Year: 2012

Reporting season

Excuse the extended silence. Reporting season is an all consuming time of year for me. In addition to actually writing a number of annual reports, I do a lot of travelling and lots of meetings with senior managers. I look forward to it every year. People are often perplexed. You’re into brands, they say. Why do you want to write annual reports? They position this as if it’s an either/or. I’ve never seen it that way. After all, what are brands for if not to generate profits for investors? Their question also implies annual reports are just a writing exercise. Again, I’ve never seen them that way. To me, annual reports are cues to sit down with decision makers one on one and quizz them in detail about what they did, why, what happened and what it all means at year end. I get to understand something of how the business worked over the last 12 months. And I get to hear the stories from the inside. It’s a chance to talk through the dynamics …

The death of demographics? Does it matter?

A new study by Catalina Marketing appears to cast significant doubt over a veritable pillar of media marketing. Demographic targeting, it seems, often falls wide of the mark. Catalina researchers looked at 10 brands targeted at households headed by women ages 25 to 54. They found that, on average, just 15 percent of the ads playing in those households reach the people that account for 80 percent of sales. Wow. On the face of it, that’s some shortfall. The clear take-out seems to be that demographics, in a media planning sense, may not be an accurate indicator of purchasing behaviours. According to the study, 53% of a brand’s sales volume, on average, came from outside its demographic target, with the remaining 47% of sales volume coming from people that the brand was actively targeting. Of the products studied, yoghurt was split 50:50 between targeted and untargeted; mayonnaise was 60:40 in favour of being bought by those outside the demographic target. The average brand in the study delivered 30 percent of exposures to households that were …

The contradictions of eyelashes and data

Christine sends me this image of a VW with eyelashes attached to its front headlights. And all I can think is “There’s just no way on God’s good earth that big data can predict this.” It’s flirty. It’s girly. It’s extraordinarily popular. And I don’t get it. Thing is – I don’t have to. It’s not for me. I’m the first to admit I’d probably never have thought of this. But clearly someone else did – and they made it fly (probably with every man in the vicinity snorting in disbelief). Read eyelashes on a car in a number of ways. The power of the woman consumer in the car market for starters. The wish by consumers to distinctualise a brand by adding a form of self expression. The opportunity to build a short-term brand on the success of another brand. What you can’t read into it is this. There is no way that a spreadsheet could have predicted this would take hold. In much the same way as no-one would have foretold that putting …

Market leadership: why innovation needs to engage, not just impress

Blair points me in the direction of Booz & Company’s 2011 Global Innovation 1000 for some interesting insights as to why innovation works for some and not for others. (Thanks Blair.) According to Booz & Co, innovation spending increased in 2011 to $1.15 trillion globally. The 1000 companies that Booz & Co surveyed represented almost half this spend and in the last year their innovation spend was up 9% on the previous year. However, what interested me was the news that the companies that spent the most were not necessarily those that got the most out of their innovation investment. In fact, the top 10 innovators (Apple, Google, 3M, GE, Microsoft, IBM, Samsung, P&G, Toyota and Facebook) out-performed the top 10 spenders in three key metrics: revenue growth; EBITDA and market capitalisation. So innovation can work but it doesn’t always work, and it doesn’t work the same for all. What really counts is the context in which innovation is applied. According to the report, 44 percent of companies who reported that their innovation strategies are clearly …

4 ways brands fail to maintain brand loyalty

Maintaining brand loyalty: 4 ways brands get it wrong

Most good marketers know how to gain top of mind. Good marketers are adept at widening the funnel at the top end. They’ve good at introducing new lines, new variants, new dimensions – in order to attract new customers. They know how to work with their agencies and their internal teams to fashion a story that intrigues to draw an audience. They know how to weight media flights and craft promotions that persuade consumers to call or to visit. They’ve learnt to charm. Competition’s taught them to do that well. That used to be their biggest challenge.

Market adjacency

Market adjacency – have you asked the two key questions?

The model for achieving ambitious growth is well documented: a combination of organic and inorganic growth that sees companies looking to gain market share at the expense of their competitors in markets they already occupy, as well as looking for inorganic growth through an adjacent market strategy and/or prospecting for high-return greenfields markets beyond that. Organic growth often stems from increasing brand likeability within the industry that your consumers already associate you with. In today’s economy, in most sectors, it’s a zero-gain scenario. In order for you to win market share, someone else has to forfeit. There are at least two other options for organic growth that we should discuss. You can look to specialise within a market – selecting niches and tapping them for profit. It’s not always the easiest way to find above-market margin, but it’s certainly an option in sectors where specific skill adds value and the field is swamped with middle-market generalists. Or you can look to pincer your middle market competitors by having offerings on either side of them – …

Strategy: 11 ways to purposefully achieve growth

You can’t build a sustainably purposeful culture it seems to me without having a deliberately purposeful strategy. Part of the problem of course is that, traditionally, strategy and purpose have lived in different parts of the organisation. My suggestion is that they shouldn’t, and that instead of simply allocating purpose to culture and strategy to planning, the business, the strategy and the culture all need to stem from the company’s driving purpose – its absolute reason for being. That in turn means that the purpose must be much more than a wish list or a broad hypothetical goal. It must be inspiring, engaging, profit-focused and it must work hard to stand the company apart from its competitors. Here’s how I use purpose and beliefs to drive distinctive business direction. 1. What is our core purpose (rather than just what is our core business)? When people think of our brand, what is their blinkpoint (the first association that snaps into their heads)? Are they aligned? 2. Why do people buy from us? How have we made …

The new role of marketing

The reason why companies have worked photocopy business plans for so long is because they never thought to work any other way. It just seemed too risky. The rise and rise of producer nations, in the words of Michael Porter, “rivetted attention on implementation”. Watching Japan, then China and India continue to progress, many companies fell further into the action trap. They believed that the only way to outrun their immediate competitors and their looming Asian rivals was to, somehow, out-do them. But as Michael Porter has commented: “It’s incredibly arrogant for a company to believe that it can deliver the same sort of product that its rivals do and actually do better for very long … It’s extremely dangerous to bet on the incompetence of your competitors” – and that, he says, is what companies are doing when they rely on operational effectiveness for competitive advantage. My sense is that operational effectiveness and efficiency currently account for about 50 – 70% of perceived competitive advantage, but that percentage is falling. It’s falling, because of …

Does my brand look big in this?

As marketers, we’re often encouraged to puff up our brands to look as big as possible so that they appear significant and credible in a global marketplace. There’s a sense that if you’re big, you must be successful and if you’re successful, then there’s a higher than likely chance that you’ll continue to grow. Size matters. But not always in the senses that we have been led to believe. My own view is that the size of your business is actually less critical than the scale and/or extent of your thinking. A big brand on the hoof is a thing of beauty, to be sure. Strong, assured, competitive, resourced and focused on bringing its vision of the future to life. Big brands command presence and respect. But the biggest companies aren’t always the smartest, they’re not always the pace setters and they’re certainly not infallible even though they might like to think they are. I have only to direct attention to the GFC to remind all of us that neither history nor size counts as …