UN-BENNETON?

UN-BENETTON?

When I think of Benetton I am reminded of the raft of outdoor and TV adverts that they launched in the 1980’s 1990’s and into the noughties. Images of a mercenary with a person’s limb in his hand, a person suffering from aids at the point of death, Obama kissing the Chinese president and so on still resonate in my mind.

These adverts were designed to shock people and in so doing, draw their attention to the Benetton brand. Its creative director Oliver Toscani, developed a world-wide reputation for his consistent ability to come up with such adverts.

The retailer enjoyed a great deal of success throughout these decades and expanded its operations to become a global retailer in every sense. The nagging question however was whether or not its success was due to the marketing campaigns. In particular, did the advertising encourage people to purchase merchandise or simply become aware of the campaigns?

As might be expected Benetton underwent some significant changes over the past few years. In 2012 it delisted from the Milan Stock Exchange and it reverted back to family ownership. In 2014 it split into three divisions: retail brands, manufacturing and real estate. The son of the founder (Lucian Benetton) Alessandro, took over during this time and recently stood back and left it to the Directors to run operations. John Mollanger took over the retail brands category.

We have witnessed a change in direction with regard to Benetton’s advertising strategy.

Gone are the “shock” adverts and in are softer, more focused messages.

Mollanger describes the change as follows.

“We have moved away from pointing a finger at what we thought was wrong and instead we want to actually improve what we think is wrong” (Sunday Telegraph; 25 October 2015)

An upcoming ad will be released via social media and features five women taking it in turn to interview each other on Scandinavian styled chairs. One is Asian, another is in her seventies and it contains no black women. They discuss issues such as the contraceptive pill as a form of sexual freedom and the challenges of being a woman living in a male-dominated society. The “hard edge” nature of the older adverts is missing.

Benetton has also launched an initiative with the United Nations to improve the quality of women’s lives world-wid.  It has set up a £1.5 million foundation to address this challenge.

What do you think of this shift in direction with regard to its marketing communications in general and it’s advertising strategy in particular?

Do you think that this is simply a more subtle and cynical way of playing with people’s emotions in an attempt to get them to buy Benetton merchandise?

Is it a genuine and more measured response to a changing environment where individuals are showing more concern about ethical and socially responsible issues? Increasingly, within Western Europe at any rate, people are showing a stronger inclination to pay more for products are ethically and socially based.

I would welcome your views and opinions.

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Somebody has to pay

Perhaps the benefits of shopping online are about to decrease. Recently in the UK, retailers have begun to address an issue which was always there under the surface but has not been really addressed up front. I am talking about the costs of shopping online.

Shoppers, in their droves, have embraced the concept of online shopping in recent years. To such an extent that many retailers are seriously questioning whether or not they need so many physical stores in order to conduct business. The perceived benefits of shopping online are based around the belief that you will get a better deal in terms of price if you purchase from an online retailer.

Amazon, perhaps the pioneer of online shopping, seriously challenged established retailers in the bookselling and music business. Those that have survived have had to redesign and reconfigure their business models in order to ‘stay afloat’.

However, one of the biggest challenges facing retailers who operate online channels is that of the cost of transportation and delivery of orders to customers. It places great strain on their respective supply chain strategies and structures. Many of them, seduced by the exponential growth in demand for online channels, have steered around the issue of the costs of delivering orders.

This however is changing. In the last few months, large retailers such as Amazon, John Lewis, Marks & Spencer, Sainsbury’s and Ocado have reviewed their approach to managing such costs and have introduced an array of different methods to deal with the subject. The common denominator in all of these initiatives is that the shopper will have to pay more for delivery.

These initiatives include shoppers having to make a minimum purchase order before they receive free delivery, or no free delivery at all and charges decreasing only as the spending on a particular order increases. Other retailers apply a time slot to the delivery: people pay more at peak times during the day and less, when orders are delivered during quieter periods of traffic. The latter point is very relevant in the context of delivering orders in major centres of population.

Another initiative involves shoppers being asked to make an annual subscription payment (e.g. around £50 per year). In return, they receive ‘free’ delivery. In some cases, shoppers are finding that even with the subscription fee paid, they still have to make a minimum order in order to receive the free delivery.

Forgive me if I am being cynical, but are we seeing the beginning of a complex problem being created by retailers?

Nobody is naïve enough to assume that retailers will blithely ignore the costs in their ever-ending quest to offer lower prices. However the bewildering array of initiatives being introduced is in many ways similar to the price tariffs that have been introduced in other sectors such as utilities and mobile phone companies. In the latter cases, the end result is that most consumers become confused by the jargon and the complex way in which the prices are determined and presented to them. Consumer groups such as Which also expose many of these companies for deliberately creating confusing and misleading tariffs such that the consumer ends up paying higher prices than are actually available, if people have the time and ingenuity to discover them! The next time you need to travel from one city to another, contact the rail operator for your region and you will experience this feeling of frustration and cynicism.

I would welcome comments and contributions on these questions.

Should retailers incorporate the costs of delivery into their overall pricing? This would avoid the situation where shoppers perceive the costs of delivery as being “extra” charges, over and above the price.

How do they keep the charges simple and transparent?

Do they have to make any apology for introducing these charges? After all, shoppers surely cannot expect such services to be provided free of charge?

Can we learn from any other sector?

How do they avoid being perceived as greedy?

What’s the deal with store loyalty?

Retailers in general and supermarkets in particular tend to be greatly animated by the concept of store loyalty. This is manifested in the widespread use of loyalty cards over the past couple of decades or so. It is also reflected in the use of various forms of promotions and special offers both in-store and through online channels. The use of mobile technology has expanded these opportunities in recent years.

I was interested therefore to read of a recent initiative that was launched by Waitrose, the up-market UK food retailer.

As you may or may not know, the UK food retail sector is currently in the midst of a very aggressive price war. The growth in market share of the discount retailers Aldi and Lidl has put pressure on the more dominant supermarket groups to respond with price cuts. As a consequence, the main players are looking for areas where they can gain any form of leverage or traction in order to give them a competitive edge in the area of pricing and promotions.

The use of loyalty cards has always engendered mixed views and opinion both from shoppers, experts and even retailers. Tesco’s Club Card has undoubtedly been the ‘star of the show’ since it was launched over two decades ago. It has been seen as a scheme that provides focused and relevant rewards for cardholders: mainly in the form of vouchers which can be used to get discounts off items. Over seventeen million shoppers in the UK hold such a card and they get quarterly vouchers which reflect the personal brand preferences of the individual shopper.

The basic principle of such loyalty card systems is that they are based on shoppers gaining points for their general spending.

Waitrose’s managing director argues that shoppers actually want immediate benefits: not rewards that may come their way some distance into the future i.e. when sufficient points or sending levels have been acquired. Waitrose has introduced what it sees as an innovative and customer-focused promotional campaign.

‘Pick Your Own Offers’ lets the shopper decide which items they want to include with respect to discounts. The scheme is based on the shopper choosing ten items for a twenty per cent reduction on each item. Waitrose has developed a list of 1,000 items from which the shopper can choose from. Every time they purchase them, they get the twenty per cent discount. This list was developed and launched in June by Tesco and reflected items that are typically purchased in the summer period (if there is such a thing in the UK!). Shoppers have to stick with the nominated ten brands until September. Waitrose will then bring in a new list to reflect the autumn season.

Waitrose has over 5.7 million loyalty card holders and in order to incentivise them to sign up for this deal they kept it open until July 7th 2015. Anybody who signed up received a £6 discount of a £60 pound shop.

This is an interesting development in so far as the retailer, while still retaining control over the items to feature in the promotional campaign, allows the shopper some degree of freedom and choice in the exercise. The benefits appear to be real: they receive twenty per cent off the price of an item when they purchase it in the store. For example if one of their nominated items was a Warburton’s seeded loaf batch, before the deal, the shopper would pay £1.50. As a result of participating in the campaign, the shopper would now pay £1.20 for that item.

Thus the benefits are immediate and contrast with traditional loyalty schemes where points and spending have to be built up and accumulated over time.

Can this campaign change the way in which retailers think about rewarding loyal shoppers? Will we see a move in this direction from the other large food retailers in the UK?

Is it a gimmick that is still largely loaded in favour of the supermarket?

Can supermarkets introduce other novel schemes? For instance Waitrose offers free coffee and newspapers to its members of its myWaitrose scheme.

I would welcome some comments and contributions on this issue.