Premium alcohol brands endanger bottom line

by Marketing ON 10 May 2010

A report has found rough economic times have had a ‘keeping up with the Joneses’ effect on Australian’s drinking behaviour.

Consumers are opting for quality over quantity when their choices are on show says Datamonitor’s report, ‘The Future of Wine/Spirits/Beer, Cider and Flavored Alcoholic Beverages Series: capitalising on new opportunities and preferences’.

When drinking in bars or restaurants people are choosing less of premium brands rather than trading down. When at home however, the report claims consumers are drinking cheaper alcohol.

“It is typical keeping up with the Joneses behaviour just exaggerated during the recession. In a significant number of cases people are actually trading-up, so rather than drinking two or three bottles of house wine with a meal, they’re splurging on one top-end bottle” said Richard Parker, senior consumer insights analyst, Datamonitor.

“Although people are sticking with quality, they are drinking less impacting on the bottom-line of the industry. Companies that have introduced offers and cut their prices will struggle to maintain a reputation for being a premium product.”

“As a result people will start to trade-up to new products and experiment. Therefore, we can expect to see those products that have spent money on innovation do well in the near future.”

Post-GFC talent retainment

by Marketing ON 14 April 2010

So far I’ve written about citybranding. We know that it is an emergent topic that involves large amounts of thought and practice in the field of communication. And we know that the need for cities to carefully brand themselves comes from the way capital and talent move in a globalised world. Today’s post is about the fact that, in my opinion, it all entails essential communicational changes inside companies.

The credit crunch may have slowed down that movement to a considerable extent, but before the crisis I was already amazed when seeing how talent flew from one place to another, from one company to another. Many friends and acquaintances of mine, single or married, took on the challenge of leaving Barcelona to work in the US, or changed job once every year on average. It wasn’t only people working in IT. The professional profiles ranged from that to business management, publishing, industrial production…

At some point I even wrote an editorial about it in our magazine Comunicas? (translation: Do You Communicate?)but through the lenses of quite a well-known book. You probably have read The Human Factor by Graham Greene. I asked the reader to allow me to spoil the reading by disclosing the ending. In the novel, a man finds himself before a dicotomy in his priorities. He has to chose between being completely faithful to his family or betraying his own country. The situation is especially meaningful because he works in the Foreign Office. His country is both his employer and his social community, all at once – and he betrays it for the sake of being true and loyal to his family.

Outstanding professionals are ultimately more loyal to their professional and personal priorities than to those of the company that employs them. Hence their continuous flight. As I said before, the credit crunch may have slowed down that movement to a considerable extent… but after the crisis, talent will fly again, and even more so.

These dynamics will be reinforced by two important factors. First, it is obvious that among the developed countries, economies emerging and moving away from the crisis will be the ones that best reward talent. On April 8 in Barcelona, European commissioner Androulla Vassiliou said that one in every three new jobs created in the EU between now and 2020 will be a highly-qualified working position.

Second, dynamics such as the competition among cities (read my blogposts on enjoyable Barcelona or pleasant Paris and their governments’ will to boost a knowledge-based economy) will give further reasons for outstanding professionals to fly and give new places a try.

The answer to that phenomenon or, say, to the risk of excellent professionals leaving our companies, lies in the area of internal communication. Managing people means being aware of what their professional concerns and challenges are, and it even means having a glimpse at what those concerns and challenges are at the personal stage. Graham Greene’s book has it that the mismatch between those issues is the reason for the flight, meaning the escape, of the novel’s main characters.

I hear, for instance, that 70% of women end up leaving their professional area of expertise between the age of 30 and 40. The main reason is maternity. Lack of corporate planning and support force them abandon the boat after their maternity leave: an unbearable loss of talent which costs a fortune to both employers and employees. Fortunately initiatives such as maternity coaching are becoming more frequent and allow a ‘maternity transition’ that avoids both business and career disruption.

So we’re talking about a cultural change in business organizations that the Anglo-Saxon economies have addressed a lot more than we have in Europe and in Spain. Generally, Human Resource departments have transformed themselves from being a mere administrative unit to assessing each department leader for the sake of intellectual and human capital management…

…but have they, really? That’s what the usual quote from Dave Ulrich is all about: “HR must give value”. It was a need in the field of internal communication before the crisis, but it will especially make a difference after the credit crunch.

Speak soon,
Pau

Going a little nutty

by Marketing ON 13 April 2010

Background

Conventional wisdom says the way you start an ad agency is to find yourself a couple of like-minded souls, some groovy offices and a foundation client; however, new Sydney-based creative consultancy Cabana Boys aimed for anything but conventional.

They started out with two like-minded souls – ex-Lowe Hunt art director Nik Robinson and former Razor Sydney creative director Stuart Ghent, but that’s where the similarity stops.

Instead of groovy offices, they opened their ‘doors’ under the shade of an umbrella at Redleaf Pool in the Sydney harbour side suburb of Double Bay. And, instead of a foundation client, all they had was an address book, a somewhat risky idea for a name, a month each of credit on their mobile phones and some of the worst timing imaginable.

Cabana Boys cut the ribbon on their new venture just days after the demise of Lehman Bros set the GFC in full flight. The challenge, therefore, was not only to draw attention to their creative capabilities, but also to let marketers know that they were a real alternative for the times – leaner, more nimble, still creatively led but less expensive. And they had to do it with a budget of functionally zero.

Campaign: ‘You’ve been hit’
Agency: Cabana Boys

Strategy

The Cabana Boys strategy was to go direct to business owners and marketers with a physical demonstration of their point of difference – high impact creative at low cost. Their strategy was to show what they could do for clients by doing it for themselves.

Cabana Boys knew that this market was both time poor and difficult to reach, often protected from marketing efforts by a perimeter of admin and support staff. Getting through to them would mean getting through gatekeepers – anyone from the receptionist to the mailroom clerk, to the marketing department PA or a manager’s personal secretary could kill their chances.

What’s more, they had to recognise that once through to their intended market, it would have had a lot of exposure to advertising agencies and creative product. Their standards would be high. It would not be enough to simply get in front of a marketing manager or business owner, Cabana Boys would have to stand out.

A conventional approach was simply not going to cut it.

Execution

Cabana Boys aimed to create a piece that would charm its way through the gatekeepers, while still making an impact with the intended recipient. With a name like Cabana Boys (a reference to their beginnings at Redleaf Pool and hospitality-inspired attitude to service), the consultancy had a rich creative palette to work with.

The piece they developed was a real-life, ‘hair-shell-milk-and-all’ coconut.

The coconuts were hand-delivered with no personalisation, no address, no salutation, no covering letter and nothing more than an ink-stamped message on the outside, directing the recipient to Youvebeenhit.com.au.

At this URL, recipients were told that a falling coconut reached speeds in excess of 80 kilometres per hour and hit the ground with a force equivalent to over 150 kilogram, with 150 people each year killed by being hit by coconuts, it said.

The website then went on to explain that while the chances of a coconut hitting their desk were astronomically low – hundreds of times less likely than, say, their chances of being hit by lightning – it would certainly make a real impact if it did.

The fact that the recipient had clicked through to the website and was still reading was proof positive. What’s more, this was exactly the kind of impact that Cabana Boys was in the business of making on behalf of its own clients.

The recipient was then offered a free creative session on the brief of their choice, to further prove what could be done for them, and were invited to meet with the Cabana Boys “anywhere but under a coconut palm”.

Cabana Boys hand-picked who they would target and delivered only 50 coconuts, following up on each a few days later with a phone call. The delivery phase of the campaign ran over two months.

Results

Cabana Boys creative partner, Nik Robinson, says the consultancy knew it had succeeded with ‘Part A’ of its job from the moment they walked into their first reception.

“People would see us coming and laugh. About half of the people we visited started singing ‘I’ve got a lovely bunch of coconuts’, while the other half would crack jokes about putting our hairy coconut in someone’s hand. It made people smile. We knew they were going to pass it on,” explains Robinson.

From this notoriously difficult to reach C-suite audience, Cabana Boys achieved 100 percent click-through to the campaign URL, with around 70 percent of respondents navigating through to the Cabana Boys home page. Stuart Ghent reports that around 80 percent of people who received a coconut took a follow-up phone call:

“They got what we’re about straightaway. They got that we do things differently, we’re a bit of fun, but we get results. They were happy to talk. As we anticipated, a lot of people were looking for fresh ways to make their money go further. They’d cut their budgets to suit the times, but had cut as far as they could. Yet they still needed to get out there into the market,” says Ghent.

Of those who did talk on the phone, says Ghent, around 25 percent went on to accept a face-to-face meeting. Of those, in turn, four have gone on to become regular clients, including Fuji Xerox Global Services, Mexican restaurant chain Guzman Y Gomez, not-for-profit YWCA NSW and technology giant Ingram Micro.

One surprising result, according to Ghent, was how few people took up the offer of a free creative session.

“In total, we only gave away two. Most people had a specific problem in mind and, we suspect, knew it would take more than one session to solve. It was absolutely worthwhile to make the offer. It proved that we are prepared to put our money where our mouth is. Conventional direct marketing wisdom says an offer increases take-up. We think it did that, although not of the offer itself,” says Ghent.

Ghent calculates most of the cost was in creative development and head hours – all soft costs. The only hard costs were the coconuts themselves, having a rubber stamp made and building, hosting and running the URL. At the end of the day, their total outlay per unit was just $1.94. Needless to say, the campaign has paid for itself since launching in April 2009. Cabana Boys moved from their poolside umbrella to a more permanent cabana in Sydney’s Surry Hills.

According to Robinson, the effects of the coconut continue to roll on. Having helped bring in four clients, it helped the budding business establish its credentials, allowing it to attract still other business.

The Australia Council for the Arts was one of these, engaging Cabana Boys in early October as the creative lead on its ArtStart initiative, a new grants scheme to help arts graduates with the difficult transition from study to employment.

The New SME

by Marketing ON 18 February 2010

There is a new breed of small business on the boil and it is about to shine.

One of the developments to emerge from the recent financial crisis is the birth of a new breed of SME. They are niche companies born out of a need to fill a void in an increasingly small global market. They work in a market of ever finer market segments that mass marketing and generic products cant cater to.

Affordable ecommerce solutions, coupled with cheap outsourced manufacturing or product sourcing, are connecting with market segments identified through social media – and providing them the products and services that suit them. Social media is allowing consumers to congregate and be heard in a way that is revolutionary.

Australia is in a unique position to be launching pad for many of these new SMEs. It has come through the GFC better than any other developed country. That means as markets are still growing and funding is readily available and the Federal Government spending on the new broadband infrastructure will only make it easier for these new business to get off the ground. The cost of setting up and operating a business drops dramatically with online software services that provide accounting, project management, and a myriad of other management and business tools.

This is not something to be feared. These new businesses are not stealing market share. They are creating new market opportunities. And they need help – maybe from you.

There is a fundamental change coming to our economy and its going to be driven by the little guy – and everyone will want a piece of the action.

Trends in 2010: specialists

by Marketing ON 12 January 2010

2009 was a year of shifting paradigms. I think the GFC forced us to change in some capacity. This year, instead of dwelling on revenue losses and budget freezes, I think it is wise to focus on what we learned, how we can apply these learning’s in 2010 and best of all convert them into tangible revenue?

Observing trends in 2009 brought some fascinating insights for me, one in particular: are blue chip companies looking at engaging specialist agencies to deliver specific project tasks versus outsourcing all their project requirements to their major advertising agencies and or consulting firms? I think yes.

That is not to say the client is going to stop using their blue chip partners but it does open new opportunities for specialist agencies that have a key focus in areas such as user experience and usability design, project management, research and strategy, etc. This is definitely a mind shift and something that I admire. It shows leadership and optimism and allows for cooperation and collaboration. It invites new perspectives and returns real value to the client. Let’s face it, just because a multinational agency has 200 employees, doesn’t mean they have a team of 10 people who focus in one specialised area within a discipline.

So, forget those long lunches we all enjoyed once upon a time… they are so yesterday. Should we also forget about loyalty? Does it still exist? I think yes but only if we continue to deliver ‘real value’, educate our clients with new qualitative information, know our stuff better than any of our competitors no matter how big or small and be available.

I would love to hear your comments.

Audit: 2009 marketing predictions

by Marketing ON 15 December 2009

Last year I made some marketing predictions for 2009. I thought it might be timely to see how accurate I was before I hypothesised my marketing predictions for 2010.

Prediction #1: Marketing budgets will be slashed by 35%.

Looks like I wasnt too far off actually. Forresters Laura Ramos found that marketing budgets went down by 23% in 2009. Its not quite as dire as I predicted, but that being said, there arent many things people would be happy losing almost a quarter of (unless of course youre Jenny Craig and your thing is Magda Szubanski).

Prediction #2: Marketing expectations will be raised by 35%.

Actually, Id like your feedback on this one as its so subjective. Do you think marketing departments, agencies and people in general had more pressure to perform in the face of a GFC? Or were we let off the hook a bit; given an excuse even?

Prediction #3: Facebook will not be sold, Twitter will not be monetised and MySpace will grow at precisely the same rate as the American economy.

Check. Check. Check… Actually, the US economy shrank by an average of 3.2% this year. MySpace either shrank by 20% or grew by 5%, depending on who you ask. I was close though.

Prediction #4: A major Australian corporation will get its first social media marketing officer/director.

Telstra hired Mike Hickinbotham as its social media senior advisor in December 2008, so I was only a month out! There are quite a few others now too, but the Telcos are definitely leading the way.

Prediction #5: Someone you know will be made redundant and start a new web-based consultancy with a misspelled domain name before moving to Northern NSW, assuring you they always had an interest in permaculture.

Hello to my good friend and former Brisbane agency CEO Cos, now at Communicator1.com.au.

Prediction #6: The following will officially be declared dead and later discovered to be, in actual fact, alive:

Advertising (I think I was guilty of declaring advertising dead by way of social media on a number of occasions, before realising that big-budget brand campaigns really are still a damn effective way of giving credibility to a message people discover via word of mouth. I also think Facebook advertising is pretty much the bees knees.)
The American Dream (The news for the US economy and the housing market in particular was dire at the start of 2009, but mid-way through the year things started to turn. Now the country is out of recession, shazam!)
Fidel Castro (Dudes still kickin)

Prediction #7: The following will finally be exposed as having been dead since June 2005:

Banner ads (Theres still hope.)
Kim Jong Il (Not dead, but apparently, according to Wikipedia via the North Korean state media, he is an avid golf fan and routinely shoots three or four holes-in-one per round. Im guessing that God has kept him alive to take from where Tiger Woods left off, so I can be forgiven for being wrong.)

Prediction #8: You will wake one morning to find that Google has bought your competitor and now makes a version of your best-selling product:

And it’s better than yours
And it’s free

Sucked in realestate.com.au. And the year aint over yet… Make sure you check www.googlelabs.com for updates.

Prediction #9: Radio. LOL!

I thought it was going to be a funny year for radio, but who knew just how hilarious concentration camps and molestation could actually be!

Prediction #10: You’re not in the car or housing industries are you?

OK, so I was wrong. Damn.

Whats going to happen in 2010? Check out my predictions here.

Moments with Marketers: Marina Majeran

by Marketing ON 10 December 2009

Marketingmag.com.au had a chat with Marina Majeran, marketing manager for Centro Roseland. If
you would
like to see a certain
marketer profiled, please email your suggestion to Sean Greaney on sean.greaney@niche.com.au.

What do you do?

I have a great time planning, creating and implementing the marketing strategies for Centre Roselands Shopping Centre in Sydney. Year after year I still get excited about the next campaign, because you never really know what the outcome will be. This Christmas we are doing a Christmas Splash — free beach gear gift with purchase: a free beach in November, beach umbrella in December and beach towel in January. There is an eDM strategy involved that allows us to continue to build relationships with those customers who participate. I love the creative process and since the GFC my sense tells me simple is good.

What was your first job?

I worked for The Bay in Canada in the receiving room pricing stock and sending it to all departments. I had a wicked boss that nobody liked, but we got on just fine. I have a great work ethic that I am very proud of.

What did you study?

I studied marketing, but really it has been my hands on discoveries and years of experience that I am most proud of. The study of life and people, and the art of communication, is ongoing. Experience brings insight and directs me in what I need to do next.

Describe a typical day?

I wake at 6.00am, sometimes I hit the treadmill and, well, sometimes not. Mornings are a hair thing with me, need time to get it right. I kiss Harry (the cat) ruffle his fur and get a bit of a fight happening. He hates me, and runs when he sees me coming. My daughter, 22, and partner, 52, are all grown up now so they fend for themselves. I leave for work at 7.45am. My day is always busy. It starts by doing a Centre walk (I usually do this on the way in, I call it the quick scan if I have a lot on). The days are filled with retailer communications, creating the next promotion, writing briefs, writing copy, proofing ads, completing reports, tracking results, providing direction and whinging about everyone else’s poor listening skills: Why can’t they get it right so I can get what I want”. At night I plan to go to the gym (sometimes I do, sometimes I don’t) but after a day of full on communications, I like to chill and keep it light, lean and leisurely.

What is on the agenda for the next year?

To be personally better than I was the year before. I did a pre-Christmas fashion magazine in October this year which included employee and customer makeovers. I would like to make it even better next year. Plus Centro is launching a new web based National Loyalty Program and I am really looking forward to integrating this into my marketing plan. Sometimes adding in a national incentive can be disjointed from the local things you are doing. I’m looking forward to creating an awesome program with seamless integration.

What brand do you love the most? Dislike the most? Why?

I am not a lover of brands, but I do admire good work when I see it. Right now I am fond of Visa GO. I love the one word of action. As for brands I hate, I wouldn’t mention any names, but there is a TV Ute ad that has women following the two men in the vehicle with reference that the vehicle is like a chick magnet. Now that I can say I hate.

What do you believe has been the most significant moment in the history of marketing?

The election of Barack Obama was the most significant moment in marketing history. His campaign, his election and his inauguration were perfect demonstrations of the results that can be achieved through highly effective, real and honest communications. He didn’t make it about him; he made it about “the people”. He communicated through all forms of media and connected on several different levels with all age groups. From a marketing perspective, it is about “the people: the customer. The public knows what truth is and there is very little tolerance for the misguided try hard.

Where can people find you?

I’m on Facebook, but that is to just stay in touch with my family overseas. You won’t find a photo of me unless a family member put it there. I am @rosepatch on Twitter, but I have no followers — yes, quite pathetic I know, but in order to be followed one must follow. I was never good at following.

Amazon eyeing pick-up stores

by Marketing ON 8 December 2009

Amazon.com is looking to bricks and mortar stores to expand its offering.

The etailer has begun scouring the UK for sites to open ‘click and collect’ stores. The move is allegedly in response to Amazon.com’s expansion away from books, CDs and other easily delivered items. The plan is not entirely dissimilar to Australian competitor dstore’s movements.

This expansion comes as the UK arm of Borders goes into administration.

Globally, Amazon has been able to hire 3,700 staff last year as it ignored the GFC, experiencing a net sales increase of 28%.

UPDATE: An Amazon spokesperson has denied that it is planning to open physical stores, but would not comment if it was going to partner with existing retailers as pick-up points for Amazon-sold products.

Developing your growth strategy

by Marketing ON 11 November 2009

As the southern hemisphere heads into summer and people flock to the beach it is tempting to think that the GFC was a just bump in the road. In some ways it was – at least for Australia. We seemed to have ducked the worst of the GFC. But that perception ignores the major changes that the GFC has produced. One of these changes concerns the way brands discover and talk to their markets. The GFC accelerated the rise of social networking and decline in popularity of mass media to produce a tectonic shift. This shift will have far reaching implications.

This new environment has enabled a quite different approach to growing markets and winning market share. Technology has both facilitated the fracture of markets into special interest groups and provided the wherewithal to identify and communicate with these groups – in real time. Its time to get granular!

Stop guessing and start knowing

Not many companies have been able to turn the massive amounts of data that social networks create into profit. This is because they lack the ability or simply do not have the courage to make the steps necessary. In fact, the vast majority of companies have not managed to develop a management structure and marketing strategy that is in line with the fracturing of the market place they play in. Many are still guessing their way through mass media insights and market research based on small sample sizes extrapolated out to the entire population.

This will change very quickly in the coming months. As Hal Varian, the chief economist of Google, recently stated in the McKinsey Quarterly, I keep saying the sexy job in the next ten years will be statisticians. People think I’m joking, but who would’ve guessed that computer engineers would’ve been the sexy job of the 1990s?.

Companies develop far better growth strategies if they choose to focus on granular information – in both identifying and attacking new market segments and in cutting costs.

The concept in practice

The Harvard Business Review recently explored the ramifications of exploring granular data. In that article they discussed how Amazon leverages its virtual and low cost supply chain to efficiently indulge the tastes of narrow customer segments, literally down to the individual buyer, at very low marginal cost.

The article went on to discuss how the strongest contribution to performance comes, not necessarily from focusing on acquiring overall market share, but identifying and investing in markets with the most vitality. The example they illustrated was that of a construction and services business face near zero growth. The company used granular data to divide its world into geographic, customer and product segments. They quickly discovered that they had very weak market share in the fastest growing market spaces revealing over $10 billion in potential that could be tapped into.

Steps to take

So here is what you need to do:

Accept that a fundamental change in communication is taking place and be prepared to adapt
Allocate budget towards methods and technologies that can gather relevant data
Use this data to identify new market opportunities, the strongest growth areas will be apparent quickly
Invest in these new segments and be prepared to ditch low growth market segments, and
Develop a method for managing the multiple market segments you may now be playing in

Lifes a beach

In the good times its easy to be complacent as customers come to you easily – like all of those people flocking to the beach this summer. But in the wintry phase the world economy is currently going through understanding the needs and wants of the micro-markets you can have most influence over is a winning strategy – its is easy to scale up when things begin to warm back up.

Nows the time to get out your microscope and look carefully at the grains of data you have available to you.

Radio ad revenue slump slows

by Marketing ON 10 November 2009

Radio advertising revenues decline has slowed to 3.8%, from a 7% drop in September.

“The radio ad market remains soft despite a better performance in the month of October and reports of improving financial conditions across the board in recent weeks,” said CEO of Commercial Radio Australia, Joan Warner.

According to findings from a report compiled by Deloitte, the new figures bring October revenues to $57.39 million. Spread across the the the metropolitan markets Perth fell by approximately 2% to $7.47 million, Sydney by 4.17% to $17.59 million, Brisbane by 4.9% to $9.05 million, Adelaide by 3.03% to $5.4 million and Melbourne by 3.8% to $17.8 million

For the first quarter of this financial year revenue is down 5.17% to $212.7 million.

“The industry will continue to work hard to promote radio as a cost effective and efficient advertising medium and is meeting later this month to further discuss strategy to help promote radio in these challenging trading times,” said Warner.

Staff equally content and dissatisfied

by Marketing ON 28 September 2009

A recent Robert Walters report has found 49% of professionals nationally will be looking to move roles when the economy stabilises. Correspondingly, 51% will be happy to stay put.

Sales, marketing and communications professionals were the second most unsettled, behind secretarial and business support staff, with 62% keen to look at the employment market when the economy recovers. Of those looking to move, 38% are motivated by better pay/bonus structures, while 31% are seeking a new challenge.

From the 49% looking to move roles in a recovered economy, 37% want to begin their search in the next two months and 40% will wait until the New Year. Those in the legal profession are most loyal, with nearly 100% happy to stay in their current position. Queensland professionals are most content, with 65% claiming they won’t be looking to move roles when the economy picks up and positions are more plentiful.

The majority of those looking to move are motivated by career advancement opportunities (31%), followed by 21% who are seeking better pay and bonus structures. Just 6% sought a larger, more stable organisation.

“Retention is key for organisations even during times of increased unemployment. A downturn is traditionally one of the hardest times to motivate staff, yet it is one of the most important. Companies should have clear retention strategies in place to ensure they keep hold of their top talent – the market will turn once again and companies who have fought to retain their top talent will be ahead of the game,” said James Nicholson, managing director of Robert Walters.