alhodg

Posts Tagged ‘Tesco’

Can Marketing Save Milk?

In Advertising, Marketing, politics, Uncategorized on July 20, 2012 at 8:02 am

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
2
009 – 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:

Milk production value chain

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.

Milk prices

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.

Advertisements

Tesco + Facebook = The end of high street shopping?

In Marketing, Online on March 1, 2012 at 9:07 pm

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.

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

In Marketing, Online on September 25, 2011 at 1:10 pm

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?

Co-op advert fail?

In Advertising, Marketing, Movies, TV on January 29, 2011 at 4:40 pm

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.