Creating Added Value: Post Crisis Trends
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Transcript of Creating Added Value: Post Crisis Trends
Creating Added Value
Post Crisis Trends
Clive Woodger, SCG London
• Customer Mindsets – staying relevant
• Shopping Modes – formats … multi channel
• Differentiation – brand development
• Social Media Challenge
Creating Added ValuePost Crisis Trends
Strategic Consulting Group
International Strategic branding and design consultancy.
13 years … 60+ Russian managements
We work in the retail, financial, real estate sectors by creating
Creating Added Value
Customer Mindsets
Staying relevant
Customer MindsetsStaying relevant – Lifestyle changes
• Marrying later …• Rise of single households• Time poor – cash richer• Value• ‘Values’• Freshness … Health … Choice
Changes in Society, needs and aspirations
• Increase• Decrease• No Change Consumer confidence – Russia = ‘average’
Return of Consumer confidence?International
Return of Consumer confidence?International
Return of Consumer confidence?Russia
Shared Norms for the New Reality “we live in a world that is becoming increasingly
complex and interconnected but also experiencing an erosion of common values and principles”. DAVOS 2011
Opinion poll 2010 … global values for cooperation40% chose honesty … integrity … transparency24% chose others’ rights, dignity and views20% chose the impact of actions on the wellbeing of others17% chose the preservation of the environment
Universal Values?
Food Trends – Customer Attitudes Value Health Connectivity Home Dining Fresh Sustainability Energy vs. Relaxation Internationalism
Food TrendsValue
“Constrained consumers”
More for Lesspragmatic .. careful… planned shopping
Price led but value drivenQuality …Choice …Experience … environment / service / process
The best quality at the best price
A good ‘deal’ … every time you shop
Food Trends
Health … nutritionfood / pharmacy realistic claims – growth of ‘proven’ products
Food TrendsConnectivity … social media marketing campaigns
Food TrendsHome Dining … indulgence at home /
new products for creative home cooking
‘eating out at home’
Premium ranges – gourmet and restaurant dishes
Budget – cooking from scratch
‘Ingredient foods’ – less pre-made / packaged
Tesco launches City Kitchen range
Food TrendsFresh
Demand for Freshness Minimal processing, chilled, minimal packaging Food safety Organic products Diet books Increased frequency of shopping trips Highlighting ‘sell by’ dates
Organic and Ethical label range opportunities
Food TrendsFreshBack to basics – Fruit & VegetablesLess packaged / processed foodSmoothies / packaged fruit snacks
Food TrendsSustainability … environmental / ethical / social … People … Planet … Profit
• Consumers want to feel ‘good’ about what they buy - how was it procured, grown, reared, caught, manufactured, transported, by who, how?
• Emergence of the ‘principled consumer’
• Did it harm the environment, people, communities?
• Was it ‘Fair Trade’
• CSR industry - differentiated by values
• ‘Look behind the label’ …. M&S
Food TrendsEnergy vs. Relaxation
InternationalisationRegional / Locally sourcedEthnic / Fusion cuisine
“Now all fresh meat at Morrisons is 100% British”
Creating Added Value
Shopping Modes - Formats
Multi Channel
Shopping Modes - Formats
• shopping centres• hypermarket• supermarket• convenience stores• discounters• online
“MULTI CHANNEL”
Shopping CentresTrends ….
Food Experiences & Services
Crisis exposed weak developer strategies
In UK 60% of centres in trouble, only super regional will survive?
What lessons for Russia?
Shopping Centres“the city centre at your doorstep”
Kaleidoscope Tushino, Moscow
Hypermarkets
More than functional warehouses – providing services and non food as lifestyle pit stops and community destinations
• Choice • Price• Services
Lifestyle pitstops /centres - ‘everything for your life’
big was better?
Retail theatre … events / workshops / parties
Supermarkets“making shopping a pleasure”
• Balancing convenience, quality and experience• Range – focused to local catchments … demographic … ethnic• More space for deli and fresh produce• Food to go / Cafes• Services – financial, mobile phones, …
Sales densities vs better environments
Supermarkets“making shopping a pleasure”
Convenience Stores“my place”
• Near to the customer … work or home• Baskets not trolleys • Coffee cafes - takeaways
“Marks & Spencer struggle to keep up with demand for wine by the cup concept”
Open … 7am to 11pm
Discounters“quality repositioning”
Online“total convenience … to your door”
According to sales data collected through the UK’s leading website MyVoucherCodes.co.uk, Tesco enjoys the majority share of online grocery shoppers, with 41% of supermarket sales through Tesco.com, compared to 27% via Asda.co.uk
Online“total convenience … to your door … to your store”
2000 2001 2004 2006 2007 2010
Founded, first distribution agreement with Waitrose
Deliveries began
First automated conveyor warehouse
50’000 orders delivered in a week
EBITDA positive for first time
100’000 orders delivered in a week
2011
IPO, valued at £1bn
Trades above IPO price for first time
2010 HIGHLIGHTS
Gross sales 2010: £551m Average order value: £112 EBITDA: £16m Still loss-making after 10 years Market cap: £1.13b
2010 HIGHLIGHTS
Gross sales 2010: £551m Average order value: £112 EBITDA: £16m Still loss-making after 10 years Market cap: £1.13b
1997 1999 2000 2001
Founded, $50m of seed capital raised
Deliveries began
$40m in annual sales, average order value $81
Bankruptcy
$800m in accumulated losses
IPO valued at $600m
2010 HIGHLIGHTS Owned by amazon.com Only ships non-persihable, household goods and office supplies Sales $10m2010 HIGHLIGHTS Owned by amazon.com Only ships non-persihable, household goods and office supplies Sales $10m
OCADO = New webvan.com … Amazon … What is the difference?
Customers will shop through various platforms and formats – supermarkets, convenience stores, farmer’s markets or online. Tomorrow’s sector winners can’t ignore - customers will demand the best possible experience.
Web grocery sales will increase to 9.5 billion pounds ($15 billion) by 2015, from 4.8 billion pounds this year. More 18-to-34 year-old shoppers are moving online and wider delivery coverage means sales have the potential to grow “significantly.” The Internet will account for 5.2 percent of total grocery spending in five years, up from 3.2 percent now. (IGD).
Web grocery sales will increase to 9.5 billion pounds ($15 billion) by 2015, from 4.8 billion pounds this year. More 18-to-34 year-old shoppers are moving online and wider delivery coverage means sales have the potential to grow “significantly.” The Internet will account for 5.2 percent of total grocery spending in five years, up from 3.2 percent now. (IGD).
In 2010 total retail spending was up 1%, online retail spending up 15%.
CONVENIENCE + VALUE will fuel the online food sales.
In 2010 total retail spending was up 1%, online retail spending up 15%.
CONVENIENCE + VALUE will fuel the online food sales.
OCADO = New webvan.com ? What is the difference?The difference is structural shifts in the society and higher acceptance of online shopping
Multi Channel
“How to grow your business in a low / no growth industry”
City … Supermarket … Convenience … Hypermarket … Online
… now towns!
Multi ChannelUK grocer challenge
Intense competition … near market saturation Slow growth … rising taxes … higher inflation Grow by stealing market share from rivals … enhancing proposition … adding space (better to cannibalise sales than lose to rivals!) Race for space – but diminished site availability Need for hypermarkets lessening – growth of convenience stores and online UK petrol price increase – more local shopping Leverage of multi-channels – click & collect kiosks … direct catalogues Non food needs more space – extensions & mezzanines More services and facilities … health, finance, travel
Brand ExperienceCUSTOMER EXPERIENCE BRAND REPUTATION
word of mouth, sms…
advertising, direct marketing
web site, social media, twitter, facebook
promotional publicity
posters, street signs …
collateral …
bags, cards, leaflets
assurance, memories
reminders, triggers,
after service …
customer journey…
anticipation … moments of truth
first vistas, approach, process,
layout, environment, products,
staff, facilities, exit experience …
Managing the Process – Physical … Human … Technical
coordination … consistency … control …
Brand Touchpoints
AwarenessPromise
Customer JourneyVisit
AfterglowSatisfaction
Touchpoint SynergyFood Retail
Identifying opportunities … solutions
‘Customer Journey’
Touchpoint SynergyPeople
‘Our people make the difference’
Creating Added Value
Differentiation
Brand Development
Differentiation
• Convenience• Products• Service• Experience• Culture
Why are you first choice?Brand Development - Image & Reputation
“Added Value”
Marketing and Communicating ‘added value’Using media, activities and events to reinforce tangible and emotional attributes … head and heart triggers.
Outdoor advertising Press Radio T.v. Web banners Web search engines
Talking ‘at’
ATL
Talking ‘to’
BTL ‘relationship ‘ marketing Direct mail Email Printed media through database … Personal contact Events / road shows
‘Brand Awareness’
Mass Audience
Difficult to measure benefit
Defines / triggers purchase
Targeted Audience
Easier to measure benefit / outcomes
Differentiation - Marketing Methods & Media
Differentiation - Marketing Social Media Challenge
Customer
‘Awareness’
Price comparison
sites
Social mediaOpinions
Shared experiences
ATL
Individual needs ‘triggers’ action
BTL
‘Database Knowledge’
Target customer groups information / aspirations
Differentiation - Marketing - ChallengesSavvy Customers - Product Reviews
‘To buy or not to buy?’
Differentiation - Marketing - ChallengesComparison websites
Differentiation - Marketing Email marketing – customer dialogue‘immediacy – relevance’
Differentiation - Marketing Brand Reputation … Equity - P.R. Challenge
International Benchmark – credibility crisis …
Inept corporate governance?
TESCO FISH FIGHT
When ‘sorry’ is not enough …
‘Damage limitation’
Differentiation - Marketing - Sponsorship Corporate Imaging’
Who gets the benefit?
Cynical endorsement marketing or mutual reputation enhancement
Differentiation - Marketing Discounter repositioning creating quality credibility
There is no such thing as loyalty … you are as good as your last transaction / customer experience
Challenge - loyalty programmes not just cards
Transparent mutual deal - we really reward you - we learn about you - we can serve you better.
It has to be relevant, clearly worthwhile, proactive.
Role Model - Tesco ... Increased investment ... Key factor in success …
Retailer or Partner card?
Differentiation - Marketing Customer loyalty – wishful thinking?
Hard to ensure loyalty of a fickle, frugal customer!
Tesco Tesco now has 16 million active Clubcard holders in the
UK, compared to 11.7 million people who have a Barclaycard.
Tesco has earmarked further investment on top of the £150m it pledged when it re-launched the Clubcard.
iPhone, BlackBerry, Android, Ovi applications +
Asda Invests in new TV marketing campaign Improved likelihood to shop Created better ‘my kind of supermarket’ perception … and launched own T.V. channel on YouTube ‘saving
you money TV’
Differentiation - Marketing – StrategyDifferent investments
Differentiation - Marketing - Private Label - ‘More for Less’ … Something Different- A key retailer differentiation strategy …
Obvious growth potential with Russian mindset changes
Less status conscious - more acceptable ... for anyone … democratic
Less brand loyalty - consumers more likely to switch
Demand for a bargain - need value for money with economy pressures
Trading Up - psychological requirement to treat yourself - premium own brands e.g. Tesco Finest
Variety and Choice - new products / ingredients / flavours …
Organic and Ethical - retailer label ranges & opportunities
Traditional
Differentiation - Marketing & PRCreating awareness … desire .. reputation
Today
Image development
Marketing – promises … promotions ... events‘what you say about yourselves and offers’… billboards, T.V., radio, themed promotions / activities …
Reputation development
Public Relations – corporate relationships, events, messages / crisis management ...
…
Image and reputation ‘is what people say about you’
Marketing and P.R. activities and audiences are now symbiotic – social media merges B2B and B2C communication
Creating Added Value
Social Media Challenge
Staying relevant
Social Media ChallengeCreating a ‘joined up’ social media strategy
Social Media ChallengeCustomer Connectivity
not what retailers say … customers listen to each other ... iPhones, wifi, … food forums etc
“… there are 59.7m internet users in Russia, 42.8% population” (June 2010)
61.9m people will use the internet in Russia by 2013” eMarketer
“Russians are the heaviest social networkers worldwide in terms of time spent per user” eMarketer
Internet Transparency
Software Technology who is targeting who?Software Technology who is targeting who?
Software technology can track and interface with customers through loyalty cards, touch screens and phone apps …
But, …. consumers can use technology to create instant damage or enhancement to your brand – cut and paste communities – Facebook, fanclubs, Tweeters, YouTube
http://www.adturds.co.uk/tag/sainsburys
Brand demolition!
Social Media Challenge
Customer dialogue – ‘the good’
Sainsbury Twitter … ‘almost’ real time response to ideas and complaints.
Waitrose Forum3500 people viewed single chat about a food recipe. 24x7 customer service.
Not just advertising!
Social Media Challenge
Managing reputations - ‘the bad’
556,308 fans … “4000 chavs a year die from tesco cheap booze. Every little helps”
Tesco had to pull the plug on an unofficial Facebook group of 2000+ called 'Tesco employees could rule the world’ where staff abused their customers.
Social Media Challenge
Aldi
USA Aldi “hate” sites …
Live Aldi Twitter1,614 followers in Germany4,615 Australia
Social Media Challenge
Russia
Social Media Challenge
Twitter – 3,514 followers
'enjoy the taste of our new cereal' Facebook - Russian winter campaign, 3,295 people like this
Perekrestok now have active Twitter and Facebook pages.
Black PR – Instant ‘cut and paste’
Social Media Challenge
CUSTOMER EXPERIENCE BRAND REPUTATION
word of mouth, sms…
advertising, direct marketing
web site, social media, twitter, facebook
promotional publicity
posters, street signs …
collateral …
bags, cards, leaflets
assurance, memories
reminders, triggers,
after service …
customer journey…
anticipation … moments of truth
first vistas, approach, process,
layout, environment, products,
staff, facilities, exit experience …
Managing the Process – Physical … Human … Technical
coordination … consistency … control …
Brand Touchpoints
AwarenessPromise
Customer JourneyVisit
AfterglowSatisfaction
Creating Added Value …Achieving a first choice Brand Experience
Creating Added Value …Achieving an effective management organisation
Marketing
Department collaboration?Teamwork = Synergy
operations
Store WorkplacesService Internet
real estatebuyers
IT
communicationshuman resources
managementprocurement
sales
Brand experience – for customers and employees
Departmental activities / functions
marketing
logistics
finance
Thank You
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