HOLD BACK THE TIDE
A measure of just how much some union officials are out of touch is the current mass media advertising campaign being conducted by the Shop, Distributive and Allied Employees Association in Western Australia.
In essence, it is a personal attack on the West Australian Premier, Colin Barnett, and his legislative initiatives to extend and deregulate retail trading hours.

The union contends that the major beneficiaries will be national and global trading entities, to the detriment of local small businesses and their employees. For some, continuing practices whose genesis dates from the 1950s seems relevant.  However, there is no recognition, nor respect for the needs and expectations of contemporary consumers.

Retention of restricted trading hours will doubtless, and inevitably, be a prime cause of job losses and business failures.

As more consumers visit on-line channels and transact purchases, business owners need to satisfy demands, lest they cede (rather than lose) revenue to on-line operators.
A recent national study of 1800 adult Australians reveals the criteria applied in the choice of on-line purchases:

RESPONSE	PERCENTAGE %
·       I can shop when I want	71
·       It’s easy to compare	56
·       Greater choice	53
·       Home deliveries	52
·       Lower prices	49

 Convenience is the common factor in the first four nominated criteria. Therefore, bricks and mortar retailers which restrict trading hours will progressively become irrelevant, inconvenient and unattractive. Natural consequences will be reduced sales, squeezed profits and less need for staff members.

Little wonder then that union membership in the private sector has collapsed to around 12% of the target workforces.

The fundamental issue is choice. Those business owners who choose to maintain restricted trading hours will quickly witness their established and longstanding clients migrating to on-line sources (which are available 24/7), and to competitors which choose to offer the convenience and service of extended trading hours.
Price -competitiveness, range, brand and in-store customer service will be secondary considerations.
That is the inconvenient truth.

Barry Urquhart

“THIRD” IS THE NEW FIRST
Third-person marketing is assuming increasing importance in the digital era multi-channel marketing strategies of high-performance companies.
It is particularly pertinent and effective in social media communication.

Put simply, the expressions, product/service evaluations and personal endorsements of individuals enjoy greater credibility than much of the high-volume, non -discriminatory, mass-media advertising. This is reality among active social media participants who are aged 35 years and younger.

The concept is different from the nature and application of brand ambassadors, which typically involve personal visuals, and often, physical presence in-store, at events and in the mass-media of television, print and, to a lesser extent, radio.

Third-person bloggers are selectively retained and paid by retailers, manufacturers, distributors and wholesalers to project the presence, relevance and competitive advantage of brands, products, services and apps.

For product mavens, being informed and involved is reward enough. Their self-awareness, self-image and self-worth are qualified and valued by their preferred and early access to and, to some degree, control of relevant information. In such instances there are mutual advantages, benefits and rewards, with little or no need for an exchange of money.

In the digital era, word-of-mouth has been replaced with third-person communication. It’s a whole new era, world and set of opportunities, all too often unrecognised and under-utilised. That requires some first-person thinking, expressions and actions.

SHORT-CUTS TO SALES
Consumers do, consciously and subconsciously, take shortcuts in their buying decision processes.

The process is called heuristics, and astute marketers utilise such to expedite sales and, in appropriate circumstances, to dismiss the effective entry of competitive and substitute products, services and apps.
One effective means to expedite and to optimise sales is brand management. For many consumers it simplifies the decision-making process for many consumers.  This is a case of heuristics in action.

They, the consumers, recognise the brand, labelling and packaging, are reassured by experiences with previous purchases, are encouraged by a good reputation and the loyalty of peers, friends and family members, influenced by third-party endorsements and comments (particularly on social media) and conclude that in purchasing that brand they will avoid making a wrong purchase decision.

In many instances the entire process is completed within 2 seconds.
For circumstances in which the brand is not known there is no easy decision, each of which will be subjective, relative, and biased on imperfect information.

Answers are sought, and needed to a range of questions, including:

·       Is it fashionable?
·       Does it represent good value?
·       What is the measure of quality?
·       What is its utility – life expectancy?
·       Does it represent the best available option?
·       How does one quantify the risk?

With unknown and untrusted brands there are no easy or fast answers.

Informed decisions are typically more accurate, astute, fulfilling and satisfying.

An understanding of the process, its application and the consequences provides insights to key contributing factors to the success in Australia of the German discount supermarket network, Aldi, the recent failure of Dick Smith stores and the ongoing under performance of many mortgage brokers, insurance brokers, financial planners and real estate agencies.

The latter four sub-groupings place too much emphasis on enhancing sales closure techniques. At best, that will incrementally increase sales conversion ratios.  Real, substantial, strategic and sustainable growth is best achieved by opening the door (- to more prospective customers and clients), – in preference to closing the sale.

This is where heuristics fulfils an essential role.

Much of the over-performing success of Aldi in Australia can be attributed to the initiatives and strategies of the two major domestic supermarket chains, Coles and Woolworths.

Among their competitive, head-to-head campaigns was the promotion of generic or house-brand product ranges.  In raw statistical terms they both could be deemed to have been successful. The category has increased over a decade from around 12% of sales to between 23% and 28%.

Interestingly, the overall market shares of the two combatants did not change substantially over the period. However, to some, the profit margin argument would have been and is justification enough.

On recognised, established, branded products like Coca- Cola, Colgate and Heinz the typical market ups are around 23%. With housebrand products the average mark-up is some 32%.  The differential is alluring.

However, the consequences, possibly unforeseen and projected, have been profound. A key percentage of the consumer public have come to accept and possibly to prefer the housebrand products, influenced somewhat by a pricing incentive.

However, that too made the house-brand -oriented market positioning, presence and value-packaging of Aldi more accepted, and possibly attractive.

Australian consumers have been quicker to embrace Aldi and its offerings than many others in its global network.  In Britain, the company enjoys around 3.8% market share, while in Australia in the three states in which Aldi has operated since its arrival around 2000 market share is between 11% and 14%.

Recognising the brand, understanding the “cheap, cheap” marketing position and accepting the quality and value of the housebrand have seen heuristics kick in to expedite its presence, growth and competitiveness.

It seems that for some, there is not a lot to think about in deciding which to patronise, and to prefer Aldi.

The process has been helped by the confused, and often conflicting marketing messages of Woolworths, which have variously been:

·       The Fresh Food People
·       Everyday Lower Prices
·       2000 Specials, Each Week
·       Cheap, Cheap
·       Green
·       Be Rewarded (in preference to loyalty points)

There’s a lot to think about in each and all of these messages.

The demise of the Dick Smith chain is regrettable, interesting and in some ways, was predictable.

Its genesis was in 1968 as an electronics store, which specialised in imported, often unbranded goods from Asia (primarily Korea). Consumers were assured and comforted with the presence of qualified, experienced staff members who were referred to as “Techsperts”.

The operation was sold to Woolworths which operated it until around 2013 when it was sold to a USA-based equity funds management practice.

A majority of the purchase price was reportedly funded by the disposal and contraction of the in-store inventory. Not necessarily a good idea, in seeking to satisfy the expectations and demands of Now consumers.

Subsequently the product range was broadened, to include computers and television sets, featuring brand-names that were unfamiliar to many established consumers. That is inconsistent with the use and benefits of heuristics.

Arguably, the final nail in the coffin was the 70% store-wide, network-wide discounting of products.

The desire to generate increases in consumer traffic, revenue and profits was met with customers taking pause (possibly over some period of time) and questioning the value of previous purchases which were secured at full-prices.

Store traffic and revenue did not increase. Therefore, paraphrasing the words of recently deposed Australian Prime Minister, the bricks-and-mortar Dick Smith will soon be: Dead. Buried. Cremated.

If only the financial wizardry of the equity fund management discipline recognised, respected and applied the principles of the heuristics process.

THE INNOVATOR WITHIN
For those seeking to drive innovation, inertia is not an option. Waiting to be swept up in a wake of economic fervour is wishful thinking at best. Those old enough to recall having been through numerous business cycles, are best advised this time to get back on their bike and to pedal fast and hard.

Indeed, sage advice for all who are in commerce is to: THINK YOUNG

In so doing, risk becomes tolerable, the fear of failure more distant and the lust for action more urgent. Ah, the virtues of the young….

CREATE YOUR OWN
Age, experience, training, expertise and a good dose of 20/20 hindsight are not infallible ingredients for tellingly accurate forecasts and projections.
Einstein readily accepted that we do not live and operate in the linear world. Even time bends, and, now confirmed; it comes (and goes) in waves.

Profound, but true, the best way to predict the future is to create your own.
In itself, that statement recognises that the future is a relative, if not personal, reality rather than an all-embracing absolute.
Therefore, my future may well be better, or lesser, than yours. Both are consequences of choice. No single future will be shared.

NON-NEGOTIABLE
Driving and harnessing innovation, and breaking free from the prevailing “headwinds”, such as limited marketplace, are non-negotiable imperatives.
Recognising, analysing, respecting and, possibly, deploying one or more of four key motivators that drive innovation are essential initial steps.
These are: Curiosity, Fear, Wealth Creation and a Desire for Significance.

CURIOSITY
What if?
A wonderful, fluid state of mind that encourages and enables one to explore, discover, enjoy and develop.
Moreover, “what if” thinking is challenging, restless and keen to experience more. Status quo is simply not acceptable, unless questioned. Acceptance and accepting slow the rate of progress and innovation.

Such a framework and template reduces, if not minimises, the scope for external disruptive innovation and entrepreneurism.
Curiosity need not imply or apply value judgement. It is simply an energising free-wheeling driving force, which can be infectious and compelling.

Moreover, curiosity, its values and consequences, are consistent with the ideals of on-going, lifetime learning.
Now that is competitive, led from the front.
No project, day, week, month, year, or life should be concluded without each person addressing, reflecting the laudable question: WHAT IF?

FEAR
In many ways the drive of fear is innate.  It is a key component of both “flight” and “fight”.
Necessarily, it must be marshalled, channelled to the positive and respected for all its characteristics, positive and negative.

Self-included obsolescence is symptomatic of the presence of fear. Inertia, and retention of the status quo allows for competitors, substitutes, interlopers (often disruptive entrepreneurs) to gain, sustain and develop a presence and competitive advantage.

Few, if any, know their deficiencies and inadequacies better than self.  Therefore, accountability and transparency are the justifiable realms of self.

For some, fear is a constraining or restraining factor, centred on considerations of failure.

An objective, forensic review of what one most fears – above failure – can be and often is, therapeutic and burden-shedding.  Failure is no big deal, and is not permanent.

Most innovators, Thomas Edison included, perceived and accepted progress, not failure.

CREATE WEALTH
Wealth, like profits, is a measure, not a goal in itself.
It is best when it is shared, – widely.
Wealth creation is fundamentally good because it has consequences.  The degree to which those cascade through societies and nations is determined by the philosophies, decision and actions of individuals and small groups.

Wealth, when complemented with generosity is a powerful force for the good.
Imagine how much “poorer” the world would be, had the creator of the world-wide web decided not to freely share his innovation.

The philanthropic pursuits of Bill and Melinda Gates, Warren Buffet, “Twiggy” Forrest and countless others are generating wealth, health and happiness.
Perhaps aspiring innovators need to be educated and nurtured on the true measures of wealth.

DESIRE FOR SIGNIFICANCE
The fourth and final of the key motivators underscores the fact that they are not, and need not be, mutually exclusive.
The mortality of human innovators is irrefutable.  Their legacies and significance can be eternal.
To make a difference, for the betterment of all, is both significant and virtuous.
Abraham Maslow would label it, self actualisation.

Actually, there could be few, if any more fulfilling sentiments and realisations.

HARNESS THE DRIVE
Innovative thoughts and actions often falter on the steps of the temple of success.
Good intentions alone are not enough to drive to, and through goals.
Incentives have a long, recurring record of contributing to the attainment of stretch-objectives – innovations if you will.
A reach-back in history will unveil countless case-studies of incentives, however modest, being key ingredients in innovation.

For example, Napoleon needed, sought and incentivised a means for the storing of food for his intended long march to Moscow.  Two hundred years later we still enjoy the benefits of a then significant innovation, the canning of food.
Vive La France!

Incentives are best when the rewards are monetarised, time constraints are applied, developmental budgets are capped and operational parameters are determined.
Ironically, many contributors are more driven by the significance of the innovation than by the quantum of the reward.

 

THE AUTHOR
Barry Urquhart of Marketing Focus is an internationally respected business strategist, consumer behaviour analyst and conference keynote speaker.

Barry Urquhart
Marketing Focus
M:      041 983 5555
T:       08 9257 1777
E:       Urquhart@marketingfocus.net.au
W:      www.marketingfocus.net.au
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