Wednesday, 13 February 2013

Opportunities for all brands in a horse-meat crisis?

Anyone who believes that the current crisis is about meat-ingredients needs to re-examine the small print.... What we are witnessing is a fundamental challenge to the meaning of branding, that assumed guarantee that a branded product contains what it says on the tin, no less and occasionally a little more, in a world where every little helps...

One of the first past the post, the Savvy Consumer, lost faith in intermediaries a few years ago. She learned never to outsource her purchasing decision-making to marketers or shopkeepers, ever again.., instead demanding demonstrable value-for-money before handing over a penny... Her lack of trust and purchasing insight has now extended all the way back up the supply chain, and discovered horses in a field...

Can we blame her for never trusting any of us again...?

The meat crisis has converted us all into savvy consumers, and therein lies the opportunity...

Essentially, those brands that are prepared to deliver what it says on the tin, plus a little more, in quantities and of a quality that meets or even exceeds consumer expectations, now have a clear run...

That old-fashioned combination of Product, Price, Presentation and Place, packaged harmoniously to meet created expectation are all that is required to be better than many alternatives, in these unprecedented times..

When ingredient-cost increases can no longer be absorbed, and retailers refuse to budge, the answer is to eliminate attributes now superfluous to consumer need, rather than substituting inferior quality in attempts to short-change a savvy consumer by cheating on brand delivery.  In other words, if the product does not need a handle, its removal will not be missed, and the cost goes down...

Reverting to meeting a combination of the consumer's functional and emotional needs, better than the other guy, then becomes a basis for NAMs to build a similar 4P proposition for the retailer.

Rocket-science it ain't...

Tuesday, 12 February 2013

When the buyer does not benefit personally/directly from your rebate..

S:   …and of course, you also have a 2% early payment discount…

B:   ..that money goes to the Finance department.., it doesn’t benefit me..

S:   So, you’re saying it’s not important…

B:   Correct!

S:   Tell you what, I’ll take it from the Settlement  Discount bucket and add it to your margin, how about that?

B:   No, you can’t do that!

S:   You just said it wasn’t important….

B:   Well, it is important to my company, you can’t just remove it

S:   I am not taking it away from your company, I am simply transferring to a more important bucket…the total value stays the same…

B:   No, I can’t authorise that..

S:   Now let’s start again…. I represent the whole of my company in these negotiations. I had assumed you represented all of yours…

B:   Correct!

S:   But you have just implied that you are not responsible for all of the cake… I need to talk to someone who is responsible for the whole deal with us, someone who can factor in each piece…

Buyer:    I am responsible for the whole deal…

SuperNAM:   Great, so taking into account the 2% Settlement Discount, that makes your company’s total take equal to….

Adventures of SuperNAM! (12)

Monday, 11 February 2013

Twenty Retailers that will save the High Street

Unlike brand marketing, where new products enjoy high status, the NAM/KAM system tends not to acknowledge the presence of new retailers until they achieve 5%+ of our business. In fact new, low profile retailers tend to operate under the radar until a chance discovery by our competitors…(think back to early Pound Shops, for starters…)

The 20 fastest growing high-street retailers are niche-carvers, multi-channel strategists, and go-to addresses for affordable goods. All of them have found their own particular edge that enables them to look to 2013 with optimism, despite challenging market conditions.

At the same time, they are diverse. The only thing all of the business on this list have in common is growth. Store numbers range from a single one to hundreds across the country; turnover from just over £200,000 to hundreds of millions. Business growth is very much present across the spectrum, with the right strategy in place.

Real Business and Jordans have identified the 20 UK retailers that are defying the downturn, with super-smart tactics and awesome growth.

Not all will be of direct interest (yet?) but five minutes studying the list of CAGR performances might be worth a ‘mabey’…??  or perhaps a 'what if'? see below

Criteria:
  • Sales greater than £5m in latest year’s accounts
  • Ebitda greater than £50k in latest year’s accounts
  • Latest accounts must be filed in 2011 or 2012
  • Latest year and previous three years financial info to be provided (regardless of year or last filed accounts)
  • UK based company
  • The company needs to have grown turnover over each of the three periods, and most importantly in the final year
  • Company to have been profitable in each of the three periods
What-if?
Perhaps even worth applying the above criteria to the tail-end of your customer portfolio, or the little player that naively requested a call, just-in-case?

Friday, 8 February 2013

When the buyer knocks your trade spend…

S:   ….and I am offering £50k to support this price promotion, subject to conditions,…

B:   £50k is not very much…

S:   How come?

B:   Like I said, for a company of your size, a drop in the ocean…

S:   How much profit do you think we make?

B:   How should I know?  Lots…

S:   Our Pre-Tax Net Profit is 11%

B:   So?

S:   This means that when I put £50k trade spend on your desk, I need to see incremental sales of £455k before I let go of the money…

B:   That’s your problem…

S    OK, Sunshine, let’s talk about your problem… You think £50k is nothing…?

B:   Agreed!

S:   Your business makes 2.5% Pre-Tax Net Profit, right?

B:    How do you know that?

S:   Companies House online, £1 for the latest Annual Report. See, I’ve invested in you already, we call it preparation…

B:   Wish I had the time to surf the internet… Anyway, so we net 2.5%...

S:   This means that my little £50k is equivalent to giving you extra sales of £2m……

B:    Prove it !

S:    Fine.  Our £50k trade investment comes with no handling costs (except bank charges!!!), so it goes straight to your bottom line. It therefore represents 2.5% of sales, in your business model.

B:   So?

S:    £50k divided by 2.5 and multiplied by 100 gives you sales of £2m, bingo!

Buyer:    What do I have to do?

SuperNAM:  Now you’re talking…..


Adventures of SuperNAM! (11)

Thursday, 7 February 2013

HMV suppliers resist cut-price deal, the downside of administration…

According to the FT, HMV’s administrator Deloitte is attempting to pay rock-bottom prices to buy up the CDs, DVDs and video games provided to it under a loan arrangement, a move being resisted by some suppliers.

Before HMV went into administration, the entertainment retailer had agreed more favourable terms with suppliers, which meant it only had to pay for stock after it had been sold in stores. As a result, HMV is now stocking many thousands of video games, DVDs and CDs on consignment, where the content owners – music and film companies – still retain ownership.

Deloitte first offered to buy up this stock – which runs to hundreds of thousands of music CDs and films – at 12p in the pound, allegedly still significantly lower than standard retail deals of between 65p to 70p in the pound.

Given the large number of retail chains now in administration (see details), this negotiation stance by administrators presents issues for brand owners in many other categories.

Whilst every little sale helps in unprecedented times, the combination of low revenue and the low sell-on price by retailers in administration for prolonged periods, means brand value is suffering the same damage as an item on perpetual BOGOF.. 

Experienced NAMs will also appreciate that goods sold on consignment and based on scanned sales, means that the supplier is taking over the shrinkage problem. In other words, if a supplier delivers 100 items, and the retailer is paid for 98, two having been stolen, the suppliers absorbs the 2% loss.

A  final thought, have you ever tried to actually retrieve unsold consignment goods...?

Tuesday, 5 February 2013

Trade-spend Responsibility – a move to the Finance Department?

Having grown from a sales-department ‘slush-fund’ of  5%  of turnover to over 20% of  a typical supplier’s sales, trade-spend is now greater than cost-of-goods in many cases.

The global financial crisis having caused consumers and businesses to ‘deleverage’ by paying down debt, means there is less money available to spend, resulting in flat-line demand for the next five years, in most markets…

This situation was becoming unsustainable leading up to 2007, but the global financial crisis has changed the game fundamentally…  The sums and the stakes involved are now so high that companies have to consider applying all of the disciplines of capital investment and the law of contract to the allocation of trade funds, or risk devaluation of the share price by investors, or worse….

In other words, trade-spend, this key selling tool, has become too important to be left to the sales department…

However, it should be kept in mind that NAMs are closer to the customer and as a result are better placed than most to take a commercial view of the ‘cause and effect’ of promotional expenditure.
Above all, the NAM should by definition be a good integrator of company and customer interests in ensuring that trade promotions meet joint objectives.

The key is to be able to converse with individuals in their own language, framing all requests in terms of meeting their needs via the NAM’s initiatives, with the corporate goal-in-common expressed in financial terms, the common language, and Return On Capital Employed the key driver. .

By incorporating the principles of Capital Investment to trade spend management, including the financial impact on both parties P&L, NAMs will echo the finance department approach to making financial investment decisions and will thus make trade-spend feel more comfortable in Sales’ hands…

More on ‘How’ for NamNews subscribers in the February edition.
Free trial available here 

Monday, 4 February 2013

New compressed aerosols deliver same quantity from 50% of the space…


Dove’s 150ml cans shrink to 75ml, but contain the same amount of deodorant and remain the same price.

Undoubtedly a great ‘Green’ move, the real merit of the idea is in demonstrating to the savvy consumer that Unilever is prepared to play fair when it comes to adjusting prices to reflect cost increases.

In other words, the new aerosol will focus attention on what consumers get for the money, when it comes to changes in pack sizes.

As you know, following years of freezes on trade prices, a number of suppliers have resorted to reductions in pack contents to disguise shelf-price increases, possibly causing damage to consumers’ faith in the brand. This latest move by Unilever heightens interest in the issue… and will surely cause the ultra-savvy consumer (and the competition) to conduct comparison tests for ‘peace of mind’….

Today's launch will be backed by a £13m marketing campaign. In these unprecedented times, Unilever will need to devote a high proportion of the money to explaining how an aerosol 50% smaller contains the same amount of active ingredient. However, if competitors have equivalent technology available in the wings, their subsequent launches will ease the consumer-education burden, but will leave Unilever with the innovator’s advantage for Sure Women, Dove and Vaseline Intensive.

Incidentally, given the resulting 15% reduction in shelf space taken up by the new cans, it would also be interesting to check out the small print of Unilever's retail agreements to see if shelf-payments specify shelf-length or number of facings…

It sure is complicated launching new products nowadays...

Watch this space...

Sunday, 3 February 2013

Telling the time – a lesson in bonding…?


With 77 stores in the UK, and stocks thousands of products online at TheToyShop.com, The Entertainer is one of the most innovative and professional toy retailers I have encountered.
They are currently featuring a Time-telling kit aimed at helping kids learn how to tell the time, as preparation for the day when time becomes money…

If you are one of those parents that feel teaching your child to tell the time is part of the bonding process, the following pointers on the key communication issues may add some insight:

“.,…….Now: there are 24 hours in every day and every one of these hours is represented on the face of the clock…. 

There are three hands: the first hand is the hour hand, the second hand is the minute hand and the third hand is the second hand. 

Now the fat hand is hour hand and it is shorter than the minute hand.
I know that an hour is longer than a minute, but the Hour hand is shorter than the Minute hand because it is!

Now, when the fat hand and the thin hand are pointing at the 1 and the 2 up at the top of the clock- you see the 1 & the 2?-1 and 2 is 12. 
12. Yes it would be 3 if you joined them together…..”  (Dave Allen extract)

This hopefully gives a little flavour of the ‘advantages’ of having English as a first language, and its 'literal meanings' traps for those colleagues and buyers who had to pick it up…

Incidentally, if  the time-teaching task now seems a little more daunting, perhaps a quick trip to The Entertainer for a £7 kit would do you both some good…!

The full 6-minute Dave Allen Time teaching routine is below