BRANDOOGLE

Blog

  • Has Social Media made Brand Building irrelevant?

    Without trying to sound too jaded, it seems to me, the less that is collectively known about a given subject, the more experts there are in the field. My case in point is the number of “experts” who are calling for the demise of brands due to the social media revolution. Social Media is so new, so vast, and evolving so quickly that nobody, and I mean nobody, can accurately project the trajectory of this force on consumer behavior. We do know that it will impact consumer behavior, but what we don’t is how it will impact behavior, or how impactful this force will be. The so called social media “experts” are all just simply guessing.

    There’s an old sales adage “People buy from people they know, like, and trust”. This phrase is also the backbone of a number of brand building efforts. The very essence of a brand is neatly packaged in the concepts of know, like and trust.

    • To “know” a brand, is really to “know of” a brand: Brand Awareness.
    • To “like” a brand, is to find that the brand differentiates itself from competitors, and tells a brand story that resonates with the target audience.
    • To “trust” a brand is to say that the brand has consistently kept the promises and expectations created by the brand story.

    These concepts aren’t new, but in an era where “technology changes everything”, sometimes it’s important to go back to the basics.

    Now fast forward to 2014, and the rampart calls for the imminent demise of brands as we know them. Social media will be the new force that defines winners and losers in the market place. Brand builders will become a thing of yesteryear, an anachronism, and eventually end up going the way of typewriter repairmen.

    Not so fast. Social media will absolutely play a role in brand management, but maybe not always in the way we would like it to. By its very nature, social media is organic and spontaneous. People share and/or follow selectively. Simply put, the current forms of social media are too disorganized, and too disjointed, to rally around a company or brand long enough to create a positive lasting impact on consumer behavior. Strangely though, social media can play a significant role in advancing negative brand imagery at lightning speed. Years of brand building efforts can become unraveled literally overnight when a brand gets caught violating the trust of the public. Social media platforms light up as bad news goes viral, and the community at large share their disgust over the topic de jour. (Recent examples would include the GM ignition recall, or the LA Clippers debacle.)

    So what makes brand management relevant? Today’s consumer is absolutely overwhelmed by the sheer number of buying choices at hand. It’s with this in mind, that the brand managers of this generation are more valuable than ever. They make sure that the brand is known by consumers, liked by consumers, but ultimately trusted by consumers. All the social media in the world can’t build trust like a well-organized brand that keeps its promises.

    This is my humble opinion…not my expert opinion.

    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.

  • Managing the Brand “Experience”

    How can a brand possibly deliver a consistent experience, if they don’t even know all the potential points-of-sale? The simple answer is they can’t.

    I recently had the pleasure of attending the BRITE conference at the Columbia Business School. This world class conference is focused on the intersection between brands, technology and innovation. The overarching theme of this year’s symposium was “brand is an experience”. How do brands emotionally connect with their target audience? What experience can the brand create that moves a customer beyond loyalty and move them to a state of evangelism? And how do we achieve such lofty goals pre-sale, at the point of purchase, and after the sale?  Given the increasing inter-connectivity brought about by mobile, social media, digital interface, and apps, as well as “old world” channels, delivering consistency across mediums is becoming a herculean task. BRITE did a terrific job of helping brands understand how to promote consistent “brand experiences” in this very complex environment.

    The concept of “promoting” an experience is built on the fundamental belief that we know where we are going to engage the target customer. We focus on reaching them where they are. Which retailers they frequent, what magazines they read, what web-sites they visit, what TV shows they watch and the list goes on and on. But what if target customers are engaging with us in places we don’t know about? What then?

    Having worked in brand and supply chain management roles over the last 15 years, it has been my experience that increasingly brands don’t know all the places they are engaging customers. With the explosion of e-commerce accessibility to both buyers and sellers, many, if not most, brands can’t definitively say they know every outlet that their product is presented for sale, nor the prices offered. This is becoming a huge problem.

    When product is for sale at outlets that don’t “share the ideals of the brand” (specifically rogue web-sites), delivering the desired brand experience is going to be a challenge. If anything, all the efforts in product development, marketing, brand and pricing strategies can be undone with a few clicks of the mouse. Channel discipline weaknesses on the part of brands are being exploited by an increasing number of web-sites focused on offering “lowest price available”, not promoting brand stories, brand experience, or brand value.

    By way of example, Justcalculators.com sells branded watches, along with a number of other branded goods, at very steep discounts on their web-site. (In fairness, they do sell some calculators on this web-site as well.) Hardly the “brand experience” or consistency of message the marketing and brand people at the watch companies had hoped for, or anticipated.
    Even with all the changes afoot, brand management still goes back to the fundamentals. Product, Place, Price, Promotion. Great brand management, and great brand experiences, requires that not only is product in the right places, at the right prices…it also requires that managers ensure that product is not in the wrong places at the wrong prices.

    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.

  • Is Best Buy’s Showrooming Strategy Flawed?

    About a year ago I blogged that “Showrooming is no longer a sideshow, but now the main event”. (Showrooming is the practice of evaluating an item at a retail outlet, and subsequently purchasing the item online for a much lower price.) In this blog I went to great pains to show that showrooming risk impacts earnings, and that investors would shun business models that had a high degree of showrooming risk. I even went as far as to use Best Buy (BBY) as an example of where Wall Street analysts predicted that showrooming would hurt earnings, and subsequently beat down the stock price.

    I was wrong. Well, at least partially wrong.

    Since the writing of that blog Wall Street bid up the price of the stock from the mid-teens to the high forties. Management proclaimed that Best Buy would “be the Ultimate Holiday Showroom.” The theory was that this would improve foot traffic to the stores, and subsequently dramatically increase sales. The theory was proven out, and throughout the year management demonstrated that same store traffic was improving and Best Buy became one of the great turnaround stories of 2013. They were taking on Amazon.com head on, and winning. The 2013 holiday season would be Best Buy’s victory lap.

    And then the bombshell. In mid-January Best Buy released their earnings for the previous quarter and the results could not have been more of a shock to Wall Street. While same store sales were essentially the same as the previous holiday season, the practice of “price matching” Amazon had decimated margins. Management claimed that this was an “unexpected speed bump on the road to recovery” and was the result of operating in an “extremely promotional environment.” In the days following the earnings announcement the stock was bid down to 50% of its 52 week high.

    I would argue that we are not in “an extremely promotional” environment. In fact, quite the opposite. The advances in technology, along with merchants offering price matching guarantees, has created unprecedented pressure on retail margins. There is nothing “extreme” in this environment. This is the new “normal.”

    So should investors completely abandon the entire retail sector, in favor of industries that promise higher returns? Not at all.
    Before making a bet on a retail stock, investors should understand the showrooming risk profile of the company, and what management is doing to address this risk. If management can’t tell investors how much exposure they face from online price competition from deep discounters, investors shouldn’t walk away, they should run. On the other hand, if management can tell investors precisely what their risk exposure is, investors should listen to how management intends to manage that risk. If management simply suggests that price matching is how they will combat this risk, ask for their resumes to see if any of them used to work at Best Buy.

    This new “normal” presents great opportunities for both retailers and investors. Those retailers that “get it” will well outperform their peer group. Those retailers that don’t, present a great opportunity for those investors who like to operate in the “shorts” market.

    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.

  • Retail Showrooming is Dead

    According to a recent IBM report, retailers should no longer feel threatened by the practice of retail showrooming. Time to pop the champagne, right? Retail showrooming is a known margin killer and according to the IBM report, it now occurs at so such low levels, as to not constitute a measurable threat. So rest easy, brick and mortar retailers, you’ve dodged calamity. No more sleepless nights worrying about shrinking margins, plummeting sales, and unsold inventory…all is well.

    Or is it?

    While I agree with the IBM report that retail showrooming is dead, unfortunately, that’s not the story. The IBM report completely misses the elephant in the room…while retail showrooming is dead, virtual showrooming is exploding (virtual showrooming is the practice of comparison shopping and purchasing online without ever visiting a store).

    Data from this past year bears this out. While internet sales dollars were up 40% this past holiday season, retail sales were generally flat to down, and retail foot traffic was down an alarming 15%. Certainly, some of that foot traffic decline can be attributed to 6 fewer selling days (and some inclement weather) but the majority of that decline is from virtual showrooming.

    What’s happening? Consumers discovered that comparison price shopping on a mobile device stinks. While mobile devices are great for updating your Instagram and Twitter feeds, they are terrible for comparison price shopping. Screens are just too small and don’t allow the flexibility and movement of full screen computers. It’s just too difficult, so people don’t do it. But that’s not a cause for celebration. Those same consumers have just switched to a more efficient medium.

    A report from ChannelAdvisors.com bears this out. It found that 75% of online holiday purchases were made using full screen devices. Want to bet how many of those consumers were responsible for that 15% drop in retail foot traffic? As technology and apps get faster and more powerful, does anyone think that this trend won’t continue? Hence, the new challenge. How to stem the rise in virtual showrooming by the price-conscious, tech-savvy consumer.

    Traditional solutions like omni-channel retailing, in-store experience, internet price matching, and loyalty programs will only go so far (see: recent Best Buy earnings report). The key to combating virtual showrooming is to eliminate the opportunity for showrooming to occur in the first place. That means addressing inventory assortment.

    Showrooming can really only occur when what’s available in the store is also available online. Therefore, preventing retail or virtual showrooming, starts with an assortment plan that recognizes showrooming risk before inventory is ever purchased. Most of us wouldn’t extent credit to a customer without checking their credit risk first. So why would a forward-thinking retailer buy inventory without first checking out the vendor’s showrooming risk?

    Technology now exists to measure showrooming risk comprehensively and analytically. The retailers that will survive and prosper in this new environment will be those that are as savvy with technology-enabled assortment planning as the consumers are with technology-enabled comparison shopping. But do traditional brick and mortar retailers have the capability to adopt new thinking? Do they even understand the problem? Or, will they continue to bury their heads in the sand and celebrate “the death of retail showrooming?”

    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.

  • It’s Midnight on the Internet

    It’s Midnight on the internet…do you know where your brands are?

    The honest truth is, that for most of us, the answer is no. Like the naïve parents of teenage children, we don’t precisely know where brands are, but like to think that all is well. It’s not until the phone rings at one in the morning that we realize that hoping things are alright and knowing things are alright are two very different things.

    The internet revolution has changed consumer behavior forever, and managing brands has never been more complicated. Less than a decade ago, opening a retail store took months, cost tens of thousands, if not hundreds of thousands of dollars, massive infrastructure, and a ton of inventory. After all this effort, and getting the best location, most retailers really only had a market penetration of about eight square miles. Today, an on-line store can be set up in as little as four hours, and requires as little as four thousand dollars in start up costs. The infrastructure is outsourced, the inventory is drop shipped by the manufacturer, and the market penetration is over 300 million people.

    This new retail landscape has made it exponentially more difficult to control brand presentation and brand messaging. In the old world, the brand would only be available in the most exclusive storefronts, prominently displayed, and sold by a knowledgeable and friendly sales staff. Controlling brand messaging was a relatively simple task in bygone days. No need to worry about being in a bad store, in a bad neighborhood, on the bottom shelf in the back of the store next to the day old donuts.
    Today, without good brand control mechanisms in place, the metaphorical equivalent is happening every day to brands. In order to control the brand, and the brand message, brand oriented organizations MUST know where there brands are being presented on-line. Otherwise, that call that comes at one in the morning maybe your top retail customer telling you “you’re out, because your brand is out of control.”

    Solid brand control is hard work and requires a coordinated effort. That said, it always starts by knowing where and by whom your brand is presented on the internet.

    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.

  • The Fall Showrooming Season

    There is no better place to witness the fall color season than Michigan. In my back yard I am extremely fortunate to have a number of large maples of different varieties that change into a cornucopia of colors during a six week period. The view is simply spectacular. That said, I am also very unfortunate to have a number of large maples in my back yard.
    As the first leaves begin to change, I can already feel the blisters forming on my hands in anticipation of the hours, days and weeks of raking ahead. This year, however, will be different. I will be outsourcing the work to a specialist who uses automation to accomplish the job more thoroughly, faster and more affordably than I could do it myself.
    There has always been much discussion in our house about the most effective/efficient way to get the leaves up, as well as the hourly pay rate. (If you have teenagers, you are no doubt aware of how their preference is to spend a lot more time talking about how to do the work that actually doing the work.) Over the years we have bought an arsenal of “improved” rakes, added labor, worked in teams, etc but all these efforts have yielded only minor incremental improvements. The upshot is that there are simply too many leaves to be raked given the limited resources of time and labor.
    Last year our neighbor hired a contractor to gather up the leaves. The contractor brought in a “modified” mower that functioned as a leaf vacuum. The neighbor’s yard was leaf free in less than 30 minutes, and his cost: $25. We spend that much time getting out rakes, tarps, bags, and discussing strategy.
    While watching the Leaf-Vac at work, I saw a strange parallel to raking leaves and retailer strategies. I spend a lot of time talking to retailers about how they determine if the products they are offering in-store can be found for lower prices on-line. Invariably, the task is not at the top of anyone’s list, and is in fact, quite the opposite. Most people try to avoid it like the plague. In the absence of automation, the research is completed one SKU at a time, copied into spreadsheets, sorted, filtered, and eventually reported on. By the time reports are generated, the data is out-of-date, and essentially useless. What an incredible waste of resources. This process is the metaphorical equivalent of picking up leaves one at a time. No wonder nobody is volunteering to put this task at the top of their list.
    Monitoring on-line pricing is not the core competency of any brick and mortar retailer. Their competency is retailing. There is no question, that understanding competitive pricing is a very valuable asset to any retailer. However, this work can be much better accomplished by specialists who can deliver much more thorough results in a fraction of the time, and at a fraction of the cost of trying to perform this task in-house. Retailers would be best served by re-directing the time and talents of the people currently assigned these tasks to projects that help grow the business.

  • How Showrooming Impacts Earnings

    Showrooming is no longer a sideshow. For C-Level executives it has become the main event. The extensive press coverage of the demise of Best Buy was a wake-up call for both brands and retailers. Showrooming is not just simply a nuisance, it can actually bring down a major retailer. The fact that both Target and Walmart, two extremely savvy retailers, now match internet prices is some indication that the Showrooming phenomena now has the attention of management at the most senior levels.
    The internet press made no secret of the fact that a number of items purchased at Best Buy could be purchased on-line at significant savings. Overnight Best Buy became the poster child for showrooming. What happened next went largely unnoticed in the popular press. Some rather bright earnings analysts created a financial model to try to determine the impact the decision to match internet prices would have on Best Buy’s earnings. The news was not flattering. Investors, upon reading and understanding the earnings analysts report, headed for the exits. They gave a serious “thumbs down” on Best Buy management’s decision to match internet prices. The rest, as they say, is history. Well documented history. Clearly Best Buy management made a series of miss-steps over the last few years, but it cannot be denied that the showrooming phenomena played a significant role in the ultimate downfall of this once iconic retailer, and darling of Wall Street.
    Showrooming impacts earnings. How earnings will be impacted is a function of both the scope and complexity of the showrooming challege, as well as how management chooses to address those challeges.
    Can the showrooming impact on earnings be predicted? To some degree: Yes. The earnings analysts have already proven this. However they had the significant advantage of a ton of information innocently provided by others in the retail research world. Can your organization predict the impact that showrooming will have on your earning? Maybe.
    We recently tested this theory. We created a mock brand organization that sold to retailers. We then designed three possible scenarios based on three different Showrooming Risk Profiles™. Due to space and time considerations, we’ll presume that the Showrooming Risk Profiles (SRP) were graded as high, medium and low.
    In the first scenario the organization was rated at having a medium SRP. The impact was losing placement of the 5 best selling SKU’s at their top 5 retailers. Sales dropped 5.3%, and earnings dropped 20.0%.
    In the second scenario the organization was rated as having a low SRP. The impact was that they picked up 5 new SKUs at their top 5 retailers because they demonstrated to the retailers that they had a much better SRP than their peer group. Sales increased a modest 1.1% and earnings increased a healthy 4.0%
    In the third scenario the organization was rated as having a very high SRP. The impact was losing their 3rd largest retail account. Sales dropped 7.3% and earnings plummeted by 27.8%
    A similar exercise was run for retailers with various SRP scores. The results were very similar.
    The message was clear. Even a little bit of showrooming can have a significant impact on earnings. That’s why showrooming is no longer a side show, but is now the main event.

  • The Showrooming Scorecard

    “If Showrooming is so pervasive, why aren’t companies doing more to combat it?” This is a question we are hearing more and more. Companies, be it brands or retailers, realize that this problem is reaching epidemic proportions, yet seem to be doing little to change the dynamic. Why?
    We can’t manage what we don’t measure. And we don’t know how to measure showrooming. Until now.
    It is possible to define an objective measure that is applicable to both retailers and brands. Essentially we need to measure the “risk” of being showroomed. How likely is it that a customer will see our product at retail and then choose to purchase the item on-line at a discount?
    The risk is a function of several factors
    • How many of the SKU’s being investigated are available at both retail and the web simultaneously?
    • How many web sites are discounting the product?
    • How many products does each web-site carry?
    • How deeply is each SKU being discounted on-line?
    There are probably other factors that could refine the metric, but the above factors are clearly the ones driving the risk. Only once the showrooming risk is measured, can the management of that risk be addressed.
    Two companies with an identical showrooming risk profile™ score may have very different underlying causes of their risk. Understanding the numbers behind the numbers is the key to managing the risk. Imagine two golfers return to the clubhouse after playing 18 holes of golf. Each shows a 103 on their scorecard which, among serious golfers, would not be considered a very good score. Before the golfers work on improving their game, they need to understand what is wrong with their game. One may have trouble getting off the tee, and one may have trouble putting. Two very different problems, but yield the same total score.
    It’s the same with the showrooming risk profile™ score. Knowing the score is only the start, understanding what is driving the score is where the real improvement begins. Is it a single web site that is deeply discounting, or is multiple web-sites with moderate discounting? Or is it something else entirely?
    Now that we have a metric, who should we hold accountable for managing that metric? The organization. The underlying causes, and solutions to showrooming risk can be found across the organization from purchasing to IT to sales. When showrooming risk is a corporate metric the corporation will work together to manage that risk. We are all responsible in some way, large or small, for helping improve the profit of our organization and the same can be said of our role in managing showrooming risk.

    David Coleman is the founder of Brandoogle, a company that is focused on helping retailers and brands understand, measure and manage their showrooming risk. He can be contacted by e-mail at dcoleman@brandoogle.com.

  • The Great Showrooming Showdown

    That right. It’s coming. Showrooming is no longer just a minor business nuisance, it’s becoming a life altering change in the lives of traditional brick and mortar retailers. And they’re not taking this change sitting down. They’re coming out swinging. Brands that are involved in Showrooming will be shown the door by their top retail accounts.
    Are you prepared for the showdown?
    We’re all aware of the relatively recent change in pricing transparency that the internet has brought to the lives of consumers. They can now go into retail stores, evaluate products, and from the leisure and comfort of their own home (or mobile phone) purchase the desired product for 40% off what they would have paid at retail, on-line. Great for consumers, bad for retailers and brands.
    Retailers, by and large, have had some difficulty understanding the role that they play in the consumer buying experience since the advent of the internet. Many thought originally that it was just a novelty, and were slow to develop, and dedicate resources to managing this channel. Things have changed. Traditional Brick and mortar retailers now have a much better understanding of the web, and the opportunities and challenges it presents.
    Showrooming is perhaps the single greatest threat most retailers have experienced in a generation. Not since the advent of the Yellow Pages “Let your fingers do the walking” tag line that encouraged consumers to call stores for the best pricing, have retailer seen such a dramatic change in consumer buying patterns. Fingers are still doing the walking, but that’s about the only thing that has remained the same.
    Retailers know that the key to their survival in this new age, is to understand the impact “Showrooming” is having on their business, and then taking actions to address it. In the not so distant future, retailers will determine which brands, and products, they are being showroomed on, and those brands will no longer be welcome in the store’s assortment.
    If you are a brand or a retailer that doesn’t fully understand the extent of showrooming within your business, finding a trusted partner to help you measure this problem is the first step in addressing the problem.
    The Great Showrooming Showdown is coming. Are you prepared?

    Brandoogle is a Showrooming Solutions Company. We help brands and retailers understand, measure and manage their showrooming risk exposure. Software, Services, Solutions…We’re here to help.

  • Showrooming is the New Shoplifting

    Showrooming isn’t technically a crime, but if you ask many of my clients they think it should be.
    Each year, showrooming costs retailers tens of millions in lost profits. Showrooming is when someone purchases a product online after researching it in a brick and mortar store. Last year, $42.3b was spent online and a large percentage of those sales were from showrooming. While exact numbers are difficult to determine, it’s clear that brick and mortar retailers are facing a critical challenge. Everybody showrooms. Who among us hasn’t seen an item in a store, checked prices, purchased it online, and then gleefully bragged about our savings to a friend?
    Unfortunately, my retail clients don’t share that same joy.
    By some estimates, as much as 48% of visitors to brick and mortar retailers are showrooming them…and doing it in plain sight.
    Showroomers aren’t hard to find. They are usually the person scanning items with their smartphone, punching a few keys, and then walking straight out the door—usually with a smile on their face. The problem can be even worse for retailers of high end, highly technical, or complex products. Their staff is swamped answering questions on product features and functionality, yet rarely closes a sale.
    Well-established brands with high-value, high-margin items are the most lucrative for online flea marketeers to exploit. Margins can be shaved with lower, overhead structure and customers can be reached easily through the Internet.
    Retailers can be at fault too. “We Match Internet Prices!!!” is not a leadership strategy, a marketing strategy, or even a pricing strategy. It’s a retailer’s suicide note.
    Yet despite this looming menace, most retailers don’t know where to begin. Most retailers ignore showrooming altogether. They tend to spend their time and money fighting tangible threats like shoplifting. Yet, shoplifting only occurs in a fraction of 1% of all store visitors. Showrooming threatens a retailer’s existence.
    What is a retailer supposed to do?
    The answer is to fight back with a comprehensive battle plan…a plan that appreciates the changing retail landscape. Some ideas:
    1. Understand which high-value, high-margin items are likely candidates for showrooming.
    2. Learn how the product assortment and pricing stacks up against Internet vendors. Showrooming only occurs when a product is available in the store AND on the web. If it’s not on the web, the retailer is not going to get showroomed.
    3. Track the pricing and distribution of items online. Identify potential challenges. Identify the sources of any showrooming.
    4. Have frank discussions with branded goods vendors. Remind them that retailers still make up the lion’s share of most product manufacturers sales and profits and if they wish to be part of the assortment tomorrow, they must clean up their Internet presence today.
    5. Monitor over time and be vigilant. A clean product line can be showroomed in a matter of weeks.
    6. Don’t be afraid to take action. Whether you pull a product line, pursue a legal strategy, or simply host a frank “sit down” with a supplier, don’t be afraid to be aggressive.
    Unfortunately, there is no “silver bullet” to fix the showrooming problem. It’s going to be a complex and labor intensive fight. But it can be won. Retailers and their high-end brands still have a lot to offer that the Internet does not. The key for retailers is recognize those differences, understand that showrooming is a problem, and adapt their business models to aggressively compete in this changing landscape.

    David Coleman is the founder of Brandoogle, an online brand protection company and has nearly two decades of supply chain and brand management experience serving Fortune 100 and Fortune 500 clients.