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Posts Tagged ‘Unilever’

New realities of competitive advantage

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This week’s purchase of Yahoo suggests Verizon’s strategy department thinks much the same way as myriad other organisations; “size matters”. Whether it’s about minimising risk or increasing economies of scale, such logic has steered many companies to successful tenures. However, there are new trends in the marketplace that make such aphorisms more and more contentious.

It was a couple of years ago now that Rita McGrath wrote about “the end of sustainable competitive advantage”. Prior to this, the arrival of digital was, in general, supposed to have done away with such things. But perhaps the most recognisable face of the digital revolution over the past decade has been none other than Facebook. Facebook has consistently maintained competitive advantage through a savvy use of lock-in via network effects and an aggressive proclivity to buy out any competition (see Instagram, Whatsapp). Users spend about 50 minutes per day across these platforms.

What about organisations outside of TMT? For several years now, Zeitgeist has seen qual data showing the waning power of branding. As we’ve written extensively about in previous posts, this is partly to do with information asymmetry. In the early days of advertising, it wasn’t easy for an average person to be able to know much about a product like Colgate; a brand identity was a quick way to communicate what expectations a consumer should have. Nowadays, almost entirely due to the internet and digital communication, we are able to quickly ascertain what products meet our requirements (what size tube do I need), which are bullshitting (how much whiter teeth?) and which our friends use (still ranked as the most important data point for trying a new product). Companies like Colgate sit in the Consumer Packaged Goods [CPG] category, where most of the world’s most instantly recognisable brands reside. But according to research from Boston Consulting Group, between 2011 and 2015, CPG companies lost nearly three percentage points of market share in the US. Nestle has missed its sales growth targets for the past three years.

Part of what’s hitting the CPG sector is a sustained enthusiasm for “local”. Zeitgeist first saw this trend emerging in 2011 when he worked in a strategic capacity for retailers who were increasingly looking to tailor their store design and offering to the area they were in. This is happening in media too, where local content in the Chinese market is quickly adapting to the pyrotechnics and thrills of imported Hollywood fare, and reaping the rewards. Many of China’s businesses are built on being the home-grown version of x foreign product. Uber’s recent deal with Didi Chuxing is an example of this. Moreover, if you’ve decided you’re happy to pay a premium for a product, it is increasingly unlikely you’ll choose a mass produced one. A real treat would be buying a nice cheese from Jermyn Street’s Paxton & Whitfield, not from one of the thousands of Waitrose stores in the country. Deloitte report that US consumers would pay at least 10% more for the “craft” version of a good, a greater share than would pay extra for convenience or innovation.

Of course, as mentioned earlier, digital has had a profound impact on lowering barriers to entry. From The Economist,

[New entrants] can outsource production and advertise online. Distribution is getting easier, too: a young brand may prove itself with online sales, then move into big stores. Financing mirrors the same trend: last year investors poured $3.3 billion into private CPG firms, according to CB Insights, a data firm—up by 58% from 2014 and a whopping 638% since 2011.

Digital’s impact has also been to dovetail with the trends already mentioned. Consumers’ turning away from brand messaging and interest for local is a quest for authenticity in a crowded market. Rightly or wrongly, no other tactic has proved so successful to communicate a roughshod authenticity as the viral video over the past ten years. New entrants are communicating using different channels but also in different ways, that make incumbents uncomfortable. As pointed out though in an editorial from the FT this weekend, “It is tempting to see these young companies as miracles of branding. In fact, they expose outdated industry structures and offer dramatically more value to consumers.”

Large organisations, sensing the eroding advantage, are responding in different ways. P&G is increasingly focusing on its top tier brands, selling off or consolidating around 100 others. Unilever recently bought the famous Dollar Shave Club, and VC arms are popping up at companies like General Mills (think Lucky Charms) and Deloitte, which like other firms is also thinking about how to avoid disruption.

At the start of this piece we mentioned two reasons that going big could lead to sustained advantage: minimising risk and establishing economies of scale. In our eyes, the former is more at risk than ever, as firestorms on platforms like Twitter and Periscope can eviscerate a brand more quickly than ever; VW’s vast operations have not saved it from significant reputational damage. Economies of scale are also a risky proposition, as The Economist points out “Consolidating factories has made companies more vulnerable to the swing of a particular currency, points out Nik Modi of RBC Capital Markets”.

But what about Facebook? At the start of the article we talked about its ongoing rule of the social world, but that definition seems too narrow for what the platform is trying to accomplish. Zuckerberg has talked about Facebook becoming a “utility” as part of a long-term vision over the coming decades. This is interesting given this is exactly what every mobile phone network operator in the world is trying to avoid. Reflecting on Yahoo’s demise last week, the Financial Times wrote that “the Achilles heel of each new wave of technology is that it eventually turns into a utility”. Teens don’t tend to find utilities exciting, and perhaps then it is no surprise that Pew reports declining usage and engagement with the platform from this age group. For Facebook then, commoditisation is as much a risk as disruption by a new entry.

 

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Magnum Opus in Digital Activation

April 23, 2010 Leave a comment

Zeitgeist is fast running out of places to dispose of the bodies of clients and colleagues who blithely ask ‘Can we just do something with Facebook?’, ‘Why don’t we just make an app?’ or ‘Let’s do something viral!’ with no thought for what could actually be done or how it would fit into a larger strategic picture.

So, when we see a clever piece of digital activation supporting a larger campaign, it’s only right and proper that we highlight and celebrate it – particularly when the product it is promoting suggests that summer is on the way.

We recently chanced upon this offering from Magnum announcing the availability of Magnum Gold which places ordinary people in a spoof trailer directed by the celebrated Bryan Singer and co-starring none other than Academy Award winning Benicio del Toro and the lovely Caroline Correa. The trailer, based on the cinema version below, shows the three protagonists breaking into a vault to steal 75 million Magnum Golds because they couldn’t wait a day for them to appear in the shops.

Users simply upload their photograph and the app renders their face onto a third character who appears in the film.

The end product is pretty slick and can be shared on the usual social media sites along with downloadable customised movie posters.

When Zeitgeist added their own versions to their Facebook pages they rapidly attracted several approving comments and resulted in friends making their own versions – and the cycle was repeated. Viral box emphatically checked.

The site, which is supported by multiple languages is all part of a £3million campaign including TV, cinema, outdoor advertising, PR, in-store and on-pack promotions. While to some this might seem an expensive way to raise awareness of your ice cream, high profile brand ambassadors are nothing new to Magnum variants who have been promoted in the past by the likes of Eva Longoria and Eva Mendes and with Unilever claiming NPD saw the brand grow 10% last year it’s not surprise they stuck to a tried and tested formula.

So, for having the guts to make something so original and well executed, Zeitgeist is happy to help spread the word that the delicious Magnum Gold is out now.

An Axe to Grind

Zeitgeist has not yet dedicated the time to comment on the increasing number of campaigns involving elements of crowdsourcing, which has become popular enough that last year an agency launched dubbing itself the world’s first crowdsourced ad agency.

The latest campaign to leap onto the bandwagon is for Axe / Lynx, based on the insight that apparently the fairer sex, inscrutable as they are, “get bored easily”. Does this presumption say more about men though than women? One might also question whether corralling a mere 25 students together really constitutes ‘crowdsourcing’.

UPDATE: Great article about crowdsourcing from the Ogilvy New York Digital Labs blog, here.

Taking Care of Masculinity

November 2, 2009 1 comment

From the November Zeitgeist…

Taking Care of Masculinity

If the absurd film 300 is anything to go by, men have been shaving their chests and enjoyed taking part in vaguely homoerotic activities for some time. They also seem to have spoken loudly, decisively and dramatically about all manner of things, no matter their import. How different is the man of today? Does he still shave his chest and communicate with declarative statements to no one in particular? Does he need to be reassured by campaign’s such as Ogilvy’s recent entry for Dove that debuted at the SuperBowl?

In the US, Unilever is currently trying to convince men to use a body lotion. After a quick 15-minute workout in which former NFL player Michael Strahan demonstrates working out in a hotel room before smothering Vaseline body lotion over himself; “It takes just 15 seconds for stronger, more resilient skin.” The point is not to convey effeminate qualities in what until now, has clearly been a female-driven domain, but rather to show that a cream can be related to high performance for demanding men. Vaseline research showed that 17% of men “used body lotion at least once a week”, which is more than might have been guessed.

So, while one marketing tone of voice tells us to take care of ourselves in increasingly unexpected ways, another, Maxim, pushes us toward a different direction; “Using too many products makes you a girl”, the magazine dictates. It remains to be seen how playing on tenets of performance and durability will affect sales of products of these kinds in the long-term. The New York Times article on the subject also mentions that Niveaʼs idea of putting their body lotion in the menʼs aisle was not a successful one.

There seems to be no apparent cachet for such a placement. Is this because women do the shop for men and donʼt venture to the menʼs aisle, or is it because men feel comfortable borrowing the products of their partner confident that it works just as well on his skin as hers? Or maybe men donʼt think or want to think about such beauty products in the retail environment. In Paris and Rome, it would be hard for a man to escape a kiss from a male colleague when greeted. For most men in the UK, however, the act ranks somewhere alongside the activities of Caligula.

Reuters however recently reported on an increasingly prevalent inclination in UK men in their teens and early 20s to end texts to each other with a kiss. 75% “regularly [end] texts with a kiss and 48% admitting the practice had become commonplace amongst their group of friends”. Is the prudish, self-aware man becoming more emotive? Ironically it is only in a non-verbal way, for the moment. If a man can be more open with his feelings, he might be more willing to confess his use of cosmetic products, removing any notion of taboo about the subject. If people feel more comfortable discussing such things in the virtual world, social networks would appear to be a convenient place for network effects to take hold…