Product recognition is a marketing fundamental. But what really is the difference between products vs brands? The early brands used marks like the red triangle of BASS beer. This was actually a symbol of strength similar to Castlemaine XXXX or Wadworth 6X (Figure 1). Others from Ford to Kellogg to Boots used the simple signature of the owner. These were the first product differentiators.
Products that are named and recognisable in design and packaging can then be recalled by their qualities, properties, and attributes and benefits. This is all very logical so far ….
Yet brands also convey ‘values’ – the importance, worth, utility or usefulness of something (1). They build an image or perceptions in the customer’s eyes. In turn they also build a relationship based on emotions of trust and care, responsibility, and respect. We call this brand positioning.
Simply, adding more products under the umbrella of the brand has many attractions. In particular, in today’s fragmented and targeted media environment. It gives weight to messaging, and scale to business. We call this brand extension.
So take care that brand values are well aligned to product performance. Especially in both technical and service sectors. A single poor experience in a restaurant will lower the brand reputation across a chain.
This is a problem that befell Boeing. When their much-vaulted new plane, the Boeing 737 Max, fell out of the sky it took two years to sort out. The planes are now undergoing final stages of airworthy certification. And Ryanair have now ordered over 200. But they are now named the Boeing 737-8200. No Max (Figure 2).
So to summarise the difference between products vs brands. Brands are a value-added subset of products and services. All brands are either products or services. However, not all products and services are brands. Not all products and services have a good awareness, a distinctive image nor a strong emotional connection with consumers. Nor the massive share price over earnings multipliers of the strongest brands.
So be clear about the difference between products vs brands. And manage the risks and invest accordingly.
(1). Oxford English Dictionary. While the word ‘values’ is useful to a point, it is also a somewhat vague term. And thus we prefer the more specific concepts of benefits, personality traits, beliefs and behaviours to understand and describe brands. They are more powerful to develop brand strategies.
The Covid-19 pandemic has changed the lives of us all. So many businesses have been adversely affected through seemingly no fault of their own. But let us look at this a little more closely. To the true marketer there may be more going on than first meets the eye. No doubt opportunities beckon; some you would expect but others you may not. So with plans to ease the restrictions announced (1) now is the time to plan your lockdown bounce-back.
Sales of high heeled shoes have fallen dramatically (2) notwithstanding the staying at home, health and fashion memes that are already taking hold. Car usage has also declined due to concerns about climate change and healthy living. And sales, by uncertainty and lack of understanding about electric and hybrid.
However, these underlying shifts are merely being magnified by the C-19 pandemic. And the biggest shift of all … to a digitally dominated world …. is facilitated by evermore smarter phones with increasing accessibility and more acceptable access cost.
The shift is most obvious in retail (3). Whilst many retailers bemoaned the health crisis and gobbled up the Government grants, this merely diverted attention from their inability to anticipate and position themselves to compete in a digital world.
Consequences flow from the inflexibility of Marks and Spencer, to the ubiquity of Tesco, to the profit squeezing of fund-owned brands such as Boots and Debenhams. Also the fall from grace of wheeler dealers who grew fat on the glories of pre-existing brands. All of course were further compromised by greedy local government making it difficult and costly to visit any high street.
As the UK Government recently announced plans to lift the lockdown, now is the time to plan your lockdown bounce-back!
Firstly it is important to consider the overall trends; what are the underlying forces, and what do these mean for your future? This is key to devising effective business and marketing strategies.
A recent CEO survey suggests that 77% of UK CEOS are increasing their investment in digital transformation as a result of the pandemic. So work out the best balance and inter-relationship between on-line and offline, and invest accordingly. Many recognise too that the balance of office and home working has changed forever. This is an opportunity to boost staff morale, as well as improve efficiency, and enhance sustainability credentials. We certainly feel this way. And we’ve heard anecdotal tales of staff at some businesses being told to work more slowly because they were getting more done at home!
Remember too that managing marketing in a digital world contains lots of traps for the unwary. So tread carefully. The quickest wins are likely to come from your core target market. So focus on the ‘sweet-spot’, and promote in tones that reflect the circumstances in which we live.
Lockdown bounce-back also means recognising the long term benefits and the importance of your brand, as well as giving attention to your detailed product and service offering. So remain true to and clear about what sets you apart.
Going forward retailers must pay more attention to the shopping experience that they control rather than hand it over to the brands they stock and don’t own. John Lewis, and many garden centres, for example, have long realised the appeal and profitability of restaurants.
And finally the Government must step-up too. And strike a fair playing field in terms of taxing the High Street, and on-line pure plays. It is time to change the rules for those who are based in, or channel revenue through, offshore havens.
(1) Press release from The Prime Minister’s Office February 22 2021
(2) Glossy.co (2020)
(3) A record 35% of sales were online (January 2021 – ONS)
(4) CEO survey (PricewaterhouseCoopers March 2021)
We often get asked to help businesses get closer to customers and to develop new business, marketing and brand strategies. Yet businesses plan, organise and manage in different ways. Virtually all also have their own lexicons. Thus sometimes a challenge to address the latter really requires the former and vice versa.
However, a marketing mindset is powerful to address either, and indeed all of these challenges. Marketers are also increasingly empowered to lead business strategy, and many of the world’s most successful businesses are led by CEOs who previously held marketing functional skills.
However, marketing has not always been viewed as a strategic planning and management discipline. It only emerged formally as such in the 1950s (1). Marketing functions evolved from sales, and brand functions, from communications. However, customers and brands are the only constant in a fast-moving digital world.
So here is a simplified strategic planning process that is adaptable for all (2) (Figure 1 – Infographic).
By understanding where a business or brand is now and where a business wants to be in the future allows route-map development.
So first understand where the business or brand is now. Ask what are current business, marketing and brand strengths and weaknesses and business drivers?
The marketing discipline uniquely looks through the lens of customers and customer segments to assess issues, size market opportunities and demand influences. It also looks at competitive relativities. So the answer these questions looking through these lens.
Work with colleagues and allow human imagination to generate and build ideas (2). Then create clear, challenging, and inspiring goals. While some organisations prefer an analytical approach to business strategy development, others prefer a more creative approach. However, there is merit in dual ‘left brain’ and ‘right brain’ thinking. Left brain thinking involves assessing the pros and cons of each idea or opportunity. Right brain thinking requires stepping away from the detail, and taking inspiration from the world around, to imagine new opportunities and destinations. In our experience no-one has a monopoly on good ideas, and employing different brains fuels progress.
Planning from the customer, market and brand point of view requires considering how to establish or meet customer needs or change customer perceptions. As distinct from setting financial goals, say increasing sales by 5% or realising £Xm. The limitation with the latter is that it is not initially market and customer based. Though financials will need overlaying at a later date.
By clarifying where you are now and want to be, will allow you to quantify and qualify the size of the gap that needs bridging. In so doing, potential roadblocks or key issues to address should also become clear. So then the challenge is to design strategies – ‘how to’ solutions, to address the key issues. If this is not possible, then new goals need setting.
Engaging colleagues is important to gain buy-in to a way forward.
The best solution is seldom the one that is 100% technically correct if only 20% of stakeholders agree with it. However, a better solution is one that is 90% technically correct where most stakeholders agree with it.
Thus engage a broad church to fact-find, understand hopes and fears, and generate ideas. Then work together to turn your ideas into concrete strategies and solutions.
Through working together, and judicious market research, the best ideas should naturally surface to the top. And with agreement every step of the way, comes a mandate for, as well as desire and commitment to change.
Change, and the journey to success will not happen overnight. Especially if the journey involves shifting customer hearts and minds. So be pragmatic about what’s achievable, at what cost, and by when. Also understand the risks and barriers to change and factor these into your plans.
Figure 2 shows a typical journey from basic product to power brand led business. At each stage on the product-brand continuum you’ll realise additional customer and business benefits (3).
If you are a product, service or sales-led organisation, there are benefits in simply understanding and meeting the needs of customers. So put the customer and his or her needs first and centre using market research.
For organisations in markets where brands are emerging as a differentiator, you also need to understand your competitors. And use these insights to better position your brand.
For digital and service organisations delivering through people, and for larger product brands, understand and influencing perceptions through all brand encounters. This needs structures, skills and processes to focus and align people activities and behaviour to deliver consistent brand experiences.
Finally, the very largest organisations and those contemplating expansion into new countries and categories require more sophisticated relationship building strategies. So build brand personality, structures, skills and processes to extend your brand.
Everyone knows how much our lives have changed since the advent of the digital age and C-19.
The number of platforms, their actual usage and also time spent online has just grown and grown. It also sky-rocketed at the height of the Spring Coronavirus lock-down to 4 hours and 2 minutes a day (April 2020) compared with the mean time spent online in 2019 of just 3 hours and 19 minutes (1). And linked to this the online proportion of total retail sales also sky-rocketed to nearly 33% compared with less than 20% through the whole of 2019 (May 2020)(3).
It is fair to say that this massive growth caught everyone by surprise except the early digital adopters who could easily be underestimated as nerds, the youth of today or both!
The world will never be the same again. Let’s face it, digital permeates every aspect of life for every generation of whatever creed or country. Generation Y (so-called Millennials) watched as the digital world erupted around them, and Generation Z were the first generation to live digital lives from birth. The current lock-down can only embed the shift to digital. And the children of Millennials (Generation Alpha) are set to be the most digitally savvy ever (Figure 1).
But did you know the extent to which Google and Facebook dominate online reach and time spent online? (Figure 2). In the UK, they reach over 95% adults and command over 45 minutes and 30 minutes a day respectively. Their dominance is such that a massive 39% of total time is spent on Google-owned media (including YouTube) and Facebook-owned media (including Instagram and Whats App) (4).
And as the public turned online, so has Marketing. As a result, some 57% of total UK advertising expenditure now goes online. Initially and still mostly to Google, who offer certainty of audience reach at a competitive cost and also expertise on the vagaries of search and algorithms. All without the need for a long term commitment to planning or creativity.
Yet their costs have grown and thus the balance of spend has tilted their way at the expense of TV and press, outdoor and public relations, and even other online media. Such that some 78% of online advertising spend, now goes to Google and Facebook (5). However, advertising was not their original nor primary intent, and their advertising and analysis offers are only based on a superficial understanding of marketing. Not for these digital experts the troublesome need to build brands or customer loyalty, but merely to attract clicks.
However, there are now signs that the emperors’ clothes are wearing thin. Google’s annual minutage fell in 2019 (6), and search advertising revenue appears to be flat-lining. Though Facebook advertising shows continued growth (Figure 3).
So how to manage marketing in the digital age? Building strong brand relationships and customer loyalty remain the bedrock of marketing.
While the digital world perpetuated keeping in touch and entertainment in many forms, customer usage also expanded through predictive text and emoji. Because people do what they always do … congregate and gossip, and be amused and saddened.
For human nature is what it is. And understanding human nature and their concomitant behaviour is also at the heart of Marketing.
The fundamentals to manage marketing in the digital age remain constant as much as change is a constant. It is in embracing change and remaining customer-centric that Marketing is most successful.
The Marketing Director’s role is to understand and exploit the change to benefit their organisation by always staying one step ahead. That’s what successful marketing has always done and must continue to do.
To help you stay a step ahead, we’ve now launched Volume 2 of The Marketing Director’s Handbook – Managing Digital Marketing. This spotlights, and puts marketing in the digital age in context. It provides practical insights to help you understand the changing digital world and also to manage key digital marketing activities. In particular, to optimise your website for search, and better use advertising, and social media to attract and engage more customers. And most fundamentally to better lead your organisation, and manage the marketing whole.
This new volume fits like a jigsaw piece with the original practical marketing guide. It is a unique reference work you’ll be able to refer to time and time again. It is available from all good bookshops, including The Chartered Institute of Marketing bookshop, Foyles, Waterstones, WH Smith, Blackwells, Amazon, many university bookshops, as well as our own bookshop (with free P&P).
1, 2, 5 and 6. OFCOM Online Nation 2020. Base: All adults 18+
What are brand extension strategies for success? And when is it better to extend your brand or launch a new brand? Let’s start with a short story to illustrate some of the factors to consider.
In 1881, Rowntree launched Fruit Pastilles, and then in 1893, Fruit Gums. Their success allowed them to launch new chocolate products, including chocolate beans. However, through the early 1900s, Rowntree struggled to make milk chocolate to match the quality of market leader, Cadbury’s Dairy Milk. Then in 1931, George Harris became marketing manager for chocolate products. So mining his knowledge of marketing and consumer research gained in the USA, he launched Rowntree’s Chocolate Crisp, later renamed KitKat (Figure 1). Fast-forward to today and there are over 200 KitKat brand extensions.
He also transformed Rowntree’s Chocolate Beans into Smarties. So today you can now find large Smarties, Fruity Smarties, and ice cream Smarties, amongst many other brand extensions.
While launched as ‘fruit confectionery’ brand extensions, this gave KitKat and Smarties the focus to grow into discrete, and successful new ‘chocolate’ brands. Harris was lauded for this success, and as a result, he became Rowntree’s company Chairman in 1941. Today he is also viewed as a father of modern marketing (Figure 2).
There are two principal benefits of extending your brand. So consider what you wish to achieve with your brand? Either or both to:
However, the further a brand extends, the greater the potential dissonance from the core. While this may imply greater opportunity, and potential for a ‘new’ brand, it also implies greater risk. (Figure 3). The question then, as George Harris understood, is whether a brand extension or new brand strategy will inspire greatest success?
Extending a brand allows it to benefit from its existing brand awareness and equity, thus potentially reducing launch promotion costs. Conversely, launching a new brand, requires building new equity. Thus at higher cost (See Figure 4). This form of brand extension strategy is likely to be most suited to launching a ‘new to world’ product or variant which requires a more differentiated positioning.
There are two principal brand extension strategies; ways to extend a brand, either by evolving from the brand core or to realise a brand vision.
Brand extension from the core requires understanding on the nature of the brand equity, its strengths and weaknesses, and then building on those strengths, or eliminating weaknesses.
In 1935 Boots launched a retail own brand called Boots No7. Originally, it was just a skin care line, though cosmetics followed and subsequently took off after the war (3). Over the years the brand had many make-overs: both changes in livery (blue, terracotta, brown, grey, black etc). Also many brand extensions. Though growth was impeded through a close association with Boots. So in 1971 the decision was made to build an independent fashion brand, exclusive to Boots.
New product innovations also added to the ‘skin care’ equity, with (No7 Special Collection) Positive Action Cream (1980) (designed to compete with upscale skin care brands). Then in 2007 No7 Protect & Perfect Serum. A BBC Horizon documentary declared it the only product on the market to have proven anti-ageing effects. As a result it caused a storm in Boots’ aisles with stock selling out in two weeks. Today ‘Protect and Perfect’ is a sub-brand extension in its own right. It also sells outside of Boots’ stores (Figure 5).
Olay is a pink beauty lotion (or Oil of Ulay, Olaz, or Ulan as it was originally known) launched in South Africa in 1952 (4). Promoted as ‘the secret of younger looking skin’, it eventually became global category leader. While largely a single product brand, it was clearly perceived as ‘for younger looking skin’. In 1985, Procter & Gamble therefore acquired the brand, and invested significantly in R&D, to create a raft of brand extensions to better deliver the said promise. As a result, brand extensions now include Complete, Total Effects, ProX, Regenerist, Regenerist Luminous, Classics, Fresh Effects, Body (North America) and White Radiance (Asia). They also include lots of ingredients to deliver the younger looking promise: including a broad spectrum sunscreen, retinyl propionate (a vitamin A derivative), glycerin, niacinamide (vitamin B3), and amino peptides.
Gucci started out making saddles for wealthy horsemen in Tuscany in 1921 (5). Impressed by some of the luggage he saw guests with at luxury hotels, he then employed fine leather craftsmen, and the latest machinery, to make luggage. He also set up stores to reach elite customers. Clothing then followed in 1964, as did the iconic double GG logo on belt buckles. Through the 1970s, the company established a reputation for classic Italian style and luxury, and prospered. While ups and downs followed, the hiring of the highly creative Tom Ford to design a ready-to-wear collection in 1990 took the company to new heights. Most recently the brand stretched into homeware and decoration (Figure 6). It also encouraged social sharing via digital media. This has inspired further growth.
Caterpillar Inc. (sometimes shortened to Cat) is the world’s biggest manufacturer of construction equipment. The name results from the merger of two companies in 1925; one of whom Holt, whose tractors hauled guns in World War 1. During World War 2 their trucks also found fame with the US Navy who used them to build military bases. Then through the 1950s, the company made a series of acquisitions, bringing new products to market under the Caterpillar name.
By the late 20th century, Caterpillar was synonymous with reliability, durability and technology, and a distinctive yellow livery. In 1994, therefore, via a carefully controlled licensing programme, Caterpillar extended the brand to a other merchandise. Firstly, and most famously, boots. The footwear sector has since boomed, and it remains the most successful consumer product licensing segment to date. In the late 90s Caterpillar then issued its first watch license, to Catwatches.com (Cat calls them rugged timepieces), and in 2016, to mobile phones. According to Kenny Beaupre, Caterpillar Brand Licensing Manager, “This builds positive brand awareness which helps in many ways. It also connects new and existing audiences to Caterpillar’s products and services. We’re fortunate people like being associated with our brand, and Cat licensed products are a great way to show this connection.“
Walt Disney, a shy yet visionary man, famously created his first sound cartoon, Steamboat Willie in 1928 (4). It featured what was to become the world’s best known mouse. Later in 1935, he went on to create the first full length, animation, Snow White and the Seven Dwarfs. Then in 1955, he opened the world’s first amusement park, Disneyland (in Anaheim, Los Angeles). To fund this he also diversified into TV programmes, including the Mickey Mouse Club, and live action movies. As a result, by the mid 1960s, when Walt Disney died, he’d set high standards, instilled strong beliefs in, and established a clear vision for the company, “to make the world happy”.
This vision has since guided Disney’s “imagineering”.
1. Brands grow through evolution (from a brand promise), or revolution through innovation to realise a brand vision. So build clear brand values. And also answer the question – “what does the brand stand for”? (Figure 8)
2. Great brands, and thus brand extensions, tend to have high awareness (at least in their niche). And also distinctive rational and emotional benefits. So pay particular attention to boosting the latter, as people pay more.
3. Successful brand development springs from clear insight, a strong creative leader, visionaries, a great R&D department, or a strong brand belief system.
4. Don’t think too linearly i.e. just within a market segment, to stretch your brand. Try and think laterally. So understand customers, and their views on your brand. Also seek a new insight or thread to connect the brand parts, and inspire a clear direction. Further even if a finding is untrue, it could still inspire growth.
5. You are more likely to reveal extraordinary brand extension ideas, through a culture of innovation. So hire bold and creative thinkers.
6. Don’t cannibalise your own sales unless you are making more money i.e. higher margins.
7. Slapping your brand name on any product risks eroding rather than boosting your brand. So avoid a stretch too far, and only use a new brand when clearly different and upside potential is great.
Need some help? Our brand strategy services are always tailored to your needs.
2. Sébastien Jaulent, Katia Luxin, and Yna Sacko, Dissertation on ‘Advantages and Disadvantages of Brand Extension Strategy for Companies’
3. No7 Beauty
7. Capodagli Bill, Jackson Lynn, The Disney Way – Harnessing the Management Secrets of Disney in Your Company (1988)
As marketing folk, rather than politicians, we think in a particular way. We also have roots across the country, and don’t live in the London bubble. So reflecting on marketing politics over the General Election, and since the EU Referendum, we share thoughts on lessons learned.
It is Friday 13th December and all of the results from the first winter-time general election since 1923 are in. Of 650 seats, the Conservative Party have 365, a clear majority of 80. That’s an increase of 47 more seats, while Labour Party lost 59 seats. The reflects a 44% and 32% share of the vote respectively. The SNP also gained seats with a 45% share of the Scottish vote. The Lib Dems lost one seat overall, most notably that of leader, Jo Swinson. Their vote share was just 11%.
The Conservative seat gains are largely in the North, Midlands and Wales. These are also amongst the highest Brexit supporting areas. And also areas of traditional working class labour support. Though Labour also lost share of vote in strong remain areas (1).
According to numerous polls in the run up to the election, the key issue facing the country was firstly, though not universally, Brexit. Second, health (i.e. the NHS). And third of approximatly equal importance, crime, immigration and the economy (2).
Of course, the Brexit issue masks different needs, either to leave or remain in the EU. Nevertheless, the 2016 Referendum result stands, and ‘leave’ was endorsed in the 2019 local European elections. Further, Parliament’s inability to get the job done has compounded public frustration.
The Conservative message focused primarily on ‘Get Brexit Done’ and also ‘Unleash Britain’s Potential’. Secondarily that enabled investment in the NHS (20 new hospitals, 30-50k new nurses etc.) and 20k more police. Thus cleverly linking the voter’s #2 and #3 concerns to the first. Whereas Labour focused primarily on the NHS (the concern most relevant to their supporters) yet offered a protracted and no obvious solution on Brexit.
Yet interestingly, despite the Conservative’s focus on Brexit messaging, a recent survey suggested that still only some 57% associate the party with this cause. Thus while many of us may be bored with the message, it failed to reach 43%.
At the same time as promoting ‘Get Brexit Done’ the Conservatives also ‘dissed’ the ambiguity and incredibility of Labour’s position in calling for another referendum, and being unclear what they would support.
Conversely the Labour Party attempted to stoke fear that the NHS would be sold by the Conservatives to Donald Trump). This message was strongly challenged, unsupported by documents provided. Procuring drugs from US companies at the right price appears an entirely different and less relevant point.
While historically voting allegiances split along age, wealth and geographic lines, the Brexit issue has complicated this pattern (3). There now appear to be more different types of people with differing underlying concerns. In London, folk are younger, more white collar, work for big, multi-national business and are remain concerned. Whereas in the Midlands, North, and Wales, as well as parts of the South, there are also larger numbers of blue collar, small business, and leave concerned. As the Conservatives have won them over, reading between the lines, it appears that Labour has failed to understand and meet their hopes.
Social media which allows targeting by multiple demographic and psychographic variables seems to have played a significant role.
Of course, it remains to be seen whether Labour voters’ switch of allegiance is temporary or evidence of a fundamental shift in attitudes.
The Conservatives elected Boris Johnson leader partly on the premise that he would give them a bounce in the polls. He has also consistently led Jeremy Corbyn on leadership ratings (strong, decisive) (4). While there are many personality issues on both sides, it appears there is considerable anecdotal evidence on doorsteps that JC was a liability. The Conservatives knew this and it was central to their communication strategy – ‘we’re not Jeremy Corbyn’ (rated dislikeable, weak, untrustworthy) (4).
Sensing decline under Mrs. May in the Summer, the Conservatives, quickly replaced her with a fresh face. While much has been made of his personal life little appears to have harmed. Again this is interesting, and by comparison, we should remember that a ‘colourful’ personal life appears essential to get top jobs in countries such as France and Italy. Looking to the future, it remains to see what type of Prime Minister Boris Johnson will be. He has the opportunity to choose and learn from others – perhaps Winston Churchill or Ronald Reagan.
Today’s announcement that JC will not stand at the next election in order to oversee a change of leadership and not go quickly seems to prolong Labour’s difficulty. Though perhaps in time, the Labour Party will thank the Conservatives for hastening his end.
There are many myths about the role of marketing. Some perceive marketers as customer champions, growth drivers and highly creative. Yet others see them as ‘fluffy’ and lacking in commercial nous. A glance at the back pages of many newspapers or online marketing posts also reveals a variety of different titles for the job of marketing director. Including customer, experience, digital, direct, brand, communications, commercial and so on. Thus it is no wonder there are differing and sometimes contradictory perceptions. All underlines that a successful marketing director requires a combination of skills and expertise.
It never surprises how few really understand marketing. Thus go out of your way to explain what marketing is to your colleagues. In particular, how it works, and adds value. This will help win trust.
At the same time, steer your business to a more successful place. Success will follow not just from what you do, but also how you do it. So manage the day-to-day and set the tempo for the business. Get what needs to be done done, while looking to the future. In particular, articulate a bright and motivating future and work collaboratively with your colleagues to win friends and influence.
As Jack Welch once wrote in a letter to shareholders:
“In the old culture, managers got their power from secret knowledge: profit margins, market share, and all that… In the new culture, the role of the leader is to express a vision, get buy-in, and implement it. That calls for open, caring relations with every employee, and face-to-face communication. People who can’t convincingly articulate a vision won’t be successful. But those who can will become even more open – because success breeds self-confidence.”Jack Welch
No matter how sophisticated organisations might seem on the outside, it’s amazing how many hire and expect marketers to make decisions based on their own ‘gut-feel’. However, history suggests that the most successful are those that best understand their customers. As a result this is not something just to pay lip-service to.
You’ll also make better decisions based on facts – who customers are, their needs, attitudes and behaviour. This is particularly true in our increasingly digital world. A world with more and more data, yet that is sadly lacking in insight.
Thus accurate and comprehensive understanding on customers and their needs is vital to optimise products or services, and communications. Specifically this means understanding the ‘why’s’ behind that ‘what’s’?
This also means investing in processes and people to do this. So do this yourself, and also encourage colleagues to do likewise.
The nature of customers, markets, and technology, also means that new opportunities and threats are emerging all of the time. Yet history is littered with organisations that failed to adapt or change to new threats. Those that failed died an untimely death.
It is also easy to become ‘blinkered’ by corporate cultures, and trapped by a ‘flimsy’ job specification. Someone in the company therefore needs to look outwards, and challenge and reinvent the ‘wheel’ to grasp new opportunities and anticipate and head off threats.
Marketers can and should be the eyes, ears and ‘early warning radar’ of the organisation. This fits perfectly with helping everyone understand and focus on customers. However, don’t do this on your own, nor view this as a power grab. Moreover, an exercise to empower your teams’ eyes and ears to feedback to the organisation’s brain.
By knowing most, and what’s going on first, gives a competitive advantage. Some also call this foresight.
Attracting customers and making money are common business goals. This is where marketing makes its most important contribution. However, only marketing directly fuels growth. Other functions fuel efficiency. So combining both leads to more profit, and better stakeholder returns.
Effective management is only possible by measuring ‘key performance indicators (KPIs). So as you have growth objectives, and responsibility for marketing initiatives, it is natural that you measure and manage the numbers. Simply so that any deviation can be understood and addressed.
In managing the numbers, also understand the relationship between customer and financial outcomes. Thus the ability to justify where to invest in, or fine-tune, your marketing activities.
So get your CFO onside. The more heads on the case, the better the ‘measurement’ solution.
A quick win is to work with your CFO to establish a marketing and financial dash-board. This will also boost your Boardroom credibility.
If your colleagues do not understand marketing, you can be sure they do not understand brands. So this challenge also starts by helping them understand. And in particular, to establish ‘why bother with your brand?‘
First, to simplify and drive customer choice and purchase. Second, to enhance value (brands command premiums) and shareholder value. Also, to align hearts and minds and deliver consistently over time.
While the management function to boost brand stand-out and appeal is marketing, you’ll also need help from other functions to deliver your brand.
In particular in service companies, where the good work of an advert in raising expectations is sometimes undermined by a surly customer service agent, or poor system. It therefore requires effective management of the customer touch-points or underlying processes to deliver a great brand experience.
Influencing brand delivery also requires you to influence in parts of the organisation beyond your responsibility. So work with your colleagues to identify issues, and deliver a more distinctive and appealing offer to your customers.
In highly competitive markets, both strategy and execution make a big difference to the results. Misplaced or poorly articulated words in a strategy also risk confusion or mistakes in product development or marketing communication. Sub-optimal products, positioning or communication also risk missing the ‘target’ or ‘need’. All risks wasted marketing investment.
The devil is therefore in the marketing implementation detail. Even a tiny improvement in response could add millions to revenue or your bottom line.
So set up processes, tools and techniques to make sure that both strategic and executional decisions are of the highest order. And then test and test again from low to high investment.
Through your great advertising and promotion work thus far you’ll build a reputation for being creative. So use this strength to help colleagues and the business as a whole. Also think about it this way. If the CEO’s role is to manage the big picture and the financial director’s is to manage the numbers, then the task of creating ideas lies with you.
So take the lead to solve problems that your business faces. Even if the problem lies outside of your functional area, the health of the business remains your prime responsibility.
Also bring colleagues together to this end. With the right skills, resources and creative tools no problem is insurmountable. And if bravery does not come naturally, remember that it is a just state of mind. So go for it! If needed, also bring in some external help. An even more objective approach could also help you unite and align your colleagues.
1. In short, you want to be a great marketing director not just a good marketing director. Greatness comes through business success. Then, as a result personal success will follow.
3. So put yourself in the customer’s shoes (and thus understand him or her) to make the best decisions.
4. Success will also follow through your ability to persuade others. In other words through your personal skills and relationships. Sometimes this is more important than technical excellence.
5. If in doubt, sleep on it.
6. If still in doubt, then ask round and about.
7. While it is lonely at the top, remember you are not alone, and don’t have to do everything yourself. Ask for help when needed.
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Productivity is an economic concept (Figure 1). It represents the ratio of economic output: input. Practically, productivity assesses the competitiveness of an economy, and the health or otherwise of constituent businesses. It also indicates a country’s ability to improve raise wages over costs as this depends largely on raising output per worker. Thus understanding UK productivity is key to determining how to improve the UK economy and businesses.
Since 2008, UK productivity failed to follow the previous 10 years plus trend line (Figure 2). Overall output fell by 6% yet employment by just 2%. As a result, productivity fell by 4%. Exactly why UK productivity failed to grow is hotly debated by economists (1). The decline is similar to other major OECD countries (with exceptions such as the USA and Ireland (2)).
We, therefore, thought it helpful to have a view. So in this article, we investigate why? We also pin-point lessons for UK plc and businesses. In particular, we cover:
In general, labour productivity is the ratio between a measure of output volume (gross domestic product or gross value added) and a measure of input used (the total number of hours worked or total employment).
For our analysis, we use the following UK Office for National Statistics (ONS) definition (3).
Productivity = output per worker i.e. Gross Value Added / Total Number of Hours Worked (by those employed).
Gross value added (GVA) is the same as gross domestic product (GDP) minus taxes on products plus subsidies on products. We use the ‘Chained’ definition to eliminate the effect of inflation.
We also use time series data with 2007 indexed as 100 to match Figure 2.
Thus, for productivity to improve, this means that output must rise ahead of hours worked. Or more must be produced in the same or fewer hours. Let’s investigate further.
Figure 3 shows first, that total hours worked failed to keep pace with the trend line between 2008-2014. The decline between 2008-2014 reflects the fall-out from the banking crisis. Between 2007 and 2009 some half a million lost their jobs when many firms down-sized, went out of business (and/or were taken over). Some notables in financial services include Northern Rock, Bradford and Bingley and Lehman Brothers. However, total hours worked is now back on the long-term trend line mirroring population growth. Nevertheless, the number of hours worked has failed to ‘grow output’ or it has held up despite the fact there is less to do. Both options suggest some time is ‘wasted’ or ‘inefficient’.
Second, total output (Chained GVA) grew strongly between 2000-2007. It also fell sharply at the height of the banking crisis, yet continues to under-perform the trend line. Thus this also appears a compelling reason for the productivity decline. Let’s investigate both of these factors further. Starting with the supply-side.
Since 2008 the number of single owner businesses and part-time employees grew above the trend line (Figure 4).
However, according to the Annual Business Survey, the ONS’s annual tracker, small firms produce less than large firms (Figure 5). Overall, therefore, it seems that a shift in the mix to less productive firms has depressed overall UK productivity. Further, as Figure 5 also shows, even the productivity of the largest firms fell during the heights of the financial crisis. This suggests that even switching some workers to part-time contracts, failed to maintain productivity. Of course, both part-time and full-time workers still require the same training.
Further, looking at the ‘W’ shape of Figure 5 suggests that firms of all sizes have ‘bounced-back’ from the worst of the recession. With output at between £43-52,000 per worker, figures match those a decade earlier. It therefore appears that both employers and workers appear to have swallowed a new pill to keep businesses fully functional, flexible and to benefit quickly from an economic recovery.
The UK service sector currently accounts for 80% of output and hours worked (2018). This is an increase of 7% points in output and hours worked since 2000 (from 73%). Further, in the 7 years to 2007 the increase was 4% points, yet in the last 11 years, just +3% points. While the service sector continues to grow ahead of the rest of the economy, growth remains below the pre-2007 trend line. As Government has focused on ‘belt-tightening’ since 2008, and Brexit since 2015, it is unsurprising, that spending remains depressed. But what’s going on in the different sectors?
Closer inspection of the performance of individual service sectors reveals six laggards: wholesale/retail, finance/insurance, recreation/culture, hotels/catering, transport/storage, and the public sector (Figure 7). All six continue to perform below the historic trend line. Performance changes may be due to lower levels of expenditure and/or trading down to lower value, margin, or non-essential services. This seems reasonable given several sectors appear more ‘discretionary’. A decline in transport could also be explained by an increase in ‘stay-at-home’ entertainment.
Two sectors are yet to show a marked change of trajectory post the financial collapse. First, the finance sector which grew very rapidly to 2007 (with historical evidence pointing to uneconomic over-lending as the reason). ). Yet the sector still trails the pack. This seems due to a combination of low interest rates, low consumer confidence, and the rise of challenger banks (offering better value, and perhaps an opportunity for revenge). Second, the public sector; while resilient post ‘crash’, public sector GVA declined from 26 to 22% of the service economy from 2000-2017. However, hours worked remained c. 28% throughout the period. Thus output per hour has fallen and remains subdued.
Conversely, some service sectors have over-performed: services businesses (including rental, building and employment services), real estate, IT (including media and telephony), and other services (includes scientific, technical, law, accounting, advertising and consulting professions) (Figure 8). However, growth for all but two remains below the historic trend line. Growing most strongly, are IT (reflecting many new markets and growing customer penetration), and service businesses. Some services businesses, such as employment, advertising, consulting, and media firms, were highly responsive to changes in the economic environment. They quickly laid off staff or reduced hours or salaries, and vice versa, to maintain competitiveness and profitability. Many are also highly reliant on people, particularly well-educated people, to deliver services. Also on personal relationships to drive demand, rather than mass marketing, and the Internet.
Since 2007 the UK has experienced major sociological shifts, ‘belt-tightening’ societal pressure, and the rise of online channels. The financial crisis of 2008 also seems to coincide with a tipping point in the rise of the Internet. In 2000, just 27% of the UK population had Internet access, and fast speeds were non-existent. In 2007, 75% of the population had Internet access, and 50% received broadband at an average speed of 4.6 Mb/second. The first iPhone also launched in 2007. Yet today UK Internet penetration is over 90%, and average download speeds are 45-47 Mb/second (4). The first iPhone also launched in 2007 yet today 80% own a smartphone.
Aided also by the growing number of comparison sites, there is an increasing and high propensity for customers to compare and hunt lower prices (up to 30% less) online.
Thus online purchasing has grown significantly from just 3.4% of retail sales in 2007 to nearly 18% in mid 2018. Further looking at trends (Figure 9), overall retail sales since 2007 remain below the overall output trend line. And retail sales excluding online sales, even further below the trend line. The pattern of decline is almost a mirror image of the growth in Internet users.
The convenience and financial benefits of shopping online enabled by increasing broadband and mobile penetration continue to drive online sales growth at the expense of ‘bricks and mortar’ retailers. Black Friday appeared in the UK in 2009 championed by etailers such as Amazon, eBay, and others. It was also spurred by Asda in 2013. However in 2015 Asda de-clined to participate, announcing that their customers preferred year-round deals rather than a single day of discounting. Reading between the lines, this suggests the event had little effect on Asda’s bottom line. Perhaps merely serving to bring forward demand. Conversely, etailers have experienced significant sales and growth.
The UK branch of Amazon EU alone amassed £21 billion sales in 2017, +80% over 3 years (and equivalent to £7.5m per employee). However, as this Amazon business is based in Luxembourg these sums are largely removed from the UK’s accounts.
While the wholesale/retail sector only accounts for a 10-11% of total output, other sectors such as real estate, hotels/catering, recreation, transport, and finance /insurance markets, also have burgeoning online sectors. And the last decade or so has seen online challenger brands enter and grow share in other markets too. Examples include Rightmove in real estate, Booking.com in travel/hotels, a myriad of flight search engines, Confused.com and ComparetheMarket.com in finance and insurance, and uswitch.com in energy.
The growth of online therefore appears to coincide with the removal of a significant chunk of income from the UK economy.
Figures were first recorded for digital advertising expenditure in 2005. In 2005 spending was just under £600m (some 5% total advertising expenditure). In 2007 digital advertising spend was 9% of the total, and by 2017, 28% of the total (£5.7bn). This is a growth index of 474 vs. 2007 (Figure 10).
While online advertising potentially influences all purchases, growth better correlates with online sales rather than total output (Figure 10). While online advertising potentially drives income, it is also a cost, and only adds to profits if extra income generated exceeds extra costs. It remains to be seen whether this level of online advertising is sustainable (6-8% income) and grows margins.
What we do know however, is that a very great proportion of online advertising income is also due to US owned Google and Facebook – both based in Ireland. Google Ireland’s turnover is £27.5bn (£9.2m/employee) and Facebook Ireland’s turnover is £16bn (£4m/employee). Again this suggests a significant chunk of UK advertising output has shifted offshore.
Now let’s return to the role of internal business influences on productivity (Figure 11). In 2016, the ONS surveyed management practices among 25,000 firms. The so-called ‘management practice’ score is an aggregate of several measures including practices relating to continuous improvement and employment management – such as those relating to promotions, performance reviews, training and managing under-performance. In the questions, a score of 1 is assigned to the most structured management practice and 0 the least. The mean score across all organisations was 0.49. Their analysis found a statistically significant correlation between management practices and labour productivity, with an increase in management score of 0.1 associated with a 9.6% increase in productivity.
The analysis also shows a statistically significant relationship between management practices, the size of a firm, and productivity. Further analysis also reveals that family firms have lower management practice scores and productivity than non-family or foreign-owned firms. Management scores are also higher for the real estate, service business, and other services (scientific and technical) businesses. A higher incidence of degree-level staff is also associated with a higher management practice score and greater productivity.
Finally, we explore the effect of hours spent online at work to see if this has any bearing on productivity (Figure 12). Since 2007 the number of hours spent online at work (or in education) doubled from 3.3 hours (10% total in 2007) to 6.6 hours (20% total in 2017) (6).
While we cannot precisely quantify productivity in those hours, some research raises questions. Asked whether ‘I feel more productive without the Internet’, 10% of adults 16+, and 15% of those aged 18-34 answered ‘yes’ (6). Recent announcements that Wetherspoons, and Lush Cosmetics, are closing their social media accounts, also confirms (at least for them) that the marketing time-costs fail to outweigh the benefits. And if marketers are failing to realise benefits, it raises the question are you?
What do you think?
(1) Patterson, Peter, Deputy Chief Economist, Office for National Statistics, The Productivity Conundrum, Explanations and Preliminary Analysis, 2012
(2) Organisation for Economic Development (OECD)
(3) Camus, Dawn, Editor, The ONS Productivity Handbook – A Statistical Overview and Guide, 2007
(4) UK Fixed Line Broadband Performance (Residential), OFCOM, November 2017
(5) Management and Expectations Survey, Office of National Statistics and Economic Statistics Centre of Excellence (ESCoE), 2016
(6) Communications Market Report, OFCOM, August 2018
Thanks to the UK productivity team at the Office of National Statistics for answering our questions and helping with our analysis. Also to fellow marketing consultants at The Marketing Directors, Chris West, and Tim Arnold. To anyone wishing to build on this analysis, please do. We’re also happy to share our datasets and insights to help you.
B2B vs B2C marketing is a very different proposition. Or is it? The growth of digital media means that there is an increasing number of channels and methods from which to choose. So how should marketers approach the task of engaging and winning customers? It’s a bit like learning a dance.
The B2C marketing challenge is to build product awareness and convert browsers into buyers. As it’s usually a ‘low involvement’ purchase, say to buy a confectionery bar, thus marketing campaigns must capture the consumer’s interest immediately. Typically mass promotion activities like tv and press advertising are employed. In addition, special offers such as discounts or vouchers ‘activate’ the purchase. The challenge is therefore to establish an effective one-step routine.
In the online world, an email or search marketing campaign encourages consumers to click and buy. The email or advertisement encourages consumers to a website landing page designed to sell the product. The purchasing process must be simple and easy, for example, by integrating the shopping basket and checkout page. Requiring more than a couple of clicks risks the customer shopping elsewhere.
The goal of B2B marketing is also to convert prospects into customers but the purchase is usually more considered. More decision makers are usually involved and the challenge is also to engage and educate the target audience and build relationships. To succeed a B2B company must generate and nurture leads over a longer time period. A careless or quick step could mean a lost partner (or customer). The challenge is to therefore also to establish an effective multi-step relationship building routine.
In the online world, an email campaign or online advertising campaign again typically drives prospects to a website. However it is less likely to achieve an immediate sale. A more realistic goal is to secure a meeting with a sales representative in order to discuss the customer’s business requirements in more detail and also influence him, her or them to buy (i.e. complete a sale). By providing information about the products and services, benefits, features, possibly pricing, and also contact information, reassures customers and wins trust. Conceiving marketing activity as one of several steps in a longer, integrated, multi-step campaign is more likely to persuade. Consider awareness and relationship building via direct mail, newsletters, video promotion, webinars, virtual exhibitions, conferences or live events and also social media such as Twitter or Linked In .
While there are differences between B2B vs B2C marketing, the principles about engaging and building customer relationships remain the same. At the outset use market research to understand the customer journey from the customer’s point of view. In particular, the sources of information and the selection criteria that the customer uses, and the triggers and barriers to building awareness, relationships, and drive sales. At each step along the journey, consider how the experience that your brand delivers is different from or better than your competitors. And if it is no different, then work out what improvements to make.
This information will then help you build a better marketing communication strategy. Specifically the key messages, media and timing to attract and engage customers at each step on the journey. If you are a B2B marketer, learn how to dance the marketing 2 or 3 step. And while B2C marketers may be 1 step routine masters, learning a 2 or 3 step routine may help you to build stronger customer relationships. In so doing you will better invest your resources to really make a difference.
1. How B2B customers search for tech solutions, Tenfold.com
Storytelling predates writing; the earliest forms were spoken, combined with gestures and expressions. They also include fairy tales, myths, legends and many of religious origin. There is much to learn from stories. Thus with brand storytelling it is possible to transform a brand from a frog to a prince, prolong brand life and even slay a competitor or two in the process.
Saint George (AD 280 to 23 April 303), for example, is immortalised in the myth of Saint George and the Dragon. Initially, a soldier in the Roman army, he became venerated as a Christian martyr. Also adopted as patron saint of many countries, cities and organisations.
The story about George and the Dragon returned from the Crusades in the 11th Century. In what is now a legend, the dragon lives at a water hole and requires a gift of a sheep or maiden to allow the locals to reach the water. When it is a maiden, they draw lots. However, one day a princess is chosen. She begs for her life but to no avail. Then George comes along, slays the dragon and saves the day.
Great stories touch and move us. Particularly when seen in a cinema, or through mini movies – as some television advertising has become. Not only do great stories engage, but they merit retelling and sharing. Only the best stories grab attention, are ‘liked’ and shared. In this rich digital media world (1), we are therefore all writers, photographers, producer/directors and editors.
It is the same for brands. Only the best impress journalists, trade buyers and of course, consumers. Some brands became great through brand storytelling. Some stories are born of reality, many of accident or serendipity and some invention.
Figure 1 shows a typical cinematic story structure. This is useful for brand storytelling. Act 1 involves setting the scene, introducing the characters, conflict and setting. It then concludes with a climax or set-back (turning point 1 (TP1)). Act 2 develops the story, with rising action and tension, and concluding with another climax or set-back (turning point 2 (TP2)). Finally, in the last act, the dénouement, the story reaches a climax, and resolves.
For example, that good always triumphs over evil. That every cloud has a silver lining – i.e. that you can derive some benefit from every bad thing that happens to you. Or that fortune favours the brave – that drive and determination is essential to success. Christopher Booker’s Jungian-influenced analysis of stories and their psychological meaning, espoused seven basic plots (2). Margaret Mark and Carol S. Pearson subsequently highlighted eighteen: eight guides or gifts and ten warnings (3). Figure 2 shows eight familiar stories mapped to Mark and Pearson’s need-states.
‘Transformations’ deal with significant change in attitude, behaviour or personal growth. ‘Overcoming the Monster’ stories are crime and adventure staples. They feature archetypal heroes (and villains) such as George and the Dragon. Also James Bond vs. Scaramanga (The Man with the Golden Gun). And Harry Potter, growing from boy to man, while battling Voldemort.
The typical story-line is baddie does bad thing (set-up), goodie fights baddie and loses (story development, set-back). Then goodie digs deeper, fights back and wins the day (dénouement). In Bram Stoker’s Dracula, he kills a young maiden and then goes after Harker, the hero’s fiancée. Harker and friends then hunt and eventually kill Dracula. Thus saving Harker’s fiancée (and allowing them to live happily ever after).
Brand archetypes can play different roles in narratives, and inspire brand storytelling. In a typical ‘overcoming the monster’ story-line, archetypal heroes, such as James Bond and Harry Potter are protagonists (leading players). Equally the brand could still be the hero, but not the protagonist. Alternatively a bit player – perhaps the protagonist’s assistant or ‘weapon’.
Consider a utilitarian hero archetype, cleaning brand Mr. Muscle. In a typical 3 act story, we see the housewife battling the dirt, getting tired and frustrated at her inability to clean the house etc. until along comes the hero, to clean away the dirt and save the day. The protagonist is the brand user or housewife, and the adversary, simply dirt.
Nike is a more inspiring, hero(ine) archetype (4). The protagonists in Nike advertisements are usually athletes or ordinary people, and the adversaries are fellow competitors. In a typical 3 act story, the athletes compete against each other. One wearing Nike clothing or using Nike equipment, suffering set-backs yet finally winning, and winning applause.
The Nike advert (below) features a tennis playing protagonist vilified for being a pretty face. However, the antagonist is not just a fellow competitor but public dismissal, or disdain. All questions confidence in the athlete’s skills. Will she, won’t she succumb to the pressure? Watch the advert to see the dénouement. Also feel how the rising tension strengthens the brand story.
Now work through these simple brand storytelling steps to finesse and execute your brand strategy.
Great brands like great stories are based on great truths. Great truths include customer and brand truths. So look inside and outside your business to find them.
Consider characters, the role of the brand, and how your brand could transform customers’ lives. How can you create rising tension, and a dénouement that fits the brand? Also involve disparate people in the creative process and allow time to nurture the ideas. Figure 3 shows a start-point brand storytelling concept.
While great stories and great brands touch people in different ways, they are based on a clear brand strategy and also express a consistent message. So for creative brand storytelling involve diverse experts in early brand development. Also consider how the story unfolds or presents through different media and choose media that enhance the message and enable sharing.
1. According to https://www.internetlivestats.com there are now over 1.1 billion websites including a burgeoning range of social media including Facebook, You Tube, Twitter, Instagram, Pinterest, LinkedIn, Snapchat and many more.
2. Booker, Christopher The Seven Basic Plots: Why We Tell Stories.
3. Mark, Margaret and Pearson, Carol S. The Hero & the Outlaw. Building Extraordinary Brands through the Power of Archetypes.
4. Named after Nike, the Greek goddess of victory.