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  • For some Retailers, Black Friday should be renamed Brown Friday

    When I was in elementary school I had to do a project on my family’s history. I asked my father if any of our ancestors had been war heroes.  He went on to tell the following story:

    In the 1700’s a great grandfather many generations back had been an Admiral in the Royal Navy.  One day a sailor called down from the crow’s nest to report that a Spanish warship had been spotted on the horizon.  The Admiral turned to his first mate and told him to get the Admiral his red shirt. “That way” he explained, “if I am wounded in battle, the sailors won’t be alarmed”.

    A moment or two later, the sailor in crow’s nest frantically called down that it was not just a single Spanish warship, but the entire Spanish armada. The Admiral calmly turned to his first mate and instructed him “Go get my brown pants”.

    I was recently reminded of this story as the first reports started coming in about the weak Black Friday retail store traffic. Shortly after the initial retail reports started coming in, the internet sales volumes were reported, and at surprisingly robust levels.  So the pundits were half right. Sales volumes in total were up, but heavily lopsided towards on-line sellers*.

    How, with all the resources and big data at their disposal, and months of planning did so many experts and retailers get it so wrong?

    How? Because 83% of the sales on Amazon were to third party sellers (as reported by therobinreport.com), and most large retailers don’t participate in Marketplaces. The reason most of large retailers don’t participate in Marketplaces, is the same reason that many consumers are drawn there to shop:

    PRICE

    When online sellers choose to participate in a marketplace (Amazon, Jet, Rakuten, etc.) they commoditize products, and compete almost exclusively on price. Retailers have a much different, and generally higher, cost structure than their online counterparts, and therefore cannot compete solely on price. It then follows that major retailers cannot compete on marketplaces. Unfortunately, it looks like that’s where the shoppers were.

    So despite the huge advancements, and investments, in OMNI Channel infrastructure, technology, customer experience initiatives and web design by most large retailers, shoppers chose to spend their money where they could get the best deal. Interestingly, what the large retailers did not invest in was technology and service providers to help ensure pricing integrity across their assortment. By monitoring which brands were chronically discounted online, they could have steered their assortment into brands that have demonstrated an ability to maintain pricing consistency across channels. In that environment, consumers would have expected to pay the same in store as online. Not coincidently, retailers could have leveraged their customer experience assets to win the sale. Price would no longer have been a part of the equation.

    Regardless of what the reason is, shoppers appear to place a lot more weight on price and 2 day delivery, than the black Friday retail consumer experience.

    A few years ago, the fear was that shoppers would visit retail and buy online (showrooming). This year proved that fear to be misguided. Now retailers are struggling just to get the shoppers in the store. The truth is that the retail landscape is forever evolving. In years past, the major retailers shrugged off the risk of a single product, single brand or single website posed to their business. To continue the metaphor, a single warship. They are now seeing much of their assortment available at much lower prices from an entire armada of online sellers. If retailers choose not to invest in the pricing management solutions in the coming year, then they should probably reach for their brown pants.

     

    *Most of the major retailers have yet to report if e-comm sales, and margins, made up for some, or all, the shortfall in store traffic. Not all retailers break out there numbers by e-comm versus traditional store sales.

     

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com) and can be reached via e-mail at dcoleman@brandoogle.com. Brandoogle is a supply chain research organization that specializes in the identification, investigation, and remediation of pricing irregularities on the internet. Brandoogle works with both Retailers and Brands to improve margins using a proprietary suite of software and services.

     

  • Is Dynamic Pricing the Retail Equivalent of On-Line Gaming?

    In the spirit of full disclosure I am not, nor have I ever been, the CEO of a major retailer. That said, if I was, and my Chief Merchandising Officer told me that his/her strategy to improve profits was “to buy into inventory, and sell it for whatever we can get” I would at the very least  wonder aloud if I had the wrong person in the job, and in a worst case scenario begin severance proceedings.

    Quite frankly, in the retail world, buying into inventory always carries some risk. Be that as it may, the approach described above is not informed risk taking, rather it is unbridled gambling.

    While I seriously doubt any CMO has actually verbally articulated a “sell it for what we can get” strategy to their CEO, there seems to be a growing mountain of evidence that, in fact, some retailers are beginning to follow this approach.

    This shift in retailer behavior is being driven by the intersection of two powerful market forces: consumer price sensitivity, and dynamic pricing technology. The price sensitivity of consumers has been a market force for eons, but with advances in data analysis we can now see for the first time at a granular level how price sensitive consumers truly are.  A recent report by Cognizant (as reported by retailtouchpoints.com) suggests that 90% of shoppers will switch retailers over price. The second market force, dynamic pricing, is the relatively new ability of retailers to instantly re-price goods based on real time information about competitor pricing.

    When the market forces of price sensitivity and dynamic pricing collide, retailers can draw the erroneous conclusion that in order to generate sales, and thus profit, they must price match their competitors. (This may be one of the underlying factors driving the recent earnings warnings offered by Walmart).

    One of the underlying assumptions about price matching competitors is that they actually have inventory on hand that is immediately shippable.  But what if they don’t?*

    Unfortunately, even with the current advances in price monitoring technology, it is impossible to know if a competitor has inventory on hand, or whether the competitor is simply waiting to receive and order before they procure the product.

    If the competitor doesn’t have inventory on hand, should the retailer really be price matching? And if they do, how much profit has the retailer forgone on the sale?

    There are no simple answers to this dilemma, but there might be alternatives.

    • Only work with vendors that aggressively enforce their MAP policies
    • For those vendors with weak pricing enforcement, only take product on consignment
    • Only use price matching on chosen loss leaders
    • Demand exclusive packaging or SKU numbers from vendors
    • Some combination of the above

    The upshot is that for retailers, buying into inventory always carries some risk, but buying into inventory and applying a dynamic pricing matching tool without a reasonable understanding of probable margins goes well beyond normal risk taking and borders upon institutionalized   gambling.

     

    * Analysts at Brandoogle estimate that anywhere from 3-5% of the time, the web site posting the lowest price cannot immediately ship the selected item.   

     

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com) and can be reached via e-mail at dcoleman@brandoogle.com. Brandoogle works with both Retailers and Brands to improve margins and combat grey markets using a proprietary suite of software and services.

     

  • What Bank Robbers can teach us about Grey Markets and On-Line Pricing

     

    The bank robber’s motivation is to make a lot of money fast, without putting forth a lot of effort. The same is true of the grey markets made up of on-line Minimum Advertised Pricing (MAP) violators. In both situations, the perpetrators know what they are doing is wrong, and therefore disguise themselves to avoid getting caught.

    Minimum Advertised Pricing policies have been around for decades. While often mischaracterized as being a thinly veiled version of price-fixing, the underlying purpose of these MAP policies is to ensure that retailers don’t engage in a “race to the bottom” on price, and inadvertently destroy the perceived value of the brand. In fact, in addition to MAP policies, many brands have very strict distribution guidelines to continue to reinforce the exclusivity of the brand. By way of example, while Walmart may be the nation’s largest retailer, they carry no luxury brands.

    For brands, MAP violations are moving from a nuisance issue to a major threat to their longer term survival.  A number of large retailers are growing ever more frustrated, and vocal, about the competition they are facing from on-line MAP violators. So much so, that some brands have found themselves “in the penalty box” while they sort out their online pricing and distribution.  Those brands that can’t seem to get this sorted out, risk being completely thrown of some of their largest retail accounts.

    In the pre-Internet era, policing MAP policies used to be a simple as thumbing through the weekly circular to see if anything looked out of compliance. Alas, we are no longer in those bygone days, and MAP policing has become increasingly more difficult. As necessity is the mother of invention, a whole new category of internet price monitoring services has appeared over the last 3 years. Brands are now discovering that their product is advertised on the web at prices well below MAP, on sites they would never choose to be associated with.

    To continue the metaphor, banks have installed the latest camera technology for a two-fold purpose: discouraging would be bank robbers, and secondarily catching bank robbers on film. The same can be said of the many brands that have started using “Internet Price Monitoring” services to capture the web addresses of MAP violators.  In both situations, the perpetrators disguise themselves to avoid getting caught, and the bank film/internet address, in isolation, adds little value in solving the problem.

    It is only when the bank image is coupled with solid detective work, based on clues found at the scene of the crime, that it is possible to identify the person behind the mask. Once the true identity of the bank robber is known, it simply becomes a case of going out and arresting them.

    Unfortunately the same parallel holds true for Brands that get a download of offending websites from the internet price monitoring service (the equivalent of a photograph of a bank robber). Only when brands deploy additional research and investigative resources to identify the true identity MAP violators can they   move from monitoring MAP violations to addressing the supply chain that supports these rogue web sites.

    Minimizing grey markets and online MAP violators requires a comprehensive approach that goes much further than simply enlisting a price monitoring service.   And that, I can assure you, is money in the bank.

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com) and can be reached via e-mail at dcoleman@brandoogle.com. Brandoogle works with both Retailers and Brands to improve margins and combat grey markets using a proprietary suite of software and services.

     

     

     

     

  • Are Brands at Risk of Identity Theft?

    15 million victims lose $50 billion a year, In the U.S. alone. Identity theft has exploded because of technology, but people aren’t the only ones at risk. As counterfeiters get more sophisticated, brands become just as vulnerable.

    I would imagine that most people who buy a fake Rolex watch or fake Gucci bag are well aware that they are not purchasing the genuine article. After all, luxury brands rarely choose flea markets or back alleys as their retail venues of choice.

    Unfortunately, counterfeiting is not limited to luxury items. Counterfeiting has expanded into many product categories that most consumers would never suspect, even life critical products. Dietary supplements, medical supplies, auto parts, safety devices, and even infant products are now at risk. While most consumers would never buy these items from flea markets, they certainly would purchase them online if it meant saving a few dollars.

    To make matters worse, counterfeiters have gotten much better at marketing their products online. They’re now producing very credible looking websites, complete with glowing customer reviews.

    Even if the consumer does their research, they generally research the product, not the seller. Unfortunately, most consumers have a limited understanding of the risk posed by counterfeiting and would never suspect it to be life threatening.

    If a counterfeit product were to maim or kill a consumer, that brand would be facing a public relations nightmare. The incident would certainly hurt that brand’s sales and could even force them into bankruptcy. In our world of 24 hour news cycles and instant social media word-of-mouth, a brand could be destroyed before counterfeiting is even identified as a factor.

    On the surface, Brands seem to be faced with an impossible task: How can they, Brands, possibly begin to locate all the possible websites selling counterfeit goods?

    Fortunately, just as counterfeiters have evolved to exploit the advances in technology, brand protection services have become much more adept at scanning the internet for “problem websites”, and developing remediation strategies.  One of the tell-tale signs that a branded product may be a counterfeit is an unreasonably low price. By scanning the web, a brand can see not only which websites are in violation of Minimum Advertised Pricing (MAP) policies, but may also have the ability to detect the presence of possible counterfeit goods. Even the smallest brands that have limited budgets for market research can now have access to the sophisticated tools that the bigger brands use to protect their brand equity, product identity, and pricing strategies.  These services are not only affordable, but generally cost a fraction of product liability insurance.

    Like most things in this world, an ounce of prevention is worth a pound of cure.  In this case, a solid internet monitoring process could save lives.

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com).   Brandoogle works with retailers and brands to help protect brand equity and deliver consistent pricing integrity across channels using a proprietary suite of software and services.  He can be reached via e-mail at dcoleman@brandoogle.com.

    Stats Source = http://www.identitytheft.info/victims.aspx)

     

  • PRICE MATCHING: Have Retailers Created a Monster?

    Price matching is a known margin killer. Yet, the fear of losing in-store sales to on-line competitors has retailers aggressively implementing discretionary price-matching policies.

    In the past, all sellers had very similar cost structures. Store hours and location convenience played a significant role in consumer behavior. In order to utilize price-matching, a consumer had to:

    A. Be aware that a better price existed

    B. Jump through a number of hoops to prove it

    C. Prove that the competitor was within the local trading zone

     

    Not only was this process inconvenient, but the difference between prices was generally small. As a result, price matching was widely offered by retailers, but rarely employed by consumers. This was a win-win scenario for retailers because they could appear competitive without actually taking much of a loss. However, the internet would change all of that.

    Technology has empowered consumers. Price matching no longer favors retailers. Today price shopping is not only practical, it has become valuable. Price spreads among sellers, both on-line and off, are no longer in the 3-5% range, but often in the 30-50% range. Now price-shopping an item is easier than ever thanks to advances in Comparison Shopping Engines such as Amazon, Rakuten, and Overstock. In the internet age, the store is located right in the palm of the consumer’s hand, and the store never closes.

    Consumers flocked online to shop and retail stores grew quieter. Declining sales pressured retailers to rethink their price-matching policies. With consumers clearly willing to walk out the door, a few retailers began to offer price-matching internet sites. This allowed consumers to have the best of both worlds. Now they could get the benefits of on-line pricing along with the convenience of “have it now” retail delivery.

    Retailers that offered internet price-match guarantees really had delivered an exceptional customer experience. Naturally, once consumers discovered this, they began returning to those stores. These successes made internet price-matching a competitive necessity and forced other retailers to follow suit.

    A number of retailers achieved their goal of increasing sales this season. Thus, the internet price-match policies were initially regarded as a great success. Unfortunately, as the financial results were released this January it appears that the incremental sales did not generate any incremental profit. In fact, some retailers actually saw their profits shrink. To make things worse, rolling back these programs will be very difficult, as consumers have now begun to expect internet price-matching.

    Clearly price matching to generate sales, but without the consideration of profit/loss impact is not a sustainable strategy over the longer term. The key to a retailers’ profitability going forward will not be a function of “me too” pricing, but rather merchandising a product assortment that appeals to consumers, but has limited internet price competition.

    The first retailers to make this transition away from discretionary price matching will be the retailers of the future. Those that don’t, will face a monster of their own making.

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com). Brandoogle works with retailers and brands to develop strategies that help them achieve their pricing goals with a proprietary suite of software and services. He can be reached via e-mail at dcoleman@brandoogle.com.

    Sources:
    http://www.retailwire.com/discussion/17893/walmart-considers-online-price-match-guarantee
    http://www.retailwire.com/discussion/17919/walmart-stores-get-burned-matching-online-prices

  • Traditional Retailers Get A Boost From A Most Unexpected Source…UPS/Fedex

    UPS and Fedex have both announced rate increases for the coming year, but this year’s increases come with a little twist. Both carriers have announced that they will start using a “dimensional weight” freight rating system (a system that considers package density as well as weight). This new pricing structure is a game changer.  The battle for the consumer’s dollar that has waged on for the last decade between traditional brick and mortar retailers and small internet sellers may have just taken a taken a new, and very dramatic, turn.  

    The dimensional weigh program won’t affect all shippers equally. Those shippers that ship large parcels with low weight to residential addresses will feel the impact most severely.

    So why is this a game changer? The reason is simple. A significant number of small internet shippers that sell in low density, low value, categories (diapers, lamp shades, light bulbs etc.) that compete solely on price, will now see the freight component of their business model jump considerably. I would not be surprised to learn that some web sellers will see their freight costs double. For years these sellers have grown their businesses because they have enjoyed a significant cost advantage over traditional retailers. All of a sudden, all that is about to end. A number of websites that sell low value, low density, items will find the dimensional weight rates put them at cost disadvantage to the traditional retailers.

    Traditional retailers that sell in low value, low density categories will benefit as price conscious consumers migrate from low cost internet sites back to the brick and mortar stores. In fact some categories will probably see price increases at retail, as retailers will raise prices (and increase profitability) in categories that no longer compete with small internet sellers.

    In certain product categories, this change in shipping prices could potentially have a larger benefit to traditional brick and mortar retailers, at the expense of small internet merchants, than the concept of a national internet sales tax.

    (The Marketplace Fairness Act has been stuck in congress for years.)

    One could ask “Won’t the FedEx prices go up for the traditional retailers as well, making everything equal again?” Probably not. Most major retailers are already very big accounts for both FedEx and UPS. As such, they will be in a position to negotiate away, much, if not all, of the price increases related to package size.

    It’s not clear how all this will pan out eventually, but the early signs are that Traditional Brick and Mortar Retailers just got a huge boost in the battle for the consumer’s dollar.

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com).   Brandoogle works with retailers and brands to combat showrooming with a proprietary suite of software and services.  He can be reached via e-mail at dcoleman@brandoogle.com.

     

     

  • Channel Conflict…The Ugly Truth About Growing On-line Sales

    “Increasing our on-line penetration is the key to our future sales growth.” This line has been uttered so many times, in so many ways, by so many corporate leaders in CPG, in the last five years that it now falls into its own special class of cliché. On the surface this phrase makes perfect sense. The internet is the fastest growing sales channel, and every corporate leader should make the internet channel a part of their growth strategy. The truth however, is a little more complicated. The economy has been growing at an anemic pace for the past several years, and therefore, the growth of internet sales must be coming at the expense of another sector. That sector is traditional brick and mortar retail.

    Are these corporate leaders suggesting that their companies abandon their traditional retail sales channels? Probably not. Unless the sales generated from the on-line channel are incremental, and not cannibalistic in nature, increasing on-line sales will not automatically lead to sales growth.

    An argument could certainly be made that very few companies can honestly claim that the internet has actually created new demand, demand that hitherto did not exist. They may have created new points of sale, but not necessarily new demand. Quite the opposite in fact. A disproportionate number of internet sales are probably just sales that historically would have occurred at traditional retail.

    Why does any of this matter? In the stampede to grow the internet channel a number of corporations have tried to get their product on-line on as many websites as possible, with very little thought to the longer term consequences. No self-respecting brand would want their product sold at a flea market, yet in the rush to get maximum on-line penetration, a number of brands are now available at the metaphorical equivalent of on-line flea markets. Not only does this seriously undermine the exclusivity of the brand, and diminish its brand equity, but it also creates a very nasty channel conflict problem.

    In short, once an item is available on-line at multiple websites, the only way for the web sellers to differentiate themselves from each other, and win the sale, is to compete on price. Real brands don’t compete on price, they compete on a platform of exclusivity, and differentiating features. That’s why they spend so much time and energy on marketing, advertising, and brand management.

    The channel conflict problem occurs when the brand’s traditional brick and mortar retailers, those who promote the ideals and exclusivity of the brand, and sell the brand at full price, find themselves competing with on-line low price leaders. These retailers are getting hurt by the brands misguided foray into “on-line sales penetration”. So as internet sales increase for the brand, it’s coming at the expense of their traditional brick and mortar retail customers. This channel conflict makes true sales growth an elusive opportunity. Worse yet, a brand that has undisciplined distribution on the internet risks losing a major brick and mortar retail account.

    What should brands do to avoid falling into this trap, and still grow their business? Do the same thing consumers do, shop around. Find a web partners that will promote the brand ideals, offer great customer service, and will honor pricing guidelines. All these websites ask in return is that the brand rigorously maintain a clean web presence, and not sell to “price only” internet flea markets. Seems fair. The brand gets great on-line penetration with great on-line partners, and does so without diminishing the true value of the brand or alienating their existing retail accounts. I think that’s what the corporate leaders have been meaning to say all along.

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com) and can be reached via e-mail at dcoleman@brandoogle.com. Brandoogle works with both Retailers and Brands to improve margins and combat showrooming using a proprietary suite of software and services.

  • Win or Lose, Retailing in an Omni-Channel world is a Team Sport

    I have been a player, captain, coach, referee, and spectator of team sports for the better part of three decades. I have always been amazed at the parallels between business and sports. When reflecting on the day’s events, be it a game or a business challenge, I often find myself concluding “it all comes down to fundamentals…right players, right training, right coaching”.

    That said, a friend recently shared a very interesting story about his attempt to buy a basketball pole. On the previous Saturday afternoon he visited a local discount sporting goods retailer, and spent a little less than an hour evaluating his options. Eventually he settled on a pole that cost about a thousand dollars. He pulled the inventory ticket (they don’t store these kits on the sales floor) and headed to the cashier. With credit card in hand, along with his customer loyalty coupon, he presented the inventory tag to the cashier. That’s when things got a little weird.

    She informed him that the item he had selected wasn’t in stock, and that he, the customer, should  call around to other stores to see if they had one in stock.

    Not a word of it a lie.

    Then he dropped the punch-line. He informed me that he went home, with the intention of finding the phone numbers for the other stores, and found himself shopping for the item on-line. The net-net of the story he proudly announced was that he saved $300 by purchasing the item on-line. “I never would have thought do that, if the cashier hadn’t recommend it” he chuckled. “Free shipping, and no sales tax. What a deal!”

    In sports parlance, what the cashier did by encouraging the customer to do the inventory availability research himself, and in essence showroom the product, amounted to nothing short of a “forfeit”. In retrospect, I would say this is a team loss, not just poor play by an individual.

    What went wrong? Where do you begin? And most importantly what do you need to do today to prevent losing this way again in the future? This loss was due to a combination of poor players, poor training, and poor coaching.  Below I will delineate the most glaring short comings by functional area.

    • Basic Sales Training – The cashier could have completed the sale, by recommending
    o A specific store that had the product in stock and offering to put a “Hold” on the item
    o Offering to have the product shipped to the customers home
    o Offering to have the product shipped to her store, and allow the customer to pick up the item later in the week

    • Inventory Management – If the product was on display on the sales floor, why wasn’t the product in the back room?

    • Pricing Management – Why was there such a gap between the retail price, and what could be found on-line?

    • Systems – Did the cashier have the ability to see inventory availability at other stores?

    • Systems Training – If the system functionality existed, was it user friendly, and had the cashier been trained on it?

    Unfortunately, retailing  isn’t a game, and with the advances in technology, and the growth of internet retailing, the retail playing field is only going to get more competitive. For those retailers that have started investigating  different interpretations of omni-channel marketing as a new way to compete, it’s important that they stay focused on the fundementals of retailing.  Winning the sale, either in store  or online, starts with the right people, inventory, tools and training in place.

    With cashiers turning down thousand dollar sales, working on showrooming solutions can’t begin soon enough.

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com) and can be reached via e-mail at dcoleman@brandoogle.com. Brandoogle works with both Retailers and Brands to improve margins and combat showrooming using a proprietary suite of software and services. 

  • Internet Price Risk…Buyer Beware

    As the summer winds down, the all-important fall buying season for retailers is heating up. While the role of the retail buyer has never been easy, the advances in technology, savvy online retailers, as well as increased use of mobile devices, the job is now infinitely more challenging.

    Historically, retail buyers have managed a series of macro risks when determining how to deploy their open-to-buy dollars to maximize their Gross Margin Return On Inventory (GMROI):

    • Trend Risk – Will the product resonate with consumers?
    • Inventory Risk – What is the optimal inventory needed to meet demand?
    • Delivery Risk – Can the supplier deliver product to ensure the smooth flow of goods throughout the selling season?

    Now, the retail buyer faces an added internet price risk – commonly referred to as Showrooming.
    Simply defined, Showrooming is the likelihood a consumer will find product significantly discounted online and purchase the product on a discounted site rather than through the retailer. If this risk is not understood and mitigated it could make all other traditional macro risks seem inconsequential.

    Both advances in mobile technology and comparison shopping apps in the last year have amplified the Showrooming risk. These advances have led to increased convenience, speed and ease of comparison shopping, and have been adopted by consumers at unprecedented levels. Retailers can find themselves in trouble when the product can be found online at a significant discount despite their best efforts to choose proper trends, brands and products.

    Best Buy is perhaps the most well documented example of mismanaging the Showrooming phenomena. Best Buy’s strategy of price-matching, coupled with multiple delivery options, to compete with pure e-tailers resulted in similar year over year sales numbers. That said, when the impact of price matching on GMROI was revealed after the holiday season, a near panic ensued among shareholders. So despite significant investments by traditional retailers to deliver a robust omni-channel marketing strategy, large retailers still face an uphill battle when a pure “e-tailer’s” pricing creates a dramatic gap in pricing.

    Not all brands suffer the same fate. Several brands exercise incredible price discipline in both retail and online channels: Apple, Stihl, and KitchenAid to name a few.

    So what should a retail buyer do to manage Internet Price Risk?
    The first step in curbing Showrooming is to monitor the online pricing behavior of brands being considered for the fall assortment. By monitoring the products and the brand within the category assortment, the retail buyer can quickly determine which brands take online pricing discipline seriously and which ones do not. Once the buyer knows the risk posed by the brand they can shift open-to-buy dollars to brands that offer the lowest Internet Price Risk and protect the GMROI.

    With the National Retail Federation projecting that traditional retailers are in for another tough year, while Amazon is projecting another year of double digit growth, it’s more vital than before for retailers to win the war for consumer dollars. For retail buyers, the success of this coming holiday season will depend largely on how well they manage Showrooming and Internet Price Risk this current buying season.

  • Spot the Artist’s Mistake…A.K.A. Digital Marketing Defense

    It’s been said that a picture is worth a thousand words, and the explosion in digital media would tend to support that conclusion. In fact, a large part of marketing is “imagery management” and the concept of “association”. Certain things go together to help create concept. Very clean black and white cows, in a green field, with a bright blue sky with little white clouds all work together to harness the concept of “the freshest, most wholesome, most delicious milk on earth”. Certainly that image is considerably more compelling than a picture showing a sweating one gallon jug of milk sitting on a poorly lit shelf in the refrigerator section of a grocery store. That’s why imagery matters, and why association matters. How things are visually perceived is plays an even larger role now in brand messaging, than ever, as so many ideas are communicated through images rather than text.

    Unfortunately, brands can sometimes find themselves victims of association errors. Metaphorically speaking, association errors are very similar to the “spot the artist’s mistake” puzzles, and occur when brand images appear in the wrong places. By way of example, you wouldn’t expect to find high end watches for sale in a traditional brick and mortar vitamin store, simply because brand managers know that that’s not the best way to promote the value and exclusivity of the brand. That said, I recently discovered high end watches for sale on a discount vitamin web site. In my role as an internet brand monitor I see these kinds of association errors all too often.

    The problem is, that in the chaotic environment of the web, marketing managers don’t always have complete control of band imagery or messaging. In the current web landscape, any unauthorized re-seller of a brand can post the host’s product in places that completely muddle brand imagery and messaging. Like, I suppose, steeply discounting branded watches on a vitamin website.

    To maximize the digital impact of the brand, today’s marketing manager needs not only a solid foundation in digital brand offense, they must also dedicate some of their time, efforts, and resources to brand defense: Ensuring that the brand imagery and messaging are not being diluted by inappropriate pricing and presentation on the web. In order to deliver a consistent message, it’s important to ensure mechanisms are in place to “spot the artist’s mistake” before the incorrect brand image is ingrained in the minds of the target audience forever.