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In defence of Adelaide
June 3, 2010, 11:09 pm
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Love it or laugh at it, Adelaide is still widely regarded as the best place to test products for the Australian market.

Why?

I had cause to think about this after a conversation with someone trying to set up a luxury handbag label based in Adelaide. They were telling me how difficult it is – there is little education about the quality of leather and products above a certain price point don’t sell.

And it’s true. One of the reasons our eastern coast cousins look down on Adelaide is the lack of availability of internationally renowned brands. They hardly exist. Starbucks went out of business within a year despite its prime location.

Part of the reason is that there just isn’t a huge awareness of otherwise well-known international brands. Brand image is of little to no significance. Why would Adelaideans go to Starbucks and pay $5 for mostly water and sugar when they can go just down the road to get a perfect Italian coffee for $3?

It would be tempting as an international brand to try and ride on success elsewhere, hoping that their reputation will precede you. But Adelaide makes you work to earn its trust and establish your credentials. You need to be patient and educate your customers. Beyond that, you need to have a product that genuinely offers value above and beyond its competitors and its brand image.

The key thing to me is that Adelaide is very insular. People like to do business with people they know, and there’s about two degrees of separation between anyone who has lived in Adelaide for a reasonable amount of time, so why bother dealing with people you don’t know?

The current paradigm of marketing is that building relationships is one of the strongest ways of building a brand, and a market like Adelaide that forces companies to do so is going to prepare them for other markets.

The smaller size of the market also makes it incredibly competitive for the consumer dollar, which makes it even tougher for new entrants.

Think of Adelaide’s market as being a more competitive, value-driven market minus the international influence. If you want to filter out everything else and find out the true Aussie taste, this is where you’ll find it.

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5 Comments so far
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“if you can make it there, you can make it anywhere”? There’s probably some truth in that – I know consumer goods are often market tested in Adelaide.
Your point about relationships is valid – and it is conversations and relationships that are the point of social media, and that are increasingly a pre-requisite for business (my phrase is “conversation –> relationship –> transaction”).

I suspect however that Starbucks struggles here (and in Melbourne) because we have a long-standing cafe culture that appreciates good coffee (thanks largely to Italian immigration) … only Americans could think Starbucks is coffee 🙂

PS I don’t actually think Adelaide needs to be “defended” … we shouldn’t be trying to “be” anything other than ourselves 🙂

Comment by Ric

True – it perhaps might act as a good test of an ability to compete in a market but I think would represent a poor entry strategy into the Australian market as a whole. This might seem self-evident but is illustrative. Consider the following:

– Adelaide is, as you say, very insular. This means that Adelaide people don’t necessarily talk to people outside of Adelaide. There’s little flow-on effect from success/popularity in Adelaide to elsewhere – at least as far as premium brands and fashion go. What was the last Australian fashion chain that started in Adelaide? This doesn’t apply to non-trend everyday consumer items like juice bars etc which are less reliant on such reputation (just good base concepts with broad general appeal requiring little explanation).

– I would dispute the same applies the other way however – Adelaide holds an aspirational viewpoint towards the eastern seaboard (demonstrated in the fact that people in Adelaide go on shopping trips to Melbourne and Sydney). Something like sass and bide was popular in Adelaide for a period that started later and ended later than the eastern seaboard. suggesting following rather.

– I agree that Starbucks is a poor example (Starbucks has also flopped in Melbourne, and only survives thanks to international students and tourists – it’s an essentially poor product from all Australian perspectives).

– Who really actually wants to be tested from the outset? Suitability within a country is a fluid concept and both the product and market adapt to each other. Your eventual target market does not necessarily represent your initial target groups – MacBook/iPod/iPhone as an example, these products were initially targeted at Mac geeks with the knowledge both the product (pricing/iTunes/apps etc) and the market (increasing savviness/desirability) would adapt to each other and eventually capture young fashionable trendsetters and then the wider population. Adelaide as a test is more likely to measure a static snapshot (ie do people right now like the product as it is, yes or no?)

Now you might say Adelaide would still be a good place to test products ie to focus group them and see whether they will be accepted by mainstream Australia. I am sure this is true to some extent (and I agree with the far wiser mind that has commented prior to me) but you must have the suspicion that the trends I’ve mentioned are symptomatic of overwhelming attitudes and should be considered outside of their limited context. I’m not saying that Adelaidians are backward or self-directionless, but that being in a wider, more diverse market means that eastern seaboard cities are likely to be more open minded and hence better early adopters, and that wouldn’t be quantified in an Adelaide focus group.

All of which does pose the question – what incentive is there for international companies looking to break into Australia to either enter or test primarily through a more close-minded smaller bubble like Adelaide, where success purely there would be likely insufficient and any success or failure would likely represent only a static picture? Discuss.

I look forward to the abusive response from the masses…

Comment by David

Okay, Starbucks, bad example.

But the point is not so much that brands looking to expand into Australia should be looking to Adelaide as a gateway, to get the proverbial foot in the door. If you wanted that – sure, go to Sydney, make a statement, there’s lots of demand and they’re open to new things.

I’m talking about companies with new products, low budgets, the kind that need to figure out if this whole expanding to Australia thing is worth it.

Basically, for them Adelaide will be the toughest market. Therefore testing the waters here means you have a better idea of whether a national roll-out is going to fly. Obviously not a blanket answer, but could be helpful, yes?

When you talk about fashion it’s a little different, and you’re definitely right that there is a trendsetting effect from the east coast. The Adelaide market is MUCH more conservative.

Comment by K

Emphasis would be on not the blanket answer and when would it actually be useful.

If you’re a small company with an emerging product and a low budget (who isn’t going to get big press from a splash in the market and hence isn’t concerned about the speed at which they roll out) would you:
(a) take that money and trial it in the sub-market where it has the best chance of success/acceptance/adoption/adaptation and flow-on
(b) take the same amount of money and trial it in a limited-prospect sub-market with attitudes lagging the leading sub-markets which might represent how middle Australia reacts if confronted with your product now in stasis but not with the chance to evolve – success does not necessitate success in the wider market (the market may well have moved on), failure does not necessitate failure (the market may be soon to be ready but Adelaide might not) and that’s a poor test by any standard.

Where you might imagine it useful is for middle-ranking companies with products in relatively stable markets to test in both trendsetter market segments and follower market segments to make sure that the phenomenon is not limited to the trendsetters ie that it will fly as a whole. An example of this might be in Melbourne with the entry of Krispy Kreme donuts – donuts are a relatively stable proposition (fat, sugar, white bread, what’s not to like?) the first branches almost simultaneous in Narre Warren (ultimate suburbia where Cory Worthington the teenager who wrecked his parents place with a house party and subsequently ended up on Big Brother was from) and QV (middle of CBD with a mix of high fashion and commuter and youth-appeal retail). So in that prospect, if a Krispy Kreme-esque company with a Krispy Kreme-esque product were looking to test the market, they might consider focus grouping/testing in inner Sydney and suburban Adelaide.

Comment by David

Good post Katherine,

I would suggest that in general Adelaide has been a good test market, however the market is moving on to a new level here. Adelaide is growing in a different direction to markets in the eastern states and also out west. Distinct differences in consumer culture is more than likely emerging in Adelaide, and as a result it may not be truely reflective of “national” or Sydney and Melbourne Trends.

It is interesting to note that many of my colleagues in China, find Adelaide as the perfect location to invest. Not becuase it is a test market for Australia, but because it is indeed different, and not Sydney. It is curious and I would expect this to potentially develop further as Adelaide’s population and market size grows further.

Comment by Nathan H. Gray




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