Tuesday, 18 April 2017

When the pricing gap becomes too great for savvy consumers....

How home-brew, at 9p a cup, could be a threat to food service coffee...

With street coffee priced at upwards of £2.50 a cup, I have reverted to grinding and filtering best quality French coffee beans, purchased from Waitrose at £2.59 per 227g bag. Each bag yields 5 x 6 cups, effectively costing me 9p a cup. If I could buy wholesale, the price would be no more than £2/bag....

OK, the ambience is worth something, but 30x 'domestic rates'?

In fact, when you think about it, apart from the bill, most people's memory of a great restaurant meal is coloured by the final course, a cup of coffee. Yet, even at these mark-ups, some restaurants risk diner alienation by skimping on the coffee..., thereby triggering the 'tell a friend' mechanism' whereby, if you please a customer, they tell one friend, disappoint them and they tell ten....., electronically.

Tuesday, 11 April 2017

If Airlines Sold Paint…

Given some of NAMs desire to avoid some painting chores by flying away for the Easter weekend, we felt it might be interesting to link airlines and paint with a lesson in pricing for those NAMs that never like to forget the ‘day-job’

Customer: Hi. How much is your paint?

Clerk: Well sir, that depends on a lot of things.

Customer: Can’t you give me an approximate price?

Clerk: Our lowest price is our introductory special at $12 a gallon. After that we have dozens of different prices up to $199.

Customer: What’s the difference in the quality of the paint?

Clerk: Oh, there’s no difference. It’s all exactly the same stuff.

Customer: Well, in that case I’ll take your $12 paint.

Clerk: Well actually the $12 variety is only available on our website. If you want to buy it here at the store you’ll be charged an additional $20 Customer Convenience Fee

Customer: So if I go home and get it off the website, its only $12?

Clerk: That’s correct sir – plus a Credit Card Usage Fee of $6 and then there’s standard Shipping and Handling of $15.

Customer: What? So in other words buying online would cost me almost exactly the same as what I’d have to pay here in the store?

Clerk: I suppose so, but if you buy it here you get to use it immediately. Online purchases take ten business days to get to you – unless you pay the optional $25 Express My Paint Fee.

Customer: You’ve got to be kidding me!

Clerk: Well no sir, but it’s academic anyway as right now the $12 paint is completely sold out in both places.

Customer: That’s BS. I’m looking at shelves full of the stuff!

Clerk: Ah, but that doesn’t mean it’s available for sale. We sell only a certain number of introductory priced cans on any given day. Oops, look at that! It just became available again – at $17.50.

Customer: C’mon! You mean to say it went up while I’m standing here?!

Clerk: ‘Fraid so. Inventory control changes our prices all the time.

I strongly recommend you purchase your paint as soon as possible as it could go up again. How many gallons do you want?

Customer: Well, maybe three gallons. No, make that four, I don’t want to run out. I assume I can return anything I don’t open?

Clerk: Certainly sir. The $12 paint is non-refundable, but if you return it within 48 hours you will be entitled to a $5 credit towards the future purchase of another gallon of the same color at the same or higher price.

Customer: That’s crazy. In that case I’ll just give any unopened cans to my brother as he’s planning to repaint his home soon.

Clerk: Sorry sir, no-can-do! Our terms and CANditions – that’s a little in-house joke – prohibit paint transfer. It is strictly for the use of the original purchaser.

Customer: But wait a minute, I hadn’t spotted those “Paint Sale – $9.99* a Can” signs over there? That sounds like a much better deal.

Clerk: Ah yes, that’s from our low cost paint division. The asterisk denotes that the cans are actually half-gallons and the price is based on a minimum purchase of two. There is also an additional Environmental Fee of $5 per can, a non-refundable Can Deposit of $3.50, a Paint Facility Charge of $5 and if you want more than one color, the second has a $25 surcharge and the third is $50 extra.

Customer: This is utterly ridiculous. To hell with this! I’ll buy what I need somewhere else!

Clerk: Well sir, you may be able to buy paint for some rooms from another store, but you won’t be able to find paint for your connecting hall and stairway anywhere but here. And I should also point out that if you want Uni-Directional paint it is priced at $249 a gallon.

Customer: I thought your most expensive paint was $199!

Clerk: That’s only if you paint non-stop all the way around the room and back to the point at which you started. Stairways and hallways are considered one-way exceptions to the rule.

Customer: So, if I buy the $199 paint and use it in my hallway what are you going to do about it – send some goons in to paint over it?

Clerk: Wow, I believe you’re getting it now sir. But no, please, that would be plain silly. We’ll simply charge you a Direction Adjustment Fee plus the difference to $249 on your next purchase.

Customer: Next purchase? No way! I’m out ‘a here

Clerk: At Skyhigh Paints we never forget you have a choice, so thanks for shopping with us. Have a nice day!

Have a price-sensitive weekend, from the NamNews Team!

Credits: latest version found here
Appears to have originated in Travel Weekly, October 1998, by Alan H. Hess

Tuesday, 21 March 2017

Busy NAMs: How to select the right actions when issues are complex and time is short

Nowadays, effective National Account Management means being on top of key trade issues, anticipating their future impact and taking action now in order to optimise the personal benefits.

This is why we try to help you by completing each news update with a call to action.

Essentially, we try to end each news item with a four-step approach:
Where at:
Where headed:
Effect on you:

Specifically, each step aims at covering the following:

Where at: (our NamNews summary of the issue, from the NAM perspective). You need to be able to summarise the issue ‘in a phrase’ in order to focus and communicate...

Where headed: (by the time we tackle the issue, it will have developed and possibly escalated).  In other words, we need to make a judgement re the stage it will have reached in order to pinpoint the effect and action required now.

Effect on you: Pointless raising the alarm, unless you can outline the probable impact on you and the company.

Action: Well based decisive action is required of you (the in-house customer expert) in any issue affecting the supplier-customer interface.

Yesterday’s Daily NamNews bulletin announcement: 

Unilever Reportedly Planning £6bn Food Sell-Off

NAM Implications:
  • Where at: Companies sell divisions in order to focus on more profitable parts of the business. Companies acquire divisions of other companies in order to release synergies by amalgamating operations, rationalising any aspect, in order to cut costs and justify the purchase price.
  • Where headed: Unilever will sell the spreads business, and the acquirer will do what acquirers do…
  • Effect on you: As a competitor, the category will experience a change in competitive landscape as the new owners drive the business harder, without the distraction of other activities.
  • Action: Complete what-ifs on various options and re-evaluate your relative competitive appeal from consumer and retailer POV.
Competitor NAMs have a choice: await completion of the Unilever deal, and allow the dust to settle, or start planning now to optimise the probable new category landscape.  We believe our NAM Implications can provide a little help…

NB. See how NamNews subscribers benefit a little each day. 
Simply download a free copy of January NamNews and see 20 news items analysed as above...

Friday, 17 March 2017

A failed attempt at bridging the generations…again?

You have no doubt seen the TV advt (above) featuring the trendy dad in latest enviable car, attempting to fist-bump his 14 yr old daughter before she exits to meet her pals at school....

Well, yesterday at schools-out time, I boarded a local bus. I made my way to the back, where two 13/14 yr old creatures sat staring at the floor as I advanced.

Putting it down to natural modesty, I gave them a reassuring grandad smile and sat opposite. I was then subjected to a high-intensity eye-roll reaction to my Nike Air Max trainer trendiness as they reverted to their texting conversation...

One needs plenty of self-confidence in this town, I find.....

Am I alone in this? 
(Please add personal experiences in 'comnments' or if you prefer, personal email to bmoore@namnews.com !!)

Thursday, 16 March 2017

The Little Guys Matter Too…..

Although the growth in customer concentration at the top end of most trade sectors, especially UK grocery, has been halted by the advance of the discounters, and global is becoming increasingly local, combined with our increasing ability to communicate directly with the consumer via social media, it could be said that major customers are ‘more manageable’ and thereby less threatening…

In addition, the relative difficulty in influencing online shopping behaviour combined with the high cost of servicing small accounts, could cause us to forget the potential advantages of cultivating and developing business with small customers, especially as a means of keeping our mults ‘under control’ and moving towards fair share dealings.

For instance, as we enter a post Article 50 Brexit environment, the UKs ‘re-appreciation’ of independent retail presents potential lessons in channel re-alignment for local and global consumption.

Four major elements are changing UK channel configuration, firstly causing a significant power-shift within convenience, as the two radically different cultures of Tesco and the Co-op continue to develop the top end of the arena and Sainsbury's increasing rely on convenience for growth…

Moreover, discount drug is in a state of flux, courtesy of Hutchison Whampoa, who incidentally also have ambitions in the distribution of mobile telephony, and as a result, are re-defining their business model in retail…

To this must be added the near certainty that the government will further de-regulate retail pharmacy (self-medication) as a way of easing pressure on the national purse, allowing grocery retail and discount drug to compete aggressively with traditional pharmacy, the only real constraint being the availability of qualified pharmacists…

Given the basics of supply and demand, it seems obvious that those with deeper pockets with which to fund a 'golden hello' are unlikely to suffer from such shortages…

And all this at a time when Walgreens Boots Alliance continue to roll out their global strategy, everywhere….

Whilst ‘risk-seekers’ are prepared to tolerate/encourage ‘extreme’ trade concentration, many suppliers may prefer to spread risk by building and maintaining effective distribution at the lower end of the trade.

As the future is probably more about store-level retail competition, then suppliers should prioritise ‘Intrapreneurial’ store managers within the multiples’ superstore base. However, whilst such managers are/can be highly qualified, and motivated by share options and career aspirations, nothing beats the dedication and focus of an entrepreneurial owner-manager that has managed to survive global recession and flat-line demand, attempting to optimise the performance of a small outlet, living with the constant distraction of overdraft constraints and other life-or-death issues associated with small business survival.

However, whilst small independents undoubtedly need professional help, they are often unwilling/unable to pay market rates. Even if suppliers are willing to supply a version of this help via consultative-selling at outlet level, it is unlikely that full compliance will yield sufficient return on investment in terms of sell-through.

The answer has to be to seek to work with ‘natural-groupings’ via wholesalers, symbol groups and dedicated third-party organisations designed to manage the entire marketing-sales-merchandising role at independent level.

Successful partnership with such intermediaries requires NAM/KAM-level analysis of the partners’ organisational needs, taking a realistic view of the degree of trade-off in having to share their resources with other suppliers, coupled with their need to achieve acceptable levels of return on investment at outlet level.

Providing tailor-made solutions, fully integrated with the intermediary’s own marketing aspirations, targeted at optimising performance at outlet level, can help ensure the achievement of ‘fair share’ vis a vis other suppliers in their portfolio.  

This treatment of the intermediary as a ‘national account’ and managing them appropriately can help in optimising resource allocation across the supplier’s customer portfolio.

Whilst dedicated intermediaries can be of considerable help in managing existing independent sectors cost-effectively, suppliers should also be sensitive to opportunities to cultivate new customers in emerging channels, i.e. there are 17,000 postmasters in the UK capable of granting potential access to 28 million consumers/shoppers each week….

Finally, for those small retailers outside the ‘loop’, who wish to remain independent because they ‘like it that way’, and are by definition highly individual, one can thankfully rely upon the rule of large numbers in finding groups with needs that are sufficiently similar and have sufficient critical mass to make tailor-making a viable option. The solution can then be to design template-variants aimed at meeting the needs of these ‘obvious’ segments. All that remains is to find appropriate media with which to communicate those solutions…

This concrete recognition and development of independent retail options will not only help to balance channel-mix but will also enable the supplier to manage the mults, and thus help to preserve brand integrity…

Alternatively, suppliers have the option of ignoring the little guys and spending the extra cash on fire-proof clothing for the 2017-18 kitchen…?

Tuesday, 14 March 2017

Waitrose doing something by halves could result in a thorough spring clean ....?

                                                                                                                                    pic: Brian Moore

Supermarkets Using “Shocking” Tactics To Obtain Money From Suppliers

The GCA needs a basis for taking action, your experience can help:

  • The key to better working relationships i.e. willing adherence to the spirit rather than letter of the law has to be in the hands of suppliers that are willing to come forward...
  • i.e. If many suppliers complain of the same type of treatment, then ‘an isolated incident’ can become an issue…

Friday, 10 March 2017

Lots of testers, helpers and mums-to-please, but it ain't over until the shopper engages......

                                                                                                                                pic: Brian Moore

Monday, 6 March 2017

When the client actually knows best, despite the research...

Today's emphasis on Big Data as a must-have in brand marketing reminds me of my early ventures in giving business advice to a Danish dairy company re the fact that their UK butter offering might prove confusing to UK shoppers because of its 'haphazard' changes in colour from yellow to white and back again during the year.

Despite my farming and Mom 'n Pop store upbringing in less politically-correct times, I persisted in recommending a purist marketing approach to this farmers' cooperative in that a consumer-test was essential in establishing whether white or yellow was the preferred colour. This insight would then determine whether the product should be bleached or coloured yellow to match consumer need...

The client politely pointed out that theirs was a natural product whose colour reflected the cow's seasonal diet, and told me they did not think much of my reservations re the brand name either...

I often wonder what ever became of Lurpak over the years...

Friday, 24 February 2017

Aldi's down-to-earth proof-of-origin

According to ESM: The European Supermarket Magazine, Aldi Süd are piloting Isotope Analysis to guarantee produce source by locality/region...more details here.

Apart from savvy consumers’ interest in establishing the source of their food, this Aldi initiative will also help in allaying doubts regarding discounters ability to provide like-for-like produce at prices lower than the mults.

In addition to adding cost to the sourcing process, this will heighten consumer curiosity as to the origin of other products available in discounters.

In the UK, this increase in their costs would result in a reduction in the pricing advantage enjoyed by the discounters, but if this proof-of-origin initiative gives Aldi a competitive advantage, others will follow…

Interesting how the cookie crumbles...