Why you may need to reposition your product

There may be times in a product or brand’s life cycle that it needs to be repositioned in the mind of consumers. A famous example is Listerine which was first sold as a general household detergent and which is now sold as a mouthwash against tooth decay and gum disease.

The most difficult thing with repositioning a brand is removing the existing brand image and expectations from the minds of target consumers. The longer a product or brand has been around, the harder it is to reposition.

Skoda cars is another example of good repositioning. For years, when Skoda models were produced under the Communist Czechoslovakian government behind the ‘Iron Curtain’, the cars were seen as cheap, poorly built, inefficient and unfashionable. When the Warsaw pact fell apart and Czechoslovakia became part of the EU Skoda was purchased by Volkswagen Audi. The Skoda brand was repositioned as a fighter brand; a cheaper version of a standard Volkswagen. today, with models like the Yeti, Skoda is a mid-market car brand showing good build quality and good value for money.

There are four reasons why you may need to reposition a product or brand:

  1. A competitor produces a product which is positioned in direct competition to your product and is therefore taking market share from your brand. The need to reposition may be strong if said competitor is larger and better resourced than your organisation. A larger competitor may be able to quickly take control of your market niche.
  2. You may need to reposition as consumer preferences change. In the UK food preferences have changed as our diet has become more international. In the 1950’s you could only buy Olive Oil at pharmacies where it was used to clear ear wax. Then, following the boom in Mediterranean package holidays exposed British travellers to the food of Italy, Spain and Greece. Olive Oil is now a staple in the UK diet and our consumption of animal fats like dripping and lard has reduced. Animal fat producers have had to repurpose their brands to meet the consumer preference for vegetable oils and fats.
  3. There may be new customer preferences. For many years Lucozade was marketed as a health drink for invalids. Advertising often included a glass bottle of Lucozade in it’s plastic wrapper on a hospital bedside cabinet. Today, given the expansion of fitness brands, Lucozade has been reformulated as an isotonic energy drink for athletes.
  4. A mistake was made with the original positioning. Ready Brek is an example where the product was repositioned because the original marketing strategy failed. Ready Brek was first marketed as instant porridge. It was rejected by those who liked porridge for breakfast. They saw the product as fake, they didn’t like the taste. Some rejected Ready Brek as it was ‘too easy to make’. Ready Brek was repositioned as ‘central heating for kids’ a warming breakfast for kids during the winter months.

Repositioning is risky. Changing consumer perceptions may alienate existing consumers and the new target customers may not accept the new definition of the product or brand. New positions may end up lees attractive than the former position. Continually trying to shift consumer’s perceptions of a brand, non-stop repositioning, may only cause confusion.

There are three sub-divisions of repositioning:

  1. Repositioning for Existing Customers: This is possibly the safest form of repositioning. You reposition the product with existing customers by offering new ways of using the product. This is why many larder staples come with recipes printed on the pack. This is a good way from shifting a product from being a standard item in the cupboard to one which is keeping up with new ideas.
  2. Repositioning for New Customers: Try to develop a new image for your brand amongst people who do not normally use it. Ugg sheepskin boots began by being marketed to male surfers to keep their feet warm when they had come out of the water. Now they are retailed as a female fashion item.
  3. Repositioning for New Uses: Often consumers will find new uses for a product. Astute businesses will spot these new uses and use them to promote their products. Powdered Gelatine was a food additive, but now it is also used as a way for women to strengthen their finger nails. Super glue was first created as a way of sealing wounds on the frontline during combat. That is why it is so good at sticking your fingers together. Today, it is marketed as a strong general purpose glue for repairing household goods.

All repositioning carries a degree of risk. If a product is selling reasonably in its existing market, it may be better to leave its position alone. A better option may to be to create a new product or brand to meet new customer perceptions. However, if your product is losing ground to your competitors, repositioning may be the best option.

Anyone who was around in the late 1980’s will remember the disaster of ‘new recipe’ Coca Cola. The recipe change was an attempt to reposition the Coca Cola brand in response to increased competition, particularly the success of Diet Pepsi. The repositioning strategy was an utter failure and caused Coca cola significant reputational damage.

Bases of Segmentation

I recall speaking to a businessman about his marketing goals. I asked him who he intended to sell his services to. He responded, ‘Everyone and anyone’.

I then asked who he intended to market his product to. At first he was puzzled. Surely that question had already been answered: He would market to those who he was intending to sell to, everyone and anyone.

I narrowed the question. Who would the businessman target to receive marketing messages. The word target puzzled the businessman. Surely he would target marketing messages at ‘Everyone and anyone.

So I had to explain the concept of market segmentation and targeting.

Marketing to everyone is expensive in terms of both cash and effort. By marketing to all, you could be reducing your margins and make you marketing messages inefficient. You may have to develop high share of voice, big advertising budgets and bland messaging.

Most businesses do not restrict who they will sell their goods to. If you have the money to buy the goods or the service, they will trade with you. there are exceptions. For example, for some models of Ferrari, you will have to show you have the skill to drive the vehicle as well as having the requisite pot of cash. Occasionally a firm may refuse to sell a product to a particular individual if they feel such a sale will actually harm their brand image (but such occasions are incredibly rare.).

Businesses who follow a diversified marketing strategy will still segment the market and create distinct offers for different segments. the car industry is an example of this Ford create cars from budget city cars through to executive saloons, SUVs, off-road vehicles, sports cars, etc.

Businesses who target a market niche need to segment the market so as to identify the boundaries of their market.

Businesses who are following a cost focus strategy need to segment the market to identify groups of consumers who will be attracted by a budget offer.

Since the concept of market segmentation was created, the methods and techniques used to achieve distinct segments have evolved.

  1. Geographic and Geodemographic: This is possibly the earliest form of market segmentation. You divide your market into different geographic areas and develop marketing materials specifically for those areas. For example, I once dealt with a parallel imports case in relation to branded jeans. The jeans’ manufacturer had complained that the retailer had no right to import the jeans as, they were marketed differently and were manufactured differently. The imported jeans were made to a lower standards and of different materials to suit the price cap of the intended market, Eastern Europe, not the standards expected in the UK. A geodemographic model of segmentation takes a distinct geographic area and then segments that area by different lifestyles. ACORN is a good system of lifestyle types for the United Kingdom and includes groupings such as Affluent Greys and Striving Families.
  2. Demographic Segmentation: Such segmentation splits a market by terms of age and family lifecycle. Currently the UK has an ageing population. We have more older people. So using marketing messages which attract that ageing demographic can be a route to marketing success. Think of the Werther’s Originals adverts and adverts which rely on ‘the good old days’ nostalgia. Also, think of fashion brands and sports clothing which tend to be marketed to under 25 year olds. The family life cycle is analysis of how a family changes over time. There is also the psychological life cycle that recognises that life stages don’t happen to everyone at the same time. We don’t all learn to drive at 17. We don’t all get married at 21. We don’t all retire at 65. Income is also a major demographic factor. Everyone is aware of the A, B, C1, C2, D, E categories used by government which split the population through occupation and income bracket. However, the A, B, C1, categories are now seen as a blunt tool and somewhat out of date. Gender is also a major demographic for segmentation. Think how successful marketing campaigns for male cosmetics have been.
  3. Behavioural Segmentation: this is segmenting a market by identifying how different groups of consumers behave. In the UK a famous example is Professor Malcolm MacDonald’s seven farmer model. Professor McDonald identified seven types of farmer when fertiliser was to be purchased. He found one group of farmers who will always buy the cheapest fertiliser; another group who would buy based on the yield expectations of the fertiliser; a third who would buy based on the science behind the fertiliser; a fourth who would buy only if they felt they had achieved a discount; etc. Behavioural segmentation recognises that people are not sheep tied to their herd. Income and demographics are one aspect of our lives, our beliefs and actions will differ and only be partially affected by the demographic group in which we conform. That is not to say we do not belong to tribes; we do. The football team we support puts us in a tribe. The music we like puts us in a tribe. The clothes we wear, the sports we play, the events we attend, put us in tribes. The important thing to realise is that we can all be members of several tribes simultaneously.
  4. Psychographic and Lifestyle Segmentation: This is complex segmentation techniques based on three factors: Tradition-directed behaviour (easily predictable e.g. My Mum bought Brand X washing powder, so I buy Brand X washing powder); Other directedness (e.g. peer pressure e.g. Jimmy says Reebok trainers aren’t cool so I want Nike trainers); Inner Directedness (I don’t care that others don’t like smooth jazz, I do, so I’ll put Norah Jones on my iPod). Psychographic and lifestyle segmentation is common amongst fashion brands and in the car industry. Firms in these sectors create ideal customer profiles which list a range of lifestyle options.

In business you need to be focused, productive and efficient. So whatever your generic marketing strategy you need to make the best of scarce resources and achieve the most return for the least effort. therefore segmenting a market and targeting the most profitable consumers within that market is critical.

What type of business are you?

One of the first activities in the preparation of a marketing plan is to define the organisation that will carry out the plan. This process means outlining the organisation’s mission, goals, values and objectives. It means assessing the organisation’s stakeholders and members and its structure. There is a bigger question to be answered, particularly with businesses: You need to know what type of business the organisation is.

In every market there are a number of players. often the firm first into the market is believed to have prime-mover advantage. However, this belief of ‘first in is best dressed’ is a myth. The clich√© of most people’s youth is that the cool kids are always half an hour late for the party.

The first into the market often bears the cost of developing the market and creating consumers attitudes towards that market. Developing a market costs. Add to that the cost of creating a market and ironing out issues with the products for that market, and first movers can find it hard to maintain profit margins and sales volume to enjoy significant profitability. Those that follow on the prime mover’s coat tails can avoid many of those costs and be more profitable.

Recently, at a Made UK conference, the broadcaster Andrew Neil spoke as to what he believed were the government’s intentions towards the UK manufacturing sector. He highlighted the end of cross-border supply chains, and that components would be created in the UK through the commercialisation of technologies like 3D printing.

Manufacturers of 3D printers will have to show that their technology is a better option than existing production processes. Why would a car parts manufacturer choose 3D printing over current injection moulding technologies. Injection moulding is fast. efficient and cheap. Currently, 3D printing is slow, expensive and inefficient.

I suspect manufacturing will find a place for 3D printing but I suspect it will be for specialist components and to allow service centres to print spare parts. I suspect that for mass production of simple components, existing technology is here for a significant time to come.

If we track a market’s life cycle we can see different types of businesses that populate each phase of the market’s life.

  1. Market Scopers: These are the market innovators. They build the product and they build the market and they may have prime-mover advantage. This is particularly the case in markets which involve patents and complex registration processes such as pharmaceuticals. These businesses shape the market and shape consumers’ expectations. Often, market scopers don’t have set plans. The market may develop through a series of happy accidents. Market Scopers can show what readiness there is in a market for a particular product or innovation; they can show how big a market is and what latent demand exists in a market; they indicate how a market wants to buy a product and they set the price level that a market will bear.
  2. Market Makers: These are the firms in the market that build the greatest market share. They may not be the first into the market but they create ‘best value’ in the market. They exist at the early growth stage of the market but as the market matures and fragments, they may not be agile enough to meet the requirements of different segments. These companies are driven by product development rather than tracking market activities. these are, in terms of the BCG matrix, the ‘Star’ companies of the life cycle growth stage.
  3. Market Exploiters: These companies follow technological advantages and pounce when the market fragments. They are ‘fast followers’. They aim to develop best value in particular market segments. This is often achieved not through the product but through leveraging brand values, service provision and alternative supply channels. These are either market followers or market challengers and a goal is to take market share from leaders.
  4. Market Changers: These businesses try to redefine the market. they force competitors to change their offer. For example, Tesla is a market leader in electric cars and the actions of Tesla are forcing existing car manufacturers to change their offer. the change is achieved through a price/quality analysis or by providing services unobtainable elsewhere.

So you need to decide what type of business you want to be, but you also need to take account of the stage of the market life cycle.

You need to know the rate of progress of the market taxonomy. You need to judge the speed at which the market accepts change and you need to assess what best value a fragmenting market will develop.

A word or two about value

I want to tell you about a guitar. The instrument in question is a 1969 Fender Stratocaster in black with a white pick guard. It was the standard model and was purchased in Manny’s Music in New York. It was purchased because an airline had mislaid a band’s instruments and the guitarist needed a new ‘axe’ to complete the US leg of the band’s world tour.

Over the next two decades the guitar suffered massively through its use and the guitarist’s numerous alterations to it. The white pickguard was replaced for a black one. The tuners wore out and were replaced. the guitarist shortened the tremolo arm with a hacksaw. The pickups and potentiometers were replaced on numerous occasions. Several necks were bolted on to the body as frets wore out or as the guitarist searched for different tones. the guitar’s owner decided to try a Kahler tremolo system, an alteration which required a large chunk of the body being chiselled away. Eventually the guitar was retired having, its owner thought, seen its working life through.

However, after a few years, the guitarist decided to restore his old guitar. The hole for the Kahler bridge was filled with a new piece of wood and a standard Fender bridge installed. New pickups were installed and the rest of the guitar cleaned and repaired.

The guitar saw a few more outings on tour and on a couple of new records. Then, to support charities, the musician decided to sell his black Stratocaster. That musician was Dave Gilmour of Pink Floyd. The black Stratocaster was the instrument used on Dark Side of the Moon, Meddle, Wish You Were Here and all the bands classic albums.

In the charity auction held at a major London auction house, the ‘Black Strat’ sold for $3,975,000. At the time the highest price ever paid for a guitar at auction. A price only beaten when Kurt Cobain’s Fender Jaguar was sold a few years later. That’s not a bad price for a guitar where, it is thought, the only two remaining original parts are the pickup selector switch and the bridge plate.

For comparison, if you want to by a 1969 Fender Stratocaster, not formerly owned by one of the World’s greatest rock guitarists, you’d pay between $5,000 and $8,000. If you want to buy the new equivalent of a standard American Strat, you’d pay $1,300.

So how did the buyer of Gilmour’s guitar decide its value and the limit of his bids?

Today, particularly in mature markets, it is argued that customers are a rare commodity. Customers therefore have strategic value. You need to win customers and once you have won them you need to keep them. You don’t just consider the exchange of products and services, you need to consider the value which is created by that exchange.

So how do customers calculate value?

Accountants (and some economists) would only consider the economic value, the value in use, of goods and services. This isn’t just the cost of purchase but other costs such as switching costs, maintenance and repair, cost of disposal, etc. Through showing lower cost in usage, it is therefore possible to justify a higher initial purchase price.

However, if we were to consider just the cost in usage of Dave Gilmour’s black Stratocaster, no one would pay such a vast sum. We’d either buy a 1969 Stratocaster for $5,000 or we would pay $1,300 for a brand new Pro model.

However, the buyer of the Black Stratocaster wasn’t just concerned with its economic value, they were concerned with its perceived value. Perceived value is the qualitative element of a product or brand. Whilst products may function in a similar manner, the customer may perceive one to be superior to the other. For example, Ford and Vauxhall have for years tried to gain a foothold in the executive car sector. They have had little success in disrupting the market share of brands like BMW and Mercedes. Simply, the buyers of BMW’s and Mercedes cars perceive those brands as having higher value than cars from Ford or Vauxhall.

So the purchaser of the black Strat wasn’t buying a functioning electric guitar. The guitar may never be played again. It will sit in a glass case attached to the wall of a millionaire’s mansion. Even more likely, it will sit in a highly secure bank vault where it will receive occasional visits from its proud owner.

Value is about more than price and exchange is about more than goods and services. Value is the solution to a formula expressing the differences between a customer’s perceived benefits resulting from their purchase and their perceived sacrifices from the transaction and future ownership of the goods or services.

So the customer who purchased the Black Strat perceived that he would gain greater benefits from purchasing the guitar in terms of owning a piece of history, the guitar that created lasting art, like Rembrandt’s easel or Da Vinci’s brush, than he would sacrifice in paying the huge cost of the guitar or the security needed to retain it.

The purchase of the black Stratocaster satisfied the higher Maslow’s hierarchy needs of its new owner. The guitar is now an expression of that individual’s self actualisation in terms of bragging rights, self image. It is an expression of their wealth and self image. It is also an expression of their generous nature as the profits from the sale of the guitar go to charity. In that respect it is worth far more than, in the words of Richard Thompson, “A block of wood with some wires on it”.

Integrated Marketing Communications and Strategic Focus

The Oxford Dictionary of Marketing defines Integrated Marketing as:

An approach that influences transactions between an organisation and its existing or potential customers, clients and other consumers connecting all marketing channels. Integrated marketing is more of a marketing management approach than a different type of marketing. The focus of integrated marketing is to ensure that all communications, the brand’s positioning, propositions, reputation development, brand personality and brand messages are delivered coherently and with impact across every channel. This means a holistic approach to marketing communication including PR and internal marketing. This is necessary because of the fragmentation and globalisation of media channels. It may also mean a move away from mass advertising to a more targeted approach where a similar message would repeat across channels.

To achieve integrated marketing communications you need strategic focus. That means:

  1. Measuring the effectiveness of marketing communications;
  2. The growth and increased visibility of the corporate identity, status and reputation;
  3. Corporate governance and ethical behaviour.

A strategic role of the brand is required given the need to add value and differentiate your organisation in the market. You need to understand how your entire organisation communicates not just the role of the marketing department. You need to know the impact that such communication will have. Communications must be managed at all levels of an organisation and you must commit to that management function. Communication is everyone in the organisation’s concern: It isn’t a matter solely for the marketing department. You need professional communicators across your organisation not just tucked away in a management silo.

Communications can be seen at three levels:

  1. Strategic External Integrated Marketing Communications: Top level communications promoting the organisational vision and values, corporate objectives and Corporate Strategies. Strategic communications to build reputation, image and brand.
  2. Internal Marketing Communications: Communication across your organisation involving all business functions including HR, Finance, Productions, R & D, etc. Internal behaviours aligned to organisational goals.
  3. Tactical External Integrated Marketing Communications: Communications to ‘push your products through the supply chain and to increase customer demand (‘pull’ communications). Communications intended to promote goods and services provided by your organisation.

A major issue with integrated communications is that people are different. We all have different views and we perceive the world differently. Particularly in service industries these differences matter. So you need to ensure a consistency of customer experience.

What really matters is communication consistency not difference. If fact difference could be an asset. However, if your communications and customer experience of them is inconsistent you have a big problem. If a single customer can experience good, bad or indifferent communication experiences with your organisation, you may lose not just one customer but many. your customers and prospective customers talk to each other; particularly in these days of social media. Word of mouth means one customer’s perceived bad experience can be used to persuade many other potential customers to avoid your business.

What is Internal Marketing

Over recent years I have seen lots of organisations trying to improve their internal communications. I have seen organisations with poor to terrible internal communication. I have seen organisations with them and us cultures, poor management and dictatorial leaders. Often these organisations play at internal marketing. They go through the motions, put out poor quality newsletters, send long-winded emails and offer poor quality staff away days.

At one organisation, the senior management locked itself away. They went from bunker mentality to an actual bunker. At another, if a member of senior management went onto the ‘shop floor’ it was akin to a royal visit. When the ‘visit’ was over, the staff sighed with relief; well, it would be another couple of years before they would be bothered again.

The problem with these organisations was that they saw staff communication as an un-necessary hindrance on their grand plan. they viewed internal marketing solely as a communications issue not as a core part of service delivery. After all, the best policy, like the security services was need to know.

These organisations also tended to have top down heavy, ‘do as I say’ management styles. They rejected the more modern, policy down/plan up approach to management.

Last week I discussed the marketing of services and stated that good internal communication processes were critical to service competitive advantage.

Internal marketing goes further than communication. It is the creation of an open, information-sharing organisational culture.

To offer superior customer service you need make a concerted effort to communicate better. Your staff need to know what is expected of them in terms of behaviour and attitude. They also need to know how superior customer service will be measured and evaluated.

Internal marketing should be seen as a powerful tool in managing your organisation. It helps align organisational stakeholders to your organisation’s values and goals.

Internal marketing is knowledge management, not just better communications. It communicates management intentions and expectations. It informs, educates and persuades employees to follow your intended course of action. It should aim to motivate employees and to clarify their responsibilities.

The aim should be to unite stakeholders behind your organisational goals. You shouldn’t only rely on formal communications channels. Informal channels should also be leveraged. Don’t just rely on formal communications plans and team meetings, one to one communications with staff are equally important,

The aim of communications should be to reduce conflicts, not to ignite them. Better informed staff are better motivated staff. Using a ‘Intentions down – Plans up’ approach means staff gain ownership of organisational goals.

You are not simply moving data around your organisation. the aim of internal marketing is to inform, educate, persuade, motivate and enthuse. If you view corporate communications as solely a data process you may end up with data overload.

The following are key factors in internal marketing success:

  1. Clear Objectives: Clear objectives unite the workforce behind organisational goals. They promote organisational change and customer focus. they allow the clear communication and sharing of organisational values. Clear objectives commit staff to a total quality approach and they develop a commitment to customer service. Interdepartmental relationships improve when objectives are communicated; as is organisational knowledge and information sharing. Obviously to be clear objectives need to be SMART.
  2. Identify your Stakeholders: You need to identify their perceptions and expectations; their needs and wants; their concerns and motivations. You need to establish how your organisation objectives deal with those stakeholder criteria. you also need to know the status of interdepartmental relationships.
  3. Communications: What is to be communicated? What is the purpose of the communication? How will a communication affect the expectations of different stakeholder groups. Expectations need to be managed and it is important that you establish feedback mechanisms. You need to avid information overload whilst providing trustworthy, honest, timely communications. You need to avoid an information vacuum where gossip and rumour will fester.
  4. Alliances: You need to create alliances across your organisation. This could be through personal exchanges. Avoid an ‘us and them’ culture; the management ‘bunker’. You need to encourage stakeholders to see issues from various points of view.
  5. Training and Development: You need to equip stakeholders with the knowledge and skills required for them to do what is expected of them. Appraisals should specify internal marketing goals.
  6. Control: Internal marketing and communications need a budget, a schedule and performance control mechanisms. Messages should be aligned with the communication norms of different organisational departments e.g. HR, Finance, Marketing, etc.

Marketing Services

Marketing services requires a different set of tools than when you market goods. This is because services are different to goods.

When Philip Kotler first defined the marketing mix, he named four criteria; Product, Price, Promotion and Place. Today we talk of the extended marketing mix adding People, Physical Evidence and Process to the mix. These are the service elements of a marketing plan. We apply the extended mix to goods because these days, very few goods are sold without additional services. You do not buy a car, you buy a car with finance, a servicing package, roadside assistance, wi-fi connectivity, a warranty and a host of other additional services.

So what makes services different from goods when delivering them to customers:

  1. Service Intangibility: Services cannot be seen, or touched, or tasted or smelled. You cannot handle a service before you purchase it. So before you sell a service to your customers you need to transmit signals which declare service quality only then can consumers define service quality.
  2. Service Inseparability: Services cannot be stored. You cannot have a warehouse filled with spare services. Customers don’t just buy a service; they play a part in its delivery. Services need provider-customer interaction. Both the customer and the provider are affected by the service outcome.
  3. Service Variability: Even the best actor has a bad performance. Services rely on people. People vary. Their mood varies. A hotel receptionist can be bright and breezy one day and in a bad mood the next. If you staff’s mood can vary, so can your service quality.
  4. Service Perishability: As stated, you cannot store services. Once a service has started, you can’t add more customers to that service. When a jumbo Jet has taken off, you cannot put more passengers on that plane. When a restaurant sitting has finished, you can’t fill those empty tables. That is why most service firms aim for 100% capacity. that is why package travel firms and budget airlines operate flexible pricing strategies.

So what strategies are suitable for the marketing of services?

The aim of service marketing strategies is to leverage the service profit chain:

  1. Develop internal service quality through training and improving service standards
  2. Create employee satisfaction. Satisfied employees leads to satisfied customers
  3. Develop greater service value
  4. Encourage increased customer satisfaction and loyalty.
  5. Leading to better levels of turnover, profit and growth.

This profit chain is an extension of the Kaplan and Norton Balanced Scorecard which has already been discussed in this blog.

There are three main aspects to services marketing:

  • Internal Marketing: You need to orientate your staff to your organisational vision and values. You need to support service providers through your admin and support staff. You need a charismatic leadership group. You need to develop a customer centred organisation.
  • Interactive Marketing: You need to develop the provider-customer interface. That means dialogue not monologue. It means involving your target customers with your organisation. This means forums, social media groups, customer events. Your customers need to be involved in the setting of your service standards. Customers need to help define your service quality. Your loyal customers should matter. They should see your organisation as having a ‘passion to serve’.
  • External Marketing: You need good external marketing as you would if your business was supplying goods.

It is often difficult to differentiate services in the market place. How do you differentiate a boiler service, or a haircut, or a restaurant meal, from the offer of your competitors?

But to stand out in the marketplace, you need to differentiate your offer, how it is delivered and your corporate image.

By providing innovative service features, you can differentiate yourself from the competition. For example, the Japanese restaurant chain, introduced sushi conveyor belts into the UK, a new way of delivering food to UK diners. Others have tried to install self-service beer taps (and faced issues with UK licensing laws). Cinemas introduced ‘bonkettes’ and leather arm chairs. One of my favourite cinemas re-introduced the intermission and bar service at your seat. Tyre fitters and vehicle valets began mobile services where they come to your home or place of work to di car maintenance. Services can be differentiated through the physical evidence of your brand e.g. logos, brand statements, etc.

It is important when delivering services that you aim for consistent service quality. Service standards and their communication are critical. You should aim for consistently higher standards than your direct competitors. Your target customers must drive your service quality. So customer feedback and retention statistics are crucial measures of service standards. You should strive for zero defects. A service standard of 98% sounds good, but if Royal Mail operated at such a target, that would be millions of misdirected parcels and letters annually. One of the most reliable services in the world is the Mumbai tiffin tin lunch service, where Indian office workers have a homemade lunch delivered in a stacked series of tins. If the tiffin service can use the Indian railway system and porters with little or no modern technology; and achieve staggering levels of service quality; so can you.

It is also important to have good service recovery processes. On the odd occasion something goes wrong, you need to be able to reinvigorate the customers trust in your brand. You need more than an apology. You need to explain what has gone wrong and how you intend to put things right. You need to offer suitable compensation including gifts and discounts off future purchases.

You need to continually improve service productivity. This means staff training, recruitment processes and your technology needs to continually improve. Marginal gains are important. Often small changes in service efficiency leads to big increases in productivity and customer retention.

But don’t push productivity so hard it harms service quality. The more you rush staff, the more work you pile on their plate, the more likely service standards will slip. It is amazing how often efficiency drives and cost-cutting backfires. Rather than improving productivity you harm service provision and your brand promise.

the aim of productivity changes should be to create customer value and so, once again, tools like value chain analysis are useful.

The Power of Packaging

This time last year I bought a new guitar.

When I bought my my first instrument buying a guitar by distance means was a big no-no. You bought an instrument from a music shop. You walked in to what often appeared to be a imposing environment: and yes, someone was always thumping out Smoke on the Water in the background! (n.b. many music retailers now ban anyone who starts the infamous riff).

By actually going to a music retailer, you handled the instrument, you played a few notes and you could be assured that the instrument was properly set up.

In those days, mail order guitars, and mail order was the only distance selling route, were seen as poor quality, badly constructed and lacking a set up process which made them difficult to play.

The growth of internet shopping means that the most successful music retailers have a big internet presence. In the UK probably the biggest exponent of this is Andertons, who have grown from a single music shop in Guilford to being the most prominent instrument retailer in the UK on the web.

Manufacturers have recognised that a large proportion of their sales will be through distance selling, so manufacturing standards have risen and instruments arrive properly set up (and even in tune!).

However, I think many retailers and manufacturers in the musical instrument sector are missing a trick when it comes to the marketing of their products. Guitars arrive in plain brown cardboard boxes. They are not leveraging the communications power of their packaging.

What is the role of a products packaging?

Well obviously, packaging holds the goods, it stops them being spilt. It protects goods and stops them from being broken. It can be a barrier to stop goods from spoiling. It can allow for efficient transportation of goods. It can act to prevent theft and is why many small goods such as camera memory cards come in oversize packaging.

But packaging also has a communications role. It can convey information e.g. assembly instructions, safety information and certification marks.

But communication goes beyond simply advising purchasers that goods are safe and how they are to be used. Packaging can be an opportunity to upsell and to advertise acessories.

After all, most guitar manufacturers also make and sell strings, plectrums, amplifiers, effects pedals, T-shirts, lesson packages, tuners, straps, baseball hats, etc, etc, etc…

Packaging has a promotional role. It attracts consumer interest on the supermarket shelf. Why else would packs of breakfast cereal be covered in cartoon characters like Tony the Tiger?

Packaging conveys brand messages and allows consumers to make brand choices. Packaging is an important source of marketing messages particularly with fast-moving consumer goods.

Packaging is particularly important where consumers are making low involvement purchase decisions. It can provide promotional cues. this can be the colour of the packaging e.g. Cadbury purple. It can be an identifiable brand character e.g. Mickey Mouse. It can be logos, fonts, tag lines and colours. Packaging has the power to attract consumers and to hold their attention.

Take as an example a can of Coca Cola. The brand name is in a particular font. The can is a particular colour of red. The can is marked with an identifiable swoosh design. Coca Cola even trademark their distinctive bottle shape. All are distinct brand identifiers and provide strong points of differentiation from those of competitors.

There are cultural aspects of the communication role of packaging. Colour often implies a particular class of product. Dark coloured packaging is often viewed as expensive or classy. Red packaging acts as an appetite stimulant. White packaging implies purity and cleanliness. Blue packaging implies freshness. Green packaging implies environmental concerns.

But colours also have cultural implications. In China, red is the colour of luck and happiness. In Germany, products for infants are often in brightly coloured packaging whilst in the UK it is far more common to see infant products in pastel shades.

Pictures can have cultural implications. In Europe we put a picture of a baby on infant formula and baby foods. In Africa, the practice is to put an image of the contents of the pack on the label. So sales of infant formula did not go well in Africa when a baby is shown on the label.

The shape of packaging can give communications cues. Look at the perfume and fragrances market where perfume bottles come in fancy shapes e.g. high heeled shoes, a fist, a woman’s torso in a corset etc, etc. The packaging of these products becomes an attractive ornament on a dressing table or the bathroom shelf. The packaging of the fragrance becomes a product in its own right.

Attractive packaging get re-used. Fancy biscuit tins have been used for marketing since the days of the Victorians. Who hasn’t got an old jam jar or Lyon’s golden syrup tin repurposed to hold coins, nails, paper clips, pens or other bric-a-brac. Every time you go to put something in the tin you get a reminder of the brand message.

The size of packaging can operate on the basis of Gestalt Theory, i.e. the whole is greater than the sum of its parts. So you can buy ‘sharing’ bags of sweets and crisps. The message being that our product helps with social coherence. Value packs offer diversity and can influence product desirability. Big containers also take up more shelf space leaving less room for competitors products

Packaging directly affects a products market position. So if you buy a ‘value’ guitar it will be packed in folded cardboard whereas a premium guitar will have a travel case and come with ‘case candy’ owner’s certificates, a cleaning cloth, booklets about the guitar and brand, and even memory cards with photos of your guitar being made.

Cheap goods are sold in cheap packaging whereas expensive goods have glossy and robust packaging. toys and Easter eggs often have packaging that can be used as part of the toy or which includes activities like puzzles and games.

Increasingly, re-useable packaging is increasingly offered by manufacturers of household goods.

Packaging sometimes has to harmonise with the in-store appearance e.g. supermarket own brand labels or Apple electronics.

So your packaging is not just a container for your goods. It offers instructions. It contains regulatory information and compliance marks and it is a promotional tool.

If your packaging is passive, you need extensive and widespread promotional activity.

If your packaging is active it provides its own advertising and promotion. Active packaging works in a synergistic approach to marketing communication.

How Trade Descriptions Law Has Changed

I am going to tell you a story, only the names have been changed so as to protect the foolhardy.

I have written extensively in this blog about one side of my consultancy business, Marketing Strategy. I think that it is time that I added an entry on the second part of the consultancy, Consumer Protection due diligence.

For over 25 years I worked as a trading standards professional dealing with consumer complaints and advising businesses on their legal responsibilities. The tale which follows is typical of the types of complaint I dealt with on a daily basis during my career. However, it also shows how the law relating to the description of goods and the rights which consumers hold has changed with the implementation of:

  1. The Consumer Rights Act 2015
  2. The Consumer Protection from Unfair Trading Regulations 2007.

Are you sitting comfortably, so we’ll begin.

One day Jane told her mother that she needed a new car. He old vehicle was fifteen years old and on its last legs. It was due a service and the cost of that service was going to significantly exceed the cars second hand value. However, Jane didn’t have the money to buy a new car. The option was no vehicle or to continue to pay large servicing fees.

Generously, Jane’s parents said they would help Jane get a replacement vehicle.

One day, Jane’s mum was passing her local garage and on the forecourt saw a smart little runabout. It was a bright metallic red and it had the word Turbo written on the back. The car had a personalised number plate.

Jane’s Mum asked the salesman in the garage about the car. She was told that the car wasn’t yet ready to be sold. the garage still had to do the safety checks to ensure it was roadworthy and they needed to remove the number plate and revert the car back to its old registration. Due to staff shortages it would be a week or so before the car was ready.

Jane’s mum was told the car was a “1.4 engine” and that the car had “around 17,000 miles” on the odometer. She was also told that the car was a 2016 model.

Excitedly, Jane’s mum called her daughter about the car. Jane agreed that the car seemed to be a good option but that she was aware there were two versions of the model of car a 1.4 litre engine and a one litre engine. Worse there were two versions of the one litre engine.

Jane told her mum that she would prefer a 1.4 litre version and told her mum to avoid the one litre version.

Jane then did lots of research on the car and what would be an appropriate price to pay. A 2016 model with 17,000 was a low mileage vehicle and the low mileage increased the vehicle’s value. However, the price being asked by the dealer was, as one price comparison site said, “a bit pricey”. Jane hadn’t been able to check the exact details of the car through a site like HPI due to the personalised number plate.

A few days later, Jane’s mum was passing the garage and saw the car was still on the forecourt. She spoke to the salesman who said the car was still not ready for a test drive. Jane’s mum saw a similar car on the forecourt in a metallic grey. The salesperson told her that the grey car had a one litre engine, so it wasn’t as good as the red car.

A few days later, Jane’s mum got a phone call from the garage about the red car. Another branch of the motor dealer had a customer interested and had asked that the car be moved to their location. Would Jane’s mum put down a deposit of ¬£99 to secure the car. Jane’s mum agreed and paid the deposit to hold the car. Following payment of the deposit Jane’s mum received no paperwork such as a receipt which would have described the vehicle.

A week or so after paying the deposit, Jane’s mum got another telephone call from the garage. The car needed to have its brakes replaced and it needed a new catalytic convertor on the exhaust. The garage was dong that work but they had been let down by their parts supplier who couldn’t source the catalytic convertor. Apparently there was a shortage of ‘cats’ and it would be a couple of weeks before the replacement part would arrive.

After waiting six weeks from first seeing the car, Jane’s mum finally got the opportunity to take it for a test drive. On arriving at the garage, the salesperson apologised. The car hadn’t travelled 17,000 miles: It had travelled 27,000 miles. This would have been the average mileage for a four year old car. This removed the low mileage price premium. Jane and her mum agreed to carry on their interest in the car.

After a test drive, Jane’s mum paid the full asking price for the car in cash. She was handed a vehicle order form in lieu of a receipt. It was arranged that the car would be delivered to Jane’s address.

Excitedly, Jane contacted her car insurer to switch her car insurance over to the new vehicle. She gave the details of the car to her insurer who then told her that the car had a one litre turbo engine, not a 1.4 litre engine.

Jane phoned her mum who then inspected the vehicle order form. In small print next to the description of the car was written “1.0T115”. Jane’s mum inferred from this that the car was indeed a 1.0 litre engine size and that the engine had three cylinders; unlike the 1.4 litre version, which was a four cylinder engine.

Written at the bottom of the invoice was a statement that the car’s odometer reading was 17,000 miles.

Jane phoned one of the directors of the motor dealership to complain that:

  1. Her mum had paid about 10% too much for the car, and,
  2. The car had been wrongly described to her parents in terms of the engine capacity.

The director replied that the modern one litre turbo engine was a better engine than the old 1.4 litre version and was its replacement. Therefore, in terms of the engine capacity, there was no consumer detriment. He also stated that the incorrect mileage on the vehicle order form was the fault of a former employee who had now left the company.

So at the end of this lengthy tale where do Jane’s parents stand. Are there potential offences under the Consumer Protection regulations? What are Jane’s parent’s consumer rights? Can the garage rely on a due diligence defence?

Under the Consumer Protection Regulations, there are three potential offences in the way the car had been marketed to Jane’s mum.

  1. A false or misleading description has been applied to the car
  2. The car has been misleadingly described through the sales person omitting critical information
  3. That the salesperson had acted outside what the average consumer would see as appropriate professional diligence.

There had been a verbal description of the car as having travelled 17,000 miles. This statement was incorrect. There had been a verbal apology that the correct mileage was 27,000 miles. However, further to that verbal statement a document; upon the sale of the car; the vehicle order form had been proffered included the incorrect mileage of 17,000 miles.

The mileage statement on the vehicle order form is a prima facie offence under the regulations. The vehicle order form incorrectly describes the vehicle.

Worse, the garage knows that the 17,000 mile figure is wrong. They have known that mileage is incorrect for a number of weeks but nothing has been done to alter the statement of the mileage on their database.

The fact that the mileage error has not been corrected means that the garage cannot rely on the ‘reasonable precautions and due diligence’ existing within regulations. This is a two part defence. Reasonable precautions is having a system of checks in place to ensure false or misleading descriptions do not take place. Due diligence is ensuring that the system is operating as intended and that it is being followed. In this case it is clear that a system of checks did exist but that the system was not followed.

The motor dealer tried to blame the mileage error on ‘an ex-employee’. Case precedent is clear on this matter. A business can blame an employee for the commission of an offence BUT to do so they must show that their due diligence system was operating as intended and that the former employee deliberately or negligently deviated from that system. In any case, since becoming aware of the ‘ex-employees’ negligence, and knowing the true mileage of the vehicle, the dealership had done nothing to alter their records as to the car’s mileage.

Ah, you say, but Jane’s mum was verbally told that the mileage was incorrect. Unfortunately for the dealership, there is lengthy case precedent, referred to as ‘disclaimer doctrine’, which covers disclaimers and amending statements applied to trade descriptions.

The doctrine states that disclaimers must be as “bold, precise and compelling” as the original description. They must be placed in close proximity to the original description AND they must negate the impact of the false or misleading description. So a verbal statement two weeks before the issue of a document containing a false description is NOT a valid disclaimer to the offence.

When Jane’s mum eventually received and amended vehicle order form for the car, the 17,000 miles statement had been scored through and the correct mileage written next to it. This was also an improper disclaimer as the original false description could still be read.

It is no surprise that much of disclaimer case law relates to the motor trade and the mileage statements on second hand vehicles!

Now we move to the issue of the engine capacity and this brings in the other two offences described above.

It is clear that Jane and her mum had been given a false impression as to the engine capacity of the car. the garage had several weeks to correct this impression by giving necessary detail. Remember Jane had stated a preference for the 1.4 litre version of the engine. It was only after the sale had been made and title for the car having changed did the true engine capacity come to light. Indeed this information did not come from the garage but from Jane’s insurers.

It is clear that by omitting to appropriately inform Jane and her mother of the true engine an offence under the Consumer Protection Regulations had occurred. An offence of misleading omission. Clearly, in the weeks between Jane’s mum first seeing the car and the purchase of it, the garage had plenty of opportunity to correct the false impression in the minds of Jane and her mother. They did not do so.

The offence of misleading omission did not exist in the Trade Descriptions Act 1968. It was specifically added to the Consumer Protection Regulations to allow for such circumstances as that of Jane’s mother’s situation. For years there were issues of motor traders not giving consumers appropriate information.

The old ‘only one female owner’ description was a common tactic amongst some dodgy motor dealers. The ‘one lady owner’ may have been true but what the dealer did not tell the consumer was that the lady in question was a rally driver and that the car’s suspension was on its last legs.

It is clear in my mind that by not giving correct details of the engine capacity, preferably in document form, to Jane’s mum before the purchase, and by leaving a false impression in the minds of Jane and her mother, a misleading omission offence had occurred.

Finally, the Consumer Protection Regulations include the new professional diligence offence. This offence occurs when a trader, or their staff, act out with levels of professional diligence expected by ‘the average consumer’.

The term average consumer is new and replaces the case precedent set by Lord Denning of ‘the man on the Clapham omnibus’. In most cases, average consumer means a reasonable person with appropriate mental acuity. However, in certain cases, the average consumer may need to have specialist knowledge. For example, if your business is selling rock climbing equipment to amateur climbing clubs, the average consumer would be expected to have some knowledge of what climbing equipment is for and what tolerances it should have for their intended ascent.

In the case of our motor trader, who in this case had a brand dealership, reasonable professional diligence would include having appropriate documentation and signage in place to avoid misleading consumers.

Under the consumer protection regulations, there does not have to be consumer detriment for offences to occur. The old detriment test has been abolished. The offences in the regulations state that the legal test is whether the false or misleading statement or omission materially affected the purchasing decision of the consumer. In any case, even under the old test, a mileage discrepancy of 10,000 miles clearly does affect the value of the vehicle and thus provides financial detriment.

What this also means is that descriptions given can be true but through their manner of presentation they can be as misleading as to alter the consumer’s transactional decision. This is also a massive change from the old Trade Descriptions Act offences.

So it is clear that the motor dealer in this case has fallen foul of all three offences under the regulations. The car has knowingly had a false description applied to it; the 17,000 miles statement. No appropriate disclaimer has been applied. Through omitting the correct details as to the engine capacity, a misleading description through omission offence has taken place and finally, by not correcting these errors, the sales person and the dealership has acted outside expected levels of professional diligence.

When told of the above offences, the motor dealership tried to void the contract. This they could not do. Title of the goods had passed and the monetary payment for the car had spent several days residing in their bank account. The old ‘possession is nine tenths of the law’ statement is a long superseded myth. The car, despite it sitting on the dealer’s land awaiting collection’, was clearly Jane’s mother’s property irrespective of its registration with the DVLA. The garage had no claim to the car.

The Consumer Rights Act 2015 makes several changes to the statutory rights of consumers. Most prominent is the time limit of 30 days within which the consumer can reject goods. This replaced the ‘reasonable time’ clause of the old Sale of Goods Act 1974 which parliament felt was legally ambiguous. The Trading Standards Institute and I believe parliament was wrong to place such a short time limit on rejection, particularly when it comes to complex goods like cars. The time limit partly negates the ‘reasonable durability’ clause of satisfactory quality and thus limits consumer’s rights. However, we are stuck with what parliament legislated.

However, a consumer’s core statutory rights remain unchanged:

  1. Goods must be of satisfactory quality
  2. They must be fit for their intended purpose
  3. The must be as described
  4. Consumers must be able to have good title to the goods.

Clause 4 is particularly the case with motor vehicles where there might be outstanding finance on the vehicle. Under English law, only the first purchaser of second hand goods is protected i.e. the motor dealer, not the consumer. So if there is outstanding finance on the vehicle, the credit company can recover the vehicle from the consumer and the consumer is out of pocket. Suffice to say, the law in Scotland is different!

In our case, it is clear that the car sold to Jane’s mum is ‘not as described’ in terms of both engine capacity and mileage. She would therefore have a right to a claim under the Consumer Rights Act 2015.

In this case the garage tried to act as if Jane’s mum wished to reject the car outright. However, this is only one of the civil remedy routes open to Jane’s mother.

  1. She could reject the car and accept a full refund.
  2. She could ask for a replacement (this is probably the most likely remedy where a car bought on finance is found to be faulty. The owner of the car, the finance company or the lease provider will ask for a replacement car to be provided).
  3. She could seek a repair (if the car was faulty).
  4. She could seek damages.

In our case, the last of these options is likely to be appropriate and the level of damages which would appropriately be sought is the difference in value between that of a car with 17,000 miles on the odometer and one with 28,000 miles on the odometer. This could amount to several hundred pounds.

As you can see, traders need to not only know the effect of consumer law, they need to design due diligence procedures which take account of case precedent. And they need appropriate check and balances in place to ensure their systems operate as intended. Particularly at times of stress and in unusual circumstances such as during a pandemic.

The Strategic Advantage OODA Loop

Winning and keeping customers is at the core of marketing strategy. In modern markets, changes in technology over time play an increasing role in customer retention and attracting new customers.

When new technologies are launched into a market, those technologies often create a strategic advantage which only lasts whilst competitors do not have the opportunity to apply that technology to their products.

You can assess the effect of technology over time on your products by applying the concept of the Strategic Advantage Cycle. This cycle is an adaptation of the Boyd Cycle (or OODA loop) developed by Colonel John L. Boyd of the US Air Force. This cycle was the cornerstone of US Air Force military thinking throughout the 1960s and 1970s and thus the design of military aircraft. It was this cycle that led to the creation of the U2 spy aircraft and the stealth bomber.

Boyd defined four phases where combat advantage could be gained through the application of technology:

  1. Observe: Where you watch and see what is going on around you.
  2. Orientate: Where you decide what is important in the environment that you have observed and when you understand why it is important.
  3. Decide: Where you decide what to do about the environment to make it more advantageous to your business
  4. Act: Where you take action to implement your decision.

Boyd then points out that the winner is the person who changes the environment in their favour faster than their competitors. When your competitor is ready to take their strategic decision, the outcome of their decision-making process is no longer appropriate.

Speed is a critical factor in the OODA loop. The winner in the combative situation is the one who adapts fastest to the changing environment and who can apply the four stages of the OODA loop quickest.

We can all agree that:

  1. Customers buy the products which, given their perceived needs, offer best value.
  2. Best value is determined by the environment within which a customer exists and how they perceive that environment.
  3. The exist in a market over the long-term, a business needs to continually offer consumers ‘best value’ as the environment changes:
    1. By waiting for the environment to influence the customer and to redefine best value: Then racing against your competitors to produce that new best value, or
    2. by influencing the definition of best value in the market (changing customers perceptions through communication).

In other words, if you can:

  1. Create factors which are perceived by customers as best value,
  2. Orientate your organisation to that best value,
  3. implement that value through your operations,
  4. deliver that value through a marketing channel,

faster than your competitors, then you will succeed in the market and either retain your position or grow your position.

You create ongoing customer value improvement by:

  1. Observing what in the environment defines best value for the customer
  2. Orientating your organisation
  3. Taking decisions strategically
  4. Implementing your decisions through operational actions which alter the market environment.

You need to apply Boyd’s OODA cycle to observe where in the market you can identify the drivers and manifestations of customer perceptions of best value.

You need to understand your organisational competencies and the other factors which give your business competitive advantages in the market. You need to understand how your strategic decisions affect those competencies. You also need to understand how the outcome of your decisions affect the market environment.

Finally, after you have assessed the market and made your decisions based on that assessment, you need to put into place marketing operations which are based on your strategic assessment of the environment. Those marketing actions must best satisfy the perceived requirements of your customers and which develop your marketplace so as to change the expectations of your customers. You should look to strengthen your organisational competences to create the desired environmental change.

You need a go-to-market programme which converts your desired market change into sales

Remember Technology changes markets over time. You must carry out PESTEL analysis of your macro-environment AND assess the effect of technology on your targeted customer group. This is a cyclical ongoing process. Depending on your market cycle such assessments may need to be taken annually, quarterly, monthly or in cutting edge industries weekly.