Sep 16, 2024 | Branding, Communication
‘Marketing’ & ‘Communication’ are two words that should not be compounded. They have entirely different meanings.
The confusion of meaning amongst quasi marketers is the beginning of wasted marketing budgets. It is also the source of much of the dumb rubbish clogging up the digital pipes.
Following are 4 strategies to increase effectiveness.
Define the objective of the communication.
What seems to happen here is that the tactics become confused with the objectives. This is not about optimising your website, or deciding whether or not to use Facebook ads, it is about creating the outcomes you want. Create demand for a product, generate awareness of the company, attract funding, and many others may be the objectives of a marketing investment, but they are not the tools for implementation. Lack of clarity of objectives, time frame, and performance metrics, is a basic marketing sin. I always advocate for a SMART framework.
Who is the audience?
Having figured out why you are communicating, the obvious next step is who you need to communicate with. Who is your ideal customer, and who do you need to engage to generate a transaction?
Your ideal customer may be hospitals with specialist surgical services. A relatively specific ideal customer, but inside that customer, there are those who sign the order, engineers who assess regulatory compliance, accountants who have control over budgets, and the medical staff who use the product. All have different concerns and motivations, and all require differing communications. Understanding the audiences, crafting messages and selecting the channels by which they will be delivered should be second nature.
What does your audience want and need to hear?
Often these are two different communications. They may want to hear about the prices and delivery times, but they need to hear about the regulatory status, availability, and detailed specifications of the range of options being presented to them.
Your task is to clearly communicate what it is you are offering, the benefit it delivers, and why they should care, along with presenting a call to action that is compelling.
How do you communicate?
What is the tone of the messages, and how do you reach the target is the oldest marketing challenge in the book.
Every successful marketing communication is in some form a story. Do you use drama, comedy, a villain, testimonial, or do you use an academic approach to the copy? This even applies to the blazing headline of a huge price reduction, where that is the only thing in the ad. Even that tells a story to those that see it.
What media is used, newspapers, magazines, social platforms, direct mail, email, digital advertising, face to face? In most cases it will be some combination of these, and many other options available to deliver messages.
While writing this post, it was constantly in my mind that ‘everyone knows this stuff’ and ‘nobody out there needs to be told, again, how to suck eggs’.
However, the weight of crap I see floating across the web, and sadly into my inbox, unsolicited, told me otherwise.
I am confident nobody reading this needs to hear it again, but perhaps you could share it to your less enlightened comrades.
If you want to get noticed, lift your game!
Header illustration via DALL-E in 5 seconds.
Apr 2, 2024 | Branding, Change, retail
The retail landscape is changing, even as the two retail gorillas hunker down and set about extracting more from the current model.
Following are a few of the macro trends I see that will continue to erode the current model that has been so successful.
Declining customer loyalty.
I have no numbers, but anecdotally, where in the past you shopped at Coles or Woollies, now you have Aldi, Farmers markets, Costco, Harris Farm, and a range of specialty retailers all competing successfully for the consumers dollar. I no longer know why anyone sees any of the major retailers as ‘their’ store. Loyalty is something that is given in acknowledgement of great service, and the gorillas have failed in that space.
Changing customer habits.
Associated with loyalty, customers are looking for things other than just the lowest price. Increasingly they want product provenance, domestically produced product, they are increasingly sensitive to the ingredient lists, and spurious health claims. This is all happening as the gorillas remove the options from their shelves in the game of short-term margins.
The continued growth of home delivery by the gorillas since Covid gave it a turbo-boost seems here to stay. Interestingly, home delivery also seems to be a useful brand building tool for the gorillas. Anecdotally, consumers tend to stick with one or the other of Coles or Woolies for delivery in greater numbers than they exhibit loyalty when shopping for themselves.
Investment attraction.
Aldi has invested successfully, Costco while going more slowly than expected, appear here to stay, farmers markets have become ‘corporatized’ to some extent, Harris Farm continues to invest, and specialty stores continue to ‘pop up’ although few survive for the long term. It seems that the market is sufficiently big, that with only two major players there is risk capital going in at the fringes, and in the long term, the fringes tend to become mainstream. Looming over all this is the shadow of Amazon, and more generally the move away from the bricks and mortar business model. I was betting a few years ago that the Harris family would cash in and sell to Amazon, a transaction consistent with their strategy in the US. So far, I have been wrong.
More recently, the public and political attention focussed on the gorillas can only have a negative impact on the investment attraction of FMCG retail.
Business model proliferation at the fringes.
While the supermarket model absolutely dominates the current landscape, technology and changing consumer attitudes are enabling evolving business models to compete for the consumers dollar. Two of my neighbours combine to buy meat in bulk direct from a farmer in the Southern highlands. It started as all the meat from a single animal, which meant lots of mince. Recently much of that mince is being made into sausages, and they are experimenting with differing sausage flavours for variety. This proliferation seems to me to be another signpost that change is coming, like it or not.
Margin pressure.
While all this is going on, margins through the supply chain are under increasing competitive pressure. This pressure impacts enormously on the decision making of incumbents, offering niche opportunities to newcomers and new business models to make a case with consumers.
It seems to me that the incumbent retailers are waiting to see what happens. History tells us that this is not an effective strategy. The better course is to shape your future in some way that suits your aspirations. It would be naive to say this was easy, it is excruciatingly hard, which is why so few are able to make the transformations necessary.
I keep on harping about the failure of Woolworths to leverage the start they made with Thomas Dux. To my mind it was a classic strategic mistake to back away.
My conclusion is that the current management culture at both the retail gorillas lacks the courage to explore, be curious, make investments that are separate from the main business, and stick to them in the face of short-term challenges. Instead, they have chosen to hunker down and optimise the current model.
Mar 11, 2024 | Branding, Marketing
Price promotion is just a price subsidy to consumers, and margin subsidy to retailers in disguise. .
In consumer goods, most volume that comes from a price promotion is just bringing forward sales that would have happened anyway, just over a longer time-frame. Alternatively, it is volume taken from an opposition product by buyers who will avoid ever paying the full retail by switching products based on price. It is common in FMCG for consumers to have a basket of ‘acceptable’ products that they shop from via promotional pricing.
Over the 45 years I have spent in FMCG, I have seen the terminal erosion of most proprietary brands on supermarket shelves as a direct result.
In times of inflation, the gap in real wages and price widens. This pressure will only increase over the next year or so as retailers push for better and better price promotional deals, despite the current focus on their pricing tactics.
Now is a great time to go broke being successful at securing price driven promotional slots.
To dodge the ‘go broke’ outcome, there are a few simple to say but very difficult to implement marketing practises.
Understand the elasticity of demand for your product, and tactically market accordingly. This requires that you quantify the break-even points between the tactical volume increases you generate while on promotion, the lost margin from the discount, and the cost of the promotional slot. The strategic challenge here is that erosion of margin happens over time, as buyers from whom your product is in their ‘basket’ wait to buy on promotion, and most often only buy then.
Zig as others zag. Many, if not most suppliers will stop advertising, and direct the funds into short term price and promotional activity. This offers the opportunity for those brave enough to take it to generate a higher share of advertising voice for less. Over time. the body of research that examines the relationship between brand health and price delivers irrefutable evidence of the negative impact of price on brand health. Advertising share of voice is a leading indicator of market share. In tough times, most cut advertising investment to salvage the bottom line, as advertising is seen as an expense rather than an investment in future profitability.
Understand the reality of attribution. It is way too easy to make simplistic single source attribution of price promotion as the driver of volume. This moves the sightline from the more important ‘delivered’ margin. We now have the tools to do a much better job than has been the case in the past of separating volume and margin. However, the explosion of digital channels and tools has led to a quagmire of conflicting attribution claims, most of which are no better than marginal contributors.
As a kid, the Arnott’s red trucks delivering biscuits to supermarkets were always polished to a high level, no blemish in the polish was allowed. Even now, over 60 years later, that stays with me as an indicator of the effort put into quality which feeds into my view of the Arnott’s brand, despite the years, and ownership changes.
Resist the siren song of volume. For an SME to be successful, they need to make a whole series of tough choices. Amongst the most seductive of those choices is the perceived trade-off between price and volume. I say perceived because most see the trade-off as the traditional price/volume choice drawn as the graph they saw in Economics 101. It is grossly misleading to see it in this one-dimensional way. Consumers make their purchase choice on a whole range of ‘value-delivery’ parameters, of which price is only one. When you allow it to be the only one, it will logically dominate. As a marketer, your task is to make price a minor component of the purchase choice consumers make. While short term that may dampen volume, and even deny you distribution in a retailer, the point of being in business is to make enough to remain in business. You will not do this by giving away margin for no return.
Know your costs. This seems pretty obvious. However, the number of SME’s that do not understand the detail of their costs and the difference between marginal costs and overheads never ceases to amaze me. One of the most valuable tools, previously noted, in the SME toolbox is a sophisticated understanding of their break even. When you have this model working it enables you to add in some assessment of the impact of price and volume over time. It enables consideration of the impact of pulling forward your sales volume and delivered margin on promotion, the volume and margin delivered off promotion, and volume and margin impacts of competitive promotions.
Following are a few of the many research reports that articulate the linkages between price, volume, and brand salience. I include them to demonstrate the views expressed above are way more than just my opinion.
https://tinyurl.com/496vwphy Ehrenberg Bass. Brand health (podcast)
https://tinyurl.com/4wzkebav Ehrenberg Bass. Brand salience
https://tinyurl.com/4b5er6rc Amity University. Impact of price promotion on brand equity.
https://tinyurl.com/36fr8xwf Research Gate. Long term effects of price promotion on brand choice and purchase quantity
Feb 15, 2024 | Branding, Marketing
There are many contenders from around the globe for the mantle of ‘GOAT”, or at least of the last 20 years.
The obvious choice might be Steve Jobs, whose single-minded pursuit of all the factors that coalesce into great, long lasting, and commercially effective marketing culture is unparalleled.
You might nominate Elon Musk. He reshaped the auto industry worldwide, made batteries sexy, and figured out how to create a reuseable rocket, before imploding by renaming Twitter ‘X’.
How about Jeff Bezos who figured we would buy books online and turned that idea into a retail behemoth that has reshaped markets.
Some might add the foul mothed Gary Vaynerchuck to the list, whose ability to promote himself while talking about himself is unmatched.
Then there is a small number of genuinely original marketing thinkers and academics: Seth Godin, Mark Ritson, Byron Sharp, Roger Martin, and Scott Galloway.
Add in a few hands-on practitioners like Angela Ahrendts, Richard Branson, Marc Pritchard, and a trio of Aussies who changed the world, Melanie Perkins, and the Atlassian duo of Farquhar and Cannon-Brookes (whose core values include ‘don’t F%@k the customer’) and you have a good list.
However, my nomination would be from outside the usual ‘who is the GOAT’ box. It is a 34-year-old musician, songwriter, entrepreneur, and publicity machine, who has added tens of billions to the GNP of the US.
Taylor Swift.
I could not identify one Taylor Swift song, and I do not know if she even has any musical talent, but she certainly is a truly great marketer!!
To have the world talking about you, (even a 72-year-old bloke in a blog post) to have massive fan clubs of ‘Swifties’ salivating over every new piece of iconography, hordes fighting to pay eyewatering amounts to get nosebleed seats in a 100,000 seat stadium, takes some talent.
What makes her so great? Indeed, what are the common characteristics of all those in the list?
- Understands who her customers are, and applies relentless focus. Swifts core market is young women and girls. She has demonstrated mastery in engaging with that audience with the music, visual extravaganza, and personal storytelling that resonates. She is also a powerful role model, encouraging independence, ambition, creativity and determination, emotions to which those in her market all aspire.
- Consistently creates value for customers, individually. It seems the ‘Swifties’ out there all see Taylor as someone they easily relate to personally, across a wide range of channels and media. She is consistently delivering experiences, based on the music and extravaganza shows, but supported by all sorts of adjacent activities, such as having Kobe Bryant, a superstar in his field, come on stage at a concert and wax lyrical about her kindness, generosity, and ‘grounded’ personal values. She tells Swifties what they want to hear, and even their parents have trouble arguing!
- Is ‘the only one’. Marketing success is an outcome of meticulous attention to detail, and the communication of all those details in a package. It requires two types of activity that is an extremely difficult mix to get right. On one hand, you need to ensure ‘activation’. The calls to action that today generate the motivation to spend money to be a part of the party. On the other, it requires that long term investment be made that build a brand, an identity that engages and creates a long-term platform from which the activation and short-term revenue generators are launched. When done well, as in this case, there will be ‘only one’. Where else can a teenage girl find the excitement, engagement, communal vibe she gets from being part of a ‘Swiftie’ fan community?
- Swift applies compounding leverage. Taylor has executed a masterful commercial strategy. Unlike almost all other entertainers, she has retained control of everything, and runs the whole shebang as the CEO of a large, volatile and very complex business entity. Her uncanny ability to generate ‘Buzz’ around everything she does, which is spread by wildfire word of mouth and unpaid media enables a continuous stream of ‘Swift-news’ which has fans hanging out for more. She provides the creativity, leadership, and alignment most CEO’s can only dream of across the diverse range of activity her business embraces.
Swift is touring Australia, starting later this month, with multiple sold out shows in Sydney and Melbourne. The hype is becoming all consuming: you even have to reserve a spot in the line to pick up your merch and get to the cash register at the exit of the ‘pop-up’ merchandise stores.
Header illustration is via DALL-E, everything else is ‘organic’
Feb 12, 2024 | Branding, Communication, Customers
Last week I provided a template for a Customer Value Proposition. The template works well, but ‘Customer Value Proposition’ is a piece of marketing jargon which just means making a promise to your customers.
This presupposes that you actually know who your ideal customers are, and what sort of promise would be attractive to them.
In the January February 2024 Harvard Business Review there is an article called ‘The right way to build your brand‘ written by Roger Martin and two Co-authors. The article sets out research that proves the hypothesis that making a specific promise to customers is more attractive than a generic claim of some level of excellence. The specific promise is about the benefit a customer will receive with use of the product. A generic claim to greatness is just about the product.
It does not surprise that the first is more powerful than the second.
‘Your promise is your strategy’ is a sub headline towards the end of the article. When you think about it, the observation must be right. Strategy is a process of influencing factors over which you have no control in such a way that the subsequent behaviour of the customers benefits your enterprise rather than an alternative. Making a promise of performance in delivering an outcome desired by a customer is about the strongest driver of short-term behaviour I can think of.
Delivering on the promise, will build trust.
Right at the end the authors ask four crucial but simple questions that can be used to determine if a proposed advertising campaign is worth investing in:
- Is the campaign based on a clear unambiguous customer promise?
- Were customer insights used to identify a promise the customers value?
- Is the promise framed in a way that is truly memorable?
- Were product marketing, sales, operations, and customer service involved to ensure the promise will be consistently fulfilled?
To me, this sounds like a comprehensive framework by which to decide if a proposed communication campaign is a worthwhile investment.
Feb 9, 2024 | Branding, Marketing
Almost everyone has trouble with this most basic of marketing jobs, articulating your ‘Value Proposition’. It is a simple statement of the benefit a customer gets from using your product, rather than an alternative.
Internally it also plays a role, in aligning staff and other stakeholders to a common purpose.
For …………….. (your ideal customer)
Who……………..(define the specific need, pain point)
Name……………(of the service or product)
Provides…..…. (The key benefit)
For example, the simplified Value Proposition for StrategyAudit might be:
For small to medium manufacturing business leaders,
Who do not have the resources to hire deeply experienced management,
Allen Roberts from StrategyAudit,
Provides that deep experience across all functional areas of your business on an ad hoc, part time, project, or on-call basis that is guaranteed to lift your profitability.
This simple template works well for just about any product or service.
It forces you to articulate why your ideal customer should deal with you rather than an alternative, and the value they will derive from that choice.
Generating the best possible value proposition is an iterative process. Rarely do I see the ‘perfect’ one emerge quickly. Often there are several that look OK, which can be tested and improved.
