Poor WW & Coles – Hard Frustrating Unsatisfying!

Spare a moment of sympathy for executives, senior management, C-suite leaders and directors of Woolworths and Coles.

Yes, they get paid well but at what cost?

For decades they have suffered in absence of the wisdom of the ages, best summarized by legendary strategist, Sun Tzu, who said…

“Tactics without strategy is the noise you make before defeat.”

Few people at either Coles or Woollies know what strategy is; many perceive tactics to be strategies.

A flotilla of strategy-qualified executives having spun through the revolving doors of Coles and Woolworths employment, and gone again; in frustration, meeting for coffee after retrenchment, echoing the words of those who have gone before, “It’s getting worse!”

You can only be sympathetic.

The conundrum is that everyone in-charge at both companies are operational A1 players. They know their business. They understand their operations intimately They sweat over very piece of data, every report. Every fact and figure they can gouge. They slave long hours. They grapple with silos, with politics, with hidden personal agenda, with bosses who don’t communicate well and suppress initiative.

Despite their best efforts, customer satisfaction is failing. KPI’s are increasingly hard to meet. Outperforming each other is hard enough, while Aldi continues to happily erode their market share… only slowed down by Metcash’s resistance to adopting blue ocean growth opportunities and FMCG suppliers’ willingness to surrender all their margin.

Where do you go when you’ve got nowhere to go?

Now Coles is abandoned by Westfarmers with Woolworths struggling in the wake of its Big W decay, Masters flop, and other lack-lustre performance outcomes.

Both are blinkered to the reality of their merchandising philosophies and combative relationship with suppliers, and the very stoppable (but not without strategy) flow of shoppers to Aldi.

Do what you always do… Get what you’ve always gotten

It seems incredible, doesn’t it, that the power of the two giants and the operational executive talent is unable to recognise their archaic approach to their problems.

Their resistance to change is formidable. Their unwillingness to accept they are tracing the 19th Century path of the American Rail corporation and the buggy whip industry, they are as resistant to change is News Corps and Fairfax were in the 90’s, they are determined they are doing everything right when they are doing a LOT of things wrong… just like Nokia, Blockbuster, Kodak and others…

When a past CEO of Woolworths warned them to beware of the ABC’s of Corporate Cancer, Arrogance, Bureaucracy and Complacency) their response was to evict him rather than heed his advice!

The Writing is on the wall

Lots of those that know, know! The wisest stakeholders abandon ship and the millennial naive are innocently walking into the web.

Tie will tell if I am right, but anyone reading this, who can observe a trend, may be shaking their head in acknowledgement of these observations.

Poor Woollies. Poor Coles. 😦

“Customers” are NOT identical. A “market” is only a corral of market segments. Until business leaders fully accept that fact, businesses will not do as well as they could, probably flounder at some stage, and ultimately fail as their competitors (who DO “get it”) out-manoeuvre them.

The Most POWERFUL tool in a business strategist’s arsenal is Market Segmentation

For years I have used market segmentation to successfully “breakthrough” and improve the direction of employers’ and clients’ businesses. Market Segmentation is the “secret sauce” which helps businesses find the best customers.

Multi-million-dollar outcomes have followed market segmentation. It simply is the single most powerful tool in the marketing manager’s arsenal of marketing tools.

Identification of market segments almost guarantees optimal decision-making

With superior segmentation, you can identify attractive market segments so you can target and position your marketing mix and best satisfy the needs and wants of your “preferred” primate target audience prospects. This helps you “marry” your capabilities and appeal to the potential customers who desire your unique offering. (Every offering is unique, but that’s another topic.) Market Segmentation secures sustainable competitive advantage and market dominance.

Better customer insight and segmentation

Using proven market research methods, Market Segmentation means you’ll best be able to deliver differentiation strategies that achieve brand loyalty and brand preference.

You can get insight into where your profits come from, how to improve them, and how to best spend your marketing budget to reap the greatest returns.

You get insight and direction for decisions regarding:

* Distribution strategies and channel management

* Product management strategies and brand management

* Pricing and discounting strategies

* Improving demand & identifying high return customers

* New product development

* Brand Equity movements and brand portfolio opportunities

And more!

Market segmentation studies help identify opportunities and threats, competitors and trends… all helping you maximise your competitive marketing advantage.

Are you doomed, or are you set up for success?

Outside of micro businesses (under $5M p.a.) if your business hasn’t undertaken a proper, professional segmentation study in the past three years, you’re cruising for a bruising.

Worse still, if you (or your business leaders) think “marketing” is a word that accurately describes “advertising” and/or “promotion”, you’re likely in for, or already experiencing, a world of pain!

Almost all of the most successful businesses in the world, certainly the most profitable and powerful companies, all undertake annual or bi-annual segmentation studies. It is typical to find businesses that have failed who neither understand the definition of marketing or undertake (proper) market segmentation.

Common Sense

When management meetings happen and someone says, “Everyone wants…”, “Nobody will…” or “Buyers prefer…”, you NOW you’re in trouble: Subjective opinion is no more than unsubstantiated assumption, and “assumptions are the mother of all mistakes”.

It makes perfect common sense to ask… to ask enough people to know, and then if you ask the right questions you get the right answers , and if you ask people what they want and they tell you… and you LISTEN… then it is an effort to go wrong.

Remarkably, this common sense escapes many operational executives who get caught up in micro-economic detail and “can’t see the wood for the trees”.

I wonder if this could explain why businesses fail, and why corporations don’t experience ongoing success and longevity.

Do you agree? Please comment and let’s discuss?

Why Do Businesses Stray from the Proven Path to Making Billions?

I recall the adage, “Not advertising is like kissing someone in the dark… YOU know what you’re doing, but nobody else does.”

Market research tells you:

  1. If there are any kissable people in the dark,
  2. How to find them,
  3. What sort of kiss they would like, and
  4. How likely you are to enjoy it.

It is so, so easy for big businesses to make billions… why don’t they?

If research can tell you EXACTLY how to achieve your business goals, why doesn’t EVERY business do it?

THE FIRST, OF TWO REASONS, is that bad research has a GIGO effect (garbage in, garbage out). With most executives undertrained in how to brief research, appraise and assess its implementation, and interpret the findings (properly) in concert with strategic marketing know-how, research can simply go to waste.

The second reason is (in Warren Buffet’s words) because of “Corporate Cancer”… where arrogance, bureaucracy and complacency, combined with operational micro-thinking, dilutes or discounts the demand for, and reverence towards, market research.

In the high-profit, high-growth days of B2C (FMCG and Consumer durables), research was conducted with finesse, expediency, discipline, regularity and concise interpretation.

Nowadays, few executives demonstrate any respect for, tight management of, or scientific approach to the art of research … and the results speak for themselves.

We can all probably name brands that are weaker versions of what they were, and trace it back to a departure from the disciplines of marketing strategy built upon good research.

Where is the once-dominant Sharp brand? How long can Nestle last, relying on its long-term cash-cows? How out of touch and behind is Kellogg’s? What happened to Spillers? Where’s Ampol? Grace Brothers? Criterion Furniture?

The Hurdles to the Billions

Remembering that products don’t fail, businesses don’t fail, brands don’t fail… it managers making bad decisions who fail… It is possible to remove the hurdles for failure by opening business leaders’ minds to more productive and proven methods: Commissioning and utilising market research!

In 1983/4 when My Dog had failed to launch successfully for Mars, their Product Manager asked me for help. All I did was read the research overnight, and it was clear the positioning for the re-launch had to be “for fussy eaters”: 33 years later My Dog has not made less than $250M annual sales… simply founded on good interpretation of good research.

In 1994, simply reviewing the research data for Mersyndol revealed that 95% of sales came from the 5% of heaviest analgesic users, but Mersyndol loyal users were forced to buy another brand to avoid drowsiness. In a 20-minute meeting, my identification of this and suggestion of a “Mersyndol Light”, led to the launch of Mersyndol Day-Strength, that has generated around $200M p.a for the past 23 years.

All those billions came from objective interpretation of quality market research.

IF companies REALLY want the Billions, bad research won’t ‘cut it’.

Interpretation without the synergy of understanding strategic marketing science also won’t ‘cut it’. (e.g. Brand adoption theory, innovation theory, brand equity, brand loyalty, involvement, BCG Matrix, and about 100 other key models.)

But, with good market research… well planned, well conducted, well interpreted, and well respected and followed… the path to billions is simply “finding out what people want and giving it to them”.

How easy it that? So why don’t or won’t business leaders do it?

I think it would be healthy and beneficial for anyone to share thoughts, perceptions experiences, and concerns… or just comment…

 

Too many marketing strategists believe their own BS! Pricing Strategy, Communications strategy, Online Strategy, branding strategy etc. isn’t genius… it is obvious, common sense that evolves out of the fact that perfect knowledge leads to perfect decisions.

I’ve had an extraordinary number of commercial successes in my career, record-breaking ones… NOT because I am one bit smarter, more intuitive, have more street cunning or am unusually lucky, but because I persevered long enough in learning my trade to be able to recognise the one, inalienable truth of business: If you genuinely know what the customer wants and can give it to them, they WILL buy!

The absolute secret, of all extraordinary business success, is knowing the customer.

Is it REALLY that simple?

Whether it is the individual or the segment – yes!

There are so many examples of this across the internet, in each of our careers, recorded, diagnosed, studied and reported by academics around the world, and demonstrable in every case study and high return annual report… so why do we complicate and confuse, cloud and cover this fact?

Think about it…

Pricing Strategy: In particular Value-Based pricing? Know the customer!

Communications strategy: In particular advertising & positioning? Know the customer!

Retailing: In particular store layout, ranging, staffing, location? Know the customer!

Manufacturing: Everything from branding, sizing, packaging, new product development, distribution strategy? Know the customer!

Why is the business community in denial?

When FMCG hummed a merry tune, the industry habitually committed to segmentation studies annually… but as operational executives with corporate political skills rose in a culture of corporate arrogance, costs were cut to carve out larger profits, ignorant to the fact they were really blunting competitive advantage and digesting brand equity.

In adequately training marketing personnel, briefing and sustaining market research of questionable quality, undermined the payback from segmentation studies and other market research.

Over the years, the team at my firm has written strategy for transport, banks, FMCG, commodities, utilities, government that has generated record-breaking results, unimagined sales growth, and extraordinary profits… why? Simply better understanding of the customer – EVERY time!

Frustration is viral

November 20, 2013

Frustration is a viral sentiment spreading throughout the global business community, “How do you find executive management who can truly achieve results, embrace cutting-edge methods and implement bold new ways to succeed?”

Business success comes not by natural intuition, through costly mistakes, charismatic diplomacy or knowing the ‘right’ people. (This attitude has, and continues to, put potentially immortal companies at risk and costs billions in avoidable commercial failures.)

Business success comes from wisdom-based talent layered upon experience and knowledge.

Many large international businesses need to experience change and renewal, particularly those with a number of market leading products, in established industries, major categories and competitive businesses.

They desperately NEED sustainable competitive advantage, which comes from innovation built upon solid strategic skills, genuine strategic innovation, blue-ocean growth initiatives spawned by the ability to identify key challenges effecting the organisation, and ability to develop and conceptualise strategies to improve competitiveness, steering those initiatives to improve overall business performance.

This calls for a leader with academic grounding, a breadth of experience that is rare among business individuals, and genuine successes in SME as well as middle sized and large companies. (The premise being no one person is ever responsible for success in large organisations, so ‘pure corporate’ executives from this background are more likely to behave been at the right place, at the right time, as often as they are a true performer.)

Boards must now scour the executive labour market for a new beast: Someone best suited is now an individual with success across a plethora of industries, who possesses demonstrable ability to understand new concepts quickly and act as an innovative thinker, with numerous experiences setting product strategy as well as the ability to implement.

Breakthrough performers must possess a passion for marketing strategy and instinctual understanding of buyer behaviour. They must be endowed with insight into the mechanics of marketing planning and business issues, and a wisdom that is unlikely to been seen in a young, corporate “climber”.

Self assured, mis-perceived as arrogant, or over-confident, ‘hero’ CEO’s dispel doubt when allowed to apply their craft and when results evolve.

All it takes is for an imaginative and dynamic Board or Shareholders to dare to try… the outcome being greater than the pain of resistance to change if they do.

What about the future?

November 20, 2013

Many businesses reach the height of their success just before they expire. Why?

Under the operational umbrella, they they have learned rights and wrongs, developed an understanding for their strengths and weaknesses, developed quality networks, and streamlined efficiencies.

Under the strategic umbrella, leadership and management are starved of skills.

Ignorance, being blissful – until things go wrong – remains in tact. Management blames the economy, their workforce, their trade channels, their advertising agencies, even their customers, for their demise.

The truth is they do NOT know what strategy is. They do not have strategic skills. They have not managed, or planned, strategically.

A decent strategic marketing plan protects against an adverse future, in fact it creates a utopian one.

A decent strategic marketing plan understands industry dynamics, capitalises upon competitive circumstances, caters for and creates opportunity in economic change, and prepares an organisation for evolutionary adaption to new market forces.

Life cycle stage analysis is a crucial element of strategic marketing. So is product portfolio management. So is brand portfolio management. So is trend analysis. Tracking change in market and segments alike is mandatory for strategic planning.

I was once told by the CEO of Australia’s biggest software and hardware distributor at the time (with 75% market share), “We write a marketing plan in 3 weeks”. They went broke within 2 years.

I once expressed concern to Australia’s biggest Office Equipment supplier that they needed to think about Strategic Marketing. The Sales Director replied, “Don’t talk to me about ‘marketing’, we just need to get out there and sell!” They collapsed into liquidation 18 months later.

I counselled a company for three years in photographic services and forewarned them of changes to consumer behaviour. Their CEO said, “This company has been going 44 years, and you think you can predict its demise.” Four years later he, and his business, were dead.

National Account managers in FMCG, senior consultants in global consultancies, CEO’s of multi-nationals… all can fall into the trap of mistaking tactics for strategies: Perceiving operational skills as strategic ones, with impressive success camouflaging the absence of outstanding success.

When a business becomes bullet proof, immortal, and self-perpetuating; even then there can be no rest. This is (traditionally) when the smooth talkers, diplomats and bureaucrats – overshadowing the gifted strategic thinker – win Board level roles.

Insightfullness, the ability to see the future with clarity, the skills to determine what factors are relevant, crucial or significant, is not necessarily accompanied by charisma, diplomacy, or graciousness.

It takes a brilliant mind, wisdom of the ages, entrepreneurial spirit and great basic training to lead a company to a dominant future.

This is the aspiration great leaders must envisage and pursue. This is how CEO’s should be assessed and evaluated, and rewarded. For my money, it’s ALL about the future.

[Anyone wanting to know more about strategic planning should go to: http://j.mp/markstrat ]

When Twitter started, I guffawed, “What the ….”?

Like so many ‘baby boomers’, I just didn’t ‘get it’.

Even after I started Tweeting, I didn’t really understand the value of the medium, until I sat down with my colleague, Brad Keeling, who has led the cutting edge of Social Media Marketing… then I REALLY started to learn.

Like anything ‘marketing’, the core is really to deliver something of value, something that helps the target audience – in this case readers should enjoy something worth reading.
For me its attempting to give operational and managerial executives some inspiration, motivation, encouragement, or insight so they sail through their day a little easier.

What’s the payback for me, from my Tweets to inspire business people?

We’ll, its kind of like payback from friends… you enjoy some exchange of thought, some banter, some debate, some humour and an affiliation.

What SHOULD be a very much smaller, second benefit, is possible, incidental business opportunity IF readers find my key areas of expertise are LIKELY to be genuinely of assistance in their business circumstances. (This causes the interference, noise and nuisance value of Twitter, in that too many Tweeters Tweet for monetary rather that philanthropic gain.)

Inspiration

The greatest reward when you’re a Tweeter is when people follow and re-tweet your tweets… making you feel like you’re appreciated.

So, if YOU are feeling magnanimous, why not follow me at @LeighCowan and re-tweet one of my tweets now?