Sales season has arrived, as global shopping festival Singles Day (or 11.11) kicks off on Thursday. Started by Alibaba in 2009, 11.11 is now the largest shopping festival globally, with upwards of 250,000 brands competing for the attention of online shoppers. Speaking at VMLY&R Commerce’s Doubling down on double 11 in APAC webinar, Kraft Heinz APAC’s chief marketing officer, Dhiren Amin, discusses brand building, how to create memories around purchases and the threat of festival fa
fatigue.
Here are some of the highlights.
The challenges of 11.11 for brands
“The challenge with big brand days is twofold. The first challenge with 11.11 is the fact that the day is built on transaction, and so the platforms will push brands that have the highest value-generating propositions from a transaction standpoint. So the amount of discounts and the promotions you give [really matter].
“Secondly, it’s [about] buy-in. You need to have enough traffic being generated to your flagship stores for you to get any value out of it. It is a high volume day but all brands need to be smart in terms of managing its impact on profitability.”
On brand building at festivals vs sales events
“From a marketing and brand building standpoint, festivals allow for better brand building [opportunities as opposed to] big brand days like 11.11.
“The ethos of the two are different. Festivals were built around the cultural notion of the importance of festivals in that religion. For example, Chinese New Year is an important festive period and also an important period for sales for most companies. It allows for brand building because you can weave a narrative that is common to your brand with Chinese New Year.
“It’s tough to build a narrative around a big brand day that is about transaction at its core. I would argue it may not be the best use of money.
“The challenge for the platform is how to [turn] big brand days [into] brand building opportunities, not high transaction opportunities alone.”
On the power of memories over value
“I think the reason why consumption is higher during festivals than big brand days is because one is associated with value and the other is associated with memory.
“When you buy during a festival, you plan for it. There’s anticipation and the fact that you bought it during the festival creates a warm memory. On a big brand day, it is [about] value: ‘I bought it at this discounted price and I got such a great deal.’ Its value remains transactional.
That is the impact on consumption. What remains in your memory is likely to be consumed because it is something that is likely to create a habit. Great transactions will always remain at a point of value.
“The challenge, I think, both for brands and the platform itself is how do you go from value to memory? The minute that gap is solved, a lot of these issues will start going away. I believe even the platform doesn’t want the day to be a purveyor of discounts. It’s not valuable to the platform, it’s not valuable to the brands.”
On saving the big innovations for another day
“I think that during the big festivals, you should push your highest selling products because those are the ones where desire and a habit already exists. People are going to be looking for this product.
“I am not a fan of pushing innovations on these days. The demands of the day will mean that you’re going to have to discount your innovations heavily, which is never a great idea for an innovation that’s just getting off the shelf. Then you’re going to have to put in an inordinate amount of media spend both off site and on site to be able to drive traffic to that new innovation.
“You’re trying to sell a new product, which people don’t know, at a discount, hoping they get excited by the offering. And it’s just a lot to expect.
“I’m sure Alibaba will show multiple cases of how innovations have done well on this day, but I would argue that those are exceptions and not the norm.”
On festival fatigue
“On big brand days, people are expecting the most innovative and value-driving deals. And hence they will plan their biggest purchases on these days. The other [sales] days, when you have discounts on a monthly basis and nowadays every day, every week, people will be more [likely to] impulse purchase.
“There is going to be fatigue, as there should be, but in China, we’re not seeing much of that yet. It’s a consumption-based economy. Most of us should be thankful for that because people like to buy stuff. I don’t think there’s as much of a consumption fatigue on discounted brand days yet as there should be, but I think it will come. When? We don’t know.”
On online-to-offline (O2O) commerce
“The growth of O2O in China is likely to be the next big thing that drives consumption. The marriage of big brand days into O2O is natural. It will happen and I think that will have a lasting impact. I think the marriage of O2O with brand days is likely to allow brands [with] experience spaces, that allow for consumers to truly experience products, to command a slightly higher premium. And I think that will make it very interesting.
“If you go to [Chinese supermarket] Hema, you will see some 11.11 activity, but I think a lot more can be done from a brand experience standpoint. And that’s the opportunity for platforms and for brands.”
On advice to marketers working on 11.11
“Be pragmatic in your traffic buying choices. Depending on the maturity of your brand, you may need to invest more in off site, which is actual traffic that comes to your site, or if your brand is entirely mature, you may just want to focus on insite purchases, or you may require a serious boost in your visibility and end sale and you may want to go with KOLs – it depends entirely on the maturity of your brand. Understand that well enough to make your traffic choices well.
“Protect profitability; as marketers we are responsible for volume and the value we derive for the company. It’s a thin line. There is a science to getting the profitability right during big brand days. Spend the time and effort that’s required cross functionally to do that.
“Finally, big brand days are a collaborative, commercial effort. It requires a collaboration between the sales [team] to arrive at the right promotion mechanisms, with the marketing [team] to arrive at the right media mix and content, and thirdly with supply chain to ensure that you have enough stock to give to your platforms. Plan for it early and plan for it collaboratively.”