With all the attention on how Amazon is killing store retailers, we think the future plight of CPG brands is being overlooked

For decades, companies invested in brands to build relationships with consumers and forestall competition. Shorthand for quality and consistency, consumers reached for known brands even if they carried a premium. But brands now look awfully vulnerable to possible Amazon own labels.  CPG brands are accustomed to retailer private label brands that for years have chipped away at share and compressed margins, but none of this comes close to what we expect Amazon will roll out

Amazon has since 2009 been quietly experimenting with its own brands that now extend across 10 product categories and 40 private-label brands. These include AmazonBasics (bedding, backpacks, cutlery, plates, office chairs, cables, adaptors, chargers and already the most popular brand in battery sales online), Amazon Essentials (Baby Wipes and nutritional supplements), Lark & Ro (women’s apparel) and Strathwood (home furnishings). Morgan Stanley estimate these account for just 0.15% of its gross merchandise sales but could contribute $1 billion in profit by 2019

We expect focus to soon shift even further towards CPG brands. In recent years we hit a tipping point – since 2015 online sales growth has accelerated, and Amazon is aggressively moving into physical retail with its Whole Foods acquisition and is actively looking at prescription drugs. It would be a fairly easy add for it to fold in a portfolio of premium beauty, personal care and health care items

What a cruel irony that retailers that spent years educating consumers of the benefits of private labels merely greased the skids for their most ruthless competitor[Image Credit: © Business360]

After 11 years of trying, L’Oréal finally threw in the towel and late June the Brazilian company, Natura, confirmed it would buy The Body Shop

In the process, L'Oréal learned a painful but valuable lesson about which sort of acquisitions it can manage and which it can't

The Body Shop, with its sprawling retail footprint, established and distinctive culture and separate supply chain, was too cumbersome for L'Oréal to contain

L'Oréal also misjudged The Body Shop's loyal consumer base which felt the brand had sold out. Consequently, the store had erratic like-for-like performance and poor margins that fell in each of the last four years to just 3.7% in 2016 (the latest available)

Meanwhile, the rest of L’Oréal posted strong underlying growth with rising margins

An important factor behind this strong performance is L'Oréa 's emerging expertise at integrating acquired brands. It has well-established processes to standardize acquired brands (including entirely reformulating all products) so they can be quickly scaled-up and rolled into new markets

It has successfully done this with SkinCeuticals, essi, NYX, Urban Decay, Kiehl’s, IT Cosmetics - and we expect it to do the same with more recently-acquired brands, including CeraVe, AcneFree and Ambi

​L'Oréal management acknowledge their errors with The Body Shop and we expect the €1 billion raised from the sale to go toward acquiring some small, on-trend brands that it can quickly fold into the L'Oréal distribution and marketing machine[Image Credit: © Business360]

Failure rates for innovation are difficult to pin down but some commentators talk of 80 percent or more

We're told that companies, when innovating, shouldn't be afraid to fail - Fail Fast, Fail Often! - and that failures tell you as much, if not more, than successes

So we were interested to learn of the Swedish Museum of Failure, with its seventy or so exhibits that showcase innovation failures from around the world and that provide "unique insight into the risky business of innovation"

There are a host of technological examples - Google Glass, Nokia N-Gage and the Kodak Digital Camera - but our favorites are the impressively incongruous Colgate Beef Lasagne and a failed real-estate board game by some unknown called Trump (oh for such innocent days!)

If you want to see failure in the flesh, a pop-up museum is currently on tour in in LA until February 4, 2018, with a stop to be scheduled in United Arab Emirates later that month[Image Credit: © Museum of Failure]

We’ve added an article feed option so we can send you a stream of highly relevant material drawn from a wide range of sources. For basic information there are many good and close-to-free RSS feeds, like Feedly and Feedbin, but for complex business news be prepared to be deluged, get many duplicates and miss relevant items. Our service is for comprehensive coverage of complicated, focused topics. For over a decade we’ve been sending materials to teams at leading companies – if you’re interested to know more or give it a spin, just say

We're now so conditioned to getting information online that it seems we're forgetting about more traditional paths to knowledge

One critical and often forgotten source is what people do (and don't) say in structured interviews. Current or past employees, past competitor employees and industry experts are all excellent sources of highly focused and valuable knowledge

Time spent with these experts can often lead to insights unavailable thought online research

In recent assignments we've leveraged structured interviews to assess a range of pressing competitive questions, including talking to past employees of L'Oréal to get a better sense on how it might position a nearly acquired brand,identifying likely innovation paths for an emerging beauty brand and identifying new markets for food ingredients that deliver specific health benefits[Image Credit: © Kyle Smith]

Are there any consumer good categories as off-trend as Big Food? Processed, non-local, non-organic, standardized, rich with preservatives, high in fat, sugar-laden… feeling peckish? No surprise that Big Food’s market share (and share prices) are falling both consistently and impressively, with CEOs being fired or laid off at an impressive rate, 17 in the last 20 months by one 2017 count. Big Food’s efforts to innovate have been uninspiring – a little spelt here, some chia seeds there – and there are precious few on-trend wins to point to. On the upside, Big Food is a cash cow, throwing off large amounts of free cash that can be returned to shareholders or reinvested. Unable to innovate fast enough or effective enough, Big Food looks to have two options. One is to buy into growth, snapping up emerging brands in the hope they’ll get on-trend and bond with those capricious Millennials

Recent valuations show how keen (i.e. desperate) Big Food is to muscle in on new markets. Four years after launch RXBar sold to Kellogg’s for $600 million. In July, Campbell Soup Co. paid $700 million for Pacific Foods, known for its organic soups and broths (3.2x sales), while Conagra Brands spent $250 million to buy the maker of Angie’s Boomchickapop ready-to-eat popcorn to go alongside its Orville Redenbacher brand

Results from this strategy are mixed. For some reason, it seems folding in young, vibrant growth brands into staid Big Food behemoths doesn’t always go well. The logic – securing bulk purchase discounts, professional management, access to national distribution – makes sense and can fast track growth brands, but there’s the risk that the brand’s secret sauce drains away once it’s in Big Food’s grasp

The other main option for Big Food is to aggressively cut costs especially through scaling up. This is the 3G Burger King + Tim Hortons + Kraft + Heinz + Unilever (nearly) strategy. Initial results from this strategy are impressive – since 3G acquired Heinz in 2012 operating margins moved from about 2 percentage points above Unilever’s to about 11 points better today. 3G achieved this through fast and brutal cost-cutting, closing many factories, laying off thousands of employees and rolling out zero-based budgeting that has deeply cut expenses and reportedly left remaining employees tired and demoralized. Skeptics point out that it’s easy to boost margins through cutting costs but warn that long-term investments are being dispensed for short-term gain, and worryingly, sales of Kraft Heinz (KHC) have fallen in four of the last seven quarters. It looks likely that for growth 3G will have to join its more bloated brethren and buy up emerging brands that are gaining traction. If you’ve ever wanted to start an on-trend food or beverage business, now is your moment![Image Credit: © Business360]

Last March we published a short paper on the fallout from the KHC bid for Unilever, suggesting that Unilever should do more than sell its Spreads business. We thought it should sell the rest of the Foods operation and the Refreshment unit too, providing funds to return to shareholders and for developing its Personal Care, Home Care and nascent Beauty businesses

Unilever’s post-bid strategic review recommended exiting Spreads, and buyout fund KKR recently won the bid at around $8 billion, but Unilever hasn’t come with us on the disposal of the Foods and Refreshment units. Or has it?

It did decide to merge the Foods and Refreshment, to create a “leaner and more focused business that will continue to benefit from our global scale and footprint," which sounds suspiciously like something KHC would have written or want to hear. It’s also running it out of Rotterdam, separate from the rest of the business

We still suspect Unilever is preparing those two businesses for an exit, either through a spin-off or a sale, and maybe to a returning KHC. The combined food and refreshment unit might be more inviting to KHC, for example, than the whole company, and possibly more valuable than as part of a broader operation. Unilever has been busy this year buying niche brands in the food and refreshment space (Sir Kensington’s, Tazo, Mãe Terra, Pukka Herbs, and Weiss), which might not sound like a prelude to an exit, but does give it the allure of better growth potential and arguably a higher valuation

And, more in line with our March suggestions, it has been acquisitive too in the personal care and beauty space, buying Carver Korea, Hourglass, Quala, Sundial and, most recently, Schmidt’s Naturals. These help Unilever get a stronger foothold in premium, and in consumer segments in which it’s under-represented, such as ethnic and Millennials, as well as those looking for natural products. It’s also been launching its own new niche brands in personal care and beauty

Unilever expects 3-5 percent underlying sales growth for the year and says its 2020 program to accelerate sustainable shareholder value creation is progressing well. Results for Q4 and FY2017 were adequate with a 170 basis point lift in reported operating margin and 110 basis points for underlying operating margin, but analyst praise was muted. The 20 percent operating margin target still seems a long way off (another 2.5 points of underlying margin to cover), especially since easy cost savings have already been taken and questions exist over pricing power. New businesses will help, but are too small to make sufficient impression on Unilever’s bottom line

One strong positive for the company is that it is now less vulnerable. Its share price is up over 20 percent on pre-bid levels (and about 40 percent in dollar terms), making it a much less attractive target. If it wanted breathing room, for the time being at least, it seems to have got it[Image Credit: © jarmoluk]
 

Our corporate newsletter solution, SmartNews360, now allows clients to edit the draft newsletters we prepare before they get sent out to their distribution list. This gives clients full control over content and message

We do the hard, time-consuming work – finding the content to inform your internal teams or external audience, preparing the copy, adding images and assembling it all in your branded template design

We send you a ready-to-go draft that you can edit – amending or adding commentary, changing images and text however you wish. When you're fully happy, click Approve & Send and off it goes (we manage the distribution for you)

It's already in use with a few well-known MNCs in beauty and food. Learn more here[Image Credit: © Business360]

[Image Credit: © Business360]

Effective communication is critical to retaining and growing business yet we’re all time-poor, especially senior decision makers, so what’s the best approach? We think information leadership is the way

Sharp, relevant and valuable content delivered to key stakeholders (clients, prospects, executive teams, country leads….) builds interest and engagement. It also boost credibility and trust and lays the foundation for strong and sustainable business relationships

Delivering all this isn’t easy, but it’s what we do to help clients. We leverage our research and analytical skills to create focused, intelligent and informed content to help you engage decision-makers. You get ready-to-go drafts you can easily edit in a browser before clicking Approve & Send. Your readers get content they value and you get the benefit of being seen as an information leader

Delivered by email – still the killer app – our targeted newsletters are helping companies build credibility, trust and revenue

This year we’re hitting the road - come and learn how informational leadership could work for you[Image Credit: © Business360]

 

 

Is the razor-and-blade strategy becoming a tired and dangerous trope?

For years, companies looked at Gillette with its razor business and marveled at the high barriers to entry and hefty margins. P&G then created a whole new category with the Swifer and consumer goods/beauty companies were off looking for the next device-driven niche

But how is that going? Look around and it’s increasingly clear that these companies rarely hit gold, and if they do it’s a fleeting win

So focused on the device - adding blades, ergonomic handles and improved shaving angles - Gillette forgot what really drives consumers (performance, yes, but also convenience and price) and let itself be gouged by private label and small online upstarts (like Dollar Shave Club, now annoyingly for P&G owned by Unilever, and Harry’s)

 

Gillette has seen its market share steadily drop away: its US men’s razor market share has fallen for six straight years – to 54% in 2016, from 59% in 2015 and over 70% in 2010 (Euromonitor)

In our view, this again shows companies should stick to what they know. Devices are technology and that's a very different thing from shampoos/lotions/creams

Even experienced tech companies struggle to innovate consistently and maintain their consumer base, so why should we expect non-techs to succeed in this space?

All of which makes L'Oreal's latest tech/device venture interesting. In January 2017, it unveiled the Kérastase Hair Coach, the “first-ever smart hairbrush… with L’Oréal’s patent-pending signal analysis algorithms to score the quality of hair and monitor the effects of different hair care routines. An accompanying mobile app provides additional insights and customized product recommendations to help people better care for their hair”

But this time, L'Oreal isn't going alone. It's working with Withings (a “leader in the connected health revolution”). And in a sign of technology's ongoing evolution, Withings has since been re-branded as Nokia (a former tech star trying to again find its footing)[Image Credit: © RB and L'Oreal respectively]

Nearly a decade ago The Dab emerged in hip-hop circles as a playful celebratory dance move consisting of a quick nod into the crook of a bent slanted arm with the opposite arm stretched out. It quickly spread, picked up by Cam Newton, Le Bron James and many others. Jason Derulo taught James Corden to dab in 2015 (6:42) and it went awkwardly into the political mainstream when the son of US Congressman Roger Marshall dabbed during a swearing-in ceremony

It has since gone global (and even deemed illegal in Saudi Arabia) but more interesting to us is how middle-aged men (mainly, but not only) essentially killed it. Dabs moved from cool and intriguing to naff and embarrassing as dads across America jumped on the fad. YouTube is now rich with dads who dab, you can get a dad dab t-shirt or watch comedy about dads dabbing.  ‘Uncool dads’ get lampooned for dabbing badly

And as fast as you can say 'stop that middle-aged man doing strange things', the dab started to die. So yes, dads killed the dab. All of this is an amusing meandering but marketers should take note – if you want your meme to stay vital and cool, keep your kryptonite demographic at bay. Facebook suffered as teens fled when their parents piled in and it’s interesting how app designers must tread that fine balance between being accessible but discouraging to elder users. If you’ve ever wondered where the button is or why the writing is so small, perhaps the designer is trying to tell you something :)

[As an aside for those interested in how trends start, The Dab’s origination story is hotly contested, with leading contenders being Migos, with their pleasantly titled and NSFW 2015 hit “Look At My Dab (Bitch Dab)”, to Peewee Longway or (and most likely the true originator), Skippa Da Flippa][Image Credit: © Kepler Fontenele]

With all the attention on how Amazon is killing store retailers, we think the future plight of CPG brands is being overlooked

For decades, companies invested in brands to build relationships with consumers and forestall competition. Shorthand for quality and consistency, consumers reached for known brands even if they carried a premium. But brands now look awfully vulnerable to possible Amazon own labels.  CPG brands are accustomed to retailer private label brands that for years have chipped away at share and compressed margins, but none of this comes close to what we expect Amazon will roll out

Amazon has since 2009 been quietly experimenting with its own brands that now extend across 10 product categories and 40 private-label brands. These include AmazonBasics (bedding, backpacks, cutlery, plates, office chairs, cables, adaptors, chargers and already the most popular brand in battery sales online), Amazon Essentials (Baby Wipes and nutritional supplements), Lark & Ro (women’s apparel) and Strathwood (home furnishings). Morgan Stanley estimate these account for just 0.15% of its gross merchandise sales but could contribute $1 billion in profit by 2019

We expect focus to soon shift even further towards CPG brands. In recent years we hit a tipping point – since 2015 online sales growth has accelerated, and Amazon is aggressively moving into physical retail with its Whole Foods acquisition and is actively looking at prescription drugs. It would be a fairly easy add for it to fold in a portfolio of premium beauty, personal care and health care items

What a cruel irony that retailers that spent years educating consumers of the benefits of private labels merely greased the skids for their most ruthless competitor[Image Credit: © Business360]

After 11 years of trying, L’Oréal finally threw in the towel and late June the Brazilian company, Natura, confirmed it would buy The Body Shop

In the process, L'Oréal learned a painful but valuable lesson about which sort of acquisitions it can manage and which it can't

The Body Shop, with its sprawling retail footprint, established and distinctive culture and separate supply chain, was too cumbersome for L'Oréal to contain

L'Oréal also misjudged The Body Shop's loyal consumer base which felt the brand had sold out. Consequently, the store had erratic like-for-like performance and poor margins that fell in each of the last four years to just 3.7% in 2016 (the latest available)

Meanwhile, the rest of L’Oréal posted strong underlying growth with rising margins

An important factor behind this strong performance is L'Oréa 's emerging expertise at integrating acquired brands. It has well-established processes to standardize acquired brands (including entirely reformulating all products) so they can be quickly scaled-up and rolled into new markets

It has successfully done this with SkinCeuticals, essi, NYX, Urban Decay, Kiehl’s, IT Cosmetics - and we expect it to do the same with more recently-acquired brands, including CeraVe, AcneFree and Ambi

​L'Oréal management acknowledge their errors with The Body Shop and we expect the €1 billion raised from the sale to go toward acquiring some small, on-trend brands that it can quickly fold into the L'Oréal distribution and marketing machine[Image Credit: © Business360]

Failure rates for innovation are difficult to pin down but some commentators talk of 80 percent or more

We're told that companies, when innovating, shouldn't be afraid to fail - Fail Fast, Fail Often! - and that failures tell you as much, if not more, than successes

So we were interested to learn of the Swedish Museum of Failure, with its seventy or so exhibits that showcase innovation failures from around the world and that provide "unique insight into the risky business of innovation"

There are a host of technological examples - Google Glass, Nokia N-Gage and the Kodak Digital Camera - but our favorites are the impressively incongruous Colgate Beef Lasagne and a failed real-estate board game by some unknown called Trump (oh for such innocent days!)

If you want to see failure in the flesh, a pop-up museum is currently on tour in in LA until February 4, 2018, with a stop to be scheduled in United Arab Emirates later that month[Image Credit: © Museum of Failure]

We’ve added an article feed option so we can send you a stream of highly relevant material drawn from a wide range of sources. For basic information there are many good and close-to-free RSS feeds, like Feedly and Feedbin, but for complex business news be prepared to be deluged, get many duplicates and miss relevant items. Our service is for comprehensive coverage of complicated, focused topics. For over a decade we’ve been sending materials to teams at leading companies – if you’re interested to know more or give it a spin, just say

We're now so conditioned to getting information online that it seems we're forgetting about more traditional paths to knowledge

One critical and often forgotten source is what people do (and don't) say in structured interviews. Current or past employees, past competitor employees and industry experts are all excellent sources of highly focused and valuable knowledge

Time spent with these experts can often lead to insights unavailable thought online research

In recent assignments we've leveraged structured interviews to assess a range of pressing competitive questions, including talking to past employees of L'Oréal to get a better sense on how it might position a nearly acquired brand,identifying likely innovation paths for an emerging beauty brand and identifying new markets for food ingredients that deliver specific health benefits[Image Credit: © Kyle Smith]

Are there any consumer good categories as off-trend as Big Food? Processed, non-local, non-organic, standardized, rich with preservatives, high in fat, sugar-laden… feeling peckish? No surprise that Big Food’s market share (and share prices) are falling both consistently and impressively, with CEOs being fired or laid off at an impressive rate, 17 in the last 20 months by one 2017 count. Big Food’s efforts to innovate have been uninspiring – a little spelt here, some chia seeds there – and there are precious few on-trend wins to point to. On the upside, Big Food is a cash cow, throwing off large amounts of free cash that can be returned to shareholders or reinvested. Unable to innovate fast enough or effective enough, Big Food looks to have two options. One is to buy into growth, snapping up emerging brands in the hope they’ll get on-trend and bond with those capricious Millennials

Recent valuations show how keen (i.e. desperate) Big Food is to muscle in on new markets. Four years after launch RXBar sold to Kellogg’s for $600 million. In July, Campbell Soup Co. paid $700 million for Pacific Foods, known for its organic soups and broths (3.2x sales), while Conagra Brands spent $250 million to buy the maker of Angie’s Boomchickapop ready-to-eat popcorn to go alongside its Orville Redenbacher brand

Results from this strategy are mixed. For some reason, it seems folding in young, vibrant growth brands into staid Big Food behemoths doesn’t always go well. The logic – securing bulk purchase discounts, professional management, access to national distribution – makes sense and can fast track growth brands, but there’s the risk that the brand’s secret sauce drains away once it’s in Big Food’s grasp

The other main option for Big Food is to aggressively cut costs especially through scaling up. This is the 3G Burger King + Tim Hortons + Kraft + Heinz + Unilever (nearly) strategy. Initial results from this strategy are impressive – since 3G acquired Heinz in 2012 operating margins moved from about 2 percentage points above Unilever’s to about 11 points better today. 3G achieved this through fast and brutal cost-cutting, closing many factories, laying off thousands of employees and rolling out zero-based budgeting that has deeply cut expenses and reportedly left remaining employees tired and demoralized. Skeptics point out that it’s easy to boost margins through cutting costs but warn that long-term investments are being dispensed for short-term gain, and worryingly, sales of Kraft Heinz (KHC) have fallen in four of the last seven quarters. It looks likely that for growth 3G will have to join its more bloated brethren and buy up emerging brands that are gaining traction. If you’ve ever wanted to start an on-trend food or beverage business, now is your moment![Image Credit: © Business360]

Last March we published a short paper on the fallout from the KHC bid for Unilever, suggesting that Unilever should do more than sell its Spreads business. We thought it should sell the rest of the Foods operation and the Refreshment unit too, providing funds to return to shareholders and for developing its Personal Care, Home Care and nascent Beauty businesses

Unilever’s post-bid strategic review recommended exiting Spreads, and buyout fund KKR recently won the bid at around $8 billion, but Unilever hasn’t come with us on the disposal of the Foods and Refreshment units. Or has it?

It did decide to merge the Foods and Refreshment, to create a “leaner and more focused business that will continue to benefit from our global scale and footprint," which sounds suspiciously like something KHC would have written or want to hear. It’s also running it out of Rotterdam, separate from the rest of the business

We still suspect Unilever is preparing those two businesses for an exit, either through a spin-off or a sale, and maybe to a returning KHC. The combined food and refreshment unit might be more inviting to KHC, for example, than the whole company, and possibly more valuable than as part of a broader operation. Unilever has been busy this year buying niche brands in the food and refreshment space (Sir Kensington’s, Tazo, Mãe Terra, Pukka Herbs, and Weiss), which might not sound like a prelude to an exit, but does give it the allure of better growth potential and arguably a higher valuation

And, more in line with our March suggestions, it has been acquisitive too in the personal care and beauty space, buying Carver Korea, Hourglass, Quala, Sundial and, most recently, Schmidt’s Naturals. These help Unilever get a stronger foothold in premium, and in consumer segments in which it’s under-represented, such as ethnic and Millennials, as well as those looking for natural products. It’s also been launching its own new niche brands in personal care and beauty

Unilever expects 3-5 percent underlying sales growth for the year and says its 2020 program to accelerate sustainable shareholder value creation is progressing well. Results for Q4 and FY2017 were adequate with a 170 basis point lift in reported operating margin and 110 basis points for underlying operating margin, but analyst praise was muted. The 20 percent operating margin target still seems a long way off (another 2.5 points of underlying margin to cover), especially since easy cost savings have already been taken and questions exist over pricing power. New businesses will help, but are too small to make sufficient impression on Unilever’s bottom line

One strong positive for the company is that it is now less vulnerable. Its share price is up over 20 percent on pre-bid levels (and about 40 percent in dollar terms), making it a much less attractive target. If it wanted breathing room, for the time being at least, it seems to have got it[Image Credit: © jarmoluk]
 

Our corporate newsletter solution, SmartNews360, now allows clients to edit the draft newsletters we prepare before they get sent out to their distribution list. This gives clients full control over content and message

We do the hard, time-consuming work – finding the content to inform your internal teams or external audience, preparing the copy, adding images and assembling it all in your branded template design

We send you a ready-to-go draft that you can edit – amending or adding commentary, changing images and text however you wish. When you're fully happy, click Approve & Send and off it goes (we manage the distribution for you)

It's already in use with a few well-known MNCs in beauty and food. Learn more here[Image Credit: © Business360]

[Image Credit: © Business360]

Effective communication is critical to retaining and growing business yet we’re all time-poor, especially senior decision makers, so what’s the best approach? We think information leadership is the way

Sharp, relevant and valuable content delivered to key stakeholders (clients, prospects, executive teams, country leads….) builds interest and engagement. It also boost credibility and trust and lays the foundation for strong and sustainable business relationships

Delivering all this isn’t easy, but it’s what we do to help clients. We leverage our research and analytical skills to create focused, intelligent and informed content to help you engage decision-makers. You get ready-to-go drafts you can easily edit in a browser before clicking Approve & Send. Your readers get content they value and you get the benefit of being seen as an information leader

Delivered by email – still the killer app – our targeted newsletters are helping companies build credibility, trust and revenue

This year we’re hitting the road - come and learn how informational leadership could work for you[Image Credit: © Business360]

 

 

Is the razor-and-blade strategy becoming a tired and dangerous trope?

For years, companies looked at Gillette with its razor business and marveled at the high barriers to entry and hefty margins. P&G then created a whole new category with the Swifer and consumer goods/beauty companies were off looking for the next device-driven niche

But how is that going? Look around and it’s increasingly clear that these companies rarely hit gold, and if they do it’s a fleeting win

So focused on the device - adding blades, ergonomic handles and improved shaving angles - Gillette forgot what really drives consumers (performance, yes, but also convenience and price) and let itself be gouged by private label and small online upstarts (like Dollar Shave Club, now annoyingly for P&G owned by Unilever, and Harry’s)

 

Gillette has seen its market share steadily drop away: its US men’s razor market share has fallen for six straight years – to 54% in 2016, from 59% in 2015 and over 70% in 2010 (Euromonitor)

In our view, this again shows companies should stick to what they know. Devices are technology and that's a very different thing from shampoos/lotions/creams

Even experienced tech companies struggle to innovate consistently and maintain their consumer base, so why should we expect non-techs to succeed in this space?

All of which makes L'Oreal's latest tech/device venture interesting. In January 2017, it unveiled the Kérastase Hair Coach, the “first-ever smart hairbrush… with L’Oréal’s patent-pending signal analysis algorithms to score the quality of hair and monitor the effects of different hair care routines. An accompanying mobile app provides additional insights and customized product recommendations to help people better care for their hair”

But this time, L'Oreal isn't going alone. It's working with Withings (a “leader in the connected health revolution”). And in a sign of technology's ongoing evolution, Withings has since been re-branded as Nokia (a former tech star trying to again find its footing)[Image Credit: © RB and L'Oreal respectively]

Nearly a decade ago The Dab emerged in hip-hop circles as a playful celebratory dance move consisting of a quick nod into the crook of a bent slanted arm with the opposite arm stretched out. It quickly spread, picked up by Cam Newton, Le Bron James and many others. Jason Derulo taught James Corden to dab in 2015 (6:42) and it went awkwardly into the political mainstream when the son of US Congressman Roger Marshall dabbed during a swearing-in ceremony

It has since gone global (and even deemed illegal in Saudi Arabia) but more interesting to us is how middle-aged men (mainly, but not only) essentially killed it. Dabs moved from cool and intriguing to naff and embarrassing as dads across America jumped on the fad. YouTube is now rich with dads who dab, you can get a dad dab t-shirt or watch comedy about dads dabbing.  ‘Uncool dads’ get lampooned for dabbing badly

And as fast as you can say 'stop that middle-aged man doing strange things', the dab started to die. So yes, dads killed the dab. All of this is an amusing meandering but marketers should take note – if you want your meme to stay vital and cool, keep your kryptonite demographic at bay. Facebook suffered as teens fled when their parents piled in and it’s interesting how app designers must tread that fine balance between being accessible but discouraging to elder users. If you’ve ever wondered where the button is or why the writing is so small, perhaps the designer is trying to tell you something :)

[As an aside for those interested in how trends start, The Dab’s origination story is hotly contested, with leading contenders being Migos, with their pleasantly titled and NSFW 2015 hit “Look At My Dab (Bitch Dab)”, to Peewee Longway or (and most likely the true originator), Skippa Da Flippa][Image Credit: © Kepler Fontenele]

With all the attention on how Amazon is killing store retailers, we think the future plight of CPG brands is being overlooked

For decades, companies invested in brands to build relationships with consumers and forestall competition. Shorthand for quality and consistency, consumers reached for known brands even if they carried a premium. But brands now look awfully vulnerable to possible Amazon own labels.  CPG brands are accustomed to retailer private label brands that for years have chipped away at share and compressed margins, but none of this comes close to what we expect Amazon will roll out

Amazon has since 2009 been quietly experimenting with its own brands that now extend across 10 product categories and 40 private-label brands. These include AmazonBasics (bedding, backpacks, cutlery, plates, office chairs, cables, adaptors, chargers and already the most popular brand in battery sales online), Amazon Essentials (Baby Wipes and nutritional supplements), Lark & Ro (women’s apparel) and Strathwood (home furnishings). Morgan Stanley estimate these account for just 0.15% of its gross merchandise sales but could contribute $1 billion in profit by 2019

We expect focus to soon shift even further towards CPG brands. In recent years we hit a tipping point – since 2015 online sales growth has accelerated, and Amazon is aggressively moving into physical retail with its Whole Foods acquisition and is actively looking at prescription drugs. It would be a fairly easy add for it to fold in a portfolio of premium beauty, personal care and health care items

What a cruel irony that retailers that spent years educating consumers of the benefits of private labels merely greased the skids for their most ruthless competitor[Image Credit: © Business360]

After 11 years of trying, L’Oréal finally threw in the towel and late June the Brazilian company, Natura, confirmed it would buy The Body Shop

In the process, L'Oréal learned a painful but valuable lesson about which sort of acquisitions it can manage and which it can't

The Body Shop, with its sprawling retail footprint, established and distinctive culture and separate supply chain, was too cumbersome for L'Oréal to contain

L'Oréal also misjudged The Body Shop's loyal consumer base which felt the brand had sold out. Consequently, the store had erratic like-for-like performance and poor margins that fell in each of the last four years to just 3.7% in 2016 (the latest available)

Meanwhile, the rest of L’Oréal posted strong underlying growth with rising margins

An important factor behind this strong performance is L'Oréa 's emerging expertise at integrating acquired brands. It has well-established processes to standardize acquired brands (including entirely reformulating all products) so they can be quickly scaled-up and rolled into new markets

It has successfully done this with SkinCeuticals, essi, NYX, Urban Decay, Kiehl’s, IT Cosmetics - and we expect it to do the same with more recently-acquired brands, including CeraVe, AcneFree and Ambi

​L'Oréal management acknowledge their errors with The Body Shop and we expect the €1 billion raised from the sale to go toward acquiring some small, on-trend brands that it can quickly fold into the L'Oréal distribution and marketing machine[Image Credit: © Business360]

Failure rates for innovation are difficult to pin down but some commentators talk of 80 percent or more

We're told that companies, when innovating, shouldn't be afraid to fail - Fail Fast, Fail Often! - and that failures tell you as much, if not more, than successes

So we were interested to learn of the Swedish Museum of Failure, with its seventy or so exhibits that showcase innovation failures from around the world and that provide "unique insight into the risky business of innovation"

There are a host of technological examples - Google Glass, Nokia N-Gage and the Kodak Digital Camera - but our favorites are the impressively incongruous Colgate Beef Lasagne and a failed real-estate board game by some unknown called Trump (oh for such innocent days!)

If you want to see failure in the flesh, a pop-up museum is currently on tour in in LA until February 4, 2018, with a stop to be scheduled in United Arab Emirates later that month[Image Credit: © Museum of Failure]

We’ve added an article feed option so we can send you a stream of highly relevant material drawn from a wide range of sources. For basic information there are many good and close-to-free RSS feeds, like Feedly and Feedbin, but for complex business news be prepared to be deluged, get many duplicates and miss relevant items. Our service is for comprehensive coverage of complicated, focused topics. For over a decade we’ve been sending materials to teams at leading companies – if you’re interested to know more or give it a spin, just say

We're now so conditioned to getting information online that it seems we're forgetting about more traditional paths to knowledge

One critical and often forgotten source is what people do (and don't) say in structured interviews. Current or past employees, past competitor employees and industry experts are all excellent sources of highly focused and valuable knowledge

Time spent with these experts can often lead to insights unavailable thought online research

In recent assignments we've leveraged structured interviews to assess a range of pressing competitive questions, including talking to past employees of L'Oréal to get a better sense on how it might position a nearly acquired brand,identifying likely innovation paths for an emerging beauty brand and identifying new markets for food ingredients that deliver specific health benefits[Image Credit: © Kyle Smith]

Are there any consumer good categories as off-trend as Big Food? Processed, non-local, non-organic, standardized, rich with preservatives, high in fat, sugar-laden… feeling peckish? No surprise that Big Food’s market share (and share prices) are falling both consistently and impressively, with CEOs being fired or laid off at an impressive rate, 17 in the last 20 months by one 2017 count. Big Food’s efforts to innovate have been uninspiring – a little spelt here, some chia seeds there – and there are precious few on-trend wins to point to. On the upside, Big Food is a cash cow, throwing off large amounts of free cash that can be returned to shareholders or reinvested. Unable to innovate fast enough or effective enough, Big Food looks to have two options. One is to buy into growth, snapping up emerging brands in the hope they’ll get on-trend and bond with those capricious Millennials

Recent valuations show how keen (i.e. desperate) Big Food is to muscle in on new markets. Four years after launch RXBar sold to Kellogg’s for $600 million. In July, Campbell Soup Co. paid $700 million for Pacific Foods, known for its organic soups and broths (3.2x sales), while Conagra Brands spent $250 million to buy the maker of Angie’s Boomchickapop ready-to-eat popcorn to go alongside its Orville Redenbacher brand

Results from this strategy are mixed. For some reason, it seems folding in young, vibrant growth brands into staid Big Food behemoths doesn’t always go well. The logic – securing bulk purchase discounts, professional management, access to national distribution – makes sense and can fast track growth brands, but there’s the risk that the brand’s secret sauce drains away once it’s in Big Food’s grasp

The other main option for Big Food is to aggressively cut costs especially through scaling up. This is the 3G Burger King + Tim Hortons + Kraft + Heinz + Unilever (nearly) strategy. Initial results from this strategy are impressive – since 3G acquired Heinz in 2012 operating margins moved from about 2 percentage points above Unilever’s to about 11 points better today. 3G achieved this through fast and brutal cost-cutting, closing many factories, laying off thousands of employees and rolling out zero-based budgeting that has deeply cut expenses and reportedly left remaining employees tired and demoralized. Skeptics point out that it’s easy to boost margins through cutting costs but warn that long-term investments are being dispensed for short-term gain, and worryingly, sales of Kraft Heinz (KHC) have fallen in four of the last seven quarters. It looks likely that for growth 3G will have to join its more bloated brethren and buy up emerging brands that are gaining traction. If you’ve ever wanted to start an on-trend food or beverage business, now is your moment![Image Credit: © Business360]

Last March we published a short paper on the fallout from the KHC bid for Unilever, suggesting that Unilever should do more than sell its Spreads business. We thought it should sell the rest of the Foods operation and the Refreshment unit too, providing funds to return to shareholders and for developing its Personal Care, Home Care and nascent Beauty businesses

Unilever’s post-bid strategic review recommended exiting Spreads, and buyout fund KKR recently won the bid at around $8 billion, but Unilever hasn’t come with us on the disposal of the Foods and Refreshment units. Or has it?

It did decide to merge the Foods and Refreshment, to create a “leaner and more focused business that will continue to benefit from our global scale and footprint," which sounds suspiciously like something KHC would have written or want to hear. It’s also running it out of Rotterdam, separate from the rest of the business

We still suspect Unilever is preparing those two businesses for an exit, either through a spin-off or a sale, and maybe to a returning KHC. The combined food and refreshment unit might be more inviting to KHC, for example, than the whole company, and possibly more valuable than as part of a broader operation. Unilever has been busy this year buying niche brands in the food and refreshment space (Sir Kensington’s, Tazo, Mãe Terra, Pukka Herbs, and Weiss), which might not sound like a prelude to an exit, but does give it the allure of better growth potential and arguably a higher valuation

And, more in line with our March suggestions, it has been acquisitive too in the personal care and beauty space, buying Carver Korea, Hourglass, Quala, Sundial and, most recently, Schmidt’s Naturals. These help Unilever get a stronger foothold in premium, and in consumer segments in which it’s under-represented, such as ethnic and Millennials, as well as those looking for natural products. It’s also been launching its own new niche brands in personal care and beauty

Unilever expects 3-5 percent underlying sales growth for the year and says its 2020 program to accelerate sustainable shareholder value creation is progressing well. Results for Q4 and FY2017 were adequate with a 170 basis point lift in reported operating margin and 110 basis points for underlying operating margin, but analyst praise was muted. The 20 percent operating margin target still seems a long way off (another 2.5 points of underlying margin to cover), especially since easy cost savings have already been taken and questions exist over pricing power. New businesses will help, but are too small to make sufficient impression on Unilever’s bottom line

One strong positive for the company is that it is now less vulnerable. Its share price is up over 20 percent on pre-bid levels (and about 40 percent in dollar terms), making it a much less attractive target. If it wanted breathing room, for the time being at least, it seems to have got it[Image Credit: © jarmoluk]
 

Our corporate newsletter solution, SmartNews360, now allows clients to edit the draft newsletters we prepare before they get sent out to their distribution list. This gives clients full control over content and message

We do the hard, time-consuming work – finding the content to inform your internal teams or external audience, preparing the copy, adding images and assembling it all in your branded template design

We send you a ready-to-go draft that you can edit – amending or adding commentary, changing images and text however you wish. When you're fully happy, click Approve & Send and off it goes (we manage the distribution for you)

It's already in use with a few well-known MNCs in beauty and food. Learn more here[Image Credit: © Business360]

[Image Credit: © Business360]

Effective communication is critical to retaining and growing business yet we’re all time-poor, especially senior decision makers, so what’s the best approach? We think information leadership is the way

Sharp, relevant and valuable content delivered to key stakeholders (clients, prospects, executive teams, country leads….) builds interest and engagement. It also boost credibility and trust and lays the foundation for strong and sustainable business relationships

Delivering all this isn’t easy, but it’s what we do to help clients. We leverage our research and analytical skills to create focused, intelligent and informed content to help you engage decision-makers. You get ready-to-go drafts you can easily edit in a browser before clicking Approve & Send. Your readers get content they value and you get the benefit of being seen as an information leader

Delivered by email – still the killer app – our targeted newsletters are helping companies build credibility, trust and revenue

This year we’re hitting the road - come and learn how informational leadership could work for you[Image Credit: © Business360]

 

 

Is the razor-and-blade strategy becoming a tired and dangerous trope?

For years, companies looked at Gillette with its razor business and marveled at the high barriers to entry and hefty margins. P&G then created a whole new category with the Swifer and consumer goods/beauty companies were off looking for the next device-driven niche

But how is that going? Look around and it’s increasingly clear that these companies rarely hit gold, and if they do it’s a fleeting win

So focused on the device - adding blades, ergonomic handles and improved shaving angles - Gillette forgot what really drives consumers (performance, yes, but also convenience and price) and let itself be gouged by private label and small online upstarts (like Dollar Shave Club, now annoyingly for P&G owned by Unilever, and Harry’s)

 

Gillette has seen its market share steadily drop away: its US men’s razor market share has fallen for six straight years – to 54% in 2016, from 59% in 2015 and over 70% in 2010 (Euromonitor)

In our view, this again shows companies should stick to what they know. Devices are technology and that's a very different thing from shampoos/lotions/creams

Even experienced tech companies struggle to innovate consistently and maintain their consumer base, so why should we expect non-techs to succeed in this space?

All of which makes L'Oreal's latest tech/device venture interesting. In January 2017, it unveiled the Kérastase Hair Coach, the “first-ever smart hairbrush… with L’Oréal’s patent-pending signal analysis algorithms to score the quality of hair and monitor the effects of different hair care routines. An accompanying mobile app provides additional insights and customized product recommendations to help people better care for their hair”

But this time, L'Oreal isn't going alone. It's working with Withings (a “leader in the connected health revolution”). And in a sign of technology's ongoing evolution, Withings has since been re-branded as Nokia (a former tech star trying to again find its footing)[Image Credit: © RB and L'Oreal respectively]

Nearly a decade ago The Dab emerged in hip-hop circles as a playful celebratory dance move consisting of a quick nod into the crook of a bent slanted arm with the opposite arm stretched out. It quickly spread, picked up by Cam Newton, Le Bron James and many others. Jason Derulo taught James Corden to dab in 2015 (6:42) and it went awkwardly into the political mainstream when the son of US Congressman Roger Marshall dabbed during a swearing-in ceremony

It has since gone global (and even deemed illegal in Saudi Arabia) but more interesting to us is how middle-aged men (mainly, but not only) essentially killed it. Dabs moved from cool and intriguing to naff and embarrassing as dads across America jumped on the fad. YouTube is now rich with dads who dab, you can get a dad dab t-shirt or watch comedy about dads dabbing.  ‘Uncool dads’ get lampooned for dabbing badly

And as fast as you can say 'stop that middle-aged man doing strange things', the dab started to die. So yes, dads killed the dab. All of this is an amusing meandering but marketers should take note – if you want your meme to stay vital and cool, keep your kryptonite demographic at bay. Facebook suffered as teens fled when their parents piled in and it’s interesting how app designers must tread that fine balance between being accessible but discouraging to elder users. If you’ve ever wondered where the button is or why the writing is so small, perhaps the designer is trying to tell you something :)

[As an aside for those interested in how trends start, The Dab’s origination story is hotly contested, with leading contenders being Migos, with their pleasantly titled and NSFW 2015 hit “Look At My Dab (Bitch Dab)”, to Peewee Longway or (and most likely the true originator), Skippa Da Flippa][Image Credit: © Kepler Fontenele]

With all the attention on how Amazon is killing store retailers, we think the future plight of CPG brands is being overlooked

For decades, companies invested in brands to build relationships with consumers and forestall competition. Shorthand for quality and consistency, consumers reached for known brands even if they carried a premium. But brands now look awfully vulnerable to possible Amazon own labels.  CPG brands are accustomed to retailer private label brands that for years have chipped away at share and compressed margins, but none of this comes close to what we expect Amazon will roll out

Amazon has since 2009 been quietly experimenting with its own brands that now extend across 10 product categories and 40 private-label brands. These include AmazonBasics (bedding, backpacks, cutlery, plates, office chairs, cables, adaptors, chargers and already the most popular brand in battery sales online), Amazon Essentials (Baby Wipes and nutritional supplements), Lark & Ro (women’s apparel) and Strathwood (home furnishings). Morgan Stanley estimate these account for just 0.15% of its gross merchandise sales but could contribute $1 billion in profit by 2019

We expect focus to soon shift even further towards CPG brands. In recent years we hit a tipping point – since 2015 online sales growth has accelerated, and Amazon is aggressively moving into physical retail with its Whole Foods acquisition and is actively looking at prescription drugs. It would be a fairly easy add for it to fold in a portfolio of premium beauty, personal care and health care items

What a cruel irony that retailers that spent years educating consumers of the benefits of private labels merely greased the skids for their most ruthless competitor[Image Credit: © Business360]

After 11 years of trying, L’Oréal finally threw in the towel and late June the Brazilian company, Natura, confirmed it would buy The Body Shop

In the process, L'Oréal learned a painful but valuable lesson about which sort of acquisitions it can manage and which it can't

The Body Shop, with its sprawling retail footprint, established and distinctive culture and separate supply chain, was too cumbersome for L'Oréal to contain

L'Oréal also misjudged The Body Shop's loyal consumer base which felt the brand had sold out. Consequently, the store had erratic like-for-like performance and poor margins that fell in each of the last four years to just 3.7% in 2016 (the latest available)

Meanwhile, the rest of L’Oréal posted strong underlying growth with rising margins

An important factor behind this strong performance is L'Oréa 's emerging expertise at integrating acquired brands. It has well-established processes to standardize acquired brands (including entirely reformulating all products) so they can be quickly scaled-up and rolled into new markets

It has successfully done this with SkinCeuticals, essi, NYX, Urban Decay, Kiehl’s, IT Cosmetics - and we expect it to do the same with more recently-acquired brands, including CeraVe, AcneFree and Ambi

​L'Oréal management acknowledge their errors with The Body Shop and we expect the €1 billion raised from the sale to go toward acquiring some small, on-trend brands that it can quickly fold into the L'Oréal distribution and marketing machine[Image Credit: © Business360]

Failure rates for innovation are difficult to pin down but some commentators talk of 80 percent or more

We're told that companies, when innovating, shouldn't be afraid to fail - Fail Fast, Fail Often! - and that failures tell you as much, if not more, than successes

So we were interested to learn of the Swedish Museum of Failure, with its seventy or so exhibits that showcase innovation failures from around the world and that provide "unique insight into the risky business of innovation"

There are a host of technological examples - Google Glass, Nokia N-Gage and the Kodak Digital Camera - but our favorites are the impressively incongruous Colgate Beef Lasagne and a failed real-estate board game by some unknown called Trump (oh for such innocent days!)

If you want to see failure in the flesh, a pop-up museum is currently on tour in in LA until February 4, 2018, with a stop to be scheduled in United Arab Emirates later that month[Image Credit: © Museum of Failure]

We’ve added an article feed option so we can send you a stream of highly relevant material drawn from a wide range of sources. For basic information there are many good and close-to-free RSS feeds, like Feedly and Feedbin, but for complex business news be prepared to be deluged, get many duplicates and miss relevant items. Our service is for comprehensive coverage of complicated, focused topics. For over a decade we’ve been sending materials to teams at leading companies – if you’re interested to know more or give it a spin, just say

We're now so conditioned to getting information online that it seems we're forgetting about more traditional paths to knowledge

One critical and often forgotten source is what people do (and don't) say in structured interviews. Current or past employees, past competitor employees and industry experts are all excellent sources of highly focused and valuable knowledge

Time spent with these experts can often lead to insights unavailable thought online research

In recent assignments we've leveraged structured interviews to assess a range of pressing competitive questions, including talking to past employees of L'Oréal to get a better sense on how it might position a nearly acquired brand,identifying likely innovation paths for an emerging beauty brand and identifying new markets for food ingredients that deliver specific health benefits[Image Credit: © Kyle Smith]

Are there any consumer good categories as off-trend as Big Food? Processed, non-local, non-organic, standardized, rich with preservatives, high in fat, sugar-laden… feeling peckish? No surprise that Big Food’s market share (and share prices) are falling both consistently and impressively, with CEOs being fired or laid off at an impressive rate, 17 in the last 20 months by one 2017 count. Big Food’s efforts to innovate have been uninspiring – a little spelt here, some chia seeds there – and there are precious few on-trend wins to point to. On the upside, Big Food is a cash cow, throwing off large amounts of free cash that can be returned to shareholders or reinvested. Unable to innovate fast enough or effective enough, Big Food looks to have two options. One is to buy into growth, snapping up emerging brands in the hope they’ll get on-trend and bond with those capricious Millennials

Recent valuations show how keen (i.e. desperate) Big Food is to muscle in on new markets. Four years after launch RXBar sold to Kellogg’s for $600 million. In July, Campbell Soup Co. paid $700 million for Pacific Foods, known for its organic soups and broths (3.2x sales), while Conagra Brands spent $250 million to buy the maker of Angie’s Boomchickapop ready-to-eat popcorn to go alongside its Orville Redenbacher brand

Results from this strategy are mixed. For some reason, it seems folding in young, vibrant growth brands into staid Big Food behemoths doesn’t always go well. The logic – securing bulk purchase discounts, professional management, access to national distribution – makes sense and can fast track growth brands, but there’s the risk that the brand’s secret sauce drains away once it’s in Big Food’s grasp

The other main option for Big Food is to aggressively cut costs especially through scaling up. This is the 3G Burger King + Tim Hortons + Kraft + Heinz + Unilever (nearly) strategy. Initial results from this strategy are impressive – since 3G acquired Heinz in 2012 operating margins moved from about 2 percentage points above Unilever’s to about 11 points better today. 3G achieved this through fast and brutal cost-cutting, closing many factories, laying off thousands of employees and rolling out zero-based budgeting that has deeply cut expenses and reportedly left remaining employees tired and demoralized. Skeptics point out that it’s easy to boost margins through cutting costs but warn that long-term investments are being dispensed for short-term gain, and worryingly, sales of Kraft Heinz (KHC) have fallen in four of the last seven quarters. It looks likely that for growth 3G will have to join its more bloated brethren and buy up emerging brands that are gaining traction. If you’ve ever wanted to start an on-trend food or beverage business, now is your moment![Image Credit: © Business360]

Last March we published a short paper on the fallout from the KHC bid for Unilever, suggesting that Unilever should do more than sell its Spreads business. We thought it should sell the rest of the Foods operation and the Refreshment unit too, providing funds to return to shareholders and for developing its Personal Care, Home Care and nascent Beauty businesses

Unilever’s post-bid strategic review recommended exiting Spreads, and buyout fund KKR recently won the bid at around $8 billion, but Unilever hasn’t come with us on the disposal of the Foods and Refreshment units. Or has it?

It did decide to merge the Foods and Refreshment, to create a “leaner and more focused business that will continue to benefit from our global scale and footprint," which sounds suspiciously like something KHC would have written or want to hear. It’s also running it out of Rotterdam, separate from the rest of the business

We still suspect Unilever is preparing those two businesses for an exit, either through a spin-off or a sale, and maybe to a returning KHC. The combined food and refreshment unit might be more inviting to KHC, for example, than the whole company, and possibly more valuable than as part of a broader operation. Unilever has been busy this year buying niche brands in the food and refreshment space (Sir Kensington’s, Tazo, Mãe Terra, Pukka Herbs, and Weiss), which might not sound like a prelude to an exit, but does give it the allure of better growth potential and arguably a higher valuation

And, more in line with our March suggestions, it has been acquisitive too in the personal care and beauty space, buying Carver Korea, Hourglass, Quala, Sundial and, most recently, Schmidt’s Naturals. These help Unilever get a stronger foothold in premium, and in consumer segments in which it’s under-represented, such as ethnic and Millennials, as well as those looking for natural products. It’s also been launching its own new niche brands in personal care and beauty

Unilever expects 3-5 percent underlying sales growth for the year and says its 2020 program to accelerate sustainable shareholder value creation is progressing well. Results for Q4 and FY2017 were adequate with a 170 basis point lift in reported operating margin and 110 basis points for underlying operating margin, but analyst praise was muted. The 20 percent operating margin target still seems a long way off (another 2.5 points of underlying margin to cover), especially since easy cost savings have already been taken and questions exist over pricing power. New businesses will help, but are too small to make sufficient impression on Unilever’s bottom line

One strong positive for the company is that it is now less vulnerable. Its share price is up over 20 percent on pre-bid levels (and about 40 percent in dollar terms), making it a much less attractive target. If it wanted breathing room, for the time being at least, it seems to have got it[Image Credit: © jarmoluk]
 

Our corporate newsletter solution, SmartNews360, now allows clients to edit the draft newsletters we prepare before they get sent out to their distribution list. This gives clients full control over content and message

We do the hard, time-consuming work – finding the content to inform your internal teams or external audience, preparing the copy, adding images and assembling it all in your branded template design

We send you a ready-to-go draft that you can edit – amending or adding commentary, changing images and text however you wish. When you're fully happy, click Approve & Send and off it goes (we manage the distribution for you)

It's already in use with a few well-known MNCs in beauty and food. Learn more here[Image Credit: © Business360]

[Image Credit: © Business360]

Effective communication is critical to retaining and growing business yet we’re all time-poor, especially senior decision makers, so what’s the best approach? We think information leadership is the way

Sharp, relevant and valuable content delivered to key stakeholders (clients, prospects, executive teams, country leads….) builds interest and engagement. It also boost credibility and trust and lays the foundation for strong and sustainable business relationships

Delivering all this isn’t easy, but it’s what we do to help clients. We leverage our research and analytical skills to create focused, intelligent and informed content to help you engage decision-makers. You get ready-to-go drafts you can easily edit in a browser before clicking Approve & Send. Your readers get content they value and you get the benefit of being seen as an information leader

Delivered by email – still the killer app – our targeted newsletters are helping companies build credibility, trust and revenue

This year we’re hitting the road - come and learn how informational leadership could work for you[Image Credit: © Business360]

 

 

Is the razor-and-blade strategy becoming a tired and dangerous trope?

For years, companies looked at Gillette with its razor business and marveled at the high barriers to entry and hefty margins. P&G then created a whole new category with the Swifer and consumer goods/beauty companies were off looking for the next device-driven niche

But how is that going? Look around and it’s increasingly clear that these companies rarely hit gold, and if they do it’s a fleeting win

So focused on the device - adding blades, ergonomic handles and improved shaving angles - Gillette forgot what really drives consumers (performance, yes, but also convenience and price) and let itself be gouged by private label and small online upstarts (like Dollar Shave Club, now annoyingly for P&G owned by Unilever, and Harry’s)

 

Gillette has seen its market share steadily drop away: its US men’s razor market share has fallen for six straight years – to 54% in 2016, from 59% in 2015 and over 70% in 2010 (Euromonitor)

In our view, this again shows companies should stick to what they know. Devices are technology and that's a very different thing from shampoos/lotions/creams

Even experienced tech companies struggle to innovate consistently and maintain their consumer base, so why should we expect non-techs to succeed in this space?

All of which makes L'Oreal's latest tech/device venture interesting. In January 2017, it unveiled the Kérastase Hair Coach, the “first-ever smart hairbrush… with L’Oréal’s patent-pending signal analysis algorithms to score the quality of hair and monitor the effects of different hair care routines. An accompanying mobile app provides additional insights and customized product recommendations to help people better care for their hair”

But this time, L'Oreal isn't going alone. It's working with Withings (a “leader in the connected health revolution”). And in a sign of technology's ongoing evolution, Withings has since been re-branded as Nokia (a former tech star trying to again find its footing)[Image Credit: © RB and L'Oreal respectively]

Nearly a decade ago The Dab emerged in hip-hop circles as a playful celebratory dance move consisting of a quick nod into the crook of a bent slanted arm with the opposite arm stretched out. It quickly spread, picked up by Cam Newton, Le Bron James and many others. Jason Derulo taught James Corden to dab in 2015 (6:42) and it went awkwardly into the political mainstream when the son of US Congressman Roger Marshall dabbed during a swearing-in ceremony

It has since gone global (and even deemed illegal in Saudi Arabia) but more interesting to us is how middle-aged men (mainly, but not only) essentially killed it. Dabs moved from cool and intriguing to naff and embarrassing as dads across America jumped on the fad. YouTube is now rich with dads who dab, you can get a dad dab t-shirt or watch comedy about dads dabbing.  ‘Uncool dads’ get lampooned for dabbing badly

And as fast as you can say 'stop that middle-aged man doing strange things', the dab started to die. So yes, dads killed the dab. All of this is an amusing meandering but marketers should take note – if you want your meme to stay vital and cool, keep your kryptonite demographic at bay. Facebook suffered as teens fled when their parents piled in and it’s interesting how app designers must tread that fine balance between being accessible but discouraging to elder users. If you’ve ever wondered where the button is or why the writing is so small, perhaps the designer is trying to tell you something :)

[As an aside for those interested in how trends start, The Dab’s origination story is hotly contested, with leading contenders being Migos, with their pleasantly titled and NSFW 2015 hit “Look At My Dab (Bitch Dab)”, to Peewee Longway or (and most likely the true originator), Skippa Da Flippa][Image Credit: © Kepler Fontenele]