Overview of the Internet of Things – Infographic.
Unfortunately I am not able to vouch for the veracity of the data in the Infographic above.
#Kissforpeace ? | Watch the ad, then decide:
Quote: “AXE + purpose: the concept divided the Contagious office as we heatedly debated whether it even counted as purpose in the no-nonsense way of brands in the Unilever stable, for instance Lifebuoy and its health hygiene programme designed to help children reach their fifth birthday.”
Link to full Contagious article.
Watch the commercial, then take poll below…
More than half of Super Bowl viewers will use smartphones or laptops while they watch the Seahawks take on the Broncos on TV. Harvard Business School professor Thales S. Teixeira explains how advertisers can step up their game to capture viewer attention.
Headline GMI shows improvement, despite a slight dip from last month’s high.
Marketers in Asia Pacific show increased confidence in January.
Marketers remained generally optimistic in January, according to the latest data from Warc’s Global Marketing Index.
Across all featured regions, the headline GMI measure — which takes into account marketers’ expectations for trading conditions and staffing levels as well as marketing budgets — recorded a reading of 57.9 in January’s count, a drop of 0.7 points from December.
See full press release here: Global Marketing Index January 2014
Howard is a member of the Global Marketing Index Panel.
“The Last Iceman” strategy relies on being the last player left in a diminishing market. This strategy can be more profitable than might first be thought, provided you outlast all your competitors. Some markets last much longer than anyone would expect – take for instance vacuum tubes (the market remains in spite of decades of solid state transistor technology), or the return of vinyl records.
Article on the resurgence of vinyl:
The Unlikely Return Of Vinyl Records, And How Indie Musicians Are Making Money On Them by Jackie Shuman (@jackieprobably) an independent music supervisor and Head of Sync at Crush Management. http://tinyurl.com/ken9b38
Growth. It’s the natural order of things. Those of us who own businesses are naturally ambitious for our “baby”. You may have participated in the business’ birth as a start up and gone through the awkward teenage years together. It is only natural for us to drive our businesses to grow.
How big to grow?
Once grown beyond the survival start up phase, it is time to decide: how big do you want your company to become? It seems self evident that most companies try to grow as big as possible. But larger doesn’t necessarily mean better or more profitable. It may be better to be a medium fish in a small (niche) pond than a large fish in the ocean. You may not know that the acknowledged market leader in Olympic class racing rowing boats is Empacher Bootswerft (boat works) a German family business founded in the 1950’s. They manufactured 10 of the 11 Olympic heavyweight-rowing gold-medal-winning boats at the recent London Olympics. In fact they produced 50 of the 84 boats in the finals – a 60% Olympic market share. Apart from also producing oars for racing rowing boats and catamaran’s for well, rowing coaches, they have focused single-mindedly on this particular boat niche. Given this focus and consequential success at Olympic level, you can imagine which boat Germiston High rowing club would really like to own. Success becomes self-fulfilling. Clearly it limits expansion, but market dominance can reduce risk, and not encroaching on say the luxury yacht market means that retaliation by significantly larger competitors is less likely. Customers like to know that their suppliers are world-leading experts rather than generalists. Sticking to ones knitting does make for exceptional jerseys. But the risk remains that said jerseys might go out of fashion. Empacher boat works has for instance lost its dominance in lightweight rowing class boats. South Africa’s stunning Olympic gold in the lightweight four was in a Filippi boat – an Italian competitor. Is this the end of over half a century of Olympic dominance? The point is that as your company grows, you need a specific intent with regards to: do you want to grow? / how much you want to grow, and if aggressive growth is appropriate how best to achieve this.
How to grow.
Professor Igor Ansoff left us a very succinct (and by now well known) road map for growth, known unsurprisingly as the ‘Ansoff Matrix’. Combinations of new or existing products and new and existing markets give four basic growth strategies:
Market penetration (more of the same – same products into the same market)
Unless you already enjoy a very high market share, the most obvious growth strategy is to simply take market share from your competitors. Your competitors of course will be less enthusiastic about this strategy and may well retaliate by attacking your core customers. This could well drive down market prices and consequently profitability, and as most companies are driven by profitability rather than turnover, consider this impact carefully before attacking a bigger aggressive competitor.
Product Development (New products into your existing market
A relatively low risk strategy, most organisations drive the development of new products as a matter of course. The primary attraction being that adding products to your existing portfolio increases sales with very little additional sales or administrative cost. It also helps lock in customers by adding to your basket of products – less opportunity for competitors to make inroads on your customer relationships because you don’t stock an item. In many industries the real competitive advantage is the relationship with the customer and cost effective distribution, rather than exclusive access to products. Use these strengths if you have them, to your advantage.
Market Development (New markets for your existing products)
Do you know all the current and possible usages for your product? Seems a simple question, but often products have unintended markets. Baking soda intended to make cakes and baked goods rise during baking is also used to reduce odours in fridges and to clean plastic piano keys, I understand. Could your products be repurposed into dramatically different markets? What about geographically new markets? Is there an export market for your products, or is there significant business in cities other than your current location?
Diversification (new products into new markets)
It is easy to believe that the strong brand you have developed can be leveraged into completely new products in new markets. This is a strategy utilised with significant success by Sir Richard Branson and his Virgin Group. With businesses ranging from travel (soon to include space travel), mobile phones, financial services and entertainment, the only common denominator is the brand and the founder’s personality. Of course many forget that there were numerous failures along the way including (bizarrely) Virgin Brides a wedding dress business launched in England 1996. Richard Branson predictably dressed up in a wedding dress for the occasion but it closed its doors about a year later. Cosmetics, lingerie and most famously Virgin Cola came and went. With reference to the latter Sir Richard admitted: ”That business taught me not to underestimate the power of the world’s leading soft drink makers. I’ll never again make the mistake of thinking that all large, dominant companies are sleepy”.
Even McDonalds. a recognised marketing heavyweight with a hugely powerful brand has suffered when it tried ill-advised diversification. Based on the thought that “Our restaurants serve 74 million customers in a country with a population of 7 million, if only one in 1,000 of those guests choose the Golden Arch Hotel, the project will be a success” McDonalds Switzerland went into the hotel business. However, apparently the 74 million customers couldn’t see the connection between the Mickey D brand and luxury 4 star hotels, with complaints that rooms were “too plastic”. This combined with unfortunate market timing resulted in the hotels being sold off after just a couple of years.
So, where the market sees a valid connection to the mother brand and believe the relationship can add real value, this can be a compelling growth strategy. Leveraging an existing brand for no additional cost to kick-start a new business is compelling. But it is high risk, with many failures even under the guidance of world-class marketers. So think long, hard and more importantly objectively, before attempting to deploy this game plan.
Blue Ocean Strategies
What about going one-step further than mere diversification? How about creating completely new demand consumers haven’t even realised they have yet, in completely new business categories? This is ‘Blue Ocean strategy’ devised by W. Chan Kim and Renée Mauborgne from the Blue Ocean Strategy Institute at INSEAD business school. The iPod is an often-used example – where the market wasn’t even aware of the possibility of managing their own personal music library through buying music tracks individually and digitally downloading them onto a personal listening device. Many recent social media and digital businesses fall into this category. Who could have predicted that half a billion people were itching to communicate in 140 characters or less, the foundation of Twitter? The payoff with such a growth strategy can be dramatic, primarily because by definition, there are no competitors to take a share of the market.
Growing a business is not unlike parenting. It is a roller coaster ride as you try and guide your progeny in the right direction, protect it from adversaries and help build a viable exciting future. Just like bring up children, it is also exciting, rewarding and well worth the investment.
This article was first published in Your Business magazine.
Given the progressively complex and rapidly changing business environment, few would argue the importance of the marketing role in commercial organisations. Companies’ market value and business flows (particularly given the apparently inextricable move towards digital business models) are firmly anchored to market decisions, degree of market orientation, and the strength of their brands and reputation. Even during these economically tough times, international brand values continue to climb to stratospheric heights. Coca Cola, affirmed by Interbrand (a respected branding agency), as the world’s most valuable brand, tops the list at over $77 Billion. “The company excels at keeping the brand fresh while maintaining a powerful sense of nostalgia that unites generations of Coke lovers and reinforces consumers’ deep connections to the brand.” Apple, rushing up the brand value charts to a close second (129% increase in brand value to $76 billion in 2012), has transformed how the world sees technology and its brand personality defines the very character of its consumers.
The explosion of social media has irrevocably changed company / consumer relationships, effectively reversing the balance of power. Take Dave Carroll, small time musician, peeved that United Airlines had damaged his guitar and refused to compensate him. Their parsimony no doubt saved their insurers a couple of thousand dollars. It also earned their reputation a YouTube video entitled “United breaks Guitars” which has amassed twelve and half million views to date. And a book (unsurprisingly named “United Breaks Guitars – the power of one voice in the age of social media”. Dave fills his days doing corporate talks on, well, how United breaks guitars. The Daily Mail quantified the resultant losses at $180 million. Contrast this with KING III requirements to carefully manage stakeholder relationships. Of course, Greg Smith’s New York Times op-ed piece on why he resigned from Goldman Sachs knocked $2.2 billion off their market capitalisation – certainly a material consideration for the board.
In spite of this context some companies remain without a marketer in the boardroom. While it is the norm to have board finance committees, remuneration committees, ethics committees and audit committees, it is very rare to have a customer, brand or reputation committee. However given the requirements of King III and the increasingly legislative environment in which South African business is required to operate, the marketing directors role is increasingly critical.
At a leadership level, the scope of the marketing role is dependent on the marketing-orientation Vs product / production orientation of the organisation as a whole. Organisations vary dramatically in their marketing orientation due to their market conditions, industry structure, strategic intent and maturity as an organisation. Brand driven organisations are inclined to place greater emphasis on marketing with greater scope under the direction of the marketing director. In sales led organisations a separate sales director may work in conjunction with, at the same level as the marketing director. In business-to-business roles or indeed those organisations that are price takers (such as miners of commodity products) may require only a very limited marketing role.
Senior marketing professionals at board level must balance the analytical and creative. While it is true that the marketing discipline may perhaps require a greater creative component than say, financial management, it should not be confused with “Mad Men” the American TV show depicting an ad agency in the ‘60’s. While the creative output is perhaps the most physicall y evident, and is a differentiating aspect of marketers role, it in not, a senior level, the exclusive defining aspect. Marketing remains after all a management science. The Marketing Director needs to be able to hold a long-term focus on developing the brand and business positioning into the future while simultaneously retaining a short-term action orientation.
The high level functions of a Marketing Director include:
- Input into the organisations overall strategic direction.
- Translating the strategic direction into a specific marketing strategy and campaign.
- Create a corporate / stakeholder communication strategy and plan
- Developing and protect the organisations corporate and other brand/s
- Developing and protecting the organisation’s reputation, including risk management and mitigation structures and procedures.
- Overseeing new business development and sales strategies.
- Ensuring appropriate pricing and distribution structures are in place.
- Managing the organisation’s marketing resources. Budgeting for such.
- Identifying, appointing and managing appropriate, cost effective marketing service providers
- Development and maintenance of market and competitor intelligence, and the maintenance of the organisational customer records and CRM systems.
- Develop a suitable structure for the marketing department and if appropriate a matrix structure for marketers embedded within functional business units.
- Leading the marketing professionals across the organisation.
- Ensure legal compliance of all marketing activities.
Appointments at this level would clearly hold significant experience, ideally in the type of marketing environment the organisation operates within. Recognising that marketing is very broad by definition, experience in the FMCG field may not easily, for instance, translate to business-to-business marketing. Likewise senior marketers from within a marketing specialisation such as advertising or research may be stretched to undertake a full spectrum marketing-generalist, leadership role. A senior marketer should additionally be reasonably knowledgeable in a wide variety of allied disciplines, such as production, information technology, legal and finance given that the marketing function is expected to interface across such disciplines.
While there are a number of notable senior marketers with no formal qualification in the subject, it would be the norm to expect a Marketing Director to have a minimum of a degree specifically in marketing, communication, or an associated specialisation. As with other board level appointments a general management qualification such as an MBA adds stature, improves linkages into the business and ensures an organisation-wide outlook. A professional designation Chartered Marketer conferred by the Marketing Association and ratified by the Directorate Registration and Recognition (DRR) of the South African Qualification Authority is available to senior marketers.
“It takes 20 years to build a reputation, and 5 minutes to ruin it. If you think about that, you will do things differently.”
The Marketing Director is the primary custodian of an organisation’s brand and reputation. While most of his efforts are focused on building a positive reputation, the marketing director needs to ensure reputation monitoring and risk mitigation strategies and structures are in place in anticipation of future crisis.
King III points out that the economic value of a company can no longer be based solely on the balance sheet:
Principle 8.1: The board should appreciate that stakeholders’ perceptions affect a company’s reputation.
Principle 8.2: The board should delegate to management to proactively deal with stakeholders relationships.
Principle 8.5: Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence.
Principle 8.6: The brand should ensure disputes are resolved as effectively, efficiently and expeditiously as possible.
Large listed companies may retain the services of a specialist stakeholder relations firm to maintain communication with shareholders, although responsibility for such may be devolved to the Company Secretarial or Corporate Affairs teams.
Some larger brands have their brands explicitly valued by external brand agencies to ensure long-term protection and growth of this asset. While the marketing profession can’t claim unanimity with regards to brand value methodology there are recognised methods, such as ISO 10668 Monetary Brand Valuation.
Creativity and the role of ad agencies.
Creativity is used as a lever to multiply the impact of a well thought through communication campaign. You will recognise from your own experience that highly creative adverts break-through the clutter more effective than bland ones do. However, clearly a more risqué advert or communication is more likely to offend at least a portion of the target market. Thus while a creative campaign can offer significant strategic advantage, it may come with an increased risk to the organisation’s reputation. The degree of market tolerance for such communication depends on the history of the organisation with regard to past advertising (i.e. has it always tweaked the nose of convention) and the category of product and service. A fast service chicken restaurant with a long history of satirical and irreverent advertising is more likely to be forgiven than a funeral home or multinational pharmaceutical company. Critically brands should remain consistent to reduce market push back.
Marketers outsource the creative component of advertising to external agencies because it is difficult to justify the cost of retaining ‘creatives’ in house, especially given the ad hoc nature of their output; creatives prefer and work best in the fertile environment agencies offer; and because the sort of creative staff who work at ad agencies generally don’t want to work in client-type organisations.
A primer on media
Media has proliferated, fragmented, and faces significant change as consumers move from traditional media such as newspapers and magazines to more contemporary channels such social media. Some form of media is a requirement to communicate to an organsation’s target market, and is likely to be their single largest marketing expenditure. The broad categories of media are: those channels the company owns: web sites, brochures, in house publications and the like; media it buys such as advertising and sponsorships and that media exposure it “earns” – traditionally thought of as “public relations” but increasingly “content marketing” and most social media. It is the marketing directors responsibility to arbitrage between the costs and advantages of the media types available. This is done with the assistance of a media house, which offers both media strategy, as well as media buying on behalf of a large number of organisations. Earned media is likely to be facilitated through a media relations or reputation management service provider (previously known as the “PR agency”).
The South African business environment and in particular the marketing environment has become and continues to become increasingly legislated. The days of simple self, or industry regulation are largely coming to a close. With sanction of fines up to R10 million or jail terms up to 10 years, the risk of legal non compliance are material at board level. Clearly the prospective reputational damage of a legal case via the Consumer Commissioner, the Competition Tribunal or other bodies are also significant. While the Marketing Director may not be in a position to determine the specific legal risks of a particular market structure, marketing strategy or tactical undertaking he should certainly have sufficient knowledge and experience to know when to confer with legal council.
Relevant legislation specific to marketing issues includes:
- Competition Act no 89 of 1998 as amended
- Consumer Protection Act no.68 of 2008
- Electronic Communications and Transactions Act, 2002
- Protection of Personal Information Bill soon to be promulgated
- Sector specific legislation such as FIAS Act no. 37 of 2002
Self-regulation clings on in the form of the Advertising Standards Authority (ASA), an independent body funded through industry contributions based on advertising spend. All members are required to abide by the rulings of the ASA. Additionally, in terms of the Electronics and Communications Act (Act No 36 OF 2005) all electronic broadcasters must adhere to the code administered by the ASA. This offers a low cost alternative to legal action to settle complaints regarding advertising in South Africa. Unfortunately for marketers it also means that advertisers are required to respond to complaints even if such a complaint is from a single individual. The ASA can sanction advertisers by prohibiting further dissemination of the communication.
This article was first published in Directorship the official journal of the Institute of Directors South Africa.
- Introduction: Madness in the Market(ing) Place (themarketingmadness.wordpress.com)