The Best of All Ms
Paul Herbig
I often tell my classes that Marketing is the most important of all the business disciplines. Although I teach marketing and have lived and breathed (and if I am cut I bleed Marketing red) for twenty-five years, I am really not biased. So let me count the ways for you.
In business, if you look at an enterprise in its rawest form, there are only 3 things you can do: Manufacture a product, Market the product, or count the Money (3Ms). Before you invest in all the facilities necessary to make the product you had better determine if there is sufficient customers to make your operation profitable (marketing) and that the product you are indeed designing and plan to manufacture will meet those customers’ needs (marketing). Customers are needed to buy those products before you make them so they need be sold (marketed) before you can manufacture any products. Similarly, unless the products are sold (marketed) you will not have any money to count. Therefore of all the 3Ms, Marketing is primary and must take precedent over the other two if the company has any chance of surviving let alone thriving and making profits.
Still not convinced? What do you believe was the amount of world trade during 2002? In the U.S. alone, trade (imports and exports together)(products and/or services that crossed the border from or to the United States) is rapidly approaching $2 Trillion annually. That may sound (and is) large but many countries’ trade accounts for twice to three times the percentage of GDP that occurs in the U.S. It is safe to say the worldwide trade is trillions of Dollars. So what does this have to do with marketing. Before any product is traded across the border, a sale must have taken place between the two parties doing the trading. Once again, marketing. Without marketing taking place, trade would not occur and the world economic system would come to an abrupt halt (okay, perhaps I am exaggerating a slight bit here). By the same token, every dollar in the GDP (Gross Domestic Product) of the US (nearly $10 trillion) reflects an exchange that has taken place between a buyer and seller and a recognition that an act of marketing has occurred that hopefully betters both the buyer and seller.
Without marketing, new products would not be produced nor purchased by customers. Unless a customer knows about a new product and its features and benefits (Publicity), likelihood of purchase is small. A customer must then have his interest awoken for the product and understand how the product will satisfy needs and make life better (advertising). The product must be easily available to the customer wherever and whenever the customer wants the product (distribution). The product must be priced at a comparable point where it provides sufficient value for the dollar paid yet provides sufficient profit for the company to continue to manufacture the product. And finally, the customer must be assured the product will continue to work as promised (customer service), is aware of support activities to allow the customer to fully utilize the product, and has a migration path to upgrade or replace the product when it is obsolete or a newer product becomes available.
Experts estimate that marketing related jobs account for between one-quarter and one-third (25 to 33%) of all jobs in this country. Other estimates are that marketing costs as a percentage of every dollar in revenue received averages 50% (in some industry such as food processing this percentage can go as high as 70% while for most organizational pursuits it will be 30-35).
Truly, Marketing does make the world go round
Sunday, July 27, 2008
Thursday, July 24, 2008
Undercover marketing
Undercover Marketing
By Paul A. Herbig
Advertising has become advertising ad nauseum, and we are forever being pitched to, marketed to, and appealed to by someone trying to sell us something. If you find that troubling, the companies trying to sell you stuff aren't too thrilled either. They're finding it harder and harder in this assault of advertising to get your attention, and are coming up with inventive - even devious - ways of grabbing you. This is called "undercover marketing" -- marketing by masquerade, or stealth marketing. Somewhere in downtown New York, a secret plan is being hatched. A handpicked team of attractive, approachable guns-for-hire has been tapped to go undercover. They've been assembled by a company called Essential Reality, which has launched a new product called the "P-5 Glove," a cutting-edge device that video-gamers can use to fly planes and fire weapons on their computers, with the twitch of a finger.
“We're gonna go into coffee bars and crowded places,” says one marketer. “Your job is to go out there and have fun with it. And say, ‘Yeah sure, c'mon you wanna try it? Great, try it,’ and then all of the sudden you just involve them with the brand. And then feed them a few sound bites along the way: ‘Hey, you're in there. It's, like, look at this, it's like you're in the game. It's like you're in the game’ -- that's a good sound bite.”
Inside a nearby Starbucks, Theo and Kumani could be any of a million 20-somethings hanging out, obsessed with their new toy, not pitching anything, just waiting for someone to approach them. "How long have you had this," asks a curious bystander. " I've had it a few days. They had a whole lot, I got a lot of product information," says Theo. "It works really well. Try it on for a minute, you'll see this thing moves fluidly." "Okay, I'll try it," the man says, playing right into Theo’s hands. After the temptation, Theo offers to email him information about the product, making sure he never lets on that he’s on the job. No one is overtly trying to sell you anything, only trying to get you to want it, and then, of course, buy it and tell your friends about it. It’s not a soft sell or a hard sell. It’s a secret sell.
Malcolm Gladwell, who wrote about such things in his book, "The Tipping Point," thinks undercover marketing is a bit of a con game: “Well, there's an element, obviously, of deception involved that I don't think is the case in conventional advertising. Conventional advertising is about trying to charm us or trying to persuade us. But it's not usually about trying to trick us. And it's the trickery part I think, that makes this different.” But there is deception in all advertising. For example, the cars you see on television are slicker, faster, and shot in a particular way to make them look even better than they may look in a showroom. But there's a set of rules that govern a lot of advertising and we're aware of the rules,” says Gladwell. “We’re aware that the woman in the advertising for Ivory Soap is prettier than most women in our lives. A line is crossed, I think, when you go outside of those normal boundaries and start to deceive people in ways that they are, where they are totally unwitting to what's going on.”
"Cool new products" are the lifeblood of undercover marketing, and these are the kinds of people the marketers want to get them to not just buy, but get them talking about a product. But can buzz be manufactured?
“Part of what makes real word of mouth so powerful is the understanding we have from, that the person telling us about it is telling us about it for, for disinterested reasons,” says Gladwell. “They're not being paid by somebody. They have our interests at heart. That is worlds apart from a situation where the person telling us something is telling us that because they have some private agenda. They're getting paid, they're being planted.” “My problem with undercover marketing is not what happens in the moment. It's what happens a week, or two weeks, or a month down the road,” adds Gladwell. “When we discover we've been duped. And I think that the moment when we discover we've been duped causes a backlash. Companies who engage in this practice are courting that backlash. And that's a very, very dangerous thing to play with.”
The consumers in the examples above were unaware that they were being pitched to every time they were offered a drink. These painfully hip party animals do not seem a bit curious that the only alcohol being poured is a new brand called Turi Vodka -- nobody hyping anything, just pouring. David Elias, CEO of a marketing company called "Soulkool," ran the vodka operation. He's the man to go to if you want to influence the choices of that fickle, unpredictable 20-something demographic. He made a deal with the hottest club in town: to only push Turi Vodka at this party, hoping to start a vodka buzz..
“This is not the old theory. This is the new way of doing it. The clutter in the marketplace, people feeling like they're marketed to all the time, that kind of message for this demographic doesn't work,” says Elias. “It really, they're not interested. They want to know about it from a friend of theirs that's in the know, that keeps up with the trends. And that way it's very subtle.”
Subtle is Elias' weapon of choice. On the day 60 Minutes visited, Soulkool operatives were going undercover on the Internet, promoting the movie "Cowboy Bebop," an animated feature. Soulkool employees, all of them barely in their 20s, boost the promotion by flooding Internet chat rooms and message boards with rave reviews for the movie. Soulkool does not mention any professional affiliation, so the kids who read their messages have no idea they're talking to a paid marketer, hired to plug the movie. And it's not just Soulkool employees who are doing the plugging.
There's Lucas Schlager, a 13-year-old Cowboy Bebop fanatic, one of 350 volunteers across the country enlisted by Soulkool to hype the movie in exchange for T-shirts and posters. From the comfort of his Long Island bedroom, Lucas spends hours in chat rooms, typing and hyping away. “Thirteen different chats and four message boards, multiple postings. And I would just, you know, completely tell everything about this movie. And just get people to go see it,” says Schlager. Lucas sometimes mentions Soulkool in his chats, but often he doesn't. The other person has no idea he's dealing with a marketer. Undercover marketing hasn't eclipsed the old fashioned kind, but it's growing. And if you think you haven't run into an undercover marketer yet, well, that's the point.
Considerable risks do exist. If marketers fail to hide their vested interest in selling a product, they run condsiderable risk of backlash. Cases where consumers have found out they have been manipulated into liking the product, they generally become angry at the marketer (and by association that product) over being mislead. This indignation has lead some to apply more derogatory names to undercover marketing, such as roach baiting, likening the products marketed this way to poison. In some cases, the amount of buzz generated by a failed campaign can exceed that of a successful one, only with the opposite of the desired result.
When targeting consumers known to be consistent Internet users, undercover marketers have taken a significant interest in leveraging Internet chat rooms and forums. In these settings, people tend to perceive everyone as peers, the semi-anonymity reduces the risk of being found out, and one marketer can personally influence a large number of people. During the dot com boom at the turn of the century, stock promoters frequently used chat rooms to create a buzz and drive up the price of a stock.
Whatever the risks, undercover marketing only requires a small investment for a large potential pay off. It remains a cheap and effective way of generating buzz, especially in markets such as Tobacco and alcohol where media-savvy target consumers have become increasingly resistant or inaccessible to other forms of advertising.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
By Paul A. Herbig
Advertising has become advertising ad nauseum, and we are forever being pitched to, marketed to, and appealed to by someone trying to sell us something. If you find that troubling, the companies trying to sell you stuff aren't too thrilled either. They're finding it harder and harder in this assault of advertising to get your attention, and are coming up with inventive - even devious - ways of grabbing you. This is called "undercover marketing" -- marketing by masquerade, or stealth marketing. Somewhere in downtown New York, a secret plan is being hatched. A handpicked team of attractive, approachable guns-for-hire has been tapped to go undercover. They've been assembled by a company called Essential Reality, which has launched a new product called the "P-5 Glove," a cutting-edge device that video-gamers can use to fly planes and fire weapons on their computers, with the twitch of a finger.
“We're gonna go into coffee bars and crowded places,” says one marketer. “Your job is to go out there and have fun with it. And say, ‘Yeah sure, c'mon you wanna try it? Great, try it,’ and then all of the sudden you just involve them with the brand. And then feed them a few sound bites along the way: ‘Hey, you're in there. It's, like, look at this, it's like you're in the game. It's like you're in the game’ -- that's a good sound bite.”
Inside a nearby Starbucks, Theo and Kumani could be any of a million 20-somethings hanging out, obsessed with their new toy, not pitching anything, just waiting for someone to approach them. "How long have you had this," asks a curious bystander. " I've had it a few days. They had a whole lot, I got a lot of product information," says Theo. "It works really well. Try it on for a minute, you'll see this thing moves fluidly." "Okay, I'll try it," the man says, playing right into Theo’s hands. After the temptation, Theo offers to email him information about the product, making sure he never lets on that he’s on the job. No one is overtly trying to sell you anything, only trying to get you to want it, and then, of course, buy it and tell your friends about it. It’s not a soft sell or a hard sell. It’s a secret sell.
Malcolm Gladwell, who wrote about such things in his book, "The Tipping Point," thinks undercover marketing is a bit of a con game: “Well, there's an element, obviously, of deception involved that I don't think is the case in conventional advertising. Conventional advertising is about trying to charm us or trying to persuade us. But it's not usually about trying to trick us. And it's the trickery part I think, that makes this different.” But there is deception in all advertising. For example, the cars you see on television are slicker, faster, and shot in a particular way to make them look even better than they may look in a showroom. But there's a set of rules that govern a lot of advertising and we're aware of the rules,” says Gladwell. “We’re aware that the woman in the advertising for Ivory Soap is prettier than most women in our lives. A line is crossed, I think, when you go outside of those normal boundaries and start to deceive people in ways that they are, where they are totally unwitting to what's going on.”
"Cool new products" are the lifeblood of undercover marketing, and these are the kinds of people the marketers want to get them to not just buy, but get them talking about a product. But can buzz be manufactured?
“Part of what makes real word of mouth so powerful is the understanding we have from, that the person telling us about it is telling us about it for, for disinterested reasons,” says Gladwell. “They're not being paid by somebody. They have our interests at heart. That is worlds apart from a situation where the person telling us something is telling us that because they have some private agenda. They're getting paid, they're being planted.” “My problem with undercover marketing is not what happens in the moment. It's what happens a week, or two weeks, or a month down the road,” adds Gladwell. “When we discover we've been duped. And I think that the moment when we discover we've been duped causes a backlash. Companies who engage in this practice are courting that backlash. And that's a very, very dangerous thing to play with.”
The consumers in the examples above were unaware that they were being pitched to every time they were offered a drink. These painfully hip party animals do not seem a bit curious that the only alcohol being poured is a new brand called Turi Vodka -- nobody hyping anything, just pouring. David Elias, CEO of a marketing company called "Soulkool," ran the vodka operation. He's the man to go to if you want to influence the choices of that fickle, unpredictable 20-something demographic. He made a deal with the hottest club in town: to only push Turi Vodka at this party, hoping to start a vodka buzz..
“This is not the old theory. This is the new way of doing it. The clutter in the marketplace, people feeling like they're marketed to all the time, that kind of message for this demographic doesn't work,” says Elias. “It really, they're not interested. They want to know about it from a friend of theirs that's in the know, that keeps up with the trends. And that way it's very subtle.”
Subtle is Elias' weapon of choice. On the day 60 Minutes visited, Soulkool operatives were going undercover on the Internet, promoting the movie "Cowboy Bebop," an animated feature. Soulkool employees, all of them barely in their 20s, boost the promotion by flooding Internet chat rooms and message boards with rave reviews for the movie. Soulkool does not mention any professional affiliation, so the kids who read their messages have no idea they're talking to a paid marketer, hired to plug the movie. And it's not just Soulkool employees who are doing the plugging.
There's Lucas Schlager, a 13-year-old Cowboy Bebop fanatic, one of 350 volunteers across the country enlisted by Soulkool to hype the movie in exchange for T-shirts and posters. From the comfort of his Long Island bedroom, Lucas spends hours in chat rooms, typing and hyping away. “Thirteen different chats and four message boards, multiple postings. And I would just, you know, completely tell everything about this movie. And just get people to go see it,” says Schlager. Lucas sometimes mentions Soulkool in his chats, but often he doesn't. The other person has no idea he's dealing with a marketer. Undercover marketing hasn't eclipsed the old fashioned kind, but it's growing. And if you think you haven't run into an undercover marketer yet, well, that's the point.
Considerable risks do exist. If marketers fail to hide their vested interest in selling a product, they run condsiderable risk of backlash. Cases where consumers have found out they have been manipulated into liking the product, they generally become angry at the marketer (and by association that product) over being mislead. This indignation has lead some to apply more derogatory names to undercover marketing, such as roach baiting, likening the products marketed this way to poison. In some cases, the amount of buzz generated by a failed campaign can exceed that of a successful one, only with the opposite of the desired result.
When targeting consumers known to be consistent Internet users, undercover marketers have taken a significant interest in leveraging Internet chat rooms and forums. In these settings, people tend to perceive everyone as peers, the semi-anonymity reduces the risk of being found out, and one marketer can personally influence a large number of people. During the dot com boom at the turn of the century, stock promoters frequently used chat rooms to create a buzz and drive up the price of a stock.
Whatever the risks, undercover marketing only requires a small investment for a large potential pay off. It remains a cheap and effective way of generating buzz, especially in markets such as Tobacco and alcohol where media-savvy target consumers have become increasingly resistant or inaccessible to other forms of advertising.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
Echo boomers
Echo Boomers
By Paul Herbig
Echo boomers (sometimes called Generation Y) have a lot going for them. These children of the baby boomers were born from 1980 through 1994. These teens and young adults are as a whole an extremely confident group. They think they are smart. They know what they want out of life and are willing to work hard to get it.
Echo Boomers value authenticity and autonomy. Among 14- to 18-year-olds, 80% have a clear idea of objectives and goals in life; 76% of 18- to 24-year-olds know what they want and 71% said they know how to get it. And they're willing to work hard (81%) to come out on top. The vast majority believes they are really good at their jobs.
Echo Boomers also feel they are smarter than the average Joe. Some 62% of 12- to 17-year-olds think they are smarter than most kids their age. Sixty-three percent of the 18- to 24-year-old group think their IQ is higher than average (mimicking the Lake Wobegon effect where everyone was above average). When it came to critiquing the business world and media, Echo Boomers saw some credibility issues. Some 71% of the 18-to-24 group believe that most businesses would take advantage of the public. Another 82% are skeptical about what they see in the media.
Few Echo Boomers, a mere 2%, said they trust magazine ads or TV and radio commercials. None trusted the Internet. They are looking for integrity, for credibility, for truth in advertising and the media, for someone or something that they can trust. Always telling the truth was high on the list of things that are important to Echo Boomers. They want to be seen as people that tell the truth, that their integrity is beyond question. And they want to be seen as people that can see through the exaggeration and the hype.
These young people have been shaped by a wide range of influences, from TiVo to being able to select the color of an M&M for worldwide distribution, to their parents. They are the beneficiaries of a new focus on family thanks to their Boomer moms and dads. Some 78% of Echoes indicated that having a good relationship with their kids is a sign of success and accomplishment, compared to 66% in 2001. More Echoes (52%) say their parents tell them what they can and cannot watch on TV versus 43% in 1999.
They are remarkably accepting of differences and different choices. Some eight to 10 people between the ages of 18 and 24 said it was OK to do what you want. Other characteristics include:
*48% of Echoes are looking forward to the day when they can affect what happens in a TV program.
*68% will buy a different brand just to see what its like (17- to 24-year-olds).
*19% subscribe to fewer magazines than they did one year ago citing a busy schedule and the ability to get the information free online.
*53% said it is very important to make time to relax, compared to 41% in 1997.
*42% want to know more about stress.
These young consumers are influenced by friends more than ads. Trying to market a personal technology product to Gen Y? Getting their ear may take some doing. A new study from market research firm GMI shows this demographic is more receptive to word of mouth than advertising. Among respondents age 18 to 29, 44 percent said they
were influenced by advertising, while 67 percent cited recommendations from friends as an influence (respondents could choose more than one option). In contrast, 58.5 percent of boomers say that word of mouth or friends' opinions influence their decisions to buy.
Echo boomers are bombarded by advertising and do not know what they can and cannot trust; as a result, the only thing they can really trust is a friend. This phenomena can also be seen in the the growing popularity of online networking sites like Myspace , Facebook, and Friendster, which easily let consumers (mostly echoboomers) solicit opinions from a large group of people.
The next wave of consumers is upon us now and they are nothing like we have ever seen before. Get to know them and their needs and special ways of operating. The alternative is an early exit from the game.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
By Paul Herbig
Echo boomers (sometimes called Generation Y) have a lot going for them. These children of the baby boomers were born from 1980 through 1994. These teens and young adults are as a whole an extremely confident group. They think they are smart. They know what they want out of life and are willing to work hard to get it.
Echo Boomers value authenticity and autonomy. Among 14- to 18-year-olds, 80% have a clear idea of objectives and goals in life; 76% of 18- to 24-year-olds know what they want and 71% said they know how to get it. And they're willing to work hard (81%) to come out on top. The vast majority believes they are really good at their jobs.
Echo Boomers also feel they are smarter than the average Joe. Some 62% of 12- to 17-year-olds think they are smarter than most kids their age. Sixty-three percent of the 18- to 24-year-old group think their IQ is higher than average (mimicking the Lake Wobegon effect where everyone was above average). When it came to critiquing the business world and media, Echo Boomers saw some credibility issues. Some 71% of the 18-to-24 group believe that most businesses would take advantage of the public. Another 82% are skeptical about what they see in the media.
Few Echo Boomers, a mere 2%, said they trust magazine ads or TV and radio commercials. None trusted the Internet. They are looking for integrity, for credibility, for truth in advertising and the media, for someone or something that they can trust. Always telling the truth was high on the list of things that are important to Echo Boomers. They want to be seen as people that tell the truth, that their integrity is beyond question. And they want to be seen as people that can see through the exaggeration and the hype.
These young people have been shaped by a wide range of influences, from TiVo to being able to select the color of an M&M for worldwide distribution, to their parents. They are the beneficiaries of a new focus on family thanks to their Boomer moms and dads. Some 78% of Echoes indicated that having a good relationship with their kids is a sign of success and accomplishment, compared to 66% in 2001. More Echoes (52%) say their parents tell them what they can and cannot watch on TV versus 43% in 1999.
They are remarkably accepting of differences and different choices. Some eight to 10 people between the ages of 18 and 24 said it was OK to do what you want. Other characteristics include:
*48% of Echoes are looking forward to the day when they can affect what happens in a TV program.
*68% will buy a different brand just to see what its like (17- to 24-year-olds).
*19% subscribe to fewer magazines than they did one year ago citing a busy schedule and the ability to get the information free online.
*53% said it is very important to make time to relax, compared to 41% in 1997.
*42% want to know more about stress.
These young consumers are influenced by friends more than ads. Trying to market a personal technology product to Gen Y? Getting their ear may take some doing. A new study from market research firm GMI shows this demographic is more receptive to word of mouth than advertising. Among respondents age 18 to 29, 44 percent said they
were influenced by advertising, while 67 percent cited recommendations from friends as an influence (respondents could choose more than one option). In contrast, 58.5 percent of boomers say that word of mouth or friends' opinions influence their decisions to buy.
Echo boomers are bombarded by advertising and do not know what they can and cannot trust; as a result, the only thing they can really trust is a friend. This phenomena can also be seen in the the growing popularity of online networking sites like Myspace , Facebook, and Friendster, which easily let consumers (mostly echoboomers) solicit opinions from a large group of people.
The next wave of consumers is upon us now and they are nothing like we have ever seen before. Get to know them and their needs and special ways of operating. The alternative is an early exit from the game.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
Customer Experience
The Customer Experience—easier said than done
By Paul Herbig
The Customer Experience - it's the sum total of the FEELINGS evoked as a result of ANY interaction that takes place at ANY touch point in the
organization. It's based on the PERCEPTION of the value
delivered, both tangible and intangible. Most companies talk the good talk about customers, about customers being their number one priority, about being a customer centric organization. But when push comes to shove, the customer gets the short stick.
Once upon a time, quite recently, Delta Air Lines surveyed some of its customers, asking whether they'd be willing to pay a fee to talk to U.S.-based customer-service representatives rather than having their calls directed offshore. Frequent fliers were outraged, and before long a frank op-ed article by the company's chief customer-service officer appeared in The Atlanta Journal-Constitution . In it, she renounced the plan, quoted CEO Gerald Grinstein -- "That darn question should never have been on a survey" -- and noted that "creating a 'customer-focused culture' is a central element of a new plan to transform Delta and its business model."
True, the folks at Delta are in quite a pickle, and you can't blame them for brainstorming ways to save cash. But their example illustrates the issues at play for consumers today. Market forces such as offshoring are transforming service. Too many CEOs are removed from the customer. Coddling customers can seem like an expensive frill in tough times, a cost to be cut when it's time to make next quarter's number. And yet more and more companies are talking about creating a more customer-focused culture. "I think people are starting to understand that the customer experience is the next competitive battleground," says Tom Knighton, who heads the customer-experience practice at consulting firm Forum Corp. "It's where business is going to be won or lost."
But as Delta shows, talking about focusing on the customer and actually doing it are two completely different things. That's what makes truly customer-centric companies so worthy of our attention. They constantly try to innovate and manage based on what their customers want, not just on what they can sell to them. They do not delegate the customer experience to marketing or operations; it is a core function that has support at the highest levels of leadership. Companies that put customers first win their loyalty, and in our minds deserve to win even more.
The names that often float to the top were those that not only provide good service but a rich experience, too. The total customer experience -- the service, the quality, the design, the brand attributes -- connects on an emotional level, keeping customers satisfied and feeling well-served, as well as loyal. Chick-fil-A bonds with its customers through friendly, speedy service and by communicating its values of humility and compassion. Wegmans builds a marketplace-style atmosphere that's underpinned by its employees' deep knowledge. Mini USA engages its impatient customers with fun, customizable technology. Trader Joe's feeds customers with its authenticity and uniqueness. And Progressive reassures its insurance customers during a time of crisis through on-the-spot service.
Two categories also clearly emerged as more important than the rest. They are, not surprisingly, the ones that most depend on people. Without customer-centered leadership and without the right employees in place to deliver great service, other plans and programs won't amount to much. In fact, many customer-focused leaders talk about the value of putting employees first. Take care of your staff, this thinking goes, and they'll take care of your customers. Put your customer first and they will take care of you first.
A few extra bucks for customer service, a few extra bucks for trained staff, a few extra bucks for incentives to provide superior customer service, will pay off 100 to 1. With odds like that, it is surprising more companies do not gamble on a sure thing such as customer service.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
By Paul Herbig
The Customer Experience - it's the sum total of the FEELINGS evoked as a result of ANY interaction that takes place at ANY touch point in the
organization. It's based on the PERCEPTION of the value
delivered, both tangible and intangible. Most companies talk the good talk about customers, about customers being their number one priority, about being a customer centric organization. But when push comes to shove, the customer gets the short stick.
Once upon a time, quite recently, Delta Air Lines surveyed some of its customers, asking whether they'd be willing to pay a fee to talk to U.S.-based customer-service representatives rather than having their calls directed offshore. Frequent fliers were outraged, and before long a frank op-ed article by the company's chief customer-service officer appeared in The Atlanta Journal-Constitution . In it, she renounced the plan, quoted CEO Gerald Grinstein -- "That darn question should never have been on a survey" -- and noted that "creating a 'customer-focused culture' is a central element of a new plan to transform Delta and its business model."
True, the folks at Delta are in quite a pickle, and you can't blame them for brainstorming ways to save cash. But their example illustrates the issues at play for consumers today. Market forces such as offshoring are transforming service. Too many CEOs are removed from the customer. Coddling customers can seem like an expensive frill in tough times, a cost to be cut when it's time to make next quarter's number. And yet more and more companies are talking about creating a more customer-focused culture. "I think people are starting to understand that the customer experience is the next competitive battleground," says Tom Knighton, who heads the customer-experience practice at consulting firm Forum Corp. "It's where business is going to be won or lost."
But as Delta shows, talking about focusing on the customer and actually doing it are two completely different things. That's what makes truly customer-centric companies so worthy of our attention. They constantly try to innovate and manage based on what their customers want, not just on what they can sell to them. They do not delegate the customer experience to marketing or operations; it is a core function that has support at the highest levels of leadership. Companies that put customers first win their loyalty, and in our minds deserve to win even more.
The names that often float to the top were those that not only provide good service but a rich experience, too. The total customer experience -- the service, the quality, the design, the brand attributes -- connects on an emotional level, keeping customers satisfied and feeling well-served, as well as loyal. Chick-fil-A bonds with its customers through friendly, speedy service and by communicating its values of humility and compassion. Wegmans builds a marketplace-style atmosphere that's underpinned by its employees' deep knowledge. Mini USA engages its impatient customers with fun, customizable technology. Trader Joe's feeds customers with its authenticity and uniqueness. And Progressive reassures its insurance customers during a time of crisis through on-the-spot service.
Two categories also clearly emerged as more important than the rest. They are, not surprisingly, the ones that most depend on people. Without customer-centered leadership and without the right employees in place to deliver great service, other plans and programs won't amount to much. In fact, many customer-focused leaders talk about the value of putting employees first. Take care of your staff, this thinking goes, and they'll take care of your customers. Put your customer first and they will take care of you first.
A few extra bucks for customer service, a few extra bucks for trained staff, a few extra bucks for incentives to provide superior customer service, will pay off 100 to 1. With odds like that, it is surprising more companies do not gamble on a sure thing such as customer service.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
New brands over old
New Brands 7 Old Brands 3
By Paul Herbig
Consumers are embracing new brands at the expense of more established brands, researchers say. The difficulty brands face in differentiating themselves in ways that are meaningful to consumers is an outgrowth of this finding. That newer brands are showing up and replacing older brands must serve as a warning to established brands to consolidate their customer base or risk seeing newer, trendier brands appropriate their customers and markets. Some examples are Google superseding Microsoft and Verizon overwhelming ATT. Meanwhile Starbucks falls—it is yesterday’s brands, old news.
Your customer's conception of your brand is formed from his first
experience or "imprint" with your company, or more generally, with the
products you sell. But emotion is required to instill a strong memory. So one way to regroup and win the brand wars, to take back what newer brands have conquered from you, is to be fixated on the emotional aspect of your brand. Folgers Coffee, for instance, was able to make use of the first impression consumers had with coffee, which is its scent. People smell the product when they are children, long before they're old enough to drink it. The scent becomes linked in a person's mind with his mother making coffee in the kitchen as she prepares to feed him. Almost all coffee drinkers love the smell of it, while only considerably fewer drink it because they like the taste. So Folgers created an ad campaign centered on the smell rather than taste of its product. This is the reason that commercials for Folgers focus on the customer opening the package and
savoring the scent, rather than on the actual experience of drinking
it.
The main reason a scent linked with family and the consumer's mother is
so powerful is that the home is part of a category of subconscious motivations termed "reptilian," meaning they are prehistoric instincts geared towards survival and reproduction into the next generation. These are the most compelling motivations. The reptilian always wins when people are trying to figure
out what to do. The second class of motivation is "limbic," or governed by the limbic system in the brain that controls emotion. This is the category of motivations where the differences in how men and women react to products and advertising campaigns can be seen. While men are akin to a simple box with an on/off switch, women are more like a box that has multiple options to choose from.
Some reasons for brands being "revived" and a few examples:
1. Some products die because they lose novelty, and novelty is part of
why people buy. So they are revived after a period of time because
novelty can be present again. TV shows like Scooby Doo reflect this
(and some movies). Fashion products are the same... lots of fads
come and go. The rationale seems to be similar to the TV
rationale... a fad/fashion loses novelty after a while, but can come
back later.
2. Some products are deficient and the brand goes away but is revived
when the product gets fixed. Red M&Ms are not a brand, but
illustrates a product that was deficient. The original Red M&Ms had a
dye that the FDA said was unhealthy. So Red M&Ms were taken off the
market 30 years ago. But later a new dye was developed that was safe, so Red M&Ms came back. The new Maytag Neptune Washing machines are another example. The old front-load washers died out because they were technologically deficient... they sometimes leaked water and were replaced by top-load washers. But the leak problems were solved, and front-load washers require less water and have been revived a bit.
3. Some markets are stimulated with a new product, and that revives the
category and with the category some brands. An example is
coin collecting. Coin collecting in the US used to be more popular...
but almost died out. Then the country started to mint quarters from
each state, and coin collecting was revived somewhat, along with coin
collecting binders from companies that never quite died... so these
coin collecting tools were revived. The recent stimulation of diet
programs helped revive some brands that had lost steam, so that's
another example. A few poker chip brands are dominant and they have
been revived recently because of greater interest in poker, stoked by
the recent hold-um fad.
4. Some brands lose distribution and then are "revived" when
distribution muscle returns. An interesting example is Quisp cereal.
Quisp has been around for decades but distribution was scaled back
many years ago. The brand languishes but is still produced... you can
collect Quisp boxes online. Every now and then the
manufacturer needs a boost in cereal revenue and distributes the
product more heavily. So the brand is kept from death, and is revived
periodically for short gains.
Keep your brand fresh and it will keep your revenues fresher.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
By Paul Herbig
Consumers are embracing new brands at the expense of more established brands, researchers say. The difficulty brands face in differentiating themselves in ways that are meaningful to consumers is an outgrowth of this finding. That newer brands are showing up and replacing older brands must serve as a warning to established brands to consolidate their customer base or risk seeing newer, trendier brands appropriate their customers and markets. Some examples are Google superseding Microsoft and Verizon overwhelming ATT. Meanwhile Starbucks falls—it is yesterday’s brands, old news.
Your customer's conception of your brand is formed from his first
experience or "imprint" with your company, or more generally, with the
products you sell. But emotion is required to instill a strong memory. So one way to regroup and win the brand wars, to take back what newer brands have conquered from you, is to be fixated on the emotional aspect of your brand. Folgers Coffee, for instance, was able to make use of the first impression consumers had with coffee, which is its scent. People smell the product when they are children, long before they're old enough to drink it. The scent becomes linked in a person's mind with his mother making coffee in the kitchen as she prepares to feed him. Almost all coffee drinkers love the smell of it, while only considerably fewer drink it because they like the taste. So Folgers created an ad campaign centered on the smell rather than taste of its product. This is the reason that commercials for Folgers focus on the customer opening the package and
savoring the scent, rather than on the actual experience of drinking
it.
The main reason a scent linked with family and the consumer's mother is
so powerful is that the home is part of a category of subconscious motivations termed "reptilian," meaning they are prehistoric instincts geared towards survival and reproduction into the next generation. These are the most compelling motivations. The reptilian always wins when people are trying to figure
out what to do. The second class of motivation is "limbic," or governed by the limbic system in the brain that controls emotion. This is the category of motivations where the differences in how men and women react to products and advertising campaigns can be seen. While men are akin to a simple box with an on/off switch, women are more like a box that has multiple options to choose from.
Some reasons for brands being "revived" and a few examples:
1. Some products die because they lose novelty, and novelty is part of
why people buy. So they are revived after a period of time because
novelty can be present again. TV shows like Scooby Doo reflect this
(and some movies). Fashion products are the same... lots of fads
come and go. The rationale seems to be similar to the TV
rationale... a fad/fashion loses novelty after a while, but can come
back later.
2. Some products are deficient and the brand goes away but is revived
when the product gets fixed. Red M&Ms are not a brand, but
illustrates a product that was deficient. The original Red M&Ms had a
dye that the FDA said was unhealthy. So Red M&Ms were taken off the
market 30 years ago. But later a new dye was developed that was safe, so Red M&Ms came back. The new Maytag Neptune Washing machines are another example. The old front-load washers died out because they were technologically deficient... they sometimes leaked water and were replaced by top-load washers. But the leak problems were solved, and front-load washers require less water and have been revived a bit.
3. Some markets are stimulated with a new product, and that revives the
category and with the category some brands. An example is
coin collecting. Coin collecting in the US used to be more popular...
but almost died out. Then the country started to mint quarters from
each state, and coin collecting was revived somewhat, along with coin
collecting binders from companies that never quite died... so these
coin collecting tools were revived. The recent stimulation of diet
programs helped revive some brands that had lost steam, so that's
another example. A few poker chip brands are dominant and they have
been revived recently because of greater interest in poker, stoked by
the recent hold-um fad.
4. Some brands lose distribution and then are "revived" when
distribution muscle returns. An interesting example is Quisp cereal.
Quisp has been around for decades but distribution was scaled back
many years ago. The brand languishes but is still produced... you can
collect Quisp boxes online. Every now and then the
manufacturer needs a boost in cereal revenue and distributes the
product more heavily. So the brand is kept from death, and is revived
periodically for short gains.
Keep your brand fresh and it will keep your revenues fresher.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
Customer loyalty
Give me Loyalty or give me death!!
By Paul Herbig
Does loyalty in a business relationship actually exist? Loyalty is something you give to your country, your family, your friends. It is an absolute willingness to do something that could be against your own best interest. In its most intense form, you give your life for your country or to save a member of your family. It is a principle of profound faith. What it isn't is a marketing term denoting a customer's commitment to a business. As the old axiom spouted by my old mentor goes, “When prices goes up, loyalty goes out.”
Loyalty doesn't have a bi-directional requirement, but the relationship between customers and a business demands that two-way street. In its simplest form, a customer relationship with business is a value exchange. As the business provides a level of value satisfactory to a customer, so the customer provides value in return to the business. The customer retains that commitment as long as the business continues to provide the expected value. But when you stop meeting the customer's expectations of value, that customer goes elsewhere.
Is your business actually loyal to its customers? Then why would you need algorithms for customer lifetime value? Customer profitability shouldn't matter to a company that is loyal to the person, rather than to the long-term revenue potential of that possibly committed customer. Should it? Are your customers loyal to you? The expected churn rate for the telco industry is 77 million customers moving on to other telcos. Know how the telcos are going to deal with it? Not find out who have been the most committed customers with weakening ties, but who the most profitable customers with weakening ties are so they can try to manage the churn and keep those profitable customers.
But, you say, these things happen in business. Exactly. This is why there
is no such thing as customer loyalty. Business practice demands that customers be valued for their profitability and revenue possibilities, not for their emotional commitments to you or vice versa .So, CRM folks and aspiring English majors, get your language straight. Let's not denigrate loyalty with the needs of business. Call it customer commitment if you want, but business value exchanges don't equate with a deeply
held, deeply felt fundamental principle for country, friends, and family.
If you think they do, then I'd recommend a prenup. After all, "till death
do us part" is a business proposition, right?
The concept of loyalty, especially brand loyalty is misunderstood by many marketers. The love marketers have for specific demographics (particularly the young 18-30 group) is based upon the theory that once a person becomes brand loyal, that person is brand loyal for rest of their entire life. This is also why, marketers have taken to themselves to begin the marketing process with children, some even preschool age. They believe a form of indocrination: once smitten with my brand, no matter what my age, they will be forever brand loyal.
But that is not how life operates. A pre-teen girl could be in love with Barbie and American Girl. However, once she becomes a teenager, she overthrows her dolls for boys. As a pre-teen or tween, she might readily wear clothing that Hannah Montana or her other favorite shows might suggest. However, as an adolescent teen, she turns to Aeropostale or Hilfinger, whatever the current fad is by her social group. And when she goes to College, she changes again. After college with a career, she turns in her jeans and tees for more fashionable clothes. As she marries and has a family, she once again makes a change. And so forth until her apparel at the nursing home or retirement facility is a far cry what she started out decades ago.
Loyalty is not a one time affair. It must be constantly won and rewon. Never take a consumer for granted. Many have done so and have ended up on the scrapheap of history for doing so.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
By Paul Herbig
Does loyalty in a business relationship actually exist? Loyalty is something you give to your country, your family, your friends. It is an absolute willingness to do something that could be against your own best interest. In its most intense form, you give your life for your country or to save a member of your family. It is a principle of profound faith. What it isn't is a marketing term denoting a customer's commitment to a business. As the old axiom spouted by my old mentor goes, “When prices goes up, loyalty goes out.”
Loyalty doesn't have a bi-directional requirement, but the relationship between customers and a business demands that two-way street. In its simplest form, a customer relationship with business is a value exchange. As the business provides a level of value satisfactory to a customer, so the customer provides value in return to the business. The customer retains that commitment as long as the business continues to provide the expected value. But when you stop meeting the customer's expectations of value, that customer goes elsewhere.
Is your business actually loyal to its customers? Then why would you need algorithms for customer lifetime value? Customer profitability shouldn't matter to a company that is loyal to the person, rather than to the long-term revenue potential of that possibly committed customer. Should it? Are your customers loyal to you? The expected churn rate for the telco industry is 77 million customers moving on to other telcos. Know how the telcos are going to deal with it? Not find out who have been the most committed customers with weakening ties, but who the most profitable customers with weakening ties are so they can try to manage the churn and keep those profitable customers.
But, you say, these things happen in business. Exactly. This is why there
is no such thing as customer loyalty. Business practice demands that customers be valued for their profitability and revenue possibilities, not for their emotional commitments to you or vice versa .So, CRM folks and aspiring English majors, get your language straight. Let's not denigrate loyalty with the needs of business. Call it customer commitment if you want, but business value exchanges don't equate with a deeply
held, deeply felt fundamental principle for country, friends, and family.
If you think they do, then I'd recommend a prenup. After all, "till death
do us part" is a business proposition, right?
The concept of loyalty, especially brand loyalty is misunderstood by many marketers. The love marketers have for specific demographics (particularly the young 18-30 group) is based upon the theory that once a person becomes brand loyal, that person is brand loyal for rest of their entire life. This is also why, marketers have taken to themselves to begin the marketing process with children, some even preschool age. They believe a form of indocrination: once smitten with my brand, no matter what my age, they will be forever brand loyal.
But that is not how life operates. A pre-teen girl could be in love with Barbie and American Girl. However, once she becomes a teenager, she overthrows her dolls for boys. As a pre-teen or tween, she might readily wear clothing that Hannah Montana or her other favorite shows might suggest. However, as an adolescent teen, she turns to Aeropostale or Hilfinger, whatever the current fad is by her social group. And when she goes to College, she changes again. After college with a career, she turns in her jeans and tees for more fashionable clothes. As she marries and has a family, she once again makes a change. And so forth until her apparel at the nursing home or retirement facility is a far cry what she started out decades ago.
Loyalty is not a one time affair. It must be constantly won and rewon. Never take a consumer for granted. Many have done so and have ended up on the scrapheap of history for doing so.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
Pay me per view
Pay Me Per View
By Paul A. Herbig
In a world where consumers are empowered to choose the content (and advertising) they view, a number of entrepreneurs are developing environments that "force" consumers, through a variety of incentives, to watch and recall advertising. Many consumers are highly skeptical of such schemes, They don't allow consumers to absorb messages in an natural environment. But they seem to be getting both consideration and test budgets from many leading marketers.
Ads.com. existed a few years ago and was the first property to devote an entire Web destination to advertising (and to consumers who love it). Its mantra was "all ads, all the time." Its rapid fall from grace and dramatic business failure spoke volumes about consumers' lack of interest in viewing marketing messages. But at least they tried and are to be considered by many to be the pioneer of continuous ads (“All Ads, All the time” would be their slogan if they were a radio station.)
Then came alladvantage.com, billing itself as "the nation's #1 employer."
It paid millions of consumers to surf and click on ads. Another crash and
burn. Two down and countless many more to go. Undaunted, a few new efforts are underway to pay consumers to watch video ads online. If viewers answer a few questions correctly about the ads (to ensure they take away the salient points), they get paid.
One such effort, which rewards consumers with 50 cents in their PayPal
accounts for each correctly retained commercial, is BrandPort.
The company has supposedly received test money from leading marketers who are seeing "tremendous results." Other companies also pay consumers (either in cash or with credits) to watch and retain ads.
One place where paying to view ads has been in existence for decades is the movie theatre. Moviegoers do not like this practice but it is common and many purposedly arrive later than the scheduled time just to miss the requisite advertising. This may cause you to throw popcorn at the screen, but a new study finds that in-cinema ads are effective. The results clearly demonstrate that consumers bond with brands they see advertised in-cinema, driving consideration and purchase intent, leading to brand trial and loyalty. Testing commercials across various categories — packaged goods, automotive, consumer electronics, apparel and fast food restaurants — the study found that moviegoers who saw in-theater advertising were 44% more likely to remember an ad than consumers who saw it on TV.
Additional findings comparing in-cinema advertising to traditional media:
* Moviegoers who saw cinema advertising are 70% more likely to correctly identify the advertised brands
* Moviegoers are nearly 70% more likely to be motivated by in-cinema ads
* Up to one week after seeing commercial at the movies, nearly half of consumers could name the specific brands they saw advertised
* Moviegoers are also more likely to exhibit increased interest in the advertised brands, have a better opinion of the brands and talk to others about a point brought out in the ad.
Several companies are already excited by the study. A recent announcement by Sony Ericksson mobile phones that it would dedicate a significant portion of its media launch to a theater-buy shows that the category has broken out of the candy advertisers that traditionally dominated this category. Advertisers like the ability to target a captive audience that
doesn't have channel zappers and to hit them with all of the potential offered by the big-screen media.
It looks like moviegoers are going to have to get used to looking at ads, whether they like them or not. When something works, everyone wants to use it. Moviegoers do not start panicking quite yet. Loews Cineplex Entertainment has found a compromise to meet moviegoers' wishes to have the actual start times of feature films, opting to note in movie listings that the movie will start 10 to 15 minutes after the published show time.
As we say in the marketing business, Point-counterpoint: Advertisers make their move, consumers counterpunch. A long battle that will never end.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
By Paul A. Herbig
In a world where consumers are empowered to choose the content (and advertising) they view, a number of entrepreneurs are developing environments that "force" consumers, through a variety of incentives, to watch and recall advertising. Many consumers are highly skeptical of such schemes, They don't allow consumers to absorb messages in an natural environment. But they seem to be getting both consideration and test budgets from many leading marketers.
Ads.com. existed a few years ago and was the first property to devote an entire Web destination to advertising (and to consumers who love it). Its mantra was "all ads, all the time." Its rapid fall from grace and dramatic business failure spoke volumes about consumers' lack of interest in viewing marketing messages. But at least they tried and are to be considered by many to be the pioneer of continuous ads (“All Ads, All the time” would be their slogan if they were a radio station.)
Then came alladvantage.com, billing itself as "the nation's #1 employer."
It paid millions of consumers to surf and click on ads. Another crash and
burn. Two down and countless many more to go. Undaunted, a few new efforts are underway to pay consumers to watch video ads online. If viewers answer a few questions correctly about the ads (to ensure they take away the salient points), they get paid.
One such effort, which rewards consumers with 50 cents in their PayPal
accounts for each correctly retained commercial, is BrandPort.
The company has supposedly received test money from leading marketers who are seeing "tremendous results." Other companies also pay consumers (either in cash or with credits) to watch and retain ads.
One place where paying to view ads has been in existence for decades is the movie theatre. Moviegoers do not like this practice but it is common and many purposedly arrive later than the scheduled time just to miss the requisite advertising. This may cause you to throw popcorn at the screen, but a new study finds that in-cinema ads are effective. The results clearly demonstrate that consumers bond with brands they see advertised in-cinema, driving consideration and purchase intent, leading to brand trial and loyalty. Testing commercials across various categories — packaged goods, automotive, consumer electronics, apparel and fast food restaurants — the study found that moviegoers who saw in-theater advertising were 44% more likely to remember an ad than consumers who saw it on TV.
Additional findings comparing in-cinema advertising to traditional media:
* Moviegoers who saw cinema advertising are 70% more likely to correctly identify the advertised brands
* Moviegoers are nearly 70% more likely to be motivated by in-cinema ads
* Up to one week after seeing commercial at the movies, nearly half of consumers could name the specific brands they saw advertised
* Moviegoers are also more likely to exhibit increased interest in the advertised brands, have a better opinion of the brands and talk to others about a point brought out in the ad.
Several companies are already excited by the study. A recent announcement by Sony Ericksson mobile phones that it would dedicate a significant portion of its media launch to a theater-buy shows that the category has broken out of the candy advertisers that traditionally dominated this category. Advertisers like the ability to target a captive audience that
doesn't have channel zappers and to hit them with all of the potential offered by the big-screen media.
It looks like moviegoers are going to have to get used to looking at ads, whether they like them or not. When something works, everyone wants to use it. Moviegoers do not start panicking quite yet. Loews Cineplex Entertainment has found a compromise to meet moviegoers' wishes to have the actual start times of feature films, opting to note in movie listings that the movie will start 10 to 15 minutes after the published show time.
As we say in the marketing business, Point-counterpoint: Advertisers make their move, consumers counterpunch. A long battle that will never end.
Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
Trends in Advertising
Trends in Advertising
By Paul Herbig
Advertising has ventured into new areas, gray areas, in a similar obvious mood to capture the attention of a desired target audience.
1) First, they're spending more in odd places. Not just on traditional TV ads, but a wide range of interesting and obscure media. Campbell's Soup bought ads on parking meters. Macy's spends a fortune each year on its Thanksgiving parade. Kellogg's has spent millions building a presence on the World Wide Web-a fascinating way to sell cereal.
Companies have seen that a mass-market broadcast strategy isn't working as well as it used to, especially when targeting the hard-to-reach upper income demographic. As this lucrative audience spends less time watching TV, marketers are working overtime trying to find media with less clutter, where their interruption techniques can be more effective.
Marketers hire Catalina Corporation to print their coupons on the back of receipts at the grocery store. They buy ads on the floor of the cereal aisle. There are ads atop taxis in New York City and on the boards around the rink at the hockey game. Fox even figured out a way to sell the rights to the small area over the catcher's shoulder, so TV viewers would see the ad throughout an entire baseball game.
(2) The second technique is to make advertisements ever more controversial and entertaining. Coca-Cola hired talent agency CAA to enlist top-flight Hollywood directors to make commercials. Candies features a woman sitting on a toilet in its magazine ads (for shoes!). Spike Lee's ad agency did more than fifty million dollars in billings last year.
Of course, as the commercials try harder to get your attention, the clutter becomes even worse. An advertiser who manages to top a competitor for the moment has merely raised the bar. Their next ad will have to be even more outlandish in order to top the competition, not to mention their previous ad, to keep the consumer's attention. The cost of making a first-rate TV commercial is actually far more, per minute, than a major Hollywood motion picture. Talking frogs, computer graphics and intense editing now seem to be a requirement.
A side effect of the focus on entertainment is that it gives the marketer far less time to actually market. In a fifteen second commercial (increasingly attractive as a cost-cutting way to interrupt people even more often), ten or even twelve seconds are devoted to getting your attention, while just a few heartbeats are reserved for the logo, the benefit and the call to action.
Take the interruption challenge! Write down all the companies who ran commercials during your favorite TV show last night. Write down all the companies that paid good money to buy banners on the Web during your last surfing expedition. If you can list more than ten percent of them, you're certainly the exception.
(3) The third approach used to keep mass marketing alive is to change ad campaigns more often in order to keep them "interesting and fresh." Tony the Tiger and Charlie Tuna and the Marlboro man are each worth billions of dollars in brand equity to the companies that built them. The marketers behind them have invested a fortune over the last forty years, making them trusted spokesmen (or spokesanimals) for their brands.
Nike, on the other hand, just ran a series of ads without the ‘swoosh’, arguably one of the most effective logos of the last generation. Apple Computer changes its tagline annually. Wendy's and McDonald's and Burger King jump from one approach to the other, all hoping for a holy grail that captures attention.
In exchange for these brief bits of attention (remember the hoopla when they replaced Mikey on the Life box?) these marketers are trading in the benefits of a long-term brand recognition campaign. It's a trade they're willing to make, because Interruption Marketing requires it. Without attention, there is no ad.
(4) The fourth and last approach, which is as profound as the other three, is that many marketers are abandoning advertising and replacing it with direct mail and promotions. Marketers now allocate about 52% of their annual ad budgets for direct mail and promotions, a significant increase over past years.
Of the more than $200 billion spent on consumer advertising last year in the US, more than $100 billion was spent on direct mail campaigns, in-store promotions, coupons, free standing inserts and other non-traditional media. Recently Wunderman, Cato, Johnson, did more than $1.6 billion in billings for its clients.
The next time you get a glossy mailing for a Lexus, or enter an instant win sweepstakes at the liquor store, you're seeing the results of this trend toward increased direct marketing efforts. Advertisers are using them because they work. They are somewhat more effective at interrupting you than an ad. They're somewhat more measurable than a billboard. Best of all, they give the marketer another tool to use in their increasingly frustrating fight against clutter. After all, there are only five or ten pieces of junk mail in your mailbox every day-not 3,000. And another few feet of shelf space at the supermarket can lead to a dramatic upturn in sales
A Providence based company pays collegians up to $150 to wear temporary logo tattoos on their foreheads for one week. Called Headvertise, eight clients have signed up, all seeking recognition in the coveted 18 to 24 crowd. Over fifty students have worn the decals. What next: ads on the cheeks for beachwear?
By Paul Herbig
Advertising has ventured into new areas, gray areas, in a similar obvious mood to capture the attention of a desired target audience.
1) First, they're spending more in odd places. Not just on traditional TV ads, but a wide range of interesting and obscure media. Campbell's Soup bought ads on parking meters. Macy's spends a fortune each year on its Thanksgiving parade. Kellogg's has spent millions building a presence on the World Wide Web-a fascinating way to sell cereal.
Companies have seen that a mass-market broadcast strategy isn't working as well as it used to, especially when targeting the hard-to-reach upper income demographic. As this lucrative audience spends less time watching TV, marketers are working overtime trying to find media with less clutter, where their interruption techniques can be more effective.
Marketers hire Catalina Corporation to print their coupons on the back of receipts at the grocery store. They buy ads on the floor of the cereal aisle. There are ads atop taxis in New York City and on the boards around the rink at the hockey game. Fox even figured out a way to sell the rights to the small area over the catcher's shoulder, so TV viewers would see the ad throughout an entire baseball game.
(2) The second technique is to make advertisements ever more controversial and entertaining. Coca-Cola hired talent agency CAA to enlist top-flight Hollywood directors to make commercials. Candies features a woman sitting on a toilet in its magazine ads (for shoes!). Spike Lee's ad agency did more than fifty million dollars in billings last year.
Of course, as the commercials try harder to get your attention, the clutter becomes even worse. An advertiser who manages to top a competitor for the moment has merely raised the bar. Their next ad will have to be even more outlandish in order to top the competition, not to mention their previous ad, to keep the consumer's attention. The cost of making a first-rate TV commercial is actually far more, per minute, than a major Hollywood motion picture. Talking frogs, computer graphics and intense editing now seem to be a requirement.
A side effect of the focus on entertainment is that it gives the marketer far less time to actually market. In a fifteen second commercial (increasingly attractive as a cost-cutting way to interrupt people even more often), ten or even twelve seconds are devoted to getting your attention, while just a few heartbeats are reserved for the logo, the benefit and the call to action.
Take the interruption challenge! Write down all the companies who ran commercials during your favorite TV show last night. Write down all the companies that paid good money to buy banners on the Web during your last surfing expedition. If you can list more than ten percent of them, you're certainly the exception.
(3) The third approach used to keep mass marketing alive is to change ad campaigns more often in order to keep them "interesting and fresh." Tony the Tiger and Charlie Tuna and the Marlboro man are each worth billions of dollars in brand equity to the companies that built them. The marketers behind them have invested a fortune over the last forty years, making them trusted spokesmen (or spokesanimals) for their brands.
Nike, on the other hand, just ran a series of ads without the ‘swoosh’, arguably one of the most effective logos of the last generation. Apple Computer changes its tagline annually. Wendy's and McDonald's and Burger King jump from one approach to the other, all hoping for a holy grail that captures attention.
In exchange for these brief bits of attention (remember the hoopla when they replaced Mikey on the Life box?) these marketers are trading in the benefits of a long-term brand recognition campaign. It's a trade they're willing to make, because Interruption Marketing requires it. Without attention, there is no ad.
(4) The fourth and last approach, which is as profound as the other three, is that many marketers are abandoning advertising and replacing it with direct mail and promotions. Marketers now allocate about 52% of their annual ad budgets for direct mail and promotions, a significant increase over past years.
Of the more than $200 billion spent on consumer advertising last year in the US, more than $100 billion was spent on direct mail campaigns, in-store promotions, coupons, free standing inserts and other non-traditional media. Recently Wunderman, Cato, Johnson, did more than $1.6 billion in billings for its clients.
The next time you get a glossy mailing for a Lexus, or enter an instant win sweepstakes at the liquor store, you're seeing the results of this trend toward increased direct marketing efforts. Advertisers are using them because they work. They are somewhat more effective at interrupting you than an ad. They're somewhat more measurable than a billboard. Best of all, they give the marketer another tool to use in their increasingly frustrating fight against clutter. After all, there are only five or ten pieces of junk mail in your mailbox every day-not 3,000. And another few feet of shelf space at the supermarket can lead to a dramatic upturn in sales
A Providence based company pays collegians up to $150 to wear temporary logo tattoos on their foreheads for one week. Called Headvertise, eight clients have signed up, all seeking recognition in the coveted 18 to 24 crowd. Over fifty students have worn the decals. What next: ads on the cheeks for beachwear?
Portability
Portability. Now You can take it with you!!
By Paul Herbig
.
Cellphones highly competitive before have now become almost volatile.
Portability: switch vendors and still have same cell number. You may be able to buy the phone from one vendor, service from a second, and have the same cell number you obtained earlier from a third vendor. This presents a whole new twist to the world of cellular phones. Whereupon earlier vendors could use a lock-in strategy, this is not possible any more.
In an industry already plagued with a 25 percent annual customer attrition rate, one estimate is that out of the 145 million cell phone customers in the U.S., an additional 10 to 12 million customers will switch, increasing the expected attrition rate to as high as 35%. Even this number could be low.
Marketing strategy is to lock-in customer through some non-duplicable property of the product offered. For example, Sun computers operate on their own operating system. Many high level Enterprise software systems (that operate the overall business entity) are not compatible with others competitive systems, you must often reconfigure your computing system and ways of business around their software. Your people must be trained on their system. And a definite learning curve is evident; it may take a year or more before you become truly proficient on the system. From a vendor’s point-of-view, this is most preferable situation—a truly captive customer base. You can give considerable abuse to your customers once you have locked them in, raise prices as often as contractually permitted, provide poor to non-existent service, and the customers often have no choice but to stick with you (sounds sort of like the local cable company doesn’t it) because they are locked in. To change vendors or systems would incur considerable “switching costs” which most customers really do not want to pay. So they stay. And you can boast about your large customer base but rarely do you mention anything about customer satisfaction. And rarely do you provide references or give testimonials. But it can be quite profitable.
That is, for a while. Then it will catch up with you. Sooner or later the dam will break. Even with tremendous switching costs, at some point customer’s ire will overcome and take the plunge and costs necessary to switch vendors. Good luck on every getting them back. Or technology changes (as it did from word processing units to PCs) which make switching to the new technology a requirement and switching costs become mute in the vendor selection process (as you must pay them no matter which vendor you select). Even if your current vendor decides to upgrade and offer the new technology, you escape as fast as you can. So lock-in (get ‘em and string’ em) strategy is a short run success (short run being 5-8 years) but does not offer longer sustainable advantages. It works much like a crooked used car dealership: you must continually be looking for new customers. Even with proprietary software or patents or processes, lock-in without customer focused marketing is not viable in the long run.
Now that cellular companies cannot use the lock-in strategy and must compete for customers head=on, what will they do? History tells us there are only 3 viable strategies: low-cost, focused, or differentiated. Usually only one company can be the low-cost vendor. We are likely to see numerous companies during vie for that position but only one will survive to fulfill that niche (And become known as the ‘Walmart of cellphones’?). Price competition will be fierce but only one firm will become the price leaders.
Other companies will attempt to be the generalists, something for everybody. This too is not a winning strategy as if you stand for everything, you stand for nothing. The fall from grace of the generalist department stores show the end path for that strategy. If you build devices that everyone can use for all options for all, it will be either too bulky, too expensive, have too many functions most people will not want, or be just plain undesirable by many segments. Some generalists may survive but a few and not well.
Others could well zero in on specialty segments: teens, Gen Y’ers, parents, etc and work to become expert on that segment and offer phones keyed to that segment’s special needs. You are already seeing some of that in action as phones for teens and tweens are being marketed that are considerably different than those for businesspersons. This strategy has its down side: being a niche player does not make you a market leader and has limited upside potential but it can certainly be profitable. This is the route I believe most players in the cell market will take if they expect to be in for the long run.
Who says you can’t take it with you!!
Paul Herbig is managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
By Paul Herbig
.
Cellphones highly competitive before have now become almost volatile.
Portability: switch vendors and still have same cell number. You may be able to buy the phone from one vendor, service from a second, and have the same cell number you obtained earlier from a third vendor. This presents a whole new twist to the world of cellular phones. Whereupon earlier vendors could use a lock-in strategy, this is not possible any more.
In an industry already plagued with a 25 percent annual customer attrition rate, one estimate is that out of the 145 million cell phone customers in the U.S., an additional 10 to 12 million customers will switch, increasing the expected attrition rate to as high as 35%. Even this number could be low.
Marketing strategy is to lock-in customer through some non-duplicable property of the product offered. For example, Sun computers operate on their own operating system. Many high level Enterprise software systems (that operate the overall business entity) are not compatible with others competitive systems, you must often reconfigure your computing system and ways of business around their software. Your people must be trained on their system. And a definite learning curve is evident; it may take a year or more before you become truly proficient on the system. From a vendor’s point-of-view, this is most preferable situation—a truly captive customer base. You can give considerable abuse to your customers once you have locked them in, raise prices as often as contractually permitted, provide poor to non-existent service, and the customers often have no choice but to stick with you (sounds sort of like the local cable company doesn’t it) because they are locked in. To change vendors or systems would incur considerable “switching costs” which most customers really do not want to pay. So they stay. And you can boast about your large customer base but rarely do you mention anything about customer satisfaction. And rarely do you provide references or give testimonials. But it can be quite profitable.
That is, for a while. Then it will catch up with you. Sooner or later the dam will break. Even with tremendous switching costs, at some point customer’s ire will overcome and take the plunge and costs necessary to switch vendors. Good luck on every getting them back. Or technology changes (as it did from word processing units to PCs) which make switching to the new technology a requirement and switching costs become mute in the vendor selection process (as you must pay them no matter which vendor you select). Even if your current vendor decides to upgrade and offer the new technology, you escape as fast as you can. So lock-in (get ‘em and string’ em) strategy is a short run success (short run being 5-8 years) but does not offer longer sustainable advantages. It works much like a crooked used car dealership: you must continually be looking for new customers. Even with proprietary software or patents or processes, lock-in without customer focused marketing is not viable in the long run.
Now that cellular companies cannot use the lock-in strategy and must compete for customers head=on, what will they do? History tells us there are only 3 viable strategies: low-cost, focused, or differentiated. Usually only one company can be the low-cost vendor. We are likely to see numerous companies during vie for that position but only one will survive to fulfill that niche (And become known as the ‘Walmart of cellphones’?). Price competition will be fierce but only one firm will become the price leaders.
Other companies will attempt to be the generalists, something for everybody. This too is not a winning strategy as if you stand for everything, you stand for nothing. The fall from grace of the generalist department stores show the end path for that strategy. If you build devices that everyone can use for all options for all, it will be either too bulky, too expensive, have too many functions most people will not want, or be just plain undesirable by many segments. Some generalists may survive but a few and not well.
Others could well zero in on specialty segments: teens, Gen Y’ers, parents, etc and work to become expert on that segment and offer phones keyed to that segment’s special needs. You are already seeing some of that in action as phones for teens and tweens are being marketed that are considerably different than those for businesspersons. This strategy has its down side: being a niche player does not make you a market leader and has limited upside potential but it can certainly be profitable. This is the route I believe most players in the cell market will take if they expect to be in for the long run.
Who says you can’t take it with you!!
Paul Herbig is managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
Where the boys where
Where the Boys Are
By Paul Herbig
During a recent Fall , advertisers and networks were surprised to find one coveted segment, Males 18 to 34, were MIA to the tube, down 7% from the previous year for all TV sets and down a whopping 22% for the major networks. NBC’s flagship youth sitcom lost nearly 30% of its young adult viewers over the previous year; Fox’s “24’ fell an equally remarkable 37% among those youthful viewers. Other productions showed a similar type of falloff among the desired market. The usual suspects were called in and interrogated at length: Nielsen. The networks accused Nielsen of sloppy research and claimed the ancient devices used by Nielsen were defective and not registering the correct numbers. After considerable deliberation and rechecking of the numbers, the jury found Nielsen not guilty and the facts were left as before (to put this in perspective, over the same timeframe, cable showed a high percentage growth and videogames, a twenty percent increase in games played).
Which brings us to: Where did the boys go? With over 500 cable/satellite channels, with channels for every niche and taste, with Pay-for-View, downloadable films, plentiful video rental outlets, with TIVO and recorders that allow them to view now and watch commercial-free later, with PCs that are becoming another entertainment vehicle, the options for entertainment are unlimited. With Ipods, Iphones, YouTube, MySpace, a host of other social networking web sites (Facebook, etc), Downloadable Programs and Movies, and Peer produced media, their options are becoming virtually unlimited. On demand videos, clips, links, you name it exists out there in virtual space. And advertisers are flocking to the net in droves trying to take advantage of the demographics that exist (and to a limited but trendy extent are replacing network TV ads for those on the web—how else would Google become so power and valuable so quickly?) They may be viewing, but not at the hour (8-11 prime time) nor channel (network TV) desired. They watch what they want, when they want it, and how they want it. The networks better accept this and work with it; the youth are not going to change; the networks must if they want to stay around.
Where are the boys going? Far, far away from Network TV. To Cable. To Video Games. To DVD. To whomever will provide them with the content they demand. Network programmers can either take the chance to provide the more controversial, extreme, programming the younger males are demanding (at the risk of offending the older clientele) or lose them to other media. It is not an easy decision. But all signs indicate to the first choice being made—at the risk of losing the older, more traditional clientele.
The networks must worry about the Oldsmobile effect: that misguided effort by GM to go after the youth market at any cost without regards to its potential effect upon its current users with the end result being not only not gaining the youth market but losing the seniors as well (who then left in droves saying in effect if they do not care about me-- “It is not your father’s Oldsmobile”—then whose is it anyway?-- why should I care about them) and hence leading to the demise of one of the great historic brands of the automotive marketplace. Seeing what has been playing on the tube lately and the resulting numbers, makes me believe they too will be just as successful as Oldsmobile was.
Only time will tell whether it was the right decision.
Paul Herbig is managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
By Paul Herbig
During a recent Fall , advertisers and networks were surprised to find one coveted segment, Males 18 to 34, were MIA to the tube, down 7% from the previous year for all TV sets and down a whopping 22% for the major networks. NBC’s flagship youth sitcom lost nearly 30% of its young adult viewers over the previous year; Fox’s “24’ fell an equally remarkable 37% among those youthful viewers. Other productions showed a similar type of falloff among the desired market. The usual suspects were called in and interrogated at length: Nielsen. The networks accused Nielsen of sloppy research and claimed the ancient devices used by Nielsen were defective and not registering the correct numbers. After considerable deliberation and rechecking of the numbers, the jury found Nielsen not guilty and the facts were left as before (to put this in perspective, over the same timeframe, cable showed a high percentage growth and videogames, a twenty percent increase in games played).
Which brings us to: Where did the boys go? With over 500 cable/satellite channels, with channels for every niche and taste, with Pay-for-View, downloadable films, plentiful video rental outlets, with TIVO and recorders that allow them to view now and watch commercial-free later, with PCs that are becoming another entertainment vehicle, the options for entertainment are unlimited. With Ipods, Iphones, YouTube, MySpace, a host of other social networking web sites (Facebook, etc), Downloadable Programs and Movies, and Peer produced media, their options are becoming virtually unlimited. On demand videos, clips, links, you name it exists out there in virtual space. And advertisers are flocking to the net in droves trying to take advantage of the demographics that exist (and to a limited but trendy extent are replacing network TV ads for those on the web—how else would Google become so power and valuable so quickly?) They may be viewing, but not at the hour (8-11 prime time) nor channel (network TV) desired. They watch what they want, when they want it, and how they want it. The networks better accept this and work with it; the youth are not going to change; the networks must if they want to stay around.
Where are the boys going? Far, far away from Network TV. To Cable. To Video Games. To DVD. To whomever will provide them with the content they demand. Network programmers can either take the chance to provide the more controversial, extreme, programming the younger males are demanding (at the risk of offending the older clientele) or lose them to other media. It is not an easy decision. But all signs indicate to the first choice being made—at the risk of losing the older, more traditional clientele.
The networks must worry about the Oldsmobile effect: that misguided effort by GM to go after the youth market at any cost without regards to its potential effect upon its current users with the end result being not only not gaining the youth market but losing the seniors as well (who then left in droves saying in effect if they do not care about me-- “It is not your father’s Oldsmobile”—then whose is it anyway?-- why should I care about them) and hence leading to the demise of one of the great historic brands of the automotive marketplace. Seeing what has been playing on the tube lately and the resulting numbers, makes me believe they too will be just as successful as Oldsmobile was.
Only time will tell whether it was the right decision.
Paul Herbig is managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.
Generations
Generations
By Paul A. Herbig
A century or more ago many of our forefathers lived in log cabins, houses made out of sod or clay , or a few hundred square feet of living area in a multi-family environment. Compare that to today’s lifestyles with thousands of square feet of living area and all the modern conveniences we have today. Try extrapolating that difference into the future? What will life be like a century hence? What will the next generation perceive as the necessities of life?
This is not just a rhetorical question. My grandparents moved to Indianapolis by 1920 and settled in a typical urban double—a two story house (and a basement) split down the middle (with each side having half of each floor). A high school education was the exception at that time and graduates were noteworthy. My aunt, now in her eighties, remembers when they paved Webb Street during the nineteen-twenties. It was a big deal when they finally added an indoor bathroom that same decade—one bathroom (with tub no shower) for a family of six (during the depression years there were times ten or more people lived in that house, camped out on the sofa and living room, all sharing that single overused bathroom!). They had 3 bedrooms upstairs (my grandparents in one room, my aunts shared a bed in one room and my father and his brother shared a bed in the third room). Hand-me downs were the norm and the baby of any family rarely had anything bought just for him. Necessities of life were simple: a roof overhead, clothes to wear, and enough food to keep from going hungry. The ice man cometh daily to provide coolant for the refrigerators of the time; coal was often shoveled into the basement for the furnace; washer boards for the housewife were typical.
During their entire childhood they had one wagon and perhaps one or two bicycles (for all the four kids to enjoy). No organized youth sports existed; the kids would call out to each other to play ball or some other game and the entire neighborhood would join in or march down two blocks to a city park and play, doing their own umpiring. Entertainment was either attending church socials, watching first run feature films at any of the many neighborhood cinemas, or sitting by the radio as a family listening to the great stars of the time come into your home. Neither of my grandparents ever learned to drive a car; the trolley and buses were quite sufficient for all their transportation needs. Family vacations meant a trip to the next county seat to visit relatives. Trains were the country’s primary transportation mode. Perhaps the family had one phone line that was a party line and you had to wait for the ring to determine if the call was for you or for another party on the line. And yes, they did have electricity but it hadn’t been for long.
They have been called the Great Generation (and few would disagree with that nomenclature), those that were born after WWI or in the twenties, lived through the depression, survived military combat during World War II and launched the great baby boom. The men married in their early twenties, most women married right out of high school. Most did not wait to start a family. Many went to school on the GI Bill, surviving on bare necessities while completing their studies. Prior to the Second War, a high school diploma was considered a superior degree and college education was basically reserved for the elite. These returning GI s found crowded conditions at colleges, housing at a premium, and barracks-like living conditions. But they never complained; they were exhuberant at the opportunity to get a college degree, to better themselves, and to provide all sort of things for their children they did not have themselves. They were determined not to deprive their children of any of the luxuries of life. This they did well. They found jobs in large companies and stayed there for life, thirty, forty years were not atypical; they were the first of the organizational men. They worked hard and long supporting a wife and many kids and nary said a word about their awesome responsibilities.
Their children, the baby boomers, of which I am one, were not, contrary to modern tales told by their parents to their grandchildren, spoiled by rich living. A multi-bedroom ranch home (perhaps 1200 square feet) is not a mansion. But each house had its own refrigerator, washer and dryer and central heating unit. Everyone typically knew everyone in the neighborhood and people stayed for decades. The kids probably had to share rooms like their aunts and uncles but they at least had their own beds. And not one bathroom but at least two. They had their own bicycles, old perhaps even purchased used but it was theirs and theirs alone. Clothing was mostly purchased for the individual. Christmas gifts were typically elaborate. Most families had one car which Dad usually drove (many Moms still did not drive during the fifties); station wagons ruled the roads. Airlines were in their infancy and to fly for many during the fifties and early sixties was an experience you would talk about for years. My allowance was $5 a week (A princely sum I thought) from which I had to spend lunch money (.35 to .50 daily).
Entertainment was watching the one TV in the house—black and white for most of their childhood (during the early years blurry pictures were the norm and we would take turns holding the antenna just so to get the right angle for the best picture)(during those early years few families possessed TVs and block parties around the TV set to watch the prime time shows were not atypical). Most families still had one phone line for the entire family (party lines were quickly phasing out). Little League was about as organized as youth teams got, no soccer; athletics were primarily found through the school system. And Sports for Girls were only a dream for most girls. Pre-School in the fifties meant Mom and perhaps grandma. Many but by no means all had cars—used cars, often very used cars--when they became sixteen (usually purchased by us with the fruits of our hard earned after school work)(Being a baby Boomer meant competing with thousands of other boomers for even the simplest of jobs—every McDs during that time had file cabinets full of applications from Boomers. You worked knowing that there were dozens of other kids just waiting for you to goof up or get fed up and quit—talk about incentive). Family vacations were to bundle up in the station wagon and spend a week or two in the summer traveling the highways to a distant relative or friend’s house, spending the nights in cheap motels all in one room. Not necessarily enjoyable but we didn’t know any better, complained very little, and enjoyed what we could when we could.
We Baby Boomers—both boys and girls now, not just mainly boys as were our fathers the GI s-- went to college during the sixties and seventies, some thrust on by parents who worked their entire lives so their children could live better than they had and some to escape the drama that was Vietnam and the draft. We were thrilled to go to college and appreciated schools would take us (during our interview trips we wore suits and our finest apparel to impress the admissions folks for like everything boomer, there were often many of us and comparatively few spots open; we took very little for granted) We lived in dorms with one large barracks style bath area per floor. No air conditioning; opening the window was the only cure for most of us. Working our way through school, even at state schools, was expected for many.
By the time the boomers grew up, a high school diploma was a necessity and a college degree was quickly on its way to becoming the expected and norm for up and comers. Once out of college, jobs were scarce (and competition tough) so we took what we could get and worked hard. Few of us believed we would work for the same company forever as our parents did. We did join the workforce believing in the American dream, work hard, work long and you will advance and go far up the ladder of success. The Myth of that Dream, for many of us, was by far our life’s worst experience. We found many a disconnect between ability, performance, and outcomes. Life Was (is0 Not Fair we discovered the hard way. But we also discovered life goes on, and so did we.
The Baby Boomers eventually married; often, however, 5-10 years later in life than had our parents. Like our parents before us, the Baby Boomers wanted only the best for our children and a better life for them then we had (and in retrospect, we remembered only what we didn’t have and forgot all we had). Our houses had to be bigger and better (2000 to 3000 or more square feet), two or three car enclosed garages, all the modern conveniences (I wouldn’t dream of buying a house without a dishwasher; to this day my mother still refuses to buy one—she says she already has one called my father) How can you live without Air conditioning (no room AC units, Central A/c and Heating only). Often both parents work (to afford their dream castle) and at-home moms are the exception not the norm. Child care and Mom’s Day outs have blossomed. Suburbia living is a must. We are a nomadic bunch—three years, four if your lucky, and it is off to a new assignment, a new city. You may or many not even know the names of your neighbors and then they move and you must meet the new people. Vacations. We Fly. Aspen for Skiing, the Caribbean over Spring break, Europe during Summer. Spare no expense, nothing is too good for my kids. Forget trains, air is the only way to go/
Our children (the so called Generation Y or baby boomlet) must have only the best. Each have their own room. With perhaps their own computer and cable modem internet hook-up (otherwise you won’t be a good parent and will be contributing to their falling behind their peers). Oh yes, their very own TV—color with cable no less. Their wardrobes are bulging with apparel, much of it last year’s in-clothes--they would die if they didn’t have them then and would die now if they wore them now. Bicycles—not just one per child but a new one every year or so. Organized sports—Soccer Moms in their SUVs require a datebook to keep track of all the events they have enrolled their children in—abound and all tightly organized with coaches, referees, and thick rule books (where has children just playing gone?) With passive entertainment and well organized sports leagues, few kids know what to do by themselves if left alone for any long periods of time (which purposedly many parents book solid to minimize such free time).
Individual phone lines for the kids has become routine (and often not just phones but cell phones for each child as well). Allowances can be twenty dollars or more a week, all too little for all the expenses a child has (movie tickets, make-up, jewelry). Oh , and cars for the little darlings when they turn 16. Not used cars but new cars and the more fashionable the better (can’t embarrass poor dear in front of his friends can we?) Work? During the nineties, every establishment was begging for bodies and if they didn’t like the way they were being treated (often times actually being asked to work!) or if the pay was lower than what they felt they should be earning, they would leave in an instant and go next door where they would be welcomed and working within the hour.
All boomlet kids are expected to go to college. You start thinking about college before you enter high school. The colleges start besieging you with materials your sophomore year (some even have tracking programs for kids in middle school!). SAT or ACT can be the most frightening three letters in your life, those that could well determine your fate for the rest of your life. As all colleges are recruiting heavily, the central question in the student’s mind is what are you going to do for me. Colleges beg you to visit and when the student does, be glad he/she is wearing clothes: Jeans, sneakers, T-shirts, baseball hats on backwards, often unwashed, all body jewelry on and plainly visible. What no lunch, what kind of place is this? What kind of trinkets do you have for me to take home—gee, you’re a cheapskate compared to all the stuff I got at the other schools I visited. If you bore them (any discussion past 3 minutes usually does), they either will tell you to your face or nod off. Take me as I am. If you don’t me like his, a dozen other schools are knocking on my door (and they are right). Who has the best financial aid package? Let’s negotiate some more. I. I. I. I. . . me. me . me. me. …
When they finally select a college, the modern dorms have a two bedroom suite with an adjoining bathroom Many Gen Yers are even demanding private rooms with private baths quickly becoming a necessity. Air Conditioning better be present or scratch this school off my list. Computer hookups in every room with fastest internet connections available so I can download thousands of my favorite songs. And the cafeteria food? No more meatball sandwiches or “guess the entrée” contests as their parents had to contend with. Many universities have decided to enunciate their food as a competitive advantage to recruit students. Perhaps not quite yet French cooks or trained sous-chefs but a menu most restaurants would be proud to have. Deli sections, salad bars, pizza, you don’t see it let us know and we will get it for you. If a student is having trouble in his classes, it becomes the responsibility of the instructor and institute to assist him and to provide instruction according to what learning style he may have. History? History is bunk. If it occurred before 1990, it is irrelevant (Several Yers have told me they will not watch a film if it is over a decade old as it could not possibly have any meaning for them!)
Not that Gen Yers have it totally easy. For most of today’s Gen Y students, an undergraduate degree is just the start of their academic preparations. Graduate degrees are quickly becoming the norm and expected for today’s entry-level employee (a statistic I heard is that there were more Masters degree being given today than undergraduate degrees!). After they graduate, no waiting for them. They want to have it all and want it now. House, car, furnishings, vacations, all the good parts of life they have become used to. It is all for the present. The model of many Yers is the past is irrelevant and the future is unpredictable so enjoy today for today is all there really is.
Within ten years, we will have a fourth generation, the children of the boomlet, our grandchildren. I am not certain what they will be called: Perhaps Generation Z (since X and Y have already been taken). I can only imagine their lifestyle and how they will raise their children. If the pattern continues (and I have no reason to doubt it will), they will spoil their children even more than we spoiled ours and our parents spoiled us. Their children, being like children everywhere, will accept what they can get and always push for more, attempting to find the limits to what they can have and what they will not get. What will their lives be like?
How much larger a home can one have? Do we need one plus cars for every person in the household? Does each child need to have his/her own bedroom and own bath and Jacuzzi? Should each child have his/her own guest house on the property? Should each have own phone/computer/fax/internet connection and fiber optics network? Are they going to demand private day cares with educational experiences guaranteed for their children? What type of demands will be made on public schools systems? Colleges? What will the boomlet as parents be expected to provide to Gen Z to indicate to their peers they are good parents? In attempting to make life better and easier for our kids , will they be expected to do likewise for our grandkids? When will enough be enough?
The United States, with only 5% of the world’s population, already consumes a far greater proportion of the world’s resources (25% of its energy and 33% of its resources). The gap between the world’s rich and poor continues to grow. If the fourth generation is like the previous three plus, it will demand far more resources and luxuries as a means of placating its youth. Can the U.S. or the world afford this drain or will the world even allow us to consume more? At some point will the gap becomes so large, it becomes unbearable to those on the bottom? At what cost will these youthful demands be on the economy and productivity? Already, obesity for the boomlet has reached almost epidemic proportions. Should we expect any less for the next generation? Can this trend continue or will it collapse on its own weight?
What does the future hold? Have we created a Frankenstein we cannot control and that inevitably will destroy us by trying to outdo each other and each previous generation? What will Generation Z be like? More of the same? Or a return to a more balanced lifestyle? The answer to this no doubt holds the answer to how the entire 21st century will develop.
By Paul A. Herbig
A century or more ago many of our forefathers lived in log cabins, houses made out of sod or clay , or a few hundred square feet of living area in a multi-family environment. Compare that to today’s lifestyles with thousands of square feet of living area and all the modern conveniences we have today. Try extrapolating that difference into the future? What will life be like a century hence? What will the next generation perceive as the necessities of life?
This is not just a rhetorical question. My grandparents moved to Indianapolis by 1920 and settled in a typical urban double—a two story house (and a basement) split down the middle (with each side having half of each floor). A high school education was the exception at that time and graduates were noteworthy. My aunt, now in her eighties, remembers when they paved Webb Street during the nineteen-twenties. It was a big deal when they finally added an indoor bathroom that same decade—one bathroom (with tub no shower) for a family of six (during the depression years there were times ten or more people lived in that house, camped out on the sofa and living room, all sharing that single overused bathroom!). They had 3 bedrooms upstairs (my grandparents in one room, my aunts shared a bed in one room and my father and his brother shared a bed in the third room). Hand-me downs were the norm and the baby of any family rarely had anything bought just for him. Necessities of life were simple: a roof overhead, clothes to wear, and enough food to keep from going hungry. The ice man cometh daily to provide coolant for the refrigerators of the time; coal was often shoveled into the basement for the furnace; washer boards for the housewife were typical.
During their entire childhood they had one wagon and perhaps one or two bicycles (for all the four kids to enjoy). No organized youth sports existed; the kids would call out to each other to play ball or some other game and the entire neighborhood would join in or march down two blocks to a city park and play, doing their own umpiring. Entertainment was either attending church socials, watching first run feature films at any of the many neighborhood cinemas, or sitting by the radio as a family listening to the great stars of the time come into your home. Neither of my grandparents ever learned to drive a car; the trolley and buses were quite sufficient for all their transportation needs. Family vacations meant a trip to the next county seat to visit relatives. Trains were the country’s primary transportation mode. Perhaps the family had one phone line that was a party line and you had to wait for the ring to determine if the call was for you or for another party on the line. And yes, they did have electricity but it hadn’t been for long.
They have been called the Great Generation (and few would disagree with that nomenclature), those that were born after WWI or in the twenties, lived through the depression, survived military combat during World War II and launched the great baby boom. The men married in their early twenties, most women married right out of high school. Most did not wait to start a family. Many went to school on the GI Bill, surviving on bare necessities while completing their studies. Prior to the Second War, a high school diploma was considered a superior degree and college education was basically reserved for the elite. These returning GI s found crowded conditions at colleges, housing at a premium, and barracks-like living conditions. But they never complained; they were exhuberant at the opportunity to get a college degree, to better themselves, and to provide all sort of things for their children they did not have themselves. They were determined not to deprive their children of any of the luxuries of life. This they did well. They found jobs in large companies and stayed there for life, thirty, forty years were not atypical; they were the first of the organizational men. They worked hard and long supporting a wife and many kids and nary said a word about their awesome responsibilities.
Their children, the baby boomers, of which I am one, were not, contrary to modern tales told by their parents to their grandchildren, spoiled by rich living. A multi-bedroom ranch home (perhaps 1200 square feet) is not a mansion. But each house had its own refrigerator, washer and dryer and central heating unit. Everyone typically knew everyone in the neighborhood and people stayed for decades. The kids probably had to share rooms like their aunts and uncles but they at least had their own beds. And not one bathroom but at least two. They had their own bicycles, old perhaps even purchased used but it was theirs and theirs alone. Clothing was mostly purchased for the individual. Christmas gifts were typically elaborate. Most families had one car which Dad usually drove (many Moms still did not drive during the fifties); station wagons ruled the roads. Airlines were in their infancy and to fly for many during the fifties and early sixties was an experience you would talk about for years. My allowance was $5 a week (A princely sum I thought) from which I had to spend lunch money (.35 to .50 daily).
Entertainment was watching the one TV in the house—black and white for most of their childhood (during the early years blurry pictures were the norm and we would take turns holding the antenna just so to get the right angle for the best picture)(during those early years few families possessed TVs and block parties around the TV set to watch the prime time shows were not atypical). Most families still had one phone line for the entire family (party lines were quickly phasing out). Little League was about as organized as youth teams got, no soccer; athletics were primarily found through the school system. And Sports for Girls were only a dream for most girls. Pre-School in the fifties meant Mom and perhaps grandma. Many but by no means all had cars—used cars, often very used cars--when they became sixteen (usually purchased by us with the fruits of our hard earned after school work)(Being a baby Boomer meant competing with thousands of other boomers for even the simplest of jobs—every McDs during that time had file cabinets full of applications from Boomers. You worked knowing that there were dozens of other kids just waiting for you to goof up or get fed up and quit—talk about incentive). Family vacations were to bundle up in the station wagon and spend a week or two in the summer traveling the highways to a distant relative or friend’s house, spending the nights in cheap motels all in one room. Not necessarily enjoyable but we didn’t know any better, complained very little, and enjoyed what we could when we could.
We Baby Boomers—both boys and girls now, not just mainly boys as were our fathers the GI s-- went to college during the sixties and seventies, some thrust on by parents who worked their entire lives so their children could live better than they had and some to escape the drama that was Vietnam and the draft. We were thrilled to go to college and appreciated schools would take us (during our interview trips we wore suits and our finest apparel to impress the admissions folks for like everything boomer, there were often many of us and comparatively few spots open; we took very little for granted) We lived in dorms with one large barracks style bath area per floor. No air conditioning; opening the window was the only cure for most of us. Working our way through school, even at state schools, was expected for many.
By the time the boomers grew up, a high school diploma was a necessity and a college degree was quickly on its way to becoming the expected and norm for up and comers. Once out of college, jobs were scarce (and competition tough) so we took what we could get and worked hard. Few of us believed we would work for the same company forever as our parents did. We did join the workforce believing in the American dream, work hard, work long and you will advance and go far up the ladder of success. The Myth of that Dream, for many of us, was by far our life’s worst experience. We found many a disconnect between ability, performance, and outcomes. Life Was (is0 Not Fair we discovered the hard way. But we also discovered life goes on, and so did we.
The Baby Boomers eventually married; often, however, 5-10 years later in life than had our parents. Like our parents before us, the Baby Boomers wanted only the best for our children and a better life for them then we had (and in retrospect, we remembered only what we didn’t have and forgot all we had). Our houses had to be bigger and better (2000 to 3000 or more square feet), two or three car enclosed garages, all the modern conveniences (I wouldn’t dream of buying a house without a dishwasher; to this day my mother still refuses to buy one—she says she already has one called my father) How can you live without Air conditioning (no room AC units, Central A/c and Heating only). Often both parents work (to afford their dream castle) and at-home moms are the exception not the norm. Child care and Mom’s Day outs have blossomed. Suburbia living is a must. We are a nomadic bunch—three years, four if your lucky, and it is off to a new assignment, a new city. You may or many not even know the names of your neighbors and then they move and you must meet the new people. Vacations. We Fly. Aspen for Skiing, the Caribbean over Spring break, Europe during Summer. Spare no expense, nothing is too good for my kids. Forget trains, air is the only way to go/
Our children (the so called Generation Y or baby boomlet) must have only the best. Each have their own room. With perhaps their own computer and cable modem internet hook-up (otherwise you won’t be a good parent and will be contributing to their falling behind their peers). Oh yes, their very own TV—color with cable no less. Their wardrobes are bulging with apparel, much of it last year’s in-clothes--they would die if they didn’t have them then and would die now if they wore them now. Bicycles—not just one per child but a new one every year or so. Organized sports—Soccer Moms in their SUVs require a datebook to keep track of all the events they have enrolled their children in—abound and all tightly organized with coaches, referees, and thick rule books (where has children just playing gone?) With passive entertainment and well organized sports leagues, few kids know what to do by themselves if left alone for any long periods of time (which purposedly many parents book solid to minimize such free time).
Individual phone lines for the kids has become routine (and often not just phones but cell phones for each child as well). Allowances can be twenty dollars or more a week, all too little for all the expenses a child has (movie tickets, make-up, jewelry). Oh , and cars for the little darlings when they turn 16. Not used cars but new cars and the more fashionable the better (can’t embarrass poor dear in front of his friends can we?) Work? During the nineties, every establishment was begging for bodies and if they didn’t like the way they were being treated (often times actually being asked to work!) or if the pay was lower than what they felt they should be earning, they would leave in an instant and go next door where they would be welcomed and working within the hour.
All boomlet kids are expected to go to college. You start thinking about college before you enter high school. The colleges start besieging you with materials your sophomore year (some even have tracking programs for kids in middle school!). SAT or ACT can be the most frightening three letters in your life, those that could well determine your fate for the rest of your life. As all colleges are recruiting heavily, the central question in the student’s mind is what are you going to do for me. Colleges beg you to visit and when the student does, be glad he/she is wearing clothes: Jeans, sneakers, T-shirts, baseball hats on backwards, often unwashed, all body jewelry on and plainly visible. What no lunch, what kind of place is this? What kind of trinkets do you have for me to take home—gee, you’re a cheapskate compared to all the stuff I got at the other schools I visited. If you bore them (any discussion past 3 minutes usually does), they either will tell you to your face or nod off. Take me as I am. If you don’t me like his, a dozen other schools are knocking on my door (and they are right). Who has the best financial aid package? Let’s negotiate some more. I. I. I. I. . . me. me . me. me. …
When they finally select a college, the modern dorms have a two bedroom suite with an adjoining bathroom Many Gen Yers are even demanding private rooms with private baths quickly becoming a necessity. Air Conditioning better be present or scratch this school off my list. Computer hookups in every room with fastest internet connections available so I can download thousands of my favorite songs. And the cafeteria food? No more meatball sandwiches or “guess the entrée” contests as their parents had to contend with. Many universities have decided to enunciate their food as a competitive advantage to recruit students. Perhaps not quite yet French cooks or trained sous-chefs but a menu most restaurants would be proud to have. Deli sections, salad bars, pizza, you don’t see it let us know and we will get it for you. If a student is having trouble in his classes, it becomes the responsibility of the instructor and institute to assist him and to provide instruction according to what learning style he may have. History? History is bunk. If it occurred before 1990, it is irrelevant (Several Yers have told me they will not watch a film if it is over a decade old as it could not possibly have any meaning for them!)
Not that Gen Yers have it totally easy. For most of today’s Gen Y students, an undergraduate degree is just the start of their academic preparations. Graduate degrees are quickly becoming the norm and expected for today’s entry-level employee (a statistic I heard is that there were more Masters degree being given today than undergraduate degrees!). After they graduate, no waiting for them. They want to have it all and want it now. House, car, furnishings, vacations, all the good parts of life they have become used to. It is all for the present. The model of many Yers is the past is irrelevant and the future is unpredictable so enjoy today for today is all there really is.
Within ten years, we will have a fourth generation, the children of the boomlet, our grandchildren. I am not certain what they will be called: Perhaps Generation Z (since X and Y have already been taken). I can only imagine their lifestyle and how they will raise their children. If the pattern continues (and I have no reason to doubt it will), they will spoil their children even more than we spoiled ours and our parents spoiled us. Their children, being like children everywhere, will accept what they can get and always push for more, attempting to find the limits to what they can have and what they will not get. What will their lives be like?
How much larger a home can one have? Do we need one plus cars for every person in the household? Does each child need to have his/her own bedroom and own bath and Jacuzzi? Should each child have his/her own guest house on the property? Should each have own phone/computer/fax/internet connection and fiber optics network? Are they going to demand private day cares with educational experiences guaranteed for their children? What type of demands will be made on public schools systems? Colleges? What will the boomlet as parents be expected to provide to Gen Z to indicate to their peers they are good parents? In attempting to make life better and easier for our kids , will they be expected to do likewise for our grandkids? When will enough be enough?
The United States, with only 5% of the world’s population, already consumes a far greater proportion of the world’s resources (25% of its energy and 33% of its resources). The gap between the world’s rich and poor continues to grow. If the fourth generation is like the previous three plus, it will demand far more resources and luxuries as a means of placating its youth. Can the U.S. or the world afford this drain or will the world even allow us to consume more? At some point will the gap becomes so large, it becomes unbearable to those on the bottom? At what cost will these youthful demands be on the economy and productivity? Already, obesity for the boomlet has reached almost epidemic proportions. Should we expect any less for the next generation? Can this trend continue or will it collapse on its own weight?
What does the future hold? Have we created a Frankenstein we cannot control and that inevitably will destroy us by trying to outdo each other and each previous generation? What will Generation Z be like? More of the same? Or a return to a more balanced lifestyle? The answer to this no doubt holds the answer to how the entire 21st century will develop.
Thursday, November 1, 2007
CustomerExpectations
Customer Expectations
By Paul Herbig
Customer expectations have been rising over the past few decades. Graduates expect to find that perfect job and be managers and owners within a few years out of school; everyone is searching to find the ‘perfect’ spouse, often discarding those with one or two frailties; and our children should be perfect, beautiful, smart, athletic (picking those characteristics genetically is not as far off as one might think). As the number of choices increase in our life, many consumers believe they should never have to settle for that which is just “good enough” and instead shoot for perfection—given the plethora of options available, They know it is out there and theirs to be found. Those that do aim for only the best have been repeatedly found to be less happy, less optimistic, and more depressed . . . the making of a dissatisfied customer who cannot make up his/her mind (sounds familiar?).
Recently a "Husband Shopping Center" opened in Houston, where women could go to choose a husband from among many men. It was laid out in five floors, with the men increasing in positive attributes as you ascended up the floors The only rule was, once you opened the door to any floor, you must choose a man from that floor, and if you went up a floor, you couldn't go back down except to leave the place never to return.
A couple of friends went to the place to find their perfect mate. First floor, the door had a sign saying "These men have jobs and love kids." The women read the sign and said, "Well, that's better than not having jobs, or not loving kids, but I deserve better so I wonder what's further up?" So up they go. Second floor says "These men have high paying jobs, love kids, and are extremely good looking." Hmmm, say the girls, “Better but not the best. I deserve better. I wonder what's further up?” To the Third floor they go: "These men have high paying jobs, are extremely good looking, love kids and help with the housework." Wow! Say the women. Very tempting, BUT, Not quite good enough. There's more further up! And up they go. Fourth floor: "These men have high paying jobs, love kids, are extremely good looking, help with the housework, and have a strong romantic streak." Oh, mercy me. Sounds heavenly but not quite perfect. I only deserve the absolute best. Just think what must be awaiting us further on! So up to the fifth floor they go. The sign on that door said, "This floor is empty and exists only to prove that women are impossible to please."
This is funny. Take away the sexist implication (substitute men for women, substitute looking for perfect) and you have an excellent example of seeking perfection and never be satisfied with anything less. The result: constant dissatisfaction.
Customer expectations are often misaligned with company objectives. This could be due to the customer having unrealistically high expectations or the company having created levels of expectations it either cannot or will not fulfill.
Setting expectations. You must set the level of expectations you are able to meet and then sell to that point or just below it. Tell customers what you want them to want. Messages must be crafted to give the appropriate level of expectations. Hype might bring customers to your door but if your product and delivery cannot match the hype, you will not close the sale or keep the customer. What are you promising to the customer? Are you willing and able to meet the promises?
A study by the University of Illinois found customers willing to hang around even with lower actual satisfaction if their expectations were of higher actual future use. And conversely, those customers whose future value of products were minimal (not very useful to them in the future) tended not to hang around even with high ratings of customer satisfaction. In other words, if you provide a product valuable to them in the past, present and future, they will tend to stick with you regardless of the level of satisfaction (up to a point that is). You must 1) Effectively set expectations for customers; 2) Understand all the expectations of your customers. Not just those overtly expressed but just as well trying to understand those hidden; and 3) Deliver on their expectations or exceeding them Remember, Dissatisfaction is often derived from failed customer expectations
If your major benefit or sustainable competitive advantage is service and customer support, do not send messages of aggressive pricing. You will attract the wrong type of customer who will not be happy with the actual product offered. The expectation you create for your customers must match the message they hear.
By Paul Herbig
Customer expectations have been rising over the past few decades. Graduates expect to find that perfect job and be managers and owners within a few years out of school; everyone is searching to find the ‘perfect’ spouse, often discarding those with one or two frailties; and our children should be perfect, beautiful, smart, athletic (picking those characteristics genetically is not as far off as one might think). As the number of choices increase in our life, many consumers believe they should never have to settle for that which is just “good enough” and instead shoot for perfection—given the plethora of options available, They know it is out there and theirs to be found. Those that do aim for only the best have been repeatedly found to be less happy, less optimistic, and more depressed . . . the making of a dissatisfied customer who cannot make up his/her mind (sounds familiar?).
Recently a "Husband Shopping Center" opened in Houston, where women could go to choose a husband from among many men. It was laid out in five floors, with the men increasing in positive attributes as you ascended up the floors The only rule was, once you opened the door to any floor, you must choose a man from that floor, and if you went up a floor, you couldn't go back down except to leave the place never to return.
A couple of friends went to the place to find their perfect mate. First floor, the door had a sign saying "These men have jobs and love kids." The women read the sign and said, "Well, that's better than not having jobs, or not loving kids, but I deserve better so I wonder what's further up?" So up they go. Second floor says "These men have high paying jobs, love kids, and are extremely good looking." Hmmm, say the girls, “Better but not the best. I deserve better. I wonder what's further up?” To the Third floor they go: "These men have high paying jobs, are extremely good looking, love kids and help with the housework." Wow! Say the women. Very tempting, BUT, Not quite good enough. There's more further up! And up they go. Fourth floor: "These men have high paying jobs, love kids, are extremely good looking, help with the housework, and have a strong romantic streak." Oh, mercy me. Sounds heavenly but not quite perfect. I only deserve the absolute best. Just think what must be awaiting us further on! So up to the fifth floor they go. The sign on that door said, "This floor is empty and exists only to prove that women are impossible to please."
This is funny. Take away the sexist implication (substitute men for women, substitute looking for perfect) and you have an excellent example of seeking perfection and never be satisfied with anything less. The result: constant dissatisfaction.
Customer expectations are often misaligned with company objectives. This could be due to the customer having unrealistically high expectations or the company having created levels of expectations it either cannot or will not fulfill.
Setting expectations. You must set the level of expectations you are able to meet and then sell to that point or just below it. Tell customers what you want them to want. Messages must be crafted to give the appropriate level of expectations. Hype might bring customers to your door but if your product and delivery cannot match the hype, you will not close the sale or keep the customer. What are you promising to the customer? Are you willing and able to meet the promises?
A study by the University of Illinois found customers willing to hang around even with lower actual satisfaction if their expectations were of higher actual future use. And conversely, those customers whose future value of products were minimal (not very useful to them in the future) tended not to hang around even with high ratings of customer satisfaction. In other words, if you provide a product valuable to them in the past, present and future, they will tend to stick with you regardless of the level of satisfaction (up to a point that is). You must 1) Effectively set expectations for customers; 2) Understand all the expectations of your customers. Not just those overtly expressed but just as well trying to understand those hidden; and 3) Deliver on their expectations or exceeding them Remember, Dissatisfaction is often derived from failed customer expectations
If your major benefit or sustainable competitive advantage is service and customer support, do not send messages of aggressive pricing. You will attract the wrong type of customer who will not be happy with the actual product offered. The expectation you create for your customers must match the message they hear.
Wheredidtheygo
Where did they go?
By Paul Herbig
When Nielsen Media Research's fall sweeps ratings came out this past November, they clearly showed that men between the ages of 18 and 34 were watching less television, particularly fewer prime-time shows. For the time period during the autumn weeks, when many vaunted network shows hit the airwaves for the first time, Nielsen's data concluded that men 18-34 watched a hotly debated 7.7% less, or 270 fewer seconds, of prime-time TV programming a day than they did a year earlier. That may seem an insignificant drop, but Nielsen's research shows that younger men have been watching less television for the past 12 years and are no longer glued to the boob tube
This is not a trivial audience. For ad-supported network and cable TV channels, with more than $37 billion in annual revenue, 18- to 34-year-old men account for about $4.3 billion. So every minute that young males don't watch prime-time programming could carry a potential price tag of about $77 million across network, cable, national syndication, and national Hispanic TV channels
Where did the boys go? The Online Publishers Association (OPA) conducted a study
that addresses the where-the-boys-are problem TV networks are struggling with
(they appear to have found the girls, too). The coveted 18-34-year-old demographic
composes 24 percent of the U.S. population. Yet it accounts for a disproportionate
34.1 percent of the online population. This group takes access for granted, wherever,
whenever, and under their control. It is the first generation that grew up with the Internet. These young people are ditching their PCs in favor of laptops -- with wireless
broadband access.. It is not as if these people don't watch TV. They do. But "chaotic" schedules make concepts such as primetime all but meaningless. And when they do watch, it's often with laptop and cell phone at hand (they own lots of gadgets). When this demographic sees something in a brick-and-mortar store that catches their fancy, they'll often go home and buy it on the Web. "No lines,"
As TV loses its appeal among younger men, advertisers are using divining rods to follow the money. The PGA Tour, which tries to attract younger fans, sponsored EA Sports' golf video game, "Tiger Woods PGA Tour 2004." It even includes a section where the player can outfit his virtual persona with accessories from Nike, Tag Heuer, and Adidas. Says Kris Magel, senior vice president/group director of national broadcast at Optimedia, a New York advertising firm, "Partnerships with the developers of these games is a really interesting way to try to get in front of these guys." And while Volkswagen spent over $125 million on television advertising in 2003, the car company also paid Sony Computer Entertainment to have one of its vehicles featured in "Gran Turismo 3: A Spec." In the car racing game, the player can buy different car models from the Dodge Viper to Volkswagen's new Beetle
Research consistently shows men ages 18-34 watch less TV and go online
more. But research also says people who own DVRs watch more hours of TV.
Maybe people don't just watch more TV (since they can skip commercials),
but they watch it differently (because they control the schedule), at different
times (customized and managed to their availability and leisure), and only
the programs they want to watch. It resembles opt-in permission to exchange
personal information for tailored, relevant content.
TV media executives and advertisers should be glad they are not in the news print industry due to plummeting readership among younger consumers. I asked my son in college if he would like a subscription to The Wall Street Journal. His response: “If I want to read any articles I will check its web site.” This generation demands instant content on what matters to them and the newspapers must adapt their methods to customer’s behavior or die.
Behavioral targeting and DVR are ultimately about the consumer. Allowing
people to consume what they individually deem relevant will only increase
product affinity It is a war out there: the media and advertising versus the consumer. As you can’t win by fighting the customer, perhaps it is time to cooperate with him.
By Paul Herbig
When Nielsen Media Research's fall sweeps ratings came out this past November, they clearly showed that men between the ages of 18 and 34 were watching less television, particularly fewer prime-time shows. For the time period during the autumn weeks, when many vaunted network shows hit the airwaves for the first time, Nielsen's data concluded that men 18-34 watched a hotly debated 7.7% less, or 270 fewer seconds, of prime-time TV programming a day than they did a year earlier. That may seem an insignificant drop, but Nielsen's research shows that younger men have been watching less television for the past 12 years and are no longer glued to the boob tube
This is not a trivial audience. For ad-supported network and cable TV channels, with more than $37 billion in annual revenue, 18- to 34-year-old men account for about $4.3 billion. So every minute that young males don't watch prime-time programming could carry a potential price tag of about $77 million across network, cable, national syndication, and national Hispanic TV channels
Where did the boys go? The Online Publishers Association (OPA) conducted a study
that addresses the where-the-boys-are problem TV networks are struggling with
(they appear to have found the girls, too). The coveted 18-34-year-old demographic
composes 24 percent of the U.S. population. Yet it accounts for a disproportionate
34.1 percent of the online population. This group takes access for granted, wherever,
whenever, and under their control. It is the first generation that grew up with the Internet. These young people are ditching their PCs in favor of laptops -- with wireless
broadband access.. It is not as if these people don't watch TV. They do. But "chaotic" schedules make concepts such as primetime all but meaningless. And when they do watch, it's often with laptop and cell phone at hand (they own lots of gadgets). When this demographic sees something in a brick-and-mortar store that catches their fancy, they'll often go home and buy it on the Web. "No lines,"
As TV loses its appeal among younger men, advertisers are using divining rods to follow the money. The PGA Tour, which tries to attract younger fans, sponsored EA Sports' golf video game, "Tiger Woods PGA Tour 2004." It even includes a section where the player can outfit his virtual persona with accessories from Nike, Tag Heuer, and Adidas. Says Kris Magel, senior vice president/group director of national broadcast at Optimedia, a New York advertising firm, "Partnerships with the developers of these games is a really interesting way to try to get in front of these guys." And while Volkswagen spent over $125 million on television advertising in 2003, the car company also paid Sony Computer Entertainment to have one of its vehicles featured in "Gran Turismo 3: A Spec." In the car racing game, the player can buy different car models from the Dodge Viper to Volkswagen's new Beetle
Research consistently shows men ages 18-34 watch less TV and go online
more. But research also says people who own DVRs watch more hours of TV.
Maybe people don't just watch more TV (since they can skip commercials),
but they watch it differently (because they control the schedule), at different
times (customized and managed to their availability and leisure), and only
the programs they want to watch. It resembles opt-in permission to exchange
personal information for tailored, relevant content.
TV media executives and advertisers should be glad they are not in the news print industry due to plummeting readership among younger consumers. I asked my son in college if he would like a subscription to The Wall Street Journal. His response: “If I want to read any articles I will check its web site.” This generation demands instant content on what matters to them and the newspapers must adapt their methods to customer’s behavior or die.
Behavioral targeting and DVR are ultimately about the consumer. Allowing
people to consume what they individually deem relevant will only increase
product affinity It is a war out there: the media and advertising versus the consumer. As you can’t win by fighting the customer, perhaps it is time to cooperate with him.
XADS
X-Advertising
By Paul Herbig
Extreme Sports (X-games) are now the rage. It is the ultimate in obtaining the more-fickle-than-ever-before consumer’s attention. Just as X-games are getting the attention of the coveted younger crowd, a new set of X-advertising (Extreme Advertising) is being broadcasted to get the younger consumer’s attention.
TRAVEL advertising is “predictable, bland and boring”—unless you’re advertising UK youth package tour company Club 18-30, that is. Unsurprisingly, this is the view of Club 18-30 managing director Andy Tidy, whose controversial advertising created by Saatchi & Saatchi London won a Grand Prix at Cannes last year.
The entry featured a group of gorgeous young things in recreational situations, much in the manner of a Breughel painting, and incorporated a number of visual gags in each poster
Tidy was a speaker at the Cannes International Advertising Festival last week on the topic of ‘extreme advertising’—in which Club 18-30 indulges. The brand has been created around the consumer insight that for the majority of its customers, a Club 18-30 trip means sun, fun and, most of all, getting laid. Most of its marketing, including a variety of ambient and stunt campaigns, focuses on the latter point. For example, the brand ran a pseudo-demonstration outside the U.S. embassy in London recently, with people carrying placards and chanting “We want Bush”. On the back of the signs was a Club 18-30 logo.
“Within the travel industry, very few ‘brands’ exist,” Tidy told B&T. “The Club 18-30 logo adds meaning and completes the ad.”
Interestingly, however, a brand that is so strongly and controversially positioned contributes to a limited lifespan with its consumers. Tidy said there is a three-year window where Club 18-30 is the right travel brand for a person.He says the brand—which is owned by mainstream travel company Thomas Cook, but run by a separate management company at which Tidy is the only person aged older than 27—needs to expand its market to include slightly older travelers (who prefer ‘unpackaged tours’), and further generate word-of-mouth and loyalty .“Traditional loyalty programs are useless,” he said. “The real loyalty is when our customers tell other people what a great time they had and it gets passed on.”
As part of its efforts to generate word of mouth, the company spends time and effort on getting close to its market—and oddly, even their parents. For example, it runs local model competitions in local newspapers—something that is popular with its potential target market—and their parents—who might otherwise be expected to be rather anxious about sending their offspring on a Club 18-30 holiday.
“We have one rep to every 25 guests. A lot of the other companies only have one rep to every 200 guests,” Tidy says. “We’ve very successfully used this tactic for years..We also have an annual reunion—9000 people—it’s the biggest indoor event in Britain.” This is also where the ‘extreme’ advertising approach comes in. Club 18-30’s advertising must be “talked about”.
“It’s very, very important for the advertising to be award-winning,” Tidy says. “There’s no way I want to be a ‘me-too’ brand. It’s got to lead, not follow.We are so close to the target audience that we know if something is working. We know if we’re losing it. It’s anecdotal evidence—if we’re not being talked about.”
Tidy says for the longer-term, there’s little alternative but to launch new brands that target older travelers. For example, Cultura is set to launch at the end of August this year offering partly-packaged tours to Spanish and Italian cities and Prague.“It’s not a package holiday,” he says of the new brand. “You’re opting out, not in.
“We have a new reservation system. We’ll be able to work with partners like EasyJet. It will be very different from Club 18-30. But budgets will never be huge [so we need to] define another strong brand.”
Extreme Advertising—the future?
By Paul Herbig
Extreme Sports (X-games) are now the rage. It is the ultimate in obtaining the more-fickle-than-ever-before consumer’s attention. Just as X-games are getting the attention of the coveted younger crowd, a new set of X-advertising (Extreme Advertising) is being broadcasted to get the younger consumer’s attention.
TRAVEL advertising is “predictable, bland and boring”—unless you’re advertising UK youth package tour company Club 18-30, that is. Unsurprisingly, this is the view of Club 18-30 managing director Andy Tidy, whose controversial advertising created by Saatchi & Saatchi London won a Grand Prix at Cannes last year.
The entry featured a group of gorgeous young things in recreational situations, much in the manner of a Breughel painting, and incorporated a number of visual gags in each poster
Tidy was a speaker at the Cannes International Advertising Festival last week on the topic of ‘extreme advertising’—in which Club 18-30 indulges. The brand has been created around the consumer insight that for the majority of its customers, a Club 18-30 trip means sun, fun and, most of all, getting laid. Most of its marketing, including a variety of ambient and stunt campaigns, focuses on the latter point. For example, the brand ran a pseudo-demonstration outside the U.S. embassy in London recently, with people carrying placards and chanting “We want Bush”. On the back of the signs was a Club 18-30 logo.
“Within the travel industry, very few ‘brands’ exist,” Tidy told B&T. “The Club 18-30 logo adds meaning and completes the ad.”
Interestingly, however, a brand that is so strongly and controversially positioned contributes to a limited lifespan with its consumers. Tidy said there is a three-year window where Club 18-30 is the right travel brand for a person.He says the brand—which is owned by mainstream travel company Thomas Cook, but run by a separate management company at which Tidy is the only person aged older than 27—needs to expand its market to include slightly older travelers (who prefer ‘unpackaged tours’), and further generate word-of-mouth and loyalty .“Traditional loyalty programs are useless,” he said. “The real loyalty is when our customers tell other people what a great time they had and it gets passed on.”
As part of its efforts to generate word of mouth, the company spends time and effort on getting close to its market—and oddly, even their parents. For example, it runs local model competitions in local newspapers—something that is popular with its potential target market—and their parents—who might otherwise be expected to be rather anxious about sending their offspring on a Club 18-30 holiday.
“We have one rep to every 25 guests. A lot of the other companies only have one rep to every 200 guests,” Tidy says. “We’ve very successfully used this tactic for years..We also have an annual reunion—9000 people—it’s the biggest indoor event in Britain.” This is also where the ‘extreme’ advertising approach comes in. Club 18-30’s advertising must be “talked about”.
“It’s very, very important for the advertising to be award-winning,” Tidy says. “There’s no way I want to be a ‘me-too’ brand. It’s got to lead, not follow.We are so close to the target audience that we know if something is working. We know if we’re losing it. It’s anecdotal evidence—if we’re not being talked about.”
Tidy says for the longer-term, there’s little alternative but to launch new brands that target older travelers. For example, Cultura is set to launch at the end of August this year offering partly-packaged tours to Spanish and Italian cities and Prague.“It’s not a package holiday,” he says of the new brand. “You’re opting out, not in.
“We have a new reservation system. We’ll be able to work with partners like EasyJet. It will be very different from Club 18-30. But budgets will never be huge [so we need to] define another strong brand.”
Extreme Advertising—the future?
OlDGUYS
Don’t trust anyone over 30
By Paul Herbig
Advertisers want to be where the youth are. Advertisers are willing to pay a steep premium (sometimes two to three times as much) to have their products seen by young men and women in the ‘coveted’ 18 to 34 age group. Examine any primetime network show and you can almost see the intended audience mirrored by the show’s stars and culture. The networks cringe in horror if any show is targeted to “older” viewers (The dropping of Joan of Arcadia was because the viewership had turned old with many of the youth tuning out.). They fight one another over the average age of their viewers, dreading the ultimate insult of having the “oldest” average viewer, knowing the toll it will take on its advertising income.
Which brings us to the major question at hand: Why does Madison Avenue fight tooth and nail, court fiercely, and live and die for those youthful viewers? It can’t be for the money. Those “old folks” age 45 and over are the ones making the big bucks, have the largest disposable income, and who are buying most of the expensive products available today. The kids are either in school or just out of college, beset by huge amounts of college loans they must pay back, in an uncertain economy where any job is a good job, and living in modest digs if they haven’t already moved back with mom and dad. If the Advertisers wish to go where the money is, they have their priorities upside down.
Why then pursue the young and restless? Several reasons exist to rationalize the Advertiser’s odd behavior. The number one reason is the belief that marketers need to instill brand loyalty when the consumer is young and it will be maintained for the rest of their lives (Analogous to “Give me the child until he is 5 and he will be mine forever” School of thought). The only problem with this theory is that is it blatantly wrong. Young girls play with Barbies, that does not make them loyal to Mattel for life; as tweens (8-13) they loved the Backstreet Boys ; as teens they listened to Hip-Hop, in College young women have different tastes, and so on. Just because at one stage of their lives, they enjoy a product does not guarantee their loyalty for life; in fact, just the opposite is true, because they enjoyed a product as a high school student will almost guarantee they won’t like it as college student (because they associate it with their less mature high school life and they are now college students who must act and live like college students). This fallacy can be seen through the results of a recent survey:: males 18 to 21 are nearly four times as likely to favor apparel specialty shops than those 8 to 12 (38% to 10%) But guys lose interest in shopping at discount department stores as they get older (78% 8to 12 enjoy, compared to 57% of males 18 to 21). Perhaps as their spending patterns grows, their desire changes to more status brands.
The second reason is the “my customers are dying” syndrome whereas you fear the older average age of your product users could spell major problems in the future. Some truth may exist to this fear: the average age of Cadillac buyers have been edging up; however, Cadillac as a brand is under siege. In real life, some products are preferred by different age groups: Cruises tend to attract more seniors because they have the time and the money. To attempt to market to the young as a means of complementing your older users tends to alienate both groups: Remember “This is not your father’s Oldsmobile” commercials. They failed to attract the young and drove away their loyalty older customer. Oldsmobile has been retired from GM’s stable primarily due to this debacle.
The third and more probable reason is that the creative team at the Advertisers tend to be young and project what they like to see and what they think their peers would appreciate. It must be new, hip, faddish. Very few fifty-ish creative types exist at agencies anymore. It is a game for the young (who likewise tend to be selling to their youthful marketing peers at your company). If you do not want to lose your older users, you “senior” marketers must monitor and rein-in those runaway youth, less your product finds the black hole as did Oldsmobile.
Don’t forget the older or they will forget you.
By Paul Herbig
Advertisers want to be where the youth are. Advertisers are willing to pay a steep premium (sometimes two to three times as much) to have their products seen by young men and women in the ‘coveted’ 18 to 34 age group. Examine any primetime network show and you can almost see the intended audience mirrored by the show’s stars and culture. The networks cringe in horror if any show is targeted to “older” viewers (The dropping of Joan of Arcadia was because the viewership had turned old with many of the youth tuning out.). They fight one another over the average age of their viewers, dreading the ultimate insult of having the “oldest” average viewer, knowing the toll it will take on its advertising income.
Which brings us to the major question at hand: Why does Madison Avenue fight tooth and nail, court fiercely, and live and die for those youthful viewers? It can’t be for the money. Those “old folks” age 45 and over are the ones making the big bucks, have the largest disposable income, and who are buying most of the expensive products available today. The kids are either in school or just out of college, beset by huge amounts of college loans they must pay back, in an uncertain economy where any job is a good job, and living in modest digs if they haven’t already moved back with mom and dad. If the Advertisers wish to go where the money is, they have their priorities upside down.
Why then pursue the young and restless? Several reasons exist to rationalize the Advertiser’s odd behavior. The number one reason is the belief that marketers need to instill brand loyalty when the consumer is young and it will be maintained for the rest of their lives (Analogous to “Give me the child until he is 5 and he will be mine forever” School of thought). The only problem with this theory is that is it blatantly wrong. Young girls play with Barbies, that does not make them loyal to Mattel for life; as tweens (8-13) they loved the Backstreet Boys ; as teens they listened to Hip-Hop, in College young women have different tastes, and so on. Just because at one stage of their lives, they enjoy a product does not guarantee their loyalty for life; in fact, just the opposite is true, because they enjoyed a product as a high school student will almost guarantee they won’t like it as college student (because they associate it with their less mature high school life and they are now college students who must act and live like college students). This fallacy can be seen through the results of a recent survey:: males 18 to 21 are nearly four times as likely to favor apparel specialty shops than those 8 to 12 (38% to 10%) But guys lose interest in shopping at discount department stores as they get older (78% 8to 12 enjoy, compared to 57% of males 18 to 21). Perhaps as their spending patterns grows, their desire changes to more status brands.
The second reason is the “my customers are dying” syndrome whereas you fear the older average age of your product users could spell major problems in the future. Some truth may exist to this fear: the average age of Cadillac buyers have been edging up; however, Cadillac as a brand is under siege. In real life, some products are preferred by different age groups: Cruises tend to attract more seniors because they have the time and the money. To attempt to market to the young as a means of complementing your older users tends to alienate both groups: Remember “This is not your father’s Oldsmobile” commercials. They failed to attract the young and drove away their loyalty older customer. Oldsmobile has been retired from GM’s stable primarily due to this debacle.
The third and more probable reason is that the creative team at the Advertisers tend to be young and project what they like to see and what they think their peers would appreciate. It must be new, hip, faddish. Very few fifty-ish creative types exist at agencies anymore. It is a game for the young (who likewise tend to be selling to their youthful marketing peers at your company). If you do not want to lose your older users, you “senior” marketers must monitor and rein-in those runaway youth, less your product finds the black hole as did Oldsmobile.
Don’t forget the older or they will forget you.
ओनेतूने
You to me marketing
By Paul Herbig
One-to-one marketing it is called, a radical rethinking of the way marketers treat their customers. Companies can increase their profits by selling more things to fewer customers. It is wiser to focus more on increasing sales to a smaller percentage of your existing customers than it is to find new ones (estimates are it costs 5 to 10 times as much to get a new customer as it is to retain current ones).
Getting a new customer is expensive. It takes money to get his attention and it takes continuing effort to educate him (interruption marketing is expensive, and so is the
process of winning a customer's trust). It's also expensive for the customer, who has to spend time evaluating and learning about the features and benefits of a product. Instead of focusing on how to maximize the number of new customers, the focus should
be on keeping customers longer and getting far more money from each of them over time.
It's back to the old days, when merchants had a limited supply of customers and worked to get the maximum revenue from each one. Except now, with technology, companies can combine this old world thinking with the ability to dramatically grow their customer base at the same time.
If MCI spends hundreds of dollars to get a new long distance customer, and that customer pays just $20 per month for MCI’s services, then they have to be figuring out other ways to generate revenue through their interaction with that customer, not spending all their energy getting yet another new customer. By selling cellular phone services, home security services and an increasing array of other items, MCI can recoup the expense of obtaining these customers.
Levi's has built the single largest brand of women's jeans in the country. And they've done so without having any jeans in the store. Instead, women have their measurements taken by a trained specialist, who sends them to a computerized factory. There, a semi-custom pair of jeans is made to order. The shopper gets custom fit for a fraction of the cost. Levi's has a huge savings in inventory risk and advertising costs. And best of all, once a customer has given her measurements to Levi's, once she's endured the hassle of all that measurement-taking, once she's worn a pair of custom jeans that fit her to a ‘T” and makes her look like she always wanted, why would she even consider switching brands to save a few dollars?
A company should focus on four things when selling to customers:
1. Increase your "share of wallet." Figure out which needs you can satisfy, then use the knowledge you have, and the trust you've built, to make that additional sale.
2. Increase the durability of customer relationships. Invest money in customer retention, because it's a small fraction of the cost of customer acquisition.
3. Increase your product offerings to customers. By being customer-focused instead of retail-focused, or factory-focused, a manufacturer or merchant can widely increase its offerings, thus increasing its share of wallet.
4. Create an interactive relationship that leads to meeting more customer needs. It's a never-ending cycle. By constantly inducing the consumer to give more information, the marketer can offer more products.
This series of techniques isn't easy, nor is it free. If it were, everyone would do it. It requires a huge investment in scaleable technology, along with the focus and the commitment to do it right. It puts a lot more pressure on your organization, as well, because as each customer becomes worth more, the cost of losing one increases. But with the risks come the rewards.
By Paul Herbig
One-to-one marketing it is called, a radical rethinking of the way marketers treat their customers. Companies can increase their profits by selling more things to fewer customers. It is wiser to focus more on increasing sales to a smaller percentage of your existing customers than it is to find new ones (estimates are it costs 5 to 10 times as much to get a new customer as it is to retain current ones).
Getting a new customer is expensive. It takes money to get his attention and it takes continuing effort to educate him (interruption marketing is expensive, and so is the
process of winning a customer's trust). It's also expensive for the customer, who has to spend time evaluating and learning about the features and benefits of a product. Instead of focusing on how to maximize the number of new customers, the focus should
be on keeping customers longer and getting far more money from each of them over time.
It's back to the old days, when merchants had a limited supply of customers and worked to get the maximum revenue from each one. Except now, with technology, companies can combine this old world thinking with the ability to dramatically grow their customer base at the same time.
If MCI spends hundreds of dollars to get a new long distance customer, and that customer pays just $20 per month for MCI’s services, then they have to be figuring out other ways to generate revenue through their interaction with that customer, not spending all their energy getting yet another new customer. By selling cellular phone services, home security services and an increasing array of other items, MCI can recoup the expense of obtaining these customers.
Levi's has built the single largest brand of women's jeans in the country. And they've done so without having any jeans in the store. Instead, women have their measurements taken by a trained specialist, who sends them to a computerized factory. There, a semi-custom pair of jeans is made to order. The shopper gets custom fit for a fraction of the cost. Levi's has a huge savings in inventory risk and advertising costs. And best of all, once a customer has given her measurements to Levi's, once she's endured the hassle of all that measurement-taking, once she's worn a pair of custom jeans that fit her to a ‘T” and makes her look like she always wanted, why would she even consider switching brands to save a few dollars?
A company should focus on four things when selling to customers:
1. Increase your "share of wallet." Figure out which needs you can satisfy, then use the knowledge you have, and the trust you've built, to make that additional sale.
2. Increase the durability of customer relationships. Invest money in customer retention, because it's a small fraction of the cost of customer acquisition.
3. Increase your product offerings to customers. By being customer-focused instead of retail-focused, or factory-focused, a manufacturer or merchant can widely increase its offerings, thus increasing its share of wallet.
4. Create an interactive relationship that leads to meeting more customer needs. It's a never-ending cycle. By constantly inducing the consumer to give more information, the marketer can offer more products.
This series of techniques isn't easy, nor is it free. If it were, everyone would do it. It requires a huge investment in scaleable technology, along with the focus and the commitment to do it right. It puts a lot more pressure on your organization, as well, because as each customer becomes worth more, the cost of losing one increases. But with the risks come the rewards.
Celebrities
Celebrity Non-sweethearts
By Paul Herbig
Celebrities have gained deity perspective in many minds. More than ever before, Americans are celebrity smitten, if not obsessed. Some psychologists claim Americans need celebrities as much as food, water and shelter. “We need them to feel connected.” Some estimates are that one in three people are moderate to advanced celebrity worshippers. Whether the paparazzi follow celebrities because the public demands news of the stars or the celebrities and their pr machines broadcast news because they believe the public should be interested, the situation is not healthy.
It is the epitome of the infamous “Fifteen Minutes of Fame.” Celebrities are made every day. A man in California suspected of killing his wife; Smart after her kidnapping. A female American soldier captured in Iraq. (What happened to the hundreds of Americans killed in Iraq—why aren’t they celebrities; they gave the ultimate sacrifice, their life. Why was she chosen?) If they aren’t appearing, they are being invented (American Idol? Bachelor/Bachelorette, Survivor). Michael Jackson’s arrest lit the headlines for weeks, even to the point of downplaying Iran’s massive earthquake that killed tens of thousands or the Asian Tsunami. Kobe Bryant occupied the news for weeks during Summer 03 for a rape accusation (how many real rapes occur daily, what made him so special?) News networks placed this situation on par with the Iraqi war.
Oprah Winfrey tells America what books to read. Celebrities sponsor every product imaginable. What makes them an expert? Why should we buy a certain pair of shoes or apparel just because a celebrity says we should? Hugh Hefner eating a Carl’s Jr. hamburger is meant to bring throngs to the fast-food chain because Hugh supposedly eats there and says they should? Hollywood Celebrities make headlines by their political actions and comments: what makes them political experts? Why should Americans care what Jane Fonda has to say? The ultimate in hubris was when Ben Affleck made his “if Bush gets elected I am out of here.” Comment during the 2000 election. Did he really expect Americans to vote against Bush because they did not want to see him leave? He might be an excellent actor but as a knowledgeable political figure he is not credible. And finally there are those inane television shows whose very essence consists of celebrities and their status: Celebrity Poker, Donald Trump interviews, Made for TV movies about celebrities, Celebrity-Magazines fill the grocery next to check-out; Does Hollywood really believe the “little person” is so concerned about their stars they want to know every bit of gossip (affairs or rumored affairs, inside scoop on marriage difficulties, operations, etc) no matter how trivial? What is this society coming to?
Some experts say technology is to blame. Celebrities used to be larger than life and inaccessible—viewable only on the big screen or the little screen in the living room. No longer. Fans can now learn and view intimate details of celebrities practically on a minute-to-minute basis through 24 hour news channels, Entertainment cable channels, a host of available print vehicles, or online at any of the many celebrity or fan web sites. The end result is the feeling that the fan knows the celebrity, establish a relationship with them, and shares the celeb’s life. Or perhaps it is, as another expert indicates, because we, as a nation of consumers, are information hungry, about anything, including stars.
Another reason is due to economic uncertainty and recessions: during economic downturns, there is a tendency for people to want to know about the rich and famous more than other times. Others say the advanced economic status of the developed countries is to blame. As all the basic needs are taken care of, more leisure time is available. When this happens, Joyce Brothers says, “We have time to fritter away on less important things.”
Stars who believe their own press . . . Jack Quigman played Quncy, MD and then for years afterwards relied on his expert presence to rally troops around medical issues.
Parade magazine sells out constantly with only stories about stars and starlets. The same goes for People,..Sports , Media, Music and Hollywood. Celebs: America’s royalty? It certainly appears so.
The demagogy of the word hero is an excellent example. In past days, the term hero was reserved for one who sacrificed his/her life or whose actions put his/her life in jeopardy. Heroes were also those who put their career, reputation, honor on the line for that they believed in. It was not a term to be bandied around lightly. Today, the term is practically synonymous with celebrity. Michael Jordan is a hero to the youth; really? When did he ever put his life on the line?
From a marketing perspective, if celebrities sell, who are we to pass judgment on the situation. Nonetheless, use of celebrities as sponsors of products must be a cautious undertaking. O.J. Simpson was the star of Hertz commercials, jumping over airport lounge chairs, and running through airports, for decades. The public indelibly linked the two. It was a huge success for years--until the summer of 1994 with the murder of his wife and her male friend. Even though eventually acquitted, the negative press and the resulting doubts have made him persona non-grata for any sponsorship role; the impact upon Hertz has had to be negative. Another prime example is the Drink Milk campaigns with celebrity after celebrity with milk moustaches. Another great success. Except with Dennis Rodman, the NBA bad boy, went too far, kicked an courtside cameraman during a game; The Agency fired Dennis and withheld those ads with his appearances.
Celebrities sell but not celebrities are created equal and stay that way. Be careful whom you choose. .
By Paul Herbig
Celebrities have gained deity perspective in many minds. More than ever before, Americans are celebrity smitten, if not obsessed. Some psychologists claim Americans need celebrities as much as food, water and shelter. “We need them to feel connected.” Some estimates are that one in three people are moderate to advanced celebrity worshippers. Whether the paparazzi follow celebrities because the public demands news of the stars or the celebrities and their pr machines broadcast news because they believe the public should be interested, the situation is not healthy.
It is the epitome of the infamous “Fifteen Minutes of Fame.” Celebrities are made every day. A man in California suspected of killing his wife; Smart after her kidnapping. A female American soldier captured in Iraq. (What happened to the hundreds of Americans killed in Iraq—why aren’t they celebrities; they gave the ultimate sacrifice, their life. Why was she chosen?) If they aren’t appearing, they are being invented (American Idol? Bachelor/Bachelorette, Survivor). Michael Jackson’s arrest lit the headlines for weeks, even to the point of downplaying Iran’s massive earthquake that killed tens of thousands or the Asian Tsunami. Kobe Bryant occupied the news for weeks during Summer 03 for a rape accusation (how many real rapes occur daily, what made him so special?) News networks placed this situation on par with the Iraqi war.
Oprah Winfrey tells America what books to read. Celebrities sponsor every product imaginable. What makes them an expert? Why should we buy a certain pair of shoes or apparel just because a celebrity says we should? Hugh Hefner eating a Carl’s Jr. hamburger is meant to bring throngs to the fast-food chain because Hugh supposedly eats there and says they should? Hollywood Celebrities make headlines by their political actions and comments: what makes them political experts? Why should Americans care what Jane Fonda has to say? The ultimate in hubris was when Ben Affleck made his “if Bush gets elected I am out of here.” Comment during the 2000 election. Did he really expect Americans to vote against Bush because they did not want to see him leave? He might be an excellent actor but as a knowledgeable political figure he is not credible. And finally there are those inane television shows whose very essence consists of celebrities and their status: Celebrity Poker, Donald Trump interviews, Made for TV movies about celebrities, Celebrity-Magazines fill the grocery next to check-out; Does Hollywood really believe the “little person” is so concerned about their stars they want to know every bit of gossip (affairs or rumored affairs, inside scoop on marriage difficulties, operations, etc) no matter how trivial? What is this society coming to?
Some experts say technology is to blame. Celebrities used to be larger than life and inaccessible—viewable only on the big screen or the little screen in the living room. No longer. Fans can now learn and view intimate details of celebrities practically on a minute-to-minute basis through 24 hour news channels, Entertainment cable channels, a host of available print vehicles, or online at any of the many celebrity or fan web sites. The end result is the feeling that the fan knows the celebrity, establish a relationship with them, and shares the celeb’s life. Or perhaps it is, as another expert indicates, because we, as a nation of consumers, are information hungry, about anything, including stars.
Another reason is due to economic uncertainty and recessions: during economic downturns, there is a tendency for people to want to know about the rich and famous more than other times. Others say the advanced economic status of the developed countries is to blame. As all the basic needs are taken care of, more leisure time is available. When this happens, Joyce Brothers says, “We have time to fritter away on less important things.”
Stars who believe their own press . . . Jack Quigman played Quncy, MD and then for years afterwards relied on his expert presence to rally troops around medical issues.
Parade magazine sells out constantly with only stories about stars and starlets. The same goes for People,..Sports , Media, Music and Hollywood. Celebs: America’s royalty? It certainly appears so.
The demagogy of the word hero is an excellent example. In past days, the term hero was reserved for one who sacrificed his/her life or whose actions put his/her life in jeopardy. Heroes were also those who put their career, reputation, honor on the line for that they believed in. It was not a term to be bandied around lightly. Today, the term is practically synonymous with celebrity. Michael Jordan is a hero to the youth; really? When did he ever put his life on the line?
From a marketing perspective, if celebrities sell, who are we to pass judgment on the situation. Nonetheless, use of celebrities as sponsors of products must be a cautious undertaking. O.J. Simpson was the star of Hertz commercials, jumping over airport lounge chairs, and running through airports, for decades. The public indelibly linked the two. It was a huge success for years--until the summer of 1994 with the murder of his wife and her male friend. Even though eventually acquitted, the negative press and the resulting doubts have made him persona non-grata for any sponsorship role; the impact upon Hertz has had to be negative. Another prime example is the Drink Milk campaigns with celebrity after celebrity with milk moustaches. Another great success. Except with Dennis Rodman, the NBA bad boy, went too far, kicked an courtside cameraman during a game; The Agency fired Dennis and withheld those ads with his appearances.
Celebrities sell but not celebrities are created equal and stay that way. Be careful whom you choose. .
Tuesday, October 2, 2007
CRM
CRM
CRM Customer Relationship Management: A big fancy word for knowing your customer. Something most good businesspersons never stopped doing. It is only new in the sense that for most of the twentieth century, mass media advertising was the norm. In the nineteen century, before the rise of the large corporation, most of America’ (and indeed the world’s) commerce was performed by small sole proprietor shops. They HAD to know their customers. But as one-to-one marketing gave away to marketing to the masses, that knowledge of working with individual customers, knowing them intimately, and working to satisfy their unique needs, dissipated. CRM is an attempt to return to what worked well in the nineteenth century and what will work well in the twenty-first century as well.
A Term that must be understood, remembered, and utilized is Lifetime value of a customer This revolves around a company’s attitude towards customer If I spend 300 dollars a month on groceries for my family, am I worth $300 to that grocery chain? No, I am worth $72,000 ($300 per month times 12 months times 20 years). The company then had better think about treating me as if I were worth $72K. Loyal customers: buy more, more often, are less price sensitive, more loyal, and will purchase higher priced options, while the cost of servicing them is much less and the profitability of a retention customer much greater than a mere acquired one Customer wants: recognition, service, information, convenience, helpfulness
Today’s marketers are being required to provide ROI forecasts as well as to provide quantitative revenue contributions of marketing activities. Marketers must have the ability to track and measure precise return of all activities down to the individual customer level.
With availability of customer purchase information, marketers now have access to critical data that can be combined with demographic and historical information that a company has on its customers. Using that combination, marketers can then determine more precise market segments and customer characteristics and thus deliver more effective marketing.
The objective is to provide the information and marketing offers to the right people at the right time. When this is done, consumers see the effort as valuable to them and appreciate the responsiveness. It provides the company a significant competitive advantage.
Through a CRM system and the availability of customer data, marketers can finally see clearly who their customers are, what they are purchasing, when they are purchasing it, and where it is being purchased at. Marketers can then apply statistical analysis to predict future purchase behavior. CRM systems also calculate the lifetime value of customers which can then allow Marketers to categorize customers and pursue the high value segment. Through CRM systems, marketers can better understand and shape the customer experience in all phases of the relationship—from leads to prospect to customer to (worst case) former customer. Marketing and CRM work so well together because they basically have the same mission: to identify, acquire, foster, and retain loyal, profitable customers.
Through CRM, the company will know more about what the customer might be interested in and will send specific offers only to those with the highest possible interest and readiness to buy. CRM has had mixed successes. Less than 30 percent of CRM adopting companies report achieving the expected return from their CRM investments. The problem all too often is not the program but the company (29% failure from organizational change, 22% from company politics/inertia; lack of CRM understanding 20%)
Perhaps not CRM but CMR (Customer Management of Relationships).
CRM Customer Relationship Management: A big fancy word for knowing your customer. Something most good businesspersons never stopped doing. It is only new in the sense that for most of the twentieth century, mass media advertising was the norm. In the nineteen century, before the rise of the large corporation, most of America’ (and indeed the world’s) commerce was performed by small sole proprietor shops. They HAD to know their customers. But as one-to-one marketing gave away to marketing to the masses, that knowledge of working with individual customers, knowing them intimately, and working to satisfy their unique needs, dissipated. CRM is an attempt to return to what worked well in the nineteenth century and what will work well in the twenty-first century as well.
A Term that must be understood, remembered, and utilized is Lifetime value of a customer This revolves around a company’s attitude towards customer If I spend 300 dollars a month on groceries for my family, am I worth $300 to that grocery chain? No, I am worth $72,000 ($300 per month times 12 months times 20 years). The company then had better think about treating me as if I were worth $72K. Loyal customers: buy more, more often, are less price sensitive, more loyal, and will purchase higher priced options, while the cost of servicing them is much less and the profitability of a retention customer much greater than a mere acquired one Customer wants: recognition, service, information, convenience, helpfulness
Today’s marketers are being required to provide ROI forecasts as well as to provide quantitative revenue contributions of marketing activities. Marketers must have the ability to track and measure precise return of all activities down to the individual customer level.
With availability of customer purchase information, marketers now have access to critical data that can be combined with demographic and historical information that a company has on its customers. Using that combination, marketers can then determine more precise market segments and customer characteristics and thus deliver more effective marketing.
The objective is to provide the information and marketing offers to the right people at the right time. When this is done, consumers see the effort as valuable to them and appreciate the responsiveness. It provides the company a significant competitive advantage.
Through a CRM system and the availability of customer data, marketers can finally see clearly who their customers are, what they are purchasing, when they are purchasing it, and where it is being purchased at. Marketers can then apply statistical analysis to predict future purchase behavior. CRM systems also calculate the lifetime value of customers which can then allow Marketers to categorize customers and pursue the high value segment. Through CRM systems, marketers can better understand and shape the customer experience in all phases of the relationship—from leads to prospect to customer to (worst case) former customer. Marketing and CRM work so well together because they basically have the same mission: to identify, acquire, foster, and retain loyal, profitable customers.
Through CRM, the company will know more about what the customer might be interested in and will send specific offers only to those with the highest possible interest and readiness to buy. CRM has had mixed successes. Less than 30 percent of CRM adopting companies report achieving the expected return from their CRM investments. The problem all too often is not the program but the company (29% failure from organizational change, 22% from company politics/inertia; lack of CRM understanding 20%)
Perhaps not CRM but CMR (Customer Management of Relationships).
Saturday, September 22, 2007
RealityofBranding
The Reality of Branding
Reality shows are all the rage. Rumor has it next year the Survivor franchise, having run out of exotic places to televise from is going to run an experimental Survivor: South Central LA hour long show: Contestants will be parachuted into that part of LA and any that survive until the end of the show wins a chance to return the following week to try again. Of course, show business execs are complaining that an hour might be too long and difficult to fill with the rate of expected attrition. Nonetheless . . . one has to view these reality shows with a cynical outlook; after all, how “alone’ can you be with twenty camera crews and fifty overhead cameras recording your every move and thought?
Of all the reality shows, the Apprentice comes closest to real world value. It teaches concepts such as leadership, teamwork, competition and customer centric that this here prophet has always thought worthy of dissemination. However, one can also watch the show and pick up such non-desirable traits as finger-pointing, sabotage, autocratic behavior, bullying, and pure stupidity. But it is fun to watch and probably more of a learning experience than all the other Survivor series combined (ad infinitum).
Nevertheless, I must comment on some aspects of the series. The format typically has two teams competing against each other on a particular assignment. They have 24 hours (or less sometimes) to complete a business assignment. Of course it is “staged” but often fun to watch. Here’s my beef: in less than 24 hours the team are challenged to create a new brand or branding position for a particular product and present their findings to corporate head honchos.
Wrong. Wrong. Wrong. This is teaching America that all it takes is 24 hours and a Power-point presentation and you have established a brand that you can sell by the millions.. This is an entirely wrong notion of how to brand and what brands are. Brands are not created overnight and come into the world fully formed and ready for consumer consumption. Brands are an emotional shortcut between the product/company and the customer and provide valuable information to customers regarding quality to customers. Brands identify, differentiates, minimizes risk to the customer, reduces search cost to the customer, and provide meaning to the customer. It is basically a promise: ”You continue to buy from me and I will continue to provide the same high quality product to you.”
1) Branding is a multi-year phenomenon. Some experts indicate it could take as many as 5-7 years to firmly establish a brand in the mindset of your customers. It takes time and multiple purchases to gain credibility and trust among customers. You cannot merely tell them once and it is a done deal.
2) Consistency in the message is a necessity. All forms of marketing media must contain the same branding message and position. Otherwise, your customers will be confused about what you stand for . . . if anything.
3) Brand message and position must be reasonable and rationale with the product or service you are marketing and the company mission/reality. A Tiffany store in Walmart may not do well. In other words, you can’t make pearls from swine. You can always get them to buy once but it takes a good product to get repeat purchases.
4) Provide a simple, realistic, relevant message. All the branding advertising in the world is not going to make up for a poor product. The product must be a quality, usable, understandable and relevant.
So next time you watch The Apprentice, enjoy the show, watch the business banter but understand reality is much more subtle (and less forgiving than The Donald).
Reality shows are all the rage. Rumor has it next year the Survivor franchise, having run out of exotic places to televise from is going to run an experimental Survivor: South Central LA hour long show: Contestants will be parachuted into that part of LA and any that survive until the end of the show wins a chance to return the following week to try again. Of course, show business execs are complaining that an hour might be too long and difficult to fill with the rate of expected attrition. Nonetheless . . . one has to view these reality shows with a cynical outlook; after all, how “alone’ can you be with twenty camera crews and fifty overhead cameras recording your every move and thought?
Of all the reality shows, the Apprentice comes closest to real world value. It teaches concepts such as leadership, teamwork, competition and customer centric that this here prophet has always thought worthy of dissemination. However, one can also watch the show and pick up such non-desirable traits as finger-pointing, sabotage, autocratic behavior, bullying, and pure stupidity. But it is fun to watch and probably more of a learning experience than all the other Survivor series combined (ad infinitum).
Nevertheless, I must comment on some aspects of the series. The format typically has two teams competing against each other on a particular assignment. They have 24 hours (or less sometimes) to complete a business assignment. Of course it is “staged” but often fun to watch. Here’s my beef: in less than 24 hours the team are challenged to create a new brand or branding position for a particular product and present their findings to corporate head honchos.
Wrong. Wrong. Wrong. This is teaching America that all it takes is 24 hours and a Power-point presentation and you have established a brand that you can sell by the millions.. This is an entirely wrong notion of how to brand and what brands are. Brands are not created overnight and come into the world fully formed and ready for consumer consumption. Brands are an emotional shortcut between the product/company and the customer and provide valuable information to customers regarding quality to customers. Brands identify, differentiates, minimizes risk to the customer, reduces search cost to the customer, and provide meaning to the customer. It is basically a promise: ”You continue to buy from me and I will continue to provide the same high quality product to you.”
1) Branding is a multi-year phenomenon. Some experts indicate it could take as many as 5-7 years to firmly establish a brand in the mindset of your customers. It takes time and multiple purchases to gain credibility and trust among customers. You cannot merely tell them once and it is a done deal.
2) Consistency in the message is a necessity. All forms of marketing media must contain the same branding message and position. Otherwise, your customers will be confused about what you stand for . . . if anything.
3) Brand message and position must be reasonable and rationale with the product or service you are marketing and the company mission/reality. A Tiffany store in Walmart may not do well. In other words, you can’t make pearls from swine. You can always get them to buy once but it takes a good product to get repeat purchases.
4) Provide a simple, realistic, relevant message. All the branding advertising in the world is not going to make up for a poor product. The product must be a quality, usable, understandable and relevant.
So next time you watch The Apprentice, enjoy the show, watch the business banter but understand reality is much more subtle (and less forgiving than The Donald).
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