SIG sees full-year profit in line despite bad weather

INSULATION and roofing group SIG reported full-year profit in line with expectations, despite bad weather, after stripping out costs in response to a slump in volumes.

The company, which began life as Sheffield Insulations Limited but now operates across in 11 countries across Europe, said pretax profit for 2009 before amortisation and exceptional items would not be less than the current market consensus of £60m.

But SIG warned that the outlook for 2010 remains challenging given the uncertainity in construction markets.

Total sales for the year dropped 10 per cent to £2.7bn while like-for-like sales fell by 11.5 per cent, SIG said.

SIG, which supplies specialist products to the construction sector, said its focus on reducing capex led to cash generation of £119m during the year and it reduced net debt to £260m from £697m at the end of 2008.

The company said in November that the rate of decline of volumes had slowed in the second half of 2009.

Marketing in the age of sustainability

Ten years ago, marketing was at the peak of its influence within business. In contrast, the first decade of the 21st century will be remembered as marketing’s Perfect Storm.

History will identify a number of different crises – material and philosophical – developing in parallel, converging around the global economic crisis and triggering a fundamental re-think.

This article attempts to make sense of the storm, and lays out some of the principles that might guide marketing back to sustainability.

1) CRISIS OF PURPOSE

Today, we know that the Earth is not flat because we have travelled to the edge and seen that it does not exist. We know that parallel lines can theoretically meet, because we have gone beyond empirical study into the world of quantum mathematics. We know that matter can be created and destroyed, because nuclear physics has found ways of destabilising matter itself.

To this list of old truths that have been tested and disproved, we must now add the ability of markets to regulate themselves. When Alan Greenspan was pulled out of retirement to answer questions about the decisions he made in the run-up to the global economic crisis of 2008, he acknowledged – to his own very real astonishment – that the premise that had guided him, and by extension the US, and by extension the world, through 60 years of economic management had collapsed.

So, the free market is not a perfect, self-correcting entity. It is possible for flaws to develop in the chain of logic, and for those flaws to be concealed by subsequent flaws; and for this process to repeat itself until a bubble of market-killing proportions has been created. And what’s more, it is possible for that bubble to burst.

If one looks deep into the operating system of global capitalism, there is no single piece of code that can be rectified. The error is human error. Not just the enduring human fallibility of fear, greed and denial, but a new 21st century human syndrome. Let’s call it Can’t Go Backwards.

Can’t Go Backwards is the human syndrome that corrupted the judgement not just of world governments, central banks and enterprise, but also – indirectly – of marketing. The only way that marketing could continue to deliver at the rate demanded of it by the boards of Can’t Go Backwards companies, was to fudge one fundamental question: ‘Do people need or want the stuff we are selling them?’

If you remove this particular clause from the marketing covenant, life in the short-term becomes a whole lot easier. Rather like the sub-prime mortgage vendors who unlocked artificial growth by dispensing with credit checks, so brand owners had begun to write enduring human benefit out of the marketing process in order to speed things up.

Can’t Go Backwards companies needed marketing departments that could Sell More Stuff. And consumers were awash with such easy credit, buoyed by such sky-rocketing property values, and memory-warped by such a long period of uninterrupted prosperity, that they too let their judgement lapse. They adopted a mentality best described as: ‘Why the hell not?’

So Can’t Go Backwards relied on being able to Sell More Stuff to Why the Hell Not. This model collapsed in 2008. The idea of marketing as stimulant of un-requested consumption looks a little thin nowadays. In fact, it looks a little mad. So what will be marketing’s raison d’être in the 21st century?

Perhaps it is time for business to seek to grow in step with human development, not in an accelerated parallel universe. Perhaps marketing exists to listen to people, and having listened, work out how a product or service can serve people’s needs and wants.

2) CRISIS OF METHODOLOGY

Meanwhile, through the same period – and specifically between 2001 and 2008 – marketing had been going through its own internal debate about methodology. The minor corporate advertising recession triggered by the dotcom bubble and the huge blow to confidence inflicted by the 9/11 attacks created the moment when the internet’s share of advertising spend overtook newspapers’ share of advertising spend.

These lines, once crossed, were unlikely ever to uncross. With one person in seven globally online, and with major advertisers making big and public commitments to new media, a noisy and long-running debate began in which we were all encouraged to choose between the traditional ways and the modern.

The traditional ways are characterised by telling people things about a brand until they buy it. The modern ways are characterised by letting people climb all over your brand until, through the repeated movement of Plimsoll on Platform, an energy loosely recognisable as publicity is generated.

It’s a distinction that runs far deeper than the creative product. It taps into deep-seated preferences about the degree of control we like to operate with; the degree of single-mindedness we like to impose; and the degree of transparency we can comfortably apply.

Around this distinction between traditional and modern, different schools of brand management have emerged. Half of the people reading this will have made some conscious and explicit commitment to the rejection of traditional marketing. The other half will have spent recent years entrenching themselves in the comforting truth that for them, for the time being, the olds methods still work.

With brand management, brands themselves have developed to be type A or type B. If 40% of the market capitalisation of the FTSE 500 is accounted for by intangible brand value, then the first 20% exists in the strength of a brand’s promise and the second 20% in the depth of a brand’s engagement. Today, some brands are still governed by the power of words. Others have embraced the power of deed.

The brands still governed by the power of words are typically packaged goods brands selling a promise (durable, fast moving or otherwise); and those that have embraced the power of deed are typically service brands selling an experience (retail, technological or otherwise).

Occasionally, a type A brand will suddenly and conspicuously adopt the technique of a type B brand – Cadbury is probably the decade’s most notable example – and yet for all the well-earned publicity that this generates, it does not, in any real sense, blend the two approaches.
‘Can’t Go Backwards’ is the human syndrome that corrupted the judgement not just of central banks but also – indirectly – of marketing

There’s no denying that we have all drawn energy from the old versus new debate. It has provided posture and drama. But it has been a rigid and partisan conversation and has not brought us any closer to finding a new model.

The crisis that these polarising methodologies present is a human one. While the two camps have been forming, the consumer’s appetite for what can most simply be described as ‘relevant and engaging stuff’ has remained unchanged. (The only difference being that the associative pathways to relevance are now more complex; and the channels of engagement more powerful and diverse.)

So what new methodology can allow brands to create relevant and engaging stuff in this new, more complex landscape? Perhaps between the ‘believe what I say’ approach and the ‘enjoy what I do’ approach, there is a third way. Perhaps the brands of the future will be those that can look the world in the eye and say ‘everything I do is a result of something I believe’.

Perhaps we have been asking people to believe in brands for too long. Perhaps the two dominant schools are simply different ways of earning people’s faith and commitment. Perhaps this whole transaction is the wrong way round. Perhaps now, with people’s faith in most things so fundamentally shaken, it is a brand’s job to believe in something.

People have enough to cope with. Why on earth should a brand succeed simply by adding to the list of human energies that need to be invested in? Perhaps brands themselves need to start investing emotional energy. Perhaps Douglas Coupland is right. Perhaps people are simply too tired. If so, it is for a brand to know why it exists, not for people to work it out. Perhaps even more than a promise or a platform, brands need a purpose.

3) CRISIS OF SCALABILITY

If marketing output continues to proliferate, as it has begun to do this decade, into ever-diminishing units of enacted experience, it won’t be long before the entire business of marketing becomes unmanageable and unprofitable. The economies of mass media have always been at the heart of marketing. Put simply, the cost per consumer impression decreases, as the number of consumer impressions increases.

It has been fashionable to discard this way of thinking because it seems crude; riddled with assumptions about the parity of different impressions; and over-generous towards practitioners. Roughly half of the advertiser community probably thinks that mass media is money for old rope. And this view probably helps that same half of the community accelerate away from traditional marketing thinking.

However, what are marketers to be rewarded for, if not for the quantity of human participation that they stimulate? What is an IP-based reward culture, if the value of the idea does not, in some way, relate to the number of people it successfully engages with? What is an ROI-based reward culture, if a key part of the ‘return’ is not the number of people taking part? The fact is, long after media commission is consigned to the dinosaur drawer, the basic principle of paying for the quantity of human participation achieved is likely to endure.

And rightly so. Brands grow when more people use them. Big brands have more users than small brands. There are worse things brand owners can do than seek scale; and there are worse ways of judging creativity than its ability to unite people en masse.

The crisis of scalability lies in the fact that straightforward reach – the absolute number of people that a brand connects with – has too often been sacrificed in the name of modernity. One half of the marketing community is trying to talk to a million tiny villages on the basis that they are unique, their passions intense, and the value of their commitment high. The other half is trying to talk to an entire nation on the basis that all the villages are the same, their passions universal, and the value of a big conversation exponential.

The village practitioners are typically owners of new brands, built one postcode or social network at a time. The nation practitioners are typically owners of incumbent brands, thriving on the rule of double jeopardy, and adding penetration one anonymous thousand at a time.

But what does each aspire to in the end, if not scale? And what does each need from marketing if not ideas that are capable not just of intensity, but also of size? Perhaps we should look for shared routine. The days of 50 ratings programmes may be gone, but we remain creatures of habit, and perhaps hunting down the new herd is still more efficiently done in shared routine than through millions of disaggregated private moments. Perhaps the new mass media plan will be a blend of the efficiencies of the television age and the fluidities and eccentricities of the modern media diet. Perhaps, also, we should check that the base of whatever pyramid of participation we are building, can be matched to the scale of the business problem.

4) CRISIS OF THEORY

The marketing community can normally agree – and particularly in such times as these – that behaviour change sits at the heart of any marketing objective. What has been challenged, though, in the past decade, is the theory of how behaviour change happens.
The marketing discipline has become divided into new ‘village’ and old ‘global’ practitioners

The cosy belief that people could be managed along a funnel-shaped journey of increasing contemplation and readiness was a perfect match with the way that traditional media were used; and a perfect match with the persuasive messages on which marketing relied.

The Prochaska-inspired, step-by-step approach to behaviour change would have revealed its creakiness in any event, but its fall from fashion was accelerated by the advent of digital media. Interactive technology brought with it a turbo-charged form of engagement in which people could skip through the echelons of consideration in a matter of seconds and reach a previously uncontemplated behavioural outcome moments later.

Our own experience of the interactive world gives credibility to a more mercurial and suggestible model of human behaviour. Half of the marketers who still invest in TV believe they are somehow warming people up to a higher state of contemplation in order that press can somehow convert that contemplation into rational enquiry, which in turn leads to answers on a website. The other half believe that when a powerful piece of content inhabits the popular imagination, all sorts of favourable and unpredictable things can happen, regardless of where an individual might stand on the spectrum of readiness.

However, in both cases, the preference is probably guided more by beliefs about how to use media than beliefs about how behaviour change happens. What should be an enquiry into the human psyche has become an enquiry into media deployment. This is the crisis – we have been so obsessed with how media works, we have become amateurish on the more fundamental question of how the human brain works.

We have stopped being psychologists. So, when the Perfect Storm forms around us and we reach for the rock-like safety of human understanding, it is simply not there. All we can resort to is our favourite publicity model: broadcast; diffusion; viral; discovery. None of which is a theory of behavioural psychology. None of which will guide marketing into the next decade.

So what will? Curiosity about why people do the things they do. We need (and there is no ‘perhaps’ about it) to become obsessively interested in people and their behaviour. Grasping the anatomy of behaviour itself is far more useful – and, let’s face it, far more interesting – than finessing our map of the human-brand intersection. Perhaps we need to stop investing in research that describes markets that we already participate in. Imagine if every research dollar was redirected into ethnography. Imagine if we could truly be students of people.

We need to be. This is their world. We marketers just live in it.

BE AWARE OF MARKETING JERKS

If you go on to youtube or any other video web page there are many individuals such as Eben Pegan who give seminars in the name of advice to businesses. These people are mainly scam!

Electronics Reach Out to the Ends of the Age Spectrum

BERLIN — Engineers at a research institute in the Netherlands have programmed two robots — Nao and iCat — to teach young children to avoid overeating and to remind them to take life-saving medications, like insulin.

Aldebaran Robotics

Intended for children, the Nao robot is about two feet tall and can talk and mimic empathy. It is made by Aldebaran.

Emporia Telecom, an Austrian cellphone company, has expanded production since T-Mobile, the largest German mobile operator, began selling its TalkPremium model for seniors. The phone has a large keypad and is built for voice- and text-messaging.

The very young and the elderly have never been target markets for high-tech companies, which focus instead on the global mainstream. But with the economic downturn reducing growth, companies are applying cutting-edge technology to the often-neglected extremes of the consumer spectrum.

Last week, at the largest European consumer electronics convention, the Internationale Funkaustellung in Berlin, age-specific gadgets were introduced by major electronics companies like Philips, based in the Netherlands, and Samsung, the South Korean company, as well as by specialized firms like DSC-Zettler of Germany, Emporia, and Doro of Sweden.

“Targeting technology to the very old and the very young is a fast-growing field,” said Mark Neerincx, a professor of man-machine interaction at Delft University of Technology in the Netherlands. “This is going to be a big business.”

Consumer electronics makers have traditionally designed products for the global mass market. But as the world population ages, the potential for greater sales is driving the interest.

“We have many more older people now, they have a better quality of life and there is a big industry there,” said Iker Laskibar, the scientific coordinator at Ingema, an institute that develops technology for the elderly and the disabled in San Sebastián, Spain. The institute does research for I.B.M. and Hewlett-Packard, among others. “They all want to know how to adapt their products,” Mr. Laskibar said.

An advocate for seniors, Majd Alwan, director of the Center for Aging Services Technologies in Washington, said the new focus is overdue.

“Many consumer electronics makers are still not designing senior-friendly products,” he said. “They are designing for the younger generations. They want to be hip and don’t want to be associated with the elderly.”

In the 1980s, Sony tried to design products with older consumers in mind, said Fujio Nishida, president of Sony Europe. But the effort did not work and has not been tried since. Seniors rejected Sony’s clock-radio with simple mechanical dials and large buttons, Mr. Nishida said.

“Even though the design was helpful for them, it turned out that a lot of older consumers didn’t want to admit to being old,” Mr. Nishida said. “So they didn’t buy it.”

But seniors are now more willing to spend money on technology that enhances their lives, said Levent Bektas, the head of sales for DSC-Zettler, a maker of large-button mobile and fixed-line phones in Petershausen, Germany.

“We are seeing much more demand than 20 years ago,” Mr. Bektas said.

Doro, a maker of senior-friendly cellphones in Lund, Sweden, is using panels of elderly consumers to test its devices.

Emporia has had success with its TalkPremium for seniors.

“It’s been selling very well for a year,” said Roland Meyer, the head of employee training in Germany for Emporia. “The elderly are growing in number and have money to spend.”

Even some of Sony’s competitors are finding the niche. Nintendo’s Wii, a video game designed for the mass market, has caught on with seniors in the United States who are using simulations like bowling for diversion and low-impact exercise.

“The Wii is a hit at a lot of U.S. senior centers,” Mr. Alwan said.

Twenty percent of Germany’s 82 million residents are 65 years old or older, according to the United States Population Reference Bureau. That compares with 13 percent in the United States. Worldwide, 8 percent of the global population, or 544 million people, is 65 or older.

By 2050, the world’s elderly will grow to at least 10 percent of the population, or more than 1.4 billion people, according to the International Institute for Applied Systems Analysis in Laxenburg, Austria.

Philips has shifted its focus to the other end of the age spectrum. At the TNO research institute in Delft, Philips has developed the iCat, which, along with the Nao, developed by Aldebaran Robotics of Paris, has been programmed to appeal to the young.

The robots, about two feet tall, can see and talk, and mimic empathy by moving facial features. Both have been successful in studies at building emotional ties with young children, said Mr. Neerincx, a researcher on the project.

Philips is applying some of the fruits of that research to Sonicare for Kids, an electric toothbrush designed to teach 4- to 10-year-olds to brush their teeth. The oscillating brush beeps every 30 seconds for two minutes.

The audible reminders are supposed to encourage children to brush for a full two minutes and to help parents monitor that the job has been done, said Hubert Grealish, a Philips product manager. The brush also has a rectangular rubber grip to let children lay it down while applying toothpaste.

Samsung, the world’s largest consumer electronics maker, introduced a mobile phone called the Corby, which the company said represented its revamped focus on the youth market. The handset, which comes in a variety of loud colors, has integrated links to YouTube, Facebook and Twitter and other popular social networking sites.

“The Corby continues Samsung’s history of developing new products and technologies for specific audiences,” said J. K. Shin, an executive vice president who heads Samsung’s mobile division. “We see strong growth opportunities in this sector.”

hasan pegan

hasan beleives that Eben Pegan is 80 percent for US market does not fit to UK. He said that donts speak empty.

ruhsuz picler

Effective ways to measure activities for a global brand portfolio

Christene McCauley

Measurement and evaluation (M&E) can be a hugely demanding activity in terms of time, resources and expense. While most client firms recognise the importance of evaluation, it is not always easy to achieve robust, cost-effective and useful results that inform business decisions.

At Diageo, we have been wrestling with these issues for ten years. We have found that, if an organisation establishes some guiding principles and ways of working, and focuses on building marketing and consumer planning capability, it can navigate the evaluation minefield.

Given the extensive Diageo brand portfolio and geographic spread, there are many brand activities in the marketplace at any one time. Potentially, this could create enough evaluation to occupy armies of planners and researchers.

To help consumer planners focus their efforts, there are three guiding principles that shape how Diageo applies best practice in evaluation.

Simplicity, not complexity

Taking a pragmatic approach, rather than an academic one

Focusing on getting the inputs right, as opposed to obsessing about evaluation of the outputs.

The first two principles are in no way revolutionary; they are just good practice and are probably adopted by most client companies. Diageo develops best practice for the key marketing disciplines – advertising, sponsorship, experiential, relationship marketing, PR, packaging and digital marketing activity – centrally, with input from key markets and then trains it in via consumer planning teams.

This embeds best practice approaches and guidelines across the globe. The process of centre-led creation of best practice ensures consistency and ease of application around the world, but also frees up the country teams to focus on development and execution instead of wasting time creating a technique someone else has already thought about. If ten people are working on an advertising pre-testing approach, nine of them have wasted company resources and limited the ability to share findings across markets.

MODELS VERSUS GUIDELINES

For some forms of evaluation, such as advertising, there are quite directive Diageo models and tools. But for other disciplines, such as sponsorship and PR – which vary greatly in terms of objectives, content and how they are implemented – guidelines are given, rather than firm recommendations.

The third principle, (input-focused, rather than obsessed about measuring output), is part and parcel of why any measurement and evaluation is conducted. At a very basic level, the purpose of measurement and evaluation is not just about knowing whether and how an activity worked, but being able to apply the learnings and change something in the marketplace by doing more of what is working well, modifying activities that can be improved, and calling a hard stop to those that do not deliver. In other words, proving to improve.

However, often the time and budget required to conduct meaningful evaluation means the learnings aren’t applied until the next brand planning cycle. Putting more investment, time and resources into developing the input to improve the current cycle of activity may be a better way forward than employing armies of people to create dashboards, traffic lights, top-line reports, monthly reports, quarterly reports and deep-dives to demonstrate the effectiveness of outputs from the cycle of activity that has been completed.

If you want simplicity and pragmatism, it is worth considering carefully how and when to use proprietary techniques. The Diageo stance is to avoid buying into proprietary research techniques that tie it to any one supplier unless there is good reason to do so. There are only two exceptions. One is the company’s global consumer segmentation study, which provides a consistent model to manage our brands globally, and the other is quantitative TV advertising pre-testing, which provides a global database of norms to use when assessing TV advertising performance. For all other research, the most appropriate approach for the business is selected, and then ‘Diageo-fied’ for internal teams.

For example, there is a common global brand tracking study used to monitor the equity of Diageo brands and to evaluate the consumer response to large-scale activities, particularly advertising. Consistency of approach enables Smirnoff or Guinness to be compared within, and across, geographies, and also means the same supplier does not necessarily have to be used in all markets to achieve this, but for cost efficiencies, regional suppliers are used for this study.

GETTING IT RIGHT FROM THE START

Advertising is still one of the largest marketing investments Diageo makes, and far more time is spent getting the thinking right with the consumer than is spent tracking and proving effectiveness of it once launched. To equip planners to do this well, training is provided that focuses on the areas in which planners can make a difference. It covers the different stages of defining, developing and delivering advertising activity and barely touches on the final stage of evaluation.

This means time is spent both on understanding the critical areas of the brief, which planners need to own and be accountable for, and how the target consumer can be brought to life when briefing agencies. Qualitative creative development research is covered in detail, specifically understanding what type of research is required, and appropriate stimulus material to use depending on the stage of the ad development process. It is also crucial to know how to use quantitative TV advertising pre-testing constructively to optimise ads, and how to ensure learnings stick right through to the production of the finished film, poster or digital communication. Focusing energies on doing all these things well increases the chances of success of the activity.

DEMONSTRATING PAYBACK

Inevitable questions arise in any discussion of accountability. How great is the pressure from management to demonstrate the financial payback of marketing communications? How is payback realistically achieved, and has it made any difference?

After putting these questions to the planning teams at Diageo, there is variation in the stance taken by management to demonstrate accountability for investment.

“There is moderate pressure,” says one, “and there is general acceptance that the currently available methods of measuring financial payback are expensive and of questionable validity.”

But others appreciate the difficulty of determining the financial payback on communications, and are prepared to settle for much softer measures from the brand tracking study.

“Good intentions are there, but not a lot actually happens,” claims another. “General managers seem to be happy with brand tracking results.”

In some markets (and some of the larger brands) econometrics and marketing mix modelling is conducted, but even then some questions remain about accuracy and reliability. “Econometric modelling has given us as good a steer as we will ever need in the real world,” one planner agrees, “but it is not an exact science, no matter what people say.”

In other markets, people are either not going down the road of proving financial payback at all, or they have given up even trying to do so. “I have been asked many times, but I stopped trying about seven or eight years ago,” one person admitted.

COST-EFFICIENT GROWTH

Reassuringly, when evaluation is conducted – and, more importantly, the learnings are applied – it does lead to decisions that create growth for the brand in a cost-efficient way. One person I interviewed said marketing mix analysis led to incremental spend on TV advertising, resulting in a sales increase on the previous year.

The reason for the huge variation across the business in the amount and degree of rigour with which evaluation is conducted is that there are some real, and sometimes insurmountable, barriers. Some are specific to our industry, some to our markets, but they prohibit the detailed measurement and evaluation that is possible for brands in other sectors.

For example, in some markets, it is impossible to measure sales accurately, and sometimes we just don’t know precisely how much we sell. If you go to parts of Africa or Asia, (Nigeria is the second-largest Guinness market after Great Britain), you will find either that there is, at worst, no sales audit information available or, at best, dubious coverage, particularly for the on trade (pubs, bars, restaurants and other licensed premises).

Some parts of the world are either too remote, too costly or too dangerous to audit with the frequency and rigour that we take for granted in markets where Nielsen and IRI data is commonplace.

Hence, markets take a more pragmatic approach and use softer measures of consumer attitude and behaviour change that they can measure and, over time, at least give directional information on which to aid decision-making. After all, like any research, even the most rigorous and detailed study is only a tool to make better management decisions. It doesn’t make the decision for you – you need to use your brain for that.

Lack of data not only makes ongoing monitoring difficult, but also makes measurement of individual pieces of activity challenging. It prompts us to be creative in how we can evaluate in these situations – for example, collecting bottle tops of our brand and competitors’ for an in-bar promotion and counting them up manually at the end of the night to calculate volume sold and share. It is a primitive approach, but a practical one.

While the techniques and approaches used to evaluate activities are pretty standard, there are two very important things that help Diageo with best practice in evaluation. First is the way marketing and consumer planning capability is built, and second is ensuring any tools used provide simple outputs that give direction.

The marketing capability programme, The Diageo Way of Brand Building, is an internally developed and taught marketing process used across the globe. It comprises a set of tools that are easy to understand and have practical applications for marketers.

It is not a book of theory that sits on the shelf gathering dust, but something that is ingrained in our language and way of working. In fact, new recruits sometimes struggle to do their jobs until they have been trained in the ‘Diageo Way’.

In the words of one of the original creators of the programme, ‘best practice is good practice, rigorously applied and deeply ingrained’. There may well be new and better tools and techniques out there, but having a commonly understood, easy to apply approach across the business far outweighs the incremental benefits of introducing a new technique. To quote Diageo chief marketing officer Andy Fennell: “The debate about whether your onion is better than my triangle is one I quite frankly don’t have time for.”

To build consumer planning capability, there is dedicated senior resource, whose sole responsibility is to raise functional skills in market, brand, innovation and shopper planning and planning behaviours.

KEEPING IT SIMPLE

The uniting philosophy for the ‘Diageo Way’ is to create simple outputs that give direction. The truth is that marketing peers do not need to be bamboozled by complicated research techniques and scientific explanations. They spend most of their time permanently tuned into the world’s most listened-to radio station, WIIFM – ‘What’s in it For Me to help me do my job better?’

Likewise, they don’t always want the latest and hottest techniques; they want consistency and ease of use. That is not, of course, to say we should be completely averse to change.

It is important to keep on top of developments in the industry and ringfence some funding for piloting as appropriate, but it is not appropriate to introduce new research techniques on a whim, or choose those that are only workable in one market. They have to add value to Diageo holistically.

To sum up the Diageo perspective, rigorously evaluating effectiveness and efficiency of marketing investment in markets where it is feasible to do so, is important, but an equally important goal is for marketing and consumer planning approaches that make the complicated simple and make the academic practical for market teams.

And finally, focus on input in addition to – not instead of – output, to increase the chances of success as opposed to proving the levels and degree of failure.

Brand loyalty: does it really exist?

Roderick White
The ‘focus’ theme for the May 2007’s Admap report is brand loyalty. In this introductory article, Roderick White discusses definitions of behavioural and attitudinal loyalty, some metrics to measure it and ‘possible’ methods to sustain it.
Other articles featured in this Admap May 2007 report on brand loyalty:
• Driving loyalty through fantastic Customer Experience
Huw Watkins
• The Net Promoter debate
Timothy Keiningham
• There is no such thing as loyalty
Stuart Evans
• How to measure customer loyalty
Jeremy Griffiths
____________________________________________________________________________________________________________________________
Every brand marketer has a notion of an ideal customer: someone who buys the brand in large quantities, very regularly, and, if asked, both disses the competition and recommends the brand passionately to everyone within earshot. In other words, the high-value, loyal, influential customer.
It is less easy, by the length of several streets, to devise strategies for creating and keeping these mythical creatures than to define them. Or, even, to find them. As Andrew Ehrenberg has pointed out, and no-one has successfully disproved what he has to say, in any competitive market there are very few hardline brand-loyal consumers, and those who do buy only one brand in the market (and are, therefore, on most behaviour-based definitions, genuinely brand-loyal) are, by and large, merely light or occasional users of the category, who have no reason to develop the repertoires that most consumers, in most such markets, actually buy from.
DOUBLE JEOPARDY
Yes, to be sure, thanks to double jeopardy, bigger brands have more apparently loyal users than smaller brands, so that the market leaders appear, at least, to be leaders by virtue of having a higher proportion of ‘loyal’ users. But close inspection of real purchasing data tends to show just how skin-deep such loyalty often is.
But, you will naturally ask, surely every marketer is aiming to drive, develop and preserve brand loyalty? To which the answer is, equally naturally, ‘of course’. Assuming a repertoire market – or any competitive market, in practice – it is a perfectly valid strategy to aim to keep as many customers as possible as loyal as possible. That way, you reduce churn and maintain your business at a viable level. But, as sure as anything, you will, over time, lose customers, or people will reduce your brand’s role in their repertoires: the ‘leaky bucket’ is in effect a law of nature.
So while it may be perfectly realistic to do analyses that say it’s far more profitable to retain a customer than to acquire several new ones; and that it costs five to twenty-five times as much to get a new customer as to retain one, the erosion of your customer base over time is as certain as death or taxes – and so, therefore, is the imperative of acquiring new customers, on an on-going basis, to replenish the diminished supply.
A TOUGH OBJECTIVE
The most convincing recent light to be shed on this issue comes from the UK IPA’s Datamine project. Peter Field and Les Binet have been analysing award-winning cases from the 25 years or so of the IPA Effectiveness Awards (1), and one of their most striking findings is that, although many brands’ objectives include developing loyalty, few succeed in demonstrably achieving this objective – but those that target loyalty are in fact rather good at recruiting new brand users, and this is clearly a core element in their evident marketplace success.
From this phenomenon, we can begin to speculate about what, generically, drives loyalty, however we choose to define it. But, first, we ought to at least look at the issue of definition. There’s a school of marketers who define loyalty simply in terms of behaviour: a loyal customer buys the brand regularly, and (e.g.) buys it on more than half of all category purchase occasions. This is fine, as an operational definition, but it has the weakness that it tells us nothing about the parameters of loyalty: is this simply habit, or inertia? Or does it reflect a genuine commitment to the brand and a deep belief that it is, if not actually the best in the field, the best affordable value available?
In other words, attitudinal loyalty, if not actually the defining feature of the genuinely brand-loyal, looks to be a vital component of true loyalty. And, indeed, there have been numerous attempts to develop suitable attitudinal measures to allow marketers to pin down just how loyal their users are, how this compares with the competition, and hence to put in place strategies that might build or cement loyalty in the face of competitive challenges.
Obvious examples include, for example, the well-established Conversion theory, with its scale of commitment to brands; and the Millward Brown Brand Dynamics pyramid, where the top segment consists of people who can be shown to have, in some sense, ‘bonded’ with the brand (2).
THE NPS
As several of the articles that follow point out, the candidate du jour for election as the key loyalty metric is Frederick Reichheld’s Net Promoter Score, based on the balance of strong positive recommendations over strong negatives. Apart from being an apparently good measure of an individual’s loyalty to a brand, it is, it is claimed, a highly effective guide to the overall prosperity, growth and profitability of the brand and its owners. As will become clear from Tim Keiningham’s article, this claim to predict growth and profits is being challenged – in spite of work by Paul Marsden in the UK, which seems to support the core findings.
What’s more, in spite of its evident appeal to marketers who want to be able to give a single-number indicator of success to their CEOs, the NPS clearly dissatisfies many who are trying to help marketers articulate loyalty-related strategies and campaigns: while it may be a useful diagnostic of a positive attitude to the brand, it is essentially uninformative, and does nothing very helpful to guide policy.
Given these uncertainties, it is hardly surprising that so-called ‘loyalty marketing’ is not a universally accepted panacea for marketing ills. Indeed, although there are some well-accepted methods of trying to lock customers into a brand, it is often questioned whether they are doing much more than acting as a quite low-key form of on going price promotion.
Classic loyalty schemes involve collecting ‘points’ of some kind in return for regular purchasing. Arguably the oldest of these is the British Co-op ‘divi’, which dates back to the 19th century, and is the precursor of both the allegedly highly-successful Tesco Clubcard operation and, in a totally different sector, the almost ubiquitous airline frequent-flier scheme. And, yes, there is some survey evidence to suggest that these schemes have some effect.
IS THERE A VIABLE LOYALTY STRATEGY?
This all invites the key question: what can marketers actually do to foster loyalty to their brands?
The answer, I believe, is distressingly simple. It goes right back to the heart of marketing. Get the product right. Communicate effectively about it. Service the hell out of it, in whatever way is appropriate or feasible. Keep innovating to ensure that the brand continues to deliver competitive value. Live the brand, and make sure all your people do, especially (but not exclusively) those in any direct contact with customers.
If you then want – or need – to bolt on some form of ‘loyalty’ scheme, make sure it offers real value to those customers you particularly want to keep. But the true loyals won’t actually need it, because they will be whole-heartedly with you already – and they may well have the wit to see that you are trying to bribe them, and resent it.
Loyalty, in other words, depends on consistent, valued customer experiences. Everything else is, frankly, candyfloss. And too much candyfloss rots your teeth.

Marketing maintains drinkers

• Diageo leads adspend (see Brand Communication and Promotion) and the big marketing budget of £4.2 million in 2008 helped Smirnoff Red to not only grow its value sales in the off-trade, but also to increase its lead on Glen Catrine’s Glen’s brand. Glen’s has also sustained volume growth since 2006 (albeit at a slower pace than premium segments) on account of its low price and good distribution.
• Diageo is mounting a campaign of defence, including significant marketing investment in Smirnoff Red, highlighting its heritage in response to Russian Standard’s challenge. It is also targeting Absolut territory, rolling out flavour variants and relaunching Smirnoff Black.
• A blueprint for successful market launches, marketing spend of £5 million in 2007 and £8 million in 2008 worked wonders for Russian Standard (First Drinks Brands), which achieved £13 million in retail sales in its first year in the UK. The brand has ambitious plans to lead premium sales within five years.
• Overtaken by new market entrant Russian Standard, Vladivar has been struggling in the off-trade, resulting in brand owner Whyte and Mackay ditching its 2007 campaign targeting an ‘urban cool’ youth market for a new strategy targeting mainstream but more premium positioning.
• Vladivar underwent its second repackaging in two years in 2008, following the likes of Smirnoff and Russian Standard in highlighting its heritage. Advertisements reflect its focus on 18-34-year-old drinkers with a light-hearted approach to responsible drinking.

Six essentials of a successful social media case study

Laura James
Social networks are not attracting the advertising spend expected of them.
As any media planner will tell you, it is often a challenge to convince an advertiser client to change his or her media mix and invest in a new opportunity, especially in a recession.
There are a number of reasons for advertiser caution about social media but high on the list is the lack of robust evidence demonstrating effectiveness.
Whilst there are many high profile stories of brands using social media, few actually link their success back to tangible marketing objectives, such as increasing sales, profits or market share or even softer metrics such as brand consideration or purchase intent.
Below, therefore, we outline six essential components of writing a persuasive social media case study.
1. Demonstrate you understand how customers discuss your brand in social networking spaces, and what you bring to the conversation
Many brands have achieved a high profile presence but with no input from the brand owner. The content has more often been created by users.
The first step for any advertiser contemplating using social media is to listen and understand what is being said about its brand and the competition.
It is necessary to set up the technology and a process to monitor what conversations already exist, where they take place and who is having them.
Coca Cola had the number one branded profile page on Facebook with 3.3m fans- with no help from Coca Cola. The page was created by two fans in Los Angeles. The corporation only became aware of the situation when Facebook let them know that the site would have to be removed as it was there without permission.
After it was introduced to the creators (thanks to Facebook), Coca Cola collaborated to make a great film of the story which is now on YouTube.
According to BMW, there are 140,000 BMW videos on YouTube but only a small number are from the brand itself.
Successful social media marketers show they have understood what content they could create, or already own, which would engage networked consumers.
Rexona (Unilever) understood the importance of the teenage bedroom and launched the first brand-specific sponsored application on Friendster.
Once users became a Rexona fan they could add a “teen room” application to their profile. By participating in the competition they could buy items for their room. In some cases, brands are happy to take a back seat and listen to the conversations, using them as a barometer of consumer satisfaction.
PWC, the professional services group, recognised the importance of effective new business lead generation from alumni so it used social media to manage and connect alumni.
2. Show knowledge of the target group in the social media context
As with any marketing campaign it is vital to understand the target audience, the role of social media in their lives and their online behaviour.
There is no shortage of information. Site owners such as Facebook provide access to site demographic and behavioural information relevant to advertisers’ brands.
Banana Republic repositioned its clothes to appeal to business executives by using LinkedIn. Users were invited to update their profile and update their wardrobe. Some 2m users updated their profiles and 220,000 entered the competition.
Intel’s Intel Powers Music MySpace Programme used MySpace to engage “tech-savvy digital musicians” to educate them about Intel’s Centrino Duo product. Users were provided with tools to make better music and invited to participate in a competition to create an Intel SuperGroup. As a result, six million profile views have been generated and Intel signed up more than 60,000 friends.
Orange targeted opinion formers with the Unlit campaign. The Orange Unlit tour, led by presenters Jont and Dave, gave MySpace members the chance to host a one-off gig with a hot new band playing in their front room.
3. Provide evidence of successful planning and execution of how content- sharing spreads among the target audience
Successful case studies need to include evidence of what activity, on- or offline, was put in place to give the brand’s message the best chance of spreading.
To encourage teenagers to stop smoking the American Legacy Foundation (insert link) used social networks to create advocates to share facts about cigarettes.
For example, chemicals found in cigarettes are also found in hair removal cream, which prompted the creation of a “hair mail” widget. Targets were set for the spread of the viral films and website traffic.
Coca Cola mounted the 007 trivia Challenge, involving a custom Quantum of solace skin that a fully-functional and customizable coke tag, linked to wallpapers, games and exclusive video all linked to a text to win promotion.
To spread the message users had to invite friends to help unlock the answers of the daily 007 trivia questions.
eBay/Sephora/Dell mounted a joint campaign to build the number of connections with consumers on Facebook. Just prior to Thanksgiving in 2008, the three retailers sponsored holiday shopping-themed virtual gifts on Facebook. As the users gave gifts to their friends they gained viral attention as other friends discovered gifts in their News Feeds. A total of 40,000 gifts were given.
4. Was the campaign integrated with other communications activity?
With many current case studies, evidence of the exact contribution of the social media element within a total media campaign is often lacking. It is also rare to be able to discount other factors, concurrent with the social media campaign, which have contributed to the results at the time.
It is common to cite the number of views or parodies a campaign generated on YouTube but these metrics often feels like an after-thought rather than a a pre-planned, integral part of the communications strategy.
The American Legacy Foundation Infect Truth campaign used specifically targeted television and print campaigns to build awareness of the social media campaign and drive traffic to the website thetruth.com. Two television ads formed part of the viral campaign and widgets were created of the characters.
To launch Skins, Channel 4 used social networks to bring the characters of the show to life. Fans were offered exclusive programme content, competitions and the chance to create their own content. Broader awareness was created using television trails and outdoor.
British Airways created http://www.metrotwin.com/, a curator site bringing together the best of New York and London, providing recommendations from local experts, bloggers etc. The specific aim of the site is to reach new audiences (acting to reposition BA) and to provide added value to existing customers.

5. Document evidence of understanding of the resource required to keep the social media activity going
Unlike traditional media campaigns, social network campaigns do not have a cut off date. Once in the social networking ecosystem, the activity/film etc should take on a life its own and should continue to evolve. This requires a level of commitment from the originators of the campaign to ensure that whatever content available online is relevant and current.
It is difficult to simply remove activity- a community has been created, how is it going to be maintained in the longer term? It is important to have an exit strategy, especially if ongoing resource is a possible issue.
On launching Metrotwin, BA recognised the agility and resource needed to constantly keep the site fresh.
6. Outline measurement and results that are commercially relevant
When it comes to results for social media campaigns there is no shortage of numbers. Webpage views, blog posts and views on YouTube are nice to know but they are currencies rather than evidence of success.
In isolation the figures are the equivalent of citing television ratings or coverage and frequency. Advertisers need to know how these numbers contributed to the overall campaign business objectives. Was there any change in consumer behaviour or uplift in sales etc?
Whether the social media activity is the sole comms channel or part of a broader media mix, the results of the activity are relevant if they can be linked to the desired objectives: what was the consumer expected to do as a result of your campaign?
Did the millions of video views result in an increase in awareness which then translated to a sales shift or change in consumer perceptions?
How did the number of fans on Facebook affect brand advocacy and in turn did that increase brand loyalty and repeat purchase rates?
Many advertisers use the sites for polling opinion and customer feedback – all of which are used to help formulate new product development/customer care strategies.
General Motors created GMnext.com “to engage consumers and create a dialogue”. It comprised a virtual media forum with 24 hour virtual chat with over 30 GM global leaders commenting on the future of transportation.
Concept vehicles were also showcased including behind the scenes video and online chats. A mobile club was used to deliver messages and conduct text-voting campaigns. The site was also used to launch Chevrolet Volt. This all resulted in 1m visitors to website and 4.2m video views.
More relevant was the analysis of 40m blog posts over six months which demonstrated that GM was in the top four auto manufacturers to deliver the greatest volume of positive conversations on environmental sustainability.
The Channel 4 Skins series case history credits the social media campaign with helping make the series launch an outstanding success and boosting ongoing levels of viewing. Cost per viewer investment of launch was quoted as being lower than five of six comparable programme launches and the total campaign generated a significant return on investment.
The upshot, then, is that social media case studies require the same level of detail and rigour to be convincing as studies of mainstream campaigns. In fact, in the current environment, they probably require even more.
About the author:

Laura James joined WARC Online as Media Editor in October 2007. She can be contacted at laura.james@warc.com.
Previously she was Media Director at PHD with client responsibilities across a wide range of major brands including HSBC, First Direct, Toshiba, Smith and Nephew, Bayer and Daihatsu.

Shopper marketing – the key to unlocking growth in a recession

Simon Moore and Marina Foxlee
Oxford Strategic Marketing

During these difficult economic times, the key is to ensure that consumers not only continue to want use your brand, but also to ensure that shoppers buy your brand in the first place. Fail at this ‘first moment of truth’ and you will not even reach the second moment of truth – consumption. Win at ’shopper marketing’ and you just might unlock growth in a recession.
So, what is shopper marketing? We define it as ‘the capability to drive growth through insight-led, shopper-based demand creation and fulfilment’. In a nutshell, it’s about institutionalising shopper insights to drive business growth. And it’s hot. In May 2008, OxfordSM conducted a survey on shopper marketing among 28 top fmcg manufacturers and retailers on behalf of ECR Europe, revealing that companies already see shopper marketing as critical to success, and expect its value to rise dramatically in a downturn.
The deepening recession is changing consumer priorities, and disrupting their traditional buying patterns. Shoppers’ category allocations and brand loyalties are shifting too. Recently, Sainsbury’s announced that sales of its Basics range rose 30 per cent in the last quarter through its ’switch and save’ campaign, which aims to lure shoppers to own-label goods from branded labels. And the search for value can drive more extreme retailer loyalty. The hard discounters Aldi, Lidl and Netto are claiming double-digit growth at present as a result of more people coming through their doors. Tesco is responding by positioning itself as ‘Britain’s biggest discounter’, setting up specific discount aisles and promoting over 350 products in-store where customers could save up to £24 a week. So people are still consuming bread, beer and washing powder, but they are shopping for them differently.
Shopper changes are not limited to down-trading and discounting, though. More complex shopping behaviours are visible too. Datamonitor has shown that 15% of shoppers are now trading down and trading up in the same basket. For example, the wine category is already starting to polarise into ‘below £4′ and ‘over £10′ sectors, with the much vaunted £4.99–£6.99 price ranges losing shelf space.
Now, more than ever, it is vital to really understand the attitudes and behaviours of your target shopper. Some behaviours are unpredictable. Will cash-constrained shoppers be less likely to respond to multi-buys and favour price cuts on individual products, making bulk-buying a boom-time behaviour? Or are shoppers taking fewer trips to the supermarket to save on fuel costs, making bulk buying a smart option in the current climate? Or, conversely, are they shopping more frequently but with smaller basket sizes? Will they buy more online? Only by embracing and institutionalising shopper marketing in your organisation can you anticipate and capitalise on these developments.
Whatever the diagnosis for your category and brands, the credit crunch is putting a premium on the need to generate and act on shopper insight. Our 2008 ECR survey indicated a significant variation in how effectively and widely companies leverage shopper insight. Leading companies are those who are applying shopper insight most widely. The three broad applications are as follows.