Tag Archives: value

Olympics jumps to second most valuable brand, only beaten by Apple

by ON
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The Olympics brand is now the second most valuable brand in the world, behind Apple, thanks to a 38% jump in overall revenue and growth in broadcasting and sponsorship deals.

The Olympics is now worth US$47.6 billion, according to Brand Finance, having grown by 87% since the 2008 Beijing Olympics.  This makes the brand’s value higher than all of its major sponsors, which include Samsung and Coca-Cola, and puts it behind Apple which is valued at US$70.6 billion.

Broadcasting revenue contributes two-thirds of the International Olympic Committee’s (IOC) revenue of US$5.1 billion and has grown 51% in the last four years to reach US$3.9 billion. Growth in sponsorship revenues was less strong but still significant, up 10.5% on Beijing.

CEO of Brand Finance, David Haigh, says the Olympics brand is a formidable revenue generator and has huge value. “It has recently been criticised for heavy-handed brand control, however it should not be forgotten that in the current four year cycle US$4.6 billion has been generated for initiatives to develop sport worldwide,” Haigh adds. “It is also expected to produce a net benefit to the UK economy of more than US$25 billion.”

The IOC has running costs of less than 10% of revenue leaving US$4.6 billion for distribution and investment in sport worldwide.

The high levels of growth achieved by the Olympics should be sustainable as emerging markets remain largely untapped, the study found. Currently Asia accounts for only 12% of broadcasting revenues which compared to 59% in the Americas leaving room for growth for the brand.

Sponsors also believe Olympic sponsorship to be a sustainable marketing investment, according to Brand Finance. P&G expect to generate an extra US$500 million in sales from London 2012, having already generated US$100 million from Vancouver 2010. GE, who paid US$200 million for top sponsorship rights covering London and Vancouver, reportedly believes it has earned back its investment.

In arriving at the brand value Brand Finance valued everything operating under the Olympics brand using the International Olympic Committee’s (IOC’s) financial statements. These include revenue from broadcasting, sponsorship, licensing, merchandising & ticket sales.

 

CEOs find marketers untrustworthy, unimpressive and disconnected

by ON
1

Four in five CEOs have trust issues with their marketing team and claim to be unimpressed by their work, a study by Fournaise Marketing Group has revealed.

The marketing services provider surveyed more than 1200 CEOs in North America, Europe and Asia Pacific finding that 80% admit they don’t really trust and are not very impressed by the work done by marketers, while trust and value in the work of CFOs and CIOs was dramatically higher at 90% of the sample.

The negative opinion of marketers appears to be driven by a perception that they’re disconnected from financial imperatives. Over 70% of chief executives believe marketers to be disconnected from business results and focus on the wrong areas.

Jerome Fontaine, chief executive of Fournaise, had harsh words for the marketing profession, calling on his peers to ‘cut the rubbish’ in order to improve their reputation. “Marketers will have to understand that they need to start ‘cutting the rubbish’ if they are to earn the trust of CEOs and if they want to have a bigger impact in the boardroom,” Fontaine says.

“They will have to transform themselves into true business-driven ROI marketers or forever remain in what 65% of CEOs told us they call ‘marketing la-la land’.”

The study went on to investigate the reasons that CEOs felt less than positively about marketers, finding that the proliferation of new tools, marketing jargon and the ‘creative bubble’ impacted on perceptions.

Most (69%) chief executives from consumer-facing firms asserted that communications teams live too much in their “creative and social media bubble” and criticised metrics like Facebook likes and Twitter buzz for being difficult to tie to sales. The gamut of new tools and the jargon associated with them has proved a distraction to marketers, the CEOs believed.

Three in four of the interviewees thought marketers were too focussed on new techniques and jargon to understand terms like ‘results’, ‘return on investment’ and ‘performance’ in the business context. The group wants their marketers to focus on more tangible results, with 74% expressing a desire to see greater demonstration of return on investment.

The study also found 78% of respondents reported that marketers too often lose sight of what their real job is – increasing demand for goods and services in a quantifiable manner.

In the business-to-business sector, CEOs feel marketers have been so desperate to prove their worth that they’ve started to (wrongly) focus on performance indicators that are actually not theirs, such as prospect conversions and revenue. These marketers have lost sight that these are primarily sales force-related performance indicators and should focus instead on the customer demand-related indicators directly linked to their job and for which they have 100% control, the study found.

B2B marketers were also criticised for their efficacy. 71% of CEOs agreed they were prioritising the latest technologies – such as lead management, automation and customer relationship management – but added they were not delivering incremental growth. 85% of those questioned emphasised prospect volume and quality rates, and how effective communications were in attracting potential customers.

 

Graduate like a rock star #5: Provide value

by ON
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The process of getting your dream job is essentially the exact same process a consumer goes through during a purchase, except you are the product and the manager is the consumer. Firstly, the manager realises there is a problem and a need for someone to fill a position. They collect the necessary information required to start making decisions and then select alternatives that would be suitable. Finally they make the decision and you land your dream job. Let’s hope there’s no cognitive dissonance.

This series of articles is about selling yourself as the product the manager needs to have. That manager must need you, your talent, your skill, your knowledge and whatever else you can bring to the organisation.

It’s actually quite simple, graduating like a rock star is about personal branding. You are one of many brands out there all fighting for the same thing. You have to stand out and do the things discussed in this series. And to do that, we can bring it back to the first lecture any student takes in Marketing 101: provide value. Marketing at its core is the exchange of value and for a salary and benefits, which ever graduate can exchange the most value is the one that lands the dream job and graduates like a rock star.

There’s a number of ways you can do this, some of which has been already discussed in this series. Don’t approach an employer and ask what’s available – you have to show that you are indispensible, that they already need you and without you they will be at a loss. Offer to volunteer and say that you’re willing to work for free until they find you of enough value to start paying you. Create work for yourself and show them how well you can do it. There’s a number of strategies you can take, but at the core of what you’re trying to achieve make sure you’re providing value.

If you’ve managed to become a passionate student, ditched the resume and started a blog, begun to network digitally and done something incredibly creative, show an employer how you can add value to their organisation and you will graduate like a rock star.

I hope this series has been helpful and I’d love to hear if you’ve gotten something out of it. I wish you all the best, don’t steal my graduate position and I couldn’t think of a better way to finish this series… rock the casbah.

Be creative is the fifth article in the ‘Graduate like a rock star’ series.

Using Market Research to strengthen DM efforts

by ON
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Are your campaigns minimising wasted creative and reducing your cost of sales? Good market research should be able to help you with your initial sale and subsequent sales. Sophisticated analysis can then assist you in segmenting your target groups and measuring your ROI.

The value of sales is not just the measurement of revenue, but profitability. You therefore need to take account of not only the initial sale, but the ‘lifetime value’ of the customer and the value of all referral sales too.

In this regard, the work of marketing writer Ray Kordupleski in the area of valuing customers may be of assistance. Kordupleski, author of Mastering Customer Value Brand Management, defines the CVA (Customer Value Added) rate as:

CVA = The average perceived worth of your company’s products and services
The average perceived worth of competitive offers

He says perceived worth is measured by asking customers, considering everything, “Are the products and services worth what you paid for them?” This question and the relative-to-competition CVA ratio are at the heart of the customer value management.

Setting your objectives

Objectives drive strategic choice. Strategy questions are ‘or’ questions: ‘You do this’ or ‘this’. Any ‘and’ question is tactical and isn’t related to ‘big’ objectives, but incremental gain. For example, an objective to attract Generation Ys drives strategy to target people under the age of 29 instead of over the age of 29. An objective related to how a direct mail execution should look is tactical.

In designing any direct marketing campaign you need to take account of immediacy objectives – the advertising and communication need to work quickly and be measurable. The best measurement is the immediate sales generated, and this is easily measurable in an absolute sense. Underneath all of this is the fact you are dealing with individuals, not brand categories.

Understanding those individuals, their lifestyle, family context and needs will ensure that any campaign design is well targeted. Market research is terrific in assisting with segmentation and needs analysis.

Don Pepper and Martha Rogers write about one-to-one marketing, where there is a need to know each customer as an individual and to design processes to meet individual needs, even when dealing with a large customer base.

In a similar vein, strategic database marketer Arthur Hughes says that surveys tell you more personal information about each customer than you could ever get from overlays or models. “Many people like to be asked their opinions or desires, particularly when they think that someone will pay some attention to what they say,” says Hughes.

Not all attributes you communicate will be equal. Some are worth far more to you than others. The trick is finding out which ones are most valuable, because a dollar spent against the most important areas is worth a lot more in sales than a dollar spent on less relevant ones.

Market research uses multi-variate analysis to identify the utility values of each ‘driver’. Prior to this stage, qualitative research can be used to ensure the most relevant attributes are covered in the research and the multi-variate analysis is meaningful.

As well as generating sales, all communication can help build long-term brand salience, and this too is measurable. Measuring the causal impact of the advertising and communication, however, presents more of a challenge.

One of the key benefits of DM is building a longer-term relationship and one of the best ways of conducting a dialogue with customers is the satisfaction survey. According to Hughes, “The information from satisfaction surveys should be stored in a database and used immediately as a part of an overall relationship-building strategy that could include:

  • making sure the customer purchases a replacement model at the appropriate time
  • making sure the customer comes back to you for spare parts, service or consumables, or
  • alerting the customer to other products you sell. 

“The strategy needs to be worked out in advance before the survey is even drawn up,” Hughes continues. “Each question should be designed with the strategy objective in mind. The appropriate response to the survey needs to be worked out and put in place and the cost of the survey should be built into a customer lifetime value model.”

The DM process

Let us look at a typical process path to generating successful sales.

Targeting

Identify the target market:

  • demographically (age, gender, socio-economic status etc.)
  • geographically
  • geo-demographically
  • by needs
  • by psychographics
  • by social values
  • by product and brand usage
  • by existing attitudes to the product category and client brand, and
  • by current category and brand experience.

Concept testing

Having developed communication concepts against strategy, work out which of these concepts is likely to be the most effective in generating sales. Which of them best communicates against the ‘drivers’ most relevant to the target group? In testing or pricing alternative DM options, not only do you need to establish which is most effective in generating sales, but you also need to assess why. What lessons have you learned for the design of future marketing campaigns? Ultimately, the best test is parallel in-market testing of alternative options. The more you can pre-empt this with research, the faster you can implement the main program, and the more confident you can be of success.

Modelling

Have you ever looked at modelling those people who respond positively to the offer and using this to pinpoint key opportunities for further DM, partially by CCD and location? Other disciplines use Choice Models and Decision Support Systems (DSSs) to model the value of different offers and the utility of the individual components of those offers. Using these tools, you can look at optimum pricing to generate maximum profits, by looking at the projected sales potential at each pricing level.

Strategy

You can play ‘war games’ where, by reducing cost marginally, you identify incremental sales opportunity (assuming price sensitivity) in terms of:

  • the number of incremental sales
  • the value of these sales in absolute terms
  • the profile of those who come across, with a price decrease, and
  • where they come from.

The inverse is also possible, where you identify the impact of a price increase on sales (assuming price sensitivity) in terms of:

  • the number of lost sales
  • the value of lost sales and the resultant impact on profits, given a higher margin level
  • the profile of those who leave the brand, with a price increase, and
  • where they go to.

While this article is aimed at looking at ways to increase your ROI on direct marketing, I believe that intelligent use of research will itself provide an ROI on the efficacy of the DM campaign.

Effectiveness is measured by multiplying strategy by execution. For example, if you have a strategy value of nine out of 10 and an execution value of six out of 10, there is an ‘effectiveness value’ of 9 x 6 = 54.

If you only have a strategy value of four out 10 and execution value of seven out of 10, the ‘effectiveness value’ is 4 x 7 = 28 (half the previous example, even with an improved execution).

Getting your strategy right in what you communicate, where you communicate and to whom you communicate, will increase your success rating potential. Testing alternative executions of your DM against strategy within key target groups will ensure that you get the balance of the equation right.

Building an ongoing relationship

If you are a client, this is the least you deserve and should demand. As a supplier, your professionalism demands that you leverage all tools available to you. The fact that market researchers have not been beating a path to your door, nor been overwhelmed by briefs from you should not be a deterrent.

To conclude, I will borrow the wisdom of Arthur Hughes. According to Hughes, mistakes are often made through failure to understand the difference between market research and database marketing. “Modelling can help in deciding which individuals should receive promotions from the universe of those you could conceivably contact,” he says. “Using modelling, you can reduce the cost of your mailing and still maintain sales. Excessive reliance on modelling will divert marketers from their main objective: building an individual relationship with each customer, rather than spending money on appending external data (which may be inaccurate). It is better to use the same money to survey your customers and ask them why they bought your product, what they would like to see in the way of new products and services and what their plans are for the next year. Once you know these things, you can really build a relationship and your bottom line.”

Effective wireless marketing

by ON
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It’s evident that as an increasing number of brands shift their marketing spend from traditional to digital methods of communication the allure of mobile marketing continues to grow. Interest in mobile marketing is driven by the fusion of pinpoint targeting ability and the very personal nature of wireless devices. If done correctly, mobile marketing delivers tremendous value to both brands and consumers.

Mobile phone penetration in Australia is close to 100 percent and – depending on to whom you talk – over half of these device-carrying consumers have a phone that is less than one-year-old. The processing power of mobile devices is continuing to grow and the purchase cost is decreasing (and mostly subsidised by the telco). What we have now are powerful processing/connectivity devices equal to a desktop PC from a just a few years ago.

This article is about the steps required to successfully use the mobile/wireless device to connect brands and consumers.

1. Engage your mobile agency in the strategic planning process

It’s pretty clear through my experience of delivering mobile campaigns since 1999, that bringing in your mobile agency earlier in the idea generation process increases the effectiveness and innovation of your mobile campaign. Too often agencies/brands approach a mobile solutions provider late in the game, limiting the ability to effectively engage the consumer. One of the benefits of mobile is the ability to get up and running quickly; however, there are some limitations that your mobile specialist will help you sort through.

The mobile experience is not the same as the web experience. As with many examples of cross channel integration (ATL, BTL, digital, direct, mobile…) it’s not about forcing a creative idea into the channel. The mobile user experience (like digital extension from traditional) is not the same as the interruption-based ‘awareness generation’ mechanic of traditional marketing. There is a need to understand the limitations of the device (e.g. small form factor, screen size, data speed). Your mobile agency can solve these issues for you and enable results-based communication and connection. You shouldn’t simply repurpose existing creative for the mobile medium.

By engaging your mobile solution provider you can gain valuable knowledge about the possibilities of the wireless medium. There are many case studies that show real tangible use of the mobile medium to realise brand goals.

Also, check out some of the exciting stuff happening with your mobile device. Go and visit some newer WAP sites. Get a new 3G phone with a good camera. The world is moving quickly and people are increasingly using the mobile device to connect, live and shop. It’s a marketer’s responsibility to be across the process of utilising these channels to connect with their audience.

2. Identify your target goals

Mobile is not easy for every brand. It is imperative that you can identify what your goals are within the mobile channel – or, in other words, what do you want to achieve through mobile? Is it brand extension or user interaction, customer acquisition, mobile commerce/content delivery or as part of your customer relationship management ongoing communications? Mobile is a great complement to other marketing channels, providing the opportunity to drive real-time direct response from TV, outdoor, radio, print and increasingly in conjunction with other digital efforts.

Like any channel activity, the goals and expectations must be clear in order to assure the appropriate programs and KPI metrics. As you work with your mobile solutions provider to develop your mobile strategy, carefully consider how mobile will extend out of your existing channel activity. Make sure you share and discuss your KPIs and ensure that the channel activity will support these goals.

3. Create a mutual value exchange

Timely message delivery and relevance are only a part of success within the mobile marketing consumer experience. You as a marketer need to think of your consumer as the media savvy consumer they have become. Consumers know all about engagement (perhaps not in the buzzwords sense we marketers use), but we have to be able to effectively answer the question ‘What is in it for me?’

We have to show some respect and have a mutual value exchange as all of us have less and less time these days. Brands can help consumers in a wide variety of ways, but it is clear that we can’t expect consumers to want to interact with our brands and product. Make sure your content and messaging are relevant and respect your consumer’s lifestyle and capacity to interact.

A great example of this value exchange can be to reward consumers through the delivery of free or brand-subsidised mobile content that is relevant to them. Additionally brands can give back to consumers through subsidising data charges – either through effectively zero rating mobile internet experiences or rewarding interaction/engagement through free minutes or talk credit.

Another example that is starting to occur more often is to promote simultaneous use of multiple media platforms. Encourage mobile internet interactivity while watching TV by delivering content that matches the audience’s need state. For example, when watching a TV program, interaction on the handset can give extended information about the content (be it music artists or behind the scenes character information), or even live engagement or chat with other community members also interested in the show. Offer free downloads of branded games and graphics that are designed specifically for the mobile device. These experiences foster loyalty and brand value as well as providing the consumers with a good experience.

4. Extend beyond ‘SMS 2 win’

Above all, you need to experiment. Dont be afraid to try out different programs to see how your consumers respond. Based on consumer response, you can adapt the mobile program, incorporate new elements and launch into more advanced areas of mobile marketing.

The most obvious, but often forgotten, investment is to make the most of traditional media through mobile by closing the loop on communication campaigns. As TV communication continues to lose its effectiveness and cut-through, the immediacy of mobile allows one to jump a few steps (if done correctly) in the purchase process. Make sure your mobile call to action is clear and obvious – burying the number or the address in the small print is a classic mistake.

There is a difference between the mobile and the desktop internet. Key for the brand is making sure there is something new and interesting waiting once a customer interacts. Techniques that have succeeded on TV or even the internet don’t translate instantly to effective mobile campaigns.

Move into rich media. There are several examples discussed within this issue regarding how to use the advanced features of the mobile device to connect. Think about MMS, mobile web, mobile branded content, mobile advertising, mobile search, social networking tools or mobile games… The sky is the limit.

5. Mobile analytics

Its not about waiting ‘til the end of the campaign to see what works. Mobile provides the ability to get real-time feedback. Constantly think about your KPIs and see what is working. Change the messaging, change the offer, continue to see what works and what doesnt. You can look at this as similar to how old DM testing through segmentation communication worked. It’s important to talk about your KPIs with your agency partners. Discuss how the activity is going during the campaign.

Three valuable KPIs to most businesses when engaging via mobile are to:

  • drive traffic to traditional retail bricks and mortars stores
  • drive social interaction among phone/net users, particularly if that can involve the brand advertiser, and
  • engage in ongoing CRM-based communication through the mobile channel (not just outbound).

Despite the constancy of change in advertising and marketing today, a few things do remain consistent – most importantly, a good campaign can really work. New techniques and channels like wireless mobile marketing shouldn’t be viewed negatively – be open to the possibility of success through innovation. After all, with methods of connecting with consumers (such as mobile) we have a new method of challenging the inefficient interruption-based methods of the past and embracing transparent mutually value driven communication techniques.

Capitalising on christmas

by ON
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Ah, Christmas promotions. So much fanfare, so much cardboard, so much waste. It’s the marketer’s Catch-22 – damned if you do, and damned if you don’t.

Or are you?

Do you spend inordinate amounts of money on Christmas-ifying your point of sale in order to be ‘part of the Christmas spirit’, and risk being lost in the visual clamour of all the other red, white and green things? Or do you stand on the sidelines, potentially Scrooge-like, and watch the Christmas parade pass by while you promote your point of difference?

In other words, do you Zig or do you Zag? Well, as with most things in life, it depends.

Below are some steps to successfully negotiate the in-store Christmas clutter with the least amount of grief. Whether you should Zig (‘be in it’ in terms of Christmas theme and price promotions) or Zag (do your own thing, and not necessarily drop price) depends on the relevance of your category to Christmas shopping occasions.

There are two basic shopping occasions surrounding the Christmas season: entertaining and gifting. We’ll deal with categories in each of the above two occasions, and also what to do (or not to do) in categories that fall into neither of the above.

Entertaining
Which categories? The basics are:

  • food: traditional Christmas dinner items such as hams, chickens, turkeys, puddings, mince pies, prawns, ice cream and custard for the pudding, gourmet condiments and sauces
  • treats and snacks: chocolates, dips, cheeses, crackers
  • liquor: beer, sparkling wine, table wine, RTDs
  • non-alcoholic beverages: bulk packs for entertaining
  • decorations: tree and home decorations including baubles, tinsel and lights, wreaths for doors. gift wrap, tags, bags
  • utensils: paper plates, cups, napkins, and
  • lighting: indoor (candles), outdoor (bamboo lanterns, fairy lights).

In-store execution: create solutions
Shoppers shopping for Christmas entertaining are in stock-up mode, but they are time pressured, harried from dealing with crowds, and therefore looking for convenience and a ‘one-stop shop’. Entertaining occasion categories should be ‘redded up’ in traditional Christmas gear, put all together if possible to create an ‘entertaining solution’ display and have a clear occasion message, e.g. ‘Christmas dinner’.

Entertainment solution displays may be divided into the following:

  • cold foods/delicatessen
  • decorations, lighting and utensils, gift wrap
  • treats, snacks and condiments, and
  • drinks.

Don’t discount turkeys at Christmas
Because it’s a one-stop shop with a time limit, the grocery shopper mindset for Christmas shopping is ‘how fast can I get out of here?’ not ‘how much can I save?’. Entertaining occasion items would be purchased anyway, so there is no point in decreasing your and the retailer’s profit for the same sale. Price should only be dropped as a mechanism to secure display, if necessary. Price point should be communicated on point of sale, but being ‘on special’ is less important than getting display visibility with a clearly communicated occasion.

Gifting
Are you in a gifting occasion category? If not, can it become gifting by changing pack format or gift boxing, e.g. single serve chocolate bars versus gift box chocolates? Can your category ramp up the indulgence factor to play in gifting occasions? Who would buy your category, for whom? And what does this mean for pricing and execution?

It starts with for whom the shopper is buying
Is there a ‘type’ of Christmas shopper? For instance:

  • ‘on a budget’ – I only have $X to spend across everybody, or $X per person, or
  • ‘the right thing’ – I want to buy them the right thing to show I care, regardless of the cost.

In reality, a shopper might be either depending on for whom they are buying.
The shopper’s relationship to the gift recipient is at the core of what they are likely to buy and what they’re likely to spend on it. Let’s look at three levels of relationship – intimate, close and distant – and their impacts on gifts bought.

Intimate
Who they are: immediate family such as mothers, fathers, kids, wives, husbands.

Shopper mindset: I want to show that I spent time and effort in thinking about them and make sure that I get exactly the right thing for them. Price is not very important. I am happy to spend several hours getting the right thing.
What they buy: specific, high-value products and brands, potentially with a degree of uniqueness or customisation. Unlikely to be gift box format unless a very high-value item.

Categories: books – specific authors; music – specific artists; perfume – premium and couture; accessories – belts, scarves, ties, handbags; jewellery; digital and electronic devices; toys and games – higher value; tools; sports and leisure, e.g. golf clubs, fishing rods; high-value vouchers; chocolates (high-end, as additional present to the primary one).

Close
Who they are: close friends seen frequently, grandparents.

Shopper mindset: I’m happy to spend a few dollars on something nice that shows I know them, but isn’t too intimate. And I don’t want to spend hours looking for it.

What they buy: category may be matched to individual recipient, but may or may not be brand- or product-specific. May be in gift pack format.

Categories: books, music and DVDs – category specific; liquor – focus on bottled wine, sparkling wine, spirits, imported, micro- and home-brewed beers and kits; bags; perfume – mainstream, gift boxed; personal care pampering – bath packs, foot care packs, skincare; homewares – kitchenware, e.g. platters, particularly with an entertainment focus, candles; toys and games (low cost) – for both kids and pets; pot plants and flowers; cosmetics – gift boxes; chocolates mid- to high-end, e.g. Lindt, Cote D’Or.

Distant
Who they are: friends seen only occasionally, acquaintances and work colleagues, clients, extended family, e.g. cousins.

Shopper mindset: I need to be seen to be doing the right thing, but don’t want to spend too much time and money. How many people can I knock over all at once in one store for a total of $X? What can I buy in bulk?

What they buy: categories not matched to individuals. Generic, ‘safe’ categories, lower value items, likely in gift box/value pack format. Multiple recipients may receive the same item.

Categories: liquor – red wine, gift boxed liqueurs with glasses; homewares – candles; toys and games – stocking fillers; pot plants and flowers; chocolates including themed, e.g. Santas, coins, roses; food items, e.g. hampers.

Impacts on POP execution
The type of relationship impacts upon what is bought. This in turn impacts upon how the category should be executed. Let’s look at how each of the relationship categories would work in-store.

Intimate categories
Brands in categories falling under intimate relationships should ‘Zag’. That is, they should focus on their own branding, uniqueness and point of difference. Ensure your POS embodies your brand and reinforces shopper decision as to why they should buy you. Do not use Christmas colours in the point of sale. Focus on shelf space, and an additional display in the immediate vicinity of the category, as the category is a destination. Price point is relatively unimportant. Chanel is famous for not discounting its perfume. Ever. Yet it remains popular as a Christmas gift because of its brand strength – shoppers buy it anyway.

Close categories
Products in categories falling under close should concentrate on quality and value for the money, particularly for gift boxes. Point of sale should carry images of the gift pack and outline its contents and the price point: ‘For $XX you receive all this…’ Christmas colours and messaging should be subtle. Displays should ideally be located at the front of the store, or at least within the category vicinity.

Distant categories
Front of store rules for displays. If you’re not in a large display bin at the front of store or on a gondola end, don’t bother. Colour up your point of sale to reflect Christmas, decide on a sharp price point, and communicate value – provide an incentive to buy your product versus the competitor’s. Quality is less important here than price and convenience. Ideally use promotional staff to communicate your product and generate trial if necessary.

This can be summarised in the featured table.

What about other categories?
What if you’re not in an entertaining or gifting category? For example, what if you are: apparel (lingerie, socks and jocks, and apparel vouchers excepted); staple groceries, e.g. milk, bread, toilet paper; health foods and health products; personal care staples, e.g. shampoo, toothpaste; general household goods, e.g. garbage bags? Staples don’t require being Christmas-ed up as they bear little relevance to the occasion. For instance, it’s hard to see a roll of toilet paper on Christmas promotion unless it’s a novelty roll of loo paper with Santas and reindeers etc. on it. You can capitalise on the stock-up shopping occasion and additional store traffic with price promotion and ‘just in case’ messaging without turning everything red and green and adding to the clutter.

For household categories that are guest-facing, you might be able to up-trade shoppers to a higher quality product. An interesting UK study outlined in The Retail Bulletin highlights the tendency for consumers to trade up to higher quality items across most categories during celebration seasons due to ‘snob value’ – the need to impress guests. Products in this category include beverages such as juice and coffee, and personal care items such as soaps, hand wash and, yes, toilet paper.

So as we’ve seen it’s all about the occasion and the shopper’s relationship with the gift recipient. If you’re a ‘distant’ category then it’s all about Zigging – rolling out the red, white and green and the sharp price point and ‘buy in bulk’ messages. If you’re a ‘close’ category or entertaining occasion the focus is on communicating the occasion, quality/value equation and convenience of the one-stop shop. And if you’re an ‘intimate’ category or a household staple not related to Christmas you should Zag – stay away from Christmas colours and messaging and instead concentrate on branding and up-trade.

Merry Christmas!

Kiely: Delivering value through convenience

by ON
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Next time you are standing in a queue, waiting to enjoy the service experience, perhaps you can contemplate the Paradox of Convenience. This principle states: Consumer offerings based on convenience inevitably produce their own inconveniences which can cancel out the original benefit. This principle is being launched in draft form here today and I welcome your input (Michael@michaelkielymarketing.com.au).

Take the supermarket, or the ‘super’ market. Obviously its inventors thought of it as the highest level of evolution for the distribution of consumer household goods. But consider the customer service experience: Scrabble around in the crevices of the car to find a gold coin to insert in the trolley security system to ‘rent’ a trolley. (The convenience is the company’s.) The customer must search for the goods unassisted, because there are few staff when you need them. They disappear through the mysterious rubber doors whenever you need them. Periodically the management shifts the location of the stock, based on analysis of profit planograms. So just when you start to know the lie of the land, it all changes. Then you discover – after fruitlessly searching for your favourite variant of tinned tuna – that is has been delisted.

Now to the checkout where there are often too few open and queues are long. What happened to that technology developed a decade ago that scanned the products as you put them in your trolley? Your total shows up on the terminal, you pay and you go. But no. We suffer stone age ‘super’ markets. How you wish you had 12 items or less. (The supermarket companies prefer it if you visit several times for smaller amounts of goods. Their data tracking system based on their loyalty card program tells them this.) Your turn finally arrives, then you stumble out into the carpark with your booty, driving home to stagger in with wrist-strangling plastic bags pulling your arms out of their sockets… and so it goes.

What inferior system did it replace? When I was a boy, the housewife would take her shopping list to the grocer’s shop. The counter separated the customer from the goods. The grocer took the shopping list and ‘filled’ the order himself. Mother could leave the list and return to collect the goods. I remember there was a home delivery service as well. Bread and milk were home delivered, so there was no need to lug that home. And not only that, but Mother was at home so during the week, various traders would drive past the home and come in to get her order: green grocers for vegetables, soft drinks, even meat and fish. This paradise was destroyed by low prices and the new ideology of ‘convenience’.

Now think of flying. Is there any customer experience more discomforting than boarding an airliner, that futile stop-start procession up the aisle to find there are no spaces left in the overhead locker so you stuff your bag under the seat in from of you and suffer cramp for the entire journey. The seats are comfy if you’re a midget. A perfect example of the Paradox is the new check-in system: you swipe your card and get your boarding pass. But to ‘drop off’ your luggage, you return to the traditional check-in queue.

And what did this system replace? A sleeper carriage with a cup of tea brought to you by an attendant. It took longer to get there, and time is money. But the Paradox is based on the Principle of Convenience: making life easier for consumers. Since the Second World War, mankind has seen the emergence of the labour-saving device as the dominant cultural icon. Food processors with a thousand pieces make washing up after preparing meals a major job – so you need another labour-saving device: the dishwasher. And so it goes. Convenience has a momentum of its own.

The mobile phone is a Paradox Principle device. It makes life easier while it makes life harder. The inconvenience embedded in the mobile phone is subtle: the widespread expectation that you will be available to a caller round the clock. The Blackberry creates an email fixation in people, a compulsive disorder that makes people anxious if they don’t get an email for more than a few minutes. A Blackberry blackout in New York last year caused chaos and hysteria among the Big Apple’s big time operators.

Paradox everywhere: would we need the gym and the weight loss program – both modern developments – if we did not have labour-saving devices? “Take the stairs, not the lift”. “Walk to the shops. Leave the car at home.” Instead we pay to avoid physical activity and pay to engage in physical activity.

How does this help you? An ‘inconvenience’ is an itch. An opportunity to provide a ‘scratch’. But once a system has been devised to address an inconvenience, it’s inevitable that this ‘convenience’ system will create its own inconveniences. Be vigilant in identifying these emergent itches and address them and you will win favour with modern consumers.

Second, learn to tell the difference between a ‘convenience’ for customers and a ‘convenience’ for the company.

Finally, the customer’s choice is a matrix of benefits and dis-incentives. Customer ‘levers’ are convenience, possession and functionality and two ‘currencies’ – time and money. One or more of these elements can outweigh dis-incentives. For instance, many people will endure inconvenience for low price. Or high price for functionality or possession.

Remuneration negotiation

by ON
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Achieving a pay rise depends on a number of key factors, and not all of them are directly related to your personal performance; some are out of your control. Firstly, the performance of your company is a crucial factor. If your company is doing well, achieving targets and making a healthy profit you are, of course, more likely to be able to negotiate a pay rise than if your company is underperforming and not making a profit. Do your homework. If your company has no profit to share, then you do not need to feel insulted if your pay rise is modest, as your company may simply be unable to offer you more. If your company is having a record breaking year you know that your chances for success are higher.

Assuming your company is performing well, you feel within your heart that you have performed well and you choose to negotiate, call a meeting with your manager to discuss this in the correct forum and environment. Once a date and time is set, it is important to ensure that you negotiate from a position of strength and power. To maximise your chances of achieving a pay rise you must be able to clearly demonstrate your direct contribution to your team’s tangible output. Better still, attempt to link your output to key business issues such as: your company’s revenue stream, any cost saving initiatives and exercises that you have driven or been a part of, customer service excellence or business/departmental growth.

The key message is not to assume that your boss knows everything that you have achieved, and what you have contributed to the team and the broader business. This is a mistake that a lot of professionals make, putting in the effort all year and sitting back and waiting for their boss to reward them accordingly come salary review time. The reality is that your manager may not be aware of the contributions that you have made; so document them clearly and concisely in readiness for your meeting.

It is also important to review your job description prior to the meeting, as your job role may have changed a little over the course of the year. You may even have taken on extra responsibilities that are not reflected in your formal job description. Make a list of the extra tasks that you are doing outside of your job description and, again, link each task to a tangible outcome wherever possible, such as: revenue generation, a new business outcome, a cost saving and so on. If your job description includes key performance indicators (KPIs), assess your performance against your KPIs before the meeting.

Key to your preparation should also include arming yourself with knowledge of your worth. Talk to as many people as possible from within your industry or field of expertise, use salary surveys to add weight and tangibility to your request, look at job advertisements in the newspapers and online, and consider talking to a recruiter who will be able to review your skills and provide an honest synopsis of your worth.

Upon presenting your case, do not rush your manager into giving you a decision. More often than not your manager will need to refer your request and your case to Human Resources, and their own manager, as well as ensuring that departmental budgets have room for the level of increase that you desire.

If your company is performing well, you have prepared well, the market is right, your expectations are realistic and you have presented your case professionally, there is a high likelihood that you will succeed. If you do not receive the news that you were looking for, however, try to ensure that you have prepared a suitable contingency plan and do not overreact or say something that you will regret.

If you feel your salary is not a true reflection of your ability or market worth, and the salary increase does not bridge the gap, changing jobs may well be an option, particularly in the current candidate-short environment, but you should aim to do this on your terms and to your own timetable.

If you do not receive the pay increase that you were looking for, but you are keen to stay within your current role, an alternative could be to seek non-pay related rewards as part of your overall package, such as access to extra training, financial assistance with your further education and time off to study, parking, access to a company-funded mobile phone, contribution to your home internet bills etc.

Your strong performance over the duration of the year should always provide the platform for a salary negotiation, and your rewards should be linked to improving your work performance. So, the bottom line is to roll up your sleeves, add value to your business in any way you can and work as hard as possible to become indispensable.