MARKET LEADER Q2 11 COVER AMI VERSION.Indd

2/24/2011 15:18:56 MARCH MARCH 2011 Peter Field Peter Laurie Young LIVE FOREVER PRODUCTS DIE PRODUCTS Patrick Barwise Patrick WON’T HAPPEN WON’T BUT BRANDS CAN CAN BUT BRANDS WHY VIDEO ON DEMAND THE VALUE OF CREATIVITY THE VALUE

SIMON SILVESTER global brands order of order The new world new world The QUARTER 2 QUARTER NEW THINKING, DIFFERENT PERSPECTIVES

QUARTER 2 MARCH 2011 MARKET LEADER q2 11 COVER draft 1.indd 1 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 commoditisation 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

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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. forecasting trends for two Leapfrog Strategy the Guardian, The Independent, decades and has worked Consulting, she has more and magazines including JereMy BullMore is a with consumer, public than 20 years of experience Wallpaper and Campaign Asia. former chairman of JWT sector and third-sector observing Indian consumers, She also writes for Beijing- London and the Advertising organisations of all sizes. working with brands and based website Danwei and Association and is currently She holds several non- communication. Her previous is co-writing a book about a member of the WPP executive and advisory roles. roles include researcher, contemporary China for advisory board. strategist and head of Earnshaw Books (Shanghai). Kieran levis is the author planning at JWT. Peter Field has been a of Winners and Losers, laurie young is a marketing consultant for the Creators and Casualties of siMon silvester is head specialist in the marketing past 14 years. Prior to that the Age of the Internet. He of planning, Young and and selling of services. He he ran the account planning is also principal of Cortona Rubicam EMEA. He has local divides his time between departments at Bates and Consulting, which advises and international marketing consultancy work (including Grey. He has worked in on strategy in markets for experience in 45 countries in teaching on the Executive most categories and on new media and technology. Asia, Europe, Africa and the Education Programme of more than 100 brands. He He has helped HP, Intel, Americas, and has worked Wharton Business School, set up the IPA Databank in the Open University and the with major local companies USA), public speaking and 1996 and co-authored its BBC to evaluate new and in Brazil, Russia, India writing. Previously he was first progeny, Marketing in the volatile markets. and China on their growth the global marketing partner Era of Accountability, in 2007. strategies. of PricewaterhouseCoopers’ He is an honorary Fellow of andy Milligan is a $2bn corporate finance the IPA. leading international shaun sMith is founder division. consultant on brand and and partner in the customer Kyle Findlay is a senior R&D business culture. He experience consultancy To submit an article, email executive at the TNS Global has worked for almost smith+co, which works with the editor at market_leader@ Brand Equity Centre. As part 20 years advising major leading brands around the warc.com

6 Market leader Quarter 2, 2011

6 contributors.indd 6 2/23/2011 16:14:24 ML MS AD .indd 1 2/24/2011 15:07:12 brainwaves Different thinking

BrainwavesOur selection of light reading from around the world of marketing Why are there no ads on Big Ben? by winstOn fletcher

why isn’t Big Ben’s clock tower covered with ads? It’s one of the most photographed and frequently televised edifices in the world; it’s seen each year by zillions around the globe. Ads on the home of this humongous timepiece would command massive rates, raising lots of lovely lucre for impecunious UK Ltd. And surely some cool lipstick ads would pretty up the old face a bit. And it’s not only Big Ben. There are no ads on Buckingham Palace, the Tower of London, or St Paul’s. Nor is this just a British phenomenon. You’ll see no ads on the Acropolis, the Taj Mahal, or along Venice’s Grand Canal. Even in ad-fervent USA Well, the boring answer to So why are right for ads, some are not. In you’ll find no posters on the the question about Big Ben and the past, advertisers have tried White House or the Statue of the rest is that it is the public ads too vulgar out countless possible media Liberty. Why ever not? The who do not want ads on them. which failed, including books, Statue of Liberty would make Imagine the public outcry if to sully the records, telephones and even a fab poster site – possibly somebody tried to slap ads public loos. The public didn’t even better than Big Ben. on the Tower of London: world’s finest respond to any of them. So why are ads too vulgar off with his head! Research So we may yet find that to sully the world’s finest shows people generally like buildings and the public does not want ads buildings and monuments? ads – but this does not mean cluttering up all their personal Why are ads banned in they want to see them all the monuments? digital communications, Trafalgar Square but nearby time and everywhere. They such as mobiles and social Piccadilly Circus is plastered want, and expect, advertising networks. Maybe this explains with, and famous for, them? to be controlled and kept in its why many of them have Devotees of new media may rightful places. been surprisingly sluggish find these questions very olde This is not a new in building up ad revenue. worlde. With new marketing phenomenon. Billposting Hard though this may be for communications bubbling up has been controlled since advertising and marketing every nanosecond, who needs Victorian times, and even guys to swallow – ads are not to stick ads on Big Ben? Who advertising on television – that welcome everywhere. n wants to associate their brands most commercial of media – with aged buildings – even has been controlled in Britain Winston Fletcher writes if they could – when there (and in most countries) since extensively on advertising are so many trendy digital its inception more than half a and marketing. opportunities out there? century ago. Some places are [email protected]

8 Market Leader Quarter 2, 2011

8 brainwaves.indd 2 2/23/2011 16:09:12 and comms give their clients advice about their brands’ Direct mail rules ok presentation but don’t feel that it applies to themselves. in the internet era, is direct The research suggested that Don’t overestimate ... mail still relevant? Research greater emotional processing is That everyone knows what suggests yes. facilitated by physical material they are supposed to be In collaboration with the than by virtual, which should doing, supposed to be saying Centre for Experimental help to develop more positive or even what props to bring Consumer Psychology brand associations. to a meeting. at Bangor University in The real experience is also the experience that Wales, Millward Brown internalised, which means taught me most ... conducted an experiment that the materials have a more Being CEO in a market that used functional Magnetic personal effect. n was going off a cliff. They do Resonance Imaging (fMRI) Source: Millward Brown say that you learn most from to understand how the adversity and it’s mainly true. brain reacts to physical and Making people redundant virtual stimuli. The fMRI This much whom you have recruited, highlights the brain regions trained and spent time with is most involved in processing I’ve learned seriously tough. You have to written material. This showed rita cliftOn make hard decisions, and act more emotional involvement earlier than you’d ideally like, when participants handled for the sake of the company. material printed on cards than the best advice i the most fun i had ... when they viewed the same ever got … Being a planner at Saatchi & material online. ‘Be yourself because you’ll Saatchi in its ‘maddest and never be as good at trying to baddest’ period. be someone else.’ It didn’t suit the worst moment ... me trying to ape a ‘kick ass’ The worst research debrief style of management. Passion I’ve ever sat in was when I fakes making a mint and nurture came much more had briefed the research but the OrganisatiOn for Vuitton, brought a suit easily to me. hadn’t had a pre-meeting with Economic Co-operation and against Google, claiming the worst advice i the researcher. The first thing Development estimates that that Google was infringing ever got ... he told the client was that the between 2001 and 2007, fake its trademark and promoting A senior female executive told research had gone wrong and brands doubled in value to the sale of counterfeit me never to be seen at the so the answer wasn’t validated. about $250bn. By 2008, the products by selling brand- photocopier, making tea or Peak career experience ... market in the US alone was name search terms. In March doing your own typing if you What I’m doing now. I have a thought to be about $200bn 2010, the European court wanted to be taken seriously. portfolio of really interesting annually. In January 2008, case was decided in favour of Don’t underestimate ... roles. Life is full and fulfilling the New York Times reported Google, although the French The importance of looking – but who knows what’s next? that about 7% of the world’s Supreme Court didn’t agree. the part, sounding the part goods were estimated to be l In May, Versace won and behaving like it. It never Rita Clifton is chairman, counterfeit. a $20m suit filed against ceases to amaze me how Interbrand UK l In December 2009, fake more than 100 people and people who work in marketing www.interbrand.com bags and watches worth 70 retail shops in the US $1m were seized in New charged with selling fake York City. Versace goods. l LVMH, owner of Louis l Also in May, Christian Louboutin launched its What you really mean ‘Stop Fake Louboutin’ l ‘We’ve got to keep the sexist and capable only of website in an effort to expose inertia going.’ (Nothing’s talking in riddles.) counterfeiters of its shoes happening and I intend to and handbags. keep it that way.) l ‘You can’t ease the throttle l In June, the European back after six months – you Union gave brands the l ‘Process re-engineering need two years to get your legal means to pursue has just become Service head above the trench.’ e-tailers who are illegally Quality Improvement.’ (Driving fast in a trench is a selling a brand’s goods or (Any generic phrase to justify long-term commitment.) n misrepresenting a brand’s what’s not happening to me.) name. n Source: The Fifth Little Book Source: Barry Silverstein, l ‘This is the new little black of Business Bullshit – Kevin Brand Channel dress of marketing.’ (I am Duncan

Market Leader Quarter 2, 2011 9

8 brainwaves.indd 3 2/23/2011 16:09:13 ideas & issues over to you Ideas & issues

apple and Google are ahead of the field – but their type of competition is closer to Federer v nadal than achilles v Hector

Technology Apple v Google: they’re rivals in many ways but it’s not quite a death match From Kieran Levis

RobeRT lane Greene has compete on several fronts: they simply venerate him. a platform for other people’s written a sparkling account in operating systems, browsers, Google on the other hand videos. Apple and Google are Intelligent Life, Winter 2010, email, photos, app stores, is a ‘herky-jerky place’, competing only obliquely, and of the growing rivalry between cloud computing, even books where engineers experiment their cultures and values have Google and Apple. For years and music, although not endlessly, happy to put out far more in common than Steve Jobs was an inspiration exactly ferociously. beta products that often fail. what separates them. to Larry Page and Sergey Brin, Greene is particularly According to Eric Schmidt, They are the shining and Eric Schmidt sat amicably good on what he calls the ‘the Apple view is coherently exceptions to the general rule on Apple’s board until 2009. clash of cultures. The key to closed. Ours is the inverse that, as companies become As Greene puts it: ‘The understanding Steve Jobs, he model: the web, openness, all large incumbents, they lose companies could have been a suggests, is that calligraphy the choices, all the voices.’ the ability to produce really match made in heaven: Apple’s was the most important course Yes, but they’re doing very radical innovations. gorgeous devices running he took in his brief time at different things. You don’t Google’s miraculous services.’ college. Design is Apple’s produce beautiful objects HealtHy competition But when Google launched supreme value and Jobs has like the iPad and the iPhone Apple and Google are Android and challenged always been a perfectionist. through open source, nor is exceptional – even by the the iPhone in the glittering His colleagues used to moan Google simply a mouthpiece standards of start-ups they are smartphone market, they about his reality distortion for the wisdom of crowds, any way ahead of the field, and became serious rivals and now field. Now that he’s a god, more than YouTube is merely able to attract and inspire the

10 Market leader Quarter 2, 2011

10 ideas & issues.indd 2 2/23/2011 16:06:06 ideas & issues over to you

most talented people. They Google has seriously sought gave it the world’s most are still driven by the visions to displace is that master of efficient supply chain. He that inspired them from the Whoever wins customer lock-in, Microsoft. has been all but a partner to start, much more than by how Apple has learned to coexist Jobs since he joined from to keep Wall Street happy. won’t drag the with the old enemy. For Compaq, and if Jobs should They also greatly respect mangled remains years Microsoft was its most not come back he would each other. Schmidt recently important software developer probably make as good a called Jobs ‘the best CEO in of the other and even now Office for successor as Apple could find. the world by any measure’. Mac remains crucial for its The changes at Google This is more a contrast of through the dirt credibility as an alternative are timely. Having three cultures than a clash and it’s a to the PC. Surpassing people take all the important long way from being a ‘death Microsoft’s market cap must decisions worked well during match’; it’s closer to Federer v way out of Apple’s system . . . have brought enormous its extraordinary growth Nadal than Achilles v Hector. Apple’s offerings hardly ever satisfaction to Steve Jobs, but period, but has been clogging Whoever wins won’t be let you down, but when they now he has more important things up now that it is a dragging the mangled remains do, you are stuffed, left with things on his mind. large company with many of the other through the dirt. sunk costs and a reputation The recent announcements aspirations. Blaming Schmidt Android is on the way to as an Appleist that you would that Jobs is taking sick leave for supposed failures such becoming the most popular publicly have to disavow.’ again and that Google is as not beating Facebook, as operating system, but iPhone But this is not lock-in in changing its leadership some have done, is ridiculous. users are likely to retain a the way that most businesses structure raises intriguing If anything, Google should be significant market share, like are still stuck with Windows contrasts. One reason Jobs criticised for trying to do too RIM’s BlackBerry. The crucial and Office, because the has been such a successful many things at once. What difference from the PC world cost of switching would be CEO since his return in is remarkable is how many of the late 1980s is that Apple prohibitively high. Appleists 1997 is that he has had in have succeeded. will not be cut off from the have chosen to be different and Tim Cook a COO who The last thing either mainstream as it was when put up with inconveniences complements his mercurial of these two needs is a Wintel became dominant. like iPods dying young, as they brilliance perfectly. conventional CEO who There could be only one used to do, because they simply Cook may have played as would try to turn them into dominant winner in the adore them. Some aspects of big a part in the company’s machines for maximising smartphone market if one the cult may be ridiculous, but transformation as its iconic shareholder value. Long may player enjoyed enormous this is true love. Brands don’t leader. Until 2002 when the they continue to swim against network effects or switching get any better than that. iPod took off, Apple was the corporate flow. n costs. That isn’t yet the case barely profitable and annual and John Gapper in the UniqUe companies sales were stuck around $6bn. Kieran Levis is the author Financial Times has made a Neither of these two have It has just announced a of Winners and Losers, strong case for suspecting that serious rivals in their core net profit of that amount Creators and Casualties it may never happen. domains. Despite disrupting for the last quarter alone. of the Age of the Internet Greene makes much of nearly every part of the media Cook revolutionised Apple’s (Atlantic Books, 2009). the fact that ‘there is no easy industry, the only adversary production processes and [email protected]

india Building brand power in emerging middle classes From Hamsini sHivKumar

The indian middle classes, nature of Indian society, individual’s chances of moving and enterprise of a youthful numbering more than which is a highly stratified up the social ladder in his or and hard-working population 400 million people, are a large social hierarchy. her lifetime were very low. combined with a spirit of consumer force who are now For centuries, social However, the economic optimism and possibility solidly engaged in gaining mobility was frozen. People liberalisation process of the pervade the atmosphere upward mobility. This is true were born into a caste past two decades, the growth despite the daily struggles perhaps of the middle classes which had its place in the of Indian industry and the of coping with a host of in many emerging countries, social order, and lived continuing GDP growth at problems, from rising prices especially in the BRIC and died there. Even after 8.9%, have opened up avenues to failing infrastructure. countries. However, there independence, the socialist for every middle-class Indian The path to upward are specific nuances to the economic model with low to aspire to progress forward mobility, expressed in approach to upward mobility GDP growth and a huge role and upward in their social material terms, means that in India that arise from the for the State ensured that an milieu. Today, the energy continued on p12 >

Market leader Quarter 2, 2011 11

10 ideas & issues.indd 3 2/23/2011 15:57:40 ideas & issues over to you

Brands play the same How Brands manaGe socio-cultural and psychological roles to transFer valUe in india as they do elsewhere nokia is the market leader and a power brand in the cellphone market in India. For the mass consumer, Nokia transfers all forms of value. Nokia phones can be sold or exchanged in the second-hand phone market for a better price than the competition brands. In this instance, the brand trust is not merely a reassurance of product quality but an active contributor to the Nokia buyer’s stock of capital. By continuously innovating and offering a slew of products as well as educating consumers, Nokia acts as a knowledge source about a product category that they are very interested in. However, Nokia is unable to offer badge and network value to the same degree as Apple and BlackBerry, especially to the upper-income buyers of smartphones. Raymond is an established Indian brand of men’s suiting fabric. It is the market leader in its product category and a power brand by all measures of brand equity. Raymond transfers four elements of value to its buyers, especially in the mass segment. For the principal suit-making and gifting occasion, ie weddings, the Raymond suit is a well-recognised status symbol. Hence the brand is able to charge a fiVe eleMenTs ThaT coMPRise a bRanded offeRing significant premium and also to offer products that span a significant Value element Product role brand role price differential. However, for the younger consumers, Raymond lacks and power distinctiveness compared with international men’s apparel brands and, Task value Quality/performance Trust and affinity mark for them, the brand transfers only the first three elements of value, Add-on value Offers and deals Trust and affinity mark Talk value Continuous innovation Knowledge source but not beyond. For these consumers, Raymond does not add much Badge value Stylish design Status and identity, to their stock of social and cultural capital, whereas for the small-town, symbolism and meaning mass consumer, Raymond does. n Network value Support the myth Icon, myth, legend and aura

Indian families are working to maximise the return middle class highlighted here hard to acquire all forms of they get on the money they The Indian’s require that brand strategists capital – financial, social and spend. Goddess Lakshmi is take a forensic approach to cultural capital. Consumption the goddess of wealth in the attitude towards decoding value and its linkages and exchange via trade Hindu pantheon; it is believed consumption is to the acquisition of financial, of products, services and that the goddess showers social and cultural capital. knowledge are the preferred blessings on those who respect marked by a The table above sets routes to acquire these her by not taking a cavalier out five elements of value forms of capital, as it is in all attitude to money. strong value that typically comprise any capitalist-consumer societies. branded offering, whether a Two characteristics of Brand BeneFits orientation product or a service, and the the Indian mindset give the As with aspiring middle role of the product versus the process of consumption and classes all over the world, brand in delivering value to capital acquisition a distinctly the emerging Indian middle the consumer. Indian flavour. First, Indians classes value brands. And The most powerful brands live and work in an extended they value brands for the are those that are able to network of family, friends same benefits that brands transfer more value elements and peers arranged in a provide in all consumer to the buyer for the price he vertical hierarchy of social societies: brands function as or she pays. By transferring relationships. This network trust marks; they are affinity value, brands add to the is the contemporary version markers of identification consumer’s stock of financial, of the traditional joint family. with like-minded people; social and cultural capital. If Much trading of products, they act as status symbols, the value transfer is real, not services and knowledge takes as identity symbols and as notional, then the consumer place within this network. carriers of personal reputation is able to trade further down Second, the Indian’s and influence. Brands play the line, leveraging the brand’s attitude towards consumption the same socio-cultural and power for personal profit. n is marked by a strong value psychological roles in India as orientation. From the elite they do elsewhere. Hamsini Shivkumar is a and super rich to the man However, the three singular brand consultant in the street, everyone tries characteristics of the Indian [email protected]

12 Market leader Quarter 2, 2011

10 ideas & issues.indd 4 2/23/2011 15:57:41 ideas & issues over to you

Media landscaPe TAG are the Adam and Eve of Groupmwood) is endlessly this world. This service stores recreated, refined and assets created elsewhere and repurposed in a million Business models and a releases them at the right place slightly different forms to at the right time to the right appear in a million slightly revised big bang theory customer according to the different digital spaces prompt from media scheduling selected by the geeks. From marco rimini software. It’s all online, all And finally the world of automated and all globalised. Googlewood where media in ResPonse to C John condemned to permanent It’s a world where traffic and inventory is shaped uniquely Brady’s feature ‘A new view of revolution and volatility? production, the people who around customers and brands the future of media landscape’ C John Brady gives us three really make creative agencies and then licensed to clients (Market Leader Q1, 2011, possible new worlds, new tick, are finally the pearly for global use. IMG meets p38), looking back, the ‘big planets: a data-led planning kings and queens. Facebook, meets Groupon: a bang’ of marketing services planet that is a cool, rational To complement this planet world of creative geeks, the can be dated to around 2000. place and the world of geeks; is a moon of mass-produced, new species for the new world. At that time, the explosion a low-cost, high-volume mass-customised, high- Perhaps the biggest of digital technology blew the buying planet that’s a world volume, low-margin creativity. question will be whether the media and marketing industries of smoke-filled rooms and I’m not convinced commercial development of this universe into fragments of different dealers; and an integrated, creativity will remain in a is controllable – with WPP, sizes and shapes travelling at creative boutique world that low-volume, high-value Omnicom, Interpublic great speeds through space and is a small but beautiful world, business. Perhaps a large and Publicis as the divine time. Suddenly everyone did full of beautiful things and swathe of creativity becomes watchmakers – or whether everything. Media agencies free spirits. commoditised and media marketing services’ Darwinism created, creative agencies Geeks, dealers and free becomes bespoke as media will find the group constraints distributed, technology spirits are all good planets, but agencies, media owners and too tight. Who knows? But it companies became media quite close to the pre-bang rights owners co-create will be an exciting ride. n owners and data became the world. Let me suggest a inventory around clients’ new black. couple of wilder worlds. brands. Marco Rimini is leader How will it all settle One might be a planet This moon might be a business planning worldwide down? What new worlds for the global adaptation place where content created at Mindshare. will be created? Will it and distribution of content elsewhere (Hollywood, marco.rimini@ ever settle down or are we (creative) assets. Hogarth and Bollywood, Googlewood, mindshareworld.com Brands must connect on- and offline advertising

From asHLey HigHFieLd one billion global customers behaviour and attitudes of The ability to gain insight consuming a variety of media multi-screen consumers – across different devices to a key feature of content across different devices people aged 18 to 64 who develop and track campaigns communication planning is at varying times of day. From actively use TVs, PCs, that span media platforms how consumers can control mobiles to PCs, gaming smartphones, and game means we have the greatest their on- and offline media consoles and TVs, at home consoles to consume media. opportunity for creative experiences. They expect or work, the opportunity for Summary findings show exploration that advertising brands to understand when, advertisers to reach audiences that multi-screen consumers has ever experienced. Brands where and how they want to has changed and consumers crave a connected experience that are making this journey be engaged with and be ready want their experiences across devices and believe are realising the rewards with to respond to these demands. integrated and connected. that it provides numerous improved return on investment Digital media innovation To ensure that advertising benefits, including making the and greater brand loyalty. n has given consumers greater remains relevant we have content more useful (69%) choice and fuelled market to learn how technology is and their media experience * Study conducted by Microsoft complexity, and has rapidly changing behaviour. Key to more relevant and informative Advertising, in partnership with expanded the scope for this is insight. Digital media (69%). Younger multi-screen Wunderman (a WPP company). advertisers to harness insight enable a more sophisticated consumers are most likely The study surveyed 1,200 of and creativity to respond. approach to how we gather and to value consistency across these consumers across the US in As C John Brady states in utilise insight, ranging from screens, believing that it the spring of 2010. his article about the future integrating online and offline greatly improves their media of media landscape (Market data, planning new targeting experience; 75% of 18- to Ashley Highfield is UK Leader Q1, 2011): ‘Consumers strategies and measuring the 24-year-olds believe having managing director at Microsoft don’t think that way; they see effectiveness of campaigns. the ability to access content Consumer and Online. it as a joined-up journey.’ We conducted a research across multiple screens makes msadvertising@3-monkeys. Microsoft has approximately study* to explore the content much more useful. co.uk >

Market leader Quarter 2, 2011 13

10 ideas & issues.indd 5 2/23/2011 15:57:41 ideas & issues over to you

consuMeR behaViouR How to make choice easier From Judie Lannon

if any single word defines the which assortment attracted frustration and indecision that is taken by the US company consumer benefit of a market- more people and which one goes with rejecting possible Best Cellars. By consulting based society it is ‘choice’. would lead to higher sales. candidates. She offers four with oenophiles in advance, It is rooted in our culture. They observed the shoppers strategies to help people have it limits its variety to 100 Henry Ford’s car offer as they moved from the booth better choosing experiences. high-quality, reasonably wouldn’t have echoed down to the jam aisle, which boasted Cut their options. This is priced wines. Then, instead the decades as the defining 348 varieties. the obvious strategy but of categorising by grape or by joke about the centrality of As might be expected, 60% 1one not often followed region, Best Cellars divides individualism if it didn’t hit a of the incoming shoppers for fear of losing customers. the wines into eight simple profound cultural chord. stopped when 24 jams were In the mid-1990s, when ‘taste’ categories, such as Products, brands and displayed, but only 40% Procter & Gamble Company ‘fizzy’, ‘juicy’ and ‘sweet’. services are all forms of stopped when six jams were winnowed its 26 varieties Condition them for self-expression and we learn displayed. Clearly, people of Head & Shoulders anti- complexity. For certain from childhood how to make found the larger assortment dandruff shampoo down to 15, 4kinds of decisions you can choices. But you hardly need more attractive. When these eliminating the least popular, set consumers up for success to be a psychologist to observe shoppers went to the jam aisle sales jumped by 10%. Another by encouraging them to learn that choice in many markets to pick up a jar, the shoppers example comes from a 2001 from, and build upon, their own has run out of control and that who had seen only six jams study that tracked an online previous choices. there are psychological, not had a much easier time grocer that had made substantial For example, Lyengar just shelf-space, limits to how deciding what to purchase. cuts in the number of products conducted a study with a major much choice we can manage. The researchers discovered it offered, across 94% of all the German car manufacturer. that the small assortment product categories. Not only Researchers presented the Jam every day? helped narrow down choices, did sales rise an average of 11% first eight design choices in Sheena Lyengar is a Canadian whereas the large assortment across 42 categories, but 75% different sequences to different who has studied how we left people unsure of their of its customer households groups of car buyers. choose. Her jam experiment is own preferences. Of those increased overall expenditures. One group had first to a famous example and a largely who stopped by the large Create confidence through choose interior and exterior unheeded warning about what assortment, only 3% ended recommendations. No colour, with 56 and 26 happens when people are up buying a jar of jam, which 2one does this better than options, respectively. From overwhelmed with choice. is far fewer than the 30% who Amazon and it is surprising that there, they chose features The experiment went like bought jam after stopping by their techniques aren’t more in descending order by this. Lyengar set up a situation the small assortment. Lyengar widely copied. Presumably most number of options, ending in a speciality grocery story and Lepper calculated that people know what book, for with interior decor style and in Menlo Park California people were more than example, they want. However, gearshift style (which were where she had often shopped six-times as likely to buy jam if for those who are searching each limited to four options). but found herself occasionally they saw the smaller display. for enlightenment on a subject A second group of buyers coming out empty-handed, without knowing a specific had the same choices in reverse overwhelmed by the choice a Better experience author or title, the long and order, starting with the design available. She wondered if In a recent article in often detailed reviews, what elements that offered the others had the same problem. Strategy+Business, Lyengar others bought, books on similar fewest options and ending with To find out, Lyengar and her explores this idea and its subjects, reminders, all help the ones that offered the most. collaborator, Mark Lepper, set consequences for marketers focus and narrow choices. Although both groups up a jam-tasting booth near the and retailers. She concludes TripAdvisor.co.uk gets better eventually saw 144 total entrance of the store. Every that people don’t want choice, and better on this score. options across eight categories, few hours, the booth switched they want a better choosing Categorise the options. the buyers who moved from between offering an assortment experience. This may seem like Where the novice sees high choice to low choice had of 24 jams and offering a semantic quibble but it isn’t. 3100 different options, the a much harder time and settled an assortment of six. The People want to feel satisfied expert sees maybe seven or eight for the default – and ended up researchers wanted to know with their choice without the relevant core qualities. The trick less satisfied. n is to get the novice to see things A small assortment helped narrow as the expert sees them. From: A better choosing The easiest way to do this experience by Sheena down choices, whereas the large is to categorise. All wine Lyengar and Kanika sellers categorise but a more Agrawal. Strategy+Business, assortment left people unsure customer-friendly approach December 2010

14 Market leader Quarter 2, 2011

10 ideas & issues.indd 6 2/23/2011 15:57:41 viewpoint david aaker

Why good concepts are strangled at birth

one key to winning the brand-relevance battle around; that its track record of never having been by creating new categories or subcategories is to compromised was persuasive; and that its use of evaluate and select the right concepts to develop. third-party brands such as VeriSign and Hackersafe In doing so there is a risk that a concept with high ensured safe communication. potential is not funded or has its funding cut off. Another problem is the failure to identify the As a result a firm loses the opportunity to create a right application. Intel, during the development category or subcategory in which the firm could 4of the 80286 microprocessor that began in hold an ongoing advantage and a potential source 1978, came up with 50 possible applications. The of profits and growth. The problem is hard to personal computer, the ultimate application that correct because the results of such decisions often became the basis for the Intel business for decades, are forever hidden. was not on the list. This failure was in part due What kills concepts with potential to make a to an understandable inability to forecast the difference with an innovative offering? development of technologies and software programs Companies Many are terminated by a gloom-and-doom bias that made the PC a runaway success. A powerful need to assess that takes on several forms. Pessimism about technological breakthrough with the right creative innovations without 1technological advances meant that GM killed effort will find an application. the EV1, a battery-operated car in 1998 just before a In some cases, the wrong market is prejudice, and with breakthrough in battery technology occurred. In 2005, targeted. Joint Juice is a firm founded by an an acceptance of GM CEO Rick Wagner said this was GM’s biggest 5 orthopedic surgeon who had the breakthrough strategic blunder. idea of making glucosamine, which is effective some risk, says Synthetic detergent was in reducing joint pain, David Aaker under development The ultimate reason to kill available in a liquid at P&G for five years form. The initial target when the firm killed the a potential offering is that market, young to project. Luckily a P&G middle-aged athletes, was scientist pursued the the market is too small, but disappointing. However, effort without permission a refocus on an older or funding and five years niche markets can grow demographic, people who later Tide was born. Had wanted lower-calorie, less- the firm enforced their decision, P&G would still expensive products, resulted in a successful health be a soap company. In contrast, Toyota charged its business. At the early stages a variety of markets product team to come up with the Prius, despite should be on the table. the fact that at the outset the technology was The ultimate reason to kill a potential offering inadequate. There was a commitment to find or is that the market is too small. For that reason create the necessary technology. 6Coca-Cola avoided the water market for decades, Market-size estimates are based on existing a decision that was a strategic disaster in retrospect. flawed products. Digital readers, termed Niche markets can grow and can go mainstream. Nike, 2e-readers, were around for a decade but Starbucks, and SoBe are examples of brands that have never had traction, in part because accessing books successfully scaled their value proposition. was difficult and the units were clunky. Then in Beware of snap decisions based on instinct November of 2007, Amazon launched the Kindle or superficial metaphors and be willing to with its Whispernet fast download system, its accept some risk. The future is hard to forecast. 30-hour battery life, a book-like reading experience, But the upside of the creation of a new category or and a market buzz. The Kindle sold more than one subcategory can be strategically important and can million units in just over a year and made sales of justify the acceptance of risk. It can provide a previous products irrelevant as points of reference. business platform for the future and a profit flow The belief that offering limitations is fatal. that can support strategic growth. A firm needs to For example, Mint.com, the US personal take care that a bias toward doom and gloom does 3 finance service, had trouble getting funding not result in the wrong decision. n because the judgement was made that no one would provide personal financial information. Dave Aaker is chairman of Prophet and author of However, it proved that judgement to be wrong Brand relevance: Making competitors irrelevant, because it was able to argue that its read-only Jossey-Bass, 2011. system was not vulnerable to moving money [email protected]

Market Leader Quarter 2, 2011 15

15 viewpoint.indd 15 2/23/2011 16:21:03 chopping BLock jeremy bullmore

Emotion works? But that’s irrational!

Fact one: if it’s ever to see the light of day, a congratulates the marketing director, signs off the television commercial lasting half a minute must final production estimate and moves on to the next survive, second for second, far fiercer scrutiny item on the agenda, the acquisition of another 29% than any other piece of cinematography. And of an associate company in Taiwan. that includes Avatar, which runs for three hours ‘Rational’ advertising – heavily dependent on and cost $300m to make. Given the number of tested-to-destruction verbal propositions and hurdles, of both research and judgement, that the measurement of that which can be easily every humble 30-second commercial has to jump measured – is relatively easy to sell. ‘Emotional’ – and given the number of people empowered advertising isn’t. It’s now ten years since Robert to amend or reject it – it’s a miracle that any get Heath published The Hidden Power of Advertising – made at all. with its more useful subtitle, How low involvement Jeremy Bullmore Fact two: for at least ten years, serious doubts processing influences the way we choose brands. wrestles with have been cast on the traditional models of When describing his findings, he wrote: ‘Above how advertising works. There has been slow if all, I found I had to accept that effective brand the catch-22 growing recognition that, for many brands, the communication … involves processes which are of advertising ‘emotional’ element may be far more important uncontrolled, disordered, abstract, intuitive … and than the ‘rational’. Yet still, more often than not, impossible to explain other than with the benefit approval the ‘rational’ wins. Despite the evidence in support of hindsight.’ of the ‘emotional’, advertising agencies and their Have pity, then, for today’s enlightened clients seem reluctant to move to a model that marketing director. ‘Good morning. I’m here to ask could greatly improve the return on investment of for your formal approval to make this 30-second their advertising expenditure. commercial for Burgrips Minidrops. As is widely Why should this be? I’ve a sneaking suspicion accepted, effective brand communication involves that the reason lies less with the hope of making processes that are uncontrolled, disordered, advertising that works and more with the need to abstract, intuitive and impossible to explain other get advertising approved. than with hindsight. So there’s no way of knowing In the good old days, when USPs in their cruder if this commercial is any good until we’ve run it for manifestations ruled, the marketing director’s a few months. But I think it’s bloody marvellous so presentation to his board was relatively easy. ‘Good may I have £750,000 to shoot it, please?’ morning. I’m here to ask for your formal approval I suspect that the potential value of ‘emotional’ to make this 30-second commercial for Burgrips advertising can be communicated to the sceptics Minidrops. Forty potential consumer propositions only by judicious reference to the persuasive were reduced to seven as a result of exposure to power of other emotional stimuli. Noël Coward 3,452 members of the core target group. Those knew the potency of cheap music. As military seven, evenly rotated, were then exposed to a leaders and the founders of religious faiths have similar number in animatic form. The winner, a known for centuries, expensive music can be even clear 17 points above the category norm, was this more potent. Big speeches still work. Can anyone [holds up board]: ‘Burgrips: the only Minidrops to remember what David Cameron said at that contain WD40. They brush your breath while they Conservative Party conference? He said almost tease your tongue.’ nothing and he said it without notes and the next ‘This commercial graphically demonstrates that thing you know, he’s prime minister. Barack Obama unique proposition while the voice-over reiterates made a speech in Tucson, Arizona, last month. I the claim three times. We also super it up at the bet you that his day-after-recall score wouldn’t have end. Preliminary results indicate unprompted looked good but his approval ratings have soared. proposition recall at 63%, with purchase intention If I was asked to put the case for creationism in in the top quartile.’ a formal debate, and knew that I’d be up against a What wonderfully reassuring numbers. Members reading by Richard Dawkins from his book The God of the board don’t need to know anything about Delusion, I wouldn’t try to defeat him on rational people, the market, the brand, the competition grounds. I’d play that tape of Timothy West or how advertising works. They don’t even need reading from the King James Version of the Book to exercise their judgement. It’s evident that the of Genesis – with Handel’s Messiah for afters. I decision to invest in this commercial is a highly think I’d do quite well. n responsible corporate act and one that will shield them forever from future criticism. The board [email protected]

16 Market Leader Quarter 2, 2011

16 bullmore.indd 3 2/23/2011 16:57:47 IPA AD Q2.indd 1 2/24/2011 14:57:30 gLobaL isM Simon SilveSter New world order of global brands

In the emerging markets, the sense of optimism is everywhere and the future for well-positioned brands looks bright

18 Market Leader Quarter 2, 2011

18 Silvester.indd 18 2/23/2011 16:38:49 gLobaL isM Simon SilveSter New world order of global brands

most global brands have been invented by Western companies for Western consumers. emerging-market consumers are very different. simon silvester explains how to reach them

ver the past two decades, Westerners. They have different Western brands have spread demographics, different attitudes and across the world. They now different priorities. The average human fill the supermarkets of Brazil, being is a decade younger than the Russia,O India China, as well as Mexico, Western consumer. They grew up with Indonesia, Vietnam and the other ‘next 11’ generation gaps greater than anything emerging markets. Five billion of the world’s ever seen in the West; and they share a seven billion people buy them. past – but it is not the past of rich people. But while they are all successful, So a brand designed to appeal to a these big global brands all have something Westerner is never going to be the right else in common: nearly all were invented brand to appeal to the new generation of by Westerners for Westerners but they young adults in the emerging world of the are now being sold to customers who earn $3,000 a year. It’s quite a leap. The consumer they were designed for looks nothing like the global consumer of today. the top ten: Emerging market consumers are Most vaLuabLe Chinese brands getting richer of course, and rapidly so – consumer incomes in China, India and rank on brand value Brazil rise by 7% to more than 10% each brandZ us$b year. But those consumers are not going 1 China Mobile 56 to be as rich as consumers in the West in 2 ICBC Bank 38 the foreseeable future. 3 Bank of China 22 The Chinese economy will soon eclipse 4 China Construction Bank 22 the American economy with Chinese 5 China Life 18 household incomes being one-fifth of 6 Agricultural Bank of China 16 those in America. India will follow with 7 Petrochina 14 incomes even lower than that. We are 8 Tencent (portal) 12 entering a new era where the tastes and 9 Baidu 10 desires of poorer people are coming to 10 Ping An (insurance) 8 dominate the consumer goods business. These poorer people in emerging Source: BrandZ/Millward Brown 2010. markets are very different from >

Market Leader Quarter 2, 2011 19

18 Silvester.indd 19 2/23/2011 16:38:53 gLobaL isM Simon SilveSter

For most of the emerging world, the past 20 years have been the best 20 years ever. The sense of optimism, and that anything is possible, is everywhere. The brand mood needs to get with the times and be positive and optimistic

2010s. New brands are needed – brands Do you think this will lead people to that talk not to the rich, but mass- think those brands are unsophisticated? market brands that talk to the lives and Only if you believe that a modern aspirations of the ‘average’ human being. sophisticated piece of technology would be better called a ‘ZX 300 PK’ rather Here are some principles which may than simply having a big picture of an help you build one. apple on it. Or a running shoe would be l Think zeitgeist: in the emerging better off with writing on it than simply a world, the early 1990s was a dark time. graphic ‘swoosh’. In apartment blocks in Eastern Europe, l Think ‘youthquake’: in emerging pensioners were starving to death. Most markets, the generation gaps are much Chinese were subsistence farmers. Many greater than anything seen in the West Indians had insufficient food to eat, no in the 1960s. A typical 15-year-old girl in TV, no phone and no prospects. the emerging world has grown up in the Over time, everything became better, same SpongeBob- and Dora-led culture and then it became better again. Indeed, that Western kids have. But her mother for most of the emerging world, the past grew up poor, without a TV or toys, and 20 years have been the best 20 years her grandmother grew up a peasant, with ever. The sense of optimism, and that no sense of personal free will. Global anything is possible, is everywhere. You brands need to recognise and leverage this may be managing your global brand from generation gap. a depressed a post-credit crunch city in l Think status: in emerging markets, Europe or North America, but the mood status symbols have a much greater of that brand needs to get with the times significance than in the West. Young and be positive and optimistic. adults in particular see the acquisition of l Think trial: over the past few decades status and its symbols as the be all and the Western world has become older. The end all of their existence. If they’ve paid average person in Italy is 43 years old. In extra for a logo, they want people to see Japan the median age is 44. That ageing the logo. So the modest, understated has slowly altered Western marketing nature of many Western clothing brands culture – there aren’t many new adults is completely wrong for them. to recruit; but there are many existing l Think small: most people in the customers to keep, so marketing budgets emerging world have a lot less space at have shifted from trial to retention. home than a typical Westerner; 60 sq m consumers Globally, marketers are talking to a in Asia is a big apartment. And the person Last year Mrs Schmidt of Peoria, Illinois, much younger consumer. The average age living in that apartment is unlikely to have USA received a 10% pay cut. As did her of Indians is 26. The average age in much a car at their disposal to do the shopping. sister in Europe. And their partners lost of the Middle East and Africa is under 20. So they tend to favour smaller, lighter their jobs. Brands are marketing to billions of young items that are easier to carry and store. Meanwhile, on the other side of the adults who are eager to try the fruits of l Think video: more than 98% of world, Mrs Wong, Mrs Singh and the boom for the first time. And that Chinese people have a TV at home, Mrs Martinez all saw their 2004 incomes means that, globally, trial is absolutely and TV penetration in India will reach double. As did their partners. central to marketing. 90% by 2014. In China, people spend For every Mrs Schmidt there are about l Think visual: there are hundreds of more time watching video streams via seven Mrs Wongs, Mrs Singhs and languages in use in the world today, so the internet than they do in the US. Mrs Martinezes. They are on average ten any brand that relies on its name meaning The conditions for a global mass market years younger. And they want it all. And they something in English has problems. – the availability of cheap mass media – want it now. Also, a big part of the world’s population have arrived. So who are you going to make your has problems with reading. All of which l Think fast: while the West stagnates, global brand appeal to? Mrs Schmidt? Or suggests that to succeed in the world the global consumer is living through the the future? n today, a true global brand needs to be fastest changes in history. So don’t spend primarily visual in nature. ages trying to fit your product into past

20 Market Leader Quarter 2, 2011

18 Silvester.indd 20 2/23/2011 16:38:54 gLobaL isM Simon SilveSter

consumer trends. It doesn’t matter, and l Think Kiasu: this is a Hokkien they won’t understand. Chinese word meaning literally ‘fear l Think service: marketers in rich of losing’, used by South East Asian countries tend to think that they are the Chinese to reflect their obsession with best when it comes to inventing brands success. Among the new middle classes and delivering brand benefits, but the of the emerging world, life is about being reality is that they aren’t very good ambitious, getting up to the next level when it comes to services. Asian hotel and never being ripped off. Life is about and airline brands often offer better pushing your children, and education, standards of service than their Western education, education. Brands need competitors. Global service brands to reflect and celebrate their sense of should be led from emerging markets, achievement. not from the West. l Think cheap: Chinese and Indian l Think cultural neutrality: global companies are not succeeding by brands that focus on American and north innovating in the conventional sense. European faces and attitudes can leave They are succeeding by working out how 80% of the world thinking that ‘this is not to deliver products and services such as a brand for me’. For anyone looking for a telecoms and cars profitably at a small cultural centre to their brands, the biggest fraction of the Western price. Western consumer market of the 2010s and 2020s companies dismiss them as price-cutters will be China. So they need to work out at the moment – but they are following how it will play in Putonghua rather than exactly the same strategy that Japanese in Peoria, Illinois. goods used successfully in America and l Think fake: fake brands are huge in Europe in the 1970s. emerging markets, and may be the main l Think value equations: price competitor to your brand. Work out consciousness is an element of every how to handle them. Google’s Android buying decision for the global consumer. is sweeping the emerging world at the This leads everyday brands to be moment without any problem at all with perceived differently in the emerging fakes – simply because it’s free. world from how they are seen in the

thInk frugal The biggest innovation trend of the 2010s, and the biggest threat to conventional marketers everywhere is ‘frugal innovation’. Frugal innovation is being pioneered by Indian and Chinese companies. It involves stripping out 90% of the costs within a business, and offering the products and services that result to the consumer for one-fifth to one-tenth of the existing market price. A classic example is in telecoms, where Indian companies have reduced the cost of calls and texts by 90%, putting the mobile phone in the hands of peasant farmers and fishermen across the country. And indeed now across Africa too, as Indian innovators roll services out across the continent. Another example is the Tata Nano – the car for US$2,200. Frugal innovation changes the balance of consumption between developed and emerging markets, as it makes everyday consumer goods affordable to people who earn much less. In emerging markets, Will 80% price cuts catch on in the West too? Since the Great Recession turned every Western consumer into a price hawk, it’s very likely. n status symbols have a greater significance than in the West. If they’ve paid extra for a logo, they want people to see the logo. So the understated nature of many Western brands is wrong for them >

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18 Silvester.indd 21 2/23/2011 16:38:55 gLobaL isM Simon SilveSter

West. In the US, McDonald’s is the l Think innovation: societies in the cheapest meal you can buy. In Russia or in emerging world are changing rapidly. Facebook hardly Indonesia, it’s a mixture of a family treat, Those in the West have stagnated. It’s a middle-class teen hangout and a date much easier and more fruitful to innovate existed in Indonesia venue. In the West, Ikea is the cheapest in rapidly changing societies. Global two years ago; today, way of filling a home. But to most other companies need to focus their innovation people in the world, Ikea is a mid-market, efforts on the emerging world. 30 million Indonesians stylish option. l Think about your origins: people l Think mobile: at the end of 2009, respect Mercedes Benz and BMW not use it. Global brands 90% of all humans lived in areas where because of any advertising they do but they could receive a cellphone signal, because they are made in Germany. Prada need to work out how and there were 5.3 billion cellular is stylish not because of the campaigns it subscriptions in the world. Most of the runs in Vogue but because it comes from to socialise themselves, planet has a cellphone. After television, Italy. For many brands, their country of not just to Westerners, the mobile phone is the world’s most origin is their biggest asset. So manage the popular technology – and is becoming a image of your country of origin with care. but to the entire planet vital marketing medium. l Think big ideas: many big companies l Think social: social networks, accessed in China and India have built themselves via smartphones, are exploding in the as conglomerates, rather than around a developing world. Facebook hardly strong, single-minded business idea. Being existed in Indonesia two years ago; today, a conglomerate allows them to succeed 30 million Indonesians use it. Global within the complex business environment brands need to work out how to socialise of their home country, but it means that themselves, not just to Westerners, but to they have no equity when they decide the entire planet. to expand abroad. These big companies l Think B2B: ten years ago, if a poor need to build big brand ideas around fisherman caught 20 mackerel, he would themselves if they are to take on Western then have to choose a port, spend several global brands and win. n hours sailing to it, and then hope for a good price for his catch. If prices were Simon Silvester is head of planning, low that day, he had to sell anyway – or Young and Rubicam EMEA. This is an sail home with a boatload of rotting fish. abstract of the book ‘How To Dominate Today the fisherman does his deal at sea the World’, which is available in full at via mobile phone. In the 2010s, peasant http://pubs.yr.com/dominate business is real business. [email protected]

the 200-Year anomalY In 1709, a maker of brass cooking utensils called Abraham Darby bought a shed in Coalbrookdale, England, and began experimenting with iron. Darby, his co-workers and descendants developed techniques for ironworking that allowed cheap mass production. And those mass production techniques caused economic activity in Britain to rocket to almost 40% of world output. Why the modern world came into existence in the village of Coalbrookdale rather than in Hangzhou or Tientsin or Guangzhou is a bit of a mystery to economic historians. But one thing is certain: for the previous 20 centuries, China was the world’s largest economy. And today it’s coming back. n

A technique to produce cast iron cheaply, developed by Abraham Darby in 1709, helped pave the way for mass production of ietms in the UK

22 Market Leader Quarter 2, 2011

18 Silvester.indd 22 2/23/2011 16:38:56 ML brand value AD .indd 1 2/24/2011 15:10:32 brands laurie young Products die but brands can live forever Laurie Young wonders why so he obsession with newness a long and erratically compiled list that many marketers and business seems to have blinded many comprises the category, country of origin in the marketing community and start date of brands still sold today. leaders seem to base their to the infinitely more valuable (Brands from 1850 to 1999 are listed on payoffT of long-standing brands – many pp26–27.) I am not an historian nor an investment strategies on a set that are familiar today have startlingly academic but there seem to be several of beliefs that are in complete ancient lineages. obvious implications of this simple list contradiction to the facts A few years ago I was returning from for both the nature of business and the a marketing conference in America. I role of marketing. had heard speaker after speaker fill their presentations with an unchallenged There are surprises consensus: that markets were changing I was surprised that Bailey’s Irish cream is very fast, that they were becoming more so new (1974). I was not so surprised by global and customers were becoming the age of some Champagnes and spirits more demanding. As a result, competition – Veuve Clicquot (1805), Glenfiddich was increasing and it was difficult to (1887), Jack Daniel’s (1866) – but I was create enduring value. The ‘product you taken aback by Jim Beam (1795), Rémy launch on a Monday is a commodity Martin (1724), Martell (1715) and by Wednesday’. Bushmills (1608). By the time I was at the airport, I I am astonished at the age of some was tired and hungry. As I looked at of the beers that are around today. It’s the beers in the bar, I noticed the age enough that a relatively new country such of Kronenbourg (1664). There were as the USA has beer brands hundreds of also American beers such as Budweiser. years old (Schlitz 1849, for instance) but I had never thought about its age and Europe can boast not only of Carlsberg was astonished to hear from the barman but also Greene King (1799), Guinness that it was at least a hundred years old (1759), Lowenbrau (1383), Stella Artois (launched in 1886 in fact). I knew that (1366) and, astoundingly, Weihenstephan Coca-Cola was quite old and resolved (1040). I have been on many courses in to look it up (also 1886, just beaten by my time, but not one has used a case study Dr Pepper 1885). Later, I wandered of brands created around the time of the into duty free and was again struck by Norman Conquest. the age of a number of brands we still I knew that several banking brands use today. American whisky Southern were quite old – HSBC (1865), Comfort (1874) or Jack Daniel’s (1866) sat Santander (1857) – but Barclays caused alongside perfumes such as Chanel No5 me to raise an eyebrow (1690). I knew (1925) or watches such as Breitling (1884). that tea (Twinings, 1706) and coffee I spent the remaining time before my (Douwe Egberts, 1753) were introduced flight collecting the names of brands to Europe in the 17th and 18th centuries that I thought had been around a long but I was surprised by the age of some time so I could look them up. I have kept Chinese tea brands (Pi Lo Chun has been going since then and, a decade later, have brewed for 1,200 years) and the other

24 Market Leader Quarter 2, 2011

24 Young.indd 24 2/23/2011 16:54:18 brands laurie young

When tackling markets ravaged by recession, it is sensible to understand that some ‘brands’ have survived for hundreds of years

drinks – Schweppes (1783), Cinzano When we are all trying to tackle markets China, that were created several hundred (1757) and San Pellegrino (1200) – that ravaged by recession, surely it is sensible years ago, which have survived both are around us today. to understand the implications of the communism and the Cultural Revolution. Despite all this, I still find the fact that brands such as Courvoisier and Marketers have a responsibility to their technology brands the most surprising. Heal’s furniture are around 200 years old? shareholders to convince their colleagues IBM is celebrating its centenary this year. I have never heard a business strategist, to invest in this remarkable approach. And it was interesting to find that Philips a marketing author or a media pundit (1891), GE (1876), Ericsson (1876), deduce implications to investment from Well-rounded markeTing Toshiba (1875), HP (1875) and Cable & the fact that familiar entities such as Cow Techniques Build Brands Wireless (1869) have been moving with & Gate, Martell, Crosse & Blackwell and It would be easy to dismiss these technical changes for so long. But my Twinings are around 300 years old. And enduring wealth creators as the kids were amused by the age of Nintendo the long life of those beer or food brands by-product of long-lost, heroic (1889) and I was stunned that Otis (such as Brie de Meaux dating from 774 or entrepreneurs, if they hadn’t been elevators originated at the time of the Fontina from 1200) should surely attract created by bog-standard marketing. Wild West (1861). the attention of not only marketers but Several modern marketing books imply The more I collected details about the also economists and business leaders. that marketing was created after a ‘sales ages of familiar brands (or brands familiar Admittedly, some of these offers phase’ and ‘manufacturing phase’ in to their target segments in foreign may not have had brand characteristics America around the 1950s. markets) the more the story of longevity throughout their long life. Some (such However, brands such as Pears, began to emerge. It made the suggestion as Axminster 1755, Meissen 1705 Wedgwood, Sunlight (Lever), Heinz, that it is difficult to create enduring value or Majolica 1405) were originally a Selfridges, and Coca-Cola were built seem ridiculous. description of a regional or geographical well before that with techniques skill. It is also true, particularly for luxury including: quality obsession; viral Brands are amazingly resilienT goods, that many were run by artisans marketing; sustained advertising; PR; I have a list of more than 400 brands that with a craft heritage and a commitment celebrity endorsement; international were created before 1900 and some that to quality but perilous financial track market penetration; clear segmentation; are around 1,000 years old. Some of these records. Nevertheless, this evidence and direct marketing. Histories and entities have been doing what brands do suggests that brand creation is a powerful biographies (some of which are now (creating wealth by appealing, in a unique way to create substantial, sustainable, rare books or archived correspondence) way, to a succession of human beings) for long-term businesses. It is striking, written about 100 years ago are full of several centuries. for instance, to find brands in modern campaigns that we would recognise today.

Market Leader Quarter 2, 2011 25

24 Young.indd 25 2/23/2011 16:54:21 brands laurie young laurie’s lisT: producT Brands 1999 To 1850

Product category country date Product category country date Product category country date

Furla Fashion/ Italy 1927 Product brands: 1950 to 1999 Greene King: Ale UK 1951 luxury goods Google Search engine USA 1998 Abbot Ale Spillers: Dog meal UK 1927 Dior: J’adore Perfume France 1998 Clorets Breath USA 1951 Winalot Renault: Espace Car France 1997 freshener Patisserie Valerie Food and drink UK 1926 Stella McCartney Fashion UK 1997 Flying Pigeon Bicycles China 1950 Harvard Business Management USA 1926 Chanel: Allure Perfume France 1996 Pierre Cardin Fashion France 1950 Review magazine Amazon Book retailer USA 1995 Mentos Sweets Netherlands 1950 Godiva Confectionery Belgium 1926 Chupa Chups: SMINT Confectionery Spain 1994 (Part of Van Melle) Shanghai Tang Fashion China 1994 Camay Soap USA 1926 Viktor & Rolf Fashion Holland/ 1993 Unilever: Lux Soap UK 1925 France Product brands: 1900 to 1949 Corona Beer Mexico 1925 Prada: Miu Miu Fashion Italy 1992 Pucci Fashion/ Italy 1949 Fendi Luxury goods Italy 1925 o Vera Wang Fashion USA 1990 luxury goods Chanel N 5 Perfume France 1925 Renault: Clio Car France 1990 Onitsuka Tiger Sports wear Japan 1949 Belstaff Leather jackets UK/Italy 1924 Unilever: Slim Fast Weight loss UK 1990 (now ASICS) Primula Cheese Norway 1924 (was Thompson Longchamp Fashion/ France 1948 Mars: Milky Way Confectionery USA 1923 medical) luxury goods Q-tips Cotton bud USA 1923 Dior: Fahrenheit Perfume France 1988 Rowntree: Polo Confectionery UK 1948 Russell Stover Chocolates USA 1923 Martin Margiela Fashion Belgium 1987 Biro Ballpoint pens Hungary/ 1948 Time Magazine Magazine/news USA 1922 Unilever: Magnum Ice cream UK 1987 Argentina BMW Cars Germany 1922 Christian Lacroix Fashion France 1986 Lambretta Scooter Italy 1947 Filofax Stationery USA 1921 McVite: Hob Nob Biscuit UK 1985 Golden Wonder Snacks UK 1947 Gucci Leather goods Italy 1921 Donna Karan Fashion USA 1985 Céline Fashion/ France 1947 McKinsey & Co Consulting USA 1920 Dolce & Gabbana Fashion Italy 1985 luxury goods Allied Chemical Corp. Food/bio tech USA 1920 Dior: Poison Perfume France 1985 Dior: Miss Dior Perfume France 1947 Union Carbide Corp. Chemicals USA 1917 Dell Computers USA 1984 Sony Electronics Japan 1946 Nikon Cameras Japan 1917 Unilever: Vienetta P&G: Tide Soap powder USA 1946 Harry Winston Diamonds USA 1916 (originally Wall’s) Ice cream UK 1982 Estée Lauder Perfume USA 1946 Cadbury: Milk Tray Confectionery UK 1915 Unilever: Impulse Shampoo UK 1979 Vespa Scooters Italy 1946 Rolex Watches UK 1915 (originally Pond’s) Dior Fashion/ France 1946 Lipton Tea UK 1915 Versace Fashion Italy 1978 luxury goods Salvatore Ferragamo Shoes USA 1914 Calvin Klein Fashion USA 1978 McVite: Penguin Biscuit UK 1946 Prada Fashion/ Italy 1913 Ben & Jerry’s Ice cream USA 1978 Paul Weiss Law U S A 19 45 luxury goods (now Unilever) White Rabbit Confectionery China 1943 Camel Cigarettes USA 1913 Unilever: Pot Noodle Snack food UK 1977 Ikea Furniture retail Sweden 1943 J.C. Penny Co. Inc. Retail USA 1913 Apple Computers USA 1976 Velcro Fastening Switzerland 1941 Aga Cookers Sweden 1912 Rowntree: Yorkie Chocolate UK 1976 Mars: M&M’s Confectionery USA 1941 Jean Patou Fashion France 1912 Bailey’s Irish Cream Drink UK 1974 Coach Fashion USA 1941 Mars Confectionery USA 1911 Microsoft Technology USA 1973 Vitasoy Milk China 1940 IBM Electronics USA 1911 Molton Brown Cosmetics Uk 1973 alternative drink Gauloises Cigarettes France 1910 Nike Shoes USA 1971 McVitie: Jaffa Cakes Biscuit UK 1939 Hallmark Greeting cards USA 1910 YSL: Rive Gauche Perfume France 1971 HP: Computers/ USA 1939 Samsonite Luggage USA 1910 Timotei Shampoo Sweden 1970 Hewlett Packard tech Peek Frean: Biscuit UK 1910 (now Unilever) Teflon Kitchenware USA 1938 Bourbon Virgin Consumer UK 1970 (now part of Du Pont) Ronwtree: Confectionery UK 1910 services Old Spice (now P&G) Aftershave USA 1938 Walnut Whip Russell Reynolds Executive USA 1969 McDonald’s Fast food USA 1937 British Petroleum Oil UK 1909 search Valextra Bags Italy 1937 Mercedes-Benz Cars Germany 1909 Cif Household France 1969 Rowntree: Rolo Sweets UK 1937 Audi Cars Germany 1909 (now Unilever) cleaner and Smarties Teacher’s Whisky UK 1909 Rowntree: Confectionery UK 1968 Pickwick Tea Netherlands 1937 Johnnie Walker Whisky UK 1909 Matchmakers (Part of Douwe Red Label Ralph Lauren Fashion USA 1967 Egberts) Selfridges & Co. Retail UK 1909 Dior: Eau Sauvage Men’s scent France 1966 Orangina Drink France/ 1936 Lanvin Fashion France 1909 Boursin Cheese France 1965 Algeria Vogue Magazine USA 1909 Nike Sports shoes USA 1964 Lux Soap powder UK 1936 Bisto Gravy UK 1908 Unilever: Flora Soft margarine UK 1964 Mars: Maltesers Confectionery USA 1936 Hoover Vacuum cleaner USA 1908 Rowntree: Confectionery UK 1963 Rowntree: Dairy Box Confectionery UK 1936 Amoy Soy sauce China 1908 Toffee Crisp Quality Street Evian Bottled water France 1908 Yves Saint Laurent Fashion/ France 1962 Rowntree: Kit Kat Confectionery UK 1935 (now owned by luxury goods and Aero Danone) Janet Reger Intimate UK 1961 P&G: Dreft Soap powder USA 1933 Spillers: Dog biscuit UK 1907 apparel Rowntree: Confectionery UK 1933 Shapes Weight Watchers Health USA 1961 Black Magic UPS Courier services USA 1907 P&G Pampers Nappies USA 1961 Lacoste Fashion France 1933 Osram Lighting Gerany 1906 P&G: Fairy Soap UK 1960 Mars: 3 Musketeers Confectionery USA 1932 (part of Siemens) Castello Cheese Denmark 1958 Tesco Retail UK 1931 Kellogg Company Corn flakes USA 1906 Hush Puppies Shoes USA 1958 Joy by Patou Perfume France 1931 Max Factor Make up USA 1906 Chupa Chups Confectionery Spain 1958 Unilever: PG tips Tea UK 1930 Warner Bros Entertainment USA 1906 Rowntree: Confectionery UK 1957 Birds Eye Frozen food USA 1930 Xerox Copiers/printers USA 1906 Munchies Allen & Overy Law UK 1930 Honeywell Electronics USA 1906 Unilever: Dove Soap USA 1955 Mars: Snickers Confectionery USA 1930 Van Cleef and Arpels Jewellery France 1906 P&G: Crest Toothpaste USA 1955 Fisher-Price Toys USA 1930 Cadbury: Dairy Milk Chocolates UK 1905 Chanel: 2.5 Handbag France 1955 Ryvita Biscuits UK 1930 Hellmann’s Mayonnaise USA 1905 Pucci Fashion/ Italy 1954 Peak Freen: Biscuits UK 1929 (now Unilever) luxury goods Twiglets Gillette Razors USA 1904 Lladró Porcelain Spain 1953 Domestos Bleach UK 1929 Batavus Bicycles Netherlands 1904 Chloé Fashion/ France 1952 (now Unilever) Kiwi Shoe polish UK 1904 luxury goods Brylcreem Hair gel UK 1928 Burton Men’s tailoring UK 1904 Havarti Cheese Denmark 1952 Harry Ramsdens Fish & chips UK 1928 Ovaltine Nutritional drink Switzerland 1904 Givenchy Fashion/ France 1952 P&G: Oxydol Soap powder USA 1927 Noritake Tableware Japan 1904 luxury goods

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24 Young.indd 26 2/23/2011 16:54:21 brands laurie young

Product category country date Product category country date Product category country date

Waitrose Retail UK 1904 Sharwood Spices UK 1889 De Beers Diamonds South Africa 1870 Rolls Royce Cars UK 1904 Slaughter & May Law UK 1889 Cable & Wireless Communications UK 1869 Werther’s Original Sweets Germany 1903 Schwartz Spices Canada 1889 Campbell Soup USA 1869 Persil Soap powder Germany 1903 Savoy Hotel UK 1889 Pillsbury Bakery products USA 1869 (now Unilever) Woodbine (Wills) Cigarettes UK 1888 Tabasco Sauce USA 1869 Typhoo Tea UK 1903 Lee Kum Kee Food sauces China 1888 Exchange and Mart Magazine UK 1868 Ernst & Young Accountancy UK 1903 National Information/ USA 1888 Saks Retail USA 1867 Gillette Male grooming USA 1903 Geographic membership KPMG Accountancy UK 1867 Ford Cars USA 1903 Kodak Cameras USA 1888 Marshall Field Retail USA 1867 Perrier Drink UK/France 1902 Bulmers Cider UK 1887 Jack Daniel’s Whisky USA 1866 Peak Freen: Biscuit UK 1902 Glenfiddich Whisky UK 1887 Nestlé Babymilk/ Swiss 1866 Pat-a-Cake Brighton rock Sweets UK 1886 confectionery Unilever: Marmite Food stock UK 1902 Smirnoff Vodka Russia 1886 Nokia Electronics Finland 1865 (originally own brand) Verkade Chocolate Netherlands 1886 HSBC Banking UK/China 1865 Monsanto Pesticides USA 1901 Adler Jewellery France 1886 BASF Chemicals Germany 1865 Hornby Toys UK 1901 Coca-Cola Drinks USA 1886 Bertolli Olive oil Italy 1865 Meccano Toys UK 1901 Westinghouse Electronics USA 1886 (now Unilever) The Tatler Society magazine UK 1901 Avon Cosmetics USA 1886 Bovril Beef stock UK 1865 (named after Del Monte Food USA 1886 Jacob’s: Biscuits Ireland 1865 Tatler of 1709) Whittard Tea UK 1886 Cream Crackers Lurpak Butter Denmark 1901 Anchor Butter UK 1886 Fisherman’s Friend Lozenges UK 1865 Eveready Batteries USA 1900 Raleigh Bicycles UK 1886 McDougal Flour UK 1864 Van Melle Confectionery Netherlands 1900 Sketchly Cleaning UK 1885 Quandude Food China 1864 Austin Reed Clothing retail UK 1900 Lyle’s Golden Food UK 1885 John Lewis Retail UK 1864 Gossard Intimate apparel USA 1900 Syrup Victory Lozenges UK 1864 Johnson Controls Electronics USA 1885 Robertson’s Marmalade UK 1864 The Lady Magazine UK 1885 Heineken Beer Netherlands 1864 Product brands: 1850 to 1899 Fabergé Jewellery Russia 1885 Benedicitine Brandy France 1863 Aspirin Pharmaceutical Germany 1899 Dr Pepper Drink USA 1885 London Underground Transport UK 1863 Renault Cars France 1899 Marks & Spencer Retail UK 1884 Lillywhite Retail UK 1863 Miele Domestic Germany 1899 Bovril Processed food UK 1884 H. Samuel Jewellery retail UK 1862 appliances (now Unilever) Fray Bentos Processed food Uruguay 1862 Morrison Grocery UK 1899 NCR Technology USA 1884 Bacardi Drink Cuba 1862 Bassett: All Sorts Sweets UK 1899 UHU Glue Germany 1884 Rowntree Chocolate UK 1862 Bugatti Cars France 1899 Black and White Whisky UK 1884 Heinz Processed food USA 1861 San Pellegrino Jaeger Clothes Germany 1884 (Horseradish first) (local since 1200) Bottled water Italy 1899 Waterman Pens USA 1884 Peek Frean: Biscuits UK 1861 Castrol Lubricants UK 1899 Bulgari Jewellery/ Italy 1884 Garibaldi (was Wakefield luxury goods J P Morgan Banking USA 1861 & Co) Breitling Watches Swiss 1884 Otis Elevators USA 1861 Dentyne Chewing gum USA 1899 Tiptree Jams UK 1883 Swan Vesta Matches UK 1861 Dewar’s White Label Whisky UK 1899 Sainsbury’s Retail UK 1882 Paneri Watches Italy 1860 Pepsi Cola drink USA 1898 VAT 69 Whisky UK 1882 Amaretti Virginia Biscuits Italy 1860 Michelin Tyres France 1898 Cerruti Watches Italy 1881 Grenson Shoes UK 1860 Bergdorf Goodman Retail USA 1898 Wharton Business Education USA 1881 Peek Frean: Nice Biscuits UK 1860 Nabisco Biscuits USA 1898 School Vaseline Skin care UK 1860 Lewin Shirts UK 1898 Rowntree: Confectionery UK 1881 (now Unilever) HMV Entertainment UK 1897 Fruit Pastells Tag Heuer Watches Swiss 1860 Chad Valley Toys UK 1897 Scott’s Porridge oats UK 1880 Chopard Watches Swiss 1860 Jell-O Dessert USA 1897 Sears Mail order USA 1880 Tate & Lyle Sugar UK 1859 Dow Chemicals USA 1897 Maynard Confectionery UK 1880 Moretti Beer Italy 1859 Hornby Toys UK 1897 Hovis Bread UK 1880 Canadian Club Drink USA 1858 HP Sauce UK 1896 Philadelphia Cream cheese USA 1880 Macy’s Retail USA 1858 The Daily Mail News UK 1896 Spear’s Games UK/ 1879 Peak Freen Biscuits UK 1857 Lifebuoy Soap UK 1894 (now Mattel) Germany Smith and Wesson Guns USA 1857 Barbour Clothes UK 1894 Eu Yan Sang Chinese Malaysia 1879 Borden’s Condensed milk USA 1857 Andrew’s Liver Salts Pharmaceutical UK 18 94 medicine products Banco Santander Banking Spain 1857 Famous Grouse Whisky UK 1894 Listerine Mouthwash USA 1879 Credit Suisse Banking Switzerland 1856 Hershey Confectionery USA 18 94 D H Evans Retail UK 1879 Burberry Clothes UK 1856 Mikimoto Pearls Japan 1893 Ivory (P&G) Soap USA 1879 Spiller’s: Pet foods UK 1855 Maxim’s Restaurant/ France 1893 J Walter Thompson Advertising U S A 1878 Dog food luxury goods Quaker Oats Food USA 1878 Miller Beer USA 1855 Halls Cough sweets UK 1893 Boots Pharmacy retail UK 1877 Daily Telegraph Newspaper UK 1855 Tholstrup Cheese Denmark 1893 General Electric Consumer USA 1876 The Halifax Banking UK 1855 Rowntree: Confectionery UK 1893 (investors backing electronics Louis Vuitton Clothing/fashion France 1854 Fruit gums Edison’s experiments) Steinway Pianos Germany 1853 Alfred Dunhill Men’s UK 1893 Ericsson Technology Sweden 1876 Standard Chartered Bank UK/Asia 1853 accessories Budwieser Beer USA 1876 Le Bon Marché Retail France 1852 Sears Roebuck Mail order USA 1893 Bissell Cleaners USA 1876 Wells Fargo Financial USA 1852 Shredded Wheat Food USA 1893 Tufts Soda fountain USA 1876 Reuters News UK 1851 McVitie: Digestive Biscuit UK 1892 Toshiba Technology Japan 1875 Moss Bros Retail UK 18 51 Maxwell House Coffee USA 1892 Liberty Retail UK 1875 Pullman Rail services USA 1851 Ingersoll Watches USA 1892 AT&T Communications USA 1875 Aquascutum Clothes UK 1851 Philips Electronics Netherlands 1891 HP Sauce UK 1875 Kiehl’s Cosmetics USA 1851 Fenwick Retail UK 1891 Remington Typewriters USA 1874 New York Times Newspaper USA 1851 Wrigley Confectionery USA 1891 Southern Comfort Whisky USA 1874 Singer Sewing machines USA 1851 Parker Pens USA 1891 Church’s Shoes UK 1873 Bally Shoes/ leather Switzerland 1851 San Miguel Beer China 1890 Beck’s Beer Germany 1873 Howden Engineering UK 1851 Allianz Insurance Germany 1890 Levi Straus Jeans Clothing USA 1873 products Kendal Mint Cake Biscuit UK 1890 Chivers Jams UK 1873 Lazzaroni Amaretto Liqueur Italy 1851 Player Cigarettes UK 1890 Horlicks Drink UK 1873 Jacob’s Biscuits Ireland 1850 Canada Dry Drink Canada 1890 Eijsbouts Bells Netherlands 1872 Moss Bros Clothing UK 1850 American Tobacco USA 1890 Bloomingdale’s Retail USA 1872 Eno’s Salts Pharmaceutical UK 1850 Hovis Bread UK 1890 Stork (now Unilever) Margarine Netherlands 1872 (now part of Nintendo Entertainment Japan 1889 Folger Coffee USA 1872 GlaxoSmithKline) Paul Baker France 1889 Adams Chewing gum USA 1871 Dunlop Tyres UK 1889 Penhaligon Men’s scent UK 1870

Market Leader Quarter 2, 2011 27

24 Young.indd 27 2/23/2011 16:54:21 brands laurie young

dispelling The myThs own fortunes en route. Bernard Arnault The ‘product life cycle’ concept is of LVMH, Sir Paul Judge (who led the surely utter nonsense. This irritatingly After nearly ten years buyout from Cadbury) and Mika Jatania well-known concept is taught in nearly of Lornamead are just a few entrepreneurs every course on marketing and appears in of unsubstantiated who have exploited the daft strategies of nearly every textbook. assertion, several marketers or business leaders in this way. Young marketers are taught that the sales of individual products or services credible pieces of commodiTisaTion is noT follow a pattern over a period of time alWays ineviTaBle which can be represented by a simple work in the early 1970s Time and again I hear marketing people S-curve. They are born, grow, mature talk about their offer as a commodity. In and die. Yet, although that idea has a debunked the idea of utilities or many technology companies, strong hold on management thinking, for instance, it is often an assumption that and executives can often be heard to the product life cycle they cannot do much to their core offer to talk about their product as ‘mature’ enhance its perceived value. Why is, for or a ‘cash cow’, it remains unproven Their passion for creating an offer instance, the telephone service of BT so and controversial for many products which served their customers well and similar to many of its competitors? or services. their intuitive investment in sustained, Modern brands such as Virgin have It is seldom taught, for instance, that high-quality marketing, helped them shown that it is possible to create wealth after nearly ten years of unsubstantiated make, like many brand icons, a fortune. through the visionary pursuit of a unique assertion, several credible pieces of work When asked how he wrenched himself offer. It has created a perception that it in the early 1970s debunked the idea of from abject poverty to the 18th century’s is possible to provide an airline, train or the product life cycle. In an article in the equivalent of billionairedom, Wedgwood broadband service that is truly different. Harvard Business Review, two planners called his systematic use of branding But that is also the lesson of these long- from JWT (Dhalla & Yuspeh, 1976) and marketing ‘the science of money lived brands. I’m not a beer connoisseur pointed out that most advocates of the getting’. These brand creators might not and I am sure there is a difference proposition had little empirical data. have had the terminology available to us between many of the products, but it is They said well-crafted research projects today but there is no doubt that they used just beer. Why then should Lowenbrau had failed to find a correlation between deliberate, systematic, brand-building (1383) be able to hold its own against, say, numerous sales histories and an S-curve. techniques to create enormous wealth. Grolsch (1615) after 400 years? Their article contains several data-driven Another way to get seriously rich is The message of the great, durable models that show no S-curve at all in by buying neglected or orphan brands. brands is that none of us should accept individual products or services. There are many neglected or starved the idea that commoditisation or price The knowledge that there are several brands that retain a cultural resonance cutting is inevitable. In the face of harsh hundred entities that are hundreds of in the memory of large groups of competition from China or India, many years old surely also calls this relatively people. Their owners could invest in business leaders in the West are assuming new idea into question. I am convinced them to grow their wealth but have that there is no way they can hold their that the first question any marketer should neglected them. In some cases this is own and command a customer franchise; ask is ‘can I find any way to turn this into a result of short-sighted leadership. In that you cannot build value in a changing a brand?’ not ‘at what phase is my product other cases it’s because of misguided or commoditised, international market. in its life cycle?’. misunderstood marketing strategy. Wedgwood, Cadbury, Colt, Heinz and They may, for instance, have been the Singer must be spinning in their graves. define The producT or service subject of a portfolio review that labelled Compiling the list of long-established One way to get seriously rich is by them as a cash cow. Terms like ‘cash cow’ brands has given me a different creating a brand. It is remarkable how are far too easily and sloppily applied perspective on our craft. When I many of these brands are connected to the and have, sometimes without analysis, discovered that Stella Artois was vision and determination of one business prompted firms to neglect or denude nearly 1,000 years old and that, in 701, leader or their relatives. brands of capital investment. article 12 of Japan’s Ganshi code was Later in their life they may have been To teach young marketers (who are consumer protection legislation requiring bought and nurtured by trained brand likely to be in any job for a far shorter manufacturers to brand their goods as managers , but names like Wedgwood, time than any of the products, services or a quality safeguard, it prompted me to Heinz, Mars, Cadbury, Guinness and corporate brands they will handle) that it re-evaluate the significance of marketing Singer have earned vast sums because is routine to take money from long-term and branding to wealth creation. their founders had a vision for a product successful entities to invest in creating After 30 years of trying to persuade or service that they built over time. risky innovations is daft and naive. executives not to treat marketing as just Josiah Wedgwood would roam his The fact that smart entrepreneurs an afterthought and to invest in brand premises smashing poor-quality product have been able to make millions (even equity, it is satisfying to find that one of with his walking stick and proclaiming it billions) by buying up the resultant the most enduring, differentiating and ‘not fit for JW’. Heinz campaigned for orphan brands suggests that there is profitable business techniques in human quality in food production and Marshall something fundamentally wrong with history is ours. n Field was obsessed with giving excellent this approach. It should not take new, customer service to Chicago shoppers 30 visionary entrepreneurs to breath life into Laurie Young is a writer and consultant. years before Al Capone was on the scene. them but many have; and they built their [email protected]

28 Market Leader Quarter 2, 2011

24 Young.indd 28 2/23/2011 16:54:22 ML cannes AD .indd 1 2/24/2011 15:12:02 media patrick barwise Waiting for ‘Vodot’ Why ‘video on deman d’ won’t happen

Many digital experts predict an mid aLL the excitement about proposed for 2012, and most households imminent transition to non-linear how media are changing, one having much greater bandwidth, of the most widespread issues ‘streamed, downloaded or searched-for television – video on demand is the supposed imminent content will become the norm’.1 transitionA from ‘linear’ to ‘non-linear’ The new coalition Government has said (VOD). Patrick Barwise clarifies television. This is not just the idea that nothing that suggests it disagrees with this the definitions and argues that people are occasionally watching various view. On the contrary, it has repeatedly VOD will not happen on the scale types of video on demand (VOD), said that the Digital Britain proposals for that some people envision and we including some TV programmes – which broadband were insufficiently ambitious. is true, if often exaggerated. I’m talking In 2008, the Guardian’s Emily Bell could be waiting in vain about the suggestion that, in the next few wrote that: ‘Within two years, audience years, the main way that people watch behaviour has completely changed due television will change to VOD. to the availability of broadband and the The previous UK Government’s penetration of the internet.’2 Digital Britain report – a centre-piece A senior independent TV producer of its Building Britain’s Future plan – recently told me that ‘in five years’ time, referred to the ‘not-distant point’ when TV channels may no longer exist’. people switch from ‘passive [viewing] I believe that most of this talk is both through the linear schedule’ to ‘active confused and deluded. It’s confused [consumption] using search and on- because the expression ‘non-linear TV’ is demand’. It predicted that, with universal hardly ever defined and is used to mean access to video-quality broadband very different things. And it’s deluded

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30 Barwise.indd 30 2/23/2011 17:05:03 media patrick barwise

by which I mean significant in terms it or the death of so-called ‘linear TV’. of viewing time relative to television. This is despite the fact that the digerati Remember, Digital Britain referred to have been predicting these revolutionary people switching from passive viewing changes for more than 20 years. through the linear schedule to active Waiting for ‘Vodot’ consumption using search and on- the tV reVolution demand, which ‘will become the norm’. In 1990, George Gilder wrote: ‘Television The delusion I’m addressing is the is a tool of tyrants. Its overthrow is at Why ‘video on deman d’ won’t happen belief that mainstream TV viewing is hand.’4 He also predicted a new golden undergoing revolutionary change. VOD age for newspapers thanks to online, isn’t just a fad. I have no doubt that in which should tell you how much to 2020 people will still be downloading and believe his pronouncements. Five years exchanging short video clips, probably later, Nicholas Negroponte, head of even more than today. I also expect that the MIT Media Lab, wrote: ‘What will the video retail and rental market will happen to broadcast television over the switch from physical DVDs to online next five years is so phenomenal that delivery. But both of these will still be it’s difficult to comprehend.’5 Nothing peripheral to people’s mainstream TV much happened. viewing. They’re not revolutionary and Part of this 1990s vision was that TV don’t fall under my definition of Vodot. viewing would itself involve a lot of The other word I want to stress in that definition is standalone. It may make good commercial sense for Apple, The delusion is Sony, Sky, Virgin Media, BT, Nintendo, Microsoft, Google, or Facebook to the belief that include VOD in their product offering if mainstream TV it helps them increase the revenues and profits of their main business. I have no viewing is undergoing doubt that this will continue. For these companies, it doesn’t matter if VOD revolutionary change generates less revenue than its costs. But for the revolution that Digital Britain and others envisage, large-scale VOD has to interaction. You’d be able to watch the be commercially viable in its own right, match from any seat in the stadium, click paying a fair market price for content, on the screen to buy Jennifer Aniston’s distribution and marketing. T-shirt during Friends, or call up a In Waiting for Godot, Godot never potted history of Estonia when its prime appears. In ‘Waiting for Vodot’, we’re still minister was on the news. The distinction waiting. Will Vodot finally appear? I say between TV and other video content no, but many would disagree. Most homes would disappear. Most viewing would now have broadband; VOD is increasingly be non-live – what the technologists because the extent of change in what getting onto the main TV screen; and call asynchronous. Most content choice and how people watch TV has been – people in several countries are testing would use search and recommendation and will continue to be – less than the a wide range of technical and business agents. All of this was supposed to be hype suggests. models. The jury is still out, but we commonplace by the early 2000s. In this article, I outline the evidence should have a verdict by the end of 2011 After the bubble burst in 2000, most and explain why I liken the VOD situation or soon after that. people accepted that the interactive bit of to Samuel Beckett’s absurdist play Waiting this vision – Jennifer Aniston’s T-shirt and for Godot,3 in which the enigmatic and making the changes happen all that – was nonsense. But as recently as long-awaited Godot never appears. If, as I believe, the VOD bubble is about 2006, Janus Friis, the co-founder of Kazaa to burst, that doesn’t mean VOD will and Skype, and then about to launch the What the future might hold disappear, any more than the internet ill-fated VOD site Joost, said: ‘People love When referring to ‘Vodot’, I mean large- disappeared after the technology bubble TV, but they also hate TV. They love the scale, commercially viable, standalone burst in 2000. Big technology and media … amazing storytelling, the richness, the VOD. A Vodot company would create or players will still provide VOD alongside quality itself. But they hate the linearness, acquire TV content; market it; physically their main products and services to the lack of choice, the lack of basic things distribute it on demand through the increase customer acquisition, retention, like being able to search. And wholly internet to consumers’ TVs and other and willingness to pay – but not as a big missing is everything that we are now devices; and generate more revenue than direct revenue or profit source – and accustomed to from the internet: tagging, its costs, from advertising, subscriptions, there will also be niche services replacing recommendations, choice, and so on.’ and pay per view. There are two physical DVD retail and rental. The idea that we’re going through important things about this definition. But what we won’t have any time soon revolutionary change in TV viewing First, it includes the words large-scale, – or maybe ever – is Vodot as I’ve defined is remarkably persistent. The Digital >

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Britain report refers to it repeatedly channels for something better; watch a and VOD features in the new coalition video cassette or DVD; or switch off the Government’s enthusiasm for superfast TV. They usually took the first option – broadband and local TV and its apparent partly because it required the least effort. lack of interest in universal basic Now, they no longer have to do this. broadband and digital inclusion. There’s always something good, which they themselves have chosen, easily defining non-linear available on the PVR. For most viewers In the new TV environment, we can in ‘converged’ homes, the PVR is the distinguish between four broad types of main backup to live TV, accounting viewing. Given the amount of confusion for more than half of the 20% non-live and the loose way in which people talk viewing in these well-equipped homes. about linear and non-linear TV, these PVR penetration is still much lower distinctions matter. than broadband penetration. As that gap There’s live viewing of regular TV. decreases, and as PVRs get bigger and There’s time-shifted viewing off the smarter, more homes will have their own, personal video recorder (PVR) or increasingly large, self-selected archives, something similar. There’s catch-up TV reducing the value of both catch-up and such as the BBC iPlayer, which is also on-demand TV. Note that the PVR relies time-shifted but doesn’t require you to entirely on regular TV programmes from preset the recording. All three of these are the linear schedule and doesn’t even need evolutionary. They’re all about watching a broadband connection. regular linear TV from the regular linear There’s also catch-up TV for when you schedule, either live or time-shifted. forgot to set the PVR or heard about the In the new TV environment, we can distinguish between four types of viewing. Given the amount of confusion and the loose way in which people talk about linear and non-linear TV, these distinctions matter

Far from heralding the death of linear programme the next day. Catch-up TV is TV channels, they all depend on those another tough, free competitor to VOD. channels for content. It does need broadband, but it’s still about traditional linear content. Less important Only the fourth type of viewing – true regular linear TV content and channels. reasons are: to see content that’s not available video on demand – breaks away from It’s not VOD. on TV; to keep informed during a breaking the linear schedule. The content here VOD is still tiny as a proportion of news story; and to see additional content is a mixture of long-form movies and total viewing time, maybe 1% among about a programme. Even these are often TV programmes (competing against the whole UK population and 2% of driven by or derived from linear TV.7 DVD retail and rental and some pay TV 15- to 34-year-olds. It will increase over Compared with broadcasting, the channels) and short-form video clips on time, but much more slowly than the internet is still an unreliable, low- websites such as YouTube. hype suggests, and viewers’ willingness 3quality, expensive video distribution to pay for it is very limited, even assuming channel. To replace broadcasting – that’s fiVe reasons for scepticism there’s little or no piracy – a necessary about five hours per home per day of, If you look at proper data about typical assumption. Having VOD on the main increasingly, HD-quality video – the viewers, a consistent picture emerges. TV instead of a laptop or PC will help. technology will need to mature, and either 1If people have lots of channels, a PVR, But the initial evidence – including Virgin viewers or advertisers will have to pay the and VOD, the first thing most of them do if Media’s continuing coyness about the internet service providers the significant they want to watch TV is still to see what’s percentage of true on-demand viewing extra bandwidth costs. Neither seems keen on live on their favourite channels. Live TV in Virgin homes with PVRs as well as to do so, which is presumably why so many still accounts for 80% of viewing in these catch-up and VOD – suggests that the technology and media players want the ‘converged’ homes and that percentage is benefit isn’t that dramatic. taxpayer, or BBC licence payer, to subsidise falling slowly, if at all.6 Surveys of why people watch online fast broadband. What about the other 20%? In the past, TV show that the main reasons are: to Many people still don’t use the internet if there was nothing they liked on any of 2watch recent TV programmes that they at all. These are mostly elderly and/or their favourite channels, viewers had four missed; to watch a TV programme or movie 4low-income heavy TV viewers living options: watch the ‘least bad’ programme a second time; and to view something for free in areas with broadband access. By 2020, on one of those channels; search the other rather than paying. All of these are still about I expect them to be only a small minority,

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growth has been on main sets in living how much, what, when, where, with whom, rooms: watching the main set is more and even how, people watch tV has compelling than ever because of bigger changed surprisingly little since the 1960s and better screens, PVRs, and so on. Put simply, this is a well-served market. I simply don’t see large-scale, standalone VOD services adding enough value to enough consumers (and, therefore, advertisers) to generate enough revenue to cover the substantial costs of content, marketing and distribution any time soon, except at the margin as a replacement for DVDs. We’ve waited a long time for Vodot. I don’t think he’s about to appear. n

Patrick Barwise is emeritus professor of management and marketing at London Business School. [email protected]

Notes: 1. Digital Britain Final Report, June 2009, pp109, 135–6. www.official-documents.gov.uk/ document/cm76/7650/7650.pdf 2. ‘Happy fifth birthday BBC3, but will there be many happy returns?’, Emily Bell, the The Guardian, 11 February 2008. www.guardian. co.uk/media/2008/feb/11/bbc 3. Pronounced ‘Goddo’. It was originally written in French and Godot may have been named after a low-ranking veteran racing cyclist called Godeau. 4. Life After Television: The Coming Transformation of Media and American Life, George Gilder, Norton, 1990, p49. 5. Being Digital, Nicholas Negroponte, Knopf, 1995, p54. but many of those who use the internet for things, but not enough to demand serious 6. BARB. Note, this is for homes with access simple apps, such as email and search, still effort. We watch TV to take our minds off to a PVR and VOD. Among all UK homes, won’t be using it for watching TV, even if what we’re not doing – work and chores.9 live TV still accounts for about 93% of total they have an internet-enabled set. In contrast, we mostly listen to the radio viewing. The final reason for my scepticism to take our minds off what we are doing – 7. Deloitte presentation at 2010 Edinburgh about Vodot is that live and time- driving, cooking, ironing, and so on. International Television Festival. 5shifted linear TV are so compelling, Another reason for the average of almost 8. ‘Television: Back to the Future’, Byron and becoming more so. For more than 40 six hours a day that people spend watching Sharp, Virginia Beal and Martin Collins, years, viewers have watched an average and listening is that broadcasting is such Journal of Advertising Research. 49, 2, June 2009. of three and a half hours of TV a day – a good value for money. Despite Moore’s 9. See ‘The Limited Capacity Model of mixture of drama, comedy, news, sport, Law and all that, telecoms and the internet Motivated Mediated Message Processing’ by documentaries, and general entertainment – cost UK consumers more than a pound per Annie Lang, in Robin L Nabi and Mary Beth mostly to relax, in the evening, in the living consumer hour. Television costs about 11p, Oliver, eds, SAGE Handbook of Media Processes room, with other family members. How radio a bit over 1p.10 and Effects, SAGE, 2009, pp193–204. Professor much, what, when, where, with whom, and Annie Lang of Indiana University, an expert even how, people watch TV has changed and finally… on the psychology and physiology of media surprisingly little since the 1960s.8 The only Whatever the reasons why we watch so consumption, says that TV ‘strongly influences real change is that viewing is now spread much TV, it seems to work. Further, our automatic processing (defined as you can’t over hundreds of channels, although the top despite the growth of new media, TV stop it happening) system, which is why it is five still capture just 50% of viewing. viewing has actually increased in the so hard to stop watching’. Lang’s model helps Oddly enough, we don’t really know past few years. Some of that is due to explain why TV so successfully takes our minds why people watch so much. Maybe the people spending less on out-of-home of other things but we then recall little of what neuroscientists can explain it. My hunch is entertainment during the recession and we have seen. that watching TV takes up enough mental a growing proportion is combined with 10. Based on Ofcom, Communications capacity to take one’s mind off other other activities. But, interestingly, all the Market 2010.

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30 Barwise.indd 33 2/23/2011 17:05:10 M arketing insigHt melanIe howard Marketers nee d more insight

Insight teams are now commonplace in companies, yet the relationship with marketing isn’t always clear. Melanie Howard looks at the balance between the two functions and recommends ways in which they can work more closely together

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He recent publication of they were close to their customers and Future Foundation’s The Future cited examples such as HP, Disney and of Insight report1 argues for a Walmart (then in its infancy). more prominent role for the We highlight how, through the Tinsight function. This includes creating evolution of advertising planning, as more senior champions and demonstrating a well as a number of other key shifts, the return on investment. modern insight function has become The natural assumption about the means by which companies and brands marketing and insight departments – create and maintain customer closeness. given a common focus on the consumer/ customer – is one of harmony and Why not a part of marketinG? working together towards a shared goal. Surely this is a seminal starting point for To a considerable extent this is the case. all modern marketing. Marketing has also But digging beneath the surface in the 40 been transformed over the decades from or so interviews that were conducted for a command-and-control process – albeit that study reveals a less rosy picture. slowly and imperfectly – to one that is This article looks at the tensions increasingly dictated by customer needs and challenges that exist and explores and preferences. how the functions can work more Doesn’t this mean that the insight effectively together. Marketers should function should best be treated as ask themselves if they are making the a subset of marketing – rather than best use of insight across the entire attempting to raise its own profile marketing function. A serious review of on the board, or maintain a clear the relationship might pay dividends, line of independence, as some of our particularly in exploring how insights respondents reported? might be more effectively distributed We estimate that 60% of insight teams and communicated. report into the marketing function, but We distinguish between the desired that leaves a hefty minority that don’t. impact of insight delivery – the ‘Aha The interviews reveal that insight teams moment’, as many survey respondents report to a plethora of other functions described it – and the process of in organisations – including directly generating this through the insight to the CEO, also strategy directors, function. This process uses many sources commercial directors, CRM directors beyond traditional market research to and knowledge directors. generate fresh perspectives and translate The question of where the best these into actionable intelligence about reporting line might be can’t be answered consumer needs and behaviour. This without a detailed analysis of where distinguishes it from the market-research insight teams are judged to be the most department of old, whose job was largely effective and influential – which we will to measure and report, rather than do in a future exercise. But perhaps in anticipate and predict. those companies where it isn’t placed in the marketing function, marketing GettinG closer to customers directors should be thinking about why The report argues that the creation and that is the case and whether or not they empowerment of the insight function can could be using insights to greater effect. be traced to the publication of Tom Peters An important clue that many and Robert Waterman’s seminal work In marketers are not getting to grips with Search of Excellence in 1982. internally generated insight comes from Their in-depth analysis of successful an online survey of 172 companies2 to businesses identified that one of the most quantify key issues from the interviews. important distinguishing characteristics The survey found that just 55% of of the truly excellent companies was that marketers are regularly using the insight >

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But the impression we got from our interviews is that this is still a work insiGht must Be a ‘think tank’ in progress rather than a done deal. Once the emphasis shifts from knowledge acquisition and filtering to one of interpretation, Most insight teams are continually integration and ultimately explanation, insight professionals have to create a framework of experimenting and exploring new routes explanatory ideas for the organisation. to improve integration and application These will create an intellectual structure into which evidence can be gathered and assessed of their outputs. This is a critical area for and used to reduce risk. What had been the domain of the external think tank in the 1990s and skills development for the future. 2000s must now also become the terrain of the insight team – miles away from the work of the While 60% of the survey respondents market research manager only a few years before. distribute insight outside their More organisations are using the language and skills from the think tank world – from the department on a weekly basis or more COI’s Big Thinkers Network to the IAA’s biennial Global Brand Think Tank. n frequently, there could be more and better use of the resources. The key component to this is not just the sharing of knowledge but the interpretation and creation of actionable insights – ideas that can be readily implemented to improve marketing planning, communications, sales and results. Our analysis is that more can be done in this area to create shared processes and methods of improving the return of investment on the insight-generating process. Insight teams are keen to make sure that their work is properly used and marketers need to know how to demand what it is they need in terms of frequency, format and terms of engagement. It may be time to explore this together.

the drive for innovation In the interviews, we heard a rallying cry to marketing and insight teams to collaborate effectively. Meeting the pressure to innovate relies on the fuel of good insight, the insider knowledge of insight teams are keen that their work is that specialist teams provide in their the brand and its distribution, provided properly used and marketers need to know how to demand what they need in terms of day-to-day jobs – a lower proportion by the marketing team, plus the structure frequency and format to make it work even than senior managers. and creativity provided by excellent Despite the commonality of purpose, innovation processes. the use of insight has not permeated the Increasingly, insight teams are being activities of the marketing department required to take on board the innovation to the degree that it should. If this is brief in companies where this hadn’t the case, it is worth asking why. Surely been a function. This has simplified the marketers should want to be exposed to process, but still requires the cooperation every possible source of inspiration and and engagement of the marketing team. ideas available. A growing number of Future Foundation’s clients are called ‘insight Good communication and innovation’ managers and 70% of One of the hallmarks of good survey respondents use this internal relationships is good communication. A resource in their innovation work. But striking finding from The Future of Insight that leaves 30% who don’t, and we report was the degree of time and effort occasionally hear of marketers engaging that the newly empowered insight teams external innovation consultancies invest in communicating their material to without involving internal insight the wider organisation and in engaging teams – although this is rare and reflects other teams to use it. a disappearing fault line. This shows the value that is placed It is time to bring insight and on insight across the wider organisation marketing together in the common beyond marketing, but also the need to cause of maximising the organisation’s find ways of condensing complex thoughts innovative capacity, irrespective of the in a way that inspires creativity. nature and structure of the reporting

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lines. We believe that all businesses will benefit from a re-examination of how the two can be more effective together. As management guru Peter Drucker said in 2002: ‘Because its purpose is to create a customer, the business has two – and only two – functions: marketing and innovation. Marketing and innovation produce results. All the rest are costs.’ Regular presentations and workshops already seem to be a key part of the solution among many companies, which highlight the importance of face-to-face engagement. Of these, 55% say they use workshops in some way – although what this means must vary and best practice standards are not clear. A project at Innovation RCA (Royal College of Art) is sharing workshop practice from across the college – the workshop of workshops – and finding much commonality but also significant differences too. This area might benefit from a brighter spotlight in many organisations, not least because workshops are becoming ubiquitous and are delivering real value.

strateGic contriBution at the most senior level The Future of Insight report found that tensions and insight is used strategically in the majority challenges exist of organisations. Only a quarter say that it between functions – the is used more tactically than strategically. question is how they can work together This again points to an opportunity for to benefit the organisation marketing to make greater capital from the insight function. In the battle for greater boardroom We presume that many marketers access to the insights needed to enhance influence for marketing directors, this see this as their role and would not the operation. The onus in this case is is an area in which the perception of necessarily welcome the elevation of the on the insight team to communicate more insight as leading to the strategic high insight function to the lofty heights of effectively throughout, but marketers ground at the most senior level could board membership. However, these issues can play a part in specifying outputs and be of value. should be reviewed and debated. If, as we engaging in creative idea-generation Interestingly this points to a source have argued, both have a common interest processes, particularly in the design and of tension, since one of our principal in ensuring the organisation is focused delivery of workshops. recommendations in the report was for on customers, it makes sense to work It is from this common ground that it the insight function to be represented together as closely as possible. will be possible for functions within an at the most senior level on the board – organisation to form a stronger, mutually fielding its own champion, as it were. develop effective partnership beneficial alliance. n We talked about the possibility of Despite the positive reports from chief insight officers becoming the many respondents about the greater Melanie Howard is chair of the Future essential conduit for intelligence about contribution of insight to marketing Foundation. the wider world to be represented at this and other key functions, there are still [email protected] level. Nick Howarth Pullen, strategy, many other ways to increase the value planning and insight manager at Aviva, of a working partnership. More than Notes: had an intriguing suggestion: ‘I would two-thirds of respondents believe that 1. The Future of Insight report, November 2010, like to see insight as absolutely central insight is being taken more seriously than can be requested from www.futurefoundation. alongside the marketing director, maybe it was three years ago. net/page/view/The_Future_of_Insight even a research or intelligence person In companies where the insight 2. Drawn from the Future Foundation’s in the boardroom in the way you would function does not report to marketing, database of clients and prospects, the IPA have an intelligence person in your the reasons for this should be Strategy and Planning Group and the war room if you were conducting a examined and the marketing team Marketing Society’s membership. Research was military campaign.’ should ensure that it is getting regular conducted in September and October 2010.

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34 Howard.indd 37 2/23/2011 17:16:53 theory kyle findlAy Why doesn’t the best always win?

Markets are not fair. Big brands n order to understand how The funny thing about market share enjoy a disproportionate market share forms, we must agree is that it often doesn’t behave in the way that markets are inherently social we expect it to. One might rationally advantage over smaller brands. constructs. We either define ourselves assume that a brand’s market share is a inI terms of society (for example by the function of its quality and how well it And, not only do they have more clothes we wear and the music we listen delivers its product or service. One might customers, but their customers to) or against it (perhaps by joining a be forgiven for assuming that the best use the brand more frequently. counter-culture group such as punks or brand always wins and that customers goths, who, ironically, are often an even will always have the prescience and good Kyle Findlay looks to network more homogeneous group than the general judgement to spot a ground-breaking theory to explain how this populace). Either way, we cannot fully new market entrant, ensuring that it escape the sculpting effect that society has eventually comes to dominate the market advantage works on us. Indeed, it has been found that even with its own large market share. our risk of becoming obese is influenced by Although these assumptions might what our friends weigh. seem reasonable, we know that they are Society defines us, even as we define not 100% correct. In reality, the market society’s structure and norms in return. share that a brand enjoys is as much a Social influence is inescapable. In function of timing and luck as it is a addition, we are faced with more social function of quality and delivery. The influence than ever before in the digital best in the market doesn’t always win, age thanks to social media platforms such and many new products fail to make a as Facebook and Twitter, search providers dent in the market regardless of how such as Google and Yahoo and online good they really are. retailers such as Amazon. This makes it For example, the Sony PlayStation 3 difficult to make decisions in isolation. might be the most technically advanced home-console with the most features Background theory out of the box such as Blu-ray and wi-fi Network theory helps us to understand support, but the Nintendo Wii, with the ebb and flow of social influence. its dearth of extras and its previous- In addition to understanding who generation graphical powers, still the people are that act as information managed to hit a sweet spot between gatekeepers or exert influence in a price and broad appeal that saw customers social group, network theory helps us to flocking to stores for units. understand how people group together around specific ideas. the ‘douBle-whammy’ effect When we consider that a brand Despite brands’ best intentions and is really just an idea – a bundle of superior products, it is often very difficult perceptions, associations and experiences to predict which ones will do well in a wrapped around a functional product market and, more often than not, new – we realise that network theory can products fail. One might be forgiven for help us understand how people group imagining that incumbent brands are together around conceptual focal points, surrounded by unassailable fortifications linked by a common idea that we call that make it difficult for newcomers to a “brand”. In conventional marketing chip away at their market share. parlance, we call the group of people tied Marketing wisdom does recognise together by a common usage experience, the ‘fortifications’ that form around a brand’s ‘market share’. big brands’ market share. For example,

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marketing scholars such as Andrew involve product re-formulation and/or like ‘natural selection’, a gene [brand] with Ehrenberg have long shown that the new strategic departure in advertising/ even a 1% advantage in its number of phenomenon of ‘double jeopardy’ applies communication. surviving offspring can quickly crowd out alternatives [competitors] in most markets. Double jeopardy describes the phenomenon whereby big Skewed marketS brands benefit from a double benefit at Network theory gives us a formalised the expense of smaller brands: not only name for this phenomenon whereby big do big brands have more customers, but brands tend to grow bigger over time, their customers use them more often crowding out their smaller rivals in the than small brand customers use their process. Indeed, there is a generic term respective brands. This positive feedback for the class of mechanisms that can means that big brands tend to get bigger produce such a crowding-out effect. and small brands tend to get smaller. They are collectively referred to as In other words, big brands are ‘generative mechanisms’, and one of the self-sustaining entities with an internal most well-known examples is ‘preferential consistency that lends itself to continued attachment’, which we will focus on for growth in the future at the expense the remainder of this article. of smaller brands. This feedback loop Preferential attachment is a simple represents the fortifications that new and concept and it works like this: imagine a small brands need to overcome in order store shelf with five brands on it (see Figure to survive and grow if they hope to reach 1). The store shelf has ten facings. To begin a stronger position in the future. with, let us imagine that five brands start Thus, any marketing initiative on equal footing with two facings each. All that wants to enact change needs to other things being equal, each brand has a understand the opposing forces at play 20% chance of being chosen according to that seek to reinforce the status quo. their number of shelf facings. Any would-be competitor brand needs Now imagine that, as luck would have to overcome these forces by putting it, more customers buy brand 1 than any more energy into finding a crack in other brand (perhaps because it is in the existing defences or undermining them best position, has great packaging or offers completely through the process known the best value proposition). Regardless of as ‘disruptive innovation’ which may the reason, when it comes to restocking >

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the shelves (Round 2), the retailer sees ubiquitous connectivity and social media that brand 1 is their best seller and platforms that make it easier than ever to assigns the brand an extra facing. Brand share one’s thoughts about brands. 1 now has three shelf facings. However, If we were to follow this feedback the shelf still has only ten facings in total, loop for a long enough period of time which means that brand 1’s extra facing during which the shelves are consistently comes at the expense of one of the other restocked, we would find that the brands. In our example, brand 5 loses a distribution of shelf facings could be facing as a result. described by a class of skewed functions This shake-up on the store shelf called ‘power laws’. Power law changes our brands’ purchase distributions are characterised by a probabilities. Brand 1 now has an few large observations at the head advantage with a 30% chance of being of the distribution and many smaller chosen, while the remaining brands have a observations in the long tail of the 20% chance, except for brand 5 which has distribution (in this case, a few brands a 10% chance. This small initial difference would have many shelf facings, while most can quickly spiral downwards owing to a brands would have few facings). feedback loop that ensures that as brand 1 Power law distributions stand in stark sells more than its competitors, word of contrast to the more familiar normal mouth surrounding brand 1 spreads faster distribution, or bell curve, that is an than its competitors and that increases its underlying assumption of many traditional chances of being sold even more. Thus, it statistical approaches. What a normal expands across the shelf, crowding out the distribution might treat as an outlier other brands. actually becomes the most important observation in a power law distribution. natural parallel So, the reason why markets aren’t Evolutionary psychologist and author, always fair and why big brands tend to get Steven Pinker, neatly describes the same bigger is because generative mechanisms process in a biological context: ‘Natural such as preferential attachment and selection works like compound interest: social influence bias our behaviour as customers, thus shoring up big brands, making them bigger still at the expense of The market share that a brand enjoys is as smaller competitors.

much a function of timing and luck as it is a theory v oBServationS function of quality and delivery. Many There is one more twist in the tale though. Once we’ve arrived at the products fail to make a dent in the market conclusions described above, the next logical question is whether or not regardless of how good they really are our market share data display this characteristic power law pattern. The short answer to this is, no, they do a gene [brand] with even a 1% advantage not show clear-cut power law distributions in the number of surviving offspring it in terms of market share. However, yields [facings] will expand geometrically most markets do show clear inequalities over a few hundred generations, and in terms of the distribution of market quickly crowd out its less fecund share, with most markets containing a alternatives [competitors]. Why didn’t few large brands and many small brands, this winnowing leave […] us with the and these distributions tend to show the best version of every gene [product]? … characteristic power-law-like drop-off The world would be a duller place, but from the market leaders to the next evolution doesn’t go out of its way to biggest brands. keep us entertained.’ In markets that do not initially show People who use brand 1 may enjoy clear inequalities between the market the product just as much as people who leaders and other brands, the issue is use brand 2, but there are more people usually one of market and category talking to their friends about brand 1 than definition. We often found in such brand 2. Consequently, word of brand 1 cases that we were looking at categories spreads faster, again reinforcing the that have not been sufficiently tightly feedback loop that will ensure that brand 1 defined such that brands that do not comes to dominate in the long run. This compete directly in customers’ minds is the role of social influence in markets as supplementary products have been – a role that is amplified in a world with lumped together.

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A thought experiment

Round 1 Market share

Brand Brand Brand Brand Brand Brand Brand Brand Brand Brand 1 1 2 2 3 3 4 4 5 5 Probability 0.2 0.2 0.2 0.2 0.2 12345

Round 2

Brand Brand Brand Brand Brand Brand Brand Brand Brand Brand 1 1 1 2 2 3 3 4 4 5 Probability 0.3 0.2 0.2 0.2 0.1 12345

Round 3

Brand Brand Brand Brand Brand Brand Brand Brand Brand Brand 1 1 1 1 2 2 3 3 4 5 Probability 0.4 0.2 0.2 0.1 0.1 12345

We found that no market perfectly often can they afford to disappoint their figure 1: a thought experiment showing an reflected a power-law distribution, despite customers before they are abandoned? imaginary store shelf. as brand 1 expands most markets clearly displaying some form And, if I am a competitor brand, it is across the shelf in three consecutive ‘rounds’ it creates a skewed distribution in of inequality between the biggest brands in useful for me to know how high and thick terms of market share for the five brands the market and the smaller brands. the walls are that I need to besiege. that will eventually form a power law Perfect power laws form only when the What marketer can really afford not to cost of distributing a quantity is low. And understand the basic mechanics that drive we know that in most markets, there is their market? Understanding market-share usually some form of ‘cost’ or trade-off formation from a network perspective involved when customers make a choice allows us to understand why customers between brands, either in terms of the don’t always appear to act rationally and actual product price or in terms of the why business isn’t always fair. I time and effort required to find a product that is poorly distributed. acknowledgementS This means that power laws form in A massive thanks to Anna Retief for frictionless markets and, considering her power law curve-fitting efforts that most markets have some form of across these 46 datasets. In addition, a friction, all we are left with is a general big thank you to Aaron Clauset of the biasing tendency towards market share Santa Fe Institute and Michel Goldstein inequalities that rarely blooms into full of Yahoo Research for their guidance in power law distributions. However, this applying the most appropriate method for does not diminish the value associated identifying power laws. with understanding how these inequalities form over time in the first place. This Kyle Findlay is a senior R&D executive helps us to understand why the best brands at the TNS Global Brand Equity Centre. don’t always win and why it is so difficult kyle.ﬁ [email protected] to introduce new products into a market. In addition, it gives us some indication This is an edited version of a winning of the inertia or gravity surrounding a big paper in the WPP Atticus Awards. The brand. This is useful to know as it gives full paper and references are available at large brands an indication of the ‘buffer www.esomar.org/web/publication/paper. zone’ they have to work with – how php?id=2171

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38 Findlay.indd 41 2/24/2011 09:40:03 creativity peter field The value o f creativity Peter Field describes an he practical aspect of the creative with the 40 or so that did win creative ingenious analysis of cases process has been argued for awards (for online and offline). decades. For many agency My source for the creative award wins from the ipA awards and creative teams it was the only was the globally respected Gunn Report Gunn report that puts to rest Tthing that mattered; for many clients it was a database; my source for the hard business any doubt about the distraction from the business of selling. results was the similarly respected The gulf between clients and agencies in IPA effectiveness databank. With one effectiveness of creativity this respect has narrowed in recent times, exception, the two groups of campaigns as evidenced by the launch of the Creative are fairly evenly matched in terms of the Effectiveness Lions at the Cannes Lions myriad factors that can affect effectiveness Advertising Festival – an event historically (market share, maturity etc). dominated by creative categories. But the The important mismatch is in the divide persists in less-enlightened quarters. relative level of investment behind the So, not surprisingly, when The link between campaigns defined by their ‘extra share creativity and effectiveness1 was published of voice’ (ESOV), ie share of voice minus it received a mixed response: enthusiasm share of market. ESOV has been widely from creative agencies and scepticism from validated as a key driver of effectiveness some others. Both responses are entirely – if it is positive then brands tend to grow appropriate for reasons I examine here. and if negative, shrink in proportion. The non-creative group of campaigns the golden egg enjoyed on average nine percentage points The study aims to provide the most robust more ESOV than the creative group, examination yet of the commercial benefits giving them a huge potential advantage of creativity in communications – not just in terms of expected business results (for for traditional advertising, but online too. example, around one point more market The analysis compares the hard business share growth per annum). In fact, they did results of the 170 or so IPA for-profit not realise this potential advantage – the campaign case studies submitted since 2000 creative group out-achieved them across that did not win any major creative awards the spectrum of business effects.

60 Market share gain v ESOV 50

20 SOM growth (%)

0 –60 –40 –20 0 20 40 60 80 100 –10 ESOV (%) –20

–30

–40

figure 1: the relative efficiency of creatively Creatively awarded Non-creatively awarded awarded and non-creative campaigns

42 Market Leader Quarter 2, 2011

42 Field.indd 42 2/24/2011 09:42:00 creativity peter field The value o f creativity The most revealing comparison consequence of lack of available budget was between the efficiency of the two (‘we have no money, so we shall have groups of campaigns, measured by the to think’) – if so, then the proportion relationship between share growth and of brand leaders among the creative ESOV (see Figure 1). The non-creative campaigns would have been lower than group generated around 0.5 points of share among the non-creative campaigns growth per ten points of ESOV (slightly (which it was not), as brand size is a major low by the standards of the IPA databank), determinant of budget. but the creative group generated an I believe two alternative explanations, astonishing 5.7 points of share growth per the folly of which are both highlighted point of ESOV. In round terms, they were by the study. The first of these is the about ten times as efficient. Another way belief by many in general management of viewing the value of this is to project that creativity is risky. Highly creative what average level of share growth the campaigns (if they are ever allowed to creative campaigns would have achieved see the light of day) are likely to be with the same level of relative investment budget-restricted until they have proved (see Figure 2). Thus instead of merely themselves in the marketplace. In fact out-growing the non-creative campaigns this study suggests that the opposite is by 1.5 share points as was the case, the true – the levels of confidence in the creative campaigns would have outgrown relationship between share growth and them by more than six share points. ESOV were greater for the creative campaigns than non-creative ones. This WhY is creAtiVitY stArVed of suggests greater certainty of effect for inVestMent? creative campaigns. It is interesting to explore why the The second explanation is widely demonstrably highly effective creative evidenced in case studies and is more campaigns were relatively starved of inexcusable. The conventional ‘logic’ investment. It cannot be simply explained peddled by many advisers to clients is that by suggesting that creativity was a the benefit of greater effectiveness is the

15 Not creatively awarded

Creatively 12 12.6 awarded

7.3 6 5.8 5.8 Market share growth (% points)

0 At actual ESOV At same ESOV figure 2: Market share growth at actual esoV and projected at the same esoV >

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42 Field.indd 43 2/24/2011 09:42:00 creativity peter field

of growth as a mediocre asset. Unless 10 0 Not creatively your business would genuinely be unable awarded to supply the greater level of demand (perhaps true of automobile companies, 88% Creatively but few others) then it must make sense 80 awarded 80% to increase the media budget to ‘sweat’ 75% the asset while it is still potent. No agency can guarantee to deliver a sequel with the 60 same power, so the study advises making 59% the most of what you have. The analysis showed that the business advantages of creativity lie across 40 the spectrum of metrics. Taking the Effective success rate (%) effectiveness success rate (the proportion of campaigns that achieved any ‘top box’ 20 business effects scores – for example, price sensitivity, penetration, profit growth) as a metric of broad business success, the study showed considerable uplifts in broad 0 business effectiveness within ESOV bands Low <6% High >6% ESOV among creative campaigns (see Figure 3). As a final step in demonstrating the link between creativity and effectiveness, the figure 3: the impact of creativity on the broad business effectiveness success rate study looked at the link between levels of creativity (measured by the Gunn Report score – the number of major creative High achievers on a low budget are the most creative awards won by the campaign) and the levels of effectiveness (measured by the number of ‘top box’ business effects scores 12.1 achieved – which correlates closely with 14 return on marketing investment). 14 12 Again when the ESOV levels are 12 10 accounted for, it becomes very apparent 10 that greater creativity leads to greater 8 8 effectiveness among this group of 6 6 campaigns (see Figure 4). 4 4 3.5 2 2

Average Gunn Report score 0.8 hoW AWArds Were Won 0 0 Perhaps the most practical facet of Low <6% the study was the examination of why High 2+ 0.1 creatively awarded campaigns out- Number of very large performed non-creative ones. ESOV High >6% business effects Low 0–1 The analysis suggested that two factors were involved. The lesser of these was Low achievers on a high budget are the least creative the greater likelihood of the creative campaigns to be emotional in terms of figure 4: greater creativity is associated with greater effectiveness modus operandi. In the publication Marketing in the ability to reduce the budget and still meet era of accountability2 it was shown that the brand’s targets. emotional campaigns outperform It is a seductive argument and one that rational ones. So, by selecting in favour will meet with enthusiasm by the CFO; it of emotional campaigns, creative awards is also about the worst, most short-sighted judges would also have been selecting piece of advice you could give. For one in favour of effectiveness. But this could thing, the analysis shows that the benefit have explained only a small part of the of creativity increases dramatically as superiority of creative campaigns. the budget rises (and can be completely The major factor was the very strong negated if it is cut too far). ‘fame’ effect (ie, online and offline buzz) For another, consider what this ‘logic’ associated with creative campaigns – twice actually means: it is the cutting of the level of non-creative campaigns. investment behind a highly productive Campaigns that generate buzz were but time-limited asset (even creative ads shown (also in Marketing in the era of wear out) so that it delivers the same level accountability) to be the most effective of all,

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42 Field.indd 44 2/24/2011 09:42:02 creativity peter field

so creative judges are again instinctively submit effectiveness case studies. If I were selecting in favour of effectiveness by a client of one of these campaigns I would tending to award campaigns that have what want to know why. it takes to get shared and talked about. The study therefore offers a fairly convincing ProsPecting for success body of evidence to support the link The only wise response to this study is for between creativity and effectiveness and a agencies to pursue – and clients to reward reasonably compelling explanation of why – success in both creative and effectiveness it should exist. End of story? awards competitions. Greater success in one of these should be taken as evidence All thAt glisters is not gold of room for improvement in the other and The study appears to have presented an a need for better balance. open-and-shut case for the pursuit of Creative success without effectiveness creativity. And in a sense that is true – the suggests poor strategic and/or channel- analysis implies that a strategy executed planning rigour, while effectiveness success creatively is likely to be greatly more without creativity suggests an over- effective than the same strategy executed dependence on budget and brand muscle. non-creatively. I greatly welcome the decision to include But let me side with the sceptics for a a creative effectiveness jury at Cannes this moment by inserting a note of caution into the interpretation of the findings. What the study actually demonstrates No amount of pure creative genius will turn a is that creatively awarded strategically misguided strategy into a commercial success. sound campaigns are much more efficient than non-creative but strategically sound You need to focus on both effectiveness and campaigns (demonstrating strategic rigour is a major part of an IPA case study creativity to hit the sweet spot author’s requirement). It does not suggest that all creatively awarded campaigns are year. This has to be a good development inevitably effective. and if replicated at other major creative In Donald Gunn’s landmark 1996 study award competitions will help promote the (Do Award Winning Commercials Sell? – kind of balance that is needed to ensure sadly unpublished), he found that around the general link between creativity and 14% of creatively awarded campaigns effectiveness. It is unlikely to do away failed to show any commercial success – with the need for pure effectiveness usually because the strategy was wrong. If competitions, because there are many one looked for the levels of commercial ways other than creatively that agencies success and of its proof that are expected can create value for clients – indeed of IPA case studies, then the proportion increasingly so in the proliferating multi- of creatively awarded campaigns that are channel communications environment. unable to demonstrate success is likely to The important outcome is to find a be much greater. productive balance between the pursuit No amount of pure creative genius of creativity and of strategic effectiveness. will turn a misguided strategy into The alternative is either a return to the a commercial success. The analysis often ill-directed creative excesses of the demonstrates that you need to focus on 1980s or to the deadening era of risk- both effectiveness and creativity to hit the averse accountability of the noughties. n sweet spot. And herein lies the danger of the enthusiastic response to this report by Peter Field is an independent marketing creative agencies and the reason why the consultant to the IPA databank initiative sceptics may have a point. [email protected] An agency that targets creative awards alone as its key output success References: metric (as some may be tempted to do) 1. The link between creativity and effectiveness, runs a great risk of undermining the value IPA, June 2010. of that creativity, because the drive for 2. Marketing in the era of accountability, Warc, creative awards will mean de-prioritising June 2007. effectiveness. This is Goodhart’s law in action: when a metric is turned into a Warc, publisher of Market Leader, is target it loses its value as a measure of the official knowledge partner for the success. Perhaps this already happens. Cannes Creative Effectiveness Lions. There are many conspicuously creatively For more information, please visit www. awarded campaigns that never seem to canneslions.com/effectiveness

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42 Field.indd 45 2/24/2011 09:42:02 LeAderS hip shaun smIth and andy mIllIgan

An example of users’ influence was when Virgin galactic redesigned its spacecraft It’s time to following feedback from its customers boldly lead

In a world where digital, mobile and web technology has transformed the media landscape into a bewildering array of possible channels, and social media are being used to punish brands or force them to change everything from supply-chain policies to marketing tactics, Shaun Smith and Andy Milligan argue that it is time for a radical approach to marketing leadership

ArketerS fAce enormous radically shifted, and there are serious But we have also seen a different breed challenges. Targeting, questions about the long-term viability of of organisation emerging. They succeed locating, communicating brands that use precious resources. because they have the courage, confidence and maintaining any form or just sheer chutzpah to pursue a ofM reliable relationship with customers or Two conflicTing sTyles purpose that is beyond profit, to engage, consumers, has never been more difficult. In the midst of all this change – entertain and educate their audiences. The problem is not one of access, but one uncertainty or opportunity, depending on They see their customers and employees of control. It is the marketing equivalent of your point of view – we have observed two as members of a like-minded community, trying to slake thirst from a fire hose. distinctly conflicting styles of leadership who create an almost cult-like following The sheer volume of marketing ‘noise’ in organisations attempting to survive and around their brand – both within and means that for many new consumers, succeed in this turbulent period. without their organisation. These are traditional above-the-line marketing is The first, most obvious and – in our companies that are not just different but ‘below the radar’ as more turn to viral opinion – the most dangerous is that dramatically different and who push to marketing and social networks for sources of companies who become internally the extremes the consequences of their of inspiration. Nobody is sure exactly how focused on financial re-engineering and desired positioning and strategy. the communications and media landscape management restructuring. Balance-sheet Companies like this are often based will look in ten months let alone ten years. repairs, cost-cutting, trigger-happy on the personality and values of the The nature of business models is redundancy programmes and poorly people who establish and lead them, but changing – some have been turned on their thought through acquisitions are the not always. Sometimes their path has head by brands such as Six Senses Resorts corporate equivalent of rearranging the been deliberately chosen by executives and AirAsia X, for example (see box on deck chairs on the Titanic. They are all to differentiate them from the sameness p48), and some are broken for good. The the usual signs of a business with, in the of companies in the sectors they share. methods of distribution and exchange of words attributed to former CEO of GE They eschew typical ‘faceless’ corporate products, services and information have Jack Welch, ‘its ass to the customers’. behaviour and dare to put their

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shareholders’ concerns behind those of things. As Gav Thompson of O2 says: their customers, their employees and their ‘Don’t tell me how funny you are; tell me obligations to the wider public. They see customers and a joke that makes me laugh.’ We looked at Even during the most difficult times how these companies actually behave and – such as the global financial crisis from employees as members what they do differently from others. which recovery will be long and painful We conducted intensive in-depth for most – they are relentless in pursuit of of a community, who interviews with a cross-section of improvement, zealous in communication create an almost executives from the short-listed and take action in accordance with what brands. From these we identified eight they think is best for their brand not just cult-like following key practices and 40 behaviours that their bottom line. seemed to explain ‘boldness’. Finally, But this is not some corporate Quixotic around their brand we conducted a quantitative survey in tilting at windmills. These organisations the US and UK to compare the bold also happen to be incredibly commercial brands and their remarkable leaders. brands against other companies on and in most cases outperform their Brands such as Burberry, Virgin Galactic, these practices. sectors. In short, they are bold. Not Six Senses Resorts, Zappos, O2 and We found that the bold brands reckless. Just bold. They stand out from AirAsia X. outperformed the comparison companies others because they stand for something. We believe that being bold is an by a significant degree on each of the We investigated companies that we attitude of mind but is evidenced by what eight practices. The bold companies believe demonstrate boldness: how they people do and thus how any organisation scored an average of 4.3 on our five-point do it and, most importantly perhaps, why acts. Anyone and, by extension, any type scales across the eight practices versus they do it – their purpose. The result is a of company can be bold if it wants. The 3.4 for the comparison companies. It is book called Bold: how to be brave in business key is that it must be willing to behave a dramatic difference in our experience. and win. It is the story of 14 inspiring accordingly, not just claiming it does bold There is insufficient space in this article >

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46 Smith and Milligan.indd 47 2/24/2011 09:44:47 LeAderS hip shaun smIth and andy mIllIgan

They use dramatic language that fixes clear expectations in the customers’ cAse sTudy: AirAsiA x minds. Whether it is Burberry’s AirAsia X has built a bold and successful business model for long-haul, low-cost flights based on ‘Democratising luxury’, Zappos’ ‘Powered rapid turnaround, unusual schedules but a real sense of entertainment. Its insight was that long- by service’ or the Geek Squad’s slightly haul travel was built entirely round the needs of the premium traveller who is hard pressed for pithier ‘We’ll save your ass’, these brands time but not for cash. In contrast, Azran Osman-Rani, AirAsia X’s CEO, says: ‘We’ve built an airline are honest in their communication and model around the price-sensitive, time-insensitive customer which was previously untapped.’ As a engaging in their tone. result AirAsia X’s seat/kilometre cost, the key measure of airline productivity, is a mere 2.8 US They dramatise this promise through cents per available seat-kilometre compared with the seven to eight cents of their competitors. the customer experience. They recognise And low cost doesn’t mean low quality – the airline’s flat beds work just fine. n that consumers are increasingly cynical about big brands and traditional above-the-line marketing so they use the customer experience to demonstrate the Boldness cAn Be … promise. For example, Umpqua, the US community bank, has one of the boldest l An heroic purpose – whether it be to fly into space or save the planet. visions in banking: ‘To make going to the l Doing things that are dramatically different from what has been done before – whether it be a bank, the best thing you’ll do today.’ It has logistics company that treats its employees as a key asset in a commodity market or a bank that reinvented the banking experience from a acts like a fashion store. series of financial transactions conducted l Sticking to your principles regardless of the ‘market norms’ – whether it be an advertising in a sombre and stuffy environment to agency that refuses to pitch for new business or a retailer whose sole purpose is to create ‘wow’ something that looks more like the Gap. moments for customers. n And the Umpqua experience doesn’t just happen in the ‘store’, as they call the branches. Umpqua has embraced what it to report these findings in detail but what calls ‘handshake marketing’. we can do is to comment on some lessons By this the company means marketing that we can learn from the way the bold activity that is up-close, personal and companies approach marketing. in keeping with its positioning as a community bank. For example, employees MArkeTing is eVeryThing, noT are encouraged to perform what the bank JusT An Add-on funcTion calls ‘random acts of kindness’. They can In Market Leader Quarter 1, 2011, John pay for the bill for the customer behind Kearon argued that the adoption of them in-line at their local Starbucks so ‘marketing science’ has been the enemy of that when the customer goes to pay they innovation. We agree. In some important are presented with a small chit that says aspects, our bold companies are quite old- ‘Your coffee today is on Umpqua’. It’s all fashioned in the way they think about their part of delivering on the Umpqua promise business: they stay extraordinarily close to and getting customers to talk about the their customers and they ensure that the brand. Contrast this with one high-street brand is everything they do. Marketing bank in the UK which broadly advertises therefore describes a way of life rather than a list of customer commitments only a function or set of processes. to fall short on even the most basic of Marketing, for them, is primarily interactions with customers. a way of engaging and entertaining Actively involve customers in The bold organisations (logos above) believe customers or consumers, not a way of helping to improve the brand that there is a clear causal link between persuading them to buy a product. They and products. Bold brands do what you communicate, how you operate see marketing as an integral part of the not believe their products are so and how you protect your earnings customer experience – the marketing of perfect2 that customers can’t improve them. the product and the product itself are one. Nor are they so frightened by competitors From our research, the bold brands stealing their ideas that they won’t release intentionally and relentlessly do the anything until it’s foolproof. They see following: the involvement of their customers in the Clearly and honestly development of their products as a key part communicate the brand promise of marketing them. and values to customers. A An extreme example of this user- key task of marketing is to get led design is Virgin Galactic which your1 proposition over to the market as redesigned its spacecraft following early powerfully as possible. These brands are feedback from its customers. Innocent both bold and authentic in the way they invites its customers into its offices to do this. They don’t use weak or watered- suggest ideas and improvements as well as down promises of quality, or bizarre and allowing them to recommend and create incomprehensible slogans. new recipes. Sir Anthony Bamford, the

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chairman of JCB, changes the smallest for the brand stay. He says: ‘A company’s details on his diggers – for example, the culture and a company’s brand are really way the petrol cap rotates – because just two sides of the same coin. Brand is customers tell him that it matters. just a lagging indicator of culture.’ Use innovative viral marketing techniques to reach target MAking The righT connecTions customers. We found that all of the There has long been a belief in business bold brands use social media to tune that, put at its simplest, growing into3 the views of their customers and digital your reputation and revenue (usually marketing to reach them. Innocent does through sales and marketing) could be this through the simple words it uses on its separated from protecting your assets packaging that has encouraged people to and profit (usually through operations spread the word about the brand. and finance). However, the bold Burberry streams 3D live broadcasts organisations believe that not only is of its runway shows to five cities around there a clear causal link between what you the world and then publishes the show communicate, how you operate and how via 80 partner websites, reaching a you protect your earnings, they are in potential audience of 100 million whereas fact interdependent and you can’t get any the traditional catwalk show in Milan one of them right unless you get them all or London will be attended by 1,300 exclusive clients. The customers’ can view Bold companies are quite old-fashioned in the the show on their iPad, click on a product and have it delivered within a few days way they think about their business: they stay via Burberry’s Worldstore portal. In this way, Burberry delivers on its promise of extraordinarily close to their customers and ‘Democratising Luxury’. Achieve high levels of customer ensure that the brand is everything they do advocacy or ‘fandom’ to drive referral business. Communities right. As Dunne of O2 observes: ‘It only of fans validate these brands; they works when it all works.’ help4 to reinforce them, inform them and Robert Stephens of the Geek Squad, sometimes even to forgive them when they which provides computer-related services get things wrong. O2 has created a strong and accessories, used the expression: basis of fans by providing value that no other ‘Marketing is a tax you pay for being operator does. Access to events at the O2 unremarkable.’ We believe that the point Arena and Rugby at Twickenham all help he was making, and one that is shared by to cement a strong relationship with the these bold brands, is that if you focus your brand and deliver its promise of ‘Helping entire business on delivering a valuable, customers connect with the things in life entertaining and engaging experience that matter to them’. for your customers across multiple At the same time the brand has stripped channels then they will do the job for out the restrictive contracts and weasel you. You don’t need to waste additional words to make it easier for their customers marketing dollars on fancy or phony to leave. Products such as Simplicity, a campaigns that seek to shout louder SIM-only offer, allow customers to have than your competitors and persuade total control over their relationship with increasingly cynical consumers that you the brand. Ronan Dunne, CEO of O2, are different or better. n explains: ‘If you give your customers the freedom to leave, what you actually give Shaun Smith is founder and partner them is the confidence to stay.’ at smith+co. Create a cult-like culture. One of [email protected] the characteristics that we found to Andy Milligan is an international be significantly more evident in the consultant on brand and business culture. bold brands was the kinds of cultures andy.milligan@thecaffeinepartnership. they5 create. They invent their own words, com use unusual hiring practices and then go to enormous lengths to ensure they protect the You can download a free ‘Bold’ app DNA of their brands. from the Apple Store to compare your Tony Hsieh, CEO of US online retailer organisation with the bold brands. Zappos, offers new recruits $2,000 to Bold: how to be brave in business and win leave at the end of the first week of is published by Kogan Page in April training. Why? To ensure that only those 2011. For more information go to www. people who are passionate about working boldthebook.com

Market Leader Quarter 2, 2011 49

46 Smith and Milligan.indd 49 2/24/2011 09:44:48 digital tessa thorniley Uniqlo thrives on digital marketing

For more than a decade, Uniqlo s Tadashi Yanai, the chain’s shift has prompted a significant change in founder and one of Japan’s most Uniqlo culture from within the company has been exporting its brand dynamic businessmen, said in a and externally in its marketing to the of Japanese low-cost, quality recent interview: ‘We really outside world. haveA to transform this company to be In Japan, Uniqlo HQ has caused a casualwear around the world. successful and compete. Before, we sensation by breaking with many of tessa thorniley describes manufactured in China and sold in Japan. the conventions of Japanese corporate how the retailer has become an Now we need to manufacture in the world culture. Its parent company Fast and sell to the world.’ Retailing has said that English must be apparel empire by appealing to The transition to international brand spoken at all business meetings where a multicultural set of consumers partly reflects the need to compete with foreigners are present and that by March larger rivals Inditex of Spain (owner of 2012 all email correspondence must without losing its ‘Japaneseness’ Zara) and Sweden’s Hennes & Mauritz be written in English. The number of (H&M). It is also required to offset foreign employees will overtake Japanese slowing sales in its domestic market. The workers by 2015, the company has

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pledged, suggesting it is serious in its in mind. By January the following the company – that year. And some of mission to reform. year more than 27,000 widgets from the campaigns took on a sales-driving Similarly, the company’s global 76 countries were circulating, and the element as well as brand building. advertising and marketing – its external widgets and website that accompanied ‘Lucky switch’, a campaign that communications – have decisively shifted. the campaign had been viewed 68 million ran in Japan to coincide with Fast Throughout the past half a decade, a times in 209 countries. Retailing’s 60th anniversary, came out growing emphasis has been placed on Kentaro Katsube, the creative on 1 December 2009 for 31 days. It creative campaigns that include dance, management director at Uniqlo who aimed to promote the retailer’s end-of- music, colour and the internet rather has been with the company since season sale. than the spoken word and traditional 2005, was a key creative mind behind ‘Lucky switch’ turned the boring forms of marketing. It’s a tactic that Uniqlock (and many other digital banner advertisement on its head. Uniqlo has adopted to ensure maximum campaigns since). He is credited with What looked like a banner was instead ‘inclusivity’ in its approach to consumers spotting the power of web-based a kind of blog badge (another widget) and to ensure that existing and potential marketing several years before Uniqlock that transformed any website into an customers can engage with the company tick-tocked its way to viral success. He instant-win Uniqlo lottery. To encourage and understand its message no matter is also credited with convincing Yanai to blog owners to install the widget Uniqlo which country they are in. embrace online marketing. promised prizes to both the blogger and Daisuke Hase, Uniqlo’s public relations Addressing a conference in 2009, any visitor to a blog site who flipped a and global marketing communications Katsube urged other advertisers to use winning ticket. spokesman, explained: ‘Our emphasis the web as a ‘placeholder for ideas, which Uniqlo called it the ‘appreciation and is on digital marketing because we feel in turn will become fodder for blogs and giving back campaign’ and combined that by harnessing the power of the web bloggers’. He also said creative concepts ‘Lucky switch’ with an instore we can overcome language barriers as we expand globally. We also believe that By 2009, the company’s digital marketing an image speaks a thousand words and images and music transcend language.’ division was in full stride, producing at least 11 ‘UNIQLOCK’ – CONsIdered tO be web-related projects – the most ever for the tHe breAKtHrOUGH CAMPAIGN Uniqlo’s creative vision in the digital company – that year. Some campaigns took on a sphere first grabbed the world’s attention in 2007 when the company’s ‘Uniqlock’ sales-driving element as well as brand building campaign took the online advertising sector by storm. must be ‘unique, emotional’ as well as component. It ultimately generated The viral marketing project, designed ‘fun and entertaining’, principles that are almost three million clicks with more to build brand awareness internationally, evident in Uniqlo’s campaigns today. than 4,000 blog badges installed. The featured a clock with spliced clips of In the past few years, following the number of shoppers visiting Uniqlo’s well-choreographed dancing and catchy success of Uniqlock, the digital element online retail site in Japan topped 46,396, lounge music. It ran all year round, to Uniqlo advertising campaigns which was two to three times higher than 24/7. In summer the girls dancing wore has become increasingly important. the usual monthly traffic. polo shirts; in winter, cashmere; and at According to a source close to Uniqlo, By building a digital presence, Uniqlo midnight they slept. at the time Uniqlock was released, about is not simply driving more consumer Uniqlock swept the board at a raft of half the brand’s campaigns had a digital engagement, it is also shifting its major advertising awards in the following component. Now most do, even though advertising from paid media to owned year, even scooping a Grand Prix at the objectives might differ between them. media. In the long run this may be a more Cannes. And the innovative but simple The 2008 international campaign effective way for the brand to deepen its execution of the campaign helped to propel ‘Uniqlo jump’ followed in Uniqlock’s relationship with its customers. a local clothing retailer, which even in footsteps, using quirky online audio Also much-lauded in the advertising Japan was not considered fashionable, to and video to advertise the company’s sector was Uniqlo’s 2009 autumn/ the status of a hip marque in a few years. autumn/winter collection; 696 Uniqlo winter campaign to promote its autumn ‘This campaign was all about employees from around the world were collection – Tokyo 2009 Collection. communicating with customers in a way photographed jumping in the new A simple website that was linked to that travels around the globe. The web collection, and the resulting images and Uniqlo’s online retail sites in the US, tool, Uniqlock, was perceived as very films were distributed via Flickr, YouTube UK, Korea and China ran alongside advanced at the time. It included a blog and a blog site ahead of the launch of the TV advertisements. The site featured widget so the clock could be embedded official campaign site. an interactive catwalk that allowed web into blog sites. We used dance because it viewers to explore the clothing ranges is understood globally and has no barriers ‘LUCKY sWItCH’ – drIVING sALes worn by models. It created a personal like language does,’ Hase said. By 2009, as the Uniqlock campaign fashion experience and a few clicks led Uniqlo worked out that 70 million underwent its sixth incarnation, the through to Uniqlo’s online retail stores blogs worldwide could be a powerful company’s digital marketing division for shoppers in Europe, China, Japan buzz-building medium and its widget was in full stride, producing at least 11 and Korea who had spotted the models was designed especially with bloggers web-related projects – the most ever for wearing something they liked. The >

Market leader Quarter 2, 2011 51

50 Thorniley.indd 51 2/24/2011 09:48:27 digital tessa thorniley

[approximately £7] jeans. But the chain has discovered that no matter how low it CAse stUdY: sINGAPOre goes, others can go lower and still make Plunging into new territories can be daunting, especially in countries where brand awareness is margins. I think Uniqlo is going to have relatively low. Uniqlo’s experience in Singapore, where it launched the first of three stores in to undergo a process of pushing prices April 2009, shows how the internet can be harnessed in creative ways to generate excitement back up. It could take two years or more over a brand, even one that is barely recognised. to have an impact on the bottom line.’ Shortly after Tribal DDB Singapore was given the brief to launch Uniqlo’s first store on the May argues that, for its domestic island, the agency was shocked when an early survey revealed that just 16% of Singaporeans business, its digital work may need to be – known to be some of the most savvy shoppers in Asia – had heard of the brand. recalibrated; in its efforts to be a global Jeff Cheong, the head of Tribal DDB Singapore, said: ‘When we started, 50% of brand, it may be distancing itself from Singaporeans couldn’t pronounce the name Uniqlo properly. It was a tough brief for us, in the Japanese consumers. ‘As the chain starts heart of the recession.’ to refocus, its online marketing strategy The first store was due to open in a mall in a satellite town frequented by ‘flip flop-wearing, has become very centred on overseas sales casual shoppers’ near the airport, Cheong said. Uniqlo was a major tenant in the development. and promotions. The campaigns have To set about generating a buzz about the new store opening, with the right consumers, been very clever and unique; the problem Tribal DDB turned to the web. The agency set up an interim website because Uniqlo.com was is that ultimately they aren’t speaking to being reworked and it also planned to drive viewers to a Facebook page. But Tribal soon the post-bubble buyers in Japan, now in discovered that someone had beaten them to it; a die-hard Uniqlo fan had already established their late 20s to early 30s. The campaigns a fan site. have no meaning to these buyers, and ‘We decided to let him continue and we effectively joined him,’ Cheong explained. ‘We asked these are still some of the brand’s biggest him to put up certain information, but the rest of the work was his. It was more genuine that consumers,’ he said. way. After a week, Uniqlo had 5,000 Facebook fans in Singapore in the first social media collaboration of its kind that Uniqlo had undertaken..’ OPPOrtUNItIes AbrOAd As well as the fan site, Tribal DDB set up a one-page microsite featuring an interactive Non-Japanese sales in Uniqlo’s first gacha-gacha game (similar to pachinko, a Japanese slotmachine) that allowed players to win quarter (to November 2010) were up surprise prizes daily. 29%. Yanai has stated that his aim is to ‘UniqloSurprise.com stirred engagement and it was fun. One survey indicated that we quadruple the number of Uniqlo stores achieved 100% brand awareness by the end of the campaign. Online and social media are worldwide to 4,000 by 2020 (including where the social majority is found. More importantly, they are also the media where social 1,000 in China) as he looks to become the influence is spread rapidly. Word-of-mouth is the most important medium,’ Cheong said. world’s leading clothing retailer. Many More than 60% of Uniqlo’s Singapore launch campaign took place online, with outdoor retail analysts point out that Fast Retailing advertising accounting for 25% and print just 15%. Tribal DDB said that opening-day sales at is wise to target global growth given its Uniqlo Singapore were the highest the company had seen in Asia, beating both Hong Kong and huge exposure at home. China. The microsite achieved 1.6 million page views during the course of the 12-week ‘New territories are going be a big part campaign and 10,000 shoppers registered and signed up for the loyalty programme. of global growth going forward,’ Hase As Uniqlo beats a deeper path into existing and new territories in Asia over the coming years, said. Uniqlo has announced plans to open the company’s focus on the social majority who favour Twitter, Facebook, YouTube and the web its first store in Thailand this autumn. to fashion magazines, looks set to continue unabated. Hase said the emphasis on digital, viral For the agencies with which the company collaborates on this expansion drive, the challenge and social marketing, especially in will be to maintain the creative highs that have so far set Uniqlo’s online presence apart from countries where Uniqlo has only a few many of its rivals. n stores or is opening for the first time ‘will continue’. Hase explained: ‘In places where we campaign was praised at the time for being combination of factors, from a shift into have two or three stores, we don’t find ‘very simple and effective’: look, like, buy. fashion items that didn’t sell to a failure TV advertising, for example – the most In January 2010, when Fast Retailing to stock enough basic items, were blamed. effective way to reach consumers. People announced stellar first-quarter sales and First-quarter sales in the three months to don’t pay attention in the same way operating profits in Japan and the rest November 2010 at Fast Retailing were they do when they are online. Digital of the world – up almost 40% and 49% down 35% at stores in Japan. advertising engages the consumer. respectively – the company highlighted Retail analyst Richard May, at the Japan ‘In Taiwan, for example, where internet the success of products including Uniqlo’s Consumer Marketing Research Institute, penetration is high, digital campaigns neo-leather jackets, which had been a said: ‘Uniqlo today is still all about are more effective than traditional major feature of the online fashion show. Japanese consumers. It has 900-plus stores advertising in many ways. They help to in Japan and 150-plus stores overseas. create buzz around, for example, a new CHALLeNGes At HOMe The problem is that there has been a shift flagship store. That said, you will still see Recent months have thrown up new in buying attitudes in Japan, particularly the large outdoor hoardings go up near challenges to the digital-marketing-for- among 27- to 31-year-olds, Uniqlo’s our new stores, to drive traffic and draw the-world approach. Since early 2010, the target consumers. shoppers’ attention.’ n Japanese market has proved increasingly ‘Overall these shoppers are buying less tricky for Uniqlo, and by the start of and increasingly looking for value. For a Tessa Thorniley is a business and travel 2011 the retail chain had reported five while, Uniqlo led the flight to the bottom journalist based in Shanghai, China. consecutive months of falling sales. A of the value chain. It introduced ¥900 [email protected]

52 Market leader Quarter 2, 2011

50 Thorniley.indd 52 2/24/2011 09:48:27 trendwatc H melAnie howArd

How to get more ‘soft power’ to your elbow

I’M devotIng this piece to what we call an nVitro drinks – possibly the best embodiment of soft power trend – newly hatched from our own trends in a single brand. The company’s determinedly laboratory – which is a crossover from the political nice approach has been lauded over the years. For sphere but perfectly tuned to the consumer example, in November 2009 it sponsored the ‘big environment. We call it The Rise of Soft Power, a knit’ – paying 35p to Help the Aged for every woolly term coined by Harvard academic Joseph Nye in hat knitted for its smoothies in Sainsbury’s. his 2004 book Soft Power: The Means to Success in The coverage praised the participation and the World Politics. hats and did well for Sainsbury’s ‘niceness’ quotient Nye argues that the means of achieving what as well. Incidentally, the craze for hand-knitted you want in the modern world is not through the items which is manifesting itself in many forms in historical means of command, domination and early 2011 is a perfect pointer to the strength of coercion, but by the powers of attraction and thus the current sentiment. Whether it is the guerrilla ultimately subtle persuasion and seduction. He knitters in London or on the US West Coast, Attraction and writes: ‘In individuals, soft power rests on the skills or fashionable household items from cushion of emotional intelligence, vision and communication. covers to lampshades, it seems that the continued seduction, rather In nations it rests upon culture, values and policies.’ uncertainties post recession are ensuring that than domination Like many influential ideas it has taken time the desire for comfort and help from brands and and coercion, to gain serious adherents although it was seen as businesses will remain strong. being a key component of the Obama victory in Tesco’s continued trading on its highly successful are the keys to 2008. What is particularly interesting is that it plays ‘Every little helps’ strap line and Kit Kat’s ‘Have a persuasion, says strongly in the emerging nations, which lack the break’ also play effectively to this sentiment. Not heritage of military strength to get what they want. new perhaps, but newly relevant. Brands cannot Melanie Howard Brazil’s foreign minister, Celso Amorin, claims be nice enough to their customers at the moment that Brazil’s greatest skill ‘is to be friends with – not just in terms of discounts and offers for everyone’. China and India are similarly working customers but in tone, manner and openness. hard to woo rather than demand – although you As well as the communication of underlying might argue that the economic cards are so clearly values and relevant helpfulness, maximising all stacked in their favour that it gives them a launch- forms of customer and stakeholder engagement pad from which to practise niceness. will remain paramount, particularly in the context of the Big Society in which businesses will be What are its commercial applications? expected to help fill the gaps. For example, the For the multinational corporation there are many Co-operative’s ‘renaissance’ – now in its third examples of how a soft-power approach is proving year – continues to make capital from its long-term more effective than a rigid, defensive stance when commitment to mutualism and ethics as well as things go wrong. Contrast the abject apology of community involvement. This demonstrates how Toyota chairman Akio Toyoda when in mid-2010, such steadfastness can pay off when core values are the company was forced to recall a staggering strongly held. 8.5 million cars – ‘I myself, as well as Toyota, am Why this trend will continue to gather strength not perfect ... quite frankly I fear the pace at which is because getting it wrong will be so swiftly and we have grown may have been too quick’ – with publicly punished. Social networking and media, the ill-fated CEO of BP, Tony Hayward, whose as well the rapid mobilising power of mobiles handling of the oil spill in the Gulf of Mexico was (smart or otherwise) have resulted in, for example, so ill-judged. A failure to use soft-power techniques previously popular Boots bearing the brunt of meant he lost all power and was inevitably replaced. demonstrations for allegedly evading UK tax. As big brands attempt to spread throughout Vodafone and Top Shop have been attacked for the globe, there have been many examples where similar reasons. brash neocolonialism has been rebuffed and a more We believe that this phenomenon will be playing considerate and inclusive approach, often under the out in many forms over the coming decade – time aegis of corporate social responsibility programmes, for every brand to question how it too can exert the has paid dividends. Coca-Cola, McDonald’s, soft powers of attraction in 2011 and beyond. n Starbucks and Unilever are shining examples of engaging with local development programmes. Melanie Howard is chair of the Future For individual brands and more niche businesses Foundation. the value of soft power is clear too. Think innocent [email protected]

Market Leader Quarter 2, 2011 53

53 trendwatch.indd 53 2/24/2011 09:51:52 BEST IN BRIEF BOOK REVIEWS

Chance favours the connected mind JUDIE LANNON

STEVEN JOHNSON is both an original and eclectic The book also deals with how work thinker. He has looked at innovation from an environments should be structured to maximise environmental perspective exploring the spaces the kinds of connections that collide to produce that historically have given rise to great surges something new such as open spaces of many in innovation. And the central insight in this creative environments in Silicon Valley. Images examination of how ideas happen is that innovation of collision pepper the book: half-formed flourishes in connected spaces. But what makes the thoughts meeting other half-formed thoughts to book fascinating is the sheer sweep of territory he produce a whole greater than the sum of its parts covers to support his core thesis. Johnson draws is a common pattern of innovation. Johnson calls from the history of science and natural history and it the ‘slow hunch’. Other patterns he describes art and commerce. The book is dense with examples. are how networks are formed and nourished, the Whether he is looking at biological spaces such wonderful unintended consequences of mistakes, as intensely populated coral reefs or the greater the serendipitous discovery and using existing incidence of ideas in crowded cities compared to components for an entirely different purpose. the countryside, the conclusion is the same: spaces All of this, of course, links to the internet and where life congregates produce more innovation. while he acknowledges the views of its critics – Writing in the Financial Times, Johnson said: that the internet makes us shallow with shortened ‘Economists have a telling phrase for the kind of concentration and a magpie-like approach to sharing that happens in these densely populated knowledge – its main value as an engine of environments – “information spillover”. When you connectivity excuses everything. I share a civic culture with millions of people, good ideas have a tendency to flow from mind to mind, Where good ideas come from, Steven Johnson, even when their creators try to keep them secret.’ Riverhead (2010), £12.99

What marketers don’t know PAUL FELDWICK

BIGGER BRANDS are always big because more may also prove challenging because the efficacy people buy them, not because they have higher of segmentation, loyalty programmes, niche weights of purchase – so growth strategies based targeting and price promotion are all called on heavy users or loyalty building don’t work. into question. Advertising, too, works not by Customers in any category buy across all brands communicating differentiating propositions, in a predictable way, so segmentation doesn’t exist. but by creating salience through ‘meaningless Users perceive all brands pretty much the same, so distinctiveness’, talk that will shock many the quest for differentiation is pointless. creatives almost as much as planners and clients. These, and several other marketing heresies, This view of advertising as ‘mere publicity’ has are the results of a huge body of empirical long seemed to me a powerful one, and certainly research into purchasing and other data, carried more useful than the message transmission out by the late Andrew Ehrenberg and his many model, but I am not convinced that it tells distinguished colleagues over 50 years. These the whole story. And the tone of dogmatic robust, law-like patterns, replicable across time, certainty that characterises this book seems geographies and categories, have long been in the to me less appropriate when it involves the public domain, but mostly in academic journals more problematic topics of mental processing, or privately published papers. emotions or aesthetics. Now for the first time, professor Byron Sharp, How brands grow clears away many major head of the Ehrenberg-Bass Institute in Australia, misconceptions and offers a practical agenda for has summarised this crucial body of marketing change, but it still doesn’t quite put its finger on knowledge in a single, accessible volume. It is a just why brand A performs so much better than valuable and important achievement. brand B – nor, perhaps, should we expect to find Practitioners now have a choice. They can simple, generalisable answers to such questions. find arguments to disprove, or at least qualify, At least that will leave something for ad agencies the strong and simple principles that the author to puzzle over. Meanwhile, this book remains Byron Sharp trenchantly presents, or they can essential reading. I begin rethinking their practice to fit the reality of how markets really behave. The first course How brands grow: what marketers don’t know, is, I think, unlikely to succeed but the second Byron Sharp, OUP (2010), £22.50

54 Market Leader Quarter 2, 2011

54 books.indd 54 2/24/2011 09:52:57 BEST IN BRIEF BOOK REVIEWS

Round-up of essential strategy guides ANTHONY FREELING One of the problems with working is that there is please read a salutary text by Phil Rosenzweig, never enough time to read – even if you want to. The Halo Effect. It demonstrates convincingly In particular, there is never enough time to learn that we tend to see successful companies as about topics that are outside your immediate area good in all they do and unsuccessful companies of interest. This lack of time is the best explanation as uniformly bad – even the same companies I can find for the fact that marketers rarely seem and people just a couple of years apart. He also to have read even the most important books on identifies eight other popular business delusions business strategy. Here are a few books that I think that I am sure we have all fallen for at some time. are useful to any active marketer, with a strong bias Marketers always need to balance analysis towards short and easy-to-read ones. with intuition. There is a lot written about First, Michael Porter’s Competitive Strategy analysis in the marketing field, but less on is a classic for the best of reasons. It introduces intuition. One classic from the field of decision his ‘Five Forces model’ which is a simple and theory is The Power of Intuition by Gary Klein. practical tool to evaluate markets and potential He demonstrates convincingly how intuition profitability. There have been many follow-up can outperform analysis in many fast-moving books, from Porter and others, but this remains a situations – but also how intuition can be simple summary of what you need to know. developed only through deep immersion in the Since marketers increasingly concern environment in which decisions are going to be themselves with innovation and a desire to be taken. This should give pause for thought to any first to market, a short book by Markides and marketer who believes you can jump between Geroski, Fast Second, may be salutary. It shows in industries and still trust your gut. fewer than 200 pages how being first to market Finally, a recent book by John Kay, called through radical innovation is often less profitable Obliquity, pulls together thoughts on how than scaling up the markets created by others. goals are more likely to be achieved when There is also a love in the marketing pursued indirectly. This provides the basis of community of trying to copy successful an argument for why businesses should pursue companies – sometimes in an informal way, customer satisfaction as a means to improve sometimes through techniques such as shareholder returns – so it should be required benchmarking. Before you embark on this course, reading for marketers and their bosses. I

Evolution of technology services KIM TASSO

LAURIE YOUNG is a leader – and writer of several relations, addressing rational and emotional books – in UK professional services marketing and needs, investment in customer intelligence and his co-author is managing director of the Boston- integration of marketing and sales. based ITSMA (Information Technology Services The 40-page appendix provides a summary of Marketing Association). They have produced a tour the best-known (and, as the authors point out, de force that spans strategic management, services often misunderstood) analysis and marketing tools marketing, branding, account management, service and techniques. I enjoyed the challenges to some and quality management, innovation and marketing of the most commonly used marketing tools. communications. But the focus is on how these Its 300 pages are crammed with academic tools apply to the radically changing world of rigour and valuable insight. The case studies technology services. show ideas in action among some of the world’s By their definition, this evolving sector leading B2B and B2C service organisations. spans established technology companies and It’s a sophisticated, intelligent and challenging consultancies and those services that exploit an introduction to services marketing for senior ‘installed base’ or infrastructure and thus extends people – especially those in larger organisations. to the utility companies. However, I’m not sure it would do much except While the first two chapters (defining the worry the many smaller technology or other sector and introducing services marketing) service firms who are yet to embrace some of the and chapter nine (communicating with tough strategic challenges the book addresses. I service markets) might be considered basic, the remaining chapters are full of value even Marketing technology as a service: Proven to seasoned marketers. Themes throughout techniques that add value, Laurie Young and the book include the importance of: public Bev Burgess, John Wiley & Sons (2010), £34.99

Market Leader Quarter 2, 2011 55

54 books.indd 55 2/24/2011 09:52:58 letter froM brazil silvina mOrOnta

Big brand ideas inspire huge emerging market

We all know that Brazilian culture is about dance airlines, technologies, telecommunications and and rhythm. And this goes for the economy, not cosmetic surgery. just the night-life. In 2010, Brazil’s GDP grew six A good example of a company embracing the times faster than the UK’s (7% versus 1.2%). This class-C consumer with open arms is Ambev, the growth is being driven by a dramatic change in Brazilian beer giant. The owner of the three the income of Brazil’s 190 million inhabitants. In leading brands (Skol, Brahama and Antartica) is the past seven years poverty dropped from 35% to planning to launch Budweiser this year. It will 22%, real salaries grew by 40% and unemployment be positioned between the current mainstream dropped from 12% to 8%. This has led to the segment and premium segment, called ‘core plus’ dramatic growth in middle-class consumers from and integrated by consumers whose tastes are 37% to 50% of the population. evolving and becoming more sophisticated. But what does it take for brands to be successful Some companies are still focusing on products Opportunities and join the growth in Brazil? Two of the key for low-income or high-end consumers. What for growth in principles of brand leadership we use at the are your marketing projects for the new class-C brandgym are particularly relevant. consumer? Are you dancing in some of the Brazil come from categories with explosive growth projections, or targeting a mass Follow the money still deciding whether or not to join the party? Concentrating effort and money on the business middle-class with where there is a competitive edge is the most Build Big Brand ideas big brand ideas, fundamental characteristic of a leader brand. So, Winning brands in Brazil, like successful brands the first question to answer is which are the most anywhere, have a big brand idea that goes beyond according to attractive targets/markets to focus on? the purely functional. The key in Brazil is to appeal Silvina Moronta A few years ago, to win in Brazil meant to to people’s optimistic and colourful hearts. This target two extremes. On one side there were the explains the local success of Persil/Omo’s global luxury seekers – the luxury goods market in Brazil ‘dirt is good’ campaign, which was in fact born in represents US$2.3bn a year – and on the other side Brazil and then exported around the world. Two there was a huge mass of low-income consumers. more iconic Brazilian brands using this positive Global companies such as Unilever responded outlook on life are Natura and Havaianas. to this with price tiers, with affordable mixes and Natura is the leading brand in Brazil in premium offerings of key brands. cosmetics, fragrances and personal care, and a For example, on the same personal-wash shelf Brazilian company that is growing globally with were two tiers of Lux brand: Lux Luxo and Lux a turnover of more than US$2bn. The company Suave, a low-price/margin version. Despite the pioneered using ordinary women rather than communication and innovation effort behind Lux supermodels in communication and having a new Luxo, the lower-priced version is what grew. approach to the massive anti-ageing trend. It Today the picture has changed dramatically. An was the inspiration for the Dove Global team to attractive new target is the emerging lower-middle develop the famous ‘Campaign for Real Beauty’. class or ‘class-C’ consumer. They earn between Havaianas has turned the commoditised category US$600 and US$2,600 a month and the group of flip-flops into a huge business with its relaunch has increased to 95.4 million people, which is in 1994. From being cheap sandals for fishermen, 1½-times the UK population. These previously they became fashion articles for Hollywood stars low-income consumers now have access to a new and top models – proving again that there are no world of brand alternatives and are becoming commodity markets, just commodity thinking. more sophisticated. Some brands are still offering a traditional To see class C in action, head to the Nova problem-solving proposition in Brazil. Is your America Rio de Janeiro shopping mall. This brand story inspiring enough for the emerging mall gets about 50% of its sales from the class-C Brazilian class C? For your brand to join the consumer, buying everything from new homes party you need to follow the money by targeting to cars (about 400 cars are sold each weekend); the emerging class C and make sure you develop and 40% of the Brazilian population (more than an inspiring and positive brand idea so these the UK population) are planning to change consumers will want to dance with you. n their mobiles in 2011. Many other categories with explosive growth projections for the next Silvina Moronta, partner at brandgym LatAm. few years include banks, beverages, garments, [email protected]

56 Market leader Quarter 2, 2011

56 letter from brazil.indd 56 2/24/2011 09:54:43 spE akE r’s cornEr fru hazliTT

Beyond the long tail…

EvEry so often a book comes along that so aggregators such as television help us fulfil that eloquently captures the media zeitgeist no emotional need. The death of the mass aggregator self-respecting exec’s office is complete without and the audience it brings – which has been much a well-thumbed copy. Way back when, it might discussed and widely predicted – has never been have been Marshall McLuhan’s The Medium is fulfilled, and never will be. This is because the the Message, and more recently perhaps Malcolm human need to belong is and always will be one of Gladwell’s The Tipping Point. the most powerful drivers of behaviour. A few years ago, at the start of media’s digital As the poet John Donne famously put it: ‘No journey, the seminal ‘must-read’ text was Chris man is an island, entire of itself.’ A consequence of Anderson’s The Long Tail. The argument was that, in Deloittes’ slightly more prosaic language, simple and seductive: digital would drive media is that television retains a ‘super-media’ status that distribution costs close to zero and there would isn’t going to change anytime soon. However, every Fru Hazlitt be no cost barrier to making content available part of the established TV value chain is being discusses the online. Therefore, any piece of content would transformed – from transmission and production to have to compete against not only everything else the way viewers consume programming. What was anticipated and being broadcast or published today but every bit of once a simple business – one channel, one means real impact of content ever. of transmission, one revenue stream – is now more At the same time, digital technology would complicated. The TV advertising market may have the digital age on allow publishers to leverage the economic power bounced back in 2010, but that doesn’t mean that TV production, of committed niche audiences as never before. As ITV can sidestep the digital revolution. We need a result, value would shift from the big blockbuster to embrace it and make sure that our content is transmission and to the ‘long tail’, from ‘out now’ to archive. The available wherever, whenever and however viewers revenue streams knock-on consequences across all aspects of media want to consume it – from games consoles and – and indeed our lives – would be profound. internet-enabled TVs to smartphones and tablets. So far, so good. But some took Anderson’s The way we monetise that content is also argument even further. The trends identified in The changing. We need to maximise our share of the Long Tail would mean the end of established media television advertising cake and continue to sell that altogether. Mass would become passé, niche would ‘super medium’. The opportunities are significant. be the new black. We’re building our content business in the UK and internationally; delivering greater scale in Keeping it all in perspective online advertising – video and display; leveraging Taken to this extreme, I have to give The Long Tail transactional revenues from voting, competition short shrift. Mass media isn’t going anywhere. entries and teleshopping; and looking to deliver Indeed, people’s hunger for the big, live, shared content micro-payments and pay subscription communal experience is as voracious as ever. revenues for the first time. And one of the most establishment of established But such complexity does not mean media – television – is able to satisfy that hunger fragmentation. Overall, UK TV viewing increased unlike any other. In the past year alone, we’ve seen in 2010. ITV1 also increased its audience, with 18 million viewers gripped by The X Factor final the big blockbuster shows in particular growing and 15 million together celebrating Coronation year on year. With the incremental reach delivered Street’s 50th birthday. by growing digital channel and online viewing on What’s more these kinds of mass TV programmes top of this, the audience delivered across ITV is have dominated all media – including digital. As well greater still. And it is a more engaged audience, as wall-to-wall coverage on radio and press, The X seeking out ITV content on multiple devices, in Factor was the number-one subject for the Twitterati, the living room, on the laptop and on the move, Facebookers and most of the other denizens of the and interacting directly with us, via phone voting, blogosphere. And it wasn’t just light entertainment: competition entries, or chatting online. last year, we were promised the first general election Forget the ‘long tail’. The engaged, mass digital to be fought online. Instead, the first leaders’ debate audience delivered by TV could be marketing’s on TV drew ten million viewers and changed the ‘holy grail’. n course of the campaign. Whether it is entertainment, religion, sport Fru Hazlitt is managing director of commercial, or news, the big, live event is something we online and interactive at ITV. all continue to want to be a part of and mass [email protected]

Market Leader Quarter 2, 2011 57

57 speakers corner.indd 57 2/24/2011 09:59:13 the Last word rory sutherland

Heard the one about good comedians and behavioural economics?

This past week I have been reading How I Escaped approach. It is a much richer source of insights My Certain Fate by the fascinating and innovative that the ‘go on, tell me why it’s funny’ approach of stand-up comedian Stewart Lee. The book – a kind pre-testing, because it encourages us to seek out of autobiography – is extremely funny, but it is also those very stimuli that achieve their effects without remarkable in another way. the necessary intervention of conscious logic. Perhaps more than any other art form, it has Behavioural economics shows us something that become axiomatic in comedy that ‘you can’t analyse successful comedians already know. Social proof humour’. A joke is believed to be a living thing – so really matters. Whether people laugh or not depends ‘once you dissect one, it dies’. Yet almost every page massively on the reactions of the people around of Stewart Lee’s book contradicts this. Just because them. Context really matters too. The nature and the audience shouldn’t over-analyse jokes, that appearance of the joke teller really matters. Seemingly doesn’t mean that comedians can’t. trivial executional details can make or break a joke. rory sutherland Lee deconstructs, reassembles and analyses his It seems to me that the best marketing ideas have examines the own (and other people’s) material with the precision something in common with the best jokes. They of a watchmaker. As an unintentional guide to the have a powerful behavioural effect for reasons the link between creative temperament, the book is fascinating. The audience may not be able to explain. Behavioural behavioural same analytic streak is found in other comedians. economists find these aberrations fascinating Jimmy Carr has co-authored (with Lucy Greeves, and worthy of study precisely because they defy economics and a copywriter and friend) The Naked Jape, a superb the logic of the conventional economic model of humour, observing investigation into the nature of humour. The great human preference. Here are a few examples which Douglas Adams, when writing his Hitchhiker’s Guide particularly fascinate me. what the best series of novels, took individual sentences written l Did Red Bull find it easier to charge three-times marketing ideas by PG Wodehouse and spent hours picking apart the regular price for a carbonated drink because it every word to work out what made them so funny. made the can smaller? have in common The analysis of comedy appeals to me because l Why do people prefer to receive four Boots with jokes: they humour, like advertising, is something that can only Advantage points on every £1 spent than to receive don’t stand up to properly be judged behaviourally. A successful joke a 4% discount? results in a human response – a laugh or smile – l Why, when telephone call charges have dropped rational analysis which is in many ways involuntary and automatic. by more than 70% overall, do we remember none Most likely the audience cannot explain why they of these price drops – but we all remember Friends are laughing. But that very inability to explain what & Family, which gave us 10% off just ten numbers? is funny is irrelevant to the value of the joke. l How many people would buy fabric conditioner The mistake many conventional marketers seem if there wasn’t a special drawer for it in their to make is to require of any communication that washing machine? the audience can explain how it works before it can l Why is it much easier to spend £40 on a tie when be considered effective. This is an extraordinarily you have already spent £80 on a shirt? restrictive approach. When researching any l Why do we pay so much for cinema popcorn? message, the act of asking the audience to explain l Would Spotify be more successful if it limited its workings somehow destroys its effect. the number of songs it allowed you, rather than Creative people sometimes react to this offering unlimited downloads? absurdity by adopting a position at the opposite l Why is Amazon Prime more effective because end of the spectrum – claiming that great creative you have to pay for it? communication is incapable of any meaningful No focus group will ever answer any of these analysis, and that it can arise from an Amadeus- questions. Behavioural economists and good style outpouring of genius. This doesn’t help much comedians, with their access-all-areas pass to the either. Just because something may be apparently unconscious mind, can. Next time you have an illogical does not mean that nothing is gained NPD project, why not hire some of both? n through attempts to explain it. And it is for this reason that I find behavioural Rory Sutherland is executive creative director and economics a more promising line of enquiry vice-chairman of OgilvyOne London and Ogilvy for marketers than the conventional marketing Group UK. [email protected]

58 Market Leader Quarter 2, 2011

58 last word.indd 58 2/24/2011 10:01:40 ML truth AD .indd 1 2/24/2011 15:02:40 ML JKR AD 60.indd 1 2/24/2011 15:00:51