Published on April 14, 2009
Marketers today understand that consumers think, feel, and react in ways different from June Cleaver some 50 years ago. We use descriptors like fickle, indecisive, and disloyal to describe the modern consumer.
Just what do these terms mean? Mainly, they mean that consumers have too many choices—multiple brands, brand extensions, and sub-brands—and too much stimulation, especially online, making it nearly impossible to predict their next move.
And yet, marketers continue to spend hundreds of millions of dollars on segmentation analysis and other research, hoping to understand and predict the behavior of these fickle consumers.
Rather than predicting a consumer's next move—which is not only imprecise but also impractical—marketers should focus on forming meaningful brand relationships by listening to and actively engaging consumers as they negotiate the major changes in society and their lives.
Identity Crisis
That no two consumers are exactly alike is a given in marketing. And now, marketers are starting to realize that individual consumers bring with them a whole new set of complexities:
Each person has several identities that shift with context. They may, for example, represent themselves one way in the LinkedIn business network, and another, very different way on Facebook with friends.
Each of those identities has its own idiosyncrasies and behaviors, so when they are in one context—e.g., a busy mom chatting on onechicmama.com—they're more receptive to some brands, perhaps recipes from Kraft, and totally closed to others that don't appeal to that persona.
Let's consider the busy mom further. A typical mom has sub-personas that may include "household manager," concerned with efficiency and convenience, and "gracious homemaker," focused on entertaining friends in Martha Stewart style. These two personas—efficient manager and elegant homemaker—can and must coexist dynamically, even though they may clash on a daily basis. And those are just two of many personas a busy mom might have.
So what's the secret to understanding our modern June Cleaver, she of multiple personas, morphing from context to context? The answer is simple: Listen to her.
Listening is critical for a more meaningful relationship between brands and consumers. First, however, brands must embrace today's epic cultural shift toward more open, flexible, and adaptive communications across the social Web.
What Won't Work
Traditional research—what may have once helped identify, segment, and target June Cleaver—just isn't well-suited to understanding and engaging consumers on the open, flexible Web. To build relationships with ever-evolving, persona-shifting consumers, marketers need new strategies and approaches that are built around listening. Not just once, but continuously and programmatically.
For companies getting started, it pays to rethink how and when to approach consumers. The short answer is continuously. But how can a company sustain continuous connections to customers? Would a purpose-built social network or public online community work? What about an integrated marketing campaign that uses state-of the-art Web and site analytics along with newsletters and customized email?
While those approaches have merit and can be part of a larger marketing effort, they can't help brands truly understand, engage, and sustain long-term relationships with today's dynamic, multi-contextual consumer.
What Does Work
If you want to understand, engage, and sustain, you'll need to embrace three tenets of new consumerism: listening, relationship-building, and empowerment.
Relationship-building, as a process, is misunderstood by many marketers. Too often we confuse willingness to buy as evidence of a relationship. It's not. Brands must earn the right to have meaningful relationships with their consumers, and that isn't accomplished by special offers and personalization alone. Like personal relationships, brand relationships are built on trust that is earned over multiple exchanges and eventually feels natural instead of contrived.
If all you're doing with customers is surveying them periodically, you'll never build trust or a relationship. But if you establish some intimacy with your customers—providing an ongoing, intimate forum to dig deeper and share the many facets of their different personas—you're entitled to ask more of the relationship. You've earned that.
Listening—real listening—is one of the most powerful and often misunderstood "disciplines" of marketing. Social-media monitoring, for example, is a great early warning system, but it isn't really listening. Effective listening can't be keyword-driven alone; it must be done with sensitivity to nuances and with a finely tuned ear for discovering unexpected insights.
One way to effectively listen to customers is through private online communities where brands can begin to understand how customers negotiate changes in their lives. Through communities, brands have the means—like never before—to be with consumers over time, building relationships and being present so that they can really listen. The trick is to isolate the multidimensional voices of the consumer, nurture them individually, and channel what you're hearing into meaningful changes that send a clear message: "We're listening."
Empowerment is the final, misunderstood tenet of new consumerism. Giving consumers a public forum to voice, vent, or vindicate—perhaps a public social network or your blog—seems like empowerment, but it's not. When you master listening and build a relationship with a consumer, you owe them something in return. And, contrary to conventional wisdom, what they want isn't coupons, free stuff, or other remuneration; they want to see the impact they're having on your brand and hear their own voices in new products and promotion. That's real empowerment for today's consumer.
In the end, consumers are most engaged when they realize that a brand—perhaps yours—is actively helping them negotiate the changes in their complex lives, from how and where they communicate to what they consume. Give them that, and they'll be empowered to dig deeper and explore more on your behalf. Moreover, eventually you'll offer more than simply a product or service to them: You'll become "their brand."
Showing posts with label Segmentation. Show all posts
Showing posts with label Segmentation. Show all posts
25.3.09
Hyundai ::: Behavioral Segmentation
How Hyundai Uses Behavioral Segmentation to Take the Bull by the Horns and Send the Bear Packing
"The Faith We Have In You"
Published on March 10, 2009
Published on March 10, 2009
Hyundai took the bull by the horns in this bear market and scored big. It used behavioral segmentation to identify what was keeping prospects from buying and then developed a strategy that made it easier for customers to part with their hard-earned dollars.
What can you learn from its example? In every market change, even a downturn, there is an opportunity to use the power of behavioral segmentation to make your product or service stand out.
Talk to Your Target Prospects
Each news cycle brings a tsunami of information that influences your customers' purchasing decisions. The smart marketer understands that every change in the marketplace is an opportunity to capture new customers.
How do you seize that opportunity and grow your business? Relying on secondary data or past segmentations isn't a realistic option. Even in these tough times, resist the urge to repeat a smaller version of last year's marketing strategy and tactics.
Instead, use voice-of-the customer research to talk to prospects you are currently winning over as well as those whose business you would like to win. You can't overestimate the value of talking to your customers. Ask new, open-ended questions. Focus on learning:
What can you learn from its example? In every market change, even a downturn, there is an opportunity to use the power of behavioral segmentation to make your product or service stand out.
Talk to Your Target Prospects
Each news cycle brings a tsunami of information that influences your customers' purchasing decisions. The smart marketer understands that every change in the marketplace is an opportunity to capture new customers.
How do you seize that opportunity and grow your business? Relying on secondary data or past segmentations isn't a realistic option. Even in these tough times, resist the urge to repeat a smaller version of last year's marketing strategy and tactics.
Instead, use voice-of-the customer research to talk to prospects you are currently winning over as well as those whose business you would like to win. You can't overestimate the value of talking to your customers. Ask new, open-ended questions. Focus on learning:
- What their reason is for buying—how is it changing?
- What their needs are—how have they been affected by recent events?
- What's keeping them from buying?
- What do they think of your product versus the competition's product?
- What would change their perception of your product versus the competition's?
- How do they rate your product against alternative solutions?
Sort Findings
Take a hard look at your data and sort groups with similar characteristics to determine which segments to target.
Hyundai discovered that as the market changed so did their segmentation. Significant numbers of prospects were no longer focusing on gas mileage performance, and they weren't necessarily looking for more discounts.
Armed with such customer insight, Hyundai identified a business opportunity.
Define Segment
Hyundai determined that the fear of losing one's job was a high barrier preventing prospective buyers from purchasing a car.
After defining the segment, the company developed and aligned sales and marketing strategies to reach this new segment. By targeting prospects concerned about job security, Hyundai broadened its audience and increased the number of customers who considered its cars.
David Zuchowski, vice-president of national sales for Hyundai noted in a New York Times article, "It doesn't matter how many zillion dollars you put in rebates, or what APR you give them. If people are worried about their job, they don't really care and they're just not going to get off the fence."
So how did Hyundai motivate customers to move off the fence?
Develop Strategy to Target Segment
Next, Hyundai developed a strategy to ease the fears of this segment: The company's Assurance Program releases customers from car payments without harming their credit score.
As Advertising Age editor Jonah Bloom wrote, "right there, is an honest-to-goodness big marketing idea.... Hyundai confronts the recession head-on and does something tangible to tackle its effects."
With consumers demanding more for their money, more companies are cutting prices to offer the “best deal,” which can come at the expense of the bottom line and brand perception. And now, more than ever, it’s important to stand out. Maybe marketers would be better off fighting the recession with incentives that add value and provide distinct business advantages instead. Creating tangible and rational value allows consumers to spend more wisely especially in this climate of frugality.
Create Messages
Craft messages to address the specific concerns of your customers.
Hyundai advertising used straight talk that resonated with customers: "We're introducing Hyundai Assurance to show you the faith we have in you. Right now, finance or lease any new Hyundai, and if in the next year you lose your income we'll let you return it. That's the Hyundai Assurance."
Hyundai’s Assurance program — which promises to let you return a newly bought car if you get laid off.
As of early March, no Hyundai buyer had yet returned a vehicle bought under the Assurance umbrella. This raises the intriguing point about what sort of consumer is being reassured. Probably anybody who is really afraid of losing a job simply isn’t going to buy a car right now. But somebody whose insecurity is more abstract, who perhaps simply needs a rationale for a big-ticket purchase at a moment when the headlines are full of doom — that’s different
* * *
Hyundai's Assurance Program had hit a home run. The company was one of only a few automakers to post an increase in sales.
So here's the question of the hour: Are you using behavioral segmentation to differentiate your product, reach new customers, and drive additional sales?
Instead of simply discounting its already economical line of vehicles, Hyundai is addressing consumer fears with an innovative return policy: Hyundai Assurance. Those who finance or lease a new Hyundai can return the car for no additional charge if they lose their job within a year of purchase. The incentive has helped Hyundai distance itself from America’s Big Three automakers and increase sales 14%, nearly doubling its Instead of simply discounting its already economical line of vehicles, Hyundai is addressing consumer fearswith an innovative return policy: Hyundai Assurance. Those who finance or lease a new Hyundai can return the car for no additional charge if they lose their job within a year of purchase. The incentive has helped Hyundai distance itself from America’s Big Three automakers and increase sales 14%, nearly doubling its market share as industry-wide, new-vehicle sales fell 37% last month.
Take a hard look at your data and sort groups with similar characteristics to determine which segments to target.
Hyundai discovered that as the market changed so did their segmentation. Significant numbers of prospects were no longer focusing on gas mileage performance, and they weren't necessarily looking for more discounts.
Armed with such customer insight, Hyundai identified a business opportunity.
Define Segment
Hyundai determined that the fear of losing one's job was a high barrier preventing prospective buyers from purchasing a car.
After defining the segment, the company developed and aligned sales and marketing strategies to reach this new segment. By targeting prospects concerned about job security, Hyundai broadened its audience and increased the number of customers who considered its cars.
David Zuchowski, vice-president of national sales for Hyundai noted in a New York Times article, "It doesn't matter how many zillion dollars you put in rebates, or what APR you give them. If people are worried about their job, they don't really care and they're just not going to get off the fence."
So how did Hyundai motivate customers to move off the fence?
Develop Strategy to Target Segment
Next, Hyundai developed a strategy to ease the fears of this segment: The company's Assurance Program releases customers from car payments without harming their credit score.
As Advertising Age editor Jonah Bloom wrote, "right there, is an honest-to-goodness big marketing idea.... Hyundai confronts the recession head-on and does something tangible to tackle its effects."
With consumers demanding more for their money, more companies are cutting prices to offer the “best deal,” which can come at the expense of the bottom line and brand perception. And now, more than ever, it’s important to stand out. Maybe marketers would be better off fighting the recession with incentives that add value and provide distinct business advantages instead. Creating tangible and rational value allows consumers to spend more wisely especially in this climate of frugality.
Create Messages
Craft messages to address the specific concerns of your customers.
Hyundai advertising used straight talk that resonated with customers: "We're introducing Hyundai Assurance to show you the faith we have in you. Right now, finance or lease any new Hyundai, and if in the next year you lose your income we'll let you return it. That's the Hyundai Assurance."
Hyundai’s Assurance program — which promises to let you return a newly bought car if you get laid off.
As of early March, no Hyundai buyer had yet returned a vehicle bought under the Assurance umbrella. This raises the intriguing point about what sort of consumer is being reassured. Probably anybody who is really afraid of losing a job simply isn’t going to buy a car right now. But somebody whose insecurity is more abstract, who perhaps simply needs a rationale for a big-ticket purchase at a moment when the headlines are full of doom — that’s different
* * *
Hyundai's Assurance Program had hit a home run. The company was one of only a few automakers to post an increase in sales.
So here's the question of the hour: Are you using behavioral segmentation to differentiate your product, reach new customers, and drive additional sales?
Instead of simply discounting its already economical line of vehicles, Hyundai is addressing consumer fears with an innovative return policy: Hyundai Assurance. Those who finance or lease a new Hyundai can return the car for no additional charge if they lose their job within a year of purchase. The incentive has helped Hyundai distance itself from America’s Big Three automakers and increase sales 14%, nearly doubling its Instead of simply discounting its already economical line of vehicles, Hyundai is addressing consumer fearswith an innovative return policy: Hyundai Assurance. Those who finance or lease a new Hyundai can return the car for no additional charge if they lose their job within a year of purchase. The incentive has helped Hyundai distance itself from America’s Big Three automakers and increase sales 14%, nearly doubling its market share as industry-wide, new-vehicle sales fell 37% last month.
The US recession.::: marketers Vs. consumers
"a great mismatch exists between the way consumers experience and think about their world and the methods marketers use to collect this information."
During these 'bad' days marketers have to be "attentive to the emotional dynamics of peoples' lives in these times… The goal of advertising should be to engage people with a message that has an emotional impact. And that requires actually grappling with the means by which they have experiences and react with emotion, sentiment, and feeling….
By tapping into an "emot-econ" marketing mindset, Hyundai's Assurance "provides a little heart in a world that has gotten so cruel."
The Transformation (basic changes that alter life's circumstances) frame is a powerful driver: People who are worried about losing their jobs may be reluctant to buy a car. "Hynudai has taken a relevant point of communications that may not have been true a year ago, but is true today,"
The Transformation (basic changes that alter life's circumstances) frame is a powerful driver: People who are worried about losing their jobs may be reluctant to buy a car. "Hynudai has taken a relevant point of communications that may not have been true a year ago, but is true today,"
And, similarly, ReMax's "Best Time to Buy/Sell" invokes a) a Journey ("The meeting of the past, present, and future") and b) Transformation: Basic changes - some desired, some involuntary - that alter life's circumstances and c) Force (events that have a powerful impact on the lives of consumers) frames by suggesting that "people will be administering strong, self-inflicted kicks down the road if they fail to take advantage of home-buying or selling opportunities now."
In the current economic conditions, "People want to know they're being respected. Their feelings have to be acknowledged."
As a point of caution, however, that brands that are insensitive to the feelings and emotions disclosed by the visual metaphors may "suffer a backlash".
The possible downside of the ReMax advertising ("it may remind people of poor decisions they made in the past coming back to kick them") as an instance where some consumers "may perceive the company to be insensitive and out of touch…. Well meaning attempts to tap into these emotions could be seen as opportunistic or patronizing that could backfire."
Improve Your Email Marketing Through Segmentation
Published on March 24, 2009
Not all customers are alike, and what appeals to one may not interest another. Therefore, it is important that you connect the message you are sending to your customers' differing interests.
Email messages that are segmented, targeted, and relevant to the recipient are much more likely to be opened and acted upon.
Every small business can segment its customer base at some basic level. The following are some examples:
A sporting goods store emails information to its customers who have purchased bikes to inform them of new arrivals, while sending an "end of the ski season" blowout special to customers who have purchased ski equipment.
A garden center sends out a "Planting for Spring" promotion to gardening customers and a "Flowers for all Occasions" promotion to cut-flower and bouquet buyers.
A landscaping company sends out a promotion to past customers about keeping up their landscaping activities as well as its new services, while sending out a different appeal to prospects and builders.
A pub/restaurant sends out an email about an upcoming food pairing/tasting event to wine enthusiasts and an email about seasonal brews and pitcher specials for beer lovers.
Otherwise, the wine lover might get turned off by the beer promotion, and vice versa... but tap the right customer's passion and need at the right time—with a targeted subject line and content—and you're much more likely to create a sale.
Segmentation—Getting Started
Creating different email messages for different groups is a bit more work, but it's worth the extra effort when an email message hits your customer's sweet spot.
Your general e-newsletter may appeal to most customers, but mailings that reach out to your audience segments can build even deeper relationships, and drive more sales.
Consider these simple tips to be more successful with your segmentation:
1. Start with the first touch point
The best time to collect information for segmenting purposes is right when your prospect or customer joins your email list. You can easily create segmented lists by offering options with checkboxes on your sign-up form.
2. Ask for personal information
Ask for information such as location and personal preference to determine what's relevant to the person signing up. For example, a retailer might ask whether someone prefers to shop online or in the store. That way, the retailer can create two separate lists and send email coupons that contain an online promotion to one list and an in-store promotion to the other list.
3. Use online surveys
In your email newsletters, include a link to a short survey and ask for noncritical information that helps you add your people to the appropriate segmented lists. Once you have the survey results, you can create new lists or add to existing ones based on how respondents answered questions.
4. Use tracking reports
If you are using a professional email service that provides campaign-tracking reports, let the links that people click on help you understand them better. Your tracking reports make it easy for you to add anyone who clicks on a link to an existing list or a new list.
* * *
Remember that there is a real person on the other end of each email address. Every time you create an email, ask yourself whether your email content is addressing the specific needs of your audience, or whether you're only addressing the needs of your business. Segmenting your list will set you up to do both effectively.
Not all customers are alike, and what appeals to one may not interest another. Therefore, it is important that you connect the message you are sending to your customers' differing interests.
Email messages that are segmented, targeted, and relevant to the recipient are much more likely to be opened and acted upon.
Every small business can segment its customer base at some basic level. The following are some examples:
A sporting goods store emails information to its customers who have purchased bikes to inform them of new arrivals, while sending an "end of the ski season" blowout special to customers who have purchased ski equipment.
A garden center sends out a "Planting for Spring" promotion to gardening customers and a "Flowers for all Occasions" promotion to cut-flower and bouquet buyers.
A landscaping company sends out a promotion to past customers about keeping up their landscaping activities as well as its new services, while sending out a different appeal to prospects and builders.
A pub/restaurant sends out an email about an upcoming food pairing/tasting event to wine enthusiasts and an email about seasonal brews and pitcher specials for beer lovers.
Otherwise, the wine lover might get turned off by the beer promotion, and vice versa... but tap the right customer's passion and need at the right time—with a targeted subject line and content—and you're much more likely to create a sale.
Segmentation—Getting Started
Creating different email messages for different groups is a bit more work, but it's worth the extra effort when an email message hits your customer's sweet spot.
Your general e-newsletter may appeal to most customers, but mailings that reach out to your audience segments can build even deeper relationships, and drive more sales.
Consider these simple tips to be more successful with your segmentation:
1. Start with the first touch point
The best time to collect information for segmenting purposes is right when your prospect or customer joins your email list. You can easily create segmented lists by offering options with checkboxes on your sign-up form.
2. Ask for personal information
Ask for information such as location and personal preference to determine what's relevant to the person signing up. For example, a retailer might ask whether someone prefers to shop online or in the store. That way, the retailer can create two separate lists and send email coupons that contain an online promotion to one list and an in-store promotion to the other list.
3. Use online surveys
In your email newsletters, include a link to a short survey and ask for noncritical information that helps you add your people to the appropriate segmented lists. Once you have the survey results, you can create new lists or add to existing ones based on how respondents answered questions.
4. Use tracking reports
If you are using a professional email service that provides campaign-tracking reports, let the links that people click on help you understand them better. Your tracking reports make it easy for you to add anyone who clicks on a link to an existing list or a new list.
* * *
Remember that there is a real person on the other end of each email address. Every time you create an email, ask yourself whether your email content is addressing the specific needs of your audience, or whether you're only addressing the needs of your business. Segmenting your list will set you up to do both effectively.
Four Best-Practices for Renovating Your Brand—Before It's Too Late
Published on March 24, 2009
Stories of marketing heroes who transform poorly performing brands never fail to enthrall us: the transformation of Dove into an empowering brand; the shift to healthier eating for McDonald's; the rebound of Hewlett Packard in the PC market.
Those are among some recent successes. But they elicit the question: Why do brand leaders wait until their brands are at the breaking point, and at risk of joining such brands as Radio Shack, 7Up, or the GAP... for which renovation may be too late?
Unheralded marketing heroes renovate their brands while they are strong and growing. They spot changing market dynamics and address them as opportunities before they have time to develop into threats. Their reward is faster profitable growth without the negative headlines.
Here are four best-practices in brand renovation identified in our work with businesses across a range of markets.
1. Develop a holistic understanding of the brand
A holistic, customer-driven understanding of the current brand and a vision of the brand's future are crucial to proactive renovators. Typically, a holistic view includes an understanding of the brand's heritage, personality, iconography, functional benefits, emotional benefits, and perceived value in the minds of customers, influencers, and intermediaries.
The key is to understand how each of these groups views the brand in the context of their daily lives and compared with the other things that are on their minds. This view enables proactive renovators to see opportunities to credibly extend the brand and avoid the trap of defining the brand by what the company knows how to make or offer, instead of what customers want to buy.
Crayola has managed to stay relevant despite the digital and graphics technologies that might have threatened its brand's very essence. Its understanding of the brand goes beyond the functional benefits of washable markers or erasable pencils. Crayola's brand leaders understood that colorful fun and creativity best defined its role in the lives of teachers, parents, and children; accordingly, it evolved from an art-products company to a visual-expression company. It moved from being a partner with retailers to a partner with educators, parents, and children.
Crayola recognized the danger of being perceived as traditional and has continuously updated the look and the feel of the brand in a way that stays true to its roots but is fun and creative.
Finally, its leaders have used their understanding to guide them in developing programs for the Internet, a children's magazine, interactive toys, and advanced color technologies, breaking the constraints of selling only what can be made in a crayon and marker factory.
2. Look for segment swings
By the time most brand managers spot important trends, they are already threats. That's not surprising, since it's difficult to identify the early impact of trends among the general population of brand users.
Proactive renovators spot trends early by tracking segments of the population where the impact of change is more apparent, segmenting customers in different ways to fit their businesses.
Among the common segmentation principles:
More than 30 years ago, Kohler spotted an emerging willingness of urban customers to spend more for high-end home designs. Herb Kohler began to advertise the Bold Look of Kohler with a differentiating focus on design that rode the wave of home investment and kitchen renovations throughout the '80s and '90s. In the early '90s, it spotted another emerging trend: the bathroom as a refuge and oasis in large suburban households. It took advantage with a line of whirlpools, Jacuzzis, and tubs, extending its reach into showers and bathroom accessories.
Most recently, Kohler has increased its emphasis on green technologies with toilets, showers, and control systems aimed at a broad audience.
3. Distinguish the underlying issues
Not every brand issue is a competitive one, but we frequently encounter brand leaders so focused on gaining advantage against a narrow set of competitors that they fail to address indirect competition or tackle customers who are questioning whether it's worthwhile to buy the category at all.
Proactive renovators are much more likely to distinguish among different types of threats and respond accordingly. Brand guru (and Prophet vice-chairman) David Aaker groups these threats as commoditization, brand lethargy, and changing customer dynamics:
The company shed its handcrafted, American-made points of differentiation to leverage its core essence of classic, premium American design within the world of women's fashion accessories. It became more relevant and energetic by introducing color and fresh materials to its designs, transforming its assortment to provide a wide range of accessories and reinventing the Coach shopping experience.
Coach is the ultimate example of a proactive renovator that transformed itself into a category leader.
4. Apply the right strategies
Too many marketers think every brand issue can be solved with a new advertising and promotion campaign.
Of course, brand communication is an important component to building differentiation, energizing a brand, or building relevance. But, proactive renovators ensure that brand communications reflect fundamentally different strategies to cope with differentiation, brand energy, or relevance. One size will not fit all:
These four best-practices expose one central truth: Customers must drive brand decisions.
To succeed, brand leaders must understand the brand through customers' eyes, track how different customer segments are changing, identify the different issues customers have in their lives, and link the brand to customer needs.
Stories of marketing heroes who transform poorly performing brands never fail to enthrall us: the transformation of Dove into an empowering brand; the shift to healthier eating for McDonald's; the rebound of Hewlett Packard in the PC market.
Those are among some recent successes. But they elicit the question: Why do brand leaders wait until their brands are at the breaking point, and at risk of joining such brands as Radio Shack, 7Up, or the GAP... for which renovation may be too late?
Unheralded marketing heroes renovate their brands while they are strong and growing. They spot changing market dynamics and address them as opportunities before they have time to develop into threats. Their reward is faster profitable growth without the negative headlines.
Here are four best-practices in brand renovation identified in our work with businesses across a range of markets.
1. Develop a holistic understanding of the brand
A holistic, customer-driven understanding of the current brand and a vision of the brand's future are crucial to proactive renovators. Typically, a holistic view includes an understanding of the brand's heritage, personality, iconography, functional benefits, emotional benefits, and perceived value in the minds of customers, influencers, and intermediaries.
The key is to understand how each of these groups views the brand in the context of their daily lives and compared with the other things that are on their minds. This view enables proactive renovators to see opportunities to credibly extend the brand and avoid the trap of defining the brand by what the company knows how to make or offer, instead of what customers want to buy.
Crayola has managed to stay relevant despite the digital and graphics technologies that might have threatened its brand's very essence. Its understanding of the brand goes beyond the functional benefits of washable markers or erasable pencils. Crayola's brand leaders understood that colorful fun and creativity best defined its role in the lives of teachers, parents, and children; accordingly, it evolved from an art-products company to a visual-expression company. It moved from being a partner with retailers to a partner with educators, parents, and children.
Crayola recognized the danger of being perceived as traditional and has continuously updated the look and the feel of the brand in a way that stays true to its roots but is fun and creative.
Finally, its leaders have used their understanding to guide them in developing programs for the Internet, a children's magazine, interactive toys, and advanced color technologies, breaking the constraints of selling only what can be made in a crayon and marker factory.
2. Look for segment swings
By the time most brand managers spot important trends, they are already threats. That's not surprising, since it's difficult to identify the early impact of trends among the general population of brand users.
Proactive renovators spot trends early by tracking segments of the population where the impact of change is more apparent, segmenting customers in different ways to fit their businesses.
Among the common segmentation principles:
- First, they ask questions about lifestyles and general attitudes in order to gain a broader context for the role of their products and categories.
- Second, they are particularly sensitive to trends with the potential to cross segments—from urban to suburban shoppers, or from youth into mainstream culture, for example.
- Third, they proactively test alternative ways to connect their brands to important trends in order to identify opportunities to play a greater role in the lives of their customers
More than 30 years ago, Kohler spotted an emerging willingness of urban customers to spend more for high-end home designs. Herb Kohler began to advertise the Bold Look of Kohler with a differentiating focus on design that rode the wave of home investment and kitchen renovations throughout the '80s and '90s. In the early '90s, it spotted another emerging trend: the bathroom as a refuge and oasis in large suburban households. It took advantage with a line of whirlpools, Jacuzzis, and tubs, extending its reach into showers and bathroom accessories.
Most recently, Kohler has increased its emphasis on green technologies with toilets, showers, and control systems aimed at a broad audience.
3. Distinguish the underlying issues
Not every brand issue is a competitive one, but we frequently encounter brand leaders so focused on gaining advantage against a narrow set of competitors that they fail to address indirect competition or tackle customers who are questioning whether it's worthwhile to buy the category at all.
Proactive renovators are much more likely to distinguish among different types of threats and respond accordingly. Brand guru (and Prophet vice-chairman) David Aaker groups these threats as commoditization, brand lethargy, and changing customer dynamics:
- Declining brand differentiation underlies commoditization, which is characterized by increasing price competition, entry of low-cost competitors, and narrower margins.
- Brand lethargy is often a problem for category leaders who fall into the trap of repeating past success factors rather than updating the brand and keeping it fresh and alive.
- Brand relevance underlies customer dynamics issues. Changing technologies, lifestyle patterns, or attitudes typically cause a brand or a category to become less relevant to peoples' lives.
The company shed its handcrafted, American-made points of differentiation to leverage its core essence of classic, premium American design within the world of women's fashion accessories. It became more relevant and energetic by introducing color and fresh materials to its designs, transforming its assortment to provide a wide range of accessories and reinventing the Coach shopping experience.
Coach is the ultimate example of a proactive renovator that transformed itself into a category leader.
4. Apply the right strategies
Too many marketers think every brand issue can be solved with a new advertising and promotion campaign.
Of course, brand communication is an important component to building differentiation, energizing a brand, or building relevance. But, proactive renovators ensure that brand communications reflect fundamentally different strategies to cope with differentiation, brand energy, or relevance. One size will not fit all:
- Successful differentiation in commoditized categories almost always requires finding ways to provide more emotional reasons to prefer the brand. Emotional leverage enhances consumer credibility and trust in innovations that drive big margin gains and allows the brand to eke out small, but often crucial, margin advantages in older products. Emotional bonds provide a platform to charge more despite the competition. Staples's focus on ease (think "Easy Button") and expertise in small-business and home-office efficiency differentiates it from other superstores and lends permission to provide such value-added services as office delivery and computer repair to enhance loyalty and margins.
- Reinvigorating brand energy typically requires revamping the brand's imagery. A brand image in keeping with its promise makes it more noticeable, easier to understand, and more desirable. Marketers often think that refreshing the logo and trademark imagery is sufficient; that's rarely the case. User, usage, product, and associative imagery all must be explored to truly reinvigorate a brand. Sprite is one brand that regained energy by changing its user imagery to focus on young iconoclasts and its associative imagery to focus on the NBA.
- Relevance issues demand a re-examination of the customer experience. When consumers change the ways they shop, live, or use technology, the experience must adapt. Sometimes the adaptations include new offerings such as the salads and wraps that McDonald's has added to its menu to appeal to health-conscious women. Some adaptations encompass a comprehensive redesign of the entire experience, like Coach's store and product redesign to meet women's fashion accessory buying expectations.
These four best-practices expose one central truth: Customers must drive brand decisions.
To succeed, brand leaders must understand the brand through customers' eyes, track how different customer segments are changing, identify the different issues customers have in their lives, and link the brand to customer needs.
23.3.09
How Important is Ownership?
Market Leader
Issue 29, Summer 2005
How Important is Ownership?
Chris Middleton
Sociovision Ltd
Recent research suggests the place that possessions occupy in our lives is changing, slowly but surely. Look back to the 1960s, for example. The mass market was built on the assumption that you worked hard, earned progressively higher salaries and bought more and more products that reflected your new money status. Today, selfactualising is about experiences, emotions, ethics and engagements – leaving less space for products.As in any change, there is opportunity for those businesses that read the new reality and react in ways which align to the world as it is. The danger for so many retail and fmcg businesses is that they ignore the signs – or read the signs but enter a denial phase. My contention is that, like so many social shifts before, the change in attitudes to ownership is going largely unnoticed; it is creeping up by stealth and the proverbial frog is dying in the slowly heating waters.
If you look in the right places, you can see the results of these demandside changes all around. Retailers had a bad Christmas and continue to publish poor results. Articles appear regularly signalling the urgent need to rebrand brands, turn them into 'lovemarks' or revitalise them into 'powerbrands'. Marketing becomes more desperate in its tactics to seduce people – to the point where its activities are regularly criticised by MPs, watchdogs and journalists. Sales become an accepted way to make year-end figures rather than simply the method to clear stock for the next season – with the evident impacts on margins.
And here's the rub. While marketing has undeniably become harder, most analysis ignores changes to people's values as a significant driver of the retail marketplace. Typical complaints are that 'the competition just got stronger' or 'housing values are no longer growing' or 'demand is now limited to replenishment due to high household penetration levels'. And, of course, if everything else fails, we blame the weather. On the other hand, we rarely hear, for example, 'Some people are now coming to the conclusion that enough is enough and that increasing the amount of material possessions they own is no longer a central value in their lives.'
THE CONSUMERIST PARADIGM
To state our conviction in even stronger language, we are convinced that the very assumptions of the existing consumerist paradigm are increasingly out of sync with everyday reality. Moreover, we observe that most of contemporary market analysis and market research is so rooted in these traditional assumptions that it is blind to changes at the edges.
We hear about 'identity morphing', 'hyper wants', 'tribal belonging' and 'buying bulimia', and these are presented as the trends driving today's consumer. But what if the truth is increasingly elsewhere? What if companies are continuing to measure the past rather than anticipating the future focus?
Sociovision's research indicates the consumerist value set is becoming passé and new life is burgeoning beyond the old world of purchase, prestige and property rights. We have been able to identify seven archetypes, each with a specific new take on ownership. Let's look at just two of these archetypes, which sit outside of the mainstream consumerist logic, and illustrate their impacts on businesses today.
LIGHT LIFERS
Light Lifers do enjoy material possessions. It's just that they see no need at all to pay for them. In an era when so many have so much, their strategy of beg, steal or borrow is perfectly practical. What counts for them is to be able to use things for more or less short periods of time; individual access is the door and networking the key.
The ramifications are considerable for consumer goods companies. Renting and leasing are frequent means to access, although borrowing, filching and sharing are even better. The idea of spending money to acquire something, frequently does not even enter Light Lifers' heads. Their philosophy of travelling light means being weighed down by longterm commitments and 'for ever possessions' is the last thing they desire.
What challenges do Light Lifers lay down for marketers? Car companies, in particular, are scratching their heads about the move towards rental. Equally, they are worried that an increase in leasing contracts is blurring the perceived cash value of cars. In the future, many will only know that their Ford Fiesta costs £199 a month, the total cost being hidden from view.
The travel industry is also feeling the effects of Light Life attitudes. Why buy a package holiday when you can design a DIY adventure around visiting distant family and friends? Finally, ever wondered why people use internet cafés? Well, if you have recently bought a home media system you will soon understand. Light Lifers may or may not have the money to buy a new HP tower, but subcontracting the configuration and maintenance to the internet café owners meets their footloose objectives. Renting a screen for half an hour of emailing is so much lighter than plug-and-pain.
RESPECTABLE REBELS
The Respectable Rebels have grown up in an era where bytes replaced atoms and where the web is the new marketplace. Respectable Rebels barter rather than buy; in the peer-to-peer world, what is virtual is virtually free. Do not speak to these downloaders about legality since this archetype believes in rebels' law, where possessions are shared and where the payment for a transaction is the investment needed to set up the software.
The music industry has taken the best part of five years to cotton on to Respectable Rebels. The industry first threatened Napster: then it bought and closed Napster; then it attacked pirates through the courts and only latterly has set up legal download sites. The film industry is likewise threatened and has yet to respond with official sites. Meanwhile, millions use emule, e-donkey and so on to build their film archives. Less obviously, Respectable Rebels were some of the first to pile on board low-cost airlines. The price was seductive, of course, but, at the back of their minds, it was so sweet to put one over on the national airlines that had milked the market for so long. This time they
did nothing illegal but rebellious thoughts were part of the appeal.
The other archetypes we discovered were as follows.
Financially Challenged: necessity drives these people to access not possess. Hand-outs and rental are frequent means of accessing consumer society.
Freeloaders: a group of individuals whose high-powered network is the source of their wealth. They are parasitic consumers rather than purchasers; it is more important 'to know than to buy' and 'to seem' rather than 'to have'.
Old Style Socialists: supporters of sentiments like 'all private ownership is theft'; people with this leaning want collective ownership and public service to distribute wealth equitably.
Pre-Materialists: these are people who have never been fond of possessions, emphasising a simpler, sometimes spiritual, approach to life.
Post-Materialists: experiencing and being are the leitmotivs of this cluster, who have gone beyond possessions and now 'invest in lives'. They do consume, of course, but always for higher motives and ethics.
ANALYSIS
Taken together, Sociovision estimates that these seven archetypes represent around 55% of the population. Put another way, only 45% of British society today believes in full-on consumerism as a way to live, a route to happiness and a reason for being. Furthermore, our time series research indicates that, over time, this percentage of white-hot consumers is slowly declining. Meanwhile, the most rapidly growing groups are the Respectable Rebels (which we estimate at 4% of the population) and the Post-Materialists (at 9%). Interestingly, while the Rebels, in common with Light Lifers, are younger in demographic terms, Post- Materialists tend to be older. The fact that some older people have turned their backs on serial consumption would seem to scotch any hope that this is a passing phase linked to carefree youth trends. Moreover, we are convinced that these value changes, which now replace consumption at the centre of many people's lives, are more permanent than many in our industry hope.
In conclusion, we believe current marketing faces a significant risk of being blindsided by social evolutions despite some clear signs of the consequences of change. So much seems to be riding on the uninterrupted and unmolested continuation of the consumer marketplace – and yet archetypes surround us that threaten this continuity. Each archetype, remember, has a radically different notion of what ownership is all about. Retailers and consumer goods companies would do well to understand better the emerging social shifts, and plan how to reconfigure as a consequence.
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