Management Blog

P&G's word of mouth marketing force

Mothers have all the answers at Procter & Gamble, which has enrolled 600,000 of them in its call centres. Vocalpoint is a word-of-mouth marketing campaign the company has developed to pitch its and other companies' products.

The consumer products giant is using personal endorsements by developing product messages mothers will want to share, along with giving them samples, coupons, and a chance to share their own opinions with P&G.

"We know that the most powerful form of marketing is an advocacy message from a trusted friend," says Steve Knox, Vocalpoint's CEO.

Vocalpoint proved its value in October 2005 when it drove explosive sales for the Dawn Direct Foam product, doubling sales over those units which didn't use the campaign.

Whitespace: Boiled frog retail

By Mark Fowler

It has become increasing tough for small manufacturing and grower businesses to profitably supply their products to the price-squeezing duopoly of Coles and Woolworths which jointly drive 76 percent of the $70 billion-a-year Australian supermarket sector. (1)

And to make life even more challenging the just released PriceWaterhouseCoopers report "Retail & Consumer Outlook 2006" (2) confidently expects private label sales to reach 30 percent of supermarket revenue in the medium term.

Continuing down this margin-eroding and brand-loss path is a no-win scenario for small manufacturers and growers.

It’s time to break out!

Asking questions is a great way to jump-start the creative process. Here are some starters:

• Are there any emerging consumer lifestyle trends which present unfulfilled opportunity?
• What alternative retail channels might deliver higher margin, or customer loyalty?
• Could partnering or industry cluster strategies create a better customer value differentiation for your product than working alone?

Some start point ideas:

A web shop
Despite post-2000 dot com crash rumours to the contrary, six years on, the business of selling products and services to consumers via the Internet has become a very convenient, highly functional and now affordable shop front for all manner of products and services. A recent Forrester report found more that almost 40 per cent of online customers were new customers (3). It also found that consumer visits to retailer websites influenced 22 percent of their purchase decisions. So increasingly the Internet has become an essential parallel shop front. How could a website allow your business to bypass the supermarket choke point, to better reach and service your market?

Farmers markets point to new clustering opportunities
Consumer demand for healthy, fresh and organic food products is growing rapidly. Farmers markets are popping up all around Australia to meet this opportunity. They present a powerful example of how small businesses can successfully cluster around a common theme of not just high quality - but also wrapping value around the product to create a valued experience - participating in a memorable and repeatable carnival like market event. Are there opportunities for your business to cluster with ‘like’ businesses in an innovative physical or virtual (Internet) space which could create increased customer lifestyle value or an exciting new consumer experience?

Like the boiling frog fable (4), it’s always hard to recognise the impact of slowly emerging trends on an industry from the perspective within that industry. But it’s very clear now – it’s time to get out of the pot.

Notes

1. Stephen McMahon, "Metcash chief has growth in the bag", The Age, 29 April 2006

2. "Retailers' pursuit of private label likely to succeed says PwC", PriceWaterHouseCoopers Australia, 3 May 2006

3. "Online Retail Predicted to Top $200 Billion", eMarketer.com, 25 May 2006

4. "Will it happen here? UK report paints bleak picture for independents’ survival", Checkout, March 2006

Mark Fowler is a Director of Global Foresight Network Pty Ltd, a business consultancy which provides research, strategic advice, facilitation and training services to help organisations navigate the 21st Century. Whitespace is an AIM monthly feature focusing on trends, opportunities and new concepts in the business world.

Defining the leader-breader

The ability to hire and mentor top-class individuals is an important quality of leadership. The leader-breeder, as defined by Ivey Business School professor and leadership expert Jeffrey Gandz, has the emotional intelligence and sense required to attract, develop and retain talent, regardless of the academic background.

In this Ivey Business Journal article, Gandz describes how these leader-breeders contribute to high-performing organisations. To develop leadership talent he believes the role of the leader-breader is to:

• Recruit and select high potentials even if they’re hard to handle
• Coach for skills development
• Mentor for career development
• Give totally candid feedback on performance
• Create stretch assignments
• Reward and reinforce success
• View failure as a learning opportunity and help their people learn from failure
• Surrender their high performers for corporate challenges and personal development

Shantaram

If you were lucky enough to attend AIM's breakfast this morning with Gregory David Roberts you will undoubtedly be inspired by the very personal story of a man who has seen more highs and lows than most.

If you have not heard Greg speak, or read his best selling book Shantaram (soon to be made into a Peter Weir-directed, Johnny Depp-starring film), you can find out more about this extraordinary individual by visiting www.shantaram.com.

The theory of increasing returns

Diminishing returns impose limits on companies growing too big, thus preserving competition between them. In his new book, Knowledge and the Wealth of Nations, David Warsh tells the story of the rebel economics of increasing returns.

Warsh makes clear the adherence economists show to the principle of diminishing returns is as much mathematical as philosophical. The 'hero' of the book is Stanford University's Paul Romer, who assumed that ideas were goods of a particular kind that everyone can make use of as a single design, recipe or blueprint at the same time.

The argument leads to the conclusion that ideas engender increasing returns of scale because the total cost of a design does not change much, whether it is used by one person or by a million.

But manufacturing ideas is not of itself a good business to go into unless some protection, such as patenting, copyright or just keeping them secret, can be achieved.

Brand sharing via word of mouth

The Church of the Customer Blog has noted some statistics on consumer word of mouth trends [PDF], as compiled by the US-based Keller Fay Group.

Highlights include:

• 72% of brand-related opinions are delivered from a individual to a family member or friend
• 13% of opinions are delivered to co-workers
• Only 7% are delivered by a professional or expert on the topic
• 62% of marketing-related discussions described as "mostly positive", while only 9% are described as "mostly negative"

Most surprising, perhaps, are the findings that 92% of word of mouth conversations occur offline, with face-to-face interaction still the most common way to share opinions about brands.

Inspirational for the soul

For anyone who loves those ubiquitous office motivation posters, this web tool is for you.

The Motivator generator tool steps you through the creation of your own motivational poster from an uploaded image or Flickr photo. Just add a title and inspirational message and the final product is automatically generated.

Of course, the tool can also be used for demotivational images...

Seven ways to stay innovative and competitive

How does a 104-year-old company like 3M stay so inventive? Larry Wendling, vice-president of 3M's corporate research labs, has narrowed it down to seven points - what might be termed "The Seven Habits of Highly Innovative Corporations":

1. From the chief executive on down, the company must be committed to innovation.
2. The corporate culture must be actively maintained.
3. Innovation is impossible without a broad base of technology.
4. Talk, talk, talk - formal and informal networking among staff.
5. Set individual expectations and reward employees for outstanding work.
6. Quantify efforts.
7. Research must be tied to the customer.

"We do think innovation is more than an accident," Wendling says, "and that you can create the environment for innovation by paying attention to these seven things."

Working from home: The good life?

If you're considering making a shift and working from home or telecommuting, Andy Calkins invites you to first look and pros and cons of this new way of (work) life with his Home Office Compatibility Quotient.

The simple formula looks at all of the pros of home office life divided by all of the cons.

According to Calkin, pro factors include:

• Independence: the ability to truly shape your own work day                      
• Focus: no (or at least less) office politics and fewer office distractions
• Lifestyle: no commute, more time (theoretically) for personal interests
• Management: the many conveniences in having someone around the house      

Cons for working from home include:

• Career Impact: out of sight, out of mind may mean a slower climb up the ladder for telecommuters 
• Proximity Conflict: for some families and marriages, this much togetherness is too much of a good thing
• Distraction Potential: kids, dogs, that good book, the jogging trail, the refrigerator - they're all out to divert you from what needs to be done
• Isolation: exactly how much do you like talking to yourself?

By applying the formula and assessing your aptitude to telecommuting, Calkin believes the greater learning can come from the act of establishing the values - finding out what's really important to you - rather than the final tally.

Browsing for blogs

If you struggle to find blogs of interest via traditional search engines like Google or blog search engines such as Technorati, Blogflux Directory might be for you.

Indexing over 16,000 blogs (as of May 2006) into categories, the site makes it easy to browse for manually-checked weblogs of interest. Users can also get more information about the blog and subscribe to its RSS feed.

Blogs can also be browsed by country (check out Australia's indexed blogs for local content) and language.