Branding Strategy Insider

All Consumers Are Not Created Equal

Academics rarely get out much. So it is perhaps no surprise that one of the major conferences for marketing academics, the European Academy for Consumer Research Conference proved so popular.

Two Hundred marketing professors from around the world convened in Dublin to spend three days presenting and discussing their research and then drinking heavily and falling over in the evenings.

One of the prime locations for the latter activity was Temple Bar. Dublin's pre-eminent, city centre location for nightlife is as famous an Irish venue as Trinity College or the Guinness Brewery.

I still tenderly cherish (but only vaguely recall) a long, boozy weekend I spent there a decade ago. And what a place it was: local Irish pubs filled with character and a mixed crowd of young Irish people on the brink of experiencing the economic windfalls attributed to the 'Irish Tiger'.

But the past ten years have not been kind to Temple Bar. Many of the authentic independent bars, forced out by sky-high rents, have been replaced by generic chain pubs. The clientele has changed too. Many of the more discerning Dublin drinkers now avoid the area and it is filled at the weekends with stag parties, foreign students and tour parties. A survey published by the Royal Institute of Chartered Surveyors actually uses Temple Bar as a case study in understanding how an area changes from "buzz to bland" and how a once-admired area becomes "inauthentic". The survey concludes that British cities can learn much from these mistakes.

Ironically, while many in Dublin place much of the blame for the demise of Temple Bar on the "marketing men" who have over-commercialised it, a true marketing vision for the area could have been its saving grace.

The Power of the Super Consumer

I was working last week with the marketing directors of a multinational biotechnology company. It manufactures a device that alleviates the symptoms of a commonly occurring affliction.

We were running five groups of patients to identify whether the device was working to their satisfaction and to learn more about their perceptions of the condition. But it was clear from the outset that something was very, very wrong with our focus groups.

Our trained moderators lost control of the groups within minutes. We expected, indeed hoped, that the groups would set the agenda, but this was ridiculous.

Each group was interrogating their moderator about the company, its planned products, business strategy and, in one instance, a recent corporate acquisition.

Even worse, despite the fact that our moderators were all company employees with years of product experience, many of the patients appeared to be much more knowledgeable than them. Within 20 minutes most groups were on the verge of breakdown.

It was only later that evening, as I reviewed our recruitment strategy for the groups, that I was able to confirm the problem. We had invited participants to attend from a list of patients supplied to us by a leading charity and inevitably this list and those who responded to our mailing were skewed away from typical patients and toward lead users. Lead users are 'super consumers'. They occur in every market, usually arriving at the head of the adoption curve. They have a much greater degree of product expertise and develop stronger brand relationships with the manufacturing organisation. They also have an incredible influence on the rest of the market, which tends to perceive them as experts and values their opinion higher than any other source of information.

The Power of Breaking Consumer Compromise

I believe “breaking consumer compromises” is one of the most powerful concepts in business today.   Introduced by George Stalk, Jr., David K. Pecaut, and Benjamin Burnett in a Harvard Business Review article in late 1996, it states that the best way to create breakaway business growth is to identify all the ways in which a business has made compromises with the consumer and then break them all so that that consumer gets exactly what he needs and wants.

CarMax and The Used Car Industry
A powerful example they use is CarMax and the used car industry.  An industry outsider (Circuit City) carefully analyzed the very large and profitable used car industry to identify all the consumer compromises – limited variety at any one place, no maintenance records, limited knowledge about the car’s history, high pressure sales tactics, perceived lack of honesty, etc.  By breaking all of these compromises, Circuit City gained a substantial market share very quickly with its CarMax business.

The Greeting Card Industry
Another example is the greeting card industry.  Most of the major greeting card companies raised their card prices much faster than the rate of inflation over several years until the average price of an individual card exceeded $2.  This invited deep discount card shops into the industry.  Factory Card Outlet (selling all cards for under $1) and others have gone from a zero share of market to over 20% of the market in less than 10 years. (These stores have introduced other compromises, however, which will limit their long-term share to about 25% of the market – unless they can keep on reinventing their successful business formula.)

Another greeting card industry example is share shift from card shops to the mass channels.  As more and more women entered the workhorse (the vast majority of working age women today), the convenient hours of grocery stores, chain drug stores, and Wal-Mart broke the compromise consumers faced in card shops (with their traditional 10 am to 5 pm hours, which they have extended more recently).

Building Emotional Connections with Research

The most compelling brands usually connect with consumers at an emotional level. Their benefits are often experiential, emotional or self-expressive.  Certain types of research can help marketers understand which benefits will have the greatest emotional impact.

Following are some of the types of research that one could use to identify these sources of emotional connection:

Laddering – this helps one understand the following links: product or service features and attributes → functional benefits → emotional benefits → underlying consumer attitudes and values →  self-image → self esteem (“I feel good about myself.”). The researcher leads the research participant from brand or product features and attributes to self-esteem through a series of “why” questions. The most powerful levels at which to communicate with the consumer are at the emotional benefit, attitudes/values and self-image levels.

Projective techniques – these help the marketer uncover brand associations that the average person cannot or will not articulate unless asked indirectly. Typical projective techniques include:

o    Sorting (into two piles: “This is the brand,” and “This isn’t the brand” or “This is the brand’s consumer” and “This isn’t the brand’s consumer”) – can be done with the products themselves, images, colors, flavors, textures, sounds, etc.
o    Analogies, including “If the brand were an animal, what kind of animal would it be and why?” or “If the brand were a car, what kind of car would it be and why?”

The Future of Consumer Behavior

A typical 21-year-old has played 5,000 hours of computer games, exchanged 25,000 emails, SMSs and chat messages, has used a cellphone some 10,000 times and spent 3,500 hours online. Surprised? Well that’s your future consumer.

When I conducted the ‘BRANDchild’ research for my book of same name – the world’s largest study on kids and their relationship with brands - one of the results which took me most by surprise was the number of channels kids are able to handle at the same time. Where adults are able to manage 1.7 media channels at the same time, say, watching TV and reading a magazine, kids can give attention to an astounding 5.4 channels at the same time. To illustrate this multi-tasking, they can watch TV, send SMS messages, surf the net, chat on MSN, listen to music and even devote 0.4 of their simultaneous communications repertoire to homework.

But even more surprisingly, when I recently repeated the study, three years on, not only had the number of channels kids handled at once increased by 0.2, but adult capacity for dealing with multiple channels had increased by close to 0.1. It seems, therefore, that the ever-evolving media environment is not only influencing the younger generation. It is affecting us all and we are all making adaptations to it. This leads to this question: what behavioral changes will we see in future generations vis-à-vis communications strategies and media use?

The answer is straightforward. A lot. But here are two key developments you can expect to deal with in handling future generations of consumer behavior:

Shopping Centers in the Brain

As reported in the January 4, 2007 Issue of Neuron, Brian Knutson and his team performed functional MRI on individuals while they were deciding whether or not to purchase various items. Their results support the theory that the decision to purchase involves the integration of emotional signals related to the anticipation of both obtaining the desired product and suffering the financial loss of paying for it.

Sponsored By: Brand Aid

Clarity: Marketing's New Task

Two score and a few years ago, my late grandfather ventured from his small farmhouse in Colfax, Louisiana to my family’s home just south of Boston. Talk about culture shock. During his visit he glanced out of a sliding glass door and was blown away by the number of squirrels milling about in our backyard. Dozens of scavenging squirrels in plain sight and within arms reach. His eyes were bugging out of his head.

I didn’t appreciate his amazement until I walked with him, a few years later, through the dense backwoods of his rustic home. You see, for as long as I can remember, my Paw Paw had farmed and hunted for most of his food.  And Louisiana squirrel made one heck of a tasty gumbo. But as evolution would have it, the squirrels eventually figured this out as well. And so, as we walked quietly through the woodland⎯ an area teeming with squirrels of every size and color⎯we never saw a single one. As Leda Cosmides and John Tooby explain in Better than Rational: Evolutionary Psychology and the Invisible Hand, “form follows function: the properties of an evolved mechanism reflect the structure of the task it evolved to solve.”

Believe it or not, this got me to thinking about the evolution of marketing (or lack thereof). What is the structure of today’s marketing task? Yesterday’s marketplace was somewhat like my childhood backyard: people were scavenging around, consuming everything in sight. They were easy to find and easy to reach. The marketer’s task was simply to make people “aware” of their new and improved offering. And they did just that, primarily through mega spending on mass media advertising. But the marketplace has evolved. And it appears that it has changed faster than most marketing executives have changed. Today’s marketplace is more like my Paw Paw’s woods.

The Good News for Despised Brands

Well, it's official: Ryanair is the world's most-disliked airline. Online travel guide TripAdvisor polled 4000 of its members and the Irish discount carrier was singled out as the one they like the least.

Before we start predicting the imminent decline of Ryanair, however, it is worth reviewing the value of popularity polls such as this. Drawing a correlation between general liking for a brand and future business success might seem sensible. In reality, liking is a largely irrelevant measure of brand success.

For starters, TripAdvisor sampled the general population. This kind of approach is valid only when gauging national opinion or predicting general-election results. Even the most mass-market of brands has a relatively selective target market from which it derives most of its sales and profits. These are the only people who matter.

In 2000, for example, when Budweiser launched it infamous 'Whassssup' campaign, two-thirds of the general population disliked the commercials. Who cared? More than half of the people in the target market, 18- to 24 year olds, loved the ads and that is what drove sales.

Indeed, it may even be an advantage to be disliked by the rest of the general population if it increases preference within your target segment.

Techniques to Retain Customers

The “lifetime value of the consumer” concept is based on the fact that it is much more cost effective to keep a good consumer than to attract a new one.  For large ticket items (automobiles) or items that require frequent purchase over time (breakfast cereals), the lifetime value of a consumer can be very high.  So, encourage young customers to buy your products and services.  This will help your business to remain healthy over time and to create a longer lifetime value of the customer.

Techniques for keeping good consumers include the following:

•    database marketing,
•    special services,
•    product customization,
•    personal touches,
•    legendary service,
•    communication that reinforces previously made purchases (especially to overcome post purchase anxiety and doubts for large ticket items),
•    programs that reward loyalty and heavy brand consumption, and
•    avoiding programs that encourage brand switching.

Can you think of others?

Sponsored By: Brand Aid

Defining the Target Customer

Organizations exist for one purpose – to meet human needs.  Thriving organizations do that exceedingly well.  Venerated organizations have managed to meet evolving human needs over a long period of time.  All of an organization’s revenues and profits result from one thing – customers who are willing to pay money for products and services that meet their needs.  Any brand management initiative, any marketing initiative, and indeed any business or organizational initiative must start with a solid understanding of the customer.

Focus is an important part of a brand’s success.  Brands focus on a target customer and often narrow their focus to a particular customer need segment.  As I've mentioned here before on BSI, customer targeting is the first step in brand design.  Everything else emanates from that.  So let's start with how to identify your brand’s target customers.

Look for customers that meet the following criteria:

•    They have an important need and your brand meets that need. 
•    Your brand has the potential to be preferred by them.
•    There is something about your brand that they admire.
•    They have the potential to provide your organization with the ample revenues and profits over the long run.
•    Your organization can grow by building a long-term relationship with and increasingly fulfilling the evolving needs of these customers.

At a minimum, you should identify and understand the following target customer attributes: