Keep looking for the ‘Big Idea’

Keep looking for the ‘Big Idea’

Oct 29, 2018 | Branding, Communication

 

Following on from my rant about content porn, it seems to me that the real problem has become the immediacy required by the digital age.

You need more stuff, on line, now!

At least, that is the demand, but more stuff is of no value unless it moves someone to an action.

Time is no longer allowed to curate and enable the creative process that can deliver what my old advertising colleagues used to call ‘The big idea’.

Now we just upload any old crap and move on, thinking we have done the job of producing ‘Content’.

So perhaps the problem is not having a framework for  the big idea to emerge?

This is despite the disciplines necessary for effective marketing I have spoken about previously. The persona of the ideal customer, and differentiation, as well as understanding from the  customers perspective what problem you are solving for them, and why they should pay you to solve it.

Setting out to enable the big idea to emerge without having gone through the pain of defining these boundary items first will be in most cases, a waste of time and effort. However, having defined them, there are some simple to say, but very hard to do, steps that you can take that may assist.

Attract  attention.

Unfortunately this is a chicken and egg proposition. To attract attention, you need an idea that resonates with your ideal customer, without which, you will not attract the attention. To resonate, it must solve a problem, often one they did not realise they had, or had just got used to having, so was not a constant itch. The creativity required to see the problem from the perspective of the customer, and frame it in such a way that motivates them to action, is the essence of the process, and is not something that happens quickly, or regularly.

The classic example is Apples ‘big idea’ for the original iPod: ‘A thousand songs in your pocket’

Hold attention.

To hold the attention once passed the huge hurdle of attracting it, the idea must be compelling. Most businesses compete in markets where there is little that is genuinely new, where you have some sort of defensible ‘uniqueness’. Patents are defensible, but the sad reality is that you need very deep pockets, and even then, they are increasingly just a road bump a competitor has to negotiate. Therefore, you need to create some sort of differentiation in the minds of the ideal customer that you can ‘own’. In their minds, it is what you become known for, and is sufficiently compelling that they reach for their wallet. The iPod line achieved this in spades.

If you were in the market for a hard floor covering, and you stumbled across this optical illusion from British tile maker Casa Ceramica, used as the header for this post, you would at least look at them closely.

Have a strategic roadmap

Every idea you generate should be a brick in the road towards your long term strategic goal. You cannot predict the future, but you can define where you want to be, then set out to go there. The route might change, not the goal. You will have challenges and obstacles to overcome on the way that were never envisioned at the outset, but keeping your eyes on the goal provides the framework against which you ask the question ‘Does this idea take a step forward in the journey?‘

This post evolved as a result of seeing the photo in the header on social media somewhere. If you happened to be in the UK midlands, and were thinking of replacing your floors with tiles, you would add this lot to the list to talk to. The aspiration of their website is: ‘We aim to inspire you and help you stand out. We aim to give you the aspirations you need, the innovation of our showroom and knowledge and the dedication you deserve.’  Their mission is all about leading the independent wall and floor tiling industry. This example of a piece of content moves them along towards that goal, and I would suggest, is a great example of the big idea in action.

 

 

 

 

The 5 strategic dimensions of price

The 5 strategic dimensions of price

Oct 17, 2018 | Marketing, Strategy

Setting prices is one of the most challenging, but often sidelined management decisions. Given that price has more impact on the bottom line than any other single factor, it is crazy that it is so often left until the last moment, or to a superficial assessment. The manner in which price is packaged and delivered should attract considerable time and creative effort.

In many cases the consideration goes little further than looking at costs, competing prices, and perhaps the gross margin.

Nowhere near enough.

Just setting an arbitrary price, struck at the last moment, without deep consideration seems irresponsible. Pricing strategy is the most important variables over which management has control, and that control should be exercised to reflect your strategic priorities, while delivering maximum value to your customers.

In order to find the best ‘fit’ between these two usually competing outcomes, there needs to be more than just passing consideration given.

There are two processes to undertake.

  1. Set a pricing architecture.
  2. Set a price list.

These are fundamentally different, but the first should always drive the second.

Striking a price architecture should be a strategic process. It is a trade-off between the wide range of factors that drive a customers purchase choice in various circumstances, and the costs and margins involved in addressing those choices.  However, once set, the architecture of your pricing should be reasonably stable.

The actual price lists built on top of the pricing architecture can be varied as often as you like, and as often the market in which you operate will allow, in response to  the factors that drive purchase.

In some markets, you will have little room to move, in others, there will be a wide range of options. The common factor is that a responsible management maximises the return over the long term, which necessarily involves having satisfied, repeat customers, with a minimum of churn.

In every case the price set will be the end result of a range of trade-offs that are made. The most obvious and clearly understood is the simple  price/units trade-off, but this comes at the end of a wide range of trade-offs made in the manner in which the architecture is constructed.

Business model.

Every business model has its own characteristics that have an impact on the way prices are set.

In a retail franchise model, the prices are often set by head office, and the individual franchised outlet has limited ability to vary them.  A supplier of grocery products through an Australian supermarket, has almost no control over price if they want to retain distribution. The seller of a bespoke solution to an expensive problem can set their own price, so long as it remains slightly below the cost of the problem, and guarantees the solution.

The emergence of the web as a sales channel has led to a rapidly expanding menu of pricing options.  The SAAS industry in increasingly using subscription models differentiated by the availability or otherwise of some sort of ‘tripwire’ or ‘freemium’ model followed by varying price levels based on features, available seats, transaction numbers, and a host of other variables from which customers can choose.

Market power.

In a monopoly, the monopolist can set his own prices at the point that maximised the profitability, without regard to the well-being of stakeholders beyond the shareholders. At the other end of the scale, when supplying a raw commodity, you have no pricing power at all, you will be purely a price taker.

Spending some time considering Michael Porters ‘5 forces’ will be time well spent.

Almost all situations fall somewhere in between a commodity and a monopoly, and in most situations there are substitutes, or the threat of substitutes emerging when the margins become sufficiently attractive.

Market power can be built by the process of branding, which requires long term investment  and again, trade-offs. Apple currently sells about 15% of mobile phone units sold around the world, but has 85% of the profit in the mobile phone market. This is an almost unique situation, matched by few ever before, the possible only others were Kodak, in their heyday, and Microsoft in the 90’s. Currently emerging we see the Digital trio, Facebook, Google and Amazon who have huge market power setting prices in ways that reflect the depth of that power.

Strategic priorities.

Price is a primary indicator of the positioning of your product in the minds of customers. The level of price is very often used as a signal of quality. Think about the array of wines in your local grog shop. To most, the majority are unfamiliar, and they lack the objective experience to make judgements, so price becomes a default indicator of quality.

Apple as noted has done a masterful job of reflecting the strategic priority of margin over volume.  By contrast, Aldi has become successful  in every market they expand into  by keeping overheads and transaction costs to an absolute minimum throughout their supply chains, and reflecting these savings in low shelf prices, which delivers volumes.

One producer of dried pasta in Australia holds a 70% market share with a combination of a dominating proprietary brand, many alternative and cheaper brands across every conceivable distribution channel, together with supplying pretty much all the house brand products in the market. There is a pricing matrix that covers the whole market, creating meaningful differentiation of price and brand. They do this by leveraging the economies of scale they have built in the operational processes throughout the production chain, from the control of the supply of grain through to the packaging of the end product, and ensuring that nobody else can compete on price. It has been a masterful job, implemented with consistency and determination over a 30 year span. The retail price you pay for dried pasta varies enormously, but the cost of the products are differentiated only by the characteristics of the semolina used, a marginal cost difference in the scheme of things. However, having watched blind tastings of pasta, the knowledgeable consumers can pick the premium brand from the others, in order of quality of the grain in some (hidden to me) taste and texture characteristics with unfailing accuracy.

Price packaging

Packaging of price is not something most would think about in a specific manner as they would the external product packaging. However, any price list with some sort of structure that reflects volume, channel, or some other sort of difference is in effect price packaging.

Creative thinking about the packaging of pricing can pay huge dividends. A feature that adds no value will not attract a customer, but the same feature that does add value to someone else becomes a benefit that can be priced for that customer.

A friend just bought a European sports car, lovely thing at an inflated price based on the marque, with a long list of ‘optional extras’. He chose the few ‘extras’ he wanted, all the while whingeing that a much cheaper Korean sports car, with similar performance (according to his research) that did not have the cachet of the brand he bought, had them all as standard. Both are examples of price packaging, in a manner that is driven by many of the other marketing and strategic characteristics of the choices available.

Behavioural drivers

We are increasingly aware that psychology has a huge impact on our behaviour, and as a result, those who understand the psychology can ‘manage’ the drivers of price to their benefit.  Anyone with responsibility for the construction of price should be aware of  the basics at least. The original (readable) book was ‘Influence’ by Robert Cialdini in 1993, followed up more recently by a new book ‘Pre-Suasion’ in late 2016, both of which add considerably to the well-known principals of ‘anchoring‘ and the ‘Rule of three.’

Anchoring is simply the first price that is mentioned usually becomes the basis of the following conversation, so the logic is anchor high.  The rule of three is where you ensure there are three alternatives with differing prices, and you present the highest first, which makes the others look cheaper, and uses the high price as the anchor. Any more options than three, and you risk confusion creeping in and the greater possibility of a no decision as a result. Add to these models is the obvious $24.99 price instead of $25.00 which works all the time, and the common ‘Huge savings on special’ offers where the saving is calculated against a price that nobody in their right mind would pay.

The more you dig into the behavioural drivers of price, the greater the range of options you can create. Scary when you think about it, as they are all being used on us every day.

 

The final word should go to Warren Buffett, someone who knows a bit about making a profit.

“The single most important decision in evaluating a business is pricing power. If you have the power to raise prices without losing business to a competitor, you have a very good business. If you have to have a prayer session before raising the price by 10% then you have a terrible business’.

 

A marketers rant about ‘content porn’

A marketers rant about ‘content porn’

Oct 10, 2018 | Branding, Communication, Social Media

Content has become a marketing buzzword delivering a tsunami of crap into our inboxes, cluttering up our phones, and potentially delivering all sorts of nasty surprises if we open them.

Content started as a great idea, suddenly we could communicate directly with those in our markets and give them stuff of value, that coincidentally led to a transaction, perhaps many transactions.

Anyone would think this was new, this is what advertising has done for decades, we can now just target the recipient more accurately.

We have forgotten the ultimate objective of content is to create circumstances where a transaction can occur. However, ‘Content’ has become a cliché, and we all indulge, churning out shit that does nobody any good.

It is like Porn, interesting at first, perhaps educational for some, offensive to others, but quickly becoming just boring.

People are keen to receive things of value, things that make a difference to their lives, but increasingly the stuff they are being delivered is just content porn, doing nobody any good, leading to the turn off, so that the good stuff gets missed in the never ending churn.

There is a branding opportunity here, send only good stuff, and personalise it!

What we need to produce is ideas, not indulgence, and there is way too little of the former and too much of the latter.

Let’s be fair dinkum about what content is.

Fair chance it is a regurgitated version of something else, and by the time the first good idea has been reshaped, and re-imagined, it has become blurred and unrecognisable. An original good idea is something most recognise when they see it, simply because it demands attention and action.

That is what  we need, more ideas, originality, and deviance, in a nice way, that demands your attention, and drives an action. We do not need more of the same old content porn.

I read somewhere, and I wish I could take credit for it that: ‘if I take a photo of a pile of dog shit, I have a photo of a pile of dog shit, if I upload it to  a website, it becomes content’

Sounds a bit like the inimitable Bob Hoffman, but could not locate the source.

 

Jack is back!!

Jack is back!!

Oct 8, 2018 | Branding, Marketing

 

Tesco in the UK is in the launch phase of a discount chain, ‘Jacks’ as a competitive response to the inroads of German discounters Aldi and Lidl.

I can only assume Coles and Woolies management are watching with interest, as they have yet to find a way to combat Aldi in their backyard, and in the absence of a better idea might just copy it, almost as something to do.

Second ranked Sainsbury’s strategy has been different. They are ‘merging’ with Wal-Marts Asda chain in a deal reported to be  worth 7.3 billion pounds. This deal would take them past Tesco as the UK’s biggest retailer, and so needs regulatory approval. Wal-Mart bought Asda in 1999, believing their discount model that made them the biggest retailer in the world by a country mile, would work in the UK. They have clearly failed in the face of more effective discounters from Germany. Meanwhile, both Aldi and Lidl are rummaging around in Wal-Marts US backyard.

Perhaps Wal Mart have recognised the threat to their dominance is coming from more than Amazon and are hunkering down for a fight?

As this all unfolds, I suspect history will reveal that Tesco has made a huge blue.

They are setting out to make Jacks clearly part of the ‘Tesco family’ according to the blurb sprouted by CEO David Lewis at the opening of the first Jacks, just down the road from an Aldi site. At the same time, they are committed to sourcing ‘British first’.  This is a mix of business models that must make the Aldi executives giggle with joy, as all it will do is drain money from the Tesco coffers while highlighting Aldi’s positioning as the cheapest around. Setting out to ‘out-Aldi’ Aldi will be a doomed strategy, particularly as they have already compromised it by being overtly British first. This approach may appeal to some, but those who shop at Aldi do so for the price, first, second and last, and will not care about ‘Britishness’, so all Tesco will be doing is damaging their own positioning, and dropping bundles of cash.

From a distance, I hope those few in Coles and Woolies who have been around for a while will whisper some common sense into the ears of their bosses.

‘Anyone remember Jack the slasher, Franklins, Bi-Low, and Jewel’ ?

All discounters, all now gone.

Content quality trumps quantity, every time!

Content quality trumps quantity, every time!

Sep 28, 2018 | Communication, Strategy

Marketers have always created ‘Content’ as a means to  raise awareness, motivate an action, build a brand. It is what they do in an effort to hook into the behavioural patterns of their customers in order to build a relationship and generate revenue.

Human beings learned to tell stories as a means to communicate the things that are important to them way before they learned to record things on clay tablets.

So, ‘Content’ is not new, the form has just morphed over the last 20 years with the emergence of digital tools as a more efficient way to spread the ‘content’. We also know that the ubiquitous bullet points may simplify things, but they are easily forgotten, whereas a compelling narrative is remembered.

It is just the way our brains have evolved to work.

Content should be organised as stories, marketers should know this by now, and mostly do, but often fail to give us stores that are memorable and relevant, that touch an emotion.

The old story of the poet and the beggar makes the point.

The beggar asks the poet for money, but the poet having none himself offers to re-write the beggars sign, which just says ‘Blind. Please help.” to ‘Spring is coming, but I will not see it’. A week later, when the poet sees the blind man again, he is not surprised to hear the donations have soared. A simple change of word from a fact to a story that touches the emotions.

Our brains are wired to recognise and recall stories, details are remembered, so when you relate the story to others, all the colour, movement and emotion of the original remains.

Stories take a lot of development and telling, they are very hard work and are optimised over time. Attention to detail, selecting stories and story lines that really dig into the emotions are crucial.

Marketers are now required to measure everything, stories are no different. Generally the conversion rate that is relevant is the best measure. How many finished the story, how many then did what you wanted them to do.

Mediocrity rules, the 80:20 rule is really 95:5 in stories, as only the great ones  get read, create engagement and sharing, and to do this, it is all about quality, not quantity.

Ever wonder why some content goes viral?

Well for one reason or another it is in the 5% that is worthy of  the attention and sharing, aim to be in the 5%, which means that the effort has to be organic, you cannot outsource passion and commitment, it has to be in the DNA of the business.

(Sorry about the ickky  word in the headline, I have even stopped playing 500)

Cartoon credit. My thanks again to Tom Fishburne, the Marketoonist. Another marketing story told in a cartoon

P,S. This morning, in my inbox was this new ‘storybook’ by the great Hugh McLeod and Brian Solis, supported by Linkedin. It makes my point better than I ever could. I encourage you to download it and have a look. I love Hughs work, as any reader will know, I often have his cartoons as headers, as the say so much in a few lines.

 

 

 

 

Customer value conforms to the laws of Thermodynamics

Customer value conforms to the laws of Thermodynamics

Sep 24, 2018 | Change, Marketing

Theoretical Physicists disagree on a lot, but one thing they do agree on is that matter is constant, it does not disappear, it can undergo changes of form, and become something different, but is not destroyed.

Value is like matter, it does not disappear, it just undergoes change, and moves somewhere else.

Customers used to look for value in places where they no longer get the best return, so they look elsewhere to find it.

Technology may destroy some jobs, as it has in retail, and factories, but the jobs are not destroyed, they change form and move elsewhere.

For the last 20 years I have heard the ‘technology destroys jobs’ story, usually told by those with a direct interest in the industries being disrupted, in parallel to the number of jobs being created, usually touted by politicians with an agenda.

This is  not to denigrate the pain of those whose jobs are replaced by an automated process, but it does demonstrate the movement from one form to another.

Apple may have been a destroyer of jobs in some sectors, but they created many more in different locations, and in newly imagined retail as they re-created lost retail jobs in their Apple stores, now the most successful retailer in the world on a GM/Square foot metric.

If you take this perspective when thinking about the pressures on your business, and how it must respond to those pressures to survive, you just might be one of the fortunate ones who sees a picture of what the future might look like, and move there in front of the wave.

My favourite marketing strategist, Albert Einstein, once again, got it right!!