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.

Ideas are disruptive, not technology 

In transportation “UBER” gave us the opportunity to order a car, a better car more personalized. Technology enabled such idea, ideas are disruptive not technology. Without idea’s technology is useless, technology is born out of ideas. 
Facebook gave us the opportunity to connect with those we went to school with and friends we lost along the way. It’s the idea that’s social disruptive not the technology, technology enabled. 
Airbnb gave is the opportunity to enjoy the local sense in every city we travel too. 

AirBnB being app gave the idea of “Affordable but in fact their price are close to all hotels”. This whole new way of accommodation is disruptive, technology enabled the idea. 
To book your flight tickets, hotels and activity through apps such as Expedia and others are ways to ease the pressure of going through long process of several parties just to have your ticket and hotel confirmed. Technology brought this great idea to life, technology enabled. 
Ideas are the most powerful business tools, they keep your business constant and on top. Without ideas, your money in the bank and all sort of technologies means zilch!!! 
Ideas are disruptive, technology is enabler. 

Baaghil 
From my speech in Berlin.

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! 

 

Uber and Careem! Brand or Commodity?

 

When it comes to hiring a chauffeur driven car, Uber, is an app that is globally known. However, when looking at the success regionally, Careem is also another app that makes the list.

Uber led to many passenger transportation apps popping in different parts of the world today and helped the industry make billions as a result. It operates in 65 countries under passenger transportation and has an array of payment options.

In recent years, the Middle East witnessed the need for such apps in order to have better services and avoid the hectic cab rides.

Two brands that come to mind are Uber, a San Francisco based company and Careem, a Dubai based company. Both brands share similar values but Careem still holds the unique value over Uber by giving the option of “book later” and leading the region with cash option payment.

Uber’s first regional destination was Riyadh, Saudi Arabia then it gradually expanded throughout the region. Careem, in recent years, has expanded to most of the region but not all of it.

My goal, in this article, is to focus on as a brand what their brand message to their audience is and which company is more intact when it comes to the commodity of transportation. I fully understand when a brand chases quick expansion it intends to lose its focus.

So for the past two months, I used both brands aggressively to experience all the brand touch points. So let’s look at each of the brands.

You can clearly see from the name and the few of the brand touch points, Careem as a brand is positioned as your local app. Given that positioning, the core question always was “who is Careem?” The simple answer is a regional transportation app, which is generic. If the app takes you from one point to another then it’s a commodity. You can’t hold the company responsible if the management treats the brand as a commodity. Question is and will remain, what idea as a brand are they trying to sell to the public? A transport app? Well so is Uber and others.

During each of the experience, you’ll notice Careem calls their drivers “captain” while Uber calls them “chauffeur”. So which of the two holds premium? Clearly Uber. When you travel to a congested city like Cairo, the two offer a totally different experience as they speak to completely different audiences. Careem caters more to the middle and lower class while Uber is targeting a higher class. The Careem app is user friendly. However, you are in for a few surprises once you have placed the order and their brand promise becomes a reality.

Careem has GPS issues – it has an accuracy problem. Drivers either end up on the wrong side of the road or a block away. Second, because proximity is not added, like it is in Uber, you end up waiting longer for the driver to arrive. What I mean by proximity is that Uber is closer from your point of pickup and is available in less time.

Before I start with Uber let me finish Careem. Firstly, for the life of me, I just can’t figure out what Careem’s brand essence or promise is? I feel the brand was developed as an app and went only through a design experience.

Today, customers can’t expect so much from Careem other than the most shared value “convenient”. You order a car and the car shows up. Other services including the recent launched “go”, propose more value but remember many of Careem’s values are originally owned by Uber. During my different visits to Cairo, Riyadh and Jeddah, my experience with Careem changed. When Careem first launched, it made every effort to retain customers, different types of drivers and cars. Today Careem doesn’t cares as much, I guess. To test the brand experience, when I was recently in Riyadh, I ordered Careem and at the same time I ordered Uber. The Careem driver failed to find my location which was the Al Faisalia hotel. It took him almost an hour from the time I ordered. The Uber driver showed up in twenty minutes due to rush hour. While I was heading to my meeting in Uber, I called the Careem driver and the customer service to locate the driver. Both failed to respond so I finally cancelled the order.

What is Careem’s brand promise? What’s its brand essence? We understand that Careem was good in positioning itself as the regional brand but sorry that’s not good enough to deliver what customers expect. Customers are paying for the entire experience of the brand. Sometimes, I feel the brand Careem we knew became a commodity. The amount of price discount they give away is crazy. The text messages they send for discounts is not any different from Al Ahram in Jeddah that sells low priced clothing. I never received an email from Careem like I do from Uber which focuses on experiencing the city you are travelling to. So is Careem a brand?! I need to get my brand facts book out to be convinced.

On the other hand, Uber lives as your private chauffeur. A promise they made and delivered in so many ways. Now let’s get the record straight here, I don’t favor any. In fact, when Careem first launched, I was an advocate of theirs but you can’t be an advocate to something that has ignored the core of their experience. Uber is expanding to 65 countries and the experience in each of the country differs due to local laws and so forth. For example, Uber in Germany has to operate under a licensed cab company but not in Austria. But, for the most of it, Uber still manages to keep its promise. Even though, Careem’s app is much more user friendly, Uber’s app is still friendly. During the time of order, their driver’s proximity is much closer than the Careem drivers and GPS is much more accurate. Recently Uber realized they are more than just passenger transportation and evolved their brand. Today, Uber is hire a driver, helicopter, order food and courier. Don’t be surprised at what’s next.

Since the company is evolving so fast they need a core essence that will hold everything together. Something that says who they’ve become. Today, in simple term Uber is “logistics”. You can hire a car, they will arrange it. You can hire a helicopter, they’ll arrange it. You can order food, they’ll arrange it. You can send a parcel, they will arrange it. They simplified logistics to one single app which is just a click away. The brand has evolved and so did their marketing mix. Their positioning is reflected in their new look and feel. You will notice the key word “availability” and their promise is “reliable at all times”. The rationale behind Uber’s new brand idea is to bring together two things that were in separate worlds for over seventy years. And they are doing this by bringing them together as the “Bits” and the “Atoms”. The bits for Uber is the technology and its ability to express its efficiency, ability and power. The “Atoms” is responsible for how technology moves cities and their citizens, and the goods that are transported everyday. The brand tells its story from its inception of the famous tweet to its recent evolution of serving its new created purpose. We all can agree that Uber has disrupted the transportation industry across the 65 countries and 400 cities but we can never disagree that Uber is one of the most talked brand in this era.

Uber and Careem are two different brands. While one is massively evolving and other is catching up. Uber provides the experience and Careem is turning into a commodity.

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

The Preferred Brand

Why Brand Preference matters?

You always think of your competition and most companies position their resources to battle competition. If your Brand was Preferred and Relevant, competition won’t matter, your Brand will matter

Your company will focus its resources on how to serve the customers better, innovate and became more preferred as well as relevant

For example, Facebook is preferred for time spent with family and friends to share stories. Facebook is relevant as a Brand for creating the subcategory of instant messaging, in fact, Facebook is the most relevant Brand on mobile to reach family and friends through messages

Today the world knows that Facebook owns WhatsApp and Facebook Messenger apps. Both have become ‘must haves’ on mobiles/smartphones. This acquisition has made the Brand more relevant by owning the subcategory of Mobile Messaging

Snickers the candy bar, is preferred when you need a quick meal to hold up your hunger, it’s relevant because it shares two great attributes: Chocolate and Energy

The more you focus on your target audience, the better you perform. Keeping an eye on your competition will drain your resources and your Brand will become irrelevant

Example: Every time we think of the best Airlines in the region we think of Emirates, we think of the service, we think of the luxury and innovative experience. On the same token, as much as Qatar Airways invests in and claims its ‘5 Star’ airline status, the Brand is still irrelevant to a category owned by Emirates

On the other hand, Etihad Airways is focusing more into Premium Luxury Travel, they just introduced ‘The Residence’ for their first class. Now Etihad has created a category and has become the preferred and relevant Brand to High Net-worth individuals traveling first class which Emirates enjoyed having on their Airbus A380s and lost

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 7th February, 2015

Virgin or Lebara. The rest don’t matter!!

Saudi Arabia’s Telecom industry is evolving, 3 new Mobile Virtual Network Operators (MVNO) in recent months. Question is: Which MVNO will have the 1st mover advantage? Virgin the equity owner, Lebara piggybacking on Mobily’s Equity or Zain and Axiom both being latest entrants before Virgin and Lebara? Users will decide but Brand Equity and Price points will determine the leadership

  • Lebara, an MVNO based out of Europe, partnered with Mobily
  • Virgin mobile, partnered with STC
  • The ailing Zain decided to partner with Axiom, a regional retailer for mobile/smartphones

The ‘Pay as You go’ MVNO model targets migrant workers and international community. For locals and residents, it’s a second choice to their official/original number. Which of these 3 MVNOs has the first advantage? Apparently, Virgin Mobile (partner of STC) because of its ‘Brand Weight’

I believe the Saudi market is fragmented into several segments that share same attributes or needs but are apart in many ways. Virgin will have the first mover advantage with inbound business travelers and others. Out of the 27 million, 6 million are Expats/Migrant workers or their family members in Saudi Arabia and that’s a big number which is using the current networks, so:

  • What’s the value in having the 3 operators (STC, Mobily, Zain) carry their own MVNOs?
  • What’s the benefit besides ‘Pay as You go’ for the end user in Saudi?

I see Price but other than that, it’s difficult to determine other benefits and expect the Brand which STC has as the winning partner: Virgin. Virgin Mobile will appeal to international community and citizens who are well aware of the Brand, for citizens and residents they will sign up with Virgin and Lebara as second choice (for back-up purposes). Lebara will focus on a target audience which is Price Sensitive (obvious from their communication). Most consumers associate Lebara with Mobily because of similar Brand colors and on the same token, they think it’s a sub brand of Mobily

It’s interesting to see how MVNOs will unfold under the original 3. Hardly anyone knows, at the least among the mainstream users, that Virgin mobile is associated with STC from first time experience but many see the association between Lebara and Mobily. I think Virgin’s Brand Equity will play an interesting role as it will have the first mover advantage and that’s STC’s strength in MVNO scene. On the other hand, Axiom and Zain are yet to prove their success story as Mobile Virtual Network Operator.

Slow moving and Price Sensitive audience will hardly find any value if Lebara and Mobily are attracting the same audience with the same values

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 29th January, 2015