Australia is on Sale.
There are signs of it everywhere……..
“EOFY Sale”
Significantly, one adjective – “door-buster” – has lapsed into disuse, because of widespread disinterest and apathy.
The concept of the financial year is an artificial construct, like the widespread recognition assigned to Sales.
The use of seasonal factors, like “winter” or operational considerations such as “stocktake” have waned in recent times.
So too have has effectiveness of seemingly meaningless and irrelevant events (read: Sale).
Consumers and clients are confused.
They are also now informed, discerning and demanding.
Woolworths is a striking contemporary case study of not what not to do. It has frustrated consumers, compromised a long-standing and successful position statement, “The Fresh Food People”, and as a result seen three senior executives “leave the building”, be shown the door, or resign.
Introduction of new themes impacts on established, recognised and respected presences “Cheap, cheap”, was just that – a cheap attempt to compete.
Use of initial trade and product names should be applied sparingly and selectively, as should “EOFY” – End of Financial Year. It has most relevance to accountants and taxation consultants.
Responses to the recent Australian Federal government tax relief initiative which was, supposedly, a feature of the budget have been spasmodic and tepid.
In reality, all products, services, businesses and possessions are always on sale – it’s called Service.
What many leaders of high profile retail businesses don’t appear to recognise or appreciate is that “up to 70% discounts” which are offered during EOFY Sales effectively discount the value of the brand.
Many consumers are quick to calculate, comprehend and to become emotionally aggressive about “rip-off” profit margins, that enable a 70% reduction in price, and yet enable the retailers to “bank a profit”.
Value, consistency, continuity and customer service excellence appear to be, and are, the compelling and sustainable attributes on which mutually rewarding relationships are established, developed and sustained.
Dare I write it? Have a great, profitable and fulfilling new financial year.
REWARD FOR EFFORT
Don’t confuse activity with achievement.
This sporting cliché has a lot of relevance and application for businesses and communities at present.
Much time, thought and organisation are currently being committed to address an enveloping, challenging marketplace, with disappointing consequences.
Commonly, what is apparent is the lack or inadequacy of money, resources and risk tolerance.
Economic and market realities dictate the need to think and to do, BIG.
Understated endeavours do minimise the risk of failure, enable progressive development over a period of, say, 2 to 3 years, and they signal that many entities and people are stretched. They also make little impression and, seemingly, fail to recognise and respond to the dynamic nature of life, commerce and politics.
The formation of local community groups to integrate and stimulate activity, in pursuit of generating additional revenue and visitations is laudable. It is also, too often, lamentable because of the absence of a budget and access to appropriate resources.
Some people are driven to “talk-through” issues, have the time to attend meetings (often repeatedly), and seek to be both involved and recognised. For what purposes?
Many, so called not-for-profit organisations suffer from the same fundamental flaws. They often successfully seek recognition and sympathy … and achieve little.
Individuals and collective benefits and advantages are typically attained and sustained from major, attention-grabbing and creative initiatives.
Look no further than charities throughout Australia. The total number of official and government-recognised charities exceeds 63,000, few of which achieve widespread public recognition, support and respect.
Local communities, most of which have tourism committees, reflect similar trends and characteristics. Many have full annual calendars of activities, limited in scope because of miniscule financial backing. Accordingly, they attract little attention.
Interestingly, the state of Western Australia presents a similar case study. It is located in one of the most active earthquake-belts on the planet. However, almost all quakes register small readings on the Richter Scale and are therefore an imperceptible presence.
There are few attention-arresting media headlines as a consequence of such regular activities.
So the essential message is to make a noise, create movement, have impact and above all else, MAKE A STATEMENT.
Key Action Points:
- Carefully detail quantitative and qualitative outcomes
- Set specific time horizons
- Be focused, limit activities
- Establish a viable and achievable budget
- Determine and marshal sufficient resources
- Delegate authority and responsibility to those who will be accountable
- Strive for success, but do not fear failure … and then remember the words of the late Steve Jobs, founder of Apple:
Fail Big, Fail Often, Fail Fast
POSTCODE-DISCRIMINATORY PRICING
Prices are currently under searching scrutiny. Consumers, governments, regulatory authorities, suppliers and trading entities are reviewing pricing policies, as evidence of consumer and public back-lash becomes more conspicuous.
Proposed and pending pricing revolutions are being subjected to forensic audits, based on market acceptance, fairness and perceived value.
It is a complex issue, with profound consequences.
POSTCODE PRICING
Big Data, the cloud and social media are progressively producing greater, more enhanced and detailed access to information on customers, clients, prices, cost-structures and logistic distribution networks.
The concept of air travel pricing being determined by the postcode of the inquiring and intending traveller was introduced at a recent international travel industry forum, which was held in Miami, the United States of America (USA).
Such discriminatory pricing is possible, given the profiles retained of existing, prospective and past customers. Intimate knowledge of travel patterns, frequencies, time of travel, destinations, periods of absence and the usual classes of air travel is a powerful variable in the relationship with these consumers. Much of such information is derived from loyalty program data.
STREETS AHEAD OR BEHIND
It is a false, or questionable premise, to believe that persons living in “leafy” high-price suburban locations are happy to pay more for travel and other merchandise.
These are typically discerning, informed and demanding customers. Ability-to-pay is not a sole determinant of consumer buying behaviours and purchase patterns.
Pursuit of value, and the number of value-purchasers are increasing market characteristics.
LOYALTY BEGETS LOYALTY
It seems ironic and contradictory for airlines to declare an intention to utilise data retained on and retrieved from information generated by loyalty programs for the purpose of selectively discriminating price offers, determined or influenced by their personal information.
Inevitably, rightly or wrongly, some, many or all consumers will perceive or believe they personally are being disadvantaged in their relationships with airlines.
Anonymity may have many values.
Thus, pricing propositions warrant review, refinement or rejection.
FUELLED UP
The 7-day retail petrol price discounting-cycle is widely recognised to be artificial and difficult to justify.
It has had little impact on customer satisfaction, brand loyalty or outlet preference. Overall, the practice and process have educated many consumers when to buy.
In the first instance, “Cheap Tuesday” entered the street-talk lexicon. That morphed into “Cheap Wednesday”. One persistent perception among members of the public is that the nadir of the retail price cycle is primarily influenced by the distribution-dates for the weekly catalogues of the major retailers.
This is complemented with recognition of the quieter trading days for the national chains, typically Tuesdays and Wednesdays.
A recent unannounced policy to break the predictability of the 7-day discounting cycle created annoyance, frustration, and even outrage among consumers who were unexpectedly confronted with the reality of having to pay an up to 14 cents a litre premium when they drove onto their chosen service station forecourt on a Wednesday.
There had been no advance notice, no justification provided or information given about what pricing policy would now be applied then – or henceforth.
Emotional negative reactions were promptly evident in all mass-media channels.
The brand-damage for petrol retail networks and individual outlets will be substantial and long-lasting.
Pricing policies need to be consistent with and a projection of corporate cultures, many of which enunciate the commendable values of transparency, accountability, fairness and responsiveness.
AN UBER ISSUE
The word über is German. It means “above”, “beyond” and “upward”. Common-language use has extended the understanding to include “large” and “extreme”.
For example, “uber-rich” is limited to “seriously” wealthy individuals and families.
For taxi-plate owners and taxi-drivers throughout the world the word Uber has a different meaning … intense competition. That could include, “thief”.
Some incumbent taxi-industry operators contend that the new entrant to the marketplace is winning business on a price-discounting policy. Wrong.
In the selection criteria for public transport, price is ranked relatively low.
Access to an easy-to-use mobile application, nomination of specific pick-up times, pre-determined (and set) fares, the ability to nominate an individual preferred driver and prepayment all contribute to an enjoyable positive experience, and represent value.
Add-on value now includes the ability for the patron of Uber to nominate their Spotify code, so that on arrival, and during the course of the journey, the vehicle sound-system will be broadcasting their personal music selection. How good is that?
Uber has removed the anxiety which arises with taxi metres, by providing the service of specifying a set fare at the time of booking and accepting credit card payment at that time. That is incomparable value .. and transparent as well.
The bottom line – it’s always the bottom line – is that one should be careful in determining a pricing policy, because if you choose poorly, you can and will pay the price.
ALDI UNDER ATTACK
Well intentioned, but questionable information.
Supermarket chains Coles and Woolworths were recently recipients of some free, unsolicited, public advice from an investment bank analyst.
He proposed that both should attack the smaller, but growing presence of the German-based interloper, Aldi, by attacking the network where it was weakest.
Apparently, extensive and intensive analysis had identified four strategic inadequacies in the market presence of the discount supermarket group. They were nominated to be:
- Limited product range – around 1350 SKUs (stock-keeping units)
- Dominance of house brands
- Lack of partially-cooked and prepared meals
- Poor customer service
REALITY CHECK
Interesting.
It is not difficult to identify and appreciate the strongest attributes of Aldi. They are:
- Limited product range – around 1350 SKUs (stock keeping units)
- Dominance of house brands
- Lack of partially-cooked and prepared meals
- Poor customer service
Collectively, they enable Aldi to offer the lowest competitive prices to Australian consumers. In some price-surveys the differences in individual product and basket-prices can typically be as much as 28%, and in isolated instances up to 40%.
Consequently, the advertising and marketing campaigns of Coles (Down, Down, Prices Are Down) and Woolworths (Cheap, Cheap) have been ineffective against the smaller competitor. Put simply, Aldi owns the market positioning of “cheap”.
Unquestionably, Coles has taken the lead in supermarket presence against Woolworths, because of its sustained and expensive advertising theme and campaign.
On balance, it is probably widely recognised as “the cheaper of the two more expensive big chains”.
FIGURES DO COUNT
Since its introduction to the Australian marketplace in 2001, Aldi has grown its footprint among the eastern coast of Australia to number some 350 stores (in June, 2015).
A total of 50 further outlets are planned for South Australia and approximately 70 for Western Australia.
The growth rate appears relentless, reflective of and driven by consumers’ acceptance and demand.
CUSTOMER FOCUS
Those consumers who are attracted to the value-offerings of Aldi recognise and accept that the four “strengths / weaknesses” represent the constraints within which they make purchase selections and decisions.
An overwhelming majority anticipate and do visit competing, if not complementary, supermarkets to make “top-up” purchases. They are typically for branded products which are not available at Aldi.
Therein lies the marketing dilemma and challenge for Coles and Woolworths.
At present, and in most instances among a select and growing target audience of consumers, they are second-choice outlets.
That limits scope for impulse and spontaneous purchases. Those stimulants are usually triggered within the Aldi premises.
First choice should be a goal for both Coles and Woolworths, rather than the trading name of a liquor store network owned and operated by one of them.
A fundamental marketing, business and life principle is that it is better and more advantageous to be first, the most preferred and top of the shopping list.
That is best achieved, and sustained, by a strong focus on, say, 2, 3 or 4 strengths.
BATTLEFIELD LESSONS
Military strategies tend to focus on the desirability of attacking the opposition where it is weakest. Identifying, isolating and accurately analysing those weaknesses are imperative.
A wrong call can be expensive, the consequences long-lasting and, all-too-often, the outcome fatal.
Therefore, value must be correctly assigned to intelligence, differentiating it from readily available information.
In this case, what is a weakness and what is a strength?
Objectivity, detachment, considered and informed decisions are called for.
The same fundamentals apply to banks, retail pharmacies, jewellers, financial planners, mortgage brokers and accountancy practices.
BEWARE COMMODISATION
On the fields of battle, and in the prevailing marketplace, there is considerable fluidity. Forces ebb and flow. Contingency planning, delegated authority, integrated communication networks, unimpeded chains-of-command and short supply lines, competitive advantage and sustainable market dominance need to be deployed adroitly.
It is inconceivable, if not improbable, that Coles and Woolworths, responding to advice about the nominated weakness of Aldi would decide to substantially increase the presence and percentage of house-brand products.
For both chains that category has increased in recent years from around 12% to 25% of the product range and sales.
Besides, it can be reasonably argued that it is a strength of Aldi.
Similarly, narrowing or expanding the current product range of Coles and Woolworths to attack Aldi appears, on the face of it, to be meaningless. It is difficult to identify and quantify the purpose and the probable or desirable outcomes.
Increasing the offering of partially-prepared meals should be a decision determined by consumer demand.
Previous attempts to launch, promote, expand and highlight the DIFM (Do It For Me) category, have been met with tepid consumer responses.
The one non-negotiable, acceptable and laudable proposition is enhancing customer service, extending customer engagement and upgrading the total retail experience. That is demanded, expected and will address a prevailing deficiency in many sectors of retailing and businesses- with or without the presence of Aldi.
Care would have to be taken to avoid the temptation to refine the marketing positions of Coles and Woolworth to more closely align with that of Aldi.
Few win in such circumstances, and in the short-term it is the cheapest who comes out on top: Read: Aldi.
Moreover, look over the horizon in the global economy. German discount supermarket group Lidl has just announced its intention to enter the Australian marketplace.
Alas, another guerrilla in this crowded Australian retail battlefield or is it a further Barbarian at the gates?
This situation calls for more strategic thinking, marketing intelligence, leadership, discipline and differentiation… built on, say, 4 discernible strengths.