Sustained Marketing success requires managed mindset change

Sustained Marketing success requires managed mindset change

Jul 12, 2017 | Change, Leadership, Marketing

We marketers, and usually sales people talk endlessly about putting ourselves in the shoes of those to whom we are communicating, and seeking to serve. It is absolutely right that we do, but then we stuff it up.

We do that by the way we define the industry we are in.

Go to any network meeting, and I (almost) guarantee nobody will define the industry they inhabit from the perspective of those they are seeking to serve.

They are lawyers, or Architects, or Insurance brokers, and so on. None will define what they do by the outcome for their customers.

Examples of the great miss-definitions abound, but two stand out.

Kodak was in the late nineties one of the great successful companies sitting on a mountain of cash, dominating an industry they defined as ‘Film’. They were so successful their advertising slogan persists to this day, we all know what a ‘Kodak moment’ is, well all over 40 do anyway. In 1975 Kodak engineer Steven Sasson invented the first digital camera, which Kodak patented, and later collected billions on the royalties until expiry in 2007. They even commercialised the technology for Apple under the brand ‘Apple QuickTake’, and even then failed to see the writing on the wall. In 2012 Kodak was made bankrupt, although it has since emerged as a different company.

Blockbuster, what a Lulu of failed strategic sight that is, although it is always easy with the benefit of hindsight. At their height, Blockbuster had 50 million members worldwide, thousands of stores, and were a critical link in the movie money making chain. In 2001, the fledgling  Netflix approached Blockbuster, seeking to sell their business into them, and run the online part of Blockbuster, for just $50 million. CEO John Antico had been looking at ways to experiment with on line delivery, and supported the idea. He had made some changes to blockbuster,  like removing the profitable late fees that penalised customers, but failed to get the deal with Netflix through his board, and it ultimately cost him his job. His successor led the business into oblivion by bowing to  the board, reintroducing the hated late fees,  and allowing the power of incumbency, and the aversion to change, to prevail.

You do not have to be a huge business to be caught by this definitional challenge that pervades the way you think, unconsciously driving the decisions you make. A client of mine is a printer, a modest sized family business that has been around for 60 years. They see themselves in an industry that has been significantly disrupted by digital, and while there is still plenty of printing being done, the volumes are modest compared to those of a decade ago, and  the prices and margins are very slim. They acknowledge they are printers playing a role in the communication industry, but they still think and act like commodity printers. At least however, they have made a start in the mindset change which drives behaviour, and which eluded Blockbuster and Kodak.

Blockbuster saw themselves in the video rental industry, not as a part of the entertainment industry to the end, and Kodak was in the film industry, not the memories industry, until they weren’t.

Marketing Myopia, a term coined in 1960 by Theodore Levitt in his seminal HBR article of the same name remains alive and well, just harder to recognise.

 

 

 

 

The marketing flip, with pike & twist.

The marketing flip, with pike & twist.

Jul 5, 2017 | Branding, Marketing, Small business

The marketing degree of difficulty has exploded, making getting a good score  exponentially more difficult.

There used to be a few TV and radio stations, newspapers and magazines by which to reach potential customers, and supply them with the information you thought they needed to buy your stuff.  It was mass marketing, with little to no ability to customise, personalise, or engage.

The name of the game was scale.

Scale of capital to control the means of communication and mass produce products for sale

Scale of financial resources  to afford the advertising costs demanded by the communication owners

Scale of markets, mass consumers

Scale of intermediaries like supermarket chains, and suppliers of capital and equipment.

Scale had all the power.

In 15 years, less than half my working life, marketing has flipped.

Individuals now have all the power

Marketing has to be personalised, one on one, or it will be ignored

Media channels are now virtually infinite, and the cost can be modest to free

Brands are only as good as the last delivery of value to the individual

However, the objective remains the same, just as with the fancy dive. It is to go through the surface with as little splash and disturbance as possible, a good old fashioned, well executed and relatively simple swan dive can achieve that objective as well as the fancy risky, and hugely complicated combinations of tricks.

Next time you are contemplating a complicated marketing dive with a pike and twist, consider the benefits of simplicity.

 

Will Amazons venture into book stores rewrite history?

Will Amazons venture into book stores rewrite history?

Jul 3, 2017 | Branding, Change, Marketing

I love books, thousands of them infest my home, and I have spent years of my life browsing. I may be one of the last “heavy consumers’ of books, and particularly coming towards Christmas, my local Dymocks and Berkelouw’s which have so far survived, welcome me with open arms.

There is a physical tactility to a book that you cannot get on a ‘device’, no matter how great the design, which has the potential to generate an emotional attachment.

Perhaps it is just me?

As a result of this I am on the Dymocks mailing list. Every month or so, I get an email outlining the deals on the best sellers, books of interest, and new releases.

Now, I do not mind the odd romance, or light ‘love and discovery’ adventure, I have probably read 2 or three in my time, but they are not my normal fare.

Nowhere near my normal fare.

Despite a couple of emails, and even a phone call to them indicating my absolute lack of interest in their hit list, and observing they have access to a significant amount of purchase data should they choose to use it, I still get this crap filling my inbox.

Meanwhile Amazon is opening book stores, bricks and mortar book stores.

Unthinkable a few years ago that having disrupted and almost destroyed book stores, they then venture into them.

Shades of the Washington Post turnaround under Jeff Bezos

They will be doing all the stuff in bricks and mortar stores that Dymocks, and all the other retailers now disappeared had the opportunity to do, but lacked the foresight and understanding of their customers to be able to do, despite having 15 years head start.

Book stores have a place, long live real books, and the stores that sell them, I guess they will be branded ‘Amazon’, and Jeff will keep laughing.

 

 

 

Is it schizophrenia or just something in the cactus?

Is it schizophrenia or just something in the cactus?

Jun 30, 2017 | Branding, Innovation, Marketing

For years consumer markets have been relentlessly commoditised by retailers who hold the power over the distribution, and who not unreasonably, have sought ways to divert the proprietary margins available from manufacturers pockets into their own. Short term thinking, but that seems to be the world we live in.

Largely retailers have won the game, and branded FMCG products are now becoming an increasing rarity, and mostly where they survive, it is on the back of trade deals and residual strength of brands built by smart and visionary marketing in yesteryear. In liquor there are still many brands, but unbeknownst to most consumers, many of them are just housebrands infused with the wine industry hyperbole that seems to be expected.

The impact on category innovation is yet to be really seen, but I suspect it will stumble further, as by my observation of the shelves, it has done over the past few years.

There however, is the schizophrenia.

Every now and again, a product emerges that runs against the trend.

Consumers are increasingly concerned with the integrity of the supply chains that deliver products to their mouths, so on the fringes there are some very expensive products, usually in alternative distribution that use long lists of adjectives to describe their products: organic, hand- made, all natural, crafted, you have seen them all. Occasionally they are genuinely ‘new’ products, but mostly they are better quality, low volume versions of the commodities available on supermarket shelves.Sometimes they work, and consumers pay a significant premium for  the story that supports the claims, but generally the promise given by the adjectives is taken on trust by consumers.

Technology will increasingly have a role in this as magic like Blockchain emerges that can both guarantee the integrity of products supply chain, and make it absolutely transparent. Suddenly the hyperbole can be subjected to rational scrutiny.

In 2013 George Clooney and a few of his mates wanted their own brand of tequila. Why not, they can afford whatever they want, (but why Tequila??) anyway, the brand they chose and subsequently built,  ‘Casamigos’ has just been bought by Diageo for $US1 billion, around 1.3 Billion Aussie. Not bad in four years!

I do not drink tequila, and the term ‘Super Premium Tequila’  seems to me to be an absolute oxymoron, although perhaps I am unduly influenced by one very bad night involving a bottle of the stuff and a lemon tree while at University.

For $1.3 billion I could be persuaded to give tequila a second chance. Is this growth and purchase of such a highly personalised brand another signpost that consumers are demanding a whole set of new experiences from the items they buy, or is it just something in the cactus?

 

 

 

 

 

Is Amazon about to hunt the Aussie retail gorillas?

Is Amazon about to hunt the Aussie retail gorillas?

Jun 28, 2017 | Marketing, Strategy

Amazon has bought Whole Foods in a deal worth $13.7 Billion, around $18 billion Australian. The gorilla of the digital retail troupe has invested in an old fashioned, albeit trendy, bricks and mortar retailer.

This Whole Foods purchase makes it very clear that Amazon is setting out to be a significant player in grocery, and you would be brave to bet against Jeff Bezos.

In the US, listed retailers shares took a real dump, while here, Woollies and Coles shares dropped a bit on the announcement of the purchase, but seem to have largely recovered. Perhaps this is because share punters considered the considerable time frame of an impact by Amazon on the profitability of  Woollies and Coles, and the shorter term ‘Aldi effect’ is already priced in.

Amazon sells some grocery staples, and is experimenting with delivery options, including the Amazon Go store in Seattle, but this is a step further. What does this purchase gives them, beyond the small market share estimated at 1.7% ?

  • A footprint they would have found hard to replicate from scratch in a reasonable time,
  • A well known and liked brand that fits comfortably with the heavy users of their on-line services,
  • 20 years of experience in the creating of fresh supply chains from farm to the consumers plate.

I suspect this last one, not mentioned by the financial analysis that has happened in the last few days,  would have been a significant factor in the considerations. Being able to put Amazons tech capabilities alongside that experience could just be the game changer that grocery  home delivery  has been looking for.

Add this purchase to Amazon’s other activities and extensive list of experiments like Amazon Go, and you have the dynamic pricing capability of  Amazon being deployed into the centralised and rigid pricing system that drives the supermarket model.

Isn’t this what taxis used to look like?

In Australia Amazon are pretty well known to be recruiting, and they will not be doing that without some sort of  plan. Retail of any colour requires trade-offs between speed, variety, convenience and price. Home delivery has ‘taken off’ according to some pundits who have a horse in the race, but still has no more than 3 – 5% market share, depending on whose numbers you use. Whatever share it may be, it is heavily skewed towards shelf stable commodities.

These numbers do not seem to have dented the enthusiasm of Coles and Woolworths for store expansions. Their business model serves the last retail step better than  any home delivery has to date, albeit becoming a bit frayed at the edges. The combination of order size, delivery density, and labour and freight infrastructure costs has been toxic for home delivery to date.

Of particular concern to both sides of the equation are the perishable lines, fresh and frozen,  now a significant part of any households consumption. The cold chain requires very close management, and there is no room for error.   At some point I guess someone will ‘Uber’ it by enlisting the crowd in some way to pick up and deliver a packed order at a specific times for a small fee.

Perhaps history will repeat itself.

As a very small boy I remember Mum shopping at a small store in Avalon beach. There was one man in the shop who served from behind the counter, and pretty much knew what Mum bought, so assembled an order from memory as she walked into the store. These days the ranges of SKU’s has exploded, but that can be fixed with a data base on your phone and perhaps the supermarkets of the future will go the way of other capital intensive infrastructure and decentralise.

Amazon has picked on the retailer who does fresh best in the US. In Australia, there may be a couple of options for  them to do the same thing. I wonder if the Harris family is prepared to sell out this time?

Online also misses the impulse sale, the one made as you wait in the queue, although Amazon has a pretty good handle on the personal preferences of their customers. My wife of 35 years ‘never knows’ what to buy me for Xmas and birthdays, but Amazon sends me invitations to buy stuff several times a week, some of which I would genuinely like. The irony of that!

The challenge of traditional retail is the very high fixed costs involved. Retailers seek to convert as much of those fixed costs to variable ones so at least  they can match their costs to activity to some extent. They do this by casualising the workforce, and deploying technology. In contrast, the on line retailers have way lower fixed costs, but their variable costs in the order construction and delivery are much higher.

Even that may not be the major hurdle faced by the established retailers. That hurdle is the capacity Amazon brings to the table for innovation, at high speed. While Woolies and Coles are contemplating a new store layout to trial somewhere, Amazon has trialled, optimised and dumped or implemented several iterations of the best ideas they have at any one time.

Retailers seem to me to have thought that merging their legacy operations with some level of ‘digital transformation’ is something they can do over an extended period, with all the risk modelling that has evolved to supp0rt their existing business model. However, that assumption now seems to have gone out the window.

I do  not know the percentage of revenue that Coles or Woolies spends on anything genuinely new, but suspect it will go nowhere even in sight of the 11.8 % Amazon spends on ‘technology and content’ on their revenue of $135billion.  The major part of that massive amount will not be directed at FMCG, but the lessons will be directly applicable.

I may  not be around to see this all finally play out, but I know for sure that grocery retailing will  not look anything like it does now when my baby granddaughter is buying for her family.

 

9 places to dig for great ideas

9 places to dig for great ideas

Jun 21, 2017 | Innovation, Leadership, Marketing

Ideas are the fodder of our lives these days. Gone are the days of physical labour, even in the professions where labour is necessary, construction, agriculture, and others, the application of technology, the result of ideas is everywhere.

So how do you come up with the ideas that make your life more productive and  comfortable .

Look at it the other way, rather than just hoping that a great idea comes in a flash in the shower, think about the habits and practises that you need to undertake in order to improve the probability that  the ideas will emerge.

Feed your subconscious with the fodder it needs to consume in order that it is able to grow  the ideas.

Curiosity.

Questions are the source of most ideas, and we do  not ask enough of them, I suspect because we have been trained from an early age to think that asking questions is a signpost to  ignorance. Think about how your kids learnt, they asked endless questions, just because they were curious.

What if? why? How does that work? When?

Be a kid again, and ask questions, and from the answers, you will  not only learn, you will have the opportunity to have ideas presented to you on a plate.

Brain-dumping and re-ordering.

Consumption of the idea fodder is half the battle, the other half is to find ways to fit it all together in different ways, apply it to a variety of contexts, and problems. In other words, forcing yourself to regurgitate what we see in other forms really works. The story of the development of the post it note is a classic in re-ordering.

Have an idea corral.

Ideas come when they come, and not necessarily when you want them to come. In fact, I have often found that they come at the most awkward times, stimulated by something I see, hear or read, not when I am sitting down trying to bring it on. As a result you need some sort of corral in which to capture these fragments, and ideas before they disappear. There are now many digital tools, but you can still use the old fashioned notebook. I use both, a notebook, and OneNote on my computer to capture the stuff that pops into my head, almost never when I expect and want it to.

Conspicuous consumption.

Ideas are the result of what you consume, the more volume and variety of consumption, the more likely that something useful will emerge. This is not to encourage you to watch more cooking or renovation shows on TV, although they do count, it is to encourage you to widen the reach and increase the quality of that consumption. With the wealth of information at your fingertips, there is no longer any excuse not to scratch the curiosity itch.

Articulate your ideas.

Listening to an idea in your head, is different somehow to speaking it out loud. Saying them out loud, particularly to an audience, even if it is your dog, but even better a few friends, a small network group,  those at the pub, whatever it is, speaking out loud helps order the ideas, and subjects them to the discipline of the crowd. As a kid I was a reasonable tennis player, a modicum of talent that was well coached, and combined with a competitive attitude, I was OK. However, when I started coaching, it made me a better player, as I had to articulate all that I had learnt from my coach, and from competition to those I was coaching. In the process, my own game improved considerably, as I applied the lessons articulated.

Devils advocate.

The most productive commercial relationship I ever had was with a bloke to whom I reported for quite a long time, in two different companies. The course of our debates was always coloured by the presence of the devil. Even if we agreed, one of us would take the contrary point and argue it, and the inevitability was that the outcome  was better than the starting point.  The point is not to win the argument, but to use the different points of view and perspectives productively to arrive at better outcomes.

Think backwards.

Ideas are only any good when they do something useful. Normally that is to solve a problem for someone, so rather than beating your head against a wall trying to come up with ideas, try and identify problems, then think backwards to  the solution. I suspect Uber did not emerge as an idea, it evolved as a solution to the problems associated with the taxi industry as it was in most of the  developed  world. Thinking about the solutions to a problem will always generate ideas. When running a workshop, I would never go in and ask for ideas, you go in and spend some time defining the nature of a problem, and only then go looking for solutions.

Randomise.

Routine is the enemy of ideas, routine allows you to go through the motions without thought, by rote, and it is in the disruption of routine that ideas may emerge. Go to lunch in different places, exercise at different times and in different manners, seek a variety of physical and emotional environments to spark a variety of different thoughts.

Be a changeling

Never believe that the best idea is the first one you have , be prepared to be wrong, to include new information or elements that adjust the original. Do not however, mistake the agility of accepting new information with being unable to make up your mind. Those who get great ideas are in my experience the most disciplined of people despite the sometimes chaotic appearance.

Never forget that ideas come from our ability as human beings to make connections all sorts, in all sorts of ways. Imagination, the creation of ideas, then being able to do something with them, is what makes us human.