Donald Trump: The Smackdown Strategy.

It has been fascinating watching the recent Presidential selection cycle in the USA.

On arrival, I started asking people who they were looking for as a Presidential candidate – and a surprising number of people I spoke to said, “anyone but Hillary” and Donald Trump was the person they would like to vote for. Several are serious, successful, thoughtful people whom I respect the opinions of – so it isn’t just the disenfranchised.

As a European coming to America, I was genuinely ambivalent about Trump. His candidature did not seem serious, despite the number of people who felt he was a legitimate political figure. Like many, I saw him as a celebrity critique insurgent, like Russell Brand in the last UK election; a man with support, who lacked credibility other than to inspire the disaffected and marginalised in society. His campaign made no sense. “I’m richer than these guys so I am right and they are wrong. These guys are hopeless, ugly and stupid. I will beat them to a pulp.” His policies were, “I am a tough guy and I will stop the bad guys who are foreigners, weak liberal elites, the establishment who are keeping “us” down.”

I didn’t get it.

Surely Presidential candidates are the peak of American society, experienced leaders with decades of public service serving as VP like Nixon (and Senator of California) and George H W Bush (who also headed the CIA). We want to elect the best among us, like Truman and Wilson, educated men with a firm moral compass needed  to make the hardest and most difficult decisions. Or we want the most congenial leaders, like Reagan, Roosevelt and Clinton who use charm and personality to bring people together. We want military heroes like Kennedy and Eisenhower, (among many) both of whom had demonstrated leadership in the battlefield. Even when we need the dirty stuff done, Presidents like LBJ have a firm grasp of the real world having been a teacher and public servant.

Donald Trump is none of these and unlike any other candidate.

As a student of the post-war American Presidency, I looked back at similar campaigns and the closest candidate is Barry Goldwater in the 1964 campaign. Goldwater was a southern businessman and politician, and perhaps the godfather of the southern conservative movement, of which Ted Cruz is now the flag bearer of. His policies are not so similar to Trump, but his positions were just as polarising. His bullying criticism of the Republican elites and hounding of Nelson Rockefeller, the grandest of grandees, has some similarities, but Trump is no Goldwater.

Goldwater, for all his opinions was a committed public servant, a thinker and had great rectitude. And, as we know, Goldwater lost the 1964 election by a landslide against LBJ.

And then it hit me today. Donald Trump is not following a traditional political strategy at all, he is NOT Goldwater, or anyone else. His campaign is a wrestling narrative and November the 8th is Wrestlemania. He is playing the playbook of “Stone Cold” Steve Austin, a 1990s character from the WWE.

Wrestling as Life

Back in the 1980s and 90s I was a wrestling fan. Each “character” represented a segment of American life.

Hulk Hogan was the bronzed all American super-hero. Roddy Piper and Jim Duggan, the American everyman, Sgt Slaughter the turncoat, Andre the Giant, The Iron Sheikh, Nikoli Volkoff, the foreign bad guys (who became good guys depending on prevailing US Foreign Policy!).

However, something strange happened in the late 1990s. A wrestler, a bad guy, Steve Austin, after winning a match against former “hero” Jake “The Snake” Roberts (below) came up with a persona where he took on the good guys and denigrated their personas.

Because of his character’s “personality”, nobody owned him, he said what he wanted and drank beer after a fight against the rules. The ruder and more obnoxious he became, the more people loved him.

As his popularity grew, the WWE created more “establishment” figures to try and stop him, to the point where the WWE created a long running feud – as part of the storyline –  with the owner of the WWE Vince McMahon. The narrative was that the WWE as a company wanted to stop Austin, but buoyed by his grassroots support, Austin became more and more popular and won the day.

Steve Austin remains one the most iconic wrestlers in history. There were many better technical wrestlers, many more articulate and charismatic speakers, but few who managed to win as much popularity and adulation.

Austin not only earned top billing, but changed the medium of wrestling away from the black and white narrative of good guy-bad guy, but shifted the entire wrestling business to a new phase known as “Attitude.”

After injury, Steve Austin’s appearances became less frequent, but Donald Trump, a long term supporter of WWE started to appear as a guest and latterly as a character, involving himself into storylines, ultimately becoming one of Steve Austin’s victims in the Wrestling ring.

It is clear to me, that Trump has copied Steve Austin’s strategy.

Like Steve Austin, he has ridiculed his opponents in the crudest and most obvious ways to make them become irrelevant and small compared to him. With Cruz and Rubio, expect the same standard stereotyping as seen previously, and against Hillary Clinton a new wave of sexism and misogyny not seen in public debate for decades. 

And like Steve Austin, he has changed the Republican Party through insurgency; the traditional rules of politics do not apply. The voters are his and not the Party’s.

So stop talking about historical precedent or anything else that has gone before. The fight for the Republican Nomination – and indeed the Presidency – has roots in WWE and not historical political strategies.

Opponents better hit first, and hit hard, as taking from Steve Austin’s signature move, it only takes a second before they are hit by the Donald Trump Stunner – and there is no getting up when knocked down.

OL March 2016

 

 

 

Gambling Badly: WTF is going on?

Las Vegas is a curious city. It is a town built for gambling by gamblers, and if gambling is part of the human condition, Las Vegas is the most distilled version. Gambling is about hope, about luck, about aspiration, however unlikely, to win that big prize.

Indeed, today all our political campaigns centre around the message of aspiration. However, this message of bettering your life has been at the heart of some of the most pernicious regimes over past decades. Aspiration for a more equal society, aspiration for a growing economy, aspiration for extreme wealth, aspiration for change. The aspiration candidate is one who offers to make lives better, and communists, fascists as well as social democrats have played that tune.

Where casinos succeed is in selling aspiration while having effective management in controlling risk and expectations, as not every customer can be a winner. The same cannot be said in politics. Currently in global politics there are several gambles in progress, some economic and financial, the others political. Our political leadership in past generations seemed to have balanced risk and reward and erred on the side of caution.

Today, this is not the case as our leaders seem to fail to grasp that risk has downside as well as upside.

 OB-IR

Obama: Trusting the Gambler to Play Fair

I have written previously on game theory and the Iranian negotiations. It seems that the deal worked out by the US and Iranian Governments is not so much a fully comprehensive treaty, but the framework for a bet.

On one side we have the USA offering to ease sanctions on Iran and allow them to get on with building a nuclear capacity, trusting them not to build a weapon.

This is like giving a known card cheat free chips and a pack of cards and asking them to deal to themselves. Moreover, the casino will not monitor the security cameras routinely, but when they do, it will be the cheater’s family that will do so. If the cheater stays in the casino for a given time, they can walk away with their winnings.

The government‘s case is that the only alternative to the above scenario is that the card cheat would find a way to cheat anyway, so you might as well let them do it under your roof.

This logic is clearly flawed, however the response to the debate has been chilling; if you are opposed to the deal, you are acting against the best “interests” of America. You are shut down. An enemy voice. A dissenter. A warmonger.

Conflict with Iran is inevitable. It may be military, may be ideological or may be in trade, but the governing philosophies and ideologies of the USA and Iran are not aligned. It is not correct nor helpful to single out for criticism anyone who who states this obvious fact.

Wanting to find peace and a diplomatic solution to conflict is aspirational, but it it isn’t always possible.

 MAIN-Corbyn-Miliband

Labour: Bringing Down The House

Much as been written and debates about the 2015 Labour defeat. I have watched and read as much as anyone and am not at all surprised by the rise of Jeremy Corbyn within the Labour election process.

The British left has always fascinated me since I was a student, where I would develop strategies to counter the leftist radical groups, such as the Socialist Workers Party, Socialist Action and Socialist Organiser. As a campaigner for a fair, free, meritocratic and just society, I would look at some of their policy positions and obsessions (in particular on the Middle East) and would try and understand what parallel universe these people lived in. The groups were mired with conspiracy theories and were operated like cults.

The checks on the influence of these groups; who already run the Trade Union movement and have adopted key positions in the Labour party and public sector bodies in true entryist fashion, were the rules of the UK Labour Party, which included centralised power in the hands of the MPs and a dispersed electoral base.

Ed Miliband, who looks increasingly like the worst political leader in the history of UK politics, gambled and failed many times. Each bet was a losing one. He was a loser and when eventually betting and losing the house, he walked away.

His legacy is a Bennite Manifesto for political change in the Labour Party. History has a selection of unwitting ‘morons’ who had good intentions but bad decision making. Ed Miliband was ether incompetent beyond belief or an engaged subversive in allowing radical groups control and influence in the party. This is a huge gamble for the Labour Party, perhaps the most extreme political bet in the past 100 years.

Jeremy Corbyn is the aspirational candidate in the Labour election and will be the aspiration candidate if he makes the general election. He has already galvanised the Labour Party, bringing on a new wave of support which will change the direction of the Party for decades to come. But he cannot deliver his message without destroying Britain.

Corbyn may make it to Prime Minister, he may not, but at this juncture it seems likely an entryist radical may take control of a major political party for the first time in history. It may be that the radical left could build a coalition to win an election in the UK, stealing votes from the SNP, UKIP and Labour.

Now, some may say that I am being slightly overboard here and this may not be such a bad thing to have a leftist leader framing the debate or even winning an election, but when a society becomes ambivalent on the subject of anti-Semitism this is history’s alarm bell. That “I am not an anti-Semite, some of my friends might be” is Corbyn’s position.

Watch this space.

ISIS

ISIS: Hoping their luck will run out.

Since the Nazis, there has been no greater evil in the world than ISIS today.

“How did we let this happen?” and “Never Again” are much quoted afterthoughts from the Holocaust. What made that genocide unique was that it was industrial in its conception and delivery. This is true today in Iraq and Syria in ISIS held areas.

The brutality and barbarity knows no bounds. We KNOW of the mass executions, the beheading, the drowning, the burning, the shooting, the random murder of non-believers, gays and those who do not accept the ISIS philosophy but how many thousands of deaths do we not know?

I weep for the Yazidi, the ancient sect that has been systematically destroyed, the children raped, murdered and traded as slaves, and although there has been global condemnation the lack of military response to this real time avoidable genocide is a moral crime against humanity.

But ISIS has supporters. Those who reject liberal society and embrace the truth of radical Islam. These people are no different than anyone else in that they aspire. Their aspiration is historical, religious and to a restate a modern Caliphate.

The global response to ISIS has been like the casinos view of a gambler; they them keep on playing and eventually the gambler’s luck will run out, their play will revert to the mean and they will begin to lose. Except that ISIS sometimes wins, sometimes loses, but throughout the larger campaign, the slaughter continues. Daily. Hourly.

I read an article in the Times that ISIS was bound to fail as they have pinned their economy to the gold standard! How can a terrorist group have an economic strategy? How can it possibly have come to this?

ISIS are coming to Europe. They are coming fast. They deserve all the opprobrium we can muster. Our response to evil is pathetic.

It looks like our leaders are gambling with our world and making bad bets. When there is no casino to regulate behaviour, the gaming floor can turn to anarchy quickly. I am fearful.

Business Lessons Learned From The Reinvention Of Las Vegas

In the past calendar year, the Las Vegas Convention and Visitors Authority (LVCVA) reported that 41,126,512 visitors came to Las Vegas, finally shattering the 40m visitation ceiling that only five years ago looked impossible. Like other markets, the recession forced Las Vegas to react to the changing conditions, but unlike other markets, in true Las Vegas manner, it beat all expectations. The story of how this happened has lessons for all of us involved in strategic marketing and business.

BUST!

The year 2009 was a bad one for Las Vegas. By year-end, the 43 properties on or around the Strip reported gaming revenues of $5.5bn, well below the $6.8bn reported from the 38 properties that made up the market in 2007. It was also a bad year for Atlantic City, as it posted revenues of $3.9bn, significantly less that the record revenues of $5.2bn in 2006. Unlike Las Vegas, the decline has continued and in 2014 the final revenue total was $2.7bn, less than 50% of the previous high.

By 2014 Las Vegas had all but recovered, posting gaming revenues of $6.3bn, but that is only the beginning of the story as the visitation numbers are staggering. Build it…and they might come. The history of Las Vegas is a story of excess – either excess demand or excess supply!

When the Tropicana (1957) and Stardust (1958) opened, the critics argued that there was no demand for these properties, each with over 1,000 rooms. For a time they were correct, but when the Convention Center opened in 1959, the demand for midweek hotel space met the excess supply that was needed for the weekend visitors.

Between the opening of the original MGM Grand (now Bally’s) in 1973 and Mirage in 1989, there was no significant Strip resort development, but the case for untapped demand was evidenced by Steve Wynn’s gamble, and the 1990s saw 10 resorts open with nearly 30,000 rooms within a short walk from the Mirage’s volcano. In 1990 the historic Convention Centre was demolished and a 1.6m sq ft new centre opened, expanding to 1.9m sq ft in 1998 and 3.2m sq ft in 2002.

But the 2007 recession was somewhat different. Between 2007 and 2009 the 39.1 million visitation level didn’t just stagnate but actually collapsed to 36.3 million, which coincided with a new supply of almost 11,000 new rooms on the Strip, as the Palazzo, Encore, Vdara, Mandarin Oriental and Aria opened their doors. Occupancy targets were not met and if one looks back at the news columns at that time, some believed that there was excess supply that may never be met.

Steve Wynn, G2E 2014
Steve Wynn, G2E 2014

CHANGING FACE OF THE CUSTOMER

“It’s always been that the non-casino story, was the story. It was never the slot machines. They have been everywhere for centuries and nobody gave a damn about them.” – Steve Wynn, G2E 2014.

This summer Gary Loveman steps down as CEO of Caesars Entertainment. Loveman’s success was built on offering additional value to Total Rewards players, whether in Las Vegas, Atlantic City, Tahoe or throughout the regional casino market, by understanding the behaviour of gaming customers and creating experiences for customers through an inside-out business model. The antitheses of Loveman’s data-driven model is Sheldon Adelson and Steve Wynn’s top-down decision making, which is based on giving customers what they want – or what ‘we’ think they will want.

On one level, the reinvention of Las Vegas was nothing particularly innovative. Some chose to initially look internally and adjust their business models, but others looked outwards and met that excess supply, by stimulating demand by identifying a new segment of customers.

The LVCVA reports annually on visitor profile. In 2009, 72% of visitors were 40 or older. By 2014 this was 57%, and the average age had moved from 50 to 45.2. A total of 19% of visitors were from abroad – up from 14% in 2009. This is a huge shift in visitor profile. New customers are younger, international and are not traditional gambling customers.

In analysing these figures some more, we note that if one discounts the gaming spend, non-gaming customers are actually more profitable than gaming customers. Non-gaming visitors’ spend has increased over $45pp in the past decade, whereas the gaming segment’s non-gaming spend has risen only c.$8.50 over the same period. Considering that there are considerable costs in managing the gaming customer’s expectations in terms of incentives and volatility (gamblers actually sometimes beat the house!), the non-gaming customer clearly becomes an obvious target customer.

Las Vegas Sands Convention Centre
Las Vegas Sands Convention Centre

What can we Learn?

  1. Analyse and Strategise

This may sound like common sense, but it took some Las Vegas resort operators time to analyse what was going on, while others who rushed in made some costly mistakes. The established rules of resort management failed in the early days of crisis management. Conventional wisdom based the response to 2008 on 2001’s 9/11 ‘shock’ rather than the 1950s oversupply crisis. The initial response was to slash costs and drop room rates, believing that visitors would still come, but spend more on gaming if less on rooms. When room rates fell, gaming revenues did not compensate. By ‘comping’ rooms, what the casinos saw was a deterioration in the value proposition, and it has been a five-year battle to creep ERVs up to where they were in 2008 in Las Vegas.

A similar price-leadership strategy has all but destroyed Atlantic City. The double whammy hit, as rooms became uneconomic to service and casinos offered incentives that eliminated the house advantage in order to try and achieve revenue targets. The effect has been to erode the value proposition to the point that casinos have closed.

  1. Give customers what they want, now!

Harvard Professor, Anita Elberse writes that we are moving into a ‘blockbuster’ society, where entertainers, sports stars and mega-spectacles form the basis of key experiences in modern society, and people want to be part of them. If this is the case, Las Vegas is the blockbuster town for the millennial age, with the best dining experiences, hottest clubs, leading DJs and great product.

Las Vegas’s operators have curated a calendar of must-see events, but also invested in a portfolio of must-do experiences. These limited time engagements and residencies have both created visitation and increased revenues – there is a belief that the show that Las Vegas can put on is better than anywhere else.

It was reported earlier this year that seven of the top 10 nightclubs in the USA are now in Las Vegas, producing almost $450m per annum, with Omnia, the latest offering at Caesars Palace, reported to have cost over $100m to construct.

  1. It’s just business

In 2014, 5,169,054 business people attended 22,103 conventions. Local executives’ opinions on President Obama’s advice after AIG’s collapse, for federally supported intuitions to avoid conventions in Las Vegas, ranges somewhere between unhelpful to malevolent.

Despite the President’s caution, Las Vegas has become a place to do business. The Convention Center has grown to meet the demand for convention space and the move by the LVCVA to acquire and implode the Riviera to build over 900,000 sqft convention space only emphasises the importance of this in Las Vegas’s future.

Moreover, conventioneers spend more. They see shows, dine on the corporate dollar and perhaps a spouse will gamble or go shopping. Seeking to attract group and convention business is a sure winner in developing a sustainable business model. It is my hypothesis that Vegas’s reputation as a place for international trade will only enhance in the coming decade.

  1. Work out what your competition is – and better it!

Las Vegas has a structured and focused approach to challenging other convention towns. Thanks to the Hangover and other movies, Vegas is the place, globally, where one has their bachelor party or indeed any other landmark event where a group can come and spend some money and have some fun. For the SoCal group (which still constitutes c.30% of visitation) Las Vegas is competing with any of the beaches and highlights of California, so must have bigger clubs and better DJs. For each segment of visitor, the resorts identify that customer, what they want and when they need it, and deliver that better than the competition.

  1. Innovate ‘outside the box’

Listen to Steve Wynn. Las Vegas has realised that it really isn’t about the casinos. Las Vegas has gambled on retail, nightclubs, restaurants, conventions, shows and attractions of all shapes and sizes, and visitors seeking experiences have chosen to save money, book flights and travel to the middle of the desert for that escape from reality.

If you want your customers to be loyal in a competitive environment you have to give them something to be loyal to, and give them a reason to express their loyalty. Innovating, changing and creating something new is always appreciated by visitors.

The Las Vegas Strip posted a 5.54% year-on-year decline in gaming revenue over the past six months. This time, nobody is worried.

 This article is adapted from the original, published by Gambling Insider: http://www.gamblinginsider.com/

LV Sign

Electile Dysfunction Disorder

Bits of me are not working correctly. Maybe it is my age or lifestyle over the past 20 years, but I have a problem.

As a strategist I love elections and political campaigns.

Like the columnist and politician, Daniel Finkelstein, I mark key life events around general elections, but his is the first general election since 1992 where I have not campaigned. In fact I will be out of the country on election day and will not be able to vote.

In 1997, I was in the middle of my Undergraduate degree. After graduation many of my contemporaries in student politics moved in to polling, policy and politics – as did I.  Five years ago I was undertaking an Executive MBA where my main focus was strategy. Subsequent to finishing this, I have continued to research and advance my thinking in the area of Strategic Marketing and approaches to customer loyalty – which I suppose is the aim of political parties in campaigning season.

I have met with senior politicians of all stripes in the past 5 years and shared some of my insights with them, so I think I have an understanding of what goes on both on the ground and in the sky.

crosby_2627575b

Strategists and the Message

Ideological philosophy is not enough to win an election – indeed it is arguable hasn’t been for decades. Voters are looking at their political parties to present a competent, coherent and credible strategy for government and have it communicated.

A strong political strategy starts with understanding the core values and needs of the electorate and providing a policy response.

Philip Gould’s The Unfinished Revolution features this insight from Tony Blair:

“One of the most common fallacies in Politics is that you can have great communications and lousy policy and win. You can’t. People may admire the campaign, but it won’t prevent defeat. The 1987 election was a classic of this genre… Owing to Peter Mandelson’s brilliance, the campaign was stunning. We still lost by a landslide.”

Political strategists poll. In Netflix’ series House of Cards, everything is polled, from the colour of the candidate’s spouse’s hair to the use of keywords in speeches and the same is true in reality. Political strategies are created in two ways, either top down or bottom up, however even the most patrician of strategies must try and understand the voter.

Watch old party political broadcasts (I am sad enough to be an owner of the old VHS tape acquired from Politico’s Bookshop, back in the day). This was top down politics, from all parties, but with the advent of targeted polling, big data and the ability to customer segment, all political strategies now have an element of bottom up, even if they are really top down. Segmentation by not just demographics, but also psychographics.

dave

It strikes me that the Conservative Party’s entire election strategy is based on three tactics:

The first is the appearance of economic competence. This is nonsense. Yes the economy is improving, but after a sustained period of recession, it was difficult not to get growth, and they nearly managed that! There is a collective short memory and the coalition’s economic strategy did a 360 turn and when the cutting didn’t work, they shifted to spending to stimulate. So when the monetarist strategy failed, they went back to Keynesian-lite. They implemented the policy that they opposed when it was proposed by Labour.

Secondly, the opposition leader is unfit to govern. I comment on this below, but by painting the opposition leader as weak, then ruthless, then “red” even that strategy is comical. This is an import from the USA and Australia, however the big difference from those countries and indeed past elections is that this is no longer two or even three party politics. Indeed the last national election was won by UKIP, the SNP are the largest party in Scotland. Negative campaigning directly against a leader is becoming a zero-sum-gain as the Conservatives reinforce perceptions of their nasty side.

Finally, Identify swing voters in marginal seats and bribe them with things that will make them money. So far we have seen Conservative plans to freeze rail prices, but criticise Labour for calling for an energy freeze, to criticise Labour for unfunded promises, but promising an unfunded amount to the NHS, but worst of all, by promising renters the right to buy from private companies with state money is a scandal, if not illegal! It is like saying a Government will force McDonalds to give free food to all hungry people!

Over the past decade the Tories have hopscotched from “Are you thinking what we’re thinking”, which never really meant anything, other than appealing to people’s fears and concerns, to this opportunistic bag of tactics, rather than a coherent strategy.

Today’s Labour is very similar. Everything is polled and analysed. Labour had had time and resources to build a map of Britain. However when creating the policy responses to Britain’s problems, the response is not strategic, but tactical. And tactically wrong.

The Liberal Democrats will struggle, how can a political strategy sustained for decades as the opposition campaign as incumbent?

The SNP, UKIP, Greens and others fall into the category of identity politics, which I have written about earlier. To counter this strategy it is very difficult as the premise of debate is not even as the vote isn’t about power or even policy, but identity.

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Why I Left The Labour Party

When I cancelled my direct debit late last year, I felt, to paraphrase President Reagan, “I didn’t leave the Labour Party, the Party left me.”

Fairness, equality and social justice, not to mention opportunity, meritocracy and social mobility remain as core to my identity as they always were, but the leadership of the Labour Party no longer had resonance with me. What I saw was opportunistic, ignorant and a lack of judgement on issues that were of key importance to me.

Specifics? Well, first of all is the rejection of the Blair Government. Britain was transformed under Tony Blair’s leadership. The cities were renewed, London became a key global city and opportunities for people from all backgrounds became enhanced. The response to this from the leader was some kind of rejection, perhaps embarrassment. When the financial system collapsed, the Government supported it. If it had not, then everyone – except the most wealthy – would have been wiped out. This is the reason for the increase in the national debt. Britain got better after decades of neglect and in crisis, the Government stepped in to save ordinary families, their savings and their pensions.

Phrasing the debate as rich versus poor, bashing Stephen Hester at RBS (who did an exceptional job) and the financial sector is the politics of envy. Quite frankly, if the rich got richer, I don’t care – as long as they pay their taxes. Incidentally, I have some support for the “non-dom” argument, not that those who are not domiciled in the UK should have to pay tax on foreign earnings, but how the status of non-domiciled people are determined; that a tax benefit is inherited on a hereditary basis is nothing short of farce! But that is not the way that it is being sold, it is a “them and us” argument, which is not palatable in my view.

Likewise, the producers versus predators rhetoric is also misleading as efficient financing and capital structures are business strategy and not a matter of morality or Government. It is the role of business leaders to maximise returns for their shareholders – including the millions of investors and pension holders – and to form and shape their company’s ethics to the point that CSR is a core part of what they do, but it clearly not the role of the Government.

For over 20 years I have been aware of the rise of radical Islamism, a vicious, fascistic doctrinal movement that is in diametric opposition to the liberal views of modern society. It makes me sad to say this, but throughout history, there is no evidence that a liberal response to this type of evil works (please see my earlier post on Chamberlain).

As tens of thousands of Yazidis were murdered in Syria, what did the Labour leader do? When thousands of radical Islamists hijacked the cause of the Palestinians in Gaza and called for the murder of Jews on the streets of London, what did the Labour leader do? When a Member of Parliament leads a charge to recognise a terrorist backed State, what does the Labour leader do?

Labour took polls, it found bandwagons and the leader jumped on them. These gross errors tell me more about the Labour leader than any campaign. I don’t think he is weak or stupid or indecisive or uncharismatic or anything else thrown at him. I think his lack of real world experience does not give him the perspective to have good judgement and as a result is just plain wrong on the issues that matter to me.

As alluded to, Labour needs to keep the core base in tow especially in those key marginal seats, which includes a large amount of British Islamic votes. Labour’s leader’s response to Islamic radicalism and the Middle East tells me his thoughts are about more about those votes than mine.

I support the Labour Party and wish them well. But I cannot pay money to be a member of an organisation, which has a leader with such poor judgement.

1-2014-uk-opinion-polls

Analysis

I remember in 2010, I spent the day leafleting in a marginal, but winnable constituency with a first class Labour candidate. By 5pm news was filtering in that Gordon Brown had called Gillian Duffy a bigot when a microphone has been left on him. The Conservatives held the seat, Labour lost a great potential MP.

I am not a pollster with insights other than what is printed in the media.

A million things could change and what I write could be irrelevant as soon as I publish, but as I stand, with three weeks of campaigning to go, this is my reading.

Tony Blair claimed of David Cameron’s Conservatives, that “If we can’t beat this lot, we don’t deserve to be in politics”. He was right.

Labour will not win this election. They don’t deserve it.

Neither do the Conservatives.

The electorate is far more sophisticated than of yesteryear. I don’t believe that their argument surrounding economic competence is such a major driver as the Conservatives want it to be. Ed Miliband is proving he is not a weirdo now that as he has direct media exposure and on reflection voters see right through the bribes on offer as they can’t reconcile the language of “austerity” with unaccounted giveaways. This is bad strategy.

Labour has the best candidates and the best communication. However, their strategy is flawed.

Creating a strategy to win an election is about understanding needs and providing the policy response that works. Neither party has provided a clear policy response. The Conservatives are cynical. Labour’s leader has demonstrated terrible judgement.

This entire election campaign is dysfunctional. I am not enjoying it.

I am delighted to have no emotional investment in this election campaign and even happier to be abroad for the final weeks of it. However, I don’t think it will be long until we will be having another one, hopefully with a different dynamic and different outcome.

Making Dough: Getting it right and wrong in pizza market positioning.


Getting A Pizza The Action

Most of us love pizza and Italian food, whether this is sitting lakeside in Garda with a glass of wine or munching through a New York style pizza at 2am, it is amazing how such a simple dish has traversed the globe and is eaten by all members of society. In the UK the pizza market has been dominated by several large brands. Allegra Strategies report that the UK Pizza market (2013) breaks down as follows:

Outlets Restaurant Market Share
Pizza Hut 650 10.90%
Pizza Express 406 8.60%
Prezzo 198 3.80%
Zizzi 130 2.60%
Strada 68 1.50%

The product is pretty generic but Pizza Hut, the market leaders, successfully differentiated their own product over the past 15 years developing a total market strategy. Pizza Hut offered salads, pasta and a full range of pizza bases and shapes catering to all members of the family. The UK brands – Pizza Express, Prezzo, Zizzi and Strada also followed the total market maxim with pizza at the core, plus salads and other broad menu items.

So what we effectively see is a market dominated by two large players and three smaller players offering a similar offering, but more interestingly, there are several insurgents and niche operators which are challenging the big boys as a credible alternative.

In order to capture market share, these new operators have segmented the market and have focused on targeting customers with what they want.

There is Franco Manca, which is targeting the casual dining crowd featuring a smaller menu with a focus on ingredients, differentiating mainly on the sourdough base, which should appeal to the younger customer and not the family dining space.

This is closely followed by Pizza Pilgrims, which has evolved from a market stall and focuses on heritage and authenticity of the pizza in the modern age, again targeting the individual or social diner.

Sunday Lunchtime

Over the recent holidays I visited two of the London based pizza challengers aimed at the family pizza market, which is dominated by the big five above.

In each, the intention was to have a nice family lunch and enjoy the food.

Prior to the holidays I had not been to either of these restaurants before. I was unaware of the menus, history or ownership, but as an MBA with a curious mind, I have given some thought to my experiences – and indeed the follow up.

For all students of marketing, finance and strategy, this is a very interesting case study.

Pizza East

Pizza East

Pizza East is owned by Soho House Group and has four units, in east, west and north London, and Chicago. We visited the Shoreditch unit in Derwent’s Tea Building.

We went on a Sunday lunchtime, expecting to be part of the Shoreditch hipster set, but were surprised to be surrounded by lots of families eating good food and an amazing family friendly menu. So whilst the marketing and positioning of the brand and content is for the “hip” crowd, the family crowd are happy to buy into this, especially in the day time.

The key conceptual differentiators are the environment and experience; there is more exposed concrete in Pizza East than on Derwent’s current development on the other side of Old Street and the informal engagement with friendly servers and the easy going nature worked just so well. But the winner was the food. This was first class pizza and very well done sides.

We live nowhere near Shoreditch, which is why we hadn’t been since the place opened, but would we make the effort to drive 40 minutes through London for pizza – yes, and we have done subsequently.

Here you have a successful strategy, which has a concept, several defined markets and is executed well. The owners have not sought to rapidly exploit at a pace that dilutes the brand and the experience, and for long-term sustainable success, this is a strong proposition.

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Rossopomodoro

The UK restaurant market is dominated by institutional and private equity backed investment. I have a little bit of knowledge in this space and once met Luc Vandevelde, the Founder Chairman of Change Capital Partners who have invested heavily in Sebeto, the Italian group that owns and operates Rossopomodoro both in Italy, and in the UK.

The PE investors in the restaurant sector have both done very well in terms of investment return, but also have enabled the expansion of the sector to grow, although some would say that the ‘Pizza Expressisation’ of the high street is not such a good thing for independent restaurateurs, it has forced under-par operators to shape up and give customers what they want

The premise of Rossopomodoro is this; casual restaurant concept focusing on a menu of genuine Neapolitan pizza and Neapolitan recipes aimed at targeting the family customer, so all parts of the family can order something different.

Having read the franchising pack, the brand premise is based on visible attraction and to target people who are not looking to travel “too far” on an average expense mission.

So the basic strategy of Rossopomodoro is to position a similar offering to the mainstream market, at the exactly the same customer segment as Pizza Hut, Pizza Express, Zizzi, Prezzo and Strada.

The rationale, I assume, is that if you think that this is an established market, by creating an offering on par with the market, you will achieve a natural proportion of market share.

The problem is that based on my experience Rossopomodo is a real mess – in so many ways.

Here are my thoughts:

You are in a competitive space, if you are going to make food your differentiator, try and get it right:

  1. If you are advertising burrata on your menu, sell burrata, not mozzarella. There is difference.
  2. If you are selling focaccia, it shouldn’t thud when knocked against a table – the bread was so stale, Churchill could have built his garden walls at Chartwell with it!
  3. Pizza – and even Neopolitan pizza – is not served with a pool of olive oil on it. Poor.
  4. Finally, when you point this out to the manager – after waiting some time – the customer doesn’t like to be told that he “doesn’t know what he is talking about and clearly has no idea what Neapolitan food is like.” We don’t like being insulted very much.

Becoming A Brand Terrorist

If you are not seeking to have food as your differentiator it isn’t that important what the food is like. The likes of Hard Rock, Planet Hollywood and Rainforest Café do not make the food the key aspect and they survive as they appreciate the key is the experience to the customer.

Yum! Brands realised this some times ago. I have discussed this before in my blogs, but only too happy to do so again as I cannot believe how few restauranteurs are aware of these principles which have been around since 1994- when social media was sharing a newspaper. Heskett et al. talk about the Service Profit Chain, where customer loyalty drives profit and growth.

When customers are happy they remain loyal, when customers are very unhappy, they become “terrorists”. A Satisfied Customer Is Loyal Today, more than ever, your customers are the key to your business.

Just as Pizza East has become popularised through word of mouth rather than unit proliferation, companies have to give disaffected customers the ability to address their issues.

When these complaints continue to fester, customers can become brand terrorists, which I fear Rossopomodoro would consider me to be – with some merit! I repeatedly asked them on twitter to contact me, tried in vain several times to contact head office to alert them to my experience (as a marketing academic, and social science undergrad I strongly believe in “voice of the customer” programmes and am always happy to informally feedback) but there is no way of contacting the head office.

Having asked Rossopomodoro several times to contact me on twitter, they have blocked me; so in trying to feedback without success, I am now, as Heskett would say, a very dissatisfied customer. Not only is the food bad and the staff insulting, there is no way to complain about it!

pizza

(FYI – this isn’t the pizza in question!)

Conclusions

So here are my pieces of advice to all students of marketing and branding – and a special piece of free advice to Change Capital and their investors.

1. Pizza East have done it, Franco Manca have done it, Pilgrims Pizza have done it. Rossopomodoro have failed. This is an evolved market, unless you can deliver something different and better than the existing offering, you have no purpose.

2. Deliver. Irrespective of your ingredients, if you have rude employees, locals will be gone and these businesses cannot grow sustainably on tourism alone. For sustainable growth and success you need loyalty. By alienating potential customers into brand terrorists is the worst kind of customer service; indeed it is criminal in this day and age that a customer complaint is just ignored.

3. When developing a brand or concept define your customer’s needs. If nobody needs your concept, don’t waste your time and money. It is now 55 years since Marketing Myopia and people still don’t get it!

And for Change Capital, the outcome of a balanced menu concept of Italian food aimed at the mass market – anyone for a Sbarro?

OL Jan 2015