28/11/2011 19:34:31 2012 JANUARY Janet Hull GOOD CRISIS Sir Terry Leahy THROUGH THE THROUGH GLASS CEILING GLASS Rory Sutherland IS NOT ENOUGH ENOUGH IS NOT NEVER WASTE A NEVER WASTE ACCOUNTABILITY ACCOUNTABILITY Douglas Holt and Holt Douglas Cameron Douglas Cultural innovation:Cultural better a of triumph ideology QUARTER 1 QUARTER NEW THINKING, DIFFERENT PERSPECTIVES 1 cover.indd 1 QUARTER 1 JANUARY 2012 Market Leader_Experienica.HR.pdf 1 11/11/2011 13:05 Editorial
Keeping brands healthy I recently attended a lecture on the applications of neuroscience to marketing. All the data marketers will ever need, it was claimed, can now be obtained from ‘neurometrics’ – via MRI scanning, EEG measurement and eye-tracking devices. I listened to the lengthening list of uses with mounting disquiet and an article formed in my mind entitled ‘Caution: neuroscience may be dangerous to the health of your brand’. The lead article in this issue provides the explanation of why the skills required for brand building live in a parallel universe. Douglas Holt and Douglas Cameron in ‘Cultural innovation: triumph of a better ideology’ look to anthropology for inspiration. It is commonplace to say that brands live in the mind (as opposed to the factory). But where they really live is in culture, in society’s norms, values, codes and practices. And while yes, neuroscience and anthropology can exist together, the danger is in what we qualitative researchers call ‘physics envy’ (the need to elevate market research to the level of the pure sciences). Put access to the brain – the human version of the Rosetta Stone – together with lots of gadgetry that measures things and before you know it, the new and intriguing drives out the old but essential. The key point that Holt and Cameron make is that innovation models tend to reflect an engineer’s view: technology is the necessary driver. Yet, cultural innovation, a new and better ideology (think Innocent, Starbucks, Harley Davidson, Dove and many many more) are just as innovative and likely to be just as profitable. Neuroscience may have a lot to offer but it will never contribute the insights into brand building to be obtained from a constant monitoring of the cultural environment. The article forming in my mind could equally have been entitled ‘Caution, data can be dangerous to the health of your brand’, and this is a theme that Mark Earls pursues elsewhere in this issue. The ‘data hosepipe’ – the literally billions, maybe trillions, of pieces of data flowing over us – can lead to paralysis. Advice: look for big patterns or you may lose the will to live. Also in the issue, Rory Sutherland explores concepts from Behavioural Economics as well as some other less familiar sources that have insightful applications in understanding brand choice. Finally, from the most successful brand builder of them all, Sir Terry Leahy, comes a checklist of the ways in which CMOs can turn the whole organisation into marketers. Use the power you have, he advises. After all, he did it.
Judie Lannon, Editor [email protected]
Market Leader Quarter 1, 2012 3
3 editorial.indd 1 24/11/2011 20:23:34 contents In thIs Issue
QUARTER 1, 2012 PUBLISHED IN ASSOCIATION WITH THE MARKETING SOCIETY BY WARC
editor Judie Lannon
editorial Board Paul Bainsfair, Roger Banks, Hugh Burkitt, Matthew Coombs, Martin Deboo, Paul Feldwick, Anthony Freeling, Roger James, Laurie Young
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4 Market leader Quarter 1, 2012
4 contents.indd 2 26/11/2011 16:16:30 contents In this issue
ideas & issues 57 Speaker’s Corner Are you pushing customers around? By 12 Marketing services providing too many channels, you could be 24 The divide has almost disappeared between discouraging people from using any of them ‘below-the-line’ and ‘above-the-line’. By Kamil Michlewski Where to draw the line now? By Andy Nairn 58 the Last Word The advertiser’s generally cheerful demeanour 14 Public relations could be a disadvantage – we need to take Not so long ago PR executives had to fight more notice of case histories of brand failures for the chance to play an integral role in the By Rory Sutherland organisation’s business. The tables are turning By MaryLee Sachs features 15 Marketing food in China An understanding of what and how Chinese Cover story want to eat is a quick way to know China 24 triumph of a better ideology By Tom Doctoroff Market innovation has been dominated by the world view of engineers and economists, 17 Marketing in recession but cultural innovation can be more successful When cuts are rife, it’s time to make the By Douglas Holt and Douglas Cameron case to your organisation for marketing expenditure in austere times 28 Blazing the retail trail By Vincent-Wayne Mitchell Many mould-breaking retail innovators are loved by shoppers and are bucking the 18 Gender agenda downward trend in the retail environment Genetics influence how we consume; more By Leslie Clifford and Laura Moser people are now choosing brands that celebrate their masculinity or femininity 32 drinking from the big By Mary Say and Charlie Skinner ‘data hosepipe’ We have access to more data than ever, but we need to use that ‘data hydrant’ in the correct regulars way or marketing benefits are lost in the deluge By Mark Earls 08 Brainwaves A selection of what’s going on from around 36 co-creation is here: we the world of marketing can’t ignore it By Elen Lewis This powerful source of competitive edge is still one of the most misunderstood 20 Chopping Block By Doron Meyassed, Philip Burgess A great deal of time and money is spent on and Priscilla Daniel trying to find out what people think of brands, 32 but what do brands think of us? 40 accountability is not enough By Jeremy Bullmore It’s time to reject the limitations of regular business language and devise a vocabulary 22 Viewpoint specific to marketing needs How does it feel when you’re on the receiving By Rory Sutherland end of healthcare? Insurers could do better By Hugh Burkitt 44 Partners or suppliers? Agencies like to think of themselves 53 Trendwatch as partners, but that is not realistic if they fail The consumer psyche is complex: attitudes to understand clients’ commercial needs and behaviour refuse to follow logical patterns By Derek Day By Melanie Howard 47 never waste a good crisis 54 Best in Brief Tesco’s former CEO urges marketers to take advantage of these difficult times Reviews by Michael Bayler, Winston Fletcher, By Sir Terry Leahy David Nichols and Hamish Pringle 50 through the glass ceiling 56 letter from Tokyo Several recent initiatives should make it easier Reflections on Japanese women, earthquakes for women in the marketing and advertising and ad agencies community to earn a place in the boardroom By David Nichols By Janet Hull
Market Leader Quarter 1, 2012 5
4 contents.indd 3 26/11/2011 16:16:35 in this issue contributors
Market leaders Jeremy Bullmore is a former challenge through online Sir Terry Leahy is a former Andy Nairn is chief strategic chairman of JWT London and co-creation communities. CEO of Tesco and one of officer of Dare, Campaign’s the Advertising Association Britain’s most influential Digital Agency of the Decade and is currently a member of Derek Day is a founding businessmen. As marketing and the IPA’s Effectiveness the WPP advisory board. partner of Passionbrand, and director he was responsible Agency of the Year. He was co-author of Creating Passion for the famous Tesco Loyalty named the UK’s top planner, Philip Burgess is a director at Brands: how to build emotional programme. He became CEO by Campaign, in 2011. Promise Communities, which brand connection with customers’ in 1997 and led the expansion helps solve insight, innovation published by Kogan Page. into Europe and Asia. David Nichols is managing and brand strategy challenges partner of the brandgym where via online co-creation Tom Doctoroff, North Asia Doron Meyassed is an he leads brand strategy and communities. He has consulted CEO of JWT, is one of Asia’s entrepreneur with a passion for innovation projects across for brands including Danone, most respected marketing cutting-edge technology. He the world. He has published PepsiCo and Starbucks. professionals. He is the author founded Promise Communities three marketing books, three of Billions: Selling to the New and monitors technological musicals and managed an Hugh Burkitt is chief Chinese Consumer and What trends. He delivers consumer improvisation troupe. executive of the Marketing Chinese Want, to be published closeness, brand strategy and Society and has been in spring 2012. innovation programmes in the MaryLee Sachs is the former responsible for the launch of fmcg arena. US chairman and worldwide the society’s Manifesto for Mark Earls is a ‘recovering head of consumer marketing Marketing and the Marketing account planner’. His Kamil Michlewski is a of Hill & Knowlton. She Leaders Programme for award-winning writing and senior consultant at The launched her book, The aspiring marketing directors. consultancy work are based on Value Engineers, a strategic Changing MO of the CMO – insights into human behaviour, brand consultancy. He has How the Convergence of Brand Douglas Cameron is gained from behavioural and worked with global blue-chip and Reputation Has Affected Founder and Chief Strategy cognitive science. clients across industries on Marketers, in June 2011. Officer of Amalgamated, issues ranging from brand a New York brand Douglas Holt is CEO and positioning to multichannel Mary Say is managing director communications firm. He has co-founder of the Cultural marketing strategy. of Brand Potential, delivering developed strategies, created Strategy Group. Holt was creative insight, innovation and communications campaigns, a professor at the Harvard Vince Mitchell is Professor engagement strategies. She has and conducted workshops Business School, and L’Oréal of Marketing at Cass Business 20 years’ experience of working for a wide range of clients in chair in marketing at Oxford. School, London, and with brands, internationally. North America and Europe. co-author of Real People, Real Melanie Howard is chair Decisions. He has published Charlie Skinner is a brand Leslie Clifford is executive of the Future Foundation. more than 250 articles on consultant who specialises director, strategic planning and She has been successfully marketing and has worked in using insight to advise on consumer insights at G2 USA. forecasting trends for two with such companies as Boots, brand and business strategy. She has developed advertising decades and has worked with Coca-Cola and KPMG. and promotional campaigns, consumer, public-sector and Rory sutherland is digital marketing, loyalty third-sector organisations. Laura Moser is executive vice-chairman of OgilvyOne programmes, and multichannel director of retail marketing London and Ogilvy Group shopper initiatives. Janet Hull is responsible for G2 USA. She works on UK. He was formerly for strategy, content and a variety of brands including president of the IPA and Priscilla Daniel is a promotion of external Ford, Coca-Cola, Discover, currently writes a column for consultant at Promise marketing programmes for the Kraft, Campbell’s, Heineken The Spectator. Communities, which IPA, member association for and P&G. She is a frequent helps brands solve insight, the top 250 UK advertising contributor to Ad Age and To submit an article, email the innovation and brand strategy and marketing agencies. Shopper Marketing magazine. editor at [email protected]
6 Market Leader Quarter 1, 2012
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Admap_210x297mm_Advert_HiResPrintReady_CMYK.indd 1 30.08.11 13:08 brainwaves Different thinking
BrainwavesOur selection of light reading from around the world of marketing
The glory, the glamour, the gongs galore …
by winston Fletcher
with the end of one year and start of another, throughout the country – perhaps throughout the world – everyone spends time trying to recall who in their spheres of life deserve to be awarded gongs for their achievements in 2011. In marketing we tend to think our businesses are unusually keen on such communal backslapping. Not so. Today, almost every business and profession is up to its neck in trophies. Hundreds of thousands of people, from all walks of life, attend awards thrashes each year, paying handsomely for the privilege. The major dinners take place in London, mostly on Park Lane. The Great Room The rest are either hopeful just earning loadsamoney. at the Grosvenor House can contenders – oh, the glamour Almost every The glittering prizes honour squeeze in up to 1,500 people, of that triumphal walk in the business is up quality, accomplishment, while a real biggie at Olympia spotlight – or chums of the excellence. They are will manage 2,500. But similar hopeful contenders. And the to its neck in an increasingly alluring dinners, albeit on a smaller organisers are adept at hinting antidote to our increasingly scale, take place in every to all and sundry that they are trophies. mercenary world. chandelier-spangled hotel in in with an excellent chance. But the truly neat trick is the country. This delicate process might be Hundreds of that while pretending to glorify The guests will always dress called gong-teasing. higher values, awards deliver to impress. The sponsors will Why have awards and people attend the shekels too. To the winners charge hefty sums to enter the awards shindigs become they generally deliver higher competition, inflated prices such an indispensable part awards thrashes salaries, maybe extra sales for the dinner, fees to the of business life? A visiting each year and bigger profits too. This is donors of prizes, ludicrous Martian would be bewildered why, while many people mock programme advertising rates by our insatiable urge to awards, and moan about their and other nice little earners, ring each other’s necks with reason for the dressing up, cost, everyone still enters. probably totalling around garlands. Quite simply, the fanfares, the glamorous Merit and money indissolubly £50m a year in all. It’s a small awards make us feel good venues, the famous compères entwined: in the 21st century, but perfectly formed industry. about ourselves. They help and the rest. what could be better? n Yet almost nobody attends us convince ourselves that They imbue the awards with an awards bash either to be the value of our work to glory, with mystique – with Winston Fletcher writes entertained or for the inedible society is far greater than is almost religious significance. extensively on advertising grub. Most view it as an measured by our measly little To win a trophy, it all implies, and marketing. unavoidable business chore. monthly payslips. This is the is much more exalted than [email protected]
8 Market Leader Quarter 1, 2012
8 brainwaves.indd 8 26/11/2011 16:25:51 brainwaves Different thinking
articulating things clearly and having the courage to do so. 10 things … we Don’t overestimate ... The importance of meetings. Meetings aren’t work. discovered this autumn The experience that taught Jimmy Savile and me most ... I joined WPP 1 Margaret Thatcher Kantar in a newly created role celebrated New Year’s Eve with no job description and together for 11 years in a row. no plan to follow, just a clear Young Chinese girls purpose given by the CEO, 2 in Hunan province Eric Salama. I learned to work used Nushu, a language from first principles and do that no men could read, what would make a difference. to communicate with one The most fun I had ... another. This much Playing ‘rock, paper, scissors’ as The forces involved when a woodpecker drills at a tree are an energiser at a meeting of 150 3 up to 1,000 times stronger than gravity. I’ve learned people from all over the world. New homes in Denmark are 80% bigger than new homes in fiona mcanena The worst moment ... A 4 the UK. new colleague I had not met In 1941 the Government in the UK wanted to know how The best advice I got phoned to complain about 5 many bras women owned. ... When I was a graduate how one of my team, also Britain has 800 major self-storage units, the same as the rest trainee, a sales manager who called Fiona, had been rude 6 of Europe put together. spent every lunchtime in the to her on a conference call. It The average Briton suffers 726 hangovers in a pub told me: ‘Everyone has was worse for her though – 7 lifetime. something to teach you.’ when I revealed it was me on Apple’s market capitalisation is $340bn – more than the The worst advice I got that call. 8 economy of Singapore, or all the illegal drugs in the world. ... When I arrived in a new My peak career experience Fifteen per cent of European monarchs who lived between company as CEO, a very ... Is still ahead. If you 9 600 and 1800 were murdered. Their risk of violent death was experienced account man told keep learning and making a more than 700 times greater than their subjects and seven times me not to bother getting to difference then every stage is greater than young black American males today. know a major client as he had better than the one before. In Britain, ‘growing apart’ (27%) has replaced ‘infidelity’ it under control. Of course, we 10 (25%) as the top reason given for marriage breakdown. lost the business. Fiona McAnena is the Don’t underestimate ... global brand director, BUPA Brainwaves pages are edited by Elen Lewis, editor of How you can help and liberate (membership) The Marketing Society [email protected] people around you just by [email protected]
Thought for the day king charles i’s 12 golden rules for deportment at table
From Notes and Queries, 14 March 1863, via futilitycloset.com
Market Leader Quarter 1, 2012 9
8 brainwaves.indd 9 26/11/2011 16:25:58 brainwaves Different thinking
Words worth Golden brands of 1978 B is for beginnings. Craft the beginning and the In the archive of 50 golden brands, it was a year of rest will take care of itself, says Elen Lewis wonder women, golden cigarettes and the Atari 2600
The greatest short story ever Consider some of the best Healey in Parliament. written is just six words long opening lines in novels. From A striking series of by Ernest Hemingway. ‘Baby LP Hartley’s The Go-Between: photomontages and cinema shoes. For sale. Never worn.’ ‘The past is another country: films for B&H Gold, by The power of six words. they do things differently Collett Dickenson Pearce Opening lines are so there.’ Or Tolstoy’s Anna at the peak of its success, important in business writing. Karenina: ‘All happy families featured the gold pack Whether it’s the subject line in are alike, each unhappy family of cigarettes in various an email or the first sentence is unhappy in its own way.’ surreal juxtapositions and in a presentation, these words As a red and blue lycra-clad transformations, devoid of will grab or lose your reader’s So how can we use these Wonder Woman ker-powed words and people. attention in a moment. lessons in literature for onto our screens, another 1978 was also the year of One of my favourite writing in business? wonder woman of sorts was electronic games. The Atari examples of punchy headlines 1. Write your headline (your making an impact. Margaret 2600 with its woodgrain comes from Sir Harold email subject line) last. This Thatcher, leader of the console and stubby rubber Evans, former editor of The helps reduce writer’s block. opposition party, had engaged joysticks became a livingroom Sunday Times. He said: ‘If I 2. Spend as much time on the Saatchi & Saatchi ad agency to fixture in many homes, choose to head an article “An beginning as you do writing help win the General Election. featuring games such as Tennis Inquiry into the Conditions the rest of your text. Although the election and Space War. Then there of Mycean Civilisation in the 3. Start writing whichever didn’t take place until the was Simon, a plastic circle with Heroic Epoch, with Special part you feel most comfortable following year, 1978 saw a four-coloured quarters that Reference to the Economic with. Just get the words down. raft of political advertising flashed and beeped. and Domestic Functions of 4. Put the most important including the memorable Across the Atlantic, two Women Before and After information first and then poster campaign ‘Labour isn’t men called Ben and Jerry the Conjectural Date of the provide the context. working’. The ad had a huge opened an icecream parlour Argive Expedition against 5. Avoid beginning with impact, largely because it was in a renovated petrol station Troy” … I really have no clichés like, ‘as you know’ or denounced by Labour’s Denis in Vermont. n right to complain if (when ‘I hope you are well’. Make it I send it to the Chicago specific and relevant, include Daily Scoop) they alter it the details. n to “How Helen Did the 1961 snapshot Housekeeping”.’ [email protected] Books: John Irving published The World According to Garp; Plenty by David Hare. Events: First test-tube baby born; Polish bishop, the first non-Italian for 400 years, becomes Pope; Spain set to vote for democracy. Films: Grease; Superman. Five ways to… Music: The Boomtown Rats knocked Grease’s Olivia Newton-John and understand happiness John Travolta off the top spot of the Top 10 chart . 1 Don’t confuse memory and experience; between being happy in your life and being happy with your life. 2 Consider two selves. The experiencing self lives in the present, and there is the remembering self who maintains the story of our life. 3 The remembering self is a storyteller. Our memory tells us stories – that is, what we get to keep from our experiences is a story. What defines a story are changes, significant moments and endings. 4 The experiencing self lives its life continuously. The psychological present is said to be about three seconds long, which means that, in a life there are 600m of these moments, and most don’t leave a trace. 5 There are two concepts of happiness. Happiness for the experiencing self is about happiness for moment. For the remembering self it’s about how satisfied the person is when they think about their life.
Daniel Kahneman was awarded the Nobel Memorial Prize in 2002 for his pioneering work in behavioural economics. Watch ‘The riddle of Want to keep your competitors up at night? Hire Gapingvoid for experience vs. memory’ on TED.com. your next campaign, and sign up to the Free Daily Cartoon at www.gapingvoid.com
10 Market Leader Quarter 1, 2012
8 brainwaves.indd 10 26/11/2011 16:26:00 brainwaves Different thinking
Blogbytes: when strategy is execution by dave trott
In New York in the early 1960s, a truly seminal ad campaign broke. Posters in the subway, showing different ethnic types eating sandwiches. Black, Chinese, Italian, Irish, Native American. Above each one, the headline: ‘You don’t have to be jewish to love Levy’s real Jewish Rye’. Maybe right now that doesn’t seem so daring. But remember this was the ‘Mad Men’ era of advertising. The time when everyone, in all the ads, aspired to be a WASP (White, Anglo-Saxon, Bill Bernbach said: ‘The Protestant). Men were only problem is, you need to appeal Then, in a shown wearing suits and ties, to a wider audience than just women wore pinafores and had immigrants. Where are you master stroke, ponytails, and all the children running your ads?’ Ruben told were blonde and freckled. him they ran the ads in the Bernbach So it was actually really New York Post because it had daring to do advertising that an 80% Jewish readership. persuaded featured ethnic minorities. Bernbach said: ‘But Jews them to change Not only that, it was rare already know about rye bread; to do advertising that made we need to get to the people the name a big deal about the fact that who haven’t tried it yet.’ the product wasn’t made by And he persuaded them to WASPs; and that actually advertise in the food sections bread. People automatically had the word JEWISH in the of the World-Telegram and add ‘on white’ or ‘on rye’ with headline. the Journal American. And it their pastrami, or tunafish, or These ads celebrated worked: sales took off. bologna. And, incidentally, at the fact that New York was Then, in a master stroke, the same time Bernbach had more ethnically diverse than Bernbach persuaded them to repositioned the competition. anywhere else. I always knew change the name. ‘We need He called Levy’s ‘Real Jewish they were among the best to make it more ethnic, give Rye’, thereby sewing the advertising I’d ever seen, it more credibility. We need doubt that not all rye bread but I only recently heard the to change the name to Levy’s was ‘Real Jewish Rye’. Levy’s whole story. And it has as Real Jewish Rye.’ Whitney became the biggest selling much to do with the strategy Ruben was horrified. He was brand of rye bread in the city. as the creative. It started when scared about an anti-Semitic Then the biggest in the state, Doyle Dane Bernbach was backlash from the retailers. and eventually in the entire still a tiny agency. One of its Bernbach said ‘For God’s sake, country. At delis all over accounts was Levy’s Bakery in your name is Levy’s. They’re America, sandwiches are now Brooklyn. Whitney Ruben, not going to mistake you for offered on ‘New York Style the head of Levy’s, told Bill High Episcopalian.’ Rye Bread’. Bernbach they had a problem And eventually they agreed. Bernbach moved rye bread with rye bread, because it was And they ran the ads that not beyond being merely a type of sold packaged. only changed New Yorkers’ bread, to being a symbol for Rye bread wasn’t so much a eating habits, they celebrated New York City. Jewish bread as an immigrant New York’s ethnic and cultural bread. And the immigrants diversity. And in fact they Dave Trott writes a monthly preferred it fresh. So they’d were the precursor of the ‘I article on The Marketing go to the local bakery for it, (heart) NY’ campaign. Society’s blog. http://blog. instead of getting it packaged, Customers at delis nowadays marketing-soc.org.uk from the supermarket. routinely specify particular [email protected]
Market Leader Quarter 1, 2012 11
8 brainwaves.indd 11 26/11/2011 16:26:02 ideas & issues over to you Ideas & issues No agency in the world seriously claims to offer every single marketing service equally well: there will always be some discipline which they lack for one reason or other
marketing services The new line: in-house or outsourced From andy nairn
Not so long ago, agencies emerged and it has both The catalysts bring a much wider range of were classified using an profound and practical On the one hand, there has skills in-house, so that they imaginary line, whose origins implications for agency been a growing demand from can offer a more holistic view. stemmed from 19th century models going forwards. clients for more joined-up On the other hand, there accounting terminology1. The new line describes the advice. Marketers have has also been a growing In recent years, that divide degree to which an agency seen the fragmentation of demand from clients for has almost disappeared, as outsources or not. Of course media and channels, spotted specialist skills and advice. ‘below-the-line’ operators this is a question which all the danger of inconsistent Marketers have recognised have railed against the businesses have to wrestle brand experiences across that the very fragmentation snobbery of the terminology with these days, typically for the customer journey, and described above makes it very and ‘above-the-line’ shops cost-related reasons. But for become frustrated with difficult for any one company have rushed to proclaim marketing services companies, agencies’ traditional silo to do everything equally well. their integrated credentials. it has been exacerbated by two structures. This has, in turn, This has, in turn, prompted However, a new line has additional issues. prompted many agencies to other agencies to adopt a
12 Market Leader Quarter 1, 2012
12 ideas.indd 12 26/11/2011 16:49:07 ideas & issues over to you
much looser model, whereby more pragmatic, factors. only a core management However, this is exactly team is retained, and other As with most things in business, the where they derive their specialists are pulled in, on power: by taking a visionary a freelance or subcontracted winners will be those who are stance, in spite of more basis, depending on the practical pressures, an agency task in hand. flexible enough to adapt. But the can differentiate itself and prosper in the long term. The pros and cons challenges are not going away, and The interesting thing is that Keeping an open mind each agency model has a they will impact on everything It should be obvious from strong rationale, underpinned the above that each agency by cultural trends and client achieving mass any time soon, (brand consultancy, for must decide for itself demands. and in any case tend to retain instance), making them more where to draw the line, on Advocates of the in-house some form of central editorial desirable to bring in-house a discipline-by-discipline approach argue that they can control, at the very least. for financial reasons. basis. But just as importantly, exert much greater quality Instead of two opposing Another key factor is, of it must continually control over the thinking and camps then, there is really course, client needs. Whether review this position as creative product, by keeping a much subtler spectrum of agencies like it or not, the circumstances change. them close to home. They approaches. Nobody operates people who pay the bills will A new hiring may even claim that they can offer a purist model. Everybody also have a major say in where bring specialist skills better value, by removing is somewhere in the middle, to draw the line. in-house (or a departee the need to relearn for trying to figure out exactly Smart shops will have might take such expertise every project, stripping out where to draw the line. There a constant eye on the away, and not be worth duplication and third-party is no wrong or right answer, ever-changing needs of their replacing). A client win or overheads, and avoiding hefty but there are some key clients, anticipating the need loss could be equally telling. freelance fees. considerations which agencies for new marketing services Relationships with Meanwhile, fans of the should mull over before but also – crucially – deciding external partners outsourced approach (often adopting a stance. whether these needs would might improve or deteriorate. called the ‘Hollywood model’ be best served in-house or Technological advances as it mirrors the way in which Some other externally. might change the relative studios assemble teams) reply considerations Honesty is the best costs of in-house and that it is actually they who The first factor to take into policy here. History is outsourced options. can provide better quality, by account is perhaps agency littered with agencies who As with most things in picking from a wider pool of size and life cycle. Unless have overclaimed about business nowadays, the talent. Similarly, they claim they are blessed with wealthy their internal capabilities winners will be those who that it is they who can achieve backers, start-ups will or, at the other extreme, are flexible enough to adapt. keener value, by paying for naturally gravitate towards outsourced too carelessly. But the challenges outlined people only as and when they a more outsourced model Either way, the truth will above are not going to go need them. because they have neither out, so it’s better to take an away, and they will impact So which side is right? the workload nor income objective stance in the first on everything from hiring Well, both and neither. And to justify a host of in-house place, based on the client’s policy to remuneration, that’s where the line comes specialists. More established best interests. creative approach to in. Where do you draw agencies may well incline to Last but by no means least, office design. the line? The truth is that the opposite point of view, there’s the agency’s vision. So even if your line is the polarisation which I’ve in an attempt to generate For instance, a start-up’s drawn in the sand, rather described above doesn’t really economies of scale from their founders may simply believe than carved in stone, you exist. No agency in the world existing workforce. that a particular discipline will still need to draw it seriously claims to offer every Related to this is the must be kept at the heart of somewhere. n single marketing service, question of cost. Certain the agency, regardless of size, equally well, under one roof: disciplines need heavier cost or current client needs. Andy Nairn is chief strategic there will always be some investment to set up than Alternatively, a more officer at Dare, and head of discipline which they lack for others – media buying being established company may punning one reason or another (be it the classic example because resist the temptation to take a [email protected] data, media planning, web of the systems required, data service in-house, despite the build, search, PR or whatever). analysis being another. Even financial possibilities and 1. The precise origins of the Likewise, no serious established agencies may client demands, because it phrase are lost in the mists of player advocates the baulk at these costs and prefer might change the culture time. Most writers trace it back outsourcing of everything: to outsource instead. for the worse. to the different sections of a while a handful of virtual In contrast, other services These are principled balance sheet, although others creative agencies have sprung may command relatively positions which are often claim the phrase had its roots in up, they do not look like high fees and margins subsumed by the first three, film-making. >
Market Leader Quarter 1, 2012 13
12 ideas.indd 13 26/11/2011 16:49:08 ideas & issues over to you
public relations Should public relations be part of marketing? From MaryLee Sachs
Not so long ago public aligned objectives relations executives had to In many cases, structures are fight for a seat at the table not even formalised. A 2009 to be heard, to plan, to study of 114 CMOs by Forbes play an integral role in the reported that advertising organisation’s business – the (92%), research (85%) and table being the board of PR (73%) are top functions an organisation or a senior falling under the purview of decision-making group. marketing, followed distantly Now, public relations (PR) by internal communications has risen in such importance (58%) and corporate social that a debate has emerged responsibility (51%). over where it should sit within But according to a 2010 an organisation. CMOs and survey of CMOs by The the senior-most marketing CMO Club, while the leaders are fairly unanimous synchronisation of brand that at least part of the PR reputation and brand image function should reside within is more critical than ever, marketing departments, and more than half (52%) of in many cases, CMOs already companies are not fully have laid claim to PR within aligned between marketing their own organisations. and communications. What has prompted the CMOs who report the question and sparked such At the same time, some highest levels of alignment a healthy debate over the marketing executives are between marketing and PR ownership of PR? Certainly professionally jaundiced The growth of establish objective-setting the growth of social media and towards PR, considering it social media and with blended and collective the necessary skills to navigate only tactical at worst, and an rewards. Firms where joint two-way communication have imprecise practice that is too the skills to metrics and joint rewards given PR an edge over more difficult to measure at best. systems have been created traditional ‘push’, one-way Many organisations navigate two-way (66%) or joint objectives marketing approaches. And are struggling with the without joint reward systems as reputation, credibility, optimum mix of disciplines communication (71%) report much higher authenticity and transparency to best harness influence levels of being ‘fully aligned’ have become more important and advocacy, particularly have given PR an compared with firms where to consumers, PR has with the increasingly edge over more objectives are not shared emerged as a key element of empowered consumer made (31%) or where objectives are the marketing mix. possible by social media. traditional ‘push’ shared only for information But while all indicators The shift in power for PR is purposes. are pointing to increased new, and only just starting approaches The growth of digital effectiveness when the two to take hold within some and social media has disciplines are combined, the organisations, while others contributed to a new battle continues to brew over are only just beginning to Vocus surveying 966 PR landscape where marketers who reports to whom and how consider the options. professionals about their lack control over how the disciplines work together. Marketers are embracing perceptions of integrated their brands are perceived. PR and agree that integrated communications. Credibility, trust and Balance of power communications increase ‘Despite formalised relevance are becoming Many PR professionals overall effectiveness, but processes or structures, increasingly important consider the statement ‘PR is while marketing and PR 34% cited “organisational to consumers who view part of the marketing mix’ as have formalised working structures, functional silos, traditional marketing and blasphemous because, in their relationships in some cases, or turf battles” as the single advertising as irrelevant view, PR is a much broader data suggests that ‘formal’ largest barrier to integration. and suspect. The concept management discipline that doesn’t necessarily mean The next largest barrier is of ‘truthiness’, a word should report directly to the ‘functional’, according budget shortcomings noted coined by American CEO in all cases. to a study undertaken by by 20%.’ television comedian Stephen
14 Market Leader Quarter 1, 2012
12 ideas.indd 14 26/11/2011 16:49:13 ideas & issues over to you
marketing food in china
Colbert, has underlined the crisis management importance of transparency And let’s not forget the whole Accounting for tastes and has popularised it within area of crisis management and urban culture. communications. In what was from Tom Doctoroff PR can step in and address hailed mid-2010 as the ‘year credibility issues by providing of the recall’ by Advertising China’s relationship with authenticity and relevance due Age, PR professionals have food is a window into basic to its conversational nature enjoyed new-found respect instincts. The country’s Chinese cravings as well as the element of as able navigators of an cuisine is a manifestation of third-party endorsement and uncontrollable environment in a civilisation that has never differ from those advocacy. which negative word of mouth taken survival for granted. An of Westerners, can be exponentially painful to understanding of what and practical help brand health. how Chinese want to eat is but it is a myth PR can also provide the glue Undoubtedly, the myriad of a quick way to know China. across paid, owned and earned aspects and issues connected With the ever-popular dim that people media channels. According to social media have provided sum of Guangdong province to a Nielsen report on the practice of PR with the literally meaning ‘touch the reject foreign advertising effectiveness, the opportunity to take a more heart’, it’s fair to say that food key to success for marketers central role in marketing, and is a window into the Han soul. food brands is creating a mix of social there even appears to be a In most categories, local simply because impressions that incorporate trend for senior executives with brands including Mengniu, both paid and earned media. PR backgrounds to take the Yili (both dairy companies) they are foreign ‘Social advocacy and earned helm of marketing departments and COFCO (everything impressions can impact within organisations. from chocolate to pork) rule consumers in three important the roost. Although Chinese Salads, Fragrant Mushroom ways: by making them planning ahead cravings differ from those of Rice and Tomato Egg more likely to notice an ad With CMOs’ roles expanding, Westerners – noodles, not Drop Soup. (ad recall), to take away its how best can they prepare burgers, are comfort food – it The following are a few message (awareness), and for their new responsibilities? is a myth that people reject basic principles of marketing to increase their interest in Who should be in their foreign food brands simply food in China. making a purchase (purchase ‘kitchen cabinet’? Where can because they are foreign. Delicious balance. Chinese intent). The next step is to they get the best advice? Western marketers were cuisine is tremendously varied expand this understanding to PR grounding can be slow to enter China and – Shanghai food is sweet and offline sales and long-term the polar opposite of the made huge mistakes. Kellogg, oily, while Sichuan dishes brand value.’ other marketing disciplines. for example, launched cold are hot and spicy – but the Even Forrester suggests If PR is a less-understood cereal, an alien category, at balance of yin (cooling) and that owned and earned media and sometimes maligned prohibitively high prices. yang (heating) is important become as important, if not discipline, how can CMOs Since then, many others have everywhere. From stir-fried more important, than paid fully utilise and leverage it? made significant progress. beef with broccoli to sweet- (bought) media. In The Changing MO of the and-sour pork, dishes should Although there will always CMO we explore how some local knowledge be ‘harmonious’. be a role for paid media, it organisations are making the From Kraft to Nestlé and Yin foods, not necessarily does face several challenges most of a blended approach Dove to Coca-Cola, brands low in temperature, include including an increasing level through a series of interviews have tailored products toast, bean sprouts, cabbage, of clutter, falling response with CMOs who, in their own to suit Chinese tastes. carrots, cucumber, duck, rates, and less credibility than right, are change agents in Recent successes – Lipton tofu, watercress and water. owned and earned media. their organisations. milk tea, Danone fortified Yang foods include bamboo, People simply don’t trust All of these CMOs have calcium biscuits, Pizza Hut’s beef, chicken, eggs, ginger, paid media as much as other been in the communications/ seafood lover’s pizza – are glutinous rice, mushrooms sources of information. PR business at some point testaments to the power and sesame oil. China will More than 40% of US in their career so they have of empathetic insight. never be a coffee culture adults online agree with the a different perspective Yum! Brands’ KFC menu because beverages should be statement: ‘The experience I on the roles and how the localisation has been cooling, but Nestlé three- have with most products does disciplines are best combined particularly impressive. in-one coffee is a hit because not equal the promises made to greatest effect. n Hot wings and chicken sweetness balances bitterness. by their advertisements.’ It burgers are the biggest Illness is perceived to spring is certainly in CMOs’ best Edited extract from The sellers, but the menu also from yin and yang imbalance. interests to expand their Changing MO of the CMO by includes products such ‘Heat patterns’ (eg headaches, power base and own the MaryLee Sachs, published by as Beijing Chicken Roll, bleeding) are remedied with function that can address Gower Publishing 2011. Golden Butterfly Shrimp, cooling foods while excessive some of these issues. [email protected] Four Seasons Fresh Vegetable yin (eg runny noses, night >
Market Leader Quarter 1, 2012 15
12 ideas.indd 15 26/11/2011 16:49:14 ideas & issues over to you
sweats) are cured with heating Chinese cuisine is varied but the balance of yin (cooling) and yang help the older man perform foods. Chinese aren’t lactose (heating) is important everywhere – dishes should be ‘harmonious’ on the basketball court and intolerant, but dairy products, at the office. Osteoporosis including ice cream, are scaremongering is old school. perceived to be ‘damp’. Even In the hyper-competitive today, milk sales increase if business world, the comfort accompanied by something of food lubricates trust ‘dry’ like bits of wheat. and transactional gain. Safety: never assumed. Partnerships are tested in Counterintuitively, Chinese restaurants at round international brands are tables in private rooms. preferred to local brands, Dishes are meticulously assuming compatibility with choreographed. Proper local taste and acceptable seating must be respected, price. This is because Chinese with the guest of honour never take safety for granted. placed directly opposite the Prior to the 2009 tainted- door, flanked by his hosts. milk scandal, local dairy brands Serving oneself prematurely is were known for purity. But a faux pas. Leaving before the dairy manufacturers, in cahoots fruit comes is bad. with local officials, abused this Familiarity at home. A trust by adulterating products glance through any city’s expat with illegal ingredients. That’s guide gives an impression why all leading brands of infant that Chinese people are formula are foreign, despite culinary adventurers. price premiums of up to 400%. warm and soft, nourishing Shanghai’s restaurant scene That’s also why endorsement hugs that moms give families rivals any American or from central government Western before they dive into a cold European city. Mexican, tapas, organisations – such as world – the Chinese don’t Japanese, Western brunches, national dental and medical marketers were ‘crunch’ before noon, so cold Asian–French fusion, Johnny associations – are highly slow to enter cereal will always be niche. Walker parties, glamour clubs, sought after for any item that Special K would be most wine bars... the list is endless. goes inside the body, from China and made effectively positioned as a But, deep down, the Chinese toothpaste to orange juice. woman’s energy bar. are restrained about foreign Protection is king. Chinese huge mistakes Advancement always. Once food or new tastes. fear invasive elements, hence physical safety is a given, Inside the home, a refuge the appeal of germ-kill food becomes a weapon in from the outside kaleidoscope, products in many categories the game of life. First, most they are loath to experiment. including soap (Safeguard), nutritional benefits ladder Pizza Hut will receive delivery toothpaste (Colgate, Crest, up to academic excellence. orders for office parties, but Zhonghua), mouthwash Energy is closely linked rarely for consumption at (Listerine), air conditioners to intelligence or, more home. Despite Starbucks (Midea) and even dishwashers specifically, concentration and having outlets, roast and (Little Swan). quick-witted resourcefulness. ground coffee is not purchased It is, therefore, not Calcium strengthens in supermarkets. Italian surprising that foods both bones and brains. In a restaurants are ubiquitous in all that promote ‘immunity’ dog-eat-dog society, a sharp major cities, but few Chinese are embraced. Infant mind, not a buff physique, enjoy pasta with the family. formula, again, is a case in is the difference between In public, anything goes. point. Every brand must success and failure. Second, People pay a premium to demonstrate resistance to convenient foods are a means project internationalism, disease before moving on to to an end. They provide the hence Häagen-Dazs’ success performance benefits. Physical ‘fuel’ needed to start every day as an icecream parlour but transformation, on the other with a kick, so every indulgent failure as an overpriced in- hand, has less appeal. ‘Bigger, food must also be ‘good for home treat. With professional stronger, taller’ babies are not you’, a sugar-coated pill. acquaintances, the world is objects of admiration; every Third, transformation a stage. n mother wants her child to be benefits have growing appeal ‘perfectly normal’. for the mature market. Tom Doctoroff is CEO, Emotion protection is Dietary supplements, Greater China, of JWT. important too. Breakfasts are particularly in first-tier cities, [email protected]
16 Market Leader Quarter 1, 2012
12 ideas.indd 16 26/11/2011 16:49:15 Ideas & issues Over to you
marketing in recession Defending the budget in difficult times From Vincent-Wayne Mitchell
Marketers need to defend against potential cuts in Learn to fight your corner during marketing budgets and must austere trading conditions better explain the case for marketing expenditure in austere times. Most studies confirm that advertising and promotional expenditures in recessions produce ROI, contributing most to earnings in the year of expenditure, but also beyond – up to three years for consumer goods and two years for industrial products. (Interestingly, this effect does not happen with services.) When we do get an increased ROI for B2C or B2B, there are several reasons: l firms can achieve a greater share of ‘voice’ as most companies cut back marketing spend during a recession; l advertising increases both the salience of the product to consumers and the perceived brand quality; l counter-cyclical promotion boosts consumer confidence, helps overcome inertia and performance, share a number if it has a balance-sheet sends reassuring signals to of characteristics. advantage over rivals and concerned consumers; They have a strategic Market share is thus competition is unable l it reinforces the reasons for emphasis on marketing, an to respond to aggressive brand choices in uncertain entrepreneurial culture, easier to get as marketing increases, or if the economic times and helps slack resources (ie resources competitors are brand can demonstrate the justify premium prices; that are in excess of the value of quality and has a large l it attracts the increased minimum necessary to too hard pressed market share. numbers of ‘brand switchers’ produce a given level of CFOs unfortunately have who are less loyal and more output, such as underutilised to defend their their own arguments for opportunistic in a recession, human resources, unused reducing marketing spend. if more promotional spend production capacity, excess position Here are the key objections is put into call-to-action cash resources), and strategic and arguments to refute them. and point-of-sale-oriented flexibility, which is the ability vigorously l ‘Consumers have less activities; and finally to rapidly redeploy resources disposable income and will l market share is easier to to adapt to changing not be spending anyway.’ To get as competitors are too circumstances. rebut this, research shows hard pressed to defend their There are some brand- that for a 1% change in GDP position vigorously. specific factors that could there is a 1.4% change in Firms that manage to help marketers persuade advertising expenditure, so increase marketing spend their CFO to release more often the marketing spend is and do proactive marketing money. For example, if the cut disproportionally. during a recession, leading brand enjoys money-saving l ‘We need to appease to increased business points of superiority, or shareholders through >
Market Leader Quarter 1, 2012 17
12 ideas.indd 17 26/11/2011 16:49:18 Ideas & issues Over to you
gender agenda
target segment; adapting or extending existing campaigns Is unisex option over? If you lose the rather than commissioning from Mary Say and Charlie Skinner new ones; and trying to argument and consolidate advertising at a single agency to maximise Men and women may be from Mars, and women have to cut media buying discounts. social and legal equals, but from Venus. Role models your budget, Whatever the outcome of we are wired differently by seem to be changing: Cheryl the budget battle, steps can be our genes. These differences Cole is a traditionally take a scalpel taken to improve the efficiency influence how we consume. feminine role model, while of a given budget in difficult After years of unisex Beckham is looking distinctly rather than a times. For example, most positioning aiming to please manlier and Bear Grylls is consumers become more price both men and women at the emerging as a tough male meat cleaver sensitive during a recession, same time, consumers are role model. but this can vary by a factor starting to choose brands The verb ‘to man up’ has continued dividends of 13 by market and market that give them the chance to entered the dictionary and disbursements.’ Again, segment. So, check before you celebrate their masculinity and men and women want to the evidence shows that start engaging in more and femininity. celebrate and indulge their investor confidence declines deeper price promotion. Also, Recently there has been separate identities. for firms that discontinue think about using websites a revival of old-fashioned So there’s no need to worry corporate advertising such as Voucher Cloud which female pursuits such as – we’re not turning back the campaigns and that annual can be highly targeted, flexible making cupcakes and clock on feminism. It’s just growth in shareholder value and time limited. knitting; while men are that after years of advertising for companies that do not The product strategy indulging in pick-up trucks either ignoring the issue with tie their ad spends to the challenge is to innovate at and gaming. Are we going unisex positioning or trying business cycle is 1.3% higher. the right price. Breakthrough backwards and turning back to follow the ‘new’ man l ‘Resources could be innovations can build firm the clock on feminism and and ‘new’ woman, it looks better allocated to product value significantly, while small female empowerment? Will as though men and women development or R&D.’ innovations preserve firm our daughters turn their want to be treated in more The rebuttal to this is that value. For example, Purex back on careers to focus traditional ways. increases in R&D have been detergent brand is succeeding on homemaking, and will In a world where male and shown to lower profits for in getting core customers to our sons avoid cooking and female roles have merged, B2B and B2C firms, but have spend more on their laundry cleaning at all costs? every now and then men and had no effect on service firms, even in thrifty times by adding Not as far as we can see. women want to escape back while increased advertising an anti-static fabric sheet. Real progress has been made to a world where roles are improved profits for B2B and Finally, have the courage to in the past 20 years; men and more separate and to brands B2C, but not for service firms. be bolder and more creative. women are moving towards offering an engaging way of l ‘If everyone is cutting For example, Universal’s social equality, and there has doing this. back, we won’t be hurt.’ This use of the most influential been a merging of men’s and is only if the assumption is bloggers to promote their women’s roles. new strategies true and even so, firms could new Harry Potter ride, or Gender provides a compelling capitalise on the opportunity caring for homeless people changing places source of stories. Brands can to seize market share as on the iHobo app, or Women have moved into use gender in their strategies competitors cut back. Smirnoff Vodka Experience the workplace, and men in various ways. Gender-ise replacing conventional have moved into the kitchen, a unisex category: same use a scalpel campaigns with a though apparently they always brand, different story. Safe Two arguments are difficult to combination of brand leave the cupboard doors haven: an enclave in the other refute, namely: ‘media costs events and parties and open. As men’s and women’s gender’s territory. reduce in a recession’; and ‘we social networking sites to roles merged, role models Gender-ise a unisex just don’t have the money’. build a ‘movement’ around emerged to match. David category. Strategy: Take However, if you lose the the brand. n Beckham represented the 1a category where argument and have to cut feminised, metrosexual male brands are unisex and create your budget, take a scalpel Full references of all the in his sarong, while predatory a gender-ised personality. rather than a meat cleaver studies are available from the Jordan took ladette culture to There was a gap in the by: shifting from 30- to author on request. new levels. market for free magazines for 15-second ads and using Yet the desire to go back commuters in London, which cheaper radio rather than Vincent-Wayne Mitchell to traditional roles has a spoke directly to men or to TV, especially for reminder is Professor of Consumer compelling rationale behind it. women. Stylist magazine has advertising; advertising jointly Marketing, Cass Business We may be social equals enjoyed huge success, and was with a brand in a different School, London. but that doesn’t mean we recently voted Britain’s Best product category but same [email protected] are the same – men are still New Magazine.
18 Market Leader Quarter 1, 2012
12 ideas.indd 18 26/11/2011 16:49:18 Ideas & issues Over to you
The magazine Safe haven: an enclave connects with women by in the other gender’s acknowledging the many 3territory. Strategy: In facets of their feminine a market dominated by one identity. It addresses gender, create a niche within them at several levels: as it exclusively for the other, professionals, as mothers, minority gender. Just wives and girlfriends and over half of gin drinkers as simply women. Its are women, yet the content explores the feel of the category tensions involved in is overwhelmingly juggling roles and masculine. time to achieve Greenall’s, the a work–life gin manufacturer, balance, alongside saw this as an unashamedly opportunity, and girly moments developed Bloom of indulgence Premium Gin – (beauty, nails, the first premium hair). gin specifically For Stylist, aimed at women. the underlying The team story is of women behind Bloom rediscovering and wanted to create celebrating their a brand that would femininity. One of connect with the challenges of this women, be aligned approach is to accept with their aspirations that by focusing on one and speak to them brand and one gender you on their terms. The are subsequently writing brand’s backstory confirms off half of the potential target this; created by the world’s market. The benefit is that by first female master distiller, doing so, you create higher Joanne Moore, it has a strong levels of brand engagement proposition (‘Steal a Bloom and identification than moment’) that helps establish would be the case with a it in a male-dominated unisex brand. category. Bloom is enjoying Same brand, different strong growth in the UK and story for men and In a world where male and female Spain, and is about to launch 2women. Strategy: Target roles have merged, every now and in the US. both genders with the same The social tensions product/brand, but tell each a then men and women want to escape surrounding gender can different brand story. provide a potent energy, Bugaboo baby buggies to a world where roles are more which brands can use as a presents itself to men as a platform to tell stories to cleverly engineered rugged separate, and to brands offering this engage consumers. Gender all-rounder, and to women as is a simple though often a must-have baby accessory. The female story: The overlooked way of getting Bugaboo’s brand proposition is brand tells an aspirational consumers to identify closely based around progress. It gets lifestyle story, placing the with your brand. n this across to men and women Bugaboo as an essential ally in different ways. in modern-day parenting. Mary Say is managing The male story: The Grounded, practical, director of Brand Potential. brand tells an engineering progressive and chic. mary.say@brand-potential. story, Dyson-style, complete The two stories co.uk with pictures of the male complement one another. Charlie Skinner is client founder of the company They are two different takes services director of Brand and his mission ‘to solve a on the progress theme, as if Potential. complex problem, choose a talking to men and women in charlie.skinner new path’. a different language. @brand-potential.co.uk
Market Leader Quarter 1, 2012 19
12 ideas.indd 19 26/11/2011 16:49:20 chopping block jeremy bullmore
A seasonal guide to insulting people…
I’ve written about this before and it continues to a thumbs-up sign and says LIKE! And the other intrigue. We spend a great deal of time and money has a thumbs-down sign and says DISLIKE! trying to find out what people think about brands. That’s the one that David prefers. He can dismiss But at least as fascinating is trying to deduce, from ten conscientiously considered ideas in as many a careful study of their Special Offers and their seconds; and thumping the stamp with his fist give Creative Approaches, what brands clearly think him an adrenaline charge of naked power. He’s about us. always admired Lord Sugar. They think I’ll buy a PC that I’ve never wanted Only £14.95 buys you three Personalised Golf because it now costs less. So they think I’m stupid. Balls. You can have your client’s face printed on They think I’ll pay for a Titanium Credit Card them in full colour and he’ll be thrilled. And David because it will impress head waiters and upset can hug himself and go on about it in the pub at the We know what my golfing partner. So they think I’m petty and thought of his client doing to himself exactly what socially insecure. David had always wanted to do to him: and that’s we think about They think I’ll be tempted to spend an hit him viciously out of sight. Oh my. brands. But what expensive weekend in a remote and draughty Wi-fi Bathroom Scales cost £149.99 – but for mansion because it has real log fires and once the right senior colleague, they’re well worth do brands think belonged to a person with a title. So they think it. If he’s podgy, he’ll get your point right away. of us? Jeremy I’m a snob. (Even wittier for women!) Wi-fi Bathroom But what, I asked myself recently, do the Scales monitor just about everything about you, Bullmore purveyors of Christmas Premiums think of their including Fat Mass – and transfers it wirelessly speculates prospective recipients? Or to make it even more to an iPad or computer! Enlist the help of your deliciously complicated: what do the purveyors IT department: and your boss’s Body Mass Index, of Christmas Premiums think that those who buy and how far it departs from the recommended their Christmas Premiums think of the people norm, could be displayed on every desktop on they plan to give them to? the management floor. Better than karaoke for Having spent far too long looking though a the office party! (And don’t forget the Bacon and catalogue of branded seasonal gifts and gewgaws, Absinthe Range of Christmas Smellies; the girls the answer’s obvious. The entire collection will really appreciate the Bacon Lip Balm.) is designed to appeal to David Brent; either Here’s one that David would love. Dave to appeal to him personally or as a means of pretends to despise celebrities – or Slebs, as humiliating others. he wittily calls them. Secretly, of course, Dave His interests include eating, drinking, bullying loves Slebs and could win any pub quiz on the and showing off. How many people do you know subject comfortably. So why not give Dave A VIP who use swizzle sticks? Fifty years ago I knew Night Out? someone who kept a gold swizzle stick in a weskit Give them enough money, and make-believe pocket, moored by a slim gold chain. Today, you bodyguards and make-believe paparazzi will can buy David a packet of ten branded swizzle pretend that Dave is a VIP; snapping away with sticks for as little as 10p. elevated cameras and manhandling him and his Or you could send him a Christmas card (bit of gang though the make-believe surging crowd a snorter, this) that triples in size when released and round the end of the velvet rope into some from its envelope. He’ll really enjoy putting it unappealing basement. And with pictures later to back in its envelope and then pulling it out again prove it all happened. in Jessica’s face: just look at her expression! But if you can afford it, give Dave a Villain Mugs are always welcome but here’s a twist: Chair. As its caption tells us: ‘Recipients of this The AntiBug mug. It’s a small but mighty mug imposing chair can act out their Sir Alan fantasies.’ that kills on contact as many as 50 different bugs At £4,500, it’s not a snip. It’s worth giving only if including MRSA and E.coli. On reflection, David its recipient will be reasonably certain that you’re would probably prefer to give one rather than get mocking him rotten but not so certain that he’ll one: preferably to his rival down the road with a feel able to challenge you. Instead – and oh, the witty note attached. joy of it – he’ll have to say thank you. And you, But there’s a pair of printing stamps he’d really demurely, will be able to say truthfully: ‘The appreciate (at only £9.99). They save time and moment I saw it, Brendan, I thought of you.’ n painful thought when responding to written suggestions from apprehensive juniors. One has [email protected]
20 Market Leader Quarter 1, 2012
20 bullmore.indd 1 24/11/2011 20:26:20 One day, this ad will save you time and money
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market leader q4 2011 ipa ad.indd 1 11/28/2011 11:24:26 viewpoint hugh burkitt
Operating on the customer’s heart
It is a cliché in marketing that we must put the acceptable – but his recommended hospital – The customer at the heart of the business, but I recently Harley Street Clinic – was not covered. Aviva found that my heart was at the centre of someone would pay the average cost of five NHS trust else’s business. I needed an operation to repair a hospitals for this operation – which was a cool leaking aortic heart valve. Two organisations have £22,500 – but they warned me that The Harley helped put me back at my desk – the NHS and Street Clinic could cost twice this amount and I’d Aviva Healthcare – and I am profoundly grateful to be on my own for the extra money. them both. Each call to Aviva was dealt with efficiently, but every single call was with a different person, and it The customer need was quite clear that they were in much more of a It all began back in May, when I decided after panic about what my policy covered than the fact several weeks of coughing that I should get along that I had a serious health problem. to my doctor for a check-up. The cardiologist I never established any one person at Aviva How does it feel to was brisk to the point of being brusque. He had who recognised me, and I never had a written be the customer no ‘bedside manner’ but he was logical, clear communication from Aviva to me that addressed and direct. Having identified the problem he me by name. The only paperwork I received came when your heart recommended I go and see a surgeon. I asked: from a computer in the accounts department – not is being operated ‘What will happen if I don’t have an operation?’ from anyone interested in health care. on? Hugh Burkitt ‘Your heart will fail,’ he said. So I decided to settle for my preferred surgeon operating at his NHS base in two weeks’ time, describes his Finding the right service which was a specialist unit run by UCLH called recent encounter So I went to see his recommended surgeon and The Heart Hospital. As one visitor later said: ‘The fortunately immediately liked him. He described name is reassuring. It sounds as though they know with the business the problem and his proposed solution with great what they are doing.’ end of healthcare clarity. The aorta needed to be brought back into shape and this should cure the leak in my valve, but Delivering the service if it didn’t he could put in an artificial one. I needed The surgeon was no doubt happy to have me as to have the operation done ‘in the next four weeks’. a private client, and the fact that I was private The risk of an ‘event’ rose exponentially with may have helped move me up the queue, but on the extent of the dilation of the aorta and mine was the planned day of admission I still had to call at already at a dangerous level. Oh, and the mortality 11.30am to check that there was a bed available, rate for the operation was ‘less than 4%’. The and when I did I was told that I would have to wait mortality rate was mentioned on at least two other until 1pm to hear for sure – ‘after the doctors have occasions before the operation and it weighed done their rounds’. As I got a call back my pulse heavily on my mind. rate leaped – something it was to do a lot of in the Is 4% low or not? Well if you say to yourself next few days – but I was in. there are 50 people on this rush-hour bus, and two The first three of my six nights in hospital were of us are going to die before the final stop, then it all grim. I shared a room on the night before my starts to seem quite high. operation with a charming man, but his appalling The stricken faces of one’s nearest and dearest cough kept both of us awake. At 1am, I considered also tell you a lot. We all need a heart that works discharging myself and coming back again in and it has been possible only in my lifetime to the morning. The next day, as the hour of my operate on it. Messing with the heart sounds operation approached, my rising tension caused alarming, though more than 300,000 people in the my backache (a relic of sporting activity earlier in UK have now had heart surgery, and the outcome the summer) to grow worse and worse. When the for most people is excellent. But going into the anaesthetist came round he offered me painkillers operation, while outwardly calm, I was frankly and a sedative. ‘I’ll take anything you’ve got,’ I said scared. and as soon as I took them I passed out and didn’t wake up again till I was in the intensive therapy Would Aviva pay for it? unit after the operation. During this period there had been a series of Here they were talking to me to wake me up and telephone conversations with Aviva Healthcare, taking a breathing tube out of my mouth. I stared which had established that my policy did cover at the neon lighting and felt cheered that I was not this operation and that my preferred surgeon was in the next world after all. My partner, Antonia, and
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22 viewpoint.indd 22 26/11/2011 16:22:59 viewpoint hugh burkitt
I had attended a pre-operation orientation day two days earlier which had wisely included a trip to the intensive therapy unit. There we saw what people looked like when they came straight out of the operating theatre. In a word, ghastly. They looked a terrible colour with tubes everywhere. Once I was conscious I became acutely aware of the state of my neighbours in the beds on either side of me. On my left was a Polish granny who was said to speak not a word of English, and on my right was a Mr Ahmed who was said to speak only Urdu. The blue curtain blocked out vision, but every sound from the beds next to me was audible, and I found myself being drawn into each patient’s personal drama. I settled uneasily down for my third night in hospital which I can confidently say was the worst night of my life. Mr Ahmed’s alarm kept going beep beep and every time it did my pulse rate leapt and my alarm beeped once in response. After some hours of not sleeping I heard a highly cultivated English voice from Mr Ahmed’s bed repeating over and over again: ‘Hello I’m Barney Ward.’ Who was this? Clearly a posh new patient had arrived straight from the operating theatre. What had happened to Mr Ahmed? Had he become one of the lost 4%? But when light finally dawned, Mr Ahmed had reappeared, and Barney Ward was nowhere to be introducing such customer-friendly measures such People facing an seen. Mr Ahmed did speak English, and now he as an individual patient manager – in my case it operation don’t feel was protesting that he didn’t want to sit up, as two was a nice lady whom you felt might otherwise great about it, and would like to be treated wonderful male nurses – Matthew and Alfredo – set have been running a National Trust Teashop – who sympathetically as about waking up the entire ward and throwing off popped in each day to listen to any concerns over individuals our post-operative stupor. my stay in hospital. She had no medical role and Even now, months later, I feel quite emotional didn’t have the power to change anything, but she when I think of the wonderful care I received was there to listen and pass messages on. in that ward from so many different staff, who So she couldn’t do anything about the truly were all working over the weekend. Matthew disgusting food. Even the tea tasted terrible. I think and Alfredo stick in my mind because they had that if a tea manufacturer could be persuaded to such a wonderful effect on the whole ward on a sponsor the tea bags in a major London hospital sunny Sunday morning after a very dark Saturday for a trial period of a year they would be able night. After what had seemed like a very long to demonstrate a speedier recovery rate among period in captivity – in fact only three nights – I patients. And surely the alarms in intensive care could look out through an attic window at the could be visual rather than aural, in a way that peaceful roofs of Marylebone and look forward to would alarm the staff but not the patients. the rest of my life. Finally, I do wonder why we don’t all come out of an NHS hospital knowing what our treatment Reflecting on my treatment cost. On my last day I encountered another patient My message to readers is this: do get your health leaving who was complaining to anyone who checked regularly. My condition might have been would listen about the poor treatment he had fatal if I had left it too much longer. received. This included an emergency ambulance My message to Aviva (as to all healthcare into hospital, a new heart valve, a triple bypass and providers) is simple: as with all good a pacemaker. He was, he told me, aged seventy, communication you need to put yourself in the overweight, a lifelong smoker and had diabetes. His place of the recipient. People facing a heart ‘free’ treatment must have cost the NHS at least operation don’t feel great about it, and would like £50,000. He may not have valued the professional to be treated sympathetically as individuals. It must expertise he had received but surely he would have be possible to be clear and businesslike about the been quite impressed by its cost. n money involved, while at the same time appearing to be interested in the patient’s health. Hugh Burkitt is chief executive of My message to the NHS is more complex: The Marketing Society well done on listening to a lot of feedback and [email protected]
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22 viewpoint.indd 23 26/11/2011 16:23:00 c u lt u ra l i n n ovat i o n douglas holt and douglas cameron Triumph of a better ideology
Market innovation has long been innovators have massively transformed Existing markets are characterised by food preferences. dog-eat-dog fights to outdo competitors dominated by the world view of We call this phenomenon cultural on a conventional set of benefits. engineers and economists – build innovation. Cultural innovation has Incumbents rely on incremental changes been ignored by management strategists, in product and tactical marketing to a better mousetrap and the world despite its pivotal role in launching fight over thin margins. This, according will take notice. But Douglas and reinvigorating any number of to Kim and Mauborgne, is a red ocean. Holt and Douglas Cameron billion-dollar businesses. The Body In order to develop future-leading Shop, Ben & Jerry’s, Marlboro, businesses, companies must reject the argue the merits of cultural Method, Whole Foods, Dove, Red Bull, conventions of the category to craft innovation instead Harley-Davidson, the Mini, Starbucks, ‘value innovations’ that have no direct Coca-Cola, Levi’s, and Snapple, to competition – blue oceans. name a few, have all profited from These marching orders have inspired his functional point of cultural innovations. When these many managers and entrepreneurs. view certainly has merit. But, enterprises advanced a more compelling But what kinds of future opportunities because it is the only way that ideology – leapfrogging the staid should we be looking for? And how does we approach innovation, the cultural orthodoxies of their categories – one actually go about spotting these ‘betterT mousetraps’ approach has had consumers beat a path to their doors. opportunities and designing new concepts the effect of eclipsing a very different that will take advantage of the blue innovation world view – champion a The search for better oceans? Innovation experts have offered better ideology and the world will take mousetraps us two paths. notice as well. Launching ‘the next big thing’ – the This phenomenon is found everywhere innovative idea that resonates powerfully Technological Innovation in consumer markets. For example, with consumers and takes off to establish For most innovation experts, future farmer-cookbook-author-television a profitable new business – is the holy opportunities mean one thing – the host Hugh Fearnley-Whittingstall, grail of managers and entrepreneurs commercialisation of new technologies. author Michael Pollan, the international alike. Strategy experts have been offering Technology-driven innovations are Slow-Food movement, and the American advice on how to identify and exploit such the stars of business. From historic grocery retailer Whole Foods Market, opportunities for decades. innovations such as the light bulb, the among others, have transformed food Fifteen years ago, Gary Hamel and telephone, the television, the Model T, consumption for the middle and upper- CK Prahalad offered a pioneering call to and the personal computer to recent middle class. These cultural innovators arms. To ‘create the markets of tomorrow’ stars like the iPod, Amazon.com, have championed an alternative approach they urged managers to focus on industry BlackBerry, Viagra, and Facebook, the to agriculture and food as an ideological foresight and strategic intent. To avoid commercialisation of breakthrough challenge to the dominant scientific- getting bogged down in an established technologies has clearly had a huge impact industrial food ideology. market’s internecine tactical battles, they on business and society. They have brought to life the value, encouraged managers to stake out new In The Innovator’s Dilemma and even necessity, of winding the clock market space – what they famously termed subsequent books, Clayton Christensen back to some sort of pre-industrial food white space – in order to create and argues that new technologies allow culture in such a way that it is irresistible dominate emerging opportunities. companies to design ‘disruptive for the upper middle class in the United More than a decade later, W Chan Kim innovations’ that transform their States, the United Kingdom, and other and Renée Mauborgne introduced a new categories. Disruptive innovations are countries. Relying upon what we term metaphor – blue ocean – to dramatise a products and services that trump the myth and cultural codes, these cultural very similar idea. value delivered by existing category
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These better-mousetraps innovation models are based on the world view of the economist and the engineer, but there is more to the world of innovation than new product design alone
offerings because they are cheaper, of the economist and the engineer – a the vast majority have failed despite their more useful, more reliable, or more world in which it is only the material seeming combinatorial creativity. convenient. properties of what we buy that are Brewers have tried to follow blue-ocean important. strategy for many years. Combining Mix-and-Match Innovation concepts across categories, they have In recent years, a ‘mix-and-match’ Consumers see innovation launched beer+energy drinks (Sparks, approach to innovation has become differently Be), beer+tequila (Tequiza), beer+soft influential. According to Kim and Consumers – the ultimate arbiters of drinks (Zima), and so on. All these Mauborgne, in order for companies to market innovation efforts – often find supposed innovations were failures in the offer customers a significantly better offerings to be innovative even though mass market. value proposition, they must methodically they seem quite pedestrian from a Now let us look at the beer category break the rules of their existing category: product-design standpoint. It turns from an ideological viewpoint. While subtracting and enhancing conventional out that blockbuster new businesses do the product – the beer itself – has seen benefits, as well as importing new ones not necessarily require radically new only minor changes over the past 30 from other categories. features that fundamentally alter the value years, the category has been very dynamic For instance, in Blue Ocean Strategy’s proposition. in terms of the cultural expressions that lead example, the authors describe how Consider beer. From a better- consumers value. Incumbents have been Cirque du Soleil created a blue ocean by mousetraps perspective, the American pushed aside by new entrants with a borrowing from theatre and Broadway beer market has long been a mature better ideology. musicals to reinvent the circus. category – a notoriously red ocean In the popular-price tier, Budweiser These better-mousetraps innovation that resists innovation. Many product took off in the 1980s with branding that models are based on the world view innovation efforts have been tried, and showcased men working cheerfully and >
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industriously in artisanal trades, men focus either on ‘functional benefits’ whom Budweiser beer saluted with a (sometimes termed ‘rational benefits’), or baritone-voiced announcer proclaiming: While food scientists on ‘emotional benefits’, or on both. ‘This Bud’s for you!’ The results were startling. The beer brand quickly became were struggling to the functional benEfits trap the go-to choice for working-class Mindshare marketing relies on an easy American men. By the middle of the make odd-ball mix- and intuitively appealing metaphor: decade, Budweiser was unchallenged as and-match drinks brands succeed when they colonise valued the most desirable beer in the country. ‘cognitive territory’ in consumer minds. By the early 1990s, Bud’s ideology had combinations, cultural The model directs managers to determine lost resonance and the business sank, the cognitive ‘gap’: which functional ben- to be replaced by its stable mate. Bud entrepreneurs were efit in a given category is most valued by Light took off in the 1990s to become consumers and least dominated by other by far the dominant American beer playing a different brands? Targeting the gap, the marketing brand, speeding past the brand that goal is to stake out a claim to the cognitive had pioneered light beer as a product game. They pursued association in consumers’ minds, then innovation, Miller Lite. Bud Light radical innovations in hammer home the connection between tastes little different from Miller Lite. the trademark and the benefit claim as Rather what was different was a decade’s culture, not product simply and consistently and frequently as worth of silly Peter Pan stories of men possible. who engage in all sorts of juvenile high Over time, according to the theory, jinks, which conjured up a new kind of consumers would unconsciously associate rebellious masculinity for adult men. against drinks full of preservatives and the brand with the benefit, and as a result Consider soft drinks – a category synthetic ingredients. the brand would come to ‘own’ (in a that would seem to be one of the most The Coca-Cola Company, which had cognitive sense) the benefit. masochistic red oceans around. The paid $180m to buy out the ideologically The functional benefits model is two leading soft-drinks marketers in innovative Odwalla in 2001, followed most useful when a product really does the world, PepsiCo and The Coca-Cola suit by paying $50m for about 15% of command a novel functionality that Company, have invested hundreds of Innocent in 2009 – a $333m valuation. gives the brand a substantial and durable millions of dollars to innovate their way Failing at its better-mousetraps advantage over competitors. In such out of this mature category. innovation strategy, Coca-Cola has had instances, the mindshare model simply Both companies have aggressively no choice but to acquire ideologically reinforces what economists have been pursued mix-and-match concepts to create innovative brands at very steep prices. preaching about reputation effects for new value propositions. For example, These businesses have been every bit decades. Such advantages, however, The Coca-Cola Company has made big as innovative as the technological and are hard to come by, and, when a new bets on Coke Blak (coca-cola+coffee) mix-and-match businesses celebrated technology with a truly improved and Enviga (a ‘calorie-burning’ green by innovation experts. But what was performance is introduced, it is summarily tea). Both of these ambitious efforts – radical about them was what the copied by competitors. supposedly targeting distinctive consumer product stands for – its ideology, which, ‘need states’ – failed to break through. when staged through myth and cultural The Commodity Emotions Trap codes, becomes a distinctive cultural Unfortunately, the new style of Enter the cultural expression. mindshare marketing has proven to entrepreneurs Furthermore, many technological be more problematic. To avoid the While the food scientists were struggling innovations can benefit from innovative functional benefits trap, many marketers to make odd-ball mix-and-match drinks ideology as well. Cultural innovations now focus on identifying what they combinations, cultural entrepreneurs were have turbocharged many better term ‘emotional benefits’, which are playing an entirely different game. They mousetraps including Apple, Google, the softer values, thoughts, and feelings pursued radical innovations in culture, not Mini, Red Bull, JetBlue, and Wikipedia. that consumers associate with the product. product, brand, or category. Although The most familiar example of this in the traps in ‘mindshare’ the intentions may seem noble and the United Kingdom is Innocent Drinks. marketing sophisticated, ‘laddering up’ to the The market for alternative natural fruit We might expect that the discipline of consumer’s ‘higher order values’, or smoothies had long been established in marketing would play a leading role in ‘probing deeper’ to unveil the consumer’s the US, pioneered by Odwalla (est. 1980) the development of strategy for cultural ‘fundamental need-states’ and the ‘brand and Fresh Samantha (est. 1992). The big innovation. Yet, conventional marketing truth’ is anything but that. UK grocers such as Marks & Spencer, – what we term mindshare marketing In practice, the result is simply to Sainsbury’s, and Tesco imported the because it is couched in psychology – push for vague abstractions that hold a concept and developed their own versions. emphasises the day-to-day stewardship negligible value for consumers. At least Innocent easily won over consumers of existing businesses and, in so doing, functional benefits forced marketers who were worried about health issues by slights cultural innovation. to remain grounded in the product’s making a cultural assertion – championing Depending on the company and material performance. There are no the pre-industrial purity of ‘only fruit’ category, today’s mindshare strategies constraints at all for emotional benefits:
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all emotions are fair game. We are Mindshare marketers’ favoured that it can. For the past decade we witnessing an emotions ‘arms race’ in terms for a brand’s key benefits – brand have engaged in a ‘cultural innovation which companies vie to own one of the essence and brand DNA – reflect this laboratory’ of sorts: we conducted shortlists of top emotion words. assumption. Because the strategic core of academic research on dozens of these This process encourages companies the brand has no connection to society successes while also consulting to a wide to pursue generic ‘emotional territories’ or history, mindshare marketers push the variety of companies to develop cultural that any brand in any category can job of making their brands resonate with innovations for them. claim. Coca-Cola becomes the champion consumers onto their creative partners. The result is what we call cultural of ‘happiness’, Pepsi becomes the They are charged with injecting some strategy: a six-step cultural innovation champion of ‘joy’, Fanta becomes the ‘trends’ or ‘fame’ or ‘cool’ into the brand framework supported by a systematic champion of ‘play’, Snapple becomes in an effort to make it relevant. toolkit of cultural research methods. the champion of ‘fun’. The marketers Conceiving of brands as a phenomenon We have successfully applied our at Oscar Mayer, the lunch-meats and of the mind – rather than of society, cultural innovation model to blue-chip bacon brand, have launched a $50m culture, and politics – means that brands such as Coca-Cola, Mini, Ben advertising campaign consisting entirely opportunities for innovation created by & Jerry’s and Converse, as well as to of slice-of-life vignettes featuring people historical changes in society are totally smaller entrepreneurial brands such as being happy while eating Oscar Meyer ignored. Fuse music television, Svedka vodka, and the tagline ‘It Doesn’t Get Better Freelancers Union health insurance, and Than This’. The company expects that Brands are rooted in culture Fat Tire beer. these ads will ‘recapture the joy and People always want better functionality. Ideological opportunities provide one exuberance’ of the brand. Ideological opportunities, in contrast, of the most fertile grounds for market These emotion words blur into a fuzzy are produced by major historical changes innovation. Yet, these opportunities sameness. Levi’s becomes the champion that shake up cultural conventions of the have gone unrecognised because of the of ‘confidence’ and ‘freedom’. But so category, what we call a social disruption. extraordinary influence of economics, do Lee Jeans and Guess Jeans. For that These shifts unmoor consumers from engineering, and psychology on matter, so do Oxford Health Insurance, incumbent brands, and prod them to management thinking. These disciplines, Volvo Station Wagons, and Verizon seek new alternatives. It is an emergent as different as they are, share a common Mobile telephone plans. kind of opportunity that is specific to assumption – in order to simplify the Only through such a process could Procter & Gamble house a pregnancy test, a washing powder, an oral hygiene As with the functional approach, emotional brand, a feminine hygiene brand, a line branding drives brands to mimic the cultural of cosmetics, and an antiperspirant, all of which offer ‘confidence’ or ‘confidence in orthodoxy of the category. Mindshare marketing results’. While the pursuit of emotional benefits not only limits innovation, it creates red oceans has helped many a brand manager avoid the functional benefits trap, the a historical moment and a particular world, they purposely ignore cultural unintentional consequence is to land in group of people. Likewise, the cultural context and historical change. These an even more strategically bereft space – innovations that respond to these theories remove all the messy bits of what we term the commodity emotions opportunities are fundamentally different human life in order to present a tidy trap. Emotional benefits render the brand from better mousetraps. They are theory that is easy for big companies to even less distinctive, from a consumer’s composed of specific cultural expressions, work with. We argue that it is in these perspective. which are conveyed by the brand across untidy hard-to-measure parts of social As with the functional approach, consumer touchpoints. life that some of the greatest innovation emotional branding drives brands to Powerful cultural expressions can opportunities lie. n mimic the cultural orthodoxy of the be dramatised via product design (Ben category. Mindshare marketing not only & Jerry’s, Starbucks, Vitaminwater), Douglas Holt is president of the Cultural limits innovation, it creates red oceans. print ads (Jack Daniel’s), guerrilla Strategy Group, a cultural innovation stunts (Ben & Jerry’s, Fuse), corporate consultancy. Psychology to blame business policies (Ben & Jerry’s, Fat [email protected] Ultimately, both the functional and Tire, Freelancers Union), retail design emotional benefits tangents of mindshare (Starbucks), packaging (Starbucks, Douglas Cameron founder and chief marketing are severely limited as Vitaminwater), the service encounter strategy officer of Amalgamated. innovation tools because they are rooted (Starbucks), naming (Vitaminwater), [email protected] in psychology. Both approaches imply outdoor media (Freelancers Union), that marketing is about embedding and television ads (Nike, Marlboro, This article is excerpted from Cultural associations between brand and valued Clearblue, Fat Tire, Levi’s, ESPN). Strategy: Using Innovative Ideologies benefits in consumers’ minds. As a All touchpoints are fair game for to Build Breakthrough Brands (Oxford property of mind, the brand and its cultural innovation. University Press, 2010). You can benefits are both assumed to be durable Can cultural innovation become a learn more about cultural strategy at and contextless. systematic pursuit? We have learned culturalstrategygroup.com
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24 holt.indd 27 11/30/2011 11:40:51 retail renegades leslie clifford and laura moser
Blazing the retail trail
Bricks-and-mortar retailers in hat comes to mind As competition across many channels the age of the internet face when you hear the term escalates, retailers have increased the ‘renegade’? Do you sophistication of all aspects of their increasing threats. Leslie Clifford think deserter? Outlaw? marketing mix. Our research uses the WWhile the dictionary definition has a five Ps (product, people, price, place and Laura Moser have scoured negative connotation – ‘an individual who and promotion) as a framework to share the world for examples of the rejects lawful or conventional behaviour’ – examples of those who buck convention. kind of mould-breaking retail renegades often have a positive impact on Our research took us on a metaphoric innovators that shoppers love and culture. Many are rejected by society during shopping spree around the world, where their lifetimes only to be admired later as we found some innovative, unusual, and that are succeeding in this more innovators. even irrational examples of retail (see competitive environment. From Mark Zuckerberg (father of table, opposite). Facebook) to the Grateful Dead (who While vastly different in many ways, believed music was becoming too our renegades share several traits we commercialised and encouraged fans to believe will shape the industry over the tape their live concerts), renegades have next five years. significantly enhanced our lives. Put another way, renegades often provide a Fulfilling Deeper Desires glimpse into the future. The first ‘P’ in most marketing models Depending on your perspective, a refers to product. Renegade retailers have retail renegade’s actions could range from found ways to ground both products and a monumental shift to a more subtle product selection in emotional needs not strategy. We find both to be relevant. Our broadly acknowledged by other marketers. goal in this feature is to share some of the These retail mavericks link their items most intriguing global examples, highlight with unexpected services that let shoppers commonalities and provide inspiration for fulfil intangible needs – even somewhat establishing deeper shopper connections. ‘darker desires’.
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In Japan, Nike opened a retail outlet school, rides to sporting events and A metaphoric quest for with a concept inspired by Tokyo’s transportation to shows. Tesco may or renegades included 185 Harajuku neighbourhood – where may not receive any direct sales from retailers across 12 categories originality is critical to defining your this aspect of the service, but we suspect personal street-style – and features a shoppers who participate will feel a deeper Channels Number of NIKEiD Generator and NIKEiD Studio. sense of loyalty – perhaps obligation – to Retailers These tools elevate colour selection to the retailer. Food, drug, mass, grocery, the art and science of creating a unique A grocery store in Oregon, Mercado Los C-store, club, value/discount 53 colour ‘identity’. The NIKEiD Generator Gavilanes, moves beyond food products Fashion 33 is an interactive kiosk that scans shoppers’ to hosting anniversary parties, church Restaurants 27 clothes and creates a personalised colour fundraisers and teen nights. This US Department stores 26 shade. Shoppers take this shade to the retailer of Latin products has converted Liquor: private and chain 14 NIKEiD Studio for one-off Nike shoes, an unused storeroom into an events centre Electronics 13 stickers and wallpaper, allowing Nike to that accommodates up to 500 people. Cash and carry 10 tap into the youthful craving for a new The room offers a stage, bar, restroom DIY/hardware 9 form of individuality. and kitchen as well as a children’s room Wet Seal uses technology to provide adjacent to the main hall. This service not Source: G2 USA. customisation that allows shoppers to only increases the store’s profit per square virtually ‘snoop’ into their friends’ closets foot, it also recognises a strong community before committing to a purchase. The need unrelated to food. Shoppers have inventory and price does not define them retailer’s instore kiosks and Fashion begun to see the store as more than a or their clientele. Community site enables shoppers of their business: it’s now a destination. The Panera Cares Café also refines the bricks-and-mortar and online outlets to The owner of a small London coffee price model. This bakery café suggests create and post their personal outfits. outlet, Gwilym Davies, turns the very a recommended price for each item, but About 20,000 new combinations are definition of loyalty on its head. Winner customers pay what they can or think is created each month. This allows both of the 2009 UK Barista Championship, fair. Around 65% pay the recommended shoppers and Wet Seal to get a pulse on Davies’ love of the category runs deep. price while others pay more or less, and what’s hot for the season. While fashion is He feels education is key to coffee some pay nothing at all. The organisation often touted as a means of self-expression, appreciation and rewards his patrons for was operating a nearly breakeven status teens still need assurance that their tastes visiting other outlets. Davies provides with its first two outlets, and the company are aligned with those of their friends. a dis-loyalty card that features eight expanded in 2011. On a more extreme level, a group of high-quality coffee outlets across east In an environment where consumers retailers in China created a women-only London. Once individuals visit each of are increasingly concerned about their ‘venting store’. Female shoppers who the listed venues, Davies rewards their communities and the role they can play spend a given amount at select retailers category exploration with a free cup of in supporting them, this retail price in the mall receive a voucher for one his own brew. This twist on relationship model is a daring demonstration of minute of destructive bliss – complete marketing has already spurred imitations how charitable retail programmes can with a protective helmet. For 60 seconds, in Seattle and Toronto. be self-sustaining entities, even in the shoppers can smash and destroy inanimate toughest of times. objects. This revolutionary offering Defying Channel Norms recognises the emotional need that can Pricing is the backbone of all business Real-Life Retail drive the shopping trip itself – pent-up models and therefore the least likely One of the most interesting aspects of frustration. of the Ps to stray from conventional retail renegades is how they approach strategies. Most retailers resort to place. Shoppers’ heightened focus on A Broader View established channel norms to define their options, authenticity and immediacy Most retailers spend a considerable pricing structure. Our renegades have has these retailers going to extremes in amount of time, money and energy discovered ways to defy channel norms terms of interior design and shopper building personal connections with through pricing strategies that express experience. Incorporating real-life context the people who shop in their stores. their unique DNA. into your retail format or distribution Renegades, however, take a broader view Topshop, a global fashion specialty point provides instant relevance and a of their shopper connections and help store with more than 400 outlets, has a compelling competitive edge. individuals build ties with other shoppers, brave and irreverent approach to style A Tokyo Adidas outlet has taken a bold the community at large and even and a product range that has captured move in how flexible the place of business competitive retailers. the imaginations of fashion-conscious can be. Near Imperial Palace, a popular Tesco has tested a ride-share shoppers. This specialty fashion retailer area for the city’s runners, the Adidas programme in London. The expected has a price offering that aligns with how Runbase Store reinvents the traditional execution of this initiative includes women stock their closet. Merchandise sports gear channel. Expert staff are on helping loyalty-card members arrange ranges from $20 sweatshirts to $800 hand to help with a broad array of cutting- carpools to three north London stores. designer dresses – but all are sold in a edge Adidas shoes and clothing options The irrational, renegade component unique, fashion-forward environment. that shoppers can don for an immediate, includes also facilitating carpools to At Topshop, edgy style drives fast-turn and literal, test run. Included onsite are 16 >
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28 moser.indd 29 26/11/2011 16:28:38 retail renegades leslie clifford and laura moser
shower cubicles and 248 lockers for rent, Spanish, no worries, the vending machine on Desigual items. Developing a accessible to the public at large. recognises multiple languages. promotion that exploits a behaviour in Adidas’ extreme destination current culture is a compelling way to demonstrates an innate understanding of The High Road to Sales Results grab attention. the runner’s mindset: ‘I need to feel how Conventional retail approaches promotion it performs.’ With a huge selection to as a short-term sales driver that directly Thinking Like a Renegade choose from, runners can sample product benefits the retailer. For many years, this Being a renegade takes more than just combinations for the ultimate purchase has been a winning formula to provide a willingness to challenge convention. confidence. a competitive edge, drive traffic and Renegades are tenacious and passionate. Like Adidas, Luxottica, a manufacturer increase overall basket. Leaders today, They view obstacles as opportunities and and retailer of eyewear, recognises its however, have discovered ways to put believe that trial and error can lead to true products are fashion statements as well their own financial needs on an equal and lasting improvement. as functional; therefore, real-world footing with prominent social movements. This last characteristic is a difficult trial is key. At the EyeHub, Luxottica Promotional efforts that take a less pill to swallow and in conflict with provides shoppers with a simulator room direct route can instill a deeper expression many corporate environments. In to evaluate glare and wind resistance. of brand positioning or create a more today’s corporate environment, it takes For the sports enthusiast, Luxottica has a compelling point of difference during courage for retailers to adopt such an treadmill and exercise bike to test eyewear competitive sales periods. Renegades have attitude. Here are some ways a renegade in real-world, everyday situations. the same goal as their competitors – to perspective can infiltrate your initiatives: Fashionista purists can take a touch- drive ROI – but deliver programmes l Align the product selection process screen photo of themselves wearing anchored in ideas bigger than savings. with actual product usage traits. Look for each option and select from an array The Waffle Shop is a neighbourhood even small modifications of your physical of printouts. Shopping with kids? No sit-down restaurant in Pittsburgh. It environment that will help shoppers enjoy problem. The store has a dedicated operates a take-out window that sells food the process more, feel better about their selection and perhaps even increase the Many renegades do not aspire to be contrarians, contents of their basket. l How does your pricing structure limit but most refuse to take things at face value. you? Look for ways to expand your positioning in shoppers’ eyes via different They are open to examining multiple facets of pricing structures. Identify what factors truly influence the selection and purchase their businesses, placing bets and making of your products. Look for ways to link these need-based factors more strongly investments without guaranteed outcomes with your pricing structure. l Think of your retail outlets as individuals play area for children. Going the from countries engaged in conflict with living within a larger community. What extra mile to provide shoppers with the United States. The goal is to bring roles and responsibilities do other residents real-world conditions underscores a true people from all walks of life together over have? Does your outlet carry its weight understanding of how to maximise the a common element (food), encourage within the community? role that place can play. dialogue on challenging topics, and share l Does your view of relationship In their relentless pursuit of new outlets them via a live, streaming talkshow. marketing incorporate shopper-to- and formats for delivering products to This promotion increases foot traffic shopper links, cross-generational ties or shoppers in real time, some businesses as customers gather to participate in even cross-cultural connections? are proving to be extremely innovative. community discussions. Its success l Zig when everyone else is zagging. Many Travellers, hotel guests and visitors to has gained the attention of retailers renegades do not aspire to be contrarians, fast-food restaurants in the US can use such as Whole Foods, which is now a but most refuse to take things at face value. vending machines to buy items ranging contributing sponsor of the promotion. They are open to examining multiple facets from prescriptions to freshly baked pizza. Desigual, a Spanish clothing retailer, of their businesses, placing bets and making Best Buy recently installed more than 100 understands the power behind the idea investments without guaranteed outcomes. vending kiosks at airports with high-end of random acts of kindness. It recently Determine which aspects of your business electronics – from digital cameras to launched a programme that rewards model are ripe for a ‘renegade makeover’ portable gaming devices. its shoppers for being kind to bloggers and do what feels right. n Taking the number-one position in online. Desigual alerts its fan base of renegade vending retail, a butcher shop in favourite bloggers to target with cheerful Leslie Clifford is executive director, northern Spain understands that people comments; the first 100 to get a reply from strategic planning and consumer insights do not always think about dinner until it is the blogger each win a clothing item they at G2 USA. dinnertime. They have developed a touch- have pre-selected interest in. All blogs are Email: [email protected] screen vending machine in front of the non-Desigual related, just destinations that store; shoppers can purchase fresh steak, represent what Desigual stands for. Laura Moser is executive director, retail poultry or hamburger around the clock All participants in the Happy Hunters strategy at G2 USA. when the shop is closed. If you don’t speak programme also receive a 20% discount Email: [email protected]
30 Market Leader Quarter 1, 2012
28 moser.indd 30 26/11/2011 16:28:39 warc.com
Warc is the go-to resource for the latest knowledge and trends in marketing and brand communication Reymond D’Silva, Global Brand Director, Pond’s, Unilever
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WARC.COM_210x297mm_Advert_HiResPrintReady_CMYK.indd 1 09.08.11 11:36 market research mark earls Drinking from the big ‘data hosepipe’
Today’s marketers have access to e live in a world of ‘big more consumer data than ever. data’. It must be true: McKinsey Quarterly, But they need to learn to use The Economist and even CampaignW magazine all agree. All of these the ‘data hydrant’. Mark Earls fine publications have published articles argues that it is important to in recent months exhorting managers to get jiggy with what they call the ‘data be less precise – to draw bigger hosepipe’. conclusions from large datasets Thanks to the proliferation of by spotting important patterns, interconnected devices and machines (what the geeks call ‘the internet rather than smaller ones at lower of things’) and the explosion of levels of granularity interconnected people (aka ‘the social web’), there’s now a constant flow of data coming our way about people and things and people and brands and people and people. A constant and unrelenting torrent of data that somebody – somehow – in your organisation needs to get to grips with and to sweat for insight (or everyone does, if you believe McKinsey). All the experts agree that the hosepipe is on (even if no one can quite nail the actual gobsmacking size of the aperture or the speed of flow). The International Data Corporation (IDC) suggests that there are now more bytes of consumer data than all of the grains of sand on all of the beaches in all of the world. The Economist, by contrast, points out that Tesco alone generates 1.5 billion bytes of customer data a month. Whatever the specifics, this should be good news for marketers: we have more and more information about the people who should be our greatest concern – ‘consumers’ – which is excellent days of marketing dashboards as we tried news. The truth, however, is that in many to knit together half a dozen disparate organisations marketing runs the risk of datasets. Now it’s quite common to being overwhelmed by consumer data. We have four or five times as many datasets are discovering you can have too much of to synthesise. In addition to the sales a supposedly good thing. figures and longitudinal quant studies we used to have, we now have call centre getting to grips with data records, customer service and customer How times change. Some of you will satisfaction numbers as well as real-time remember (as I do) doing manual transaction data. And still we complain copies of Nielsen sales data and plotting about what’s missing. graphs manually to align these across That’s without considering the categories, with promotional activity or never-ending source of amusement with the tracking study. Many of you will and distraction that is social media: remember the excitement in the early you merely have to flick a switch to be
32 Market Leader Quarter 1, 2012
32 earls.indd 32 26/11/2011 16:41:26 market research mark earls Drinking from the big ‘data hosepipe’
The truth is that in many organisations, marketing runs the risk of being overwhelmed by consumer data. We are discovering you can have too much of a supposedly good thing
washed away by the conversations, the do with all this data; and it’s nigh on griping and the enthusing, the gossip impossible to set strategy in the face of so and the speculation that real people are much information. having in real time about our services and Just think of Wall Street: how has products (and those of our competitors). more data helped traders and their And, of course, there are any number employers get better at predicting the of different companies offering to read future? Or avoiding the biases that the the social web for you – many of them behavioural economists describe – loss excellent and pioneering. aversion, framing etc. Traders can’t The truth is it’s genuinely hard – possibly compute the amount of however good your dashboard – to make information that’s coming onto their sense of so much data; it’s genuinely screens in real time (which is probably difficult to keep abreast of so many why the more successful traders are datasets moving so fast; genuinely also heavy users of instant messaging bewildering to try to work out what to platforms which help them keep in touch >
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32 earls.indd 33 26/11/2011 16:41:28 market research mark earls
with the reactions of their peers to new we can, we do; having access to more information – a sort of ‘phone a friend’ granulation must be good, mustn’t it? option for the City). There are two kinds of problems with this. First, there’s the seductive nature How do you cope? of infinite detail. In his short story, On I’ve noticed a number of different kinds Exactitude in Science, Jorge Luis Borges of responses to the hosepipe from the describes a civilisation in which map marketers I meet. Some have always making became so all-consuming that preferred the ostrich approach to being the maps ended up being bigger and hosed by data: rather than up their more detailed than the landscape being engagement with this rich nutrient mapped. Eventually, the maps were liquor, this kind of marketer is actually abandoned and scraps left fluttering using less data than ever before and in the breeze. The point is this: just instead falling back on instinct and ‘best because we can analyse and reanalyse in practice’ (ie what other companies do). incredible detail doesn’t mean we should. Others – as in The Lord of the Rings – Second, it turns out that coarse defer to one mighty measure (‘one… granularity is better than fine granularity to hold them and in the darkness bind when you are trying to build a strategy. them’) that will run everything else. One person who learned about these Fans of the (otherwise excellent) Net kinds of dangers – and did so the hard way Promoter Score are a good example – is Hilary Clinton. During her fight for of this. For many users, it comes to so the Democratic Presidential nomination dominate the foreground of marketing back in 2008, her favourite pollster, Mark thinking that few other measurements Penn, is supposed to have kept providing are paid much attention. Another such more and more nuanced insights about smaller and smaller segments, each of which would require a bespoke policy The more precisely we can read something, the offer from Senator Clinton. At the same time, the Obama team were finding ways more we obsess with micro changes in a data to unite larger and larger groups with line and thus the more signal becomes noise. shared insights. Too much monitoring of social media falls into Less not more precision So what I’m proposing instead for this particular trap – more noise than signal marketers who are struggling to deal with the data hosepipe is this: less precision, not more; bigger insights from big treasure is Millward Brown’s Awareness patterns, not smaller and smaller ones. Index, which is perhaps more useful Insights that help us make big strategic beyond its intended use (the measurement decisions, rather than merely guiding our of advertising effectiveness), for example tactical ones. as a means of setting individual and The key to this is simple. Rather than agency performance targets. crunch a big dataset into tiny pieces, At the same time, there is the opposite learn to spot the patterns that tell big tendency: inappropriate precision. The important stories. One pioneer of this more precisely we can read something, is a personal hero of mine – the late and the more we obsess with micro changes great Andrew Ehrenberg. He insisted on in a data line and thus the more signal rounding up numbers in any analysis to becomes noise. Too much monitoring stop decimal points distracting the eyes of social media falls into this particular and minds of those reading it with small trap – more noise than signal. Old-school fluttering variations and instead draw tracking studies also tend to end up in their attention to the similarities between the same space – what fun we’ve had brands or across markets. Equally, his arguing about two points up or down. Dirichlet model was – and remains – a Related to this tendency is the love really beautiful pattern that a number of of micro-segmentations that direct fmcg markets exhibit. marketers and database software sales The kinds of patterns I have in mind teams have. Recently, I joked with a US have roots in the diffusion science of audience about having seen a 30-plus the 1950s and 1960s, similar to those consumer segmentation solution; one of Ehrenberg, but they are simpler to plucky person confessed to having worked recognise and easier to draw, too. The with a 300-plus segment solution. Because most obvious one here is the long-tail
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32 earls.indd 34 26/11/2011 16:41:29 market research mark earls
distribution (made famous by TED We follow the same kind of thinking founder Chris Anderson in his book of when we demand ‘category experience’ the same name). If your product really is or ‘category-specific expertise’ from our A long tail is a plot of popularity bought independently, advisors and teams – as if the learnings ranking versus sales in which a handful of a particular category are only relevant of items in the market enjoy a majority then the traditional within it; as if different categories of of the market’s share; conversely, most product were bought by entirely different of the items in the market (the tail) have kind of messaging will kinds of species or different kinds of little or no market share. Lots of markets cultures. create long tails (hence the fact that be fine; but if it’s The fact that the kinds of patterns Anderson’s book was a book rather than I’ve described exist in our data tells us just an article), most famously what the socially chosen, you’re that there are important underlying academics call ‘culture markets’ such as going to have to work communalities between behaviour in music downloads, book sales and fashion different markets. They show the big items, alcoholic drinks, dog breeds, baby social influence and important and similar things that you names and so on. need to know to build the basics of social channels more your strategy. Pattern spotting allows why is this a pattern worth us to identify important similarities spotting? between things (as opposed to small and Put simply, the presence of a long-tail should focus on how consumers are insignificant differences). pattern in a market is a strong indication connected to each other and how Patterns help you see the signal for the that that market is shaped by social willing and able they are to copy from noise: the stuff that matters. And seeing influence rather than independent choice: each other, and how you might go what matters is what strategy needs to be that consumer purchase decisions in about changing these things. These built on. it are fundamentally social rather than are not things that traditional research individual. methodologies and researchers are Conclusions If your product really is bought necessarily very good at, so different Today’s marketers are awash with independently, then the traditional kind kinds of research techniques such as consumer data – we have more than of messaging (persuasive product-led network analysis and ethnography any previous generation of marketers propositions) and the kind of media become useful here. have ever had – which could help us considerations and vehicles (reach and The point being that this kind of understand our consumers. Yet more cost) will be fine; but if it’s socially pattern spotting that makes it easier to data actually seems to mean less. For chosen, then you’re going to have to know the kind of thing you’re dealing many of us, being exposed to the work social influence and social channels with – the kind of behaviour you’re trying hosepipe of data makes it harder to much more, particularly in the modern to change – has got to be job number one engage with data in the same way. Some world. It’s not that product excellence for any marketing strategy, hasn’t it? of us default to the ostrich position, doesn’t count, it’s just that what people others seek a silver bullet that we hope say to each other and see each other Not everything is a special case will make analysing everything else less doing is much more so. This kind of general question ‘what necessary. And the temptation to boil Think how beer and alcohol kind of thing are we dealing with?’ has the ocean doesn’t help us much either advertising have changed in recent never been an easy one for marketers – digging deeper and deeper, becoming years (to involve social techniques and and their advisers. Now, as much as ever, more and more precise. media), reflecting the fact that booze we feel compelled to treat every case as Of course, precision is important and is a fundamentally social choice – as in a special one; every instance as unique. useful when planning implementation but ‘I’ll have what she’s having’. This kind From the marketer’s perspective it must what’s needed for strategy is exactly the of analysis makes it clearer which side of be flattering to be told by your agency or opposite: it is the ability to spot patterns this divide you need to be on with your other advisors that your brand is like no in the data. Patterns signal important comms. other but is it helpful to talk and think in and significant phenomena below the Perhaps the significance of the this way? surface of a market. It’s not all of the different implications of each is best Equally, while it’s somehow reassuring answer, but getting these things right, crystallised in the kind of market to think of the marketing challenge and doing so rapidly, makes it possible research approach you might want to you’re facing as uniquely tricky as to build strong and clear strategies and use in each case. So, if you’re sure your opposed to generally so – it makes the create time and space to sweat the detail market is built on independent choice, person meeting that challenge seem of implementation. n then by all means ask people about the somewhat more special, more heroic product and how it makes them feel even. But does it really help us solve ‘I’ll Have What She’s Having – Mapping (bearing in mind, of course, the fact the problems better? In particular, does Social Behavior’ by Alex Bentley, Mark the respondents are much less reliable it encourage us to apply knowledge, Earls and Mike O’Brien was published by witnesses about their own lives to experience and skills from elsewhere? All MIT Press on 3 November 2011. themselves, and to us). too often, in my experience, this ‘special If, by contrast, your market is socially case’ leads us to ignore what we already Mark Earls is HERDmeister at HERD shaped, then your research approach know as marketers. [email protected]
Market Leader Quarter 1, 2012 35
32 earls.indd 35 26/11/2011 16:41:29 p ro d u c t d e v e lo pm e n t Doron meyassed, philip burgess and priscilla daniel
Co-creation is here: we can’t ignore it
The idea is that organisations can produce something successful by innovating ‘with’ customers rather than ‘for’ them
Doron Meyassed, Philip he major trends affecting Pull up Michael Porter’s recent Harvard Burgess and Priscilla Daniel the business environment – Business Review study and find him arguing globalisation, the necessity passionately that the concept of shared argue that co-creation is one of of speed, the importance of value has the power to unleash the next Tinnovation, the empowerment of consumers, wave of global growth. the most powerful, modern-day aided by technological innovation – all Demonstrable success stories of sources of competitive advantage. support the increasingly strategic use of co-creation are emerging left, right and It’s also one of the most co-creation activities. centre. Organisations that are embracing A recent IBM survey of 1,500 global the approach are outperforming the misunderstood CEOs concluded that ‘the most successful market, getting better products onto organisations are those that co-create shelves, doing so faster and building products and services with consumers deeper, more loyal bonds with their and integrate customers into the core customers. processes’. Last year, Business Week, However, all co-creation is not the 2 November 2010, proclaimed that co- same. The catch-all term has meant that creation is ‘the second largest innovation everything from crowd-sourced marketing trend happening today, right behind ideas through to general collaboration has sustainability’. If you type co-creation been labelled co-creation. This has led into Google you get 27.5 million hits. many executives to believe that they have
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36 meyassed.indd 36 11/30/2011 12:00:48 p ro d u c t d e v e lo pm e n t Doron meyassed, philip burgess and priscilla daniel
experienced co-creation, when in effect failures. They are perceived to be they have experienced a tactical (and often prospering at the expense of the broader far less value adding) interpretation of You are no longer community, optimising short-term the practice. Co-creation is not a tactical financial performance, missing the most marketing technique nor is it just a creating for consumers important consumer needs and ignoring synonym for collaboration. It is a way of ‘the broader influences that determine doing business that can truly revolutionise and then testing it with their longer-term success’. how you and your organisation work. them. You are creating In this new paradigm, organisations are increasingly seeing the practice of So what is co-creation? it with them. Their co-creation as the most appropriate tool Co-creation, defined by Promise for problem solving: it brings all these Corporation, is ‘the active, creative and thinking, needs and diverse stakeholder groups together and social process, based on collaboration ensures the result genuinely adds value to between producers and users, that is desires are expressed in all parties. initiated by the firm to generate value Furthermore, there is a growing for customers’. In essence it is the idea every detail acceptance that consumers and partners that organisations can be more successful are an excellent source of ideas, solutions by innovating ‘with consumers’ rather and creativity. As organisations look at the than ‘for consumers’. In its purest form, average time spent watching TV. In this sheer success of (not for profit) co-creative co-creation proclaims that consumers are ‘post-TV’ era, Shirky argues, consumers initiatives such as Wikipedia and Linux, no longer at the end of the value chain, now have more free time to do or create there is an increasing acknowledgement but rather, assume a central importance in things rather than passively consume that no matter how much talent there is the process of value creation. things. Furthermore, as media guru inside your organisation, there are always Charles Leadbeater argues, a culture is more bright people outside of it. And What’s driving the trend emerging where our status is increasingly these bright people are willing to help, towards co-creation? defined by what we create and share, sometimes even for free. Cap Gemini’s 2010 Global Co-creation rather than by what we own. survey proclaims: ‘Co-creation is the Everywhere we look, we see this trend Why are organisations result of a broad and irreversible shift manifesting itself. Almost 13 million hours embracing co-creation? in society and corporate culture.’ We’ve of video were uploaded to YouTube in The above three trends have created observed three inter-related trends 2010. That translates to 48 hours of video an environment where co-creative that have combined to accelerate the every minute and eight years of content approaches start to bring game-changing trend towards a co-creative approach to uploaded every day. Roughly half of this benefits. In our years of working with value-creation. content is consumer created (emarketer organisations to implement co-creation Technological advances are and YouTube statistics). A recent study by programmes, we’ve seen four core facilitating cost-effective ways of 360i found that 77% of YouTube, Twitter reasons mentioned again and again as bringing together diverse groups and Facebook listings that appeared for to why organisations are embracing the of consumers and stakeholders. brand searches were controlled by a party approach: To1 truly co-create value with customers, other than the marketer. Increased innovation you need them to contribute to your Relatively easy access to information, effectiveness. Perhaps one of decision-making process regularly, combined with the widespread usage the most famous co-creation sometimes even daily. Doing so without of social media, has changed the way programmes is Procter & technology, in an ongoing fashion, that consumers want to interact with Gamble’s1 Connect and Develop. In 2000, becomes prohibitively expensive and corporations and brands. Organisations former P&G CEO, AG Lafley, set the slow. Furthermore, getting consumers with the foresight to leverage this goal to acquire 50% of the company’s to meet physically every couple of days ‘cognitive surplus’ are yielding significant innovations from outside the company. would be unrealistic: consumers aren’t benefits as they discover that consumers Systems and structures where set up willing to give up their daily lives to help have become both generous and creative to bring ideas and collaboration from organisations co-create. But consumers with their free time. consumers, fans, scientists, academics are willing to give up 30 minutes a They want to engage, interact and and engineers. week, even a couple of hours a week. influence brands, seeking to ‘exercise their The success that followed has been Digital technologies make this possible. influence in every part of the business phenomenal. Writing in the Harvard Individuals can collaborate from wherever system’ (Prahalad & Ramaswamy, 2004). Business Review (March 2006), Lafley they are, at the time that suits them. said: ‘Through Connect and Develop The rise of the participative, A new mode of value creation. our R&D productivity has increased by proactive consumer. Clay Shirky, Michael Porter’s recent paper nearly 60%. Our innovation success rate a prominent thinker on the social in the Harvard Business Review has more than doubled, while the cost of and economic effects of internet (Creating Shared Value, 1 January innovation has fallen. R&D investment technologies,2 argues that we are now 2011)3 highlighted that business is as a percentage of sales is down from experiencing a ‘cognitive surplus’. In being viewed as a major cause of social, 4.8% in 2000 to 3.4% today. And, in America the amount of time the average economic and environmental issues. the last two years, we’ve launched more person spends online is greater than the Companies are being blamed for society’s than 100 new products for which some >
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36 meyassed.indd 37 11/30/2011 12:00:48 product development Doron meyassed, philip burgess and priscilla daniel
different styles of co-creation
Crowdsourcing as a Problem-Solving tool InnoCentive is an ‘open innovation’ company that takes research and development problems in a broad range of domains, such as Pure co-creation engineering and computer science, and frames them as cash- incentivised challenges for anyone to solve. This methodology offers a Collaborative unique approach to sourcing expertise and creativity. It can be a time- problem solving and cost-effective way of solving challenges (particularly scientific ones). However, this approach ultimately doesn’t offer the maximum potential Problem solving for value creation since the commissioning party does not share its knowledge or collaborate closely with the person tackling the challenge. Ideas generation a problem-solving tool Co-creation as a problem-solving tool is the practice of bringing Crowd-sourcing/ together a diverse group of stakeholders to collaborate on solving a mass customisation challenge. This is where most organisations should aim to be. This approach adds most value, while being something that can be used by all types of businesses. McDonald’s in 2009 worked with customers, management, frontline We have identified the five most common ways in which organisations are staff, psychologists and designers to invent the restaurant of the future. applying co-creative principles. The higher up the diagram your Etihad Airways collaborated with customers, crew, engineers and other endeavour, the higher the value it will add to the organisation. And while key stakeholders to design the interior of its new A380. Diageo invited using ‘co-creation as a business model’ might not be right for everyone, hundreds of consumers to become part of an advisory board that has we believe using ‘co-creation as a problem-solving tool,’ is something all helped them reposition one of their brands. And of course, Procter & organisations should be doing. Gamble’s Connect and Develop had a multitude of stakeholder groups collaborate on innovation challenges. Crowd-sourcing and co-creation Crowdsourcing and co-creation are often deployed as marketing Co-creation as a business model techniques to drive awareness and ‘buzz’ around a brand. While hugely Some smaller and pioneering businesses have however integrated co- effective at this, such activities fail to truly capitalise on the potential of creation into their fundamental business model, placing consumers at consumers as a source of value creation. For example, Doritos became the the centre of the value creation process. GiffGaff, a mobile phone first brand to air a crowd-sourced ad during the Super Bowl as part of its service operated by O2, is one of these. Its brand tagline is ‘the mobile ‘Crash the Super Bowl’ campaign this year, leveraging the PR potential of network run by you’. GiffGaff operates an online customer support co-creating with consumers for the year running up to the ad screening. community which in June 2011 had over 100,000 users and 5.5 million Chevrolet is jumping on the bandwagon and doing the same thing in 2012. page views per month. Consumers sign up to become a member of the online community which deals with customer service enquiries. Crowdsourcing as an idea-generation tool At least 50% of queries are answered by other customers and 95% Other brands have gone one step further by providing consumers with are answered in less than an hour. The average response time on the a platform to suggest ideas to improve the business. Here the ideas are company’s ‘help boards’ is less than a minute and a half. In turn for crowd-sourced (outsourced to the masses) rather than co-created answering questions, customers are incentivised with cash (profit) that (generated through iterative collaboration). Starbucks’ website can be redeemed for phone credit or donated to a selected charity ‘Mystarbucksidea.com’ and Dell’s Ideastorm (www.ideastorm.com) (Forbes, 5 September 2011). By creating value for the business and both fulfil this function: they invite consumers to suggest ideas for themselves, consumers feel ownership and loyalty towards the brand. improving their business. This creates value for both parties, but not Co-creation as a business model will not suit every business. However, going so far as to truly collaborate with consumers to drive value for elements of this approach can be applied to most businesses at least in their businesses. some part or function of the organisation.
aspect of execution came from outside the Professor Scott Page from the University innovation is simple: understand what company. Five years after the company’s of Michigan explains: ‘The more consumers want and deliver it better stock collapse in 2000, we have doubled vantage points from which a challenge than the competition. And yet, 80% our share price and have a portfolio of is tackled, the more likely you are to of innovations fail. Most traditional twenty-two billion-dollar brands.’ hit a breakthrough solution.’ Diversity innovation processes make it very hard So why does co-creation lead to such breeds creativity. And co-creation is all to truly understand what consumers want dramatic improvements in innovation about diversity. By bringing together and hardwire that understanding into effectiveness? While there are a dozen staff, consumers, suppliers and experts every detail of the innovation. complex and interlinked reasons, in our we can arrive at new and previously Co-creation makes that possible. view, there are two core drivers: undiscovered solutions. You are no longer creating for Diversity breeds creativity. As True consumer centricity. In theory, consumers and then testing it with them.
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36 meyassed.indd 38 26/11/2011 16:38:19 product development Doron meyassed, philip burgess and priscilla daniel
You are creating it with them. Their five-month period. Their input helped and creative challenges. However, thinking, needs and desires are expressed shape every decision, from blank canvas to the community also has a zone where in every detail. final wording. consumers talk about the things at the top Increased communication So how did this happen? How did an of their agenda. Working with Promise, effectiveness. In 2009 Danone organisation as large and complex as Kraft Sony carefully listens, monitors and probes launched its first co-creative align around a new higher purpose so the conversations. The lessons are then venture in the UK together with quickly? taken and hardwired into the business on a Promise,2 by inviting consumers to help The reality is that co-creation weekly basis, ensuring that the organisation it co-create its communication strategies. generates alignment and buy-in very has got its finger on the pulse. The concept was simple: build a private quickly. The final solution ‘belonged community of engaged, dedicated and to everyone’. Everyone had invented Not all co-creation is passionate consumers to act as an advisory it and felt a sense of ownership over it. made equal board to the communication development Furthermore, you get a sense of what The term ‘co-creation’ has been process. The results were staggering. is right and what is wrong quickly. In both misunderstood and misused – Danone has a standard test for a co-creative environment consumers, collaboration, mass customisation, measuring the effectiveness of suppliers, marketers, researchers, open innovation, crowd-sourcing – are communication platforms. And the manufacturing, taste makers and HR all used interchangeably to explain the communication platforms generated from come together. This means that bad or process by which companies collaborate the co-creative approach were 84% more unfeasible ideas are dropped quickly and with consumers (see diagram, p38). effective than those generated through quick wins are fast tracked. However, not all yield the benefits traditional methods (IPSOS study). In truth, this increased communication effectiveness is driven predominantly InnoCentive, an ‘open innovation’ company, by the same two reasons highlighted takes research and development problems in a for increased innovation effectiveness: the diversity of participation and the range of domains and frames them as cash- high level of consumer centricity. But there is one other reason that is of incentivised challenges for anyone to solve particular importance when developing communications: the up-skilling of Finally, the distance between the of a truly co-creative approach. As consumers. Consumers inputting into boardroom and the consumer is often way such, many marketing departments Danone’s communication development too great. With a lack of closeness, there have experimented with small tactical process were not coming to the process is often a lack of alignment. People align co-creative experiments, and drawn the cold. They had spent several months around their personal opinions. With wrong conclusions about the approach. talking about yogurt, their eating habits, the consumer at the centre, inputting their drivers, their barriers and Danone’s sometimes daily, the core teams align far So what now? business. By the time we worked with more quickly. Co-creation has evolved enormously them to develop marketing strategies Staying relevant. The world over the past five years. It ‘has mutated that would increase (say) frequency of is increasingly changing faster from a niche phenomenon to a prevalent consumption, we were talking to a clued- outside organisations than inside. approach of collaborative innovation up audience. An audience that understood If you are managing a brand, that’s taken by innovation leaders such as P&G, its own behaviours, the competition a4 tricky landscape to operate in. It means BMW, Siemens, Nokia or Beiersdorf’ and general marketing concepts. The you must constantly and obsessively (Bilgram V, Bartl M, Biel, S, 2011). level of the debate and ideation was of a monitor the world, and tweak what you We think that in the next ten years, particularly high standard. do, in order to stay relevant. Those who co-creative practices will further evolve Speed to market. Kraft recently fail to do so pay a high price. Kodak’s with new techniques, theories and ways of undertook a mission, vision and slow response to the growth of digital applying it. values exercise, in collaboration photography has almost brought the We genuinely believe that the most with ad agency Nitro and organisation to its knees. The music successful organisations will be those that co-creation3 consultancy Promise. The industry is no different. get good at using co-creative practices organisation went from blank canvas to So, as the world changes faster outside to solve their brand, marketing and a new mission, vision and values being organisations than inside, co-creation innovation challenges. It will be they who launched to shareholders in under five can be a powerful way of internalising remain the most relevant and launch the months. As far as we know, for a company that speed of change. Having learned most successful innovations. n of 120,000 people, that is unheard of. the hard way, the music industry today The process was truly co-creative employs some of the most innovative Doron Meyassed, founder and managing in nature. Consumers worked with practices in ensuring they stay close to the director of Promise Corporation. management to co-create potential changing consumer. [email protected] mission and vision territories in large Sony Music set up a private co-creation Philip Burgess, consultancy director. co-creation events around the world; community of music consumers – Sony [email protected] 5,000 handpicked employees collaborated Music Back Stage. The community Priscilla Daniel, consultant. on an online platform daily over the works on lots of Sony Music’s strategic [email protected]
Market Leader Quarter 1, 2012 39
36 meyassed.indd 39 26/11/2011 16:38:20 communication rory sutherland Accountability is not enough
It’s time that marketers broke free from the restrictions that are imposed by business language and devised a vocabulary that actually reflects human behaviour, saysRory Sutherland
nlike many in marketing, the bean-counting view of the world, ‘proposition’ or suchlike as it carries I am rather ill-disposed to but to point out to bean-counters that with it the understanding that words like ‘accountability’. their mechanistic models of the world are businesses communicate a great deal It seems to me that this inadequate. We cannot do this if we think about themselves even when they are notionU imposes on brands a demand and talk like bean-counters ourselves. not intentionally communicating. It for numerical quantification which may encompasses the idea that actions and simply be neither possible nor desirable – a common language behaviours may often convey more and may risk underestimating significantly Our current marketing vocabulary does information than words. a brand’s true value. us few favours, either. To people trained As Robin Wright has observed, How do you ‘account’ for the effect to respect hard science, the language is peacocks are beautiful examples of a brand may have on the quality of the indistinguishable from that of flower signalling. To breed, the peacock needs people you hire, or on your ability to arranging or astrology. Talking to a the acquiescence of a peahen who must launch new products? As with weather finance director about brand iconography choose a peacock with which to breed, forecasting, it seems likely that reliably is like going to the head surgeon at a question that involves genetic fitness. predicting a brand’s future effects may be St Mary’s Hospital and suggesting that he The peacock addresses this in three mathematically impossible. ‘trust to the healing power of the crystal’. extraordinary ways. The peacock is stating But I also think that to be obsessed with We need to find inspiration – and a that it is so genetically fit that it can still quantifying the results of every area of phrasebook – somewhere else. Happily, function as a bird even with this absurd, marketing expenditure is to misunderstand in this task, we have been pre-empted by purely decorative appendage on its back. the nature of the marketer’s problem. a new, exciting community of behavioural That is conspicuous waste as a form of Doctors are uncomfortable with the economists, Darwinian psychologists and meaningful advertising. placebo effect not because they believe it behavioural scientists, as well as network The peacock’s tail signals in two other doesn’t work but because they don’t know scientists. The models and language they ways. The evenness and symmetry of how – it does not sit with any available have developed are a gift to marketing – the eyes on the tail are also indicators model they have of how medicine works. one it would be insane not to accept. of genetic fitness as is the degree of In the same way the finance function in I have no idea why the marketing field translucence of the feathers. The tail business is uncomfortable with marketing lost touch so badly with academia (David operates at the macro, the median and not so much because they think it is Ogilvy, Bill Bernbach and Howard Luck the micro level, providing inarguable ineffective but because it is not congruent Gossage were all, in their way, social proof that its carrier is fit and healthy. A with their reductionist, neo-classical scientists manqués). We now have a valuable brand does the same. economic view of the world. chance to re-establish intelligent links. Brand expenditure is a form of My contention is we need a new With these words and concepts, a few of signalling. The fact that you are prepared vocabulary. To adopt the vocabulary of which I have listed below, we can once to put money into your product up front accountancy is too defensive – it is an again speak truth to power. suggests you have faith in it. Moreover, example of the ‘Stockholm Syndrome’ by investing in a reputation, you have where you adopt the phraseology and SIGNALLING something valuable to lose by not dealing mindset of your abusers. As marketers, Signalling is a concept from evolutionary squarely with your customers. who should above all believe in the biology and is also now used widely Creativity is a way of signalling your primacy of human psychology over in economics. It is a vastly more own intelligence and ability (music, economic models, our task is not to adopt useful phrase than ‘messaging’ or poetry, art and sport all arose from similar
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Our task is not to adopt the bean-counting view of the world, but to point out to bean-counters that their mechanistic models of the world are inadequate
human displays). The vital component LOSS AVERSION of meaningful signalling is that it is There is a huge element of trust and a expensive and/or difficult to do. It is the Talking to a finance leap of faith in virtually every purchase time or money invested in the message we make – which is why we are so that makes it a mark of commitment, not director about brand desperate to find, and willing to pay a just an empty claim. iconography is like premium for – any signals of reassurance. Yet this is hugely underestimated, by INFORMATION ASYMMETRY going to the head marketers and economists. Indeed, Information asymmetry makes signalling research by behavioural economists necessary. The bowerbird demonstrates surgeon at St Mary’s indicates that, when we hand over the to the female that it is likely to hang cash, fear is roughly twice as powerful an around after the chicks are born by taking Hospital and emotion as hope. the trouble to build an elaborate nest. Subconsciously we may be ‘thinking’ Human females similarly look for some suggesting that he far less about how to buy the very best mark of commitment from men who do television and far more eager to ensure not have a biological need to stick around ‘trust to the healing the model we buy isn’t rubbish. Most and look after their children – which is power of the crystal’ discussion in research focuses on whether where the engagement ring comes in. It or not the thing is the best I can buy is something expensive up front which but human decisions are not exclusively suggests you intend to be around for more barriers to entry, which is precisely why made that way. They are more weighted than one pregnancy. If you are planning consumers value them so highly. A costly towards the avoidance of disappointment. only a one-night stand, an engagement engagement ring is a barrier to entry Once you know that, brands make a lot ring is an expensive way of getting one. To in marriage, but you should be wary of more sense than if you assume people are a female bowerbird or human, the mantra someone who tries to avoid buying one. seeking perfection. is credo quia carum est – I believe what you And a brand reputation is difficult and A brand is not a guarantee of perfection. say because it has cost you dearly to say it. expensive to acquire but you should be The very best thing you might find in any That is why I find it so ludicrous when wary of buying without one. If these market may be from an obscure source economists object to brands because they things were cheap and easy, they would be and require six months’ work to find it. are ‘barriers to entry’. They are indeed meaningless. However, as a guarantee of something >
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40 sutherland.indd 41 26/11/2011 16:14:41 communication rory sutherland
not being bad, a brand is spectacularly enthusiasm for Starbucks and a deep and they will then become better disposed powerful. loathing for Costa Coffee. Far more often, to the concept of recycling. The saying that nobody ever got they alternate happily between the two. fired for buying IBM is probably the This presents some problems. When HEURISTICS most famous example of marketers you put people in a market research Heuristic is a very useful word that I hope understanding loss aversion. Indeed, it is context, they are not in the subconscious will become adopted by marketers. They worth remembering that in business-to- realm of satisficing where most decisions are the rules of thumb that people deploy business markets, loss aversion is often at are taken, but in the realm of rational, when making decisions. Consumers use its most powerful. conscious thought and attention. People heuristics – for instance fame and social feel, particularly in the presence of others, proof – all the time. When choosing MAXIMISING AND ‘SATISFICING’ that they must portray their purchase between two restaurants, when little is This leads to something very interesting, decisions as optimal and highly rational. known about either, you will probably go first identified by Herbert Simon of They portray themselves as maximisers – to the one with more people in it. What Carnegie Mellon University in the 1950s. an act which, although well-intentioned, is interesting is that all this is instinctive; It is the difference between decisions is highly misleading. It is how they think we deploy such techniques without being made by ‘satisficing’, where risk aversion they should decide; it may even be how aware of them. is prominent in the mind, and those made they think they do decide – but it is not When faced with a choice, one default through ‘maximising’, which is getting how they really decide. may be to buy what I bought last time. If the very best possible thing for a specific that is not available I’ll buy the one there amount of money. BEHAVIOUR FIRST is most of on the shelf or possibly the one If you want to know the difference Another problem is that, when people I have heard of. between satisficing and maximising, ask explain their behaviour, they believe, Choice architecture can be developed yourself this question: ‘What is the best as we all do, that attitudinal change exploiting the heuristic of ‘doing whatever meal you have ever had in your life?’ You precedes and is a necessary precursor to seems normal’. This is demonstrated in the difference in organ donations by country, based purely on whether We deploy techniques without being aware of the donor card is opt-in or opt-out. If them. When faced with a choice, one default it is opt-in, where it seems normal not to donate your organs, around 12% of may be to buy what I bought last time. If that is people will donate. If opt-out, where the assumption is you are happy to donate not available I’ll buy the one there is most of unless you specify otherwise, 98% donate. If you make it a managed choice, with on the shelf or possibly the one I have heard of. both yes and no boxes, about 66% donate. So, to an important question to which we may recall ‘a charming little backstreet in behavioural change. However, nearly all probably do not know the answer – should Rome’ or ‘this place in Paris’. And how neuroscience and behavioural economics I donate my organs? – the instinctive many times have you eaten there? Once? research suggests it happens the other way heuristic is to ‘do what most people do’. It is only when you understand around. As one neuroscientist beautifully Retail must have been boosted by an satisficing that you understand the success observes, the brain is not the Oval Office insight, whether accidental or deliberate, of McDonald’s. of the body issuing directives and being into the heuristic that, when presented There probably is nowhere in the world obeyed, but more like the press office. with three choices, we tend to choose where McDonald’s is the best restaurant Decisions are actually taken down in the middle one. When I was a child, in town but there certainly is not a town the basement and the brain issues hasty supermarkets offered the choice of a basket in the world where it is the worst. In post-rationalisations to explain why you or a trolley the size of a Mack truck. The terms of loss avoidance and satisficing, adopted the course you did. trolley was a ridiculous size so you chose when you go to McDonald’s you will If we understood this – and it is the basket – and so bought less. Then, never get ill, never be disappointed, deeply counterintuitive – that people brilliantly, supermarkets offered a third never be ripped off and never be treated do things and then make sense of them choice, the Japanese or shallow trolley. uncivilly. Nor will you be socially subsequently, the world might be a happier Because it is ‘the one in the middle’, embarrassed. All of these are pitfalls you place. For example, it is believed by people choose that. This ‘one in the must face when trying to find somewhere environmentalists that in order for people middle’ heuristic applies strongly to ‘better’. to adopt environmental behaviour it is first price, too. Most of the time people are happy with necessary to convert them into committed the ‘pretty good at a reasonable price’. environmentalists who share exactly the RELATIVITY This explains why most people in reality same motivations as their own. This is very Another aspect of choice architecture is have a repertoire of acceptable brands, painful and involves a huge amount of very the fact that we choose something relative rather than choosing through ranked annoying preaching which generally makes to what is around it. We look at alterna- preference. Contrary to what some ad people resentful. The trick is to change tives. Estate agents work this way. They people would want us to believe, normal behaviour first then the attitudes will will take you to a house very similar to the consumers do not develop a passionate follow. Make it easy for people to recycle one they think you will buy but slightly
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more expensive and a bit less good. It will choice to brand selection and if you lose new car delivered to your home free or then be much easier to flog you the house within a channel, you may lose overall. you collecting it from Maranello, Italy, they think you will buy. It will be £3,000 at a cost of £300. I am sure you will get a cheaper and have a greenhouse. Bang, Complementarity tour of the plant too but the point is that sold. Our brains work relatively rather There are some things the value of which the latter option is positioned as the more than absolutely. vastly depends on what you consume desirable. That it is also much the cheaper A German car maker had a stock of new them alongside or with. Possibly the most option for Ferrari doesn’t seem a factor. cars it needed to sell and it was about to extreme is popcorn. If you went out this That our perception and memories knock €3,000 off the purchase price in evening and there was a popcorn seller may be affected by remarkably arbitrary order to do so. Then someone who knew on the street outside your house, you are influences makes marketing more rather what they were doing asked: ‘Are you sure unlikely to be tempted. However, were than less important. Take an espresso that is the best option?’ ‘Well, €4,000 you to go to a cinema, there is virtually machine. If you think how much the cost would be better but we can’t afford that’. no limit to what you would pay for a of running a Nespresso machine would be ‘No,’ the visitor said, ‘make it €3,000 on bucket of popcorn. It makes no sense but if it were filled up with coffee and sold in the trade-in price of the old car, not off the two, film consumption and popcorn a jar like Nescafé, it would be a fortune – the price of the new car.’ consumption, are complementary goods, on a like-for-like caffeine shot basis, you A classical economist would say it is as economists call them. would be paying £80 for a jar, something the same thing. They tested it and the A perfect example of complementarity, most of us would find unconscionable. difference was pronounced, accounting is the Guide Michelin. It was started in However, the coffee comes in little for the sale of 20,000 extra cars. The 1900 when Michelin had about 95% of individual metal pods and hence the frame reason is that €3,000 on top of the the French tyre market. It realised that of reference isn’t Nescafé but Starbucks. €8,000 you might expect for your old car the only way to make more money was Every time I use the machine I think seems a lot of money, while €3,000 off to get French people to drive further and how I am saving money, paying 26p for the €22,000 price of a new car seems less burn more rubber. Now the thing about something that would cost a couple of of a deal, proportionately. That shows French people is they won’t go anywhere quid at Starbucks. The frame of reference the extent to which our brains work at a unless there is a restaurant at the end of means I think it a bargain. comparative level. it. What Michelin created was a guide Video conferencing has failed to take to restaurants and interesting things off because it is what economists call an Path dependency to see, the consumption of which was inferior good. It is framed as a cheap We tend to have a model of behaviour complementary to the burning of tyre alternative to something else. It is what where people go from brand preference rubber in 1900 France. someone gives you when they don’t trust to purchase behaviour, as though it was an Marketers tend to overlook this. Were you with the real thing. If your frame unmediated, absolutely direct process. In I Coca-Cola’s marketing director, I would of reference is negative in this way, you reality, many decisions involve multistage spend more time getting ice widely almost always lose (something from which path-dependent actions. adopted in British homes than I would coach travel and frozen food have suffered I like the cocktail culture in the US with promoting the virtues of Coke. If you appallingly). The video conference needs all that mixology stuff. One reason for the look at the complementarity, there is reframing as the rich man’s phone call, lack of cocktail culture in the UK is that, evidence that if you serve Coke with ice not the poor man’s air trip. It should be by the time you get to the spirits section and lemon, sales will be 70% higher than installed in the CEO’s office and nowhere in a supermarket and consider buying if served without ice. So the best way to else, and certainly not in a basement room. Campari, Pimm’s or rum for Mojitos, the increase consumption of cola if you are How can Red Bull charge £1.50 a fruit you need is 500ft away against the brand leader is to create complementarity can when Coke can charge only 50p? flow of shoppers and ice is nowhere to be and bribe fridge makers in the UK to add Weirdly, you make the can smaller. found. Sainsbury’s, with Diageo, through a proper ice-making machine as they do in Suddenly people think this is a different brilliant use of path dependency, has civilised parts of the world. category of drink for which different created a cocktail pod in the spirits section I am only half-joking. What is your price points apply. If the can had been the where there are mixers, ice, lemons and biggest obstacle to more sales? Is it same size, I am not sure they could have (for the connoisseurs of gin and tonic) a brand issue or the absence of some charged £1.50. limes, all together. The net effect is a complementary good? It is a question This list is neither exclusive nor rise in sales of spirits of between 8% and worth asking. exhaustive. But it includes just a few of the 9%, due to an understanding of path concepts from the behavioural sciences dependency. FRAMING which will provide us with a new and Path dependency is vitally important It is a fascinating thought that you can scientifically validated way of looking at in the context of channels to market. make something seem better or worse the world. Perhaps more importantly, People thought that Barnes & Noble’s according to the comparative frame though, it is a vocabulary that can be used brand strength would carry through to applied to it. If you can change the frame, when speaking to people who don’t speak the online space and defeat Amazon but you can change the game. marketingese. n it didn’t. Once a consumer is within a That human perception is malleable channel, their brand map changes. If and susceptible to suggestion and Rory Sutherland is vice-chairman of you are online you will probably go to comparison is demonstrated by Ferrari: OgilvyOne London and Ogilvy Group Amazon. Channel choice may be a prior it offers you the choice of having your UK. [email protected]
Market Leader Quarter 1, 2012 43
40 sutherland.indd 43 26/11/2011 16:14:41 ad agencies derek day
Agencies have always liked to think of themselves as partners but Derek Day questions just how realistic this is. Quoting marketers’ criticisms of the agency world’s unwillingness to understand the commercial logic of their clients’ business, he offers advice as to how to improve the relationship
or an industry supposedly What clients think at the fulcrum of capitalist This endemic isolation from the norms enterprise, the advertising of commercial existence does not go business displays few outward unnoticed by marketers, and nor does Fsigns of commerciality. The layperson, it escape criticism. Far from it, as my on a first-time tour of a typical business partner, Helen Edwards, and advertising agency, would be surprised I discovered last year when preparing to find themselves in a low-pressure for our slot at the Advertising Planning environment somewhere between an art Group’s Battle of Big Thinking (BOBT) dealership and a private members club: conference, held in association with ironic sculptures in reception, table football Campaign. in the creative zone. The BOBT audience is dominated by At the bar – and there would be marketers and ad-agency people, so we a bar – the conversation would be were keen to take the temperature of that noticeably innocent of the vulgar relationship, as a backdrop for our theme. language of trade: no talk here of We asked our own clients, and more ‘pricing’, ‘distribution’ or ‘sales’. arms-length marketing contacts, for their Instead, the visitor will overhear views on what agencies and their planners reverent discussion of mysterious, bring to the business. The vehemence of almost-Masonic, notions such as ‘Golden their answers took us by surprise. Partner s or suppliers? Lions’, ‘Silver Arrows’, ‘Black Pencils’. While agencies are valued for creativity, The closest to the marketplace that the and planners for insights, the good chatter comes is the occasional reference news ends there. Here are some of the to consumer insights, and the desire to verbatims from that mini-survey: helps to explain the brand’s three-time stimulate consumer conversations. It is a l ‘Most agency planners just don’t switch of ad agencies in 15 months. long way from Orwell’s ‘rattling stick in a understand the dynamics of business – For fmcg spenders like Innocent, the bucket of swill’. they are about communications.’ most livid sore point in the client–agency Still, outward appearance is rarely the l ‘They don’t have any idea of business relationship is the latter’s inability to get whole story and perhaps this is merely the – they will suggest that we go back and to grips with the realities of the trade. wrapping for an implacably mercantile explain to Tesco why we shouldn’t abide The planning team’s focus is exclusively core; the commercial fist in the cultured by their guidelines.’ on consumers, with the endless quest glove. In truth, though, advertising l ‘They are not always as data-driven as for killer insights. There is no one on displays few inner signs of commerciality they should be.’ the agency team, it appears, with any either. The average number of MBAs l ‘They beat us up verbally from their worthwhile insight into the complexities in a typical agency, to the nearest office without really knowing how to do of dealing with their client’s first, and approximation, is zero. Ask for a view on it, or what it takes.’ most powerful, customers – the retailers. advertising investment, with reference l ‘Most agency people are simply not To illuminate the challenges of to the net-present-value discount numerate enough to be useful in the wider distribution, and the lengths to which formula, and you will be met with a blank context of brands and business.’ marketers must go to outflank the expression. l ‘They are so much further downstream intransigence of their retailer customers, Most curious and quaint of all is than they think they are.’ we unveiled a trade story from the the gentlemen’s agreement whereby One of the people we talked to at length Harvard Burt’s Bees case study as part of agencies currently producing fine was Richard Reed, joint-founder of the our BOBT talk. work in a particular sector – airlines, smoothies-to-snackpots brand, Innocent. say – voluntarily debar themselves from Since Reed is a former planner – he spent Burt’s Bees: a big retail idea competing further in that arena until bad four years at BMP – you might expect him Burt’s Bees is now a sizeable US brand in luck or misjudgement occasions the loss be a bit more supportive of his former personal care. But when it was smaller, of their current customer. It would be like industry. He wasn’t. He said: ‘Agencies and just beginning to branch out of its Airbus declining to sell planes to BA on get carried away by the personality of our niche retailer distribution and into the big the basis that it would feel wrong to be brand, but don’t do enough to understand US pharmacies, it ran into the problem of disloyal to Emirates. how the business works.’ Perhaps this something retailers call ‘in-line display’.
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just one of many tough distribution calls that helped get it there. What is noticeable here is that the brand took on the retail challenge itself. At the time, it had no agency. Would a brand facing similar issues today be able to encourage its ad agency to help solve the problem? It’s doubtful.
Creativity isn’t enough Imagination and measurement is hardly a combination that marketers enjoy from their advertising agencies on trade issues. Yes, imagination is there in the background, but it is a rare agency that can persuade its best creative talent to focus on the distribution exigencies of its clients: the importance of the issue to the client is in inverse proportion to its attractiveness to creative teams as a route to glory at Cannes. As for measurement, look no further than Campaign’s recent editorial (21 October 2011) berating marketers whose focus is metrics and ROI. Under the banner ‘Creativity is more than just a numbers game’, editor Claire Beale insists that ‘creativity defies data’. Yet without data to underpin its creativity, Partner s or suppliers? Burt’s Bees packs would still be flung all around the store. Remarkably, in the same editorial piece, Beale argues that agencies need to be better Burt’s Bees – an ‘artisan’ brand that represented in their clients’ boardrooms. had always shunned advertising – knew This is a variation of a long-expressed We asked our clients that in-line display was a costly issue, agency yearning for a seat at their client’s one exacerbated by the fact that so-called ‘top table’. Yet that table is the for their views on what most of its products were in small very place where numeracy, terminological agencies and planners containers. The brand was getting precision and – whisper it – compromise lost. So the management team reacted will be expected as a minimum. bring to the business. with a combination of imagination and The marketers we spoke to were well measurement. aware of their agencies’ desires to be The vehemence of First, they designed a special ‘hive’ up there with the corporate great and display unit, with all the products in one good, but noted that marketing teams their answers took place, and sought to encourage retailers to themselves have difficulty making their work with this eye-catching display. presence felt at this level. They want us by surprise When those retailers proved stubborn, agencies to help them practically in their the brand offered to pay for and run a negotiations with influential internal Perversely, this doesn’t mean that the controlled experiment in selected stores: disciplines such as operations and HR, or products are displayed in a nice strong Burt’s Bees’ SKUs would be displayed at least to be sensitive to the way these line in a single part of the retail space. both in-line and in the hive. The specific conversations run. ‘Naive’ was a word In fact it’s the exact opposite: they’re products were electronically tagged so the we heard time and again for agencies’ flung all across the store, with each store could measure which kind of display perceptions of, and impatience with, the SKU forced to sit among similar specific resulted in higher sales. internal commercial matrix. product lines (hence ‘in-line’). So Burt’s Burt’s Bees was able to prove that sales From one of the big brewery Bees had its shower gel in one place and were higher from the hive displays, because companies, we learned that the operations its lip balm in another, with its baby oil they prompted multiple purchases. Even director had vowed to ignore the somewhere completely different. For then, some retailers wouldn’t change, so pronouncements of any agency that had a brand without a big communications the brand took the courageous step of not ventured north of Watford or worked budget this diffuse presence in store can focusing on just those that would. Today, a shift in a pub kitchen. Since one of its really reduce impact. Burt’s Bees is a $200m brand, and this was agencies had done neither, the marketing >
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team was left to fight its bruising internal of the mental health system – to think This might include: battles alone. differently about the patients. l planners who go beyond consumer In service businesses, internal brand The symbolic gesture does not do its groups to conduct in-depth interviews engagement is another area in which work alone, of course; it is part of a fuller with trade customers and produce marketers would welcome more hands- internal brand engagement process. But insightful observations about them, and on support from agencies. Recently, we it is extraordinary how the people who about opportunities within the retail have seen a rash of ambitious, service- work at Cambian – cleaners and cooks, environment; based promises in national ad campaigns: as well as nurses and carers – talk about l an agreed format for presentations of ‘We’re on your side’ from Nationwide; the ‘Wow! pack’, and what it means to creative work which includes implications ‘Here for you’, from RBS; ‘Thinking new patients. It’s a kind of talisman, part for operations, finance and HR; of you’, from O2. Do the agencies that of the folklore of the brand, and part l at least one person on the dedicated created them have a process for taking of the reason why staff stay motivated agency team to have an MBA from one of the message to the thousands of people and deliver the Cambian promise: to the leading business schools; on the inside, whose task it will be to help the people in its care achieve ‘their l exchange of graduate trainees between make these promises a reality? Or will personal best’. agency and client for agreed periods; this these campaigns stumble, the way the used to be a norm, but seems to have gone ‘Doing the right thing’ campaign did, for How to become more out of fashion of late; and British Gas, whose own employees got to commercial l incentive-payment metrics that see it at the same time as customers did, Clearly, as our exploration a year ago include evaluation of agency input on the telly? reinforced, there is plenty of client-side and understanding on the full range Certainly, at the time of the BOBT, the resourcefulness and imagination on the of client issues: distribution, pricing, best examples we could find on the subject more routine commercial challenges of trade marketing, supply chain, service came from brand owners themselves, marketing life. Equally, there are many delivery, ROI. It’s decision time for ad agencies, too. Do they really want to confront all these In service businesses, internal brand engagement extra complexities, on top of the myriad communications disciplines and channels is another area in which marketers would that they already need to master? Or is the more honest approach to stick to welcome more hands-on support from agencies creativity and ads? There is no stigma, and much good business sense, in going without agency involvement. The one we marketing departments where resources this route. spoke about, for one of our own clients, are thinly stretched, leaving marketers Conversely, those who want to be Cambian, showed how internal messaging needing all the intelligent external help ‘partners’ or earn a place at that client ‘top can be held together by the power of a they can get. table’ need to recruit a few more business- ‘big, symbolic gesture’. From a practical point of view, what can school alumni, gain greater fluency in marketers do to persuade agencies to take the language of the corporate boardroom Cambian: a big symbol of care a more holistic, commercial perspective as and recognise that their current Achilles’ Cambian is in step-down mental health part of their everyday service? heel is dubious numeracy and a casual care: semi-secure places for people who The first thing is to be clear in your disrespect for data. A little stakeholder have often been in the system for years, own mind that this is what you want. A risk might also help; buying a brand and many of them sectioned, usually arriving simpler option might be to dispel all talk running it was one suggestion we made, with a bare few possessions to their name. of ‘top tables’, ‘lead agency’ or ‘brand only half in jest, for the members of the The brand is run by a charismatic guardians’ and restrict the agreement Advertising Planning Group. owner, Saleem Asaria, who created a to one of just producing great insights It would be nice to think that a healthier symbolic gesture to signal that Cambian and great ads. It could make for a more respect for numbers, to run alongside its feels differently about the people in its streamlined relationship – and may genius for originality, might pay dividends care. It is a ‘Wow! pack’, that patients get leave you free to explore project-based for agencies in the most literal sense, too. the day they arrive: a designer rucksack, arrangements rather than keeping a Right now, average ad agency margins are inside which is an array of branded retained agency, or even considering under 11%. That, if nothing else, shows toiletries, a watch and an iPod. Often it’s lower-cost options such as creative that the advertising industry could use a bit the first time patients have been provided consultancies or crowd-sourcing. more commercial nous. n with decent, branded products in their The downside is obvious: if all of your entire time in the system. These were marketing services suppliers are siloed Derek Day is a founding partner of symbolically chosen as the brands Asaria this way, without any one of them taking a Passionbrand. uses himself. broad view, then you will be the one who [email protected] The aim was to send a signal: a signal is left joining the dots. to patients, to encourage them to start The opposite way to go is to take the This article is based on a talk given feeling differently about themselves, but, advertising agency’s desire for deeper at the Advertising Planning Group’s just as importantly, a signal to staff – many involvement at face value and be clear 2010 ‘Battle of Big Thinking’, held in of whom will have come from other parts what it is they need to do to achieve it. association with Campaign.
46 Market Leader Quarter 1, 2012
44 day.indd 46 26/11/2011 16:33:57 MARKETING WISDOM sir terry leahy Never waste a good crisis
When times are good, it’s easy to do well. It’s in difficult times that a brand can make more relative progress
was the first marketing director targets. If you’re not careful, all these If any CEO knows about ever on the board of Tesco and the things can slowly suffocate you and your marketing’s contribution to first marketing person to be CEO. ability to see things fresh and new. But I’m no longer a marketing A crisis, when things may not be success it is Tesco’s ex-marketing CEO,I I’m now an investor and I think working as well as you hoped, is a great director, Sir Terry Leahy. Here, like an investor which now means I’ve time for shaking all of that up. It’s a time not the first idea what marketing’s about. for breaking away from it and starting he urges marketers to take I assume, as an investor, that marketing out again with a clean sheet of paper advantage of these difficult times should be left to the accountants. and a really fresh look at the business, at So my first observation is that, as a yourself, and above all at the opportunity. profession, marketers need to do more to tell the world – investors and finance making the most of it people – of the vital role that they play in Here are eight things you might want to modern commercial enterprise. write on that clean sheet of paper. These are difficult times. We’re four The first is finding the truth. years into a recession or at least slow It’s incredibly difficult for growth. But my own feeling is that these organisations to see themselves as can be the best of times for marketing. others see them. There’s a whole When times are good for everybody, it’s mechanism1 for filtering out the truth easy to do well. It’s in the difficult times from the outside world. We’re all part of that a brand and a person can make more it and research can be the worst in terms relative progress. of giving you a version of the truth rather But to do that you have to break out of than the actual truth. the straightjacket that gets slowly wrapped Research tools are very useful but around you within your organisation: research is like going into a dark room the conventional, a comfortable way of with a torch and all you see is what the how you see yourself, the business, your torch beam lights up, you don’t see the customers, your competitors and your whole room. So look at life. Look at products. what’s going on in the world, look at your You’re framed by habit, by the budget, customers, , the lives that they’re living, This article is an edited version of the by comparisons with last year or last their problems, hopes and fears .It’s out of speech given to The Marketing Society month or last week, and meeting sales that empathy that the truth emerges. on 10 October 2011. >
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47 leahy.indd 47 26/11/2011 17:10:05 MARKETING WISDOM sir terry leahy
I’ve never had to look for growth. I company – even the accountants – serve matter how skilled you are, it’s what you just listened to customers, listened to the customer, not just the marketing cause other people to do. It’s the impact how they talk about how their lives were department or the sales department. that your ideas have on other people. changing and the direction that they were A business is never happier than when Furthermore, an organisation doesn’t going in. All I had to do was try to follow it’s innovating and finding new solutions. want one leader, it wants thousands of them and try to stay close and be first to People will follow you because they like to leaders, people who feel good about the respond when a new need emerged. That create and to make things better. business and are prepared to step forward gave me all the growth that I ever needed Communicate. We marketing and take personal responsibility to get in my time at Tesco. people are not always good something done in any given situation. My second piece of advice is all-round communicators. We focus Marketing is the best place in an think big. When the architect very much on narrow audiences. organisation from which to lead because Daniel Burnham entered a What5 I have in mind is not so much you’ve got the greatest power in the competition for the rebuilding of external communication to consumer but business – the voice of the customer. You Chicago2 which had burnt down at the internal marketing within the organisation. have all the moral authority on your side. beginning of the 19th century, he simply If you gave more thought to that you’d find And finally, act. You may know said make no little plans. We’re not on it much easier to take the organisation with the truth, you may have an earth to make little plans and so if you’re you in the things that you want to do. ambitious vision, you may have a going to do something, make sure the I’ve often come upon very frustrated great plan, but all of it amounts to world notices it. marketing people complaining they can’t nothing8 if you don’t act. And to act you And don’t let the right idea be get support for something. But they haven’t need a process. A lot of marketing people diminished by going through a used their own skills to communicate fall down on process. They’ll say if I management process. The Club Card what it is they’re trying to achieve, why it’s wanted to be good on process I’d become would never have been launched if it had good and what help they need from other a management consultant. But the fact is if you’re going to turn an idea into something for customers that changes Marketing is the best place in an organisation their life you need a process. from which to lead because you’ve got the I’m actually optimistic looking forward, People have lost sight of the fact that the greatest power in the business – the voice of world’s economy grew last year by just short of 5% and I think this year it’s still the customer. You have the moral authority expected in to grow at 4%. We obviously are slower in recovery than we expected gone as an idea through a budget process. people. We felt this was so important in but, what’s been missed is the extent of the But we believed it was the right thing to Tesco that we used to bring journalists in oil shock that’s hit the consumer and hit do. We’d secretly trialled it without telling to teach us how to communicate. the economy. the organisation. Customers told us they Teach. Marketing people are By some measures when the oil price loved it even though we had no idea how experts, but we’re not the best doubles, an economy will shrink by 5%. to make it work or how to make it pay. teachers; we’re too busy doing. In fact, the oil price has virtually doubled But we knew if customers valued it we Take time to pass on the skills that It went up to $140 which was the start could push it though the business and to you’ve6 got. Take a day a week or a day a of the recession in 2007/2008 but then make it happen. month, whatever you need. It depends collapsed down to $50 which was right Take risks. All the things that I’m on your circumstances, but take enough in the depths of the recession and which proudest of in my career would time – probably more time than you think fired the early recovery. Then it rushed up have got me fired if they’d turned that you’ve got – and start young. again in the UK to about $130 and that out differently. You can draw I spotted Tim Mason, my marketing really is a big brake on consumer spending much3 more from organisations than they director for many years who now runs and consumer confidence. But as that is think they’re capable of delivering and Fresh and Easy in the US, at the age of slowly embedded, or if the price subsides the marketing role is a terrific place from 23. Caroline Bradley, the UK marketing a little bit, I think you’ll see a stronger which to draw out that extra capability. director was 22 when she first came to my recovery coming through. But you have to take a personal risk and notice. Richard Brasher who runs the UK you have to encourage the organisation to business, he was 22; Phil Clarke who runs drivers for growth follow you. There are only two limits I’d Tesco, was 25. Those graduate trainees Underneath all of that and largely ever put on that – be true to your values are your future marketing directors and unaffected by the economic cycle, you and never bet the company. CEOs so pay attention to them from day can see drivers for growth. Tapping into Create. Marketers are creative one and pass on your skills. them may not solve all your problems but people and should be turning Above all, lead. A definition of they’ll give you a following wind. the whole organisation into a leadership that I like is this: a And the first of those is trust. In a very marketing department. What leader will take you further than complicated world people increasingly you4 have is the voice of the customer, you will go on your own. That navigate by institutions, people and which is the most powerful thing in an gets7 to the heart of what leadership is brands that they trust and so it’s very organisation. You must make the whole about: not what you do as a person no important that you have a relationship
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47 leahy.indd 48 26/11/2011 17:10:05 MARKETING WISDOM sir terry leahy
with customers based in some way on there’s another round of that coming with trust. You can’t buy it, you can’t get it mobile commerce. Over the next few years through advertising, it has to be earned it’s going to transform how people do Customers will want to through reliable performance day in day business – including retailing. out. It needs complete transparency in Loyalty. Far too much of marketing know more about the how you go about business. spend goes on chasing the promiscuous The second big driver for growth is customer and that’s a very poor effect you’re having on information. We have more information investment. Putting more of your the environment, and than ever on our customers and they marketing monies behind rewarding have more information than before on your existing customers and encouraging you’re going to need us. As I’ve stepped outside of Tesco and loyalty will give you a far better return on looked at businesses around the world, investment. to reassure them that most business are nowhere near their full The final driver is sustainability, potential in terms of harnessing the data going green. People used to ask me if it’s beneficial about their business and customers and you can grow a business and be green. really using it beneficially. The question now is will you be able Also they’re nowhere near appreciating to grow if you’re not green? In the first that you’ve got to really engage with case it’s because you’ll constantly be customers and look for a much richer, being rocked, by unexpected regulation, deeper relationship based on the taxation, proscription from increasingly knowledge that they have about you. anxious politicians who are trying to Those customers can be real advocates address the issues around climate change of your business they can actually be like and sustainability. So unless you see those employees. They can design your business things coming you’re going to get hit. I and give you feedback on it. They can be believe that, increasingly, customers will champions of your business and give you want to know more about the effect you’re early warning about your products, but having on the environment as you serve you’ve got to engage them. them and you’re going to need to reassure Health. It’s anthropological fact that them that it’s beneficial. everybody wants to look good and live forever. That’s what drives us and any A NEW GENERATION OF SKILLS business; any product or service that The 20th century was a miracle of mass promises some help in that direction will consumption in the West; it was a miracle see above-average growth. of how marketing and supply chains came Convenience. People feel that they’re together to enable hundreds of millions of busier than ever before. It’s a moot point people to have a better material life. In the whether or not they are actually busier 21st century billions of people in Asia will than ever before but they unquestionably demand that same right to a better life. feel it. So a product that promises There’s no use asking them not to convenience will see above-average consume, that’s not going to happen.All growth. we can hope to do is to create a new form And it doesn’t have to be complicated. of consumption that is not reliant on the We created Tesco Express just from a planet, on fossil fuels, and we can grow simple observation years ago that people and decouple from the depredation of the were too busy to get themselves organised natural resources. for a weekly, one-stop shop. They wanted That needs a new generation of the store to come to them. And so we marketing skills. It can’t be done had to miniaturise it and put it right by regulation or by taxation or by next to where they were and that simple prescription, it has to be done working observation turned into a business worth with the grain of consumers aspirations. billions of pounds, it was a fast-growing You have to make being green desirable, format all over the world. you have to make it affordable, you have Simplicity. It’s a linked point but you’ll to make it easy, convenient, all of those know that people almost have too much things that we spoke about earlier on and choice. They want you to understand if you do that then you will play your what their needs are and solve those in part in creating a consumer revolution, a a satisfying way. Technology is helping green revolution and that’s a wonderfully enormously. The one that always springs worthwhile role for the marketing to mind is how the ATM machine not only profession. n transformed banking but also transformed people’s relationship with machines. And Sir Terry Leahy is a former CEO of Tesco.
Market Leader Quarter 1, 2012 49
47 leahy.indd 49 26/11/2011 17:10:05 women on boards janet hull Through the glass ceiling
The opportunity for women in the marketing and advertising community to earn a place in the boardroom is still relatively untapped, but several recent initiatives should make it easier. Janet Hull reports
elena Morrissey, founder of the 30 Percent Club, mother of nine, and CEO of Newton Investment HManagement, wants to change the shape of Britain’s boardrooms. Speaking at a drinks reception and forum at the House of Commons entitled ‘The Shape of Things to Come’1 on 26 October, she called for a paradigm shift in thinking, among CEOs and chairmen of FTSE companies, when it comes to the appointment of directors and non-executives. Morrissey predicts a future where there is a ‘kinder capitalism’; where the whole framework of doing business successfully will be challenged. And this will call for a new type of business director. Alysoun Steward, founder and director of business consultancy in particular, to candidates who have no of the 2,742 board seats of FTSE 350 Oxygen8 Solutions Ltd,2 tends to agree: previous experience of the boardroom, companies. Within FTSE 100 companies, ‘The impact of recession cannot be and to set selection criteria which give of the 1076 board seats available, only 135 underestimated. Beleaguered companies greater transparency to the process. of these were held by 116 women.4 have realised that they have to do things But change is afoot. In February 2011 differently if they are to survive and find How far have women come? Lord Davies conducted a large-scale competitive edge – having boards that In 2009, of the 14 women hired as FTSE investigation for Government, ending continue to think and act in the same old directors for the first time, one was with a report putting forward a ten-point way will be a high-risk strategy.’ British, and of the five female FTSE 100 plan to get more women into UK There is now pressure on executive CEOs in 2011, just two were British and boardrooms. Encouragingly, since then, search consultants to open up the talent three American.3 of the 250 board appointments made pool for executives and non-executives, In 2010, women occupied just 242 in FTSE 350 companies (excluding
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investment trusts) almost 20% have been mainstream, including entrepreneurs, women, with a bias to non-executive academics, civil servants and senior appointments (almost 25%). women with professional service backgrounds, for whom there are More women needed considerably fewer opportunities to take The pool of women is still limited, and up corporate board positions. UK women are not as well represented as Boardroom review firm, Bvalco7, they might be. And there’s always the risk points to the behavioural styles that that ‘alpha’ business women tend to have make for boardroom effectiveness: the same traits as alpha men. Saxonbury thinking, involving, inspiring and Executive Search director Sandy Meadows performance behaviours. Dig deeper and talks about women who have followed a it’s obvious that women have a role to male career: ‘Entering the old boys’ club play in developing open and collaborative were the old ladies.’ She complains of a dialogue. history of ‘lazy hires’ in non-executives ‘in the model of the incumbents. You don’t The challenge get paid as much, so it’s a way of paying You would have thought that women in back people who have helped you.’ marketing would be the holy grail for Tokenism is not the answer. The Davies businesses, but, although there are notable Review recommends a minimum of three precedents – the late Patricia Mann, women per board to create balance and Dr Liz Nelson, Dianne Thompson, Rita cohesion. The 30 Percent Club goes Clifton, Carolyn McCall, Stevie Spring – further in calling for a full third of the this is still far from the case. board to be women. Perhaps it is Amanda McKenzie who represents the epitome of success for Change agents for board women CMOs today. Not only has she behaviour According to the Davies Review, where governance is weak, female directors The review recommends a minimum of three exercise strong oversight, and can have a ‘positive, value-relevant impact’ on the women per board to create balance and company.5 A Canadian study quoted in the report, and entitled ‘Not just the right cohesion. The 30 Percent Club goes further in thing, but the bright thing’, found that calling for one-third of the board to be women gender-balanced boards were more likely to identify criteria for measuring strategy, monitor its implementation, follow broken through the glass ceiling to reach conflict of interest guidelines and adhere the executive board at her main employer, to a code of conduct. FTSE 100 company Aviva, but she has Whereas the 2003 Higgs Review also achieved a non-executive role at of Corporate Governance called for Mothercare in the past year. greater professionalisation of boards, But what hope is there for the rest of encouraging a focus on candidates with us? Simon Marquis, ex-CEO of Zenith significant prior financial responsibility, Optimedia, was headhunted, eight years the Davies Review argues that, although ago, for a top non-executive position at there is a need to be financially literate, PLC printing company St Ives. He says: ‘I financial responsibility, just like sector was brought on board as a media person. expertise, can be taught and should not be They wanted that skill set; a working a prerequisite for appointments. ‘Greater experience of the marketing world.’ emphasis should be placed on a broader When Marquis completes his third mix of skills and experience.’6 term of office towards the end of next year Given the aspirational target of 25% to he is certain that he will be replaced by a 30% women and broader representation, marketing person, and, possibly, a woman. the Davies Review identifies two different ‘There were two women on the board, but populations of women who are well through happenstance there are none at qualified to be appointed to UK Boards, the current time and the board are rather namely: conscious of that. It has certainly been a l executives from within the corporate topic of discussion, and while tokenism sector, for whom there are many different would be totally inappropriate, it would training and mentoring opportunities; and be rather satisfying to replace me with a l women from outside the corporate marketing woman.’ >
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50 Hull.indd 51 26/11/2011 16:20:12 women on boards janet hull
Annette King, current CEO of professional services and founders of OgilvyOne, is just starting out on her successful entrepreneurial businesses. It road. She says: ‘I made it a new year’s When King finally offers access to an extensive network of resolution to get on the non-exec ladder, appropriate chairmen and nomination and it’s taken me just under nine months.’ landed her first committees. King has recently been appointed a appointment, it came Saxonbury10 is possibly the most non-executive board member of London enterprising of the smaller groups at the First, a business organisation and service through a referral, a current time, with a new initiative to get provider to FTSE 100 companies, which chairmen to think about more diverse seeks to make London the best city in the consultative lunch, options: breaking down what is needed in world in which to do business. a NED with capability frameworks which King attributes her success to three then a formal invitation analyse knowledge, skills, experience and things: dogged determination, networking behaviours. Says director Sandy Meadows: and specialist knowledge. ‘I sought advice to interview with the ‘Otherwise it’s chicken and egg – people from friends and colleagues with more nomination committee with board experience choose people with experience and a broader network, and board experience.’ contacted eight different headhunters. I They’ve had some recent successes: was advised to tell all of my senior clients Louise Makin to Premier Foods; I was looking. With each move I gained day job.’ But she needed to take that Margaret Johnson and Lucy Kellaway more understanding and more confidence. networking further, beyond the reaches of to Admiral; Sarah Jane-Thompson to My CV changed dramatically to make it the immediate industry. Blooomsbury. Now they’re looking for fit for purpose. Commercial achievements, ‘I dropped in for a cup of tea with a sponsorship to create an online register of yes, but it contained less about what I had guy I knew who was MD of the Financial women from all backgrounds, and asking done for client companies than the quality Services Authority. He opened my eyes Chairmen of FTSE 500 companies to put of the company I had kept. A bit about to a new way of looking at things, and of their money where their mouth is. marketing and about being female. A lot presenting my credentials.’ With aggressive targets being set by about the digital thing. Most boards are Marquis argues that, irrespective of the Association of British Insurers, and still scared of digital.’ gender, it’s important to be realistic consultation under way at the Financial When King finally landed her about one’s suitability to the role. ‘If Reporting Council about whether or first appointment, it came through you’re a hands-on executive it’s very not changes should be made to the UK a referral, a consultative lunch, then difficult to transfer effectively to an Corporate Governance Code on board a formal invitation to interview with independent board position, where diversity, it might just work. n the nomination committee. It helped, your primary function is to challenge, perhaps, that she was the first nominee question, robe, cajole, not execute, Janet Hull is director of marketing to represent the creative industries and command and control.’ and reputation management at trade marketing, rather than accountancy, legal, For Marquis, diplomacy is a core skill. association and professional institute, the property or IT, services. ‘The relationship has to work at a human IPA. I too have just completed an interview level. When things get difficult, you Email: [email protected] process for a non-executive position at the may become a go-between, the neutral Quality Assurance Agency (QAA), and territory between the executive and References: have received notification that I have been shareholders or venture capitalists, having 1. Wed 26 October 2011, House of Commons, accepted for the post. to broker peace talks.’ Helen Grant MP and Carol Bagnald, Regional The feedback I received was indicative Director, HSBC London. of the challenge facing marketing: Executive Search can help 2. Critical Eye blog; Are women on board? 06 ‘Because you came from an advertising Not surprisingly, the recruitment industry April 2011. background it was expected that you is responding to the opportunity. Bird 3. Crunch time as firms seek women directors, would be brash, pushy and shallow. But & Co Board & Executive Mentoring8 Elizabeth Fournier, writing in CityAM 12 the panel were bowled over by your co-founders Isabel Bird and Kathleen October 2011. honesty, your reflective style, and your O’Donovan were early to recognise the 4. Female FTSE Report 2012, Cranfield intelligence.’ weakness of the marketing sector when School of Management, December 2010. it came to financial acumen. The Glass 5. Diversity and Gender Balance in Britain What more can women do to Ladder Academy provides one-to-one plc: a study by TCAM in conjunction with The help themselves? mentoring and small-group seminars for Observer and as part of the Good Companies King developed a strategy for her personal senior executive women to find their first Guide, London, UK: TCAM, 2009. search and suggests that other women do boardroom position, including tuition in 6. Women on Boards, Board size, The Davies it too. Her roles on industry committees ‘lingua banca’. Review for BIS, Feb 2011. such as WACL, IPA and IDM had taught Catquin9, an exclusive personal 7. www.bvalco.com her the value that these external roles representation agency for senior business 8. www.bird-co.com/board&executive could bring to her business. ‘External women, headed up by Garry Bullard, mentoring.html networking helped give me space for has recognised the opportunity for 9. catquin.co.uk ideas, and make better decisions, in the widening the talent pool to include 10. www.saxonbury.com
52 Market Leader Quarter 1, 2012
50 Hull.indd 52 26/11/2011 16:20:12 trendwatch melanie howard
The consumer psyche: irrationality rules
Centuries after the Enlightenment there is irrational – but no less powerful for it. After all, it still a mighty battle raging to decide what really describes how fear itself has become the problem dominates the wellsprings of human action. On rather than any empirical basis on which the real the one hand, the majority consensus in liberal risks to our lives and health, and the safety of our democracies holds that our choices can, and children, might be judged. should, be made according to a rational model – The difficulty in judging what is rational and what determined by reason, knowledge and science in isn’t was illustrated by participants’ responses to the the footsteps of John Locke and those legions of ‘personalisation of authority’, which describes our philosophers and social theorists that followed. tendency to trust people close to us for advice on Yet, in the other corner – experiencing a surge what to buy and where to go. Around 60% deem this in voice and influence – is the force of irrationality irrational and 40% consider it rational. that we might have assumed had disappeared as Whether rational or not in origin, our increasing religion trumped magic in the 16th century and faith in word of mouth has inspired online retailers Attitudes and religious fervour was brought under control in an to create proxy versions through inviting user behaviour refuse increasingly educated society. Is this not rather reviews. But the latest twist – quite rational perhaps exaggerated, I hear readers thinking? Well no, we – is that the veracity of many of these is now being to follow logical have evidence to the contrary. Even such high-brow questioned, and new services such as Revoo.com patterns, says debates as Richard Dawkins’ polemical crusade have sprung up to ensure they are 100% genuine. against the ‘God Delusion’ can have powerful The growing array of methodologies to explain Melanie Howard echoes in the mundane world of everyday consumer consumer behaviour and decision-making provides decision-making. insights into how we choose. Behavioural economics has so impressed the Government that there is a unit no place for logic in the cabinet office, figuring out how ‘nudge’ can Recent observations in the nVitro trend-spotting help propel us in the right direction. It is predicated laboratory at the Future Foundation are leading on the recognition that the assumption of rationality us to hypothesise that less-than-rational themes in classical economics has failed and that greater are making a strong comeback, if indeed they ever subtlety is required to help us help ourselves. went away. But this cuts both ways. On the one Experimental psychologists such as Dan Ariely1 hand we’re making choices that are injurious to argue that deliberately irrational choices might our health and wellbeing in the long term – such as prove to be, paradoxically, a more rational route to drinking and eating too much. We ignore that the better ‘bang for our bucks’ in consuming goods and Government’s Foresight team is forecasting that services. He cites the instance of overcoming the more than half of us will be obese by 2050. effects of ‘hedonic adaption’ – the process by which On the other hand, trends such as ‘magic we become so familiar with new and once delightful nostalgic’, which describes a powerful attachment to material things that they no longer give us pleasure. things from the past in a never-ending retro-cycle of Breaking up the experience, or delaying purchasing fashion, design and sentiments as emotional support can help extend the enjoyment. in the face of too much change, are motoring The increasing deployment of research techniques ahead. This year, McDonald’s has brought out a such as brain scanning, eye tracking and emotional new version of its original burger from 1955, and monitoring in situ and in the lab, reveals that Coca-Cola has celebrated 125 years with a range of consumers are as much driven by their impulsive retro-designs on their cans from the 1930s and 1940s drives, senses and emotions as their cognitive to help consumers feel the warm glow of heritage. functions. Maybe we have always known this, When put to the test in a recent interactive but the tools available now mean that rather than session with Future Foundation clients, we found irrationality being an unknowable and unpredictable that the majority of our subscribers also judge a force, it’s something we can increasingly measure. n number of our other well-established consumer trends to be irrationally driven. One good example Melanie Howard is chair of the Future Foundation is ‘authentiseeking’ – best characterised by the and a non-executive director of TCA. tendency to revere the handmade and local over the [email protected] mass-produced and global. Equally, they judged the long-running and 1. Ariely, D (2010). The Upside of Irrationality: The powerful trend, the ‘culture of fear’ (first identified unexpected benefits of defying logic at work and at home. by sociologist Frank Furedi in 1997) to be highly New York, Harper Collins.
Market Leader Quarter 1, 2012 53
53 trendwatch.indd 53 24/11/2011 20:29:40 BEST IN BRIEF BOOK REVIEWS
How does your brand sound? MICHAEL BAYLER ‘MOST BUSINESSES are shooting themselves in deserve a significant focus on and investment the foot every day with bad sound … over 95% in sound, Sound Business equips you well for the of Fortune 500 company websites are still purely fight. But often, in these brutal times, there visual.’ Julian Treasure’s goal in writing this will be a fight for budget, and it is likely that book is clear: to elevate sound from being a poor investment in more tactical, less-innovative cousin of muzak, or a half-hearted afterthought to tactics will override the more – rightly or being, literally, a sound and pragmatic investment wrongly – esoteric opportunities. in customer experience and brand growth with Sound Business seems best located as an clear ROI. underlying – and substantial – proof point for The question we must therefore ask is The Sound Agency’s coherent and, judging by simple: does Sound Business inspire and enable endorsements and client references, credible readers to move investment away from easier, offering. A book of this substance and in-depth less-controversial activities, and begin converting research is a key building block in an ambitious them into confident advocates of brand sound? niche agency’s development strategy. It’s apparent For a start, a typical busy, commercially that Sound Business will stand the test of time minded reader might instinctively prefer a less and will be quoted into the future, by those who comprehensive ‘what’, and a bit more focus have made what remains, at least for now, a more on ‘why’. Mr Treasure’s very accessible audio- cerebral commitment to the cause. visual presentation, and many interesting and However, brand sound is, for now, still viewed enhancing sonic examples from case studies, are more as ‘a bad thing that may need to be fixed’, available online. So if the reader struggles with than ‘a good thing that cries out to be leveraged’. the theory in this book, help is at hand. Julian Treasure and The Sound Agency will no Once through his extensive premise and doubt be around to fully harvest the rewards of arriving at the ‘how’ – the conceptual heart their vision and tenacity when the time comes. ■ of the book – The Sound Agency’s consulting framework is sensible and comprehensive, and Sound Business: How to Use Sound to Grow the name brand case studies generally robust. Profi ts and Brand Value, Julian Treasure, If you already suspect that your brand might Management Books 2000 Ltd, £12.74 Making the impossible possible? WINSTON FLETCHER THIS BOOK, Brutal Simplicity of Thought, brutally a brutal fracas called the First World War. The reveals the weaknesses, and strengths, of brutal latter two are far from simple thoughts. I never simplicity of thought. The book is a compilation cease to be impressed by how clever both zips of some 50 ideas, claimed to be brutally simple and Velcro are – and I’ll bet a portfolio of ideas, which it argues have changed the world. In M&C Saatchi shares to Bernie Madoff’s Ponzi his introduction Maurice Saatchi says ‘Simplicity is investment scheme (now that was a brutally a test… It forces exactitude or it annihilates.’ The simple idea) that Maurice Saatchi could not have book’s website adds: ‘Simple ideas enter the brain invented either zips or Velcro if he lived to be quicker and stay there longer.’ The opening of 1001. And nor could I. that sentence must surely be true, but I’m not sure Everyone in marketing must applaud simplicity about the ending. of thought. But in marketing, as in life, many Still, it is an attractive notion. Each example things are brutally complicated. And insisting they asks a provocative question, such as: ‘How did two are simple can go disastrously wrong. The book’s wheels emancipate women?’ And answers that a thesis is that with brutal simplicity of thought, brutally simple thought – in this case the bicycle nothing is impossible. ‘Nothing is impossible’ has – did the trick. Some of the examples are quite been the Saatchi brothers’ marching song, because entertaining (Q: How do you keep your private it sounds inspirational. But it led them into trying parts private? A: A zip). Others would make to buy the Midland Bank, and into buying the Ted excellent pub-quiz questions (Q: How did an Irish Bates agency. Both moves were disastrous. Pointer discover Velcro? A: An engineer called Simplicity of thought – not the brutality bit – George de Mestral spotted burdock seeds getting is a highly desirable discipline in marketing. But caught in his dog’s coat, and hey presto! Velcro). it does not make the impossible possible. ■ But if you examine most of the examples more closely they fall apart. The first is a truly brutal Brutal Simplicity of Thought: How It Changed the insult to the suffragettes, and ignorantly ignores World, preface by Lord Saatchi, Ebury Publishing, £10
54 Market Leader Quarter 1, 2012
54 books.indd 54 24/11/2011 20:27:58 BEST IN BRIEF BOOK REVIEWS
Stay curious DAVID NICHOLS I SELDOM have time to read business books end to are relevant and fresh as they mostly come from end, so in The Innovator’s DNA, I was pleased to find personal interviews with these business leaders. that the introduction is particularly good. All the key However, I was a little disappointed to find points are made succinctly and you get the gist of the that their number-one case study is Apple. It is whole tome in just a few pages. And the gist is that possibly the most often-quoted innovation case great innovators are made, not born. All you need to in history and their material is based on other do is follow five behaviours and you can become a books, not personal insight. It’s relevant and Steve Jobs in your own right (well, almost). useful, but not as fresh and engaging as the rest. This is not your typical innovation book. This The book’s thesis is that there are five key is from the Harvard Business Review and is based skills to being a good business innovator: on serious academic study. The rigour shows. associating, questioning, observing, networking I liked the professor-ish directness with which and experimenting. They rightly say that we can’t the authors lay down their ideas: ‘If you want all be Steve Jobs, but they have quantified his innovation, you need creativity skills within the and others’ behaviours and smartly summarised top management team.’ There’s no room for the things they all do differently from non- debate. They’ve done their research. innovators. These are not genetically gifted Clayton M Christensen, author of bestselling talents, but behaviours that can be learnt. The Innovator’s Dilemma and The Innovator’s Having established the five key behaviours, Solution, is the big name draw for this book I found the detailed chapters on each one were with a rather dull cover. It seems, however, to harder work. Brief excitement came from some be mostly written by two of his professorial of the case studies. colleagues, so I was worried it might lack his However, it’s a solid, thought-provoking book, clear thinking accessible style. Not a bit of it. based on the interesting notion that you can be a It’s cogent, readable stuff. They explain how great innovator if you behave like one. ■ many of the big names in business got their big ideas and they name check them frequently: Jeff The Innovator’s DNA, Jeffrey Dyer, Hal Bezos (Amazon), Pierre Omidyar (eBay), Marc Gregersen, Clayton M Christensen, Harvard Benioff (Salesforce.com) and so on. The cases Business Press Books, $29.95 A round-up of valuable lessons HAMISH PRINGLE THE FIRST advertising book I read was Ogilvy on the concept of ‘lateral thinking’ without having Advertising by David Ogilvy in 1972 as a graduate actually read de Bono’s work. So, when I did it trainee at the great man’s London agency, Ogilvy struck me that his premise – that the world was Benson & Mather. Apart from learning valuable largely comprised of people who were logical lessons it struck me that an agency that has a thinkers, but who could become creative while strong point of view, expressed in a book, has donning special thinking hats – was at odds with a competitive advantage even if not everyone my observation of many top people in advertising agrees with its philosophy – an agency can be very agencies. They seemed to me to have the ability successful with a relatively small market share. It to oscillate seamlessly between linear and lateral also imbued in me a career-long enthusiasm for thinking modes. This insight, backed by my exploring the inter-relationship between the art and many years of quizzing successful agency people, science of advertising. and a five-year IPA research project through Being Digital by Nicolas Negroponte also had Agency People, led to the validation of my a profound effect on me with its simplicity of ‘diagonal thinking’ hypothesis. exposition and the easily grasped descriptions The Luck Factor: The Scientific Study of the Lucky of ‘bits’ and ‘pipes’ laying a foundation of Mind by Richard Wiseman contains several knowledge that has served me well. It led to intriguing ideas but the one that appeals to me CME.KHBB being the first agency to register most is the notion that whether or not people its domain name, but we were beaten to having consider themselves lucky can be correlated with the first operational website by HHCL. That too other factors in their life experience. It seems that was a valuable lesson – it’s essential to innovate lucky people are more open, more aware of the continuously and provide clients with advice and world, and more interested in the people around support in the new frontiers of media. them. As a result, more opportunities are either Lateral Thinking: A Textbook of Creativity by spotted or made available to them, more choices Edward de Bono; I had become familiar with are made and often more good things happen. ■
Market Leader Quarter 1, 2012 55
54 books.indd 55 24/11/2011 20:28:00 l e tt e r f ro m to kyo david nichols
No growth doesn’t mean no change
This year I have been fortunate enough to spend every time the earthquake warning pops up on quite some time in Tokyo on a series of brand mobile phones, which it does with regularity. strategy projects. Two and a half months to be This stress is compounded by the economy, exact. The Japanese economy is stuck in neutral which has created a sense of uncertainty and lack with 0.7% average GDP growth since 1992 and has of a clear future that is a real problem for young dropped negative for the past two years. Yet, it is people. Jobs no longer offer a rosy career path, still one of the biggest consumer-goods markets on and a new phenomenon has appeared called the planet. ‘non-ambition’: young actresses no longer want to Clichés are clichés because they are based on truth start pop careers or go for world peace, they just – karaoke, whisky drinking and strong hierarchical yearn to open a little icecream shop. The most structures are commonplace here. But there is a favoured job for sons is to be a public servant – it’s lot of change in the air and quite an appetite for it. predictable, steadfast, safe. Even more interesting is David Nichols Thinking of launching your brand in Japan? Don’t that public servant is also the most favoured job for reflects on assume your marketing and positioning that works a boyfriend to have. I can’t imagine that in Britain. everywhere else in the world will work here – it This is showing up in brand marketing. Where Japanese women, probably won’t. You will have to have a local team once mass brands were keen to align themselves earthquakes and who understand not just the local competition but with suited young ‘salarymen’, eliciting feelings of the cultural context for your product. For once, it progress, achievement and hope, they now seem ad agencies really is ‘different in my market’. to be locked into a different image – that of the The role of women has undergone massive josh-kai, young beautiful girls with nothing to worry change over the past 20 years – and is still about but their hair and clothes. They advertise changing. In 1990, 90% of women would have been everything from vitamins to banking. married by the time they were 30 years old, now it’s only 65%. Even more dramatically, for 20- to agencies: japan v uk 24-year-olds, the figure has halved from 45% to Being a marketing director in Japan has another 23%. Birth rates are also plummeting. In the same challenge – the agency. I was fortunate to be period, single and DINK households have gone working with Dentsu, one of the world’s largest from 15% of the national total to 26% (source: ad agencies, and by far the biggest in Japan. The Japan National Institute of Population and Social difference between Dentsu and relatively small Security Research). All this is leading to a powerful individualistic UK agencies is marked. It is so big cohort of independent women in the workforce, that it frequently manages multiple brands in a unrestrained by husbands and children. Change will category. It has a division structure in order to offer surely accelerate as these women inevitably take on client confidentiality. It also handles media buying senior management and CEO roles across all types and packaging design. It must be tough to deal of industry, currently male dominated. with an agency with that much power if you are a The message for brands is clear – engage with relatively small brand – especially when on the floor women not just as housewives looking after the above they are most likely working on a strategy to family but also as independent, successful people steal your share with your key competitor. in their own right. One brand that has done this The offices would put many a bank to shame – in is Eve, a painkiller brand based on Ibuprofen (much the entrance there are rows of dark-suited execs like Nurofen). Its stylish packaging and targeting of striding grey marbled floors, taking their black business women has seen it attract continued growth briefcases past shiny steel walls up to 42 floors of in a market previously dominated by Pabron, with its desks and closed-circuit television cameras. The homely ‘mom as family carer’ image. art in the lobby has a game of chess enshrined in antiseptic white. Very appropriate. response to stress Tokyo is part thrilling, for the sheer efficiency ‘The 2011 Great North Eastern Earthquake’ as it is and modernity of the place, and part bewildering, known, is everywhere: you see it on little collection with its cryptic societal structures and seemingly boxes by tills, in brand promotions, in the power- unexitable railway stations. But it is also a dynamic rationed air conditioning, which was set no lower and exacting place for marketers to build brands. n than 28°C by government edict over the summer, and in the hearts of millions as they go about their David Nichols is managing partner global, daily lives. A recent study showed that stress levels The brandgym are at an all-time high, and they spike significantly [email protected]
56 Market Leader Quarter 1, 2012
56 letter from tokyo (2).indd 56 11/30/2011 12:10:03 speaker’s corner kamil michlewski
Are you pushing your customers around?
Consider this simple scenario: a customer walks simply because they have to. Would somebody who into a store (retailing sports equipment, let’s say) visited three different channels five times and was and asks if they have more information on the forced to make two unnecessary (in their view) jumps latest skiing equipment. The salesperson, instead of be more valuable/satisfied/loyal than somebody who answering the query there and then, says they should has switched only twice and on both occasions they check that sort of thing on their website. Customer were happy to explore the other channels? If you walks out. Let’s now see how this simplified tried searching the received wisdom in the industry, snapshot of the customer journey relates to three you’d struggle to find references to this key question. groups: customers, companies and consultancies. ALTERNATIVE VIEW CUSTOMER’S VIEW What we observe in our work is that it’s likely that What this means for the consumer is that they were those who engage in a greater number of channels Kamil Michlewski not able to answer their need when and where they happen to be in a purchasing mindset (and hence explains how wanted and were forced to go to a channel that want to explore their options more thoroughly) was not their first choice. Worse still, if they were versus those who engage with fewer channels who offering too a consumer segment that was not used to using the may be in a situation of seeking support. many channels web to do research, they may have switched off from The fact that there will be different values purchasing at this particular retailer. attached to those who engage with more channels is discourages Instead of appreciating the effort that the not surprising. What is missing from the picture as customers from company has put into making the information presented by many advisers is which group is actually available online, they see it as being ‘thrown more valuable: those purchasing who are exploring using any of them around’. They may go to another retailer rather the channels voluntarily or those who are pushed than go onto the website. Not a great outcome. from channel to channel along their journey. If we generalise this to all the contacts across COMPANY’S VIEW channels customers make, be it online, instore, The company here may have thought: ‘Right, we call centre or mobile, we have a large amount have invested in our online channel so we’d better of unnecessary channel switching that frustrates use it. Let’s shift as many of our customers onto that customers and adds costs to the company in platform because it’s cheaper and more efficient.’ revenue and lost opportunity. The argument that, Hence, they may have seen this as a positive and as a result of a greater number of contacts, the sales proactive action by their employee. They may have and loyalty increase doesn’t stack up. From our thought: ‘Customers may not be too happy but evidence, we see that if consumers are unnecessarily surely they are on their way to finding out what they forced to switch channels during their journey, they need from our new online system.’ dislike that profoundly. To exaggerate for the sake of illustration. An article from Marketing Week – published online The company may have actually wasted money on 19 September 2011 by Rosie Baker – suggested developing the system and lost an eager customer that companies such as Morrisons, Dixons, – a negative double whammy – while believing they Homebase, Phones4U, Sports Direct and DFS are are building an efficient multichannel platform. missing out on the opportunity of multichannel Without the knowledge about which of the marketing. The reality may be more nuanced as they channel jumps are positive and which are negative, may potentially be losing money in the process of the company may just be making its vital decisions developing their multichannel systems. with its eyes closed. To reap the rewards of the new interconnectedness, firms need to understand not only how many CONSULTANCy’S VIEW different channels their customers visit. They should The established view in the world of multichannel know how many channels they visit because they consultancy is that the more channels customers choose to and how many because they have to. engage in the more valuable they are. Countless With this knowledge companies can maximise the Venn diagrams with two or three overlapping circles right contacts and minimise the wrong ones for the and a bull’s eye in the middle would have us believe benefit of both their shareholders and consumers. n that this is straightforward, plain and simple. However, we’ve yet to see an approach that Dr Kamil Michlewski is senior consultant at distinguishes between the numbers of channels The Value Engineers people visit voluntarily versus how many they visit [email protected]
Market Leader Quarter 1, 2012 57
57 speakers corner.indd 57 26/11/2011 17:40:20 the last word rory sutherland
It’s time to stop looking on the bright side
You know those women who occasionally The sunny, optimistic temperament of hang around outside the Old Bailey waiting advertising people is their worst enemy. What we for the Group 4 van to arrive with some child need is the ability to paint a picture of gloom. Of molester on board? As the van makes the turn the once-flourishing brands which have sunk slowly into the underground car-park, these modern-day into obscurity. Or of businesses which became so tricoteuses run towards it as a crowd, banging enamoured of their particular model they failed to on its sides and shouting “f***ing scum, at the notice that their customers were moving elsewhere. defendant inside. Earlier in this issue I have written sceptically If you know any of those people, it would be about the idea of ‘accountability’ (see p40) as the really handy if you could pass me their contact highest goal of marketing activity. Here is another details. You see it might be good to hire them for a problem with accountability: it focuses you on the forthcoming awards event I am planning. returns gained from marketing expenditure. What We need more The idea came to me when standing outside a you also need to include in the equation is the dire case histories of building in New York sharing a cheeky cigarette effects that might have resulted from doing nothing. with a couple of Dutch software designers. And that’s when it struck me. What we need is brand failures, says What was I doing there? Well, whenever I can, rather fewer case studies of marketing successes Rory Sutherland I like to attend events on software design, web – and a few more studies of non-marketing design and ‘user experience’ in general. This is failure. Stories of businesses that have failed to partly out of fascination but also from a desire promote themselves adequately, or failed to adapt for self-preservation. You see, I think that, in to changing consumer behaviour – and have ten years’ time, any flourishing advertising and suffered dire consequences as a result. We need communications agency will spend perhaps half its to spend far less time talking about Apple, Nike, time on this kind of thing. Harley-Davidson and Dove and far more time One of the Dutchmen was, as such people discussing the brands and businesses that failed. As often are, an enthusiastic adopter of behavioural well as promoting the IPA Advertising Effectiveness economics. (You cannot really help being interested Awards, we need a biennial event called the ‘Non- in behavioural thinking if you are an interface advertising Ineffectiveness Awards’. designer or usability specialist, since in these As you arrive for these awards in your chauffeur- fields you very quickly realise how relatively small driven Ford Edsel, you will be met in the foyer changes in the design of an interface have immense by a particularly depressing exhibition of brand effects on the behaviours of the people using them.) failures. Still holding your complimentary glass of ‘I feel really sorry for you people,’ he remarked. Sunny Delight, you will then make your way to ‘You see you spend all your time trying to sell the ballroom, where the evening will open with a things to clients on the basis of optimism and hope. celebration of apathy and confusion – celebrating It’s dreadfully difficult.’ those brands that have become slowly irrelevant The typical advertising pitch, he explained, was through a gradual decline in promotional support made on the basis that: ‘If you do X, then wonderful – or that have lost any clarity of meaning through things will happen.’ In computing, he explained, excessive tinkering. There will also be a special you would only ever adopt such a sales tactic in category of awards for missed opportunities and moments of desperation. No, ‘fear of loss is twice lack of innovation. as powerful a driver of behaviour than the hope of To counter any dangerous feelings of optimism improvement,’ he explained. So, in IT, wherever that an awards event may engender, no alcohol you possibly can, you make the sale on the basis of will be served. Dress for all will be orange overalls. the dire consequences that will result if you do not And a fleet of prison vans will collect the winners buy what is being offered. The fear of hell is a much from the venue (a former TrustHouse hotel on bigger force in selling Christianity than the promise the outskirts of Slough), complete with screaming of heaven. And IT has some wonderful, Bruegelish people banging on the outside shouting ‘scum’. n visions of hell to sell – your systems will collapse, your best customers will desert you, invoices will Rory Sutherland is vice-chairman of OgilvyOne go unissued, your website will crash. This is what London and Ogilvy Group UK. really prompts people to act. [email protected]
58 Market Leader Quarter 1, 2012
58 last word.indd 1 11/30/2011 12:19:18 Could you be the next High Flyer?
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HM0398 295x225 GET ON BOARD AD.indd 2 21/11/2011 16:16 Müller United versus The Rest.
Look at any one of our new packs integrated presence in chiller cabinets Several leading supermarkets have for Müller and you might not select where few brands stand out. even given Müller an exclusive line-up it for international honours. Now instead of a bewildering on their shelves. But look at them together and array of talented individual packs you Shoppers think it’s all over. you will see a team. see Müller’s squad smartly kitted out It is now. This was our brief: to create an in their blue and red strip.