How would your brand rate on distinctiveness?

In the book "How Brands Grow", Byron Sharp set out to research and test long established assumptions on marketing. One of these assumptions that Prof Sharp tested was whether marketers indeed needed to differentiate their products/services at all cost from the competition.

Little evidence was found of the success in differentiating brands in the same category. Pizza Hut, KFC and McDonalds are all essentially fast food outlets.

When a brand makes consumers aware of its distinctiveness, it is more noticeable, recognisable, it improves recall and increase the changes of being sold.

By shifting the emphasis to brand distinctiveness instead of brand differentiation it becomes more cost effective to advertise a brand.

Just as blood letting was thought to have been the only way to rid the body of certain ailments, marketers need to consider old paradigms and take these new findings on board and ensure that every marketing dollar is applied to have a more effective impact.

Why are we in business?

No one will doubt the phenomenal success of the Virgin brand. Interestingly, Richard Branson runs the Virgin organisation by spending a third of his time on promotions, another third on fighting fires and the last third on prevention.

This approach can be applied to most Australian businesses, services and products, not-for-profits, local goverments or community organisations. It is an interesting balance between looking ahead at future opportunities (promotions) and threats (prevention) and acting on immediate threats (fighting fires) and immediate opportunities (promotions).

This approach underscores the importance of making the most and capitalising on the immediate and future threats and opportunities faced by organisations.

Drucker on the other hand was quoted to have said: "Because its purpose is to create a customer, any business enterprise has two and only two basic functions, marketing and innovation". Marketing in itself is an activity that promotes the company, its brand, products and services. Part of any marketing communications strategy is to ‘fight fires’, as Branson would call it, and many organisations uses innovation to prevent a reduction in growth and profit margins.

It seems as if Drucker and Branson are talking about similar topics. Innovation is nothing else than a prevention tactic to remain relevant, and many promotions are run to reduce the threat or shrinking margins.

In the end the challenge to us all is to find ‘others’ problems’ and turn them into ‘opportunities for us’, using elements within our control to create solutions that meets needs at a set price.

 

The 80/20 Fallacy

Byron Sharp[i] found that Pareto’s 80/20 principle is a misleading simplification within a number of markets. Research found that the Pareto principle in a number of countries amongst a number of categories are closer to 60/40, that is 60% of the turnover comes from a 40% customer base, or even 50/50.

Coca Cola describes a ‘heavy’ user as someone that purchases Coke 12 times a year! Hardly what we expect!

I expect that within services this principle would be even lower.

This week ANZ announced a full year profit of $5.66 billion http://bit.ly/S1ReeR noting the bank’s ability to ‘adapt to a changing environment’ as one of the reasons for its success.

Peter Drucker said 'because its purpose is to create a customer, any business enterprise has two and only two basic functions: marketing and innovation'. 

If service organisations want to thrive, they need to develop innovative strategies to attract and retain the attention of a much larger customer base that doesn’t necessarily spend significant amounts with the organisation.

This is where technology plays a major role. We have to get smarter at using technology to identify and ‘draw in’ customers into the sales funnel. I will discuss various strategies in my upcoming blogs.

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[i] How Brands Grow – what marketers don’t know, Oxford University Press, 2011

Which industry is really driving the economy?

Focusing Your Business on the growth areas of the economy.

A review of industry growth in Australia since 2007.

One of the fundamental principles of growing a business is to understand the economy’s fundamental growth trends by industry. Most organisations sell a core range of products and or services to one or more industries. For example providing engineering services to the mining and construction sectors or selling products through retail and wholesale.

This data can be useful in considering which industries have proven strong growth in the past using a range of measurements, are resilient and continue to be a major employer. Whether your business is supplying a product or service to one or a number of industry divisions, this data may be useful in deciding where else you could or should offer your product or service.

Which market sectors drive the core Australian economic activity? Mining? Health? I argue that the market sectors with the largest proportion of revenue (as measured by earnings before tax) and employed persons are key indicators of economic dominance. Even more so, trends indicating continued increases in the revenue of dominant market sectors have to be key indicators of the key elements which are shaping Australia’s future economy. These sectors will offer the most business opportunities, employment, taxes for governments and investment opportunities.

Trends over time are important. The continued growth or decline of an industry over a few years can be a sound predictor of future trends that may continue. If a trend continues in the same upward/downward direction for the past 3 to 5 years, one could probably assume that unless something significant changes, such as war breaking out between two countries, that the past set trend will most likely continue into the future.

Employment statistics are important for a number of reasons. Continued growth in an industry will attract the brightest talent, this is where the most recruitment activity will be, and the most sought after knowledge workers are working. I have used this data to review economic activity in Australia. Similar data should be available for most other countries.  

For the purpose of this analysis I have combined various services together, to provide a new insight into existing data. Specifically I wanted to see what impact it would have if the various service industries were grouped together.

The following services have been grouped together: Electricity, gas, water and waste services, Accommodation and food services, Transport, postal and warehousing, Information Media and Telecommunications, Rental, hiring and real estate services, Professional, scientific and technical services, Administrative and support services, Public administration and safety (private), Education and training (private), Health care and social assistance (private), Arts and recreation services and Other services. No data was provided or available on financial or insurance services.

The chart below shows the operating profit before tax for Australia’s market sectors. From this chart it is clear that more EBIT is generated from the various services in the economy than from the mining, manufacturing and construction industries combined.  It is clear that the provision of services play an important part in Australia’s economy.

 

 

 

Source: ABS 81550DO002_201011 Australian Industry, 2010-11 (Reworked)
Let’s look at some other indicators. What about employment by market sector?

Source: ABS 81550DO002_201011 Australian Industry, 2010-11 (Reworked)

When we combine the various service industries, more people are employed in various service industres than the rest of the economy combined. Mining is the smallest employer as a market sector in Australia. Contrary to popular belief, Australia’s economy when assessed by employment numbers is driven by a range of services.

At this point you may wonder which services are driving the economy. The next chart illustrates the EBIT by service type. If you are considering adding a service element to your offer to market, focus on the dominant service industries may be less risky with a higher chance of being accepted.

 
 Source: ABS 81550DO002_201011 Australian Industry, 2010-11 (Reworked)

The table clearly shows that professional and technical services make up almost a third of all services in Australia, followed by rental, hiring and real estate services. At this point your business has two options: to provide products or services to these industries per se or to add service elements as reflected by the various service industries to your offering. Can you further add value to your market offering by adding specialised technical and professional services? Can you sub-lease a part of your building?  It’s time to get creative and think how this data can help you grow your business.

 

Disruptive technology today, tomorrow's solution

Disruptive technology is technology that comes into our worlds and disrupts existing markets and value chains. Bill Gates once said that the truely exciting part of the computer age is when it start to change the way people go around doing their everyday activities. This is when technology changes are revolutionary.

Mobile phones changed the way how we communicated twenty years ago, not having to stop at a payphone, we all embraced it in our everyday lives to feel safer and became more productive as a result, managing more activities within the 24 hours a day we are all given.

With computing becoming more mobile chances are we will be searching for and broadcasting updates and information, entertain and be entertained, browse and shop when travelling, relaxing or performing routine activities.

Tasco knows how to fit grocey shopping into the busy lives of Koreans. Click here to see how they took advantage of time waiting for the train to do grocery shopping. http://bit.ly/jD13QA

Technology will save us time, make us more productive and ultimately allow us to enjoy life more every day. Bill Gates summarised it well when he said "I'm a great believer that any tool that enhances communication has profound effects in terms of how people can learn from each other, and how they can achieve the kind of freedoms that they're interested  in".

Read more at http://www.brainyquote.com/quotes/authors/b/bill_gates.html#ibp4TY6OQKmOWmFb.99