The Naive Marketer and Consumer

Why is anybody and everybody a marketing commentator?

A frustrating but unavoidable experience that every marketer has to endure is the continuous stream of unsolicited comments from every Tom, Dick and Harry. It is particularly irksome when these comments come from colleagues, people who do not have any experience and or qualification in marketing. 

I haven’t heard or seen such people comment on what engine technology should be used in a car or what IC or transistor value should be used in an electronics motherboard. However, these same people feel free, comfortable and qualified to comment on every small aspect of marketing. What makes them do this? What expertises do these people believe they have to make comments?

I have attempted to rationalize, identify some possible reasons those encourage this behavior. They are (not in any particular order):

1) Everybody is a consumer: Marketing is meant for consumers. Since everybody is a consumer or a potential consumer, every person believes that he or she has the freedom to comment on what is meant for him. This particular label of “consumer” is the only license anybody needs to make comments without fear.

2) We are creative beings: A universal human truth. Though we all believe we are creative, not all of us end up doing jobs considered to be creative. People try to make it up by commenting on marketing, considered to be a creative work, at every opportunity. It’s their way of expressing their creativity, an exercise for the right brain, though at the cost of the marketer.

3) Marketing is an art; not yet a science: Science is objective; marketing is subjective. There is a universal truth about science that still eludes marketing. In every country, every language and every context, 1+1 = 2. The same is yet not true about marketing. Unlike science, there are no universal “right and wrong” formulas in marketing. What works in a country does not necessarily work in another. Even within the same country or smallest unit of market, it differs if the context is different.

This subjectivity about marketing is an open invitation for anyone to share his opinion, knowing well that his comment cannot be subjected to a right or wrong formula. It doesn’t help that there are adequate case studies and examples to endlessly argue points and counter points and still not reach an agreement.

4) Marketing is for the heart; not the head: Most marketing activities are designed to appeal to the heart. Consumers are expected to feel; not think. It’s therefore, easy for anyone to comment on matters that don’t require the head to be used.

5) Seen and spoken: One can talk; comment only about what he sees the most often. Other functions in the organization do not have the same visibility that marketing does. R & D is normally conducted behind closed doors, production plant is usually in a different premise, and account and finance is way too boring for conversations. Marketing is the only function that touches every soul, both within and outside an organization. It is therefore, quite natural that more people talk about it.

These are my opinions. It would be interesting to know your point of view, as a marketer and consumer, on this subject.

Does price really affect brand image?

Most of us have been led to believe that high pricing enhances brand image and conversely low pricing affects brand image. This is the reason why marketers fear to be the lowest priced brand in a category or do frequent price-led communication.  Is this fear well founded?

What a brand sells isn’t price; but value. Consumers evaluate a brand by the value it offers and not by the price at which it sells. The purpose of any brand, therefore, is to create unique value that consumers would be willing to pay for. A brand that can offer this value at the least possible price would be the most preferred brand.

Consumers expect more value from a high priced brand and less from a low priced brand. This is how price and value are co-related. A brand that helps consumers rationalize, articulate and experience this value would be a “value for money” brand. Price by itself is not the value. A brand that does not offer any value would be perceived to be expensive, even if it isn’t. Sales of such brands would not increase even when there is a price drop.

The role of marketing communication is to make consumers want and prefer the value offered by a brand. Since price is relative to value, it is important to promote price along with value. Brand image would suffer only when a brand fails to communicate the value it offers for its price.

Brand image should have the least consideration in pricing decisions. Price should be a function of a brand’s target audience, context (business objective, brand life stage, product life stage, consumer life stage, and competitive environment), and cost and desired margin.

The notion that high priced, expensive brands have a better brand image is incorrect. Brands like Pepsi, Coca Cola, McDonalds and many others aren’t expensive; yet they have a good image. Apple iPhone’s image hasn’t suffered despite the many price reductions it has announced. Wal-Mart has built its business and brand image on the brand promise of “always low prices”.

My earlier post “What is value for money?” might also be of interest to you.

The Naive Marketer and Consumer: Top 5 posts of 2009

Here is a list of the most read and commented posts of 2009.  

1. 8 Strategies to improve customer service

2. 10 Suggestions for weak brands

3. Brand Metrics: Are you measuring ITS?

4.  Marketing priority for social media success

5. Traditional media are possibly dying; not traditional marketing 

I wish to thank you for your support and encouragement. Do look forward to your continued interest.

Wish your family and you a very happy and prosperous 2010.

New year resolution for The Naive Marketer and Consumer: To post more consistently.

8 Strategies to improve customer service

Every brand believes that its customer service is excellent. In reality, however, customer service across brands is mediocre. The experience is generally inconvenient, unpleasant, unsatisfactory, sometimes humiliating, and definitely expensive. 

 

Good customer service is an integral part of business. It affects important brand and business objectives like customer satisfaction, loyalty, retention, repeat purchase, up selling and usage revenue. In light of these business implications, there is continuous pressure on brands to improve customers’ perceptions of their service.

 

Improving customer service should not be that difficult. It can happen if organizations reconsider certain business strategies. In my opinion, the following eight strategies are very important to improve customer service:

1) Incorporate in business planning: The quantum and nature of service requirements are dependent on the activities of many other functions. Organizations should incorporate customers’ service requirements into all aspects of business activities like product design, procurement, production, handling, pricing, communication, people, and culture. This would help organizations to prepare better for service eventualities and at the same time make customer service the responsibility of the entire organization.  

2) Change attitude to service: Despite being a critical business activity, customer service function does not command the same respect that many other functions do. Many perceive it to be dirty, menial, and unpleasant. Service center appearances and resources are always far inferior, especially to that sales and marketing. If an organization treats the service function in this manner, customers are likely to get the same treatment from the service function.

Organization’s attitude to service is a reflection of its attitude to customers. Management has to go far beyond providing mere lip service if the rest of the organization has to respect customer service and customers.

3) Integrate with marketing: Customers are an important marketing resource. They are the most credible brand ambassadors, their word of mouth recommendation is far more effective than all other marketing activities put together. Given its importance to marketing, organizations should make marketing solely responsible for customer care and if necessary create a separate customer marketing function to protect, nurture, and leverage its core assets (customers) far more productively. Integrating it with core marketing will also remove the stigma associated with service.

4) Shed the profit center approach: Many organizations try to make a profit through customer service. In a profit center approach, revenue-generating activities like sales of maintenance contracts, spares, and expensive call charges become more important than the aforementioned business objectives. Selling at low margins is normally the reason for the profit center approach. Attempting to increase profit through service would anyway not work as customers expect service charges also to be low if the product purchase price was low. Expensive service charges would also force customers to choose cheaper third party service providers.

 

Brand and business objectives should be the only purpose of the customer service function. The collective value of these business measures, in near term and long term, would always be higher than the profits made from normal service activities. A profit center or cost center approach, disregarding business objectives, would be detrimental to the brand.

5) Adopt retention pricing: Product pricing should include the cost of acquisition and the cost of retention including the service cost. Discounting the service and retention cost to make the sale price attractive would only force the brand to recover the lost margin through subsequent transactions.

It is wrong to believe that customers do not deserve good service just because the sale price was low. Every customer, irrespective of the price that he pays, expects good service. The product price should therefore, have a sufficient margin to meet those expectations.

 

6) Manage expectations: Customers have explicit and implicit service expectations. Explicit expectations are formed basis the claims and promises made by the brand at the time of purchase. The brand has complete control over explicit expectations. Implicit expectations formed basis the customers’ perception of brand image, stature, reputation and the price premium they pay for a brand are far more difficult to gauge and manage.

Most often organizations measure only the explicit commitments. Failure to identify and measure implicit expectations is a big reason for the gap between its understanding of the quality of service rendered and customers’ perception of the service received. Customers’ perception of service will improve only when both these expectations met.

7) Recognize the role reversal: Brands make an emotional pitch to sell but provide service by the rulebook. Customers though, buy rationally but react emotionally to product and service failures. Recognizing this role reversal will help brands to appreciate the customer’s pain better and adopt an appropriate service response. Brands should remember that they are not dealing with failed products but with people’s emotions caused by failed products. An emotional approach to service, similar to the sales pitch, might work better than a rational response.

8) Focus on customers’ convenience; not yours: Most service facilities and procedures are not customer friendly. Service centers are far and few, the locations are remote, phone lines are always busy, the service center timings always conflict with customers’ work hours, and the waiting time at the service center is invariably long. Further, asking such aggrieved customers to fill lengthy forms, answer questions (often interrogatory and structured to make the customer feel that he or she is responsible for the problem), wait inordinately, listen to policies and rules is inconsiderate and humiliating.

 

These inconveniences dissuade customers from choosing company service. Removing such irritants, besides improving customer experience, would also encourage more customers to choose company service over third party service. Increase in service revenue because of more customers choosing company service should compensate for the increase in cost, if any, of providing service at customers’ convenience.

Brand Metrics: Are you measuring ITS?

Intention to Purchase (ITP), or the equivalent of it, is a well-established brand metric, across many categories, to measure the consumers' intent to purchase a particular brand. Researchers and marketers have established and demonstrated a strong co-relation between ITP and market share. As a result, ITP is now an important measure of marketing effectiveness and a lead indicator of likely market share and its movement.

 

However, actual market share is never equal to the ITP. The simple reason for the same is that ITP represents the intentions of only one of the parties involved in the transaction- the consumer. It assumes that the consumer will get the brand that he wants. A brand sale can materialize only when the seller is also willing to sell the same brand that the consumer wants.

 

Purchase cannot happen without a seller (retailer). Anybody with exposure to channel sales would fully understand that the motives of the seller (a multi brand retailer) to promote a brand are very different from that of the consumer’s motives to want that brand. These motives drive a seller to convince and convert potential customers to his (seller’s) choice of brands. This is no reason to believe that this would happen in the exclusive brand stores.

 

The seller’s ability to convert varies depending on the category, his motives, and the consumer’s insistence. In consumer durables, a category that I am very familiar with, brand conversion by retailers is as high as 60%. I would suppose that this is true for FMCG brands also especially when modern trade retailers are interested in promoting own brands over established name brands.

 

In such a scenario, ITP alone cannot be the measure of potential market share. Retailers’ “intention to sell” (ITS) should match ITP to realize the full potential of a brand.

 

Potential market share is a function of ITP and ITS. I am not aware of any retailer or brand study that measures “intention to sell” or of any surrogate measure for ITS. It is about time marketers and research professionals start measuring ITS along with ITP for a comprehensive understanding of a brand’s market share potential.

 

Further, in an organization where marketing and sales are two separate functions, ITS should also be a measure of sales effectiveness. I strongly believe that marketing (excluding sales) should be responsible for garnering consumer mind share and sales should be responsible for garnering retailer mind share. ITS is a measure of retailer mind share.

 

You are free to use the concept of ITS, but do remember that you read it here first. J

Brand conversations: How much do what others say matter to you?

Comments Board
Originally uploaded by caitlinread

Everyday I come across a multitude of comments, conversations, and opinions on social media platforms, about brands. Some comments are positive, some negative, most are subjective, a few are objective, sometimes opinionated, motivated and cacophonic. Should I take them seriously?

Yes, I do follow many conversations, but I do not take them all at face value. I simply retain the new information and perspectives in them, but discard the opinions.

My perspectives and dispositions, as a consumer, are a function of my own experiences and those of people whom I know and trust, definitely not those of acquaintances, strangers and others who belong to my friends’ networks and more.

Experiences of people whom I have never met, or not likely to meet ever, are of little or no consequence to me, unless they resonate with my own experiences. If the airline that I frequent is always on time, whenever I travel, what is the need for me to change my opinion basis another person's bad experience?

My self-esteem does not allow me to follow the herd blindly. For me, brand familiarity and positive brand experience are more credible than the comments of strangers and acquaintances on social media platforms. When it comes to the unfamiliar, I seek out friends for good old WOM advice.

How about you? How often have you avoided a brand, refrained from watching a movie, visiting a café, or reading a book basis the reviews and comments of strangers? Not very often, I suppose. I am sure you would still want to watch that film or visit that café to judge for yourself.

Research doesn't seem to agree with me. You might like to read "Online reviews key to purchase decision" http://bit.ly/hmFUA that appeared on Brand Republic's website today (27th Oct'09 ). 

Social media marketing: So, what’s new about it?

I believe that social media marketing is just old wine in a new bottle. Though there are a lot of hype and noise about social media marketing, there is very little about it to suggest that basic marketing has changed dramatically.

 

Consider some of the basics of SMM:

a)   Knowing your audience

b)  Knowing where they are?

c)   Listening

d)  Providing relevant, valuable content

e)   Facilitating and participating

f)    Identifying and managing influencers

g)   Empowering

h)   Building relationships

i)     Transparency and honesty

j)     Measurement

 

Can you imagine any form of marketing succeeding without any of the above? I can’t.  Maybe some are more relevant and important now than before.

 

Only the marketing jargon and tools are changing; not the marketing fundamentals.

10 suggestions for weak brands

This post is a sequel to my earlier post “Marketing challenges faced by weak brands”. In this post, I share my thoughts and suggestions for weak brands:

 

1) Accept reality: A realistic assessment of the brand’s situation is critical for an appropriate marketing strategy to address the challenges and problems. Management should have the maturity and guts to accept reality and act on it. Ignoring or falsifying reality will not make the problems go away.

 

While it sounds like the most obvious thing to do, it doesn’t happen easily as acceptance of reality is also an admission of failure. It is even more difficult when people involved with the brand carry an irrational belief that “my baby is the best” or suffer from the “I am OK; you are not OK” mentality.

 

2) Re-align with reality: The next step is to re-align strategies, resources and expectations in line with the accepted reality. Marketing mix and market place behavior should be altered to be in consonance with the brand’s position in the market.

 

Setting ambitious goals is good, but it is also important to be realistic about expectations. Turnaround will be slow and return on investments will be low. Unrealistic expectations, which are very often a reason for the brand to become weak, will result in more strain on the brand, resources and people.

 

3) Avoid deterioration: Re-aligning with reality is not to suggest that compromises should be made. Measures initiated to shore up the bottom line should not adversely impact the product quality, after sales service, customer experience, advertising and price. Deterioration of these would only give the consumers and trade even more reasons to reject the brand.

 

4) Don’t wait for the big idea: Weak brands should not waste time and resources in waiting around for that one big idea. It will never come. Instead, resources should be spent in ensuring that the right things are done better, time and again. This will eventually pay-off when the stronger brands commit unforced errors. Gains will come only in random small doses.

 

5) Don’t give up too soon: Strategies and programs should not be discarded prematurely just because immediate improvements are not visible. Consumers take a much longer time to respond to stimuli from weak brands. They need time to notice, process, re-evaluate, seek reassurance and then act on the stimuli. This process, depending on the strength of the stimuli and the purchase frequency, could sometimes take years. The cycle is much shorter for the stronger brands as consumers do not re-evaluate and seek reassurance every time.

 

In the perpetual search for the success formula weak brands should not jump too soon from one program to another. Frequent changes would confound the consumers in the evaluation process.

 

Implementing short-term measures to hasten the recovery process will only be counter productive.

 

6) Focus on consumers; not on competition: Weak brands should not allow themselves to be distracted by the activities and success of the stronger brands. Consumers should be the sole purpose of the brand. Marketing programs should be initiated in response to a consumer need and not in response to a competitive activity.

 

7) Focus on strengths; not on weaknesses: This will help the brand to identify and prioritize the right products, unique propositions, strong markets and profitable customers. Limited resources are better invested in defending and growing strengths. By focusing on strengths the brand could avoid drawing attention to its weaknesses.

 

8) Overcome trust and credibility barriers: The biggest challenge a weak brand could have is to build trust, credibility and emotional connect. Better products, unique propositions, claims, etc might not work if the consumers are not willing to believe the brand. Credibility will come when the brand claims are tangible, demonstrable and unique, supported by a good reason to believe.

 

Trust and emotional barriers are far more difficult to gain. Positive WOM of existing customers will definitely bridge these barriers far more effectively and efficiently than advertising claims. Marketing programs should mandatorily include the existing customers.

 

9) Leverage Advantages: Weaker brands do have a few advantages over the stronger brands. Programs should be in place to identify, assesses and exploit all these advantages.

 

· Strong brands take consumers for granted; weaker brands can’t afford to.

· Strong brands could be pre-occupied with heavy operations; weaker brands might not be.

· They have a lot to loose; weaker brands have nothing to lose.

· They have heavy competition; weaker brands don’t have competition.

· By default strong brands become everything for everybody; weak brands are not everything to everybody.

 

10) Don’t ignore the future: Non-stop fight for survival should not be an excuse to ignore future needs. Ignoring the future will only widen the gap further. For many weak brands, the solution could actually be in the future and not in the present. Relative to the bigger, stronger brands it would be easier for the weaker brands to adapt to changes faster.  

 

Weak brands definitely need better marketing. The suggestions above are purely based on my observations of and experiences with weak brands and the people involved with them. They are by no means exhaustive or exclusive.

 

Please do share your experiences, thoughts and suggestions. 

Marketing challenges faced by weak brands

Marketing in general is challenging, creative and glamorous but it is also laborious and harrowing, especially when the brand is weak and not in the purchase consideration set. The challenges faced by such brands are unpleasant and never ending.

 

Some of the challenges and problems that I have experienced are:

 

1) Standing up to the world: Weak brands have to stand up to a world where consumers are indifferent, where the management is never satisfied, where the trade is opportunistic and where the employee motivation is non-existent. These brands hardly ever get the support that they require from the stakeholders. It isn’t lonely only at the top. It’s even worse at the bottom.

 

2) Efforts disproportionate to results:  Such brands have to run faster, do more and better things than all the other brands in the category just to maintain share and ensure that they don’t yield further ground. Staying on the treadmill is the only choice for these brands even though the mileage gained, if any, is much lower than what other brands gain for half that effort. Results are never commensurate with the resources and efforts spent. At the same time, getting off the treadmill is not an option.

 

When results don’t justify efforts and resources, management cuts back on marketing investments further aggravating marketing difficulties.

 

3) Stronger reason: A brand outside the consideration set has to continuously provide a strong, differentiated and relevant rational “why buy me?" reason for it to be considered. Emotional appeal does not work for such brands. The reason has to be credible, tangible and demonstrable. Preferred brands don’t have such compulsions as the brand by itself is a reason for preference.

 

4) Credibility: A good argument (excepting price) provided by a weak brand normally goes unheeded as consumers are mostly reluctant to listen to and believe such arguments. These claims are often dismissed as being “too good to be true" to come from such a brand. Consumers do not believe that weak brands have the credibility and status to make challenging claims. Even if the brand does manage to gain some attention for such claims, it only succeeds in providing a new evaluation parameter that works more in favor of the category leaders as they are believed to have far higher credibility to make such claims.  Irrespective of reality, consumers take it for granted that market leaders offer everything and more than what other brands in the category offer.

 

Since consumers do not have an emotional connect with weak brands, these brands, even when they have a compelling reason to be considered, are still rejected on grounds of “not for me”.

 

5) More for less: Resources are finite but the pressure to deliver is infinite. These marketers are forced to do more and many things with fewer resources. The urge to experiment, to find that elusive magical success formula, is a constant distraction. Eventually, these brands resort to short-term unhealthy measures with the full knowledge that the long-term interest is being compromised.

 

6) Motivation: Considering that such brands don’t gain mileage despite the non-stop running they are perpetually low on faith and gasoline. Nothing ever works despite the hard work and sustained investments. With every business/marketing cycle the will and resources to continue running weakens.

  

These challenges are not unique only to weak brands. The market leaders would also have faced similar problems in the life cycle of the brand. These challenges have to be overcome if the brands are to survive.

 

In my next post "10 Suggestions for weak brands", I share my thoughts on what weak brands could do to mitigate and overcome these challenges.

Marketing challenges faced by weak brands

Marketing in general is challenging, creative and glamorous but it is also laborious and harrowing, especially when the brand is weak and not in the purchase consideration set. The challenges faced by such brands are unpleasant and never ending.

 

Some of the challenges and problems that I have experienced are:

 

1) Standing up to the world: Weak brands have to stand up to a world where consumers are indifferent, where the management is never satisfied, where the trade is opportunistic and where the employee motivation is non-existent. These brands hardly ever get the support that they require from the stakeholders. It isn’t lonely only at the top. It’s even worse at the bottom.

 

2) Efforts disproportionate to results:  Such brands have to run faster, do more and better things than all the other brands in the category just to maintain share and ensure that they don’t yield further ground. Staying on the treadmill is the only choice for these brands even though the mileage gained, if any, is much lower than what other brands gain for half that effort. Results are never commensurate with the resources and efforts spent. At the same time, getting off the treadmill is not an option.

 

When results don’t justify efforts and resources, management cuts back on marketing investments further aggravating marketing difficulties.

 

3) Stronger reason: A brand outside the consideration set has to continuously provide a strong, differentiated and relevant rational “why buy me?" reason for it to be considered. Emotional appeal does not work for such brands. The reason has to be credible, tangible and demonstrable. Preferred brands don’t have such compulsions as the brand by itself is a reason for preference.

 

4) Credibility: A good argument (excepting price) provided by a weak brand normally goes unheeded as consumers are mostly reluctant to listen to and believe such arguments. These claims are often dismissed as being “too good to be true" to come from such a brand. Consumers do not believe that weak brands have the credibility and status to make challenging claims. Even if the brand does manage to gain some attention for such claims, it only succeeds in providing a new evaluation parameter that works more in favor of the category leaders as they are believed to have far higher credibility to make such claims.  Irrespective of reality, consumers take it for granted that market leaders offer everything and more than what other brands in the category offer.

 

Since consumers do not have an emotional connect with weak brands, these brands, even when they have a compelling reason to be considered, are still rejected on grounds of “not for me”.

 

5) More for less: Resources are finite but the pressure to deliver is infinite. These marketers are forced to do more and many things with fewer resources. The urge to experiment, to find that elusive magical success formula, is a constant distraction. Eventually, these brands resort to short-term unhealthy measures with the full knowledge that the long-term interest is being compromised.

 

6) Motivation: Considering that such brands don’t gain mileage despite the non-stop running they are perpetually low on faith and gasoline. Nothing ever works despite the hard work and sustained investments. With every business/marketing cycle the will and resources to continue running weakens.

These challenges are not unique only to weak brands. The market leaders would also have faced similar problems in the life cycle of the brand. These challenges have to be overcome if the brands are to survive.

 

In my next post "10 Suggestions for weak brands", I share my thoughts on what weak brands could do to mitigate and overcome these challenges.

Marketing priority for social media success

The primary difference between traditional media and new media is that the former is channels for brand communications and the latter for consumer conversations. Brands are struggling to come to terms with this new reality that consumers now have as much freedom, control and influence as brands do, to communicate and be heard and that the consumers' voice and content are far more credible and potent than a brand's. Brand led push marketing is yielding ground to consumer generated brand content on social media. Some brands have learned this the hard way.

 

In response, brands are busy formulating social media strategy of placing banners, posting videos, creating social media IDs, and blogs, forming groups and communities on social media platforms. The strategy even extends to seeding content, bloggers, forum activists and hiring of specialists to manage on-line reputation.

 

Will this guarantee social media success?

 

Consumers are unlikely to start a brand conversation or create a brand content on their own. They would do so only in response to a brand stimulus. While the conversation and content are not in the control of the brand, the stimulus is. By providing the right stimulus brands can influence and lead social media conversations.

 

We do not live in two mutually exclusive worlds called offline and on-line. The reality of one extends to the reality of the other. This is true for brands also. The reality of tangible offline brand experiences like purchase, consumption, customer care interactions, etc will form the stimuli for brand conversations.

 

A social media strategy, therefore, is just not about communications and media, it is also about creating and delivering experiences across brand touch points (not different from the strategy brands needed before social media). If these brand experiences are consistent, remarkable and unique consumers will voluntarily replay and amplify these experiences.  The volume, sentiment and tone of the conversations will depend on the relevance and nature (positive and negative) of these brand experiences.

 

Building an active social media presence without an equally committed focus on improving tangible brand experiences could be detrimental to the brand. Brands should bear in mind that the best of communications and media strategy for social media will not be enough to cover-up for or overcome shortcomings of real brand experiences. Nor is it possible to manipulate and manage social media like traditional media and PR can be.

 

Marketing’s only priority is to provide the right stimuli, consumers will take care of the rest.