What makes a company successful?...

... delivering products and services that are relevant and create impact among consumers.

I combine my expertise as a Marketing executive in a Fortune 500 company and my passion as an investor to find the Companies that I think have "cracked the code" with consumers. Advertising does work. When I see a new product that fits relevant consumer trends, and that is supported with a campaign that I find particularly shrewd and innovative, I know that Company is potentially a great investment.

One of the great investors of all times, Peter Lynch, recommends to "buy what you know". You watch TV, go to the supermarket and walk around everyday. Observe... look around: what you see can make you money in the stock market. Now, let's be clear: a Company is not good just because it advertises. What we have to look for is great products supported with -and enhanced by- great advertising. The principle is simple: if something is good enough to draw your interest, it will be of interest to millions of persons just like you.

It is my goal to share with the reader my findings in the world of marketing which I think will turn into great returns for investors. Profit from it!

Tuesday, April 29, 2008

Can we invest in Green?

The Green movement is expanding like a wildfire across America and the world, and many companies are scrambling to jump into the bandwagon. I find it fascinating: the “greens”, (or “tree-huggers” or “environmentalists”) have been out there for decades, warning us about the catastrophic damage our way of life was causing to the planet. Most people would see them as a small group of na├»ve idealists (or radicals, in some cases) that made some good points, but that for the most part, grossly exaggerated the severity of the situation. As such, they were mocked and not taken very seriously. Now, they are not alone. Now, more and more people are becoming conscious about the environment and actively doing something about it. Green is quickly becoming mainstream.

What has changed? What made everyone suddenly pay attention? Most importantly perhaps, is this for real? Or is it just another fad like the carbs craze that will just fade away when consumers find another cause to embrace?

Believe it or not, the carbs craze and the green movement are related. They are expressions of the same set of values that are shaping society today. Paul Ray, in his book “The Cultural Creatives: How 50 Million People Are Changing the World”, coined the concept that has now been adopted to explain this set of values: LOHAS or Lifestyles of Health and Sustainability. LOHAS is described as “…a market segment focused on health and fitness, the environment, personal development, sustainable living, and social justice.” (http://www.lohas.com/). It sounds like a pretty hefty segment, doesn’t it? How is health and fitness related to social justice?? I addressed that in my post entitled “Consumer values to look for”: it all boils down to the pursuit of transcendental satisfaction. Inwardly driven consumers who look for holistic well-being: mind, body and soul. Consumers today demand more than the satisfaction of mere functional needs. A cup of coffee is not just a cup of coffee anymore: it must be an indulging, deeply satisfying sensorial experience that also makes them feel good because is healthy (cue in organic), allows them to help fellow human beings (enter Fair Trade) and fosters a pleasant, safe and clean environment they can enjoy (mix in sustainable and ecologically sound). Yeap, all that in a cup of coffee… or a shirt… or a car.

OK, but is this for real? There are a number of factors that tell me the underlying values behind this trend are not a short-term fad, but a new set of core principles and beliefs that are taking hold and truly dictating the way we run our lives. These principles are becoming the frame of reference in the decisions of what we buy. Some of the expressions may be temporary (like the carbs madness), but the values are here to stay. Some of those determining factors I referred to are:

Inward-driven mindset: As covered in depth in my post “Consumer values to look for

Connected globalization: Globalization is not just an economic phenomenon, but a social and cultural one. We just can’t escape the world anymore. Technology and instant communications make us witnesses of the limitations and struggles of people around the world to survive and prosper. We can’t ignore it any more than we would ignore our next-door neighbor going through hard times. A good book on this topic is Tom Friedman's The World Is Flat 3.0: A Brief History of the Twenty-first Century

Scarcity: We are finally realizing that natural resources are truly limited, and that the competition for them is increasing. This is affecting us all through increased cost of living and eroded quality of life.

Global warming: “- So, you were not kidding! It is for real, then??!!” Thank you, Mr. Gore.

Accessibility: I would dare to bet this is perhaps the most important factor in the change of attitude. People are doing something because now they can. Information, availability and cost make taking the right decisions easier and affordable.

Now that we’ve discussed the Green trend with some detail, let’s try to answer the pivotal question of this post: can we invest in Green? The answer is a categorical yes… but we have to be cautious: not everything that is green shines. In future postings, I will be covering companies that I think are doing a great job in understanding and embracing this new set of core values in their product portfolio and communications, and because of that, will capitalize on this trend and generate significant value for their shareholders.

No comments: