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

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

Brand and Branding are everything in Business

Most companies in the Middle East fail to differentiate between Branding and Advertising or the Values they both provide. Most think that Branding is about logo and design or are completely puzzled on the Values and End Benefits that Brand and Branding provide

Many companies use Advertising and call it Branding, then the question arises: What is Branding?

Branding is about building relationships between the Brand ‘Idea’ and the Consumer/Customer/Users. Logos, Design and Messages are part of Brands, not Branding. Advertising stresses on persuading audience to take action, works very well with Promotions or Trade Marketing but not with Brand Building

Companies in the region believe in ENORMOUS Advertising spending to build Brands and if you personally request your Marketing department to do an audit on your existing Brands, you will realize most revolve around awareness which means you basically drained your budget to say “I’m here!” and nothing else. Advertising will fail to create (TOMA or Top OF Mind Awareness) if the Marketing Mix fails to own the category. One the other hand, Branding builds Loyalty in the form of actual customers buying from you and repeating the same experience over and over i.e. a focused segment

People Queue outside of Apple stores across the world for days to experience new Launches or log on to Apple.com to watch a live stream of new launches or announcements. Now that’s a ‘Brand’. Its competitor Samsung hardly gets the same amount of attention, why? because it’s less exiting as a Brand

People feel proud to wear Ralph Lauren attire during a golf game or a polo game. People feel inspired to fly on Emirates and pay extra for their service. These are Brands that can manage their loyal customers. These are Brands that can increase Price and customers will still remain loyal to them

Here are some points to consider:

  • A Brand is an ‘Idea’ that best fits the audience through a relationship (Branding). A Brand at launch needs to show genuine Essence and provide an Experience which the entire organization can deliver
  • Any newly launched Brand is like a new born baby which needs time to flourish, needs genuine relationship with first time customers or users, rather than persuading the audience to get engaged instantly through Advertising. Brands are like humans, they grow gradually in the ‘Minds of their Audience’
  • The most stirring problem in the Middle East are management and board members. Their basic understanding on Brand and Branding hurts the growth of their company. Usually boards are after quick wins, I’m sorry but you can’t build Brands on quick wins, you need time and focus
  • Most mistake Brand Positioning and Promise. If companies invest enough time on the science of their Brand, they’ll build great wealth of understanding to manage their Brand with their stakeholders
  • I have met Marketers who re-positioned their Brands with the understanding of Re-Branding. Another major issue in the region is Re-Positioning and Re-Branding. Re-Positioning is effected by Marketing Mix, adding new products or changing segments. Re-Branding is the change in naming, essence, promise, design and etc. The science that goes behind any Brand and Branding is far too critical which is why it’s best that the CEOs champions the Brand. If Re-Branding occurs without input of key stakeholders (for example company employees), disaster can happen
  • The target audience is not the single stakeholder in Branding. Most professional Branding consultants will demand stakeholder mapping and educate management on stakeholder Brand Management
  • The massive difference between Advertising and Branding should be taught to CEOs and CMOs or stressed on companies CEOs by board members to attain long term results. Most global Branding experts see Advertising as optional while Branding is a fact because it is dynamic and timeless. A successful company with clear vision never stops Branding, and please be reminded that Branding is not Advertising while Advertising and Branding are not TV, Billboards etc., those are just tools
  • Myself and many others are aware of Advertising’s strong presence in the Middle East, we are also aware of the forged understating on how Advertising can play a role in Brand Building. Advertising and Marketing entered the regional market through Multinationals which had one single goal: Sales!

    When Trade was the key Strategy at market entry, Advertising played an important role. Multinationals’ regional interest was basic Marketing and Sales till maturity. They created every single category in FMCG and other sectors

  • In the past two decades Multinationals started speaking about Brands in the Middle East but most were dictated from global business units in Zurich, London, Brussels or New York
  • The result of Multinational Trade Marketing in the region also produced Trader mindset Marketers with basic understanding on Brands and Branding (not all but majority). The results are visible when these seasoned professionals moved to local organizations
  • In the past 4 years several local and regional companies went through Brand and Branding exercises, the only new visible presence they offered was a new logo, most had to revisit their initial launch on several occasions
  • The Middle East at large is a very individualistic society, personal wealth, self esteem and personal gratification are far more important than fulfilling the organization’s vision
  • For CEOs, this is crucial. If they are not aware about basics of Brand and Branding or lack understanding about the Values and End Benefits, the chance for the organization to fail is highly possible. Sorry but ‘Brand’ is far too big to be managed by a CMO on his/her own. The Brand” should be every CEOs TOP Priority whereas Branding is what Marketers of every organization should focus on each and every single day of the year
  • Not all Marketers are fit to create or build Brands. Most in our region manage Brands but lack experience to create a Brand meeting global standards

Why do I care to share or advise? Well being from the region nothing will ever fulfill my career and my life more than to see Brands from the region in other parts of the world. CEOs in our region should be Brand champions to ensure that the entire organization delivers the Promise and lives and breathes the brand’s Core 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 16th January, 2015

CAREEM and You’re There

What can we learn from Careem?

Careem is a mobile app to hire a chauffeur-driven car service. The app operates in most cities of the Gulf countries, as well as in Pakistan and Egypt. A brilliant idea similar to the US Brand Uber that also launched in the region, recently. So coming back to my question: What can we learn from Careem (i.e. its Brand Promise)?

  • Careem’s Business Strategy is crystal clear to passengers, travelling from one point to another through mobile app booking
  • The Business Strategy requires a Focused Brand with great Values. Careem’s customer experience starts from the moment the customer books a car online till the drop off
  • This leads to 2 types of experiences for the Customer/Passenger: Digital (the mobile app) and the Service (Chauffeur-driven Car)
  • Careem’s promise ‘And You’re There’ is simple yet precise and requires humans with basic skills and good behavior to deliver the experience. Great example on how Careem came up with a promise that balances across all touch points with minimal threats to the Brand
  • Careem can manage the Digital promise but not chauffeurs and/or cars. They’re 3rd party service providers but Careem was able to to train and share the Brand Values to ensure that the Brand Promise is a reality for their customers
  • If economy cars are not available to book, Careem ultimately finds the solution and sends Business Class cars
  • Careem’s Brand Promise struggles in areas such as King Khalid International Airport in Riyadh (a distant pick-up point within the city’s parameters). Hardly any driver is available in the area for a late night arrival and waiting for them could take up to an hour. It is in such locations, the Promise ‘And You’re There’ fails leading to frustrated users/passengers

Careem is a Focused Brand with great amount of simplicity. The Brand is perceived as some-what affluent. While Careem suffers from distant touch points, the company still manages to keep the promise intact

This is the difference between those that think of Brand as a promise to thier audience vs those that think of brands as mere logos used for Billboard/Out-door Advertising

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 31st December, 2014

Strategy vs Tactics

One of my crucial findings in the Middle East with Marketing professionals and CEOs is the confusion between the overall Strategic approach vs Tactical approach when it comes to Marketing. The struggle of knowing when the two are used and the values they bring. Most witness regional level Tactical Marketing followed by Tactical Advertising in which most are calling it Strategy. You can’t ‘Build Brands’ on Tactical Marketing, this why most are treated as Commodities

In FMCG sector, the constant use of tactical drives the organization’s mindset championed by the CEO or even the board in most cases to think tactical and extend the portfolio to enormous amount of SKUs only to achieve tactical goals (Seasonal Sales as they are known) but not to build sustainable Brands. If you look at the Brand portfolios of most FMCG companies, you’ll find two things:

  • Brand out of focus, ruined by Advertising that keeps reminding the audience about the Brand
  • These Brands are treated like commodities. The single reason for audience engagement is ‘Price’. Advertising benefits when Brands are treated like commodities (Price-driven)

To build GREAT Brands you need the entire organization to be of one single mindset and that’s rarely the reality with Family-owned or managed businesses in the Middle East

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 27th July, 2014

The Symbol

What is Rabea Tea’s core initiative? I’m sure it is a great cause however the Brand’s elements are confusing. The fist symbol which looks like a symbol for Political Revolution or Solidarity Movements, is commonly used by Social and/or Political groups during protests. The symbol displays anger or power and I don’t think Rabea Tea is mad at the society (well, I certainly hope not!)

Their message translates a call of action which shows kindness but the symbol that represents the cause comes off as ‘too aggressive’. This creates a clear disconnect between the cause and what the Brand translates itself as. With regards to color coordination in communication, green represents ‘freshness’, ‘environmental friendliness’, ‘nature’. Kindness and goodwill are spiritual acts that are best represented in white

In a nutshell, my concern is: if Rabea Tea is putting forward an initiative which acknowledges kindness, helping people, caring for the elderly etc., what message are they really trying to send using such a symbol?

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 1st July, 2014

Who is flyNAS?

The recent brand evolution of Saudi Arabia’s NAS Airlines to flyNAS seems logical, but I have to wonder if NAS is still a Budget Airline. Their in-flight Value Proposition indicates they are a Budget airline, but their Ticket Prices tell a different story. So I have to ask: Has NAS airlines evolved from their previous Business strategy? Or is this statement a predetermined description of a Budget Airline? It’s unclear from their description what NAS’ new positioning is and whether that strategy is clearly reflected in their current Marketing Mix

Budget airlines require very distinctive parameters to operate with low fares as a specific aircraft type in flight offerings. In the US, Southwest Airlines is the perfect example of a well-rounded and well thought success story, as its Brand does serve its Business strategy. Every part of a holistic strategy can affect the single unit strategy. The essence of any Business strategy is to be the champion of the holistic approach. The Business and Brand strategies of NAS are not intertwined well enough, so again, one must ask whether NAS is still a budget airline because their price structure implies differently, while the airlines’ booking and in-flight experience does indicate they are a Budget Airline

NAS needs to address the following:

  1. Revisit the entire Business Model and gradually move away from a Budget Airline focus, unless fuel is subsidized to support that model. Otherwise, it will be difficult for NAS to sustain the Budget Airline Model
  2. Identify a precise target group. Saudi airspace will be saturated before the end of the current year due to 2 additional airlines. Al Maha airlines (Qatar Airways) will target the higher end of the market, while SaudiGulf will take a chunk from Saudi airlines’ domestic traffic. Both incoming and existing airlines will face difficult times competing with Saudia Airlines on Price, as it gets subsidized fuel for its fleet
  3. The single Value they offered in the past was Price, that’s not a valid Value today
  4. NAS needs to align its Channels of Communication, as their strength lies in their Digital platforms. They can dominate in that medium if they invest heavily today. Their brand no longer speaks of uniqueness, which is why the question is exactly who is NAS or flyNAS? The 1st Budget Airline in Saudi Arabia? Not anymore

    The airline clearly needs to identify their Brand’s Essence, so the public can relate to NAS in very precise terms

NAS Airlines has an unprecedented opportunity. The size of the Saudi Air market is massive, both in terms of domestic and international routes. The current demand for domestic routes is greater than the supply available, based on just two local operating licenses. The Saudi Market will evolve enormously in the Air Transport industry, and numerous new upcoming airports and NAS must be ready to inaugurate that new era

He can be reached on AskBaaghil.com

The article was first published on Linkedin Pulse on 26th June, 2014

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