When developing a new product, product managers in the consumer electronics market, usually, instead of starting from scratch, develop additional features to add to already existing products.
The truth is that it’s easier to improve than to disrupt. Therefore most companies end up with a product road map that leads to the development of products with an excess of options. Those options will never or rarely be used by the average consumer. This is especially applicable to home electrical appliances.
How many washing machine programs do you use on a regular basis?
Let’s face it with an example: a medium range washing machine includes an average of 20 programmes, but how many do you use on a regular basis? Two or three at the most? Although some are targeted to specific consumer groups (baby care for instance), most consumers do their laundry always on the same programme, at the same temperature.
Of course as a consumer it’s nice to have the options, just in case.
Considering that most consumers will never read an instruction manual – especially millennials and the post-millennial generations, who are used to the plug and play and user-friendly products – product managers should focus on features that are really adding value and not adding more specifications just to provide a product upgrade.
Usually product managers only think about the product and forget about the real customer needs in terms of problem solving. In a recent conversation with the product manager of a company in the small domestic appliances sector; he stated that although the company has a long history in the sector, being the first brand to launch the product category, they were not positioned in the consumers´ mind as the leading company in innovation in that particular product segment. It was really frustrating.
He confessed that the company had centred all its investments in product development but neglected the promotion. As a result, its products provide highly efficient solutions, are reliable, durable and innovative, but have a smaller market share than that of its competitors whose products´ features are of a lower profile. The difference is that their competitors developed an ok product but invested a lot in promotion, thus gaining better consumer recognition and brand awareness.
That raises the question: is your product good enough or is it too good for your market? It might be more efficient to launch a product with less features and to devote the resources to promotional activities. A great product, unless very disruptive, will not succeed unless consumers get to know about it.
In-store promotion, with product demonstration, is the best way to show consumers what the product can do for them.
Rosa Zaragoza is CPM Expertus Client Service Director, Consumer Electronics and Home Appliance specialist.
Our FMCG Sector Insight comes from Johann-H Nagel, CPM Germany CEO.
Johann made his way through different roles in the FMCG industry over the last 25 years working for P&G, GlaxoSmithKline, Sara Lee and Polaroid. Before joining CPM Germany he was partner in a sales and marketing focused strategy consultancy. During that time the grocery landscape in Germany faced major changes. The therefrom arising opportunities for manufacturers had been one of his subjects in the consultancy in terms of field sales efficiency and sales organization.
Survival of the fittest in a world where Discount Channel has 40% Market Share
Aldi started the discounter success story in the early 60th of the last century and is aiming for global coverage. Side by side with Lidl – the other big German discount player – Aldi drives the growth of the discount channel through market entry and agglomeration. Their clear target is to keep the consumer at arm’s length.
Discount value share in Europe is close to 25%. Frightening? Maybe, but surely that’s not the end of the game.
The discount channel has a 38% market share in Germany, which is stagnating since ten years.
There are two major reasons for stagnation:
Searching for growth Aldi started to copy the Lidl assortment strategy and opened its shelfs for brands – mainly A-brands. Those brands which started new with Aldi faced a price thunderstorm in case comparable pack sizes were affected. Everybody wanted to undercut Aldi. Red Bull e.g. suffered heavily in terms of average shelf price erosion, others faced delisting at traditional retailers.
Learning number 1 for brands: Differentiate your base offer for discount –pack size….! (Obvious?)
Learning number 2 for brands: Differentiate your service level
Learning number 3 for brands: Communicate
While learning 1 should be a fundamental part of the discount strategy of A-brands, learnings 2 and 3 can also be applied by B/C brands in their attempt to focus on the business outside discount which is still 62% of the German FMCG market.
Focus is the name of the game. Focusing on your FMCG-sales-force is the answer of how to survive outside and without discount channel listing. A well trained and staffed sales force will drive your brands through on shelf visibility and extra class secondary placements. The sales force will be able to place extra promotions and benefits that help the retailer build shopper experience and sharpen his profile. A key driver for your own and your retailers’ revenue.
Proper communication of your discount channel activities through your sales team to the “other retail world” combined with exclusive offerings that help to strengthen positioning of the retailer will build trust and mutual understanding.
This clearly demands feet on the street visiting those retail doors that are key to your overall brand strategy. Outsourcing – covering stores with external sales people – must be a vital part of your overall sales strategy to ensure distribution and visibility of your brands at reasonable investment level.
Welcome to the club of the fittest!!
CPM Barcelona, our International Contact Centre of Excellence has been working in partnership with Airbnb for over five years now. From what began as a trial programme of 15 agents, has since evolved into a large scale, Global Customer Experience programme; with key achievements including: 10+ team expansions, 5 times growth of the management team, two international award accolades, achievement of the highest NPS scores across all European providers and most importantly; the development of a strategic partnership approach between Airbnb and CPM.
Sophie Chelmick, CPM Business Unit Director for Airbnb looks back at where it all began and how both Airbnb and CPM have flourished together over the past five years.
Several years ago, CPM piqued Airbnb’s interest when one of our high performing sales teams arrived back into our offices after an off site. The team were not suited and booted, as had been the case with most of the other BPO’s that Airbnb had been visiting that week while looking for an international contact centre business to partner with, but , were dressed casually and laughing with abandon having just returned from a day out at the karting track. One of the Airbnb procurement team who had come to visit our site in Barcelona city centre – turned to me and said; “never mind the PowerPoint, let me go and speak to this team” … what he discovered then was that CPM Barcelona imbue a culture of “play hard” as the team reveled in the stories of who overtook who on the racetrack and who came home with the medals. The feeling of “the team that plays together stays together” resonated with the Airbnb procurement team as a good fit for their new and disruptive culture. Airbnb were however, also looking for a partner with credibility and competency; when they discovered that the reason for the off-site had been that this team were the highest performing sales team across a global team comprising other BPO’s – they knew they had found their first EMEA contact centre partner from which to launch their EMEA customer experience (CX) team.
Fast forward to five years later and I have been fortunate enough to travel with Airbnb on their amazing hyper-growth journey and see the same thing happen within CPM. What started out as a trial team of 15 CX specialists has grown now into the beautiful beast that it is today– our management team alone is 5 times the size of that original team!
The success of Airbnb has been a result of their innovative design-led focus combined with recognizing the changes needs of the travel market thanks to economic austerity and people’s growing need for authentic experiences. The success of CPM in parallel over the last 5 years has been a result of building talented teams with operational skills steeped in rigour and agility enabling us to provide world class CX. However, I think what has set us truly apart and triggered our success is that we honour the same values as our client and share deep consistencies in our communication style. This approach is something that we endeavor to do with every business we partner with in CPM Barcelona, whatever the size of that business because who knows what size that business may one day become!
By Sophie Chelmick; Business Unit Director, CPM Barcelona
There is no denying that the Indian retail sector has gone through major transformation over the last decade with palpable organized retailing and has emerged as one of the largest sectors in the economy. By 2016, the total market size is estimated to be around US$ 1000 billion, thereby registering a CAGR of 8.3 per cent since 2000.
Retailing in India contributes 10 percent GDP in its economy. The Indian retail market is estimated one of the top five retail markets in the world by economic value as it is the fastest growing retail market, with 1.2 billion people. Retail industry can be classified into two categories namely- organized (traders/retailers, who are licensed for trading) and unorganized retail.
With the incremental growth of Internet and Technology there have been major changes in the otherwise organized retail sector over the past decade and with the pace it is growing, it has no sign of getting slow. 66% of the consumers think that online retail has made their lives much easier.
Fashion retailing is using VR to engage with customers by taking them to the ‘virtual platform of cat walking’. Travel companies are creating virtual brochures, allowing potential customers to get an exact picture of what to expect. Robots are being used in the entire supply chain of retailing and they are also used for better efficiency and customer experience. Autonomous driven vehicles are the next breakthrough in the retail industry to ease the ways we commute, faster delivery options , etcetera.
In the last 7 years, organized retail has gone through a number of changes on various verticals, whether its store layouts, per square foot, returns optimization or a smoother reordering process.
With the international chains coming to India, domestic chains have developed and implemented various best practices to come at par.
Currently, the biggest opportunity is the transition from traditional retail to organized retail due to changing consumer expectations, growing middle class, higher disposable income, preference for extravagant goods and change in the population size. These factors are expected to drive organized retail growth in India in the medium to long term.
With companies focusing on in-store excellence with limited space and higher number of competitor brands, including private labels; brands need to be visible to the shopper and leave lasting impact in the consumer’s mind. When we talk about acquiring space in the customer’s mind, we are not limiting ourselves to being visible on the shelf but also at multiple locations, thereby giving us multiple touch points for shopper interaction.
Lack of quality retail real estate supply, non-supportive FDI policy, economic backdrop, and regulatory issues are some of the factors acting as an impediment to the spread of organized retail in India.
Future threat that organized retail might face is from the highly disruptive online retail which otherwise has a very small share in the total retail industry, but it is growing at a very fast pace. Online retail in India is driven by robust investment and rapid increase in the number of internet users and in the next few years it would be equal to the retail stores.
Factors responsible for the Growth of E-tailing in India could be:
1) No rent or land costs, as E-retailers do not require sophisticated showrooms in prime locations, and operate through their websites or portals, which significantly saves the store maintenance costs, which are pretty high for physical store retailers.
2) E-retailing enables personalized interaction with customers and has a global reach of operation.
3) Effortless and joyful shopping which also saves time.
4) The online store is accessible 24×7 and delivers your products home.
5) Since 2005, a rapid growth has been seen in the number of people using internet. This is due to enhanced broadband internet services and penetration of 4G services that has given faster internet access.
6) People have additional options for everything online and can even buy those products that are unavailable at the physical retail shops.
E-tailing has become part and parcel of daily life for Indian consumers. Consumers are always hungry for modern ways of shopping. The Indian retail sector is growing fast and its employment potential is growing too. The new wave of industrialism coupled with exemplary shifts in the demographic and psychographic dynamics have driven consumers frequently to use online retail to search for product information and initiate any purchase. It is suggested that online retail businesses which focus on constant change and product innovation may be positioned for success in this new form of entrepreneurship. In India, e-tailing has the potential to grow more than hundredfold in the next eight years to reach a value of 76 billion dollars by 2021, which would be possible if more number of people from rural areas are introduced internet accessing and trained to use the sophisticated way of shopping and if the E-retailers change their business models and understand their consumers more because consumers are the real Kings. The Indian retail industry is gradually inching its way towards becoming the next boom industry.
HEMA SOIN (CPM-INDIA)
Each year Omnicom invites 60 of its brightest talents from across its 1,500 agency network to come and participate in a Senior Management Program (SMP) at Babson College in Boston, MA. Lectures and think-tank style discussional exercises are conducted by legendary Harvard Business School Professors such as Len Schlesinger, Thomas DeLong, Nancy Koehne and Luis Huete. This year, Sophie Chelmick from CPM Barcelona was one of the selected participants to attend this premier educational initiative.
“It was transformational” explains Sophie, a Business Unit Director within CPM Barcelona after successfully finishing the SMP graduate program this July. “Our lecturers; incredible, experienced professors both professionally and academically discussed real-world case studies, strategies and solutions enabling us to explore new methods and approaches to traditional leadership concepts” explains Sophie. “it was also an opportunity to network with execs from a wide spectrum of Omnicom agencies to share ideas for taking back into CPM – as well as some potential future collaborations with those agencies”.
“This was very special” Sophie goes on, “a new kind of understanding emerged amongst all of us; particularly regarding some of the shared challenges the agencies face and how together we may overcome some of them; how, even as Omnicom businesses we all have an urgent and pressing need to focus on new solutions and innovations if we are to survive the future and harness the digital revolution”.
A key part of the program is to lead an initiative inspired by the course teachings; Sophie explains; “I was particularly struck by AMV BBDO’s creation of “Flare” in direct response to the threat of creative crowd-sourcing agencies and I want to bring the concept of “self-disruptive innovation for survival” into CPM. My initiative will be around the future of work in the contact centre both from a tech and people perspective to meet future needs of customers and employees.”
“My insights were deeply personal and emotional as well as professional, I learned how critical it is to spend time with my family and that by doing so I can be more effective as a leader. I now want to to ensure I pass on these learnings to our amazing teams here at CPM so that all my CPM colleagues as well as our clients can concretely benefit from the Omnicom SMP program!”
Omnicom is an inter-connected global network of leading marketing communications companies. The Omnicom portfolio provides the best talent, creativity, technology and innovation to some of the world´s most iconic and successful brands. With 75,000 people working globally and serving 5,000 brands in a 24 / 7 / 365 world – Omnicom is made up of 1,500 agencies worldwide and CPM is one of those agencies.