Members of the Sales & Marketing Institute of Australia might remember my presentation, “Coles & Woolies aren’t the bad guys, we are!”, at the FMCG Summit in August, 2012.

In this presentation, I suggested…

  1. The fundamentals of solid FMCG haven’t changed – and won’t
  2. Loyalty data has become an information goldmine
  3. FMCG now beats to different & distinct checks & measures
  4. The Category Management business is in ‘re-jig’ – they are creating business manager experts in smaller categories
  5. Buyers don’t know where their categories will head UNTIL AFTER a category review – so there’ll be more hesitation before decision but the decision will be based upon shopper satisfaction
  6. Card data will never be completely shared because it gives retailers a new advantage
  7. There is always a trade-off between sales, profit & market share
  8. There is a new imperative on suppliers to be more effective & efficient
  9. Retailers now run ‘category laboratories’ , and do – they know more than FMCG marketers do
  10. The quality of the seller must rise to meet the quality of the buyer and visa versa

The point of the presentation was that FMCG marketers must remember that their hay-day came when they discovered segmentation, and conducted segmentation studies annually… long before cost-cutters and short sighted profit goals ate away at research budgets.

FMCG companies who are struggling MUST call out  “its time for a segmentation study” if things go astray… but MORE IMPORTANTLY… to plan a product portfolio, write a 3, 5 or 7 years marketing plan, or invest in new products, new plant, or growth without clear understanding of segments and market opportunities… is suicide by Russian Roulette!

I’m not ashamed to say that Launch Engineering does outstanding segmentation studies: One FMCG client increased business 50% in a year on the basis of strategic recommendations following his LE segmentation study…. and EVERY client that takes advantage of our expert researchers with added strategist recommendations, finds inspiration and confidence in their decision-making, post report.

If you’re in FMCG in Australia… its tough. You could make it a whole lot easier…

For more information or a confidential chat, feel free to share your problems and I’ll let you know if I can help… you’ll find my contact details at http://www.launchengineering.com

A recent Linked In discussion referred to a study predicting that Australian Supermarkets will retail 33% of private label brands.

The article suggests that supermarkets have made 33% generics a reality when, in fact, its been manufacturers that have created this environment!

Short-term profit gouging, and/or criminally negligent marketing management, and simply ignorant brand stewardship have given supermarkets a red-carpet invitation to secure consumer loyalty and win market share.

Rudimentary ‘Marketing 101’ says consumers make buying decisions based upon value. Knowing how different segments measure or assess ‘value’ is the implication and marketing science the means.

Manufacturers would be impervious to house brands, the retail word would be devoid of true house brands, IF branded products manufactures employed comprehensive strategic marketing science.

However, house brands exist because manufacturers have chosen NOT to understand and cater better for their market segments than their retailers.

Now that Coles and WW have loyalty card data… fast, immediate, and statistically reliable, they understand their segments better than the non brand-savvy marketers that supply them.

Unless huge changes to strategic marketing take place, and manufacturers don’t make quantum changes to their strategic marketing, 33% is the tip of the iceberg, and categories will ultimately have no independent brands at all… retailers will have 100%.

The following is a summary of my presentation at the 2012 FMCG Summit on Longevity, held at MGSM.

Every company must follow its mandate/mission/vision and derived corporate objectives: That’s the Board of Management’s job!

So why is everyone complaining that WW & Coles are making it hard? It’s their job to maximize profit…. and ours to help them! If we happen to make mega bucks in the process – good on us! If we get deleted in the process, we should only blame ourselves.

When marketing science reigned supreme, a very accurate and detailed segmentation study, including positioning map and competition analysis, was a yearly investment, but in the past decade, as pressure has been put on improving WW & Coles profits, operational managers have sacrificed long term strategic foresight, and stripped themselves of their most powerful ally – market segmentation knowledge.

[A show of hands at the Summit showed only 1 attendee had commission a new segmentation study in the past three years – now wonder FMCG marketers are losing bargaining power!]

Now that Woolworths, and Coles have the power of loyalty card data… data that is fast, statistically reliable, accurate, and consistent, FMCG marketers are going to be stripped of their knowledge assets, and buyers will become category experts like never before.

Buyers can now rebuild a category from scratch… deleting big brands, ranging new innovations, with assurance and confidence they have never had before… because they really KNOW their customers.

The only tool that FMCG markets have to battle is better, albeit different research.

Now, more than ever, we must see Coles and Woolworths as trade partners sharing common needs… satisfaction of the customer. FMCGers must discard the red ocean strategies of undermining competitors and fervently pursue blue ocean strategies that can be exposed by trend analysis from consistent, quality market segmentation studies conducted periodically and analyzed meticulously.

It is up to us to demonstrate to buyers that there is real and sustainable commercial advantage in ranging our products. The two basic tools are marketing effort, and positioning strategy, that together build the asset of brand equity and the outcome of significant market share.

Cynics will say this is easier said than done, but, with C-level support, it is almost easier done that said, IF we remember that the rules, laws, models and processes of professional marketing work (if applied properly) and FMCG markets simply cannot afford to shortcut on any.

 

Do this and we it is inevitable that you WILL follow your company’s mandate/mission/vision and derived corporate objectives in collusion with Woolworths and Coles instead of in spite of Woolworths and Coles.