Can Marketing Save Milk?

I have a lot of sympathy for the current protests by farmers about the pressure on their bottom line. I’m sure it’s a horrible position to know that all your hard work – often built on years of knowledge and tradition – is essentially bankrupting you.

However, this is not a first.  This issue of supermarket price pressure has been rumbling on for years:

2004 – UK milk processors clash over prices
2009 – Milk price cuts hit dairy farmers hard

Farmers aren’t very effusive people, and the National Farmers Union doesn’t seem to be a  protest organisation, so such protest really are a sign of desperation for these people. However, whilst raising public awareness may help a little, protest rarely wins out over economics. The public wants cheap milk. The supermarkets want to supply it. That won’t change.

But if protest won’t work, what will?

1. Refuse to supply

The obvious option would be to refuse to supply – en bloc.  I don’t know much about the logistics of importing milk, but it would seem difficult for all the UK’s fresh milk to come from abroad. Back in 2010 raw milk was only traded across the UK border from Ireland into Northern Ireland. It’s a hard option, and could be a long game, but sometimes a line has to be drawn.

The difficulty here, though, is the farmers’ own conservatism. As mentioned above, I don’t see the National Farmers Union as an effective Trade Union, in the traditional sense – at least, I haven’t heard from an NFU representative yet in the press (again, please comment and correct me if I am wrong – I presume they lobby behind the scenes in some way?). Without that power of unity, there’ll always be some bastard waiting to undercut the other.

So without that option, how can farmers solve the conundrum? Well, maybe marketing can help.

2. Move up the supply chain

The supermarkets may be taking all the public flack here, but as this graphic suggests (I have not researched the source data, but thanks to @OurCowMolly for the reference) the processors have a large part of the value chain, taking up some of that money the supermarket pays, which could go direct to farmers:

The Milk Production Value Chain

A standard tenet of marketing strategy is that is you are a manufacturer of a mature product, eventually your margin will disappear as your product becomes commoditised. When this happens, you either need to diversify (eg/ find something else to farm) or move up the value chain.

I cannot find a reference for this, but I was reading that in Sheffield milk processing was done cooperatively, with a fair price, until the processing plant was taken over by Wiseman, with resulting reduction in price paid to farmers (sources anyone?).

Economically, a bigger processing plant makes sense, as it can reduce overall costs of production. The problem is, however, exactly that mentioned above – you come onto the radar of the big boys.

However, from what I can find out, milk processing is not a particularly complicated process, and not reliant on the kind of advanced manufacturing processes that requires a large cost infrastructure. Machinery is easily available.

Perhaps farmers processing their own milk and supply directly to their local supermarkets is an option?  Sure, it will require change, investment, and negotiation, but cutting out the processors gives the potential to offer supermarkets an equal price, but with more money to the farmer?

Now, this is such an obvious solution, it must have been tried (and failed?) so I invite people to comment and let me know why this doesn’t work.

3. Build a brand

A bottle of Tesco body spray is about 99p. A bottle of Lynx is about £3. Both are smells in a can. The difference is brand value. It’s a hard and nebulous concept to understand and implement, but all you really need is a marketer, a budget, and a design agency (and a consistent taste – this bit may be the hardest bit. again, not enough knowledge to say.

This is already happening in the milk industry with Cravendale‘s irreverent adverts squarely aimed at generating demand through teenagers for a branded milk product. Cravendale is owned by Arla, one of the processors, and presumably helps them get more profit from supermarket distribution.

Competing against Cravendale’s budgets would be hard for farmers, but a ‘Fair Trade’ type brand may not.  This type of branding works similar to the ‘Intel Inside‘ style of marketing, where it can be carried by the users/distributors themselves to add value to their own products by guaranteeing the ‘fairness’ (in terms of price and condition) given to the producers.

This approach would seem ideal given the current scenario. Why is their a ‘Fair Trade’ icon for Kenyan coffee or Chilean wine, but not British milk?

Based on this graphic (again, thanks to  @OurCowMolly for the reference) Sainsbury’s, Waitrose et al would jump at the chance to get added social kudos for giving a decent price, and with supermarket wars as they are, if their ‘Fair Trade’ milk tempted consumers to pay a little more, the others would soon follow.

So what do you need to kick this kind of thing off. Well, will, really.

Maybe while today’s protests are going on, the farmers can discuss the minimum standards of production they are willing to commit to (eg/ adding some schtick in about treating cattle well will play well with liberals), come up with a logo, and start lobbying the public direct with the idea.

Supermarkets obviously don’t listen their supplier, but they do listen to their customers.  You’ve got the public’s attention – use it.

Facebook flotation – there’s still gold in them thar e-hills.

There’s been a lot of press around the Facebook share flotation recently, a lot of it negative, both before and after the flotation.

Most of it centres on the monumental valuation, and the amount they were looking for per share.  Many analysts asked how you could justify such a high valuation when Facebook were only making around $3 per user in actual revenue.

Talking about ignoring the bleeding obvious.  Yeah, maybe it started overpriced – the market soon sorted that out – but what would you rather invest in:

1. A mature company with mature products and customer base looking for capital to expand still further, into unknown territory, perhaps, or

2. A new and energetic company that has spent years building a massive customer base (900 million, in fact) and has barely scratched the surface of captialising on these customers?

Starting from that low point of around $4 revenue per customer per year, the potential for growth is absolutely enournous. And, Facebook has shown in the past that in this new online age, you can try something, fail, and move on pretty quickly without people really noticing. In many ways, the more failures you can have, and get over, the more successes you’re likely to have.

I think many observers also thought “they aren’t making much money from Advertising, and there may not be much room for advertising growth, so how can they grow revenue”?

This fundamentally misunderstands the what Facebook offers. As I stated in a previous blog, Advertising is just a tiny part of where Facebook could head.  In reality, the company who really needs to be quaking are not other social media outlets, but Amazon.  If Facebook has the potential to get products people want in front of them when they are not looking for them – a big jump on sites like Amazon where you have to be looking for something to be exposed to other potential purchases.

Indeed, the natural continuation of this thought is that Amazon needs to become a much more social experience. Maybe then facebook would have a real rival. At this point it doesn’t. I await the next move with baited breath.

Tesco + Facebook = The end of high street shopping?

According to the wordcloud on my blog, two of the things I like talking about the most are Tesco and Facebook, so there’s no surprise that this article caught my attention:

Tesco launches Facebook-based virtual fitting room

http://econsultancy.com/uk/blog/9164-tesco-launches-facebook-based-virtual-fitting-room?utm_medium=feeds

(courtesy https://twitter.com/#!/engagingbrand)

In one of my previous posts, I posited the idea that as soon as large retailers, like Tesco, start to properly adapt to and exploit social media channels like Facebook, all forms of physical shopping – malls and out of town, too, not just the High Street – would be in real trouble.

(Read the previous post here: FB hoax – the online mall and why Facebook will never charge you)

Here’s the final paragraph from that post:

“People still like to meet people, and clothes shopping particularly requires physical interaction, and is a very social experience, but FB is so near to being able to offer a similar experience that the shopping malls – especially the smaller regional ones – should really start to worry.  Just as malls killed off the High Street, maybe online will kill off the mall?”

Well, today’s announcement seems to even begin to tackle this basic need for ‘physical interaction’ by taking it all online.  I think it’s interesting that Tesco in particular have developed this ‘online fitting room’ given that I’m not sure they even have physical fitting rooms in their stores. Theirs is not high fashion – it’s based on “it’s cheap, so even if it doesn’t fit me properly, it’s no real loss”, so really Tesco are looking to radically increase the levels of social interaction involved in buying their clothes. Do you know anyone who’s ever been on a genuine clothes shopping trip, with friends, to a supermarket?

This is why this announcement is a double threat to physical shopping. Not only are they looking to move clothes shopping online, by launching on Facebook and including social sharing, they are looking to directly attack the ‘social shopping’ experiences that traditional fashion outlets like River Island, H&M & Topshop (forgive me if I’m out of touch with female fashion brands – I’m a 32 year old man) can offer. Forget that Tesco currently sell manky clothes – this can easily change, and the power of market research information they will get from social sharing and commenting will help them do this rapidly (note how Primark managed to gain press attention by offering a few ‘designer’ items in amongst their other pap).

The High Street is a 70s concept that was destroyed by the Mall in the 90s. Now the combination of a severe and long-lasting recession, and the maturation of online retail across a wide range of sectors and age groups, will I believe, start to kill off the Mall by the time the decade’s out.

Physical spaces have to think of something else to do. Something that is unique, that there is a high demand for in the UK, but an undersupply. Something which is highly social, but definitely requires the physical body to experience.

I’ve got 2 words for you.

Water.

Park.

The Marketing Lighthouse

In many of the places I have worked people have put time and effort into developing new products, new services etc…solely in response to the competitive environment, such as new competitor products or pricing structures.

Obviously it’s important to respond to what’s going on ‘out there’ but often the money and manpower allocated to the ‘new’ propositions takes resource away from the core products and services, which are often what you customers are really interested (especially in these straightened times).

It can be a brave thing to do to when your competitors are rushing around with ‘new’ stuff to do what you already do, but better. It can lack visibility publicly, but won’t go unnoticed by your existing customers.

Anyway, being a fan of wanky business-speak and aide memoirs, the idea of spending as much time critically examining your own business than other put me in mind of of lighthouse. It’s primary job is to look outwards and shine it’s light on potential danger, but for every sweep of its beam, it also casts its light internally, on land.

So, I give you – the Marketing Lighthouse!

The Marketing Lighthouse

Plurchase – short follow up to last week’s post on Facebook as an online mall.

Following up from last week’s blog on how Facebook will always be free, and it’s likely next direction towards being an online version of a shopping mall, I recently found reference to a service called ‘Plurchase’ which seems to already be doing this.

It’s essentially a sidebar for Amazon and similar online shopping sites, where you can invite friends to ‘shop’ with you, and all can comment via text on the various items you’re currently browsing.

I can see this being useful for people discussing Xmas present lists, or for distant parents and offspring to have some ‘social’ time together, but I think until something like this integrates with video and sound the real ‘social’ aspect will be limited, and with Facebook now tied to Skype, I’d still back FB to get there first.

As far as I can see, this is currently US only, so if anyone has any experience of Plurchase, I’d be interested to find out what it’s like.

More on Plurchase.

FB hoax – the online mall and why Facebook will never charge you

A Facebook friend posted a status update saying due to recent changes FB were going to start charging (more here).

I didn’t need to google it to know it was a hoax because charging for access goes fundamentally against Facebook’s money-making proposition both now and in the future. They’ve just gone past 800m active users on the back of being free, and whilst this has its own value in terms of advertising and online games, that’s just the start of it.

Facebook’s ambition is to become the first World Mall – an online shopping and leisure destination for everyone.

Think of the USPs of shopping malls:

• All the shops you need in one place
• Leisure destinations like Cinema and Restaurants to make it a social experience to be enjoyed in groups
• Easy access (free car parking, bus & raill links) & comfortable surroundings (air con, benches, plants etc…)

Of those 3, it is the third which is most powerful, as this is what differentiates a mall significantly from the High Street.  This is what makes many malls a weekly destination for families and friends – it’s easy and free. You don’t even necessarily go to buy some stuff, but while you’re there…

Now consider what would happen to those decisions if your local mall charged you £3 each to get in, or £7 per car to park.  This might still be cheaper than a trip to town, but the thought of paying to access would mean you would only go when you had the express intent of doing a decent sized shop, or spending a long time there.  Footfall would decline, and so would income in the shops, and it probably wouldn’t offset the amount being taken in in charges.

This is exactly how Facebook operates. By being free, and offering some basic functionality of use to subscribers, FB ensures people come back again and again and again, and in doing so, their opportunity to to sell to you increases.

Currently FB makes its money from the targeted pay-per-click ads down the right side of your profile, and from monetised online games such as gambling or those games where you buy a cow for your farm or something.  However, FB are relatively few stages away from being a one-stop shopping and leisure destination – an online mall.

In fact, I reckon they are only 3 or so tie-ins away from achieving this. Consider the following Facebook additions:

– Paypal tie in (for ease of online payment – not sure their own currency ever took off other than for game obsessives)
– Spotify & Flixster tie in – rights issues are the big stumbling block, but having HD movie streaming from Flixster with live FB comment box (or Skype connection) would allow people to essentially go to the cinema together on Facebook. Spotify is struggling to cover its costs with advertising alone, but if it was FB’s primary way to listen to & buy music, it would soon start making money.
– Tesco Online via FB – in the UK, if FB got Tesco Direct plugged in to FB, that alone would drive all other retail brands onto FB (just looked and Tesco only have 300k followers on FB – this is appallingly bad considering their customer base).

People still like to meet people, and clothes shopping particularly requires physical interaction, and is a very social experience, but FB is so near to being able to offer a similar experience that the shopping malls – especially the smaller regional ones – should really start to worry.  Just as malls killed off the High Street, maybe online will kill off the mall?

The PolyPill – an analogy for NHS reform, and the efficiency myth

Some medical authors have called for all over-55s to be given cholesterol lowering drugs as a more cost-effective route to a better outcome for all:

http://www.bbc.co.uk/news/health-13284032

Thinking through how this proposal might be applied, and the alternative, highlights an interesting point about the advantages and disadvantages of policy ‘for the many’ or ‘for the greater good’, as against the concept of choice as preferred by successive Governments with regard to the NHS.

The concept of choice as a positive is embedded in our culture, with regarding commerce and capitalism. Choice ensures money get’s to where demand (or need) is greatest, and drives down cost by encouraging competition etc, etc…you know the deal.

This is the concept that many believe will help the behemoth of the NHS move its enourmous budget to where need is greatest, and make sure those treatments also become cheaper.

However, in healthcare there’s an additional complication – the greater good. Most people in the UK still hold by the ideas behind the NHS, even if not the reality – eg/ that the overall idea is to try and raise the overall health of the entire population in all areas. Part of this can mean spending money where it isn’t necessarily ‘needed’, such as in preventative medicine, or in associated schemes such as education (to promote contraception, healthy lifestyles etc..)

In current policy thinking, anything which is decided and impemented across the board is called ‘inefficient’. They call it this because some of the money will be wasted on people who don’t need what is offered, or people of differing needs get the same treatment.

This is true. However, does this necessarily mean it is inefficient? Efficiency actually relates to the overall outcome measured against the overall effort put in (time, money, energy etc…).  Whilst everyone abhores waste, waste can be part of an efficient outcome.

And so we come to the research on the Polypill. Unlike current thinking, it makes the simple conclusion that sometimes mandating a treatment, rather than giving people choice, can be more efficient. Some will feel the effect more than others, and there will be waste and side effects, but sometimes when given choice, people decide against things that are good for themselves, and for the population as a whole.  Note the recent rapid rise in Measles on the back of parents choosing not to give their children the MMR jab, and thereby exposing their own and other children to an horrendous and easily preventable disease.

I’m not necessarily against ‘efficiency’ based reforms, just the concept that choice automatically creates efficiency. It doesn’t.

Social Media is redefining the role of the marketing department

There’s no doubt that Social Media has changed the game for Marketers, but so far this has just meant internal marketing departments adjust to new methods of communication.

However, if you consider what exactly SM does for the relationship between the company and the customer, it should actually fundamentally change what the marketing departent does.

Traditionally, an internal marketing department will get involved with ‘big idea’ marketing – finding new niches, new markets, how to fill them, defining the message, and then rolling it out. There’s a lot of work to be done in this, and this is what fills most of a traditional marketers time.

If you’re customers are really active in Social media, though, you should throw this out of the window. That’s because, much more than ever, SM gives a very public forum to customers experiences, both good and bad.

You can’t control the message – the brand if you like – anymore, so why try? Wouldn’t it be much more effective if the marketing department spent it’s time analysing the minutae of every single customer touch point, and ensuring that the people involved at those points understand what the company stands for, and how their performance affects the brand, its value, and the company’s profitability.

Scrap the design agency – fancy pants graphics only really matter if your product is ‘high-brand’ (like Nike, where the name means so much more than the product). For your website, usability is all. If it looks terrible but works great, it will get noticed (Ryan Air’s website looks terrible – deliberately so, I think – but searching and booking is still easy).

As I say, you don’t control your brand anymore, your customers do (haven’t they always?) so why put your effort into a logo redesign, when monitoring and responding to negative and positive comments on the social web could enhance your brand much more, and create those all important cyberspace advocates that help drive traffic, and demand, to your product.

Most marketers are still only just waking up to the game-changing nature of Social Media, perhaps because it will take time for the digital natives to come through to the key positions, but it does seem from the number of  ‘Understanding Social Media’ courses around that they are waking up.  However, will they be willing and able to adapt and do what the most successful social media sites, like Facebook and YouTube did – forget about the ‘look and feel’ and the fancy ‘fun’ bits of marketing, and get right down to functionality and customer experience?

I fancy that those that do will flourish.

Where are all the low calorie restaurants?

I saw an item on BBC Breakfast News recently about some activist calling for restaurants to display the number of calories and other nutritional information, in line with some trials in North America, on their menus.

Now, the fact that this doesn’t currently happen suggests one of two things:
1. There’s no demand for it
2. There is demand, but restauranteurs think it will do more damage than good.

Whether you think this is a good idea or not probably comes down to whether you think dining out is a treat and you shouldn’t worry too much about your waistline, or whether you think you should be able to keep your diet even when you do go out, and be able to enjoy your meal to boot.

Either way, the only reason a restauranteur would object to giving approximate nutritional information is because they know their food is full of crap. If not, why not give the choice?

They might answer that knowing the nutritional value (or lack of it) would put people off, but there are a couple of problems with this view:
a) It assumes when people eat out they aren’t already aware that they are eating unhealthily (surely most people are)
b) For those who don’t realise the unhealthiness of certain foods, wouldn’t it help for them to learn?
c) It assumes that there aren’t already a host of people who either don’t go out as much as they would want to because of their diet, or when they do they just have a main and some water (eg/ spend less).

Media focus on, and public awareness of, obesity and health issues have never been higher, and all supermarkets have ‘healthy choices’ options across the range.  The only area this health awareness doesn’t seem to penetrate is the restaurant business (to be fair, many fast food places actually publicise nutritional info more than formal restaurants).

My point, though, is not moral, but economic.  I think there’s a big gap in the marketplace for restaurants, especially the chains like Zizis, Pizza Express etc… to have ‘healthy eating sections of their menus, or to offer nutritional information across the board.

Having worked in offices my whole life, there’s often a difficulty when going out in groups as many of the group are often on diets (of various kinds).  What better way to attract these groups, and people that just want to eat healthily in general, than to offer the information they need to watch their calorie intake.

I’m sure some restaurants must have done this already at some point – a brand tie-in with Weight Watchers seems far too obvious not to have been tried – but it hasn’t impacted with me, so clearly hasn’t been are core part of their marketing communications (or I am blind).

Perhaps they are just too hung up on the fact that offering healthy options suggests the rest of their menu is full of crap – as if we don’t know that a 16oz steak in creamy mushroom sauce and chips is, relatively, unhealthy.  We know. We know and we don’t care. But some people do, and these people deserve the right of choice.

Co-op advert fail?

Take a look at the adverts below that have been on TV recently in separate forms, and edited together for cinema advertising. You might recognise them, but try not to think of who the advert is for, instead try to listen to that voice inside you which is trying to tell you what the solution to their problems is:

What was your little voice saying?  Was it “shop often and little, shop often and little, shop often and little” or was it “Tesco home deilvery, Tesco home deilvery, Tesco home deilvery”.

I like Coop’s advertising and their attempts to position themselves differently to the big supermarkets, but I fear all these advert do is sell the concept of online shopping and home delivery, rather than nipping round the Coop.

I love the Coop near me, but they’re always giving me vouchers for £2 of every time I spend £20. This suggests they aren’t actually happy with you just nipping in for ‘often and little’ and would prefer you to have a more substantial shop.  By the way, I have literally never redeemed one of those vouchers.  That tells the whole story, really.