Sharper Thinking

The customer is not always right

2012-03-08T03:04:00.001-08:00

Having invested too many evening of my life sitting in far flung rooms with disparate groups of strangers, probably makes me a far from objective judge on the value and role of qualitative focus; but I would like to argue that they are an increasingly misused and misunderstood beast.

Their fiercest critics have starved and abandoned them in pursuit of hard-metrics, branding them as soft, woolly and unrepresentative. Their advocates are over stuffing them with ambition and deploying ever more obscure techniques to get there – role playing, guided fantasies, product transformation, etc. A couple of things that are often forgotten are 1. Asking people to think about their choice unconsciously changes their answers towards, cautious, safe and familiar choices because they are easier to explain and 2. Most people are sceptical or cautious about new ideas the first time they see them.

Focus groups are an excellent tool if you understand what you’re asking, how to ask it and why you’re asking it. They will fail you and your budget if their used simply to avoid, failure or blame; to predict what might be, or because you have no faith in your own judgement.

Learning from the French

2012-02-13T00:43:00.000-08:00

When thinking about the critical success factors for NPD and innovation it is always instructive to learn from the success and failures of others. One of the most dramatic failures of recent times is that of French wine, whose share of the global wine market over the last 50 years has shrunk from 24% to 17%. Probably, there is no one single factor that drove this loss and competitors will claim a range of factors for their successes.

New World growers may cite a more relevant taste for their products; the marketers may cite superior branding, retailers could focus on value for money and packaging manufacturers may even point to the added convenience of screw tops. All are to a lesser or greater extent true, but I contend that they were shooting at an open goal; I believe the biggest factor was the complacency of the French producers. Growers failed to monitor the changing tastes of their consumers; marketers starved the category of investment and ignored the opportunities presented by branding, relying instead on government subsidised generic campaigns. The bedfellow of complacency was greed; vineyards were starved of investment and ended up too small and too traditional to compete against the New World.

How many brand leaders in the food and drink market have become complacent and greedy and what opportunities does this present for the hungry and agile?

“We don’t really trust you after all”

2012-02-07T07:26:00.000-08:00

Is it my imagination or are companies spending more and more time telling each other what they are going to do and less and less time actually doing it? Technology was supposed to be the great liberator, freeing up time, streamlining communication and delivering information so that actions would be better targeted, better structured and so more effective.

Unfortunately we are in danger of becoming prisoners of technology, the ability to have conference calls across continents means that we do it more and more often; the ability to provide detailed customer performance dashboards means that they have become an end in themselves rather than a means to an end.

The sad fact is that the deployment of technology has too often been designed to control rather than to empower and as a result, organisations are becoming entangled with the management of these control processes – the losers are action, innovation and competitive differentiation.

I'll have a Growler

2012-01-27T02:37:00.000-08:00

For some, owning a Growler is something that should be avoided at all costs (you’ll need to look it up); but for others it may be an innovative new way to add to beer’s inherent sociability. In beer-talk, a growler is simply a glass jug that carries a half-gallon of beer although some are now getting extravagant; holding upwards of two litres with clampdown ceramic tops and metal handle/grips (German-style); most however are shaped like moonshine jugs. Historically, in the UK they were often made of stone but tended to die out with the advent of cans and PET bottles.

Growlers might have some great advantages for both brands and for consumers. For the drinker it turns a solitary pint into a sharing occasion as well as cutting down on trips to the bar – for the brand, a growler can be printed so as to keep the brand prominently on the table in a way that branded glassware can’t and it goes a long way to reinforce the brand’s relevance for social occasions.

In the US, Miller Coors are exploiting this with their new brand Batch 19 so could it be that Carling could be the first to end up with a UK Growler?

The Batch 19 Growler

Does ‘local’ really = ‘better’?

2012-01-23T07:18:00.000-08:00

It is widely accepted that the only reason we buy foods manufactured by conglomerates rather than those crafted by local artisans is price. For the last ten years we have been told with increasing volume that local food is the best food. And so, from Cardiff to Carnarvon, Welsh produce is automatically perceived to be ‘better’, whilst at London’s Borough Market; traders vie with each other to provide ever more eloquent genealogies for their produce and in the process obtain eye-watering premiums.

It is assumed that local producers command a premium price for their authentic products because they are of superior quality or have distinctive characteristics or flavours. But isn’t this all too black and white? Too many home-produced pies contain more gristle than meat, whilst misshapen vegetables may be charming but they are also very wasteful.

We need more balance in the debate; premium quality produce is food that’s ethically produced, is of superior quality and is distinctive in a nice way – surely that logic holds true for the artisan as it does for the conglomerate – and both demand our consideration and our money?

Our complex relationship with alcohol

2012-01-16T02:36:00.000-08:00

A country’s relationship with alcohol is a slippery thing to grab hold of and understand. Liberal public attitudes can quickly morph into concern, then hysteria and in extreme cases, prohibition. Additional layers of complexity are added by changes in social expectations and values – whereas up until very recently, drinkers were happy to have a collective relationship with alcohol – all drinking the same brand of lager across the course of the week and indeed, the course of the evening – recently people are seeking to individualise this relationship as evidenced by the growth of cocktails and the resurgence of craft beers and ciders.

The implications are wide ranging; brand owners and manufacturers operate within an environment which is being shaped as much by changes within society's political and cultural dynamics as it is by the conventional forces of supply and demand. Therefore, the degree to which standard NPD processes are valid has to be open to debate with the alcoholic drinks market more prone to transformational change than any other - a scenario that increases both opportunities and threats.

Escaping the data swamp

2012-01-06T02:14:00.000-08:00

The demand for ever more comprehensive, contemporary and precise data to drive the commercial agenda is stifling innovation and is a major threat to an increasing number of companies. Meetings are taken up making sense of murky PowerPoint decks, arguing over the impact and significance of small shifts in behaviour and attitudes; decisions are delayed and delayed again pending receipt of more detailed analysis and data.

Endlessly studying where we are today will not unlock the opportunities of tomorrow. Data warehouses, eye-tracking, transaction data, real-time geo-social models, search and social network trend monitoring and interactive business dashboards are valuable tools when correctly used. But business leaders need to be able to escape this data swamp and use their data to catalyse new thinking, new ideas and new ways of working. Data is a means to an end and not an end in itself; as many have found to their cost; if you ask enough people to lead you into the future they’ll leave you lost in the past.

To tighten or discard your belt in 2012

2011-12-31T01:48:00.000-08:00

The overwhelming view of the economists polled this week by the BBC was that recession will be with us for the first two quarters of 2012 – happy new year. However, in 2010 the majority of (the same?) economists predicted that interests rates would quickly rise in Qtr 1. 2011 from their historically low level of 0.5%. Economics is an imprecise science and for example, will invariably reveal that the best time to buy anything is last year.

Nonetheless, uncertainty is a certainty and will dictate the mindsets of markets, consumers and companies. This need not be bad news for savvy manufacturers and brand owners. In a gloomy world, the need for value at one end and small indulgence at the other will create new markets; many established moribund companies will find the going too tough and leave space for more agile and innovative aspirants and those relying on the status-quo will be forced to change gear or stall.

New ways of thinking and acting will be critical and will make 2012 an exciting if challenging year.

We need variety in our beer

2011-12-18T01:38:00.000-08:00

An article in Friday’s Economist notes that Belgium has the world’s richest beer heritage and that it turns out 1,311 beers – more than any other country. However, there are only 100 commercial breweries which works out at 12 breweries per 1 million people a figure that compares with 5 breweries per million in the US. Intrigued as what the figure might be in the UK, a quick count of breweries listed in the BBPA Statistical Handbook indicates that there are currently 39 breweries that were founded prior to 1970 and some 700 established since then. This equates to 1 brewery per 80,000 people!

Recognising that many of these may be operated by hobby-brewers, the brewing infrastructure in this country is nonetheless prodigious. Whilst we perhaps lack Belgium’s Trappist traditions why are there so few of the super-indulgent beers (and their accompanying unique and often surreal glassware), that are enjoyed across Belgium? SIBA reckons that there are some 6,000+ brands of beer in the UK but few if any struggle to command a genuine price premium. Where are Britain’s wheat beers, red beers, golden ales, saison beers, brown beers, farmhouse ales, and bocks that look like, taste like and are served like they are truly worth £10 a glass?

Economist Brewed Force

Will there ever be a truly global beer brand?

2011-12-12T00:32:00.000-08:00

Travelling around Europe and searching for evidence or lack of it, of a truly dominant premium beer brand in the way that Johnnie Walker or Grey Goose are; prompts the question as to the optimum financial model for a draught beer. If history and market forces are anything to go by, the probable answer would seem to be dominance of a relatively tight geographical area - a large city or a homogeneous regional market - say Catalonia or Hamburg.

But is this just history and will beer follow spirits, food and clothing to witness the emergence of a ubiquitous, premium and truly global brand? It is notable that those beer brands with coverage beyond their homelands – Heineken, Stella Artois, etc. are failing to attract the price premium that Grey Goose achieves over local vodkas or that Adidas trainers attract in comparison to national shoe brands. In draught beer, the pricing ladder seems to be a local pouring beer at 100, the regional champion at 110 to 120 and the international brand at 115 to 125.

This modest premium means that the marketing costs needed to generate and hold retailer and consumer loyalty allied to the logistical costs of ensuring wide availability of a top quality draught beer, are surely too high.

Pile on top of this the fact that consumers seem increasingly willing to pay a premium for products with strong local credentials and relevance and it would suggest that if a truly global, truly premium draught beer does emerge; it will be against all the odds.

A consistency of cooperation

2011-12-05T00:21:00.000-08:00

Steigl beer in Salzburg is preeminent, it is sold by virtually every bar in the city, it’s beer hall near to Salzburg Castle is a masterpiece and traditional Salzburg events, such as the Maypole Festival, the Rupertikirtag fairground, the Salzburger Advent Singing festival, and the Salzburg Street Theatre are synonymous with Steigl. Ask any bar owner or beer drinker in Salzburg which beer is their first choice and the answer is Steigl. Manufacturer, retailer and drinker have a consistency of cooperation – keeping beer in Salzburg great.

The cask ale revival is Great Britain has driven similar attitudes and behaviour; brewers, real ale pubs and real ale drinkers are all committed to keeping their beers to the highest possible quality and this may be playing more than a small part in the success of the category. It may also help explain why in the absence of any ‘consistency of cooperation’, continental lagers have to rely so heavily on advertising.

The Steigl Brewery Salzburg

Too clever by half

2011-11-28T06:48:00.000-08:00

One of our clients in an exceptionally mature sector is responsible for marketing a product with household penetration at an unbelievable 96%. For many years they have being trying to find ways to add value to their offer and so move the buying spotlight away from price. A number of classic marketing techniques have been used in pursuit of this objective: segmentation, behavioural modelling, NPD against life stage, etc. etc.

Very recently, amazing traction seems to have been gained by positioning products against three simple taste profiles - comforting and familiar, distinctive and fresh and crisp. Sometimes the answer is simple rather than sophisticated and may lie right under our noses or perhaps even; on the tip of our tongues.

Peroni – Success via quality

2011-11-18T04:11:00.000-08:00

SAB Miller delivered organic volume growth of 17% in the Britain, fuelled by a strong performance by Peroni Nastro Azzurro and I believe that Peroni’ s stunning and now long-running success is based on an all-encompassing belief in quality over quantity.

I can identify a roll out programme that was built on four pillars. A few years back we were conducting glassware research for a competitor and all that the consumer wanted to talk about was the new stylish Peroni glass – a number of ladies were switching out of wine on the basis of the glass alone. SAB's distribution strategies were handled subtlety, slowly and with insight – no rush for 10,000 listings in Year 1. As a result bar owners were supportive of the brand and more importantly, its 25% price premium; a positioning endorsed in-outlet by a truly innovative, sophisticated and visible countermount. SAB chose to back a brand with the right provenance – Italy is famous for flair, branding and quality and Peroni found a natural home in our many thousand Italian restaurants. Finally the product delivered; invariably kept, served and presented just right.

As the brand reaches maturity and volumes and distribution grow, it will be fascinating to see whether it can maintain its premium delivery and premium price. Also, will San Miguel which seems set to follow the trail blazed by Peroni, find the same success?

Real local - It doesn't always do what is says on the tin

2011-11-13T01:18:00.000-08:00

Running an analysis of the top performing cask ales in this fast growing sector of the UK drinks market revealed some stunning successes - Ringwood Best, Jennings Cumberland and Wychwood Hobgoblin; all are produced by breweries in some of the loveliest spots in the UK - the Lakes, the New Forest and the Cotswolds.

Superb brews I'm sure and doubtlessly produced by experts with care and pride; but local? Not by my definition, as all are owned by Marston's the country's largest ale brewer with a prodigious distribution reach and muscle.

I think this matters as the ale drinkers I've spoken to in focus groups have often raved about these brands and love the fact they are small, local and assumed to be run as an independent family craft brewery - a beacon for the artisan vs. the multi-national. These drinkers believe that they have discovered a local gem and that their support for the brand is a small contribution to small businesses everywhere.

Brilliant marketing Marston's and I might well advise others to follow their example. However, I am still left with the feeling that this subtle subterfuge will have a negative long term impact on the micro-brewing revival, but maybe that's just misplaced romanticism!

Fewer and Better

2011-11-06T09:57:00.001-08:00

On only the third time in its history the consumer confidence index has reached -32, - on the two other occasions in 1990 and 2008, breaching this level heralded recessions.

If another recession is indeed on its way; pub, retail, bar and restaurant operators are much better positioned than in 2008; value offers, promotional loaders and everyday low pricing should encourage the customer to keep visiting.

But these value tactics can only be a short term fix; a renewed squeeze on disposable income will accelerate the demand for occasions that deliver more; with the writing on the wall for food and drink offers that deliver functionally but fail to add value emotionally. Brand owners and retailers have to offer products and services that are more fun, more sociable, more relaxing or more indulgent. I believe, those that truly meet this challenge will survive; whatever the economy may throw at us.

The Power of One

2011-10-29T02:43:00.000-07:00

The demise of multiple nightclub operator Luminar this week prompted thoughts about the validity of the ‘economies of scale’ argument for on-licensed retailing.

Customer satisfaction models are frequently based on the 3-ring model; the inner ring containing the hygiene factors without which you’re not in business; the middle ring those things which add value and the outer ring, features that ‘wow' and turn customers into brand ambassadors. In most sectors from car manufacturing to grocery retailing, economies of scale enable businesses to add features that delight and wow at a cost unobtainable to the single unit operator.

In on-licensed retailing, the most remarkable and popular operations are frequently one-offs or are part of a single-city chain. This may be because the relevant market for consumers is not the country at large but the town or circuit on which they happen to find themselves. The operator closest to this micro-market can adapt and flex his offer to beat local competitors across different times of the day and different days of the week; thereby exceeding the insular expectations of their customers.

If the optimum business model is indeed a single unit or single town operation, then retail marketing strategies need to be built locally and not be based on generic national campaigns that bear no relation to the supply and demand dynamics of local markets.

Collector's Pieces

2011-10-21T08:12:00.000-07:00

It is interesting that Belgium’s rich portfolio of speciality beers have never gained much of a foothold in the UK market. For surely their appeal to both trade and consumer would seem to be extremely strong? They have the potential to generate a superior gross margin for retailers, whilst they offer the growing number of beer-connoisseurs a depth of drinking experience that mainstream ales and lagers simply can’t approach.

Today’s news that SABMiller is launching a Belgian abbey beer, named St Stefanus may perhaps preface a more concerted effort to introduce the UK consumer to Belgium’s rich beer heritage. One of the most compelling features of Belgium Beer is that each brand has its own particular glass – designed to release the full depth and breadth of taste and aromas. In the UK branded glassware has become an everyday sight, but invariably with style taking precedent over function. So the introduction of beers from Belgium might be an great opportunity to take beer and its presentation one more step up the quality ladder.

Fancy a drink?

2011-10-16T02:50:00.000-07:00

Kate Fox argues that the effects of alcohol on behaviour are determined by cultural rules and norms, not by the chemical actions of ethanol. So it is not the drink that causes the British to start punching each other and the French to get amorous; but rather the different expectations about the effects of alcohol, and different social rules about drunken comportment.

If true this further clouds the debate about the positive and negative role of alcohol in British Society and what, when and where, actions needs to be taken to strengthen the positive elements of drink and eliminate the negative. But alcohol is a slippery character to pin down – there are of course too many alcohol dependent individuals but the point at which social drinking becomes antisocial drinking depends of physiology, occasion, social grouping and demographics and has proven virtually impossible to define. It is all too easy to forget that for millions of adults, alcohol is drunk in moderation, at lower levels than in the past and serves to make the world a little bit more convivial and life a little bit more enjoyable.

Kate Fox goes onto argue that our beliefs about the effects of alcohol act as self-fulfilling prophecies – if you firmly believe and expect that booze will make you aggressive, then it will do exactly that. In fact, you will be able to get roaring drunk on a non-alcoholic placebo. She goes on to say “But it is possible to change our drinking culture, but to achieve these changes, we need a complete and radical re-think of the aims and messages of all alcohol-education campaigns. So far, these efforts have perpetuated or even exacerbated the problem, because almost all of them simply reinforce our beliefs about the magical disinhibiting powers of alcohol.”

Is the alcohol message all wrong? Kate Fox

Thinking outside of the Beer-Box

2011-10-10T04:15:00.000-07:00

With some 6,000 cask ales in the UK market you’d think that drinkers would rarely need to look to other drinks categories when searching for a product that’s ideally suited to their mood, the day or to the occasion. However, these 6,000 beers fall into just two groups – heavier or lighter tasting, all at between 3% and 6% ABV, all intended to be best drunk as a pint. Characteristics which mean that cask beers are not significantly different to their siblings – stout and lager.

In the US, Sam Adams brew limited edition products at c$100 and in Denmark Carlsberg have their Vintage 3 at $348 a bottle. Elsewhere, both wine and spirit companies have long understood the halo effect that premium edition products can deliver – Stolichnaya Elit and Johnnie Walker Blue Label are two examples of brands which raise the stature of both their categories and their brands.

Are the UKs’ brewers really unable to produce a beer that the consumer thinks is worth £10; that is not served as a pint and is a better choice than wine and spirits? If not, then a declining beer market and a diminishing wholesale profit pool are probably some symptoms of their failure.

Samuel Adams Infinium

Social dining and social drinking live better together

2011-09-30T02:39:00.000-07:00

Many leading pub operators are investing heavily in the Eating Out market and who can blame them with current market and legislative trends as they are? A rudimentary model of this market suggests three primary sectors, with pubs ideally placed to grab a large share of the largest middle sector. The bottom sector is functional Eating Out – sandwiches, fast food, etc. which accounts for 40% of market volume and 19% of market value (£8.2bn); in the middle is Social Eating Out – Pizza, Pasta, Pubs, etc. representing 42% of volume and 46% of value (£19.8bn) whilst at the top end there’s Special Eating Out a sector dominated by full service restaurants and accounting for 16% of volume and 35% of value (£15.1bn).

But too often in the single minded pursuit of diners pub operators have ignored drinkers’ needs, driving them away and destroying the pub’s social energy in the process.

A pub which exceeds the expectations of both drinkers and diners is a fine place to eat or drink in. The competitive weapons of familiar food and a distinctive drink range, in comfortable environments with a relaxed, informal atmosphere are strong differentiators. First indications are that the new O’Neill’s Irish Pub and Kitchen has got the balance spot on.

O'Neill's Oxford

On trade beer – early signs of new category models

2011-09-23T04:19:00.000-07:00

It is possible to detect a new polarisation in retailers’ category strategies for beer? At one extreme the growth in the World Beer category and in particular, the emergence of category leaders such as Peroni, Cobra and San Miguel means that provenance based restaurants can happily stock just the one brand. At the other, a drive to differentiate the drinks offer is leading to the introduction of wider and deeper beer ranges.

Diners in pizza and pasta restaurants such as Ask have one gin brand, one vodka brand and one beer brand to choose from and there can be few complaints with the offer of Gordon’s, Smirnoff and Peroni. Drinkers enjoying a small or big night out can be confronted in some of the leading outlets by a selection of up to 20 draughts and 50 bottled beers – a choice to match the best cocktail bars.

This probably spells danger for mainstream beer brands with little other than scale to commend them.

At the ‘choice-is-better’ end: Draft House

Deal Hunting

2011-09-19T05:04:00.000-07:00

We saw research from Kantar this week that reveals 42% of grocery products were sold on promotion in the 52 weeks to the end of June 2011. In foodservice, figures from NPD Crest indicate that 17% of meals now include a voucher compared with 12% in 2008. Stats like this point to a fundamental shift in the psyche of shoppers; with budgeting an imperative for the many, added-value being sought in each and every purchase and ‘doing things together’ acting as both a financial and an emotional response.

During the recession, value engineering and innovation have to be the answers, but should such solutions become ingrained? Understanding the impact of economic factors on attitudes and the behaviour they spawn, is notoriously difficult but a great indicator is the Gfk NOP Confidence Index that’s produced monthly for the European Commission and which has data going back to 1996.

Gfk Nop Consumer Confidence Index

Segmentation

2011-09-16T10:52:00.000-07:00

There are a whole host of segmentation models - drinkers, pubs, occasions, moods, etc. The question is whether as a marketer you can do anything with them, for me behaviour is shaped by attitudes which in turn are shaped by values. That's why value based segmentation models seem to be the most successful; other systems may tell you WHAT is happening but not WHY which means there's all too little to act on.

Street Food

2011-09-16T07:08:00.000-07:00

Is street food the place the source for high street innovation? The 2011 Street Food Awards had some tremendous concepts.

British Street Food Awards 2011