Oct 31, 2023 | Change, Marketing, Strategy
When I was a boy in this business, back in the seventies, having a brand was table stakes to be in the game. At that time, there were a number of supermarket chains, and every one was stocked with a suppliers proprietary branded product.
There were many types and scale of brands. From the small producers hoping for a modest segment in the market that would provide a living and employment in their modest factories, to the multi-national, mass market giants. There were no ‘House brands’, until Franklins as an experiment ranged ‘No Frills’ margarine, packed by my then employer Vegetable Oils Ltd, which later became Meadow Lea foods.
Over time, the number of supermarkets reduced to the two gorillas and Aldi that we have today, and the number of brands reduced from the many hundreds down to the few MNC brands, with a very few exceptions, which are slowly being squeezed of life today.
If the trends of those 40 years continue, a brand extinction event is getting closer every day.
The latest victim is Sara Lee.
Originally the brand came from the US, and at its height had diversified into a wide range of products from the initial frozen cakes to clothing, and real estate. The Australian business has been through several owners, the most recent being a Dutch company nobody outside the industry would have heard of.
Manufacturers have been their own worst enemies.
They have failed to recognise the long-term impact on their profitability of the increasing power of Woolies and Coles, with the recent addition of Aldi. Retailers do not care about proprietary brands; their goal is their own profitability. If they cannot have your product on shelf, they are just as happy to have an alternative.
Increasingly over the past 30 years that alternative has been a house brand.
When retailers own the shelf space from which consumers pick products, and also ‘own’ the sales margins from half the products for sale, guess who wins. Retailers have used their muscle to squeeze out proprietary brands, taking the proprietary margin for themselves. The stupidity is that manufacturers have aided and abetted this quest to destroy them, by supplying the products and stopping the long-term brand building that made them successful. The funds have been redirected by manufacturers from advertising and brand building back into price promotion. Selling with price being the only differentiator is a sure way to destroy a brand.
To explain the resilience of a few brands, and some that resisted the retailer pressure for years before succumbing, you need look no further than effective, long term brand building advertising. The Vegemite jingle is in the brains of most Australians over 40, and Vegemite persists. Aeroplane jelly is also there, and I would guess the brand could be rejuvenated by a return. Similarly, Meadow Lea is a shadow of its former self, but 30 years after the great ‘you ought to be congratulated’ advertising finished, the positioning of Meadow Lea remains viable, and could be revived with investment.
To explain the failure of FMCG management to continue to invest in their proprietary brands over the years, allowing house brands to take over, you need look no further than the lack of understanding of the contrary dynamics at work.
Advertising is a long term investment, over numbers of years. Advertising is treated as an expense, one that is accounted for on an annual basis in the accounts of businesses. These two contrary forces, when allied to executive KPI’s dominated by accounting thinking, and the increasing power of the retailers to demand discounts as a necessity for distribution has drained the capital necessary for brand investment. The retailers are happy, they have the margin. The short term executive profitability goals of a few executives may be reached, so they are happy individuals. However, the brands have been destroyed, and the long term viability of their manufacturing operations been compromised, in most cases, terminally.
That in a nutshell, leaving aside questions of the operational efficiency of the Sara Lee business, is why it is now on the discount block itself.
Oct 9, 2023 | Marketing, Social Media
Being able to market to a ‘persona’ the picture you build of your ideal customer, is a great leap forward enabled by digital. Our ability to define who buys our products, when, why, where, how, instead of what, and so on.
However, there is a flip side.
The flip is the customer, the real one.
They are not stereotypical ‘personas’ they are people, with homes and families, hopes, dreams, problems, prejudices, and challenges. They do not care about your marketing processes, how they fit into your profile, or where they are supposed to be in the ‘customer journey’.
They are people first, customers second.
Forget that simple fact amongst all the marketing tech tools, and you will lose them.
The fumbles in your process are not your customers problem. While they may like the convenience of you having some of their data, they are wary of having that privilege abused. They also like to be in control of their own lives, so be careful of denying them the ability to make their own choices as you pursue them, setting out to ‘catch and extract’ by a variety of means.
Choice is one of the few areas of our lives where the individual still has complete control. Compromise that, and it will not go well for you.
Sep 20, 2023 | Branding, Marketing
Many of my clients are SME’s whose businesses are localised in some way, usually to the boundaries of the city they are in. The budgets they have for marketing are limited, so they must make every dollar count.
A very common and deadly mistake they make is to not be aware of the distinction between ‘Sales activation’ and longer-term branding role of advertising.
They are very different, and impact your business differently.
I am old enough to remember the ‘Pink pages’ business directory. A phone book of all registered businesses in which you could advertise. Local shops, tradies, piano tuners, and hundreds of other types of businesses were listed. When you needed one, that is where you went to find them.
The pink pages is dead, replaced by Google.
You go to Google when you need to find something, today. Google does not sell anything beyond access. Other sites like Shopify and Amazon do sell stuff, but are focussed on the transaction, the immediate sale. You only go there when you are looking to buy, now.
Advertising is the opposite end of the stick.
Most of the times you see an ad, you are not in the market for that product or service. The objective of the ad is to be remembered, to leave a positive impression, so that when you are in the market, the product comes to mind as the saviour. In the jargon, you build up ‘brand salience’, the recall of the brand and the value it delivers when the need arises.
Local businesses cannot afford large scale media, so must be more creative. However, all the disciplines that large advertisers use to get their message across and embedded in the minds of their potential customers can be used. All come from the marketing 101 basics book, and often after a set-up cost, are then free.
Following are some of the advertising ‘media’ that have proved successful over the years in generating revenue for ‘Localised marketing’
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- Vehicle signage.
- Local sponsorships, such as the kids soccer team.
- Local collaborations. The shoe shop and dress shop jointly cross promoting.
- Testimonials from well-known locals, an even unknown ones who are identified as ‘local’
- Local social media.
- Branded collateral, from stickers, to fridge magnets, shopping bags, T-shirts and caps.
- Local signage,
- Participation in, and sponsorship of local events
- A ‘locally optimised’ website, and use of the ‘Google Business Profile‘. The GBP is essential, and free.
- And, the best of all, referrals from locals to other locals.
You do not need to be a large business to be a successful advertiser, but you do need to think about advertising with a different mindset to the usual ‘grab a sale today’ that dominates the thinking of most local businesses.
Header credit: Windows Factory. The branding of Windows Factory vans have paid for themselves many times over, just from people stopping them in the street.
Aug 30, 2023 | Branding, Marketing
Marketers have outsourced creative development to specialists from the beginning of media advertising in the late 1800’s. Correctly, there was a realisation that it was a specialist skill, not easily found, nurtured, and leveraged.
Amongst the daily advertising dross have been creative gems that have built great brands. At least they were great for a while before stupid management cut the creative advertising budgets in favour of short-term sales activation, a quantitative dead end.
Over the last 8 months another monster has emerged, and suddenly the conversations I hear about are all how to get A.I. to do your creative for you, and save a heap.
Well, here is the news: It cannot.
AI should be called EI. Enhanced Intelligence, not Artificial. All it does is build on what we already have, make connections, do drafts, take what has happened in the past and extrapolate.
Creativity has no role in AI, at least not yet.
Would AI have come up with the great 1964 Volkswagen “Snowplough‘ ad, the one voted the best ad of all time by the Cannes panel? Could AI have maintained that creative standard culminating in the 2012 Darth Vader series?
If there was anything that pushed the disastrous Volkswagen software rort off the front pages, it was this 50 years of brand equity built up by the brilliant, creative advertising.
A.G. Laffey when CEO of P&G recognised that the creativity had been stifled by the rules set in place by a right brained organisation. As a result, everything was stale and boring, as were P&G’s results. He removed the quantitative hurdles, and challenged their agencies to break the rules they had previously been bound by, and demanded that P&G marketing personnel became less risk averse. A new age of creative advertising supported by a tsunami of new products emerged. P&G doubled in size from the early 2000’s, $US44 to 85 billion revenue, increased margins, and earnings/share increased fourfold.
A few months ago in a SME workshop that had a decidedly older demographic, every person in the room knew the brand when prompted by: ‘you ought to be congratulated’. It is 35 years since Meadow Lea was advertised using that piece of creative genius.
Could AI have come up with that?
Header cartoon credit: Gapingvoid.com
Aug 25, 2023 | Branding, Communication, Marketing
Context. The word is ‘Context’
Marketing is a fundamental contributor to our commercial lives.
It is about defining and leveraging the value you create for another, for which they are prepared to pay, while not being about the transaction.
The beach and Heineken experiment as told by behavioural psychologist Richard Thaler describes beautifully the importance of context.
Two blokes on a beach, very hot, and desperate for a beer.
If they are told there is a shack a kilometre down the beach from which they can buy a Heineken, how much would they pay for the beer?
Same situation exactly, except the shack becomes a 5-star hotel.
The price they are prepared to pay for a Heineken from the 5-star hotel is roughly double the price they expect to pay for the same product from the shack.
This is a classic case of context and expectation; people expect to pay more for the identical product from the 5-star hotel than from the shack.
The utility they get from the beer is identical, only the context of the purchase is different.
How do you leverage the context in which your product is presented to potential customers to maximise your revenue generation?
