This week I have invited Francesco Pagano, former VP Marketing at Fossil, as a guest to the show to talk about Brands. Brands of today, of yesterday and of tomorrow.
Francesco and I used to work together at Mondelez when we both lived in Zurich.
Francesco is a seasoned Marketing professional, passionate about innovation, brand management and international business. He is always up for irresistible product concepts, ultimate communication via integrated campaigns, and great Italian food & wine. He co-created a non profit organisation based in NYC called italytime, which gives space to new artists and promotes theatre for kids.
In this episode, we are discussing different aspects related to marketing and brands:
❲4:02❳ Chiara: What do successful brands have in common ?
Francesco: I agree with the definition of Professor Sharp, which is very clear in this respect. Successful brands command a vast market share, generated by mental and physical availability. Which means (1) they can sport good value-for-money product propositions, (2) they go to market in an aggressive way, and (3) they invest consistently in Marketing – ideally with decent content, to make sure people know they exist. Successful Brands share the same way of operating.
Having a visionary founder, a strong brand/company purpose, or a full 360 sustainability agenda is in no way a predictor of in market success. It’s actually a burden, very often, or at best a PR gig.
We measure success according to the linear model’s KPIs: produce – buy – waste. Repeat. We don’t buy Coke or apple for their purpose. They don’t succeed thanks to their transcendent values.
❲5:12❳ Chiara: What is the role of people in the success of a brand?.
Francesco: People are the first step to build a successful company and brand, before product and before processes. The order in which we should structure an organization should be: a) amazing people – rallied around the same ambition, b) extremely lean processes, and c) products that do solve people’s real problems.
Problem solving beats emotions in the long run for most categories – you can get excited about toilet paper, a mattress or a frying pan, but there is an objective limit to being ‘sexy’ for most categories we buy.
❲9:38❳ Chiara: how do we balance local needs even down to the individual, with regional and global requirements? What are 3 relevant trends you can identify?
Francesco: The key challenges for the future are: (1) adopt new tech and the right user cases – from retail stores, to our wrist; for example – think health of the future; (2) embrace sustainability without disrupting supply chain and pricing; (3) completely outsource brand narrative, thanks to the magic of digital.
Media will centralize, and so will Trade, leaving local and regional nuances to a very marginal role. Regional and national are mind constructions, which come from the past century. Besides very few local shopping festivities – think of Ramadan – or local needs e.g. Asian Women are smaller; silicone or leather accessories sell less in warmer markets, etc.;
Assortment and new trends speak to a global audience, and Marketing and execution will cater to the individual – with nothing in between. Think of health in the future. While innovation will be dominated by investment scaled up globally, therapy will be individualized – n = 1, thanks to solutions like AI & Blockchain. There will not be an ‘us’ any longer, besides ‘us’ being unique individuals or a part of global challenges, like saving our planet.
❲15:33❳ Chiara: Developing countries are leap-frogging their development path. Which markets & regions are a great source of inspiration for you and why ?
Francesco: The Fashion industry, for example, still looks at Asia as the only engine of growth and innovation for the near future. India is probably the largest opportunity that we all have in the near term. China has not yet unlocked its full potential, being dominated by Chinese players, who are protected by the state. Africa could be an opportunity for the long term. Europe and Americas will be less of an inspiration.
❲19:03❳ Chiara: Are we moving away from democratisation?
Francesco: Yes, thanks to technology. Brands treated everyone the same way. Brands democratized quality and service. The future will look different. Coming back to my health example, therapy and insurance will be individualized, and really tailored to our individual needs. The question is: if brands are not the same for everyone any longer, how do we ensure that there is no discrimination? How can I correct my mistakes and not be penalized for my unsafe behaviors?
❲23:40❳ Chiara: What does it mean to be a luxury brand in the 21st century
Francesco: There has been an increasing integration or enrichment of product with experience. Think of apple or Hermes stores. Due to Covid-19, luxury brands are moving online for the first time. So, the next level of luxury will be an integration of physical experience with mental or virtual experience, plus a superb customer service, almost like a VIP club on steroids. The ultimate luxury, in a world full of technology, will be to have our butler – our alter ego always there for us. Alexa 2.0 will be our ultimate luxury.
The opposite is also true. Luxury can be found in ultra-niche experiences, which are not scalable and not digital by choice. Think of the artisanal Chef, who has 10 tables only, or the small shop in Florence, who rediscovers the beauty of the zero-km bottega.
❲26:53❳ Chiara: Brands longevity – what is your POV?
Francesco: They have to adapt fast. Speaking of Fashion, McKinsey predicts that 70% of brands/companies will be on the edge by the end of this year. I believe this is accurate. This will boost the global concentration and the luxury trends that we discussed. A few global powerhouses will survive – at both ends of the pricing spectrum (premium and cheap), plus a network of niche players. Most brands are reacting to the current stress in the same way: assortment rationalization (once again, same trend), Marketing cuts, org adjustments, brands clean-up. The right things to do short term. There is no better moment for market leaders. There is no better moment for major changes in new tech, sustainability and Marketing.
❲31:01❳ Chiara: We are seeing a lot of conversations around shifting from linear to circular. How realistic is it for the brands to really do the shift?
Francesco: Linear will die, giving way to circular and decentralized. Not because circular is better or more profitable or it has higher impact immediately. It’s only because we can’t afford it any longer, if we want to survive as human beings on this planet. Brands who will move first on circularity, before any government, while keeping their Marketing mix intact and as compelling, will win. The larger markets will need to adjust first and fast: energy goes first. Then, health, transportation, clothing, food & beverages.
As in most of this types of conversations, I wished I did not stop recording when I did – as the conversation that followed was as valuable as the one we are sharing here.
It means we will have to record a new episode with Francesco soon!
Let me know what thoughts this conversation sparked !