To slash prices, or not to slash prices: that is the question
6 January 2011
Q. In an economic downturn should you slash prices on your core offering? - If not, what’s the alternative?
A. No! Offer other choices at a different price.
There’s an understandable tendency to focus on “price” during downturns. But it is nearly always a mistake to slash the price of your core offering.
Buyers are creatures of habit, if they get used to paying X minus 30% they’re less likely to go back to paying the full X when the economy picks up.
Philip Kotler, (the world’s authority in strategic marketing - and the guru who came up with the 4Ps), reminds us in this interview that the ideal is to introduce different levels of your product offering. “It may be smarter,” he explains, “to create a lower price version for people who want to save a little money but still want to patronize your organization. Even before this downdraft McDonald's had started to add smaller priced items to its menu” (to watch Dr. Kotler now click here or click on the relevant links below).
By introducing a “less premium” product you are catering to their lower budget requirements while protecting the “value” of your core product offering.
Andy Cosslett, the CEO of IHG, (InterContinental Hotel Group – the world’s largest hospitality company), points out that they’re already in a good position because they are able to offer accommodation choices across all segments of the market. “As business travel policies get tighter,” he says, “people are encouraged to try other accommodation choices in the mid-scale, rather than the 5-star luxurious hotels they may have been used to. We already have that product to offer them.” (to watch Andy now click here or click on the relevant links below).
Dr. Kotler adds that the other way to manage the price retaliation or pressure is to add extra value rather than lowering prices. “If you are selling refrigerators,” he says, “rather than cut the costs of the item itself you might want to absorb the shipping rates on the refrigerator your customer just bought... it’s better margin wise.”
So, if you haven’t got a “good, better and best” offering, as Dr. Kotler puts it, you might want to think about offering improved value before you resort to slashing prices.
In a few years you’ll be pleased you did.
Article by Anthony Gell, Editor, Leaders In Business @ bvo.com © bvo ltd.
Richard Reed: a 'natural' - the write-up 5 December 2010
Richard Reed is one of the most famous entrepreneurs in the UK. We're delighted to bring you this interview.
Richard Reed is one of the most famous entrepreneurs in the UK. We're delighted to bring you this interview.
Here's some of our key learning points:
1. When you come up with your brand name - make sure it reflects your core values and USPs - (the best word in the English language to describe the innocent values is ‘natural’ - the words ‘innocent’ and ‘natural’ certainly go hand-in-hand - so they did their job perfectly)
2. It really helps to love your product / service that your business offers your customers in the interview Richard bravely revealed how much he loves the ingredients of his food and drinks by confessing that he’d been to dinner parties where he’d been more focused on the fruit-salad in the corner - that’s loving your product
3. If you’re a wannabe business leader or entrepreneur with a rather unglamorous job history - it’s okay! - the vast majority of entrepreneurs and business leaders have had pretty unglamorous jobs along the journey of learning and self-discovery - Richard had his paradigm shift and realized he wanted to a life of entrepreneurship whilst working in a dog-biscuit factory (admittedly after he’d had his epiphany he bolted out the door pretty quickly)
4. Remember if you’re in business then to be successful you must be fundamentally solving an unmet customer need. As Richard points out, where there’s an unmet customer need there’s an opportunity
5. Once you know what unmet customer need you’re solving you must be able to communicate that easily and well.
6. Another good way of visualizing the customer need - is to by asking yourself what what itch are you scratching for your customer (not literally)
7. Don’t worry - to be a massively successful entreprenuer you don’t necessarily have to invent something new!... but rather take something out there and do it better i.e. the Co-founders didn’t invent the smoothie, but they were first to come up with the key differenitator of being ‘natural’ and free of preservatives etc. - and then to shout about it
8. You should be able to describe your brand in one word - for innocent it’s encompassed by the word ‘natural’
9. you know your core values - make sure that at all the points of contact you have with your customer reflect these core values. At innocent - think about the quirky innocent labels and amazing communication style we all love - this is them coming across naturally in a friendly, non-pompous way. Frankly it’s sometimes hard to bring a smile to our face at 8.00am in the morning when it’s grey out - but they manage it
10. Loads of people have ideas - but you have to be one of the few great people that take action on your idea - that’s the difference that makes the difference - that’s when you go from a dreamer to an entrepreneur. Richard and the team took £500 of fruit, made their favourite smoothie and then flogged them down the market to see how they sold - that’s taking action (this is a shorter version of the story - Richard tells it much better in the interview)
11. Start (ideas) small and then cut it or expand it - if you’re in a small company or giant company you have to have prototypes and test, test, test (in a small way and invest if it works)
12. If you’ve got some friends that want to start a business with you - then starting a company with friends isn’t always a bad idea (the innocent Co-founders proved the point very well at innocent!). Just make sure it’s a team that the team compliments each other - i.e. different skill sets, but the same values. It should be 1 + 1 + 1 = 8 (if you know what we mean)
13. On the team thing again - another benefit of having a team is a really practical one (but important one) - and it’s this: if you’re having a bad day then the chances are that at least one of the Co-founders (or your team members) isn’t - and then you can pick each other up
14. Fundamentally - when you know your core purpose (the main thing) it makes making strategic decisions a whole lot easier. So for example when the innocent team had to decide whether to distribute their drinks via McDonald’s (and they got everybody in the company together to discuss it) it was quite a simple decision: Yes! Why? - because fundamentally they’d sell more smoothies and that’s healthy for those people that buy them. Simple. Keep the main thing the main thing.
15. Innocent is a great David and Goliath story. When we asked Richard about how small cos can win he pointed out that you just have to have a better product in the eyes of the consumer - then articulate that difference in everything you do in a transparent and honest way.
16. On the packaging point - Richard says “The greatest job of packaging is to make you want it before you even know what the thing is”.
17. When looking to build a brand (on a low budget, or with any budget for that matter) - look for cheap but high impact means of doing so (for example the quirky jokes on the side of the innocent bottles and pots cost innocent nothing, but had massive value in the eyes of their brand - and still continues to - and we love them).
18. On organizational culture - remember “you don’t create a culture it’s more down to the people that you recruit - “my personal belief is the single most important business decision you make is who gets to come and join your business” Richard Reed. Hire the right people and the rest is history.
19. On hiring again - (as it’s all about hiring) make sure that you recruit based on the values of your company - but don’t forget you also need to hire both on SKILLS and VALUES - you need both to have a happy partnership
20. You can have fun at work - but that doesn’t mean that you’re not serious about your objectives and hitting your targets. If you hire great people then they will be.
21. Business is all about relationships so invest in them - Richard and the innocent team really like the guy they were dealing with at Coke - which is one of the reasons that they went ahead. Yes money is important but people want to work with people they respect and like (and it’s true for all the stakeholders, not just employees and team members).
22. Yes innocent is a great success story - but Richard makes the great point that in business you should never get complacent (even if you’re a market leader) - in fact he says it’s good to be paranoid (though as Richard says be paranoid but up to a point - if you get paranoid about being paranoid you’ve gone too far!)
23. BTW - the visionary angel investor that backed innocent Maurice Pinto also shares Richard’s point on the importance of people - he backed innocent at an early stage more because he believed more in the whip-smart and cool management team than the idea itself. Hats off to him.
Article by Anthony Gell, Editor, Leaders In Business @ bvo.com © bvo ltd.
4 November 2010
Here's some of our key learning points:
1. When you come up with your brand name - make sure it reflects your core values and USPs - (the best word in the English language to describe the innocent values is ‘natural’ - the words ‘innocent’ and ‘natural’ certainly go hand-in-hand - so they did their job perfectly)
2. It really helps to love your product / service that your business offers your customers in the interview Richard bravely revealed how much he loves the ingredients of his food and drinks by confessing that he’d been to dinner parties where he’d been more focused on the fruit-salad in the corner - that’s loving your product
3. If you’re a wannabe business leader or entrepreneur with a rather unglamorous job history - it’s okay! - the vast majority of entrepreneurs and business leaders have had pretty unglamorous jobs along the journey of learning and self-discovery - Richard had his paradigm shift and realized he wanted to a life of entrepreneurship whilst working in a dog-biscuit factory (admittedly after he’d had his epiphany he bolted out the door pretty quickly)
4. Remember if you’re in business then to be successful you must be fundamentally solving an unmet customer need. As Richard points out, where there’s an unmet customer need there’s an opportunity
5. Once you know what unmet customer need you’re solving you must be able to communicate that easily and well.
6. Another good way of visualizing the customer need - is to by asking yourself what what itch are you scratching for your customer (not literally)
7. Don’t worry - to be a massively successful entreprenuer you don’t necessarily have to invent something new!... but rather take something out there and do it better i.e. the Co-founders didn’t invent the smoothie, but they were first to come up with the key differenitator of being ‘natural’ and free of preservatives etc. - and then to shout about it
8. You should be able to describe your brand in one word - for innocent it’s encompassed by the word ‘natural’
9. you know your core values - make sure that at all the points of contact you have with your customer reflect these core values. At innocent - think about the quirky innocent labels and amazing communication style we all love - this is them coming across naturally in a friendly, non-pompous way. Frankly it’s sometimes hard to bring a smile to our face at 8.00am in the morning when it’s grey out - but they manage it
10. Loads of people have ideas - but you have to be one of the few great people that take action on your idea - that’s the difference that makes the difference - that’s when you go from a dreamer to an entrepreneur. Richard and the team took £500 of fruit, made their favourite smoothie and then flogged them down the market to see how they sold - that’s taking action (this is a shorter version of the story - Richard tells it much better in the interview)
11. Start (ideas) small and then cut it or expand it - if you’re in a small company or giant company you have to have prototypes and test, test, test (in a small way and invest if it works)
12. If you’ve got some friends that want to start a business with you - then starting a company with friends isn’t always a bad idea (the innocent Co-founders proved the point very well at innocent!). Just make sure it’s a team that the team compliments each other - i.e. different skill sets, but the same values. It should be 1 + 1 + 1 = 8 (if you know what we mean)
13. On the team thing again - another benefit of having a team is a really practical one (but important one) - and it’s this: if you’re having a bad day then the chances are that at least one of the Co-founders (or your team members) isn’t - and then you can pick each other up
14. Fundamentally - when you know your core purpose (the main thing) it makes making strategic decisions a whole lot easier. So for example when the innocent team had to decide whether to distribute their drinks via McDonald’s (and they got everybody in the company together to discuss it) it was quite a simple decision: Yes! Why? - because fundamentally they’d sell more smoothies and that’s healthy for those people that buy them. Simple. Keep the main thing the main thing.
15. Innocent is a great David and Goliath story. When we asked Richard about how small cos can win he pointed out that you just have to have a better product in the eyes of the consumer - then articulate that difference in everything you do in a transparent and honest way.
16. On the packaging point - Richard says “The greatest job of packaging is to make you want it before you even know what the thing is”.
17. When looking to build a brand (on a low budget, or with any budget for that matter) - look for cheap but high impact means of doing so (for example the quirky jokes on the side of the innocent bottles and pots cost innocent nothing, but had massive value in the eyes of their brand - and still continues to - and we love them).
18. On organizational culture - remember “you don’t create a culture it’s more down to the people that you recruit - “my personal belief is the single most important business decision you make is who gets to come and join your business” Richard Reed. Hire the right people and the rest is history.
19. On hiring again - (as it’s all about hiring) make sure that you recruit based on the values of your company - but don’t forget you also need to hire both on SKILLS and VALUES - you need both to have a happy partnership
20. You can have fun at work - but that doesn’t mean that you’re not serious about your objectives and hitting your targets. If you hire great people then they will be.
21. Business is all about relationships so invest in them - Richard and the innocent team really like the guy they were dealing with at Coke - which is one of the reasons that they went ahead. Yes money is important but people want to work with people they respect and like (and it’s true for all the stakeholders, not just employees and team members).
22. Yes innocent is a great success story - but Richard makes the great point that in business you should never get complacent (even if you’re a market leader) - in fact he says it’s good to be paranoid (though as Richard says be paranoid but up to a point - if you get paranoid about being paranoid you’ve gone too far!)
23. BTW - the visionary angel investor that backed innocent Maurice Pinto also shares Richard’s point on the importance of people - he backed innocent at an early stage more because he believed more in the whip-smart and cool management team than the idea itself. Hats off to him.
Article by Anthony Gell, Editor, Leaders In Business @ bvo.com © bvo ltd.
4 November 2010
Last night in front of 50 VIP invitation-only guests (Schroders and bvo) we had an interview with Richard Reed, Co-Founder of one of the UKs most loved brands: innocent. Richard said if he had to sum up the innocent brand in one word, it would be 'natural'. Well if we had to sum him up in one word, it would be 'natural' - and certainly a 'natural on stage'.
We're very excited to bring you the footage of the event. We've got the guys (and gals) in post production working very hard and fast on this now, and so we'll be letting our subscribers know as soon as it's live.
If you haven't subscribed then we strongly suggest you should (there might be some bias though!) right now - just click here.
Michael Birch: one of the greatest business minds in the world
10 September 2010
Michael is without doubt, one of the most inspirational people I've met. He's one of these people that truly inspire you to want to 'make it' - why? ... well, he's of the most successful people (in every sense of the word) of the digital generation, yet he's also one of the most down-to-earth, cool, and fun people you could come accross. Everybody that met him during our evening with him, commented along similar lines.
If you missed the email that was sent out alerting our subscribers of the new Michael Birch content with some of the key 'take-aways' from the event (if you did, then just subscribe here for future updates) then here's my thoughts below.
“It's so often that you plan to do things, and you’re doing it because you want the end-goal, but the end-goal is a momentary thing, however the journey getting there can be years - so if you don’t enjoy the process there’s no point doing it. So I take that in everything I do, and I make sure I enjoy what I’m doing, and who I’m with.”
Michael Birch, Co-Founder, Bebo.
First, let me tell you a little more about Michael: in January 2005 Michael, with his wife Xochi, launched Bebo - in 2008 they sold it to AOL for US$850m. Before that, Michael had many other successes. Since Bebo, he's been involved in several projects including PROfounders Capital, a venture capital fund for entrepreneurs run by some of the most famous names in the digital space. A visionary, he predicted the rise of social media and was one of the first to use 'viral' marketing to transform business.
Feel free to click here to watch the full interview (with audience Q&A at the end).
Here's a write-up below of some of the key points (and quotes) that we feel Michael makes during the interview (there's many more pearls of wisdom you can pick up by watching the interview - so when you can we suggest you do):
1. “You have to be arrogant enough to believe you can do it, and stupid enough to keep trying when you fail” Michael Birch, Co-Founder, Bebo.
2. Persistence is key. Like many of the world’s best, Michael testifies that the ability to keep going is paramount - note: it took Michael around four-years of launching ventures before you can say he had a ‘significant success’ - however it was only a few years after this period that he sold one of his companies for just under one billion US dollars.
3. Whether you have failures (or successes) you have to carry forward the lessons from both. “From site-to-site we just got a lot better - by the time we did Bebo we launched it taking everything we’d learnt from the previous sites and we hit a million members on day nine” . Michael Birch, Co-Founder, Bebo.
4. To keep cash low at the beginning, just focus on the core things you need to do - focus on the few things that really make the difference (sounds similar to Pareto Law to us).
5. You don’t have to have all the competencies required to run a business yourself, but you should surround yourself with people that compliment you (just like every Chief Executive of whatever size organization).
6. “(on raising capital) focus if you’re in that position on building the business until you’re at the point that you have the credibility to demonstrate it’s a success or it could be a success” Michael Birch, Co-Founder, Bebo. Spending a lot of time before this point CAN lead to a lot of time wasted to no avail - which could be better spent on business development.
7. “Building something you think is really cool is the way to go - if it turns out to be the next big thing then great for you, but trying to spend your entire life chasing the next big thing is probably a bad idea - just do something that you’re passionate about” Michael Birch, Co-Founder, Bebo. If you chase the next big thing it can be like a dog chasing its tail - you just go around and around in circles.
8, “It’s very easy to think that every big idea has been done and then every week you see something and you go: oh yea that’s a good idea” Michael Birch, Co-Founder, Bebo - It’s a good time for disruptive innovation and ideation. “There’s more opportunities today than there ever has been” Michael Birch, Co-Founder, Bebo - We’re living in good times for business and entrepreneurship and it’s never been easier to execute (and try) those ideas in a (potentially) low cost way.
9. Doing everything yourself and on a low cost budget is a great way for an entrepreneur to start - one of the success lessons we can take from Bebo is that we “managed to survive”!...
10. (on why Michael didn’t buy back Bebo from AOL) “It just felt like a step back and I just wanted to do something new and original - I’m more excited about looking forward than what I felt was looking backwards” Michael Birch, Co-Founder, Bebo - Despite Michael agreeing that Bebo was a bargain for what it recently sold for (around US$10m) and that it has an incredibly loyal user-base, he didn't buy it back. This, to us, demonstrates that he lives by his principle of doing things that really excites him, and keeps his outlook forward looking.
11. You can succeed in a crowded market, but often to get a good foothold you need to be very different: “Twitter succeeded because it was so different”. Michael Birch, Co-Founder, Bebo.
12. On the art of building a global brand - “focus on building a great product - the brand follows the product - the better the user experience, and the more committed you can get the user base, the more crazy they are saying that your product is better”. Michael Birch, Co-Founder, Bebo
13. Large companies can innovate through acquisition however they simply “need to buy the right ones..... I think buying something that is the right product, and is a core fit to what you’re doing, is probably a good idea” Michael Birch, Co-Founder, Bebo.
14. “It's so often that you plan to do things, and you’re doing it because you want the end-goal, but the end-goal is a momentary thing, however the journey getting there can be years - so if you don’t enjoy the process there’s no point doing it. So I take that in everything I do, and I make sure I enjoy what I’m doing, and who I’m with.” Michael Birch, Co-Founder, Bebo.
Article by Anthony Gell, Editor, Leaders In Business @ bvo.com © bvo ltd.
Jacqueline Gold: An inspiring story
18 August 2010
Jacqueline is exactly as you'd imagine her: sharp as a whip, fun, relaxed and dressed to perfection. I'm not sure she'd apply any of the same adjectives to me (particularly not the later) but hey! When I was with Jacqueline she had some of her team with her - I could tell just from the short time that I'd spent with them, Jacqueine does exactly what she says and surrounds herself by loyal, smart people.
So here's some of the take-aways from the inteview (again there's many more that you'll be able to find that is related to you) these are just what grabbed us:
1. Make sure that your company is always aligned with a major trend in the market – (and very importantly, you can clearly define what that trend is!)
2. For a rapid growth company you must be solving an unmet customer need – (and very importantly again, you can clearly define what need it is you’re solving)
3. To fight prejudice (or any obstacle) you must be passionate about what your vision – this will enable you to smash any obstacles.
4. Be proactive and move outside your comfort zone – in business (and life) you have to make it happen, rather than just wait for it to happen.
5. Don’t make excuses to not do what you’re passionate about – most excuses are unfounded and for the others you can actually turn them into your strengths.
6. “Challenging your fears is something successful business people do"
7. Whilst being passionate about your business you must be ‘unemotional’ about business decisions – wear different hats.
8. Success comes down to you being 100% yourself – never emulate anybody else otherwise you lose integrity.
9. Never let your senior management team get too far away from the customer – when was the last time your board of C-suite spoke directly to customers?
10. As a CEO (or leader of any unit of people) you must engage with your people, on both a group and an individual basis.
11. I hire “smart, passionate people that I like” – we think that says it all when it comes to getting great people around you.
12. For great feedback ask the question “if you were in my shoes what would you do”.
13. As you grow make sure your organization (not matter what size) is fast and agile – never let your decision making layers get too deep.
14. As an organization – you must have some failure – if you’re not embracing failure you’re not innovating. The key is finding out if it works early - if works augment it, if doesn’t cut it quick.
15. When it comes to multi-channel retail – make sure that you have ONE brand, many ways to shop.
16. During economic downturns there’s a great opportunity to negotiate, cut costs, get back to the customer and buck the trend!
17. During a downturn cut costs whilst also investing in your strategy.
18. When cost cutting – make sure that you have team buy-in. Your team (as long as you’re hiring well) will be smart and they will understand that during downturns you need to cost cut. So have transparency, and you will get your team on your side.
19. Have a monthly meeting (at least) where all your staff here all the new stuff in the month – the sales, the numbers, the new
20. To avoid complacency in the organization, you C-Suite MUST be constantly driving forward. It’s their job to make sure the staff have a vision and are energized by moving forward.
21. On competitive strategy: make sure you have a point of difference – it gives people something to talk about! – as Seth Godin says, you have to be ‘remarkable’ – i.e. people are ‘able’ to ‘remark’ about you.
22. In remaining competitive – “you’ve got to have something that sets you aside from your competition – you have to identify what makes you different... being innovative, being first to market with new ideas”.
Jacqueline Gold in an interview with Anthony Gell for Leaders In Business on bvo - 2010.
Article by Anthony Gell, Editor, Leaders In Business @ bvo.com © bvo ltd.