Jun 5, 2020 2:00:00 PM
Bob Phibbs interviewed Ionut Vlad of Tokinomo. In this episode Bob and Ionut discussed a unique concept for positioning merchandise and increasing sales without price cuts.
Ionut: Thank you, Bob, for having me, and it's a pleasure to be here and hello to your listeners.
Bob: Thank you. Because I can't speak your first name very well, we've agreed I can call you Vlad. So, I wanted to just go back.
You were a painter originally, and yet you're this tech guy and this leading, future edge of what retail can do. So, can you just walk me through, I mean, it's not a linear journey from I'm a painter and therefore I'm going to be this specialist in tech. So, briefly tell us your background.
Ionut: Yeah. It seems like a pretty absurd journey. However, there is one thing that can connect the dots, you know, it's about creativity. And I think at some point, an artist and a tech guy can meet in this kind of creativity aspect. I am actually a professional painter. I have a degree in painting.
I prepared to be an artist starting when I was 10 years old. But after I graduated, I thought that the world of advertising was more enticing to me – it was paying a lot more, it was very practical, it had to do with the real world with like, you know, it was very practical, high paid jobs.
Creativity was involved. So, I went for it. Initially I thought, you know, I'm going to stay here for a couple of years and then I'm going to return to painting. That never happened.
Bob: That money kind of gets in the way from starving artists. That's kind of nice. You know, we were talking about Andy Warhol also had done it and realized like, this pays the bills. Not so bad.
Ionut: Yeah, I am guilty, but, I don't think at the end of the day, the world missed me as a painter. I'm not sure if I would have been another Da Vinci or something. So that's all right. So basically, that was the time when I worked in advertising and I worked for a big agency.
And, that was a time when I had my chance to experience with CPG brands and also with retailers. We did a lot of campaigns in store, for example, to try to promote their products in store. And that was the time when I realized that there is a bit of a problem there because we kept doing the same old campaigns, the same old tricks like POS materials, displays, you know, though everybody knows those cardboard shelf wobblers.
Bob: Coupons, video ads. You did it. Just throw it all at them. Someone's got to buy something right.
Ionut: Right, exactly. So they had no metrics behind, because like, yeah, let's do everything and hopefully something works. Then I got the chance to work directly with the retailer and it was a duty-free retailer.
I was in charge of their private labels. I was in charge with designing the product and also, to market them, basically doing the marketing campaigns. And because I had access to their shop and also to their sales data in real time, which is a luxury most brands actually don't have, I got the chance to actually experience a lot and try different things and see what influences the sales and what influences the shoppers behavior, which, and because I had this firsthand experience, I could then transform this into our current product.
And yeah, I could tell, you know, like how, how we started, we were a couple of designers in that boutique, kind of, internal shop. And, we were trying to come up with the best design and, of course I was trying to be very like, yeah, I'm coming up with a best design, you know, I will totally outperform your product.
You know, your product is not, it's okay, but it's not that great. So, mine is going to sell a lot more than yours. But what actually happens is indeed, one week my product was a top seller, you know. And I was like, yeah, you know, I proved you wrong. You know, it's obvious now. I'm so successful as a designer.
And then, actually after the next week that the other product that he designed was selling more than mine. So, I was like, Whoa, what happened? It cannot have like, such a drop in sales.
Bob: He must've moved all your product to the back or something. He must have done something to it, right?
Ionut: Yeah. So, that was a time when I started to go each day in the store getting the sales data or observing the shoppers, trying to see how they react, what the difference is in their purchasing decision. And we tried like sampling campaigns, insert TV ads, testing, special placements, special displays and so forth.
So basically, we kind of tried everything there is. And we noticed that actually what difference is the most is when brands don't put it so much in front. The first condition for a product to be purchased is for shoppers to actually see, you know, so it's visibility.
If a guy cannot see the product, then no matter how good the packaging is, no matter the price, how good the price is, he simply will miss it completely and you will lose the chance to make a sale.
Bob: Well, and I think so, just to make sure everybody understands, he's not saying like, Oh, your product is underneath or back or something. No, what we're talking about is like, think of a duty free or a grocery store. You have a long aisle and all these products are all there. And yes, they're visible, but they're not really visible. That's what your point is. Nothing standing out, right.
Ionut: Yeah. Nothing standing out. Yes, you know, if you don't stand out, you're kind of lost in between a lot of product.
It's the same principle. Like, you know, when you are writing a text and you are making some words in bold typeface, you know, you want to make them bold because we want them to stand out. You know, if this is why we are using both typefaces in our emails or our documents. So, it is exactly the same way.
You know, in the supermarket you have all these products that are like words in an email, and if you make a certain product in a bold typeface, if you could do that, that product will stand out.
Bob: Well, that's the key. I appreciate, when I first met Vlad, I saw this video and it talked about a little bit about that, and you saw a little video of a spirits bottle and it kind of moves out from the shelf and it talks to somebody and it actually showed a guy in a grocery store.
And it talks to him. Oh, so this is some kind of AR or VR trick or something and someone's got to wear glasses or something. And then Vlad’s like No, no. That's happening in real, and I think you said to me, it's not virtual reality. We're actually RR. We're real reality.
So, what does that mean for people who are just trying to figure it out?
Ionut: Yeah, when we launched this product, everybody was talking about VR, AR, and that was the hype then. And, we thought, you know, this comes with some disadvantages. You know, people have to download some app, people have to wear some weird glasses, and so forth.
So why not make it very direct. And very real, you make it simple and effective. And I think that is what worked a lot better because if you look at today's in-store marketing tools, you won’t see so much VR or AR because none of them is long term.
It requires a lot of investment, and if you make it hard for people to experience, that's a thing that though it might be very cool, then people won’t use it long term, you know? So, you have to give it to be very simple for the shopper to experience that.
Bob: Well, and you've done that. So, what kind of results do you get from this literal shelf talker with the product actually moving out from the shelf and talking to you, which I just wish I could see it in reality myself because it is such a cool concept.
Ionut: Yeah. The concept that we had was actually to make the product, you know, to allow the product to interact directly with the shopper, and to make it lifelike, to make the product be like an actual person and talk and interact and move like a character, like a person.
So that was the concept behind. And, we have great, amazing results, really. I mean, at first we didn't even know what we had, because we didn't know what the benchmark was in the industry. So, on average, we have a 200% net increase in sales, and without any price cuts. Actually, we don't recommend to have any price cuts in our campaign because by simply creating this positive interaction with the product, people will buy the product.
You know, it's more important for them than the one cent they get, or a 10% discount or something that doesn't really bring them emotional joy.
Bob: So how do you decide what to tell a customer that's got to be your creativity? It's not just a matter of physically this product moves out and tilts towards me.
It's got to get my attention and, and have a certain personality behind it. Right? Is that where you come in or do you hire someone else to be copywriter?
Ionut: That is the, it's not ourselves anymore. We did this, you know, when we did the first pilot and we tried the prototypes, but it's also a collaboration between ourselves and the brands.
So basically, we have a new media. Think of it like, you know, you have TV, you have online, and you have Tokinomo. It's a specially designed media for in-store. So, the content and the way you design the content is a new way. So you cannot just, you know, put a radio ad there or a TV ad, you cannot just cut the audio and put it there.
You have to think of it as a new way of advertising products.
Bob: It’s kind of like creating a character for them, right? I mean, it's a personality of the brand on a shelf.
Ionut: Exactly. You give the voice and a personality to the product, and to the brand, and you have to be conversational. You have to engage the shopper. It's a lot different than seeing a TV ad, which is very passive. No, you just look at the TV and you enjoy it or not that TV ad communicates something, you know, like, you should buy me or something like that.
In our case, you should create that interaction, you should be conversational, you know, like, Hey, you know, I'm here. How are you? Why don't you buy me? Because, you know, I'm cool, and I have these amazing qualities, and take me home with you. Why won't you, you know, something like that. Or you could be very funny depending also on the personality of the brand.
You know, the tone of voice. Because it's one thing to have it for Old Spice and it's a completely other thing to have it for Dove or some other brands that have another tone of voice. Not all brands must do something funny. But of course, being funny, being entertaining works totally works.
Bob: Do men or women respond better to this or is it pretty much equal?
Ionut: I would say it's pretty much equal, I would say. Of course, the kids love it. I mean, people are actually dragging their parents to buy those products, even beer. We did the campaign for a famous bottler you know, and there was this little girl that was dragging, literally dragging her mom.
Mom, you should see this magic bottle. It's all lit up. It's like magic and it's moving and it's talking to me. You should buy it. Come on, buy it Mommy. And the mom, the mom didn't believe it. Then it's like, come on. Wow. How can a bottle talk and move? Yeah, you are crazy. You must be inventing this stuff, you know?
And she actually dragged her mom to the store and she actually bought that bottle, you know? Even though she was a woman. Probably too, she had a husband back home who could drink the beer. But anyway, you know, it is, and we have a lot of funny stories. You can see some of the reaction on our website.
Bob: For those of you who are listening to it on Apple podcasts, there'll be a link that you can actually go and we'll put several of these on so you can see how it works in real time because, it's pretty, super amazing. Now is it pretty much just for CPG, is it pretty much just in, you know, bottles and those kinds of things?
Do you see where this is going in the future or …?
Ionut: It’s not only for bottles, you know, those are just, for example, it works with virtually any product that you could find in a supermarket, in a grocery store. And also, other stores that are multi-branded stores, so not probably in stores that it's only one brand, then it doesn't make so much sense because what we do, we actually put a product and make it a star among other products that are usually competitors.
Bob: The silent products, they don't get to have a character. They're just standing there, Buy me, Buy me, because you've got a discount. Whereas you guys actually have a personality who's talking to people. So, it needs someone to compare it to almost, right?
Ionut: Yeah, exactly. And you could use it, for example, if you have a shoe store, like imagine a Nike shoe store, you could have one shoe talking to you, you know?
But it's not because all the store is Nike, then it will compete basically with other Nike products. While in our case, certainly make a difference not only for the advertised product, but also for the whole brand range. For example, we've noticed a lot that is not only the advertised product that has their sales increased. For example, if you have a Heineken can, you also have a lift in Heineken six pack.
If you would have Heineken with the lemon flavor, I'm not sure if you do, but let's say that it will also lead the sales to that particular product, even though it's not the advertisement.
Bob: So then I would expect brands must just love you. They must be clamoring to get your business, or do they just not know about you yet? I don't know how new you are.
Ionut: Well, we are pretty new. We only started to sell internationally in the last year. Every brand who is trying us is loving us, you know? But usually it's very hard to make them believe that we are actually bringing these results. We cannot actually tell them the best results that we have because nobody would believe us.
If I tell you now a story, you won't believe it.
Bob: Yeah, you have to tell me a story.
Ionut: You are not the brand, so you know, it's okay. So, we tried to work with a certain brand, which was a German dairy brand, and we told them, you know, we can increase the sales without actually making any price reduction.
And they didn't really believe us. So, like how much? Well, we can increase your sales by 200% without any price cuts. Come on. That's not possible. You are basically, I don't know, inventing stuff. So, we said, okay, let's do a pilot in only two stores and not only not decrease the price, let's increase the price, let's do this test. They agreed, surprisingly.
And they increased the price by 11% to match their main competitor, which had the larger package. So, they brought the price to the same level, but it was a smaller package. It was a mozzarella cheese and the results were like crazy.
I mean, imagine increasing the price by 11%.
Bob: Right? Yep.
Ionut: And the sales went up with 950%.
Bob: So, did they give you a crown? Did they say that we're going to give you all of our business going forward or do they think that was a fluke or that was an error?
Ionut: No, we did it in two stores, then we did another, let's say more extensive pilot in 15 stores and now we are their main in-store solution for this year and hopefully for the next year as well.
Bob: Congratulations, that’s not easy.
Ionut: Yes. And also, we are expanding in other countries as well with them on board. So yeah, they actually, that one point, another funny story. So that brand then, began to pitch our solution to the same brand in other countries like Germany, Poland, and so forth.
And at some point, that guy told me that the guy from Germany told him, But I don't really understand, do you actually own this solution, is it yours? Because he was pitching so enthusiastically that this guy thought he was pushing it too much.
Bob: Well, what I love about your story and you've been gracious with your time, Vlad, is that you saw the opportunity. You're a creative guy, you've seen what everybody else has done. It's not working. Even when you come up with your own design, you think, Oh, it must be me. And then a week later, like, Holy crap, it's not me.
And then realizing, okay, so visibility, how do we get more visible? And then you take that creativity and say, okay, we’ll make the product a superstar. And then you take it to the next level and say, well, once we've done that, now we can leave all that garbage that we would have used in the 50s and 60s.
Oh, price and promotion. We’ve got to be on an end cap. We've got to have a coupon, we've got to have a radio, whatever it's going to be. And you say, that's not it. We can actually raise the profile of the brand and claw back margin to reward not only the retailer, but to reward the CPG manufacturer. And then more importantly to say, customers value that.
Which is a whole new way of thinking. So, I mean, you're speaking my language, and then to be able to point to them with results and have them so enthusiastic with you as a vendor that they're pitching you too well, that people think, well, you must be incenting them or something. You're like, Wow, look what else we could do with this.
Ionut: Yes, exactly. Like I think it's an ideal win, win situation for everybody. So, you have, usually, a very complicated environment where you have the retailer, you have the supplier, the brands, and you also have the shopper, right? And it's very hard to make them all happy in the same time.
But I think we do that very successfully. We bring value to the retailer. We bring value to the brand. And we also bring value to the shopper. And you could see the inspire, look at our videos and see how they are smiling. I will send you some links and you will see that. Those, by the way, are not actors.
They are real people in real stores. And, but they look like actors, you know, they look like we were paying them to have this kind of reaction. And, we've bring value to the brands because we clearly make a difference in their uplift in sales. And by creating this brand engagement, we also bring value to the retailer and the brand by lifting the sales.
And by not having to reduce the margin and not entering into a price battle that currently affects both brands and retailers. And I think we prove that you can do it in a different way, in a better way.
Bob: Well, I really appreciate it because I think of when I grew up in the, I'm much younger than you, but, in the 60s when there were three television channels in the U.S. and they knew that characters sold things, right?
So, they had Starfish tuna. So, there's a little cartoon guy, and then there was Poppin fresh. He's the little guy. And for TV that kind of gave it a personality. But once you get in the aisle, you're still just A can of tuna fish, you're still just, you know, ready-made things. So, for you to be able to stand out, I just think it's an amazing product.
And if I had anything to do with CPG brands, I would be saying, how many of these can we get in here and how high is up? So how can they find out more about you? I think we have your website, but any other places they could find out? I mean, are you in the U.S. yet?
Ionut: Yes, we are trying now to have a few pilots and we have an actual distributor in the U.S. Everything unfortunately was a little bit delayed by this crisis, but yes, we are getting in the U.S. and it's going to be available pretty soon.
Bob: Great, well, I imagine that you don't need it for toilet paper right now, but, I can see when grocery stores move back to normalcy and when the supply chains are refilled, they are going to look for a solution like yours. I'm already sold and I was smiling watching your videos, my friend. So, I appreciate your time today, Vlad. I really appreciate it. Thanks so much.
Ionut: Thank you very much Bob. Well, and, looking forward to speak with you again and the best of health to your listeners.
Find out more about Ionut here.