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

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

SPECIALTY: One of the Laws of ‘The Power of Belonging’

The above image is of Brand names that sell Makeup

  • Sephora is SPECIALIZED in Beauty Products
  • Macy’s is SPECIALIZED in Up-Scale Fashion Retail
  • Sephora is a Destination offering first hand experience for beauty products
  • Macy’s is a Destination for retail fashion (i.e. beauty products could be third or fourth priority in the minds of the customers during their experience)

Specialty is one of the 10 Laws for Brands to succeed in generating/maintaining ‘The Power of Belonging’

What happens when you create a product or service and you want to sell everything? You end up selling nothing! The saying might be old, but it’s true to this day: Jack of all trades, master of none. Focus on your specialty. Be the master of one thing. You can’t be the master of millions

Starbucks specialized in upscale coffee and coffee drinks. If it sold other things, it was because those things (from mugs to music) go well with coffee. It’s all about the coffee experience. Successful Brand Pros are able to let their audiences know they stand for something, rather than for many things, or for whatever they think they might be able to sell. Remember the number 7? That’s a magic number in many cultures, perhaps because that’s about how far our memories go. For some reason we can relate to things in sevens. 7 wonders of the world, 7 Chakras, 7 Heavens, among many others. How much diversity in your Brand your audience can cope with isn’t up to you; it’s up to the audience’s brains. Think in terms of the ‘Rule of 7’ with regards to your Brand as being the outside limit of how far your family of products and messages can extend

Let your Brand stand for something, specialize like Starbucks for Coffee, Lipton for Tea, Xerox for Copy, Al Baik for Fried Chicken with Special Garlic sauce (not burger or seafood), Apple for Digital Lifestyle, Facebook for Social Networking (worth pointing: Linkedin is between Business Networking and Recruiting, so it needs to specialize)

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 22nd February, 2015