Ged Carroll

Search results for: “"customer experience"”

  • Omakase and luxury futures

    Omakase and luxury seem made for each other. Think about the core elements of omakase:

    • An expert provides a personalised experience that is about quality, ceremony and theatre.
    • The expert decides what you will have and prepares it for you. You are there from selection to the provision of the item.
    • The ingredients are of fine quality (and often locally sourced).
    Tokyo
    Marc Veraart

    As a trend omakase has expanded geographically with Japanese cuisine. But it has also expanded in terms of categories covered.

    Koreans have taken omakase and pushed it into other areas:

    • Coffee
    • Dessert tasting
    • Barbecue restaurants which are normally a local neighbourhood staple
    • Wine and champagne-tasting

    So how can omakase and luxury come together in the future?

    In order to understand how omakase and luxury in the future it is worthwhile paying a good deal of attention to the pressures that the luxury industry is currently under.

    Luxury is under pressure

    Undoing the mistakes of the past

    Luxury has expanded to be the size of industry it currently is due to ‘massification’ by most of the maisons. The exceptions to this would be the likes of Hermés.

    Massification

    Massification means lowering quality, using globalisation in the supply chain as well as the retail network to manufacture products cheaper. Massification occurred over a three decade period and was covered extensively by former fashion editor Dana Thomas in her book Deluxe.

    Around about 2014, Gucci led the way for luxury brands to do streetwear, leading to a more accessible luxury product. Louis Vuitton did the archetypical collection with its 2017 Supreme collaboration.

    Contrary to what most people believe luxury is aimed at the middle classes rather than the wealthy. But targeting middle class customers rather than the wealthy poses a number of problems:

    • Increased capital outlay due to the scale required.
    • Scale brings challenges in terms of supply chain management and consistency of customer experience. Greater control can be obtained by vertical integration within the supply chain and owning the retail channels. But all of this requires greater expertise and management oversight.
    • Increased economic sensitivity to shocks such as interest rate and cost of living rises.
    • Increased risk of devalued stock during an economic downturn. Gucci earnings were down 20 percent alone in Q1, 2024.

    Bigger might not always be better over a longer view.

    Secondary markets

    Secondary markets have been both a boon and a bane for the luxury sector. At one time pre-owned was seen as an ‘entry-level’ product. I bought my first nice watch secondhand once it had depreciated. It was often said that the best entry-level Porsche was a secondhand one.

    But gone are the days when you may buy a pre-owned Louis Vuitton purse on a second hand market stall in Paris. Now that will be on Vinted, Vestaire or some other platform.

    Secondary market inflated pricing affected luxury businesses in a number of ways

    • You would be interviewed to go on the waiting list for a Porsche or a Rolex.
    • Authorised dealers became order takers and dealer customer service slipped.
    • Your purchasing history would acquire you the rights to buy a Hermés bag over time.

    Luxury groups extended their businesses into the pre-owned market. LVMH owned part of secondhand watch retailer Hodinkee. Richemont owned Watchfinder and Yoox-Net-a-Porter who sold a mix of new lines and vintage preowned items. Rolex rolled out its ‘CPO’ programme selling inspected pre-owned Rolex watches through its authorised dealer network.

    Things looked really good for the luxury industry, they managed to managed to scale, to a point that LVMH is one of the largest companies in the world:

    • Massification through global manufacturing supply chains.
    • Keeping margins high, while letting quality go low.
    • Address a rising middle class in China, Korea, Japan, the Gulf countries and Russia to counteract the hollowing out of the middle class in the US and western Europe.
    • Maximising margins through controlling costs via vertical integration up and down the supply chain, from raw materials to retail.

    Market change

    A few things underpinned the craziness of COVID:

    • Money was put in consumer pockets, for which they had few outlets.
    • Supply chains were disrupted as factories closed down or pivoted to manufacturing essential products. For instances Perfums Christian Dior made hand sanitiser for hospitals for free.

    A Forrester effect (also known as a bull whip effect) resulted, driving inflation that the world’s economies are coming to terms with now. Secondary effects of this event were the increased interest rates used to reduce demand driven inflation.

    Other secondary effects include increased crime levels. London has gone from a luxury shoppers paradise, to having a global reputation amongst elites of being plagued by violent watch and bag robberies. COVID-19 isn’t the only driver of this crime wave, but is a contributing factor.

    It has also had a catalysing effect on reducing globalisation to increase national resilience.

    Consumers know that a good deal of luxury goods don’t match up with the European artisan heritage story that brands try to sell them. Experts like William Lasry has made public which brands make what kind of products where. Luxury brands often make in places like China due to capability and scale – similar reasons to why Apple products are designed in California and assembled in China. (Seriously, check out William Lasry’s channels, I love some of his visits to high-end Japanese manufacturers).

    China

    China has been a key focus for luxury brand, but it has changed in a number of different ways:

    • Chinese consumers have changed in their confidence of native brands and have a lower opinion of many foreign brands. This is partly down to a change in attitudes called guo chao. Guo chao can be traced back to the increased confidence in the run up to the 2008 olympics in Beijing. This was partly fuelled by a series of essays published in 1996 by the likes of academic Wang Xiaodong called China Can Say Now which advocated a modern robust form of Chinese nationalism, which was in stark contrast to the Deng-era vision of globalisation and biding one’s time. In the April before the olympics Chinese consumers boycotted French supermarket brand Carrefour. Over time the negativity of these boycotts have become more-and-more performative and extra-territorial in nature. The current Xi administration has seen fit to weaponise this nationalist sentiment by directing (wrangling is a more accurate term, like cowboys with a cattle train in the Old West) public opinion to further its own ends. A more positive aspect of it has been a more open market for domestic ateliers and brands than had been seen previously. Since before 2019, there have been Chinese efforts to build a rival luxury groups to LVMH and Kering and this fits in with Xi’s distaste for irrational worship of the west.
    • Xi-era growth. China under Xi Jinping faces multiple challenges around growth. The population is aging and in decline which has implications for declining consumption. Secondly economic growth has slowed compared to the double digit annual economic growth of the Deng, Jiang and Hu administrations. Foreign direct investment in China has declined for a mix of reasons including unattractive Chinese government policies, decline in China’s country brand and long term economic growth forecasts.

    Regulatory change

    I know what you’re thinking ok, this is very well Ged, but what does it have to do with omakase and luxury futures? Give me a little bit more time and all will be revealed.

    While China is an economic superpower with a desire to export its world view and the United States is a hard and soft power super power; the European Union’s super power is legislative in nature.

    European regulation drove the globalisation of the GSM mobile telephony standards during the 1990s and 2000s. They have also driven increasing internet privacy standards on web services, much to the chagrin of Alphabet, Meta and Twitter.

    Now they are driving environmental standards across a range of areas including:

    • A carbon tax to take into account the use of fossil fuels in extraction of raw materials, transportation, energy as an input to manufacturing and processing materials.
    • Product passports from raw materials to product end-of-life encouraging a circular economy and sustainable manufacturing.

    This means that the luxury sector has new restrictions on how it operates in the future.

    In summary:

    • We’ve likely reached peak massification due to economic and trade changes.
    • Market share in China looks uncertain due to changes in consumer sentiment and tastes, meaning, a more local approach might be required or a strategic withdrawal.
    • Secondary markets show that consumers are open to ownership beyond pristine new products.
    • Product passports and European legislation means re-examining the whole supply chain and the data to better control it through an entire product life.

    Finally, omakase and luxury futures!

    Omakase and luxury look like a happy meeting in the future. Think about the tenets of omakase.

    • An expert provides a personalised experience that is about quality, ceremony and theatre.
    • The expert decides what you will have and prepares it for you. You are there from selection to the provision of the item.
    • The ingredients are of fine quality (and often locally sourced).

    Going back to go forward.

    The future of luxury is about looking back. Tailors who suited generations of families and made alterations to Grandfather’s suit that the son is now wearing. The shirt maker replacing the collars and cuffs. The shoe-maker who refurbishes your shoes and has a set of lasts with your name on, for when he has to make a new set. Getting measured, having your foot cast for a last or getting your watch could be memorable events once again. So there this a precedence for expertise and service levels. But it implies a retail experience that will change dramatically.

    New techniques and questions.

    Previously with the exception of measuring sessions, these processes were largely concealed from the consumer and were difficult to scale. So it’s worthwhile thinking about how luxury’s omakase future could be extended with modern technology? We have some experiments that might give us some ideas. First up, L’Oreal has showcased bespoke make-up manufacture for a while.

    How could high-end perfume makers adapt for products beyond make-up? Improved analysis equipment from the likes of Oxford Nanopore could facilitate individually formulated fragrance products based on skin chemistry.

    Adidas experimented with its Speedfactory concept that blended the retail and shoe assembly together.

    Technologically there is a lot of promising ideas. Adidas have worked with up-cycled plastics retrieved from the debris brought together by an ocean gyre made into 3d printed soles and fibres. (Look for the Parley label, who Adidas partnered with on this.)

    How can additive or automated manufacturing and other processes feel luxe? In what way could they add to the theatre?

    This hybridisation of retail and manufacturing changes the nature of both offline and online retail completely. Would even the largest concession in Selfridges or a shopping mall be big enough, or would fashion houses need a single purpose brand experience?

    Given that there is likely to be a bit more time between manufacture and presentation of the product than there would be in a sashimi restaurant, what else would go into the maison experience? LVMH is already investing in hotels and resorts like Cheval Blanc which gives it a better understanding of more areas in luxury experience and service.

    Localisation would likely to be needed to handle omakase and luxury due to culture and the need for local materials. This might include new materials, such as fungus-derived leather. Of course, this might have negative implications for luxury house supply chains, whether it’s Louis Vuitton’s iconic plastic coated leather, or the Hermés crocodile farm.

    Which means that product line-ups could no longer be global in nature. So luxury companies may revisit that the creative process looks like. Should there be a single global vision anymore? Luxury maisons instincts would be to say yes, but could this be an opportunity to own local ateliers in markets like China or the US?

    • Will there be more local brands instead?
    • What will a maison’s heritage mean in the future? A luxury maison is about what remains the same as much as what changes. What will happen to long-standing motifs?
    • Will there be a greater opportunity for more auteurs who are closer to the customers?
    • How to bridge the tension in terms of choosing for the customer and creativity as well as quality?

    We’re talking a very different profile of creative in terms of thinking, attitudes and skills compared to the present.

    Service, repair and reuse could learn a lot lessons from traditional tailors and the service networks of watchmakers like Rolex or luggage maker Rimowa.

    I could not think of a more exciting or scary time to be setting the brand direction for a luxury maison, let alone the overall direction or the likes of LVMH. But by wrapping local materials, expertise, ritual and a bit of theatre the future could look like a fusion of omakase and luxury.

    More information

  • Boutique e-tailers

    The luxury sector is undergoing a transformation, and nowhere is that more apparent than in the world of boutique e-tailers. I am of a generation that grew up with boutiques, carefully curated fashion looks from multiple brands.

    Farfetch_8
    TAKA@P.P.R.S

    Exclusive

    As a child, my Mam would get me jumpers as I grew up from different small stores like this. To this day, the ultimate compliment she would give any item of clothing was that it was ‘exclusive’.

    As I started buying my own clothes I pivoted between sports shops for my footwear, Ellis Brigham for layers, Caran D’Ache – a menswear boutique in Birkenhead at the time for jeans and ‘going out’ clothing. (Having known the owner/manager quite well, I suspect that the store was named after the Swiss writing instrument company, rather than the pseudonym of French satirist Emmanuel Poiré). This was where I got my first down jacket (by Naf Naf), Oshkosh B’gosh dungarees and Champion sweatshirts. At the time Ellis Brigham was a sea of Polartec and Gore-tex with no down jackets in sight.

    I started venturing further afield and went to Quiggins in Liverpool, Affleck’s Palace in Manchester and what’s now the Victoria Quarter in Leeds. I’d also started coming down to London with friends to find brands I couldn’t get at home.

    Famous high-end boutiques like Browns built a reputation for championing up and coming womenswear designers like Hussein Chalayan and Alexander McQueen. They also helped the likes of Ralph Lauren, Jil Sander and Calvin Klein start seeing in London. At their best boutiques moved culture as curators and taste makers. I got my love of American workwear from Caran D’Ache and Japanese streetwear from the late lamented Hideout which was just off Golden Square.

    Department stores were the first aggregators of boutiques with a mix of single brand and multi-brand concessions under one roof. Brands like Selfridges, Harvey Nichols, Isetan, Lane Crawford, Mitsukoshi, Neiman Marcus, Saks Fifth Avenue, SEIBU and Shinsegae.

    These established businesses have their place, indeed LVMH owns a number of selective retail businesses like DFS (often known as T Galleria), Le Bonne Marché and Starboard Cruises. So multi-brand distribution has a place in the luxury retail mix. Over time the premium department store brands and LVMH’s select retail brand would both have boutique e-tailers within their brands providing an omni-channel experience.

    In the run up to COVID, multi-brand retail counted for 57 percent of luxury sales, management consultancy Bain expect this to decline to 36 percent of luxury sales by 2030.

    Online

    Online continues to disrupt retailing over a quarter century after it landed. The first casualties were book stores and music stores. Twenty years ago, one of the most enjoyable activities that I did in my spare time was rifling through record store shelves, digging for surprising or elusive vinyl records, CDs and DVDs.

    Some of the places were I did this are long gone, like Tower Records in Piccadilly Circus. On the flipside, new businesses sprang up to be online first, or online only. Amazon started as a book store and eventually became the modern-day equivalent of the Sears Roebuck catalogue.

    Luxury was no exception and a variety of dedicated boutique e-tailers sprang up:

    • Matches
    • MyTheresa
    • Net-a-Porter
    • YOOX
    • Farfetch

    In the same way that mobile operators were the key determinators of whether mobile phone shops were successful, luxury brands had the whip hand over multi-brand boutiques. Phones4U died when its relationships with EE and Vodafone came to an end. The FT article The implosion in luxury ecommerce implied a similar pivotal moment between Farfetch and Kering, but with Farfetch managing to sell itself to Korean e-tailing business Coupang instead of going into administration.

    One brand / one store

    Luxury brands have looked to gain more control over their customer experience and get closer to the customer overall. This has seen many brands open single brand stores. Up until the 1980s, Louis Vuitton sold mostly through department stores, now it’s mostly through its own brand channels. Some brands like Audemars Piaget, now only sell through their own single brand showrooms.

    The big name department stores continued to hold a position in the marketplace due to their own brand power, even while smaller mid-market stores in provincial cities folded.

    Over time, brands extended their shop front into the online sphere. This was done once two things were able to happen:

    • An all-up online and offline view of a given customer and CRM systems allowed this to happen. This wasn’t for efficiency reasons to go online only, but to provide an omnichannel service to match customer’s omni-channel lifestyles.
    • Getting this all-up view will also help with future EU legislation moving towards a circular economy.
    • The ability to provide a high level delivery experience for online purchases. This mattered less with fragrances than it did with watches and handbags. High security logistics providers like Ferrari were able to provide this to the main luxury brands.

    One small chink of hope for multi-brand stores is that single brand stores may be forced to either change business practices, or insulate themselves from legal action via authorised dealerships. A court case brought by two women against Hermés in the US claims that having to buy other products to get a crack at purchasing a Birkin bag is a violation of antitrust laws.

    The obligation to buy other products first, is what the women claim is an ‘illegal tying arrangement’ which is why Hermés might be in violation of antitrust laws. Other brand who have authorised dealers rather than their own showrooms are less likely to be at risk.

    Compressed middle-class

    One of the first things that I learned when doing LVMH’s INSIDE LVMH certificate was that the bulk of luxury purchases are made by the middle classes.

    Robert Gordon’s Rise and Decline of American Growth outlined how the middle classes in America (but also many other western countries). Income inequality, automation and globalisation drove a stagnation and decline in middle class numbers, even as the number wealthy increased.

    Globalisation elevated a new middle class in Asian countries like Japan, Korea, Hong Kong, Taiwan and Thailand. Energy drove middle class growth in the countries surrounding the Persian gulf and Nigeria. Louis Vuitton opened their first show rooms in the US in 1914, in Japan in 1978 (though department stores had been selling their products for years). The first Korean shop opened in 1984 and China eight years later.

    Over the past few decades this was compensated by new middle classes growing. They don’t necessarily have the earning power of a middle class westerner, but the purchasing power level may vary considerably. So a middle class consumer in a country like Thailand, Malaysia or Singapore might have more disposable income than someone in the UK.

    Japan’s middle class quickly reached stagnation due to the lost decades of economic growth after their 1989 asset bubble. Korea has gone through a similar challenge, it has seen raised consumption, but recently this is driven by household debt rather than prosperity.

    China

    Quantity is a quality of its own, which is a reason why Chinese consumers have been so important to luxury brands since the early 2000s when China joined the WTO and its economy took off. Once there was even a small growth in middle class numbers that represented a big increase in global luxury sector sales. The decline in economic growth due to the property sector bubble has dampened luxury sales to China. It is not only about the decline in ability to purchase, but also the decline in being seen to purchase western luxury goods.

    This less conscious consumption started early on during the Xi administration’s desire to combat corruption and aspire to a more equal society. Gifting declined. Economic decline accelerated this Chinese macro-trend.

    COVID and after

    COVID changed consumption. Money that would have previously been spent on experiences such as restaurant meals or travel transferred into things. Both single brands and boutique e-tailers got a lift in this environment. But a wider economic effect is still working its way through the economy. This effect is known as the bullwhip or Forrester Effect.

    This resulted in a number of economic distortions:

    1. Partial shutdown – Consumers no longer went to work or high traffic retail hotspots. Non-essential workers didn’t go to work. Logistics systems buckled under the weight of packages and luxury businesses diverted production to support medical needs such as LVMH’s perfumes businesses making hand sanitiser.
    2. Unusual increase in demand – Home working drove an increase in demand from media consumption and home improvement to buying more stuff from all that money they saved from not going out.
    3. Supply chain disruption – Air cargo prioritised medical supplies while existing stock sat in empty shops.

    All of this disruption which drove inflation, this reduced demand as consumers had less to spend.

    Above inflation price bumps for luxury goods

    Luxury brands focused on their inflation proof ultra-high net worth customer base and raised prices to compensate for the reduction in sales volume. The fight for that reduced volume pitched multi-brand boutique e-tailers against their suppliers and the results weren’t pretty.

    Boutique e-tailers are going to the wall, or consolidating to weather the fiscal storm until such time as middle class consumers can start spending aspirationally again.

    Some of these businesses can’t be saved. Matchesfashion, which was bought out by Frasers Group didn’t have much chance.

    Financial decline of Matchesfashion

    You can find similar posts here.

    More information

    The implosion in luxury ecommerce | FT

    Case Study | Selling Luxury to the 1% | BoF

    Matchesfashion axes half its staff after going into administration | FT

    Harvey Nichols staff face redundancies as it eyes return to profitability – Retail Gazette

    LVMH-Backed Luxury Watch Site Hodinkee Cuts a Fifth of Jobs – Bloomberg

    Who Gets to Buy a Birkin Bag? | BoF

    The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War (The Princeton Economic History of the Western World) by Robert J. Gordon

    Canada Goose is cutting 17% of its corporate staff | Quartz

    What’s up with 10-year-old kids in Sephora? Why the question itself is driving controversy | CBC News

    US Luxury Purchases Fell 15 Percent in February, According to Citi Credit Card Data | BoF

    Why Frasers Group Shuttered Matchesfashion | BoF

  • March 2024 newsletter – no. 8

    March 2024 newsletter introduction

    Welcome to my March 2024 newsletter which marks my 8th issue.

    Strategic outcomes

    I am glad that I have moved to the eighth issue. In between St Patrick’s day happening in March, and the number 8 being lucky according to the Chinese in a good place – I figure its a good omen for this issue. 8 symbolises prosperity, joy and infinity. In Chinese pricing strategy 8 holds a similar role to 9 in western markets, so $58, $88 and $688 are frequent pricing points.

    Love on St. Patricks

    St Patrick’s day is particularly lucky for one Chinese city above all others: Yiwu in Zhejiang province is often called Christmas town. In reality it’s a city selling ‘small commodities’ better known to you and I as tat. The Christmas town epitaph came from it being the centre for the global Christmas decorations trade. It’s also where most of the St Patricks Day decorations are made including the leprechaun hats popularised around the world by Irish pubs.

    New reader?

    If this is the first newsletter, welcome! You can find my regular writings here and more about me here. 

    Things I’ve written.

    • Razors for strategists – how we can apply the principle of philosophical razors to aid faster solutions for client work, while also bearing in mind their limitations.
    • Vicki Dutton – Singapore’s forgotten fashion icon.
    • Brand clichés – a bit of honesty from the trenches.
    • CMOs – their demise and evolution considered.
    • AI two-step – corporate leaders reluctant to admit AI-related job losses.

    Books that I have read.

    • A Hacker’s Mind by by veteran technologist Bruce Schneier provides a guide to the different way people have found loopholes to ‘hack’ systems. Schneier is trying to write a social movement book,, but while it’s interesting enough to read on a plan, it will be harder for it to get people moving as he intends.
    • I picked up this book from Scheltema book store just off Dam Square in Amsterdam during a work trip, with a bit of time-off bolted on the end. Browsing the English language book section of foreign book stores often gives recommendations that you wouldn’t otherwise look at. Tales from the Cafe: Before the Coffee Gets Cold is book two of a four-book series by Japanese author Toshikazu Kawaguchi is difficult to characterise in terms of genre. It’s a time travel novel with distinct rules that keep its universe coherent. It’s a book that is suitable for children, but not aimed at children- in this respect its more like the childhood books that I read growing up than are popular now as the ‘young adult’ genre. It’s about love lost, but not a romance novel – the love covered is a mix of loneliness of a widower, an orphaned child and a past romance. There is something delightful about the book, especially as it captures the minutae of everyday Japanese life.
    • Historian Dan Jones portrayal of medieval wars in his Essex Dogs series is very well written and accessible. It’s an ideal holiday read, if you can handle the grim subject matter. The Wolves of Winter is a richer story with greater intrigue in the plot line.
    • Back in the early 1990s chaos theory was very much in the public zeitgeist in a rather similar way to the internet from the late 1990s to early 2000s and artificial intelligence now. I have noticed mentions of chaos theory has started to pop up again as an idea in email newsletters. Fluke Chance, Chaos and Why Everything We Do Matters resurrects chaos theory as an analogy and hypothesis for everything from global politics to emotion-driven behaviours. The author Dr Brian Klaas is a social scentist by training and has taken a few leaves out of the Malcolm Gladwell school of writing with stories to pull in the audience. I would liked to see a bit more evidence-based findings in the book. But it is a good read.

    Things I have been inspired by.

    TheOrangeblowfish, a Shanghai design-led agency did an amazing retail / out of home activation for Arc’teryx museum on what looks like a 3D OOH execution a la Ocean Outdoor’s Deepscreen sites in the UK.

    Oliver’s white paper on How Brands Can Build Customer Trust looks at how brands can communicate about sustainability in their marketing. It’s a nice first step as a discussion document. There are a few areas I would like them to explore further:

    The gains earned by behavioural science are argued about, with practitioners relying on models that are often seen as overly complex and stacking of marginal gains. It has footholds in trying to drive meaningful changes in health, where small gains on paper mean a big change in lives saved, or made better. This LSE discussion on how it can be used to make democracy work better was interesting, especially given how many elections will be taking place in 2024.

    Finally this paper on the polarisation of popular culture is likely to affect the way marketers think about product choice, media and culture over time. Media buying itself becomes a political act, beyond advertising on overtly political media channels and indicates a widening of the lived experience gap in society. We could see this already in the UK with Brexiter favoured brands.

    Things I have watched. 

    The Knockdown – A Chinese drama where a Chinese Communist Party team goes to investigate a business and runs into widespread corruption. The corruption is centred around a fishmonger who gets tired of thugs and the grind of graft – he then reinvents himself as a gangster within the system. While it’s not Breaking Bad or The Sopranos, it is a good insight into how the Chinese government wants to see itself.

    Flic Story – Alain Delon plays a detective pursuing a dangerous criminal in post-war France. This is based on the true story of criminal Emile Buisson who terrorised France. I did wonder whether the roof top chase scenes influenced Jackie Chan’s classic Hong Kong film Police Story in terms of plot and tension rather than his acrobatic skills?

    Season 1 of Mr Inbetween had been recommended to me for years, people would rave on about it in the same way you hear about Breaking Bad or The Wire. A friend eventually sent me there copy on Blu-Ray. It has elements of Man Bites Dog about it – which makes sense when you find out it was originally adapted from Scott Ryan’s The Magician – a short fly-on-the-wall rockumentary film about a Melbourne underworld enforcer and occasional killer. Unlike Man Bites Dog – the violence is used sparingly in between the tedium of everyday life and office politics. Helen Mirren had apparently recommended it widely at the time. I am looking forward to season 2 which reputedly takes a darker turn.

    Useful tools.

    Sensia AI

    Sensia AI is an interesting set of tools for consumer brands to easily monitor satisfaction and potential problems with their products and that of their competitors quickly, with ease and efficiently. Sensia analyses diverse data, from online reviews to e-commerce; offering useful insights. I was looking at it for consideration with regards an FMCG project that didn’t come off in the end. If you are interested. Check out some sample reports here, and if it looks of interest – contact Iris Chung.

    Passport Online

    Travel this year? Passport ready

    I am an Irish citizen. The Irish government’s process to renew my passport and passport card via an online service was really easy. The service is called Passport Online and I couldn’t recommend it highly enough.

    Untranslatable

    Not necessarily something that you would use day-to-day; but definitely of interest during digging into market research transcripts or transliteration of campaigns across different markets and languages. Untranslatable is a dictionary of idioms and expressions. The creators are native speakers, so you get the different cultural nuances.

    New ways of using Miro

    If you work in brand or connections planning or have thought customer experiences you’ve probably heard of Milanote, Miro or Mural. They also came to the fore with COVID-19 as virtual workshops became much more of a thing. Recently, I have been experiencing new user cases for these platforms. To present:

    • Creative briefs.
    • Sharing creative with clients.
    • A quick folder that holds key documents and shows the links between them.

    Zettelkasten

    Trying to build that vast mental model to then wrap into a narrative for clients. Vicky Zhao revisits the analogue technique of Zettelkasten. Your mileage may vary. It does remind me of the way I use social bookmarking as a data bank and mind maps as a creative process in writing. I can also recommend Umberto Eco’s How to Write a Thesis for similar organisation ideas.

    The sales pitch.

    Now taking bookings for strategic engagements from April, or discussions on permanent roles. Contact me here.

    More on what I have done here.

    bit.ly_gedstrategy

    The End.

    Ok this is the end of my March 2024 newsletter, I hope to see you all back here again in a month. Be excellent to each other and watch out for any April fools tricks being attempted on you.

    Don’t forget to get in touch, share and subscribe!

    Let me know if you have any recommendations to be featured in forthcoming issues. 

  • CMOs

    Premature obituaries of CMOs

    Almost 11 years ago business academic Dominique Turpin wrote an article describing CMOs as ‘dead’. Turpin worked at the IMD business school in Switzerland and the article was a classic bid for thought leadership.

    UN Women Global Innovation, Technology and Entrepreneurship Industry Forum
    Alicia Tillman, CMO at SAP AG until 2021, at the time of writing CMO at Delta Airlines

    It’s just the kind of thumb-stopping headline that drives readership of LinkedIn content where it was published.

     … the decline in the CMO’s influence is alarming, especially at companies that claim to put the customer first but in reality are product-driven.

    True, some companies have marketing in their DNA, especially firms that had a visionary founder with a great understanding of the customer. Examples include Ingvar Kamprad at IKEA or the late Steve Jobs at Apple.

    But these are exceptions. The norm these days is that the CEO sets the overall strategy, the R&D and innovation teams design the product, and the CFO determines pricing and departmental budgets. No wonder some CMOs feel unloved and are considering a career change

    Dominque Turpin – The CMO is dead (August 21, 2013)

    Turpin goes on to explain what he believes that there are four causes, that together result in no CMOs.

    • Most CMOs aren’t focused on planning and delivering customer value
    • Short-termism has meant that organisations have become CFO-focused – a la ‘Neutron’ Jack Welch’s perception of shareholder value, rather than a balanced scorecard approach
    • Marketing impact is hard to measure
    • Organisations lack a clear understanding of what marketing is

    Instead Turpin wanted to create a CCO role – chief customer officer. He saw that this role could sit with the CEO, the CFO or the former CMO. While the CFO as CCO might take the fuzziness out of marketing as Turpin put it, there would be a tension between their natural ‘ neutron Jack Welch’-nature and being customer-centric. What about the CEO? Turpin pointed out that they tend to come from engineering or finance. Both are efficiency focused disciplines with incremental short-term views. Again both are barriers to customer-centricity and would be largely blind to long term effects.

    3G Capital

    Move forward six years and a CFO-driven approach to running Kraft Heinz by 3G Capital saw a massive destruction of value some $15.4 billion from the $50 billion paid to buy out the business in the first place. The quarterly dividend got cut and shareholders filed lawsuits. The founder of 3G Capital talked extensively about the GE Way driven by Jack Welch as a key influence on their approach.

    Scott Galloway

    Scott Galloway

    Professor Scott Galloway is a serial entrepreneur who is provocative, interesting and often right.

    On CMOs Galloway said

    “If you’re the CMO that shows up and says ‘I need more budget so that I can do a brand identity study, can spend money on advertising and get invited to great conferences and hang out with people who are more interesting and better looking than me by spending media dollars that are less and less impactful’ then you’re like the second lieutenant in Vietnam — you’re dead in 18 months or less,”

    Scott Galloway

    There is a lot to unpack in that statement, but it doesn’t spell the end of the CMO or advertising.

    Pax Americana to Pax Australis

    In this post Galloway taps into a wider criticism that we’ve seen of American marketers over the past few years. When I was in college American professors and marketing thinkers set the tempo for the profession around the world. As Mark Ritson recently wrote

    In the 20th Century marketing was American. The discipline, the theories, the textbooks, and the approach. To arrive at Wharton in 1994 was to see a future that was not just untenable in the UK, it was one nobody back home was even aware of. Marketing was a decade ahead of anything in the UK. The American marketers I met, academics and practitioners, were so advanced it made my head spin.

    Mark Ritson – Effectiveness ignorance has left American marketing lagging behind the rest of the world (Marketing Week)

    Text books by the likes of Philip Kotler and David Baker, were perceived wisdom of old white academics. None of this thinking was evidence-based; beyond anecdotal successful case studies.

    One of the ‘secrets’ that marketers and CMOs at large FMCG companies like Mars, Proctor & Gamble, Kellogg’s and Unilever had was access to Australian based marketing science research. This was primarily via their long-term sponsorship of the Ehrensberg-Bass Institute in Adelaide, Australia.

    This body of research in turn shook up wider marketing thinking when Professor Byron Sharp published How Brands Grow. (There were other important works as well such as the UK based publications from the UK’s Institute of Practitioners in Advertising – notably The Long and The Short of it and Effectiveness In Context).

    While marketing outside the US was shaken up by the works of Sharp and Binet, the US continued onwards in its marketing the way it always had.

    Mark Ritson’s recent column on the state of American marketing caused international furore in the marketing community, despite Marketing Week being a UK-only publication. Ritson complained about American marketers lack of awareness about the importance of marketers effectiveness.

    This comment on Mark Ritson’s post sharing the article, while humorous has a lot of truth in it:

    Okay, okay. Stop throwing big words like vituperative and effectiveness at us simple-minded Americans. Sure, we handed the keys of marketing over to software engineers at the turn of the century. Maybe that led us to a fair bit of myopic strategery here in the very exceptional United States of America.

    Based on the comments I’ve read, when asked to define effectiveness the answer provided is essentially #IYKYK. Why let a golden opportunity to school American marketers on the wise ways of the world beyond our ample shores slip through your fingers?

    I don’t care if you call it Marketingwirksamkeit or efficacité du marketing, what matters is more than just numbers on the scoreboard, but how the points were won. Just the other day I was reading a scholarly piece on the effectiveness of meme marketing by the faculty of Griffith University in Queensland. It hit me. My American, effectiveness ignorance has blinded me. I now lag behind the rest of the world.

    Michael Simmons, Sendofy

    While the US obsessed over marketing technology, the rest of the world was attempting (imperfectly) to more knowledge about marketing efficiency and the marketing technology stack. Having worked in the technology sector, it was the last place I would have gone for marketing lessons. At best, marketing as a function was sales support.

    A case in point in this mis-application of focus was the relative performance of this year’s Super Bowl advertisements. I realise that this delve into marketing efficiency has at least made the case for a dramatic change in US-based CMOs. But not so fast, CEOs don’t think that their CMOs and marketing teams are performing that badly.

    CMOs: from the dog house to the boathouse

    American agency Boathouse have been doing an annual survey of CEO attitudes to marketing and their CMOs. The third edition of this survey was published in January this year.

    Some of the highlights of the report include:

    • CEOs identified what they want their CMOs and marketing teams to address: driving growth, market share/sales, differentiation, improving brand reputation, and “transforming company narrative.”
    • 49 percent of CEOs believe their marketing team is “best in class.”
    • 40 percent of CMOs are rated “best in class.”
    • One point I found quite interesting was that half of CEOs believe the short tenure many CMOs have “is a sign of success, not failure.”
    • CMOs’ perceived trust with C-suite stands at 43 percent and 41 percent with the CEO. This has doubled over the three years that Boathouse has been running this research project
    • In a bit of an odd note: CEOs believe CMO loyalty is growing, stating that “in a dramatic shift from 2021, the CEO’s perception of CMO loyalty is growing, [as] 8 in 10 CEOs perceive CMOs would take a bullet for them (up from 3 in 10 in 2021).”
    • 76 percent CEOs are “integrating A.I. into their organizations” and 90 percent believe that 90 percent of their CMOs are engaging with AI for the benefit of the company in areas such as “content, analytics (about two-thirds), and customer experience or research (half).”

    TL;DR CMOs don’t sound as if they will be disappearing in the next 18 months or so as Galloway believed.

    C-suite without powerful CMOs get punished.

    You could argue that CEO are the ultimate arbiters of CMO success, failure and tenure. But the reality for public companies is the large investors who can vote the CEO of most companies out of office. The key influencer in this decision process is the equity analysts who sit within, or advise client organisations such as fund managers.

    equity analyst

    Even if CEOs don’t think that their marketing is important enough to have a CMO, their shareholders will. Equity analysts have indicated that they rate brand strength and marketing as more important than reported profit, or leadership quality.

    Given that most of the c-suite can’t speak or do effective marketing, they really need their CMOs. Companies like 3G Capital and Reckitt Benckiser have been punished in public markets for failing at marketing, despite operational and financial excellence. Unilever has been punished for its focus on ESG at the expense of brand building and is even under regulatory investigation.

    More information

    “You’re Dead In 18 Months Or Less”: Scott Galloway On The Future Of CMOs – B&T

    UPS’ Removal Of CMO Role Reveals The Real Problem Facing The C-Suite

    Boathouse CEO Study on Marketing and the CMO | Boathouse

    Fortune 500 companies are cutting CMO jobs | Fortune

    The Unspoken Truth About CMO Churn | AdWeek

    Marketers, investing in market research is not superfluous | Marketing Week

    Gartner Survey Shows 73% of CMOs Will Fall Back on Low Risk, Low Return Strategies for 2021

    9 recent CMO departures that point to the radical transformation of marketing | Marketing Dive

    Mark Read: CMOs have become too much like chief communications officers | PR Week

    Coca-Cola’s decision to scrap the CMO role for a CGO should begin to pay off anytime soon | Observations In Marketing | The Thinking Marketer

  • Razors for strategists

    What are razors?

    Razors are one of a series of tools that I use for problem solving. They sit alongside the idea of ‘chunking’ that is breaking a problem down into more manageable and solvable constituent parts. Razors aid in decision-making and analysis.

    Razors are rules that guide your way through a problem, or ‘cut’ your way through a problem. They simplify, they not be right in all circumstances but are right in the vast majority of them.

    They were first used by philosophers, but as we know more about the world around us, we have developed more razors and they have become more useful in a general context.

    Gillette Fusion

    This is going to be hard, isn’t it?

    Not really, we use razors in our lives all the time, often without thinking about them. The most famous one is Occam’s Razor.

    Occam’s razor

    pluralitas non est ponenda sine necessitate, “plurality should not be posited without necessity.”

    Encyclopedia Britannica

    Or to put in simpler terms, out of two or more explanations, the simpler one is mostly likely to be the right one. In certain circumstances what’s simpler is a matter of perspective and culture. Secondly, Occam’s razor prioritises simplicity over accuracy.

    The classic example of Occam’s Razor failing is the classic crime fiction trope of the death that looks like a suicide and is considered by authorities to be one. Yet by dogged investigation, it is actually proven to be a relatively cleverly executed murder plot.

    Other razors

    Here’s some razors that I have found useful over time. A good many of them have come from fields beyond the study of philosophy.

    Gall’s law

    Gall’s law “A complex system that works is invariably found to have evolved from a simple system that worked.” John Gall was a modern-day renaissance man in turn author, scholar, and pediatrician. His law comes from a book he wrote as a critique of systems design: Systemantics: How Systems Work and How They Fail… When working on customer experience related work don’t try and cover every option first, build up complexity to cover all the options from a ‘simple system’. When dealing with clients, sell the simple system as baseline framework and see how you get on. Ironically, clients are more likely to buy the simple model and then build into it over time as an additional activity.

    Hanlon’s razor

    Hanlon’s razor – “Never attribute to malice that which can be adequately explained by stupidity.” Probably more useful when pondering third party actions rather than strategy in depth, but nonetheless very useful to bear in mind in work circumstances. It featured in joke book Murphy’s Law Book Two: More Reasons Why Things Go Wrong: Bk. 2 compiled by Arthur Bloch and was attributed to Robert J. Hanlon. It probably won’t get you promoted, but might keep you sane.

    Hick-Hyman law

    Hick-Hyman law – the time it takes for a person to make a decision is a function of the number of possible choices. Psychologists William Edmund Hick and Ray Hyman, found that increasing the number of choices will increase the decision time logarithmically. This one is handy for bearing in mind when thinking about customer experiences and engagement strategy. There is such a thing as the tyranny of choice for consumers.

    Hitchen’s razor

    Christopher Hitchens

    Hitchen’s razor – what can be asserted without evidence can also be dismissed without evidence. Christopher Hitchen popularised a version of a latin proverb in his book God Is Not Great: How Religion Poisons Everything. Quod grātīs asseritur, grātīs negātur – what is freely asserted can be freely deserted. This works quite nicely with Sagan’s standard below in terms of providing evidence. Storytelling and narrative is important, but so is evidence for the deductive leaps sometimes involved.

    Hofstadter’s law

    Hofstadter’s law – “It always takes longer than you expect, even when you take into account Hofstadter’s law”. Gödel, Escher, Bach: an Eternal Golden Braid by Douglas Hofstadter is a book about the nature of “maps” or links between formal systems. Hofstadter posits that understanding these maps could be the answer to what we’d now call general artificial intelligence. Where Hofstadter’s law comes in terms of being useful for strategists is in assessing the scope of unusual or bespoke strategic asks prior to the start of a project.

    Sagan’s standard

    Polaroid Space Series 4

    Sagan’s standard – extra-ordinary claims require extra-ordinary evidence. This was popularised by Carl Sagan’s documentary series Cosmos. Sagan had also used it in essays for various publications, which were collected in the essay compilation Broca’s Brain. It encapsulates similar ideas by thinkers over the centuries. I have found this particularly helpful when reviewing colleagues decks that make big deductive leaps. The narrative might be compelling, but make sure the right amount of proof is in the right place.

    Sturgeon’s revelation

    Pyramid Books F-974

    Sturgeon’s revelation –  ninety percent of everything is crap. The Sturgeon in question reviewed science fiction and noted that while the genre had its critics one could see a similar distribution of quality in other genres and fields. George Orwell and Rudyard Kipling made similar observations but Theodore Sturgeon got the credit. When you see mediocre advertising being derided in some LinkedIn post or other, bear in mind this observation. As for Sturgeon, while he was highly regarded in the early 1960s as a science fiction writer and script writer for the original Star Trek television series – his memory primarily lives on through his revelation.

    Twyman’s law

    Twyman’s law: “Any figure that looks interesting or different is usually wrong”, an extension of the principle that “the more unusual or interesting the data, the more likely they are to have been the result of an error of one kind or another”. The Twyman in question is Tony Twyman, was a veteran market researcher in the UK. For strategists that erroneous piece of data can be like a shiny metal object to a magpie. Look at how you can verify it further and if it can’t be done, seriously consider walking on by – particularly if it fails under Sagan’s standard as well.

    Vierordt’s law

    Vierordt’s law states that, retrospectively, “short” intervals of time tend to be overestimated, and “long” intervals of time tend to be underestimated. It’s named after Karl von Vierordt who was a 19th century German medical researcher whose body of work spanned research into blood flow and also psychology. It is worth bearing in mind and testing, particularly when you are relying on a small number of qualitative research interviews.

    More related content here.

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