Open hands marketing?

At the end of 2009 I suggested terror, technology, celebrity and debt as a 4 word summary of the preceding decade.

What's the word for 2010? Strong candidates would be disclosure or openness.

The Wikileaks cables are one example of the power of technology to change how information works - and crucially to give us all access to more of it.

Another is the ongoing evolution of social media. I've been to a couple of gigs recently (trying, in vain, to regain my youth), and been amused by quite how many people are taking photos - many of which are promptly uploaded to Facebook or Flickr. Go online and it is very easy to find popular reviews and feedback from events that took place just hours ago, as well as stuff in anticipation of events that are coming up. Event promoters - like politicians - are no longer in control of the flow of information.

This kind of disclosure isn't going to go away. If the US government cannot shut down whistleblowers, then brands certainly can't. Courageous brands are already adopting openness as a virtue. I think the next couple of years will enforce it on us all. (And, in the end, good thing too.)

Wake up and smell the own label coffee

The Economist this week has an article on the impact of the economic crisis on consumer goods purchases. It quotes PwC and McKinsey evidence that consumers have significantly changed their behaviour - such as by buying own-label products, by buying less, or conversely by buying bulk, or even by deciding that some things aren't as essential as they used to seem. (Air freshener, anyone?) Well, you heard it here first - six months ago, but the data goes to reinforce the point.

93% of shoppers say they have changed their behaviour as a result of the economic downturn. (PwC)
18% of packaged-goods buyers switched from a premium brand to a cheaper one during the recession, with most saying they found that the pricier brand “was not worth the money”. (McKinsey)

Even more alarming are some of the comments by the Economist's readers:

TomNightingale wrote: Oct 14th 2010 12:18 GMT
The price differences between branded goods and own brand are mainly spent on advertising, Advertising does not create value, it consumes valuable resources and returns little, if anything. The value of a brand is largely its ability to persuade people to pay a higher price than they need to to buy a product, Advertising and brands allow parasites to take good livings at the expense of others. If the recent/current economic woes leave advertisers and "branding experts" in difficulties we should all rejoice. We don't need them; they make us all worse off.

pasam wrote: Oct 14th 2010 12:47 GMT
If the recession leads to a "Needs based Society" than the present (or past?) "Advertisement Induced Society", then that is a "silver lining". Let the "shine" of parasitic advertisement be ignored and let the chemistry of needs take over.

It's not as though we haven't heard these anti-brand views before, and they aren't very well informed - they take no account of the role of brands in delivering innovation, consistency, reassurance, confidence or convenience, for example. (But then I would say that, I'm a parasitic "branding expert".) However, they do have a compelling basic thrust: products which only sustain their premium through advertising are in a precarious position.

The conclusion we must draw from recent consumer research (both quali and quanti - pretty consistent on this matter for months now) is that long term success means delivering a premium-justifying benefit. It can still be emotional - reward, status and so on - rather than rational - taste, quality, features - but it must exist. Large swathes of supermarket aisles are still filled with brands that don't truly offer a benefit. What's worse, I fear some brand managers haven't realised that the rules are changing, or have deluded themselves that their own brand has a "real" distinctiveness when all it actually has is residual market share supported by media share of voice and retail share of shelf. Wake up!

Into the Black

Blacks, the outdoor store, has placed its O'Neill stores in administration and confirmed it will default on its debts. I would be sad to see Blacks go bankrupt. I've spent a lot of time there, planning treks and adventures. And I don't think there's an obvious alternative to them on the high street.

What can we learn from their predicament? Their website describes their portfolio thus:

The Outdoor Group comprises Millets and Blacks, the largest outdoor retailers in the UK, and Freespirit and Mambo, the leading retail chains in the newly emerging UK boardwear market

With the benefit of hindsight, this 'newly emerging' market (acquired with the Millets stores in 1999) was a bad punt for Blacks, for two reasons:

Blacks was vulnerable to economic downturn (they struggled very badly in the 1980s). Boardwear, more fashion/fad conscious and with a younger target market, exaggerated that risk. Blacks needed an anti-cyclical arm. It should have been well placed to develop one, but instead it has let brands such as Argos and Go Outdoor open up share in the 'value' end of the camping market.

Secondly, despite appearing to be a logical stretch, boardwear was maybe a step too far from the core - different product and different consumer simultaneously. Was there ever sufficient (real) capability leverage to give Blacks a robust advantage there?

Either vanity, or the promise of a fast buck, led them in the wrong direction. How many of us can claim we wouldn't do the same? For the sake of all our vanities, I hope Blacks survives.

Falling trees. Shaping contingency strategies.

After a short lull (the media even rallied with a few 'green shoots' stories), another cascade of financial awfulness. It seems unlikely that the car makers will all survive without massive subsidy - which governments appear unwilling (probably wisely) to provide.

Detroit's problems are multi-fold. Cars are expensive capital investments, not an appealing idea for worried consumers. And most car purchases in markets such as the UK are really discretionary - product performance means that the old one probably still works (mine just sailed its 7year MOT). On top of that the big 3 made some truly terrible strategic choices, such as too much emphasis on Chelsea Tractors, and being distracted by vanity brand acquisitions (Jaguar, Volvo...) when they should have been more worried about their own failing product development capabilities. Not to mention the lack of stakeholder insight demonstrated by the infamous private jet trip to Washington. (The day which surely sealed Richard Wagoner's fate?)

But not all of their problems are unique. For example, other industries depend on purchase finance loans ('buy now pay later') to close the sale - and these are now both less appealing and less easily provided. It can be little more fun right now selling sofas than it is selling the apartments to put them in.

And there are plenty of other ways consumer spending behaviour is changing - as any fashion retailer will tell.

It is not even necessary to be a failing company. Being a supplier to, or customer of, one may be enough. Zavvi were undone by their dependency on Woolworth's logistics. Bad news for sheet metal suppliers today is bad news for the customers of sheet metal suppliers tomorrow.

It isn't always possible to avoid falling trees. But a little contingency planning could mitigate some risks - such as reducing dependency weaknesses through diversified supply chains. It could even create opportunities. Where might gaps in the canopy open near you? What are your competitors' weaknesses? And how could you exploit them?