Business Strategy

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Retail Wars: Part Deux – David’s move

Like we discussed in our previous post, small retail companies currently have an advantage in terms of distribution and sales. Their swiftness has trumped the slow-moving giants. These companies are aggressively eating into the share of Big Retailer Cos. The Big Cos are back devising a strategy to regain the consumers they have cultivated over the years. Soon, the wave might turn against the smaller players as they lose their grip from the consumers’ minds and wallets.

What can the Small Retail Players do in order to maintain their position and permanently arrest the shift away from Big brands? The critical strategic play here is ‘Memory Embedding’. Here are some Strategic Instigations by Wolfzhowl about how smaller brands can create bigger memory structures in the consumers’ minds. Check out Wolfzhowl’s deck on Brands and Memory Structures

1) Be thankful – Gratitude goes a long way. Thank your Customers for trusting your brand in these tough times. Incentivise them, giving a smile or a sweet memory works too.

2) Don’t forget to leave a mark – Big players have the digital prowess and footprint that a small player might not have. Make sure the brand leaves behind a token visual mnemonic at every possible interaction with the customer.

3) Reaffirm Product Quality – Smaller brands often face the consumer perception issue cheaper price = low quality’. Therefore, they need to explicitly highlight high-quality control measures and establish that their product is at par, if not better, than the products offered by bigger brands.

4) Seize the opportunity for Product Innovation – With steady revenue coming in and big cos still left handicapped due to the lockdown, smaller brands have the opportunity to turn their focus on creating, hyper-local, consumer-centric, tactical product innovations. With some extra effort, this move can set your brand apart from other products and hence accelerate adaptability and memorability.

5) Increase basket-size with product bundling – Make hay while the sun shines. The more space the brand occupies in the consumer’s mind, the longer it remains in the consumer’s memory structure. Once your brand has entered the Customer’s wallet, make the most of it. If the brand has any other complementing products, bundle them with your fastest selling products via offers.

6) Create product consumer rituals – Effective long-term memory for brands can be created by associating the product with an action or a ritual. Invent a product consumption ritual via packaging, advertising or by gamification of product and its consumption. Eg. KitKat, Kinder Joy, Oreo etc. Create a unique, tangible mini-experience around your brand & product.

7) Unite to Fight – Evaluate Cross-category tie-ups with small manufacturers of other products to get into households with combined weight to tackle the post Covid19 onslaught of the big guns.

8) Underdog Advertising – Admitting that you are smaller player can feel like shooting yourself in the foot. But it’s a counterintuitive way to reach the consumer’s heart and be remembered for good. Smaller Cos are faster, cheaper and equally effective in the times of need. And just because they don’t have the strength of the big players, they work doubly hard to provide the best they can. This is an endearing way to embed your brand in your consumer’s mind and win some well-deserved brownie points.
Brilliant case of effective Underdog Advertising – Avis

9) Discount the Product, Not the Brand. Build one afresh – Brands that have been built in adversity have stood the test of time. Now is the best time for a smaller brand to lay the foundations and build a strong purpose from the ground up. A classic example of this is Dove.

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Two titans join hands for disruption. What does this mean for the rest?

Facebook invests in Jio

Facebook Inc announced its investment in Jio Platforms, making it the largest FDI for minority investment in India. At a time when the global economy is grappling with the impact of Covid-19, this is good news for India.

 

Let’s look at how this investment impacts various industries

  1. Indian Economy: A welcome sign, this investment brings back the investor confidence which was shaken up by the collapse & bailout of a few banks in 2019. This investment shines the spotlight on India once again, making it a favourite haven for a lot of technology, manufacturing, and automobile giants. It gives a strong signal to the world that India is back in business despite being in a 40 day lock-down. Here’s what it could mean to us:
    1. Rising consumer confidence could help in recovering the GDP growth rate from the abysmal 0.5-1% as predicted by the IMF.
    2. It could pave way for more FDI and FIIs, which, if done in manufacturing, can lead to the creation of jobs and higher tax collection by the government
    3. It gives hope to the retail investors to keep investing in the stock market, mutual funds and SIPsince it’s a sure shot sign of revival
  2. Retailers & Merchants: Mr. Mukesh Ambani specifically spoke about how this deal will disrupt the retail economy. This partnership will push Jio Mart, Jio’s retail management service for Kirana stores and enable financial transactions through WhatsApp money.
    1. An opportunity for social commerce will allow merchants to increase their network of sales beyond walk-in customers, making it easier for them to track orders and receive payment
    2. Better analytics to the retailer– Customer profiling through merchant services app, enabled with Facebook/Instagram/WhatsApp will mean that the merchant is able to track and predict what the customers will need and when will they need it. This will take care of their inventory management as well as credit limits with distributors
    3. Amazon and Flipkart will now find it difficult to onboard smaller retailers & merchants. Using Meesho, which is an innovative three-way marketplace enabling resellers, SMBs, and micro-entrepreneurs across India to connect with potential buyers using social media along with Reliance’s logistics & supply chain, Amazon and Flipkart will have to put in more resources to onboard smaller merchants and get them the desired visibility
  3. Hyperlocal Delivery: Apart from tapping into the merchants and grocery store owners, this collaboration allows Reliance an entry into the homes of the consumers directly. They already have Reliance Smart and Reliance Fresh. Social commerce of Facebook and WhatsApp pay can enable them to take orders and deliver groceries home, without spending too much on building a new logistics chain. This means that Dunzo and Amazon Now are at peril of losing their business to Reliance
  4. eCommerce Market across categories: A strong on-ground network along with superior digital connectivity disrupts the eCommerce market. Through Reliance Trends, Vimal, Reliance Digital, Reliance Jewels, Reliance footprint, Ajio, Project Eve, John Players to premium brands like Diesel, Dune, Armani Xchange etc, Reliance can assure quicker deliveries and faster payments across the board.
  5. Agriculture: WhatsApp is already the most popular tool used by farmers across the country to stay in touch, exchange information, share tips, etc. WhatsApp groups like “Hoy Amhi Shetkari” (Yes, I am a Farmer) that started out in one small part of Maharashtra has over 100 different groups that give out weather updates, information about insect attacks and the rates for fruits, vegetables and other produce at mandis.
    1. Enabling an ecosystem through digital payments: WhatsApp payments, Social Commerce, and Facebook groups along with superior connectivity, logistics of Reliance through its retail chains like Reliance Smart and Reliance Fresh could look at disrupting the supply chain for agriculture.
    2. Farm to home models now become even more feasible for farmers with the technology and connectivity offered by the giants.
  6. Fintech & NBFCs: It is no secret that Facebook has been trying to enter the Payments market in India for a very long time. This investment makes it easier for Facebook to launch WhatsApp payments and get more people hooked on to it. What does Reliance have to gain from this deal? Well, they can use Facebook’s data to add a layer of social credibility before deciding the credit-worthiness of the end consumer for their businesses like Reliance Money which offers loans to SMEs, Microfinance, Personal loans, etc.
  7. B2B: Covid-19 forced a large number of companies into experimenting with work-from-home models and this experiment has been quite successful. A lot of companies are considering implementing the WFH model even post lock-down. This means that there will be a higher demand for productivity apps and very good internet connections. While Jio takes care of the internet connection, by launching Work from Home plans, dongles, and Fibre to Home connections, Facebook offers productivity apps like Facebook for Work. One can safely say that if the trend of working from home catches up and becomes a reality for most of India, then this investment by Facebook Inc will pay off.

 

Beyond categories, what is the larger impact of this investment?

Reliance actively growing their IoT and Surveillance business. The added layer of Facebook Inc.’s social platforms that are widely used in India (Facebook, Instagram, WhatsApp) means that the companies together sit on a wealth of data. They not only know what the consumer is buying and where he/she is buying it from, but they now will also know what his/her social preferences are and how they interact with these categories and products in everyday life.

  • This will help them analyze and predict demand for categories much before the consumers can actually use them.
  • Selling the data to marketers to create a revenue stream for both the companies would become far easier
  • Inventory management and logistics for all the on-ground businesses become far easier
  • Product innovation through identifying latent consumer needs will help Reliance always stay ahead of the curve

 

Of course, there are a few possible conflicts that can arise from this investment and that could create a slight dissonance between the companies but those can be resolved to create a wider impact on the end consumer such as:

  • Payments – Jio has Jio Payments while Facebook has been trying to establish WhatsApp Payments in India for a very long time. Getting the two platforms together can help increase penetration into the market, cashing in on the ease of usage of a platform that all of us are already acquainted with – WhatsApp while Jio enjoys the trust and credibility that it earned with providing seamless internet at dirt cheap rates not only during the time of launch but also during the pandemic when many of us were forced to work from home.
  • Edutech– Facebook has invested in Unacademy while Reliance owns Embibe. Together, the brands can be a force to reckon with. While Unacademy focuses on the wealth of knowledge (with the number of courses it offers), Embibe takes pride in being an AI-driven platform for learning. Understanding consumer needs and offering far more number of courses makes this a go-to-choice for consumers.

 

What does this mean to the consumers?

  • Consumers can look at getting highly customized service  across brands and product offerings when these 2 giants come together
  • With both of them working towards net neutrality, consumers get a wider range of internet-based products & services to choose from at far lesser costs as opposed to any other telecom brand in the country
  • Consumers’ needs are met even before they arise, creating consumption frenzy and increased conspicuous consumption

 

How can brands compete with Facebook & Jio?

  • Brands need to build an emotional connection with their target audience. Emotional connect will always drive loyalty.
  • Invest in identifying and living your brand purpose. As more and more Gen Z get into the market as consumers and buyers, they seek out brands that are not vulturistic. They want to associate themselves with brands that serve a larger purpose. Brands can cash in on this need of Millennials and Gen Z.
  • Be agile and invest in innovation & design thinking. Brands need to evolve over a period of time and need to meet consumer expectations. If done well, brands can weather any storm and sustain it.
  • Identify the threats beyond just competitors and find out how you can solve these. If you can solve real-life needs of your consumers, they will never leave you.
by Shweta Sinha Shweta Sinha No Comments

Omni-channel Strategy – What is it and why do you need it?

Don’t want an Omni-Channel strategy for your Brand Orchestration?

Sure, keep throwing good money after bad!

You cannot ignore omni-channel strategy

For the longest time, marketing and advertising were completely compatible bedfellows with the former guiding the latter, and the latter (format – Print, TVC) then instructing the selection of media. However, two concomitant events brought about a shift in this tried and tested trope; the digital eagle landed and changed the game, and brands started to give complete focus to customer-centricity.

Digital completely changed the way marketers looked at advertising. Now specific audience segments could be micro-targeted and impressions, exposure, reach, the frequency could tangibly be measured. Naturally, this brought about a complete revision in the metrics of performance measurement. What it also unfortunately did was that it made Digital seem like a separate strategic initiative rather than yet another platform to be integrated and married into the overarching business objectives for the brand.
Several marketers and brand custodians started viewing Digital as the marketing silver bullet. Slowly, due to the speed, agility, and perceived ‘cost-efficiency’ of the medium, brands started hyper-focusing on digital and experimenting with content that they thought worked best for the medium – irrespective of whether it fits with the larger brand narrative. Unlike earlier (where the same TVC got adapted to print, outdoor and sometimes even radio), now brand tonality and narratives started getting inconsistent across platforms and the personality of a lot of brands started to seem schizophrenic.

In response to this, traditional agencies tried to push back by pushing for more TVCs and traditional content, while simultaneously scrambling to speedily develop in-house digital capabilities as well. This was that dangerous tipping point when the entire focus now had started shifting towards media/platform-led strategy rather than brand/business/consumer-led approach. This began to get described as multi-channel marketing strategy, where multiple platforms and channels were deployed simultaneously as touch-points for the brand, but it was ultimately left to the consumer to decide how they’d prefer to engage with one or more of these channels.

It was only a matter of time when marketers realized that while this strategy was impactful at the moment, it wasn’t effective in the long run – it helped grab eyeballs but rarely managed to take a share of mind or wallet. It was then the customer was once again brought back into the equation and placed the square in the middle, and the brand’s overall strategy once again led the way for optimum selection of media mix and cohesive orchestration of the brand across channels! This was the birth of the Omni-channel approach!

In today’s world where the rapid rate of change in consumer behaviour and technology makes it extremely challenging to keep up, the omni-channel approach is amongst the most effective and future-forward approached to planning a brand’s orchestration. It has consumer-centricity and behaviour change at its core and doesn’t put the channel or medium before the consumer or brand. Therefore, not only does it aim for impact but also effectiveness, measured through the change of heart (behaviour change) as well as a share of the wallet!

The omni-channel approach focusses on creating a seamless ecosystem for the consumer to experience the brand, instead of allowing the consumer to randomly pick and choose the channel through which he/she could engage with the brand. It therefore not only takes into consideration advertising and communication but also last-mile conversion, ergo – all touch-points of actual brand-consumer engagement. In that, the omnichannel orchestration of a brand not only ensures consistency in tonality, personality, messaging and narrative across platforms, but ensures that the consumer’s engagement and purchase experience across channels also remains consistent and cohesive – be it online (mobile or laptop, website or app, Facebook or Instagram), or offline (at the flagship store, or an event, or at a franchisee).

The Omni-channel approach accurately takes into consideration the non-linear path-to-purchase of today’s consumer. It foresees that a customer could move from the actual store to the online store on his/her laptop, to an aggregator app on his mobile device for the same product, and thus the messaging and brand experience that he/she is exposed to across channels and media needs to be consistent and cohesive – allowing for his/her seamless transition across this ecosystem.
While this makes the Omni-channel approach seems like the new and upgraded silver bullet, it’s not exactly a walk in the park to adopt. Shifting to an omnichannel approach and effectively deploying it requires a complete shift in mindset and approach across all levels of the organization and also mandates a collaborative buy-in and cross-functional alignment across all the functional silos. It now has people chasing the same common objective and outcome rather than independent, inward-looking goals. This challenging of status quo requires time, effort, conviction, and vision from the senior management and department heads, who more often than not, are the most resistant to changing old ways of working.

Additionally, the organization must have the means to mine data across channels and then have a strong analytical team that knows how to make sense of the data and how to integrate it. Adopting and integrating a technology-led platform (often expensive) is usually a good start point. It will also require marketing teams and creative agencies to learn to start laying as much emphasis on context as it does on content. Else, the results will be far from optimal. Since the strategy places the consumer at its center, it also requires the brand to know its consumer, his mind-set, his behaviour, his ticks, far deeper and better than ever before, and integrate a robust CRM tool to ensure maximum effectiveness.
All of this often makes a marketer ask, “Is it even worth the hassle?” The simple reply to that is, “If you have the intent, the means, and the follow-through, the answer is an obvious resounding yes!

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UAE Consumer confidence holds steady from the last quarter

Nielsen reports on consumer confidence in the United Arab Emirates shows a marginal decrease from 111 index points in the Q3’18 to 110 index points in the Q4’19 showing stagnancy in consumer sentiment. It also shows the impact of VAT, introduced in 2018 at 5 percent, is being absorbed by UAE residents. In another research by yallacompare, the proportion saying they are struggling with VAT dropped to 14.8 percent in Q1’2019, from 16.1 percent in Q4 2018 and 26.9 percent in Q3 2018. This shows that consumers are now accustomed to VAT and have factored it into their household budgets. As a result, confidence levels are now back to where they were at the start of 2018. 

UAE Consumer Confidence Index

 

What does this mean to marketers?

There’s a strong correlation between consumer confidence and consumer spending. While there is no significant dip in the index, it’s better to note that there’s no spike too. Hence, marketers are best prepared to make the next couple of months work in their favour, whichever way it swings next. The good news is that low consumer confidence doesn’t necessarily mean dip in consumer spends across categories. While there is a larger sentiment that governs consumer confidence and willingness to spend, there is also a sentiment that drives consumer behaviour in specific categories. 

For instance, when the overall sentiment is negative, consumers’ coping strategy is about ‘breaking free’ and ‘making up’ for the sense of compromise and compensation, which means categories or brands that are associated with quick, low cost indulgence such as QSR, chocolates, café, domestic tourism, fashion, etc. begin to spike faster than usual. Similarly, for a home owner, rising property prices may lead to a more positive sentiment resulting into spending positively. However, the opposite is true for someone saving for their first home – if house prices are rising it directly diminishes their disposable income because they would need to save more. While luxury and big-ticket items would likely experience a decline in such an environment, retailers who operate as ‘value leaders’ or FMCG brands with value driven SKU (pump packs or family packs) see an uplift in sales as consumers prefer to trade down. Hence, marketers must definitely study the shift in consumer behaviour during such times to plan ahead & move their brands in the market in a way so that they achieve their set business objectives. 

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