The 'Per 100' comparison - upfront clarity & brand equity?

Now that we have all settled into an acceptance and appreciation of the advantages of decimal measurement (1971, 41 years ! ) and some are no longer stopping at traffic-lights, perhaps it is time for retailers and suppliers to aim for clarification rather than confusion in communicating price and value to shoppers?

Revealing pricing...
Expressing the shelf-price per 100g/100ml along with the SKU price would surely add clarity to the (deliberate?) confusion caused by random use of Kg/g in shelf-label unit pricing, BOGOFs, extra-value packs, and especially the use of shrinking-packs to disguise price-rises….

Converting the savvy consumer
Most of us have acknowledged the emergence of the savvy consumer, a person who is determined never to outsource their purchasing decision-making to marketers and retailers ever again, and yet we continue to serve up pricing indicators that at least cause confusion if not suspicion in shoppers who think for themselves, like never before…
Moreover, these same shoppers, with no credibility-baggage, are now equipped like never before with the means of ‘telling a 100 friends’, in complaining about a product.

Evaluating the real brand
Sure, the ‘per 100’ comparison forces the brand to rely upon Performance, Presentation and Place in a like-with-like Price evaluation with the available competition, causing the shopper-consumer to fall back on the brand equity we have taken so much trouble to build and sustain over the years.

If the brand is that good, it should be able to stand the heat…

Who counts for the shopper when 33% is not the same as 33%?

Superficially, if some numerate NAMs feel that 33% off-the-price is about the same as 33% extra free, what hope has the shopper?

(For those who cannot wait, run the numbers as follows:
Assume Costa charge £3 for three shots of expresso
Deal 1  gets you three shots for £2 i.e. £0.66 a shot
Deal 2  gets you four shots for £3 i.e. £0.75 a shot)
Deal 1 is therefore marginally better for your pocket, and your blood pressure…

All of this suggests that by emphasising ‘extra free’, retailers can create the same impact on the consumer, yet earn more revenue per visit….
However, deeper down, this goes to the heart of the supplier-retailer-shopper relationship, the issue of trust in brand and shop equity..

Essentially, consumer-shoppers are in survival mode, and despite their recent experiences at the hands of politicians and bankers, ideally want to save time by placing their trust in brands and shops, until experience proves otherwise.
In other words, in order to maintain that trust, and minimise festering discontent, it is important that promotions anticipate 100% transparency.
This means educating the consumer as to the real value, in order that they can outsource part of their decision-making, leaving them more time to deal with the real rogues…

Otherwise, some smart-apped savvy consumer will tumble to the deception of ‘extra-free’, will not be able to bottle it up, and like all bad news…..

For 10 other ways that shoppers are weak at maths, see The Atlantic 
Thanks to Brian Loeb for the link: See FMCG Discussion Group

E-comparing prices, like-with-like...?

Yesterday’s top NamNews item on Mobile Food-price Checks indicates that shoppers increasingly want to know how food prices compare at point-of-sale.

To be precise, they are seeking a true like-with-like comparison of Prices, thus leaving them free to evaluate Product performance, Presentation and Place, in order to complete their decision to purchase.

The issue for suppliers and retailers is whether the product or brand can stand the comparison…

In other words, in a true like-with-like comparison of the four Ps, would the competitor’s product win ‘hands down’?

In which case, we can but jeopardise long term equity and credibility by making a direct comparison more difficult. Instead we should perhaps use our energy to objectively assess all category members vs. real consumer need, and then re-engineer our product offering, stripping out all redundant attributes, in order to provide a better match with that need in terms of value for money, compared with alternatives available.

Eventually, this open comparison will drive price indication and consumer choice at point-of-sale, with e-comparison merely accelerating and amplifying the process….

Farmers Escalate Milk Price-Cuts Protest

The impact of the price cuts ‘amounts to a combined profit warning for the overwhelming majority of dairy farmers in this country’ and reports indicate that supermarkets are to be targeted by blockade-protests from farmers. In some cases, given the fact that cows need milking daily, farmers plan to distribute the undelivered milk free-of-charge outside supermarkets.

In fact, in 2009 continental farmers resorted to more extreme measures such as spraying three day’s supply of unused milk onto fields and at the police.

A call to action
Yesterday, an unprecedented meeting of farming unions called for the immediate reversal of milk price cuts imposed on UK farmers since 1 April. The NFU chaired the meeting of leaders from NFU Scotland, NFU Cymru, Tenant Farmers Association (TFA) and Farmers for Action who came together in an industry show of strength after a catastrophic three months for the sector.

The representatives called for all milk price cuts imposed on farmers since 1 April to be restored by 1 August. They also plan a crisis summit in London on Wednesday 11 July.

Impact on consumer-retailer-supplier relationship
As savvy consumers, we need to run the numbers and realise that constant pressure on shelf-prices pushes back up the supply chain and in the case of clothing can eventually end with child labour abuses in third world countries. In a similar way, relentless pressure on milk prices can result in farmers going bust.

As savvy retailers, we need to run the numbers to ensure that in attempting to meet real consumer-needs, on-shelf availability is not traded off against the need for competitive pricing.

As savvy suppliers, we need to run the numbers to ensure that the total-offer-package meets consumer need better than available competition. In other words, we need to strip back any aspect of Product, Presentation and Place that may be superfluous to consumer need, and sell at a Price that represents better value than the competition.

Going forward
We then need be able to apply a similar numbers-based rationale in assembling a needs-based trade package that enables us to negotiate ‘fair-share’ deals with trade-partner retailers. These are retailers that can appreciate, and accommodate, the realities of each stage of the demand-supply chain in running efficient and effective routes to savvy consumers, in an open, needs-based market environment, offering a package that represents better value than the competition…..

All else is detail.

Flash Sale? The New Business Mantra

Flash sales are a time-limited offer of high discounts on big ticket luxury items. The system is a win-win for both retailers and consumers: retailers can build brand loyalty and at the same time sell surplus stock within a short span of time.

How they work
The offers are ‘abrupt’ and lasts for a brief time. It is also one of the safest deal takings. In other words you have to avail the opportunity as soon as you are offered the services. Consumers normally receive online offers including even invitations in the mail/emails, for offers averaging 50% off.
In the US, online sample sale site Gilt Groupe have launched an iPad app allowing users and buyers to access  flash sales of  luxury goods on its site.

Where flash sales are headed
A report by Business Insider estimate that flash sales will be a $6bn market by 2015.
Given the uniquely large supply glut in 2007, offline retailers of all stripes were likewise incentivized to convert their own inventories to cash positions, translating to even deeper discounts and fewer brand protections for manufacturers.
Into the void stepped flash sale sites to offer companies a novel strategy to off excess inventories while simultaneously creating an illusion of exclusivity.

Amazon’s flash sales
Amazon has launched a US private sale website for designer clothes, with members-only shopping and time-limited “flash” sales with discounts of up to 60%.
They opened the site called MyHabit.com last year, competing with start-ups including Gilt Groupe and Rue La La that have won well-off young female customers with their brief sales and urgent marketing.
Amazon promised a rolling series of cut-price deals – available for 72 hours each – from more than 800 brands.

Achica - an online breakthrough
Achica, the members-only home and luxury lifestyle UK website, defied the retail gloom after the fledgling company reported strong sales growth as it expands in continental Europe.
With the homeware sector being one of the hardest-hit areas on the high street as people delay refurbishment projects and trim spending on non-essential items, Achica has bucked this trend by focusing on offering premium homeware goods such as Anglepoise lamps and Le Creuset kitchenware at discounts of up to 70% via “flash” sales, typically lasting for 48 hours.

Apart from obvious opportunities in categories at the upper end of the market, how about suppliers anticipating the spread of flash sales into other categories, and pre-empting the competition, proactively…? 

Same-price pack-size shrinkage, a con or what?

Given the status of the brands and companies involved, it is obvious that the letter of the law is being adhered to, in that weights and measures are all accurately displayed on the pack. It is not even about the spirit of the law, in that it not the job of the legislature to maintain consumer trust in a brand. It is not about economics in that most research will prove that prices of ingredients, energy and labour have consistently risen faster than improvements in NAMs' ability to negotiate trade price increases of equivalent value…

'Everyone doing it'?

Moreover, it is not about the fact that 'everyone is doing it', in that the degree of collusion required to accurately preserve market/category equilibrium would be in clear breach of the law.

It is not even a new phenomenon, given that many of us cherish memories of our first bar of Cadbury’s Milk Flake, when it seemed so large one did not even object to sharing it with a younger brother..

Perception is the problem

No, pack size shrinkage is really about perception, the fact that a brand that has worked so hard and so long on convincing me that their combination of Product, Price, Presentation and Place is better than the competition in terms of value for money, suddenly, without consultation, destabilises that trust by allowing me to conclude that I am no longer getting what I thought it said on the tin… Moreover, if the brand’s marketing mix previously offered only a marginal advantage over the competitor’s offering, then the competitor suddenly becomes a serious contender for my attentions and even loyalty, at least until the next price rise.....

We are all savvy consumers
It is especially an insult to my intelligence as a savvy consumer, a person who has survived by learning never again to outsource product and service decision-making to marketers and retailers, and has set demonstrable value-for-money as a prerequisite for any purchasing decision.

What to do about it?

In fact, all the clues are available in the notes above:

If a brand makes a fundamental change in the Marketing Mix, it destabilises the market/category’s status quo, and needs to ‘re-sell’ me on its advantages over available alternatives, (via an up-to-date Buying Mix Analysis). 
I am not interested in boring stuff about ingredient, energy and labour cost increases, the media are full of it, in between the bits about political and financial corruption. 
I don’t want to know about those nasty retailers unfairly refusing to allow adequate and logical price increases.

I simply want assurance (and increasingly, proof) that the brand’s combination of Product, Price, Presentation and Place is so overwhelming that I would not even dream of considering alternatives…

Seemple, uh?       (Seemple = Shorthand for 'seems simple' ; Uh? = please read again )

Co-branded promotion featuring Coca Cola and a Metro Private Brand in Romania

                                                                                                 pic: Brandprivat
Brandprivat, a consultancy in Romania, have reported a promotion that broke this weekend.

This featured a simple mechanic: Buy one box (4 bottles Coca Cola 2Ltr) and get 2 packs of pasta (Spaghetti 200g under Fine Food brand). Fine Food is a mainstream private brand from Metro Cash & Carry (part of the Metro Group, Germany).

The package for Fine Food spaghetti was a ‘limited edition’ as it featured Coca Cola’s logo with a strapline: “meals with Coca Cola are more tasty”…  

Could this be a breakthrough example of collaborative innovation between suppliers and retailers of this scale?

In these unprecedented times, suppliers are seeking to optimise innovation resources on the best possible revenue sources, whilst retailers are seeking both product and instore innovation. Retailers also need to not only innovate in terms of the products they carry, but also on the shopper’s experience.

Suppliers and retailers therefore have a primary goal in common: to please the consumer and grow market share. Collaborative innovation seems to be a ‘no-brainer’..

All that remains is the need to reach some accommodation on the relative importance of store equity and brand equity…

Money-saving tips from America … road-tested by penny-pinching UK consumers

Ranging from eating beans rather than meat to filling up the car early in the morning when the air is cool, and the gas is dense, the Guardian Team give twenty tips a reality-check by running the numbers and evaluating any real saving…

Impact on the consumer

Whilst not all money-saving tips will yield real savings, in practice the act of re-evaluating all expenditure coupled with comparison-shopping is bound to heighten consumer appreciation of value-for-money and cause them to reduce/postpone their ‘excessive’ purchases.

How the Buyer will react

In the same way, buyers being consumers are likely to apply the same disciplines in the day-job. Whilst it is tempting for suppliers to react via defensive mode, realistically pro-active NAMs can benefit by being able to calculate and demonstrate the financial impact of their support package on the retailer’s P&L.

Calculating the cost and value of their free trade credit can be a useful first step….  

A move from price-based value?

According to the FT, shoppers are changing their opinion of what constitutes value in purchasing brands, services or experience.
P&G calls this “performance-based value messaging”, allowing them to emphasise what consumers get for the money, thus moving the shopper away from price-based value. In other words, shoppers pay more for Bounty, but as the paper towels are “twice as absorbent as bargain brands”, so the extra money will be well spent.
Perhaps it is worthwhile for NAMs and KAMs going back to fundamentals {why not loop Marketing into this kamblog to enrich the exercise?} and conducting a performance-based value analysis?
You may even find our Buying Mix Analysis tool of value in doing more for less….!