Branding Strategy Insider

Own-Label, Anti - Marketing Fuels Aldi

The Germans are coming. That was the clear message from TNS, which revealed that German discount retailer Aldi had grown its sales in the UK by 20% in the past three months compared with the same period in 2007.

If ever there was a good time for Aldi to make a move on the British shopper, it is clearly now (and the American shopper for that matter). With supermarket prices rising faster than at any time in the past 10 years, and an inevitable recession taking hold, Aldi's low prices could enable it to grasp an opportunity to grow its UK market share from 2.9% to the 10% figure the company seeks.

Tesco is certainly taking the threat seriously. For the past 12 months, Britain's leading supermarket has used a secret, mocked-up Aldi store at its headquarters in Cheshunt to develop Aldi counter-strategies. Finance director Andrew Higginson recently acknowledged that hard discounters such as Aldi were enjoying their 'moment in the sun' and Tesco is reported to be on the verge of announcing major price cuts across many of its own-label lines in direct response to Aldi's growing popularity.

Aldi is now acknowledged as operating the leanest low-cost model in the world. The key to its success is low service and even lower choice. While the average big four supermarket will carry up to 40,000 SKUs in a typical store, Aldi keeps that figure at about 1000. This results in massive economies of scale, huge buying power and an enormous reduction in the operating costs of Aldi stores, which are smaller and require very few employees. Aldi also keeps its costs low by reducing profits - a typical store operates on gross margins of 15%, about half that of the big four British supermarkets.

The really interesting issue about Aldi, however, is its approach to brands.

Ad Industry Blind to DVR Threat

In the pivotal scene of the epic movie Spartacus, Kirk Douglas, playing the eponymous renegade hero who has led an uprising of his fellow slaves against their Roman masters, now faces defeat at the hands of the Roman army.

The Roman general announces that if Spartacus identifies himself, he will be crucified, but his fellow warriors will be spared. As Spartacus begins to step forward, a slave next to him announces 'I am Spartacus', then another and another, until the whole battlefield echoes with the cry. Spartacus surveys the tragic scene with a mixture of wonder and doom.

Everyone will be crucified.

I had my own Spartacus moment a few years ago, while addressing a big group of advertising executives. One claimed that consumers welcomed advertising and saw it as interesting and valuable. Surprised by this, I asked for a show of hands to see who else believed in this positive perception of advertising. Arms were slowly raised skyward until the whole lecture theatre was a forest of defiant raised fists.

Ad agencies have spent decades convincing themselves that the production of advertising is a positive, welcomed experience for customers. Until the advent of the Digital Video Recorder this was a harmless delusion. With the introduction of the DVR, however, this rose-tinted view could blind them to the apocalyptic changes looming.

The Strategy of Consulting

Not too long ago Management Consulting News asked my opinion on business strategy and the consulting industry. Maybe you will share my opinions. Maybe you won't.

So much has been written about business strategy that it’s hard to sort through—what is your definition of strategy?

There’s no end to the jargon-rich writing on business strategy, so I like to keep my definition simple. Your strategy describes what makes your business unique, and what is the best way to get that difference into the minds of your clients and prospects. 

How you would assess the state of strategy in the consulting industry?

Terrible. Many consultants’ strategy is simply to stay on at their clients, no matter what problem needs to be solved. It could be a corporate strategy project, organizational design or implementation work. Lots of consultants tell clients they can do any project that comes along. They are trying to be all things to all clients and that’s a flawed strategy.

What’s unfortunate is that so many great companies have followed the advice of consultants and now find themselves on the brink of disaster. And that’s because too many consultants will tell clients exactly what they want to hear, instead of being objective advisers who look you in the eye and give you the good news with the bad. 

So what are the keys to an effective strategy for a consultant?

China's Brands Imitate to Dominate

From the moment the fireworks exploded over Beijing at the Olympics' opening ceremony, you knew something fantastic was taking place.

But you'd have been forgiven for underestimating just how truly fantastic those fireworks were, because many of them did not actually occur. They were digitally enhanced video effects superimposed onto the Beijing night sky by a team of special-effects experts headed by Gao Xiaolong. 'Most of the audience thought the display was filmed live, so that was mission accomplished,' smiled a clearly delighted Mr Gao after the event.

Meanwhile, equally fantastical events were taking place inside the 'Bird's Nest' stadium, where little Lin Miaoke was belting out a rousing rendition of Ode to the Motherland. It emerged later that Miaoke had been lip-synching and the real singer was another, slightly less photogenic, seven-year-old called Yang Peivi. Chen Qigang, musical director of the opening ceremony, explained to the world's media that Lin Miaoke was chosen ahead of Yang Peivi because she was nicer looking.

In China, there is often a vague but accepted disparity between what is seen as genuine and what is real. Fake fireworks that look real can be better than actual gunpowder. It's acceptable to have a little girl singing with someone else's voice if it makes for better entertainment. Copies and fakery can be better than the real thing. That's important, given the influence China is about to have on branding over the next century.

BSI Holiday

We're actually taking a break! Branding Strategy Insider will be back in a week. A warm thanks for your loyal readership and participation in this conversation about brands and branding.

Best wishes,

Derrick Daye

Scent Marketing Success: Step 2 of 10

2) Define your brands “Whiff Factor”

In the context of multi-sensory marketing, audio and visual stimuli combined account for 87% of a brand’s communication with the consumer. The next best option is to exploit the olfactory properties of your product. Touch and taste, the remaining two senses, apply to an even lesser degree to most brands and products.

Think about what you already have included in your marketing plan and a scent marketing consultant will be able to explain (and execute) how you can use scent to enhance your:

•    Marketing collateral (business cards, stationary, brochures)
•    Promotional items
•    Promotional events & trade shows
•    Affinity cards/credit cards
•    Gift certificates/redemption programs
•    Print advertising/banners/signage
•    Point of Purchase displays/in-store displays/digital signage
•    Product manufacturing
•    Product packaging
•    Environments (retail space/lobbies/offices/waiting rooms)

If you have a product with a scent (think Starbucks) you may already cover some of those areas but in many cases there is much more left that you can do to maximize consumer impact through scent. If your product does not inherently have a scent a carefully designed signature scent may be a key differentiating opportunity in your category.

I'll explore how to create a signature scent in step 3 here on BSI.

Courtesy of Harald Vogt, Scent Marketing Institute

Sponsored By: Brand Aid

Consensus: Heart of Brand Positioning

Frequently, the brand design is not embraced by the organization because the leadership team was not actively involved in the process at every step along the way. Typically, outside experts will design the brand based upon separate interviews with key stakeholders. This input does not allow for disagreement, debate, discussion or consensus building among the stakeholders. For this reason, The Blake Project offers what have proven to be highly successful and intensive brand positioning workshops for organizations.

These are highly facilitated, very well prepared sessions in which all the key stakeholders (typically organization leaders and marketing executives) are “locked in a room” until they reach a consensus on all of the key elements of brand design: the target customer and the brand essence, promise and personality.

As part of the process and in tandem with brand research we ask key stakeholders (and ad agency personnel, front-line employees, salespeople, customer service reps and marketing researchers with first hand knowledge of you customer’s perceptions) in-depth questions about the brand and its market to serve as stimuli for the brand-positioning workshop. In addition to stimuli this questionnaire ensures that key personnel with a stake in your brand and those you wish to have input from (that may not be invited into the workshop) are involved in and rallied around the positioning process.

The power of consensus in brand positioning cannot be over-emphasized. Consensus serves as the 'glue' in the coming weeks, months and years after the exercise is conducted. Without it brand focus can be lost.

Sponsored By: Brand Aid

The Reality in Ranking the Top Global Brands

Twenty plus years ago a widening disparity began to appear between the tangible net assets of a company and the actual price that would be paid to buy that company. This created a maelstrom of merger, acquisition and defence as companies scrambled to value their most precious assets - their brands.

Interbrand emerged from this era as the industry leader in brand valuation and, since 1999, its joint publication with BusinessWeek of the top 100 global brands has solidified that position. Each Summer Interbrand tells us what the world's most valuable brands are and, unlike other marketing surveys, the managerial world listens.

How does it do it? To cut a long story very short, Interbrand uses three sources of data to value a brand. First, the expected earnings the brand will generate for the next six years. Second, the percentage of earnings that can be attributed to the brand, as opposed to other decision-making factors such as location. Third, the relative strength of the brand. The higher the brand strength, the less risky the six-year earnings predictions and the more likely they are to materialise.

Combining these figures produces remarkably precise calculations. Last year, for example, Interbrand informed us that Intel's brand was worth $30.9 bn, down 4% from 2006. As marketers, we are typically afraid of numbers, especially big ones that are derived using super-complex financial calculations.

The reality, however, is that despite the apparent precision and current dominance of Interbrand's top 100, I would argue that much of it is actually a load of old tosh.

Successful Brand Repositioning

You follow the same steps and address the same brand design components when repositioning a brand as you do when first designing the brand. But, brand repositioning is more difficult than initially positioning a brand because you must first help the customer “unlearn” the current brand positioning (easier said than done). 

Three actions can aid your success in this process: (1) carefully crafted communication, (2) new products, packaging, etc. that emphasize the new positioning and (3) associations with other brands (co-branding, co-marketing, ingredient branding, strategic alliances, etc.) that reinforce the new brand positioning.

You should not rely upon an advertising agency, a brand consulting company, or your marketing department to craft your corporate or organizational brand’s design. This exercise is so critical to your organization’s success that your organization’s leadership team and its marketing/brand management leaders should develop it, preferably with the help and facilitation of an outside brand-positioning expert.

We have more to share on Repositioning here and Brand Positioning here.

Sponsored By: Brand Aid

Brands Feel Web's Growing Influence

In the 90s we all got a bit carried away with the Internet. Marketers wondered when Internet marketing expenditure would exceed traditional forms of communication. One bestselling article in the Harvard Business Review concluded that the Internet would render brands obsolete.

Well beyond a decade later and some marketers have relatively mundane expectations of the Internet. Perhaps because everyone has created a high-information, brand-centric website and many companies now sell their products online. But there is a growing role for the Internet that has far more serious implications for brands. Implications that cannot be ignored even by the most web-phobic of marketers. Consider two highly successful, but hugely divergent, brands.

Moben Kitchens is one of the UK's biggest suppliers and fitters of kitchens.

It has an impressive website which showcases some of the company's attractive kitchen designs and lists more than 200 of its outlets.

Skinny Cow is a low-fat ice-cream bar. Originally launched in the US, the brand was introduced to the UK in January of 2004 by Richmond Foods. Skinny Cow's website,(UK version) shows off its three flavours and makes much of the fact that at less than 2% fat and 90 calories a bar, it is a genuine treat for those trying to lose weight.

Frankly, neither website is stunning. But what is interesting is what happens when you leave the controlled environment of the intended brand page and run a Google search on the two brands.