Marketing_part_2 (convert-video-online.

com)
0:10
Maybe the most exciting change that I've been part of these 25 years is the is the growth of IKEA in a
number of different cultures.

0:23
We have colleagues and customers and suppliers in many parts of the world today and in that way
we're no longer, how can I say only a Swedish company with a little bit of an international experience.

0:38
We're we're really a company with a strong foothold in many different places.

0:43
In order to be able to be really not just relevant but right with a local customer, we need to, we need
to be very aware of what is life at home for people in the local market.

0:58
So we spend a lot of effort actually, yeah, following that, both with home visits and just very simple
going to see what what, what are the bathroom like in Poland, right, And understanding that better.

1:11
So we can both communicate what we have for people in the right way, but we can also do more
good things for the way people live at home.

1:18
And that's important.

1:20
But then using our means of communication, I think the more important part is really to understand
or to in different ways actually show solutions in ways that are relevant to people in the local market,
right.

1:38
So I mean, we have markets where people live in very, very limited space to come up with very smart
solutions for limited space.

1:46
It's very simple what makes all the difference, right.

1:49
Or if it's in markets where families are big with multi generation of living or there are more kids maybe
than in other markets.

1:57
We do something big with that.
2:00
Yeah and then always be very good with the right price level.

2:05
Now I think as we grow the the the changing of the evolution of the Swedishness will come.

2:13
I mean, now we are, you know, we're building IKEA culture, for example, with a large Chinese IKEA
workforce and Co workers there and managers and leaders and and of course, it's about being IKEA in
China and being Chinese, right.

2:31
And what does that mean?

2:33
So that will change us.

2:36
Yeah.

2:39
But I think the important things will stay and I actually think it doesn't really matter where we are in
the world.

2:46
People who enjoy working at IKEA and shopping at IKEA, they in a way want to share that culture.

2:56
And I think it is a universal culture also for people who who who want to work together or how can I
say a be together in a certain way, right.

3:07
I think we have to be open minded about it.

3:10
Of course our values are always important and we want to take them abroad as well and I think we
can do that.

3:17
But we also have to, to bring something from the the other cultures to our company to be successful.

3:23
I think that's important.

3:24
Now the culture of IKEA 4050 years ago I think was very much about a a place and maybe about a
man, an entrepreneur and his his group of people right at that situation.

3:37
I think we're more open minded, we're more we're more of a world citizen today than we were before.

3:45
And I think we're discovering ourselves maybe in the eyes of others in a way that wasn't possible 4050
years ago when we were much more in a in a special place or a regional place, right.

3:59
But that's the at the same time I think we would recognize ourselves visiting 4050 years back, we
would see that we would be still I mean same enthusiasm folks on future problem solvers, hard
workers, doers maybe and innovators in a common sensical way, right.

4:22
So I, I, no, I I think there's something there that's lasted.

4:28
Yeah.

4:29
But it's changed.

4:30
Yeah, I think Ingva Campground is very still very important for the company.

4:47
He's still alive.

4:48
He's very much seen in different stores and he still has an opinion and and people listen to him and
he's the founder and it's his values and and and such that it's still in the company now.

5:05
Our founder, Invercamprade, is very much still somebody who inspires us.

5:13
I mean, he's still traveling, he's still out there visiting stores regularly, shaking people's hands, he's still
doing store openings.

5:23
So once in a while he's very much somebody.

5:28
How can I say that we get a chance to meet once in a while, while we're working together with him?
5:35
I mean, of course, Ingvar will probably more and more choose not to, to do that as he gets older to to
to, how can I say choose where he shows up or what he does with us.

5:52
And I think that I think we're pretty prepared to start inspiring each other more.

6:04
I think we have good habits of how to work together and how to make the everyday.

6:11
I can say important focus for our leaders and I think we know how to to do the, how can I say the
Invar camp red thing right.

6:26
I'm pretty confident that people will fill in and I think that the culture we have together is a culture
where part of that inspiration of the entrepreneur, yeah, it's something that we have the force and
ability to maintain between us in the company culture.

6:47
That's our challenge actually.

6:49
That's what we need to do.

7:02
So market research is very critical.

7:04
Market research is actually critical from the point of view of understanding how the customer
expectations are actually changing.

7:13
What changes do we anticipate in the demographic trends, the demographic trends.

7:19
Ultimately that's what actually drives the business.

7:22
India is a fascinating market because it, you know, just as China is the the numbers are just so
staggeringly huge.

7:30
So you know, when 1 looks at, you know the number of of people, wealthy people.

7:35
Now, you know, I think everybody sort of well knows that there's sort of 200 million of sort of what
you call middle class with with with you know, a reasonable wealth these days who can go out and
afford, you know, a lot of the, the nice things in life that they would like to buy.

7:51
There is obviously a top strata of of extremely wealthy Indians, which you read about quite a lot.

7:57
They're buying companies around the world and and they're a very natural, very natural sort of client
base for HSBC.

8:04
We also need to understand what macroeconomic changes are actually anticipated regulatory
changes, increasing competition, new products that competition is actually going to come out with or
if they have come out with it already, what the specs are changing lifestyles of customers to lead us
into understanding what kind of events that we need to hold to pull the customers together with a
view to making the bond, you know, stronger between HSBC and the customers.

8:38
So it forms an integral part and it is a fairly chunky piece of the overall business development, stroke
product development, you know, pie, if I could call it that.

9:05
Private banks by nature deal with wealthy individuals or families.

9:13
They're not.

9:14
We've got to the stage of being that wealthy without being savvy and understanding the marketplace,
what they want, what they like, what they don't like.

9:24
And one of the things that we are very clear on as an institution and as a private bank, we will not
push products.

9:32
We will not look at our client basic well we can sell X number of this mate Y.

9:39
It's very much a solution driven exercise.

9:43
What is right, Is it appropriate and to present it Everyone is price sensitive.

9:52
When they get to a stage where they're wealthy, they're mindful of what they want to pay for a
service.

9:58
But price is not the only driver of to a relationship.

10:04
A lot of clients are willing to pay for relationship honesty of approach and for an institution they can
rely upon when things are not as as rosy.

10:22
And this is where I when I talk about relationship banking.

10:25
This is what relationship banking is about given the depth of relationship we have with the corporates.

10:31
And we've been dealing with some of these corporates for many, many years.

10:34
For some of them, we've been their friend from when they were small garage operations right up to
now when they're listed on the National Stock Exchange, our NSC, some of these companies are now
amongst the top 50 companies in the country.

10:48
So those relationships run very strong and they trust us and therefore taking it through into a private
banking relationship in country is very important for us and quite easy.

11:01
In fact the individual or the families that we focus on don't like to be sold to.

11:07
They believe importantly that the institution or the business that banks them is a private club and it
importantly for them, they like to see us deal with things on a discreet footing.

11:25
So our marketing by its nature is very focused and it'll be profiled where we raised it functions which
are attended by the families of the rich, be it a polo match, top end university where you've got
families attending graduations etcetera, we'll be attending there to actually provide sponsorship for
certain events.

11:52
So it's actually very selective especially in our in the Indian context, there are two kinds of events
which we're planning to do.

12:00
There will be one or two signature travel bank and Lost top of the line events which will have our top
end existing customers and the potential or the target customers.

12:15
It will be a small group, but it will be an event which will have a team.

12:19
We will have certain loyalty events based on the lifestyle preferences that we understand.

12:25
You know based on the survey that we do in each one of the cities, they will be on a much smaller
scale.

12:30
They will cover a larger number and that again will have a mix of both existing customers and and
target customers.

12:46
Pricing will depend on the customer to a major supermarket.

12:51
It will be determined by cost and generally we'll have a fixed margin and as costs move, the price of
the supermarket will move.

12:58
Supermarkets have a very close insight into how production costs are managed.

13:04
With the wholesale market, it is very much driven by supply and demand and where the market is,
where the surpluses are and how we have to react to that.

13:14
Eggs are a staple food item, so people always buy eggs.

13:18
It'd be very difficult to out price it.

13:21
However, we do have to be careful.

13:23
For example, organic eggs, that market has stagnated somewhat because it's overpriced.

13:30
The cost of organic wheat for example has driven the price of the egg on shelf too high and now the
customer has has moved away from it and growth has slowed.
13:40
In the organic category, there are overhead costs in the production of eggs, contingency planning for
example, for factors like aging, flu, you must be very careful about.

13:54
And there's a lot of regulation in food production as well and meeting that regulation is very
important.

14:01
Egg pricing tends to be both driven by the markets and to an extent it's what the retailers can actually
justify to the consumer.

14:12
Like so many things, there's always a pressure between inflation and maximising profitability.

14:17
And in this instance currently there's a severe problem in terms of feed pricing.

14:23
It's hit things like bread.

14:24
It's also thought hit other forms and sources of proteins such as pork, beef and chicken because the
animals have to eat grain, which has gone up massively in price.

14:34
It does impact upon us.

14:36
Now these are costs that we can't sustain because it's a low margin market.

14:40
We don't make the money to be able to absorb a doubling of cost in a year.

14:44
So these market, these prices have to be passed back on to the to the retailers and understand
consumers.

14:51
We're also directly involved in things like industrial wages which aren't set by the company, they're set
externally by the government and they will apply to any agricultural business.

15:00
You would think an egg is an egg.

15:02
To an extent it is, but there are differences across Europe in terms of the viability of production of
eggs.

15:08
We have various constraints within the UK market that aren't felt elsewhere in Europe, for example
stocking densities and what this really means is the number of birds you can have in a given space.

15:18
For the free range eggs, these will have up to 1000 birds in every 2 1/2 hectares of land.

15:26
In the UK the equivalent in the continent would be 1000 birds in one hectare of land.

15:32
Our birds have more than twice the amount of space to range and to express their natural behaviours
than they would elsewhere in Europe.

15:39
And clearly there's a large cost implication in doing this and it makes our free range eggs better, more
special but also more costly.

15:48
Our overall strategy for pricing is to have a long term sustainable profit margin.

15:55
We can't make short term gains and damage the relationships with our larger customers.

16:00
However, on the wholesale market, it's day by day.

16:03
We've got to find the best price we can in a market that's constantly changing.

16:17
Fridays is a very centralized business.

16:19
We have 12 sites all within 10 miles of the head office.

16:22
This allows cost savings throughout the business and it also helps our environmental credentials.

16:27
Food miles are very topical at the moment, as are CO2 emissions.
16:32
In fact, our major supermarket customers are requiring us now to supply local brands.

16:39
So we have a number of local supply lines that will end up in in the major multiples, which will be local
to Kent, Essex and Sussex.

16:49
Chickens nowadays will lay something like 300 eggs per year and that's across their real laying cycle.

16:56
It will potentially take anything from 2 days, maybe up to three or four depending on the type of egg,
the husbandry or farming method used for that egg bits, a free range or an organic etcetera will vary.

17:10
But anything from 2 days for a fresh egg from the chicken into the supermarkets and to yourselves,
the way the farm the egg gets from the farm to the supermarket shelf will depend according to the
production method that we're using.

17:22
Organic and free range will be laid in the the sheds where the birds are living.

17:27
They'll be collected normally on a daily basis and they're then stacked on a palletised system taken
across to our main production facilities where they're graded, which means that we check them for
size, weight, defects etcetera and they will then be categorized, stamped with the relevant coding and
put into packs for going to the consumer.

17:47
We're then held in our warehouse of our own fleet of lorries that we'll distribute to where they're
needed.

17:54
Any egg that we are producing will be a very low food miles and in fact most of the food miles are
incurred in getting it to the end consumer via the retailer and also in the consumer's car back to their
home.

18:06
Until quite recently, the real key to the industry was organic and it was the real growth.

18:12
Now it's much more regionality and some of the major retailers out there are now having dedicated
regional products which are on shelf.

18:19
We supply some of these.
18:21
We definitely feel there's a point of difference we can give.

18:23
Friday's as a company is based in Southeast of England and we're the only company that are.

18:27
So we're the only ones who are able to offer local eggs into the most dense consumer area of the
country and where egg consumption is the highest.

18:47
My name is Simon Totman.

18:49
I'm the managing director of the Acme Whistle Company Limited.

18:53
The Acme Whistle Company was founded in 1870 when a Joseph Hudson, who was a farm worker in
Matlock, decided to uproot his family and move from the fields of Derbyshire to the Big Smoke of
Birmingham.

19:09
To make his fortune, he invented the world's first police whistle, and although he didn't anticipate it
then, that went on to develop into a range of about 300 different whistles, now reduced for
manufacturing purposes down to 83, but a range of whistles that has propelled us into being the
world market leader.

19:30
Whether you're talking about bird calls, whistles for dog training, whistles for referees, whistles for the
police, or whistles for life saving on your life jacket, in the very early days there was only one material
used to make whistles, and that was brass, and all of the whistles were very handmade.

19:51
So if somebody phoned up with a particular inquiry and a strange whistle that they wanted
manufacturing, they could turn their hands to it and did.

19:59
The result of which was a product range that extended to over 300 different items, but of course as
things became more streamlined.

20:09
As certain products started to rule the roost in terms of sales, production lines were established and it
was essential that the number of products made were cut down and then moving on in time.

20:22
In 19102 the very first plastic whistles were made from a material called vulcanite, which failed.
20:31
Vulcanite was actually dissolved by bicycle oil lamp, and when the policeman who bought his
vulcanite police whistle had a little bit of oil on his fingers and touched his whistle, his fingers went
irredeemably black.

20:45
So the product was shelved and not until 1926 when Bakelite really came into its own in whistle
production did the plastic range start to take off.

20:56
And of course this was a very different manufacturing process, a far more automatic process that's
gone on today to be computer controlled injection moulding.

21:07
So the number of products has dramatically reduced and our ability to, as we would love to do, but it
makes no economic sense, make that special individual one off is seriously curtailed.

21:20
It's extremely important that our products are 100% reliable.

21:25
It's essential that we not only say that to people, but then when they get the product, it's true.

21:30
If you've bought one of our dog training whistles and you blow it and your dog doesn't respond, I
don't think you're going to be too happy.

21:37
If you're a referee at the FA Cup final and just before that goal is scored, you go to blow your whistle
for an offside call and nothing happens.

21:46
Can you imagine what the press and the crowd are going to make of that?

21:51
That reliability in a whistle is absolutely crucial to our very being.

21:59
It is central to our soul, hence the individual testing, the guarantee.

22:03
It's one of the reasons that people buy an Acme whistle.

22:07
Our marketing can be divided loosely into two very clear areas.
22:13
There's the product development that is improvement on an existing product where we probably
know all the customers.

22:19
We know the referees, for example, we know where their product is going to be bought from.

22:25
And the problem there is educating them in why we've made a change.

22:29
We don't just sit back and dream up the changes ourselves.

22:33
These changes are made as a result of talking to people out there in the field.

22:37
There will always be a process of trial when we'll give important opinion formers products to test and
report back to us.

22:47
Then when we're quite happy that it really is ready for market and offers genuine improvements that
people are singing the praises of, then we will take it to market with an educational campaign that
would involve advertising in the right magazines.

23:02
Word of mouth is very important to us.

23:06
We export to 119 countries worldwide and quite frankly, we're not big enough to be able to afford a
worldwide marketing campaign.

23:14
So getting things into the hands of those senior people, for example, senior referees, referee
improvement officers, making sure they know what to tell those who they're seeking to bring on and
take from lower grades to higher grades to international level, that's where we focus our efforts there.

23:34
There are also completely new ventures.

23:36
For example, we've recently launched very first foray into the world of jewelry.

23:44
We've done a range of gem encrusted diamonds, cubic zirconia whistles which have a unique offering
to the market in that there have always been ornamental whistles.
23:56
I'm sure that we are perceived as being a different type of company by our various different type of
customers, for example, business to business and industrial customer perhaps buying safety fire
whistles and and selling them on as part of a package of other products.

24:13
There we will always try and emphasize that we can improve their margins.

24:18
How can we do that?

24:19
We can do that by giving you less returns on the product.

24:24
We can do that by giving it to you a price that enables you to make a good margin.

24:28
We can give you a very famous brand name to promote in your catalogue and we can back that up
with technical information, product shots, all the things that you need to make it attractive to your
customers and guarantee your margin if you then move to a more consumer orientated product.

24:45
For example, the original Titanic whistles that we remade on the very same equipment we first used in
1912.

24:54
There we're attacking individuals.

24:56
We want them to know that it exists.

24:59
We want them to know that it is original.

25:01
And the critical thing there is that it's authentic from the original suppliers on the original kit.

25:08
So that's a whole different concept.

25:10
Price is not important there.

25:12
It still has its place.
25:13
Of course it always does.

25:14
But that's a case of advertising through newspapers, reaching people directly with those kind of
messages that will make them if they are going to buy a whistle or think of it as a present for
somebody.

25:26
Think ah, Father's Day, I'll buy dad a Titanic whistle for his key ring.

25:32
Our competitors are legion.

25:34
For example, in Shanghai, just that one city, there are 8 whistle makers and if you scan the whole of
Asia there, heaven knows how many more.

25:44
I'm sure I don't even know them all.

25:45
There's so many in the developed W There are also competitors.

25:50
There's one in Florence, there's one in Toronto, there's one in Cleveland.

25:53
OH, and there are others.

25:57
We tend not to worry about our competition terribly much.

26:00
We prefer a strategy of concentrating on what we're doing and getting that right rather than worrying
about whether they're copying us or claiming to have a better product than us.

26:11
We're already there.

26:12
We're in the market provided we get our message across and that what we say is true and that people
perceive the value and benefit of that.

26:21
We're home and dry and that goes right across through to developing new product.
26:27
Again, we don't watch what the competition is doing.

26:29
We get on with our own way of doing things.

26:33
Manufacturing in the UK is still a very important part of our marketing.

26:38
Everybody knows you can get stuff made in China, but we want to be different to them.

26:44
Indeed, they buy our product.

26:47
So seeing Made in England on it still counts for something, still tells you there's going to be some
quality issue there.

26:54
You know it's going to be more expensive and you're going to ask immediately why, why are they
doing this?

26:59
What it also in manufacturing terms give us is is gives us his total control.

27:04
There is no process that we aren't doing here in this building.

27:07
So there's no question of late deliveries or quality issues, thousands of things coming over and having
to go back to be redone.

27:16
And at the moment because we are asking a premium price for our better quality, that business model
works.

27:23
If one day it ceases to work because the competition gets better, then we may have to look at it again.

27:29
And I certainly don't mind admitting it is something that we do constantly look at.

27:34
We don't just drift along blithely making here because we always have.
27:39
There is business reason for doing it and one day if that no longer makes sense, which will change if
one day we reach the point where it isn't economically viable to manufacture in the Uki, don't believe
it will be the end of Acme.

27:53
We will still have our patents enforced.

27:55
We will still have our designs and we'll still have our position in the marketplace.

28:02
I'm sure it will have an effect.

28:03
What will that effect be?

28:04
I don't know.

28:05
We'll find out when the time comes.

28:08
There will be some people who won't want an Acme whistle made in China who'll be sceptical of it.

28:13
It must have a downside to it.

28:15
Equally, it may open up other markets for us.

28:19
Perhaps price will start to become more important to us than it has in the past and we will make the
same margin at lower price points.

28:27
We'll have to adjust the business model at the time.

28:31
Our ultimate aim is to make sure that that very famous brand name Acme and our product linked with
it is obligatory for the buyers of Whistles that such as the demand by the customer that they can't
afford to not carry that product.

28:49
And to that extent, we educate our entire workforce from the cleaners all the way through to those
who are dealing with sales calls on what the customer wants, why the customer wants it, how they
want it.

29:04
So that we're filling up that chain all the way from the very bottom right through to the customer.

29:09
And the whole company is focused on that customer making our product the best you can possibly
get, the one they've got to have.