The reasons why Sears went bankrupt

SearsToday, Sears declares bankruptcy in the US. It is a very sad day for many of us who grew up circling items in the Sears Christmas catalog. But, it is a day we have seen coming for 20 years. I have a soft spot in my heart for them because my mom worked in the Sears men’s clothing section when I was a teenager. I thought it was a cool job. That’s where I got my suit for my High School graduation. My mom told me “every man needs a good suit.”

I also know of many great people who have worked at Sears over the years. From what I heard, they were extremely frustrated by the poor moves or lack of moves by senior leaders. Too little, too late.

Let’s explore the reasons why Sears died and what you can learn from them for your brand. This is the classic retailer who tried to be everything to everyone. Sears failed because they let Walmart steal their low-price positioning at retail, and then let Amazon steal their catalog shopping model.

Sears lacked a point of difference 

I tell brands all the time: “You have four choices: you can be better, different, cheaper or else not around for long.” I have never met anyone who chooses the fourth option of not around for long, but if you don’t choose one of the first three, then the fourth chooses you.

Like any department store, it is hard to be different. They are all just a collection of goods that someone else has made for them. For decades, Sears was successful in owning the “cheaper” option with their good value, at the lowest price. They likely kept that until the early 1980s.

First, the rapid expansion of Walmart and Costco put the first dagger into Sears by severely undercutting them on price. For comparable items, Sears was a 20-30% price premium.

Trying to be everything to anyone is the recipe for being nothing to everyone.

And then, as consumers moved to the big box stores and outlet malls, each of those individual retailers put another dagger into each and every department Sears owned.

  • Looking for a TV, go to Best Buy.
  • For a home renovation, go to Home Depot.
  • If you need any sporting goods, go to Dick’s.
  • And, for any clothing item, head to the nearest outlet mall.

To find the competitive space in which your brand can win, I introduce a Venn diagram of competitive situations. You will see three circles. The first circle comprises everything your consumer wants or needs. The second circle includes everything your brand does best, including consumer benefits, product features or proven claims. And, finally, the third circle lists what your competitor does best.competitive positioning

Find your brand positioning

Your brand’s winning zone (in green), is the space that matches up “What consumers want” with “What your brand does best.” This space provides you a distinct positioning you can own and defend from attack. Your brand must be able to satisfy the consumer needs better than any other competitor can.

Your brand will not survive by trying to compete in the losing zone (in red), which is the space that matches the consumer needs with “What your competitor does best.” When you play in this space, your competitor will beat you every time.

As markets mature, competitors copy each other. It has become harder to be better with a definitive product win. Many brands have to play in the risky zone (in grey), which is the space where you and your competitor both meet the consumer’s needs in a relative tie.

Using this logic, Sears offered moderate value goods, at a higher price than their competitors. There was no reason to go to Sears. They were in the dumb zone (in blue) for the last 20 years.

Walmart did exactly what Sears did, only better

Walmart used the identical playbook from Sears: well-known brand names at a much lower price than you could get anywhere else. As Walmart grew up through the 1970s and 80s, the focused on being the perfect store for the small towns or rural areas because they offered everything you would need in one place. As Walmart moved into suburbs in the 1980s and 90s, they met face-to-face with Sears.

What did Sears do to fight back? Nothing.

If we go back to the 1970s, I would label Sears as the “Power Player” brand of the retail category. Power Player brands should be the share leader or perceived influential leader of the category. These brands command power over all the stakeholders, including consumers, competitors, and retail channels. power player brands

Regarding positioning, the power player brands own what they are best at and leverage their power in the market to help them own the position where there is a tie with another competitor. Owning both zones helps expand the brand’s presence and power across a bigger market. These brands can also use their exceptional financial situation to invest in innovation to catch up, defend or stay ahead of competitors.

Power player brands must defend their territory by responding to every aggressive competitor’s attacks. They even need to attack themselves by vigilantly watching for internal weaknesses to close any potential leaks before a competitor notices. Power player brands can never become complacent, or they will die.

Sears should have squashed upstart Walmart in 1970 when they only had 38 stores, yet it was obvious that they were onto something. The smart power player brand would have paid Sam Walton $100 million for his stores and signed a do not compete. Within five years, their sales grew 10-fold from $40 million to $350 million, yet Sears still did nothing. That $100 million would look pretty cheap by the mid-1980s when Walmart grew another 40-fold up to $15 billion in sales. Keep going and by 2000, Walmart sales were $220 billion.

Sears failed to attack any competitive move made by Walmart, and they certainly never attacked themselves.

Sears once owned what Amazon now makes billions doing

For decades, Sears delivered catalogs with the widest assortment of products, customers would pick out exactly what they wanted, send in their order through the mail, Sears would send it from a central warehouse to one of their local stores and then the customer would go pick it up at their local Sears store.  I’m sure we are all looking at this model, baffled at how Sears never mastered online retailing. All they needed to do:

  • Put the entire Sears catalog on a website.
  • Let your customers order through the Sears website.
  • Mail it from your central warehouse to the customer’s house.

Not only did Amazon steal this model, they even paved the way with a “books only” model that still allowed Sears the time to launch their full catalog online.

The problem for many leaders is that to be a visionary, you must be able to visualize the future, and then take action. Many leaders of brands about to be replaced by a smarter model for the future resist the future as hard as they can. The leader could actually replicate the brand attacking them, and become the future faster than the brand attacking them. That’s crazy.

Too many of the brands link their brand with the format they deliver. Newspapers think they are in the business of broadsheets, and retailers think of locations. Remember that phrase “location, location, location.” I would rather brands think of the idea they stand for, and adjust the business model to deliver that idea.

Running a brand takes imagination

Just imagine, if in 1975, Sears fought back with all their power and squashed Walmart. It would have worked.

Just imagine, if in 1995, Sears saw the future of online shopping, and moved their entire catalog model to an e-commerce platform.

Without a vision for the future, Sears is now part of our past. 

To learn more about this type of thinking, you should explore my new book, Beloved Brands.

With Beloved Brands, you will learn everything you need to know so you can build a brand that your consumers will love.

You will learn how to think strategically, define your brand with a positioning statement and a brand idea, write a brand plan everyone can follow, inspire smart and creative marketing execution and analyze the performance of your brand through a deep-dive business review.

Beloved Brands book

To order the e-book version or the paperback version from Amazon, click on this link: https://lnkd.in/eF-mYPe

If you use Kobo, you can find Beloved Brands in over 30 markets using this link: https://lnkd.in/g7SzEh4

And if you are in India, you can use this link to order: https://lnkd.in/gDA5Aiw

Beloved Brands: Who are we?

At Beloved Brands, our purpose is to help brands find a new pathway to growth. We believe that the more love your brand can generate with your most cherished consumers, the more power, growth, and profitability you will realize in the future.

We think the best solutions are likely inside you already, but struggle to come out. Our unique playbook tools are the backbone of our workshops. We bring our challenging voice to help you make decisions and refine every potential idea.

We start by defining a brand positioning statement, outlining the desired target, consumer benefits and support points the brand will stand behind. And then, we build a brand idea that is simple and unique enough to stand out in the clutter of the market, motivating enough to get consumers to engage, buy and build a loyal following with your brand.

We will help you write a strategic brand plan for the future, to get everyone in your organization to follow. It starts with an inspiring vision that pushes your team to imagine a brighter future. We use our strategic thinking tools to help you make strategic choices on where to allocate your brand’s limited resources.

Our brand playbook methodology will challenge you to unlock future growth for your brand

  1. Our deep-dive assessment process will give you the knowledge of the issues facing your brand, so you can build a smart plan to unleash future growth.
  2. Find a winningbrand positioning statementthat motivates consumers to buy, and gives you a competitive advantage to drive future growth.
  3. Create a brand ideato capture the minds and hearts of consumers, while inspiring and focusing your team to deliver greatness on the brand’s behalf.
  4. Build a brand planto help you make smart focused decisions, so you can organize, steer, and inspire your team towards higher growth.
  5. Advise on advertising, to find creative that drives branded breakthrough and use a motivating messaging to set up long-term brand growth.
  6. Our brandtrainingprogram will make your brand leaders smarter, so you have added confidence in their performance to drive brand growth.

To learn more about our coaching, click on this link: Beloved Brands Strategic Coaching

To learn more about our training programs, click on this link: Beloved Brands Training

If you need our help, email me at graham@beloved-brands.comor call me at 416 885 3911

You have my personal promise to help you solve your brand building challenges. I will give you new thinking, so you can unlock future growth for your brand.

Signature

Graham Robertson

Founder and CMO, Beloved Brands Inc.

 

 

 

Best Super Bowl ads of 2018, based on whether I would spent the money

Best super bowl AdsHere are the Best Super Bowl Ads. As a former client side Brand Leader, I only ever judge an Ad based on whether I would have spent the money to make it. Super Bowl Ads are high-profile, and a big financial investment. While none of this year’s Ads will make my All time Top 10 list, there were a handful I would have invested in.

 

Is the Super Bowl a good media choice for your brand?

When it comes to your media, your strategy should determine how much you can invest. Have you discovered a new brand message that you know will motivate consumers to buy your brand? Have you Identified change in the consumer needs, motivations or behaviors that will benefit your brand.Has there been a shift in the competitive dynamic, with an opportunity to make gains or a necessity to defend? Are you continuing to fuel brand growth, with a window to drive brand profits? Is there a new distribution channel you can use to move consumers through, before competitors do? Have you launched a breakthrough product innovation that offers a competitive advantage to your brand? While the Super Bowl is a huge investment, if done right, it can actually be a more efficient brand spend than paying for a 30-second spot on Big Bang Theory on your average Tuesday. It all depends on the creative. During a Super Bowl game, we tend to see some of the best…..and my god, some of the worst Ads of all time.

 

Does your Ad have branded breakthrough and a motivating message?

The Brand Leaders who are good at advertising can get great Ads on the air, and keep bad Ads off the air. You need to make decisions to find the sweet spot where your brand’s Advertising is both different and smart.

To be different, you need to achieve branded breakthrough, using creativity to capture consumers, not only gaining their attention within the clutter of the market, but linking your brand closely to the story. To be smart, you need a motivating message to make sure you communicate the main message to connect with consumers in a memorable way, and make sure the ad stick enough to move consumers to see, think, feel or act differently than before they saw the Ad.

I always use the principles for achieving Attention, Brand Link, Communication and Stickiness—the model I call the ABC’S.

Here are the 5 Ads I would have paid for:

Tide:

Tide stole the evening. While Tide has a dominant share, I have zero emotional feelings for Tide. The brand is so stoically cold, I have never seen any Tide Ad in the past 40 years I have liked. Till last night. I actually found myself wanting to see the next Tide Ad. And a few times, I said “this is a Tide Ad” and I was wrong. But still laughing my ass off.

And then there was this one, using their sister brand, “Old Spice”. When this came on, I said “oh good, finally a new Old Spice Ad”.  Nope, a Tide Ad.

Then I saw a Clydesdale horse, ready to cry. Nope, it’s a Tide Ad. Damn.

Tide is a dominant Power Player brand. They have the financial resources to do this type of Ad once a year. High on attention, strong branding, still tells cleaning message and sticks in the consumer’s mind. I’m sure the overnight recall for “A Tide Ad” is 90%. I’d buy it.

Amazon Alexa

It was a weak evening for technology. But Amazon Alexa was great. With a new product innovation, it naturally generates Attention, and used a highly creative demo to communicate the benefits of the brand. Nice use of a few celebs who fit their role. Very funny, to create some good talk value. I’d buy it.

 

Jeep

This Ad spoke to those consumers who love the Jeep Wrangler. It was a 30-second one take product demonstration. I bet if you ask Jeep lovers, this Ad perfectly epitomizes their view of the brand. While the masses might not remember by this ad today. I am guessing at every water cooler or Facebook page, the Jeep owners are quietly saying “I like the Jeep Ad”. Maybe lose half the copy of the voice over. Let the quietness of the Ad speak for itself. Plus, that voice over seemed to be talking to the Ad industry, not Joe Average Jeep owner. But,  I’d buy it.

Ram 

One of my top 10 all time favorite ads was the Dodge “And god created a farmer” ad with the voice of Paul Harvey from 2012. It was such a captivatingly quiet Ad. So last night, I could tell the MLK ad was Ram’s, but the music was annoying me. Last I checked, Dr. King doesn’t need background music. I’d buy it, but I’d ask for the music to be gone.

Compare that ad with the Dodge Ram ad from the 2012. See what I mean by the lack of sound is what captures you. Now watch the MLK ad and imagine without the music.

Doritos and Mountain Dew

I feel for the Doritos team for having to come up with a hit every Super Bowl Ad. Maybe not way out there, but a solid 8/10. Highly entertaining rap to launch a product innovation, followed by Morgan Freeman with Mountain Dew. While I love Morgan Freeman rapping and dancing, the brand link and message was not as clear. I’d buy the Doritos and think twice about the Mountain Dew. Maybe I’d use the Morgan Freeman script on a salt and vinegar Doritos.

That’s my shopping list done. There were a ton of Ads. Lots of crap last night. I will remember Tide, maybe not in my top 10 Super Bowl ads of all time, but maybe in my top 25.

At Beloved Brands, we run workshops to train marketers in all aspects of marketing from strategic thinking, analysis, writing brand plans, creative briefs and reports, judging advertising and media. To see a WORKSHOP ON MARKETING EXECUTION, click on the Powerpoint presentation below:

Beloved Brands: Who are we?

At Beloved Brands, our purpose is to help brands find a new pathway to growth. We believe that the more love your brand can generate with your most cherished consumers, the more power, growth and profitability you will realize in the future.

The best solutions are likely inside you already, but struggle to come out. Our unique engagement tools are the backbone of our strategy workshops. These tools will force you to think differently so you can freely generate many new ideas. At Beloved Brands, we bring our challenging voice to help you make decisions and refine every potential idea.

We help brands find growth

We start by defining a brand positioning statement, outlining the desired target, consumer benefits and support points the brand will stand behind. And then, we build a big idea that is simple and unique enough to stand out in the clutter of the market, motivating enough to get consumers to engage, buy and build a loyal following with your brand. Finally, the big idea must influence employees to personally deliver an outstanding consumer experience, to help move consumers along the journey to loving your brand.

We will help you write a strategic brand plan for the future, to get everyone in your organization to follow. It starts with an inspiring vision that pushes your team to imagine a brighter future. We use our strategic thinking tools to help you make strategic choices on where to allocate your brand’s limited resources. We work with your team to build out project plans, creative briefs and provide advice on marketing execution.

To learn more about our coaching, click on this link: Beloved Brands Strategic Coaching

We make Brand Leaders smarter

We believe that investing in your marketing people will pay off. With smarter people behind your brands will drive higher revenue growth and profits. With our brand management training program, you will see smarter strategic thinking, more focused brand plans, brand positioning, better creative briefs that steer your agencies, improved decision-making on marketing execution, smarter analytical skills to assess your brand’s performance and a better management of the profitability of the brand.

To learn more about our training programs, click on this link: Beloved Brands Training

If you need our help, email me at graham@beloved-brands.com or call me at 416 885 3911

Beloved Brands Graham Robertson

 

 

 

 

 

 

 

 

 

 

If your brand is afraid of Amazon, then you should be terrified of Alibaba

[sg_popup id=”9″ event=”onload”][/sg_popup]Now begins the North American battle of Amazon vs Walmart, with the winner to take on Alibaba on the world’s retailer stage.

alibabaI love watching the Kentucky Derby, especially those horses that start off slow, then pick it up on the back straight, and then basically fly past everyone on the last turn, like they are standing still. That’s how I feel about watching the Alibaba brand.

The joint venture between Walmart and Google is a signal that both might be a little bit scared of Amazon. 

But, Alibaba is using their dominance in the world’s largest market (China) to pick up all that speed in the back straight and likely beat both Amazon and Walmart.

Walmart is a tough competitor. They won’t go down without a fight.

Obviously, Amazon has a huge advantage in the US, but things are about to get really ugly as Walmart and Amazon attempt to destroy each other. 

But, if you have ever dealt with Walmart, you would have to be an idiot to ever count them out. Their culture focuses on the relentless fixation on fast-moving items that helps drive cash flow. Sure, Walmart beats up their vendors over price–but that’s mainly to drive sell through. If your brand moves slow, there is no debate–you are told to speed up your sales, and if you don’t, you are gone.

I remember when Walmart starting sending us their weekly sales data. My first thought was “Wow, this is true partnership, amazing data, thanks Walmart”. Then the questions started to come. “Your 250ml cherry flavored cough syrup is not selling fast enough, what will you do to accelerate turns”. We lowered the price. Or even worse, “Your Listerine Pocketpaks product accounts for the highest theft of any product in our stores, fix it”. We changed the packaging, just because they asked us.   In the bricks and mortar space, while most department store retailers sell through their inventory in 130-150 days. Walmart sells through their inventory in 29 days. That’s cash flow.

I expect Walmart will go lower on price than Amazon can tolerate. What retailer owned the low price positioning before Walmart?  Sears. If you go compare prices at Walmart and Sears, you will see why Sears stores are empty and about to go bankrupt.

Does the Google partnership help Walmart?  A little. But both better step it up fast. If Walmart loses to Amazon, the case study class starts off with “Walmart should have started their on-line war with Amazon in 2002, not 2017.”

Even if Amazon can tolerate lower prices and eventually beats Walmart, it will do some damage to their profits. Amazon will experience lower margins, squeezed cash flow, and a divided consumer base. It will further open the possibility of seeing Alibaba entering the US market.

Why Alibaba will win

Alibaba, valued at $420 Billion has seen an 80% increase in the market capitalization in the past twelve months. In the same period, Amazon has seen a 20% increase, still with a slight lead at $465 Billion. 

Here are 5 reasons why Alibaba will eventually win the global e-commerce retail space:

  1. Alibaba can utilize their home-field advantage. Alibaba is dominating the Chinese market, which is the #1 e-commerce population in the world. China has 500 million active on-line users, is twice the size of the US market. Walmart and Amazon will divide up the US market.
  2. Alibaba has a business model that delivers higher profitability. Alibaba’s business model, with no listing fees, with the bulk of their revenue coming from keywords and digital-advertising is closer to the social media model. This gives Alibaba significantly higher margins than Amazon. 
  3. Alipay payment system.  Alibaba launched a digital payment system in 2004, just for their own customers. Along with WePay, it has become the accepted method of payment in China. They have moved to a cashless and even cardless payment world. 
  4. Alibaba will ride the growth curve of the Chinese Economy. Despite the recent slowdown, China’s economy is still growing at almost three times the rate of the US – around 7% over the last couple of years, compared to less than 2.5%.The US has a growing trade deficit – it imports more than it exports – while China imports significantly less than it exports, resulting in a trade surplus.
  5. Alibaba’s sales will benefit from the growth of the Chinese Middle Class. In the last ten years, the average income for China has tripled. It is expected that from 2012 to 2022, those in China making more than $34K US will increase from 3% currently up to 9%, and those in the growing middle class ($16K to $34K) will increase from 14% up to 54%.

So when will Alibaba move west? Likely after the Walmart vs Amazon dust settles. By 2020, I would expect both Walmart and Amazon to be weakened. Whoever wins will have to take on a very healthy, highly profitable, cash-rich Alibaba. Realistically, Alibaba could end up two or three times the size of Amazon.Then it will be like watching that horse in the Kentucky Derby, with Alibaba rounding the final turn on the way to the finish line.

To read more on competitive strategy, click on this link: 

Competitive Brand Strategy

 

In retail, the smart money should be on Alibaba for the win.  

 

To learn about strategic thinking, follow this powerpoint slide presentation. 

 

Beloved Brands: Who are we?

Beloved Brands is a brand strategy and marketing training firm that is focused on the future growth of your brand and your people.

It is our fundamental belief that the more loved your brand is by your most cherished consumers, the more powerful and profitable your brand will be. We also believe that better marketing people will lead to smarter strategy choices and tightly focused marketing execution that will higher growth for your brands.

With our workshops, we use our unique tools force you to think differently and help unleash new strategy solutions to build around. I believe the best solutions lay deep inside you already, but struggle to come out. In every discussion, I bring a challenging yet understanding voice to bring out the best in you and help you craft an amazing strategy.

We will help you find a unique and own-able Big Idea that will help you stand out from the clutter of today’s marketplace. The Big Idea must serve to motivate consumers to engage, buy and build a loyal connection with your brand. Equally, the Big Idea must work inside your organization, to inspire all employees who work behind the scenes to deliver happy experiences for consumers.

We will help build a brand plan everyone can follow. It starts with an inspiring vision to push your team. We then force strategy choices on where to allocate your limited resources. With our advice on brand execution, we can steer the brand towards brand love and brand growth.

To learn more about our coaching, click on this linkBeloved Brands Strategic Coaching

At Beloved Brands, we deliver brand training programs that make brand leaders smarter so they are able to drive added growth on your brands. We offer brand training on every subject in marketing, related to strategic thinking, analytics, brand planning, positioning, creative briefs, customer marketing and marketing execution.

To learn more about our training programs, click on this link: Beloved Brands Training

If you need our help, email me at graham@beloved-brands.com or call me at 416 885 3911

Graham Robertson Beloved Brands

 

Can Whole Foods survive? I hope so. But, unless they change, I doubt it.

Whole Foods has lost 14 million customers the past 2 years. The people they irritated the most: their core customers who used to love the brand. Amazon, who recently bought them, sure has their work cut out to fix what has been messed up. Here are the four main reasons why customers have left Whole Foods.

  1. They got rid of freshly prepared market and used pre-prepared foods,that upset their core customers.
  2. They now carry “unhealthy” and non-organics products such as Cliff Bars, that upset their core customers.
  3. They desperately launched discount “365” brand, did nothing for their core customers.
  4. Mainstream retailers offered same organic products at lower prices. Their non-core customers left Whole Foods.

Notice a trend? Whole Foods does not seem to care about their care customers.

Would you invest in Whole Foods right now?

I remember 20 years ago, someone told me that Blockbuster would go bankrupt once on-line movies would take off. My immediate response was “No way!!!” I had just spent 45 minutes lined up at my local Blockbuster to rent “Usual Suspects” for the third time. How could a brand with so much demand completely fall off the face of the earth?

Now I am starting to wonder if Whole Foods will be around in 20 years? Strategic Thinking Whole Foods I sure hope so. I am a big fan of their brand and all the work they have done. Whole Foods has been the dominant player in ‘organic’ grocery stores the past 20-30 years. They have done everything right. They brought a clear brand positioning, a big idea, a fantastic culture that oozes off the walls of their stores and exhibited through every employee you engage with in the stores. They nail branding as well as Apple, Tesla or Nike. They built an army of outspoken brand fans and they are a beloved brand.

Would you invest in Whole Foods right now? Their market capitalization has fallen from $24 Billion to $9 Billion the last 2 years. None of their moves have re-assured investors that their future is bright.

Is Whole Foods a victim of their own success? 

For the past 70 years, the average grocery stores have served the local community within a 10 minutes drive, with 20,000 skus across 10 aisle grocery stores. The business model of traditional stores pumped out ridiculously high volumes at ridiculously low margins. At the retailer’s head office, the buyers had to beat down manufacturers like P&G, J&J, Coke, Kellogg’s and Kraft. They pushed high listing fees and high trade spend to get any displays or flyer ads. Even after all this work, Grocery stores traditionally make only 20-25% gross margins and then make only 2-4% operating profits. Over the last 10 years Kroger has averaged 22% gross margins and 2.7% operating margins. These are very typical numbers for a grocery retailer.

Whole Foods started as a rebellious disruptor to the grocery category.

Strategic Thinking Whole Foods Rebel BrandWhole Foods came along and figured out they could sell organic raspberries at $5.99  instead of $2.99 for normal raspberries and they could sell organic bacon for $9.99 instead of 3.99. They knew that not everyone would pay, but enough would. Instead of high volume, low margin, they went for modest volume with a much higher margin. Whole Foods averages 35% gross margins (+13% higher than Kroger) and 5.3% operating profit (double that of Kroger).

Up until the year 2000, Whole Foods only had 100 locations, capable enough to own a niche position as a rebel brand, yet small enough to fly under the radar of the bigger grocery players. If you notice the Venn diagram to the right, rebel brands own a niche that is far enough away from the mainstream players, to avoid being seen as a direct competitor. For these rebel brands, they believe it is better to be loved by a few than tolerated by many. These brands take all that passion of their consumers and build around it. At this point, Whole Foods owned organic, and the traditional grocery stores were fine to let Whole Foods own the ‘yoga enthusiasts’.

Most brands start as a rebel brands. They win over the trend influencers, satisfying those consumers who do not want what the mainstream brands offer. The rebel brand takes the aggressive stance against the mainstream, finding flaw in the way they do business.  They stand out as a completely different and a better choice to a core group of trend influencers who are frustrated with all the competitors in the marketplace. This consumer group becomes the most motivated consumers to buy into your new idea. Rebel brands must bring these on board and use their influence on others, as the brand begins their journey from rebel brands to island brands to challenger brands and then onto the Power Player brand. Below is a chart that outlines that evolution, and you can see how to use the different consumer types from the trend influencers and early adopters at the beginning and then finding the mass audience as the brand gets bigger and more powerful.

Brand Innovation

After 2000, the move to organic foods hit a tipping point of acceptance within the mainstream audience. Whole Foods took advantage of this shift and invested in rapid expansion across North America. Whole Foods moved to the next stage of what I call the “Island Brand” stage, where you are so different you are on your own. For the health-conscience consumers, Whole Foods success left the traditional grocery stores in a position where they disconnected from what these consumers want. During this time, Whole Foods expanded from 100 to 430 stores, with forecasts of up to 1,200 stores. Whole Foods had gone from a niche player that traditional grocery brands were willing to ignore to a major threat that pushed the traditional brands to make a counter move.

Strategic Thinking Whole FoodsAs organic moved to the mainstream the traditional grocery store responded by bringing in organic foods into their stores. Most traditional grocery chains report that 25-35% of their fresh food has become organic. These grocery stores are charging 15-25% lower prices than Whole Foods, yet still loving the added margins it gives them.

Simply marketing lesson, no one will ever travel farther and pay more, for something they can get close by at a cheaper price.

As a result, Whole Foods has lost customers to the traditional players. According to Barclays analysts, “Whole Foods has lost about 14 million of its customers over the last 18 months. The magnitude of the traffic declines … is staggering. As most retailers know — once traffic has been lost, those patterns rarely reverse”. Did Whole Foods move to the mainstream too quickly, trying to use the groundswell towards organic among mass consumers to move to a challenger position?

Whole Foods next move was a dumb one.

The history of warfare can be characterized by Generals who over-reacted and under-reacted. Both would lose. Whole Foods made the poor decision to launch a lower price, lower service, and lower margin version of itself called “365”.  I always find it frustrating to watch brands who face an attack and then try to act more like the competitor attacking them, rather than backing up a bit and being themselves. When in a competitive battle, especially against those who own the traditional space who you have attacked, never act like your competitor. Instead of staying themselves, the move to “365” acts more like their competitors.

I do not believe these 365 stores can win. They are a hybrid store which is confusing. They will not attract the mainstream consumer who want their organic foods at lower prices, but still wants to buy Diet Coke and Frosted Flakes. They will not win with the core health trend influencer audience who want more, not less.

How will the 365 stores make money?  Low volume and lower margins is a recipe for bankruptcy.

If they can’t win the mass audience, do they still have the health trend influencers? 

We are seeing local healthy grocery stores pop up around North America ready to offer the health trend influencers more. Due to “costs” Whole Foods has made some moves that will irritate this audience.  They got rid of their freshly prepared market and now use pre-prepared foods. There are now swirling questions about whether their food choices are 100% organic. Whole Foods uses their own standards of judging good/bad food options. Whole FoodsAlso, Whole Foods uses national distribution on most items, not through local farmers. On top of that, Whole Foods carries fairly mainstream brand choices such as Cliff Bars with 28% sugar or Kellogg’s Special K. This confuses or frustrates the health trend setter segment who do not want to see those types of brands in their grocery store.

This leaves Whole Foods potentially without a positioning to stand behind and without a core audience to build around. When you try to be everything to anyone, you end up nothing to everyone. Whole Foods have lost who they are. They could take the advice of Oscar Wilde who once said: “Be yourself, everyone else is taken”.

The problem I see for Whole Foods is they have been spiraling downward with losing sales base, yet they seem unable or unwilling to make the right changes. I would not invest, would you?  While brands start as rebel brands, no matter what stage your brand reaches, when the world around you collapses, I recommend the best thing a brand can do is return back to the rebel status and re-start their brand. Instead of going mainstream with lower price/lower service options like the launch of their “365 store”, Whole Foods should go back to their rebellious roots and go even healthier, go even more local, add high end services back. Make it a full experience the health trend influencers want. Instead of trying to drive high volume from their current audience, they should add higher margin services. Be more like who they were 20 years ago.

When you lose your way, return to the rebel position and kick-start your brand again.

 

At Beloved Brands, we run a Brand Leadership Center to train marketers in all aspects of marketing from strategic thinking, analysis, writing brand plans, creative briefs and reports, judging advertising and media. To read more on strategy, here is a workshop on How to create beloved brands, click on the Powerpoint presentation below:

Beloved Brands: Who are we?

At Beloved Brands, we promise that we will make your brand stronger and your brand leaders smarter. We can help you come up with your brand’s Brand Positioning, Big Idea and Brand Concept. We also can help create Brand Plans that everyone in your organization can follow and helps to focus your Marketing Execution. We provide a new way to look at Brand Management, that uses a provocative approach to align your brand to the sound fundamentals of brand management. 

We will make your team of Brand Leaders smarter so they can produce exceptional work that drives stronger brand results. We offer brand training on every subject in marketing, related to strategic thinking, analytics, brand planning, positioning, creative briefs, customer marketing and marketing execution. 

To contact us, email us at graham@beloved-brands.com or call us at 416-885-3911. You can also find us on Twitter @belovedbrands

Beloved Brands Graham Robertson

 

 

 

In advertising, what comes first: the MEDIA choice or the CREATIVE idea?

Of course the consumer always comes first. However, as you begin the advertising process, Brand Leaders need to figure out whether the creative determines the media choice you make or the media choice helps frame the creative. When I started in marketing, way back in the mid 90s, life was a little simpler because the media and the creative were both under one agency roof. The meetings were simple: you’d see your various TV script options, give some feedback and then the room would go silent and the account person would say “now let’s look at the media plan” and the media person would take you through a 15 page presentation on where else the idea of your TV script could go. You would see some magazine, OOH and even some sampling idea. Back then, there was no internet advertising yet.

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Then one day, our media folks from our agency were spun off, had a new name, moved offices and had a new President. It now just meant we had two presentations and the Brand Leader now had to make sense of things and try to piece it together. About a year into that new relationship, I was sitting there confused and asked the question: “So what comes first, the media choice or the creative idea?” The room went silent for about 5 minutes. Then of course both sides talked over each other, both saying it was them that came first.  

All Marketing Execution has to do something to the brand–getting the consumer to think, act or feel differently about your brand. Media is an investment against your strategy and creative is an expression of your strategy. Both media and creative are only useful if they connect with consumers. Great advertising must connect through very insightful creative that expresses the brand’s positioning and told in a way that matters to those who care the most. Great advertising must be placed within the consumers’ life where it will capture their attention and motivate them in the expressed desired way to meet the strategy. So really, the consumer comes first and strategy comes second. Media and creative need to work to jointly capture the consumer and deliver the strategy.  

With separate agencies, the problem now rests with Brand Leaders to figure it out. While one could theoretically argue that if the Creative Idea of the advertising is so big, it should work in every medium. That’s just not always true in reality. Some ideas just work better in certain mediums. Yet the media people could also theoretically argue that if you go for the most efficient and effective media option, the media will do the work for you. That’s also not true. The best overall advertising should work focus on what has the most impact and what has the highest efficiency.  

Here’s a solution for Brand Leaders 

The three questions you always need to keep in your head at all times: 1) where is your consumer 2) where is your brand and 3) how does the creative idea work? 

1.  Where is your consumer?

You should really understand who your consumer is, and who they are not. You need to make sure you understand the insights about them, because it’s those insights within your creative that allow you to connect with them. They’ll say “they get me”. You should always be mapping out a day in the life of your consumer. Get in their shoes and say “what does my consumer’s day look like and how will my message fit or interrupt their life?” Take a “be where they are approach” to your media. 

2.  Where is the Brand?

First thing you have to do is consider where your brand is on the Brand Love Curve where brands go from Indifferent to Like It to Love It and all the way to Beloved. At INDIFFERENT, it’s about announcement style such as mass media, LIKE IT becomes about separating yourself from the competition while LOVE IT and BELOVED you’ll start to see the growing importance of event marketing to core users or social media as a badge of honor to share with others.

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3.  How does the Creative work? (The ABC’S)

The best advertising should draw ATTENTION, be about the BRAND, COMMUNICATE the main message and STICK in the consumers head long beyond the ad.

  • Attention: You have to get noticed in a crowded world of advertising. Consumers see 7,000 brand messages per day, and will likely only engage in a few. If your brand doesn’t draw attention naturally, then you’ll have to force it into the limelight.
  • Branding: Ads that tell the story of the relationship between the consumer and the brand will link best. Even more powerful are ads that are from the consumers view of the brand. It’s not how much branding there is, but how close the brand fits to the climax of the ad.
  • Communication: Tapping into the truths of the consumer and the brand, helps you to tell the brand’s life story. Keep your story easy to understand. Communication is not just about what you say, but how you say it—because that says just as much.
  • Stickiness: Sticky ads help to build a consistent brand/consumer experience over time. In the end, brands are really about “consistency” of the promise you want to own. Brands have exist in the minds of the consumer. 
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In the reality of advertising, not every ad execution will be able to do all four of the ABC’S.  When I’m in the creative room, I try to think about which of the two ABC’S are the most critical to my strategy. If it is a new product, I want all four, but I have to have: Attention and Communication. If the brand is in a competitive battle I have to have Brand and Communication.  If the brand is a leader and beloved, I need to make sure the advertising is about the Brand and that it Sticks.   

What I recommend you do:

In a sense, you have to work the creative and media together. But that’s impossible. So what I do is hold off on making any media decisions until you see the creative idea and how it is expressed in a few media options. With all the potential media options now available, I ask for 3 executions for each creative option:

        1. Video version
        2. Billboard 
        3. Long Copy Print

Sounds simple, but here’s the logic. With those 3, I can now imagine how the advertising might work across all possible media options. 

  • The “Video” allows me to imagine how the creative would work for traditional 30-second TV ad, a 60-second movie theatre ad, 2 or 3 minute viral video for sharing or even a video you could put on a website.
  • The “Billboard” allows me to imagine how it would work with traditional media options such as out-of-home billboard, bus shelter, in-store poster, packaging copy and the back cover of a magazine.  Or if we want to look at digital, it could be a digital billboard, Facebook photo, website cover.
  • The “Long Print” allows me to imagine what how it might work with a print ad, side panel of packaging, brochures, public relations story-line,  social media feed or even a blog on your website.  

With 3 simple asks against each creative idea, it covers off most of the traditional media options, even covering the digital media. So now as the Brand Leader goes to their Media Agency, they will know how the creative idea would work against any of their recommendations. 

Obviously, we always recommend that you focus. So we’ll likely recommend a lead traditional media and a lead digital and lead social option. You need to make the most out of your limited resources of dollars, time, people and partnerships. However, if we want a creative idea to last 5 years, seeing it work across this many media options gives me a comfort that should I need that option, I know the creative idea will work.

The media math from a client’s view

While the media agency owns the media math that blows your mind, here is some simple client side media math. As clients, we have to make the most of our budgets. 

  • Your production budget should be around 5-10% of your overall advertising plan. If you have small budgets, that may creep up to 20%, but that’s it. Every time you do a new piece of creative, the production dollars go up and the media dollars go down. I’d recommend you focus on one main traditional media and have only one secondary option. This keeps your spend focused. 
  • When it comes to social media, keep in mind there is no free media options. Instead of financial capital, you are now exhausting people capital. Just like the traditional options, I would recommend one lead social media and one secondary focus. Do not try to be all things to all people.  
  • The other reason to focus is to ensure you do great executions and not just “ok”.  Pick the media that maximizes the power of the creative. Don’t exhaust the team by spreading them against too many activities.   
  • Allow 80 to 90% of your media spend be on the highly effective highly efficient media plan. That means 10-20% of your media spend can now go against high IMPACT creative ideas that you know will break through.  

Work with both the creative and media at the same time, figuring out what gives the highest return on your investment

 

To see a training presentation on getting Better Marketing Execution: 

Beloved Brands: Who are we?

At Beloved Brands, we promise that we will make your brand stronger and your brand leaders smarter. We can help you come up with your brand’s Brand Positioning, Big Idea and Brand Concept. We also can help create Brand Plans that everyone in your organization can follow and helps to focus your Marketing Execution. We provide a new way to look at Brand Management, that uses a provocative approach to align your brand to the sound fundamentals of brand management.

We will make your team of Brand Leaders smarter so they can produce exceptional work that drives stronger brand results. We offer brand training on every subject in marketing, related to strategic thinking, analytics, brand planning, positioning, creative briefs, customer marketing and marketing execution.

To contact us, email us at graham@beloved-brands.com or call us at 416-885-3911. You can also find us on Twitter @belovedbrands.

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