Dynamic Pricing: Here today, gone today.
By Paul Herbig
Pricing is one of nature’s hidden wonders. We all see it but few of us understand it. And perhaps it is rightly so. To paraphrase an ancient wise man, “ You do not want to see legislation, sausage or pricing being made. It is not necessarily an appetizing process and you will be a changed man forever more as a result.”
With the advent of the Internet and vast computational capabilities, a phenomenon called dynamic pricing has arisen, mighty in scope and tremendous in its capabilities to change habits of every American and business. Dynamic pricing. Like it or hate it, it is here and for the rest of time. Dynamic Pricing is the practice of charging different customers different prices for the same product or service . . . at the same time. It has been typical marketing practice to charge different prices (at different times) . . . the retail markdown, the seasonal sale, the inventory clear-out are all examples of this. What makes Dynamic Pricing different is that prices offered to different customers at the very same time could well be considerably different. Some examples include charging travelers different fares for the same flight or same hotel accommodations, setting prices for sporting events based on the quality of the opponents and charging borrowers different interest rates based on their credit history. From a company perspective it is full of promise and excitement, yet fraught with risk. Dynamic pricing gives marketers the flexibility to pursue margins and sales volumes simultaneously I(especially true in settings with high uncertainty regarding market condition), and that increases profits. Companies that experiment with dynamic pricing could lose a few customers but the gains from the many, many customers who don't care would far outweigh the losses.
It is both new and old. In some ways, Dynamic Pricing is as old as commerce. Think of the Arab bazaars where buyers haggle with merchants over the price of spices and rugs. One buyer could well get a price considerably different from another buyer of the exact same good within minutes or seconds of each other. What makes it different is with the advent of technology, Software programs using sophisticated statistical models and algorithms can crunch all the factors that go into determining something's price, including market trends, competitors' prices, the cost to produce and sell the item, and the customer's demographic information and past purchasing history. Companies can now disseminate an individual price instantly to the Web, to store, or to customers anywhere in the world at anytime of day. Overstock.com acknowledges the company watches how long you linger on the site and how much you spend which could determine whether you will see a notice of a liquidation sale or a new shipment of premium priced items
An urban myth had Coca-Cola developing the ultimate in a dynamic pricing vending machine. The machine could sense the outside temperature, the number of cans of each brand still left in the machine, the time of day and was programmed to factor in how many nearby vending or retailing outlets existed. Then it supposedly would change the price instantaneously accordingly. That is, if it were hot outside, the machine isolated and how few cokes were left, the machine would register a significantly higher price than if it were cold and stocked full.
You too can check out dynamic pricing on the web. If you already have an Amazon or other online retailer account, create a second email address, than order the same item from your regular account as you would from your new address. Preferably do it as close together as possible. Are the prices the same? If not, odds are that your new account was provided a lower price (as inducement to become a new customer ). Or even go to a site, check out the price and return moments later and you may well get a totally different price..
Yes it is here to stay. What can customers do? Compare often. Shop carefully and become more savvy with the technology race. Marketers beware. Dynamic Pricing offers higher margin but at a cost of consumer discontent. What is the value of a lost customer to you? And more to the point, how important is your reputation? Do you want to be perceived as the ever shifting (and shifty) company or one that is consistent and fair to all? The choice is yours.
One is to make customers who pay a higher price feel they're getting more for their money. For instance, travelers are willing to pay hundreds of dollars more on first-class plane tickets even though the ticket doesn't get them to their destination any faster than the folks flying economy. What it does get them are perks such as complimentary drinks and more comfortable seats. Dynamic pricing also lends itself to products that are purchased infrequently, such as cars or luxury goods, because consumers are less likely to remember how much they paid or to compare prices with friends. Finally, segment customers appropriately and don't charge higher prices to those who are price-sensitive. Otherwise, you'll definitely alienate customers.
Saturday, August 25, 2007
Tuesday, August 21, 2007
Numbers
Numbers
Numbers is the award winning CBS science drama that shows on Friday nights. It has become quite a hit in the year plus it has been airing. Once or twice in each episode the young math progeny professor (who could multiply four digit numbers together before he could even speak complete sentences) describes how a mathematical concept (simple or otherwise) or mathematical law can be used to assist the good buys in finding or stopping the bad guys. Add some nifty graphics and visuals and it makes for good TV and some true learning about how that dismal mathematics we all learned in high school can be applied to real world problems. For nerds, it shows that you too can be cool. Of course, it is a drama show with the math angle as the device to provide hour -long drama. Nonetheless, it does provide some real-world education benefits, which is more than I can say for practically everything else on the tube.
So what does Numbers have to do with Marketing? Simply this, do you as a businessperson know your numbers? Do you even know what numbers we are talking about? Do you know what numbers are the important ones and which can be happily ignored? If so, go to the head of the class, you are dismissed from class and can go back to adding on to your net worth. IF not, come to the front of the room, pull up a chair and be prepared for some basics.
Here are the questions about numbers you should be asking yourself: How many leads do you get per day? Week? Year? More or less than last year at this time? What is your conversion rate (that is, converting leads into customers)? Is it rising or falling? How many customers do you have? Compared to last month or year? How many potential customers exist in your universe (your market area)? Is the number increasing or decreasing? What market share do you have? How many competitors do you have in your market area? How do you compare to your competitors? How many regular customers do you have versus transient one-of-a-kind customers? What is your average revenue per customer? What is your average revenue per regular customer? Do you know your profit margin for each product? For each customer or class of customer? Can you answer any of these questions?
Why is this important? How does this relate to you? Think of some products. No, not the type of products you sell but the type you get when you multiply two numbers. Your number of leads times your conversion rate provides you with the product that is the number of customers you have. Multiply this number by the revenue per customer and you have total sales. One more multiplication, this time revenues by the profit margin per customer should provide you with the total profit. Do you have these numbers? If not, what have you been using? Do you know how much better or worse you do from year to year? Do you have an idea as to why you are being better or worse? (for instance, if you improve your conversion rate slightly, this increases your revenue and profit stream if all else stays the same.) But if you do not measure it, you have no idea what happened within the black box called your business and hence cannot readily analyze what is the cause of business swings that regularly occur. But you might say I do not have time to spend to analyze my market and my numbers for I must work constantly to stay in business as it is . But I ask you, can you NOT afford to do so?
Take the time to find the numbers that matter, to analyze them, to understand the dynamics of your business, and then use them to make your business grow and become more profitable.
Numbers is the award winning CBS science drama that shows on Friday nights. It has become quite a hit in the year plus it has been airing. Once or twice in each episode the young math progeny professor (who could multiply four digit numbers together before he could even speak complete sentences) describes how a mathematical concept (simple or otherwise) or mathematical law can be used to assist the good buys in finding or stopping the bad guys. Add some nifty graphics and visuals and it makes for good TV and some true learning about how that dismal mathematics we all learned in high school can be applied to real world problems. For nerds, it shows that you too can be cool. Of course, it is a drama show with the math angle as the device to provide hour -long drama. Nonetheless, it does provide some real-world education benefits, which is more than I can say for practically everything else on the tube.
So what does Numbers have to do with Marketing? Simply this, do you as a businessperson know your numbers? Do you even know what numbers we are talking about? Do you know what numbers are the important ones and which can be happily ignored? If so, go to the head of the class, you are dismissed from class and can go back to adding on to your net worth. IF not, come to the front of the room, pull up a chair and be prepared for some basics.
Here are the questions about numbers you should be asking yourself: How many leads do you get per day? Week? Year? More or less than last year at this time? What is your conversion rate (that is, converting leads into customers)? Is it rising or falling? How many customers do you have? Compared to last month or year? How many potential customers exist in your universe (your market area)? Is the number increasing or decreasing? What market share do you have? How many competitors do you have in your market area? How do you compare to your competitors? How many regular customers do you have versus transient one-of-a-kind customers? What is your average revenue per customer? What is your average revenue per regular customer? Do you know your profit margin for each product? For each customer or class of customer? Can you answer any of these questions?
Why is this important? How does this relate to you? Think of some products. No, not the type of products you sell but the type you get when you multiply two numbers. Your number of leads times your conversion rate provides you with the product that is the number of customers you have. Multiply this number by the revenue per customer and you have total sales. One more multiplication, this time revenues by the profit margin per customer should provide you with the total profit. Do you have these numbers? If not, what have you been using? Do you know how much better or worse you do from year to year? Do you have an idea as to why you are being better or worse? (for instance, if you improve your conversion rate slightly, this increases your revenue and profit stream if all else stays the same.) But if you do not measure it, you have no idea what happened within the black box called your business and hence cannot readily analyze what is the cause of business swings that regularly occur. But you might say I do not have time to spend to analyze my market and my numbers for I must work constantly to stay in business as it is . But I ask you, can you NOT afford to do so?
Take the time to find the numbers that matter, to analyze them, to understand the dynamics of your business, and then use them to make your business grow and become more profitable.
Monday, August 13, 2007
Viral Marketing
Viruses are catchy: More on viral marketing
Viral marketing essentially takes advantage of the rapid multiplication effects of online social networks (through e-mail, chat rooms, IM, file-sharing networks, etc.) to help spread a commercial message on the cheap. Potential exists for exponential growth in message exposure that can far exceed what's achievable were similar budget spent on commercial media channels. Passed via peer to peer, "word of mouse" messages can help endorse a brand among like-minded consumers, thus spreading its influence. Because they're passed between individuals at a low distribution level they can bypass spam filters with relative ease.
Those seeking to attract and influence a young, Web-savvy, male-oriented audience should consider online viral tactics. Many of the most successful viral marketing campaigns have come from advertisers promoting consumer packaged goods and lifestyle brands to this demographic.
Here are six rules on how to succeed at v-marketing (as it is quickly becoming known as) .
Rule 1: Stealth is the essence of market entry
Most marketers know that getting into the consumer's mind is the toughest part of the challenge; the usual response is simply to turn up the volume. Viruses are smarter: They find a way into the host under the guise of another, unrelated activity.
PepsiCola is one company that has begun to experiment with v-marketing. Its Mountain Dew campaign offers kids the chance to send 10 proofs of purchase and $35 to qualify for a Motorola pager. Cool! The kids have to subscribe to the paging service themselves, and Mountain Dew reserves the right to beep their newly equipped customers with Dew-related messages on a weekly basis. So every time the pager goes off, it reminds the kids indirectly who's responsible for getting them that way-cool piece of social technology.
Rule 2 : What's up-front is free; payment comes later
Viruses are unusually patient little buggers. Many will lie dormant in their host for years before demanding payback; digital viruses often burrow into an unsuspecting hard drive and wait for their trigger date such as Michaelangelo's birthday before making their presence known. It's a corollary to stealth: no payment up-front.
Consider how Intuit's wildly popular Quickenrogram got its start. It all spread from a single campaign that contained a basic message: order the product and pay nothing. If you aren't productive within eight minutes of opening the box, tear up the invoice.
Of course, most users were not only balancing their checkbooks within eight minutes but also discovering that they couldn't live without this software. The result: 70% global market share in personal-financial-management software with minimal expenses for traditional marketing or selling. As an added bonus, Quicken gained an installed base to drive pricier sales of ancillary products such as checks and upgrades.
Rule 3: Let the behaviors of the target community carry the message
Viruses do not spread by chance. They let the high-frequency behaviors of their hosts -- social interaction, email, Websurfing -- carry them into new territories. The lesson for v-marketers: fashion your messages so that the target markets will transmit them as a part of their core interests.
This tactic works best when absolutely no one is masterminding the campaign. On America Online, for example, there are multitudes of chat rooms for investors; Motley Fool is only the most prominent. Not long ago, these communities got hold of a couple of high-tech stocks Iomega and Presstek that key members of the group "talked up" as hot investment opportunities. Both stocks enjoyed a skyrocketing hundred-fold increase, carried by the hospitable hype of the online hosts. When the mainstream press caught on, critics rushed in to pop the bubble. But compared to their starting points before AOL came along, Iomega and Presstek still trade at hugely inflated prices.
Rule 4: Look like a host, not a virus
Because they are able to masquerade as something they are not, viruses are able to avoid being rejected by human immune and computer operating systems. They enter human cells and mimic genetic material, or they enter software systems and mimic existing code. The message to v-marketers: be the host.
One consumer marketing company, albeit one with lots of money, has perfected the tactic. Consider Nike's "Just Do It" campaign. All it takes is megabucks to hire the world's most sought-after celebrity athletes, to buy television time at $40,000 a second during the Super Bowl, and to saturate the retail channel with product promotions and giveaways. But none of that worked as well as Nike's ubiquitous tag line, "Just Do It." The phrase is practically an entry in the Merriam-Webster Collegiate Dictionary under the listing: American culture. Everyone from cynical marketers in ad agencies to prison guards in B-movies is using the phrase without irony. Every time they use it, they're endorsing Nike products.
Rule 5: Exploit the strength of weak ties
Sociologists have long noted that individuals with many casual social connections have a larger influence on communities than do individuals with fewer strong connections. Viruses thrive on weak ties. The movement of viruses over the Web -- a practically infinite collection of weak ties in countless virtual communities -- is a prime example.
In business, such tactics are the instinctive practice of companies engaging in multilevel marketing: marketers such as Tupperware, Amway, and Mary Kay Cosmetics, for instance. In each of these businesses, the strategy is to find a collection of individuals who excel at developing a large number of weak ties -- and use those ties to sell products and services. Tupperware, for example, gets someone in a social community, such as a suburban neighborhood, to host a party featuring Tupperware. Everything about the party is ostensibly noncommercial: it's her house, her food, her friends. But the social interaction is funded by the sale of Tupperware products. What's social is indistinguishable from what's commercial a powerful business network built on weak social ties.
Law 6: Invest to reach the tipping point
Viruses do not become epidemics until they reach the tipping point. In other words, the virus must expand through the host population until it reaches a certain threshold of visibility and scale. Assume, for example, a virus doubles each year. In year one, it's only 1% of the host and scarcely detectable. In year two, it's still minute, only 2%. But in year five, it's 16% -- and suddenly it's an epidemic. V-marketers must understand that they're playing the same game because the impact of exploiting weak ties does not come overnight.
That's why Microsoft's true leverage with its DOS and Windows operating systems took a decade to pay off. Today Microsoft operating systems run on an estimated 85 million PCs the world over. That's why CNN was viewed as a joke by the mainstream press -- until suddenly everyone from Saddam Hussein to Bill Clinton was getting real-time news exclusively from the 24-hour network.
Though you can certainly derive a number of benefits from encouraging the viral spread of commercial content, be aware of the limitations. You cannot control the message and the channel thus making outcomes unpredictable and difficult to measure. The proportion of the online audience likely to participate is small. Jupiter Research's latest European consumer survey shows only 5 percent of the Internet population had forwarded an advertising message. Of respondents who said they had, 64 percent were under 34 years old and 56 percent were male.
If you want to use viruses, be smart and be patient.
Viral marketing essentially takes advantage of the rapid multiplication effects of online social networks (through e-mail, chat rooms, IM, file-sharing networks, etc.) to help spread a commercial message on the cheap. Potential exists for exponential growth in message exposure that can far exceed what's achievable were similar budget spent on commercial media channels. Passed via peer to peer, "word of mouse" messages can help endorse a brand among like-minded consumers, thus spreading its influence. Because they're passed between individuals at a low distribution level they can bypass spam filters with relative ease.
Those seeking to attract and influence a young, Web-savvy, male-oriented audience should consider online viral tactics. Many of the most successful viral marketing campaigns have come from advertisers promoting consumer packaged goods and lifestyle brands to this demographic.
Here are six rules on how to succeed at v-marketing (as it is quickly becoming known as) .
Rule 1: Stealth is the essence of market entry
Most marketers know that getting into the consumer's mind is the toughest part of the challenge; the usual response is simply to turn up the volume. Viruses are smarter: They find a way into the host under the guise of another, unrelated activity.
PepsiCola is one company that has begun to experiment with v-marketing. Its Mountain Dew campaign offers kids the chance to send 10 proofs of purchase and $35 to qualify for a Motorola pager. Cool! The kids have to subscribe to the paging service themselves, and Mountain Dew reserves the right to beep their newly equipped customers with Dew-related messages on a weekly basis. So every time the pager goes off, it reminds the kids indirectly who's responsible for getting them that way-cool piece of social technology.
Rule 2 : What's up-front is free; payment comes later
Viruses are unusually patient little buggers. Many will lie dormant in their host for years before demanding payback; digital viruses often burrow into an unsuspecting hard drive and wait for their trigger date such as Michaelangelo's birthday before making their presence known. It's a corollary to stealth: no payment up-front.
Consider how Intuit's wildly popular Quickenrogram got its start. It all spread from a single campaign that contained a basic message: order the product and pay nothing. If you aren't productive within eight minutes of opening the box, tear up the invoice.
Of course, most users were not only balancing their checkbooks within eight minutes but also discovering that they couldn't live without this software. The result: 70% global market share in personal-financial-management software with minimal expenses for traditional marketing or selling. As an added bonus, Quicken gained an installed base to drive pricier sales of ancillary products such as checks and upgrades.
Rule 3: Let the behaviors of the target community carry the message
Viruses do not spread by chance. They let the high-frequency behaviors of their hosts -- social interaction, email, Websurfing -- carry them into new territories. The lesson for v-marketers: fashion your messages so that the target markets will transmit them as a part of their core interests.
This tactic works best when absolutely no one is masterminding the campaign. On America Online, for example, there are multitudes of chat rooms for investors; Motley Fool is only the most prominent. Not long ago, these communities got hold of a couple of high-tech stocks Iomega and Presstek that key members of the group "talked up" as hot investment opportunities. Both stocks enjoyed a skyrocketing hundred-fold increase, carried by the hospitable hype of the online hosts. When the mainstream press caught on, critics rushed in to pop the bubble. But compared to their starting points before AOL came along, Iomega and Presstek still trade at hugely inflated prices.
Rule 4: Look like a host, not a virus
Because they are able to masquerade as something they are not, viruses are able to avoid being rejected by human immune and computer operating systems. They enter human cells and mimic genetic material, or they enter software systems and mimic existing code. The message to v-marketers: be the host.
One consumer marketing company, albeit one with lots of money, has perfected the tactic. Consider Nike's "Just Do It" campaign. All it takes is megabucks to hire the world's most sought-after celebrity athletes, to buy television time at $40,000 a second during the Super Bowl, and to saturate the retail channel with product promotions and giveaways. But none of that worked as well as Nike's ubiquitous tag line, "Just Do It." The phrase is practically an entry in the Merriam-Webster Collegiate Dictionary under the listing: American culture. Everyone from cynical marketers in ad agencies to prison guards in B-movies is using the phrase without irony. Every time they use it, they're endorsing Nike products.
Rule 5: Exploit the strength of weak ties
Sociologists have long noted that individuals with many casual social connections have a larger influence on communities than do individuals with fewer strong connections. Viruses thrive on weak ties. The movement of viruses over the Web -- a practically infinite collection of weak ties in countless virtual communities -- is a prime example.
In business, such tactics are the instinctive practice of companies engaging in multilevel marketing: marketers such as Tupperware, Amway, and Mary Kay Cosmetics, for instance. In each of these businesses, the strategy is to find a collection of individuals who excel at developing a large number of weak ties -- and use those ties to sell products and services. Tupperware, for example, gets someone in a social community, such as a suburban neighborhood, to host a party featuring Tupperware. Everything about the party is ostensibly noncommercial: it's her house, her food, her friends. But the social interaction is funded by the sale of Tupperware products. What's social is indistinguishable from what's commercial a powerful business network built on weak social ties.
Law 6: Invest to reach the tipping point
Viruses do not become epidemics until they reach the tipping point. In other words, the virus must expand through the host population until it reaches a certain threshold of visibility and scale. Assume, for example, a virus doubles each year. In year one, it's only 1% of the host and scarcely detectable. In year two, it's still minute, only 2%. But in year five, it's 16% -- and suddenly it's an epidemic. V-marketers must understand that they're playing the same game because the impact of exploiting weak ties does not come overnight.
That's why Microsoft's true leverage with its DOS and Windows operating systems took a decade to pay off. Today Microsoft operating systems run on an estimated 85 million PCs the world over. That's why CNN was viewed as a joke by the mainstream press -- until suddenly everyone from Saddam Hussein to Bill Clinton was getting real-time news exclusively from the 24-hour network.
Though you can certainly derive a number of benefits from encouraging the viral spread of commercial content, be aware of the limitations. You cannot control the message and the channel thus making outcomes unpredictable and difficult to measure. The proportion of the online audience likely to participate is small. Jupiter Research's latest European consumer survey shows only 5 percent of the Internet population had forwarded an advertising message. Of respondents who said they had, 64 percent were under 34 years old and 56 percent were male.
If you want to use viruses, be smart and be patient.
Thursday, August 9, 2007
इन्तेग्रतेद Marketing
As Benjamin Franklin said during the Revolutionary War, “Gentleman, we must hang together or we will hang separately.” Neither marketing nor sales can succeed on their own; but together, working in unison, they create a powerful, almost irresistible force. Marketing needs the feedback from sales to determine what is working and what isn’t. They must know what promotions work and those that don’t. Sales cannot be competitive without the tools that an enlightened marketing can provide.
Integrated Marketing or Collaborative Selling is where all aspects of the organization, marketing, sales, support, customer service, are found within one umbrella organization and all facets, data bases, personnel, etc are integrated to optimize previously discrete business departments. The objective is to link all the business processes among all these common elements into a smooth flowing cooperative endeavor. If successful, the end result will be the creation of a Customer-centric organizations.
We want to be one company, providing a single face, to the customer. Therefore, you must integrate all interactions to the customer to create the customer expectations and customer experience that is relevant and useful to that customer. Companies that integrate internally across those sales and marketing process see benefits exceeding 20 to 30 percent over those that do not integrate. The ultimate is thinking of sales and marketing as one and not two organizations linked together. Consistency is the key: to be viewed at all times through all angles by all customers the same way, providing the same message.
Integration continues to gain ground slowly and painfully. Necessity, not corporate vision, will continue to drive the process of improved marketing and sales integration. Silo-based management of sales and marketing resources promotes waste and thwarts results measurement. It also creates a procedural barrier to ensuring that organizational actions align with organizational goals related to sales and customer retention
Major barriers to integration remain. Don't bet on integrated marketing becoming a corporate fad. Unlike past fads, the process of integrating business development and retention faces some unique obstacles that actually might benefit the process in the long run. Perhaps the biggest obstacle is the lack of a clear champion, short of the chief executive. Integrated strategies span sales, marketing, human resources, and operations, and few people, aside from very senior executives, have responsibilities spanning this range.
Large companies such as IBM have created integrated marketing groups, but even these don't necessarily tie into the customer service and operational issues that go along with the need to fulfill marketing promises at the operational level. Large ad agencies for years have claimed to offer this service, but, with few exceptions, integration really means the offering of additional direct marketing, promotional, or other tactical services, and not high-level organizational consulting potentially needed to align organizational silos with organizational goals. (Coke recently announced that its next ad agency will have to come up with inventive new ways to promote the brand beyond creating new types of television ads.)
Companies with a results-oriented, integrated approach to business development and retention almost always run their businesses this way, because the bosses insist on it. In the meantime, more and more of the nation's business schools are turning out students with exposure in one way or another to the emerging area of integrated management,
which could eventually create a new group of leaders less wedded to a specific
tactic.
Integrated marketing is the wave of the future and the separator for companies that will succeed and those that will fail. Which will you be?
Integrated Marketing or Collaborative Selling is where all aspects of the organization, marketing, sales, support, customer service, are found within one umbrella organization and all facets, data bases, personnel, etc are integrated to optimize previously discrete business departments. The objective is to link all the business processes among all these common elements into a smooth flowing cooperative endeavor. If successful, the end result will be the creation of a Customer-centric organizations.
We want to be one company, providing a single face, to the customer. Therefore, you must integrate all interactions to the customer to create the customer expectations and customer experience that is relevant and useful to that customer. Companies that integrate internally across those sales and marketing process see benefits exceeding 20 to 30 percent over those that do not integrate. The ultimate is thinking of sales and marketing as one and not two organizations linked together. Consistency is the key: to be viewed at all times through all angles by all customers the same way, providing the same message.
Integration continues to gain ground slowly and painfully. Necessity, not corporate vision, will continue to drive the process of improved marketing and sales integration. Silo-based management of sales and marketing resources promotes waste and thwarts results measurement. It also creates a procedural barrier to ensuring that organizational actions align with organizational goals related to sales and customer retention
Major barriers to integration remain. Don't bet on integrated marketing becoming a corporate fad. Unlike past fads, the process of integrating business development and retention faces some unique obstacles that actually might benefit the process in the long run. Perhaps the biggest obstacle is the lack of a clear champion, short of the chief executive. Integrated strategies span sales, marketing, human resources, and operations, and few people, aside from very senior executives, have responsibilities spanning this range.
Large companies such as IBM have created integrated marketing groups, but even these don't necessarily tie into the customer service and operational issues that go along with the need to fulfill marketing promises at the operational level. Large ad agencies for years have claimed to offer this service, but, with few exceptions, integration really means the offering of additional direct marketing, promotional, or other tactical services, and not high-level organizational consulting potentially needed to align organizational silos with organizational goals. (Coke recently announced that its next ad agency will have to come up with inventive new ways to promote the brand beyond creating new types of television ads.)
Companies with a results-oriented, integrated approach to business development and retention almost always run their businesses this way, because the bosses insist on it. In the meantime, more and more of the nation's business schools are turning out students with exposure in one way or another to the emerging area of integrated management,
which could eventually create a new group of leaders less wedded to a specific
tactic.
Integrated marketing is the wave of the future and the separator for companies that will succeed and those that will fail. Which will you be?
Tuesday, August 7, 2007
When Perfect is No Longer enough
Nadia. The name itself implies a senior moment. Nadia Comianci, as you who remember here would know, was a Romanian waif, a delightfully charming china-doll, who won our hearts in the 1976 Olympics in Montreal by posting the first ever 10 in Olympic history in gymnastics, not just once but several times. Those who watched and wondered saw history in the making, but not for the reason you would think. That unique experience made front page headlines all across the world. Perfect as it was once defined was the unachievable, always just beyond the possible. Only my old roommate Freak could ever claim to be perfect telling me, “ I thought I made a mistake once but I was wrong.”
But how times have changed. Nowadays, gymnasts routinely get 10s, so much so it does not even make the news in the local sports page. And perfect has changed in other events as well. I remember the once lauded academic achievement of “Straight As” was an honor that almost guaranteed an IVY league full—paid ride. Not one person had ever received a “Perfect 4.0” at my high school in the 100 years of its being in existence. That is, no one had before me (and certainly not me as I scored numerous Bs in gym and typing), but sometime about the early eighties it changed. Since that time, that once unimaginable honor has been given not a few times but many and often numerous times within the same class. It is hard to believe that today’s kids are much smarter than those in my day. If this is not the case, what happened?
Grade inflation. Score inflation. Inflation in general. A recent honors ceremony I attended provided some clues. Academic honors were given out for achievement in several basic classes: Math, English, Social Studies. As the names were called and students went up to get their awards, I noticed that almost every child received one. The reason, as I found out later, was “it helps their self esteem to get an award,” and “we don’t want any students to be left out.” (similar to what is happening in organized sports when every participant now gets an award regardless of performance.) Then the top ten were announced. As the principal read off the names and the ten students came up, he indicated, “The tenth place academically required a GPA of 11.319, that is, more than a straight A average.” Then it hit me. What once was an extraordinary achievement, one so high that no one had in the history of a school reached that level, was now so commonplace that doing so does not even guarantee a top ten ranking (My son received a Straight A on his final report with the footnote that he was now ranked 19th in his class).
When everyone is perfect, perfect has no meaning. How then can you rank and identify the top achievers. Why by creating an A+ grade, of course. This too has its limits as the award ceremony showed. When too many students start getting A+s, then the definition of perfect must change again. What then will be created? A++? When C was once representative of an “Average” Grade, it now for all practical matters represents failure and B has become the baseline average. When judges are scoring everyone as 10s (to not to hurt their feelings and hinder their self esteem no doubt), how can they then differentiate the outstanding from the just average. Are we trying to be a Lake Wobegon suburb where everyone scores above average?
Perfect once meant something. Almost perfect showed excellence and capability. But in a world where everyone scores almost perfect and many score perfect, what then does perfect really mean?
Is it time to return to the old days when perfect stood for something?
But how times have changed. Nowadays, gymnasts routinely get 10s, so much so it does not even make the news in the local sports page. And perfect has changed in other events as well. I remember the once lauded academic achievement of “Straight As” was an honor that almost guaranteed an IVY league full—paid ride. Not one person had ever received a “Perfect 4.0” at my high school in the 100 years of its being in existence. That is, no one had before me (and certainly not me as I scored numerous Bs in gym and typing), but sometime about the early eighties it changed. Since that time, that once unimaginable honor has been given not a few times but many and often numerous times within the same class. It is hard to believe that today’s kids are much smarter than those in my day. If this is not the case, what happened?
Grade inflation. Score inflation. Inflation in general. A recent honors ceremony I attended provided some clues. Academic honors were given out for achievement in several basic classes: Math, English, Social Studies. As the names were called and students went up to get their awards, I noticed that almost every child received one. The reason, as I found out later, was “it helps their self esteem to get an award,” and “we don’t want any students to be left out.” (similar to what is happening in organized sports when every participant now gets an award regardless of performance.) Then the top ten were announced. As the principal read off the names and the ten students came up, he indicated, “The tenth place academically required a GPA of 11.319, that is, more than a straight A average.” Then it hit me. What once was an extraordinary achievement, one so high that no one had in the history of a school reached that level, was now so commonplace that doing so does not even guarantee a top ten ranking (My son received a Straight A on his final report with the footnote that he was now ranked 19th in his class).
When everyone is perfect, perfect has no meaning. How then can you rank and identify the top achievers. Why by creating an A+ grade, of course. This too has its limits as the award ceremony showed. When too many students start getting A+s, then the definition of perfect must change again. What then will be created? A++? When C was once representative of an “Average” Grade, it now for all practical matters represents failure and B has become the baseline average. When judges are scoring everyone as 10s (to not to hurt their feelings and hinder their self esteem no doubt), how can they then differentiate the outstanding from the just average. Are we trying to be a Lake Wobegon suburb where everyone scores above average?
Perfect once meant something. Almost perfect showed excellence and capability. But in a world where everyone scores almost perfect and many score perfect, what then does perfect really mean?
Is it time to return to the old days when perfect stood for something?
Brands are Forever
Brands are forever
“All our factories and facilities could burn down tomorrow but you’d hardly touch the value of the company; all that actually lies in the goodwill of our brand franchise and the collective knowledge in the company.” Roberto Gonzueta, the late CEO of Coca-Cola:
Brands still matter, but not as much. Only 32% of respondents to an America's Research survey said that brands are extremely important for choosing holiday gifts, versus 48% three years ago, according to a recent New York Times article. This correlates with a report in the Wall Street Journal indicating increased demand for monogrammed or otherwise personalized items, suggesting some people may be more interested in branding themselves than adopting and promoting commercial brands on their clothing and personal effects. They may be of less importance, but they still are important.
In the meantime, brands still do have value, as proven not only by the continued willingness of consumers to pay more for names like Gucci and Louis Vuitton, but also the potential willingness of the likes of Donald Trump to invest in a scheme to save the FAO Schwarz -the major toy retailer in bankruptcy. The company failed, because it embarked on risky expansions outside of the FAO Schwarz umbrella and undercut the unique shopping experience and product selection that let FAO Schwarz charge a little more. The brand, however, still has value, as it is synonymous with unique items at the high end of the toy market.
A recent survey by the Henley Center indicated that the public trusts brand names more than government, the police, and the legal system. This research highlights the importance of the relationship that still exists between consumers and trusted brands. Three trends support this belief: individualism encourages self-identification through consumption and the brands you buy/wear/eat; globalization allows brands to become a worldly phenomena for consumers; and symbolic experiences are increasingly in demand—consumers are buying experiences, whose contents are largely image driven, intangible, and symbolic, rather than commodities.
Branding creates attachments between customers and the product: the stronger, the attachment, the better the branding. The brand creates awareness of your product and above all, differentiates it from other products (if you cannot provide differentiation to your product, you do not have a brand!) Make your brand/product come alive. Give it history, perspective. Give it a life of its own. Provide your audience with details of the product, its history, its development, the people behind the story, designers, engineers, support staff. Put the human touch on it. Bring it to life. Make it personal. Remove the all too often assumption of it being a commodity, one of millions coming off the assembly belt every day. Attach the product to real people (not just celebrity endorsers), the real people behind the story and people will see it as real, not just a thing. Caveat, though. Avoid over-slickness. Consumers are smart and becoming smarter every day. As cynical as they are, they will easily see through such puffery and your brand and brand image will suffer as a result.
Branding is all encompassing. Even the smallest of details goes into the branding. It is also a 24/7 endeavor. Employees wearing the brand or brand logo even on their off-hours or engaging in activities whether representing the company/brand officially or not can impact the brand and its position. For example, a Disney employee still wearing his Disney attire can harm the brand by uttering un-family like vocabulary or engaging in public activities that would go against the spirit of that brand. If your brand is belly button rings or tongue piercings, perhaps those forms of expression would equate to the image you desire for your brand. But certainly not for Disney, as well as most other brands in the world.
And remember, the brand is only as good as the product: it requires constant vigilance on your part to maintain the quality and functionality of the product, any lessening provides the consumers with reasons to breech the contract between you, the brand/product, and themselves. A brand should be focused on the long-term relationship between it and the consumer; any short-term gain you may attempt could well hurt the long-term value of the brand.
Brands can be forever. Don’t dilute its brand equity just to make next quarter’s numbers.
“All our factories and facilities could burn down tomorrow but you’d hardly touch the value of the company; all that actually lies in the goodwill of our brand franchise and the collective knowledge in the company.” Roberto Gonzueta, the late CEO of Coca-Cola:
Brands still matter, but not as much. Only 32% of respondents to an America's Research survey said that brands are extremely important for choosing holiday gifts, versus 48% three years ago, according to a recent New York Times article. This correlates with a report in the Wall Street Journal indicating increased demand for monogrammed or otherwise personalized items, suggesting some people may be more interested in branding themselves than adopting and promoting commercial brands on their clothing and personal effects. They may be of less importance, but they still are important.
In the meantime, brands still do have value, as proven not only by the continued willingness of consumers to pay more for names like Gucci and Louis Vuitton, but also the potential willingness of the likes of Donald Trump to invest in a scheme to save the FAO Schwarz -the major toy retailer in bankruptcy. The company failed, because it embarked on risky expansions outside of the FAO Schwarz umbrella and undercut the unique shopping experience and product selection that let FAO Schwarz charge a little more. The brand, however, still has value, as it is synonymous with unique items at the high end of the toy market.
A recent survey by the Henley Center indicated that the public trusts brand names more than government, the police, and the legal system. This research highlights the importance of the relationship that still exists between consumers and trusted brands. Three trends support this belief: individualism encourages self-identification through consumption and the brands you buy/wear/eat; globalization allows brands to become a worldly phenomena for consumers; and symbolic experiences are increasingly in demand—consumers are buying experiences, whose contents are largely image driven, intangible, and symbolic, rather than commodities.
Branding creates attachments between customers and the product: the stronger, the attachment, the better the branding. The brand creates awareness of your product and above all, differentiates it from other products (if you cannot provide differentiation to your product, you do not have a brand!) Make your brand/product come alive. Give it history, perspective. Give it a life of its own. Provide your audience with details of the product, its history, its development, the people behind the story, designers, engineers, support staff. Put the human touch on it. Bring it to life. Make it personal. Remove the all too often assumption of it being a commodity, one of millions coming off the assembly belt every day. Attach the product to real people (not just celebrity endorsers), the real people behind the story and people will see it as real, not just a thing. Caveat, though. Avoid over-slickness. Consumers are smart and becoming smarter every day. As cynical as they are, they will easily see through such puffery and your brand and brand image will suffer as a result.
Branding is all encompassing. Even the smallest of details goes into the branding. It is also a 24/7 endeavor. Employees wearing the brand or brand logo even on their off-hours or engaging in activities whether representing the company/brand officially or not can impact the brand and its position. For example, a Disney employee still wearing his Disney attire can harm the brand by uttering un-family like vocabulary or engaging in public activities that would go against the spirit of that brand. If your brand is belly button rings or tongue piercings, perhaps those forms of expression would equate to the image you desire for your brand. But certainly not for Disney, as well as most other brands in the world.
And remember, the brand is only as good as the product: it requires constant vigilance on your part to maintain the quality and functionality of the product, any lessening provides the consumers with reasons to breech the contract between you, the brand/product, and themselves. A brand should be focused on the long-term relationship between it and the consumer; any short-term gain you may attempt could well hurt the long-term value of the brand.
Brands can be forever. Don’t dilute its brand equity just to make next quarter’s numbers.
Revenge of the Neglected Customer
Revenge of the neglected customer
“He who laughs last . . .” anonymous humorist-critic-spurned customer
In this column I have often harped upon the lack of customer service that exists in the world and the all-too-present and persistent notion that chopping a few cents off a product gives a provider the right to offer poor or non-existent service. Well, it is time to discuss this topic once again. And I will continue to wail until I am blue in the face. It appears, like most prophets, the truth I speak may be heard but it is not soaking in. New evidence both indicates the continued presence of poor service and its ominous repercussions if continued. All those businesspersons out there who wish to remain in business for the long-term, ignore at your own peril.
The Retail Customer Dissatisfaction Study 2006, conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm, surveyed approximately 1200 U.S. shoppers in the weeks before and after Christmas 2005 illustrates my point. When consumers have a bad shopping experience, they are likely to spread the word, not to the store manager or salesperson, but to friends, family and colleagues. Overall, if 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers. The biggest source of consumer dissatisfaction? Parking lots
The Results show that only 6% of shoppers who experienced a problem with a retailer contacted the company, but 31% went on to tell friends, family or colleagues what happened. Of those, 8% told one person, another 8% told two people, but 6% told six or more people (This result duplicates other studies where the average number of contacts for a dissatisfied customer is five or more, and respondents indicating they told up to twenty people were not unusual). "Even though these shoppers don't share their pain with the store, they do share their pain with other people, apparently quite a few other people," says the researcher. Overall, if 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers, according to the study.
The complaints have an even greater impact on shoppers who were not directly involved as the story spreads and is embellished, researchers found. Almost half those surveyed, 48%, reported they have avoided a store in the past because of someone else's negative experience. For those who had encountered a problem themselves, 33% said they would "definitely not" or "probably not" return. This storytelling has even more impact on the people the story is told to than the people who told the story. One reason tends to be that the tales of annoyance tend to increase with each telling (remember the game of telephone you used to play as a child and the considerable differences the message at the end turned out to be from that at the onset? Same principle applies here.) The unresponsive sales clerk by the end of the chain has become abusive and almost life-threatening. the exponential power of negative word-of-mouth lies in the nature of storytelling As people tell the story the negativity is embellished and grows Psychologists indicate that to make a story worth telling, some entertainment value must be present, a shock effect to keep the other party’s attention. Basically, this storytelling of bad encounters by customers entertainments their friends and families to the detriment of businesses.
Big Box retailers were rated particularly poor in the survey. Customers of Wal-mart and its ilk shared their negative experiences with an average of six people, double to triple the audience given those who shopped and had negative experiences at other retailers. The biggest gripe? Locating merchandise in the many acres of retailing fun that exists.
Moral of the story: cents off and miles of merchandise does not a happy shopper make. Cut the complaint off at the time it occurs and satisfactorily resolve the issue . . . then and there. Otherwise you are not faced with one unhappy customer but many.
“He who laughs last . . .” anonymous humorist-critic-spurned customer
In this column I have often harped upon the lack of customer service that exists in the world and the all-too-present and persistent notion that chopping a few cents off a product gives a provider the right to offer poor or non-existent service. Well, it is time to discuss this topic once again. And I will continue to wail until I am blue in the face. It appears, like most prophets, the truth I speak may be heard but it is not soaking in. New evidence both indicates the continued presence of poor service and its ominous repercussions if continued. All those businesspersons out there who wish to remain in business for the long-term, ignore at your own peril.
The Retail Customer Dissatisfaction Study 2006, conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm, surveyed approximately 1200 U.S. shoppers in the weeks before and after Christmas 2005 illustrates my point. When consumers have a bad shopping experience, they are likely to spread the word, not to the store manager or salesperson, but to friends, family and colleagues. Overall, if 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers. The biggest source of consumer dissatisfaction? Parking lots
The Results show that only 6% of shoppers who experienced a problem with a retailer contacted the company, but 31% went on to tell friends, family or colleagues what happened. Of those, 8% told one person, another 8% told two people, but 6% told six or more people (This result duplicates other studies where the average number of contacts for a dissatisfied customer is five or more, and respondents indicating they told up to twenty people were not unusual). "Even though these shoppers don't share their pain with the store, they do share their pain with other people, apparently quite a few other people," says the researcher. Overall, if 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers, according to the study.
The complaints have an even greater impact on shoppers who were not directly involved as the story spreads and is embellished, researchers found. Almost half those surveyed, 48%, reported they have avoided a store in the past because of someone else's negative experience. For those who had encountered a problem themselves, 33% said they would "definitely not" or "probably not" return. This storytelling has even more impact on the people the story is told to than the people who told the story. One reason tends to be that the tales of annoyance tend to increase with each telling (remember the game of telephone you used to play as a child and the considerable differences the message at the end turned out to be from that at the onset? Same principle applies here.) The unresponsive sales clerk by the end of the chain has become abusive and almost life-threatening. the exponential power of negative word-of-mouth lies in the nature of storytelling As people tell the story the negativity is embellished and grows Psychologists indicate that to make a story worth telling, some entertainment value must be present, a shock effect to keep the other party’s attention. Basically, this storytelling of bad encounters by customers entertainments their friends and families to the detriment of businesses.
Big Box retailers were rated particularly poor in the survey. Customers of Wal-mart and its ilk shared their negative experiences with an average of six people, double to triple the audience given those who shopped and had negative experiences at other retailers. The biggest gripe? Locating merchandise in the many acres of retailing fun that exists.
Moral of the story: cents off and miles of merchandise does not a happy shopper make. Cut the complaint off at the time it occurs and satisfactorily resolve the issue . . . then and there. Otherwise you are not faced with one unhappy customer but many.
Survey of Surveys
Mark Twain Presents: A Survey on Surveys
“There are lies, damn lies, and statistics”
Mark Twain’s famous quote is still as valid today as it was a century and a half ago. Probably even more so as most American citizens are inclined to trust and accept blindly the results of “surveys” no matter what they may be or how they were conducted. Having performed many in my career and mentored more performed by students, perhaps a basic course in surveys and their potential misdeeds is in order.
1. The results are only as good as the data and processes used. Computer Freaks have an acronym that describes this perfectly: GIGO: Garbage In, Garbage Out. Unless you are meticulous and conduct the research through systematic endeavor, the results will indeed be GIGO. For example, a Manhattan liberal conducts a survey of twenty of his friends. He determines one out of twenty voted for Bush, perhaps two attend church occasionally or regularly, and all twenty agree that America is the real enemy, not Iran. If he were write up the report and issue it as a survey result of the entire American population, it would be numerically correct but totally meaningless. In this case, the sample chosen was a convenience sample and was not appropriate for the population (the population here being the American citizenry). In any valid survey, the sample surveyed must approximate the population as a whole. This does not take millions of people. Unemployment labor statistics for entire states are valid based upon the sampling of a few thousand. The sample must approximate the demographics of the group and be random in nature to be appropriate.
2. You can basically determine the outcome of any survey very simply by manipulating the wording of the survey questions, that is On how the questions are phrased. The proverbial “Have you stopped beating your wife?” portrays it best. Wording matters. If a pollster asks, “Are you concerned that escalating and increasing surface temperatures brought on by man=made gasses are melting the icecaps at an ever increasing rate and could raise the sea level by hundreds of feet?” should we be surprised at a 95% Agreement. Of course the survey result is then echoed as “95% of Americans worried about global warming.” Which was not the question asked. Adding in strong terms, biased phrases, loaded language (as in the wife beating question above) will result in manipulating the result to what is desired. This might be good for your cause but it is lousy science and certainly not appropriate research.
3. The Encyclopedic survey: whereas everyone wants to add his own particular question and soon the survey becomes the size of a SAT test booklet. The more questions added, the less likelihood respondents will wish to take the test or respond honestly (and the higher the chances they will soon begin marking in the answers without regard to the questions or options much as a test taker does when they have two minutes and fifty questions left). I have seen a questionnaire with nearly a thousand questions that would take hours to respond properly to. I wonder to myself who has the time to commit to the survey, let alone answer it honestly. And those that do, are they representative of the population you wish to review? Surveys must be kept short, simple, understandable, and easily completed in five minutes or less. Otherwise, the short attention spans of today’s adults will begin to wonder and any results you get will probably be worthless.
4. Be careful of statistics. A probability of 5% means the likelihood of occurring by chance is 5 percent. If you have twenty such questions and use that measure, you have a good chance of finding something “significant” that is there simply because of chance.
In conclusion, the next time you see the results of a survey and they seem counter-intuitive to you or as if they had surveyed inhabitants of Mars, not Earth, you must ask yourself a) was the sample representative of the population, 2) what was the actual survey like and how were questions worded and ordered, and 3) were the statistics meaningful? And likewise when you as a businessperson is conducting any research or survey, be careful, since, if not done properly, it is a total waste of time and money and could very well guide you in the wrong direction than is actually the case.
“There are lies, damn lies, and statistics”
Mark Twain’s famous quote is still as valid today as it was a century and a half ago. Probably even more so as most American citizens are inclined to trust and accept blindly the results of “surveys” no matter what they may be or how they were conducted. Having performed many in my career and mentored more performed by students, perhaps a basic course in surveys and their potential misdeeds is in order.
1. The results are only as good as the data and processes used. Computer Freaks have an acronym that describes this perfectly: GIGO: Garbage In, Garbage Out. Unless you are meticulous and conduct the research through systematic endeavor, the results will indeed be GIGO. For example, a Manhattan liberal conducts a survey of twenty of his friends. He determines one out of twenty voted for Bush, perhaps two attend church occasionally or regularly, and all twenty agree that America is the real enemy, not Iran. If he were write up the report and issue it as a survey result of the entire American population, it would be numerically correct but totally meaningless. In this case, the sample chosen was a convenience sample and was not appropriate for the population (the population here being the American citizenry). In any valid survey, the sample surveyed must approximate the population as a whole. This does not take millions of people. Unemployment labor statistics for entire states are valid based upon the sampling of a few thousand. The sample must approximate the demographics of the group and be random in nature to be appropriate.
2. You can basically determine the outcome of any survey very simply by manipulating the wording of the survey questions, that is On how the questions are phrased. The proverbial “Have you stopped beating your wife?” portrays it best. Wording matters. If a pollster asks, “Are you concerned that escalating and increasing surface temperatures brought on by man=made gasses are melting the icecaps at an ever increasing rate and could raise the sea level by hundreds of feet?” should we be surprised at a 95% Agreement. Of course the survey result is then echoed as “95% of Americans worried about global warming.” Which was not the question asked. Adding in strong terms, biased phrases, loaded language (as in the wife beating question above) will result in manipulating the result to what is desired. This might be good for your cause but it is lousy science and certainly not appropriate research.
3. The Encyclopedic survey: whereas everyone wants to add his own particular question and soon the survey becomes the size of a SAT test booklet. The more questions added, the less likelihood respondents will wish to take the test or respond honestly (and the higher the chances they will soon begin marking in the answers without regard to the questions or options much as a test taker does when they have two minutes and fifty questions left). I have seen a questionnaire with nearly a thousand questions that would take hours to respond properly to. I wonder to myself who has the time to commit to the survey, let alone answer it honestly. And those that do, are they representative of the population you wish to review? Surveys must be kept short, simple, understandable, and easily completed in five minutes or less. Otherwise, the short attention spans of today’s adults will begin to wonder and any results you get will probably be worthless.
4. Be careful of statistics. A probability of 5% means the likelihood of occurring by chance is 5 percent. If you have twenty such questions and use that measure, you have a good chance of finding something “significant” that is there simply because of chance.
In conclusion, the next time you see the results of a survey and they seem counter-intuitive to you or as if they had surveyed inhabitants of Mars, not Earth, you must ask yourself a) was the sample representative of the population, 2) what was the actual survey like and how were questions worded and ordered, and 3) were the statistics meaningful? And likewise when you as a businessperson is conducting any research or survey, be careful, since, if not done properly, it is a total waste of time and money and could very well guide you in the wrong direction than is actually the case.
Monday, August 6, 2007
MovieAdvertising
That will be Seven Dollars for a Movie and Commercials
In the beginning was The Film. Hollywood made The Film and what it brought in at the box office was all there was. Then came foreign film rights. Then came TV. And first run rights for new feature films during prime time on the networks. Then came residuals for late night TV and all other hours for not-so-new films. Cable evolved and Pay for TV naturally followed. The VCR worried Hollywood but it soon learned to make more money from renting and selling cassettes (and later DVDs) than in many cases the feature film made at the box off itself. Licensing rights and product rights from fast food companies and toy manufacturers followed. Hollywood learned and learned well how to milk the movie for all its worth.
During the nineties, Hollywood discovered product placement, a form of advertising in which marketers pay to have a product shown during the film. If the story line says the character has to eat at a restaurant, sell the rights to a restaurant chain so their restaurant is the one prominently shown. And so on with everything from any food item imaginable to vehicles to even resorts. You can tell if it is a product placement if the camera focuses lovingly on the brand for any length of time.
Not satisfied with the revenues from all the sources above and having milked product placement for about everything possible (watch some modern films and at times they appear to be one long infomercial with a thin plot holding the commercials together), a new source of revenues has been making its debut slowly across the nation. This commercial endeavor does not even pretend to be art.
Theaters are beginning to show more and more commercials at the beginning of the show. Now everyone is accustomed to seeing the typical promos for Soft drinks and Popcorn from the refreshment stand, static ads for Joe’s Coffeeshop (Visit us after the show, show your receipt and get 10% off), and those entertaining and excitement filled movie trailers for six to ten upcoming (or being shown on other screens of the same complex) films. No, we’re used to that. It bothers us but that’s part of the experience. No these commercials are mainstream thirty second or sixty second spots that you normally would see on TV.
If this were Europe, such exposures would be expected and the audience would shrug it off and wait for the main feature. But this is the good old USA. We are paying six, eight, sometimes ten dollars per ticket during prime time to watch a first run feature film. And now the theater owners wants us to play captive audience while they show upwards of ten minutes of traditional commercials. Moviegoers expect paid advertising for TV, magazines, and newspapers, as they subsidize the costs of the media. But there is a major difference between free TV and a ten dollar movie ticket. These commercials have been increasing in time and number shown over the past few years. For those theaters subjecting their viewers to them, ten minutes is not unusual for pure unadulterated advertisement prior to the start of the feature film. If that were not enough, one chain has decided to mandate a whopping twenty minutes of commercials preceding the start time of the feature.
If the theater owners want us to watch twenty minutes of commercials prior to their films, many theater goers (myself included) would simply walk out and demand back their money. Now if they wish to open the theater for free to anyone who wants to see the feature film but first must watch twenty minutes of commercials, that is a different proposition. However, the theater owners and the movie moguls must remember that theirs is not the only show in town and that they are competing against all other entertainment options for the dollars of their viewers. Their customers may well decide they could stay home and save ten dollars while they watch twenty minutes of commercials.
Treating one’s customer with such disdain is not a healthy means to create a relationship with one’s customers, unless, of course, the relationship is deliberately meant to be hostile and the company has suicidal tendencies
In the beginning was The Film. Hollywood made The Film and what it brought in at the box office was all there was. Then came foreign film rights. Then came TV. And first run rights for new feature films during prime time on the networks. Then came residuals for late night TV and all other hours for not-so-new films. Cable evolved and Pay for TV naturally followed. The VCR worried Hollywood but it soon learned to make more money from renting and selling cassettes (and later DVDs) than in many cases the feature film made at the box off itself. Licensing rights and product rights from fast food companies and toy manufacturers followed. Hollywood learned and learned well how to milk the movie for all its worth.
During the nineties, Hollywood discovered product placement, a form of advertising in which marketers pay to have a product shown during the film. If the story line says the character has to eat at a restaurant, sell the rights to a restaurant chain so their restaurant is the one prominently shown. And so on with everything from any food item imaginable to vehicles to even resorts. You can tell if it is a product placement if the camera focuses lovingly on the brand for any length of time.
Not satisfied with the revenues from all the sources above and having milked product placement for about everything possible (watch some modern films and at times they appear to be one long infomercial with a thin plot holding the commercials together), a new source of revenues has been making its debut slowly across the nation. This commercial endeavor does not even pretend to be art.
Theaters are beginning to show more and more commercials at the beginning of the show. Now everyone is accustomed to seeing the typical promos for Soft drinks and Popcorn from the refreshment stand, static ads for Joe’s Coffeeshop (Visit us after the show, show your receipt and get 10% off), and those entertaining and excitement filled movie trailers for six to ten upcoming (or being shown on other screens of the same complex) films. No, we’re used to that. It bothers us but that’s part of the experience. No these commercials are mainstream thirty second or sixty second spots that you normally would see on TV.
If this were Europe, such exposures would be expected and the audience would shrug it off and wait for the main feature. But this is the good old USA. We are paying six, eight, sometimes ten dollars per ticket during prime time to watch a first run feature film. And now the theater owners wants us to play captive audience while they show upwards of ten minutes of traditional commercials. Moviegoers expect paid advertising for TV, magazines, and newspapers, as they subsidize the costs of the media. But there is a major difference between free TV and a ten dollar movie ticket. These commercials have been increasing in time and number shown over the past few years. For those theaters subjecting their viewers to them, ten minutes is not unusual for pure unadulterated advertisement prior to the start of the feature film. If that were not enough, one chain has decided to mandate a whopping twenty minutes of commercials preceding the start time of the feature.
If the theater owners want us to watch twenty minutes of commercials prior to their films, many theater goers (myself included) would simply walk out and demand back their money. Now if they wish to open the theater for free to anyone who wants to see the feature film but first must watch twenty minutes of commercials, that is a different proposition. However, the theater owners and the movie moguls must remember that theirs is not the only show in town and that they are competing against all other entertainment options for the dollars of their viewers. Their customers may well decide they could stay home and save ten dollars while they watch twenty minutes of commercials.
Treating one’s customer with such disdain is not a healthy means to create a relationship with one’s customers, unless, of course, the relationship is deliberately meant to be hostile and the company has suicidal tendencies
DareToBeDifferent
I do most of the grocery shopping at our household. It is not that I am being a super husband or purely altruistic in my pursuance of the household maintenance. I find shopping to be somewhat therapeutic in nature. In addition, it appeals to my marketing curiosity. Where else can you see a plethora of new products and marketing appeals all in one place at the same time.
As I steadily slog through the aisles, I am constantly amazed to see the multitudes of products that the average grocery store carries. Just how many different types of soaps must the average family possess? Take pain relievers for example. Yesterday, I was ordered by the boss to bring home some aspirin. So I obeyed and merrily ran off to the store. There I was besieged by an awesome amount of options available. I actually measured it as 8 paces (approximately 20 feet) across and eleven shelves (I double counted just to be certain) deep.
Aspirin. Aspirin-free. Brands such as Tylenol, Advil, Ibuprofen, Moltrin. Generic versions of all of the above. Extra strength. Children’s size. Private labels. Store brands. Tablets. Capsules. Chewables. Liquid. In small packages. In large packages. Giant sized containers. Flavored. . . grape, bubble-gum, cherry . . . I would not be surprised if someone has a “Flavor of the Month” version of a pain reliever. Perhaps not hundreds of different types but it seemed like it.
As a marketer, I stood there amazed for what appeared to me as hours (and probably likewise to the customers trying to get around me). I can image the typical consumer faced with the decision to buy a pain relieving medicine. The analogy came to my mind of a mule equidistant between two bales of hay starving to death due to his inability to make a decision.
This mega-choice opportunity of anything and everything may be great for the consumer but for the producer there is little long-term advantage in being of one hundreds in the same category. Being a “me too” product is no fun for the company and very little comfort for the stockholders.
Dare to be different. Stand out among the crowd. Seth Godin in his new book “Purple Cow” elaborates upon this dilemma faced by too many in today’s marketplace. On a cross-country trip, you point out the brown cows to the kids the first time you see them, the second time, and perhaps even the third time. By the tenth time the cows begin looking alike (like they are) and begin to blend into the environment. After a short while, only if one were to stop traffic or create a collision with your vehicle would you notice it. But a Purple Cow! Ahh. Now that you will remember and will talk about for the rest of the trip and then some. A purple cow stands out.
Producers need to take to heart the story of the Purple Cow. What would you rather be, one product among many in 100-200 square feet of shelf space or a brand that sands our crying “Try Me.” “Buy Me.” As a marketer you would like to be the latter. As the classic song in the famous musical “Gypsy” goes, “You’ve got to have a Gimmick.” You’ve got to stand out above the large (and getting larger each day) crowd.
How? “New and improved” won’t do it anymore; it has become a cliché. Our senses have been deadened by the infamous phrase ”Special.” “Free” has become a turn-off as we all look for the catch in any ‘free’ offer. So what works? An innovative package that is fun and functional. Different Color. Remarkable products. Creating new niches. You know you have it when people stop in the tracks and stare. Now you’ve got their attention.
Dare to be different. Stand out from the Crowd. It might be the only way you will be noticed.
As I steadily slog through the aisles, I am constantly amazed to see the multitudes of products that the average grocery store carries. Just how many different types of soaps must the average family possess? Take pain relievers for example. Yesterday, I was ordered by the boss to bring home some aspirin. So I obeyed and merrily ran off to the store. There I was besieged by an awesome amount of options available. I actually measured it as 8 paces (approximately 20 feet) across and eleven shelves (I double counted just to be certain) deep.
Aspirin. Aspirin-free. Brands such as Tylenol, Advil, Ibuprofen, Moltrin. Generic versions of all of the above. Extra strength. Children’s size. Private labels. Store brands. Tablets. Capsules. Chewables. Liquid. In small packages. In large packages. Giant sized containers. Flavored. . . grape, bubble-gum, cherry . . . I would not be surprised if someone has a “Flavor of the Month” version of a pain reliever. Perhaps not hundreds of different types but it seemed like it.
As a marketer, I stood there amazed for what appeared to me as hours (and probably likewise to the customers trying to get around me). I can image the typical consumer faced with the decision to buy a pain relieving medicine. The analogy came to my mind of a mule equidistant between two bales of hay starving to death due to his inability to make a decision.
This mega-choice opportunity of anything and everything may be great for the consumer but for the producer there is little long-term advantage in being of one hundreds in the same category. Being a “me too” product is no fun for the company and very little comfort for the stockholders.
Dare to be different. Stand out among the crowd. Seth Godin in his new book “Purple Cow” elaborates upon this dilemma faced by too many in today’s marketplace. On a cross-country trip, you point out the brown cows to the kids the first time you see them, the second time, and perhaps even the third time. By the tenth time the cows begin looking alike (like they are) and begin to blend into the environment. After a short while, only if one were to stop traffic or create a collision with your vehicle would you notice it. But a Purple Cow! Ahh. Now that you will remember and will talk about for the rest of the trip and then some. A purple cow stands out.
Producers need to take to heart the story of the Purple Cow. What would you rather be, one product among many in 100-200 square feet of shelf space or a brand that sands our crying “Try Me.” “Buy Me.” As a marketer you would like to be the latter. As the classic song in the famous musical “Gypsy” goes, “You’ve got to have a Gimmick.” You’ve got to stand out above the large (and getting larger each day) crowd.
How? “New and improved” won’t do it anymore; it has become a cliché. Our senses have been deadened by the infamous phrase ”Special.” “Free” has become a turn-off as we all look for the catch in any ‘free’ offer. So what works? An innovative package that is fun and functional. Different Color. Remarkable products. Creating new niches. You know you have it when people stop in the tracks and stare. Now you’ve got their attention.
Dare to be different. Stand out from the Crowd. It might be the only way you will be noticed.
Competition
We have a love-hate relationship with competition. On one hand, who hasn’t wished all one’s competition would simply vanish (as if all one’s troubles would vanish as well with one’s competitors gone). Then being the only one left in the industry, life would be easy street. Being a monopolist, one would be able to control one’s own destiny, setting prices at will and conducting business without regard of customer concern or worry about customer migration. Of course, the bad part is the government does not tend to take these things called monopolies lightly and would probably either regulate you or break up your company.
But competition does have its advantages—even companies with intense rivalries must acknowledge that one’s competition keeps one sharp, innovating, and constantly attuned to the marketplace, towards constantly improving quality and performance of products and the company’s ability to provide needed services. This is a positive as it allows your company to continue to survive and prosper, alas with not nearly the same profitability as if you were alone but still sufficient for the market’s purposes.
You can have both good and bad competitors. How can that be? Aren’t all competitors necessarily bad? (see above) Not all competitors are created equal. Some are more desirous than others. They are the good competitors. These companies realize you both are in the market to make money. They may fight you tooth and nail for companies but they price similar to you and they hate price wars as much as you do. They tend to be consistent and predictable in their habits and behavior, as does yourself. This is advantageous as you can predict with high accuracy what they are likely to do (as they are with you) and thus the future becomes much more tolerable.
They tend to be credible and reliable. If they are overstocked, they will announce they are having a sale or price reduction to lower their inventory. As a good competitor, you believe their notice and will not match prices, knowing that they will also do the same courtesy to you if you have a similar problem. You also presume that as soon as inventories are corrected, they will return to normalcy with regular prices. Good competitors are like good neighbors, well respected, keep their house and yard in excellent shape, keep their word and obligations, and are a positive contribution to the neighborhood (i.e., industry). They tend to feel responsible to a higher authority (the entire industry) and wish to maintain the integrity of the entire industry. One could indicate they are indeed a team player with the industry. Good competitors tend to be the larger players in the industry, those that have been in the industry a long time and oftentimes are the ones who pioneered their industry. They often feel a moral obligation to act as a role model for all others in the industry.
Bad competitors can ruin an industry. They tend to be unpredictable, random, and inconsistent. You never know what they are going to do or when. Their behavior and reactions to your actions are totally unknown and often bewildering. Like a bipolar mate, they can be up one day and down the next with no rhyme or reason to what they are doing or why they are doing it. You become totally paranoid and almost hate to make any moves or claims as it will probably entice a complete and different reaction from them then what you expected or wished. For any reason or no reason, they could very likely start a price war and end it on the same note of uncertainty. They tend to be a loner in the industry, an outcast, on the periphery of the industry. By their very presence, they tend to shake up the industry and keep it in a perpetual motion of uncertainty. Perhaps this is their strategy, to keep you, their probable larger competitors off balance. By not being predictable, they can control the tempo, the pace of the industry and gain a small but not insignificant advantage over all the other firms in the industry.
You must determine what type of competitor you wish to be. Do you want to be respected and liked or dreaded and feared? No one true answer exists. The correct choice must be made by yourself and what your intentions for the company are. Do you want to be a valued member of the industry or a rebel and outcast that follows its own pace and path? To thy own self be true.
But competition does have its advantages—even companies with intense rivalries must acknowledge that one’s competition keeps one sharp, innovating, and constantly attuned to the marketplace, towards constantly improving quality and performance of products and the company’s ability to provide needed services. This is a positive as it allows your company to continue to survive and prosper, alas with not nearly the same profitability as if you were alone but still sufficient for the market’s purposes.
You can have both good and bad competitors. How can that be? Aren’t all competitors necessarily bad? (see above) Not all competitors are created equal. Some are more desirous than others. They are the good competitors. These companies realize you both are in the market to make money. They may fight you tooth and nail for companies but they price similar to you and they hate price wars as much as you do. They tend to be consistent and predictable in their habits and behavior, as does yourself. This is advantageous as you can predict with high accuracy what they are likely to do (as they are with you) and thus the future becomes much more tolerable.
They tend to be credible and reliable. If they are overstocked, they will announce they are having a sale or price reduction to lower their inventory. As a good competitor, you believe their notice and will not match prices, knowing that they will also do the same courtesy to you if you have a similar problem. You also presume that as soon as inventories are corrected, they will return to normalcy with regular prices. Good competitors are like good neighbors, well respected, keep their house and yard in excellent shape, keep their word and obligations, and are a positive contribution to the neighborhood (i.e., industry). They tend to feel responsible to a higher authority (the entire industry) and wish to maintain the integrity of the entire industry. One could indicate they are indeed a team player with the industry. Good competitors tend to be the larger players in the industry, those that have been in the industry a long time and oftentimes are the ones who pioneered their industry. They often feel a moral obligation to act as a role model for all others in the industry.
Bad competitors can ruin an industry. They tend to be unpredictable, random, and inconsistent. You never know what they are going to do or when. Their behavior and reactions to your actions are totally unknown and often bewildering. Like a bipolar mate, they can be up one day and down the next with no rhyme or reason to what they are doing or why they are doing it. You become totally paranoid and almost hate to make any moves or claims as it will probably entice a complete and different reaction from them then what you expected or wished. For any reason or no reason, they could very likely start a price war and end it on the same note of uncertainty. They tend to be a loner in the industry, an outcast, on the periphery of the industry. By their very presence, they tend to shake up the industry and keep it in a perpetual motion of uncertainty. Perhaps this is their strategy, to keep you, their probable larger competitors off balance. By not being predictable, they can control the tempo, the pace of the industry and gain a small but not insignificant advantage over all the other firms in the industry.
You must determine what type of competitor you wish to be. Do you want to be respected and liked or dreaded and feared? No one true answer exists. The correct choice must be made by yourself and what your intentions for the company are. Do you want to be a valued member of the industry or a rebel and outcast that follows its own pace and path? To thy own self be true.
Coolness
What is cool? How does one define it? You really can’t define it (like the judicial definition of obscenity: I can’t describe it but I know it when I see it). Those with it know it when they see it. Still, Cool is king in America and American cultural values (right up there with youthful, fitness, popular, and sexy) Why does it matter?
Cool comes from a select few early adopters, market mavens, who are opinion leaders that others tend to follow. Often the first signs of a fad come from the urban ghetto and spreads to the ‘burbs. Another source is California, known as the bellweather state for coolness; more fads get started there than anywhere else in the nation. Wherever it comes from, whatever it is, whenever it shows its new faces, it bubbles up and the rest of the country’s fashion-sensitive youth (and these days the world’s as well) pay attention and attempt to emulate coolness by following suit.
Marketers known as “coolhunters” are paid big bucks to identify, specify, and market whatever is cool at the moment. They do this by interviewing the trendsetters, by observing what they are doing, wearing, where they are going, what they are listening to. Over the years the coolhunters have had to work hard to be trusted and accepted by those market mavens upon whose likes and dislikes the rest of the world awaits. These coolhunters work by intutition and base their guesses on their experience and gut. They can only stay coolhunters so long, they, like the rest of us, age, and kids, to whom cool is everything, tend to trust those their same age group ( a forty-something coolhunter is a rarity—a man-child? A Peter Pan who never grew up)
Marketers pay coolhunters to provide them with the earliest signs of fads and coolness so they can get on the bandwagon early. Too late and they might as well forget it as they would end up with tons of unsold merchandise. Too early and it is not yet cool and the same end result. In coolness, timing is everything.
Cool is transient. What is cool today is very uncool tomorrow. In fact, because it is cool today it is bound to be uncool tomorrow. The problem with cool is that it is cool when you and I are doing it but it no longer is cool when everyone else is doing it. That is, the very act of observing and making public cool items will eventually lead to its own self-destruction. Coolness is like fragile wetlands, overuse them and they are no longer. When the cool kids see everyone else doing it and trying to become cool by comparison, then it no longer becomes cool to them and they tend to switch to something else. They are leaders and cannot afford to be like everyone else (even if everyone else is trying to be like them!) Selling cool to the public makes it inevitably uncool. Abercrombie & Fitch discovered this the hard way in 2003. For years it has strived to be the sexy-preppy cool ‘in’ look. For years, it worked. As the law of coolness states, once something cool becomes mainstream, it is no longer cool. And so it went with A&F, cool today, out tomorrow—and as a result same-store sales were down by 13%.
It is a cycle and like all modern cycles has become time sensitive and increasingly faster as the coolhunters hunt relentlessly to find the next big thing while the fashion conscious are ever aware of changes and wish to get in on the cycle earlier and earlier and generating tendency for change among the masses who follow. Yet those who originate cool then must work just as fast to change so as to stay in the forefront of cool and not get caught up with the multitudes just behind them. Like a foray into Alice in Wonderland, one has to run ever faster just to stay in place.
So the hunt for this ever-fleeing, ever-so-fragile, ever elusive, increasingly difficult to define object continues. Yet the rewards for being there at the precise moment when it is cool, of having that product or service available and packaged correctly when it becomes cool, of having sufficient demand to meet the onslaught expected of a cool product is tremendous. Keeping America’s (And the world’s) youth cool can be quite a lucrative business. And a fleeting one. Enjoy the fruits of being at the right place at the right time while it is happening for it will surely disappear as quickly as it appeared.
Cool comes from a select few early adopters, market mavens, who are opinion leaders that others tend to follow. Often the first signs of a fad come from the urban ghetto and spreads to the ‘burbs. Another source is California, known as the bellweather state for coolness; more fads get started there than anywhere else in the nation. Wherever it comes from, whatever it is, whenever it shows its new faces, it bubbles up and the rest of the country’s fashion-sensitive youth (and these days the world’s as well) pay attention and attempt to emulate coolness by following suit.
Marketers known as “coolhunters” are paid big bucks to identify, specify, and market whatever is cool at the moment. They do this by interviewing the trendsetters, by observing what they are doing, wearing, where they are going, what they are listening to. Over the years the coolhunters have had to work hard to be trusted and accepted by those market mavens upon whose likes and dislikes the rest of the world awaits. These coolhunters work by intutition and base their guesses on their experience and gut. They can only stay coolhunters so long, they, like the rest of us, age, and kids, to whom cool is everything, tend to trust those their same age group ( a forty-something coolhunter is a rarity—a man-child? A Peter Pan who never grew up)
Marketers pay coolhunters to provide them with the earliest signs of fads and coolness so they can get on the bandwagon early. Too late and they might as well forget it as they would end up with tons of unsold merchandise. Too early and it is not yet cool and the same end result. In coolness, timing is everything.
Cool is transient. What is cool today is very uncool tomorrow. In fact, because it is cool today it is bound to be uncool tomorrow. The problem with cool is that it is cool when you and I are doing it but it no longer is cool when everyone else is doing it. That is, the very act of observing and making public cool items will eventually lead to its own self-destruction. Coolness is like fragile wetlands, overuse them and they are no longer. When the cool kids see everyone else doing it and trying to become cool by comparison, then it no longer becomes cool to them and they tend to switch to something else. They are leaders and cannot afford to be like everyone else (even if everyone else is trying to be like them!) Selling cool to the public makes it inevitably uncool. Abercrombie & Fitch discovered this the hard way in 2003. For years it has strived to be the sexy-preppy cool ‘in’ look. For years, it worked. As the law of coolness states, once something cool becomes mainstream, it is no longer cool. And so it went with A&F, cool today, out tomorrow—and as a result same-store sales were down by 13%.
It is a cycle and like all modern cycles has become time sensitive and increasingly faster as the coolhunters hunt relentlessly to find the next big thing while the fashion conscious are ever aware of changes and wish to get in on the cycle earlier and earlier and generating tendency for change among the masses who follow. Yet those who originate cool then must work just as fast to change so as to stay in the forefront of cool and not get caught up with the multitudes just behind them. Like a foray into Alice in Wonderland, one has to run ever faster just to stay in place.
So the hunt for this ever-fleeing, ever-so-fragile, ever elusive, increasingly difficult to define object continues. Yet the rewards for being there at the precise moment when it is cool, of having that product or service available and packaged correctly when it becomes cool, of having sufficient demand to meet the onslaught expected of a cool product is tremendous. Keeping America’s (And the world’s) youth cool can be quite a lucrative business. And a fleeting one. Enjoy the fruits of being at the right place at the right time while it is happening for it will surely disappear as quickly as it appeared.
Thursday, August 2, 2007
Ride the Bus
As part of my profession and my own love of reading and knowledge, I read several newspapers (including the Wall Street journal) daily as well as a multitude of business periodicals (averaging two or more daily). In between, I do find the occasional time to read a business book. Of the hundreds of such books I have read, I have just finished one that has really influenced my thoughts and one of whose main points I must share with you, my captive audience.
Selling to Eskimos, is a book by the former general manager of both the Portland Trailblazers and the New Jersey Nets. It could have very well been an autographical story of the great basketball stars and battles he had seen as a GM. But it is written as a handbook of great marketing principles. In it, he indicates during a typical game (of which he had to buy his own tickets), he did not sit in the luxury boxes nor in the first row with the team but in the “nosebleed” section, where the average fan sits. He stands in line for refreshments like any other fan. He does this so he can experience the game, the entire sporting event experience, from the perspective of the average fan, listen to their comments, see what they like and don’t like. When the Nets game became so crowded, they had to park fans in the distant lots, he arranged for vans to shuttle the fans to the stadium and back, and in his normal business habit, rode the bus himself to check out the conditions Although anecdotal and not as statistically significant as a true marketing research random survey, he learned quite a lot about the fans, what they wanted, what irked them, and what to do to streamline the process to make the entire experience more enjoyable for the average fan.
Ride the Bus. Check out your business from the typical customer’s point-of-view. Many larger stores have secret shoppers that perform that function. Sam Walton used to drive to many stores a day and observe both customers and employees. Multi-billionaire as he was, he could have stayed in the ivory tower and received carefully written market research reports discussing customer satisfaction and other marketing data. But he (and many other successful entrepreneurs) wanted and needed that first-hand customer interaction.
How do customers view your business? What kind of treatment are they getting from employees, from retail clerks, from support staff? What types of hurdles are you making them perform to receive the product or service you offer? You may not believe there is a problem and everything is functioning perfectly but what do the customers’ perceive? The old Indian saying, “You must walk a mile in another’s moccasin to fully understand that person.” Says it all. You must experience your business from the point of view of a customer to fully understand what they customer sees it.
Ride the bus. Audit the business from the customers’ point of view. Be a customer for a day. See how you like it. If you don’t , chances are many customers don’t either. If you can get some good feedback, great. If you can identify places to improve your service or business, excellent.
Ride the bus. Once you have viewed your business from the perspective of a customer, you will probably never be the same again.
Selling to Eskimos, is a book by the former general manager of both the Portland Trailblazers and the New Jersey Nets. It could have very well been an autographical story of the great basketball stars and battles he had seen as a GM. But it is written as a handbook of great marketing principles. In it, he indicates during a typical game (of which he had to buy his own tickets), he did not sit in the luxury boxes nor in the first row with the team but in the “nosebleed” section, where the average fan sits. He stands in line for refreshments like any other fan. He does this so he can experience the game, the entire sporting event experience, from the perspective of the average fan, listen to their comments, see what they like and don’t like. When the Nets game became so crowded, they had to park fans in the distant lots, he arranged for vans to shuttle the fans to the stadium and back, and in his normal business habit, rode the bus himself to check out the conditions Although anecdotal and not as statistically significant as a true marketing research random survey, he learned quite a lot about the fans, what they wanted, what irked them, and what to do to streamline the process to make the entire experience more enjoyable for the average fan.
Ride the Bus. Check out your business from the typical customer’s point-of-view. Many larger stores have secret shoppers that perform that function. Sam Walton used to drive to many stores a day and observe both customers and employees. Multi-billionaire as he was, he could have stayed in the ivory tower and received carefully written market research reports discussing customer satisfaction and other marketing data. But he (and many other successful entrepreneurs) wanted and needed that first-hand customer interaction.
How do customers view your business? What kind of treatment are they getting from employees, from retail clerks, from support staff? What types of hurdles are you making them perform to receive the product or service you offer? You may not believe there is a problem and everything is functioning perfectly but what do the customers’ perceive? The old Indian saying, “You must walk a mile in another’s moccasin to fully understand that person.” Says it all. You must experience your business from the point of view of a customer to fully understand what they customer sees it.
Ride the bus. Audit the business from the customers’ point of view. Be a customer for a day. See how you like it. If you don’t , chances are many customers don’t either. If you can get some good feedback, great. If you can identify places to improve your service or business, excellent.
Ride the bus. Once you have viewed your business from the perspective of a customer, you will probably never be the same again.
Price last but not least
As all business students once learned (and most probably forgotten), the 4Ps of Marketing are Product, Promotion, Place, and Price. Marketing texts place these 4 points in various orders for recital during the course. Being a maverick and independent thinker like I am (and always have been), I do not necessarily follow the prescribed order. However, one point of consistency always exists for me: Pricing is the last P I cover. This is intentional and a method exists to my madness.
In any competitive situation, the inevitable first reaction (and probably the poorest of the options) for companies and managers is to lower the price, to compete on price alone. Invariably, this will not solve the problem at hand and will more than likely make the situation worse than originally. By my picky ordering of the Ps, I am making the point that not only should price not be the first item considered when in the midst of a competitive situation, it should be the last option considered.
In any competitive situation, be it company versus company or person versus person, the objective is to obtain a sustainable competitive advantage, an advantage the competition cannot readily duplicate. Whatever this is, be it a key patent, new manufacturing process, an identifiable brand, control of channels of distribution, or superior service, the advantage you have over your competition must be one that is long term. The problem with price is that it is a competitive no-brainer, one simply lowers or raises the price accordingly to match or fall beneath that previously enacted by your competition. Any advantage you have on price will last just long enough for a competitor’s rep to pick up the phone and gain permission from their management to match you. And you are right back where you started.
In the extreme, cases of price competition leads to price wars with one side than the other lowering prices in a vain attempt to gain an advantage over each other. This effort is reminiscence of the story of rearranging the deck chairs on the Titanic—a valiant but futile effort. Although the outcome may well be different from that of the Titanic, a price war often has the same feel: deeper and deeper, further and further under the water until no air (margin) is left and you begin to drown for lack of air.
What then should you do? Don’t use price as a shotgun, a weapon to be used for all occasions. Rather, it should be part of a comprehensive strategy with a price chosen to meet the company’s objectives. Then it should be locked up in a vast vault with only one or two people having the combinations that will open the safe and allow the prices to be changed. This is not to say that prices should be written in concrete or on tablets and held fixed for years or decades at a time as gospel from on high. No, this is the extreme opposite reaction. Times change and situations change accordingly. A regular evaluation of a firm’s pricing structure must be held.
Price may be the most visible of the Ps and the one most tempting to use but inevitably the one with the least staying power. What I hope to hear from my students is that they, as successful businesspersons, have remembered my lesson and of all the weapons they have at their disposable as marketers, price is the last one to be unsheathed. So now you too have had your lesson for the day.
In any competitive situation, the inevitable first reaction (and probably the poorest of the options) for companies and managers is to lower the price, to compete on price alone. Invariably, this will not solve the problem at hand and will more than likely make the situation worse than originally. By my picky ordering of the Ps, I am making the point that not only should price not be the first item considered when in the midst of a competitive situation, it should be the last option considered.
In any competitive situation, be it company versus company or person versus person, the objective is to obtain a sustainable competitive advantage, an advantage the competition cannot readily duplicate. Whatever this is, be it a key patent, new manufacturing process, an identifiable brand, control of channels of distribution, or superior service, the advantage you have over your competition must be one that is long term. The problem with price is that it is a competitive no-brainer, one simply lowers or raises the price accordingly to match or fall beneath that previously enacted by your competition. Any advantage you have on price will last just long enough for a competitor’s rep to pick up the phone and gain permission from their management to match you. And you are right back where you started.
In the extreme, cases of price competition leads to price wars with one side than the other lowering prices in a vain attempt to gain an advantage over each other. This effort is reminiscence of the story of rearranging the deck chairs on the Titanic—a valiant but futile effort. Although the outcome may well be different from that of the Titanic, a price war often has the same feel: deeper and deeper, further and further under the water until no air (margin) is left and you begin to drown for lack of air.
What then should you do? Don’t use price as a shotgun, a weapon to be used for all occasions. Rather, it should be part of a comprehensive strategy with a price chosen to meet the company’s objectives. Then it should be locked up in a vast vault with only one or two people having the combinations that will open the safe and allow the prices to be changed. This is not to say that prices should be written in concrete or on tablets and held fixed for years or decades at a time as gospel from on high. No, this is the extreme opposite reaction. Times change and situations change accordingly. A regular evaluation of a firm’s pricing structure must be held.
Price may be the most visible of the Ps and the one most tempting to use but inevitably the one with the least staying power. What I hope to hear from my students is that they, as successful businesspersons, have remembered my lesson and of all the weapons they have at their disposable as marketers, price is the last one to be unsheathed. So now you too have had your lesson for the day.
Just noticeable difference
Why is it a 10% off sale fails to get your attention while a 50% off sale brings in consumers from the surrounding counties? The explanation can be found in the concept of just noticeable difference (JND) (also sometimes called the differential threshold). The just noticeable difference is the minimum change necessary for a person to detect it. This concept is typically applied to the five senses but it is equally valid when applied to marketing concepts such as price and quality.
The importance of JND to marketers is the challenge in determining the amount of change necessary for it to be noticed by the consumers. Any change less than the JND is wasted because it is not perceived. But jus as importantly, any change significantly larger then the JND can also be considered wasteful because you end up spending more than is necessary to elicit the necessary response (e.g., the customer’s attention). This also may end up with you irritating the customer (in the case or increasing volume to get their attention or visual excitement and color scheme).
An example of the JND can be seen in the example at the beginning of this column. The reason the 10% sale does not excite is that it is below the JND. Research has proven that the JND for price tends to be between 20 to 25%. Any sale below that will tend not to get much attention because the consumer does not believe it makes large enough difference for him/her to spend the effort to purchase. However much the 50% off sale price may attract the consumers, you will end up giving up money since it was more than enough to get their attention. In fact, going beyond the JND can actually hurt you in the long run.
How can this be? Weber’s Law indicates that the stronger the initial sensation, the greater the additional intensity that is needed to be perceived as different. If you turn your stereo system to nearly a whisper, it does not take much for you to know when the volume has been turned up. However, turn it up until the walls start shaking and it will require considerable increase in volume for the near-deaf to realize the already loud volume has become louder. Why then might 50% actually be detrimental to your business?
A retailer that earns the reputation for constantly having sales will find they must continually increase the discount to receive the same attention as before. The situation is analogous to an addict: to continue to get high, the addict must continue to increase the dosage since the body has gotten used to the previously high level and the addict must increase the dosage to create a JND and a new high. If customers start to expect 20 and 25% sales (or discounted price regularly), this become the level from which they will gauge actual sales. You must discount the from the newly established price point (which was the 20 to 25% off ). So now you have to discount 20 to 25% off the previous 20 or 25% discount or 35% or more to achieve the same level of attention as you did before. If you start from a higher base (say the 50%), and that base becomes the norm, you will have to discount from that base to get their attention. During the last few years, automotive companies have fallen into this trap: to keep sales going they have had to increase the level of rebates.
What is the moral of the story? Customers do not change their intentions unless the promotional discount is above the JND threshold. This threshold also differs from brand to brand: the threshold for name brands is lower than for store brands. Stores therefore can attract customers by offering a smaller discount on name brands than they can on store brands or private brands. A marketer is therefore wise to reframe from offering discounts that are below the differential threshold or too much above. He would also be wise in not being too predictable in offering the discounts or more than occasionally as it could affect the baseline necessary to get the consumer’s difference.
To get someone’s attention, hit them with more than a feather but a lot less than a baseball bat.
The importance of JND to marketers is the challenge in determining the amount of change necessary for it to be noticed by the consumers. Any change less than the JND is wasted because it is not perceived. But jus as importantly, any change significantly larger then the JND can also be considered wasteful because you end up spending more than is necessary to elicit the necessary response (e.g., the customer’s attention). This also may end up with you irritating the customer (in the case or increasing volume to get their attention or visual excitement and color scheme).
An example of the JND can be seen in the example at the beginning of this column. The reason the 10% sale does not excite is that it is below the JND. Research has proven that the JND for price tends to be between 20 to 25%. Any sale below that will tend not to get much attention because the consumer does not believe it makes large enough difference for him/her to spend the effort to purchase. However much the 50% off sale price may attract the consumers, you will end up giving up money since it was more than enough to get their attention. In fact, going beyond the JND can actually hurt you in the long run.
How can this be? Weber’s Law indicates that the stronger the initial sensation, the greater the additional intensity that is needed to be perceived as different. If you turn your stereo system to nearly a whisper, it does not take much for you to know when the volume has been turned up. However, turn it up until the walls start shaking and it will require considerable increase in volume for the near-deaf to realize the already loud volume has become louder. Why then might 50% actually be detrimental to your business?
A retailer that earns the reputation for constantly having sales will find they must continually increase the discount to receive the same attention as before. The situation is analogous to an addict: to continue to get high, the addict must continue to increase the dosage since the body has gotten used to the previously high level and the addict must increase the dosage to create a JND and a new high. If customers start to expect 20 and 25% sales (or discounted price regularly), this become the level from which they will gauge actual sales. You must discount the from the newly established price point (which was the 20 to 25% off ). So now you have to discount 20 to 25% off the previous 20 or 25% discount or 35% or more to achieve the same level of attention as you did before. If you start from a higher base (say the 50%), and that base becomes the norm, you will have to discount from that base to get their attention. During the last few years, automotive companies have fallen into this trap: to keep sales going they have had to increase the level of rebates.
What is the moral of the story? Customers do not change their intentions unless the promotional discount is above the JND threshold. This threshold also differs from brand to brand: the threshold for name brands is lower than for store brands. Stores therefore can attract customers by offering a smaller discount on name brands than they can on store brands or private brands. A marketer is therefore wise to reframe from offering discounts that are below the differential threshold or too much above. He would also be wise in not being too predictable in offering the discounts or more than occasionally as it could affect the baseline necessary to get the consumer’s difference.
To get someone’s attention, hit them with more than a feather but a lot less than a baseball bat.
Just noticeable difference
Why is it a 10% off sale fails to get your attention while a 50% off sale brings in consumers from the surrounding counties? The explanation can be found in the concept of just noticeable difference (JND) (also sometimes called the differential threshold). The just noticeable difference is the minimum change necessary for a person to detect it. This concept is typically applied to the five senses but it is equally valid when applied to marketing concepts such as price and quality.
The importance of JND to marketers is the challenge in determining the amount of change necessary for it to be noticed by the consumers. Any change less than the JND is wasted because it is not perceived. But jus as importantly, any change significantly larger then the JND can also be considered wasteful because you end up spending more than is necessary to elicit the necessary response (e.g., the customer’s attention). This also may end up with you irritating the customer (in the case or increasing volume to get their attention or visual excitement and color scheme).
An example of the JND can be seen in the example at the beginning of this column. The reason the 10% sale does not excite is that it is below the JND. Research has proven that the JND for price tends to be between 20 to 25%. Any sale below that will tend not to get much attention because the consumer does not believe it makes large enough difference for him/her to spend the effort to purchase. However much the 50% off sale price may attract the consumers, you will end up giving up money since it was more than enough to get their attention. In fact, going beyond the JND can actually hurt you in the long run.
How can this be? Weber’s Law indicates that the stronger the initial sensation, the greater the additional intensity that is needed to be perceived as different. If you turn your stereo system to nearly a whisper, it does not take much for you to know when the volume has been turned up. However, turn it up until the walls start shaking and it will require considerable increase in volume for the near-deaf to realize the already loud volume has become louder. Why then might 50% actually be detrimental to your business?
A retailer that earns the reputation for constantly having sales will find they must continually increase the discount to receive the same attention as before. The situation is analogous to an addict: to continue to get high, the addict must continue to increase the dosage since the body has gotten used to the previously high level and the addict must increase the dosage to create a JND and a new high. If customers start to expect 20 and 25% sales (or discounted price regularly), this become the level from which they will gauge actual sales. You must discount the from the newly established price point (which was the 20 to 25% off ). So now you have to discount 20 to 25% off the previous 20 or 25% discount or 35% or more to achieve the same level of attention as you did before. If you start from a higher base (say the 50%), and that base becomes the norm, you will have to discount from that base to get their attention. During the last few years, automotive companies have fallen into this trap: to keep sales going they have had to increase the level of rebates.
What is the moral of the story? Customers do not change their intentions unless the promotional discount is above the JND threshold. This threshold also differs from brand to brand: the threshold for name brands is lower than for store brands. Stores therefore can attract customers by offering a smaller discount on name brands than they can on store brands or private brands. A marketer is therefore wise to reframe from offering discounts that are below the differential threshold or too much above. He would also be wise in not being too predictable in offering the discounts or more than occasionally as it could affect the baseline necessary to get the consumer’s difference.
To get someone’s attention, hit them with more than a feather but a lot less than a baseball bat.
The importance of JND to marketers is the challenge in determining the amount of change necessary for it to be noticed by the consumers. Any change less than the JND is wasted because it is not perceived. But jus as importantly, any change significantly larger then the JND can also be considered wasteful because you end up spending more than is necessary to elicit the necessary response (e.g., the customer’s attention). This also may end up with you irritating the customer (in the case or increasing volume to get their attention or visual excitement and color scheme).
An example of the JND can be seen in the example at the beginning of this column. The reason the 10% sale does not excite is that it is below the JND. Research has proven that the JND for price tends to be between 20 to 25%. Any sale below that will tend not to get much attention because the consumer does not believe it makes large enough difference for him/her to spend the effort to purchase. However much the 50% off sale price may attract the consumers, you will end up giving up money since it was more than enough to get their attention. In fact, going beyond the JND can actually hurt you in the long run.
How can this be? Weber’s Law indicates that the stronger the initial sensation, the greater the additional intensity that is needed to be perceived as different. If you turn your stereo system to nearly a whisper, it does not take much for you to know when the volume has been turned up. However, turn it up until the walls start shaking and it will require considerable increase in volume for the near-deaf to realize the already loud volume has become louder. Why then might 50% actually be detrimental to your business?
A retailer that earns the reputation for constantly having sales will find they must continually increase the discount to receive the same attention as before. The situation is analogous to an addict: to continue to get high, the addict must continue to increase the dosage since the body has gotten used to the previously high level and the addict must increase the dosage to create a JND and a new high. If customers start to expect 20 and 25% sales (or discounted price regularly), this become the level from which they will gauge actual sales. You must discount the from the newly established price point (which was the 20 to 25% off ). So now you have to discount 20 to 25% off the previous 20 or 25% discount or 35% or more to achieve the same level of attention as you did before. If you start from a higher base (say the 50%), and that base becomes the norm, you will have to discount from that base to get their attention. During the last few years, automotive companies have fallen into this trap: to keep sales going they have had to increase the level of rebates.
What is the moral of the story? Customers do not change their intentions unless the promotional discount is above the JND threshold. This threshold also differs from brand to brand: the threshold for name brands is lower than for store brands. Stores therefore can attract customers by offering a smaller discount on name brands than they can on store brands or private brands. A marketer is therefore wise to reframe from offering discounts that are below the differential threshold or too much above. He would also be wise in not being too predictable in offering the discounts or more than occasionally as it could affect the baseline necessary to get the consumer’s difference.
To get someone’s attention, hit them with more than a feather but a lot less than a baseball bat.
Point Counterpoint
discussed interruption marketing, the traditional way of sending advertising messages (the classic example of which is a silly message right in the middle of a tear-jerking drama or love scene). Between new technological progress such as TIVO or consumer trends towards taping, zapping, and watching, the mass media advertisers are beginning to suspect their advertising monies is not producing the eyeballs and purchases it used to. A slow but steady migration from free TV to cable (pay) TV might eventually spell the end of Free TV as we know it (but we will save that discussion for another article).
So what has been the advertisers’ reactions to these latest techno marvels? At first, they denied its existence or influence. Next they attempted to legislate the advances out of existence (with the same amount of luck as they had outlawing the VCR in the early 80s, perhaps music companies should pay heed here). And finally, they have decided (on the correct choice if I may say so) to use the same technological miracles that have been their nemesis. If you can’t beat ‘em, join ‘em (or rather use it for our purposes).
The big buzzword in advertising circles these days is “Virtual advertising.” I am certain you have seen it, you just did not know it. It isn’t subliminal in the sense of the fifties scare about hiding messages within a media, but it approaches the same level of subtllty. Ever watch a football game and see those broad yellow lines that mark where the offense must reach to receive a first down? Those are not on the field but digitally incorporated into the picture. The same concept is at work for virtual advertising.
Subtle but highly visible. It’s there but it’s not there. Next time you are watching a baseball game and viewing the game from the typical behind the pitcher angle, concentrate on behind the batter and check to see if a corporate name or logo appears. If so, since the fans in the stadium watching the game see only an empty wall, you are viewing another example of a digitally inserted ad. Ditto for messages along the scorer’s table for basketball. This is the new world and the new advertising strategy being used to counteract the consumer actions noted earlier.
Another advertising tactic in the war for viewers is the product placement. This has been used considerably in movies but its usage has shifted to high gear for prime-time TV. In a sense we are reverting back to the thirties and the time of a single permanent sponsor for a mass media show. However, the difference is the product is not just mentioned at the beginning and the end of the show with any live commercials as can, but actual placement of the product is visible throughout the show. One might even go as far as to say the show is one big infomercial disguised as TV entertainment.
Just as tanks overtook trenches and anti-tank missiles neutralized tanks, each new technological advance will eventually be met by another advance that will minimize the advantages of the original advance. The consumers are just beginning to receive the full attack of virtual advertising. Most are not even aware of what it is and how it appears. But never underestimate the creativeness and abilities of the consumer. If and when, the full effect of virtual advertising finally hits (which means there is no escaping the multitude of messages), expect a strong reaction from consumers and new consumer-driven technology to overcome this latest media marvel. Point—customer.
The already worried marketers have been studying “ad avoidance” and have created several strategies to counter the ad attention deficit customer. One tactic is to combine the TV and online experience: a viewer watching a reality show could vote directly and immediately on a participant’s performance, meanwhile seeing targeted offers. Another is to personalize TV ads to particular zip codes or even on a home-by-home basis. A third tactic is to make more aggressive use of loyalty cards by offering specials available only to those who swipe their cards and hear tailored pitches. Counterpoint-marketers.
Point, Counter-point, just the latest installment of one of the world’s longest running dramas.
So what has been the advertisers’ reactions to these latest techno marvels? At first, they denied its existence or influence. Next they attempted to legislate the advances out of existence (with the same amount of luck as they had outlawing the VCR in the early 80s, perhaps music companies should pay heed here). And finally, they have decided (on the correct choice if I may say so) to use the same technological miracles that have been their nemesis. If you can’t beat ‘em, join ‘em (or rather use it for our purposes).
The big buzzword in advertising circles these days is “Virtual advertising.” I am certain you have seen it, you just did not know it. It isn’t subliminal in the sense of the fifties scare about hiding messages within a media, but it approaches the same level of subtllty. Ever watch a football game and see those broad yellow lines that mark where the offense must reach to receive a first down? Those are not on the field but digitally incorporated into the picture. The same concept is at work for virtual advertising.
Subtle but highly visible. It’s there but it’s not there. Next time you are watching a baseball game and viewing the game from the typical behind the pitcher angle, concentrate on behind the batter and check to see if a corporate name or logo appears. If so, since the fans in the stadium watching the game see only an empty wall, you are viewing another example of a digitally inserted ad. Ditto for messages along the scorer’s table for basketball. This is the new world and the new advertising strategy being used to counteract the consumer actions noted earlier.
Another advertising tactic in the war for viewers is the product placement. This has been used considerably in movies but its usage has shifted to high gear for prime-time TV. In a sense we are reverting back to the thirties and the time of a single permanent sponsor for a mass media show. However, the difference is the product is not just mentioned at the beginning and the end of the show with any live commercials as can, but actual placement of the product is visible throughout the show. One might even go as far as to say the show is one big infomercial disguised as TV entertainment.
Just as tanks overtook trenches and anti-tank missiles neutralized tanks, each new technological advance will eventually be met by another advance that will minimize the advantages of the original advance. The consumers are just beginning to receive the full attack of virtual advertising. Most are not even aware of what it is and how it appears. But never underestimate the creativeness and abilities of the consumer. If and when, the full effect of virtual advertising finally hits (which means there is no escaping the multitude of messages), expect a strong reaction from consumers and new consumer-driven technology to overcome this latest media marvel. Point—customer.
The already worried marketers have been studying “ad avoidance” and have created several strategies to counter the ad attention deficit customer. One tactic is to combine the TV and online experience: a viewer watching a reality show could vote directly and immediately on a participant’s performance, meanwhile seeing targeted offers. Another is to personalize TV ads to particular zip codes or even on a home-by-home basis. A third tactic is to make more aggressive use of loyalty cards by offering specials available only to those who swipe their cards and hear tailored pitches. Counterpoint-marketers.
Point, Counter-point, just the latest installment of one of the world’s longest running dramas.
brand New World
What is a brand? We all, as experienced consumers, know instinctively about brands. We live them. We see them every day. But for most consumers, as it should be, the intricacy that makes up a brand is not known. A brand is what remains in the mind once the advertisement goes away. It is the mental image of a product. The most successful brands provide strong emotions towards that product. To be successful, a brand needs to have an identity, a set of characteristics the marketer then addresses through advertisements to the ultimate user. If the marketer cannot adequately describe what the brand is suppose to convey to the user, how can the user be expected to? Any branding effort must also be consistent with the product and the company else its credibility is in doubt. (For example, Yugo branding its cars as highest quality vehicles would not be successful in the eyes of the consumer).
Why should marketers attempt to create a brand for their products? Branding, despite media reports to the contrary, has been on the upswing in recent years. It is the ‘in’ thing to do. In this age of media clutter, of thousands of images, of rows of products to choose from, an established brand provides a significant advantage. Having an existing brand allows you to charge a premium price over unbranded items. The brand is a promise between the producer of the product or service and the user: If you continue to provide me the product or service as displayed in the brand, then I will continue to use it. Those users loyal to you will pay a premium for your product because you are a known entity. They have tried and liked your product. Essentially, brand loyalty exists due to risk avoidance: I know your brand but I do not know theirs, I trust your brand but do not know theirs, therefore the safest and most prudent course of action is to continue using your brand. In this age of time shortages, consumers are more apt to find a brand they like and continue using it because they don’t have to invest time and money in exploring the alternatives, time they are in short supply of and could better use in other endeavors.
By establishing a brand with a clearly differentiated set of characteristics from your competition, you set yourself apart from all others. As a competitor, you need to find a hilltop that you and only you occupy. For example, one brand could claim the “quality” hilltop, another the “fastest-acting,” hilltop, a third the “flavor, tasty” hilltop. If you wish to compete and these are already existing brands, the wisest choice would be to secure an unoccupied hilltop, such as “specially formulated with xxx ingredient, the only product that has xxx,” or become the product for “children” or “seniors.” By doing so you have differentiated yourself from the competition.
Called either a “tag line,’ a “theme,” or a “memory enhancer,” this is a critical part of any brand. Some examples are: “You Deserve a Break Today.” “”Think Different” “Like a Good Neighbor, State Farm is There.” “Quality is Job One.” To be effective, the tag line must answer 3 questions: 1) Who am I? 2) What do I do?, and 3) Why the heck should you care? Unless it satisfactorily answers those 3 questions it does not fulfill its main function of enhancing the brand. Most tag lines fail on the third point; it might be a fun rhyme or a catchy slogan but unless it provides the user a reason for pursuing the product further, it fails to add to the brand.
Even small businesspersons can brand themselves, their stores, their products. It is worth the investment to set yourself apart from all of the competition, to stand for something, to be known as something special to your customers. Your customers in return will offer brand loyalty to you. One caveat: you must fulfill the promise you made to your customers. If for any reason, you decide to shortchange it, you have changed the brand and nullified the agreement with your loyal users. They may very well decide to go elsewhere.
Successful Marketers create a brand, a promise, and fulfill that promise.
The benefits of creating a strong brand also extends to increased profits. Companies with strong brands can command 5-7% higher stock prices than others, have customers who are willing to pay up to 25% more than other similar products, and have up to 289% higher earning growth over low-relevance brands.
Why should marketers attempt to create a brand for their products? Branding, despite media reports to the contrary, has been on the upswing in recent years. It is the ‘in’ thing to do. In this age of media clutter, of thousands of images, of rows of products to choose from, an established brand provides a significant advantage. Having an existing brand allows you to charge a premium price over unbranded items. The brand is a promise between the producer of the product or service and the user: If you continue to provide me the product or service as displayed in the brand, then I will continue to use it. Those users loyal to you will pay a premium for your product because you are a known entity. They have tried and liked your product. Essentially, brand loyalty exists due to risk avoidance: I know your brand but I do not know theirs, I trust your brand but do not know theirs, therefore the safest and most prudent course of action is to continue using your brand. In this age of time shortages, consumers are more apt to find a brand they like and continue using it because they don’t have to invest time and money in exploring the alternatives, time they are in short supply of and could better use in other endeavors.
By establishing a brand with a clearly differentiated set of characteristics from your competition, you set yourself apart from all others. As a competitor, you need to find a hilltop that you and only you occupy. For example, one brand could claim the “quality” hilltop, another the “fastest-acting,” hilltop, a third the “flavor, tasty” hilltop. If you wish to compete and these are already existing brands, the wisest choice would be to secure an unoccupied hilltop, such as “specially formulated with xxx ingredient, the only product that has xxx,” or become the product for “children” or “seniors.” By doing so you have differentiated yourself from the competition.
Called either a “tag line,’ a “theme,” or a “memory enhancer,” this is a critical part of any brand. Some examples are: “You Deserve a Break Today.” “”Think Different” “Like a Good Neighbor, State Farm is There.” “Quality is Job One.” To be effective, the tag line must answer 3 questions: 1) Who am I? 2) What do I do?, and 3) Why the heck should you care? Unless it satisfactorily answers those 3 questions it does not fulfill its main function of enhancing the brand. Most tag lines fail on the third point; it might be a fun rhyme or a catchy slogan but unless it provides the user a reason for pursuing the product further, it fails to add to the brand.
Even small businesspersons can brand themselves, their stores, their products. It is worth the investment to set yourself apart from all of the competition, to stand for something, to be known as something special to your customers. Your customers in return will offer brand loyalty to you. One caveat: you must fulfill the promise you made to your customers. If for any reason, you decide to shortchange it, you have changed the brand and nullified the agreement with your loyal users. They may very well decide to go elsewhere.
Successful Marketers create a brand, a promise, and fulfill that promise.
The benefits of creating a strong brand also extends to increased profits. Companies with strong brands can command 5-7% higher stock prices than others, have customers who are willing to pay up to 25% more than other similar products, and have up to 289% higher earning growth over low-relevance brands.
Subscribe to:
Posts (Atom)
