Multi-Channel Commerce & Retailing

It seems to be an established fact that consumers are becoming more cautious as the economic downturn continues. Interestingly, so called ‘safe harbours’ such as Brand Loyalty - which has always enabled companies in the developed countries to ‘lock in’ a particular segment - is also under pressure.  Particularly in these developed markets ‘brand fatigue’ is a growing problem, something not shared in parts of Asia.

Boston Consulting suggests in India 79% and China 71% of consumers said brand was enough reason to pay more on a purchase, compared with 27% in US and 17% in Europe. Any guess which market will grab a marketer’s attention?

http://www.bcg.com/impact_expertise/publications/files/BCG_Winning_Consumers_Through_Downturn_Apr_2009.pdf

This trend can see companies moving into higher margin sectors, or fighting to lock in core customers. For example, Home Depot is introducing a ‘Private Brand’ whilst Tesco is re-jigging its US launch of the Fresh and Easy brand by stocking less expensive ranges than it had otherwise planned. These different approaches can be deployed by a single vendor. Pizza Hut and KFC, both brands which have a strong loyalty and backed to do well in times when eating out at expensive restaurants is a key cut to family budgets have both sought to target their brands differently depending upon the territory they are in. Currently Pizza Hut promotes a ‘PANormous pizza’ for $10 in the US, whilst offering escargot as an appetizer in China as part of a more upscale menu. KFC has this vision also, positioning itself as a ‘premium fast food’ brand in India whilst fighting to retain market share, and lower priced competitors such as Subway, in more developed markets.

See Companies World-Wide Rethink Strategies - http://silent-capital.com/index.php?news&nid=5

Companies which fail to work out these intricacies can feel the drop in sales even though there brand recognition is high. Consider the drop in sales at Nokia versus an equivalent rise at LG for example. When this happens across ranges, or divisions, it is understandably difficult to define a unified approach. Proctor and Gamble (P&G) are seeing this across their multiplicity of brands as Chief Executive A.G. Lafley admits, “There is some trade down, there’s obvious pocketbook pressure. Frankly, more consumers will try private label brands and retailer brands than would try them in normal economic times.”

http://www.silobreaker.com/a-g-lafley-11_3678663

At times such as these, it is crucial to work out the core strategy to protect the business, a time when thorough and rigorous analysis and business intelligence is key. As P&G Chief Financial Officer Jon Moeller stated during the reporting season, “While painful, pricing to protect the structural economics of our business is the right thing to do.”

http://www.news-to-use.com/2009/05/p-g-and-colgate-palmolive-prices-up.html

As a postscript, and proof that luxury items cannot always guarantee such loyalty or discretionary spending, beauty products were severely hit with P&G reporting 9% drop in sales.

So, how to make ‘a little go a long way’? With pressures such as these, getting a bigger bang for your buck is essential.  Advertising if often the first casualty and yet at times when consumers are re-assessing budgets, this is exactly the time when influencing purchasing decisions can be key. The market for web ads, and particular the boom in Search advertising has been a well known phenomena for some time now. Just ask Google! However, the traditional display ads have been taking a hit of late with many marketers questioning their effectiveness. These are displayed alongside content of a similar nature in the hope potential Customers will see them and ‘click through’ and sales conversion will result. Total US online ad spending is still expected to grow by 4.5% this year whilst these display ads, the 2^nd largest format is predicted to decline by 4.6% to $4.7bn. (Search ads equal the largest format with 13.4% predicted growth – eMarketer)

http://www.emarketer.com/Article.aspx?R=1006813

With both Yahoo (Yahoo Finance and Mail) seeing revenue falling from display ads by 13% in the first quarter (after a 2% fall in the fourth quarter) Carrie Frolich (Managing Director of Digital Media, Mediaedge:cia) sums it up, “The argument to continue to pay premiums for these ads is not there.”

http://www.videoegg.com/press/videoegg_wallstreetjournal

This refers of course to the passive role standard display ads have, payment being made just by ‘being seen’. More recently, payment models are moving towards ‘cost of engagment’ paying only when a consumer reacts to an ad – a click through or hover – rather than merely on number of ‘ad impressions’ i.e. the number of times an ad is shown on a web page. This is forcing web publishers to increase the size and quality of display ads, as well as deploying more sophisticated measurements to monitor behaviour. This new trend however comes at a time of deployed Marketing plans meaning a new pricing model, however advantageous, cannot always be readily deployed.

www.wsj.com

Perhaps one of the answers will lie in increased spending on Mobile display or banner ads? Recently Marriott international, Honda Motor and 1-800-Flowers have boosted their spending on Mobile search ads. The ads can be targeted to specific consumer requests, and they are more easily measured and less intrusive, while supported by the growing adoption of high end phones like Apple’s iPhone and Google G1 with full Web browsers. Intriguingly, revenue from advertising associated with search results on mobile phones is expected to rise to $129m this year from $99m last year according to JP Morgan.

http://siliconinvestor.advfn.com/readmsg.aspx?msgid=25694407

As proof positive of this subtle change, Google has updated its search advertising system to allow advertiser who purchases regular search ads to automatically have those ads run on high end  mobile phones. “We’re seeing some nice, robust growth in mobile search,” reports Doug Garland, Google Vice President of Product Management for mobile and local ad products. An understatement perhaps, from a company eyeing a future business opportunity?

Typically ads were cheaper on a cost per phone call or Web enquiry basis than the equivalent search ads running on PCs for the same campaign. Importantly this is being helped by advertising paying only when a consumer clicks on an ad instead of mere visibility, proving the change in focus and importance of this growing medium.

http://www.moconews.net/entry/419-interest-in-mobile-advertising-shifting-from-display-to-search/

A lot to think about, but that is often the time – a time of disruptive change – when winners are born and others fall be the wayside.

www.insightcentre.com/resources/Thomond%20and%20%20Plamondon%20_2006_%20PICKING%20WINNERS%20v51.pdf

 It sounds as if Google is placing itself for this new area already. You be the judge.

Posted by Billy Byatt at 02:13 PM | Permalink | Comments (0) | TrackBacks (0)

Shorter life cycles, time to market, product proliferations are some of the terms one associates with any product development across industries. A lot has been said, written and discussed and yet it leaves a room for further discussions. The basic question one asks is WHY?

If we look at the way traditional product development was done, it was mostly one geography, one company and one/two units playing major role. However, with the advent of technology, globalization, expanding markets, this phenomenon evolved. It evolved into what is called today as collaborative product development , spanning across almost all industries, changing the definition from company to enterprise and adopting newer methodologies while keeping essence of the product development same i.e better quality, short development cycles and more market share.

Coming back to the answer of the question, why there is still room for further discussions?
The answer is simple : It’s innovation. The evolution of product life cycle has also changed the way organizations work today. Innovation has became the key differentiation and the one who is not vigilant and innovative, will be crushed by the competition.
Being innovative does not mean that one has to bring out innovative products every time. Innovation is not limited to the product but it is also about process, tools and methodologies which go into the development of product or enable product development.
A same product which takes 12- 15 months of development , if can be brought to market, say in 6-7 months what it would reflect? It would reflect that even with the same product and reducing development time one can still expect to gain higher market share. This reduction is only possible if one finds innovative ways of working.
Having said all this, the products of today are facing another challenge which requires strong innovation.  Yes, the impact on environment. "The impact of and on Green".

Someone in the offce was discussing that green regulations are more inclined towards discrete manufacturers and are not well suited for retail manufacturers especially in the textile industry. The opinion was from the various regislations like WEEE, RoHS being very prevalent and impacting strongly discrete manufacturers. All was well till the time EU brought out REACH. With REACH in place now, even textile industries have come under radar as well. Retailers, in europe, have been advised to have certifications for their products to ensure that they do not contain restricted substances as advised by REACH.
Had a chance to look at some of the certifications for textile industry. The one which is very prevalent is Oeko-Tex® certificateand the other one which is picking the pace is from Bureau Veritas, known as "C-Mark" certification.
Some of the European private labels have recently started incorporating certification marks on their clothes. US manufacturers still have to catch up or at least start thinking on those lines. I know REACH is still not  very prevalent in US at the moment but sooner or later it will be adopted.

Well, the only reason for doing all this is because it is need of today, for better tomorrow. Not only the final product needs to be environment friendly but also the whole process needs to green enabled. Which means the paradigm shift from “cradle to grave” to  “cradle – Re(recycle, remanufacture, redesign, rethink)- grave”.
“Re” is what is forcing us to think differently , think innovative and think Green.

Posted by Jagmeet Singh at 02:35 PM | Permalink | Comments (3) | TrackBacks (0)

I am just flying back from attending the CGT (Consumer Goods Technology) Sales & Marketing Conference 2009. Overall the conference was surprisingly well attended and even more surprisingly upbeat. Infact I haven’t seen sales & marketing executives more upbeat about innovation and investments even in the boom times. Granted there was tacit acknowledgement about the economy but there was a certainty of the fact that recovery had begun. Coming from sales & marketing folks in the consumer products industry who handle some of the largest retail accounts all over the world, this is a great sign.

The CEO & Founder of Terracycle, Tom Szaky kicked things off with a stupendous story in his keynote. He seemed all of 25 with spiked hair, shirt and casual pants – a drastic departure from celebrated keynote speakers in most conferences. The most important thing was he had attitude and spunk with achievements to back them up. His company has created a revolution in the concept of “up-cycling” products. If you haven’t checked them out, I highly recommend it. Of all the keynotes I have heard in hundreds of conferences, this one really stood out among the very best. Michael Ferrara (ex-VP of Coty Brands – the beauty company) followed it up with some hard data-driven decisions that have resulted in great progress at Coty.

One of the highlights of the conference was Lora Cecere of AMR Research and her panel on Sales & Marketing investments. In her expert style, Lora asked rapidfire questions to her panel and got the essence and mood of the industry out in a few minutes very effectively. Its clear that investments are tight, challenges exist but the market leaders are pushing forward with innovative ideas. Other sessions worth highlighting were the highly energetic performance by Craig Hodnett the VP of Category Management of Dr Pepper and Anthony van der Hoek Coca Cola’s Director of Strategy & Business solutions for the Wal-Mart account talking candidly on how his team works with Wal-Mart especially on the all-critical but often under-rated area of Master Data Management. I saw people taking furious notes in these sessions.

 

Ofcourse Infosys had our very own session on “Instore Marketing in the last 100 feet” presented by yours truly. It was fun talking about actual projects and their outcomes in the areas of digital marketing specifically in the last 100 feet. I had to stay back a full hour to handle followup requests. We are set to do atleast 5 followup sessions with select clients and prospects. We truly think this is where the future and the present should be.

All-in-all a great conference for the industry and a great conference for Infosys. We obviously caught up with some existing customers & friends, and made some new ones. We should be back for the next chapter of CGT soon.

Posted by Sandeep Dadlani at 12:37 PM | Permalink | Comments (0) | TrackBacks (0)

In the early days of eCommerce development, the world was a simpler place.  You created the user experience, configure the payment servers, set up the fulfillment channels, and turned it on.  The browsers were fairly simple HTML rendering engines that took what you sent it and drew them on the screen.   You could control the user experience by tuning your servers to deliver the resulting HTML quickly.

Fast forward to today.  It is not unusual for a modern  eCommerce site to use twenty-five or more third party sites.  These sites help to satisfy both the non-functional and functional requirements.  For example, an eCommerce site needs to know how many shopping carts are being abandoned, how many orders are being placed, how many pages are being accessed, how often certain pages are being viewed, etc.  Enter Web Analytics vendors.  You place a JavaScript snippet in your important pages and there you have it.  Do you need to understand the detailed  performance of your site’s pages?  Just  add more scripts  that send data to a Web Performance Company.  Do you want to provide consistent performance in spite of the geographical location of your customers; you need a content delivery network.  Do you want to sell travel, conduct auctions, sell credit cards and gift cards?  There are services for all of these. 

Third parties also provide better functionality like product reviews, detailed product specifications, customer feedback about your site, special catalog items, and store locators.  All of these services enrich the user experience and increase the effectiveness of your site.  This does not come for free however.  In addition to the cost of the service, you have to plan for other chores.    Many of the sites require a regular feed from your systems.  These feeds must be written to a specific specification and maintained.  You also have to take customer service calls about these features because the customer thinks that they are on your site.  Their reliability and customer-orientation can reflect on your brand, either for good or bad.  Finally, their response time will form part of your overall page-load time, which may cause sales to be lost if it is slow.

In short, using these third parties may increase the value of your Web properties, but they may also detract from them if not managed properly.

Posted by Stephen Alan Potts at 10:31 PM | Permalink | Comments (0) | TrackBacks (0)