Insights with Yawer Rasool

We are delighted to be running our insight with… series once again. I had the pleasure of talking with Yawer a highly accomplished marketer who has worked on international assignments across diverse markets for RB.

In this exclusive Assured Talent interview, Yawer shared his expertise into:

💡Driving true innovation in an over-crowded sector
📈 Key marketing strategies he will be implementing in 2023
💳 How to minimise the costs passed onto consumers

1. We all know the challenges manufacturers have faced over the last couple of years. From commodity price spikes and labour shortages to persistent supply chain woes, costs have increased. How can you minimise passing the cost on to the consumer in the short term?

With the pressures of lockdown easing in 2022 came the expansion of freedom. Of course, the release of all that pent-up economic activity caused massive inflation, leading to the constriction of family budgets. However, there are many ways of reducing the burden of passing on the cost increase to consumers, one being to increase demand. Increasing demand forces a higher volume of production. Higher volume allows manufacturing overheads to spread over bigger throughput, which can reduce price increase pressures. 

Another manufacturing opportunity is to improve the overall equipment effectiveness (OEE) of a production line with fewer stop and change times. For example, if lavender is the best-selling stock-keeping unit (SKU), double up on lavender production rather than also producing the lemon variant. Assuming fragrance substitution is common in the category, having a better OEE will improve the gross margin. 

I also often see a lot of excess costs in packaging that can be trimmed. Companies should have tough conversations with retailers and assess removing shelf-ready packaging (SRP). Often, packaging artworks have five or six colour-mixing designs. If this is reduced to simpler three-colour print runs, packaging costs will go down, leading to a higher gross margin.

Optimising marketing and trade spending with a zero-based budgeting approach is also a great strategy. Instead of using last year’s base as a reference, set realistic targets for each brand and activity. From there, build a plan and calculate what budget is needed to deliver on those targets.

That said, for most companies, a price increase will be inevitable. However, if there is a portfolio of SKUs, companies should protect pricing on core by taking higher price increases on long-tail products that are sold in lower volumes.

2. How can brands win when own-label is gaining traction in the market as customers are trading down? What should companies be focusing on? 

There are many strategies companies should look to adopt to reduce exposure to consumers downtrading. One strategy is to ensure product differentiation in your portfolio. If the value you offer is not distinctive, avoid a price increase. Once a consumer trials a cheaper private label offering, they may never return. Conversely, if, for example, yours is the only gluten-free laundry detergent on the shelf, you can justify a price increase and an experience premium.

Another way to improve the value proposition is to soften the pricing impact. If you have a 5% price increase planned, then improve product offering with a genuine incremental benefit, increasing costs by 2% and pocketing the 3% margin improvement.

We have seen a major overhaul of retailer loyalty programmes recently. However, companies with a scale of multiple brands should evaluate these. Retailer loyalty programmes are a great way to build personalised relationships with consumers at scale, offering personalised experiences and customised offers for future purchases.

Another effective strategy is to have emotive connections with products beyond functional benefits.  Having belief in a brand’s effort for a societal challenge can help soften the value friction associated with pricing. 

Lastly, sharper product-centric effective marketing is key. Invest in marketing campaigns that communicate the unique value proposition and differentiate brands from own-label products. Brands should have a distinctive tone of voice and a clear point of view on why they are better.

3. Driving innovation is one way to create POD, but how do you drive true innovation in an ever-crowded sector?  Adding new flavours or scents to the category rarely drives incremental sales, but usually has a negative effect on the core range. 

Brands that are under pressure to churn out innovation quickly hide behind simple line extensions and limited editions. However, true game-changing innovations require a deep understanding of the consumer, culture and trends. Brands need to innovate and introduce new products that offer unique value and benefits to customers. This can help them stay ahead of the competition and remain relevant in the marketplace. One way to do that is to have methodologies that allow for consumer co-creation where product ideas are developed together. The consumers are involved at every stage of the innovation process, which reduces the risk of poor user experience at launch.

Innovation partnerships externally can also be an unexpected avenue for stumbling upon innovation gold dust.  Collaborate with external partners, such as suppliers, technology providers and universities, to bring new perspectives and ideas into the innovation process.

Lastly, evaluate incorporating disruptive technologies within the innovation ideation process to create new and innovative products. For example, there are already brands using tokenised gated communities on blockchain to co-create new flavours and packaging designs with their most ardent consumer fans.

4. What key marketing initiatives would you be implementing over the next 12 months to help battle the market conditions?

Within FMCG marketing, more often than not, there is a thrust to win new consumers on to the brand. However, times of inflation always test brand loyalty and there needs to be a special focus on engaging with existing consumers. Brands should actively reward people for loyalty by ensuring they are incentivised (e.g. with coupons) to buy in bulk purchases. Value bulk offering also ensures consumers are out of the market for longer, reducing exposure to competitors. Testimonial-style advertising from consumers highlighting why they remained loyal to a brand can also be an effective communication strategy to drive brand advocacy. 

It is also important to have a deeper understanding of the shopper’s mission for the key categories and channels a brand plays in. There is a new world order post-covid, and old shopper insights may not be effective to battle tough market conditions. Brands need to have a better understanding of why shoppers are taking quick trips, have special buy-ins or are pantry-loading. Each of these shopper missions/shopper types will have a different number of basket items and associated value. Understanding each cohort would help gain better insight into their price sensitivity, which will help inform future pricing decisions.