“Recession, what recession?” NPD in a falling market 30th April, 2009

An introduction to pi

global

Established in 1984

Independent Global Branding, Visual ID and Design Consultancy

A company specifically designed to deliver truly holistic branding for consumer goods worldwide

Multi-cultural, multi-national teams based in Notting Hill, London

Provide a comprehensive range of disciplines through our four specialist divisions

Co-founders and home of the ‘Museum of Brands, Packaging and Advertising’ in the UK

Who we are

We are specialists in consumer branding, packaging and holistic communication

We are a total service business with all relevant disciplines, working together, in house

We understand a brand’s visual requirements at every brand consumer interface

We are 100% focussed on the commercial success and long term growth of our clients’ brands

The visual brand foundations we put in place have real longevity

We have long-term client relationships

What’s different about

us

four specialist divisions – one focused company

structure

consumer

innovation

branding

Specialist FMCG branding creation, optimisation and management

Brand and Branding Strategy

Real world iconistic® brand identity and pack design

Focused on long term brand strength and growth

24 years experience of major international FMCG and healthcare brands

Branding, visual brand identity, pack design, naming, brand deployment, brand

protection, brand visioning through ‘aspire’

Visual brand expression for communication

Brand ‘sonicons’

branding

Structural packaging

Industrial design

Mechanical engineering

Production risk analysis and cost modelling

Rapid prototyping through ‘pilot’

Factory production audits

‘Real world’ production consultancy

Testing labs

Full in house structural production facilities including:

Extrusion blow moulding, P.E.T. injection stretch blow

moulding, Injection moulding, Vacuum forming, Pressure forming,

Resin casting, Solid and surface CAD modelling, CNC milling, CNC

lathing, Digital substrate printing, Laser carton cutting, Performance

testing equipment

structure

‘Real world’ consumer understanding and insight

Covert consumer observation, filming and analysis

Covert retail observation, filming and analysis

In home usage observation, filming, discussion and analysis

Vox-pops

Shopping script identification

Pack decoding and shelf performance analysis through ‘pickup’

Brief formulation

consumer

Insights driven idea generation

New brand / product innovation / development

New Brand ideation, positioning and footprinting

New Brand Development / New Product Development

Collective debate within a virtual community

Expert approach – playing to peoples strengths

Technology based innovation model

innovation

Some case studies

Procter & Gamble – head & shoulders

First stage

Brand strategy and visioning for over ten years Three stage 2D/3D holistic brand redesign POS/merchandising Brand guardianship Geographic scope: Global A ten year vision

Second stage

Procter & Gamble – head & shoulders

Third stage

Final design for launch

Kellogg’s – Coca-Pops Creations

Innovation and ideation 3D design Geographic scope: UK

Presentation topic:

How to innovate in a Recession

The facts

Recessions are not all devouring monsters, they are times of great opportunity

Recessions last a lifetime when you are in them, but in realty they are very short events in the life span of a brand

Like wars, recessions are times of accelerated change

Cost reductions and promotions solve the short term problem, but can destroy a brands future

If everyone uses price as a differentiator , price is all you will ever be judged on

If everyone is using the same methods, all brands are equally vulnerable to attack

The retailer knows what sells today-this does not tell them what will sell tomorrow

Recessions are brutal, if your brand is poorly differentiated it will be the first to fall.

Strong brands supported by strong NPD thrive in a recession

A recession is the ideal time to try something new.

Brands that launched in a recession

9 Targets for success Brands that launched in a recession

1 Target brand switchers

1 > Target brand switchers

Brand loyalists will stay with you in a recession, but they may buy less than before

The Competition’s Brand loyalists will also remain with their favourite

Own brand consumers will only buy on cost, they are only loyal to the lowest price

There is potential in the ’non committed’ consumers who are loyal to values other than price, but these values have not been met by your current offer.

Category norm breakers will capture these consumers if they have the right proposition

2 Target the comfortably well off

2 > Target the comfortably well

off They may only be 5% of the population, but they are insulated from recession Although they will continue to consume much as before-they like to be discrete They still like a bargain though , ALDI’s growth is strong amongst this segment “Don’t change your lifestyle, change your retailer” is very

much on message Quality is critical for this segment so don’t look for savings from product They also appreciate the simpler things in life, it does not have to be a super premium offer to work

3 Target the “live-for today” consumer

3 > Target the “live-for today”

consumer The ’live-for –today’ segment also carries on as usual They are urban, young and relatively unburdened by mortgages and credit They are more prone to impulse purchases and are acutely brand conscious They are geared to spend on experiences rather than possessions, unless you are talking about

clothes and gadgets They are early adopters and experimenters, the quintessential NPD target

4 Target small luxuries

4 > Target small luxuries

Consumers feeling the pinch scale down treats rather than stop buying them, in fact treating goes up Small indulgences are excellent brand switching tools, so tactical NPD launches can deliver beyond

the first trial Small luxuries can support better margins even in a recession and are welcomed by retailers The proposition has to be overtly indulgent, but the price point remains mainstream.

5 Target the upswing

5 > Target the upswing

Recessions feel eternal when you are in the middle of one, in reality they are rarely long term Costs in a recession are lower, making development and investment cheaper The market becomes simpler and more focussed in a recession, new propositions stand out Recessions build an appetite for novelty and reward and the longer the recession the stronger the

appetite New propositions are untainted by the value for money erosion brought on by promotions and

price fighting, they have greater credibility Growth rates in the recovery phase start small, but can accelerate rapidly offering rapid share

growth

6 Target the completely new

6 > Target the completely new

Unique propositions can’t be judged by market norms and are insulated from value comparisons Genuinely new solutions always elicit trial, irrespective of the market condition Sometime’s genuinely new solutions are the only way out of a brand or products decline-e.g

Sony’s Walkman While your competitor is focussing on price fighting in an established market, you can generate

share and margin somewhere completely new.

7 Target desire

7 > Target desire

Cost control is rational, desire is never rational and it always works Post-purchase disconfirmation studies demonstrate that true desire guarantees repurchase True desire works every time - e.g. Apple True desire lies at the heart of all great brands so its worth aiming for anyway True desire is irrational and proof of principle is delivered by market tests-you need to develop

fast cheap ways of testing propositions- you probably need to do that anyway True desire is insulated from price, will be promoted eagerly by your consumers and will develop a

life of its own

8 Target smart savings

8 > Target smart savings

It you really have to target price-and many feel they do, find a new way to deliver smarter savings.

Brand

Allied Domecq North America packaging range

Example given for Canadian Club only

Capital Investment $3.5m

Unit cost change-14%

NSV effect+30%

Data supplied by Allied Domecq Packaging innovation team 2004

9 Target a revolution

9 > Target a revolution

In a ‘normal’ market incremental NPD fails dismally. The F.M.C.G success rate is 4% In a recession timidity is a recipe for eroding profitability, eroding brand value, eroding retailer confidence and

shredding your career A recession is always a game changer , old brands with marginal propositions disappear and new propositions

emerge If you are fearless (or desperate ) you can grasp he opportunity that a recession offers and enter the recovery in

better shape than you went in. Even if you feel you are in good shape, you need to keep a careful watch on the marketplace just in case a

revolution is happening that you do not control

Final thoughts

research,observe,empathise,understand,&

know your consumer

Understand that the improved functionality and added value can be given to your

brand through design is proportional to the cost of change and level of investment…

brand v cost

Create clear marketing and design objectives, and challenge your design agencies to deliver…

“Insanity is repeatedly doing the same thing with the expectation of different results”

Albert Einstein, Genius

© pi global 2009