PODCASTS / E21
MAY 01, 2020
00:18 Welcome to episode 21 of Startup Confidential. When to change your strategy. I hope you are all doing as best as can be expected right now. I do imagine that many of you listening are very worried about your business this year. And why do I say this? Well, in my last webinar in March, 50% of those who attended were concerned that their business would decline severely this year due to the global pandemic we’re all living through. And I hope that’s not the case. Hopefully this episode will help add to the mix as you think through how to get through this.
00:56 Look, we’ve made it through the surge from March 15th to March 22nd in consumer packaged goods. It was crazy in the stores and online. When I went to Costco in Seattle around then I think it was missing only zombies. This period was when most of the country went into stay at home or locked down, and it put an enormous strain on distributors and manufacturing plants, less so on input suppliers initially. Lacking much else to cover, the media in typical fashion, obsessed with the surge, but should you. More importantly, do you now need to rethink your strategy, your competitive thesis.
01:34 In this episode, I’d like to briefly lay out how I think about the meta topic when to change your strategy, because the rules for this have not changed due to the shit can Coronavirus. Don’t [inaudible 00:01:46] people. A strategy in CPG is a behavioral theory. That’s how I look at it. And that theory states how you’re going to win, it’s a hypothesis… How will you win money from a specific audience to fulfill a deeply held need or desire better than the available options. That much is not rocket science. The winning happens when you connect your product line to those deeply held value-laden needs and desires. And the higher the stakes of fulfilling them, the more memorable you can make yourself, if you do a bunch of other stuff right, and then you have the engine of your growth turned on.
02:27 In premium CBG, successful strategy is about offering modern approaches to broad-based values and aspirations already visible in everyday life. I talk about this at length in Ramping Your Brand. It’s not about actually changing the world or the bleeding edge of inscrutable science at all. You’re welcome to chase that if you want, but you’re going to be on a long road. You change your strategy folks when you get definitive or at least convincing evidence from multiple angles, that your behavioral thesis about how to modernize your consumer’s approach to this or that need was actually a bunch of curb. And I’m sorry, but sometimes it is, like a lot, when you’re new to this industry. Sorry.
03:08 I talk at length in my book about how category geeks, you, tend to assume tons of other folks have similarly niche values and devise a strategy to basically sell two clones of themselves. This often leads to selling weird stuff that chases obscure outcomes few understand, let alone care about because you’re talking to yourself. Changing your strategy, folks, is the decision you make primarily because your key attribute outcome signal is basically not connecting with consumers. It’s not driving repeat. It’s not driving accelerated trial. You have no powerful why behind revenue growth or sales, and your attribute outcome signal is not leading to dollars flowing to you and away from other brands and categories that are chasing the same need. You don’t stand out. You’re not memorable.
03:57 If the phrase attribute outcome signal is Greek to you, please get my book Ramping Your Brand on Kindle, like right now, and you’ll learn all about it. I can also sell you a hard copy directly much quicker than Amazon right now, which is taking a month due to COVID labor priorities, which are not selling my book. Just email me. We’ll figure it out.
04:17 Cutting to the chase, the COVID-19 surge and the sustained elevated sales of CPG staples that we are seeing now, are really not any clear evidence at all that you should change your strategy. Why do I say this? Because staying at home hasn’t yet altered the fundamental cultural values related to modernizing one’s consumption that drive premium trade up decision-making. What staying at home has changed is primarily where we consume things, and with whom. It’s a reordering of the balance across many different types of consumption occasion. It’s not a torpedo to preexisting value systems. They’re still here, alive and well, because this has not been going on long enough. I’m not saying that value systems won’t change. That could have an effect on premium consumption, but it’s too early.
05:10 The rejiggering of 600 billion annual eating occasions, as fast as we have seen it through government orders, is affecting some categories that are overexposed to out of home consumption. For example, nutrition and energy bars and energy drinks, as well as many categories of classic soft drink, established soft drink, diet, soda, and stuff in vending machines, are getting hit by a major drop in your sales. Why? Well too many of them rely on consumptions occasions that are out of the home, mainly at work and also on the go to drive their continued growth and their sales volume.
05:51 Now, if you’re a category skewed heavily to out of home consumption and you think that out of home consumption will be limited for quite some time, perhaps the rest of the year and even much of next year, then should you change your strategy? Perhaps, but let’s think this through briefly. Having your consumers stuck mostly at home, which is a location change, may or may not make it harder for you to stand out among brands and categories chasing the same need, because what this is is generally, as I talked about in my book, it’s a memorability issue. It’s a problem of your trademark’s symbolic amplitude in their life, their social network, and in broader culture. It’s mostly a tactical issue. And that’s generally where I have people start focusing.
06:38 COVID-19 for the most part, is a major disruption to your 4P playbook, i.e. to executing your otherwise sufficient competitive strategy. Most of the brands that you’re competing with at the office or out of home are same brands that are in the house in most categories. If your strategy sucks, and God knows I’m the type of person who might tell you it does, then switching to D to C, or paying for historically cheap cable TV ads, it’s not going to help much, other than by generating some random trial. Trust me. So don’t blame the Coronavirus for consumers not caring about your thing, when they actually do see it. That’s your problem. And probably your fault.
07:19 Remember, changing your strategy is based on real data about a massive symbolic disconnect with your end audience. Don’t overreact to the COVID surge, but don’t forget to get a handle on your attribute outcome symbolism if you’re a new brand. That need hasn’t changed due to this. In fact, it’s probably more important now to figure that out, because you have very limited executional moves available to you now. You can actually afford less to screw up tactical execution. You need to monitor your strategy the same way you would as if the COVID-19 pandemic was not occurring. While you also alter your 4P playbook and execute within this pandemic environment in its many effects on reaching the consumer and creating memorability with them.
08:05 Look, if 2020 is simply about flat sales for you, this is not the end of the world folks, because many people are going to go out of business. I mean, flat sales are much more likely, to be honest with you, and much more likely to be a fantastic outcome in 2020, the longer the purchase cycle is in your category. Because in a longer purchase cycle category where people only buy you every three months, six months or worse, you might be getting a surge because it’s a commodity that people want to have around. They don’t want to lose it, but it’s going to be fall by collapse because they bought way too much. And in long purchase cycle commodity categories, when people over purchase these aren’t categories that people actually consume impulsively like soda and chips. So you lack the ability to get anybody to wipe their bum anymore than they already are normally going to do. All right, that’s all for this episode. And remember as always be safe out there, folks.