Perspectives on Marketing

About a decade ago, a New York advertising agency, Kirschenbaum and Bond, provided a colourful metaphor that described the challenge of contemporary marketing. They said: ‘Consumers are like roaches. We spray them with marketing, and for a time it works. Then, inevitably, they develop an immunity, a resistance.’ This perceptive view reflects a genuine truth that the world continually evolves and, as it does so, consumer needs and attitudes change with it. As new technology creates a fundamentally evolved marketplace, too many current marketing tools no longer work and too many messages fall on deaf ears.

Until the late 1990s, all you had to do to build a brand was to blow your marketing budget on a TV advertising campaign. That was fine when most people spent their evenings glued to their TVs and in an era when there were only a few channels. How times have changed. Today, cable, satellite and internet TV have created an unlimited number of channels. Your customers aren't watching as much TV as they used to, and, if they are, they're probably doing something else at the same time. While this evolution in media consumption has made effective targeting more challenging, advertising costs have risen above the rate of inflation. In summary, customer acquisition has become more difficult than it has ever been, yet advertising agencies resolutely advocate their ineffective marketing pesticide: the 30-second TV spot. 

We see four trends that have impacted marketing. 

1. Intense competition

Consumers have become conditioned to expect change almost for the sake of it. Innovation can be a source of competitive advantage, but it can also erode margins, trigger price wars and shorten product life cycles. Truly disruptive technology can make an existing product or category obsolete overnight. The pressure to invest in new products and services can stretch a company’s resources. Should success not be achieved, it can break a business. 

2. Consumer empowerment

While intense competition delivers greater consumer choice, people have higher expectations and a reduced tolerance for for products that fail to meet their expectations. Misleading hype or simply falling short can fuel mistrust and a willingness to switch brands. Consumers have become less loyal. It is also much easier for them to share experiences. Positive endorsement can make a brand, negative ones can destroy it.

3. Marketplace fragmentation

As competitive pressure forces companies to search for new market niches, this has led to the emergence of new customer segments, new product categories, new touch points and new media channels. Selecting the mix of channels appropriate to the desired audience requires a highly targeted approach to maximise spend effectiveness.

4. Communication overload

The noise of different companies bombarding consumers with badly targeted messages was a problem in the 1980s. Today, it has become so overwhelming that most people simply tune-out unwanted interruptions. Advertising is just background noise.  

The reason why building brands has become important is because the brand in itself has become a medium of communication. What it is, how it's made, its personality, what it believes and the benefits it provides all define a range of touch points that together create an effect that is equally if not more powerful than what it says. When a brand consistently delivers a superior customer experience, it engages people directly, builds a positive perception and generates trust. Meanwhile the nature of communication has changed. Consumers increasingly reject marketing hype in favour of real conversations. One-to-one interactivity is facilitated by a range of new multi-dimensional communication platforms that leverage the world wide web. It provides what is essentially a free promotional medium. 

What we've learned through research is that people love to share great experiences. There is nothing more powerful than a friend or trusted person recommending a product or service to someone else. Such endorsement isn't based on an artificial image, but rather on the reality of the experience enjoyed by the person recommending the brand. So, if we can design a customer experience that provides benefits that relevant to their needs, differentiated within the product category and true to the company providing them, then you create the basis for powerful endorsement at zero cost.  When a brand surprises and delights, customers will soon tell their friends. When someone we know and trust tells us that a product is great, we're more likely to try it than we would be after seeing the hype and unsubstantiated claims of traditional advertising. 

Marketing has changed more over the last 10 years than it has over the previous 50. As we've pointed out, many traditional tools simply don't work any more. You could say that a fresh approach is needed. Actually, our methodology isn't that new or dynamic, it's simply a way of thinking that few companies adopt. We put the customer at the heart of everything a business believes, does and says. In our view, effective marketing begins by gaining a deep knowledge of customers.

When you understand the needs, wants, attitudes, usage occasions, consumption patterns, triggers and barriers to purchase for your product category, you can segment demand for the things you offer so that you effectively target unmet needs. It's all about spotting an unfulfilled niche. A simple insight can plant a seed that creates an entirely new product category.

We never forget that market research is a rear-view mirror rather than a crystal ball. It tells you what needs exist, but not how to fulfill them. Henry Ford famously said that if he'd asked people what they wanted, they would have asked for a faster horse not a mass-produced car. So once you have uncovered fact-based customer insights the challenge is to convert them into unique products and services. That's where idea generation comes in.

Marketing is neither a science nor an art, but a combination of left-brain and right-brain thinking. In our experience, the best way to generate a good idea is to think of as any many ideas as possible. But our creative thinking is not a random process, it is rooted in what market data tells us. To think outside the box, you must first define the box.