Can Gillard save the Labor brand?

Melbourne Herald Sun, 3 July, 2010.

It sounded more like a marketing convention than political comment. Out of your paper, your telly, your computer came a flood of warnings: "Brand Rudd is terminally damaged", "The Kevin 07 brand has lost its lustre", "Labor's brand-damaging decisions". No wonder the cereal box had to be taken off the shelves and replaced with another one.

Now we have a New! Brighter! More Concentrated! product. But the question is, can it regain market leadership after such a battering?

These days political honeymoons last barely as long as the trip back from the registry office, so Julia Gillard can't rely on that to pull her across the line. Then what are Labor's marketing options for promoting themselves back into public favour, and how can the Libs stop them?

To start with they have to clear the debris off the decks. The resources tax advertising has quickly been hammered into a modified, negotiated package.

The miners knew that there was no way the tax would be dropped - no government was going to allow them to carve shiploads of money out of our soil without paying out a substantial slice. And it was obvious the Libs weren't going to rescue them - Tony Abbott has already started spending the money.

I do wish that political parties would stop decrying government advertising. Every opposition always swears that it will not use public advertising to promote its cause, and every one is revealed a liar once it gets into power.

But we the public need to get real too. We put such ridiculous demands on our politicians, such impossible standards which inevitably dissolve in the face of reality. Like this government coming under the multi-million dollar shock and awe attack of the miners. Of course they were going to dip into the treasury and fight back. Honestly, we act like the girl who believes her boyfriend doesn't have sex on his mind when he suggests a weekend in the country.

Expect to see a "happy schools" campaign to diffuse the coming attacks on Julia Gillard. The public needs to be assured that the benefits of the education spend are greater than a few screw-ups. And it's a weak spot you can bet Tony Abbot will be kicking with gusto because it's one of the few chinks in the PM's armour.

I asked the opinion of the best campaign strategist Labor ever had. Bob Hogg showed John Cain how to win, then repeatedly plotted the electoral victories for Bob Hawke. His last campaign was perhaps the most satisfying - stealing John Howard's seat with his partner Maxine McKew.

"They should concentrate on projecting their programs," said Hogg, "Don't spend time bagging Abbott - Gillard should not be associated with anything negative."


He also warns about jumping in response to opinion polls and "All the stupidity that comes out of Facebook and Twitter," which comes from very small groups and doesn't represent the public.

But Hogg was the one who invented closely managed election polling. Has he changed his mind? "No, you need research to give you information, but you don't let it run your life".

Everyone I speak to makes the same comments: that Kevin Rudd micro-managed obsessively and did not allow air to the others in his party, not the caucus nor even the cabinet. So we can expect Gillard to be much more inclusive and communicative.

This is where advertising can play a part. Not as the main thrust but as embroidery and expansion of the message. The Government needs to tell people what it is thinking and what's going on. And do it before it launches ready-made bills.

President Barak Obama has had a similar up and down ride. Fortunately for him he has no caucus to pull the plug.

But right from the start of his administration he has maintained an important link with any who care to take it. Every Saturday the White House blog loads a video address from the President. It may be just three minutes, or five, but enough to explain one of the week's topics. Not a bad idea, and you don't even have to face the charge of misusing public funds.

The Labor Government was taken by surprise at the ferocity of reaction to its carbon trading backdown. It was too busy watching the Libs and Greens across Parliament's floor and hadn't expected the massive scream that would come from its own supporters.

Mark up another topic for a coming public information campaign - once they have worked out what that information might be.

The Opposition has the hard task of kicking the Government's policies without beating up on a poor little girl. You can expect all kinds of lobby groups to pop up and run campaigns doing the dirty work, secretly guided from Abbott's office. The Government will be using the unions and others in the same way.

As for the Greens, reliable sources say that they have been gathering together their electoral funding from all over the country - they are paid $225 for every vote - and consolidating it into a killer treasure chest. Their target is Lindsey Tanner's vacated seat of Melbourne. Having taken a prime minister's head through their choking of the emissions trading scheme, their next political move is a seat in the Reps.

Now we can expect to see much of that money spent on Melbourne television through lots of very Green ads.

The Prime Minister made a smart political move by declaring that she would not take The Lodge until she won it outright. It gives a focus to the coming campaign ("Let's get Julia into The Lodge!") and an excuse for an early election.

If, this time next year, she's still in power and things get rocky again, she has another card up her sleeve. Australia's equivalent to a royal wedding. After all, that did wonders for Scott and Charlene's ratings.

The mobile phone wars are far from over - they’ve only just begun.

Herald Sun 26 June 2010

The mobile phone wars are hotting up with a new intensity of competition. The reason, of course, is the Apple iPhone. And the question is, has Steve Jobs given the sector a shot of adrenalin - or is he vampiring all of the blood for himself?

You see, last year because of the Greedy Financiers' Cataclysm (GFC) the mobile phone market took a sharp dip. The junk bond traders and barrow boys could no longer afford a new phone a week so sales and turnover declined.

But by this year it has recovered, globally up by 22 per cent in the first quarter, selling nearly 300 million units. The impetus has come from smart phones. After all, who wants to be seen with a dumb phone these days?

In the US it's still Blackberry in the lead with iPhone, the newcomer, hard on their heels. Already between them they have nearly 60 per cent of the market.

Here in Australia, Nokia is still the king. But market research analyst IDC predict that Apple will knock the Fin off its throne by Christmas.

The claim has some credence in the street. One phone store was asked, "Are the iPhones selling well?" Their reply, "We haven't been selling anything else all month." There is a definite swelling momentum at work here that could sweep all before it.

So I wondered, well the other companies aren't dummies, they're hardly going to pack up and go home, they must have some strategies up their sleeves. What's the plan?

Nokia were tight-lipped about Apple’s predicted triumph, but they did declare they have the lion's share of the smartphone market in Australia - without nominating a figure.

Their hopes are resting on the new model N8, to be released October-December. This has more bells and whistles than a theatre organ: 12MP camera, high definition video, web TV - and a big graphic screen just like the iPhone's. They have obviously been burning a lot of midnight oil in Helsinki.

The other big hitters are also slugging away. Google's Android operating system is fuelling new magic from the likes of HTC and Motorola, while Microsoft are about to launch their new Windows Phone 7; their current customers include Samsung and Palm.

Where iPhone has won big-time is in the apps race. Two years ago Blackberry had thousands of apps yet Apple had but a handful. Today Apple claim 150,000 apps while Blackberry App World has 15,000 at the most. What went wrong?

"Blackberry didn't focus on apps, Apple did," explained a BB observer. "Also, they don't do their own above the line advertising, just leave it to the carriers, and Apple swamped them." Not controlling your own advertising is like driving from the back of the truck.

This is where good marketing counts and as I've often said, there's no better marketer than Jobs. He has sold iPhone directly to the public, creating a sucking vortex that the resellers can't ignore.

"Resellers hate iPhone, they don't make money out of it," explained the observer. "Jobs put all their money into marketing and has given the guys in the middle nothing."

Nokia also took a swipe at Apple. "We're not a one size fits all company," sniffed a spokeswoman. "We're able to deliver a range of handsets across different price points to different customers."

As if to prove the point, Nokia recently released its Bicycle Charger Kit, like a bike light generator you plug your phone into. It’s aimed at the Third World, one of the biggest growth markets. In South America or darkest Africa, even if they don't have electricity, they can charge their phones as they ride to work. Try that with an iPhone.

Sometimes you need the Big Ugly Sign

Melbourne Herald Sun 19 June, 2010

One of our busiest business trainers, Brendan Nichols, has a good story he delivers at some of his seminars. It’s called “The Big Ugly Sign Theory”.

He speaks of a block of land he owned in an upmarket area. It had beautiful ocean views and he gave it to a local estate agent to sell. They put up a smart display board and waited for two months, with very little interest.

So Brendan decided to do it himself. He hammered a big sheet of plywood to a pole and hand-painted on it: “Private Sale - Good price - Phone xxxxxxxx now”. As he describes it, “The phone rang off the hook and I sold the land”.

Now this story is painful for those of us who spent much of our lives perfecting the art and craft of advertising creation. We want to the ad to look beautiful, the headline to be clever, for people to comment on what a lovely ad it is.

But I have to admit that this is not always what the product needs. Sometimes you have to tone down. So what’s the theory behind Brendan’s story? Well if you look around you, there’s a forest of real estate signs from the big house agents. Each is bigger and glossier than the last.

What the scrawled sign did was signal that this was a vendor sale. Probably they weren’t very sophisticated, maybe it was a chance to get the block for a cheaper “straight from the farm” price. It was certainly enough to stand out and spark interest.

Of course if everybody had hand-made signs on every sale property, it would then be the fancy billboard that would attract the interest.

It’s a fine call to decide which way to go, which is why you call in a professional - if they’re good, they can make that fine judgement. Do you need the glossy brochure and inserts to say that you are a wealthy, successful company they can trust. Or do you photocopy a sheet of paper to say you are honest, down-to-earth and cheap?

Well if you’re a bank, nobody would believe the second anyway. But the first can work in the right context. Like the retailer I once heard about. His shoe sales were going very slowly so he pulled out several dozen shoes of all types, piled them on a large table near the door, and put up a big sign saying: “Run-out discount sale, check for sizes”.

Soon the table was surrounded by shoppers pulling out shoes, checking them for size - and he soon sold his stock. In the right context, yes it can work.

Another of my clever friends is Bill Shannon who has an agency called Shannon’s Way. A few years ago he mentioned that one of his campaigns was for the Industry Superannuation Funds. “What,” I accused, “don’t tell me you’re responsible for those terrible ads with that wooden Bernie Fraser recommending the investment funds?” The former Reserve Bank Governor might be a clever chap but he ain’t no matinee idol - or exciting presenter.

Bill grinned, “Yeah, that’s us, aren’t they wonderful? They’ve got to be some of the most boring ads on TV - and they work like gang-busters!” Of course. He’s selling people their most important decision - where to invest their life’s savings. They don’t want to give their money to a flashy car-salesman. They will believe someone who is steady, dull and boring. (Sorry Bernie, nothing personal.)

Money is a serious business and we want to believe that the people handling ours are reliable, serious, even boring people.

Come to think of it, that’s also Kevin Rudd’s secret of success. (Sorry Kevin...)

All Blacks are a brain strain

Melbourne Herald Sun 12 June, 2010

A few months ago I helped out at an agency that needed some web-page copy written urgently. The client was a manufacturer of breakfast cereals, the market was New Zealand and the promotion was all about rugby and All Blacks.

So for the few days I had to think like a teenage Kiwi rugby-tragic All Blacks fanatic. It was a strain on the brain cells I can tell you. I never understood rugby even in my own teens.

But in business you often find yourself having to think through the mind of a customer who is not the least bit like you. And you have to be convincing.

This calls for that much overused word “empathy”. It’s different from sympathy. It means feeling what they are feeling, from the inside, taking aboard their likes and dislikes and even prejudices.

A US research firm has been doing a lot of work on this, and has put people into 16 different categories. For example, people like me, in advertising or journalism, they put in a class called “word” people. Probably you would fit in that too.

But these people make up just 18.5 per cent of the population, who do much of the talking to everyone else.

The trouble is that the ads we create tend to appeal to other word people - like the clients and their marketing managers - and maybe don’t strike the right note with the rest of the population.

The company, Xyte Inc, did tests on TV commercials. And found that these ads tend to do disproportionately well with word people.

The company’s CEO, Larry Burns, was not surprised. “This is happening more often than we would like to admit," he said. While agencies are briefed on their target markets, they also want the clients and their own peers to like the ads. “We like to talk. We like word problems. We like to express ourselves. "

But often this is not what appeals to the customers. They don’t want to know how clever you are, they want to know if the product will give them what they want - in tangible, understandable terms.

Another category Xyte calls the "hands". These are people who prefer working with their hands. Their focus is much more immediate and practical. And they make up 30% of the population, a bigger portion than word group. "They like touching things, tangible things, and they often don't like ads that appeal to word people," says Burns.

Anyone who’s raised a child knows that they emerge from the womb hard-wired with certain personality traits, likes and dislikes, that no amount of training or enforcement will change. So it is that a person will be dismal in one environment yet exceptional in another.

A product or advertisement will appeal to one set of people but turn off another. It’s important to know the market for each product - and when you identify those who react against it, you can vary your message accordingly.

This you can only do by studying your audience - your customers. Talking to them and understanding their view of the world. The researchers say they are “segmented via patterns of predictability in media, messaging and purchase”. In plain English, if you know your customers and their core attitudes, this will tell you what to say and where to reach them.

Because the fact is that conventional classifications don’t necessarily work. A middle aged woman and a teenage boy might respond to the same stimulus (“Carn the All Blacks!”) while two adult men might totally disagree with each other on a product or issue (“Magpies!”, “Blues!”).

Sing a song to sell Australia

Melbourne Herald Sun, 5 June 2010

Can you believe that the United States created its first tourism board just a month ago? Before that they have always believed that tourists will come of their own accord, while local states did their own promotions.

But then a survey - by a British company, Oxford Economics no less - concluded that were the yanks to stir themselves, they could attract an additional 1.6 million tourists a year. And an extra $4 billion to their economy. Handy even by US standards.

So finally President Barak Obama signed the Travel Promotion Act - under severe criticism from Republicans of course - and enacted a $10 surcharge on every non-visa visitor to America, as a donation to the cause.

Of course here in Australia we read this with disbelief. Tourism campaigns have been so much of our national life and psyche, for so many years.

Like them or not, we are all aware of the campaigns of the past 30 years, and the fact that they have dragged millions of the curious half way around the world to stare at our kangaroos and empty spaces.

The grandaddy of them all is our favourite grandaddy (well most of us), Paul Hogan in the “Put a shrimp on the barbie” campaign. This Mojo Advertising gem pushed Australia up the US “Dream Destination” research stakes - from number 78 to number one in a matter of months, and it stayed there for 20 years. So don’t say that advertising doesn’t work.

The problem then becomes, how do you follow up on such a huge success? You try to be clever and that isn’t always easy. “Where the bloody hell are you?” was clever but also a major public relations problem. Sure, no publicity is bad publicity as PT Barnum said, and it made us top of the world talkback charts for a while, but a campaign that is banned in several of the key countries is really not very effective.

Baz Luhrman then strode onto the stage with a campaign based around his blockbuster Australia. Alas it didn’t do a huge amount of good for either the movie or the country, but it was a short-term stopgap.

This week Australia launched its new TV campaign and this one is “designed for the next 10 years” says the Tourism Commission with lots of hope and hyperbole.

You’ll see it soon enough. It starts with lone voices, mostly pretty bad, and a piano on the beach (borrowed from New Zealand?). Bit by bit it grows into a catchy anthem, with the usual surf and koalas, Ayers Rock, Kangaroos and helicopter shots. In fact it’s like an amalgam of every tourist ad you’ve ever seen, including barbies and schooners of beer thrust at the lens.

But I can’t be too critical. After all, this is what will bring the punters in. We have to appeal to their dreams and fantasies. Canada’s “Locals Know” campaign has helicopter shots of the Rockies, grizzleys frolicking and snaking snow trails.

South Africa is being clever in its World Cup run-up, with a campaign called “Do the Diski dance”, showing individuals from schoolboy to waitress to footballer - no not singing, but dancing. They’re all bouncing from side to side to a very South African tune and inevitably become a crowd.

Then New Zealand has its 100% New Zealand ads, with lots of helicopters over mountain tops and restaurants in the vineyards. Ah yes, show them what they want to see.

In fact the cleverest ad was one I reported on nearly a year ago, from Australia. That “Best job in the world” campaign that turned a million dollar investment into a hundred million dollars worth of free publicity. But these you only see once in a lifetime.

ray@ebeatty.com

What’s the real cost of your advertising?

Melbourne Herald Sun, 29 May 2010

“I have to promote this little product. Is there any way to get free advertising for it?” At some stage every client asks that question of their agency and you give them the stock reply: “If I knew how to get advertising for free I’d have an endless supply of clients and be much richer than I am.”

The simple fact is that no, there is no free advertising, always it ends up costing you - usually according to the number of people seeing it. That’s why you need to do your sums on a “cost per thousand” basis - how much does each unit of a thousand readers, viewers, listeners, passers-by or whatever, cost?

You’ll sometimes find that a small publication works out more expensive than a big medium like TV or a newspaper.

For example the Wool Knitters’ Monthly may cost $1000 to reach its 5000 readers - 20c a reader. Whereas a TV commercial might cost $10,000 to reach 500,000 viewers. Only two cents a viewer. So which is the better buy?

Now if you are selling ice creams or draught beer, you’ll want as big an audience as possible so obviously the commercial is the way to go. But if you are a wool mill selling hand-knitting yarn, you’re looking for a small specialised market and it may well be worth 20c to reach each granny.

These days advertising is being expected to do a great deal. Think of advertising from your younger days and you’ll remember some department store and job ads in the papers, endless second-hand car commercials on telly. All right I’m exaggerating as usual, but memory does recall a simpler time, doesn’t it?

These days advertising is being expected to carry massive burdens. Like much of the cost of the internet for a start. All these billion-dollar deals involving Google and Microsoft, Times Warner and this paper’s parent News Limited, make almost weekly headlines. Just this month an online publisher called Associated Content was sold to Yahoo! for $110 million. It was founded in 2005 by a Luke Beatty. I must find out if we are related - he may get a visit from his Australian second cousin.

So much money being invested all round, and what’s going to pay for it all? Advertising. So there’s this massive expectation of how much money it’s going to generate, and that’s not forgetting all the myriad current media that still expect to make profits. Free advertising? Forget it.

However there are still cheap ways to do it. I’m frequently amused by a Prahran “fashion” clothing discounter which advertises its sales with placards and sandwich boards. You’ll find bored, desultory students standing on the street corners of Chapel Street holding a sign proclaiming “Huge sale now on!” as they read a book on their next uni assignment.

I’ve often talked with admiration about guerilla campaigns - where a very clever commercial gets hardly any paid TV time but is passed around the web with millions of hits. Or a new and exciting product that generates a tidal wave of chatter on talk sites and blogs, growing legs of its own.

But really this is only an updated version of word-of-mouth. Only now it’s word-of-web. The communication technology has improved immensely, but the product still has to pluck the heart-strings. And I’m sorry to say, however clever you are, it still involves as much luck as winning Tattslotto.

So here’s my advice. Examine your product and its users. Who are they, where would you find them? Spend enough to prepare good, effective, attractive advertising that will touch them. Then dominate your media. Now if the medium is the cooking page of your local paper, be the dominant, most visible ad on the page. If they listen to radio, choose just one of the stations they go for and be one of the biggest advertisers on that station.

In other words, don’t get lost in the also-rans. Too many small companies waste the little budget they have by spreading it too thinly - till it just disappears. It’s more effective to make a couple of big bangs, than a trail of little pops.


ray@ebeatty.com

Supporting brands supports your brand

Melbourne Herald Sun, 22 May 2010

That great ad man (long gone before us), David Ogilvy used to preach a major commandment for his agency. “I always use my clients’ products. This is not toadyism, but elementary good manners.”

His elegant words can be borne by all of us in business and marketing and advertising. In fact I would expand on them. I always use branded products. Because without branding, our clients would crumble and we’d be left cold on the streets.

I see advertising in two streams: bulk and brand.

Bulk marketing is what store chains and supermarkets do when they are promoting a sale. All the products are selected on the lowest price, often as not the stores’ own house brands. The product’s name or brand does not matter, just the price, so the cheapest wins.

The problem with this is it’s a race to the bottom. The manufacturer or importer ends up with a tiny profit mark-up, if any at all. Sometimes they are forced to sell below cost just to recoup some capital.

The rest of the producers are left with nowhere to sell their goods. Do that for too long and you no longer have a business.

Branding is the saviour here. If your product’s brand is so strong that the public demand it, and refuse to buy a home brand alternative, the retailer is forced to stock it or lose the sale.

Branding goes beyond price, it gives the customer a reason to buy.

Our job as marketers is to make people see and desire our products. They must be believed to be the best, with no acceptable plain-wrap alternative. And let’s face it, what a dull world it would be without Ferraris and Zegna - or even Dove soap, Ski yogurt, Kellogg’s All Bran.

So much of our time and effort goes into giving a brand its identity and personality. We need to believe in the concept, and support it ourselves.

What reminded me of this line of thinking was a few days spent with a quite large, successful Australian agency. Their staff were treated lavishly. Big espresso coffee machine, a dozen herb and flavoured teas, chocolates and sweeties, biscuits and big lounge chairs.

But then, looking behind the scenes, I saw crappy generic napkins, toilet paper, home brand milk, little things you wouldn’t notice, but I did. It said that part of them didn’t believe in what they were doing.

Now I’m sure that the management team didn’t run out to buy the dunny rolls. But someone amongst them should have pointed out to the staff that all their livelihoods depended on the world believing that branded products were superior.

Both at work and at home my insistence on branding was always well known. Plain wrap products were not allowed. If we didn’t look after our livelihood, how could we expect the public to buy our goods?

Because you are reading this column I assume you are involved in business, and somewhere in the process there is a product or service to sell. You’ve put a lot of effort into making it distinctive, superior, with its own personality. This is branding, even without bright colours or fancy logos.

Just as you hate somebody buying an inferior competitive product purely on price, you need to set a standard. That means buying the best - the branded - product, instead of racing to the bottom.

© Ray Beatty
ray@ebeatty.com

Why won't companies talk to their customers?

This week's Marketeer: Herald Sun, 15 May 2010

It started when I discovered that Big Pond were blocking my emails. You see I send regular newsletters to a few hundred of my clients and prospects - as any good business should. But every time my email program sent 20 out, the rest failed.

When I investigated, it turned out that Big Pond, my provider, does not allow you to send out more than about 20 emails every 10 minutes. So I’d have to continually re-start the program, 20 emails at a time.

I called their offices to see if there was any way around this problem - and ended up in Manila, I think. I was politely told, “We cannot change that, it is policy.”

So let’s tackle the policy. “I want to speak with Big Pond Management,” I said. “Sorry sir but you can’t speak to management,” the supervisor replied.

After a couple of hours it was clear that there was no way I could talk to someone in Big Pond about their policy - because their policy is not to talk to customers.

Then I wanted to ask my branch of the NAB about a new cheque book. I plunged into the world of cloying robots: “Thank you for your call” and “To check your balance press 2" and dozens of other menu choices, through voice recognition which could not recognise: “I want to speak to my branch”.

Somehow after five minutes I reached a human. And she found me in a surly mood. I think I scared her into putting me through. The branch conversation was great - the teller knew me, checked my account, arranged for the cheque book. I asked if she could save all this angst and just give me their phone number. “I’m sorry Mr Beatty, we can’t give our number out.” “Why not?” “It’s policy.”

I decided to survey just how many companies refuse to talk to their customers. With Woolworths it took a lot of robot barriers but I finally found a human. No she could not put me through to the marketing manager. Nor to anyone in the management team.

I deliberately did not say I was from the press. I wanted them to think I was a customer who needed to talk to someone in management. I discovered the marketing manager’s name is Lew Dunkeley. Could I speak to him or his secretary? “Sorry sir, policies and procedures do not allow me to put you through.” Why not? “Because you are a customer.”

I tried other companies with varying success. But nowhere could I reach anyone senior - except, actually, Intel. They had a receptionist who put me through to their Melbourne manager.

At Fosters I reached a Brand Communications Manager. What did that mean? “Well it’s mostly PR but from time to time I get customer relations calls from the punters.”

Qantas passed me as far as the marketing manager’s secretary, while Telstra has a “Contact the office of the CEO” email link.

I could go on but these are good examples of what happens when you try to talk with corporate managers. Yes they are busy men and women and can’t be bothered by every Tom or Tammy who wants to bend their ears. But building corporate walls is not an answer.

This lack of contact leaves them just talking to each other up on the 20th floor, and a growth of myths and theories instead of reality. It’s a recipe for big errors and monumental incompetence.

I’ve long thought it would be a good corporate habit for executives to take just one short call a day, at random, from the public ringing in. Just to remind them that customers are real people - and that they would not have a job without them.

Ray@ebeatty.com

Blogs Away!

Welcome to my blog!

Despite 27 years on computers, I've resisted blogs and tweets, muttering "I haven't got time". But finally my mate Winston Marsh shamed me into it: "Come on Ray, this is 2010, you've got to keep up with where the world's going!"

So I thought, OK, turn over a new page - I'm gonna Blog and Tweet and Twitter and get out into the world that way.

Mostly I will post some of the hundreds of weekly columns I have written as The Marketeer in the Melbourne Herald Sun. It has a million and a half readers every day but maybe you are not one of them. So here's your chance to catch up with me if ever you wish.

Check the title list on the left and pick one that takes your fancy.

* Cheers - Ray *

The factory back door is now huge business

Melbourne Herald Sun 8th May, 2010

Sometimes I'm a bit slow at finding things, despite my pretence to expertise in marketing and advertising. So it was that just last weekend I visited my first DFO.

In case you're one of the four people out of today's million and a half readers who hasn't yet heard of them, they are Direct Factor Outlets. And they are unbelievably huge.

If you've been around long enough to remember a time when there were factories manufacturing goods in Melbourne, you'll remember factory outlets. Round the back of the shoe or clothing or leather factory there would be a small inconspicuous door leading to a large room stocked with racks of the factory's produce.

If you had a friend who worked there or had some other connection, you could buy the goods at a wholesale price. But it had to be secret because the whole structure of retail price maintenance depended on goods only being available through proper retail stores.

Well that was long before the dismemberment of retail price maintenance, before huge monopolistic supermarket and retail chains destroyed the normal give and take of manufacture and trade, and before Australian industry shut up shop and moved to China.

The modern DFOs - huge complexes of 20,000 sqm and with 100 or more stores inside - claim to be the modern factory back door. But once you get inside you find a very familiar shopping mall, not as classy as Chadstone but with many of the same retailers.

Yes, all the usual suspects - Just Jeans, Country Road, Adairs, Boost Juice, Matchbox - are there. So is there any difference?

They claim that their goods are seconds, display merchandise and end of season goods. Some of them are, but most of them are retail products bought to sell at discounted prices. It's like the department stores pretending that their Boxing Day sales are just goods that didn't sell at Christmas, even as you see the containers unloading at the back gate.

DFOs as we know them started in the US and the first purpose-built Australian one arrived in 1997, at Moorabbin. It evaded state and municipal planning laws - which would have stopped such a big centre being built so close to Southland - by using Federal land. It comes under Moorabbin Airport jurisdiction, which is why most of these centres are built near airports.

DFO is the brain child of two very rich, very clever men. David Goldberger and David Wieland first made their pile nearly 40 years ago with Solo petrol stations. These have now evolved into Liberty Oil. The oil business bought the two entrepreneurs identical mansions next to each other in Toorak. They used their wealth to generate even more when they formed Austexx, owner of the biggest chain, DFO.

This financial muscle has been necessary because their development has been fought every step of the way, particularly by Frank Lowy's Westfield Group, and the state governments in Queensland, NSW and Tasmania.

Do they actually harm other traders' business? Well certainly seeing the crowds milling through Moorabbin last weekend clutching armfuls of large shopping bags, they cast doubt on the retail recession.

Their estimated penetration is $1 billion, or 0.5 per cent of the market. However in the clothing and softgoods market it's more like 4.5 per cent.

I asked a friend, a long-time Chapel St retailer, if his business had been affected by them. "No, they have more affect on the outer suburbs than down here, where sales are more fashion conscious." But he'd heard that the Spencer Street Station outlet had hurt some City stores.

Not Myer though: "People shop at Myer for the new season's fashions. They don't get that at factory outlets," said Myer spokesman John Gillman.

Well my new sneakers don't have a fancy brand name, but they're very comfortable and boy they were incredibly cheap.

Ray@ebeatty.com

China rules through our Cargo Cult addiction

Melbourne Herald Sun, 3rd January 2010

On New Year 2008 I described the state of world business as “Cargo Cult Economics”. Remember those natives of war-time New Guinea who believed that wealth was delivered by the gods? The planes would always land, bringing them food, clothing, machines - it was magic, they came out of thin air.

But once the war was over, the goods stopped coming. So the natives made gifts to appease the gods. They built aeroplanes out of straw and copra, radios out of coconuts, control towers out of bamboo poles. They believed that the cargo would always come.

So in our cities and Wall Street we believed that income would continue to grow, share prices would never fall, houses were solid investments.

By New Year 2009 the economic tsunami had demonstrated the flimsiness of our beliefs. Superannuation was supposed to be rock solid but it dissolved like sand. Banks crashed. Share prices crumbled, much of the world went into recession. At last we could see through all these financial facades and concentrate on building something real.

But wait a minute - here’s New Year 2010 and what do we see? All those coconut and banana structures are being rebuilt. Everybody is triumphant at having successfully saved our sacred cargo cult. The control towers are still built of bamboo and straw, the radar is a spinning gourd shell.

But the natives are living well. We have ample supplies of any goods we fancy. Beautifully made and very cheap, kindly provided by the hard working gods from Beijing.

These generous souls also allow us to continue our extravagant lifestyle, by giving us money whenever we need it. Currently America owes China about a trillion dollars for government securities alone. Whenever Uncle Sam needs a buck, Uncle Hu Jintao delivers.

Then last month we saw vividly where it was leading. China decided it did not want to be restricted by a Copenhagen treaty. So it told Obama, Brown, Sarkozy, Merkel, Rudd and the rest of our leaders to shut up and sign what it dictated. The world was going to play by China’s rules or not at all. After some vain protests, our leaders meekly signed the filleted accord.

China learned the lessons of world diplomacy from the best teachers. The British Empire fought the Opium Wars between 1839 and 1860 so they could feed the Chinese people constant supplies of opium. We knew an addicted people was in our power.

Well now the West are the addicts. Dependent on China for their tellies, iPods, clothing and - soon - cars. We’re also addicted to money. Where do you think all these billions spent on financial bail-out schemes will come from, ultimately? More loans from Uncle Hu?

Those of us in marketing are just the front-end of the process. We sell the products, wherever they were made. We build the straw and bamboo store fronts, and stand there handing out the toys and gadgets made afar. We don’t create the goods, our tools are smoke and mirrors.

The world has very little time to get real. We’ll never cure the addiction so at least let’s make more of the dope ourselves. Like adding value to the minerals we’re feeding into the furnaces of Asia’s industry.

Trouble is, our politicians have seen what happens to those who try to expose the cargo cult or preach reality. They are ripped apart by a raging mob. (Here we call this an election.)

Whatever persuasion you are, it’s time to stop berating our politicians and start encouraging them to be brave. It’s going to take some tough decisions if we’re to break the addiction of cargo cult economics. Happy New Year.

Ray@ebeatty.com

3D is coming to an armchair near you!

Melbourne Herald Sun, 9th January 2010

As a thrill junkie who nevertheless likes his adventures to be comfortable and safe, I determined to see the movie Avatar in 3-D, on the huge IMAX screen.

It was the right choice. Even if the story was rather predictable, the visual effects were stunning, keeping me on the edge of my seat for over two hours. Now this is the first 3-D I’ve seen in over 30 years and I’ve got to tell you it has come a long way from the old red and green plastic glasses.

Meanwhile, across the globe in Las Vegas, the world’s biggest gadget fair, the Consumer Electronics Show, is running this weekend. And guess what their hottest item is? Yup, 3-D TV. All the manufacturers are working round the clock to produce the newest, flashiest three-dimensional tellies.

Of course the first thing you’ll think is, "Oh gawd, does that mean that my brand-new $6000 digital TV is going to be obsolete in a couple of years?" Well, hate to be the one who tells you but... yes.

That's the way of marketing. Always have something new and irresistible waiting in the wings ready to create a frenzied wave of desire and buying around the world.

Sony already has a plan which forecasts that by the end of the 2012-2013 financial year, 3-D TVs will make up between 30 and 50 percent of the sets it sells. The Blu-ray Disc Association is working on a 3-D disc standard, plus Sony plans to add 3-D to PlayStation 3.

As always the other big manufacturers like Panasonic and Mitsubishi are hot in the race, while LG expects to sell 40,000 3-D-enabled sets worldwide this year.

You'll notice that there are a couple of marketing essentials missing here. Like product and distribution. Where are all these 3-D movies going to come from?

Here again we see a flurry of activity. Everywhere, that is, except Australia.

In the US there are two cable networks planned for this year. One is ESDN, the other is a collaboration between Sony, IMAX and Discovery. In the UK, Sky has announced plans for its own channel. Australia, having just given birth to umpteen new free to air channels, has no publicly-announced plans for 3-D here. You'll just have to watch the discs.

But before you rush out to order a set, think on this. They still haven't agreed on a standard, or even a system, yet. In fact there are four ways to do it, each with long names I won't burden you with, but basically it comes down to what kind of glasses you'll need, or whether you'll need glasses at all.

The final question I know you're bursting to ask is: what about the commercials? How are we going to see house-proud mum hanging up the washing in three dimensions?

The bad news for marketers is that the cost of making commercials in 3-D will jump between ten and twenty per cent, according to a US estimate. In fact last year Pepsi ran a 3-D ad in the Super Bowl break. But before that they had to distribute 125 million pairs of glasses at retail outlets. That's a lot of money for one commercial, I can't see any Australian company doing it.

So you can relax about forking out for the technology in the near future, you might like to put a piggy bank next to your TV and start saving for the day when it will be needed. Because believe me, 3-D is coming for you, ready or not.


ray@ebeatty.com

END

If dope was legal what would it look like?

Not published. 11 November 2009

I’m asking this question in the business pages, not the news or editorial sections, because I want to discuss this in a cool, dispassionate way rather than with the usual hysteria that surrounds the topic.

There is an increasing volume of opinion that the ‘war on drugs’ has failed. In 14 US states cannabis can be legally sold for ‘medicinal purposes’. The White House recently told the Justice Department not to prosecute users or suppliers of this ‘legal’ pot.

Last month at the Sydney Opera House the Festival of Dangerous Ideas heard speaker after speaker declare that drug prohibition was not working and would ultimately collapse, just like Alcohol Prohibition in the US from 1920 to 1933.

We have to ask, what can we do to rid ourselves of a thousand Al Capones from Mexico and Colombia and every US city, from Afghanistan to the Golden Triangle, from Moscow to Griffiths? Well history has already told us that there will only be one answer to the drugs problem. Tax it.

Just as the end of prohibition saw the re-emergence of the huge American alcohol industry, will we see the drug industry boom world-wide? Will this be the business bonanza of the century, as the billions of illicit dollars become legal trading?

So how would this legal dope work? Well there are plenty of precedents. Australians could buy opium from the local shop until 1906, and heroin was legal here until 1963. A registered heroin addict can already get his methadone at a suburban chemist.

In the UK heroin was supplied under the National Health until the early 1970s, and drug crimes rates were extremely low. Over the years several commissions into drug use have pointed to it as a health rather than a policing problem. Most addicts and smugglers don’t start life as crooks.

All the billions we could save from the relentless crime fighting would more than pay for a network of care centres and rehabilitation clinics.

Tobacco companies already control and collect taxes on vast quantities of their restricted drugs, cigarettes. They would be the obvious distributors of commercially prepared cannabis. Many think they already have the plans in their contingency drawers.

Of course the branding would be discreet, the distribution carefully controlled, with lots of warnings on the packs. But nothing you haven’t seen before. Already the cafes of Amsterdam have their shelves stacked with glass jars of premium blends and the connoisseurs can compare flavour and THC kick without worrying about gangsters or police raids.

As for production, opium and heroin are easy - we already have the globe’s biggest Golden Triangle right here, called Tasmania. We produce 50% of the world’s concentrated poppy straw.

GlaxoSmithKline and Johnson & Johnson, the two multi-national pharmaceutical giants, already have this trade well sewn up. If you want the biggest opiate factory on earth, look no further than our own Port Fairy.

This rather puts us in the box seat, doesn’t it? The 21st century equivalent of the Sheep’s Back could be the Drug Flood.

South America is well set-up for the cocain business, and once the legal taxes started flowing in, it would give Colombia and Peru the sort of advantage that Venezuela has received from its off-shore oil wells.

This is not a spoof, I’m being quite serious here. If - when - the whole drug prohibition industry dies, probably with a whimper rather than a bang, it will be a world-wide economic shock wave. All those unemployed police, empty jails, impoverished gangsters.

And for some it will be a major business opportunity. So think about it.

ray@ebeatty.com

Tell the world - did you make love this morning?

Melbourne Herald Sun 24th October, 2009

Did you make love this morning? Did your neighbour? Maybe the answer is on your computer. Visit the web site ijustmadelove.com and you’ll find thousands of people from Vladivostok to Antarctica, Woi Woi to Warsaw proudly proclaiming the night’s score. As I write this the site’s counter has clicked off over 50,000 reports.

This is as graphic a demonstration as I can find of how to start a new business venture on the Web. A lateral combination of imagination, psychology, technology and entrepreneurship.

Already the site is carrying the usual “call me” phone sex ads, but with the rate it is growing, before long the big advertisers will take over. After all it’s aimed at the right market to make it perfect for beer ads, confectionery, movies, not to mention contraception. No, whoever came up with the idea, I think you’re looking at another overnight millionaire.

Think it’s all too flimsy? Look at Twitter. The first tweet went out in March 2006. Just this month it was valued at $US1 billion. And it still doesn’t have a business plan - nobody has yet figured out how to make a cent out of it. However if you had any of Twitter’s original shares, they have increased in value 240,000 per cent.

But there’s good reason too. In Britain it was recently announced that on-line advertising had overtaken TV, in billings, for the first time. People are positioning themselves in a rapidly changing world. This has been pushed along by the global recession. Where advertisers in the US and UK have cut down on their TV spend, they have looked for cheaper alternatives and found that on-line was effective.

So there is a continuous hunt to find the next big thing and we are seeing lots of smart new businesses on the internet.

An example I found was TailoredMusic.com. This is a company formed by a group of musicians in Canada. They will write and record your very own love song, for around $200. They provide a number of ready-written songs and you can edit in the person’s name, an event, a sentiment - and it will all be professionally recorded and emailed to you as an MP3.

Imagine how delighted your sweetheart would be if at your favourite restaurant you plugged a speaker on your iPod, fell to your knees and played a love song especially for her! Well, you get the idea - it’s not for everyone.

The enterprise bug has even bitten closer to home. My wife and stepdaughter have been planning, writing and spending hours with web designers all year and early next month will launch ALittleColour.com, a colour consultant site for children. Sort of mini Trinny and kinder Suzannah.

You email or Facebook some photos of your little darlings which will be professionally analysed, and in return you’ll be given a report on the child’s colouring, a swatch book of their ideal colours, and advice on clothes and dressing. All for under $90. They’re highly excited as the launch approaches, all I ask is that when the millions start rolling in they don’t forget old Dad in the corner here.

Of course of the millions of new enterprises being launched every year, only a very small percentage will hit the jackpot. But a lot of them will supply a steady income flow for the operators. There’s the advantage of a world-wide catchment area for your customers. But the disadvantage of a world-wide source of competitors. So often the winner is the one who thought of it first, launched it big, and hung on for dear life.

Now, what was it you were doing this morning?

ray@ebeatty.com

You can never beat City Hall - or can you?

Melbourne Herald Sun 1st May, 2010

At the start of my working life, as a cadet reporter, purgatory was weeks and months covering the magistrate’s court. Forget the drama of Law and Order, a petty courtroom is a sleep-inducing atmosphere.

But every few weeks things would liven up when someone would strenuously defend themselves against a speeding charge or parking offence or shoplifting indiscretion. They would roll out well rehearsed arguments, drawings, photographs, medical records sometimes even lawyers to prove their case. And you watched with detached compassion because you knew they didn’t have a snowball in hell’s chance of getting off.

In three years of weekly courts I can count on one hand those who succeeded. It rammed home a lesson to me. As the saying goes, ‘You can’t fight city hall”. Or the magistrates and police, or the tax man. Not unless you’re very persistent and very well heeled.

A Melbourne food importer, Alfred Abbatangelo, learned this the hard way in the Federal Court last month. The attempt to persuade the tax office that Perfetto Mini Ciabatte are bread and not crackers - and therefore free of GST - will cost him an estimated million bucks, not to mention six years of his life plodding through the courts. “No,” was the verdict, “It’s crisp, it snaps, it’s a cracker."

A friend of mine discovered this six years ago. Andre Scibor-Kaminski is a smart IT man who developed a phone directory on CD called DtMS. The one disk had the every phone and every business in Australia, instantly searchable. Groups could be collected, mail-outs organised, reversed searches from a number to a name. It was far superior to anything on offer from Telstra or Sensis today.

But Telstra sued Andre for breach of copyright. The rebuttal was: how can you copyright a number? It’s not an original work of authorship or art. He lost the case, despite some heavyweight legal opinion in his favour. He appealed and lost again and finally after five years the money ran out and the company went into liquidation.

Yes, size does matter. And so do deep pockets. There again, even city hall can’t fight Spring Street. In recent months we have seen Stonnington and Yarra councils battling the Victorian Government against extended clearways on busy shopping streets.

The money hasn’t extended to the millions yet, but certainly hundreds of thousands have gone in advertising, legal fees and lost parking-fine revenue. And you just know that in the end, might shall prevail. Just as it did when the Victorian Government battled the Australian Government over hospitals.

Now you know I don’t like to despair in this column. So there is a chink of light. It is possible to beat city hall, sometimes. Remember Geelong’s sanga-gate.

Forgotten already? It was only a year ago when Mick Van Beek and Peter Anderson were sacked by Geelong Council because they used some left-over asphalt to fill a couple of pot-holes at the Leopold Sportsmans Club. Their bribe for this “theft” was a steak sandwich in the clubroom.

Well this is where you put the media to good use. The story got out and suddenly hundreds of people stormed the city hall, encouraged by the news crews and, it seemed, half the world’s media. Peter and Mick, with his beard and beanie, gained their fifteen minutes of fame in one night.

The Australian Services Union leaped in, closely followed by lawyers and politicians. And finally the council caved in and reinstated the men, city hall was beat.

But don’t expect that to happen next time you get a parking fine and are positive you did not exceed the permitted time. I can tell you right now, you ain’t got a snowball’s.

ray@ebeatty.com

To succeed, match your Madonnas with your virgins

Melbourne Herald Sun, 15th December 2009

In a world of stars and celebrities, spare a thought for the producers - the hard-working business men and women, maybe a bit like you, who have the courage to take risks and invest their meagre funds on someone’s talent.

Take Seymour Stein. This legendary record producer was in a hospital bed when he heard some Madonna demos and signed her on the spot, in 1983. A year later he risked accusations of heresy by pairing Madonna with a new song Like a Virgin. The rest is history.

Stock Aitken and Waterman were a production team in London. The Neighbours “wedding” of Kylie Minogue and Jason Donovan had been watched by half of Britain in 1987. The Aussie girl had a good voice and they thought they could put her through their “hit factory” and make a buck or two.

But when she arrived they had forgotten she was coming. While she sat in the waiting room they wrote a song that she could immediately record. I Should Be So Lucky became a number one hit around the world. And the rest is...

Perhaps genius is coming up with the smart idea at just the time when it is needed, so it’s pretty close to luck. In the history of music and theatre, luck has been ever-present.

In 1786 the hottest property on the European stage was playwright Beaumarchais. When Mozart offered the Imperial Theatre a musical of his most popular play, they snapped it up bidding 450 florins - three times the annual wage Mozart used to get back in Salzburg. The opera Marriage of Figaro became a big hit.

Seventy years later the hottest stage play was The Lady of the Camelias by Alexandre Dumas. Composer Guiseppe Verdi snapped up the rights to make a musical. “We’ll call it The Prostitute, that’ll bring the punters in.” Sure enough La Traviata became one of the most successful operas of all time.

The point is, great art is often the result of good business. History glosses over the fact that these geniuses were businessmen, just like Cameron Mackintosh producing Andrew Lloyd Webber’s Phantom of the Opera, which has become the most successful entertainment project in history. It’s still running in New York and London 24 years later.

The producer’s job is to find a great idea and develop it with the most talented people he can find. Sometimes it means taking a risk - usually because he can’t afford the price of the established people in the field. Then he applies an obsessive demand for the very best production values.

My personal experience of this was back in 1979 in a small production studio in Elsternwick where I made commercials. In the next suite a curly-haired doctor worked obsessively over the film editing desk cutting together a movie he was making for a ridiculously small budget.

But he gathered in the most talented actors and crew in Australia - the young ones he could afford - and cast an unknown lead called Mel Gibson. We watched this movie coming together over his shoulders and were increasingly impressed - it was much more intelligent and better made than the shlock we had imagined.

When Mad Max was released later that year it took Australia by storm, and then the world box office to the tune of $100 million. Miller was not just the director but the producer, along with his mate Byron Kennedy. Which just goes to show you how important a brave producer is in making history.

ray@ebeatty.com

Melbourne family creating a new Afghanistan

Herald Sun 24 April, 2010

A Melbourne family is fighting the Afghanistan war - through advertising. That's right. Galloping heroes, cuddly babies, billboards, press, TV and radio commercials, the whole armoury of a modern advertising campaign, without a shot being fired.

The ads are the idea of the US Army's Lt Col Allen McCormick, chief of information operations in eastern Afghanistan. He figured that if you want to create peace, people must first know what peace looks like and understand why what the Taliban are doing is wrong.

45 per cent of the population is under 15, so they have never known what a normal world - where nobody blows you up, summarily shoots you or terrorises you - looks like. McCormick, a Proctor & Gamble marketer back in civvy street, decided to try the kind of advertising that had never been seen in the country before. But who could do it?

Advertising agencies are thin on the ground there, but one stood out. Lapis was given the job, as a core player in Afghanistan's nascent media. It's part of the Moby Group, the local phenomenon owned by a Melbourne family.

Now this is a great story in itself. The Mohseni family were well settled here when, in 2002, they decided they had to help their newly-emerging homeland. But they were not ordinary returnees, they were very smart business people.

Saad Mohseni was an investment banker, Zaid a lawyer, and Jahid an administrator. Then there was their sister, Wajma, a marketer. (It just so happens she's also my daughter's best friend, which is how come I'm so familiar with this story.) They determined to save Afghanistan not through hand-outs but through business, specifically the media which had been destroyed by the Taliban.

Within months they created the country's most popular radio station - when music had been banned for five years, but 45 per cent of the population is under 15. Their mixture of Indian and Iranian film music and selective Western pop was snapped up.

In 2004 they opened Tolo TV, the nation's first independent TV station. They had to produce their own programs including a hugely successful daily soap opera, news, current affairs, even a comedy show that lampoons their self-important politicians.

They had to develop an Afghan music industry, with a studio and record company, and produce countless video clips. They set up a film company that has also been involved in international movies like The Kite Runner.

Most famously they created Afghan Star, a TV series based on Australian Star. Thousands of young hopeful singers paraded before judges and were gonged out, just like here. But they also had to learn not to make a fuss or come back later with guns for revenge, if they were told how bad they were.

The final contest of four runners-up was a nail-biter watched by all Afghanistan (including Taliban). It was filmed as a documentary which won major prizes at the Sundance Movie Festival.

The Mohsenis continue to grow in influence - and wealth - though they are constantly at loggerheads with the government and parliament, who hate them nearly as much as the Taliban do. Hopefully the advertising campaign and the closer ties with the US military will give them some muscular friends.

As for Wajma, she is the Moby Group's Marketing Director, but recently moved her operations to the group's huge Dubai offices. We heaved a sigh of relief at this - for years we worried about her, a high-profile target for enemies on all sides of the political spectrum. For her the best times are when she visits Australia. No guns, no bodyguards, no armoured cars. There are benefits in a quiet life.

It's all in the image

Melbourne Herald Sun 24th April 2010

We all have an image. It's the picture we present to the world that says "this is who I am" or "this is what my company is". We are each aware of it, we can all see it, but in fact it is as insubstantial as the photographic dye on a film, and as fragile as crystal.

In recent weeks we have seen a vivid demonstration of the lightness of image. A few months ago Christine Nixon was only a short distance behind Mary McKillop in the saintship stakes, retired with honour after having taken a broom to Victoria's musty police service, and welcomed as Chair of the Bushfire Reconstruction Authority.

Now a haircut and a pub dinner later and she's suddenly painted as uncaring, incompetent and unfit. Can this be the same, smart, chubby blonde lady?

Or take Rio Tinto, one of the saviours of Australia's wealth through the global economic crisis. But after the Chinese bribery trials and the stories that are now leaking out, the halo is starting to slip.

We can all immediately recognise image problems. Qantas is still the safest airline in the world but if they don't get their maintenance under control they're in trouble. Nowadays a drop in tyre pressure is enough to put them on the front pages.

Tiger Woods has had the worst winter of his life, while even the Pope is facing a horror trip.

So what is this image? I prefer to call it "a climate of opinion," what the world thinks of you. It's like the weather and as insubstantial and difficult to control. Companies and celebrities love to bask in the sunshine of good opinion but it only takes one cloud to bring on the storms and the chills.

Also in this land of ours we have the tall poppy syndrome. Here you can be hugely successful and still be given a negative image.

Think of the highest-grossing Australian film of all time. Mad Max? Australia? Nope - Crocodile Dundee. Paul Hogan redefined the Australian image and they've been chopping at his stem and roots ever since.

Derryn Hinch has a unique position as both cutter and victim - how many times has he been chopped? But he has been smart enough to turn this public churn into his unique image.

In politics image is everything, so politicians are most vulnerable. They even face a paid, dedicated team of image smashers known as The Opposition, closely helped by the media, forever looking for tomorrow's headline or tonight's news bulletin.

Bill Clinton somehow survived eight years in power with daily assaults on his image. Peter Garrett has discovered the icy waters of Parliament after years in the warm bath of fame and adulation. A decade earlier Cheryl Kernot had her image smashed after she jumped from the Democrats to Labor.

Business has many landmines. Look at Toyota with its tidal wave of recalls and problems - you have to wonder how even such a strong company can recreate its image of a solid, perfectly reliable car.

In the US the Domino's Pizza chain was brought low when two kitchen staff made a YouTube video of pizza being prepared as they messed around throwing food on the floor and up a nose. Domino's quality ratings halved overnight.

How can you protect yourself under such an assault? It's like a fire - if you can't put it out at least try to contain it. And the worst thing you can do to your image is to pretend the problem does not exist.

If you're spending squillions on a big public relations company retainer, you'll find that all they can really do is hold your hand and whisper the following advice:

Identify the problem and respond quickly - don't sit on it and hope it will go away. If you were my client I'd grill you for the truth, the whole truth. There's no gain in deceiving your doctor or your PR man.

You give the story as good a spin as possible: "As soon as the toxic leak was discovered the company put its emergency plan into operation."

Ideally, give the communications task to your top person - the CEO or chairman. The media will want to talk to them anyway.

Whatever you do, don't lie. It will always come out in the end. (Remember "I did not have sex with that woman"?).

Better to tell the whole truth however unpalatable. Say "He was drunk and in bed with his sister" in one mouthful, rather than waiting for the media to pull it out like teeth, headline by headline. "He was drunk!" Then "He was in bed!" and another few days later "With his sister!" Instead of one mouthful for the rabid dogs, you turned it into an ongoing feast.

This was the mistake Christine Nixon made. Instead of declaring all the facts of that fateful Saturday and copping one slap, she allowed it to be slowly extracted, so it became a string of front pages and news bulletins, and weeks of droning talkback hypocrisy.

So after the smoke has cleared, can a tarnished image be repolished? Well yes - especially if you have money.

Alfred Nobel invented dynamite and helped blow up millions around the world in last century's wars. But judicious placement of his legacy has made his name the world standard of peace.

Locally we have a fascinating study of image rebuilding. Steve Vizard was the darling of both the public and the establishment. Then came the issue of his share trading while a director of Telstra. Controversy exploded, and with it his image.

He is still midway through a 10-year ban from the corporate world but we are seeing his supreme media skills at work as he slowly claws his way back. Selfless donations by his foundation. Art works lent to the state. And now the resurfacing of his human face, and humour, on new radio station MTR.

There's a lot of work involved in piecing together the shattered crystal of a broken image.

Sad operas make my guyliner run

Melbourne Herald Sun, Wednesday April 7 2010

If a cosmetics maker has a dream of heaven, it's the day when men take up the use of make-up and lotions in the same volumes as women.

And they have certainly tried. Eight years ago they thought they had cracked it with the evolution of the 'metrosexual' male. You might recall that he was the young, affluent city dweller who spent all his cash and attention on himself, his body and his clothes. David Beckham was the great idol of the breed.

Such was the influence of this movement that no less than Mark Latham, in his vitriolic autobiography, claimed this country was in decline: "Australian mates and good blokes have been replaced by nervous wrecks, metrosexual knobs and tossbags," he cried.

But when the cosmetic moguls awoke they found that the world had not followed their dreams. Aussie men are more resistant to the trend than their European counterparts.

In the US, Unilever are bringing out a new Dove range of men's products, personal wash, hair care and deodorants, called Dove Men+Care. In Australia, however, only the deodorant part is coming. Is the Australian male shy about his grooming?

Not according to Melbourne success, Natio. This company is minuscule compared to its rivals, but it has jumped to number one men's skincare brand in David Jones. What do they know that the others don't?

"It was our product team came up with the idea of a men's range," said their Managing Director Max Ross. "I thought it wouldn't work because we're in female products, but I'm pleased to say they proved me wrong."

Their men's face creams jumped off the chemists' shelves far more quickly than expected. "We found out what was happening - it was women buying the products for their men, to stop them pinching their expensive face creams."

They have since expanded the men's range to 16 products including lip balm, moisturiser, eye cream and body wash. How far can they take it? Well Ruff hears that their skin bronzer is also being pinched in the bathroom, so that may be the next in line.

Then there's the fringe. In America, singing star Adam Lambert is planning to launch his own range of cosmetics for men. Foremost will be guyliner - eye liner for men, more popular on the rock arena stage than in the local high street. But also foundation, concealer, shadow, mascara, lip gloss, and nail polish, said an announcement last month.

Lambert is very publicly gay so maybe it's easy to dismiss this as a "gay thing" that doesn't touch the mainstream. But then Max Ross confided that one of the important features in the success of Natio was its popularity in the gay community. From there it rapidly spread into the mainstream - as do so many fashions and attitudes.

But don't worry fellas, it will be a while before you can't go out without your lippy and a touch of blush. This revolution is moving at glacial pace.

In Australia's $1 billion cosmetics market, a mere seven per cent is classified as male grooming. "Cosmetics is a mature industry," explained IBIS Research General Manager Rob Bryant. "Companies are looking for areas of innovation, and men's products are an obvious target."

So expect more attention to be paid to men's skin and crow's feet, from the cosmetic companies' advertising, but particularly from their women.

As for me - the opera season starts this month. But I think I'll go to opening night without my guyliner.

ray@ebeatty.com

Minding the minders - professional services firms

Melbourne Herald Sun 27 March 2010

When the world is in turmoil, who minds out for the minders? All those experts that companies depend on, where do they go when business slows to a crawl?

They call themselves the Professional Service Firms. The accountants, lawyers, engineers and architects. They depend on a thriving economy too. Though many of them will always make a good quid, whichever way the wind blows.

Futurologist Phil Ruthven's firm IBIS has done a study on these PSFs. It shows that behind the dark suits and grey bookcases there's a revolution going on.

Take the accountants. For two years now they have seen revenue falling. But not by much. Like the banks, the Big Four (Deloitts, KPMG, Ernst & Young, PWC) have taken the opportunity to do a bit of cherry picking.

They have snapped up smaller rivals with strategic portfolios, and used their ample war-chests to buy into new markets like Brazil, Russia, India and China.

Of course, whether you're winning or losing, the accountant will always have a way to make money out of you. Companies that are struggling to stay afloat need them. And this helps to make up for the dip in other business areas, managing takeovers and new-company launches.

As a bonus, they have been given a flood of business from new requirements in the areas of environment, terrorism and fraud - these are guaranteed growth markets.

Law firms of course share this bonanza. Though business slowed in 2009, the demand for lawyers continues to grow. The post-Copenhagen world is creating a whole new 'green' market, regardless of politicians' waffling; and the economic scares have seen flourishing business in crime and divorces.

There are professions that have felt the pain more than others. Take the engineers. Suddenly hundreds of big engineering projects have been put on the shelf. After years of seven per cent growth, they are now looking at a downturn of six percent.

The larger firms are finding relief in China and India and the rest of the booming Asian market. But it isn't easy pickings. The big shots in Europe and North America have also been lusting after these contracts so the competition gets pretty fierce. Even worse, these firms are also looking for pickings in the booming parts of Australia.

Every time you see the skeleton of an unfinished building or a weed-grown fenced-off wasteland in the middle of a city, there is an architect somewhere weeping into his gin. Building has slowed down all around the world and that has severely cut the returns of architecture.

But IBIS has good news for them. From next year the building market is expected to rebound by five per cent a year. However the successful firms are the ones that expand the range of their activities. They are moving into the business of building project management.

Finally there are the management consultants. Everything from executive training to HR, from marketing to IT. After a very flat year they can expect increases of over four per cent a year. Once again it's the big firms that will flourish. Some of the smaller ones will need to attach themselves to accounting and law firms, others will have to look overseas.

Now China's a good opportunity for them, with this niche business expected to grow 12 per cent in the next five years. But you can only work there if you partner a local firm.

So you can expect to see our professionals moving further from their Collins St and Macquarie St towers into a big scary world where competition is intense but the rewards are huge.

ray@ebeatty.com

Mobile phones and confusion marketing

Melbourne Herald Sun, 20th March 2010

They always call when you're about to eat dinner or your favourite TV show is starting. Now I'm not a nasty person and I don't like being rude to someone who's only doing their job, so sometimes I make the error of answering a question.

"How much are you paying on your telephone bill Mr Beatty?" And then: "We can give the exact same service for $50 cheaper plus a free Nokia XYZ phone - would you like your phone bill to be $50 cheaper?"

Well who's going to say no to that? Next thing you know you are repeating the legal agreement for recording purposes and you have made the switch. Next morning you wake up and recall - what the hell have I done?

If the deal goes through, in a month or two you will compare your new bill with some old ones and find there's no difference - it may be even worse.

Did you just get a bit confused? Well that was quite deliberate - I have only recently discovered that there is a genuine science at work here: confusion marketing. That's now a real phrase in the dictionary. I'm sure they teach courses on it at Harvard.

The point is to get the consumer so confused by varying rates, plans, offers and deals that it becomes near-impossible to make a true comparison between companies.

Banks and credit card companies love the deals. They trumpet their low-rate terms, credit at only two percent interest! Now that will make a difference to your monthly bills. You transfer the debts over. And it's amazing how quickly six months pass, after which the interest jumps to 22 percent.

Electricity and gas companies have now been chopped up into providers and retailers, who all have teams of sales people selling contracts. Wonderful, competition. At one stage I had a sales call almost once a week, each with an irresistible offer that slashed my power bills.

Once or twice, I confess, I did chop and change. But you know what? My power bills kept growing and are higher than ever before.

A new version has appeared in recent years on the Internet. This happened recently to my wife. She found a book on a topic that interested her and bought it on-line. Now all these offers have pages and pages of sales pitch, testimonials, and how great your life will be once you have that book.

What she didn't notice, buried in the spiel, was a line that says: "And you'll become a member of our Philosophy Discussion Group, receiving pages of fascinating information every week." Which went on, "Membership is only $29 a month, automatically deducted from your credit card account, unless you decline the offer within 10 days."

So there's the confusion hook. By ordering the book, she also gave them the right to deduct money for ever. Fortunately she spotted it a few days later and stopped it. Not easy to do, as nowhere on the site was there an "I quit" button.


Of course the masters of confusion marketing are politicians. The easiest way to kill your opponent's policy is not through sophisticated argument. It's by making the issue so muddy and confused that the voters throw their hands up and decide it's all too hard.

It's very difficult to counter-attack. All you can do is get very simplistic yourself and hope you can hit your opponent with a better slogan than the one he is using. Does this all sound very familiar to you?


ray@ebeatty.com

The battle of the bank managers

Melbourne Herald Sun, 20th March 2010

Do you have one of the 600 smiling, friendly bank managers from Westpac, or is she the cold, hard-faced cow "Barbara" depicted by the ANZ? As competition between banks hots up, we're now going into the Battle of the Bank Managers.

The problems they are addressing were created by the banks themselves, of course. For more than 20 years they have slashed branches, decimated staff, neglected small business in favour of big-time developers and financial markets.

Those of us struggling to make a quid and pay off huge mortgages have watched as every quarter they announce their billion-dollar profits and then increase interest rates by the Reserve Bank index plus a bit more on top. Then they weep crocodile tears about the growing costs of borrowing, as if we cared.

When they do research on themselves they find - horror! - that the public doesn't like them. A recent survey was made by West Australian mortgage manager Homeloans. They found that the number of Australians who "liked" the four major banks the Commonwealth, Westpac, NAB and ANZ had fallen by 15 per cent between August and the end of last year. In fact, says the survey, less than one in four likes the big banks.

Now such a situation is not only commercially unpleasant - it is also politically dangerous. It means that the Government can do anything it likes to the banks and nary a tear will be shed. There are votes in being nasty to banks.

Hence the spate of new TV commercials with their swarms of smiling bankers.

Anyone in small business knows how impossible it is to develop a relationship with your bank. If your branch has a manager at all (rather than a distant "business centre"), you will try to get to know your manager - you never know when you'll need them. But then one day you'll walk in and find he's been moved to Toowoomba and you have to start with some new 25-year-old.

Well it seems that branch managers are back, at least at Westpac. In their new campaign they confess to having seen the light: "We're bringing back over 600 local bank managers," they declare, and on their web site, sure enough, you can find the name of your branch manager.

The ANZ obviously believes that you think your bank manager cold and intimidating and are happy without one. Hence their "And no Barbara" campaign. It's an interesting marketing ploy - making the virtue out of not matching your opponent's high card.

The NAB have also faced harsh realities. Their new campaign says they will stop robbing you. Or not so much anyway. "More give, less take" is the slogan. We'll believe that when they announce they have halved their profits and given the money back to their customers.

The Commonwealth Bank obviously held their summer seminar at Hogwarts. They now have a benign, smiling bank manager who, with the help of his magical iPad, can conjure up a new house for a girl in a matter of minutes. That's finding the house, buying it and settling the mortgage with the wave of a finger over a computer screen. No wonder his name is the rather familiar sounding Henry Pottson.


For several years St George Bank has cashed in on this bank aversion with a TV commercial set at a barbecue. Our character is asked what work he does. When he confesses "I'm a banker" a sudden hush falls over the gathering and you feel before long there will be a lynch mob. Then he splutters: "With the St George!" and all is well, because they are small, almost not a bank.

Trouble is they are now part of Westpac, so there goes their line of defence and also, presumably, that commercial.

ray@ebeatty.com

Have a break, have a ... soy?

Melbourne Herald Sun, 13th March 2010

Have a break have a ... soy-sauce-flavoured Kit Kat? Or how about a spicy wasabi-flavoured white chocolate Kit Kat? Sound tempting? I'm sorry but you won't find them at your local milk bar, not in this country.

Yes you've guessed it, where else but Japan could such a taste sensation happen - and be a huge marketing success.

In Japan, Nestle have taken line extension to lengths that are baffling to the more conservative Australian marketplace. They make Kit Kat in 19 flavours - like yubari melon, baked corn, green beans and cherries, and red potatoes. Now wouldn't they delight the kids' Christmas stockings?

But before you shake you heads and say, "They're mad," think on this. Kit Kat is now the biggest-selling confectionery brand in Japan. That's a lot of corn and potatoes, not to mention dough.

Nestle have always been flexible and innovative in their marketing. Fifteen years ago I wrote about their Relais Bebe (Baby Stop) program in France where holidaying families with babies could stop, feed their babies and have a free coffee and croissants - using, of course, all Nestle products. This was not just a one-off promotion - I see they now have 16 of them every summer.

The point is to get involved with the customer, think about what they need or desire, and think like a local. I can imagine that at HQ on the banks of Lake Geneva, Switzerland, wasabe Kit Kat would not be regarded as a good idea. Yet they let their Japanese subsidiary proceed with it, trusting their local people to know better than a distant warren of gnomes.

This is a difficult thing for a corporation to do, their instinct is to dictate. But the soft touch produces results.

Other companies are a little more cautious. McDonald's now allows the Japanese a Filet O Shrimp burger, and Pepsi gives them a cucumber flavored soft drink.

But marketing is more than product, it's distribution. Again Kit Kat have hit the jackpot. It appears that the phrase Kitto Katsu means "sure to win". This is a favourite slogan told to students about to take exams. Kinda like "Knock 'em dead kid!"

The Japanese being great gift-givers, they send their young ones off with a card and a box of Kitto Katsu bought at the local post office. Now their post offices are no more prone to selling sweets than ours are, but the marketing team managed to sew up a massive, 22,000 post office, nation-wide distribution deal. And with no competitors!

The Kitto Katsu campaign earned Nestle and their advertising agency, JWT Tokyo, the 2009 Media Grand Prix at Cannes.

Polyphenols are plant chemicals that supposedly work as antioxidants and preventers of heart disease and cancer. They are now the key ingredient in the highly popular Nescafe Excella - promoted through lyrical TV commercials starring Meg Ryan. She doesn't speak Japanese, but obviously they think she's healthy.


The company's latest initiative is a big marketing drive on the internet. They are pushing their range through Rakuten Ichiba, the largest internet >shopping mall= in Japan. It claims to have over 25,000 virtual shops, 40 million members and $8 billion in sales.

The lessons here are the most neglected truisms in business. When you hire somebody and give them a responsibility - trust them to do the job. Give them the freedom to innovate with products and markets. Sometimes they might make mistakes, but other times they will have spectacular successes.

After all, in your corporate ivory tower, what do you know about the average Japanese's tastes in chocolate?


Ray@ebeatty.com

Raking in the dough from fat

Melbourne Herald Sun, 10th April 2010

Now put down that doughnut and tell me the truth. Are you as fit and healthy and slim as you'd like? The sad fact, of course, is that very few of us are.

The Medical Journal of Australia has just warned us that obesity is costing this country $56 billion a year. And that's just the health side. Naturally we have to do something about it, as a nation. And as every businessperson knows, where there's muck there's brass. (Or maybe it should be where there's fat there's dough.) So what are the business opportunities?

Certainly over the past decade there has been rapid growth in the business of getting us slim. Figures from the Bureau of Statistics showed that the number of job vacancies in the health and fitness sector was at an all time high, in 2008. It was reported that personal training was growing, along with gym memberships, fitness club openings and sales of fitness programs, with a shortage of staff to run them all.

There are now nearly two million Australians using these fitness centres - and more are joining up every day. You can expect to see the pressure grow from state and federal governments anxious to reduce their health costs - not to mention the pressure from our fellow citizens anxious to reduce their spouses.

Fitness Australia, the industry's association, claims that the centres contributed $900 million to our economy two years ago, and employed 17,000 people, though 80 per cent of these were part time. Since 2004 it was growing at seven per cent a year.

But, as Peter Garrett learned when his insulation scheme revealed bats in the belfry, fast growth can have its problems. So it is with fitness. A trainee can go from scratch to a Master Trainer qualification in just eight weeks. It ain't exactly a medical degree. And it means that some people who achieve the status can be less than dedicated.

Fitness Australia calls them the 'cowboys'. The small, inadequate operations that promise far more than they deliver, and leave unhappy customers in their wake.

So FA run education and training schemes for exercise professionals who are registered with them, requiring them to keep up to date. Their member businesses have to follow a code of practice or risk losing the association's 'licence'.

One of their major headaches has been the bad publicity from dodgy banking practices. At the front end, there's often a team of attractive, young, enthusiastic sales people urging you to sign up and become as beautiful as they are. Who can resist a gorgeous slim blonde in shorts - whatever their sex?

But once you've signed the reams of forms they have your banking details. All well and good until you decide you want to leave. As the Consumer Association's Choice Magazine put it, "The gym's sense of urgency suddenly evaporates. You're forced to jump through the most outlandish hoops just to cancel a membership you should have every right to terminate over the phone."

Pressure from state and federal consumer affairs departments have improved the situation somewhat - but before you sign anything, read the fine print carefully.


The industry is now consolidating into a smaller number of large franchises like Fitness First, with nearly a hundred gyms; Fernwood with its women-only niche of 80 clubs; even that money bloodhound Richard Branston has sniffed the brass and started his Virgin Active chain.

Local councils have begun to charge trainers for the use of their parks and beaches, while the music industry is suing for a big hike in royalties for those endless Madonna and ABBA tunes.

Ah yes, once you're doing well, everyone wants a slice of the pie.

Ray@ebeatty.com

Upsizing – how to maximise your sales

Melbourne Herald Sun, 6th March 2010

If you run a business I don't have to tell you how hard it is. You advertise and proselytise, urge and cajole, promise and plead to get a customer through the door. You drag that business in and take great pride in the feat.

But once you have them, do you get all you should out of them? Or do you think your job's done now they are through the door?

There is an art to good business, which is maximising your sale, getting the most out of each customer.

The deli owner knows it, and asks, "Something else?" after wrapping each product. The fast food retailer knows it, when the customer orders a hamburger and is asked "You want fries with that?"

This up selling strategy was made famous by McDonalds restaurants. In the past it added some 35% to the value of each transaction. However by the early 90s fast foods started to dip in popularity under claims of poor nutrition and obesity.

It was Melbourne that gave the world the answer - opening the first McCafe selling coffee and Danish pastries. Now the question is "Do you want a cappuccino with that?" And the per-sale profitability has gone up to some 60%.

The great lessons in up-selling come from the USA. They developed the pattern where some 35% of fast food and snack sales include a soft drink with them. When you consider the billions of dollars turned over by these companies, you get an inkling of the amount of money involved. No wonder the world's biggest McDonalds is in the Coca Cola building in Manhattan.

Another variation of this is up sizing. So when you go to the movies and get persuaded to buy an overpriced coke and popcorn, you are then told: "For an extra $3 you get the jumbo popcorn and the mega coke". Well, what's another $3? But then - when are you ever going to eat so much popcorn?

Up-selling works in every business, not just restaurants. I recall a client with a carpet-cleaning franchise. Their operators were extremely good at their jobs. But at the end they would leave with just the $100 or so cleaning fee - not a great deal to pay two salaries, a van and the driving time. They needed to add to this turnover.

So we designed them a catalogue on how to look after carpets - featuring a range of products that should be in the closet.

As they cleaned, the customer would read the book - and usually buy some cleaning fluids or even a high-efficiency vacuum cleaner. In the end these add-ons could increase the price of the visit by an average of $30. And the customer was happy that she had not been pressured.

When you buy a car you're used to being sold up. ("And would you like a roo bar with that?") Especially profitable for dealerships are the extended guarantees which deliver the commissions immediately - while the later costs are covered by insurance.

Computers are an unlimited field for the technique. I bet none of us has bought one without being persuaded that an extra $100 would double the hard disc and double the ram.

The greatest problem with upselling, in any industry I've known, has always been the staff. They need training, bribing, cajoling, to put in that extra effort and sell a little more. Within hours of reading this piece you'll be in a shop where the assistant will cheerfully take your money without giving a thought to selling you one of the extras or treats hanging round the counter.

And somewhere will be a boss tearing their hair out because of all the missed opportunities from the customers they worked so hard at to pull into the shop.

Ray@ebeatty.com

Do we need the Nanny State to save us from cold calls?

Melbourne Herald Sun, 20th February, 2010

Just last week I was complaining about telemarketers and how their phone calls interrupt the evening's dinner and telly.

Now while I was narked at their timing, I didn't say I wanted the poor working stiffs thrown out of a job and set on the street to beg. They have to make a living as we all do, and some jobs are better than others.

Not all are so soft-hearted - I see that our anointed betters are planning to do just that. In 2007 they set up the Do Not Call Register that allows you to stop telemarketers calling your home. Fair enough, it's like putting a "No Advertising Material" sticker on your gate.

But currently, in Parliament, there's a move to extend this, by allowing all businesses and organisations to list themselves - all their telephone and fax numbers.

The trouble is, there are 440,000 small companies in Australia that rely, to a significant degree, on telephone calling to win business. It is the most cost-effective form of business-to-business advertising and an awful lot of firms - and jobs - depend on it.

To my mind, forbidding cold calls is a denial of freedom of speech. The receiver can always tell me to get lost, that's his right, too. But do we need a law to police this?

It's the old nanny state syndrome. We who fought for freedom from censorship, women's liberation, gay rights, sexual freedom, freedom to wear jeans to the office - are finding ourselves compressed by a remorseless political correctness.

From politicians and education administrators, doctors and judges, there is inch by inch pressure to force us all back into the box.

So Manly City Council is trying to ban the sale of bubblegum in shopping centres, the sale of puppies and kittens in pet stores, smoking on the beach, plastic bags and the sale of bottled water at public events.

Senator Stephen Conroy, whose department is responsible for the Do Not Call Bill, is also ploughing ahead with his internet filtering legislation. Which adds up to his being the Minister for the Nanny State Imposition.

A few months ago, at a Melbourne PC User Group meeting, some 300 computer enthusiasts were quizzed by their President, Keith Younger, who asked how many members favoured the internet filtering legislation. Not one hand went up. How many thought it would work? None. Who thought it would slow down our already dismal internet speeds? Up went a forest of hands.

I have yet to find someone in favour of it - but who can stop a NSW politician with a mission?

Mind you, who are we to talk? Already in Victoria soft drinks have been banned from government schools, all confectionary will soon follow. Now I'm not an advocate for child obesity - I just don't like some politician telling me or my kids what to do.

Macquarie University has banned the sale of cigarettes on campus. Back in my day at uni, wearing shaggy hair and puffing endless fags was what it was all about. You grew out of it - in your own time.


Funny thing about nannies. Remember a few years ago when the Howard Government brought in Net Nanny, the free parental software to control children's internet viewing? Well Telstra reported that only one percent of parents ever made use of it. So it's not in demand from the voters.

Oh and the latest internet warning is to beware of messages from the Do Not Call Register. They are being used to deliver a type of virus called trojans, which collect your email and phone details. For sale to the less scrupulous telemarketers.


ray@ebeatty.com

Marching to the beat of a different drum

Melbourne Herald Sun, 20th February 2010

Were you ever an army cadet? My own version of that was an outfit called the Sea Cadets. Much like army cadets, only dressed in little blue uniforms and white sailors hats.

We never seemed to have anything to do with sailing or water but spent much of our time marching up and down the parade ground tossing rifles from shoulder to shoulder. I later learned that the reason for this was to drill into us a sense of being a part of an unthinking herd and reacting to orders from any superior without question.

It left me with a lifelong suspicion of regimentation and attempts to make me gallop in any one direction.

I was reminded of this the other day when my hardware store told me they no longer supplied carrier bags. So I walked off, purchases in arms because I suddenly got mean about buying one of their fabric bags.

This was the third time that day it had happened and I realised I was observing a trend. Multi-squillion dollar retail chains suddenly getting righteous about plastic bags and the environment, and saving themselves some money in the process.

The vast amount of packaging that surrounds their goods - boxes and plastic packs, cellophane and polyethylene and polly-wally doo dah day - are conveniently overlooked while the micrometre-thick plastic bag is banished. Now I have no liking for the bags either - but doesn't this all smell of hypocrisy?

We often come across the gallop of stampeding herds. If you can trigger it, there is no better marketing tool.

Inching though the city traffic jams you can find yourself in a solid herd of CRVs. Big boxy four-wheel drives designed for scaling mountains and fording torrents. What on earth are they doing on the Monash Car Park? It's not as if they're allowed to climb the banks and skirt the traffic.

But some clever marketers persuaded many of our citizens that they are intrepid rugged pioneers. Even if they only drive to Collins Street and back.

Rugged individualism doesn't work any more when it goes mass-market. Once upon a time a muscle-bound Chesty Bond type would put intricate Celtic tattoos around his biceps. These days go into a supermarket and you'll be surrounded by tattoos. Worn by housewives, teens, factory workers and clerks. Not quite so rugged any more - but great for the tattoo industry.

Sometimes the trend can be a triumph. Wherever you stand in the herd, you insist on a good cup of coffee these days. The frothing Gaggia is a necessity for any eating establishment. The day-old jar of stewed coffee is hard to find. Hey even McDonalds can serve up a good macchiato in their Mac Café.

These trends can be manipulated. Remember that seedy, ill-suited Welsh phone salesman who entered Britain's Got Talent? Looked sad and dreary till he opened his mouth and sang like Pavarotti. The video clip went round the world and made Paul Potts an overnight sensation.

Think that was fate? Forget it! That was marketing. ("Here run down to the Salvos and find the bloke an awful suit. And I want the hair really nerdy....") So that when he sang the contrast was jaw-dropping. In fact he'd studied opera for years including professional training in Italy.


A couple of years later they found Paul a cross-gender twin in Susan Boyle. Same thing - Scottish spinster in a daggy outfit, bad haircut and makeup - and a brilliant voice. Look at her current albums in the shop today and you'll see her the way she could have looked then. But it wouldn't have pulled off the marketing twist, to arouse the excitement of the herd and send them stampeding to the cash registers.

ray@ebeatty.com