Sourcing & Services Matter: Why Price Alone Won’t get your Customers to Stay

Price wars are a st andard challenge of marketers, whether working on the retail or manufacturing side. They have become more frequent in the last couple of years following the recession. Consumers are today even more price sensitive and are searching for great value and even greater deals. However as most retailers are now claiming lower prices, it becomes less of a differentiator. I therefore read with interest that Walmart is moving from its emphasis on low prices to one on sourcing.

Walmart gives serviceIn 2007 Walmart replaced its “Always Low Prices, Always” slogan by “Save Money Live Better”, so this new push with the message “ Made in the US” is worth noting. This latest announcement is made in conjunction with its promise of an additional $10 million in grants to non-profits focused on “on-shoring” manufacturing efforts.

 

Target gives serviceTarget announced last October its plans to introduce the “ Target Sustainable Product St andard” which was developed to “establish a common language, definition, and process for qualifying what makes a product more sustainable.” Target will ask vendors to complete an assessment that is designed to determine a sustainability score for their products. Products will be assigned a score of between zero and 100 “based on the sustainability of ingredients, ingredient transparency, and overall environmental impact”.

 

Both these initiatives show a move to a more caring retail environment. A study run by the Boston Consulting Group at the end of last year, found that more than half of companies with sales greater than $1 billion are actively planning or considering to bring production back from China to the U.S. This rise from a mere 37% just six months earlier shows a significant shift in American sensitivity.

 

Jumping across the “pond” to the UK, something similar is happening in terms of shifting attention from price to value, or should I say values?

 

Tesco gives serviceTesco recently introduced their “ Price Promise”, a pledge to match the price of a basket of both own-label and br anded products at Sainsbury’s, Asda and Morrisons, or to offer customers a voucher at the till for the difference. Sainsbury’s has appealed to the Advertising St andards Authority, arguing that this claim was misleading customers. However, their wrath was, in part at least, sparked by the fact that this new Tesco pledge came in response to their own highly successful “ Br and Match” scheme, although the latter only compares br anded products.

 

Sainsbury's gives serviceSainsbury’s has now retaliated with the launch of a new campaign with the title “ Same price, Different values”, a possible dig at the fact that although Tesco won the ASA appeal, Sainsbury’s might appeal as they claim that their own-label products cannot be compared since many are locally produced. To support this position, the National Farmers’ Union has now taken a stance, backing Sainsbury’s. In light of last year’s  horse-meat sc andal, the values of retailers and the sourcing of food has become even more crucial, and Sainsbury’s sees this latest row as an opportunity to emphasise the difference between itself and Tesco. Continue Reading

New Thinking for Old Ways of Business

I’ve just come back from IIeX-EU (Insight Innovation Exchange – Europe) in Amsterdam, and my head is full of exciting new things to experiment. It’s strange what happens to our brains when we have the chance to get away from the office and THINK! We become more creative, less bound by old habits, and ready to try new experiences.

After these few days away, I am fired with enthusiasm to bring real changes to my own business, those of my clients, as well as to yours through this post. I’d like to share a few of the ideas which were stimulated by some of the best presentations I’ve ever seen grouped into one single conference. Read on for four inspirational ideas for you to implement immediately, to bring new thinking into your own business.

Partner for Growth

Lowes logo eOne of the first speakers at the event was Kyle Nel from Lowe’s, an American home improvement chain. He explained that business is about changing customers’ behaviour and to do this we need to constantly update our methods for underst anding them. Lowe’s finds inspiration in partnering with organisations including Coke, UNICEF and NASA; how’s that for thinking outside the box? By connecting with companies in other industries, their thinking is constantly challenged, which enables them to grow exponentially, rather than in the linear fashion that most of us seem to be satisfied with. Kyle shared how Lowe’s accepts that whilst there may often be disappointments, the one in ten new ideas that truly deliver are worth all their efforts.

NEW THINKING: Find a catalyst for your own growth to bring you new ideas from external sources. Also look outside your industry for inspiration, and partner with a select few industry leaders that are trying new, exceptionally creative things (Like Loew’s!)

Know what you Know

Information & knowledge sharing is essentialGregory Short, author of “The Billion Dollar Paperclip”, suggested that it’s time we took a new look at our business and the eco-system in which it is operating. Amongst the list of things mentioned, he included identifying what you already know. This resonated with me because so often when new clients ask for help, they often already have a lot of the information they are seeking, they just didn’t know they had it!

Haiko van Lengen and Sjoerd Koornstra shared a Heineken case study which covered a similar point on knowledge sharing. They mentioned the 2009 Boston Consulting Group Insight Benchmarking study which showed that most companies are not using the majority of the information they gather.

Haiko and Sjoerd suggested that before doing any sort of information gathering, we should first assess what is already available internally on the topic. This review should include talking to all departments and definitely not just market research. You would be surprised how many companies operate in silos, each buying their own reports and information, and too often without the knowledge of their market research and insight department.

NEW THINKING: Find a way of sharing more information across your organisation, by setting up an easily accessible storage system. Continue Reading

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