Saudi E-Commerce, You Cant be the Amazon of Everything.

Why are some local e-commerce websites failing in Saudi Arabia? The idea of following a trend is all the wrong reasons to enter a business. After short glory, most fail to sustain growth, why? you can’t always point at the economy, you’re part of the economy and you must apply the proper tools to sustain your business. The opportunity is enormous but as long as you’re applying the old trick for short wins you’ll only live short.

Saudi consumer spending on travel, fashion, and beauty are the biggest in the region and Souq thrived on the Saudi market but the question still remains. Where are the local potential brands? Things must change. There are generic problems with E-Commerce, such as a reliable payment gateway but even regional brands like PAYFORT became an Amazon company. In fact, many E-commerce platforms prefer PAYFORT after Amazon bought the company, why? They trust Amazon…the brand.

First and Foremost, you can’t be the Amazon of things. In recent years, young entrepreneurs and traditional businessmen with trading mindsets thought the model of Amazon works for everything. Entrepreneurs dream of becoming the next big thing and this is their ultimate dream but unfortunately, they overlook the reality of things or the basic understanding of how things work besides having the resources

Dreams are big but dreams require tools to become reality and one of the key tools is knowledge. Without knowledge and experience, the risks are high. There is clearly an emotional hype across the region on technology and dreamers are emotionally charged to be part of the next big story. I fully support the way forward but I’m asking dreamers to walk before they fly, each step is a learning experience and very costly. I’m speaking out of experience in my industry where many launched or revisited their brands without prior experience and knowledge. The results were very costly and I’ve published many case studies on Alnahdi, Rabea Tea and Cofique; all available here on Linkedin under articles.

In response to the decline of traditional retail, everyone’s answer was: Go “online” to survive. So both the traditional trader and the entrepreneur decided to buy the idea over value but one can sit behind his/her desk and ask where is the value?

If Amazon, the shark, owns a smaller shark (Souq) in the region and then there’s Noon, a heavily-funded ‘can stand all sorts of waves until they find there market space. The key question is, where should the small entrepreneur fit in this equation or even the traditional local businesses that decided to develop their own E-Commerce platform. Even most websites of local brands failed to become a destination while their Instagram pages have huge followers.

A question to ask is, did all E-Commerce platforms mature as brands? In my humble opinion, few independent E-commerce platforms have matured to be a brand out of necessity due to price, time, convenience and availability and since the price is the ultimate factor compared to others, its either price or the brand.

If we look at some categories point of reference in E-Commerce, there are some that moved away from mainstream and were able to build their relevance ( http://www.dokkanafkar.com ; http://www.cobone.com ) Hunger Station and many more. E-commerce is a reality but being relevant in the most cluttered marketplace is key to success, you can’t be the Amazon of Everything.

The idea of selling everything with a lower price and in volume online is Amazon’s model. Amazon’s expansion strategy outside of Europe and the US is to own the largest share in any leading e-commerce and dictate its value for full transformation as an Amazon Company. Souq is a model and few are in the pipeline in Turkey, Brazil, and a few other countries. 

The Amazon of things

The E-commerce market is cluttered with Amazon’s business model and each country has it’s own Amazon wannabe. In short term, this might be viable but in the long-term, it slows growth. Now you might ask why? Well, each sector has generic values created by the category creator and that brand becomes the point of reference. In the case of E-commerce, Amazon is the industry’s point of reference and one of the early pioneers and game changer. If Amazon’s model is replicated by everyone that enters the E-commerce industry then those same values are commoditized by others while Amazon remains the brand, the most trusted one.

So can you become the Amazon of things? Well, before you sit with your friends over shisha and decide the path of your business with a group of people that never strategized in their life or their business success is inherited, you must first believe that traditional business and online business are two different creatures with extremely different sets of values. E-commerce requires a massive investment on all fronts, Startups’ focus should be on differentiating and growth not on “what worked for others will work for me.”

One point that really bugs me is how people get into business without understanding. Being technically savvy and having great business sense are two different things, each compliments the other. If you’re a tech-savvy with zero business logic, I recommend you get help and if you have so much money and you’re in rush to make money don’t enter the E-commerce business or app, it takes time to grow and requires patience. If you don’t believe in written strategies, knowledge, brand building or vision and mission then stop there.

No Strategy, No Success!

Second, business strategy implementation failure is a major drawback in many cases. If you don’t have a strategy, what are you selling? E-commerce at this stage commoditises your business and the only relevance stronger than quality is price and time. How much is it? How fast can I get it? Can you guarantee two days delivery? Most functional values are shared values. You need a robust organization and consumer centric to succeed.

The dynamic of how things change fast requires an organization structure that adapts easily to all changes and is able to survive threats as well as embrace the ‘new’ part of the ongoing change. E-commerce business is mainly built on trust and you’re tested every second of the customer’s journey and unlike traditional business, the journey doesn’t end at the cashier. The journey takes much longer and sometimes up to a month, that depends on your time and how fast you deliver, guarantee, warranty, exchange, refunds or returns. The customer owns the journey and his words matter the most, the values he experienced build a certain image in his mind which can either be positive or negative. The only way to build a great online brand is to become a “customer-centric” organization and to travel on the same journey that great brands traveled or else you’re doomed.

The Mind Challenge

A trade mindset will suffer as an online business. A trader’s purpose is money earned immediately and online business requires a much longer time to mature or even breakeven. It took Amazon over twenty years! why would it take you a lot less? Online business is a cluttered market and in order to stay relevant, you must continuously innovate. It requires constant investment in innovation, brand, and point of difference. To survive in E-commerce you must focus on being relevant and that requires a massive investment on people, marketing and technology.

Back in the ‘50s or even late ‘40s, the service industry was relatively new and brand as a subject was less scientific, today with E-commerce we’re back in the same age but in online trading instead of the old traditional one. In the near future, as the industry evolves, no business will survive unless it owns a unique set of values. Imagine someone blindfolds you and requests you to walk an entire block alone, the first thought is to remove fear and that requires “Trust”, so who will you trust? You’re all alone to explore this new experience.

For a new E-commerce platform to win, it must realize the Blindfolded Customer’s experience and find ways to build “Trust”;. This is the reason why Amazon decided to position its brand as “Customer Centric”

Those who are successful in traditional business and managing a successful business model will face difficulty adapting to new trends. Why? Online is a different nature and requires a completely different strategy. Some bet on their brand equity or relevance to help penetrate the online market. In fact, airlines sell more tickets through other online vendors than their own. Hotels sell a lot more rooms through other channels than their own.

Brands like Expedia, Booking.com and few others are online travel destinations that have become the points of reference for the online experience knows as ” Booking” the value to book instantaneously. versus the old traditional travel agencies experience was known as “ticketing” values dictate experience.

Where is Thomas Cook today? the once ticketing giant. Thomas Cook is thriving, they revisited their business strategy and repositioned from a ticket company to a holiday company. Thomas Cook today is thriving as a brand both online and offline and only a few Thomas Cook retail offices are available in major metropolitan cities across the globe.

The One Man Show!

The one-man show hurts culture and values. You can’t have growth based on a few individuals, it’s the organization that matters over a few individuals. There are decision-making flaws such as centralized decision- making, interrupting a working strategy or even controlling the details.

E-commerce is dynamic and too fast and as a leader, you must create decision-makers across the board. Sadly, the reality in our region is that our decision-making is centralized i.e. “The One Man Show.”

Let’s look at key functional values in e-commerce global trend:

A, Easy returns is one of the key factors to be successful.

B, It’s a price war… (Get out if you can’t fight).

C, Your sale doesn’t end at click-paid button. The sale is not

finalized until the 14 days return period is over.

D, Customer trust is not just on purchases but exchange/return and

complaints management.

E, Customers control the rating and reputation and this is

everything. If you don’t understand brand-building, don’t get into

online ventures. Unless you own a strong offline brand, don’t go

online.

F, Two to three days delivery max or forget it.

G, Warranty all across and guarantees on delivery.

H, Easy returns and hassle-free  (Mental comfort is key).

I, Hardly any offers that lures the audience or they’re poorly packaged.

E-Commerce is an uphill battle. You’re fighting giants on values they strongly own and helped build their brands, to America E-commerce is Amazon and to the Middle East it”s Souq. I strongly believe that the future of E-commerce is specialty. Today’s small players are tomorrow’s big players. Stick to your specialty, it’s the road to brand building.

Baaghil N’ Brand

After two years of data analysis, I came up with a model that helps both online and traditional businesses on how to build their brand without the need for advertising.

Brand G

 

My 8-steps brand-building model answers every problem of customer and user experience. A brand needs to be in the heart of every touch point and brand building comes through interaction, that’s the most genuine brand building process over a false claim.

Your brand is the point of reference and must become relevant. Your Customer experience means nothing without brand values and just how your customer experience and its design means nothing without customer retention. This image illustrates the 8-steps required to become relevant in the brand building process. Feel free to contact me for a 1-day session on Brand Maturity: the steps required for Brand building. Don’t waste your resources on advertising, own a BRAND!

Baaghil is Middle East’s most recognized name on Brand. His unconventional way of thinking has earned him recognition on the world stage including endorsements by America”s best.

Al Othaim is eating Panda ALive?! 

Othaim is eating Panda alive: How is Al Othaim spearheading when it is operating less outlets but more profitable?

 

Did the previous management fail on Panda, Hyper Panda and Pandati? Yes! Because they never had a strategy and clearly confused strategic and tactical approaches. This has cost Panda a fortune over the years.

They failed to educate the customer on the purpose of Hyper beyond discounted supermarkets. The management failed to deliver the values of convenience through Pandati. While Baglas major footfalls are soft drinks, cigarets and basic items shoppers, Pandati focused on the basic items shoppers and this narrowed the segment that Baglas enjoy but yet Pandati went ahead like a furious lion to open across the country to get the Baglas out of business and they had their share of ill intent.  Baglas, on the other hand, are offering both delivery and emotional closeness (the delivery culture is huge and it has a strong emotional value). Pandati never enjoyed the loyality Baglas enjoyed and still enjoy. The management and marketing focused only what Data said but failed on “How To create a value and Deliver”. Unfortunately we have data Marketers who can’t create values beyond understanding what the data says.

What were the key lessons learned from their failure? First, to launch all these without a strategy and clear approach is futile. Second, engaging in a private label fiasco without grounding shoppers’ trust is also futile. A private label is heavily based on “trust” and when shoppers hardly trust you, they stay away from any private label that carries your name! Get it?

 

A year and half ago, I published a post on LinkedIn about Panda and it went viral. The summary of this post is that I argued Panda is in serious trouble. Also, I published a post on Pandati when it was first launched and presented why I think it is a failing concept. Today, all that I predicted has materialized. The point you have missed in these posts is that I was never articulating my insight to battle you but to shed some light and pull your business in the right direction.

Back then the marketing department of Panda took things personal and I understood why but they were professionals. Unlike the former heads of marketing in Alnahdi, Rabea and Cofique who literally went on personal attacks in their social posts but “I NEVER RESPOND TO PERSONAl ATTACKS”, my only response was time will tell. Few years down the line none of the above work for the respected  brands and my predictions were SPOT ON. I wish them all the best, the only adivse never  go on personal attacks and harass over social media  that’s what small minds do, great minds discuss subjects.

 

Today here is my advice to whoever is reading this article!

If you keep ignoring my free advice, you will face what Cofique, Rabea, Panda and Alnahdi went through. Yes, I am extremely confident of my criticisms and claims.

 

Today, Panda management is busy closing outlets more than opening. The rational behind this is restructuring while system remains the same.  The idea of  marketing under commercial is mind disturbing,  My free advice? Don’t do it, this is crazy, you will be doomed! I’ll remind you in future posts

In Panda’s management, some are misinformed on what comes first, commercial or marketing functions and unfortunately the are key decision-makers who take decisions based on ill-informed knowledge on how marketing functions beyond managing advertising agenies. On commercial and marketing approaches, each has a completely different task in business. I suggest you keep marketing away from commercial FREE ADVICE!

 

The reason why commercial and marketing approaches need to be as far as possible is because of the nature and function of each. Commercial is plain trade and it shifts values created by marketing. Think, for example, how would you place “Marketing & PR” under commercial? Commercial is trade and price-oriented while marketing is concerned with creating choices. We can now put the question more simply and answer: What comes first, price or choice? Of course, it is choice! Because this is basic and plain, I think I can generalize and draw the conclusion that corporate managers in our region are dead dumb on marketing.

 

While commercial is purely retail trade, someone needs to manage both perception and value. I doubt your management understands the importance of perception and value to all operations and the flow to sustain long term results over short term tactical returns. This kind of structure only digs a bigger hole and hardly moves the demand side of the organization to attain greater results or build a sustainable brand.

 

Now brand should never be under commercial –period! Get it right, Sherlock!

The private sector in our region works based and favoritism over experience and credentials. Most of the stakeholders are picked by the social merits of their last names or the same origin. We have to accept the truth that favortisim is the heart of our business culture not teamwork and that’s one of the primary weaknesses. I have seen unqualified people join company boards and get heavily paid and their last name is their own merit. The problem is far bigger than brand and marketing. It is people’s mindset and ethics. If you hire a friend because it is a friend, you should question your morality. This is something that has to be completely eradicated for every organization to serve its core purpose. As long as such unethical practices exist across the region, the private sector will fail to add value to any economy.

 

Many of us wish regional brands like Panda to do great but Panda’s current management is too busy pointing fingers at the previous management. This is what the beginning of failure looks like. Al Othaim supermarkets are actively taking a big chunk of Panda’s share while also exhibiting sustainable growth on volume that is achieved through means other than opening new stores.

Constant Engagment builds loyality and improves bottomline ROI  “FREE ADVICE” 

 

Al Othaim aims to reach 207 stores by end of 2019 and this my friends will flip the entire modern trade leadership in the kingdom. Al Othaim stopped listing brands that contribute less than 3% and deactivated those that contribute less than 3%. Clearly, volume is key to any supermarket but this also greatly improves the margin on trade. In the first quarter of 2018, Panda massively declined by 50%. Many non-profitable stores were closed but again Panda always failed on stores to creat volumes. The size of their stores, category arrangements and footfall were always off. Panda comes in many shapes you cannot figure out if this a price brand or an experience brand.

Their approach to improve margin and volume was to hit the low price. Typical trader mindset not marketers. They applied this tactic last Ramadan and they managed to cut the decline but are nowhere close to compete with Al Othaim. This is a very traditional approach and a commodity mindset to seasonal marketing. Hello CEO, here is some questions for you: Is Panda a price or discount brand? The two offer different values and experience. Why is price your ultimate value without creating choices for your customers? As crazy as it sounds, this why you chase bottom-line without vision and sustainability? Exactly. I did get your answer.

 

Al Othaim’s growth is store volume which is brilliant but why? Let’s look at these key points Al Othaim delivers:

 

A. Less choices and great quality. Al Othaim does well on private label, why? Known as ethical and trusted brand.

 

B. Heavy investment on footfall to shift from Panda and Tamimi, offers experience over price (I did not mention discount, do not get all fired up).

 

C. Import division that started three years ago to lure the segment that’s attached to Danube. Great assortments, big threat to Danube.

 

D. Al Othaim name hits localization. What to understand the relevance of localization? Read my book, “The Power of Belonging”. If Al Othaim improves the value and keeps innovation at the heart of their operations like they did in the recent years, they will take over by the end of 2019.

 

E. Saudization and customer service, two things they nailed right and showcased national pride.

 

One last question: Where are you on technology Mr AlOaithem.

 

They have invested well on functional values but a lot to work on in regards to emotional values.

 

Panda did not only lose trust from shoppers but also FMCG brands. Most FMCG brands are living a painful experience because of Panda’s hiccup.

Corporate mindset should change from trading to choice or we are doomed in the next two decades. The problem is the mindset across all sectors, not the economy! Stop blaming the economy when you lack basic foundational knowledge on how to build bottom up markets. Stop saying that consumer disposable income dropped when you actually lack ideas to lures engagement. The problem with corporations today is their fear of change and inability to embrace fundamental demands for sustaining long-term growth. The economy is not stupid; you are ego tripping. Panda needs to reconsider everything what Panda is today!

Thank you to all those that helped with Data and contributed to this article.

Together we strive and thrive, change or die! Change is inevitable! 

 

Hello Al Baik, what went wrong?

From fresh fried chicken to automated fried chicken, the world of fast food and Quick Service Restaurants (QSR) are moving in the opposite direction of the mass movement on health across the globe. Recently brands like McDonald’s, the fast food giant who specializes in fried burgers, decided to evolve in a way that addresses today’s concern on junk food

With the current context on junk food that serves audience flavored taste in little time, the subject has become irrelevant when it comes to time and the focus is now on health

Al Baik, is a well-known fast food chain in Saudi Arabia that primarily sells deep fried Broast Chicken. The brand holds great sentiment to nationals and expats that live or have lived in the country. Many see Al Baik as a national icon, with part of the brand signals conveying a Saudi impression globally. The founders are very people oriented and work with humbleness, integrity and consciousness. Al Baik, as a brand throughout the years has appeared and been experienced as being humble, caring and charitable. It has touched many people’s lives through its community work and activities

So the billion dollar question becomes, does Al Baik sell chicken? No! Al Baik sells more than chicken. Through its sales it’s helping improve the communities and spreading goodwill throughout the land. If the battle was only focused on chicken then KFC and others options are available too. Al Baik, as a brand sells more than just a product. Keeping in mind the fact, the product fundamentals are of great quality and secret recipe which further resonates with the audience

Because Al Baik is a conscious and honest brand, when you visit their stores, meet their team or come close to anything that has their name, no one questions its integrity. Since the seventies, it demonstrated consciousness and transparency by showing how food is being prepared and served, something that other fast food chains like Five Guys are doing today

What went wrong today? Al Baik decided to evolve from the fresh home look and feel, something that has greatly resonated with the locals and people of all income, to what McDonald, Pizza Hut, Burger King and others looked and felt like for years

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Recently opened branch of Al Baik at King Abdul Aziz International Airport (KAIA), Jeddah, Saudi Arabia  

Am I questioning Al Baik’s recent brand evolution that’s displayed, as pilot, in KAIA? Yes indeed! As much as I love Al Baik, the brand’s legacy and how I call it our “own”, anything and everything is wrong with this brand evolution. Perhaps there was a design strategy but I strongly doubt there was a brand strategy. Al Baik’s new look and feel has thrown out what has worked and resonated with millions for years, which was the core essence of it. Who Al Baik is, in the old look and feel could be easily answered but when you look at it today, you start questioning it. It is a junk food joint? Is that the reference Al Baik wishes to bench on? I doubt it

The old identity is widely used, by many restaurants which have no link with the original, in many parts of Asia and North Africa like Egypt and Malaysia, so Al Baik decided to battle this threat by evolving. Perfect! But if you are the original source, how far do you evolve? Why throw away something you own as equity? Why give up all the brand signals you’ve created that resonates with the brand from far and close?

I think logic should prevail, it’s either that brand strategy is poorly understood in our region or that these business owners and shareholders have started to care less about their brands. In less than 2 years, Al Nahdi, Kick by Rabea, Cofique, STC, Fly Nas have become case examples of brand mistakes. Something is very wrong here. These are very costly and detrimental to any business

Said Baaghil is the ‘Unconventional’ Branding and Marketing Adviser to reputable companies in the Middle East, an author of many reputable books including the ‘The Power of Belonging’ and a Speaker. Baaghil appeared in books published by America’s experts on Branding and Marketing such as Dan Hill and Libby Gill. Most recently Baaghil was interviewed by world renowned Brand Consultancy firm Siegel+Gale on Branding in the Middle East

Looming Financial Crisis, Brands and Commodities

I don’t see the Financial Markets settling soon. Global Financial Markets will stay volatile till 2020, possibly beyond. It’s like a FINANCIAL BAZOOKA, like a train coming straight at you and you are not going to stop it by standing in its way. I see more financial bloodbath and rocky times ahead for many countries & their markets. Simple investors will have sleepless nights and smart investors will have peace of mind with their funds. But the question is where to park your funds when markets are so uncertain and unpredictable?

The Answer: Follow the basic rule of LIFE and invest in REAL ASSETS for Wealth Preservation. The global economy stands at a crossroad of growth and decline and few financial markets might even collapse. If we analyze economic history, we see that there is a recession in the global economy after every 7/8 years. So it’s long overdue now and which is why 2016 has started on a rocky note as markets went down in China, Europe, US and Asia. Financial markets look too choppy at the moment. According to Sam Zell—American Business magnate and Real Estate mogul:

US economy is knocking at the doors of deep recession in the next 7 to 11 months. Global economy is witnessing a bigger crisis which will last longer and perhaps will be more severe than the 1930s… History is repeating after 83 years and many investors are not aware of the gravity of the situation

So what’s a MARKETERS ROLE IN TOUGH TIMES? Consumers are very sensitive to Brands. FMCGs are much stable even in hard times when the economy hits rock bottom but the same doesn’t apply to Retail especially for Auto and Luxury markets as these two sectors suffer the most. The question that Economists frequently ask: Can Brands sustain themselves in times of hardship when companies cut their Marketing budgets?

The answer is simple; Brands can live long if they are real Brands (and not commodities) because of their relevance for and being the preference of their target segment. In a volatile Economy, Brands who share the same Category Values suffer the most because consumers end up making decisions based on Price. In these times, Marketers who depend on huge budgets suffer the most because they depend on Advertising as a means of influencing Consumer decisions unlike Brands which are grown organically and are sustainable in a recession economy simply because their consumers’ habits and reactions depend least on communications or any tools that influence their call to action. In tough times, Brands survive and thrive over commodities, for example: McDonald’s globally and Saudi Brands such as Al Baik and Al Marai will still perform well, like previous times

It is only in uncertain times that Marketers can innovate and come up with strategies to move ahead and support the companies’ reservation on spending

Shan Saeed is Chief Economist at IQI Holdings whose expert views have been aired on CNBC, Bloomberg and Al Jazeera English. He advises clients in the Middle East and South East Asia

Said Baaghil is the ‘Unconventional’ Branding and Marketing Adviser to reputable companies in the Middle East, an author of many reputable books including the ‘The Power of Belonging’ and a Speaker. Baaghil appeared in books published by America’s experts on Branding and Marketing such as Dan Hill and Libby Gill. Most recently Baaghil was interviewed by world renowned Brand Consultancy firm Siegel+Gale on Branding in the Middle East

Case Study: Huge Marketing budget doesn’t mean Sales!!!

Generally, most Middle Eastern FMCG and Retail brands spend enormous amount of money on communications each year to sustain survival or grow by a small fraction. Most of these Brands hardly double their digits over the years; some claim that they’ve doubled their sales, HOW? You need to grow in channels to double your sales but it’s merely impossible to double your sales from the previous two years without Channel Reach. We witness price increase every few years and that should not be the comparing yardstick with previous years. Only by Innovating values to address different segments of the Market, over extending SKUs, can add to growth

Now most marketers base their decision on Market Research, hardly any that I’ve met or known is thinking outside the box to move away from the long repetitive patterns that we all witnessed throughout the past generations. For example, what Nescafe started as a trend is followed by many local Brands, what Pampers started as a trend is followed by many to this day

The look and feel of Brands are relatively the same across the board and since most professional marketers in the region are graduates of the two multinational schools i.e. P&G and Unilever, they intend to follow the same pattern of their respective experience at local level, even the practice remains the same. Now, we understand at the local level that the scope is different as it requires all sort of development unlike the previous experience on both Brand and Marketing strategy as well as Tactics

Most of the local Brands hardly own any Brand strategy; they carry two types of strategies:  ‘Design’ and ‘Communication’ (both are extremely evident on their Brands). Now, most require a massive Communication budget in order to maintain the current level of sales or increase by few percentages each year, why? In most cases if you don’t own a relevant Brand or Marketing Strategy, you’ll depend on Advertising to push your message forward, for example: Management and Advertising agencies are aware of Rabea’s new Positioning and Promise but is the public aware? Did Rabea educate the public on their recent evolution? Not from what I saw but apparently this seems to be the current logic which is commodities over Brands

If we look deeper, into the local FMCG Brands, their 2 major problems are their ‘Brand Strategy’ and ‘Marketing Mix’ that’s resulting in a small fraction in growth which is between 5-10% because most are missing the point that Brands are about Values and not Market Research Data that dictates what they should do next. For instance, if we take Cofique and Rabea as local brands from FMCG sector, hardly their audience can understand their Market Positioning, Brand Promise or even the single idea they’re trying to sell, they are relatively offering the same values of their Direct Competitors who are also the category owners, Nescafe and Lipton respectively

If you take Al Nahdi as a Retail Brand, hardly their audience is connected with their Repositioning, though their goal is to move from Pharmacy to Lifestyle (to grab Market share from Faces, Paris Gallery etc.), that’s a Category Shift in which the Brand must resonate before the Marketing Mix. Today after 3 years, customers still think of Al Nahdi as a Pharmacy same as before (with only a face lift and addition of more product categories). The incredible amount  Al Nahdi spent on communication at the launch with the message ‘Hope’ addressed a particular value, NOT all of values that Al Nahdi  had planned to offer. It had a message but lacked the Brand strategy that could’ve helped the evolution. If one plans to apply the Boots model, then you need to apply the model across the board. I must say that they’ve done an incredible work if compared with their past

There are reasons why would we use massive Communications budgets, there are reasons why we need them and how will they support our overall goals. If the single goal is to help deliver your tactical strategies (promotions) then fine because it’s relevant to be in store (customer experience).  There are fundamental issues here, so what will a huge communication budget do? Rabea for instance has over 40 SKUs, Cofique has a good number of SKUs for a Brand that launched 5 years ago, I mean the Brand never fully matured and the management already extended their SKUs. Cofique is offering Nescafe’s values and that’s very evident but management need to understand that to solve the problem is to offer different values as consumers find Nescafe relevant and preferred, not Cofique.  Cofique spent enormous amount of money on Marketing since its launch and yet for the past 5 years the brand suffered enormously. I predicted Cofique’s failure from the day they launched. I advised the management of their approach but they seemed to take things personally and they ignored my advice, the sad reality in our region is that no one likes to be corrected or be recipients of advice from subject matter experts

Let’s looks at sales of the following brands for 2015 and you, the readers, be the judge. This case study is based on 4 different Brands (3 FMCG & 1 Retail). The Brands are Rabea, Cofique, femi9 and Code Red (the energy drink)

  • Rabea tea is a heritage tea brand with over 60 years in the business, founded by a family with great legacy in the tea business. Today in 2015, Rabea’s annual sales stand at SR. 400 million ($ 107 million) with 40 SKUs more or less. Rabea’s annual sales 5 years ago were approximately SR. 300 Million, an additional hundred million increase since five years is partially due to Price increase. Rabea annual marketing budget is relatively good amount of money that goes across all activities. Here’s the breakdown:
    • Rabea Sales 2015: SR. 400 million
      • Loose Tea: SR. 150 million
      • Tea bags: SR. 150 million
      • Other SKUs: SR. 100 million

Loose Tea is losing sales because of Tea bags as they are considered more trendy and convenient by younger generation

Tea as a category is losing 2% to Coffee because the latter is becoming more favored by the younger generation due to its variety of tastes (Mocha, Espresso, Cappuccino etc.) plus it’s also considered as a trendy drink due to growth in café culture that is adding to this perception. Rabea should own the tea category but that’s not the reality today. 5 years ago with a SR. 30 million budget, Rabea was growing 5% and bottom line 10%, on average. Today, Rabea has aggressively evolved the proposition and introduced different SKUs like long leaf in Tea bags, yet sales are not very high compared with past levels

  • Cofique is a local coffee brand which since its launch has went through aggressive Brand visit exercise for the past 5 years and yet suffers to connect with the audience till today, why? Well the sales values that are owned by Nescafe. Their total annual Sales are almost 10 to 15 million with over 20 SKUs. Sounds crazy, doesn’t it? Well they’ve spent enormous amount of money since launch and one will expect that in their 5th year they’ve reached maturity in their sales. In 2010, I had the honor of meeting the head of Marketing and I advised him NOT to go ahead with his plans but he felt offended, took things personal and decided to go ahead anyway. A free advice could have saved a lot trouble. They should’ve launched a subcategory than go head to head with the category owner
  • Code Red is a local energy drink focused mainly on Marketing Mix and a defined audience. Their total sales in 2015 have been SR. 350 million from one single SKU, Code Red spent around SR. 100,000 on Advertising in the past 10 years, they don’t own a website, nor they are active on Social Media. In fact all the videos and social media pages are created by their ‘loyal customers’, Code Red offered a unique set of values to their audience. Many might argue and say, Code Red is not in modern trade, therefore not much Marketing budget is required but the reality is that Code Red had a clear Marketing strategy addressing the entire Mix. It focused on a target audience more relevant to Code Red i.e. which doesn’t shop for energy drinks in modern trade

    Branding and Marketing is all about relevance which is why today Code Red is a Brand!

  • Femi9 is a Saudi fashion retail outlet focused on women casual wear that started from a humble beginning with two stores in Riyadh. The owner is a visionary and ambitious, today Femi9 operates in most of GCC, North Africa and Switzerland with total approx. sales of SR. 200 million. The Brand spent less than SR. 10 million on advertising in the last 15 years. Its growth continues to this day

So I beg to ask, what would a huge Communications budget achieve? Great results? No! Can any of the Marketers work without a Communications budget? Well, a brilliant Brand and Marketing strategy would achieve enormous growth. Code Red and Femi9, both local Brands, are able to continuously grow with minimal Marketing budget and yet both Brands have their loyal customers that advocate for them. Today out of one SKU Code Red earns 75% of what Rabea earns with over 40 SKUs, you would expect Rabea to sell more given the fact that they spend more on Marketing. Cofique which also spends a lot on its Marketing but with such sales, it needs to re-visit their proposed values and the Brand itself  

Some might discount this case study because I consulted both Femi9 and Code Red in the past which is why I favor them but that’s not true. I intend to speak on huge Communications spendings that should equal results i.e. SALES, therefore logic must prevail for businesses to grow. A brilliant Brand and Marketing strategy is more than enough to create short and long term growth which is why Brands are supposed to be sustainable unlike commodities. Create Your Space and evolve from the old school of Marketing

*All figures obtained from Euromonitor, Nielsen and other sources

 

Said Baaghil is the ‘Unconventional’ Branding and Marketing Adviser to reputable companies in the Middle East, author of many reputable books including the ‘The Power of Belonging’ and a Speaker. Baaghil appeared in books published by America’s experts on Branding and Marketing such as Dan Hill and Libby Gill. Most recently Baaghil was interviewed by world renown Brand Consultancy firm Siegel+Gale on Branding in the Middle East

He can be reached on AskBaaghil.com

The article was first published on Linkedin Pulse on 13th January, 2016

Category, Brand & Unique Values

Always, Category leaders face those that replicate their values on the same propositions. As they say: one success story copied by many BUT always the biggest part of the story is that which one sustains continues growth. On many case studies of existing Brands we’ve seen values evolve to maintain continued growth and those values eventually are replicated by the second and third leading ones within the Category. One of the strongest values is Price but again that’s defined on which segment you’re addressing. In case of candy bars such as Mars, Snickers etc., it’s irrelevant to address a specific target audience as they’re for all demographics that wish to consume frequently or occasionally whereas with respect to timings of consumption, the segment differs on the basis of psychographics i.e. the older segment of the audience is less motivated to consume frequently and to consumer on particular kind of day while the younger audience has no preference when it comes to timing at all. Brands with a single unique set of values and those with more than one, matter but few that have ‘Signal Values’ can easily over shadow a Competitive Category. For example:

In the Saudi market, Al Baik addresses all audiences and not a specific one, is it because of Price? The values are much greater today as a Brand than just Price. Al Baik is not a Commodity; Al Baik is purely a Brand with clear Core Values. If we look at the Fried Chicken category in which Al Baik operates, it is the undisputed owner and champion of the category and many have tried to copy and sell the same values of Al Baik but the Brand is fundamentally deep rooted within the hearts and minds of the audience. To add more, Al Baik is one of the very few timeless Brands easily inherited through generations. Al Baik created its space and the only single way that it can lose that space is when they stop innovating their values or their current values start deteriorating

Countless times we’ve seen the no. 2 within a Category either upholding to Category leader’s Brand values or offers Price as a value. We’ve seen this example with many of the local/regional Brands as latter entrants to any of the FMCG categories. Price as single strong value can turn a Brand into a Commodity, just walk into any supermarket aisles and see the amount of tactical approach to push products off shelves. Brands are about values and great brands improve their values. Look at Apple in general or its iPhone, look at Google, Emirates, Visa, Mercedes-Benz and other great Brands; see the unique values these Brands hold and ask why their customers or users are willing to find them to be the most relevant/preferred. The value of owning a Mercedes-Benz is extremely different than the value of owning a Lexus, the value of owing Samsung is completely different than the value of owning an iPhone, the value of having a Starbucks coffee is different than the value of having Duncan Donuts coffee, the value of owning a Mac is much different than the value of owing a PC

Another great local examples is Rabea. In my previous article about the Brand, I touched a bit on the evolution of Rabea Tea to address the current generation. The management decided to evolve across most of their SKUs and introduce one more (SKU or Brand) named Kick. Let’s analyze the current situation:

149cf45Rabea evolved the entire value proposition but left the Brand as is. This might serve the short-term goal but in the long-term, Rabea would have to rely on the Brand and not commodity. Rabea looks at tactical approach and immediate returns over a long-term strategy that would evolve both the Brand and the (Marketing) Mix. The recent launch of Kick (SKU to management, Brand to consumers) is a sign of both evolution and the quest for immediate returns. Kick by Rabea tea is an extra caffeine tea that keeps you awake, the concept is brilliant but the core problem is that Kick tried to own strong Coffee values, namely:

  1. Caffeine
  2. Keeping You Awake

These two values are well-Branded with Coffee so how did Rabea Marketing planned to evolve these two values which are too strong to hold on to? That’s just mission impossible because it’s a war with an entire Coffee Category. Kick clearly lacked a fundamental Brand strategy; even the visual communication had functional attributes such as ‘Alarm clock’

Suggestions:

Kick by Rabea Tea is a brilliant idea but the trouble is that Tea is not inspiring it’s boring to most youth and that requires behavior change. Tea is much healthier than coffee, there are 190 or more type of teas Rabea needs to address within the Wellness segment which is one of the fast growing population, globally

Rabea needs to revisit their Brand strategy to align with their current proposition and align the essence of the Brand with the core values

I’m not attacking Rabea, l’m addressing where I see the mistake and am suggesting the way forward. Most in our region hate to be corrected; in fact they ride on what’s wrong that’s why we’re several decades behind in almost everything

Brands are about unique sets of values. Each of these values is a reference to the owned Category. Evolving values owned by a Category is an impossible task in Branding unless several supporting unique sets of values are associated
Said Baaghil is the ‘Unconventional’ Branding and Marketing Adviser to reputable companies in the Middle East, author of many reputable books including the ‘The Power of Belonging’ and a Speaker. Baaghil appeared in books published by America’s experts on Branding and Marketing such as Dan Hill and Libby Gill. Most recently Baaghil was interviewed by world renown Brand Consultancy firm Siegel+Gale on Branding in the Middle East

He can be reached on AskBaaghil.com

The article was first published on Linkedin Pulse on 21st December, 2015

What comes first: Category or Brand?

Most confuse the process as they think that Brand comes before the Category. We’ve seen so many battles with this thought as most focus on the Brand than the Category while consumers think of the Category instead of Brand. Do you say I need to buy a new phone or an iPhone? Do you say I need to travel or I need Expedia or Thomas Cook? The strongest Brand will be the reference to a category. So what comes first: Brand or Category? Category comes first not the Brand. Whenever we say tissue we think of Kleenex, whenever when we think of information or search we think of Google, whenever we think of tablets we think of iPad and the story continues. Some of these Brands created their respective Categories and they’re the dominant players thereof

Let’s think how Brands can evolve a Category to own. The best example is Yahoo vs Google, Yahoo created the Search Engine, it was the reference before Google but Yahoo was everything not just search engine, the management decided to expand the portal and be the One-source Destination. Google came in with a new experience to search with great sets of values but Google (unlike its competitor) was focused on search and became relevant and preferred which is why today everyone says Google it, not search it. Yahoo Mail and hotmail faced the same scenario as that of search, Gmail came with new sets of values and took over which is why today Gmail is the largest Free Web based Email

Categories are created through Values, followed by Brand as a reference. Brands are ideas with sets of values as their core. If the Brand offers great sets of values as well as a very unique experience to consumers/users then the Brand is the reference to the Category

For example: in the US, the courier category within the shipping industry had many players till the mid-90s (Brands like DHL, Airborne Express, TNT and FedEx). When FedEx introduced the great value of delivering package overnight and before 10 am, it took over much of the local market making it the Category Reference. No one today says ship/courier the document in the US anymore; everyone says: FedEx It! Since then FedEx grew enormously and as a result DHL stopped serving the local US market while others like Airborne Express folded. FedEx evolved the category to own and they own it to this day

Today when we think of the category of smartphones, both iPhone and Samsung occupy our minds and not the operating systems iOS, Android or Windows. The Power of the Category serves the Brand in many ways as each of these Brands i.e. iPhone and Samsung; address two different target audiences. iPhone is more chic and appeals to intellectual and deep pocket users whereas Samsung appeals to Price sensitive users. So who owns the smartphone category? Both. Who owns the App category? Apple. Each Brand that owns a Category hardly spends money on Advertising e.g. Starbucks, The Body Shop and few others. Think of Kleenex, does Kleenex ever advertise? Does Starbucks ever advertise? Today Categories play a great role for those that create a Category or Sub-category. Yahoo created the Search Category, Google owns the Information Category, two different sets of values so what comes to mind first: Information or Search? Of course Search as its actionable followed by Information

Social Media had players like Friendster, My Space and others; today Social Media Category is dominated by facebook. It created new sets of values and therefore, is the first reference to the Category itself whereas Twitter, LinkedIn, YouTube etc. are Sub-Categories with each focused on its own purpose. Example: Youtube=Videos, Instagram=Pictures. The Social Media phenomenon comprises of two sets of environments and two different experiences i.e. Web and Apps. So focused Brands such as Instagram and Snapchat are creating great presence. Considering how dynamic technology is, everything could change overnight and different Categories and Sub-Categories will emerge

Things to consider:

  1. Think of the Category first and not the Brand
  2. Think of the Target Audience. Which segments you plan to address and concentrate more on Demographics and Psychographics
  3. Think of the Brand idea that’s relevant to your Audience (not to the Management)
  4. Plan both your short-term and long-term visions to own the Category or to create a Sub-Category
  5. Don’t battle within a Category that some other Brands own unless the Category is still maturing and your second or max third entrant in the market
  6. Research is a benchmark not a guideline to follow and most, unfortunately, fail to create but are clever to follow

If we look at the regional market, the biggest economy is Saudi Arabia. Most Category owners in the region are foreign Brands while very few are dominated by local Brands. This brings us the question: How rich is the region on Brand Knowledge and Experience? The obvious answer is that the region still works on Commodities while thinking of them as Brands. The region comes from strong trading mindset with short-term goals, completely opposite to its Western counterparts. Let me share both the prevailing Market logic and examples with reference to the regional behavior

  • Logic: The region is a trade market more familiar with tactical approach than strategy. The region aims for short-term gains over long-term ones which put pressure on the entire organization thereby resulting in continuous changes to its business model in order to acquire immediate sales. You can hardly build Brands on these termsThe organizational behavior within the region with most companies is more relevant to Commodity selling than selling the idea of the Brand which facilitates the users’ experience

    Let’s use one great local example:

    • Al Nahdi, the local Saudi Pharmacy chain, decided to evolve and move from the category of Pharmacy to Wellness Lifestyle. The company has done a remarkable job in restructuring and building great fundamentals to support the new evolution of the Brand from Pharmacy to Wellness Lifestyle Category. As much as I think that Al Nahdi did a great development within the Pharmacy Category by bringing a new meaning to the overall Pharmacy Experience in the Kingdom compared to others, at the same time I think Al Nahdi’s evolution from Pharmacy to Wellness Lifestyle will take a longer period to mature as an idea for Audience to embrace it as a way of everyday experience, Why? In the past three years the brand sold “Hope” and not the Brand idea that supports the evolution
      1. Al Nahdi’s approach on Brand is clear: To Reposition the Brand as Wellness Lifestyle which is a lifestyle that means to Stay Healthy and Look Great
      2. The Repositioning approach lacked both Brand Idea and Purpose. If the idea was to sell to the public “Hope” then how would that support the Repositioning of the Brand? Hope is more of a community initiative than a Brand Idea. So what’s the Idea or the Brand Purpose? I pondered on both for long and I can’t seem to nail them. We all know that Positioning controls the entire Marketing Mix but the Brand Essence needs to be more aligned
      3. Since Al Nahdi planned to evolve into the Wellness Lifestyle Category, what experience did they offer? Usually experience comes from a single promise. Is that also Hope? If I have to agree on Hope then how do you apply it to Wellness Lifestyle? Or how do you bring hope to Makeup, Skincare or Haircare products? These are part of Al Nahdi’s evolutions and they’re its reality
      4. I think the company did a remarkable job on the Marketing Mix and I salute them for it but the Brand was completely disconnected from the entire Mix and both are about one single purpose
      5. How the name Al Nahdi resonates with the audience as Wellness Lifestyle? Well not today but if the Brand is focused enough and more aligned, they will eventually evolve to resonate but this approach takes longer to materialize (they will have to witness generation change). Today Al Nahdi, after three years of Repositioning, is still perceived as a Pharmacy
      6. In store experience needs tremendous amount of work. You have to ask a human being for directions as in store lacks proper guidelines

Suggestions:

  1. Al Nahdi (with such a name) and Repositioning the sets of values should’ve been extremely unique in order to influence change
  2. Entering a new category or evolving from an existing one takes a long time because during that process others competitors can respond fast. Al Nahdi should’ve developed a clear Brand Idea that serves the essence of the Brand i.e. Wellness
  3. The Brand needs more focus, it also needs to break away from Hope because it rarely serves all the values that Al Nahdi is trying to sell to their customers
  4. Bring the Brand promise to the store level. Let customers experience the values
  5. Align the Brand with the Marketing Mix: Opening in malls was brilliant because that enforces your evolution

Overall, Al Nahdi has come a long way and I’m hopeful that with the new CEO, growth will continue. To evolve a Brand from one Category to another Category is not an easy task. It requires time, investment, education and momentum until the Brand is recognized in the new position. Creating a new category is the same as evolving as it requires time, education and acceptance

Said Baaghil is the ‘Unconventional’ Branding and Marketing Adviser to reputable companies in the Middle East, author of many reputable books including the ‘The Power of Belonging’ and a Speaker. Baaghil appeared in books published by America’s experts on Branding and Marketing such as Dan Hill and Libby Gill. Most recently Baaghil was interviewed by world renown Brand Consultancy firm Siegel+Gale on Branding in the Middle East

He can be reached on AskBaaghil.com

The article was first published on Linkedin Pulse on 17th December, 2015

Coffee advice

There are many that speak of Branding and on a separate note, speak of Marketing. Since when the two are separable even if they play different roles? They are both inseparable, they have one purpose and that single purpose is towards the audience. Treating both as separate entities is a problem. Let’s first agree on these two facts:

  • Since the idea of Brands and Branding came into being, Marketing became a support entity and more Tactical. In the era of commodities, Marketing was the core but today, it acts as a support to the Brand idea. Marketing is still as important but not in the driving seat instead Branding is the one driving
  • Second, let’s agree your Ad agency is not the miracle answer to your Brand problems, most are better focusing on design and in avoiding strategies

The Advice:

  • If the organization is not intellectually rich, avoid getting into the complex of Branding and Marketing, the process requires a certain type of mindset
  • If your organization is after immediate returns then avoid being a Brand, keep things the way they are, otherwise evolve
  • If your head of Marketing thinks Advertising is the way towards Branding, please fire him asap
  • If your Ad agency pressures you to be visible everywhere, fire them because they’re after the billing not quality of work
  • If your Advertising agency suddenly becomes your Branding adviser, you’re in serious trouble

Now you sit back and decide where you want to take your company. Every decision matters but your decision should be for the interest of the company and nothing personal

Said Baaghil is the ‘Unconventional’ Branding and Marketing Adviser to reputable companies in the Middle East, author of many reputable books including the ‘The Power of Belonging’ and a Speaker. Baaghil appeared in books published by America’s experts on Branding and Marketing such as Dan Hill and Libby Gill. Most recently Baaghil was interviewed by world renown Brand Consultancy firm Siegel+Gale on Branding in the Middle East

He can be reached on AskBaaghil.com

Brand and RISK!

You’ve seen plenty of Brands commit horrendous mistakes on their Brand Development by assuming that their Branding Experience comes from just managing their Communication. It’s too critical for the evolution of Brands or even their development to be handled by Brand Managers who with few years of experience with Multi-nationals are still on a learning curve. Please don’t take such risks, it’s costly and yes, that’s how sensitive Brand Development is

Things to consider

  • How much do you know about Brands and how they work? It’s a critical question to ask yourself as a Business owner, CEO and as head of Marketing. If you can’t answer this question, then get assistance from Experts. Brand Development is far too sensitive to be considered as a normal or a light task. It affects the entire organization, both internally and externally
  • If you’re an existing Business and plan to Evolve your Brand, you must consider factors such as your Business model, prior to the Evolution
  • Did the members of the Board and management accept the idea of Development or Evolution? If yes, then invite them to a workshop and have an expert on Brands explain both the Evolution and Development. You and every member of the organization must live the experience

Don’t take the risk, consider everything that makes a Brand GREAT. Your least concern at this stage is the Design (face of the Brand), however, your immediate concern is the Soul of the Brand that will help your Business evolve. This is my advice, take it or leave it…………..At Your Own RISK!

Said Baaghil is the ‘Unconventional’ Branding and Marketing Adviser to reputable companies in the Middle East, author of many reputable books including the ‘The Power of Belonging’ and a Speaker. Baaghil appeared in books published by America’s experts on Branding and Marketing such as Dan Hill and Libby Gill. Most recently Baaghil was interviewed by world renown Brand Consultancy firm Siegel+Gale on Branding in the Middle East

He can be reached on AskBaaghil.com

Simplicity is the focus in ‘The Power of Belonging’

Simplicity

The simpler the Brand, the better it can be understood, or on a more fundamental level:  the better it can be experienced

The overcrowding of the Brand, whether via an over-extended Brand Name and product lines, can leave the audience confused, or worse, leave them to fail to even form a perception of the Brand

Simplicity helps you to maintain a focus and address the Brand with one aligned message. Think of how simple and elegant Polo is, Polo is all about ‘Lifestyle’ not cuts or fabrics. Starbucks is simple: It’s coffee

Do you remember Kmart? Kmart tried to do and sell everything there was to sell, and when more categories that were focused upon came into the same industry, Kmart lost touch and its fate was clear, Kmart failed to evolve and specialize. Walmart has everything, but managed to be clear in its Brand Positioning. Everyone knows that Walmart undersells all its competitors, a Mission to which it has always been committed. Walmart is also close to nearly every neighborhood in America and thus has the reach to simplify its Brand in that direction. The days of commodities are over, today everything is about the Brand, the simpler the Brand the better it’s understood and serves the audience

Said Baaghil is the ‘Unconventional’ Branding and Marketing Adviser to reputable companies in the Middle East, author of many reputable books including the ‘The Power of Belonging’ and a Speaker. Baaghil appeared in books published by America’s experts on Branding and Marketing such as Dan Hill and Libby Gill. Most recently Baaghil was interviewed by world renown Brand Consultancy firm Siegel+Gale on Branding in the Middle East

He can be reached on AskBaaghil.com

The article was first published on Linkedin Pulse on 28th February, 2015