Revolutionary Measures

Asbury’s or Sainsda? Will the Sainsburys/Asda merger work?

The proposed merger between Sainsbury’s and Asda promises to shake up the grocery market in multiple ways. It will create a new leader in terms of market share and, the companies hope, give them the scale to tackle the rise of discounters such as Aldi and Lidl.

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Looking at it through a marketing lens, there are three things that stand out:

1          Slick PR (to start with)
This is a deal that has been discussed for several years apparently, and it shows in the careful messaging behind the announcement. Sainsbury’s CEO Mike Coupe has pledged that there will be no job cuts or store closures and that the combined entity will lower prices by 10%. Clearly this is disingenuous on a number of levels – the Competitions and Markets Authority is likely to force some stores to be sold, naturally reducing staff numbers, while any savings for consumers are likely to come from squeezing the combined supply chain of the new company. This will impact the profitability and potentially staff numbers at suppliers, who employ more people than Sainsbury’s/Asda itself. So there are likely to be job losses – just not at the company itself.

The main fly in the PR ointment has been a classic bit of spokesperson inattention. While waiting for a broadcast interview Mike Coupe was captured on camera singing “We’re in the Money”, from the musical 42nd Street. The overall impression (apart from that he should stick to the day job), was that the whole deal was about enriching management and shareholders, at the expense of customers and suppliers. Cue a hasty apology, but it has highlighted how there’s no such thing as off the record (or camera).

2          A complex brand balancing act
One of the attractions of the deal is that there isn’t that much crossover between the demographics of Sainsbury’s and Asda shoppers. That should mean that you won’t lose any customers, and if you can trim supplier costs you can generate large efficiencies. This is something highlighted by Sainsbury’s, which commissioned research that showed Asda customers value “fair prices” most and Sainsbury’s are attracted by “great fresh food.”

That’s all very well in theory, but achieving sufficient synergies while keeping things separate enough in practice could be more difficult. While other organisations (banking groups, airlines and consumer goods holding companies) manage multiple brands, somehow a supermarket feels different. People have a strong relationship with their supermarket of choice, probably because of the basic importance of food to their lives, so anything that is seen as weakening brand values is likely to upset consumers.

3          The competition won’t stand still
While Sainsbury’s wants the merger to happen quickly, something this large will need regulatory approval and will take time. And while both Sainsbury’s and Asda will no doubt stress that it is business as usual in the meantime, it will take up a lot of management time. Rival grocers will no doubt aim to take advantage of this, particularly as they know about the two marketing pillars (fair prices and fresh food) that the two brands will embrace going forward. Companies such as Lidl, Aldi and Tesco are already aiming to push both messages, now they’ve seen the potential Sainsbury’s strategy they’ll be redoubling their efforts to attract customers away from the merged organisation.

Due to its sheer scale in years to come the Sainsbury’s/Asda merger is likely to make it into marketing and business textbooks. The big question is whether it will be lauded as a well-executed and well-branded master stroke or listed with flops such as Bunnings takeover of Homebase? Initial marketing has been positive and pretty assured, but there’s a long way to go yet.

 

May 2, 2018 Posted by | Marketing, PR | , , , , , , , , , , , | Leave a comment

Why marketers fail at building online communities

In today’s world every brand wants to engage with its audiences and use the power of digital to deepen engagement and increase loyalty. Yet there’s a balancing act – consumers are choosier about who they engage with and are increasingly likely to use social media to complain about brands and their actions. Witness this week’s furore after Sainsbury’s changed the range of items eligible for its lunchtime Meal Deal.global_453812571

Many brands have tried to create communities to get closer to customers, but often these have failed to deliver any results. Why is that, and how can marketers ensure they are building effective communities for the long term? At this week’s Cambridge Marketing Meetup Chris Massey of Mind The Product explored some of the reasons why, and gave some tips to maximise the chances of success.

Building a community relies on three factors:

  • Your audience has to be reachable
  • Your community needs to be relevant
  • Members have actually got to care about your product/company

The third factor alone explains why so many communities fail. You may be the one toilet bleach manufacturer with huge sales, but how many people actually care or feel an affinity with your brand? The only way to get their interest would essentially be by buying it – offering free stuff for their time, which will result in low engagement and not deliver lasting results.

As with any marketing initiative, you need to follow a process when creating a community. Start with building a business case – what problem are you trying to solve? For companies with technical products it could be reducing support calls as the community shares its knowledge to provide answers to basic queries, or it could be to help co-create new products and services. Identify your goal, and then create aims and metrics around it, ensuring you get the right level of buy-in internally.

Secondly, do you need to create a community at all? Is there an existing community that you can become involved in? There’s no point reinventing the wheel, particularly if members are unlikely to move across to your community from an open alternative.

Why do people join communities? It is normally for a combination of four reasons, which increase in engagement and commitment as they move up the hierarchy of needs:

  1. To get things (mugs, discounts, general free stuff)
  2. For access – to receive privileged information, such as pre-launch news before everyone else
  3. To feel powerful – members see that their feedback is taken on board and really makes a difference
  4. For increased status – they are respected within the community and essentially can become brand ambassadors/fan boys for your company

Once you have connected with people you need to keep it going. As Chris pointed out, in many ways this is the difficult thing – technically it is easy to create a community, but it takes a lot of work to ensure it thrives over the long term. Think about how you set membership criteria, what it is going to be called, and remember that it is going to take a lot of human management from your end to drive it forward. You aren’t going to always be in control, so bear that in mind, but any community needs to fit your own brand values or it will undermine the rest of your marketing.

Creating a community is not easy, and isn’t a short term project – but done well it can drive real engagement and create a multiplier effect that boosts your brand through third party endorsement. Just start with the business case, rather than building it and hoping that they will come…………

September 7, 2016 Posted by | Cambridge, Marketing, Social Media | , , , , , , , , | 2 Comments