Archive for December 31, 2013

Ronald_A._Heifetz_in_seminar_2010

Posted: December 31, 2013
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Making a success of Middle East markets

As 2013 disappears over the horizon I am also waving goodbye to the project that has kept me busy, pretty well full-time for the past two-and-a bit years and moving on in search of something new.  Those who know me will appreciate that what gets me out of bed in the morning is a challenge and the task of taking a Saudi-owned fmcg manufacturer and retailer to their first IPO, as I have been for over two years, is a challenge that I’m going to find difficult to equal.

I’ve been in my element of course.  Every day held a lesson (or ten) and when you consider we were transforming a very traditional family business into an IPO-ready organisation and at the same time launching an aggressive international expansion programme you’ll realise that wherever I go next, my life is likely to be much simpler, but that’s only half of it.

Last month I wrote about “adaptive management” and, if nothing else, the past two years have proven to me, beyond doubt, how important the ideas of people like Professor Ronald Heifetz are. As we grow to better understand the role of marketing in modern business and appreciate that marketing influences every discipline in every area of business the vastness of this subject is beginning to dawn on people.  Combine this with the pace of change that delivers the continuous flow of unique challenges that drive Heifetz’s concept and you begin to realise that there aren’t any cookie-cutter solutions anymore.  The most important skill required by a marketer these days is problem-solving – adaptive management.  You can’t teach this of course,  It comes with practice – many years of it.

In the past couple of years alone I have been engrossed, among many other things, in product design and development, store design, process development, Human Resources management, recruitment and training, data collection and analysis, brand development, internal marketing, channel development, digital marketing, franchise modelling, magazine publishing and media sales, telemarketing, loyalty development and direct marketing and all the communications from press and TV advertising to PR that any business has to plan and manage.  Add more than a sprinkling of cultural, religious and social constraints – How do you represent a woman’s personality without showing a woman? – and you have a recipe for a major challenge?

I’m also delighted when I look back on our achievements of the past two-and-a-bit years to know that while modern businesses invest 10-20% of their revenue in marketing (see LinkedIn discussion) by adopting the Full Effect approach to marketing we delivered the 25% year on year growth that the owners of the businesses were demanding, for three consecutive years with a mere 5% investment.

One of the greatest challenges faced by Western marketers in the Middle East is the lack of trust local business owners have in the western managers that run their businesses.  Its a fascinating and complex relationship.  The lack of experience and skills of Arabs whose unique good fortune has placed them in the position of owners of sizeable businesses, means that to survive in the face of international competitors who are invading their markets these days, it is essential for them to employ Western managers.  However, absence of the very skills and experience they are forced to seek abroad leaves them ill-equipped to judge a good consultant from a dreadful one and as a result they’ve employed many of the latter over the years.  The inevitable consequence of this has been the failure of many Arabian businesses to realise their potential and even the demise of some at the hands of self-proclaimed marketers from the West.  There’s also a naivetae among locals that leads them to believe that ownership of a business makes them both superior and entitled to all the rewards. No wonder there’s mistrust.

This mistrust is working in nobody’s favour.  The local businesses whose past successes have been the gift of weaker or non-existent local competition are failing as international players, with more know-how supported by franchisees with pockets deep enough to bring US or European strategies to life, arrive to take ownership of Middle East markets.  Meanwhile the new wave of Western experts who find their way to the region aren’t finding the trip as lucrative as it used to be. This in turn has dissuaded many of the consultants who can actually do the job from taking on the challenges and the void is increasingly being filled by younger, wholly unsuitable candidates.  And the cycle continues …

Already, it’s tempting to dismiss this as a terminal spiral, but we are still only acknowledging part of the scene. Innumerable unexpected issues impact on the natural progress of businesses on a daily basis. For example, many Arab business owners still fail to acknowledge that their success to date has been largely due to the absence of high calibre competitors.  Nor do they realise how far ahead of them the newly emerging western competitors are. There are also still government departments in Saudi Arabia that don’t use computers and one significant business I visited had no computers in their accounts department as recently as three years ago. Even some of the most advanced local businessmen I met are unable to separate good from truly awful business services like advertising agencies, logistics companies and

But don’t think this makes some of these Arab markets easy pickings for Western businesses.  The cultural and attitudinal influences are inpenetrable to Westerners.  Just when you think you understand their motivations something happens to make you realise that you don’t have a clue.  I’ve witnessed consultants wheel out their Western sales pitches or construct elaborate argument in support of initiatives that failed totally because, though the argument would be bang on the nail in the West the considerations of the local investors they were talking to were totally different.  This kind of stuff isn’t new to those of us who have operated in diverse markets but in the Middle East the differences are far more extreme.  You really do need a local guide to help you through the challenges of the local markets.  You also have to be an adaptive manager and have many miles and loads of international experience under your belt.

However, we are getting closer.  In markets other than Saudi Arabia (which is a law unto itself) westernisation of consumers and better understanding by those of us who have taken the time to see what is really happening there are creating a convergence.  With the 20/20 Expo in Dubai and the World Cup in Qatar opportunities are emerging again after the economic slump that ravaged Dubai and shook the confidence of many of its neighbours. Smart Western businesses and entrepreneurial locals are finally working out how to combine to exploit these opportunities and where partnerships like these come together the mediocrity of their single culture competitors means that, for them at least, success is pretty well assured.

 


Peter Drucker

Posted: December 15, 2013
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Beyond the physical – the role of brand in USP and differentiation

One way or another I’ve been driving sales growth for businesses around the world for longer than I care to remember, but I’ve never considered myself a salesman.  In fact, I’ve always felt that where real marketers do their job salesmen aren’t needed at all.  

This sort of flies in the face of American business culture, which remains rather sales led and last time I voiced the opinion in an article I was inundated by angry salesmen telling me I didn’t know what I was talking about, almost all of them from the US. This is ironic, considering that nothing proves my point more dramatically than the queues of eager purchases that form outside Apple stores the day of a new product release.  There’s no “selling” involved there, just take the money and wrap.  That’s because the marketers did their job in differentiating the product and building a brand.

This week I’ve been engaged in a bit of an argument with a couple of marketers on a LinkedIn group about differentiation.  I’m happy to say that on this occasion the weight of group opinion seemed to be on my side, but the striking thing is that both my combatants were American and each of them represented themselves as authorities on branding. One was even a Marketing lecturer.  Its no wonder that young marketers are so mixed up.

This exchange explored, among other things, the principle of the USP.  An exercise that in itself illustrated the inability of some marketers to think beyond the constraints of fifty-year-old marketing practices. Real marketers are innovators, revolutionary, leading the way rather than perpetuating standards and practices established before we really understood the psychology of brand.  We can all write books about our experiences, but by the time they are in print the lessons we have learned will have been superceded.  Such is the nature of marketing.  However, we can learn from the experiences of others and use them as launch-pads for our own journeys of discovery.

I therefore gained particular satisfaction from an article By Tim Williams on LinkedIn, which among other things reminded me that the highly regarded Peter Drucker was also on a mission to eradicate salesmen from the marketing process.  Tim’s post highlights a number of parallels with my own experiences.  I’ve helped numerous marketing services firms around the world achieve growth by client and competitor acquisition, but I’ve never found cold-calling to be the answer.  All my successes have been achieved by building processes that differentiate agencies and publicising them.

Tim also highlights a Bain and Co survey that asked executives if their products were differentiated.  80% said they were while only 8% of their customers agreed.  This tallies with the experience of my own Brand Discovery programme where I ask executives to list ways in which their brands are different from their competitors’.  Almost without exception they come up with long lists of things that any business could claim.  I can tell you that typically business leaders don’t understand the principal of differentiation.

These days products are rarely significantly different.  You have to think beyond the physical for the “unique” and its membership of the brand community to which the purchase is the ticket that is the differentiator.


Social Media Logotype Background

Posted: December 15, 2013
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Are social media agencies the new branding consultants?

If you have visited me here before, or held a conversation with me for long you’ll know that nothing pisses me off more than marketing services firms that present themselves as experts in fields that they know less about than the businesses they are supposed to be advising.  When I am sitting in the client chair at some of the firms I work with, I don’t want to have to tell my suppliers’ what to do, yet increasingly I find I have to.  I hire consultancies as advisors.  By definition this means they should know more about their subject than I do, but increasingly I find they don’t.  Does this mean standards are falling or is it just that I’m getting old?

It has been bad enough with so-called “branding agencies”.  It appears that the “branding agency” monika has become a synonym of “failed design group” all over the world.  You can imagine the executive meetings where the idea arises.

Exec one: “We have to do something.  We haven’t seen a new project in six months”
Exec two: “Yes, it seems nobody wants (our) design any more”
Exec one: “No. All they are interested in is this branding stuff”
Exec three: “What’s that all about then?”
Exec one: “Its just designing logos, but you write a guidelines document to go with it and you slap a £20,000 quid price tag on it”
Exec three:  ”Well, we design logos.  We can do that can’t we?
Exec one:  ”Sure, there’s nothing to it, but we’ve never charged more than a grand for a logo”.
Exec two:  Maybe that’s what we have been doing wrong!”
Exec three:  ”Sure, we’ve been too cheap”
Exec three: “Yes but we have to call ourselves a branding agency”
Exec one:  ”OK, its decided then.  From today we are a branding agency”

I’m truly convinced that this must be how it works in the majority of cases because most of the branding agency people I have met don’t have the first clue of what a brand is! Now I’m having deja vous.  Failed advertising agencies everywhere are suddenly becoming “SocialMedia Agencies”!

I’ve been trying to find a a suitable social media agency for  my client in Saudi Arabia and I’ve had a steady stream of hopefuls through my office for the past six months.  Believe me, I’ve seen some jokers. An entire new generation of scrubbed-up young social media enthusiasts, all with surprisingly smart and trendy offices and all keen to explain that social media is different because its about “engaging” in conversation with customers.  ”This isn’t advertising” they all emphasise – usually about thirty seconds before they show a catalogue of their work that is all what I’d call advertising.  I don’t know what it is, but there appears to be a fatal disconnect between what they say and what they do.  Possibly because they are regurgitating stuff they have read in a social media post somewhere (authored by someone who did know) but don’t have the intellect to understand what it means in practical terms.

So, for the record.  Next time I am looking for a social media advisor and you fancy your chances tell me stuff I don’t know or at the very least walk your talk.  I’ll expect you to give me a framework of activity, a few ingenious apps or games and the text of posts that will launch conversations.  I don’t want to see advertisements and I certainly don’t want to have to tell you how to word posts!


food-packaging

Posted: December 11, 2013
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Small brands and the power of packaging

I’m an eager recipient each week of a Newsletter by a consultant called Peter Roper.  I like Peter. He’s from the UK Midlands, my part of the world and he’s a “good talker”, by which I ‘m not inferring that he doesn’t deliver, but that he’s a great presenter, an award-winning public speaker in fact.  You should try him out sometime, but as a “trailer” you can sample his Peppermint Wednesday weekly video blogs.

Anyway, Peter has a really neat niche.  He specialises in providing advice to “family businesses”. Now there’s a worthy cause!  I’ve worked for family businesses that would dwarf many investor-held companies.  People like the Belgian Dehaize Group who are the fifth biggest supermarket chain in the world and Zohoor Alreef with 250 perfume and bodycare stores and a manufacturing plant in France. Family businesses have a lot going for them, not the least of which is a responsiveness that comes from not having go to shareholders to get permission to do anything.  Yet despite the fact that nine million people in the UK alone work for them, too many family businesses still use the term as short-hand for “a bunch on bloody amateurs”, so I think he’s looking at a lifetime of potential clients there and his advice, from what I have seen and heard, is just what is needed to turn a hobby business into a worthwhile venture.

This week in his Spearmint Saturday newsletter (Its something to do with flavoured tea. Not my thing but, hey, dif’rent strokes …!) he talks about a visit to an event in his local town (Actually Worcester might technically be a City, but if you blink as you drive down the M5 you’d miss it) where he bought a hot-dog that wasn’t what it said on the label from one of the stalls (I’m not going to tell the whole story. You’ll have no reason to go to his page if I do). His point is the nonchalance with which the stallholders greeted the news that they’d almost poisoned him (He has allergies. Poor thing!). It seems that, like the many “family businesses” I mentioned earlier, they seemed to think that not being MacDonald’s gave them license be sloppy about their business.

The “keep them guessing” approach to labelling isn’t confined to small firms, of course.  I demonstrated to Zohoor Alreef recently, that they were losing sales because their customers didn’t understand their products. Bodycare is simple enough to explain you might think, but in their core Middle East markets where the juxtaposition of ‘French” and “cosmetics” adds up to quality the manufacturer had chosen to get their French-ness across by labelling all of their products in French, supported by English. In countries where the language bears no resemblance to French and many people don’t speak English this is tantamount to shooting yourself in the foot. What is this “Eau Fraiche pour le corps”? I hear them cry (apart from being more type than should sensibly be printed on a small spray bottle).

The problem isn’t just one of language though. Packaging is an essential short-hand to communicating a whole lot about your product, your brand and your business and in this competitive world, where every sale has to be fought for, you can’t afford to overlook any contribution that your pack design can make. I’ve been involved in more package design projects than I could count and the challenge is always to squeeze everything you can from your design. It will tell you in words and pictures what you are buying. Not just the practical stuff, but all the “soft” strategic messages as well. The simple introduction of an adjective for example, can convey product benefits.  For example the product name ,”Body Lotion” is given a new dimension by adding the word “moisturising” to make “Moisturising Body Lotion”. Instant added-value! In another recent example I added a line (admittedly long, but in this case we had the space on the pack and a great designer) to convey brand character, raise the company’s authority as manufacturers, underline the quality of the product and highlight the fact that this was part of a range, to the company’s perfume packs – “Another great perfume produced in France by Zohoor Alreef” – four wins that a simple “Made in France” wasn’t giving them.

The quality of packaging is also important. We all judge a book by its cover, so don’t put your products in rubbish packs. I’ve seen some criminally bad images and awful colour reproduction on some food products. Why would anybody buy food or anything for that matter, that looks tired and old?

Family businesses aren’t all corner shops content just to earn a living and in my experience many would improve their performance just by improving their “packaging”. (That would include all their collateral not just the box). I’ve heard family businessmen use their familly-ness as a rationale for not doing a proper job on this.  ”Our customers don’t expect us to have all that stuff” is a response I’ve heard many times – rubbish! A message to small businesses everywhere – every major international business I have dealt with considers small local businesses to be competitors and if you weren’t just outside their priority list, nine times out of ten, they’d remove you from the equation just by presenting their smartly-packaged product to your customers, so get it right.

Don’t hire the cheap local graphic designer either, unless you really know what you are doing and can drive the design process yourself, but be sure you are ready for the day when you slip inside the big boys’ field of vision. Besides, many perfectly viable products have failed because their packaging was pants and even some “so-so” products become big successes when they are packaged well. Believe me, family business or international concern, don’t ignore the power of packaging!


Saudi McDonalds

Posted: December 6, 2013
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Gulf brand wars

This week I was the guest of King Fahad University in AlKhobar, Saudi Arabia where I addressed a hundred enthusiastic business and marketing students and faculty.  I like to keep things pretty general at first meetings like this, so I set myself the objective of introducing a new perspective on a few key marketing topics that would stimulate debate later in their classes. My framework was the role of brand building (which seems to always be considered a bit creative) in the hard-nosed, rational world of business efficiency.  This provides loads of opportunity to detour into side topics such as how we make purchase decisions and the way brands exploit our tribal instincts and enables me to introduce a few  light-hearted anecdotes. 

Actually, the subject of brand-building is very topical across Middle East.  There’s a real invasion of Western brands and culture taking place that locals have seemed powerless to resist.  Nowhere is this moreso than in Saudi Arabia.  I’m not sure if I envy the emerging generation of Saudi marketers.  I enjoy a challenge, but the one they are facing might be a challenge too far.   They’ll need all the focus and determination they can muster to navigate prejudices, tradition, even the countries laws in some cases.

Every sector of these MENA markets is dominated by international brands.  Businesses in Saudi Arabia may all be owned by Saudis, but, if you haven’t been here you should know that its almost impossible to find a business that ultimately isn’t either a Western franchise or is managed by Westerners.  It’s understandable of course.  In the past, few locals have had the skills or experience to set up and run successful businesses and we are only now witnessing the emergence of a very few Saudis with the combination of skills and experience to take on the top jobs.

The impact this has had on the business landscape is considerable.  In shopping malls local brands are so rare that you can easily overlook them and frankly, they mostly serve to illustrate why Western franchises dominate.  In the BtoB sector too, plant and machinery, consumables and services are nearly all foreign brands.

Because brands are communities and therefore culture-rich, the proliferation of Western brands represents the introduction of Western culture.  The liberal attitude, glitz and glamour of the West has proven too much for the new generation of local consumers to resist and the more Western brands there are, the more popular they become.  The impact this has on a closed society with a culture that has remained comparatively undiluted for centuries, is a book in itself, but there is a narrower issue here worthy of study.  With a population of under thirty million many of whom are poor migrant workers with no disposable income, Saudi Arabia is a small market and right now it’s looking over-subscribed with consumer brands.  In the retail sector for example, most of the potential foreign players have arrived, their franchisees are learning to better exploit their brand equity and its “game on” in the malls … big time!

Its easier for an investor to take on a franchise than build a business around an Arabic brand they have to create from scratch. With the clamour for Western brands, the few remaining local brands are being forced off the field. Even Western franchises, now fighting among themselves for market share, are finding it challenging.  Yet, if only for the sake of national pride, Saudi Arabia needs some successful domestic brands.  However, its not enough to be successful in their home market, to achieve the volume they need to fund product and brand development any new brands will have to appeal to consumers in other markets and that means markets with more Western tastes.  Therein lies the challenge.

There’s no escaping the impact a nation’s culture has on its brands.  Think of the associations with British, German, Scandinavian and Americal ptroducts, while China and India are struggling to shake off the stigma their national identity has on the products they make.  Put a set of adjectives together to describe Saudi culture and you end up with a lot of words like “conservative, traditional, bland, unexciting, primitive”.  Hardly the associations a new bramnd needs.  Even Saudi consumers have fallen out of love with “Made in Saudi Arabia”.  Their neighbours are even less impressed, so what chance would you have of selling a Saudi brand to people to Western consumers?  However, if Saudi brands are to succeed even in their home market, they have to be able to play the international brands at their own game and win back some overseas territory.  That’s the challenge the students I was talking to will face when they graduate in the coming weeks and months.

I was impressed by the students I met at King Fahad University.  I talked to them about assessing their resources and being realistic about the limitations placed upon them as they plan brand strategies, but their list of constraints was probably longer and more daunting than those facing their counterparts in other markets, so they’ll need all the smarts they can muster.  There is reason for optimism.  Attitudes are slowly changing and I’m sure someone will find a way to build a Saudi brand that will compete with the West.  I may already have met him at King Fahad University!