Kl Brand Summit 2009 Presentation Ml Jacobsen

Brand Strategies in Difficult Times
by
Marie-Louise Jacobsen
Managing Director

©Copyright & Property of RMS-Retail Management Solutions ® Retail Management Solutions Pte Ltd

Economic Retail Reality

©Copyright & Property of RMS-Retail Management Solutions ®

Brand to Retail Connection
• Retailers in most cases are your Brand, products and
merchandise connectivity to the end-user; the
consumers.
• To understand sales performance of your products or
Brands, it is helpful to understand the challenges
retailers are facing in today’s economy.
• From a retailers prospective, it is now more important
than ever to improve relevancy of product ranges and
product mixes in their stores to capture their
consumers attention and spending.
• The following recession-proof strategies should give
you insights on how to match your Brand positioning
and Brand relevancy with retailers


Recover by Improving your Business Model


1.Deliver your Brand experience like nothing
Before!
Do everything in your power to Retain your
customers by giving them Value-Add and a higher
Emotional Connection.
This in turn can give you “Good-Will” that your
customers will happily spread…free of charge!


2. Re-enforce your value message

Keep to your Brand promise and deliver more
than your promise as in difficult times brand
messages can easily sidelined.
It is a good time to highlight core-brand-value
and the promise that you can deliver it each time!


3. Change
If your failing to engage with customers in a
difficult economic environment, then re-look at
your Brand position and understand why.
Then take the necessary steps to change your
Brand's position so that it again becomes
relevant to your customers.


4. Invest in your Brand to win more customers

As other businesses will be struggling and cutting
back on Marketing, make it your business to
communicate strongly and then… go out there and
win over their customers.


5. Rally the Troops

Keep your staff well motivated and super productive,
through compelling internal marketing. Make
everybody buy-in to the “Big-Picture” to increase
revenue.
Let them be part of the solution!


6. Be Confident

Brand leadership needs a clear confident strategy to
maintain success and to remain fixed on your
customer’s radar.
Believe that you can so your customers can believe
in you.


7. Aim Higher

Not all consumers have their wallets closed. Some
will always be willing to spend if you give them a
reason to. It may be time for you to re-think your
Brand and possibly expand your target audience


8. Show some Passion
Emphasize on the emotional promise your brand
delivers can help grow your customer base long term
We all need nourishment for the soul and will
continue to pay for the good stuff. People buy for
emotional reasons and justify with logical ones.


9. Have some fun
When things are looking miserable, everyone needs
more fun in their lives. A positive attitude will get you
a long way simply because it will make you more
receptive to new ideas.

Minds are like parachutes; they don’t work if their not open!

10. Focus or Diversify…

While everything is being scrutinized, now may be the
time to extend your brand into new, more fruitful
product lines. Conversely, it could be better to
narrow in on core product lines, activities and
markets. But remember, if your market is changing –
It won’t pay to stay the same!


Invest now in making your brand stronger

Long lasting Loyalty to a Brand cannot be bought - it can only
be experienced each time & every time!


Recession Proof Tips


Cut the right costs


Cut the right costs by getting to the root of the cause
•Cutting costs across the board is generally not a good
Cutting
idea because money is better spent in some areas of the
business over others, and sound investments make good
sense, even in a recession.
•Retailers willing to perform a more thoughtful operations
review by weighing fixed versus variable cost drivers, in
the context of the company's business model, servicing
objectives, and organization, will inevitably yield much
more value.
•Keep your business records up to date so that you always
know how you are faring. The more robust your records
are the easier it will be to move faster in the case of a
slump. ©Copyright & Property of RMS-Retail Management Solutions ®

Automate, Automate, Automate


Automate, Automate, Automate
•Given the continued, rapid decrease in the cost of
information technology, it is essential during a recession
to search for new places to automate communicate
automate,
information and facilitate buying as well as retain customer
loyalty.
•It is becoming more & more common not only for people
who are cash strapped to search goods and services
online, as this gives them the ability to compare prices but
enables you to stay "visible" in consumer's consciousness
each time they visit your website.

20-80 Rule


Back-
Back-up your Key Vendors
•Careful thought is required to determine which true core
Careful
competencies to build on.
•The choice of vendors is crucial to success and in the
best of world’s the Pareto’s 20-80 rule should be applied,
20-
as it has been proven to be effective time and again
across many types of retail formats.
•Negotiate Harder Ask for quicker delivery times so that
Negotiate
you don't need to have so much money tied up in stock.
•As a supplier you want your product categories to be part
of the 20% vendor that contributes to 80% of the retailers
revenue!


Identify Customers to Grow on


Identify Customers to Grow on
Rather than trying to cater to all customers with all
products, customer relationships should be reassessed
during a recession. This can be done by communicating
on product specifics.

Targeting marketing expenditure to the most profitable
customers--and changing the nature of relationships with
these key customers--while making discrete cuts in other
areas will go a long way toward emerging from the
downturn ahead of the field.


Optimize the Marketing Mix


Optimize the Marketing Mix
Increase your Marketing – that’s right - this is the worst
time to reduce your marketing budget! The aim is to keep
and hopefully increase your market share and the best
time to do this is in a recession.
Advertising and marketing spending typically get cut first in
a down economy. Many of the leading companies today
are looking across all their channels--Web, phone, direct
mail, face-to-face--to match optimal channel to
maximize interaction. They are taking advantage of new,
more cost-effective methods of interaction, where
possible. Ikea which is typically located outside city
centres did just that during “The Great Singapore Sale
2009” They fun-vertized their sale right on main shopping
fun-
street Orchard Road!

Revamp your Business Model


Revamp your Business Model
Retail leaders cannot allow innovation to screech to a halt
in the face of a downturn, and must forge ahead by
reinventing the way they do business.
1. Leverage or extend products & services
2. Innovate by creating new Products & Services
3. Concentrate on NICHE Marketing
4. Provide FABULOUS customer service
5. Keep in touch with your customers—Internet, emails,
phone calls
6. Highlight the VALUE of your products & Make your
products and services more desirable, more consumer
centric and market significant


Visual Merchandising & Retail Space


Visual Merchandising (VM)
• VM is the activity of promoting the sale of goods,
especially by their presentation in retail outlets.
• VM is one of the final stages in trying to set out a
store in a way that customers will find attractive and
appealing and it should follow and reflect the
principles that highlight the store’s image.
• VM is the way one displays 'goods for sale' in the
most attractive manner with the end purpose of
making a sale.
• Merchandise presentation refers to most basic ways
of presenting merchandise in an orderly,
understandable, ’easy to shop’ and ‘find the product’
layout.

The Importance of VM
• Educating the customers about the product/service in
an effective and creative way.
• Establishing a creative medium to present
merchandise in 3D environment, thereby enabling
long lasting impact and recall value.
• Setting the company apart in an exclusive position.
• Establishing linkage between fashion, product design
and marketing by keeping the product in prime focus.
• Combining the creative, technical and operational
aspects of a product and the business.
• Drawing the attention of the customer to enable them
to make purchase decision within shortest possible
time, and thus ©Copyright & Property of RMS-Retail Management Solutions ®
augmenting the selling process.

Window Displays

• A window display is also a "visiting card" for the
visiting card
store. Windows are the most important factor within
the store/shop front as they can communicate style,
content, and price point.
• They can be seductive and exciting, based on
emotional stimulus, or price-based (when they clearly
emphasize value for money with easy and obvious
ticketing).
• For the retailer, the window is among the most
controllable elements in relation to image and to what
is happening inside the store, and there are number
of decisions to be made about a how these effects
are achieved.

Product Focus Through VM

1. Sell by showing and promoting.
2. Create an emotional connect between the viewer and
the display.
3. Encourage the shopper to enter the store.
4. Get the customer to pause and “shop” the selling
floor.
5. Establish, promote, and enhance the store’s visual
image.
6. Entertain customers and enhance their shopping
experience.
7. Introduce and explain new products.


VM is an Art


For Most “Can’t Live Without” are…


For Most “Can’t Live Without” are…

• Mobile Phone (all)
• Internet access (all)
• Cable TV (all)
• Hair cut/styling (all)
• Favorite local eateries (all)
• Shoes (woman)
• Cheap & Good Fast Fashion (woman)
• Skin care & Cosmetics (woman)

Can’t Live Without but Can’t Find!
The Indonesian Saga


Ways to Magnify Retail Profits


A Brand/Store without any emotional value will not be
sustainable

How should one build emotional bonds with customers?
1. You must first articulate a distinctive & relevant
Brand Promise.
2. You must identify 2 or 3 key attributes of the
Brand promise
3. You must use market research to isolate specific
triggers; use quantitative approaches to assess
which of these triggers will have the greatest
impact.
4. Once the triggers have been identified consistent
delivery of these triggers will have to be part of
the normal stream of the organization’s activity.

Consumer Centricity and what it takes

Carefully analyze past buying behavior of your
customers and categorize by their buying habits.
Basically you will be slicing and dicing your database
list. Discounts may motivate your customers better
than premiums, vice versa for others. Study your
list and break it down to create special offers for
different customer groups.


BIG-
Isolate Your Biggest Spenders & Build BIG-ticket Offers
for Them

These are the customers that do not want to shop the
sales and always purchase your most expensive
items. Make it easy for them by packaging products
together.
If at all possible, keep track of what they have been
buying from you and offer complementary items.
Communicate your new arrivals. It’s a great chance to
keep in touch with your customers.

Cross Sell


Cross Sell the not so Obvious


The Amazing Power of “FREE”!
FREE”

Using the word FREE in your newsletter, marketing
materials, or on your Web site will increase your
sales almost overnight.
First, take a look at what you offer customers now and
see what you can give them for FREE.


Offer Premiums and Gifts

Premiums give you better leverage than discounts.
Premiums that can be used as gifts give your
customers more leverage for their dollar.

For example, a $50 gift certificate with every $500 in
purchases is better than a $50 discount. It costs
you less, there will be a percentage never
redeemed, and some will bring in new customers
who will spend more than the certificate amount.
Store vouchers or store money has an extremely high
consumer relevancy…


Customers view these as free
money!


How to understand customer trends and forecasting
customer demands


We haven’t the foggiest what it does, but it plugs into a computer
and retails for three fifty


Consumer & Their Buying Power


Changing Shopping Habits

Consumers are changing their shopping habits so you
need more information on their current preferences if
you want to improve your sales.


RELEVANCE

VALUE
&
COVENIENCE

REACH REWARDS

RELEVANCE

• Shoppers value relevance; and their value of
relevance gets your message through the clutter.


CRM Data
(Customer Relationship Management)

• Real relevancy is achieved through thoughtful
application of accurate customer purchasing
data/information.
• Understand that people place higher value on the
products they enjoy.


If your Products or Categories are Relevant You
will Sell!


REACH

First give shoppers what they want.

• The next thing to look at is to “Reach” them with
relevant messages.
• Ask them if they are interested in getting news or
coupons from you once in a while and how.


Let your customers keep you in mind!


Consumer Reward Preference…

– Discounts: 81%
– Currently considering buying a specific product:
52%
– Products & services are relevant to their needs:
47%
– Familiar with the merchant: 35%
– Convenience – good location for the customer:
30%
– Expiry date of the vouchers: 22%
– Flexibility of product size & choice: 18%
– Product sample: 15%

How to create customer demands


The 5 drivers needed for the total Brand
experience to work


5 Drivers

Creating Brand or Store Loyalty

Emotional Connection

Awareness 5
Drivers
Value

Relevancy Accessibility


Emotional communicator

Emotional Communicator: Know your
customers and what triggers them to buy

Value
Identify
your real
strengths

Value: Identify your real strengths what
makes your Store; brand, products and
services special

Accessibility

Accessibility: Is the Brand easy to find
each time and every time?


Awareness

Awareness: You've got to stand out and be Different .


Differentiation

Relevant Differentiation: Brands are determined by
their Unique Selling Proposition - (USP)


• Emotional Connection
Your Brand, Product or store must connect with the
people on an emotional level
• Value
Your Brand, Product or store must deliver good
'perceived' value for the price
• Accessibility
Location - Location – Location & the web!
• Relevancy
Your Brand, Product or store should be unique or
different and consumer-relevant in a consumer
compelling way
• Awareness
In your merchandise category are your products the first
Brand that comes to the consumers mind? Do you
own your consumer's mind-share? Solutions ®
©Copyright & Property of RMS-Retail Management

Consumer Motivation

•Motivation is a much-used term in explaining why people
act as they do.
•Motivation can be termed as those inner striving
conditions described as:

Wishes – Desires – Needs - Drives And Likes


How to Manage Product Life Cycles in View of
Market Downturn


Product Life Cycle

PEAK

88 pieces

44 pieces

180 pieces
TAKE OFF DECLINE

19 pieces
208 pieces

TESTING
CLEARANCE
5 pieces

It is within this grid that retailers are able to make full profits on their Merchandise Zero

Source: Joseph B. Siegel

Product Life Cycle
• Product Life Cycle Management is the succession of
strategies used by management as a product goes
through its product life cycle. The conditions in which
a product is sold changes over time and must be
managed as it moves through its succession of
stages.
• Product Life Cycle (PLC) - The phases of the sales
projections or history of a product or service
category over time used to assist with marketing mix
decisions and strategic options available. The four
stages of the product life cycle include introduction,
growth, maturity, and decline, and typically follow a
predictable pattern based on sales volume over a
period of time.©Copyright & Property of RMS-Retail Management Solutions ®

Time points in the Selling Cycle
Example
• You can estimate sales rate based on historical data, or
after the event analyze the sales efficiency of these
particular items.
• The cycle may show sales at full retail of an item selling at:
$59.00 up to the decline stage that 189 pieces are sold=
sales of $11,151.00
• At the decline stage, price change is applied. The
remaining 19 pieces are reduced by 30%. The new value is
$41.30. Stock holding of $784.70
• At clearance, there are still 5 pieces left & final reduction
of oddment to clear are at less 50%. New price for the
balance 5 pieces: $ 20.65,Markdowns in this case was 5
pieces at value of $103.25 which sold down to zero.


Date Action Season
February 1 A Sell Early Spring
Life-
Life-Cycle 2 B Clear-out introductions
Clear-
for 3 C Sell
Fashion 4 D Clear-out introductions
Clear- Promotion
March 1 A Sell
A Begin receiving 2 B Clear-out introductions
Clear-
new season 3 C Sell Spring
B Fashion 4 D Clear-out introductions
Clear-
presentation 5 A Sell
before this
April 1 B Clear-out introductions
Clear-
point
2 C Sell
C No re-order of
3 D Clear-out introductions
Clear- Promotion
this season’s
merchandise 4 A Sell Early Summer
past this point May 1 B Clear-out introductions
Clear-
D Begin season 2 C Sell
markdowns at 3 D Clear-out introductions
Clear-
this point
4 A Sell& special buys Sales
5 B Mix of regular & Sales
Source: Joseph B. Siegel
June C Season-end SALES
Season-
©Copyright & Property of RMS-Retail Management Solutions ® SALES

The product lifecycles during a downturn will necessarily be
shortened. Depending of the nature of your retail format, you
need to decide how long you are willing to hang on to the
merchandise before you start discounting.
Rule of thumbs, if 80% of your stocks are still in-store after 1
month, you have a problem.
Second rule of thumbs, the first make-down is always the
cheapest. This is because after a month the merchandise is still
“deemed” fresh and new and you can get away with a lower
discount.
In a downturn, you have to monitor the speed in which you’re
selling because if the merchandise is slow, chances are that
they will be even slower later on.
Not reacting to slow moving merchandise is not the best choice
during a recession. If it’s not selling…get rid of it!


Identifying Problem Stocks

Also known as ‘dogs !’

If a Cat can push a watermelon out of a
lake…
lake…anything is possible

Case Study
1997-
1997-1998
Asian Crisis
The 30% Club

Source: nohomers.net/showthread.php?t=80865

The 30% Club

• The Recession Strategy was dubbed The 30% Club.
• It implied that with a well thought through Strategy,
and with the full cooperation of key vendors, we
could develop merchandise concepts, new
merchandise categories and private labels all of
which should generate at least a 30% increase in
sales from all participants.

Lesson Learnt
• Lessons learnt from my past experience with
recessions, pointed to; that customers got tiered of
the loom & gloom and were feeling "Recession
Fatigue",
• and after a while, went back shopping looking for
something to Reward themselves.


Create a Strategy
• As in the past, Investing in fashion merchandise was
every vendor’s fear
• But if all stores were to carry only basic merchandise,
the customers who did want to spend would not have
the incentive to do so.
• The Strategy: Value Added


Merchandise Criteria
1. Concentrate on best sold categories
2. Decide what we wanted to do
• Expand the ranges
• Improve Quality
• Develop newness
• Create novel packaging
• Gift with purchases that has synergy with the products


Brand Criteria
• The Brands chosen had to be popular
• They had to be customer relevant, market relevant
and price relevant
• Private Labels were developed in most division


Price Criteria
• Merchandise developed had to be superior in all
aspects
• The prices were set to be deemed “great Value”
• Added innovative packaging and gifts with purchases
• Bundle offers where relevant
• Margins were planned high to support launches and
A & P expenses

Gift with Purchase


Vendor Criteria

• Each department or division would nominate their
best vendors who had a “potential” annual sales
growth of at least 30% if we backed them up.
• They had to be of reasonable size, have control over
their own production and have ranges that had
potential for expansion.
• All merchandise co-created had to be exclusive to
our Store


Selling Criteria
• The 30% Club Members were offered premium floor
space and special VM Displays.
• Additional floor space were given to support range
expansions
• VM & Special signages were developed to support
the Brands and Merchandise Concepts
• Additional promoters to support & sell
• Product Knowledge Sessions for all staff on the
features and benefits


Results

• The cooperation gave us the ability to develop
existing brands and new products strategies, new
product lines that had synergy with the core brand.
• Our first year result from 14 vendors invited to be part
of the “30% Club Members” showed increases in
sales ranging from 52% to 137%.
• The following year, five more vendors were added to
the Club and both sales and profits showed high
double-digit growth for all members.

Think of Positioning… as the “space” a Brand, Product
Positioning… space”
consumer’
or a store occupies in the consumer’s mind

The Art of Retailing Bundled in a Book

Thank You!

Kl Brand Summit 2009 Presentation Ml Jacobsen

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