What lies ahead
“I’m your TV. I know what you watch. And I’m going to play ads that you’ll like.” This will happen more and more as intelligent televisions become more common in the home. That is, brands will play different ads for the neighbor in 4A and the neighbor in 4B. How is this possible? Because our television will be connected to a data line (if it isn’t already, it will be tomorrow, just as it happened with PCs). Televisions without internet connections will become obsolete, sad, lonely apparatus. A major opportunity for both big and small business because the audience can be much better segmented.
Wanamaker’s famous quote (“Half the money I spend on advertising is wasted, but I can never find out which half.”) will no longer apply. The same way that a computer’s browser learns your tastes (online tastes are easy to recognize, just follow the mouse clicks), your television will learn. This has been going on for a while, or do you think it’s a coincidence that when you carry out a search for something with your PC the results you are offered are different that the ones your sister gets? In fact, lately I ask in my conferences how many people have a Smart TV at home and the rate grows daily (impressive in Chile and Ecuador, where I was giving some sessions in recent weeks, the high penetration of this type of apparatus).
One hears of the convergence of media between different gadgets, the same content offered on different devices, and the interesting thing to me is the convergence of data between these devices. Because by accepting the terms and conditions of an app on our mobile (yes, these 27 pages that you, like me, read every time you install an app on your device, right?) we are allowing this data that we generate to be used for financial ends, with all devices.
The battle is even beginning to be won regarding how to attribute offline sales to online activity. Facebook, which is full-speed ahead in the use of consumer data, has begun to try systems that correlate the publicity you have received on your profile with what you have bought in the physical world, using your email address and your mobile number (they associate this information with that which a store might have; that is, they may ask for your email at the time of purchase).
So the same way we have a general doctor, soon we will have a general data provider and manager. Above all if there is business and something to be sold. Because something has to be sold, right? … And remember that soon, when you sit down to watch TV, the TV will be watching you. If it wants to know you well. You’ll never be just another customer. The TV will know what you, specifically you, are looking for. That’s what lies ahead.
Is everything that glitters gold?
“I’m an addict. I buy all my clothes online ever since this company’s app exists. The only way to control this impulse a bit is not to introduce a default credit card into the system, so that if I want to buy something I have to input it every time. But it’s great, they send it to my house or I go pick it up without waiting in line. I know my size and the brand, and buying is simple.”
These are the confessions made by an online shopper, with a satisfied smile, to the author. Her annual purchase spending had grown thanks to the introduction of a mobile-format online channel (let’s not confuse the web with the Internet; Internet is the highway, web is a lane on the highway, but there are more lanes, like apps for example).
Can we think, then, that in ecommerce everything that glitters is gold? Electronic commerce, according to the CMT (which for several years has done a regular report) measures the sector at some 12.700 million euros for 2013. It is based on the most recent data available for credit card transactions; out of scope of the study are other payment methods such as native online methods like PayPal, as well as traditional methods, like cash on delivery. Previous-year growth is double-digit from 2005 to today without exception, something noteworthy if we keep in mind the deep crisis that occurred.
In 2013 there were some 190 million online transactions, which gives us an average ticket of some 66 euros. Almost half of these sales were within Spain and the other half were purchases outside Spain (half!!), the majority of the European Union representing only a small percentage of the export sales from Spain. That is, they buy little of us from outside the country, and we buy a lot from them.
There has been a debate for some time about whether electronic commerce will substitute physical commerce. I am of the opinion that it will not. It will be a necessary complement and the two will live very well side by side.
It is interesting to see how even the stores that were purely online have begun to be represented in the physical world. For example, recently in Toronto I saw a bitcoin exchange office in the street, where they were offering dollars for units of the virtual currency. Another case, Recoon, which has big home appliance brands at competitive prices, just opened a showroom in the street to show off their products. And I say “show” because in this place you don’t buy anything; you can get familiar with the products and experience them but not purchase them. Thus we see how new transaction methods are arising. It is also important to mention how the trip is being made from offline to online, and vice-versa.
Therefore, strong growth, tipped scales, and new transaction methods set a stage on which maybe not all that glitters is gold…but, really, it sparkles quite a lot.
Also published in El Periodico de Aragón (see publication here)
Photo: Gold nugget de Shutterstock
Blog de Zenith Optimedia – Keys to “The art of failing in predictions”: should we fear failure?, November 2014
Keys to “The art of failing in predictions”: should we fear failure?
Woody Allen once said “I care about the future because it’s where I will spend the rest of my life.” At Zenith we feel the same way. That’s why there are more than 100 advertising investment predictions published in Spain, ZenithVigía, and Zenthinela, a reference in the sector, give proof of it.
Yesterday we celebrated the “first centenary” and we wanted to do it justice: speaking of the future, of getting it right and failing (with style) in predictions. An event that took place in the Espacio CÓMO in Madrid to hear those who know about the future and can help us arrive there optimistically.
Pablo Foncillas, of IESE, closed the event by speaking of “Failure forensics. Some keys to fail predictions with success”, and he aimed in one direction: “Failure is not the opposite of success, it’s just the exchanging coin to arrive at success. Don’t be afraid of failure.” What’s more, as an educator he affirmed that “we should have classes on managing failure.”
Professor Foncillas identified 4 types of managers: superblamers, infrablamers, selfblamers, and no-blamers. And he advises, not just to managers but to parents generally: “your children are going to work in professions that do not exist today. Don’t teach them established patterns.”
Read the full article HERE.
Forensics of failure
“It was June 2006. 8:30 in the morning. I got a call from my boss, the CEO of the company. He was telling me that our agents had decided to carry out a boycott and stop selling our products. The situation was very serious. We were losing millions every minute. I could hear it. Tick, tock, tick, tock. Time was against us. In just a week, we had gone from being a profitable company to being in the red. We had to solve the problem, but without a doubt, we had failed in our way of selling. Our innovation when we approached the market had provoked the opposite of our expected result.”
All of us have failed. All of us. The words I quote in the previous paragraph were spoken recently by an executive whose career had played out on the highway of professional success. And it was the same one who told me that he had failed in his innovation proposal. This made me think that innovating is, above all, knowing that you will fail, with the understanding that accepting this in a company is complicated.
Failure doesn’t rhyme with promotion, or salary (preceded by “increase in”), or with recognition, or with anything positive. Does anyone know of any official failure who has received prizes? Imagine it: I appreciate the award for “Failure of the year” with thanks to my boss who has always abandoned me in the face of adversity.
It is clear that we live in a society of success. Praised, extolled, and revered, success is the holy grail of management. However, assuming that we will fail (and yes, I have a wretched mind that makes me think so) the realistic question that we should begin any project with is: What will I do when it fails?
Because sooner or later, any initiative that implies creating something new and useful for the company will pass through stages of failure, partial or complete. It’s about managing the waves of failure that will try to hurl you against the rocks, provoking the uneasiness of the initiative.
So the best thing to do is study the forensics of failure. That is, to become professionals capable of dissecting a failure, studying the anatomy of a botched job, understanding the keys that, if they are repeated, will certainly lead us to the pit…if we don’t have them crystal clear.
All of us tend to remember our “success cases,” what we have achieved through good management, analyzing to exhaustion the variables that have made us succeed. Yet, however, we try to bury the failures. Why don’t we create a folder of failures? A powerful place, more useful than painful, that serves us to classify the studies of those failures that we have had and dissect them with absolute precision. This is especially useful for those who want to innovate.
Having forensic abilities with failure in the company is not trivial and undoubtedly deals with a job of the future. By understanding why you fail, accepting that humans are programmed to commit errors, we can avoid a new failure.
Article published originally at IESE Insight Review, September 2014
Click Here for Online Ad Trends
Twenty years after the first online banner, digital advertising is due to grow in even more radical directions.
Today’s Web ads are light years away from the first-ever online banner published 20 years ago in October 1994. Given some of the trends in digital advertising currently under way, in another 20 years’ time we may look back at the present age as another Stone Age.
Forbes – Expanding Into China? 6 Tips You Need To Know, June 2014
Expanding Into China? 6 Tips You Need To Know
Emerging markets such as China are understandably very attractive to many companies; but while they offer huge opportunities to expand, entering these regions poses its own set of challenges. It is crucial to understand that having a great product is far from enough on its own to ensure success.
I would like to share how a multinational beer company was able to successfully implement a ‘route-to market’ (RTM) project in China. The company had been operating in China for 10 years with presence in several areas of the country, but by introducing some changes to their commercial model, they saw a noticeable improvement in their short-term results. These are the lessons learnt:
1. Be specific
Have clear, specific outcomes in mind: a commercial diagnostic is developed through profound, field-based knowledge of the market which is used to later define the desired goals.
Also have a very clear idea of the economic model for the wholesale distributor structure that you want to implement. This will allow you to decide who to work with and why.
It is important to be very precise in the instructions given to your collaborators. Due to historical cultural factors, and given the lack of experience competing in open markets, employees in China tend to desire very clear guidelines on how to achieve their expected goals. Without this employees may feel lost, which can put both the commercial diagnostic and the expected result at risk.
2. Study the market
In China, structured reporting systems between wholesale distributors, local distributors, and producers often do not exist. In other words, information and knowledge does not reach the producer obscuring who does what, how much is sold, and at what price.
For this reason, the beer multinational created new reporting systems from scratch. Due to China’s huge market dimensions, the company defined a concrete geographic area in which to work: its teams visited eight cities over the course of some months and carried out many interviews with distributors and points of sale, with very specific questionnaires. They also used market research, in addition to information the firm already possessed.
Upon analyzing the information they discovered that, in some circumstances, they had up to six levels of distributors between production and point of sale, each one of whom took a share of the margin. Some of these intermediaries had enormous power simply for being “in the middle” but without adding value. The company also realized that their own sales force had developed very deep relationships with many of these distributors, which made changes even more difficult to implement.
3. Stay in the field
RTM projects are not solved from an office and in China, even less so. In fact, given the speed of change in the country, it is essential to stay in the field and understand the nuances of the day-to-day work of the local distributors.
4. Anticipate risks
If you have decided to design a new, simpler, and more direct way to get your products to the market, you should anticipate and evaluate economically all the possible risks. Remember that China’s dimensions are very, very big: the country’s provinces are as big as Europe and for example, there are more than 150 cities with a population of over one million people. Consequently, if you are planning to stop working with a particular distributor in a particular region, you must be very clear on how you will make up for this loss and at what pace. Understand that for some time, sales will suffer before making a comeback. Anticipating such changes is important so to measure their real impact later.
5. Not one but many Chinas
China’s regions are different in many aspects: socio-demographic, consumption and market differences… So while it is always prudent to develop a pilot roadmap, in the case of China it is even more important to be able to validate the main discoveries of this pilot and the subsequently-defined outcome. You should also be sensitive to the pace of implantation, because market maturity in each zone is also different.
6. Roadmap, target and pace of implantation
Your roadmap should take into account these local dimensions when planning your RTM project: establish a myriad of variables (geographic, socioeconomic such as urban/rural) and beware that you might need to work on different adaptations for each region and at different times.
In the case of this company, the firm did not apply the same RTM model at the same time in all markets. The company developed a guided transition plan, where different wholesale and retail distributors were adjusted step by step, adapting to local specificities.
Thanks to the changes introduced and the way they were brought into practice, the company saw important and very positive results: they grew in the areas where changes had been introduced whereas in areas which were still operating under the “old” system, they saw their market share diminish.
This post is a copy of the original published in Forbes on 16/6/2014.
Irrational Promotions versus Sales Promotions
Recently I saw a video with Professor Dan Ariely of Duke University, best-selling author of Predictably Irrational, that made me ask myself how promotions in companies come about. And by promotion I mean how someone moves up from a junior position to a more senior position. How satisfying it must be to receive this type of recognition, right?
Yet, it is not unusual to react incredulously to the promotion of a colleague who, from your perspective, is unqualified for his or her new job. And you ask yourself, how could someone with this inadequate level of competence move up in the company hierarchy when other much more worthy people should have been first in line for promotion? In the end, it is an irrational promotion.
Most of the time, promotions are associated with results and not necessarily with the means that are used to achieve them . That of course has to do with how we measure results. In other words, what is easier to measure, the thought process someone goes through to obtain a particular result (whether or not it is good or bad) or the result itself?
For example, imagine just for a moment that in 2010 your organization, an important real estate company, wants to expand its business by developing a mall in an Asian country. It is an important investment that requires a thoughtful and well-calculated decision. You may be able to create the perfect business plan by running all the numbers and dotting all the i’s and crossing all the t’s: the data and analysis, financial forecasting, defining teams, target audience, creating a plan to generate new client leads, identifying key partnership, etc.
You could decide to open the mall in a rich country like Japan with a high level of consumption. So you place your bets on Fukushima. Obviously the tragedy that unfolded in the area in 2011 would have produced undesirable business results. However, should the person who made that decision be penalized? Or should we acknowledge that the business plan was flawless and that in spite of the results, the process undertaken was adequate and therefore the employee is deserving of a promotion?
What kind of a manager do we want to be? The kind that punishes or rewards fellow professionals?
Let’s apply the same idea to promotions in a different realm: commercial. Think for a moment about a sales promotion, i.e., the actions that we follow to increase sales at a specific moment based on certain needs. How many times does great effort go unnoticed when the results have been unfortunate? And on the same token, how many times do someone’s results have nothing to do with their rather slack effort but instead with coincidence or luck?
Perhaps in the commercial realm, because of how simple it is to quantify them, the focus is exclusively on results. Meanwhile, the process that leads to the results tends to be overlooked. And I would prefer not to confuse irrational promotions with sales promotions. In companies, we need people who know how to think, because that is what will, in the long run and independently of chance and luck, produce results. And I mean the good kind.
This post is a copy of the original published in http://blog.iese.edu/marketing/
Article published originally in November 2013
Retail Destination 2020: One of every three stores will close
One in three stores will close. We may or may not agree. It’s true; the figure might be too high. And it’s for the U.K. market (will it happen here in our market?). In the end, it’s just a prediction I read a short time ago in a report on a healthy company*. It was mentioned after an in-depth analysis of the evolution of the retail market in the United Kingdom in recent years. Like any other prediction based on the past, it was an attempt to foresee the future.
Have you thought about it? Let’s say it’s too high and that only 15% of stores will close. What if one of them is yours? That’s right. The one where you shop. Or worse, the one where you sell your products. The one you use to distribute the goods that cost you so much to manufacture. Now we can start to see what has caused such a sharp drop in the number of points of sale. It’s basically the work of the usual suspects:
- E-commerce: sales made on line, regardless of where the purchase is made and where the acquired goods are collected
- Omni-channel retailing: sales in which at least two of all the different channels are used, including the store
I think we would all agree that there has been incredible growth in these two areas in recent years. And it’s not going to stop. That will involve a series of basic changes in the current retail panorama. Let’s take a quick look at a few ideas:
1. Types of stores: Stores will follow very specific patterns:
- There will be fewer stores, but they will be bigger and better located to attract higher numbers of the target audience, which will be able to live the brand experience as occurred years ago with Nike’s Niketowns.
- On the other hand, it will be more difficult to find stores in which you can do everything (see the product, try it, buy it, customer service, return the product, etc.).
2. Shopping districts: There will be winners and losers. There will be fewer shopping streets than before. That is, streets with few stores and light commercial traffic will suffer and tend to disappear. But there will also be streets with a greater concentration of retailers.
3. Brands: Brands seeking to grow will launch or continue their retail activities (such as Apple and its stores).
4. Skills: Companies that work in retail (in any form, including online sales) will have to assess the skills they want their employees to develop (or will need in the future to be able to compete).
5. Where to buy: Manufacturing brands (such as Unilever and Procter & Gamble) and distributing brands (such as Sephora) will have to decide if the digital environment generates traffic and sales:
At physical points of sale or, alternatively, to ecom stores.
All this leads to the question: How can we manage this radical shift in the retail world? What if we analyze it in terms of opportunities? Why not exploit the potential of this change, rather than viewing it as something negative? What if the idea is to be one step ahead? What if we rethink the recent past and plan for the future? What if we do better with less? What if our goal is not to have a store with more square feet, but one that harnesses the power of new technologies and is driven by a different mindset toward selling?
And what if stores were just one element and not the central element? And what if the goal in 2020 were not to open more stores? What if we close some stores and grow in e-commerce? What if we have vision? What if we dared to do it?
* The company is called the Javelin Group.
This post is a copy of the original published in http://blog.iese.edu/marketing/
Foto: ‘Closed’, by chrisinplymouth
Farewell Hard Brands, Hello Soft
If you look at the characteristics of brands admired by consumers and considered well-managed today, we see that they follow a pattern.
Brands from the 21st Century are soft, while the successful brands from the last century were hard. It is worth noting that in many cases the brands are not new, but their managers have known how to adapt to changing times.
The word “soft,” which is usually associated with negative values in the business world, and contrary to what one might expect, is in this case positive. And this is for a number of reasons (although you will probably identify more).
- Today’s soft brands dialogue and talk with consumers while brands in the past shouted at their consumers.
- Brands now listen and learn while previously brands were deaf and arrogant.
- In fact, soft brands start their sales process with the consumer at the center, talking to them as equals. No brand makes consumers feel small and insignificant like a hard brand does.
- The brands of our era design advertising campaigns that start with the consumer, while old brands ended their campaigns with the consumer.
- In the last century, brands told consumers what they were; in this century, the consumer decides what a brand is.
- The brands of this century let consumers find them, while those of the past century followed them mercilessly.
- Innovative brands understand that the consumer is the medium while hard brands believed that the media was the medium.
- Today, soft brands allow for conversations among consumers (many to many) and they, the brands, facilitate this from the center of these conversations. In contrast, yesterday’s brands spoke from above and did it as one-to-many.
- Hard brands generated publicity while soft brands generate content to help consumers tell their story. So the old brands were status brands that communicated what the customer was (they gave you a certain aura). Brands now create status stories, that is, they create situations that allow customers to live the brand and, above all, to talk about it.
- Brands of the 21st century understand that it is the consumer who is important and that he or she is hunting content in which the can play an instrumental role; meanwhile, brands of the last century hunted consumers with a central narrative (they were the important ones).
- The sales approach of 21st century brands is soft, while those of the last century went for the hard sell.
- Modern brands understand that the consumer is connected to others, while old brands saw the consumer as isolated. That’s why brands were previously a sign of individuality and now they are a sign of collaboration.
- For brands of the year 2000 and onward, the consumer is singular, an individual, with a name and surname, while old brands managed groups, segments and media channels.
- Soft brands don’t control the message, but hard brands do.
In sum, these are a number of ways – although not all – in which I find brands today to be soft (being a positive attribute).
What other interesting ways do you think brands of this century are soft and those of the last century hard? Can you share them?
This post is a copy of the original published in http://blog.iese.edu/marketing/
Changes in Business Communication Paradigms
Two of the most important advertising festivals in the world have just ended: Cannes, which has a global reach and El Sol, which is held in Spain and includes participants from all over Latin America and where I was lucky enough to serve as a juror. It is interesting to review the proposals that were presented at both events, as communication with the goal of selling moves into new territory.
First, let’s go back a bit in time. Brands were created to generate differentiation and through this difference, create margin. Historically, to carry this out, brands created an imaginary context around themselves through different positioning techniques focused essentially on functionality or emotional values, which transcended pure product performance or service. Now let’s see what the trend is. If we look at the brands that earned awards, we see a new way of understanding business communication which is moving along two paths.
On one hand, we find brands are transcending their own environments by sparking social discourse. That is, brands are becoming defenders of certain social issues, far from their core area of activity.
A great example is Banco Popular de Puerto Rico and its idea around the most popular song on the Caribbean island (a must-see online case study). The bank knew how to understand a problem in the country related with how people work:
Another case is Dove, with its campaign focused on inner beauty (it sounds very Disney, but that’s the idea). Could anyone be against a concept like that? These are two good examples of how brands are entering the terrain of social discourse, while trying to position themselves as companies.
On the other hand, the communication campaigns developed by the brands nowadays – and this idea is already very extended – seek to start with the consumer. Before it used to be the opposite; campaigns were designed to end at the moment of reaching the final customer (a good example of this new way of acting is the Toshiba case and Intel Inside. Before it used to be the opposite, thus campaigns were designed to end at the moment of reaching the final customer). Embedded in this new framework is the idea that the internet will increasingly dominate the future panorama of marketing communication.
For the time being, investment in the reigning form of media – television – continues to be greater than online media. But we have to assume that the new normal will be that traditional media (TV, press, radio and outdoor advertising) will be increasingly at the service of digital media and not the reverse, which is what many people have believed up until now. Ah… and to finish up and related with this last idea, I warn web surfers, CEOs and marketing directors: it is not enough to have a Facebook page and a Twitter account to say that you are a 2.0 brand. You need to understand what you, as a brand, offer to people so that they are interested in becoming a part of your social network.
This post is a copy of the original published in http://blog.iese.edu/marketing/
Foto: Internet Minute Infographic, by Intel Free Press
The story economy
A few weeks ago, I was writing an article about how at one Starbucks they don’t sell coffee, but margin, thanks to experience marketing. This allowed them to create differentiation and effectively construct margin. Ok, so we can go a step further. The material possession of things is changing.
Do you know those websites for renting a car from a person rather than a rental agency? MovoMovo or RelayRides, among others. Check them out. On one of them, for example, you can rent a Jaguar convertible belonging to Alfred in Manchester for a reasonable hourly rate. The contract also includes insurance for the renter of the vehicle. The idea is no longer to own the car but to use it only sometimes and above all be able to rely on it.
Increasingly the idea of creating experiences is closely related to the idea of being able to tell stories. Think of a trip. The important thing isn’t to take it, but to live the experience and tell about it. I think that postcards were a precursor to social networks (like Twitter but with stamps). Or do you think that we asphalt animals enjoy going to the jungle to suffer?
If it were prohibited to tell many people, people would stop taking absurd trips to see the sunrise from the hills of the Sahara desert and tourism to nearby locales would increase.
So this experience marketing model is growing exponentially with the development of social networks, and shows no signs of stopping. Not long ago a friend took a road trip in the United States, and it was not necessary for me to ask him how it went and show me the photos. He posted live online during the trip with his updates in a “breaking news” style that his friends could comment on.
What brands will win in this environment? Those that understand two changes: the first, that the concept of possession may not mean exactly having the goods in your possession, but acquiring them as a service. As I mentioned at the beginning regarding the Jaguar, did you know that you can rent art by the month or high-end shoes and bags for a party? And that the music on your iPod is not yours, it’s just rented?
The second point: the idea is not that brands tell us their stories but that they contribute to their consumers’ storytelling thanks to brands.
An example: Speaking with another IESE professor, he told me that the youngsters nowadays are going out at night (as always) but coming home earlier (this seems like good news). However, they do return earlier to dedicate the last hours of the night to retelling the night’s story on social media.
Can you imagine the opportunities that this gives to your local fashion outlet? Or the drinks (alcoholic or otherwise) of these groups? Or for music groups? Or for your…?