The brandgym blog

You can't out-private-label private-label: Tom Fishburne

A long-overdue post with some genius from Tom Fishburne, the "Management Cartoonist" (great personal brand proposition by the way). This time, looking at how to grow during and after the recession.

1. Focus on being meaningful:
Firstly, a post and cartoon from Tom that reminds us of the risks of only responding by getting down and dirty on price and promotion.

Price is part of value, for sure. And some brands may have got greedy during the good times, and need to get prices back closer to private label.

But, the most important part of value is what you offer. Tom is on the button by suggesting: "The only long-term solution is to ensure that your brand is truly meaningful."

He then goes on to make a point that we have covered in previous posts as well: "The recession will be a litmus test for meaningful brands.  If a brand is close enough to private label that consumers will easily trade down, it's time to re-evaluate what is being offered."

2. innovate your way through and out of the recession
Leading on from this is Tom's second post, about the need for us to get past denial and anger about the hard times, and move on to winning in the downturn by innovating:

He also shares this great series of posters which I love. The first one is a World War II poster which captures superbly the "stiff upper lip" of the British. The second and third ones are parodies.

The on the right, "Get Excited & Make Things", created by Matt Jones, sums up well what brands need to do. We need to innovate our way out of the mess. But, this is innovation with a small "i", not BIG Innovation that requires heavy investment.

"Small i" innovation means looking at improving every bit of your marketing mix, especially those bits that are free. For example, Jordans Cereals are using their website to sell, not just tell, by encouraging extended use of their products.

Being different by being "simply better"

Differentiation is all about coming up with unique benefits that no other brand has to offer, right? And at all costs we should avoid the dreaded fate of trying to offer "generic" benefits that every other brand is trying to deliver.

Well, wrong, according to the authors of a book called "Simply Better", that was featured in the latest edition of Market Leader, The Marketing Society's quarterly magazine. The authors, Paddy Barwise and Sean Meehan, say: "Customers are not only concerned with being offered something unique, but being reliably delivered generic category benefits. The key element of the Being Simply Better Approach is emphasising the superior product or service a brand offers."

This is very much in tune with our belief that the world needs brands that offer more "sausage" (product) and less "sizzle" (emotion). The reality is that in many cases the standard of delivery on basic benefits still under-delivers versus what we really want and expect. This is especially the case in service businesses. Who hasn't turned into a green eyed monster after being forced to navigate the way through an automated phone answering service ("Press 1 for technical problems, Press 2 for new orders, Press 3 to just scream down the phone and shout at someone for wasting your time").

Here are a few examples of what Barwise and Meehan call "thinking inside the box" and innovating by superior delivery of core market benefits:

1. Shell service stations: built business by simply improving on the basics of service such as ensuring the  the toilets were clean and that you could pay for fuel quickly. These small changes, executed consistently, were enough to build the business by 10%+. More on that case you can download here.

2. First Direct bank: has become the most recommended bank in the UK by delivering personal service over the phone 24/7, 365 days a year. In an age of automation, you can talk to a real person, in the UK, whatever time of day you call.

3. Gillette shaving: despite attempts to stretch into "male grooming" via deodorants and shampoo, what has worked best for the brand is constantly raising the bar in the core shaving area, through better and better technology.


4. Tesco: perhaps the best in the world at delivering the idea of Simply Better are Tesco. We were lucky enough to see inside this amazing company by working with them on their 3 year brand vision. They have an annual process of customer planning that involves systematically analysing every bit of the business, looking for ways of improving it and then making these happen. For example, there are now infra-red cameras that monitor the number of people in queues at the check-out that automatically ask for more staff to come out when there are more than 2-3 customers waiting!

So, next time you are working on innovation, spend some of the time on how you can be simply better at delivering the basic benefits of your category. You may find doing this well is a great way to grow.

Another nail in the coffin of ethical brands

Hot on the tracks of the recent post about Cadbury making its Dairy Milk chocolate all fair trade comes news that Mars are dialling up ethical values on their core business. In the latest ad of their corporate branding campaign, Raising the Bar, they make 2 claims:
- From early 2010 Galaxy will source its cocoa beans from Rainforest Alliance farms
- Mars is the first company to commit to having the entire cocoa supply certified by the Rainforest Alliance 2020

This is further evidence of the "mainstreaming" of ethical products by the big brands. Great to see if you give a hoot about the environment and 3rd world farmers. Not so great if you are a niche brand like Divine chocoloate where fair trade is more than a reason to believe, its your reason to be.

Worth noting some interesting points about the Mars campaign itself:
1. Stamina: I like the fact this is an ongoing campaign, not just a one-off. Earlier executions were used to launch the campaign, and talked about how all the company's products were free of "nasties" (artificial colours and ingredients)

2. BSR is becoming a "table stake": the Mars campaign is another sign that if you are a big brand and don't have a clear stance on "BSR" (brand social responsibility), then you are in danger of being left behind. Social and environmental policies are becoming the norm.

3. Corporate brand vs. product brand: interesting how Mars is focusing its BSR message on the parent brand, not the product brands. I think in this case it works, as there is a lot of commonality in base ingredients (i.e. chocoloate). It would be a waste of resource to have a fair trade message on each brand.

However, the case for company brand communication is less obvious to me in a case like Unilever, then there is a huge range of products, including some with conflicting positionings (Dove = real women without sterotypes; Axe = sterotypical women without clothing)

4. Who's the target? I wondered what the payback was on this campaign, as I didn't think your average choccie shopper would a) be reading the Sunday Times, b) care much about the message.

However, this is perhaps missing the point. The ads are probably targetted not at end consumers, but rather at:
- Exmployees: making them feel good, after getting so much bad press
- Potential new hires: make them feel more positive about the company
- Opinion formers: show Mars as a force for good, not an evil empire

innocent is not so innocent after all

You read it here first, back in June 2007: "The real risk for innocent is the sell-out. Indeed, my money goes on Coke to be the one who swallows Innocent."  Last week came news confirming that innocent had sold its soul, or at least 20% of it, to Coke for a cool £30million.

Of course, the founders protested that this would in no way undermine the company's positioning. Everything will stay the same. Honest. Supporters of the deal quote examples like Cadbury's aqusition of Green & Blacks to show that everything will be fine and dandy.

Mmmm.

I'm not so sure. I think the innocent case is quite different. And as I said back in 2007, I think there are reasons to worry:

1. We really did believe in Santa
innocent has been very clever and very consistent in hard-selling the tale of a cute little company making "tasty little drinks". We really did believe in the company like we believed in Santa Claus as kids. All that knitting of woolly hats by little fruit-elves. Banana phones to call. And this emotional "sizzle" was part of the appeal for a lot of buyers.

This is now a lot harder to swallow knowing that it aint a private little company anymore. Its one step from being a subsidiary of the giant from Atlanta.

2. innocent users do give a toss
innocent users are very involved in the brand. And bought the Santa story described above. They loved it when times were good and helped it grow.

But a lot of them are now very pissed off. I think they are more pissed off than Green & Blacks users when Cadbury bought them. There are 304 comments on the innocent blog post on the deal. And most or all of these are negative. Now, some experts estimate that less than 1% of blog readers bother to comment. So that would mean 30,000 pissed off people. If they each tell 10 people what they think you can see how it becomes a big issue.

Here are the latest few comments from the blog; as you can see, all but one very angry:

"You thought wrong - you just killed your business :( "  (ow!)

"The fact is that now part of the profit from every innocent smoothie goes to lining the pockets of coke's shareholders." (ouch!)

"Innocent used to be an ethically sound business but now when times get tough the real value of whats important becomes clear: the almighty pound." (uh oh)

"Killed nothing, minority stake coke can and won't do anything, innocent still innocent I will still buy their products" (phew)

"Personally I boycott Coke. So now I'm not buying innocent either :(" (bang!)

"At best this is misguided - you'll be a fig leaf for Coke's unethical corporate machine. At worst it is a greed-driven betrayal of values and customers." (bash!)

"Disgrace but not surprising, you have sold your soul. That's the last time we buy your products." (whoops)

3. innocent was private not public

This is a big difference vs. the other example quoted by supporters of the deal: Ben & Jerry's. Yes this was another small-ish company taken over by a big one, Unilever. However, B&J was a publicly quoted company at the time, and was obliged by law to recommend the bid to shareholders. In other words, it had already effectively sold its soul to the stockmarket, and it was Unilever then buying it up.

This is different in the case of innocent which was privately owned by the founders and the employees.

4. Tropicana smoothies

As per prevous posts,  I think innocent smoothie sales have suffered because Pespsico got its act together with Tropicana Smoothies, which are very nice and a bit cheaper. Rather then launching Veg Pots, innocent should have focused on growing the core smoothie business, and getting the price down to go more mainstream.

With Tropicana now very close to innocent on the sausage/product, the sizzle was key. And with that going flat, you might see a lot of people switching to Tropicana or old label.

My (sad) prediction? Another 10% drop in innocent smoothie sales in 2009.

How do you get men to pee straight?

Who would have thought you that you could learn a lot about consumer behaviour from urinal design? Yes, that's right, public toilets for men.

The urinals in question are in Amsterdam Schipol airport. And they are featured in a new book, Nudge. The book is about how little bits of encouragement can incentivise the "right" sorts of behaviour.

Here is a picture of the urinals. When I saw this, I remembered them. Which is pretty amazing as it's at least a year since I was in Schipol. Look carefully and you'll see that each urinal has a little picture of a fly in it.And guess what men, sad buggers that we are, try to do when they see this fly? That's right. They try to hit the fly with their pee.

But what's the point, apart from proving that us guys grow up physically but are still really schoolboys at heart? Well, the point is that "spillage" went down by 80%. And that means less cleaning, which means less cost, which means more profit. And a nicer place to do a pee. Now is that clever, or what?

The bigger point is using clever design to influence, or "nudge", consumer behaviour. This means enticing and inviting them to act, rather than telling them what to do. Another example from an earlier post is Linked In, the business networking website, showing you an updated list of people you might want to connect to when you log in. This is much more effective than just telling you "Don't forget to connect to new people."

iTunes U: a clever addition to Apple's apps?

I posted last year on the runaway success of Apple's App Store, where you can easily and cheaply download loads of cool applications for your iPhone or iPod Touch. In the first 6 months of opening the people have downloaded 300 million applications and some estimates suggest Apple will generate up to $1.2 billion a year in revenue from the store.

As a fully signed and paid up iPhone-aholic I can say from personal experience that the App Store is stroke of pure genius. Beyond the pure revenue stream, these apps truly do turn your iPhone into an essential life support device that is incredibly "sticky" (i.e. gets used a lot). Consider a business trip. The iPhone has my diary, contacts, music and movies. But I also use it to check in to my flight, check flight times, store a PDF with my intinerary, navigate lost taxi drivers to my hotel with the GPS and on and on.

And this week Apple launched a new service innovation that hopes to make the iPhone even stickier. iTunes U is a whole boatload of new content with an educational bent. The nice strapline for launch it is "Forever Curious".

Great idea....

I think the concept of iTunes U is inspired. Self-improvement software has been a key part of the success of the Nintendo DS, especially the Brain Training programme advertised on TV with Nicole Kidman. It appeals to a whole new adult audience, and makes it more acceptable for kids.

.... shame about the execution

However, the execution of iTunes U is really crap. The content is a real bag of bizare stuff from no-name sources. Click on Business, and the new and notable downloads are not from Harvard Business School or INSEAD, they're from The Australian School of Business. Who?

Also, the navigation is not very sophisticated, with only 13 categories, so you get a hotch potch of stuff all mixed up. Feels like in the rush to have a full store of content Apple filled it with sub-standard content.

Net, it all feels very nerdy, and very un-Apple. I would have expected much cooler content, and more about self-improvement than hard-core learning.

I expect to see a major re-vamp in the coming months...

Brawn F1 show how to drive out of the recession

Brawn F1, the racing team that rose from the ashes of Honda, scored an amazing 1-2 win in the 1st grand prix of the year in Melbourne with drivers Jenson Button and Rbens Barrichello. This is the first time since 1977 a new team has done this. And from this story there are some interesting ideas about how to lead brands out of the recession (even if you think F1 is a snore-fest!).

1. Panic doesn't pay:
Honda spent an estimated $1billion on creating and managing a Formula 1 team. But by the end of the 2008 season they had little in the way of success for this massive investment. As the recession started to bite, they hit the panic button on December 5th last year, and announced they were pulling the plug. They put the team up for sale, worried that this big sports sponsorship looked extravagant.

This was despite having hired at the end of 2007 the sport's hottest technical director, Ross Brawn. He told the team to write off 2008, and focus on getting a great car for 2009... and this work was close to fruition.

In the end, Honda sold the team to Brawn for a nominal £1 on March 6th 2009. Whoops. 23 days later and Button was driving home first.

2. Sausage is the key
The success of Brawn cars is down to clever product innovation. In other words, a better sausage. The cars have a clever new diffuser on the read of the car that helps it stick to the track better.
[only cloud on the horizon is that, not surprisingly, the other pissed off teams have challenged this new bit of sausage as being illegal]

3. Keep investing, and get bang for your buck
We posted before on how P&G are keeping the same spend, but getting more their money. Be agile and brave, and there are some real bargains to be had. And boy has Richard Branson done this in spades. For a knock-down sum, estimated at £200,000, he became the only sponsor of Brawn F1. He left his family holiday the week before the race to personally sign the deal in Melbourne.

And then, bingo bongo, he goes from nothing to the sponsor of the winning team!

4. Now is when you need your self-belief
The story of the winning driver, Jenson Button, is a bit of a fairy tale in itself. To give you an idea, this was only his 2nd win in 174 attempts. As of a couple of months ago he was out of a job, and heading for the scrap heap. Now he's on the podium. Goes to show that its in today's dark times that you need your self-belief and stamina, not when things are booming.

5. Cut costs

The joy of winning the grand prix was dampened to say the least by an announcement last week that the Brawn F1 team were having to sack 270 people. However, in the tough times and without a rich backer like Honda, this is painful but necessary for survival.

Adding value to aquisitions fuels SAB Miller's growth

Its 10 years ago this month that South African Breweries moved its main stock market listing to London, reflecting an ambition to become a global beer giant. And what a 10 years it has been. Especially when you remember this is a company that until the mid 1990s only really had a presence in Africa.

The SAB Miller growth story is a rare example of successfully not only buying businesses, but then adding value to them. Just check out some of these stunning statistics:
- Market Value today = £14.4 billion vs. £3.4 billion in 1999, +£11billion v
- Sales volume today = 239 million HL vs. 53 million in 1999, + 186 millon HL
- Profit today = $3.4 billion vs. $764 million in 1999, + $2.6billion
- FTSE position today = No 17, vs. no 88 in 1999

£11billion of extra market value!

 

I've been lucky enough to work with SAB Miller quite a lot over the last 15 years, doing portfolio and positioning projects as they bought local breweries in Poland, Slovakia, Hungary, Russia and Romania. These CEE aquisitions were then followed by a series of huge deals to buy Miller, Peroni, Grolsch, Pilsner Urquell and Bavaria (of Columbia). Here I share here a few personal thoughts on what they done well:

1. Expertise in developing markets
SAB's strong footprint in developing markets, such as Russia and China, is a huge advantage, as these are the markets generating profitable growth. However, doing business successfully in these sorts of places is tough. There is often a lack of resources and infrastructure that many marketers take for granted, such as market share data, quality agency talent and mass market distribution.

SAB has learnt the hard way how to market in tough places, through experience in African markets like Nigeria. South Africans are also resilient and brave by nature; its in their cultural DNA! I saw this first hand when the devaluation crisis hit Russia in the late 90's, bang in the middle of a major project I was leading for Added Value there. The South African MD made a rousing speech to us. "We've been in markets that have suffered from famine, drought and civil war," he said. "We have never pulled out. And we're not pulling out here."

2. Proven model for adding value

SAB developed an effective model for adding value to the new businesses it bought. The key tools and processes were captured in an "SAB Way". And this approach was then rolled this out around the world. This combined 2 key things:

- Ship in expertise in product to up quality and cut costs. SAB really master the art and science of brewing, and were able to quickly up the quality of the local beers by applying this expertise, especially in terms of consistentcy

- Portfolio and positioning: a thorough programme of qual and quant research was the foundation to then create a portflio strategy, to give a clear role to each local brand. This was followed by work to clearly pin down the positioning for each brand, and then use this to develop a better mix

3. Conistent, strong leadership

SAB is one of only a handful of public companies that have had the same CEO for over 10 years, in the shape of Graham Mackay. His length of tenure means he has not only bought the businesses, he has then stuck around. This means he and his team have a huge motivation to ensure the successful integration and improvement of the aquisitions.