MARKET LEADER Q2 11 COVER AMI VERSION.Indd
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QUARTER 2 MARCH 2011 NEW THINKING, DIFFERENT PERSPECTIVES The new world order of global brands SIMON SILVESTER PRODUCTS DIE BUT BRANDS CAN QUARTER 2 QUARTER MARCH 2011 LIVE FOREVER Laurie Young WHY VIDEO ON DEMAND WON’T HAPPEN Patrick Barwise THE VALUE OF CREATIVITY Peter Field MARKET LEADER q2 11 COVER draft 1.indd 1 2/24/2011 15:18:56 ML Lewis moberly AD .indd 1 2/24/2011 15:05:24 Editorial A new world order as China displaces Japan for second place in the world economy and India, Brazil and the next 11 power ahead – not to mention the recent upheavals in the Arab world – a new world order is truly asserting itself. Simon Silvester in this issue’s cover story starts from the observation that most of the world’s global brands are made by Western companies for Western consumers and adapted to people in poorer countries as the world has become increasingly ‘globalised’. From this perhaps obvious but rarely commented on observation, he goes on to discuss the significance of this state of affairs in the form of some 20 insights about how aspiring global branders should think about the millions of new consumers in these many emerging countries. Each country will have its particular character, of course, but there are a number of common features that markets share. Take just two: they are startlingly young in contrast with the ageing West, which has many implications not least of which is that the familiar retention strategies of mature markets are worthless: think trial. And as the ‘Letter from Brazil’ emphasises, these emerging countries are full of optimism compared to our gloomy and nervously cautious outlook. Eighteen more observations that bubble with intriguing possibilities make fascinating reading. Marketers are a generally optimistic bunch, generally young, and generally fascinated with the next new thing. But the next new idea often has feet of clay. Short memories, limited experience and a ‘glass half full’ outlook can mislead. Take two big subjects: media and brands. Patrick Barwise looks at the much-hyped claim that ‘video on demand’ is just around the corner and he takes a sharp forensic swipe at the argument, producing convincing evidence that the forecast is deluded. Fru Hazlitt in ‘Speaker’s Corner’ makes a similar point in relation to the also much-hyped ‘long tail’. Elsewhere in the issue in an equally combative mood, Laurie Young takes a swing at the conventional wisdom that is taken as given at conferences and in marketing courses: that newness is all, that com- moditisation is a constant threat from demanding consumers and that creating long-lasting value propositions is increasingly difficult. Nonsense, he says, and mounts a spirited defence of nourishing brands over a long period of time, providing evidence from his list of brand birthdays going back to the mid-19th century (his full list goes back several centuries) – that are still alive and kicking today. Judie Lannon, Editor [email protected] Market leader Quarter 2, 2011 3 3 editorial.indd 3 2/24/2011 10:39:54 QUARTER 2, 2011 PUBLISHED IN ASSOCIATION WITH THE MARKETING SOCIETY BY WARC editoR Judie Lannon editoRial BoaRd Roger Banks, Hugh Burkitt, Matthew Coombs, Martin Deboo, Paul Feldwick, Anthony Freeling, Roger James, Rufus Olins, Hamish Pringle, Laurie Young editoRial adVisoRY BoaRd Professor Paddy Barwise LONDON BUSINESS SCHOOL Stephen A. Carter CBE ALCATEL-LUCENT INC Simon Clift CONSULTANT Hugh Davidson CRANFIELD SCHOOL OF MANAGEMENT Martin Glenn BIRDS EYE IGLO Sir Paul Judge THE MARKETING COUNCIL Sir Chris Powell NATIONAL ENDOWMENT FOR SCIENCE, TECHNOLOGY AND THE ARTS Richard Scase UNIVERSITY OF KENT AT CANTERBURY Mark Sherrington QUIRK EMARKETING AGENCY Dianne Thompson CAMELOT GROUP PRoduction editoR Helen Devonshire PuBlisHeR Matthew Coombs adVeRtising Diana Pounsford editoRial & adVeRtising office Warc, 85 Newman Street, London WIT 3EX, UK Tel: +44(0)20 7467 8137 Fax: +44(0)20 7467 8101 Email: [email protected] 34 suBscRiPtions Subscriptions Dept, Marston Book Services Ltd, Unit 160, Milton Park, Abingdon, Oxfordshire OX14 4SD, UK Tel: +44(0)1235 465574 Fax: +44(0)1235 465556 Email: [email protected] Web: www.warc.com/marketleader Annual subscription rates: £245, 405, $370 Market Leader is published quarterly by Warc in association with The Marketing Society. ISSN 1463-0877 The views expressed in contributions to Market Leader are not necessarily those held by the publishers or The Marketing Society. Printed by Pensord Press Copyright © Warc and The Marketing Society 2011. All rights reserved. Reproduction in whole or in part without written permission is strictly prohibited. 4 Market leader Quarter 2, 2011 4 contents.indd 2 2/24/2011 10:39:23 contents In thIs Issue ideas & issues featuR es 10 technology CoveR StoRy 18 Apple and Google go head-to-head but is there room for two in their arena? 18 new world order of global brands By Kieran Levis Most global brands were invented for Western consumers, but consumers in emerging 11 india markets often prefer something different The power of brand building continues to By Simon Silvester grow for the emerging middle classes 24 Products die but brands can By Hamsini Shivkumar live forever 13 Responses to possible scenarios An obsession with newness seems to obscure Tw o reactions to the recent article by the valuable payoff of long-standing brands C John Brady about potential changes that By Laurie young could hit the media landscape By Marco Rimini and Ashley Highfield 30 Waiting for ‘Vodot’ Many digital experts predict an imminent 14 How to make choice easier transition to ‘video on demand’ (VOD) but Research has shown that less really is more will it ever really arrive? when helping consumers to be decisive By Patrick Barwise By Judie Lannon 34 Marketers need more insight Insight teams are now commonplace in R egulaRs companies, but the relationship with marketing isn’t always clear enough 08 Brainwaves By Melanie Howard Our selection of light reading from around the world of marketing 38 Why doesn’t the best 15 Viewpoint always win? Big brands enjoy a disproportionate advantage Many innovations never see the light of day over smaller brands. And, not only do they because firms do not accept an element of risk have more customers, but their customers use By David Aaker the brand more frequently. Network theory can help explain how this advantage works 16 chopping Block By Kyle Findlay Emotional responses do work – but how can that be explained logically? 42 the value of creativity By Jeremy Bullmore An ingenious analysis of cases from the IPA awards and Gunn Report removes any doubt 53 trendwatch about the effectiveness of creativity ‘Soft power’ gives much more strength than By Peter Field coercion to methods of persuasion By Melanie Howard 46 it’s time to boldly lead As social media gain influence over brands’ 54 Best in Brief success or failure, ‘bold’ companies are Book reviews by Judie Lannon, Paul Feldwick addressing the role of marketing leadership and Kim Tasso plus an overview by By Shaun Smith and Andy Milligan Anthony Freeling 50 uniqlo thrives on digital 56 letter from Brazil marketing A new class of consumers is enjoying the The Japanese clothes retailer has become an dance with big brands apparel empire by making the most of an By Silvina Moronta original online presence and appealing to a multicultural set of consumers 57 speaker’s corner By tessa thorniley The digital age is having an impact on TV provision and transmission By Fru Hazlitt 58 the last Word What do good comedians, marketers and behavioural economics have in common? 46 By Rory Sutherland Market leader Quarter 2, 2011 5 4 contents.indd 3 2/24/2011 10:39:29 in this issue contributors Market leaders david aaKer is vice- of TNS’s Thought Leadership organisations on strategies world to design, develop chairman of Prophet. He team, his goal is to bring the for brand building, and deliver dramatic is the creator of the Aaker hard sciences to bear on the customer experience and customer experiences. Model™, and has published question of why people do internal culture as well more than 100 articles and what they do. as running seminars and rory sutherland is 15 books on brands and conferences on brand executive creative director and strategy. His latest book Fru hazlitt is managing alignment and employee vice-chairman of OgilvyOne is Brand relevance: making director of commercial, engagement worldwide. London and Ogilvy Group competitors irrelevant, online and interactive at UK. He joined Ogilvy as a published by Jossey-Bass, ITV. She is responsible silvina Moronta has graduate trainee in 1988. January 2011. for broadcast revenues, 14 years of local, regional After a spell as an account multiplatform development and international brand handler he became a PatricK Barwise is emeritus and is leading the Total strategy experience with copywriter in 1990, winning professor of management Value and Pay strategy leading brands. She has a few awards. He is former and marketing at London processes across the ITV specialised in developing president of the IPA and Business School and chairman group. Prior to that Hazlitt brand visions and developing writes for the Spectator. of Which?. His latest was chief executive of bold innovation for regional book, Beyond the Familiar: GCap Media plc. and global brands for LatAm, tessa thorniley is a Long-Term Growth through Europe, US, and Asia. business and travel journalist Customer Focus and Innovation Melanie howard is chair based in Shanghai, China. (co-authored with Seán of the Future Foundation. haMsini shivKuMar is She writes for newspapers Meehan, IMD), has just been She has been successfully founding partner of including the Daily Mail, published by Jossey-Bass.