Our Thoughts On Business and Brand

Filter By Topic

July 7, 2016

Continuous change needs a continuous story

We live in an age of continual transformation in advanced consumer economies. While we experience it through incremental changes, not big leaps, at its heart there are three enduring mega trends that are influencing how we live and also how we develop brand strategy.

The first is personalisation and customisation. All consumers want individual experiences that go beyond products, services and eco-systems. Brands must also go well beyond their foundations as marks of trust to deliver them. Next is digitalisation. The information revolution continually generates the data points that create new or altered forms of value forming bigger communities and winner-take-all platforms. Brands were always built to capture value in knowable markets, now they must be built to enable businesses to co create the future with it customers.

Finally we have what we term nativism. The shift in our world from the majority of consumers being born pre-digital to a world dominated by digital natives. For brands this means moving on from traditional methods to building strategy that is more dynamic just like the world the brand inhabits.

While the change is perhaps not fast enough for us who thought we would be in Mercedes flying cars by now these three trends are the undoubtable forces that are pushing how brands are born and experienced in a different direction. Brands used to be created to capture the unique, distinct value that a business offered whereas now they need to be formed to hold together an ongoing value exchange between a business and its only real source of value, how well the organisation serves a group of customers. Below we examine how to build brands capable of doing just this.

1/ Understanding customer journey is only the beginning

Customer centricity really really matters but mapping the customer journey is only the beginning. There is no doubt that done well maps highlight clearly the moments that matter more than others. They will tell you the pain points and what other ways you need to service customers to be truly customer centric. Unfortunately the same logic will also apply to any of your competitors. What they will not be able to express is who you uniquely are and how you would distinctly deliver this moment. This is the role of brand. Transforming a pain point into an experience in a way only you can. As we move beyond services and products into a world of experience it is more important than ever to understand who you are so you understand how to deliver distinctive signatures rather than generic category truths. Think like Gatorade who deliver personalised hydration from unique ‘swamp logic’ or Nike who deliver authentic ‘enabling of athletes’ across platforms through clear brand signatures that could only come from them.

EDM_ArticleImage_Jul2016_02c

2/ Build self-reinforcing narratives

In a world where a business, through its people and platforms, co-creates its value with its customer your brand needs to be the thread that can tie this all together. Customer says, Employee reacts and Business changes. You need to look beyond basic behavioural drivers and understand the promise that all three sides are buying into. Your own organisational history will give you a great deal of insight into how to build a brand that can serve three masters. You were started for a reason so spend some time distilling how this meaning applies to the business, its employees and customers. Think like Southwest who has built a self-reinforcing system around the central idea of ‘spreading the love’. Think like Wholefoods who hold an entire ecosystem together through an enduring focus on ensuring everyone shares in the values created by eating and living well.

3/ Find the heroes of your tale

Every story has a hero. Equally your brand needs one. You need a basis of inspiration that is grounded in reality. It used to be enough for your brand just to say it, now you have to show it. If you do not have a compelling founding myth this can be challenging but there are actors who can be the anchor point of your story.

EDM_ArticleImage_Jul2016_01

You can focus on the transformational CEO. Think Steve Jobs returning to Apple or Indra Nooyi at Pepsico.

EDM_ArticleImage_Jul2016_03

You can focus on the product as hero. Think Tesla and Dyson and how they build heroic products that are tangible proof of what the founders both believe in. It could be the culture from which your brand was born. Think like Qantas whose product, services and experiences are shaped through its uniquely Australian characteristics. How can you both lead on safety, style as well as a laid back approach to travel? Qantas have nailed this. It can even be the culture you create. Think like Airbnb who have constantly sought to answer the question, ‘How do you build trust between strangers so you can share the world one neighbourhood at a time?’

 

Read more articles like this:

Brand Brand Strategy Business Strategy
April 18, 2016

Context is King

Brands have always been created in response to the ethos of the people who founded them and the ideals of the consumers that they were created to serve. They deliver upon a societal truth through the founding myths and the ideals that they represent. These myths and ideals give a brand its distinctive voice and most, arguably all, of its intangible value on a balance sheet.

What do you do then when consumers start to fall out of love with your brand because their values have moved on or the ideals behind your creation yesterday are no longer relevant today? Most brands panic and grab hold of the lifeboat of fads, trends and popular culture in order to re-position themselves as something ‘new’ rather than doing the more important work of re-articulating why the foundational truth they are based on is as relevant as ever.

The trick to swimming to the shore of certainty rather than paddling further into the rip of the unknown is to assess the context that your brand operates in; understand and accept that this and this alone is the thing that has changed. What has not changed is why you are who you are or why it is important.

Below we look at three types of context changes brands face today and what steps brands can take to avoid the siren call of repositioning that is more likely to kill their brand than revitalise it.

1/ Brand salience is more important than brand stretch

Today it is much more important to have a salient brand that is distinctive than it is to have one that can stretch endlessly. Why? Consumers care much less about your brand than you and they are already overwhelmed with choice. What to do? Don’t create barriers to choice by stretching the fabric of what your brand is, make your brand easier to pick by making it simpler and more salient. This means making the most of what they know about you already rather than trying to teach them about new things that your brand could offer. Be tight, be clear, be memorable.

2/ Demand side dominance beats supply side scale advantage

Historically brands grew as marks of quality and they controlled the supply side to profitably mass-produce products that consumers loved. Today, the starting assumption is every brand is quality, but if the brand is being ‘scaled’ often it creates more challenges than it solves. Why? Because you lose the story of the making to make more things. Consumers are very suspicious if there is not complete transparency about how a product came to be. What to do? Reverse engineer? Figure out what your story of demand is then build that.

Brand Strategy Context is King Tesla Image

Be like Tesla who want a carbon energy free future and so work backwards to build the infrastructure to deliver it.

Brand Strategy Article Context Hampton Creek Image

Think like Hampton Creek who want a world that can feed itself and work backwards to create the science that makes that possible; and if you are a legacy brand believe in where you came from, step back, embrace your founders’ ethos and focus your future on that history.

3/ Product superiority creates brand superiority

In a battle of beliefs it is not what you say but what you do that wins the fight. Beliefs are funny in that unless they are proven and made real they achieve the opposite of what you intend. Why? Beliefs are not window dressing designed to make a brand superior, they are an expectation that must be proven time and time again through the superior ‘product’ you produce. What to do? Focus on product as proof of your beliefs rather than your brand communication.

Brand Strategy Article Context Patagonia Image

Be like Patagonia and prove how outdoor gear can be made in line with a founding belief about stewardship of our planet or be like Method and prove through your product that efficacy and ethics are not mutually exclusive. If you have the choice between proving it or saying it, get busy proving it and let others tell your story.

Read more articles like this:

Brand Brand Strategy Business Strategy
February 8, 2016

New year, new brand strategy?

The New Year recently ticked over, and as such we are conditioned as a society to try new things; new diets, exercise routines, hobbies or habits to improve our lives. Nutribullet anyone? It’s also instinctive to do the same for our jobs and the brands which we manage, to ponder the possibility of new products, new customer segments or new social media platforms to maximise our 2016 success. But the best thing you could do for your brand this year could be nothing.

The boss is coming, quick, look busy.” We currently live in a culture that glorifies busyness. Since TV dinners first filled our freezers in the 70s to the rise of ‘time poor consumers’ on creative briefs in the 90s, our obsession with daily noise has become an unstoppable machine and a validation of purpose. Falling trap to ‘the more bubble’ as Greg McKeown explains in the Harvard Business Review; “we back-door-brag about being busy: it’s code for being successful and important.” Even the seemingly neutral word, slow, carries a negative stigma being used to describe a person of lesser intellect. So when it comes to building brands, we must resist the undeniable temptation to create busy for busy’s sake.

1/ First Focus

There’s no way around it: you must develop a brand strategy and positioning that is more focused than James Bond’s firing range. If you have 7 different strategies, you’re probably trying to be everything to everybody, and therefore more likely nothing to nobody. Regardless of how complex your organisation or business model is, it is always possible to create a single-minded brand positioning. Know your strengths, know your customers and know where they intersect. Create one strategy everyone within the organisation can remember and apply. If that’s not happening, make it happen.

 

New year article Ikea products Image

Ikea has always focused on value and design and reflects this in everything they do, from product design and inventory storage to communications and packaging.

 

2/ Have the courage to do less

Perhaps even more important that what you do, is what you don’t do. Be selective. As Tom Goodwin, SVP of Strategy and Innovation at Havas Media, recently pointed out; “in a typical year Samsung launches 45 new phones, yet Apple will launch one.” Apple’s focus, not only helps with cost minimisation, but also provides consumers with a more simple decision making experience, sparing them the paradox of choice. And whilst it’s true, Samsung sold more smartphones than Apple in some quarters of 2015, it’s hard not to wonder whether they could have done so in less than 8 years if they were more focused. When it comes to media, Goodwin goes on to explain: “[Apple is] never hijacking the Oscars or promoting tweets. It’s not on Twitter or SnapChat, or Periscope, or Peach or the channel du jour”. Take note, the world’s biggest brand, valued at $170,276m by Interbrand, does not rely on social media.

 

New Year Article Aesop Store Image
Photography by Dianna Snape http://www.diannasnape.com.au/

Aesop don’t believe in false promises, so they don’t advertise. Instead they focus on scientific products and unique retail experiences.

 

New Year Article Coca-Cola Coke Brand Image

In a strategic shift, Coca-Cola recently unified its four core brands (Coke, Diet Coke, Coke Zero and Coke Life) under one strategy, evident in its January 2016 global ad campaign “Taste the feeling’.

 

3/ Stick to it

Over the last several decades there have been more changes in brand strategies and advertising campaigns than ever before. It directly correlates with the higher rotation of branding professionals in charge of these decisions and their quest for busyness. Avoid the trap of ‘making your mark’ and ensure that you put the best interests of your brand ahead of your own. The strongest brands evolve and revitalise themselves but remain true to their core brand positioning, and allow time for significant shifts if they prove necessary.

 

New Year Article Mastercard advertising 01

The Mastercard Priceless campaign has been entertaining audiences since 1997.

 

New year article Nike consistent brand image

Nike advertising is always consistent in look, attitude and message, their ‘Just Do It’ campaign is 25 years strong.

 

Be focused. Be selective. Be consistent.

So when 2016 presents a smorgasbord of new marketing options to you this year, fight your inherited appetite for busyness and stop. Stop and consider whether it aligns with your brand strategy and genuinely adds value. Or have the confidence to do nothing. Because nothing, might just be the best thing you could for your brand this year.

Read more articles like this:

Brand Strategy Business Strategy
November 17, 2015

Do you have a control problem?

From big box retailers who can no longer grow, to supermarkets going backwards on average basket sales, to household name products becoming commodities, to service brands who are losing their ability to generate a sustainable margin, brands are under threat like never before.

While the industries where brands are challenged are disparate, the commonality is that they are all under increased pressure resulting from the rise of the digital economic age. What is frequently called ‘category disruption’ perhaps should actually be called what it is, a business suffering a permanent loss of competitive advantage through a fundamental shift in market dynamics.

The dynamics used to be that if you or your channel partner controlled the way your product or service was distributed, then you controlled the market for it. To rework author Simon Sinek, businesses didn’t need a ‘why’ as they controlled ‘what’ and ‘how’ and were rewarded for it. The new dynamic is that a brand must control the ‘why’ to win, as their customers will pick the ‘how’ and the ‘what’ that best suit them.

Brand Control Why How What Image

The digital age reduces search and acquisition costs for consumers to near zero. This can be seen everywhere from niche brands finding sustainable success through to the latest tech start up gaining share from the establishment. It is no longer about how to gain control through a distribution advantage for your brand, but about how to control through developing a genuine brand advantage.

Here are a few ways to think about building brands that offer enough control to win, but not enough freedom to totally crash your business.

1/ Brand architecture matters

Which brand architecture will allow you to deliver your purpose most consistently is the best question to ask before thinking about a particular brand model. Tesco have recently rationalised their brand portfolio back to just ‘Tesco’ following the likes of Apple firmly into a one purpose, one brand model. Others such as Westpac and Fiat Chrysler believe multiple brands all based on each having a clear purpose are the way to go.

Brand control Tesco Image

2/ The golden rules still apply

Tight target profiles like those developed by Tiger Air, a clear consumer insight such as that developed by Wholefoods and differentiated brand values supported by expected behaviours such as those developed by Nike are more important than ever for brands when you have no control over anything else. The old rules are the best rules for the new economy.

Brand control Tiger Air Image

3/ Purpose plus permission is critical

Having a clear brand purpose is one thing but you also have to have permission to deliver it. Google and Yahoo have roughly the same purpose of cataloguing the world’s information but only one has permission to use it (hint, it’s not Yahoo). A simple rule of thumb to follow: If you have to ask if your brand has permission to do it, it probably doesn’t. The other important point is to not extend past the point of irrelevance. Brands that get this right such as Virgin only work in categories where their approach can help bring fresh competitive energy. They don’t always work out but successful brands tend to remove the ones that don’t, a good example of this being Virgin Cola.

Brand control Virgin Cola Image

Read more articles like this:

Brand Brand Strategy Business Strategy
October 13, 2015

Values, not value

With our economy growing at below trend rates and wage growth stagnant, most industry sectors are heading towards polarisation between lowest cost value at one end and experience rich value at the other. Brands are either racing for the top or racing for the bottom.

While there is much commentary on how to ensure a brand can become more premium to escape the trap of being ‘stuck in the middle’, we wanted to focus this month on three ways to make sure your brands at the lower cost end of the scale can still maintain a point of difference above and beyond just price.

Have values, don’t be value:

Tapping into the belief system that motivates a consumer’s choice of your product frees up your brand to have a dialogue around values in common, not just value through price. Insurance companies and financial institutions position value in common through sharing their customers’ belief that they are savvy and informed choosers when they ‘unbundle offers’ to focus only on getting the parts they find important as individuals such as a low rate/low service mortgage or a lower annual insurance fee in exchange for a higher excess should something go wrong.

See the win, not the loss:

Be positive in your messaging and embrace the positive associations to your brand. Budget airlines such as Tiger and Jetstar tell the story of the destination they are taking you to, rather than focusing on the less compelling story of the journey there.

Budget branding example Jetstar Image

Car sharing companies focus on the flexibility and ease of picking up one in your local neighbourhood rather than the walk to the car and the need to return it by a certain time. Fitness centres focus on the constant availability a 24-hour gym provides rather than the lack of free weights or staff.

Don’t be boring:

Budget doesn’t have to be boring. Consumer research always supports that most people see a value alternative as an informed choice rather than a necessity so creating brands based on positivity, optimism and modernity always help your brand stay above the bottom of the pile. While some brands such as Aldi focus on looking austere to communicate their absolute value, well built value brands win through embracing and building a clear personality for themselves.

Budget branding example Haier Image

Value appliance brand Haier communicates an optimistic take on family and how they ‘inspire living’ through providing basic appliances that give you time back, where IGA with their Black & Gold value brand celebrate the choice of value through a fun a vibrant personality.

Budget branding example Black & Gold Image

Read more articles like this:

Brand Strategy Brand Values Private Label
August 25, 2015

An insight out approach to segmentation

“Males and females, 25-54 years of age, living in urban areas.” Heard this before? We have. Unfortunately, this type of description of a target audience ‘segment’ in the world of branding and marketing is as common as it is unhelpful and, rather than providing valuable insight, it simply leaves everyone to play a game of ‘guess who’.

Without any real insight into the target audience it is almost impossible to determine the best way to position a brand so that it can make a meaningful connection with their minds, their hearts and their wallets.

 

Guess Who - Segmentation IMage

 

So, once you’ve done the market research, how do you then go about creating segments that are both insightful and actionable? Here are three tips to help you get more value from your audience segmentation.

1. Focus on what makes them tick

While demographics are often important, such as if you are marketing a product designed specifically for retirees, they are rarely the most useful descriptor. For example even if your consumers do share a common age, it is more often than not the mindset or specific behaviour they share as a result of being that particular age that will provide the insight you need to connect with them. Try and start with attitudes and behaviours first, and then add in the relevant demographic descriptors that will help bring your segmentation to life.

2. Single out your target

The exercise of segmentation is of no value if you don’t then build up the courage to pick the one segment that you want to focus your efforts on to deliver on your set objectives. Make sure you bring this target segment to life in a way that both informs and inspires – try to use language that sounds less like the description on a ‘most wanted’ poster and more like the opening paragraph to a novel, with your target consumer as the protagonist. Everyone who reads your segmentation should be able to clearly picture the ideal consumer you are trying to engage.

3. Embrace the cutting room floor

Think about if you were asked to describe your best friend. You would choose your words carefully and selectively to capture what makes them unique. It is just as important to understand who the consumers in your target segment are not and the qualities / attributes they do not have, in order to understand who they really are and how they differ from other consumer groups.

Taking an insight out approach to segmentation is the best way to inspire those internal and external stakeholders responsible for managing and growing your brand to find new ways to connect with your audience. Better insights lead to better ideas. And better ideas lead to better results – no guessing about it.

Read more articles like this:

Segmentation
July 26, 2015

From Brand Guidelines to Brand Guard Rails

The best brands live in the consumers’ mind not in an oversized brand guidelines folder collecting dust in the back corner of the marketing department. Of course, it’s important that visual assets and brand code are well articulated to drive future brand work. But a brand is so much more than the rules around a DL, C5 or A4 envelope.

Today brand guidelines must capture something much bigger than visual identity, they must drive the entire ethos of the brand with the ability to inspire and motivate every person who comes in contact with it.

Brand Guidelines

 

Not just guidelines, gold mines

Traditional brand guidelines can be rigid and stiff with so many rules and regulations. Instead of painting creatives into a corner, brand guidelines should empower and enable big ideas through a well-articulated brand story. Brand guidelines should encapsulate the strategy of your brand, and be dynamic, adaptive, interpretative and applicable to all media.

Not just specific pantone colours, specific consumer segments

With the fragmentation of media and the ability to target consumers down to astounding detail, the market demands brands to be tighter and more focused than ever before. It is imperative that a brand identifies precisely which consumer segment it aims to reach because if they target “everyone” they will get left behind.

Not just business cards, business strategy

The only reason a brand exists is to solve a business problem. Because ultimately, a brand is responsible for delivering sustainable financial return, which is exactly why a brand strategy and a business strategy are intrinsically linked. Consider Virgin, its business is bold and disruptive so its brand is bold and disruptive. Just as the Bunnings Warehouse business is driven by range and price, so is the branding.

Today, the best brand guidelines are electronic, immersive and adaptable with the business strategy shining through on every page. They equip designers, creatives and marketers with the power to continually add value through communication and media, including channels that currently may be unknown. And they probably don’t include the ‘With Compliments’ slip.

Read more articles like this:

Brand Strategy Guidelines
June 26, 2015

Is Authentic, Authentic Any More?

In recent years, authenticity has become the-go-to design and brand strategy across almost every category in business and retail. But what does it mean?

It started as a backwards facing idea, representing a return to the basics and simplicity of craft. Today, authenticity has become a design movement that filters through small businesses from beer, cafés and boutiques all the way to many mainstream brands. The “authentic” design style is now so common it has become the very opposite of authentic; generic. There’s even an online hipster logo generator, for you to create your own “authentic-generic” branding; www.hipsterlogogenerator.com

 

Hipster Logos

 

So how did authenticity move from a brand point of difference to a design style and has it ruined authenticity for authentic brands of now and the future? A consistent trend after economic crisis is a greater appreciation for simple and honest pastimes and DIY, which has seen the boom of authentic messaging and the rise of small businesses. Like any design or fashion trend, the “authentic style” has gathered momentum and is now at a point of saturation, where any distinctiveness has been lost.

So how can your brand be truly authentic?

1. Own it

Be authentic to YOU and YOUR brand. What is your competitive advantage and how does it enable you to deliver a truly distinctive and unique brand offering?

2. Don’t over-promise

Consumers will see straight through it. Be transparent, be proud of who you are, even if that’s a bit daggy, a bit slow, or a bit refined.

3. Connect

It’s so obvious it’s too often forgotten, but if your brand doesn’t connect with its audience your business won’t last. Tap into your consumer. Intersect your brand into their day. Give them what they want, ensure that you’re adding value to their lives.

Ultimately, your branding should not fit any other brand. If you’ve nailed that, you’ve nailed authenticity.

 

Read more articles like this:

Brand Identity Brand Strategy
May 26, 2015

The Value of Values

Do you need values to offer value?  Do you need to know who you are before you know what unique thing you have to offer the world? Do you need to have a clear sense of purpose before you begin to build the next great thing?

Below we examine how three different types of businesses begin from a set of values to outperform their peers. Like them, if you focus on finding clarity on what your business values this will turn into bottom line value that truly turns the intangible into the tangible.

Simplicity Plays:

Businesses that have taken active steps to develop a crystal clear focus on the value of simplicity and thrift have used this to remove unwanted choice for their customers to offer them a differentiated form of value. This set of values has allowed simplicity-focused retailers to find defendable spaces in competitive markets because their clarity of values aligns to a group of customers who do not want the complexity nor the cost that comes with the wide range most retailers sell. Businesses such as LIDL, ALDI, Ryan Air, Sam’s Warehouse, Uniqlo and Costco all understand that if you offer less choice you can offer more value.

Simplicity Plays - Image

Exchange Platforms:

Businesses who have focused on developing business models based on the values of transparency and efficiency have been able to develop modern day marketplaces that offer simple exchanges of clear value between two parties. This approach used by brands such as Amazon, Airbnb, Dropbox, and Uber come not from taking value but from finding new ways to share it between both seller and buyer. The Internet provides the backbone that holds these sharing platforms together but it is the sharing of defined values that allow these brands to flourish.

Exchange Platforms - Image

Service Businesses who focus on experiential values such as ease, service and personalisation have been able to eclipse their peers in commodity markets such as insurance, travel and financial services. Brands such as American Express, Southwest Airlines, W Hotels and Mr Porter have discovered that they their competitive advantage comes not from describing and defending a unique market niche. It comes from a focus on using their values a distinctive service signature that makes them more than a commodity, it makes their brand a memorable and valued experience.

Read more articles like this:

Brand Strategy Brand Values Business Strategy
April 26, 2015

What Secret Are You Working On?

What is your secret? In today’s age this is a great line of questioning to get to the truth and insight behind your brand or business. If you are an established player it is thinking about what secrets you have that could end up costing you your business and if you are the new competitor it is what secret in the market are you going to find that is going to lead to your success.

The challenge for many brands and retailers is that we are owners of secrets that we can no longer keep and we are being outed. This is particularly true of industries with little or no physical infrastructure, legislation or significant complex enough to keep competitors at bay. These players are all enabled by the information age where information is searchable, easily accessed anywhere/anytime and the quality of that information is ranked in some form.

What went first were the secrets where it was easiest to develop new marketplaces to serve the needs of buyers and sellers through disintermediation. But taking the consumer direct to the source of the information and having them do the searching established industries such as travel, music, ticketing and books were turned upside down.

Amazon Mobile - Image

What is in the process of going next is the retailing of goods. Anything that can be physically shipped from one place to another and sold in some form, online groceries, clothes, etc. without the overhead of having actual stores. If you are Amazon by the end of 2016 you have access to over two billion smartphone users representing over a quarter of the global population. Big numbers when compared with a traditional bricks and mortar retailer.

Where next? You simply have to think about uncovering the secrets are left. They tend to be in industries with lots of variables required to create a relevant service such as health care, financial services; industries that are heavily regulated such as international shipping and agriculture and physical industries with lots of compliance requirements such as automotive and construction. In a recent publication, Bain suggests that 20% to 30% of the core revenue of a retail bank could disappear by 2020 and with thousands of start ups across the world driving at financial services innovation it is easy to imagine a day when we view a high street bank the same way we view travel agents today. The last two to three steps in a purchase journey are the biggest secrets left in most industries still to be transformed. You only have to look to the rapid growth of Uber and peer-to-peer lending platforms to understand the power of solving the problems presented in the ‘the last ten feet’.

Spotify and Uber - Image

Three secrets we are happy to share.

1/ The best businesses are no longer product businesses.

They think rather in terms of developing marketplaces that sell their own products and the products of others with significant barriers to entry.

2/ The last ten feet is what is left up for grabs.

The value is left in tackling what secrets are left in industries with significant physical, multiple unsolved variables, legislative or logistic barriers.

3/ Don’t compete when you can run away from a fight.

As Peter Thiel highlights in his great book, Zero to One, “competition is for suckers”. Escaping competition has never been harder but thinking about how to avoid it rather than beating your competitors is the only way to create long-term value.

Further reading:

Zero to One Book

Digital Reinvention in Retail Banking, by Bain Insights

 

 

Read more articles like this:

Brand Strategy Business Strategy
March 26, 2015

Why Private Label Goods Are Rushing Off The Shelves

With Private Label products now accounting for one in every five grocery items sold in Australia, we look at three key drivers that will increase Private Label to 35% of all sales within the next ten years.

1. Permissibility

While underlying sales growth for Private Label has been impressive (+6% last year with inflation just a tick above 2%), it is the penetration of Private Label that is really driving it forward.

Nielsen reported in late 2014 that penetration for Private Label is now 98% of all households. This means that out of 8.18 million households in Australia, only 163,000 have not purchased Private Label products.

Success breeds more success, so retailers will find it increasingly easy to add new Private Label products and have them accepted by the consumer. With retailers controlling which products are listed, sales of their own brands are only going one way: up.

 

Permissibility - Image

2. Immediacy

Downsizing, two-parent working families and further urbanisation are ending the traditional weekly shop as we know it. While we certainly still wheel the trolley around the entire supermarket, the growth in shopper missions has more to do with baskets than carts.

Grabbing food for an immediate need or component shopping means we are willing to pay more to have meals that are partially completed, for interesting flavours we can’t make ourselves or better health benefits.

This need-state adds up to an entire range of products, from smaller packs of bread, through to ready-meals, owned entirely by the retailer.

Immediacy - Image

3. Value Creation

While sales of Private Label have grown, they have done so mainly by offering better prices than competitor brands.

This destroys overall category margin, commoditises products and leaves retailers seeking growth from brands other than their own Private Label programs.

The next evolution of Private Label in Australia will add value rather than ‘borrow’ it. We already see the early signs of this trend with new-to-market products such as Coles Grill or Woolworths Salad Pots. What will come next will be further pushes into areas of the market that are underserved but growing rapidly, in order to create new value.

Read more articles like this:

Brand Strategy Private Label
February 26, 2015

Finding Greener Grass

Since the deregulation of the Australian dairy industry, it was becoming increasingly difficult for farmers to make a profit. And the ranging of $1 milk in retailers was putting pressure on margins, ultimately leaving dairy farmers in a tough market with declining returns. We spoke to 6th generation farmer, Erika Chesworth, about her family’s unique approach to overcoming the challenge.

“If you’re going to do something, you should do it properly” – Erika’s unwavering commitment to quality is shared by the entire Chesworth family, who know their 800 cows’ names by heart. But their commitment to excellence and uncompromising standards wasn’t always valued by processors; “We worked hard and we had the best quality milk” explains Erika, “but the people we were selling milk to just didn’t care”.

After 6 generations in the business, the Chesworths found themselves in a commodity market that was competing on price, which was completely misaligned with their century old values of going the extra mile to create a first-class product. They were losing money every time they sent milk off the farm. Something had to give.

 

The Chesworths - Image

 

It was Erika’s daughter, 23-year-old Emma, who proved to be a catalyst for change. “We encouraged her to fly to Western Australia and go to Bannister Downs where they do on-farm processing,“ Emma was exploring the feasibility to realise an exciting new idea – to produce single source milk – cows from one herd whose milk would be processed right there on the farm, just like ‘the olden days’.

With significant monies invested in new processing equipment, the family business transformed from a sole commodity supplier to also be an independent single-source milk producer, which was no longer only reliant the co-operative supply chain. Together with The Contenders, the Chesworth family created a brand truly reflective of their family ethos. ‘The Little Big Dairy Co.’ was born.

The Chesworths have enjoyed considerable success since, with the largest IGA in the area expanding the Little Big Dairy Co. fridge space to meet growing demand over other milk, and considerable interest in the product across major cities and overseas. The Little Big Dairy Co. is a brand people connect with; “Once people taste it and try it and engage in the story they are hooked”, Erika adds that the real challenge is to get people to try it.

 

The Little Big Dairy Co. - Brand Design

 

Many Australian consumers differentiate milk on price, not quality; “People just see it as milk they put in coffee and they don’t think anything about it.” But Erika reveals that something interesting is happening in Dubbo; “consumers are switching from dollar litre milk because they don’t value milk at all, to buying Little Big… which is more than double the price”. This small sign is a promising indication that Little Big Dairy Co. milk may follow the trend of other dairy products, such as King Island Cream or Meredith Goats Cheese and prove to consumers that there really is a difference in quality that justifies a price premium.

 

The Little Big Dairy Co. Brand In Action - Image

 

In terms of what the future holds, Erika has a clear vision; “I want Little Big Dairy’s Co.’s spoon-able cream along with the full range featured in Gourmet Traveller magazine and served in three hat restaurants because that’s where it belongs.” Will milk become the next luxury brand category? We’ll have to wait and see. But if hard work and dedication to quality are anything to go by, we may well hear Little Big Dairy Co. milk being asked for by name in cafés and restaurants across Australia.

The Chesworths are indeed, True Contenders.

Read more articles like this:

Brand Identity Brand Strategy Case Study

Sign up for our regular email newsletter, covering global brand strategy news and tips as well as updates from the team here at The Contenders.

* indicates required