5 ways to avoid brand prostitution in FMCG

5 ways to avoid brand prostitution in FMCG

The primary tool used by retailers to attract customers is the discount prices that they offer on their suppliers products, largely funded by those suppliers.

As you read all the literature and case studies on brand building, and reflecting on my own experience, the last thing you want to do is indiscriminate price cutting to build volumes. Deep and regular discounting is a sure way to murder any long term position of the brand as anything other than cheap and nasty.

I have yet to see “Develop the brand to  be cheap and nasty” in a strategy document.

However, promoting your product, as distinct from stand alone price cutting is a potent way to get trial, and any brand building exercise  contains measures that  encourage and reward trial; setting out to turn trial into habit.

It is a delicate balance, generating trial and confirming to customers that  the product is delivering value for the non promotion price, when the discounted price rolls around every few weeks.

So how do you combat it, when  you  have so little control over the retail interface with consumers?

Not easy, particularly when to retain shelf space, discounting is mandatory, and often the  suppliers have ceded control of their promotion timing and type via  trading term agreements.

In effect the retailers do what they want, when they want, with your products to build their revenues and margins, and charge you for it.

In other words, they are able to prostitute your brand in their battle for market share and margin.

How do you break this cycle?

Not easy, and not without risks, as retailers can always delete your products and put  something else in the space, and increasingly this is a housebrand.

The answer is in several parts.

Make the CEO the senior  product manager. Too often, the boss is too busy to attend to the details of the sales and marketing programs, and conventional management wisdom  is that you leave the detail to those responsible for the outcomes.  However, abrogating responsibility is very different from leaving the details to the functional management. The boss must be engaged in the battles with retailers. Such engagement delivers certainty that you are serious to the retailers, and assures your people that the boss has their back if it goes pear-shaped.

Have a plan to manage the customer as well as the consumer.  It is essential that you have a plan actively supported by the CEO around the supply chain challenges of building of a brand. This means that the CEO needs to support the sales and marketing management in the implementation in the face of retailer pressure, removing the retailers opportunity to play the  ‘go to your boss’ card.  Obviously, any marketing plan needs to address the consumer  you are talking to, what they are looking for, and how you are delivering that value to them, or they will fail, but most in my experience miss the explicit references to those who control the choke points in the distribution chain.

Regain some control over trading terms. This is easy to say, but enormously hard to do, and is impossible in one negotiation round.  To the extent that sales success requires distribution in the two gorillas, you need to be very aggressive and smart about wresting back some of the control of the on shelf promotional and price decisions. Branding success requires that you deliver consumer trial in a competitive environment, followed up and consolidated by the reward of great value, which is way more than a cheap pick-up price. Just going along with a retailer delivering a low price to consumers only rewards brand prostitution by the retailer.

Manage your data. You need data on which to base all your decisions, as debating challenging questions with a retailer on the basis of what you think is not good enough.  Assembling data that demonstrates the ROI on promotional activity across a variety of time frames and consumer centric parameters is essential. This requires both scan data and external consumer and social data to be combined and analysed. Not an easy task, and certainly not without cost. However, if your volumes are dependent on promotional pricing without the ROI knowledge offered by data analysis, you have already lost.

Consumers need to be engaged. Outside the price, you need to be communicating with your consumers, supporting the value proposition in every way possible. This is now possible through a multitude of channels and tools not dreamed of just a few years ago, and these need to be used. However, if  you have the budgets, old fashioned advertising, so long as it is good advertising that communicate clearly the value of the brand, still works.

Yeas ago as a young product manager, I was a (minor) part of the team that built Meadow Lea margarine into the dominating market leader in margarine. Meadow Lea peaked above 20% market share, well over 3 times its nearest competitor, in a crowded market, at premium prices. It was just margarine, a great product, but hardly worth that sort of dominance until you remember that we were busy congratulating mothers for using it for the benefit of their families health and  happiness. I have not seen any numbers in a long time, but I have also not seen advertising for a long time, so I bet Meadow Lea is back with the pack, only selling on promotion, at discounted prices, and the parent company, which took a short term view of marketing, went from being a successful large company to an unsuccessful way smaller one until it was flogged off to a Singaporean group.

Sad that.

We built a brand powerhouse, only to have it squandered.

As a final groan, just pre Christmas I went into Woolworths to buy the family Christmas ham. The only choice was one of a number of Woolworths house brands.  I went elsewhere, and found a really good ham from a specialist retailer, probably cost an extra $5, but was worth every cent.

I wonder if this experience is a portent of things to come, or just me being cranky.

Three by four marketing equation for success.

Three by four marketing equation for success.

How do you win business in a competitive world?

I know for sure it is not  getting any easier, but the advice on how to do, and stories of how to be rich in 15 minutes a day seem to abound.

Perhaps I don’t take advice well?

It is pretty clear to me, after 40 years of working with this stuff that the more we complicate things, the more difficult seeing the wood for the trees becomes, so here is a really simple tool that you can use today.

To get business, any business, although the context and circumstances vary enormously, the potential customer needs to:

  • Know you
  • Like you
  • Trust that you can solve their problem/add value to their lives.

Pretty simple really.

The other side of the equation of course is the challenge of creating the circumstances where a potential customer has the opportunity to get to know, like and trust you.

Marketers can spend huge amounts of money, much of it wasted, on chasing this outcome, often failing simply because they complicate the hell out of it and confuse themselves.

I like to think of it in human terms. The building of a marketing relationship is no different to any other type of human relationship, it evolves in stages that are pretty simple:

  • You need to be where they are. This is so blindingly obvious it is often missed.
  • You need to get their attention.
  • You need to make a connection
  • You need them to take action.

marketing matrix for successBreak all the complicated cliché ridden & expensive recommendations  you get from those with a pig in the race into this simple matrix and reap the benefits.

Beware though, as Steve Jobs said, “Simplicity is the ultimate sophistication” so this stuff is deceptively hard, but now you have a tool to make it easier.

The 6 ways to benefit from losing a tender

The 6 ways to benefit from losing a tender

Most of the businesses I work with are medium sized, at best. Most have a significant functional capability that can deliver great value, but they often do not have the ‘grunt’ in other areas to get over the line with large customers.

Many of them are in businesses where competitive tenders are a fact of life, it is a characteristic of many B2B markets, and whilst it is breaking down, the bias towards ‘The big guy’ remains. As they say in corporations,  ‘You do not  get fired for buying from IBM’ which is just a way of expressing the risk aversion of those in many large businesses where making a mistake is career-toxic.

So, why celebrate when you lose?

Here are 6 reasons:

  1. You did well to get on the radar. A key component of B2B marketing is getting on the radar of those in your ideal customers who have some influence, if not always decision making power. Being included in a tender list is evidence that you have succeeded crossing that first hurdle.
  2. Customer intelligence. The information in a tender necessary for tenderers to adequately meet the specifications can tell you a lot about the business. What are its priorities, their capabilities in your areas of competence, their budgeting and  buying rhythm,  and how the buying process works. All great information. It is also extremely useful to assess weather or not they are someone you want to do business with. Selling is a transaction, a 2 way process, as the seller, it is your choice to work with a potential customer or not, so do not be afraid to work only with those who will not only pay you, but value what you bring to the table.
  3. Know the personnel & process. People buy from people, not corporations, the better they know, like and trust you, the greater the chance you have. Getting to know like and trust is a human process, it happens over time, face to face. Preparing and submitting a tender while painful when you lose, is a great way to create other opportunities during the process. Even after you have lost, don’t waste the opportunity to reinforce the relationships that will serve you the next time.
  4. Follow up intelligence. Keeping in touch with a project you have missed out on can tell you a lot about the client, and also a lot about the winning tenderer.  Knowing your competitor better than they know you is always an advantage.
  5. Other opportunities. If the tender you lost was the first tender you did for the customer, you should not be surprised that you lost. Change is hard, and risky, those managing tenders like a simple easy life, so they tend to stay with what they know. However, it is also in their interests to have options, so being around and interested, making yourself an option, might open up  other small opportunities that would just normally get missed. Getting a foot in the door with a small job and doing it really well is the best way I know of to get on the next big tender list.
  6. You get to know where you are not wanted. Sometimes there are opaque barriers to success. Try as you might, make the tenders truly great, and you still do not win, or even get any useful feedback, get the message. Our time combined with our expertise is the most valuable resource we have, don’t waste it where it is not valued, or where there is some invisible barrier to success. Move on.

Remember as well that those awarding tenders are just people, they like to he liked and valued. They like to think that they are awarding business to those who really want it, and are determined to do a great job. So, be persistent and committed, although never ‘needy’, seek to assist them in ways not necessarily associated with a tender, it will help keep you on the radar, and build a relationship.

What fly fishing can teach us about lead generation

What fly fishing can teach us about lead generation

 

When I can, I fish for trout with a dry fly in mountain streams. It can be cold, obviously very wet, frustrating, but oh the joy of the feel of a fighting trout on the end of a 2kg breaking stain line, and a light rod.

Often you sneak up a stream all day and see nothing, but sometimes, occasionally in unexpected places, you get  a rise, with luck and skill hook them, and with more luck and a lot of skill and experience, can bring some of them into the net.

So what has this got to do with lead generation?

Well, a lot actually.

Fish where the fish are.

There are places in a river where the trout are more likely to be, at the tail of runs, behind an exposed rock, under the banks, protected by overhanging trees. You can spend a lot of time fishing every inch of a stream, but if you need a feed for lunch, best spend your time going to where the best odds lie.

Patience

You rarely get lucky quickly, it takes time, perseverance and patience, as well as skill, and better yet, local knowledge.

Use the right bait

Trout are fussy feeders. In the really clear streams, you will sometimes see a trout come up ‘for a look’ and pass on the fly. When that happens, it sometimes pays to give a it a few minutes, and change the fly to an alternative. You know there is a fish there, you know it can be tempted, so trying an alternative fly sometimes pays dividends.

Blend into the ecosystem.

Being obvious ensures failure. Colorful shirts, noise, creating any disturbance in the surroundings puts trout off. They are timid, easily scared, and have very good senses that pick up anomalies. Alarm them even slightly, and you have no hope of tempting them to a fly.

Learn to stalk

When you find an ideal spot, and you know there is a trout there somewhere, spend some time watching, noting the nuances of the stream, observing the sort of food that is around, and how it behaves in the water , and particularly if and when your target comes up for a look or rises to take something. Then you have the knowledge to tempt them onto your fly.

The conditions have to be right

Trout are very sensitive to conditions. They will not rise if there is a storm coming, they feel the pressure differences, so they hunker down. Similarly, they rarely rise in the rain. Surprising really, a bit of extra water should not make a difference, but it does. Best times are early morning, when the sun has been up for an hour or so, and still evenings around dusk.

Luck plays a role.

J.P. Getty was once asked how he became so successful. His response  was ‘rise early, work hard, strike oil’.

Sometimes you just get lucky but if you are not in the river at the right time, with the right fly, and doing all the right things, by definition you cannot be lucky. Luck comes with hard work, engagement and commitment.

None of this is any different with Lead generation, it is remarkably like fly fishing. Every lesson I learnt a my old dads knees, hiking through the bush to find the right spots, wading up steams, learning the knots and skills of the sport is applicable to  commercial ‘sport’, where lead generation is an absolutely essential skill for most businesses, certainly all B2B businesses.

As we fly fishers say ‘tight lines’ .

Why many small businesses fail with digital marketing.

Why many small businesses fail with digital marketing.

Imagine you discover a compound in your kitchen that will cure cancer.

You know it works because it cured your mother.

That would be a really amazing feeling, to be able to make a huge difference to peoples lives, and find instant wealth at the same time.

Imagine further that you did  not tell anybody.

Your Mum knows, as do your siblings and a few others close to you, the old family doctor is sceptical, and your neighbour who goes to church a lot is downright dismissive, because it is clearly a miracle that has brought the cure, not a chemical.

The barrier between you and success is twofold:

  1. Lack of credibility
  2. Lack of an audience.

So it is with  marketing.

The newest iteration of marketing, digital, is not a cure-all for an ordinary product, non competitive price, lack of distribution underdone value proposition, or anything else that normally leads to failure in the market place, it is just an additional set of options to understand and manage.

You still need both the product customers want and the audience that knows about it.

One without the other is not of much value.

Most small businesses fail one if not both the tests.

No matter how great their product, how responsive their service, without an audience, people who know about what you do and care enough not just to shower praise, but to go out and buy it, and encourage others to do the same, they will fail.

Success with digital marketing is not easy, despite the nonsense to the contrary, but it is a capability now as basic as having a good phone manner was 20 years ago.