In the old days, marketers sought to identify a target consumer and would then spend millions to catch her at the right time, in the right place, with the right message. Success was like winning the lottery, you were never quite sure what you had until the results were in.
In the digital age, we identify a target market; bombard them with banner ads, online videos and tweets. If we get a good response, we bombard them some more. Has anything really changed?
The truth is that while media has been transformed, marketing practice has not kept pace. We throw budgets into different buckets, but the decision-making process remains much the same. You develop a theory of the case, test it in-market and then, if it goes well, do it some more. A true digital revolution in marketing has yet to take hold, but it has begun.
Who Is The Consumer, Really?
An often-repeated lament has been that we waste half of our advertising budget, but just don’t know which half. It continues to resonate because increasing marketing efficiency is an obvious and compelling way to improve profitability.
Conceptually, the simplest way to increase efficiency is to prevent wastage. By targeting the right consumer at the right time, in the right place, with the right message, we can get the most out of a marketing budget. In other words, fish where the fish are. Put your time, effort and money where they can do the most good.
In practice, however, targeting becomes more problematic. If 60% of your consumers are women, should you ignore men? If 35% of your consumers are 18-24, does that really mean that you should spend all your money on college students? A recent Catalina study found that over half of brand sales come from outside the demographic target.
We need to stop thinking about target consumers and start thinking in terms of consumer networks. Just because the daughter buys it, doesn’t mean the mother (or father or brother) won’t and beyond consumers themselves, there are advocates and detractors that can affect a purchase as well. They all matter.
Consumer Journey Or Drunkard’s Walk?
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1. Observe how customers are using your product. Medical device company Medtronic has salespeople and market researchers regularly observe spine surgeons who use their products and competitive products to learn how to improve their own.
2. Ask customers about their problems with your products. Upon recognizing that consumers were frustrated that potato chips break and are difficult to save after opening the bag, Procter & Gamble designed Pringles to be uniform in size and encased in a protective tennis-ball-type can.
3. Ask customers about their dream products. Ask your customers what they want your product to do—even if the ideal sounds impossible. One 70-year-old camera user told Minolta he would like the camera to make his subjects look better and not show their wrinkles and aging. In response, Minolta produced a camera with two lenses—one for rendering softer images of older subjects.
4. Use a customer advisory board to comment on your company’s ideas. Levi Strauss uses youth panels to discuss lifestyles, habits, values, and brand engagements, while Cisco runs customer forums to improve its offerings.
5. Use websites for new ideas. Companies can use specialized search engines such as Technorati and Daypop to find blogs and postings relevant to their businesses. P&G’s site has “We’re Listening” and “Share Your Thoughts” sections and “Advisory Feedback” sessions to gain advice and feedback from customers.
6. Form a brand community of enthusiasts who discuss your product. Sony engages in collaborative dialogues with consumers to co-develop Sony’s PlayStation 2.
7. Encourage or challenge your customers to change or improve your product. Salesforce.com wants its users to develop and share new software applications using simple programming tools. LSI Logic Corporation, designer of semiconductors and software, provides customers with do-it-yourself toolkits to allow them to design their own specialized chips; and car maker BMW posted a toolkit on its website to let customers develop ideas using telematics and in-car online services.
Contributed to Branding Strategy Insider by: Philip and Milton Kotler, excerpted from their book, Market Your Way To Growth with permission from Wiley Publishing.
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The Ritz – Carlton brand was built on world-class customer service. Its motto, ‘We are Ladies and Gentlemen Serving Ladies and Gentlemen’ is brought to life each day and has powered one of the world’s top brands for meeting and exceeding customer expectations. The following statistics provide more inspiration to know, serve and cherish the customers that help build your brand.
1. It costs 6 times more to attract a new customer than it does to keep an old one – Understanding Customers by Ruby Newell-Legner
2. 89% of Consumers purchase from a competitor following a poor customer experience – Harris Interactive, 2011 Customer Experience Improvement study
3. Only about 4% of dissatisfied customers complain. 96% just go away. Harris Interactive, 2011 Customer Experience Improvement study
4. 50% of Consumers give a brand one week to respond to a service concern before they stop doing business with them. – Harris
5. Only 37% of Brand received “excellent” or “Good” customer experience scores this year – Harris
6. Only 1% of consumers say expectations for good customer experience are always met – Harris
7. US Businesses lose an estimated $83 Billion in sales annually due to poor customer experiences – Parature Customer Service Blog
8. Americans typically tell 24 people about negative customer service, they only tell about 15 people about positive experiences – 2012 American Express Global Customer Service Barometer
9. A 5% increase in customer retention increases profits up to 125% – Bain & Company
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Brands that tap into people’s deepest desires make strong lasting connections with those people. Deep desires most often come from a feeling of lack but can also result from seeking a place of safety, peace or comfort. The following are deep desires into which brands can tap:
Any brand that can make people feel as though they have a little bit more of one or more of these if they interact with the brand will connect with those people on a deeply emotional level.
Can you think of examples associated with each of these? Here are some hints. Some beer brands tap into the need to belong. Many clothing brands tap into the need to be sexy or attractive. One automobile brand in particular taps in to the need to be in control. Many brands across many categories tap into the need for status. Automobile and watch brands come to mind immediately. We just helped a golf brand link to the need to be accomplished. A legendary tobacco brand focused on the need for independence. One well-known soft drink brand taps into the need to be unique or different.
What examples can you think of?
Sponsored By: The Emotional Connection Workshop
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The opposite of trading up is not trading down. In fact, there is no opposite of trading up; shopping behavior is more nuanced than that. When shopping hit the skids after the financial crisis, there was a lot of talk about a new normal of frugality, as if the only thing possible after a decade-plus of trading up was a generation to come of nothing but trading down. It’s clear now that those prognostications were flawed, not to mention overly pessimistic.
This is not to say that consumers aren’t buying less. Indeed, they are. The drop in discretionary consumer spending from the pre-recession peak to the recessionary trough was 6.9 percent, more than double the next largest post-WW2 decline during the second dip of the early 1980s double-dip recession. Since hitting bottom, spending has been growing, but on a trend line below the pre-recession trajectory. This so-called output gap is the shrinkage in the size of the economy that is playing out most problematically as high, enduring unemployment. Clearly, consumers have cut back.
The proper issue is not whether, but in what way consumers are cutting back. One way in particular is under-appreciated. More than trading down, consumers are trading off. Squeezed by tighter finances, many consumers – most, in fact – are not walking away from the things that matter most. Instead, they are prioritizing those things then trading off everything else to afford them. Brands suffering from trading down have simply done a poor job of making themselves a priority worth trading off to get.
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Branding Strategy Insider helps marketing oriented leaders and professionals build strong brands. We focus on sharing thought provoking expertise that promotes an elevated conversation on the discipline of branding and fosters community among marketers. BSI is a service of The Blake Project, a leading brand consultancy based in the United States.
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