Posts Tagged 'consumer demand'



What is a Chaotics?

One of the wonderful things about Philip Kotler is that he never gets stuck in the past.  His openness to new ideas and new ways of thinking about marketing are remarkable.  Most of us learn one way in our 20s and stick to it for the rest of our lives.  Not Phil.  His curiosity about the world is undiminished.

Evidence of this is in his new book — co-written with John Caslione.  I love the title of this book.  “Chaotics”

 

Cover of Kotler/Caslione's new book

Cover of Kotler/Caslione's new book

The book is being published in the next couple of weeks.  Very timely, given the current flat-tire economy.  It’s a book that everyone senior manager should read through.  

It doesn’t have the answers to all of the problems companies are facing.  Instead it gives a thoughtful framework for getting to the answers that are right for your company.

Are all insights really insightful, part 2

Some further thoughts on why companies often miss the best insights:

Our friend Erich Joachimsthaler has thought a lot about this issue.  One of his observations from his book “Hidden in Plain Sight“.

“The problem is that growth naturally brings with it the need for changed organization, hierarchy, structure, processes, systems, and the policies that also can inch the company further from the very people the company has been serving.  A kind of smokescreen develops that makes it very difficult to see the biggest opportunities for innovation and growth even though they are right there, hidden in plain sight.”

I like to think of it as the Galapagos Syndrome.  Why was it that Darwin was able to see the differences in the tortoises that were there for anyone to see?

In the words of Paul Simon, “Still a man sees what he wants to see. And disregards the rest.”

Marketing our way out of the mess

From 1998 until 2006 I had the great good fortune and opportunity to travel to Venezuela quite regularly on business.  My client there was Cantv, the country’s largest telecommunications company.  

During my visits I had the opportunity to observe how the country was functioning during the on-going economic and political turmoil.

Conditions for many people were deplorable. There were torrential rains followed by mud slides that killed uncounted thousands of people.  The crime rates were rising.  In the streets of Caracas there were marching mobs of Chavez supporters.

And yet in the middle of all this crisis there were billboards for mobile phones, there were advertisements on TV for chocolate bars, cars, laundry detergent. Newspapers were filled with ads.  Radio stations had ads. Cantv itself was undergoing the country’s largest rebranding program to support their business strategy.   

Why did companies continue to market amid all this human suffering and economic and political chaos?  Why were they spending the money to create or strengthen their brands?  

Today, in America, in the face of our economic chaos, companies are pulling back hard on their marketing.  Marketing and training are two of the first areas to be cut.  And the cutting just keeps continuing.

So what is it that we know that the Venezuelans don’t?  Or, rather, what do they know that we don’t know?

Even in difficult times the companies knew that they needed to continue to market if they wanted to keep their business moving.  They intuitively knew that when the marketing stops the demand for their offerings stops.

I am confident that most companies in America will recognize the same truth that Venezuelan companies have seen.  We need to market our way out of this economic mess.

Where is the urgency?

In Richard Clarke’s book about the months leading up to 9/11 he quotes the CIA director George Tenet being so emphatic about the risks that his “hair is on fire.”  The administration remained complacent until too late.

Is marketing is going through the same sit on the sidelines and wait approach to the current economic emergency?  Where is the urgency?  

This economy is unprecedented.  As Paul Krugman says, “It’s not your father’s recession.” 

My hair is on fire.  Metaphorically, since I don’t have enough hair to have a real good bonfire. 

Now is the time for companies to prioritize and fund the initiatives that will have the greatest benefit for the company.  It must be both strategic and tactical.  It has been my experience that in times like this marketers will reach for a list of tactics.  Some may be brilliant.  Some may be duds.  But without a strategic framework it’s hard to separate them out before hand.  And that just wastes money as the time companies can least afford it.

We have developed a streamlined process to help companies find cost efficiencies that will also increase the effectiveness and flexibility of their brand marketing.  

What do companies have to lose by examining new scenarios for marketing?  The playing field has shifted.  The risk of doing nothing out weight the risks of experimenting.

Demand creation

Back in the 1960s, as the anti-war protest movement gained momentum,  there was a saying, “What if they gave a war and nobody showed up?”

I think today’s version of that saying is, “What if they gave a sale and nobody showed up?”

That pretty much describes the shopping season lately.  I cannot walk down Broadway without coming across one store after another announcing sale upon sale.  

Consumer demand is falling for just about everything.  And where the demand isn’t falling, consumers are doing more trading down to lower cost options. 

At the same time, many corporations are cutting their marketing spend.  

There is nothing wrong with making some cuts in marketing.  Many companies can probably cut their marketing spend by 10 to 20 % and increase their overall effectiveness at the same time by making some very strategic moves (more about that in another post).

However, many companies seem to be engaged in a paradox of counter-productive cutting.  They are seeing falling revenues so they cut everything possible.  Marketing is an easy target because the savings go right to the bottom line.  It’s hard to justify running advertising or launching a new brand when people in other departments are losing their jobs.  

The paradox is that brand marketing is essential for a company to create demand.  At a minimum it will slow the decline of demand.

Some companies use these conditions as a catalyst for deeper changes in their marketing.  

For instance, all the research shows that there is a growing need for better cooperation and coordination between marketing, product development, customer service, CSR, online development and so on.  At the same time, our study with Forrester shows that 78% of marketers see internal silos as the biggest barrier to integrating marketing with other parts of the customer experience.  Isn’t this the perfect opportunity to remove those silos and make everyone more efficient and effective?

In some categories as single dominant company can raise demand for that category.  But that is an unusual situation.  

But imagine if every company did all they could to raise consumer demand.  Not by spending more but by spending more effectively.  Imagine how that would contribute the economic recovery.  Alone we can influence our own destiny.  Together we can shape society.

Where did all the consumer research go?

Where have all the insights gone?

The numbers and the anecdotes all point to 2009 as the most difficult year in marketing in 80 years. It seems as if marketing is under siege at company after company.   Budgets are being cut, marketing staff is being cut.  It is an easy target because the cuts can go right to the bottom line.  Market research is one of the areas under the scalpel.  Or chainsaw.  Choose your own favorite metaphor.

The risks of not doing customer research appear to be small.  We can all pretty much guess that price has become hugely important, that luxury is going below the radar, that “thrift” has become vogue again and not just for finding really cool stuff in thrift shops.

And maybe some cutbacks in market research aren’t such a bad thing.

I had a boss, Valentine Appel, who used to say that all market research was a waste of money.  Either it tells you what you already knew, so why do it?  Or else the research tells you something different from what you know and it can’t possibly be true, so you throw out the results and retest until you get the right answer.  Either way, market research is a waste of money.

This from a man who is in the Market Research Hall of Fame!  And, yes, there is such a thing.

Maybe it is useful to think of market research as an insurance policy.  It is a small price to pay to know that your business strategy is being supported by your branding strategy.  It is a small price to pay when you need every piece of communications to be more effective than ever before.

What is your opinion?

The economy, consumer demand and branding

There is something curious happening in the economy today.  Something that we have not seen in 70 years.  Demand is falling.  Consumer desire to purchase things is falling.  Business desire to purchase things is falling.  Everywhere you look people would rather put their money away than spend it.

If nobody is buying, then the economy will continue to contract.

The economist and New York Times columnist Paul Krugman recently wrote, “Once again, the question of how to create enough demand to make use of the economy’s capacity has become crucial.”

So what does this have to do with branding?  Usually we think of branding as driving preference for one brand vs. another.  Underlying this are some assumptions, unspoken, that consumer desires are limited only by their income.  That is why brand positioning is fundamentally about comparing one brand to another.  This concept is labeled “differentiation” in the language of brand positioning.

In other words, we have taken it for granted that consumers want to buy things.    Even in the last couple of recessions consumer demand has held up — people wanted to buy things.  

Today consumers are sitting on their wallets.  Businesses are sitting on their wallets.  Demand is dropping.

In this economy, branding needs to work harder, to serve a different purpose than simply “differentiation”.  Branding needs to create demand.  

Narrative Branding is a method that is concerned with the role of the brand in the life of the consumer.  A compelling narrative does more than change minds, it changes behavior.  It is more effective at generating demand than the standard brand positioning method.  

This is particularly important for companies in today’s economy.  Marketing dollars that create demand for your offerings are better spent than marketing dollars that “differentiate” you from competitors.  In other words, a company will be better served by using branding to create demand rather than to simply shift preference from one brand to another.

Of course no single company can solve the falling demand problems of the economy.  But if more companies adopt Narrative Branding or other narrative methods for creating and managing brands, there can be a substantial impact on consumer demand.  At a minimum it will create demand for each company’s offerings.  

What are your thoughts on how branding can create consumer demand?

Visual memory and branding

At dinner the other week a writer friend recommended a book to me.  She said, “Have you ever read Linda Seger’s Making Good Scripts Great?”

I said that I hadn’t.  

Later that night, when I was back home, I looked up the title on Amazon.  I immediately recognized the book’s cover.  In fact, I realized that not only did I recognize the book but that I already have it, read it and had a very positive opinion about it.  

I have a very strong visual memory of the book but a poor verbal memory of the author and title.

That got me to wondering about the methods we use to assess the strengths of brands.  One of the most common measures is Awareness.  In other words, can you remember the name of the brand?  In standard marketing research the Awareness questions are verbal.  It is asked first as an unaided awareness — “Tell me all of the brands of books on screen writing that come to mind.”  Then aided awareness, “Here is a list of brands of books on screen writing.  Please check all that you recognize.”

In that kind of research I probably would not have recalled Linda Seger’s fine book either unaided or aided.  Yet, if you had shown me the cover I would have instantly recognized it.  So is that a flaw of my memory, that I can remember what I have seen in a different way than I remember what I’ve heard?  Am I just a poor candidate for market research?

Which brings me to the title of this post.  

Many of the standard approaches to market research were developed in the 1960s and 1970s.  The technology of the time allowed for conducting research either in person or on the phone.  In person surveys were very labor intensive, time consuming and expensive.  Phone research had the great advantages of speed and lower costs.  These influenced the types of questions asked.  Jump ahead a few decades and we find ourselves in the internet age where the surveys are now conducted online.   This allows for the same phone questions to be asked online.  

The typical brand tracking study now asks the standard unaided and aided awareness questions online.

This gives rise to an interesting phenomena.  The standard research questions were developed around the  limitations of an old technology.  The new technology should allow for a rethinking of how the questions are asked.  It is now possible to visually  show the brand in context in the awareness questions.  And, in fact, some companies are moving in that direction.

In general, market research is using new technology to do old things.  Instead it should allow for creating more robust techniques for uncovering what is in our minds.  

As we learn more about the way memory works and have new technologies for market research, it provides a wonderful opportunity to develop better methods for assessing brands.  

As the late Peter Kim was fond of saying, “Question everything.  Assume nothing.”

What are CMO priorities for 2009?

We wanted to know how CMOs would arrange their priorities for 2009.  So we analyzed some new proprietary data from a new survey we conducted among CMOs and other senior marketers about their priorities for 2009.  The study was done in partnership with Jupiter Research (which is Forrester as of January 1st).

Two themes came through clearly — the need for greater accountability and the challenges of managing brands across all of the new forms of media.  

Here are the top 5 priorities of marketing decision makers for 2008

#1  Achieving measurable ROI on my marketing efforts

#2 Developing marketing programs that integrate online and traditional media

#3 Translating the brand experience across different touchpoints

#4 Cutting marketing budgets without cutting performance

#5 Optimizing our portfolio of brands

The Jupiter Research data is available here.  jupiter-cmo-priorities-for-2009

You can read more about the study by downloading it from our website, http://www.versegroup.com

Consumer new year’s resolutions

A new Marist poll reports that 12% of consumers who are making resolutions say that “spending less money” their New Year’s resolution.  That is not good news for the economy since consumer spending makes up about 70% of GDP.  

If consumer demand is falling, that will make the recovery more difficult.  Generating consumer demand therefore will play an important role in the economic recovery.  And one of the critical factors is brand marketing, since that helps to create demand.  

There is no national brand marketing department charged with increasing demand for consumer products.  That job falls to individual corporations. 

So we can see how important brand marketing is for both individual companies and for the economy as a whole.  

At the same time we are seeing that corporations are cutting their spending on marketing.  Some of the cuts are in media spending.  And some of the cuts are in the marketing departments themselves.

That creates an interesting conundrum.   Demand is falling.  At the same time, marketing, which stimulates demand, is being cut.  

One solution to this conundrum is to find more effective and efficient methods of brand marketing.   If we continue to do brand marketing as usual, with the standard techniques, we can expect the same kind of results that got us into this economic mess.


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