Creative accounting that's legal: marketing drives profits

The Lynx effect: Marketers need to help business managers focus on the long term.

Yes, the world is experiencing rapid change and it’s accelerating. However with the average tenure of management in companies constantly getting shorter, retained knowledge is being lost and long term plans are often abandoned before they have a chance to deliver returns. Short termism is rife, sales managers will always tend towards a quick fix to get orders in this month, and financial controllers will naturally be looking for new ways to reduce spending.

Yet the bottom line is it's the businesses that invest year after year in building brands that create the most wealth. The chart below compares the S&P 500 index performance, the blue line, with businesses that own stronger brands, the green line. It proves the businesses that invest in brand building ultimately generate more wealth for shareholders.

Leading brands outperform the sharemarket

A great example of how building a brand over time makes more money is to look at the work BBH in London did for Unilever. The creative leap of saying a deodorant could make a man more attractive changed the dynamics of the market category. The ad agency took an also ran product to a profit powerhouse over 20 years with the one consistent creative idea; “The Lynx effect”.

Founder of BBH Sir John Heggarty says “All we did [back in 1995] was change the thinking. It’s more than a fragrance – anyone can make a fragrance – it’s actually about the marketing.”

"I fundamentally disagree that advertising is just selling people stuff they don’t want. I believe that you have to create a competitive advantage with creativity. It seems obvious but I spend so much of my time trying to convince marketers to be more creative.”

Marketing is more art than science says the global advertising guru

Last week in Sydney Heggarty told a room full of businesspeople and advertisers “you all want it to be a science, to get the equation right and go home. But selling stuff has never been a science, it’s about persuasion and it’s an art. It will never be a science. It’s important to remember that we’re all creative. If you’re in marketing, you’re creative.”

Branding today is worth more to a business than ever before

Here is the proof for the finance department. According to Millward Brown Optimor’s analysis, in 1980 virtually the entire value of an average S&P 500 company was comprised of tangible assets (computers, factories, inventory, etc). By 2010, tangible assets accounted for only 30 to 40 percent of a company’s value. The rest is intangible value, and about half of that intangible portion, close to 30 percent of total business value, is attributed to brands. Does your CFO treat your own brand as your single biggest asset?

It truly is the era of creative destruction. ROI marketing is one of the few tools left that can still make a difference and consistently drive business growth. It's worth investing in your brand if you want long term returns.

How many ads do we see a day? Do you remember any?

"We've gone from being exposed to about 500 ads a day back in the 1970s to as many as 5,000 a day today."

Jay Walker-Smith, Yankelovich Consumer Research

Hard to believe? Well, if you include the brand label on your undies when you put them on in the morning to the box your new tube of toothpaste came in that evening you can conceive you are exposed to branding messages thousands of times a day. This researcher also counted all the junk mail you probably don't read. But 5,000 ads?

A more reasonable figure for the marketing messages you see and hear daily is probably in the hundreds. Think about your average day, from the traffic report brought to you by Bob Jane T-Mart, the bus back for some show at The Star to the flyer for a Thai massage thrust in your hands as you walk past the poster for all-you-can-eat ribs on Wednesday nights. Then a barrage of down down retail ads on the TV during My Kitchen Rules, sponsored by some diet program. And those meet women in your area now!! ads on the side of your Facebook page late in the evening? What’s that about?

Whether it’s 300 or 3,000, we see so much that we register very little – and remember even less.

So if you were advertising your business don’t you think it might be wise to be distinctive and consistent enough to be recognised for something? Of course you would. So why is it most marketing communications is neither memorable nor consistent? Why doesn’t Qantas still call Australia home?

Why would an insurance company kill off its leading actors?

I can understand why an insurance company is killing off a 3 year ad campaign featuring Rhonda who now has a full time gig in a soap, but why did they drop the memorable jingle earlier? What have they got left to ensure we remember their brand? Who was that insurance company you may well ask? Ahhhhh, Allianz? No, when I double checked it was AAMI. You'd be forgiven if you haven’t been paying attention. Instead of keeping the sign off, "Luckyyyy, your with AAMIeeee", the ads no longer end with the sound of the jingle we’ve grown familiar with over 15+ years. Wonder why?

The average tenure of the CEO of an ASX 200 company is around 4-5 years*. The head marketer changes almost as often. Those brand managers on their way up move through more often, leaving behind their mark like my pug does on street posts. Which explains why the labels on all those Lindemans wines changed so often over the last decade. Southcorp then Treasury have destroyed so much brand equity because there were no custodians with a strong thread of brand DNA. Then each new agency wants to make its name, often at the expense of the advertiser.

Why will anyone remember your brand?

I was part of the team that created the "Which bank?" campaign for Commonwealth. It outlasted my time at Saatchi and survived a change of agency, despite their attempts to get rid of it. Brand building is like compound interest, you add a bit every year. And after a while it’s worth a fortune.

'Oh what a feeling' to be a copywriter for Toyota, knowing whatever the concept you come up with, the last 25 years of ads ensure the jump at the end will guarantee recognition by a half asleep viewer. Which is why the most successful marketing campaigns are the ones with legs. They go on and on like a Duracell battery.

It’s a fine balance between testing the new and stretching the offer without breaking the elastic brand. Some brands get it right. While there have been numerous small tweaks and occasional lapses, the VB can and the Coke dynamic-ribbon have survived decades of personnel changes. Less strongly managed brands seem to change annually. So when clients tell me they are getting tired of their campaign or their tag line or the font of their logo, I like to check if it’s busted first.

Sure we live in a world of rapid change, however, it’s more likely business survival and growth will come from product and service innovation and smarter marketing techniques, not from a new typeface. It may be a better strategy to refresh and re-launch rather than completely start again if you want to hold on to some rare customer goodwill. You’re doing well if they already have a small place for your brand pegged out in their cluttered head space.

Mortein tried to kill off Louie the Fly, but after over 50 years the public would have none of it. As John Laws used to say, when you’re on a good thing, stick to it.

Here's a Louie the fly ad from 1962

* Source: A Booz & Company study shows 23.5% of CEOs of ASX 200 companies left in 2011. Median tenure is 4.4 years and falling.

The top 20 valued brands in 2014

The world's most valued brands include some surprises. Coke is no longer it, in fact in the last year the brand value of Coca Cola has actually shrunk by 1%. Might not sound like much, but we are talking US$50million. A few more great ads like they used to make could have made a big difference to the bottom line. While there's a lot to lose there is a lot to be made by building a brand.

Innovation and marketing build brand value

Consider the year on year growth of Samsung as it continues to invest in product innovation and marketing. Now the number 2 in the world by brand valuation, Samsung increased it's value by US$20 billion over the last year. Coke slipped from number 9 to 12. Check out US telco Verizon, up from 10 to 5. Expect to hear more from them in Australia.

What are the highest valued Australian brands?

The value of a brand can be greater than the parts and isn't necessarily a reflection of the relative size of the business. While Australia's largest listed company by share market value is BHP, it doesn't rate on the scale for the book value of it's brand. The business with the highest valued brand in Australia is Woolworths. Woolworths sold $21 billion of food and liquor last year. The Woolworths brand is now ranked just outside the top 100 global brands and is valued at US$10.8 billion.

Racing up behind in second place is a newly invigorated Telstra which has re-invested, refreshed and relaunched it's brand over the past couple of years. The several millions spent on marketing has been rewarded, Telstra jumping 34 spots globally with an increase in brand value of over US$2.2 billion.

The banks brand valuations aren't the same as their market cap, but the shifts in brand value are a leading indicator of performance. ANZ is the smaller of the big 4 banks yet it has had a higher brand valuation for the last few years. But it's slipping, which helps give us an idea of which bank will grow faster in the coming years. ANZ, NAB and CommBank are all losing brand value and Westpac is climbing as they leverage stronger brand appeal to hold and grow customers.

So when you're in the boardroom discussing the pros and cons of discounting to drive sales or investing in marketing, show your peers what a difference a brand makes to the bottom line.

The business benefits of a strong brand

Remember just over a decade ago when IBM only sold big computers? Today most of us have more computing power on our smartphone and IBM is a consulting services business. UNO helped IBM make the transition to a service provider to mid-sized Australian businesses with a 4 year content publishing programme.

Many brands are having to change to survive

A few years ago if you wanted to find a business service you looked up the Yellow Pages. And if you wanted to make a call when you were out of the office you had to find a pay phone. It's amazing when you stop and think about how much the Internet has changed the way we do business.

Some once mighty brands like Kodak and Darrel Lea have disappeared, while others have successfully transformed what they offer. Have you taken the time to reconsider what your brand stands for in today's competitive market?

A brand is more than a name and logo

Your brand is what the public thinks you stand for. How you present your business shapes how your brand is perceived. Your brand is how your customers feel about you – the impression you make. It's how you look and how the way you speak. It's the unique way you reveal yourself to customers, from your choice of words to the typeface and colours you use.

If your business has been around for a decade then what your business does may no longer be well represented by what your brand is representing. Today's brands are distinctive yet flexible. Consider wWhat do Apple, Google and Virgin have in common? An ability to sell products and services across virtually any category by leveraging strong brand images that represent values that can be stretched as innovations are brought to market.

Strong branding is a smart business investment

Disciplined brand creation and consistant brand marketing is proven to deliver returns. Once you've differentiated your brand positioning, today you need to remember sales is no longer a linear pipeline, the power now lies with the customer. So for your brand to create wealth it needs to be discoverable across multiple touchpoints. With consistancy, the ROI from building a differentiated brand isn't just financial.

A strong differentiated brand enables the business to:

• Overcome competition based purely on price
• Prevent or slow decline of sales
• Hold on to existing customers
• Build sales leads
• Change perceived quality of your product
• Revitalise customer appeal
• Change company culture and boost employee morale
• Enter new markets
• Speed up product acceptance and trial
• Morally discourage competitors’ salespeople
• Raise capital more easily
• Sell a business more easily

See UNO's proven Formula for Growing Challenger Brands.

Who owns the world's best known brands?

"Brands are intangible assets and account for, on average, 75% of the value of a company."

– Blake Deutsch

Investors don't value what businesses make. The sharemarkets around the world have placed the most value not on production, rather they value the power of brands. Most share prices are a reflection of the future earning ability of a brand. The brands people most recognise also get the most votes from investors.

Just ten global companies own a surprising number of the world's best known brands.

From cat food to confectionary, shampoo to fragrances, each of these companies use their marketing skills to create shareholder value. As well as the dairy brands you probably associate with Nestle, the Swiss company also owns some of the most renowned brands in other diverse categories. Most people are surprised to see just how many categories just ten global corporations are active in. (View on Pinterest):

See larger image on Pinterest.

The big benefit of differentiating your brand is pricing power

The same marketing disciplines that are used to by Nestle to differentiate Kit Kat are leveraged by Nestle in other categories like fragrance. Georgio Armani Beauty is a Nestle brand, with Cate Blanchett its public face. Differentiation is why Nestle can charge a premium for perfume, Purina pet food and Nespresso coffee capsules.

In an Internet enabled world, where prospects can literally buy anything from anyone, it is now essential to differentiate your brand. It is differentiation that will ensure long term sustainable and profitable business.

Big brands have the world covered, which opens market niches to the nimble

The good news for challenger brands is the majors have slimmed down their portfolios over the last decade to concentrate on a smaller number of brands they can manage globally. So if you now apply the same proven brand marketing disciplines in niche markets you can most likely do so knowing there will be less competition from big global players.

As for Armani the fashion brand, it's still a family owned business with Georgio, it's 78 year old founder, still at the head. See how UNO grows Challenger Brands, including a number of successful Australian family businesses, just download our free eBook.

Who tweets about brands?

Technology companies get the most tweets

If Twitter users are image shapers, setting the trends in awareness in our society, it follows that marketers want to see their brands tweeted. Research by Nielsen has for the first time shown which brand categories are most tweeted, and who is doing the tweeting. Technology companies lead, followed by restaurants.

How to get people tweeting about your brand?

Be seen on TV. The age old adage, fame is the name of the brand game is underlined by the fact the brands people tweet about are the brands seen on what is still the world's mass market medium – TV. Perhaps this explains why the biggest brands still invest in TV advertising, it's the one medium that they can still use to shape mass opinion.

What Australians look for when shopping online

Myer missed the post-Christmas online retail rush, and it was BIG. On 1 January, The Australian Retailers Association put an update out on expected post-Christmas sales from Boxing Day to 14 January to be $15.1 billion.

You may have read Myer's site was down for over a week. CEO Bernie Brookes told shareholders it wasn't a big deal because online represents just 1% of Myers sales. I'd be wary of investing in a retail business that doesn't realise the importance of e-commerce.

6.4% or retail shopping is done online

In the year to November 2013, Australians spent $14.6 billion* on online retail. This level is equivalent to 6.4% of spending with traditional bricks & mortar retailers. Some discretionary spending categories are already well into the double digits for online sales. Despite Bernie's spin about the insignificance of his own online sales, in fact Myer's business plan has a 5 year target for online sales of 10%.

I've been brushing up on online retail best-practice

Those retailers that did get a share of the online post-Christmas sales rush now have stats on what worked for them. Fortunately we can all learn from what Australians did over Christmas thanks to a survey by Credit Card Selector of online gift purchases. Here are some of the insights on what shoppers are seeking online...

Why Australians purchased Christmas gifts online rather than instore

How shoppers find online stores

What gifts shoppers bought online in 2013

What would make an online shopper buy again

* Source: NAB Retail Index

How can you measure a marketer's contribution to the business?

CEOs and business owners often ask me what’s the best way for them to measure my contribution to their business. The business of business has never been more complex, yet we are actually in an era where marketing is one of the few levers left that management can actually control to engage customers. And that’s how a marketer is best judged – by the improvement of the brand’s engagement with customers.

Marketing is all about the customer. The customer

Don’t just take my word for it.

A survey of CMOs across 92 countries reveals consensus – the most valuable measures of marketing’s contribution are in the areas of engagement and “brand health”. Health being a bit of a catchall word for the grab bag of KPIs that show how much customers recognise you, like you, value and understand what you stand for. They also ranked the capabilities that will be more important to marketers over the next 5 years.

KPIs for measuring marketing effectiveness

Source: The Marketing 2020 Report, Effective Brands survey of 10,000 professionals across 92 countrie

The capabilities most important for marketers in 5 years

How to manage the 9 biggest marketing challenges

Here is how we manage the biggest marketing challenges today:

1. What do you stand for?
   Define your differentiated positioning in the market that not only you have a passion for, enough prospects will pay for.
2. Know your customer
   Base your story on what customers genuinely care about that you can deliver. The features with benefits that ideally are unmet by competitors, or unknown to prospects. Think like a challenger brand.
3. Define your target audiences
   Don’t attempt to sell something to everyone. It’s the era of niches within subgroups. Align your messages to what each customer target cares about.
4. Customer service
   Never over promise, always over deliver on expectations.See some of the proven ways to foster customer loyalty here. 
5. Pricing strategy
   Remember pricing is a two way lever, framing value to maximise profit is the game, not cost plus pricing, that was the era of mass market production line manufacturing. Be nimble and exploit unique profit opportunities from short term market mispricing. Then find another.
6. Packaging and design
   Sell the sizzle. Creativity and a consistent brand image increases cut through, recall and engagement and helps you command a price premium. Bad ads are bad for business. Stand out and apart. Safe isn’t just boring, it’s high risk.
7. Be prepared for a crisis
   The Internet now makes everything public and places the power in the customer’s hands. Have a plan. Tell the truth, you’ll be outed if you don’t. Make sure you know your legal position with social media.
8. Innovate for growth
   Or die. Big business struggles to change, this is the great advantage for those who aren’t market leaders. Become a challenger brand by zigging while the category zags. See the bottom line benefits of innovation as determined by AIM, they are significant.
9. Data
   We are now in a digitised world. The companies that have the most data on people have the power to own their custom. Whether you are a manufacturer, distributer, service business or retailer, the business that makes the most of data will control the money.
   
   

Email outperforms social media for new business, by far

McKinsey has just published some research I wrote about last year on the ineffectiveness of social media for customer acquisition. While marketers have increasingly jumped on the social media bandwagon, the stats show the effectiveness of Facebook and Twitter as a method of acquiring customers has remained flat. In contrast, email’s share of customer acquisitions has shot up over the last three years by 700%.

% of customers acquired by channel

Source: Custora, E-Commerce Customer Acquisition Snapshot, 2013. McKinsey iConsumer survey

The tip for challenger brands here is to zig when the others zag. The more your competition and every other marketer swamp social media with activity, the less likely you will be noticed. Personally, every time I now venture onto Facebook I am actually getting rather tired of being targeted by advertisers for diets, wine and dating.

Facebook is out of favour for new business

In the quest to deliver Facebook shareholders a profit, marketers are being encouraged to spend big. Meanwhile Facebook users are beginning to move on. The statistics show us those marketers who continue using email can expect 40 times the customer acquisition than from Facebook and Twitter combined.

That's not to say I'm recommending mass email blasts. The frequency of spam in your inbox is why marketers now have to be more discerning in what they send and who they send it to. For instance, Qantas has a frequent flyer database of 10 million members, slicing and dicing and and segmenting offers with hundreds of individual creative executions.

When Email marketing, remember what’s in it for the customer

Most of us hate spam. Prospects and customers however generally appreciate receiving an email when it concerns something of value to them. Depending on your category, different days of the week achieve higher responses. And of course, research on brand recall has proven the more creative your message, the more your brand will be remembered.

So make sure your email campaigns are well crafted and you offer a real benefit aligned to a genuine customer need. In other words, smart marketing not spam.

How Private Label hollows out brands

Australia is unique for the oligopolistic power of just two supermarkets. Coles and Woolworths have 80% market share of an industry valued at A$80+ billion.

In the UK, the two major chains Tesco and Sainsbury have 48% and the US equivalent is just 20%. Consequently when our retailers brought in management from the UK to apply the successful Private Label model developed by Tesco and Asda they did so with the potential to have a significantly bigger impact on our market overall.

Private label is no longer cheap generic Black & Gold commodity lines, it's the key to the retailers growing profit at the expense of both brands and producers. Whether you are in the FMCG business or a service business, the Private Label strategy is one that threatens every business as the company with the most customer data gains ownership of the sales process.

Global FMCG brands now struggle to turn a profit in Australia

In the last year major FMCG brand owners like Unilever and Nestle have publicly lamented their lack of power in this country to compete with the oligopoly's own brand agenda. While we have more supermarkets per capita than the US and nearly 3 times as many as the UK, the 10,000 Australian independents have so little share and such disparate distribution requirements for fulfilment they offer brands little scope for profitable scale.

Most shoppers don't realise they're being had

The trend to consumer demand for more brand choice and gourmet choices is being matched by Woolworths by it's purchase of Macro Wholefoods and roll out of Thomas Dux stores. Not only have Woolies out-merchandised the Harris Farm model, they've done an even better job in wine.

Together, Coles and Woolworths have over 50% of the liquor market, not just through retail store brands like Dan Murphys, Liquorland, 1st Choice, Porters, Theos and Vintage Cellars, but the big online database driven direct marketers like Cellarmasters and Langtons. Here is how Choice sees it:

This dominance has enabled the two majors to dictate what brands you can buy. They have delisted most small vineyards and substituted them with a cynical excercise in facadism. There is a plethora of over 240 Private Labels masquerading as boutique wines giving the impression of choice. They are merely made-up attractive wine labels stuck on bottles of mass produced vin ordinaire. From Abbey View to Willowbrook, see the list of fake wine brands for yourself.

Now they are using their data Intelligence to segment and market everything from Private Label credit cards to health insurance. For instance, they use loyalty card tracking of grocery purchases and the knowledge that if you eat red meat you are a better actuarial risk to target the insurance sales process. What insurance company can compete with this big brother view of Australians?

How does a business compete with this onslaught? A study by international branding expert Professor Mark Ritson of Melbourne Business School gives some insight...

The formula for Private Label success

• Lack of perceived differentiation between brands in a category

• Lack of value innovation of incumbent brands

• Increased proportion of price promotion activity

• Available production capacity

• For me products

• Smart retailers

• Competitive retailers

• Concentrated retailers

The power of the retailers in this market allows them to demand more price promotion from brands, which leaves little in their budgets for brand building marketing campaigns or new product innovation. In no time the brand values are hollowed out, leaving the category ripe for Private Label substitution.

The Seven stages of Private Label dominance

Stage 1: Price-based generics (Home Brand, Black and Gold etc)

Stage 2: Copycat (Penguin vs Puffin biscuits)

Australia has passed here and well into the next stage.

Stage 3: Good, Better, Best (Tesco Value, Tesco, Tesco Finest)

Stage 4: Flanker brands (brand extensions to attract brand 'switchers')

Stage 5: Category leaders (Sainsbury Extra Special Tea Bags)

Stage 6: Non exclusive (expanding beyond the store)

Stage 7: Legal monopoly

The supply side to killing brands

The no-name supplier is offered a carrot to become the stick that wacks the known brands.This business is often an existing maker of their own known brand line. Why would a Heinz for instance supply Woolies Private Label baked beans? This is what attracts them:

• Usually opportunistic origins
• Often based on excess capacity utilisation
• Any contribution over variable costs of production is seen by management as good
• Less profit... but still profit

Where it leads is usually not so positive. Here is what happens when the no-name supplier exceeds production capacity:

• Increased production costs for same or less profit
• Cannibalisation of existing branded product

Gradual strategic 'split':

• From brand builder to PL supplier
• Internal resources get utilised
• An implicit strategic change

Change of business from:

• Brand builder / innovator / consumer focus to
• PL supplier / cost cutter / business customer focus

Private Label and the weaker brands are consolidated:

• As PL grows weaker manufacturer shares decline
• Brand fights brand – not PL
• To maintain brand and shelf presence, 'lesser' products become 'propped' up with disproportionate costs
• Resources become further diluted
• Finally, once mighty brands are de-listed by the duopoly
• The retailer approaches a new potential supplier for PL, and so it all repeats

How high can Private Label go? (How low will brands fall?)

Private Label share in Australia today
23% is current floor

The UK is in the middle
50% Private Label

Theoretical ceiling
95% of product in Aldi is Private Label

Why use social media when your business has a website? The stats say it all

One of my clients attended a Social Media Marketing forum at Deakin University recently. He was surprised just how out of touch most marketing and business managers are with this medium as a means for promoting a business. The questions being asked were about how to control staff access to social media or how to post their brands’ advertising and collateral across the newer platforms.

This top down approach where management dictates the agenda no longer cuts it.

In the same way the Internet has empowered the public to access their news, music and entertainment whenever they want, not when the distributers choose to roll it out, Social Media is taking the online quest for information about products and services away from publishing and brand sites. Social Media is creating a vibrant forum for conversation about products, services and brands beyond the direct control of a company’s sales and marketing force.

The statistics show the rapid pace of change of where people are going online in search of information of all kinds.

Trend away from website visitation to Social Web

Google trends show over the last 2 years a significant decline in visitors to brand and media sites.

Boom in Social Media and content sharing

More people are seeking and sharing what they want online.               

It’s no longer enough to have a brochure style website, you can no longer sit back while your salesforce distributes your marketing collateral and your marketing department runs ads telling the masses how good you are.

Everyone in your organisation and every one of your customers is now a prospective advocate for your business. Or they might be saying your competitors are better. You can’t control the conversation, but to compete today you need to formulate a social media strategy, coach your staff, create content of use to customers and prospects and contribute to the conversation in an open and honest way.               

Small can succeed in retail against big budget incumbents

Growing up in sixties suburban Sydney the most exotic cuisine my family was familiar with was cabanossi on Jatz crackers. Father felt like a Tooheys or two and good on my mum, she knew Tip Top was the one. Fortunately, forty years of immigrant mothers from around the globe have helped expand Australians’ culinary horizons.

Family businesses show how to be a challenger brand

At the Food and Wine Expo held by Family Business Australia in Sydney in November, the influence of Nonnas was evident as third generation business owners showcased their gourmet products. Their time has come, statistics show the trend to gourmetisation of the Australian shopping basket has now reached beyond the specialist deli and ethnic store to the Supermarket.

Unlike most trade shows, what struck me at the FBA event was the friendly atmosphere, no hard sell, just an infectious enthusiasm for the products these families have been creating for years and a desire to share business stories. From the small catering company making their first tentative step into retail, through to a food service business that gave up on retail in the 70s, one story is common: the bigger challenge isn’t getting onto the shelves of Coles and Woolworths, it’s how to stay there and make a profit.

Two family businesses, Taylors Wines and Coopers Brewery, are testament to the magic ingredient for success in the retail market – the power of building a brand. Branding is what puts the power in your hands, not the channel’s. Building a brand takes more than one-off promotions, or advertising that simply says you are in store now, or paying for inclusion in catalogues with discount offers. To build a brand you need to invest in marketing over time to establish the brand story and your values.

Brand marketing delivers these benefits over a me-to sales approach: 

Product

Easy to copy
A commodity
No special distinguishing features
What a factory produces
Shorter life cycle
Addresses functional needs
No identity
Products compete on price 

Brand

Hard to copy 
What consumers buy 
Emotional fit with consumers
Level of confidence and trust 
Longer life cycle 
Addresses emotional needs 
Have personalities 

Brand can demand a premium

Fosters Group has destroyed shareholder value to the tune of hundreds of millions of dollars over the last decade by mismanaging the marketing of some icon wine brands, from Lindemans and Penfolds to Seppelt and Tollana. Meanwhile, family business Taylors Wines has stayed true to its five decade history with consistent product, packaging and promotion.

Nick Levy, the marketing manager at Taylors, wouldn’t dream of throwing out the heritage of this family business, whereas corporations time and again allow each new brand manager to make their mark by changing the label their customers know and love to chase a fleeting fashion. Often the new look comes at the expense of long won recognition. Similarly, downgrading a product’s quality to maintain margin or constantly price-cutting to gain share ultimately destroys brands.

Yes, we live in a time where the pace of change is so much faster, yet taking the time to establish what you stand for, developing a dialogue with your customers and creating a sense of authenticity are increasingly valuable tools in a world where global producers can pitch to your retailer with a cheaper knock off product as soon as you leave the buyer’s office.

If you value what you have to sell, it pays to remind your customers as often as you can of why they should love you. Now you can afford to. New technologies, data intelligence and eCommunications now enable challenger brands to compete successfully with the large advertising budgets of corporations.

So find the true benefit of your offer and actively market it. As Revlon said, having built an empire with brand marketing, “we don’t sell cosmetics, we sell hope.” Worked on my mum.  

This article first appeared in Business Insight

Leave traditional marketing to your competition... Now there are smarter ways to connect

To make the most of a marketing budget there are now smarter ways to integrate social media and search optimisation.

Many struggle to keep abreast of the changing landscape, while companies that take advantage of 'eCommunication' will benefit from increased efficiencies, decreased costs and improved customer engagement.

Traditional marketing funnel view of prospects...

Medium and message is aligned to where the audience is in the funnel, information is controlled by the brand.

The decision making process in an e-connected era...

Time to replace the old touchpoints with a new mix

The journey is no longer simply linear, the customer now has control over what they see and read on any subject. The audience enters, leaves and re-enters the decision making process more often, with more access to information from more sources when they want it. 

Your eCommunications checklist

Whether your business is B2B or B2C, it’s no longer enough to think in the linear way of out of home, in store (channel), at home. Here is a new set of options which UNO utilise to supersede or integrate with existing programs:

Are you a retailer or publisher, advertiser or educator? The Internet has blurred the lines.

There used to be clear delineations between product manufacturer/creator, channel/distributor, retailer and end consumer.

Enabling this traditional marketing model there was mass media. Advertising mad men then helped consumers to embrace the products and services they hadn’t heard of and didn’t know they needed. Now the interconnections of the Internet have transformed the sequence of commerce and marketing.

Customers are now researching every category online

People have a need? They research online for themselves in the safety of their own home, avoiding the charms of advertisers and brand collateral, packaging and point of sale merchandising. The empowered consumer accessing product knowledge on the web via forums, chatrooms and reviews is beyond the charms of the seasoned salesman on the shop floor.

Even more disconcerting for the traditional retailer of a product or service is the emergence of the medium no longer just being the message, but now a vertically integrated marketing model.

From books to money management, every category has been turned inside out and upside down. What was linear, is now a 3D demand and supply freeform organism.

Consider books. A hard back would come out, early adopters would pay a hefty premium, soft cover would follow, trends would be noted, popular titles would have second and third editions printed and distributed, blockbusters would be advertised and the retailers would rake in the cash and the publishers would cover the costs of the many failures by most of their authors.

Then Amazon cut out the middleman, and now with the Kindle is changing the distance from content to delivery even further, you can now download and store a library of 3500 “books” on a device that is close to the price of a couple of hardbacks. So if there is no need to print and distribute, does the author deal direct with Amazon, seeing the retailer become the publisher?

Even services aren’t untouched by the digital revolution

Take for example Superannuation Funds. If you work you have one, no wonder there are thousands of funds competing for a share of 9% of your salary.

For Australian investors there used to be 3 Clayton’s choices, the choice you have when you don’t get a choice. If you were a blue-collar worker your employer put you into the Industry Super Fund that was created for your industry. If you were a public servant, you were automatically in your government fund. White-collar workers had a modicum of choice, the local Insurance salesman would flog a retail fund and benefit from the handsome commission and trailing fees.

Not any more. Super Choice means most can now choose their fund. Those who are motivated research online, in fact 50.6% do, whereas only 12% turn to newspapers and a mere 3% magazines. So while all those funds are spending hundreds of millions advertising in mass media, savvy investors that are shopping around are stumbling upon a vertically integrated model. Fairfax Digital owns InvestSmart, a licensed financial services business that bought Direct Access, which was a discount retailer of funds. Fairfax in its wealth and business sections publishes articles on super and investment. On the same pages are links and comparison tools branded InvestSmart. These tools and tips and comparison lists educate the Super Shopper. Then when they are ready to buy, fulfillment is just one click away for a fee a fraction of the traditional adviser model. So the publisher becomes the retailer.

So does all of this mean consumers are better off? The fastest growing and the biggest segment by value of the 1.4 trillion dollar Super category is DIY. Self Managed Super offers investors the allure of control. Pity the average SMSF underperforms the average Industry Fund and has higher costs, until someone challenges the model that is.

Whether you are a retailer or a service provider, a financial services business or a manufacturer, it’s now time to reappraise your marketing model before your competition beats you to it.

Time for Australian retailers to sell online or be left behind

Marketers have spent the last decade watching Woolworths maintain dominance in grocery while Coles failed to focus on customer needs and treated suppliers with disdain. Under Wesfarmers things are starting to change, yet the biggest fight in retail over the next decade is more likely to be driven by a huge shift to buying online.

While Australia’s Westfield has over 30 years fine-tuned a profitable model to encourage a visit to the Mall, as therapy for the modern empty soul, the Internet is on the cusp of changing the behaviour of society in an equally profound way.

It’s already happening. In 2009 Australians spent $24billion on retail online according to research commissioned by eBay and predicts a 40 percent increase to $32.8billion in 2012.

Australia’s retailers are falling behind the rest of the world in grabbing a share of the online retail spend. "As Australian retailers struggle to build effective online presence, overseas competitors are taking advantage of the gap in the Australian market and are currently taking around 40 per cent of Australia's online retail spend," according to PayPal MD Paul Feller.

"There is a huge opportunity for retailers to capitalise on the growing online marketplace in Australia. In the last six months alone the average consumer spent $1,223 on online shopping, an increase of $130 from the second half of 2009."

So Westfield has to balance an online strategy with keeping footfall high in the malls to keep those retail tenants in biz. No easy task, now that broadband speeds and speed and reliability of delivery through the mail are narrowing the gap between online purchase and the wardrobe.

Who shops online?

My daughter buys most of her clothes online from the US and UK for a fraction of local prices, my son buys his music and sound gear from all corners of the world and Amazon keeps my partner well read. Online purchases of all sorts of items will become the norm, especially as the ways to enhance the shopping experience online grow.

In the past you would see the latest fashions in a magazine spread, be exposed to an ad on TV with Megan Gale for David Jones and go the mall to try it on. Now the whole experience can be completed online. The Ceros platform is being used by the likes of Sears, Tesco, Virgin and IKEA to show product and close a sale using a rich media eMagazine. Have a look. We’re already using it to help our challenger brand clients leave their competition behind.

Marketing tips for fund managers

Fund managers can make more money by marketing. The trick is to know what marketing is exactly...

I have a passion for following fund managers’ performance and comparing how they stack up against their investment philosophies. There are a handful of fund managers who stick by their principles and deliver above average results through the ups and downs of the markets. What surprises many managers is that investment doesn’t always come flooding their way when they are doing better than the index. There are plenty of examples where poor performing funds continue to dominate in the competition for FUM.

It’s not enough to rely on BDMs and the distribution and sales channels; every fund is out there building relationships with the instos and advisers. The commercial reality is rooted in human nature; ultimately the salesmen who managers are relying on to recommend a fund will go for the easy sell. And as we’ve seen, performance can’t be the only draw card or there wouldn’t be 19,500 funds on the market where the biggest generally aren’t the best. It would be a mistake to think the end of commissions will result in a rush to quality, inertia and confusion will see to that.

It’s time the better managers tried something new to most in the industry. It’s what’s been honed and crafted by the world’s most successful companies, from Apple to Armani, Mercedes to Mars: it’s marketing. In a world of multiple choices, marketing is one of the few tools that can make a significant contribution to the success of a business.

The financial services industry still confuses sales and distribution for marketing

It isn’t. Marketing takes the ball the first fifty metres and sales kick the goal. Then it’s marketing that continues to remind investors why they made the right decision choosing your fund, so they’ll stick by you through the inevitable bumps and falls. And invest with you again and again.

In the words of Wikipedia, marketing is the process by which companies determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It is an integrated process through which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

Manage the image you create for your brand and how you promote it

From product design and the language you use, your logo and stationery, the look and imagery in brochures and PDSs, the content and design of e-newsletters, what is on your website and how it is presented, to advertising and sales collateral. When every part is working together in a co-ordinated fashion the whole adds far more value to the business than the investment in the parts. And just like investments, managed well marketing delivers compound returns.

Over the years I’ve found integrated marketing works just as well for financial institutions as it does for baked beans. Research by the School of Management and Finance, University of Nottingham showed back in 1998 the similarities emerging even then between consumers’ responses to financial services ads which featured the same cues as ads for fast-moving consumer goods (FMCG) and the influence on subsequent purchase decisions.

Put simply, when it comes to proven ways to make money, fund managers can get a healthy ROI from marketing. For evidence, they just have to ask about the results of my many marketing experiences of 30 years, from banks to baked beans.

Signs of the times... who has the time?

Outdoor advertising is diminishing in effectiveness, like many traditional mediums

Not surprising when you think about the increasing clutter advertising billboards have to compete with for attention.

In the Drive section of the SMH the other day one motoring journo observed: “I went to a suburban shopping district and counted 19 road signs clustered around the first intersection. There were 55 road information messages in about 100 metres. Even when travelling at 40km/h you are left with just nine seconds to read them". In the book Traffic, Tom Vanderbilt states the average driver must process 1340 pieces of information every minute.

So recently when a client asked UNO to review their annual advertising media budget we weren’t too keen to recommend continuing to spend several hundred thousand dollars for one poster above the M4.

Old habits die-hard, the CEO drives to work each day and passes that one sign. We couldn’t convince management that for about 20% of the cost of that one sign they could develop an ongoing relationship with their customers using the latest Web2.0 technologies and build a valuable database for future use.

While traditional media companies like Eye Corp continue to sell posters, a medium that hasn’t changed for a couple of centuries, newer more effective alternatives are emerging. (When the price is right.) ROI marketing starts with understanding the real stats.

Innovation in signage

Recently Ryan Simpson of Val Morgan showed me the latest research on their innovative take on signage, large video screens in shopping centres.

While I always take statistics with a grain of salt, the figures reflect the relationship between clutter and proximity to where the purchase can be made. Despite the amount of billboards, busbacks and taxibacks that shoppers must have passed on their way to the shops, almost 50% say they didn’t notice any advertising. 30% remembered noticing billboards, whereas this new moving screen medium within shopping centres was noticed by over 70% of the 1,000 people surveyed by Nielsen research.

Pity I didn’t have those sorts of stats on hand when I tried to talk that client out of spending a large chunk of their budget on that one sign.               

Bigger ad budgets usually mean greater waste

Marketers don't always get what they pay for. I recently met with the new regional head of one to one marketing of a world leading brand. One to one is their fancy term for online. This new manager has been brought in from the USA to determine how the millions of dollars they spend annually in this region can deliver a better return.

Mid size companies can learn from the mistakes of larger marketers with larger budgets. Some of the areas of waste this expert has identified in just a few months are listed here:

Marketing budgets managed within silos is inefficient

Some products have budgets too small to make any impact, while others spend more than necessary because they have a larger allocation. Simply by adding an overview of expenditure across the portfolio would deliver a win win result.

Too many contracts with too many large agencies can drive a big spending approach. Marketing managers with little experience are often given average strategic advice and average creative executions. Large agencies are inclined to overspend on media exposure, (with commissions it's an easy earn).

Set marketing KPIs upfront

Smarter marketers know investing in more management time upfront determining objectives and KPIs, with strategic intellect and strong creative can mean a much smaller media spend can deliver greater impact, more leads and higher conversion rates. There is also an inevitable diminishing return factor from spending more, if someone sees your ad two or three times and still hasn't bought, spending more to show them the same proposition four or five times is simply a waste of money.

There is value in retained knowledge

Years of collected data, research results, campaign learnings and customer databases are often ignored with each new project. Every campaign can and should add incremental value to the next. Take a test and learn approach, rather than a big spending one-off hit. This is one of the fastest ways to implement ROI marketing.

Fortunately for my mid sized clients, I've found over the years insight led creative marketing can punch above it's media weight time and again.

GM a victim of launch and leave

For General Motors, big has not proven to be better. From 50% market share to 20% and bankruptcy in just 40 years has partly been blamed on an inability of management to move with the shift from big gas guzzlers to smaller cars. The disastrous purchase of Hummer in 1999 showed how recently GM thought big still had a big future. Time has proven there were only a few big spenders like Renee Rivkin who bought these massive buckets of bolts, obviously not enough to pay the massive borrowing costs.

Less obvious to the public, and of more interest to marketers, are the views being expressed that a lack of advertising support has played a very significant role in the rapid market share loss to the Japanese car makers.

One example was the surprisingly upbeat statements by the head of marketing of GM, he is excited by the prospect of having less brands to support with his marketing budget. With the jettisoning of divisions like Pontiac, he'll be left with just four brands to promote, including Chevrolette and Cadillac. This he trumpets will give him a chance to compete with the same ad budget as Toyota.

In an obituary of the once market leading General Motors, The New York Times blames management for a failure to support it's product with advertising.

Advertising works, The New York Times says so

It points out GM finance staff wrestled with product developers and marketers, thus causing GM to fall victim to a practice called launch and leave - that is, putting product on the market, then failing to support them with advertising.

As someone who has played a part in helping numerous businesses grow share by using smart, creative advertising, this is a particularly public example of the consequences of not believing in the power of marketing. If you ever have to justify to management the wisdom of investing in advertising, when so many accountants seem to view it as a discretionary cost, use this following quote from a past executive of GM who was part of the team that created the successful Pontiac GTO in the 60s and wrote the book about it Glory Days...

Image is everything in building brand equity

Nobody gave any respect to this thing called image, because it wasn't in the business plan. It was about "when is it going to earn a profit?"

As the New York Times points out, over the years the marketing skeptics at GM became practiced at the art of explaining their problems, attributing blame to everyone but themselves.

It pays to trust people with passion

In the last week a visit from a chimney sweep and a conversation with a successful Australian manufacturer reminded me of the value of passion in business.

I was surprised when the chimney sweep asked when was the last time my chimney had been cleaned. Annually didn’t make sense to him judging by what he saw with his fancy mirror... unless I burn 20 tonnes of wood a year, which I don’t. I was quickly impressed by his enthusiastic run down on the finer points of proper chimney maintenance. This man has been cleaning chimneys for 27 years and was still getting a buzz from helping people solve their dirty flue problems, he described the joy solving more difficult challenges and leaving customers with fires that draw like new. His fee was no more than the company that has under serviced us over the last few years.

Whatever service you need, find a practitioner who is passionate about what they do

One of my long standing clients, going on nine years now, makes plantation shutters. Marion Mikkelsen of Open Shutters is passionate about her product, and has built a brand over this time that has proven resilient against the onslaught of cheap Chinese imports. She is so passionate every aspect of her business is constantly reviewed with the objective of constant improvement. She refuses to compromise, so instead of cutting corners to save costs this business runs on a successful program of creative thinking, R&D, staff training and manufacturing innovation.

This passion shows in her product, which my wife thought was the best when she did her pre-purchase research for our home. It was only a few years later I coincidentally won Marion as a client... it is great to be able to market a product you’ve bought yourself.

Why do so many business people mistrust each other?  

Over 20 years this pioneer of timber shutters in Australia has led with product innovation and with UNO’s marketing help driven the growth of the category. Yet Marion lamented this week how it’s only after many years her distributors are beginning to trust what she says about her product and her overarching belief in the necessity to fulfill the expectations of consumers. How could so many small business owners not recognise the genuine passion displayed by Marion?

I shouldn’t be surprised, I often find business prospects are cynical of what I have to say about how smart marketing can help their businesses succeed. I’m passionate about what I can do to help people, however it’s even harder to be believed when I work in an industry that the public constantly ranks at the bottom of the trust table alongside used car sales and real estate agents.