian scene at some point, and secondly being wrapped in social research, the stuff that details the behavior and attitudes of Australians. The original and still the best is the McKay Report. Hugh McKay has an enormous ability to articulate the complication of peoples lives and break them down into things you can use.
- Recognise and act on the simple truth that marketing is now fully accountable. No longer can marketers argue that the impact of their decisions are too hard to tie back to specific activities and costs. The ROI on marketing activity is now almost as transparent as that on capital expenditure, you just have to understand how to go about it, and get the right tools and capabilities in place.
- Differentiate. Notwithstanding the point above, you still need to stand out from the crowd, and the only way to do that is to be noticeably different, to engage with and serve consumers better than anyone else. The genuine creativity needed to do this will attract a premium, simply because it is so rare, and now the impact can be quantified, albeit after the fact.
Need help thinking about all that, give me a call, I have been there before.
May 13, 2013 | Marketing, Small business, Social Media
Creating content, the stuff that engages people, preferably customers, potential customers, and influencers of these two groups people (otherwise why are you doing it?) is a real challenge, but one that successful use of social media demands is addressed. There are plenty of resources out there offering tips and templates, but they do not get the job done.
When you have addressed the challenges, and have great content, if nobody reads and shares it, why bother?
SEO tools also abound, just behind the seeming hordes of people offering to lift your Google ranking, for a fee. It seems to me that SEO has spawned a host of shysters matched only by the easy money opportunities emanating from Nigeria.
So where do you go in all this? How do you make the tough choices about how to allocate scarce resources? SEO or Content?
A couple of general thoughts that I have offered to clients over a while now, and which seem to work.
- Have very clear objectives. An investment in Social media is like any other investment, the first step is to be crystal clear about what it is you are trying to achieve. Setting out to get to the top of Google requires a different set of activities to engaging existing customers, building a position as an industry expert, or creating a sales pipeline. These objectives are not necessarily mutually exclusive, but using SEO strategies that build general awareness when you are looking for specific outcomes such as increasing your share of existing customers wallet, is as appropriate as taking the family car to a competitive hill-climb.
- Use analytics. Facts should always be the basis for decision-making, and the facts are there when you go looking for them. Marketing for the first time in its history as a profession can be held accountable to metrics that accurately measure outcomes, rather than just activity. It can be a daunting task, data analysis often can be to many, but there are free resources and tools available that offer an unprecedented accountability and transparency of marketing investments. A Google analytics dashboard at the very least should be compulsory. If you need a resource to assist your thinking, the very very, best is the Occum’s Razor blog written by Avinash Kaushik. A really good strategy is to take your device on holidays, and spend the week reading and understanding the stuff that Avinash writes. It is gold!
- Be prepared to experiment. Social media is a bit like the finches in the Galapagos, many may look the same at a fleeting and uninformed glance, but the detail of the evolution, the way individual groups have evolved to maximise their effectiveness in a specific environment is extraordinarily different. This has happened to the Galapagos finches over millennia, but is happening as we speak to social media tools and strategies, and the only way to leverage the specific circumstances you find yourself in, is to be completely agile, and committed to responding positively to changes in the environment and new information.
- Remove the rules and barriers to customer engagement. It can be confronting for many (particularly older, and dictatorial managers) to consider allowing personnel who actually interact face to face with your marketplace to have the authority to make decisions and respond on the spot to needs and opportunities as they emerge. Whilst there needs to be some general rules of engagement, that reflect the business model and values of the organisation, empowering employees can be remarkably effective.
- “Social” implies interaction.” Social media is a two way beast, whilst there is enormous potential to build value, the flip side is that the risks of social media becoming a problem are very real. The immediacy of the potential negative impact of social media needs to be recognised, and there needs to be very clearly understood strategies to deal with any such outbreak of negativity. If you cock up, social media can destroy you, particularly if you try and cover up the cock-up, and there is also the opportunity for malicious and competitive attack. This risk also needs to be acknowledged, and ideally “war-gamed” even if in a small way.
- We are stuck with Social Media. The final thing to remember is that Social media will not go away. We have seen it before, when Guttenberg got his press working, the world of the printed message changed forever, and it has happened again. Hoping it will go away, that the impact will not reach you is fantasy land, so get with the program, with all its challenges.
May 10, 2013 | Innovation, Small business
Yesterday, watching a bee that had snuck in my office window trying to get out, I was reminded of a simple fact that to my mind is a great metaphor.
Put a few bees in a bottle, and point the bottom towards a light source, and the bees will all belt themselves against the bottle bottom, never finding the open end. Flies by contrast buzz around at random, and eventually will, by luck, find their way out the open end.
Running a portfolio of R&D projects is a bit like having a lineup of bottles full of bees.
For some bottles you need to have light very focussed at one point, in order to concentrate the effort at that point, others you need a wider light source to enable a wider scope of activity, and others, you need light all around, with one small exit, so that eventually the disciplined bees will find the opening, and escape.
If all you have in the bottles are flies, exercising discipline is a pointless exercise, as flies just buzz at random irrespective of external motivation. You need bees, and multiple potential light sources.
Getting the right mix of disciplined process and the connection of the apparently random dots that make the “wow” moment is the core task of those running a portfolio of projects.
May 7, 2013 | Branding, Communication, Small business, Social Media
You choose
Lets talk about social media for a moment, it is on the mind of most running SME’s. and it is the object of lots of “hype” by snake-oil salesmen.
There is a huge amount of very useful verbiage, and mountains of plain crap out there, as well as the “idiots guide” type stuff, but it at its core is really simple.
Remember what it was like as a kid in a new playground, you didn’t know anybody, it was lonely amongst a horde of other kids.
Slowly, one short sentence at a time, you got to know some, some you liked, others you did not want to get to know better.
The “liking” evolves over a series of small, at first disconnected interactions, slowly, the interactions become connected, and slowly, the network widens, as you start the interactgion process with others.
At some point, you ask another kid to come home and play, great if he can, but sometimes they can’t, you ask again, if they cannot a second time, with no apparent reason, you probably will not ask again, This is the “law of reciprocracy” at work. Relationships of any type are reciprocal, otherwise they are not relationship.
Just the same in social media, you need to give something before yuy can expect anything back, but get something back, and you reciproicate again, and you have the beginning of something, maybe. It takes work. You need to spend time at the other persons house, want to spend more time with them, be comfortable with what they do, think, and say.
No different in social media. All are different, are able to deliver you an outcome that varies from each other, you just need to understand clearly what you want, otherwise you will spend your limited time poorly. None of nthem, despite the hype are all things to all people. You choose who you like.
May 3, 2013 | Small business, Strategy, Uncategorized
Yesterday I did a presentation to a group of owners of small businesses, people who seemingly compete against the odds from a point of weakness, as almost everybody is bigger, better resourced, has better technology, and are more connected, than them.
As a basis for the presentation I used Simon Sineks great TED talk, that articulated the ” Why How What” model, one I have been able to use quite often as a means to assist SME’s sort out what is really important, and what just seems to be important, as they try to navigate the competitive challenges they face.
Just after I had delivered my thoughts, a great post from Seth Godin popped into my feed, and it added a further perspective to the challenges. For these small business people, working as hard as they can, trying to be “picked” by their potential customers, from amongst the baying crowd of potential suppliers is confronting and often disillusioning. How do they stand out from the crowd?
Seth’s point is do not be a part of the crowd of supplicants, do not wait for others to pick you, pick yourself by being different, useful, and interesting.
This is as true for the SME around the corner as it is to the huge multinational, but when you think about it a bit, the elephant is pretty hard to persuade to change direction, to be sufficiently agile to respond quickly, whilst the little bloke is far more able to turn on a sixpence.
It just takes the will, vision and balls to be different.
