In this (approximately monthly) newsletter, I take the opportunity to promote the marketing discipline. Whether you're a career marketer or not I hope you'll find these small tidbits useful as little reminders for yourself or your colleagues. I also try to keep it reasonably topical and not too academic. I hope you'll contact me if you'd like to discuss the topics further. This month the topics for discussion are:
- How's your connection strategy? A one-minute guide to increasing business performance.
- Doing business in China. Some tips for those considering the future in the light of the free trade agreement.
- Premium branding. Encouragement to look at the high-value end of the market given the intense competition at the lower end of the spectrum.
- Shock advertising. One marketer's opinion on when it works and when it doesn't.
- Seminars. An introduction to a new Marketing Guy service.
HOW'S YOUR CONNECTION STRATEGY?
Last month Peter Drucker reminded us:
Marketing is a generalist discipline concerning itself with every aspect of the business being directed towards strengthening the commitment between the organization, its brands and its customers.
This is a very broad statement and tends to lead the mind towards complexity particularly if you are working with a large organization. A phrase I have been using for some time now, which I find very helpful is "Connection equals Performance". It is useful shorthand that captures the idealistic sentiment or situation i.e. if your organization connects strongly with its target audiences (multiple high quality connections) then the organization must necessarily receive, understand and ultimately meet the needs of its audiences and thus prosper.
In practical terms what does this mean?:
Receptivity i.e. open channels of communication between the organization and its audience.
Interest i.e. those channels being attentive, engaged, interested in what audiences are doing, saying and thinking with respect to your brands.
Empathy i.e. the organization or brand's communications and behaviours display a deep understanding of where the audience is at, their needs, their concerns, their aspirations.
Responsiveness i.e. upon understanding an audience's needs, doing the utmost to meet those needs.
Managed Touch Points i.e. thoroughly crafting each customer contact opportunity so that the customer receives a consistent, positive, respectful interaction at every point along the value-creation chain.
The point is axiomatic. If you want to have a successful organization and brand you need to understand your customer relationship and craft customer expectations and customer experiences. Do these well, create strong connections to your audience and you will create profitable, growing and sustainable performance.
DOING THE BUSINESS IN CHINA
With the signing of the China Free Trade Agreement I'm sure I'm not alone in the soul searching I've been doing in the light of recent events in Tibet and with respect to the Olympic Torch escapades. Like most of you I am acutely aware of New Zealand's need to increase its commercial opportunities beyond our shores. Last year I attended an excellent presentation by David Skilling which really drove this point home. Specifically, the negative effects of foreign investment in New Zealand that we have failed to counter-balance with sufficient offshore investment and earnings from offshore markets.
The purists would argue that trade with China is unethical given their history and human rights record. I don't necessarily disagree with the emotion behind this belief but given that nearly every cheap consumer product I buy has at least some Chinese content, it would be hypocritical of me to take too indignant a stand at this point. I too hold out some hope that China will moderate its policies and practices in the fullness of time. I pray that China will take a more moderate stance with the people and exiled spiritual leader of Tibet but I wont be holding my breath on that one. That's me as an individual, what about we as a nation?
I do take issue with the way our current government has handled this whole agenda. How can a government which opposes the slaughter of whales effectively look the other way with regard to the abuse of whole countries and cultures by another? How can a government which condemns Fijian demagoguery then go on to support demagoguery or totalitarian rule of another kind? Is this purely economic pragmatism, a situation in which only size matters? Or is our dear leader comfortable with this double standard even if many of the rest of us aren't really sure? Anyway, I rave. My real bone of contention is how are we to ultimately decide what is right for us as a nation if we have no clear vision for this country by which we can measure these very important decisions? Without a clear signpost of where NZ is heading, just about anything is up for grabs.
Getting on to the main point of the article. The current situation is clearly in China's favour with almost unfettered access to NZ for most of their exports. Many NZ businesses have previously suffered and ultimately adjusted to this situation and many have even moved their manufacturing to China to try to rebalance and take advantage of the improving production quality there and the favourable cost of goods.
If you are considering doing business in China, I'd just like to offer a little advice. I'm no China expert but can offer some perspectives I formed when I used to get up that way a bit.
1. China is not one China.
Anyone who has worked in China will tell you that there are many, many different cities and provinces. The entire population of NZ would fit into any one of the smaller cities. So don't think of China as one market. Think in terms of markets plural. Also it is important to understand that coastal China is very different from rural China. The coastal regions are relatively wealthy with rapidly expanding middle classes and very very wealthy entrepreneurs and corporations. Rural China is very poor by our standards and is predominantly still agricultural, resource based and occupied by peasantry.
2. Don't under-estimate the impact of bureaucracy.
China has an ancient history of bureaucracy and so it is absolutely normal that something as simple as getting the stamp you need to clear some important manufacturing equipment through customs may take weeks if you don't go about things the right way. Make sure you know how things are done before you do them. You can never start relationships with key government, local business and local bureaucrats too soon. There may come a day when you will need their help. They help their friends first.
3. Get help.
Local knowledge will be absolutely crucial. Talk to NZ Trade and Enterprise before you go. Make contact with Chinese business people in NZ before you go. You'll be amazed how well connected the average entrepreneur is. The average Chinese entrepreneur quite typically spends at least half his or her time on establishing and maintaining useful or potentially useful business relationships both during and outside work hours. If you need to, contract someone in China as a facilitator. Someone to make introductions for you, open doors, smooth the way for you. If possible talk to someone from another NZ company who has already learned the ropes.
4. Unity is strength.
The Chinese roadside is littered with western entrepreneurs who tried to go it alone. The successful ventures, large and small, did it through cooperation. Partnerships, joint ventures, reciprocal investments, licensing and distributor agreements are the way to go. Most likely you'll need to do this market by market. You may find that a partner who is strong in Beijing has little experience of Shanghai or further south. In China, your relationships will be your single most important business asset during the difficult establishment phase.
5. Go there.
If you plan to do business in China, get on a plane and invest some time in exploration. Don't leap at the first opportunity that apparently comes your way. Go and evaluate potential markets and potential business partners first. Because of the population, the potential sales numbers are staggeringly large and you'll see dollar signs and lots of zeros. But so are the costs and the risks. Finding the right partner will be the most important decision you'll make.
On a somewhat related topic I just wanted to take a minute or two to talk about premium brands. NZ is an economy largely built around retail malls, mainstream shoppers and red sheds swimming in low cost products manufactured in low cost economies. A typical ad break here could quite possibly show mainly discounted or 'mass' offerings. With the exception of cars, houses and some fashion lines New Zealanders are not known for over-the-top conspicuous badging or consumption. And with the worsening economy this is unlikely to change any moment soon. Having said that I'd just like to remind you all about a couple of important points:
1. There are always customers in every segment who place a premium on high quality, high fashion or high scarcity brands.
2. In a market of mass appeal, everyday brands the easiest way to stand out is to take the premium position.
3. Where you are up against large competitors or competitors who have lower costs of goods than you, it is difficult to compete in the mainstream.
4. In theory at least, premium brands deliver higher margins in dollars if not in percentages.
The premium position is often overlooked by NZ marketers as we typically are tyrannized by the appeal of big, mass market volumes and short-term sales goals. Obsession with absolute revenue and market share growth tends to lead to myopic and mainstream thinking. If you want to achieve a break-through for your organization look very closely at your market and try to identify the premium end opportunities. If you want to succeed against Chinese imports, or in the China markets, definitely look at the premium opportunities.
The following is a recent excerpt compliments of the Blake Project website on the topic of 'premium-isation'.
"There are many reasons for the sudden rise of premium-isation. British consumers are time-poor and cash-rich, and, as a result, they are more comfortable paying higher prices if the exclusivity and extra value is there. On the manufacturer side, we are finally entering an era of mass maturity. Most categories, especially in food and beverages, are now established. With no apparent direction left or right into new product areas, many marketers are attempting to move up instead. Higher prices reduce significantly the need to sell in huge numbers.
Then there are private-labels. As British private-labels have grown in quality and popularity, they have forced brands to premiumise to find a high watermark where the rising tide of store brands won't affect them. But retailers are no dummies; they too have discovered the potential of premium-isation; Tesco Finest is possibly the best example of premium-isation in the UK.
A final explanation for the growth in premium-isation comes from Stanford University in California. A cross-disciplinary team there has been running a series of experiments on college students in which they are offered identical products, but told they are of differing prices. When students were asked which tasted better - one priced accessibly or a premium-priced one - most opted for the latter.
Interestingly, when the professors wired up the students to a brain scanner they observed that increases in price gave them more pleasure, even if the product itself was no different.
Like it or not, £85 burgers, luxury doggy puddings and £75 glasses of vodka are here to stay. Consumers are quickly growing accustomed to super-premium products - the age of premium-isation is upon us.
One final point. The NZ beer market has been in decline for quite some time. So what have been the outstanding successes in that time? Heineken, Stella Artois and Corona and the various specialty brews, and they are all premium priced!!!"
DOES SHOCK ADVERTISING ACTUALLY WORK?
It's an argument that won't go away. A client asked me the question recently and I had to say that I fall into the 'yes' camp on this one. But like any tactic you have to define it in terms of the strategic goal. So it's not a blanket 'yes' but a 'yes' with a 'but it depends' attached. We've recently been hit with a new wave of anti binge-drinking and anti drink-driving communications. And lately I've even seen a lot of advertising for side air bags using a woman who suffered serious injuries from the lack of them. (As an aside, once again our government tries to advertise its way out of a problem rather than just enforce a side air bags rule with all car dealers and importers!!!!) So what are the conditions that might require, or be assisted by, the use of shock advertising?
1. A category in which it is difficult to break through the clutter of advertising
2. When advertising with a small budget
3. When there are high degrees of complacency and inertia with respect to your advertising proposition
4. When the target audience is suffering from "communications fatigue" ie they are almost immune to the message
5. When you're looking for a strong reaction or response as opposed to just taking a message on-board.
But be warned! If you go for shock value and actually irritate or offend people, they will most likely just reach for the remote and tune you out. And that's what I tend to do with all those anti-smoking, anti-drinking, anti-speeding commercials. Game over. But that's just me.
Finally, today's shock response is tomorrow's yawn response as viewers quickly immunize themselves to your message. And don't you always find it is the ordinary, decent law-abiding person who is shocked while the drug abusing, alcohol immersed, violent wife beating, speeding driver is just too damn busy getting his twisted thrills to watch TV anyway?
This month The Marketing Guy Ltd launched a couple of new products. With the shift in the economy it's quite likely that some of you are going to face some difficult challenges in the months ahead. In which case you're really going to need all the help you can get with sharpening up your marketing thinking, marketing strategy and marketing planning. To help you rise to that challenge I am designing a series of half-day presentations, each centred on particular aspects of marketing, strategy and branding. The idea is that you commission me to present to the whole team and as such your per-head cost is much lower than what you would normally need to spend attending a half day, one day or one week seminar. In the workshops we cover topics like:
1. Beating the Budget; Ten Strategies for Increasing Business Profitability
2. Advertising is not the Silver Bullet; Using the Wider Marketing Mix
3. Avoiding Brand Addiction; Creating Portfolios of Brands for Growth
4. More Bang for your Bucks; Smarter Targeting and Better Marketing
We've also put together a ten session version called:
TEN WORKSHOPS FOR BRAND MANAGEMENT AND MARKETING SUCCESS
1. 10 Secrets for Success in Marketing and Brand Management
2. Brand Positioning and Brand Blueprints; Getting the Fundamentals Right
3. Creating Winning Brand Strategy and Brand Plans
4. Producing Internal Momentum for your Brands; Getting the Whole Organization on board
5. Managing the Marketing Budget to Maximise Performance and Productivity
6. More Rewarding Communications and Agency Relationships; Teamwork, Creativity and Commitment
7. Researching, Testing, Measuring and Monitoring. Smarter Marketing for Better Results
8. Getting out of your Comfort Zone; using the Whole Marketing Mix
9. Making it Happen in the Real World; Simple Techniques for Better Project Management
10. Keeping the Boss Happy; Proactive and Corrective Strategies for Hitting the Numbers
If you'd like to know more or are interested to discuss these further please contact me or Denise on 09 5288808.