5 ways to avoid brand prostitution in FMCG

5 ways to avoid brand prostitution in FMCG

Mar 8, 2016 | Branding, Category, Customers, Marketing

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.

Why did Thomas Dux really fail?

Why did Thomas Dux really fail?

Feb 10, 2016 | Branding, Marketing, retail

There is a whole lot of discussion around the progressive closure of Thomas Dux stores by owner Woolworths, and the assumption that it will be closed down if a trade sale does not evolve.

Maybe there is a plan to save it, but I cannot see it, and having bought some rubbish grapes at an inflated price in the Lane Cove store during the week,  I do not know what it might be.

Not a lot of the discussion actually addresses the strategic failure that is the foundation of the commercial failure, just its superficial symptoms.

Strategic failure seems to have found its way into Woolies DNA over the past 15 years or so. They became so financially dominant in supermarkets that they forgot that they still have consumers to keep loyal, suppliers to keep in business, and competitors very keen to eat their lunch. They have done OK in petrol, well in liquor, absolutely bombed in hardware, poorly in general merchandise , and missed office supplies, electrical and furnishings completely, and are fiddling around with odd things like pet health insurance. Not a lot of logic in that mix.

I have watched Dux closely since the launch,  had a number of clients products listed, and visited all the Sydney stores multiple times since the first Lane Cove store opened. Until a short while ago, I really thought they would defy the corporate odds, and make it work.

The apparent failure is a sad day for the specialty end of the Australian food manufacturing industry, what is left of it, one less way to reach consumers.

So, with the clarity of (almost) hindsight, where did they go wrong?

 

Confused business model.

Whilst Dux had separate management, they operated out of the Woolworths warehouse, using the WW back office systems and presumably KPI’s which are all focussed on mass merchandise, stock turn and margin. This makes sense to the accountants who seek efficiencies but in the end forces the big brother behaviour on the upstart sibling who needs to do things differently to survive and prosper.

They forgot their “Why“.

Perhaps they never had it beyond a kneejerk response to an upstart competitor. The slogan “Inspiring your passion for food” is at least a half way decent one, until you see packets of mass market products available in the Woolies and Coles stores next door at lower prices. As a consumer, going into Dux , the presence of such items is inconsistent and diminishes any claim to a differentiated and valuable consumer value proposition.

Value delivery.

Consumers are not stupid, there is a limit to the price they will pay for something with a fancy name, fuzzy claim and benefit, and not much else. Pushing the prices beyond that limit in order to boost the GM% is pretty silly, because you do not bank percentages, just dollars. It is a fine line, but by observation, they got it wrong as much as they got it right, which is not enough.

Discounters are not the competition.

Giving in to the accepted wisdom that discounters are winning and that Dux is competing for the same consumer dollar is nonsense.  Consumers are looking for an experience, for specialist products not available in mass retailers.  They started well with their “foodies”, in store chefs available to give advice and recommendations, but the enthusiasm for this potentially differentiating strategy seems to have waned over time. Behaving like a discounter in some Sku’s but like a high end, fancy pants deli in others just confuses consumers, and I suspect their own staff.

What you will not do.

Strategy is, amongst other things, about what you will not do, as much as it is about what you will do. Thomas Dux seems to have forgotten this lesson and succumbed to the temptation to stock SKU’s that did not add to the positioning of Dux as a retailer on whom you could rely on to deliver quality and differentiated specialist food products along with a level of service well beyond the usual expectation. This confuses and devalues the brand. Thomas Dux is like any other brand in a development phase, it requires absolute focus on what makes you different and better. So why can I buy Kelloggs Corn flakes and Blend 43 coffee there?

It takes time.

Dux has been around for a while now, perhaps 10 years? That should have been enough time to establish a defensible place in consumers minds when it is clear there is a segment looking for an alternative to the mass market supermarkets. I suspect that the financial pressure has increased markedly over the last few years as Woolies excursion into hardware drained group profitability. The net result was that the quarterly numbers mattered more than the long term, so savings were made by management, the sort of savings that delivered me the rubbish grapes the other day. If the grapes were not good enough to justify the price, they should not have been on the shelf. That sort of challenging culture requires time and continual effort to reinforce, and a reversion to a quarterly focus removes the management incentive to not sell grapes this week because they are not good enough, they need the margin today at the expense of tomorrow.

 

Meanwhile  Harris Farm, the original target of Dux appears to be powering along. Perhaps Woolies will rue the day they did not buy Harris Farm when they were still young and vulnerable. I understand they tried, but were given the finger by the venerable Mr Harris.  Perhaps they should have tried again, it would have been less costly to both their coffers and their reputation.

What do you think?

 

 

The (almost) impossible task of brand building momentum. A personal story.

The (almost) impossible task of brand building momentum. A personal story.

Jan 29, 2016 | Branding, Customers, Innovation, Leadership, Marketing

What is  a brand?

When you think about it, a brand is a just a promise embodied in a product.

A promise of performance, and delivery of value.

It survives and grows, retains and builds relevance and attraction only when the promise is delivered.

Finding the promise that can be delivered in a way that is sufficiently different to make an impact is really difficult.  Making a promise that is the same as everyone else’s promise, and the brand becomes indistinguishable, just another label on the shelf.

30 years ago I was heading a marketing group that amongst other successes, relaunched ‘Ski’ yoghurt in Australia. The relaunch was a huge success, and over the following 3 years, our national market share went from single figures to well over 35% in a market growing at double digit rates.

There is a lot of patronising bullshit around about the way to build a brand, advice that sounds nice but is usually just a template that promises an outcome, a bit like the paint by numbers paintings an old aunt had adorning her walls. Not very good, and certainly not original.

So, I thought that the hindsight afforded by the almost 25 years since that  Ski relaunch might be valuable as you consider your own brand building exercise.

Following are the lessons I took away, often with the enlightenment that comes with hindsight, as the appearance of organisation and planning is a bit of a fiction, the real situation was considerably more chaotic as we juggled competing priorities, competitive and financial pressure, and all the jostling and risk mitigation that goes on inside big businesses.

 

Be different.

At the time conventional wisdom was that the fruit in yoghurt had to be mashed, the product homogeneous, that lumps of fruit were not good. All the research told us that consumers wanted their fruit yoghurt to be consistent with the fruit mashed and evenly distributed, and the launch of Yoplait a few years earlier had kick started a genuinely competitive race and significant market growth.

We relaunched Ski on the proposition  of taste. The best tasting yogurt, the only one with pieces of fruit. It completely distinguished us from the then market leader, Yoplait, and all other brands, and gave consumers who liked or did not mind whole fruit in their yogurt a real reason to buy Ski. Of course, some rejected it, but many did realise after trying that they did prefer it, and whilst there was a lot of supporting activity and pack changes, the market share of Ski zoomed. A few of the small producers copied us, but the market leader could not, as their whole manufacturing process was designed to deliver a homogeneous product.

The value of true differentiation backed by a brand promise that was carried out and of value to at least some consumers was clear.

Across the range Ski was so different that  it created new segments within  the yoghurt category, segments we owned because we created and named them, and which made competition hard and expensive for our opposition.

 

Get onto a roll.

When you have a line-up of innovations that do add value, you can roll them out progressively and the competitive impact is cumulative, you leave the competition struggling to catch up with your first one, and spending valuable marketing resources to stay in the game while you roll out the second, and third iteration. I would not claim that Steve Jobs knew anything about Ski, but that is the exact strategy that Apple used from the launch of the original iPod on.

In our case, we relaunched Ski with the different product as noted, but we also changed the naming conventions that had prevailed. For example, the low fat version changed from Ski Low Fat to Ski DeLite. Worked a treat, and went some way to redefining the low fat category. The next ‘roll’ of the dice was to relaunch the 1kg size into the now common rectangular packs. To that time all 1kg Packs had been round, as they were operationally easier and the packs were much cheaper. However, we noted that most female buyers, and they made up 90+%  of purchasers, could not easily handle the product in one hand, they did not fit on most refrigerator door racks, and were less than optimal on the retail shelves.

When we changed all this, sales of 1kg exploded, and gave us new retail distribution. We then followed up with Ski Double-Up, a product that had a range of ‘toppings’ in a separate compartment  of the pack, and a completely different yoghurt that emerged from the combination of new strains of culture and operational process innovation,  that revolutionised the market again, creating an entirely new category.

Your customers may not be who you think they are.

Innovation is a powerful way to attract fringe, lapsed or just reluctant buyers into a market. When we launched Ski Double-up the typical consumer was young, educated, and female.  Consumption by men of yoghurt was only about 20% of female. Ski Double-Up changed all that. Not only did it attract more men, they were significantly older in profile, those who would not touch ‘yoghurt’ as it has been with a barge-pole. They tried Double-Up, liked it, tried other versions, and became regular and loyal consumers, adding significantly to the scope and scale of the Ski brand.

 

Start with ‘Why’.

Defining the ‘Why’ of your brand is a foundation of all branding activity. The best articulation of “Why’ is the now famous TED talk by Simon Sinek.  A brand without a clear and distinctive ‘Why’ is just a label. Sinek uses Apple as an example several times, because as he says, ‘everyone gets it’ and they do. Apple is a branding icon, but not the only one. Recently I stumbled across a new brand from a start-up, one that is breaking new ground on a number of fronts, competing against some of the biggest and best marketers in the world, but will (I suspect) succeed on the strength of their “Why’. It is whogivesacrap toilet paper, purchased by consumers  direct rather than via retailers, with a very clear ‘Why’. Many, almost certainly most will not buy into the why, but enough will to make the brand and business a success, and they will do some good in the process.

The corporate benefit of ‘Why’ is that everyone in the business can buy into it, and the resulting culture can become a very powerful motivator and driver of performance. In our case, the ‘why’ was that we were producing a natural, healthy product, our workforce has all been taken into our confidence, and they were our market research as we ran taste group after taste group in the factory during the development process to get the variables right. When the products became very successful, those people  saw what their contribution had resulted in, and took great pride in it, making a huge contribution to improving the production efficiencies .

 

Sweat the small stuff.

Details matter, a lot. Steve Job’s obsession with the experience of opening a shipper containing an Apple product contributed  a core part to the brand identity of Apple. With Ski we pioneered amongst other things a  process that used a new and expensive printing process that both accommodated the square shape of the 1kg tub, and delivered crystal clear graphics. It was expensive and difficult, but  the attention to the detail that could have been dismissed for cheaper more utilitarian solutions paid huge dividends in volume, and profitability albeit at skinnier margins.

 

Be brave & committed.

Nothing really useful will evolve from just doing the same thing as others, but just a bit better. Being different means taking risks, being brave, pushing the envelope, all those clichés that mean someone has to be brave enough to open the door to the unchartered. That takes guts, rare in todays corporate world,  but around aplenty in small and medium sized businesses.

When we changed Ski 1kg to the rectangular tub, there was no way back. Over a week long factory shutdown, the old machinery for  filling the round tubs was removed, and the new rectangular filling machines installed. Had the change failed, there was no way back.

The steps we took with Ski were all brave at the time. We changed the dynamics and shape of the market, a seemingly obvious step,  but at the time it was sweaty palms all around.

 

You have to be smart.

The marketing group had some very smart people, but more than that, it was a collectively smart group. There was great collaboration and support, and the longevity of the group was substantial, which had offered the opportunity to make a few mistakes and learn from them. At a time when the average tenure of marketing personnel was about 18 months, we averaged 6 years, giving us a significant depth of market understanding and intelligence. Just as important, or perhaps more so, we had the support of the CEO of the division who was prepared to support and encourage the things we did, and I am sure his palms were sweatier than any others, although at the time it never showed. His confidence in us, and support in keeping the corporate drones at bay never wavered. Innovation is impossible without that sort of support from the top.

 

It is really hard to continue to succeed.

This is a warning.

If you succeed, when the applause is over and the credit appropriated, the corporate gnomes come out to play, those who do not understand the dynamics of a brand. If you go into a supermarket today, Ski is an also ran, it looks like it is back to single figure market share, a shadow of its former self we had built. The brand we developed was raped by the accountants and sycophants who killed the golden goose by greed, short ‘termism’ and stupidity, rather than continuing to nurture and invest. The temptation to do so will be strong, and it takes a CEO with brass ones to resist the siren call of the throngs and maintain the investment required.

That rot had started a year or so before I was toddled off. By that time the corporate structure had changed a couple of times, and I was unable to keep the support that had enabled the success in the first place in the face of the changed structure and personnel. Unable to stay quiet in the face of the short term lure of the margins instead of continuing the investment for the long haul, I insisted on being the resident ‘Cassandra’  and ended up paying the price.

As I wrote this post I had to shake myself that it was 25 years ago.

Seems like yesterday.

A lot has changed in the marketing landscape, but the essentials remain the same.

7 trends driving business in 2016.

7 trends driving business in 2016.

Jan 4, 2016 | Branding, Governance, Management, Marketing, Strategy

Like everyone else who sees themselves as having a useful view of the train coming at us, I have again tried to articulate the things I see as important to businesses, particularly the smaller ones that make up my client base.

Following are the outcomes of my assorted observations and crystal ball scratching.

 

The density of digital content is becoming overwhelming.

Businesses have always generated and distributed ‘content’, but it was called ‘advertising’ or ‘collateral material’. Since we all became publishers, and the marginal  costs of access to markets approached zero, there has been a content explosion, and we are now being overwhelmed. It has become pretty clear that video will take over as the primary vehicle of messaging, and I expect that trend to consolidate over the coming year, and see a bunfight for eyeballs between social media platforms and search tools and platforms. Ad blockers will change the way the so called pay walls work, as well as ensuring that the density of content is replaced by less but better stuff, ‘tailored’ to our habits and preferences.

Ad blockers may become discriminatory, allowing through stuff that the algorithms know you have been searching for. The focus on content will be on the sales funnel and conversion metrics, much more than just pumping the stuff out, which will be a huge improvement on the mish mash currently assaulting our inboxes.

Existing digital platforms will extend themselves competitively. 

Attracting new users will become secondary to increasing the usage and ‘stickiness’ of their platforms. Linkedin’s successful extension of their blogging platform and purchase of Slideshare are one, Facebook is aggressively setting out to attract new users by making themselves attractive to developers and others, with the launch of FB techwire in an attempt to attract the really technically oriented including those writing about tech, Twitter appears to be trying to find ways of monetising their users and will probably apply controls to the currently uncontrolled stream in your feed, but there again, I thought that last year and they did not do it. Also, platforms will recognise the huge potential of the B2B advertising market, and find ways to exploit it. Many B2B businesses are reluctant to use social advertising as they see the platforms as essentially B2C and therefore  not appropriate for their products and services. This is a huge potential market for digital advertising businesses, and the social platforms will be cashing it in.

 

Rate of Technology adoption will continue to increase.

Ray Kurzweil’s 2005 TED talk on the rate of technology adoption is resonating louder now than a decade ago. Some of his observations such as the rate of cost decline of solar technology and battery technology efficiency are coming to pass. However, it is his basic thesis of the logarithmic rate of technology adoption that will engulf us over the coming short term. Think about the confluence of big data and machine learning. When you wipe away all the tech-talk and hyperbole, it comes down to a simple notion: the “friction” of information that has always existed is being removed at logarithmic rates, progressively revealing more stuff to see, and to do with the stuff we have. As we go online, and use technology throughout  the value and marketing chain, technology is reducing costs, speeding cycle time, and opening opportunities for innovation.

 

Evolution of the “marketing technology stack”.

For most small businesses this can be as simple as a good website with a series of resources available to collect email addresses, and an autoresponder series on the back. For large businesses it can be a hugely complicated stack of software running CRM, customer service and scheduling, marketing messages, integration of social channels et al.

Mar

 

 

 

 

 

Big data to little data.

The opportunities presented by big data are mindboggling, but even the big companies are having trouble hooking their data together in meaningful ways let alone introducing the third dimension of big data. Small companies will have to start to use little data better, or die. Data already available to them is becoming easier to use every day, to turn into insights about their niche, local market,  and competitive claims. Simple things like pivot tables in excel will be used, and tools like Tableau which brings a structure to  data from differing sources including big data, will  become more widely recognised by small business for the value they can deliver. Big data will have machine learning applied, and the data revolution will get another shove along. From a non technologists perspective, industrial strength  data systems such as IBM’s “Watson” must drive some sort of further revolution, but my crystal ball is too cloudy for me to have much of an idea of the impact beyond making what we currently see as advanced systems look a bit like a pencil and paper look to us today.

 

Technology hardware explosion becomes over-hyped but undervalued.

The volume and type of hardware that has become available is as overwhelming as the access to and availability of information. Driverless, wearables, AI, 3D, blah, Each of the developments has its place, and may change our lives at some point, but there is just so much of it that we are becoming immune to the hype. Who needs a tweeting washing machine anyway?

So, what is next?

Seems to me that we are on the cusp of an energy disruption driven by the combination of hardware and advanced materials science . The technology surrounding renewables is in the early stages of an explosion that will change the face of everything. Highly regulated and costly infrastructure distributing energy will start to be replaced with decentralised renewable power generation, much the same as when PC’s replaced mainframe computers 30 years ago. The catalyst to this metamorphous will be the combination of governments that are broke and no longer able to fund the institutionalised and regulated energy systems and the development of a reliable “battery” system. Elon Musk has made a huge bet on his “Powerwall” battery system and manufacturing plant currently under construction, and it would be a brave person that bet against him. However, looking well ahead, it seems probable that it is the beginning of the logarithmic adoption curve of renewable power following the path of Ray Kurzweil and Gordon Moore. The politicised and subjective debate about carbon and its impact on  the environment will become irrelevant as science delivers cheaper and more accessible renewable energy. All that will remain are the problems of the carbon clean-up. (I suspect this prediction is due to be a repeating one for some time)

 

Marketing has always been about stories.

However, somehow ‘content’ got in the way of those stories, and marketing became a different beast in the last 10 years. We will go back to marketing, and start to tell stories that resonate with individual targets. Storytelling will become again the core, and we will be looking for storytellers in all mediums, written, pictorial, video, as we all absorb and recount stories in different ways.

All the good journos displaced by the disruption of traditional publishing can find great places in this new world of marketing storytelling, if they are any good. The competition is strong, and the results immediate and transparent so no longer can you get away with rubbish. Organisations will change to accommodate the fact that everyone is in marketing

We will become more aware of the permanent nature of the internet, and the manner in which our brand properties need to be managed.

In a commoditised world, where the transparency of price makes competition really aggressive, the value of a brand is increasingly important, and fragile.

These 5 extraordinarily stupid examples of how not to do it  should be a wake-up to the CEO’s who leave marketing to the junior  marketers, often a transient bunch who have no investment in the business or brand, they are just there for a good time, and usually a short time.

One day I will do a study that compares the realisable value of the tangible assets of businesses compared to their value as calculated by the market. My instinct tells me that in many stock market categories  the biggest item as calculated  by the difference between those two numbers represented as  goodwill and a realistic assessment of the realisable values, will be the biggest item on  the asset side of the balance sheet. In short, the current and future value of their brands and customer relationships expressed in dollars. Managers and boards need to deeply consider the nature of the people that have managing their brands, or risk losing them, often before breakfast, as the speed of disruption and change continues to increase.

 

As we go into 2016, the 3 questions every board and management should be asking themselves are:

  1.  “If  I was starting in this business today, what would I be doing to deliver value?”,
  2. “If a leveraged buyout happened, what would the new management be doing to unlock the value in the business?”
  3. “What do I need to do to implement the answers to the two above, today?”

 

Have a great 2016, and thanks for engaging with me.

things I learnt, and relearnt, about marketing in 2015

things I learnt, and relearnt, about marketing in 2015

Dec 22, 2015 | Branding, Change, Customers, Management, Marketing

The year has been a blur, they go faster as I get older, something I find disturbing. Rushing headlong towards the daisy bed seems illogical when there is so much left to do.

I will be 64 in a few weeks, must be a song there somewhere, but it seems that the older I get, the more I learn.

How does that work?

Perhaps that  is because I have a wide and deep foundation built up over all those years that offers many places to tuck some added knowledge in, and the connections to other parts of the foundation are that more visible.

Anyway, here are the headline  things that struck me during the year.

All that is old is new again.

The king of Mad Men, David Ogilvy said it best, something like 50 years ago.  “It takes a big idea to attract the attention of consumers and get them to buy your product. Unless your advertising contains a big idea, it will pass like a ship in the night. I doubt if more than one campaign in a hundred contains a big idea.”  Never before has this been so relevant, as we drown in a sea of mediocre so called ‘content”. What is an old fashioned ad if it is not content? What is an informative film made to show users how to build something, or adjust the points on my old Dodge, if not content. Just because the rules of engagement have changed, i.e., those on the other end of a communication can now tell us if it sucks, either by writing to us, responding on a site that scored whatever it s we flog, or ignoring it. The challenge remains the same. Find your market and build an emotional connection with them.

Scale is not everything.

In the pre internet days, a young academic named Michael Porter wrote the definitive book on competition. One of his 5 forces was all about scale. If you had it, you carried the hammer others could only aspire to, volume sales, negotiating power in your supply chains, power to advertise and promote, it was a huge barrier to either scale or hide behind.

No longer.

The net has destroyed much of the competitive power of scale. One of the greatest wielders of power I see every day are the two FMCG retail gorillas in Australia, who between them hold 75% of FMCG (CPG to my US friends) market share. Yesterday I went into woollies to buy the Xmas ham. My job for  years. In about 30 linear feet of chiller shelf, with many SKU’s of ham on the bone, not one was a proprietary brand. Every single SKU was Woolworths in some guise or another. Clearly buying scale at work for woollies, but I walked out hamless, and went to a small supplier who has a retail outlet about 15 k from my home and bought a ham there. Good price, good service, and probably a better ham because the margins had not been screwed to the bone by Woolies exercising their power of scale. (poor pun, sorry)

The tool relies on the tradesman.

There are so many tools around, to do just about everything, but by themselves they do nothing. All still require a skilled person to get the most out of them.

I have laid many bricks in the course of renovating two old houses, paid my way through Uni all those years ago on building sites, so I know how to do it, but look in my backyard, and you can tell the brinks I have laid, and those laid by a tradesman. If you want something done properly, only do it yourself it is what you do, not what some webinar on YouTube tells you can do.

Do not be seduced by the newest shiny thing.

Simplicity is really hard.

‘The ultimate sophistication is simplicity’.

Steve jobs said those words, and others before and after have said similar things that have been proven time and time again over the years. In todays world it holds more true than ever when it is operationally now so easy to add features few want, sacrificing simplicity and elegance in the process.

We tend to fall in love with our products, forgetting people do not care about them, only what they will do for them, what problems they solve, what value they deliver.

Dunbar’s number still rules.

We might have hundreds, even thousands of “friends” and connections, but we can only manage a limited number. We have been again seduced to believe that there is value in the breadth of many  connections, sacrificing the depth with a lesser number. I would rather have a list of 100 people who knew me well, would take a phone call from me, recognise the value I can bring to them, and are prepared to recommend me to others  based on that value, than a million friends on Facebook, LinkedIn, or any other of the other houses of digital one night stands.

Customers are people.

Customers and potential customers are not “targets” or ‘target audiences’, or ‘potentials’ or ‘rusted-on’ or any of the other expressions I hear regularly. They are people , they control their pockets in ways unimaginable just a few short years ago. Treating them with distain, or even a hint of condescension, tan they are able and willing to pack up and go elsewhere.  The power is very much in their hands  now, not those of the marketer, so make your communication as personal and specific as you can. I get lots of emails with the salutation “Dear Friend”. If I was so effing dear, why not use mu name. They never get opened, and a rule gets put in my email package to dump them into the Spam file never to be seen again. Dear friend indeed, give me a break!

Trust is the make or break metric.

Trust is a word that gets bandied around like a novelty game at  the Easter show. Everyone agrees that trust is a key, but so few recognise that Trust comes from consistent, transparent and generous behaviour, it is hard earned and easily lost, and never given without deep consideration. Don’t let this important word pass your lips unless you really mean it, and back it up with behaviour over a long period.

The nature of assets.

Almost forever, corporate assets in enterprises of any size from micro of MNC have been one of three in some sort of ratio: people, technology, and capital.

Now there is a fourth.

Data.

The integration of data cross functionally, through the value chain, and increasingly with outside “big data” is becoming rapidly more important than the traditional three as the world digitises and competition is increasingly dependent on the availability and accuracy of data from a range of sources.

One of my mates runs a small freight business. He recently added GPS, and a simple program to route his small fleet in real time, that integrates with public traffic info. Now he is wondering if he can  do with less trucks, and maybe make a bit of a return on his investment for a change.

Recall the furore when the email addresses of Ashley Madison subscribers  were hacked and made available for download. The asset value of data has rarely been more publicly demonstrated.

Beware the seductive hiss.

Snake oil salesman have found a new well of clichés and poisonous  bullshit to throw at you.

Beware.

Next time you hear the word ‘awesome’ (my current greatest hate cliché)  run like hell, and save yourself the time and potentially money these sophisticated purveyors of snake oil will try and winkle out of you.

The lesson from Nurofen’s leadership folly

The lesson from Nurofen’s leadership folly

Dec 15, 2015 | Branding, Leadership, Sales

Reckitt Benckiser did everything right, and they did everything wrong with their Nurofen brand.

How can that be?

The ACCC has now successfully prosecuted Reckitt Benckiser in the federal court for misleading consumers with their Nurofen brand of painkillers, requiring them to pull product off the market within three months.

There will also be a fine, potentially a significant one to drive home the message.

In the process, years of investment in the brand will be trashed.

Who will ever trust Nurofen again?

On one hand, I have absolutely no sympathy for a corporation of any type that knowingly and deliberately perpetrated this sort of misleading communication. The writing has been on the wall some time after Nurofen won Choice magazine’s coveted “Shonky Award”  which garnered a fair bit of publicity at the time, including a star appearance on the ABC’s ‘Checkout” program. That Reckitts chose to ignore the ‘social warnings’  and voluntarily adjust their communication is a huge failure in leadership.

The marketing however has been very good over a long time.

Having run large corporate marketing departments, I can understand exactly how it all evolved.

An experiment with a brand extension generated added market share, consumer preference and retail shelf space at premium prices and margins. The marketing people responsible were recognised and rewarded by their employer and peers. Who would not take the next step, and seek new segments?

Back pain, period pain, migraine relief, et al, commercially seductive stuff.

Nobody would tinker with that sort of success. Anyone who dared to suggest that it was wrong, and they should walk away from the measurable short term success in favour of being a brand worthy of long term trust, a truly difficult notion to measure, would find themselves seeking other opportunities very quickly.

The failure is in the leadership of Reckitt Benckiser.

Reckitt Benckiser management simply  failed to reconcile the short term financial benefits of successful brand marketing with the long term benefits of having a brand and business that demonstrated leadership by building trust. They failed the basic test of personal leadership which is to do what is right, even when it is  not necessarily expedient.

Clearly the ‘leaders’ of Reckitt’s were there not as leaders, but as managers. They are undoubtedly good at managing the numbers, negotiating the deal, maneuvering amongst the corporate politics, but would you want them beside you when the going got really tough? Instinctively you know it would be all about them, they would  not ‘ have your back’

It is easy to forget that business is about people, not corporations.

People buy products from people, not businesses.

While we all talk about ‘relationships’ endlessly, particularly in the digital and social spheres that now so dominate our lives,  we tend to forget just how hard it is to maintain a real relationship.

One night stands are pretty easy, there is  no real personal investment, marriage is hard just because there is that investment required.

We should never forget the difference.