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.

Three by four marketing equation for success.

Three by four marketing equation for success.

Mar 2, 2016 | Communication, Customers, Marketing, Strategy

How do you win business in a competitive world?

I know for sure it is not  getting any easier, but the advice on how to do, and stories of how to be rich in 15 minutes a day seem to abound.

Perhaps I don’t take advice well?

It is pretty clear to me, after 40 years of working with this stuff that the more we complicate things, the more difficult seeing the wood for the trees becomes, so here is a really simple tool that you can use today.

To get business, any business, although the context and circumstances vary enormously, the potential customer needs to:

  • Know you
  • Like you
  • Trust that you can solve their problem/add value to their lives.

Pretty simple really.

The other side of the equation of course is the challenge of creating the circumstances where a potential customer has the opportunity to get to know, like and trust you.

Marketers can spend huge amounts of money, much of it wasted, on chasing this outcome, often failing simply because they complicate the hell out of it and confuse themselves.

I like to think of it in human terms. The building of a marketing relationship is no different to any other type of human relationship, it evolves in stages that are pretty simple:

  • You need to be where they are. This is so blindingly obvious it is often missed.
  • You need to get their attention.
  • You need to make a connection
  • You need them to take action.

marketing matrix for successBreak all the complicated cliché ridden & expensive recommendations  you get from those with a pig in the race into this simple matrix and reap the benefits.

Beware though, as Steve Jobs said, “Simplicity is the ultimate sophistication” so this stuff is deceptively hard, but now you have a tool to make it easier.

What fly fishing can teach us about lead generation

What fly fishing can teach us about lead generation

Feb 22, 2016 | Marketing, Small business, Strategy

 

When I can, I fish for trout with a dry fly in mountain streams. It can be cold, obviously very wet, frustrating, but oh the joy of the feel of a fighting trout on the end of a 2kg breaking stain line, and a light rod.

Often you sneak up a stream all day and see nothing, but sometimes, occasionally in unexpected places, you get  a rise, with luck and skill hook them, and with more luck and a lot of skill and experience, can bring some of them into the net.

So what has this got to do with lead generation?

Well, a lot actually.

Fish where the fish are.

There are places in a river where the trout are more likely to be, at the tail of runs, behind an exposed rock, under the banks, protected by overhanging trees. You can spend a lot of time fishing every inch of a stream, but if you need a feed for lunch, best spend your time going to where the best odds lie.

Patience

You rarely get lucky quickly, it takes time, perseverance and patience, as well as skill, and better yet, local knowledge.

Use the right bait

Trout are fussy feeders. In the really clear streams, you will sometimes see a trout come up ‘for a look’ and pass on the fly. When that happens, it sometimes pays to give a it a few minutes, and change the fly to an alternative. You know there is a fish there, you know it can be tempted, so trying an alternative fly sometimes pays dividends.

Blend into the ecosystem.

Being obvious ensures failure. Colorful shirts, noise, creating any disturbance in the surroundings puts trout off. They are timid, easily scared, and have very good senses that pick up anomalies. Alarm them even slightly, and you have no hope of tempting them to a fly.

Learn to stalk

When you find an ideal spot, and you know there is a trout there somewhere, spend some time watching, noting the nuances of the stream, observing the sort of food that is around, and how it behaves in the water , and particularly if and when your target comes up for a look or rises to take something. Then you have the knowledge to tempt them onto your fly.

The conditions have to be right

Trout are very sensitive to conditions. They will not rise if there is a storm coming, they feel the pressure differences, so they hunker down. Similarly, they rarely rise in the rain. Surprising really, a bit of extra water should not make a difference, but it does. Best times are early morning, when the sun has been up for an hour or so, and still evenings around dusk.

Luck plays a role.

J.P. Getty was once asked how he became so successful. His response  was ‘rise early, work hard, strike oil’.

Sometimes you just get lucky but if you are not in the river at the right time, with the right fly, and doing all the right things, by definition you cannot be lucky. Luck comes with hard work, engagement and commitment.

None of this is any different with Lead generation, it is remarkably like fly fishing. Every lesson I learnt a my old dads knees, hiking through the bush to find the right spots, wading up steams, learning the knots and skills of the sport is applicable to  commercial ‘sport’, where lead generation is an absolutely essential skill for most businesses, certainly all B2B businesses.

As we fly fishers say ‘tight lines’ .

Why many small businesses fail with digital marketing.

Why many small businesses fail with digital marketing.

Feb 16, 2016 | Marketing, Small business

Imagine you discover a compound in your kitchen that will cure cancer.

You know it works because it cured your mother.

That would be a really amazing feeling, to be able to make a huge difference to peoples lives, and find instant wealth at the same time.

Imagine further that you did  not tell anybody.

Your Mum knows, as do your siblings and a few others close to you, the old family doctor is sceptical, and your neighbour who goes to church a lot is downright dismissive, because it is clearly a miracle that has brought the cure, not a chemical.

The barrier between you and success is twofold:

  1. Lack of credibility
  2. Lack of an audience.

So it is with  marketing.

The newest iteration of marketing, digital, is not a cure-all for an ordinary product, non competitive price, lack of distribution underdone value proposition, or anything else that normally leads to failure in the market place, it is just an additional set of options to understand and manage.

You still need both the product customers want and the audience that knows about it.

One without the other is not of much value.

Most small businesses fail one if not both the tests.

No matter how great their product, how responsive their service, without an audience, people who know about what you do and care enough not just to shower praise, but to go out and buy it, and encourage others to do the same, they will fail.

Success with digital marketing is not easy, despite the nonsense to the contrary, but it is a capability now as basic as having a good phone manner was 20 years ago.

 

 

 

 

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 dirty little secret of digital marketing.

The dirty little secret of digital marketing.

Feb 8, 2016 | Communication, Customers, Marketing, Small business

Achieving simplicity is really hard, we all know that in our guts.

There is however a huge difference between simple and superficial, and again, we all know that but tend to be persuaded to take the easy way out.

The development of a specific ‘Persona’ to which you target your marketing efforts is one of those seemingly simple  things we can now do with digital help, but in fact it is really hard.

Therefore, many make a token effort, and go away satisfied, but have in fact settled for a superficial result.

And then they wonder why the subsequent marketing efforts fail to deliver on the hype.

It is impossible to target a generic message to a 35-year-old middle-class working mother of two, and have it received in the manner you would wish. It’s much easier to target a message to Jennifer, who has two children under four, works broken hours as a lawyer, and is always looking for quick but healthy dinners and ways to spend more time with her husband and  kids, and less time on housework.

As a young marketing bloke we always developed a ‘target audience’ for everything we did.

In those  days they were generally demographic categories, which were pretty broad. If we were lucky and had big budgets, we had a Usage & Attitude study that gave us some insights into consumers behaviour, but were pretty superficial. The research relied on peoples memory, and willingness to actually recognise and admit to the behaviours that drove marketing decisions.

It was relatively rough and ready stuff.

Then  we used mass media to try and reach those demographic groups, hoping to find a few by chance who wanted to hear and act on what we were saying, or even were just prepared to listen.

Progressively we have been able to develop detailed pictures of customers and potential customers, those of our competitors, and those who might be interested in what we have to offer. We now can build a detailed understanding of their preferences and behaviour from a range of data sources,  can direct messages very specifically at very small groups of  individuals, and with many forms of media, specific individuals.

This power is unprecedented , and mostly it is ignored by small and medium sized businesses.

It enables the development of a four sided picture of those we want to reach.

Who they are

Where you can find them

Develop your target persona

Develop your target persona

What are their behaviours that are relevant to your value proposition

Why they should  buy from you

The flip side of the persona, the challenge  most marketers fail to understand sufficiency is that individuals now can avoid you should they choose. That array of digital targeting tools can be turned against the marketer, their messages in one way or another moved to the ‘Junk file’ never to be seen or acknowledged.

Why they should  buy from you, what makes your persona something relevant to a potential buyer?

Because you can solve a problem,  they like/trust you, and/or they engage and relate to you.

Successful selling is not about the transaction, it is the value you can deliver that is more  than the cost of the transaction, and it is about the empathy you can deliver.

In order to create a story potential customers can relate to, you need to develop some sort of story for the character.  Who they are, how they got here, what they have experienced, the obstacles overcome, their character flaws, all the things that make them human. You weave your own characters into the sales itch, and lead people to the conclusion you want them to reach, because you relate to them, they relate to you, your story is theirs.

This means you may need a few variations that accommodate differing ideal customer personas, but not too many or it becomes false and fabricated.

Let me know if I can help.

 

 

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