Digital impotence and the Black Knight

Digital impotence and the Black Knight

Oct 16, 2016 | Communication

I am in the middle of a device free week.

Not by choice, my PC took a powder, and is in the ‘hospital’ for surgery. Now, at the close of day 5 I feel like the Black Knight, still kicking, but no arms.

The term digital impotence springs to mind.

It is interesting to reflect at such a time on the dependence we have developed to these things. This post is being done on one of my kids computers, a bit like the Black Knight landing a feeble kick on his opponent. Might make him feel better but is effectively useless.

Ages ago in an effort to retain some control of my time, I decided that I would not connect my phone to my email. Clients who might need me at short notice all have my mobile, so I do not need the constant email alerts going off, they are nothing but an unwelcome distraction, and kill battery life.  However, being disconnected since Wednesday morning is starting to have psychological effects.

Sweating, worrying that I just might have missed a return communication from someone not yet a client, but who is keen to be, a link to something that I would have liked the time to consider, the list drags on, and on, as does the time.

Nir Eyal writes about the habits we form, with some focus on digital products, his book ‘Hooked” is a disturbing, enlightening and fascinating read, but I thought I was largely immune.

No so.

Please give me back my PC before I lose my legs as well.

Where now for the two big supermarket retailers?

Where now for the two big supermarket retailers?

Oct 10, 2016 | Marketing, retail, Strategy

What a fascinating time to be an observer of FMCG.

The speed of strategic evolution is ramping up, and the risks to the investors in the two retail gorillas must be increasing as a result.

15 years ago FMCG retailing in Australia  was a two horse race. Coles or Woolies, there seemed to be no other options. While there were other options, independent retailers of varying types, particularly in SA and WA, their profile and strategic relevance was generally lower than a dwarf in a game of basketball. They could be annoying, and occasionally useful, but would never change the outcome of a game.

The net result is that Coles and Woolies concentrated on their short term game, with Woolies winning hands down in the shareholder returns stakes until recently. However, in the process, they lost sight of those who made a difference to their strategic numbers as distinct from their immediate financial ones: Customers.

They used their power to belt suppliers, and ignore customers beyond the land grab to put stores in every place where more than a footy team could congregate.

They ignored the opportunity to innovate beyond optimising what was already there, in other words they ensured innovation could not happen, or at least, ensure they carried absolutely no risk in the process.

The world has evolved since then, and panic has set in.

Woolworths botched Hardware in spades, demonstrating an astonishing lack of strategic insight, closed down Thomas Dux after strategically emasculating it just as it was gaining traction, is closing the Metro stores, and now it has been reported over the weekend, that they are considering selling the petrol retailing business. All that and declaring a $1.2 Billion loss for the 2015-6 year.

Meanwhile Coles has renewed itself, and announced a $1.86 billion profit for the year amongst some large write-downs in other parts of the Westfarmers group, particularly worryingly, Target.

Relative newcomer Aldi has upset the comfortable duopoly by grabbing market share and shopper penetration at a rapid and continuing rate. On top of all that you have alternative and web enabled retailers taking an increasing share of mind and attention that will over time convert to sales share. 15 years ago you could not find a Farmers Market, now they seem to be everywhere, and doing great business, and the net retailers seem to be able to actually deliver, sometimes.

For Woolies and Coles to fight each other, and invader Aldi on price makes no sense at all. The logical outcome of a battle on price is that Aldi will win simply because their business model is aligned to accommodate low margins and the gorillas are not, but if they do win that race to the bottom, the real risk is that they will go broke in the process.

No joy there.

So Woolies and Coles are left with where supermarkets started back in the thirties, delivering value to customers.

What an interesting notion for the gorillas, to be competing on the basis of the total value they deliver to customers, not just on price.  They might even have to collaborate in a meaningful way with suppliers, invoking  Joy’s Law, named after  Sun Microsystems co-founder Bill Joy who noted ‘No matter who you are, most of the smartest people work for someone else’.

Clearly, very few of the smartest people work for the gorillas, although there are some more left in their supplier base. However, those suppliers of any real scale who remain locally owned could together just about fill a phone box.

There is plenty of room in the demand chain left for innovation. The first step is to recognise the necessary change from a retail optimised supply chain that implies screwing suppliers for margin in any way you can dream up, while maximising margins at the checkout, to one that puts the consumer front and centre.

A demand chain.

This change requires recognition that the consumer has a reasonably certain amount of money to spend on groceries and household supplies, and will allocate those dollars in the ways  that best suits them and their circumstances.  Economists will call this phenomenon ‘Customer demand”. The name of the game then is to share out those consumer dollars in the best way that serves the whole supply chain based on that actual and latent demand.

Plenty of room for collaboration through the chain, enabling innovation and sustainable profitability. You just have to see the competitive game completely differently. I wonder if the gorillas are capable of that sort of strategic renewal or if I should sell my (very few) shares ASAP.

 

 

Is ‘Proprietary Housebrand’ an oxymoron?

Is ‘Proprietary Housebrand’ an oxymoron?

Oct 4, 2016 | Branding, Marketing, retail

Is this range of McWilliams wines a housebrand or not?

it is exclusive to Dan Murpy’s, so ‘yes’, but it is a proprietary brand, so ‘no’. At the very least, the trading terms conversations would have been interesting.

It is also claimed to be an ‘Innovation’ which redefines my understanding of what that word means. Housebrands do not innovate, they copy, some may say act as a parasite on the innovation activities of proprietary brands.  Product innovation is one of the two key competitive options (the other being the opportunity to now connect with their consumers digitally) available to FMCG suppliers by which they can differentiate their products from their housebrand competition. Supermarket chains have done well squeezing costs out of their supply chains with process innovation, usually to the cost of their suppliers, incapable to this point to be effective with product innovation.

Exclusivity has always been a demand of retailers, difficult in Australia with just the two of them having such overwhelming dominance, but in unbranded categories like produce, they have successfully developed strongly preferential supply arrangements. But wine? one of the most brand sensitive categories around?

From  Woolies owned Dan Murphy’s I got the above offer the other day for an exclusive to Dans branded McWilliams Bagtown range, from the Griffith area. All the hyperbolic language and story telling that goes with the wine category, but an exclusive range to Dans. it seems Woolies have started something I have not seen before in Australia that has the potential for wider use. For years in Hong Kong, you dealt with one or the other of the two major FMCG retailers, but not both. Problem here with that strategy is that there are only 24 million of us, and widely scattered so the twisted economics and trading term requirements surrounding proprietary branded retail chain distribution have simply not allowed a similar development here. Till now?

The McWilliams sales manager will be having an interesting conversation with the Liquorland buyer the next time he visits, although it is reasonable to expect he will get a phone call, and probably lose either some distribution or a promotional slot, or something that reflects that McWilliams have crossed a line, and Liquorland will not be left out.

As an aside, the Dan Murphy’s 90 point label badge borders on the dodgy. You can expect a 90 point wine (Silver medal) judged at one of the major shows to be pretty good, warranting a place in any cellar. The wine in this case might be OK, but it has not been judged by anyone outside Dans staff, and they are unlikely to tell the boss that his choice sucked. Griffith is not known for its cabernet, the climate is all wrong for the grape variety, and the few I have tried were well short of 90 points. Hopefully this one is an exception.

Should I use Facebook as an advertising medium?

Should I use Facebook as an advertising medium?

Sep 21, 2016 | Communication, Marketing, Social Media

Once again yesterday I found myself in a conversation both extolling and deriding the utility of Facebook as a small business marketing tool.

Seems to happen a lot that small businesses hear (urban myth?) of someone making a fortune just using Facebook and think ‘Why not me”

Fair question, with a bunch of ‘maybe’s’ as answers. What should be remembered is that Facebook is one of a large number of social platforms, all are different, but all are vying for your attention and the money that flows from that attention, so choose wisely

Facebook benefits.

  • Facebook (as are all social platforms)  is a wholesaler of eyeballs, they leverage your use of the platform to attract other eyeballs to which they can sell access. The sheer numbers using the platform, and the targeting ability generated makes Facebook a potent marketing tool, when used well.
  • Facebook is terrific at connecting people, one on one. It has become sometimes easier to connect on Facebook than by email or phone, although there is a strong demographic factor in this. Want to connect with me, Facebook is not the place, but you will find my kids there.
  • The small focussed groups, connecting one to a few where there is a strong common interest is also a potentially powerful marketing tool for small business, depending on their markets. However, it takes an investment of time, effort, and often money, to leverage it.
  • As a tool in the list building box, Facebook has a place, particularly as you seek to identify specific behaviours and interests. This targeting potential of Facebook is from a marketing perspective, its most potent tool

 

Facebook costs.

  • Access to your friends and followers is limited by the algorithms Facebook uses. The organic reach is now around 6%, if you want more, you pay. They may be your posts, friends and followers, but you are in Facebooks house, and they make the rules to suit them, not you.
  • Facebook has an addictive quality about it, and can become a ferocious consumer of your time, the only non renewable resource you have, so use it wisely.
  • Conversion to a sale on Facebook is a challenging prospect, often overlooked. You can spend heaps and get no sales, no financial return. You might have lots of friends, shares, followers, group members, and all the rest, but few sales. Largely this is because Facebook is at the ‘social’ end of the social media spectrum. People are on Facebook not to buy and sell, but to be ‘social’ There are however, exceptions. There is a buy/sell group in Armidale NSW with thousands of members, and it constitutes a social marketplace, but the transactions often occur offline.

 

Take-out.

Facebook is great, in some circumstances, use it when those circumstances favour you, and ‘managing‘ your involvement can deliver rewards. However, if you are not focussed on what you want, Facebook will take you to the cleaners. The only right answer to the question ‘Should I use Facebook” is the same as that question directed to any other cost in your business: do it If, and only if, it makes commercial sense to you.

Rethinking the 6 challenges of local advertising.

Rethinking the 6 challenges of local advertising.

Sep 5, 2016 | Marketing, Small business

Local businesses only need local advertising.

Right?

Usually.

So the choice is then between local analogue adverting and digital or a mix. How do you make the choices when you are a small local business with a small marketing budget. (The reality is that every business no matter what their size faces the same choices, it is only the scale that differs.)

Local analogue advertising includes everything off line, billboards, local sponsorships, letterbox drops,  and many others. In most cases, digital becomes  a choice between Facebook and Google AdWords . Often I see business owners make a series of compromises that dilute the effectiveness of their efforts by spreading it too far, and further they do not adequately consider the varying strengths and weaknesses of  the platform choices they are making.

Creating a simple framework against which to ‘score’ the alternatives against your   objectives is useful, but there are two critical questions to be answered first:

  • What is  the objective of the marketing spend. Without a clear objective, the rest becomes a potentially costly academic exercise, so lets assume you have that one nailed.
  • Who is my ideal customer. Being able to refine your communication in whatever form it is to attract the people you want to attract is key. No point wasting communication money reaching those who do not want, or cannot afford whatever it is you are selling. In addition  understanding the behaviour so you can refine the channels you use to communicate is a benefit that   is delivered by digital tools, but that knowledge is transferrable to analogue. Recently I saw an ad in a bus on a route in the north shore of Sydney for a specialist self managed superannuation provider. Firstly adverting such a service on a bus is perhaps not the best channel, and secondly the advertiser was located in Stanmore, so any ‘local’ advantage was lost.

Following are 6 simple things to consider that may assist the choices:

Longevity.

The sponsorship of a local sporting team lasts the period of the sponsorship, perhaps longer as the kids wear the jerseys running around the park. A Facebook ad that attracts page likes can be used and reused to the same presumably interested audience,  a Google ad is gone once the budget is spent on clicks, which may be from a potential customer, a competitor consuming your budget, or a bot in the Philippines.

Remarketing.

This has become flavour of the month as digital has made it seemingly easier, by providing tools that do it on autopilot. Google offers remarketing tools that can be remarkably effective, but they can also be remarkably annoying when you are chased around the web after a casual look at a website for any one of a number of reasons not necessarily associated with a purchase. However, it is an old idea, one that effective analogue advertising has been using for  ever, often called ‘leverage’. When you spend some money sponsoring the local kids soccer team, putting your businesses on the back of their jerseys, there is nothing stopping you giving out a voucher to visit your restaurant, shop, or for a discount on your services at the games where the kids are playing, displaying your sponsorship. This is simply leveraging the investment made in the sponsorship, ‘remarketing’ to the digital mavens.

Data.

On line you  can track everything, and generate an explicit ROI on your marketing expenditure, using the numbers to refine and focus the investment. This is way harder to do using analogue media, but there is no reason you would  not be able to track the redemption of the vouchers given out at the match noted above, and steadily refining the offers you made. It is just a bit more work, and nobody ever thinks of doing it. However, the value of  the data generated by digital media is huge, so long as you make the further investment in collecting, analysing, generating the insights, then actually using the insights to direct your efforts. Most local businesses in my experience fall down in this cause and effect chain.

Collaboration.

Local businesses have a significant opportunity to collaborate way more than they do. The dress shop with the shoe shop, real estate agent with the interior decorator, restaurant with local grog shop, the list goes on. Digital media makes this a bit easier, but only a bit, you still have to agree the terms, timing and nature of the offer, and how the costs and benefits are to be shared irrespective of the media.

Generating and using lists.

Analogue channels are not good at inexpensive list building, but it can be done, and has been done forever. However, the building and leveraging of lists, either by email, targeted digital adverting, or indeed  the combination of a list with old fashioned snail mail is a channel  where digital has the goods on analogue. However, many local businesses fail to build lists and the technology to leverage them although now well known and pretty simple eludes many, leaving money on the table.

Attention & impact.

Finally, perhaps the most important parameter  for which it is hard to have some tick on a list, is the impact of your communication. Paying for an ad or offer that is not sufficiently memorable or impactful to generate an action of some sort as a result of the ad is a total waste of money irrespective of the medium. Small businesses do not spend anywhere near enough time, effort or expertise considering this vital element.

When you need a bit of assistance with all this stuff, call someone you trust, and who has the experience, as  the cost will be greatly outweighed by the benefits

 

This post was inspired by another of Hugh McLeod’s insightful cartoons that popped into my inbox, and I used it in the header for this post as well. Thanks Hugh.

Shoe-string marketing for SME’s

Shoe-string marketing for SME’s

Aug 22, 2016 | Marketing, Small business

All small and medium sized businesses struggle with the problem of not enough marketing budget. They have come, or perhaps been led to the conclusion that marketing must be expensive, and often it is,  but a bit of creativity goes a long way.

You do not have to spend a fortune to get a result, but you need to be focussed, disciplined and creative.

Some of the simple things that  every small business should have down pat

Community. Small businesses are local, part of a community, and we are herd animals that like to look after our own, so long as it does not compromise us, so be local, engage in local activities and causes, make a contribution to the social and cultural fabric of your community.

Elevator pitch. It is amazing to me how many people cannot describe the value their businesses  bring to those who do business with them in 30 seconds or less. Taking the time to craft a good elevator pitch is worth every minute.

Be vocal. Many people are uncomfortable being vocal, making speeches and presentations, but they are a great way to build profile, acceptance, and loyalty,  all of which delivers new customers to you. Being controversial can be dangerous, but we all relate to the rebels, those who have the guts and presence to say what they think, and make a noise about it, respectfully and with wit and wisdom, but nevertheless a noise. The added benefit is that when you do it well others pick up on it and spread. Nothing spreads as easily and widely as a good idea.

Collaboration. Scale is power, and can be easily built. Often mutually beneficial collaborations are relatively easily managed on a local level that are challenging on a wider scale, and they offer all sorts of benefits. If you run a fashion retailer, why on earth would you not want to collaborate with the fashion shoe retailer two doors down?

Networking. Networking works, but takes considerable  time and effort, and it not for free. Nobody likes being sold to, and while that may be the objective, going into a networking conversation with the attitude that you need to give before you earn the right to receive is always a good move. Rather than opening a conversation with the usual “What do you do..?” ask instead, ‘how can I help you?’ and see the difference. Networking enables you to build relationships, and trust.The reality is that we do business as far as we can with those we know, like and trust, and that does not happen immediately, it evolves over time based on behavior and performance.

Referrals. When you have someone else recommending you to their networks, it is the most powerful marketing you can do. Therefore not be backward is asking for referrals from those to whom you have given. Usually they will be delighted to repay some of the value you have delivered to them. Referrals however can be complicated. As the number of networking groups has exploded, the value of the referral has diminished, as there is a ‘sort of’ obligation to refer as a part of the network group process. Tied up in the referral is your own credibility. Each time you give one, you should ask yourself, ‘Would I use this person to solve this problem?”  If the answer is anything less than an emphatic ‘Yes” my view is that you should not give the referral as it is a compromise of your own credibility.

Use tools for leverage. All of the above are enabled and enhanced by the digital tools now available, but they are just tools, the principals of marketing have not changed just because someone invested a fancy digital tool. Understand how  the tool is best used, use it yourself, or if your time is better spent elsewhere, and normally it is, find an expert who can maximize the leverage the tools can deliver.

None of this costs much money, but it does take time, commitment, and importantly, a plan that is executed, measured, and improved.

Do not be bamboozled by the notion that marketing is all about branding, it is not.

Building a brand is a key part of marketing success, the foundations of a brand make for marketing success, but the communication  processes to build a brand, which is what everyone thinks about, are nevertheless just a part of the more holistic process of marketing.