Sep 8, 2021 | Change, Marketing, Strategy
There is a massive but unrecognised marketing and branding war going on right on front of our eyes, unseen by most, but substantially funded by taxpayers.
It is the Covid vaccine marketing war.
Which brand will you choose?
The development of these vaccines has happened at unprecedented speed, driven by the commercial opportunities delivered to the pharmaceutical industry’s doorstep by Covid.
There are a number of agreements entered into by the Federal Government for the supply of vaccines, as well as the evolving commitment to creating manufacturing capability for mRNA vaccines. This would be additional to the rDNA capability we already have as a result of the brilliant strategic and financial management of CSL over an extended period.
Astra Zeneca? Pfizer? Both of which are TGA approved, and in distribution. Moderna is now TGA approved, on order, and about to arrive on our shores.
Which do you choose?
By moving the availability goalposts around by press release, and completely muddying the waters around the facts in the attempt to cover the total lack of planning in 2020, the federal government has created a minefield of questions and mistrust. Into this uncertainty have stepped the pharmaceutical marketers, often ignored genuine expert scientists, the ‘Looney-fringe’ with a barrow to push (a space inhabited also by some politicians with a vague grasp on the truth) purveyors of snake-oil, ‘no vaccers’, and a horde of self-appointed experts sprouting nonsense that just further confuses.
Who really knows the facts amongst the triumphant press releases and soothing words acting as prophylactics against the truth of the failure of (most) politicians to listen to, understand and communicate scientific advice.
‘Modelling’ varying covid outcomes has become a game of who can give me the answer I want. The Doherty institute modelling is widely and selectively quoted, misquoted, and ignored, as is the modelling from the Kirby Institute, and various other scientific and research organisations.
On top of the existing AZ, Pfizer and about to arrive Moderna vaccines, you have a range of other brand contenders. A Johnson & Johnson rDNA vaccine is being widely used in the US, amongst a number of not yet approved in this country options, like the creatively named ‘Sputnik’ and the Chinese ‘Sinovac’ version.
Then you have the schism between the rDNA and mRNA vaccines. This is science way beyond my understanding, but to a layman it seems that the ‘old’ vaccines, typified by Astra Zeneca are rDNA, and the newer technology, Moderna and Pfizer are mRNA
Which will you choose?
What an expensive and truly monumental mess for us, and a profit pool of unprecedented depth for those Pharma companies smart enough to put themselves in a position to dip the snout.
If I was a betting man, I would be betting on Pfizer as the winning brand. They have used one of the oldest and most effective selling techniques with great skill: scarcity. It has ramped up unfulfilled demand and this has increased perceived value enormously. In addition, they are the leaders in the newest technology, and in this space, the first mover advantage is huge.
For those who may be interested, following is some of what I have learned sifting through the mounds of material relating to the brands of vaccination medications. Apologies in advance for the simplicity, and for any errors of fact.
mRNA vs rDNA. A layman’s explanation.
DNA is the double helix design we are all familiar with, that carry the genetic instructions for the development, growth, and reproduction of life. It is the long-term storage device that drives the development and evolution of a species.
RNA is in effect the messenger that converts the instructions contained in the DNA into the proteins that take action to produce the individual cells that make up the individual organism within a species.
To date, vaccines have all been based on delivering a mechanism that results in variations that give protection from specific conditions when the cells reproduce, by altering the instructions carried when the strands of DNA split to create new cells. These variations offer protection from the condition for which the vaccine was developed. It is a game of trial and error in the lab. This is typified by the existing influenza vaccines that have been around for years. Each year, the pharmaceutical companies predict the ‘next wave’ of mutation of existing strains of the flu and produce vaccines in anticipation of next winters flu. The technology is well understood, and the processes repeatable. Many members of ‘big Pharma’ produce their versions of DNA vaccines, including CSL in Australia.
RNA has offered the holy grail of being able to translate the instructions from DNA into instructions for the cells of an individual to produce proteins that protect from the targeted infection.
The Corona pandemic put a rocket under the scientific work being done on RNA for several decades, compressing the scientific development time from decades into a year. They are based on new genetic technology called ‘synthetic messenger RNA’, a manufactured version of the substance that directs protein production in our body cells. The idea has been around for several decades, based on the recognition of the role RNA (Ribonucleic Acid) plays in the transmission of genetic codes necessary for our body to produce proteins. Understanding the mechanics of RNA is like opening a recipe book for bespoke medications for individuals to address a wide range of conditions, but the technical hurdles have been significant to date.
The result is ‘new boy on the block’ mRNA vaccines represented so far by Pfizer and Moderna.
Pfizer is 150 years old, founded by an immigrant German chemist in New York in 1849. It produced and sold medications for then common ailments such as intestinal worms, until a ‘bet the company’ investment in using fermentation technology to mass produce penicillin in 1942. Since that time Pfizer has taken over a number of significant competitors and adjacent companies, becoming a huge pharma conglomerate, producing ‘hit’ wonder drugs such as Xanax and significantly by accident, Viagra. The investment in mRNA has continued for some time, as a response to the waning sales of their other drugs as the lapsing of patents enabled competition.
Moderna by contrast is a new company formed in 2010 to commercialise the science emerging from labs around compounds that supress the immune reaction to the injection of synthetic RNA into an individual’s body. For them, the emergence of Covid was a ‘gift’ that offered an injection of capital and marketability of ballistic proportions.
Where to from here?
mRNA offers the potential, indeed, probability of developing more potent and targeted vaccines almost in real time, and there is a huge research effort quietly being applied, by both incumbent pharmaceutical companies like Pfizer, J&J, and now Moderna, as well as newcomers. For example, Alphafold is an AI breakthrough of a Google subsidiary ‘Deep Mind’ that can predict the structure of proteins, an essential piece in the mRNA jigsaw . It is a combination of Neuro and Computer science. Again, this is way beyond my understanding, but those ‘in the know’ seem to be jubilant. It seems it is an advance, using similar processes to the AlphaGo program that stunned everyone by beating the best Go player in the world. Go is a game of Chinese origin many times more complex than chess, and it had been assumed that algorithms could not replicate the billions of options open in the game. AlphaGo learns as it goes, just as humans do, and that learning can be applied to the development of the immuno-proteins that make up mRNA vaccines.
Then, we have the promise of geometrically increasing data analytical capacity with the development of quantum computing.
A couple of further places I would like to go.
- We stop talking about ‘70%’ vaccination rates as the point at which we might open up. Let’s be honest, and acknowledge that it is 70% of the ‘eligible’ population, which excludes those under 18, coincidentally the voting age. The reality is that it is more like 50%, and no epidemiologist I have heard speak believes that number is even in the ballpark of a reasonable place to consider opening safely.
- Let’s have an intelligent conversation about what happens when ‘son of Delta’ arrives, as it inevitably will, and let’s not be caught again without pants around our ankles, bending over trying to tie our shoelaces so we can run from it.
- Let’s also acknowledge that 50% vaccination rate, while grossly inadequate, is way better than much of the world’s population, whose governments do not have the funds to buy the jabs, or their ‘leaders’ have their resources tied in hidden accounts in Switzerland. I wonder where Son of Delta might emerge? Yes, probably amongst those unvaccinated populations in the third world.
Hopefully, if you have read this far, it is a bit clearer. It is to me. What started out as a simple post on the observation of an essentially publicly funded branding war became a monster, as I tried to answer for myself the ever present marketing question: what has to be true to give us this outcome?
‘
Sep 3, 2021 | Governance, Strategy
The first is to have a monopoly, preferably a regulated one, such as a public asset that has been privatised.
Sydney’s Kingsford Smith airport was flogged off by the government to a private operator who makes obscene profits, not just from the landing rights, but parking, retail concessions, and every other opportunity to gouge. What are your options… catch a train to Singapore?
The second is to be in a market where the person shelling out the money for your product is not the decision maker in the purchase.
My dog does not care how much the food I deliver to her/him costs, the marketer is selling the stuff to me on the basis that my dog will prefer it, and it is better for them, and I am a bad person if I deprive my beloved pet of the best care possible.
The Australian publicly funded pharmaceutical benefits scheme is similar.
Once on the list, the pharma companies sell to the doctors, persuade them to prescribe their magic to their patients, who pay a consistent subsidised cost whatever the price of the drug to the public purse. Perhaps inconsistently, I am in favor of this scheme, despite the obvious rorting that goes on.
I am always caught between amazed laughter and despair when I hear a politician whining about the prices of some commodity, the ownership of which they have flogged off to private enterprise, who then proceeds to make a profit, because they can.
Just look at what has happened to power prices since the privatisation of the poles and wires, done in a strategic vacuum for short term political gain.
No matter the words used, what they have done is subsidise private profit from the public purse.
One that should get a mention but does not despite the disruption over the last couple of years is the takeover of Healthscope, the operator of the new French’s Forest hospital in Sydney’s north, by Canadian group, Brookfield in June 2019. Brookfield held a featured place in the Panama and Paradise papers as protagonists in tax avoidance via trusts located in tax havens.
The state government poured 2 billion dollars into the hospital in a so called partnership with Healthscope previously an ASX listed company, and closed the alternatives in the area, Mona Vale and Manly hospitals.
So much for the competition, and for the tax on the resulting profits.
Aug 25, 2021 | Communication, Customers, Marketing, Strategy
The first QR code I remember seeing was in the early 2000’s, I think. It was a video taken in New York Zoo that showed people clicking on what looked like a square of code in front of an enclosure, and getting way more than the usual summarised information about the animal typically printed on boards. It gave detailed and varied information, linking to videos of the animals in the wild, anatomy, physiology, and the lines from which they had descended, all of which could be selected and viewed as you stood there, watching the animals in the enclosure.
This will change the world I thought. Then, almost nothing, for years.
Until Covid struck.
QR codes were invented by Toyota subsidiary Denso Wave in 1994 as a means to keep track of inventory. The problem was that a barcode could only be read one way, and carried limited information, whereas a two-dimensional QR code can carry 31,329 datapoints arranged in rows of up to 177 X 177. As a result, they can carry a huge range of information, the QR code acting as both gatekeeper and curator of the information.
The combination of the availability of QR code readers on smartphones and Covid has resulted in all sorts of creative ways people are using them to register, and engage in a whole range of information delivery processes.
This level of detail is highly applicable to B2B selling. Send a prospect an engaging letter via ‘Snail mail’ which has an almost 100% open rate, that had a QR code providing access to all the information a potential customer may want. Who would not click on it, even if just for curiosity?
I am nearly 70, so not looking for a job. However, if I was, a personal QR code would be all I would need.
Such a resume could include video of me speaking to a group, engaging in group activity, coaching a team member, playing sport, as well as giving the details of various achievements, spoken by referees. It would be a customisable digital asset that could be tailored to the job for which I was applying. Even better, it might serve to create a new job in an organisation for whom I had decided I would like to work. It would take a bit more work than the standard written resume, but would carry geometrically more weight.
If I was back in my FMCG days, I would be putting QR codes on all products offering information on ingredients and their sources, recipes, supply chains, video that enhanced the authenticity of the end product. At some point, the two retail gorillas will demand it, so you may as well get in front of the game.
Toyota has given the world a bank of manufacturing and process management capabilities through their wide publication of the tools and techniques of the Toyota Production System. To that bank you can add the QR code. They elected to make the technology freely available, rather than enforcing their patent rights. As a result, we have at our disposal what has become a vital tool for the management of Covid.
Imagine the revenue they have foregone in the public good, even if they had extracted a royalty of fractions of a cent every time someone clicked on a QR code.
Jul 30, 2021 | Governance, Innovation, Strategy
The old saying that ‘he who pays the piper calls the tune‘ is almost always true.
The piper in this case has been the orthodoxy prevailing over the past 40 years in Australian manufacturing.
I have been actively observing the trend towards outsourcing for a long time, deeply concerned that as a country we were collectively making a huge mistake, by focussing on lowering costs by outsourcing. By slicing off the things that are not deemed to be ‘core’ in some way to your profitability, you can reduce costs while maintaining revenue.
I guess it is much easier than being truly creative, taking risks, betting on a future different to the present.
As a result, manufacturing businesses in this country have progressively outsourced manufacture of sub-components, then whole components, then manufacture and assembly of finished products, and finally, because the manufacturers in China, Vietnam, or Thailand are closer to the technology, the design.
All Australian manufacturers, those few that have survived so far, are left with is a brand, with nothing to support it.
A brand without the supporting ‘brand infrastructure’ is a bit like a heavily inflated balloon. At some point a bugger with a pin will come along and, ‘bang’, you have nothing left.
The bugger with the pin proved to be a virus.
Supply chains have been ‘kneecapped’ and there is suddenly a recognition of the need for ‘sovereign manufacturing’.
Being driven by short term profit at the expense of long-term commercial sustainability has been a dumb choice.
I understand how it has happened.
Along with outsourcing manufacturing, we outsourced good old common sense to the educated but inexperienced crowd who applied IRR (Internal rate of return) and RONA (return on net assets) models shoved down their throats in MBA classes. These led to incremental investments in little, short term things at the expense of longer term and less certain but potentially bigger returns, to satisfy IRR hurdles. Reductions in the denominator in ROI calculations by flogging off productive assets made them look good by increasing RONA numbers.
They forgot that cash, and intellectual capital are not ratios, you either have them or you do not. Without cash you will be dead tomorrow, without the intellectual capital underpinning operations, you will be dead by a slower route, but just as dead.
Covid has awakened us to the effects of those decisions made over an extended period. Question is, do we have the resources and resolve left to start playing a different tune, one that common sense rather than capital ratios dictates?
I truly hope so for the sake of my grandchildren.
Header cartoon courtesy www.Gapingvoid.com
Jun 15, 2021 | Branding, Marketing, Strategy
A few weeks ago, Apple released an upgrade of their operating system, iOS 15. This release includes a (potentially) monumental change in the digital world of communication. Its default is to turn off the ability of a third party to track your online activity. If you are relaxed about being tracked, you can opt in and continue to be tracked.
This will be an opening shot in a war between very powerful vested interests.
For years there has been genuine and rapidly increasing concerns about the volume and use of the data collected by apps, and the privacy invasion and leverage that data can generate. As the concerns grew, so did the mumbling from the advertising industry about the value of targeted ads, and soothing bullshit from Facebook.
Apple has gone in hard by making opt-out of tracking the default of the new release. I suspect Apple sees it as a point of competitive leverage that they can exploit. Their advertising is making this differentiation not just clear, but an explicit reason to move to Apple.
I think it is an absolute game-changer.
There are several dimensions to the vested interest battles I expect:
-
-
- Facebook Vs Apple. The business model that has made Mark Zuckerberg one of the world’s richest men, and arguably one of the most powerful, is based on the ability of Facebook to track activity and market their ad services based on that ability to target. Removing that ability will compromise that model, and Zuckerberg has not demonstrated any sort of tolerance to any interference to his ability to accumulate more and more billions.
- Apple Vs Android. For many consumers, the ability to turn off tracking will deliver a valuable competitive advantage to Apple over Android. This presents Google, the owner of the Android system with a dilemma. Do they follow and compromise their own ad business, or allow Apple to retain such an advantage in mobile computing? Indeed, is the attraction of an automatic ‘No cookie’ environment as strong as I anticipate?
- Regulators Vs Tech. For the past 5 years or so, regulators have been suggesting that some sort of regulatory framework was necessary to protect the privacy of consumers from the rampages of ad targeting. At the same time, regulators have demonstrated a rancid inability to even understand the basics of the challenges that such regulation will face in implementation, enforcement and unintended consequences.
- Advertisers Vs Ad fraudsters. The emergence of ad fraud because of so called ‘programmatic’ digital advertising, has offered fraudsters the opportunity to milk billions out of the system unhindered. Advertisers controlling large budgets have been largely unwilling, and perhaps unable to stem these losses, so just paper them over with cliches and bullshit. In a 2017 presentation to the IAB, Marc Pritchard the CMO of P&G publicly took a stand against the ‘crap’ as he called it spawned by digital channels. Crap ads, and the fraud perpetrated by those who assembled digital advertising inventory. The P&G initiative to stop advertising in the absence of hard data about the reach to humans rather than bots, and the location of ads placed, was followed by several other major advertisers. Sadly, the words were more hollow than substantial, as the fraud continues. The fraudsters will not go quietly, and based on performance to date, advertisers are too timid, or seduced by the seeming ease of reach, to do much. Dr Augustine Fou in his research highlights the tactics, breadth and depth of the fraud being accepted by advertisers.
- Consumers Vs advertisers. Marketers have found their ability to communicate compromised by the never-ending demand for new and different content to throw at the digital channels. They no longer have the time, and increasingly the inclination, to do the foundation work that leads to creativity and advertising cut-through.
Apple’s advertising revenue is very modest, by comparison to Google and Facebook. It has little to lose from this change. Facebook and Google by contrast have huge ad revenues. In Facebooks case, advertising is 98% of its total revenue, for Google the number is about 80%.
This change by Apple, if it creates a surge of iOS market share from its current 15% will compromise these revenues, and erode the business model of both Facebook and Google.
It certainly creates a strategic dilemma for the Google owned Android software, powering around 85% of mobile devices currently. Do they follow Apple, or take another route?
For marketers who understand ‘marketing’ as distinct from the digital ‘new shiny thing’ syndrome, who treat ‘marketing’ as an integral part of their investment in future prosperity, it will be a boon. They will be much better placed to leverage real marketing skills that the large businesses have lost.
To the question posed in the headline: the degree to which consumers demonstrate they value privacy, will be measured by the rate at which they will switch to Apple to protect it. Alternatively, if Google decides to follow with Android, game over.
Note, an hour after publishing: I omitted to mention above that Google pays Apple something around 12 billion a year to remain the default search engine on iOS and Safari. This is so Google can collect information on your searches on Apple. For Apple, it is money for jam. If I am right, and there is a significant move towards the auto opt out in the new iOS upgrade, this 12 billion will erode over time, so Apple does have a bit more skin in the game than noted above.
Header cartoon credit: Dilbert explains tracking codes.
Jun 2, 2021 | Governance, Leadership, Strategy
Successful businesses in my experience have several things in common, and in general do most of them well.
Focus.
They are sufficiently disciplined to be able to assemble and deploy resources against a limited number of objectives and opportunities. This requires that there is a robust strategy in place, as they have made a series of choices about what they will do, and what they will not, which are all clearly understood throughout the business. Being all things to all people is never an achievable outcome, so they leave it alone.
Niche.
In one way or another, all successful businesses I have seen operate in a niche, where they have sufficient scale to be relevant to their selected customer base. This is the same for a small local business as it is for a multinational, each in their own way have defined a niche and set about owning it. Of great value is the niche that others do not recognise, where competition does not exist, or is marginal.
Leverage.
Leverage is doing more with less, so it follows that the greater the leverage of assets, the greater the success. Of course, when taken in purely financial terms, leverage can lead to disaster, as leverage also increases risk, but when looked at from the lens of human capabilities it works. It also works when you consider outsourcing as leverage, keeping your most valuable assets doing jobs that deliver greater returns. In successful companies, the jobs that just must be done to keep the machine grinding, are broken down to repeatable processes and done at the least cost, so the assets released can be deployed to deliver optimised results.
Differentiation.
In the absence of some sort of differentiation that increases the value of an offering to a group of customers, all you have is price. When price is all you have, you will, eventually, lose.
External sensitivity.
Being able to ‘feel’ the changes as they happen in their competitive environment and react before others marks not simply good businesses, but ones that have the DNA to be sustainable, as they incorporate in their DNA the ability to change early, and often. This does not imply a moveable feast of strategy, rather an agility in the implementation, which requires a considerable dose of leadership.
To my mind, businesses that are able to keep themselves in front of the ‘market Takt time’ are well placed to prosper.
Robust and shared culture.
‘Culture’ has become the rallying cry of all sorts of pundits, and self-proclaimed experts, but is clearly a major differentiating factor in good businesses. The cliches of all rowing in time and in the same direction apply, but the best definition is still Michael Porters definition: ‘Culture is the way we do it around here’ holds. In addition, when setting out to measure culture, as we are increasingly trying to do, I have yet to see any measure of culture that make a lot of sense beyond the simplest, ‘bad news travels quickly, & untainted, to the top’. When I see that, I know there is a robust culture in place.
Collaboration.
Part of superior performance is understanding where your capabilities are best deployed, and from time to time, a collaboration makes sense as a means to leverage both yours and another’s capabilities into an outcome neither could hope to achieve on their own. Collaboration is a really challenging thing to pull off, as it requires that both the businesses and all the personnel understand that their own best interests are best served by serving the best interests of the partners.
They have a detailed understanding of their strategically important customers.
This may not always be their biggest, although that helps, but those that will deliver sustainable profits into the future. Every large and important customer started as a small one, the trick is to pick those that will, long term, make a difference to your business, which can only be done when you can make a difference to theirs. This implies some sort of key account strategy is in place.
Robust financial management.
It should not need to be said, but sadly, genuinely robust financial management is not all that common. Anyone can deliver the statutory accounts required, but it takes creativity and understanding of the complexity of customers and markets to produce useable management reports that reflect the current, and more importantly forecasts of the state of the business.
Of all the reports, cash is the most important. All the sophisticated marketing, procedures, and cultural initiatives become redundant in the absence of cash.
Header cartoon credit: Hugh McLeod at www.gagingvoid.com nails it.
