Sunday, February 18, 2018

Making Ads Part 2 - nailing the brief is the job half done

Here we are, in the middle of February and the year already seems to be slipping by. I thought its only been a few weeks since I wrote the last post, but then realized that the few weeks was actually last year and almost 2 months have gone by. So here I am writing the next part of the "Making Ads" saga.

I am sure all of us have heard & maybe also used the age old saying "an ad is only as good as the brief" and even if it makes the creative people sometime wince; its actually true. The essence and the magic of a creative truly is in the brief. And hence, the next obvious question is what's in a brief. 

Before I actually say what's in a brief or rather how to go about writing a brief; I think it’s important to call out what's not in a brief and what should not be in a brief. Firstly, your vision of what the ad should look like should not be in a brief because you are not the creative team and even if you can be one; it does not help anyone if you put a story in the brief. Secondly, your own crafted tagline cannot be the brief for the creative team. I am sure it is great - well, I have been there as well and I totally believed I was creative enough to actually be a tagline. But it never is so let's not put it in the brief. Lastly, the consumer in the brief cannot be your self-reflection of yourself as the consumer. As a generation even when we are buyers of the products/brand the brief is for; we do not think or consumer advertising like the populace and we shouldn't even try and pretend that we do. 

So now what should a good brief be about....but before we start let me please say this. Read this blog as a sequel to the first part. a lot of the pre-work has been done there and this will make more sense to you if you go through it before this one. 

Let's start with how a brief should be written and what it is used for. A creative brief has to be co-owned by the planner & the brand manager. So this document is what you actually give to a planner to fine tune and help you articulate parts of it which is the perspective they can add. Then the planners convert it into a creative brief for the creative team. They use parts of the brief and make it more human and real for it to act as a springboard for the creative team to think about. 

Every organization has a particular format for writing a creative brief and fortunately or unfortunately you have to follow it. So I am not going to do this is any particular format but basically just touch upon the elements that are necessary in a brief and things which make a brief good. A disclaimer here I think is necessary. These are entirely personal views borrowed from my experience but they are not a science and maybe there are people who approach or write briefs differently and get better output. I am just capturing what I have learnt & done so far.

1.      What is the business issue this copy will solve? This is not about increasing market share or accelerate growth or such generic things. Every brief has to have a particular problem it needs to solve and it needs to basically be your marketing & business strategy thinking condensed into a paragraph & a tiny box. This means you need to be extremely selective about the choices you make. There is only & only 1 business problem this particular brief & comms coming out of this brief can resolve. Unless, of course this is a campaign or a brand relaunch brief which is a different demon altogether.

2.       What is the role of communication? Now, this is not a twisted way of writing the business problem. No, it is really about behaviour change. What is it that you want this communication to do for your consumer? I usually use a tool called the transformation matrix. It is a simple 2X2 matrix that helps me think and put the role of my comms into a precise, concise & water tight narrative. This is what a transformation matrix looks like.

Now, let’s explain this matrix using an example. I am going to use a category that I have not worked on so that I cannot be blamed for having insider information. I am going to judge and populate the matrix basis the little idea I have about the category and advertisement and then take it from there. Let’s take the case of a seasonal category – body lotions for instance. The consumer belief is that winters means dry weather which saps the skin of its moisture and hence you need heavy moisturisation during winters to prevent your skin from becoming dry because the evidence of dryness is very real for the consumer. If you scratch your arm or even if you don’t’ there is clear evidence of skin drying up. Hence, this current think translates into the current do of adding a body lotion to the monthly shopping list in the winter months. As a brand, you want to increase your usage in non-winter months also and hence through your comms you want the desired think to be something along the lines of – your skin loses moisture to the harsh atmosphere like pollution, sun, soap, water etc. and hence irrespective of the weather it needs a protection layer that will keep your skin soft. The desired do that you want out of this is that she buys a body lotion as a regular item in her monthly shopping basket.

Hence, the role of the comms is very clearly visible from this exercise. I am a huge fan of the transformation matrix and so much so that sometimes I use it to even work on my concepts. I anyhow love putting things in a framework. I think all things in life can be put in a 2X2 or max a 3X3 matrix and then be resolved. But more on that some other day.

3.      Who is the TG? The previous post clearly outlines how to arrive at this. Here, I just want to point out what this section is used for. The demographics help the creative team to visualize this consumer – where he/she lives, the locality, the clothes, the language, the culture codes, their place on the modernity scale and aspiration scale. This is what determines whether your protagonist will wear a sari or jeans or say Namaste or hello. Basically this section of the brief determines the look & feel of the comms. A new dimension to this look & feel is the ease of use of technology – what is the technology you can show in your ad comes out of a sharp & well defined definition of the TG.

4.      What is the insight? I don’t think there is a topic more researched, written about or discussed than consumer insight. Consumer insight is like the quest for the deathly hallows. Many try and search for it but it takes someone special to unite the hallows. Pardon my Harry Potter reference for those of you who haven’t read the books but then it’s my favourite so I guess we shall just roll with it. I can also write about it endlessly but I don’t think this is either place or we have the time to delve very deep into it. In nut shell, an insight is the “Why” of a consumer behaviour. What makes a consumer do what he/she does? Not the action but the reason behind it. It takes a lot of consumer work, meeting a lot of people before narrowing down on their motivations behind the actions. This is also a critical piece of the puzzle that the planner helps you put in. And eventually the planner will take this section of the brief and combine it with the next one that I will tell you about and marry them both to give the creative team a springboard to jump from.

5.      What is the single minded message? Well it sounds super simple but it often isn’t. A tip I do want to give from the beginning is that this part of the brief should be debated till everyone including sr. management is on board because if this is not aligned then the comms will never be aligned within the system. Also, once you have steered the creative to think in a certain direction, it is difficult to steer them away from it and the ghost of the direction will always stay in their minds. And it may sound simple but it is not. Often we are not able to narrow down to the 1 thing we want the comms to talk about. We often want to squish in as many things as we can and make it sound like the consumer is buying us because of the package deal. But it is not true. Every piece of communication can only do 1 thing and 1 thing only. So please be specific about what you want it to do. Don’t be greedy. Make more copies/print ads/facebook posts or whatever else works for your audience to communicate the multiple messages but please don’t put them all in 1 piece of communication. No consumer can take that more than 1 message so make hard choices.

And with that we are done with what comprises a brief and how to go about it. Hopefully it has been helpful. I do also want to point out here that it may seem like this brief can work only for a TV ad but honestly this is a brief for a communication piece. You will need to change the role of the communication or the insight or something else, to make it conducive to digital but the rest of it is just the same. In fact, if as marketers we do this exercise for our digital assets as well we may have assets that add value & sales to our brands and not just create “buzz”.

Another disclaimer I do want to put at this point is that a good brief can enable a good functioning hard selling ad. The magic of advertising sits in the copywriter’s brain. What makes a good ad great is actually the craftsmanship and the creativity of the genius minds who can tell stories in 20-30 seconds. So, let them fly and bring back the stars for you. Your job is to define the skies they fly in and that is what your brief does.

With this we come to the end of the 2nd part of this story. The 3rd and the last part will talk about AD and our roles & responsibilities there. For those of you who have managed to get so far without having to go to the first post on this topic, well now you will have to because what AD stands for you will understand only if you read that.

Until next time……

Friday, December 29, 2017

Making ads - a dash of creativity & lots of science

2017 is almost over and I thought we must give something to the readers to mull over as the year ends. Year ends, in my opinion automatically put one in a reflective mode about the year gone by, what has one learnt, achieved and what will the new year bring in. As I was closing things on my to-do list today the fact that 2017 has ended hit me hard and needless to say I went into this mode of what have I done noteworthy in this year. I am putting all of these down because the post is an outcome of all the thinking. 

I want to give you a brief synopsis of what I do in my current role so that you understand why am I writing about ad making all of a sudden. So I handle Equity for Dettol for all Developing Markets which means all ads that are run on Dettol irrespective of the product, country, culture, price segment, consumer et al are made by me and in 2017 I have made in excess of 20-25 ads and then they get multiplied by the number of countries and overall I have worked on approximately 400-500 odd copies including all edits. And hence this post.....

Much like the number series, I think this topic needs at least 3-4 posts to cover it in its entirety. However, the clear purpose of this one is to give a newly minted marketer a flavour of what is involved in making an ad.

Firstly, the most important part of making an ad as a marketer is the brief writing. The most famous quote on advertising always has been - the creative you get will only be as good as your brief. This is completely true. Of course, much like everything in life that sits on a normalized curve there will be exceptions on both ends - great brief leading to a lousy creative and a terrible brief leading to a great creative. But then those are what they are - exceptions and rare cases best attributed to either bad luck or great creativity. And before one can attempt writing a good brief one must know what is needed for the creative process and what your role as a marketer in the process is.

Ad making can be cleanly divided into 2 parts: Pre script development and post script development. I am going to focus on the pre script development and just for fun lets call them BC & AD. BC = Before Creative and AD = After Development (these are my fun moments while writing :p).

Disclaimer: From now onward, this post is relevant for people with marketing experience of 0-3 years. For the rest, it can be a nostalgic read for the time & fun gone by.

In BC, as a marketer you have only and only 2 roles to play in the ratio of 75:25 (can be 70:30 or 80:20 depending on your brand, form of advertising, how long the campaign has been on etc etc but it needs to be in this zone). I am putting down the ratio because in the glitzy world of ad making one can easily get lost on the other side and forget why the ad is getting made in the first place.

These 2 things will determine whether you are doing a good job as a Brand Manager or not. Actually these two things will determine whether you will have a tangible say in the copy making process or not and hence be ready to lead the process when you grow up to that position.

First and the part that constitutes 70-80% of the work is the science  exact, backed by numbers & indisputable. When I say it is indisputable; I mean the data led conclusions should be indisputable. The choices that the analytics throw of course are much like all choices debatable & often proven correct or incorrect in hindsight. But the background work has to be precise, exact & conclusive. It needs running your business through a fine tooth comb and peeling off layers & layers till you are sure you know everything that needs to be known about your business. The few questions which need to be answered in this part of the process are:

  1. WHO: Who will you target with this copy? Now, please be aware that this person can be different from your brand target consumer in some ways or in many ways. In fact, in some cases they could be completely different people altogether. This part needs extensive use of Household Panel data & syndicated consumer track or dipstick studies to pin point the exact set of consumers the ad will target. For e.g. Gain & Loss analysis can show who are you losing to - brand, sub segment, particular geographies or even SECs. Similarly the consumer track can show you if there is a certain segment of consumers who are finding you less relevant or are not finding value in your brand any longer & dipstick studies or exploratory research can throw an entirely new consumer trend that you may want to ride on.  But this needs knowing you business by segment, geography, variant (if any), pack sizes etc. inside out. The more granular & pointed the definition of WHO - the sharper & creatively sound the copy will be.
  2. WHAT: What is the business need for the ad? Again, it will help increase consumption, penetration or share is not the answer we are looking for here. You are looking for a statement that captures what is the need. For e.g. the business need is to extend into different benefit segments or is the business need to gain share of recruitment or is it to create a new category. Now, here is where the brand analytics comes into play. What will become the next engine of growth..... where is the category moving to.......... are there any macro trends one wants to ride on et al. 
  3. WHY: Why will this copy address the business need? Here, one needs to be razor sharp about the choices one is making. This is where the proof of the pudding is. Is a copy the best way to solve the business need? Will a promo do it better? Will running a longer edit of the old copy do it better? Will a price reduction do it better? Has the current copy worn out? All the questions regarding the choices you have on the table need numbers to back any of them and this is when you make the science indisputable. 
And then comes the next 20-30% of the work which is the sexy part or the glitzy part. How do you provide a creative springboard! You need to inspire the creative to share your vision of what do you want the consumer to feel & want. The creative minds are not interested in where are the consumers coming from - they are interested in who she/he is as a person. What motivates them.......... how is their day and how can your brand make their day better............ what are the little nuggets that can make this consumer laugh or cry or be angry. What will make this consumer fall in love with your brand - it cannot be the product - it has to be the feeling the brand evokes for him/her. You need to handhold the creative into the secret garden where they can then find the fairies and the demons. But the responsibility of opening the door to the secret garden is yours. How well you do it will determine the 'Aha" of your story and the aptness of it to grow your business. And here, I don't mean that every ad needs to be the one that makes the mom cry or laugh. Even absolutely functional ads need to inspire their creators. For instance, you need to be able to tell the creative the importance of 10 rupees in your consumers daily life; how she keeps squeezing out the toothpaste till the tube gives way at the seams or how she mixes water in the liquid hand wash till it no longer lathers. All of this will give the creative team the wings to dream, to fly and to come back with a winning script that will grow your business. 

So yeah, this is my two bits on what constitutes making an ad. It is a dash of creativity and oodles full of science and needless to say everything needs to be peppered with love & passion because that last seasoning does make a difference. 

On that note, here's to a great 2018 for all!!!! 

Thursday, October 12, 2017

Media 101: Biggest Marketing Spend Demystified

So we are back after almost 4 years. Kaushik & I have been thinking of reviving this platform for a while now but then life & work and the founder’s ambition of doing his 2nd MBA from the big 5 got in the way of it. But now we are back and hopefully will be more regular with this. Well done Kaushik for chasing & living your dreams and here’s to many more milestones you shall achieve.

At the onset let me tell you, this piece will make sense to someone who has been in the marketing function for at least 4-6 months. Otherwise, it will just be one of those marketing book things one reads in college or post work which has little application. My aim in this discourse is to simplify Media for first time marketers. There is of course a lot more to media than what I will cover. For Harry Potter fans, media planning is much like brewing a potion. You can put in the right ingredients and follow all instructions but there is a little magic in media which comes only to the inspired. This piece of course only enlists the ingredients and the instructions.

So let’s begin. Thing topic will cover the following key points:
  • Reach & Frequency: the only 2 things you need to understand about media
  • What’s in a brief
  • How to evaluate a media plan

Also, what I will not cover here will be the basic media terms. So those who don’t know what things like GRPs, SOVs, CPRPs etc. mean please either google those alongside or better still read Media Planning by Arpita Menon.

Reach & Frequency: the only 2 things you need to understand about media
There are only 2 things to know & understand about media: Reach & Frequency. Once you understand both of these in depth you can always make media decisions. So reach is simply how many people get to see your advertising (creative agnostic) out of your total TG universe. Sounds simple enough right – but often enough it isn’t because there are some absolute amateur mistakes all of us as marketers make:
  •         Confuse TV reach with Universe reach and evaluate plans basis TV reach
  •         Start with the assumption that the TV ad is the only creative available to them

Both of these often lead to inefficiencies in media. Let’s take the first case. Often the brief will be to maximize reach at a certain frequency level for all markets. This will make media team continuously work towards adding long tail of TV channels to your media plan to ensure all markets deliver to a certain reach level. Reality is markets like UP, Bihar etc. even with a 60% TV reach plan will only deliver to around 35% of the Universe and then when the media team boosted UP TV reach from ordinary 45% levels to 60% they added costly channels and hence made the media plan inefficient. Instead if one was to step back and put a benchmark of cost per reach point (CPRP) the options of other mediums immediately opens up. This is where you start evaluating what other mediums will help you reach more people because much like distribution; media is all about a game of availability – in this case visibility of the brand.

On the second one, I personally think we marketers are obsessed with believing that only a video format can communicate what we want to tell the consumers. Well, an audio video format is usually the most effective & hence most efficient. However, it is also the time & era to step back and push yourself and your agencies to deliver evocative static & radio creatives.

Essentially, as with most things in marketing it is about the cost benefit analysis of any investment one makes aka ROI. Let’s illustrate it with the following example:

Your current media plan is reaching 60% of TV universe and as a result only 35% reach on Universe. Now suppose your trial rate is 1% currently so you will have at best only 1% of the 35% trying your brand. Now suppose you augment the TV reach with Print or Radio and the reach on Universe goes to 50% and say the trial rate falls because the creative is not as good as the TV ad so your trail rate halves. Even in this situation you will have 1% of 35% trying you + 0.5% of the incremental 15% trying you. Essentially incremental reach is directly proportional to the probability of trials for the brand.

Now coming to frequency; it is the number of times someone sees your communication. There are lots of schools of thought on this. There is a group of marketers who believe only reach is important and if your communication is powerful enough then reach@1+ does the job and then there is a group that thinks frequency is determined by multiple variables like TG, clutter, category size et al. I am in the second camp. I think frequency is determined by what life stage your brand & category is in along with the category clutter. For e.g. with the advent of Ecommerce it would be impossible for 1 company’s brand name to stick in the consumer’s mind unless they hear it over and again. However, I do believe that frequency should never we bought at the cost of reach. One must first decide what reach they want for their brand and then decide what is the frequency they can afford or deliver for the same.

Golden Rule for point 1: First plan for reach and then anything else

What’s in a brief

I am sure by now you have heard lots of people using the quote “your ad is only as good as the brief you write” for advertising. It is actually equally true for media. Your media plan will only be as effective & efficient as the annual media brief you pen down for the agency. Let’s get a few things right:
  • The media planners will never know your consumer better than you. What they will however, be able to add value with is their understanding of this consumer outside your category and hence the media consumption habits of your TG.
  • Media agency doesn’t know the brand as well as you do. They may however be able to give you examples of other brands similar to yours and hence solutions which can be replicated.
  • No one knows your business as well as you do and they never will be able to.

Equipped with this knowledge & assumptions (if you don’t think it may be true all the time); it is your job as a marketer to pen down a brief that captures every little nuance of your brand, category, business, trends, consumer et al. The more detailed the information in the brief; the more efficient the media plan. However, don’t mistake detailed information with multiple needs from a brief. The key task that media needs to fulfill should be captured in as quantifiable and precise a manner as possible. For e.g. increasing Market share is not a good enough brand objective to put in the brief. Increase Market Share by 100 bps is a good objective because then your Media Reach leading to trial leading to market share calculations have a solid number working. Another example would be increasing salience for the brand is not a good objective. Increasing TOM awareness for the brand is because historical data analysis can clearly show at what media weights the brand saw an increase in TOM and hence give you a direction for future media weights.

Key information areas that the brief must capture (this is not an exhaustive list just broad areas):
  • Clear Objective for the Media plan
  • Detailed Brand Analysis from all possible data sources thereby coming up with key learnings and implications for next year
  • Detailed Category & Competition Analysis
  • TG definition – both demographical as well as psychographic:
    • Any new trends you are seeing in the TG
    • Different segments of the TG you want special emphasis on etc.
  • Priority Markets. Well these can be sliced & diced from any angle but this is entirely up to you and also basis your objectives for the year. The following 2 market priorities while from 2 entirely different perspectives are equally valid:
    • If you want to grow the market the prioritization could be basis category penetration in xyz markets
    • If your objective is to only grow Market Share then the prioritization could be basis your MS strength and opportunity to gain share
  • Key Big Bets or new initiatives for the year
  • Media Budgets (even if they are approximate.
    • This should also clearly state the budget you want to put aside for innovations and experiments to learn and scale up

Make your media brief an inspiration & spring board for the media planners to want to deliver the best Annual strategy. Your monthly media plans should just be the cut down plans from the Annual media strat & brief with the exact budgets and creatives you must have

How to Evaluate a Media Plan
If you have done the first 2 things right then evaluating a media plan or an annual media strategy is fairly easy:
  • Check if it delivers to the brief on all aspects:
    1. Are the medium choices right for the TG
    2. Are your priority markets getting incremental funding
    3. Are your big bests or innovations getting more than fair share of money.
    4. Are you doing enough new things to ensure you have learnings for next year
  • Ensure your key markets have enough reach as defined by you in the brief.
    1. Always check for market wise deliveries
    2. Also check for Metros vs non metros. Eg Karnataka & Blore reach or Maharashtra vs Bbay reach may vary substantially
    3. Check for reach in your buying TG vs just the media planning TG. Eg. While you may plan on SEC ABC but your TG may just be SEC A and hence you need to see the reach within that
Make a checklist and tick them off – a physical check list to evaluate a media plan and then you will never make a mistake. Also, ask questions when you start doing this process. For e.g. what is the channel mix which is leading to this media delivery. Is there any new channel one should buy? How can we have 1 tent pole property every quarter for the brand etc. etc.

With this we come to an end on Media 101. I hope this was not too basic or too advanced and it helps you understand and fall in love with media. Media is my 2nd favourite thing in marketing and I hope I have passed on some of the love to all of you. 

Sunday, December 30, 2012

Working With Numbers - Part 4

This is the final part of the series. Please read the earlier parts before going through this post or it won't make sense. Links below:

Working with Numbers - Part 1

Working with Numbers - Part 2
Working with Numbers - Part 3

Working with Numbers – Part 4

So till now we have covered 3 major sources of information – internal numbers, Nielsen & HHP. We have also covered how to tie in the internal numbers to Nielsen and how to use both of them in tandem to arrive at a richer, deeper and more insightful analysis.

This post shall cover how to marry all 3 sources together and to work towards aligning marketing strategies and actions to grow everywhere.

As with everything else in life – this post shall work on the following assumptions:
  • ·         Market Share is a marketers pride – ultimately you are doing everything to make consumers buy “more” of you in comparison to other brands
  • ·         Irrespective of what market share you have, the company wants turnover from you – that is where the “mullah” comes from and this is what funds your marketing activities
  • ·         HHP is a true diagnostic of what actually happens and if you fix that you may be able to fix everything

Now let’s lay down some housekeeping rules:
  • ·         Forget value for sometime – value is a derived figure – what sells is 1 unit of your product – the consumer buys 1 unit of your product and not Rs 100 worth of you
  • ·         Figure out what is the volume metric which works for your category – and from now we will only talk in that – it could be kgs/tons/units/liters etc etc etc – throughout this post I am going to use kgs (I sell sabun after all)
  • ·         Read the previous 3 posts for basics of the 3 sources that we are going to now intertwine and twist around and mess your mind with (evil laughter is in order here :d)

So now let’s start making the framework we will look at for this exercise – you can of course make many many of these and turn it all around if you want
Start from 1 common point – usually HHP is a great way to start as it is a most complex and inflexible database.

  • ·         Divide geographies in your internal data source and Nielsen according to how they appear in HHP. E.g. Punjab & Haryana will need to be clubbed. So would MP + Chhattisgarh and so on and so forth
  • ·         Divide all volumes in the HHP volume metric – whatever it may be – dividing HHP volumes into other metric will make it very difficult when reading into measures like Avg. Consumption etc.
o   E.g.  if you measure your volumes in tons internally and in kgs in Nielsen – while HHP measures it in grams then please convert everything to grams

  • ·         Again, please remember secondaries are your only reality. Hence, you need to start with finding out your pick up in HHP and take it as a common factor for conversion
o   For eg if your internal sales says in Delhi you sell 100 kgs  and HHP says in Delhi 120 kg is consumed then you need to take this factor and build back into secondaries

Framework:  Being the Bollywood freak that I am – I call it the love triangle. Ismein sab hai, romance, masala, tears, action and of course loads of drama. So here’s how the story unfolds:

So the construct of the framework is as below:

Note: The category contribution is Nielsen contribution. You can take any

We will use the data in this table for the rest of the post. A good exercise would be to probably populate this table and then read further.  But then that’s a lot of work so take your pick :D
So the basic premise here in this analysis is that there are states/geographies in this country which are pre disposed to a consumption pattern for a particular category and hence they need to be seen as such. For e.g. TN is one of the largest consumer of Glucose Drinks while MP is the largest market for Hair Colours. So it’s important to sort the markets according to their contribution to the category.

The next thing to note is the CAGR for the past 3 years of the category. It is important to take a slightly longer time period as it helps negate the impact of recency effect of growths, new entrant into the category etc. Similarly, for the rest of the parameters it’s important to look at CAGR and immediate period growth. Looking at both a CAGR as well as immediate growths gives one a perspective of the trend of growth.
Now let’s analyze each element of this grid and see what can be done with them. This analysis needn’t only be done for geographies – they can also be done for SKUs/Pack Sizes/Variants/formats/sub brands or any other cut of your brand or category that makes sense.

Contributions:  As a marketer one can have two approaches – ride on category dynamics and the other is to develop the category or geographies. However, these approaches also need to be looked through the lifecycle lens. For instance for highly penetrated categories it is important to take the category trends and contributions as a given and to align your brand to these dynamics. For not so penetrated categories or rather niche brands it is probably alright to confine oneself to the category construct. Now if one were to take either Nielsen or HHP cat contributions as a given then it is very important to look at how your brand stacks up against it. For e.g. if your internal contribution of a 10% category contribution state is only 5% then you know you are under pitched and need to take a look at these markets – especially if these are also high growth markets. Here growths don’t necessarily have to be in % terms it is also absolute growth. A big market will very rarely grow at 40-50% but a 10% growth in a big market will in all probability drive the category growth rather than a small market growing at 50%

Growths:  Now that we have all 3 databases lets deconstruct the growth of our brand. So step 1 is to pen down growth in each geography by all three sources (only volume growth).  For HHP you will need to break down the growth in volume by HH growth and growth in avg. consumption. States where all three growths are in the same direction its fine. And I mean direction which means that it will never be exactly the same – as long as the movement is in the same direction and in a +/-5% here and there it is in the same direction. In these states one should just continue to do what is being done. In states where all 3 are not in the same direction one would need to dig deeper and arrive at the WHYs. And here I think I am not going to detail this out as you must explore this on your own and am happy to answer questions J

Trends: One must use this analysis to find out trends for the category as well as your brand. For e.g. If the CAGR is high but the immediate growth are low then you know the category growth is slowing down and at some point so with the brand. Usually category trend leads the brand trend by a gap of a quarter or something – it’s a very rule of thumb but one can establish it for a particular category and brand. Similarly, if one were to assume a simple linear relationship of:
Household Consumption growth will drive Nielsen Growth will in turn drive Secondary growth
Then it’s important to look for anomalies in the three sources of information. For e.g. while your secondary and Nielsen are showing healthy growth but the HHs or the HHs volumes are showing a slowing down – it is a red alert situation. You would want to correct that trend because at sometime that trend will catch up with offtakes and in turn with our internal brand growths.

Problem Childs:  This of course is (in my opinion) the ideal way to find out the problem child geography and then take targeted marketing actions. Once you plot geographies/SKUs/Variants or any other cut of your brand and category which makes sense and identify which of those is creating the issue for your brand or pulling down your growths, then you can target your marketing efforts only on those.

Forecasting:  This framework is also a great way for forecasts. Once you have these numbers then you know what are the growth levers for the coming year and hence what should get focus and hence build in higher growths and ambitions. This has important implications in terms of what kind of monies will be needed to get the desired growths. E.g. depending on what are the purchase drivers for each geography, SKU, Variant the investments will need to be in the right mediums, channels etc. This also has strong implications on the sales and stock planning for the year forward. For e.g. you may need to push the sales team on which geographies to grow their distribution in and help them with accurate tools for the same. E.g. if it is a strong rural SKU then you may want to do activities like Mass Dealer Contact Programmes and on the other hand if it is a highly Modern Trade led SKU then you could plan on very strong consumer activation etc.

Important Safety Instructions – this framework can only be used in tandem with the part 2 & 3 of these posts. Only once you have arrived at the correct diagnostics of what is going right or wrong in your analysis targets can you use this framework. In itself this is just a snapshot and 1 stop shop for all information and almost like a ready reckoner for your brand. If each element is not analysed individually then this exercise will be futile.

Monday, December 3, 2012

Working with Numbers - Part 3

So my apologies for being so inactive, Anupriya had sent me this post a few weeks back, and owing to work pressures and other such things in my life, I was unable to update the blog - although planning a revamp and lots more interesting stuff next quarter, so keep visiting the blog!

As always, thanks Anupriya - star you are! Very kind of you to take time out and write :)

Also, just crossed 10,000 hits! Thanks for your support people!

Working with Numbers – Part 3
 In the 2 previous parts we have covered the basic sources of data that we have access to or use as marketers and a deep dive into 2 very important ones – internal numbers and ACN.
In this part we will try and understand Household Panel (hereafter referred to as panel) and then try and put the 3 sources together i.e. internal numbers, ACN and HHP
Panel is your one stop shop to understand what your consumers are doing. What is their purchase behavior? Understanding of Panel makes you understand the consumer need.
Panel can be put to many uses and analysis. I personally use panel to make operational decisions on the brand. As you understand the panel better or speak to more people who have been in the field for some time they will give you different uses of Panel. I however, strongly recommend panel to be used to making strong operational decisions for the brand. For e.g. in which state should you run a consumer promotion or which SKU to support with trade scheme or what is the ideal SKU size for your brand. If you want to do on ground activation against a competitor which one should it be?
Panel has answered all these questions for me.
CAUTION: a very important thing to remember throughout this post is that Panel measures everything at a household level and not individual level. Hence, panel gives you purchase behavior and not consumer behavior. Please do not use panel for consumer behavior
It will give you WHATs – it’s the job of the smart Marketer to understand the WHYs
Panel has given diaries to 74000 households in the country who are representative of the entire population and then extrapolate the data to the entire population. The households which have the diaries are supposed to note every purchase in that and then panel representatives also do pantry checks/dustbin checks.

Key Metrics to dig into:
1.    1Penetration – this measures the number of households (HH) your brand is bought by. Penetration = Brand HHs/Total Category HHs. Penetration numbers are important at 2 levels:
a.       Category Penetration – this means for the entire category what is the penetration amongst all HHs. This determines the lifecycle of the category and hence is a very important measure. Cat Pen = Category HHs/Total Universe. Very high category penetration means that the competitive heat will be very high and loyalty lower. E.g. soaps  have almost 100% penetration which means that you can grow only at the cost of other brands. On the other hand if category pen is low you actually stand to gain by just category growth e.g. hair colour have penetration of less than 30% hence category growth is the single biggest brand objective
b.      Brand Penetration – as explained earlier it measures the HHs that your brand is bought into within a category. As a marketer you have to set a penetration objective for yourself. For e.g. L’Oreal Excellence and Garnier Color Naturals will not have the same objective. However, once the objective is set then one must craft the marketing activities to achieve that and then to maintain it. Drop in penetration often means it is a cause of grave worry. Also, penetration drop cannot be measured on a month on month basis – It must be measured over a quarter. 

2.       Consumption - This measures the actual volume of your brand/category consumed in a HH. Now this can be measured at 2 levels:
a.       Total  Consumption – which is total volume of your brand in all the HHs you are bought by
b.      Avg. Consumption – this measures your brand consumption in 1 HH. This is usually the measure that is referred to when one says consumption has fallen. It is an extremely important measure as it gives you your brands consumption pattern in a HH. This is also the measure you look when looking for seasonality, impact of consumer promotion, impact of communication etc. For e.g. if you ran an ad which said for best results use twice a day – it should ideally move your Avg. consumption up.

3.       Share of Requirement (SOR) – this is the share of your brand within a household. SOR = brand volumes in brand HHs/category volumes in brand HHs. This basically is a measure of multiple brands being present in a particular HH and how strong is your brand within that HH. Again do remember this is at a HH level and hence multiple brands are present. Simplest example being shampoo, with avg HH size in India being 5-6 people more than 1 brand is but obvious. However, the measure to watch out for is the trend of SOR – if you have a SOR of say 60% and every quarter see it going down – it means there is a problem and more people in the HH prefer some other brand or they are using the other brand for more occasions. And when you were an occasional use brand and see your SOR going up it means that the consumers are sticking to your brand more than their usual brand. This may happen for a lot of reasons – increase in availability of your brand, you having corrected your pricing, affluence of the HHs going up etc

4.       Entry Erosion Analysis – this analysis tells you for a particular period what is the source of HH growth of your brand. It gives you the following measures:
a.       New Triers – for a particular period what % of your users were new triers i.e. who tried your brand for the first time in that period. Now this is an extremely important thing to know because this is a measure of trial ability of your brand. This measure also gives you the new triers constitute what % of your total consumption ie when these new triers come in do they consume more of your brand than existing HHs or avg consumption or are they only trying your brand. The key here is to choose the correct period for which we want this number. Ideally anything less than 6 months is futile – but again it depends on the nature of your category and business
b.      Retainer Users – these are the HHs who were using your brand in the last period as well. This measures the loyalty of your brand – how many HHs continue to buy you over a period of time. The important thing to note in this is the consumption trend. Whether these HHs are consuming more of your brand or have they reduced the consumption for your brand and added some other brand to their repertoire
c.       Lapsers – these are the HHs who purchased you in the last period but have chosen to not buy you in this period. Now this is a very critical measure for obvious reasons. If the lapsage for your brand is very high then it is a cause of concern. Also, lapsage is a relative term and again extremely dependent on the time period. Let me explain this with some examples.
                                                               i.      Say you are a baby food brand who has baby food only for infants from the age of 6-9 months. Then for sheer demographic reasons every year or every 3 months HHs will lapse out of your brand to some other brand which is relevant for their babies in the age of 9-12 months.
                                                             ii.      If you are a summer brand, let’s take Glucon-D where >60% sales comes in Mar-June. Now if we choose time period of Q2 vs Q3 then obviously the lapsage in Q3 will be extremely high as the brand or category is no longer relevant
Hence it is important to analyse this number within the framework of your category. And for this also it is important to know who is lapsing out of your brand. Were they heavy users of your brand or were they HHs who were marginal consumers who bought you occasionally
5.       Gain/Loss – this gives you the source of your volume growths or volumes losses. This tells you where are your volumes coming from or going to. Now you can gain/lose volumes in 4 basic manners:
a.       New Category users/lapsers – these are HHs who entered the category through your brand or were your brand users and then decided to exit the category completely. The classic example in this case is baby products. After sometime these HHs will exit the category or enter the category when the category is relevant and will be usually heavy users in that time period. And when they exit the category or enter the category they impact the brand a lot
b.      Increase/Decrease in Consumption – HHs who started consuming more or less of your brand in absolute volumes. Now this may not be an absolute decline at times. For e.g. if you are a shampoo brand and instead of 7.5 ml in a sachet you start filling up 6 ml. Now consumers will not buy 2 sachets because you have reduced fill rate. What will happen is that the absolute consumption in your HHs will come down by that amount because they will still use 1 sachet of your shampoo. On the contrary if say you give 10% extra volume – on small SKUs that small volume may not make the HHs buy lesser number of packs and hence absolute consumption will go up for your brand
c.       Addition/Deletion to Repertoire – this when a HH starts buying your brand over and above the brands they already purchase. This could be because of a special consumer need that your brand fulfills which their other brands do not so they use your brand in addition to their existing brands. For e.g. say you are a fabric softener, then HHs will buy you over and above their existing detergents and not replace their existing detergents with you. Taking the same category example, in winters a lot of HHs will add liquid detergents like Ezee to their repertoire of detergents and then remove It from their repertoire as soon as winter is over
d.      Gain/loss from competition – this is when consumers substitute your brand with competition or vice versa. This is a scary reality check and something to completely watch out for. This is where you can pin point who your real competition is and who you need to attack in the market – and whether as marketers we like it or not – this is a reality check and we need to embrace it as a fact and work with it. E.g. you launch a premium fairness cream with a new texture, with world class technology and price it at 200% premium to the market. And when you advertise it you assume that consumers who use premium skin care will move to your brand. However, this measure may show you that you actually recruit your consumers from the bottom of the pyramid. This could be a good or a bad thing – depending on what you make of it. If this is true – it means that your media deployment will need to be for these HHs and not for the premium skin care or it could mean that even with limited money, great profitability and limited visibility in media you can actually get consumers. However, the reverse would be devastating. Imagine your HHs actually lapsing to the bottom of the pyramid brand. It would mean all your assumptions about your technology or strength of communication have gown down the drain – consumers prefer their old brand over yours.

Panel of course has lots of other measures that you can dig into. But these according to me are the most important.
And unlike Nielsen where you can only take geographical cuts, here you can actually drill down into demographics of HHs and you can actually arrive at which SEC, which type of city, how many people in a HH, HHs with children etc are your brand users. With Panel you can get into as much granularity as you want.

Now, I will explain why I said I use panel for operational/tactical brand decisions. I am going to give you some examples and then when you explore the panel further you will realize that there are more and more of such decisions that you can take:

1.       Consumer Promo – this gives you the empirical evidence of what your and your competitions consumer promo did for your brand. Did it get new HHs, did it make your exiting HHs consume more of you, did it increase your SOR in the HHs, did you gain volumes from completion and same answers for your competitions Consumer promos. And there you go – you know which consumer promo actually gives you results – or even which will screw your competition the most and you go for it
2.       Cross Promotion – if you want to do a cross promo for your brand, you can actually know which other product to give. For e.g. Panel will throw up what is the intersection of HHs b/w you and intended promotion brand and whether you will each new HHs at all or will you only reach the same HHs etc.
3.       SKU choice – if avg consumption for All India for your brand is 100 gms while in a particular state or a particular SEC which is a big contributor your avg consumption is 500 gms then there is merit in the launch of a 500 gms SKU thereby saving packaging cost for yourself and also locking in the consumer for a longer time – as the HH will only think of purchasing another brand once they have consumed your 500 gms
4.       Media Deployment – if you know that while you thought your TG was SEC AB but your actual HHs are Sec C &D then there is merit in taking your media more mass or adding mediums which cater to these SECs
5.       Cannibalisation from a LUP – whether or not to launch a LUP is often a much debated decision with the fear of cannibalisaton of a bigger more value & profit generating SKU. And only panel can tell you for your competition and other categories how much cannibalization can you expect.
And there are more such decisions which only panel can help you with.
At the beginning of the post I said this post will cover marrying the 3 sources of data that we have covered so far together. However, I think this one has become longer than I thought it will. And marriage is a complicated process anyhow!!! So we shall keep it pending for the next part in the series.
And unlike what Kaushik said – I think this may just go into 5-6 parts. So please be patient.

Thursday, November 15, 2012

Working with Numbers - Part 2

Part 2 of Anupriya's 3 part series! As always, thanks a lot :)

For Part 1 click here.

My first post covered the various sources of data that we have access to or use as marketers. Now I will dig deeper into 2 sources - Internal Numbers & Nielsen and most importantly how to tie them together.
As discussed earlier on also, internal numbers are the only reality of our lives. We need to live with them and all marketing activities at the end of the day need to culminate into better sales growth. 

For simplicity sake for this entire piece we will assume Primary Sales = Secondary Sales 

Some Key Points to remember while looking at internal numbers:

  • Actual numbers are important but most important metric to look at is growths. What is most important is to chase a growth objective and chase it hard
  • While looking at growths always delink the volume growth and value growth – for e.g. if you took a price increase by 10% and your sales growth is only 11% then it is a cause of worry. One must always set a volume growth and a value growth objective. Ultimately consumers buy 1 unit of your brand – they do not buy Rs 100 worth of your brand. Hence, always try and sell more units
  • Always look for the “BASE EFFECT” – any activity in the previous period which increased/decreased your sales abnormally is a base effect. For e.g. suppose to liquidate old stocks you run a 1+1 offer on your brand – it will surely show as a part of your base. Or if you increased your price by 20% in a particular month and the category is price sensitive it will show a tanking of sales. Or something as simple as a stock out in a particular month which would make your base lower
  • Map the seasonality effect – if you operate in a category which is seasonal then you must always consider it while analyzing numbers. And seasonality is of various types. For e.g. there are some brands like Glucon-D who do more than 60% of their annual turnover in 3 months and then there are brands like Make-up for whom sales doubles during festivals.
  • Accurate Geographical Mapping – as long as you are looking at All India numbers this phenomenon does not come up as an issue. But the moment you start digging deeper and granular it is extremely important to map geographies accurately. Let me explain this further. Internally numbers come in ASM wise which means the sales are for ASM territories. Usually they are according to states. However, there are times when a certain part of an ASM territory may be removed and handed over to another one. So just a word of caution 

Key Metrics to look at in internal numbers are as follows: 

1.       Absolute Volumes 
2.       Absolute Value 
3.       SKU mix i.e. how much of each SKU/Variant sells 
4.       Volume & Value growth

Key Drill downs for each of the above should be:

  • By SKU/Variant e.g.  100 gms, 50 gms, a particular variant like in shampoos or soaps, shades for hair colour, flavours in food….so on and so forth
  • By pack type – bottles vs sachets, wrappers vs cartons, jars vs cartons etc
  • By geographies

o   Urban & Rural
o   By State
o   By Metros, Tier 1 Cities & Rest of India
o   Top 10/20 contributing Cities (ideally this should be more than 60% of your sales) 

AC Nielsen
AC Nielsen is a bitter reality of your life and will always be. So we all as a community can crib about it, can abuse it and wish that we could do without it but sadly we cannot!!!! We have to learn to live with it and at best back co-relate it to the internal numbers.
So what essentially Nielsen does is – takes a sample set of outlets – these are representative of the entire universe of outlets and then extrapolates the data collated at these outlets to an All India number or for a particular state or city. 
So in essence the ACN is your one stop shop for competition benchmarking. This is the closest one can get to market reality. 

Key Nielsen Metrics to look at:
1.       Market Share Value (MS Val)  – this is your sales in any particular market/Category sale in that market
E.g. if you sell Rs 100 worth of soaps in Maharashtra while in totality Rs 1000 worth of soaps are sold in Maharashtra then your Market Share is 10%
2.       Market Share Volume (MS Vol) – this is your volumes sales in any particular market/category sales in that market. Now this measure is important because (as quoted earlier) volume is the consumer reality – rest is only a price game. So you would want to know how good or bad you are on volume shares
a.       Volume share can be calculated at any common volume measure. E.g. Units, Kgs, tons, gms etc depending on what makes the most sense for your category. For instance in Hair Colour since the sub categories have different formats hence looking at Unit share makes sense while in Soaps volume share in tons makes sense as all soaps are measured in grams
3.       Numeric Distribution (ND) – this is a representation of your distribution. This is number of your outlets/total number of outlets the category is present in. E.g. if you are present in total 100 outlets and the category outlets are 200 then your numeric distribution is 50%
4.       Weighted Distribution (WtD) – this measures the quality of distribution i.e. in your distribution what is the category sale.  So for e.g. if your weighted distribution is 80% it means that 80% of the category sales happens in the outlets you are present in which basically means that you are present in the right kind of outlets
a.       The higher the weighted distribution the better it is and one should always chase this measure. This is not to say that you shouldn’t chase numeric distribution but weighted is more important. Hypothetically speaking if your numeric distribution was say 80% while your weighted was only 50% it means that while you are present widely, you are not present in the outlets where the chance of getting picked up is higher
5.       Share amongst Handlers (SAH) – this is a measure of your strength within your distribution. This is a measure of your market share in the outlets that you are available in. ideally for strong brands this should be higher than your overall share substantially. Else, it means that your brand strength is not good and you need to chase marketing measures than availability. Eg. If your overall market share is 20% then your SAH should ideally be around 28-30% unless of course your ND is >85% because then your distribution is almost the category universe
There are a lot of other measures in AC Nielsen which can be looked at and analyzed and there is usually never an end to analysis. I have however, chosen these 5 metrics because these are (according to me) most important and also the best to start analyzing the business with.
These measures when analysed thoroughly will throw up question which can then be answered using other measures. And I will be more than happy to tell you which ones if you can revert with specific questions. 

Marriage b/w Reality & the Bitter Truth
This is the section where I explain how both the internal numbers and the Nielsen numbers need to be looked at in conjunction to each other.
Within internal numbers you need to look at only secondary sales because this is what goes into the retail environment. However, again for simplicity I am going to consider primary = secondary sales
While marrying the two sources of information please only look for trends and not absolutes – it will only throw up nothing
So things one must correlate:
·         Growths – one must look for a similar growth trend in CAN & internal secondary numbers. Now a gap of 2/3% is absolutely normal but it should be in the same zone for eg b/w a 8% internal growth and 10% Nielsen growth then its fine. However, it is always helpful to draw a 2X2 matrix for markets where the axis cut each other as All India secondary growth and All India Nielsen growth. Then each market is mapped according to these 2 growths.

 X Axis- Nielsen Growth and Y Axis – Secondary Growth The 4 quadrants of this will be:
·         Right Top– Doing Well – Continue Efforts – these will be markets which are growing faster than All India both internally and in Nielsen
·         Right Bottom – Strong Brand – Push Sales  - these are markets where in Nielsen you are growing faster than All India however your internal growth is not so fast. Here strong sales plans help
·         Left Bottom – Immediate Action Plan  - the brand is not growing well either in Nielsen nor in internal sales. These geographies need a full understanding of what is happening
·         Left Top – increase Investment – these are geographies where your brands has a strong trade pull however, the consumers are not buying as much of you as they should. This means these geographies need incremental inputs on media or consumer activation or consumer promos depending on what is the reason for this situation 

·         One must always know the lag in pick up – so is your category the kind where what gets sold in month x gets sold in month x or does it get sold in x+1 or x+2. It is x+2 then you should look for the growths for x+2 period and not x 

·         ACN Pick up – this is an exercise one must do over atleast 24 months period and then take an average. This means take out your volume sales (if you have too many SKUs) or value sales if there is only 1 odd SKU for internal secondary and ACN and then find out the ratio for that. Then average out this ratio. So every time your share movement is not in the right direction as your internal numbers you should first check this ratio – is there a change in pick up. This is especially very important for new brands or brands which are highly mordent trade dependent.
·         Geographical contributions – one must look at the geographical contributions in the internal numbers and Nielsen. For eg if your top 20 cities/ 10 markets do not match in Nielsen and internally it means that the wholesale component is very high internally and the actual consumer is sitting elsewhere. This also means that your marketing activities should be focused on the consumer pick up geographies and not your internal sales geographies. And trust me it is always a very difficult choice
Last Quote: For the 2nd part my last quote is – these all put together give you the answer to WHAT – not WHY. So please don’t look for WHY. The biggest mistake all of us end up making is turning this analysis somehow into diagnostics. It is not. This is only the symptom. Diagnostics we will come to. 

Wait for part 3!!!