Tuesday 16 February 2016

Winning In FMCG - How Brands Can Win in the Age of the Discounters

Guest blog by Richard Nall, The Brand Garden

Pop over to Germany and drop into a Real or V-Markt and you’ll glimpse a possible future: stores that feel more like B&Q with the typical superstore range we take for granted tacked on at the side.  On a more forensic examination, you might note a seemingly odd allocation of space for FMCG categories and brands (just how do Milka or Tempo deserve all that space?) with few promotions.  You realise that this might be more about survival than coherent FMCG retailing in the sense we have known it.  You might also note something about those brands that are flourishing...  

In short they must have done, and continue to do, the basics very well.  It’s the only explanation in a world of limited differentiation and marginal gains.  Their consumer segmentation and clarity on the leading category/brand insights will be sorted.  Brand and architecture models will be powerfully crystalised and executed ‘through-the-line’ with a long-term view of innovation requirements.  They will align this to a flexible approach to promotions and tactical SKUs within a pragmatically commercial framework.  In negotiations, they recognise the value they bring their customers’ as distinctive brands & category builders.  

This is the key.  
Through building distinctive, relevant brands, these brand owners help rescue these retailers.  They support the rationale for shoppers to return rather than head for Aldi and Lidl.  And herein lies the problem for many brands in this Brave New World.  If it is there in the first place, the clarity of proposition and discipline in consistent execution is quite often lost through fragmented commercial teams.  Weak P&L management means that margin/trade spend has been conceded over the years to the extent that many brands struggle to receive the investment they need.  Rather than being concentrated or, at the very least, aligned, awareness-generating monies are split between sales, category, shopper and consumer marketing teams, and used to meet their respective, turf-driven agendas.  

Yet, as always in the gloom, there are rays of light.  Challenger brands’ growth has been the success story of the last 15 years, bringing interest to homogenised categories, and offering a recipe for success for the future.  You do not need to be big today to succeed tomorrow, and being in a rush to grow might do you a dis-service as consumers take time to evolve their shopping habits.  The well-travelled phrase ‘more haste, less speed’ is very apt here.  

Be clear regarding the market in which you are competing.  Define it narrowly and you will miss growth opportunities; be too broad and it will be meaningless.  Be ruthlessly clear on your brand proposition, and leverage that through innovation and distinctive communication.  Make sure you really do understand the available consumer touch points, and be creative in your solutions.  You don’t need a big spend to have impact but you must maximise the value of each and every part of the marketing mix you can afford.  

Think Innocent and Tyrrell’s and start with packaging and SRP.  Learn from Williams Murray Hamm’s packvertising design approach.  Think ‘less is more’ and ‘concentrate for effect’.  Market size and creative power are two of the biggest drivers of exponential sales gain so use them to your advantage.  Make sure you have proper and mutual challenge and debate with your agencies.  You don’t need stand-up rows but you should encourage the creative tension of passionate conversation and short-term disagreement.  

If you’re still wedded solely to traditional communications techniques, be creative in your negotiations with the broadcasters and expand your horizon.  Take advantage of the opportunities that digital media represent, always remembering that the consumer journey is like a funnel so ‘mass awareness effect’ should remain your ultimate goal even if it might take time to get there…don’t waste your money on gimmicks, and make your digital choices wisely.  On the other hand, if you aren’t using some of your marketing spend to test the RoI of alternatives then you are missing a trick so strike a balance.  Be clear on the investment and communications decision-maker (one!).  

Next, remember that your customers need you brand owners now more than ever before, but only if your brands, large or small, are fit to fight on their behalf.  Fail this test and you will be deservedly culled.  The reality is that it does not matter how good you are today, it will not be good enough tomorrow.  A tricky race is only going to get trickier...

To see how we can help you irrigate your business, contact Richard Nall on +44 (0) 7796 930 228 © The Brand Garden 2015

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