Show Me The Money - Plotting Trends in the UK Market
We examined the detailed data held at Pearlfinders on marketing services opportunities, of varying values and across all industry sectors, in order to extrapolate trends and help to identify where marketing services businesses might strategically focus.
Blurring the boundaries - when advertising becomes reality...
We’ve all been witness to the fusion of TV with reality (Big Brother, Pop Idol, Survivor) and Pearlfinders has started to see a trend that gravitates towards the blurring of real life with advertising. We first picked up on this when we investigated the potential of blogs and social networking sites, like MySpace, as marketing tools (Pearlfinders FT 20.12.05). Blogging and thought-sharing as a medium has been emerging rapidly - this year we've already begun to see it beginning to be accepted as a tool for internal comms and consumer PR and also for corporate communications. It seems like there's a missed opportunity for most marketers here, and we'd say it's down to progressive media and creative agencies to take the lead on educating brand owners on the workings and benefits of blogging. Once their eyes are open, there will be opportunities to engage them on the choice of blogs and messaging strategies, so those of you who react to this early on could find a lot of low hanging fruit.
Some decision-makers believe community-driven buzz marketing can be a strong method to raise brand profiles and in turn drive sales/generate revenue as opposed to traditional advertising. Car manufacturer Jaguar has given a New York socialite, who is notorious for hanging out at all the right places, an XK to use for free. The aim is to position the marque as an aspirational brand, associated with New York’s in-crowd.
We’d advise those of you with innovative ideas on how to target key influencers in different social groups to send out a thoughts-led piece to brands that are focusing on aspirational marketing. Do you have an opinion on community-driven buzz marketing you want to share with decision-makers? You might want to think about how it’s possible to measure word-of-mouth. We suggest you consider using Jaguar as an example of how reality product placement can be a key driver in reaching out to early adopters, and include insights into how your offer can take this one step further.
Luxury brands - are they overdoing it?
It has been reported that even though the number of high net-worth individuals globally has increased, there is also a growing difficulty in capturing a slice of their income. Luxury goods consumers are coming out on top as the demographic most likely to spend in non-traditional ways. As a result, premium brands have to think more laterally about how to reach them and are rethinking their offerings. Changing consumer habits and demands are indicating a growing desire for individual experiences - contradictory to the current trend of luxury brands being globally available. Emerging markets have been a key target for luxury brands in recent years, as companies are keen to tap in on the new market potential. This runs the risk of devaluing brand equity as products become too readily available, unless unique experiences can be delivered to consumers.
It is worth considering how luxury brands can continue with their growth plans whilst still catering for their wealthy customer base. Could this be through product innovation? Or could it be through targeted campaigns demonstrating the reach of a brand and its offerings? The consolidation of luxury brands and the feeling many are 'spreading themselves too thinly' is also leading some consumers to turn away, as the image portrayed is more of off-the-peg rather than haute-couture luxury. What can be done to reverse this image? How can they ensure consumers have a premium experience across all touch points? Those of you with insights and ideas should step up your prospecting to the major and minor luxury players across all segments.
Will the smoking ban be a drag on the leisure sector?
With a ban on smoking in pubs set to arrive in England and Wales next year, a number of pub operators and retail leisure chains are investing in outdoor facilities to accommodate smokers. In Scotland, where the ban is already in force, pubs have reported that the decline in visits from regular lunchtime drinkers has been offset by a rise in the number of women and families coming to pubs to eat. Enterprise Inns said pubs with outdoor seating areas are expected to gain market share, while those with lower quality facilities would be expected to report declines. Across the industry, according to the Scottish Licensed Trade Association, there doesn't seem to be an overall trend so far - some members have reported trade up as much as 30 per cent, others have been down by the same figure.
In England and Wales, companies already upgrading facilities across their estates include Enterprise Inns (Pearlfinders FT 17.05.06), Pubs 'N' Bars (Pearlfinders FT 12.05.06), Wolverhampton & Dudley Breweries and Shepherd Neame (Pearlfinders FT 22.03.06) - but research suggests some smaller operators are yet to begin preparations. As we picked up on last month, there's some confusion in the industry about what constitutes an outside area where people can smoke, but this is expected to be resolved soon (Pearlfinders FT 17.05.06). We've discovered through speaking to a number of the key players that many operators are leaving arrangements down to regional managers or individual tenants. With that in mind, we'd advise interior/exterior designers that haven't done so already to get contacting operators and individual pub owners in your locality for any opportunities that might arise from facilities upgrades.
Banks 'borrowing' from retail?
UK banks are attempting to carve their presence on the High Street through large branch opening programmes. Following a focus on digital operations over the past few years, the banking sector is now branching out from online and telephone banking and seeing the potential to treat their branches as retail outlets to sell more financial products.
Pearlfinders has been covering the trend of banks focusing on the High Street for some time. We identified last year how UK banks were urged to take lead from retailers on branch design (Pearlfinders FT 04.07.05). As we reported then, several years ago High Street banks questioned spending large budgets on running branch networks that would become obsolete when consumers switched to Internet banking. However, there has been a significant turnaround in strategic thinking, with financial services companies realising that most customer relationships are won and lost on the High Street. NatWest has embarked on a £150m refurbishment scheme (Pearlfinders E7 16.12.05), while Barclays has committed to revamping its branch network and focusing on creating a better customer experience (Pearlfinders FT 08.12.05). HSBC and HBOS have lured executives from retail backgrounds to adopt a more retail-focused strategy (Pearlfinders FT 05.04.05, 02.03.06).
With UK banks currently developing strategies to sell their products and create a retail atmosphere to attract customers, we'd suggest agencies with either financial services or retail experience consider how your offer could help. We suggest market research agencies take note of this trend and consider how you might help banks target their markets through careful location planning. Many banks have been left with taking space in retail parks and office blocks as opposed to the higher profile locations they had hoped for. Those agencies with creativity for maximising the space available to optimise selling should also consider approaching – especially retail design.
Furthermore, how can the new branches offer more than just transactions? Banks are focusing on developing the customer experience through carefully selected music, seating and lighting. Agencies with ideas on developing customer interaction with the brand at different touch points might step up your prospecting, along with specialists in POS and in-store communications. Those with retail design expertise should think how they could create an enjoyable 'shopping' experience through the store layout. In summary, the overhaul of banks on the High Street may throw up a wealth of opportunities and we would advise those with a relevant offer begin prospecting the UK's larger and smaller retail banking networks.
Utilities customers - voting with their feet...
According to Ofgem, consumers have responded to rising energy bills by "voting with their feet" to save money. Research has revealed that 900,000 customers switched gas or electricity suppliers in March after sharp bill rises - around 200,000 more than the same time last year. The figures are the highest in four years, demonstrating that competition is "alive and kicking" - particularly given consumers not only have the option to change supplier, but also to choose from a selection of tariffs.
Pearlfinders would suggest agencies consider how your offer could help the utilities sector reduce churn. How can the major players develop and maintain customer loyalty? How can they bolster their CRM activities to reduce customer turnover and increase levels of satisfaction? How important a role does customer service play, versus price? What influences consumer decisions? We'd suggest this is a good one not only for direct marketing, market research and database specialists with a strong track record in gas and electricity, but for those of you with experience of customer retention and development in other sectors. You don't necessarily need utilities expertise - what about demonstrating you transferable skills from another industry where churn is a problem - telecoms or banking for example? As consumers become more price and marketing savvy, developing the right messaging is more crucial than ever - and so is getting the price right to match the market you're targeting. If your agency has expertise in pricing strategy, we'd recommend now is a good time to connect with the utilities companies on your hitlist.
Debt consolidation - the answer to all money problems?
Debt charities have raised concerns about debt consolidation firms that encourage consumers to put their existing debts into a home loan. BBC programme Real Story recently highlighted several firms that have allowed customers to transfer credit and store-card debt into new loans secured against their homes. Many charities say the debt consolidation firms are behaving irresponsibly, especially with the use of celebrities, such as Carol Vordermann, to endorse their schemes. In addition to this, a lack of transparency and failure to communicate the risk involved in taking out a consolidated loan whilst potentially jeopardising your home are areas of extreme concern.
Pearlfinders has been tracking the fast-maturing debt consolidation sector, and we've featured analysis on Debtmatters (Pearlfinders FT 20.06.05), TDX (Pearlfinders FT 12.09.05) and Debt Free Director (Pearlfinders FT 18.02.05). We've also been predicting high growth in the sector following a spate of IPOs (Pearlfinders FT 17.01.06). The category is quickly becoming oversaturated and the negative publicity surrounding the sector at present could see a number of firms ramp up their customer comms efforts in order to address the charities' concerns and reassure current and potential customers. In addition to this, a rising number of individual cases highlighted in the British media could see a need for firms to rethink their media relations and crisis communications strategies in order to protect their brands. If you specialise in any of the disciplines highlighted, we recommend you consider sending out a thought-leadership piece to the major players in the debt consolidation sector with thoughts on how they can reassure customers and minimise the damage from any negative publicity.