Cross-selling promotions: beauty and bullets?

A husband and wife team in Kansas have been operating a combination hair salon and sporting goods shop that featured treatments and manicures as well as rifles and revolvers using the promotional slogan "where beauty and bullets collide"

Apart from Tracey’s undoubted reputation in haircare, Jeffrey was able to add authenticity to his category via his felony convictions for arson and possession of firearms… Linked-promotion synergies were optimised by combining the message that it was important for women to feel safe, with marketing material featuring sequin-studded revolvers.

Given that ‘an armed society is a polite society’ the salon was able to offer a peaceful haven of rest, a respite from the challenges of the world outside…

Unfortunately, the U.S. Attorney's Office in Kansas took issue with the fact that Jeffrey was operating without a firearm dealers licence, and are recommending five years in federal prison to enhance his CV.
Hopefully he will be able to surmount the more erratic supply-chain issues operating ‘inside’…

Regrettably, this unexpected development, combined with Tracey’s upcoming 3-year probationary period have resulted in the couple dropping all references to the firearms category from their website:  www.beautyandbullets.com

Have a peaceful weekend, from the NamNews Team!

The BOGOF Egg?

                                                                              pic: Moore household 29-01-2013
The chances of cracking open a double yolked egg are pretty slim.
One tenth of one per cent in fact.

But three double-yolk eggs in a row.?
A case of hens attempting to meet latest promotional specs?
Unprecedented times indeed!

The myth of scale economies?

How to measure the actual savings on increased quantities?

Yesterday’s NamNews item ref Morrisons’ latest ‘routine negotiations’ not only scored our highest visitor-count, but more importantly raised the question of how much discount to give when a retailer offers bigger volumes for a lower price…

As always, accepting an offer that ‘feels good’ instead of running the numbers is a good way to compromise profitability...

Also, given the long lead times required to negotiate something you want, the pressure to agree a scale-discount in the heat of the final moments of a last-minute discount-negotiation can cause you to accept ‘an offer you can’t refuse’…knowing that if you do refuse, the guys back of the ranch can label it a bad decision, never having to test it with actual numbers…

The following steps may help:  

• Keep in mind that a 10% Increase in sales does not necessarily mean a 10% reduction in costs
• Also, as a supplier, you know more about manufacturing cost-savings than the buyer…
• Select a specific SKU for one of your leading brands in the customer’s portfolio
• Check out the sales, order sizes and average delivery delivery-frequencies of the SKU to the customer in question
• Check with marketing/finance/production the cost savings on sales increases of 10%, 20% and 30%
• (sales increases greater than 30% have to raise the question of whether you have been missing too many ‘potential’ tricks with the retailer…)
• Actual savings will be driven by packaging and ingredient scale economies, capacity relationships etc in production and delivery, but it should be possible to arrive at a conservative figure ( you won’t believe how low the savings are, using real figures …hence ‘the myth’ of scale economies)
• Ask for a quick check of other big SKUs (other brands in your portfolio) to isolate any ‘funnies’ in terms of exceptions
• In negotiation, focus the discussion on your chosen SKU and limit the ‘give & take’ to a fair share of the real savings
• Run a reality-check of the incremental sales required to produce the shared savings, just in case…
• Agree minimum order quantities, and timed delivery frequencies, along with quarterly purchase levels
• Build these conditions into a deal/contract tied to a discount paid retrospectively on performance, with on-time payment added for good measure
• After six months consider extending the deal to include the rest of your business with that customer
• This will hopefully bring your dealings a little closer to real scale-economies at the next ‘routine negotiation’, only this time with the benefit of a little history…

On the other hand, why not simply roll over, and over, and over……like other folk?

Talking big mobile - The Walmart approach

Walmart anticipated 40% of their online traffic in the holiday season would come from mobile, with much of that from people shopping on their phones while they're inside one of Walmart’s  4,000 stores.

Keep in mind that Walmart are the guys that found a link between Dads buying bulk-packs of baby-napkins and six-packs of beer on Friday evenings, became the first retailer to merchandise beer in the baby category and enjoyed a 30% uplift in sales as a result…

In other words, with a data-warehouse bigger than the Pentagon, they make data work, while other retailers look for logical connections that follow traditional patterns of shopper behaviour and focus on ‘tidy’ categories, adapting gradually to change, if they must…

This is why Walmart are taking a direct approach and are going all out with mobile. The idea is not to make it an either/or option; instead, their apps cater to people who are already shopping inside a Walmart store.

If you opt into "in-store mode" the feature aimed at keeping their shoppers buying from Walmart, even via online when what they want isn't in the store, they will use your location to provide you with an app tailored for that store.

With 60% of its shoppers opting-in within two weeks of launch, and 140m weekly shoppers, the Walmart approach makes other retailers seem like they are toying with mobile…or worse…

Time for a trip to Leeds?

(Thanks to Sophie Schwartz and Jason Goldberg for the link)

Horses for courses - an exercise in brand devaluation?

The multiple horse-joke reaction to the burger-meat scandal has tended to obscure the real issues involved:
- patently, it is no laughing matter, especially for the most important stakeholders, the consumers...
- brand integrity, the fundamental reassurance that allows consumers to avoid the need to personally check the contents of the tin before purchase, has been seriously compromised...
- market segmentation, the process of tailoring a brand to consumer taste is about informed modification of ingredients, not the misleading of the consumer via artificially low price-points...

Anyone in any doubt as to the extent of the damage need only walk the aisles, and observe the focus on white meats, the subtle references to local sourcing of red meat ingredients, and the reduced uptake in the burger section.....

....and these are still early days, while retailers are exploring alternative arrangements.

Essentially, this all goes back to a fundamental misunderstanding of the role of branding, and an under-estimation of consumer sophistication in terms of their ability to evaluate what they are getting for the money. Given that much of the brand experience is 'enjoyed' in the home, a disappointed consumer may not choose to articulate their dissatisfaction at point of purchase, but simply switch brands, or even worse, shop elsewhere, pausing only to tell their friends on the way....

If we accept that these savvy consumers are very capable of picking up subtle content-downgrades, then it calls into question the ingredient-answer to a perpetual freeze on price increases, a 'secret' compromise of quality.  The use of horse meat or indeed any other 'filler' is but one example of how an obsession with cost control can compromise brand equity, be it supplier or retailer...

Moreover, as any experienced brand owner knows, consumer praise operates on 1:10 odds, while criticism is given 10:1 every time a brand disappoints...

Finally, should anyone be left with an impression that this is simply about meat...it might be borne in mind that any reduction in pack size or amount of ingredients is in danger of straying onto the same consumer-disillusionment territory...

The issue is hard-won, easily lost brand integrity, whatever the odds...

Customer in trouble - your call?

'The big ones hit the headlines, but when you see them all in a list....'

Given the cost of recovering lost profits when a customer goes bust, it is obviously vital that suppliers watch for the signs of trouble and act faster than the other guy. Obviously the finance department are equipped to pick up the signals in a customer’s annual report, but this merely gives a historical view.

Why the NAM view is crucial
However, when combined with a NAM’s daily experience of being in the market, continuously being exposed to a mix of weak and relatively healthy customers, understanding the effect of business pressures on interpersonal relationships, being subject to all the stress-symptoms of a customer drifting to the edge, and usually tasked with the job of filling the supplier’s profit-gap via incremental sales, it is more important that early warnings detection and signs of possible recovery be built into the NAM role.

This means NAM’s should familiarise themselves with the key financial indicators (see above) and couple this with any signs of a stress-driven deterioration in their dealings with the buyer and other functions within the business, and hot-line their findings to their finance colleagues…

It goes without saying that NAMs should then be part of any decision to modify (application of credit limit, withholding supplies etc) any aspect of the trading relationship, given that the NAM will have to communicate the decision to the customer, handle any flack arising and have to find the appropriate incremental sales elsewhere…

Anyone having issues ref pulling the plug should remind themselves that if their net profit is 5%, and a customer goes bust owing £150k, then the incremental sales required for recovery of profits are £3m….

More here & here

Casino enters Romania via Private label

                                                                                      Pic Brand Privat Romania
Using a method pioneered by Tesco, Casino, in partnership with Mega Image (part of the Belgian Delhaize) have launched a complete range of private lines, from entry level (Tous les jours) to bio products (Casino Bio). According to reports from Brand Privat, Romania, the other lines are Casino Family, Casino Delices and Casino, approximately 50 new articles at the same prices they have in France.

Longer term, the exit of Intermarche and the Auchan-Real deal, there are free spaces (8 former Intermarche supermarkets and 4 Real hypermarkets) and with Carrefour’s rumoured exit from Romania, who knows?

The fact remains that the use of private label to build brand franchise ahead of market entry, never did Tesco any harm…

Watch this space…

Beth Davis on courage in the NAM role?

KamBlog is meant to be a thought-provoker for National and Key Account Managers, treating them like CEOs, Managing Directors of business units, applying all the skills of a business leader, striving against the odds for growth in flat-line markets, with the added restraint of responsibility without authority...in practice, NAMs that make a difference know that real authority comes from a proven track-record in developing and implementing a profitable customer strategy, especially in crazy times…..

It could be said that profitability and ROCE are issues for others higher up the company hierarchy, that in unprecedented times, NAMs need to focus on keeping the fires down, and leave the bigger picture to the bigger artists...

We happen to believe that without a big-picture context, continuous fire-fighting limits, rather than stimulates, personal growth. Use of numbers shortens the odds, whilst taking a chance without running the numbers smacks of recklessness…

But the real issue is courage…with the bar raised higher with every high street casualty…

However, in the buyer-seller day-job, fighting for time and even risking humour in the face of ever shortening attention-spans, working from the bigger picture can be scary in that, by encouraging the use of numbers and their impact on the retailer’s P&L, our ideas and recommendations can be quantified.

This means that, in unprecedented times, where history is of little help, a buyer following the advice will sometimes hold the NAM accountable for good results, and always in the case of a bad outcome.

It takes courage to persist until signs of success begin to emerge, increasingly conscious of the fact that a better than average promotion becomes a higher hurdle for the next initiative, especially when we apply the numbers and risk an ROI analysis…

Eventually, however, this continuous drip-feed of quantified initiatives begins to make an impact on joint-profitability, while others focus on nasal cleanliness and await the emergence of new guidelines when markets eventually settle down..

Meanwhile, the proactive NAM has the courage to focus on output rather than input, in a continuous stream of creativity that over time, results in the growing satisfaction of perhaps a few good ideas in retrospect…

Beth Davis, was old actress who often quipped about the difficulties of growing older…

Had she lived a little longer, she might even have said:                                                                      ‘National Account Management ain’t for sissies…’