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Reader response to Chris Hoyt’s white paper on the bifurcated state of shopper marketing today. In our January/February 2013 edition, Chris Hoyt of Hoyt & Company wrote an analysis of The Hub’s 2012 Shopper Marketing survey, in which he reported "a serious bifurcation of the discipline."
Chris wrote: "Shopper marketing as an industry practice clearly means different things — and has very different standards — for different camps. From positioning to funding to measurement, the survey indicates a growing split."
We posted a link to Chris’s white paper on LinkedIn’s Shopper Insights & Marketing Group (which The Hub moderates) and it quickly provoked a lively discussion. Following are excerpts of some of the comments, edited for space and clarity. continue …
May 1, 2013 Comments
Loyalty isn’t dead, but traditional loyalty programs might be. By Joe Dobrow. As a top executive at Hertz since 1995, Griff Long has spent a lot of time on the road — and when he travels, he knows what he likes. Flights by United. Rooms by Marriott. Rental cars by — well, he didn’t really have much choice there. It’s all been very safe and predictable, very easy, and it’s never really had anything to do with loyalty, at least in the marketer’s sense of the word.
Of course, to those who might be crunching the numbers at United Mileage Plus or Marriott Rewards and have seen Long’s huge point totals and consistent bookings, they probably think they have hooked a pretty big fish. So, they keep sending him more rewards and incentives — all of which are completely unnecessary, since he was going to choose them anyway … at least so long as their prices were in line. If not, well, he’s a member of every other travel loyalty program, too.
The truth is that customer loyalty is an elusive goal. It’s hard to attain, harder to retain, and nearly impossible to measure. read >>
November 1, 2012 Comments
Long-lasting bonds happen when “loyalty flashpoints” strike. By Lauren de Simone. I was on a flight last week and the guy sitting next to me had a Harley-Davidson logo tattooed on his arm. Did he work for Harley? Was he a weekend biker? Why Harley? What kind of brand-bond would possess a person to tattoo a logo on his body? I had to ask.
Turns out, yes, he has a Harley — actually a few of them. He started riding in college and has been at it, off and on, ever since. On one ride, about 10 years ago, he and his friends decided to stop in Prescott, Arizona. They went out for the night, and he met an amazing woman who would become his wife and with whom he now has a family … and a few more Harleys! This got me thinking about that powerful, indelible moment, when an experience combines with a connection to form a brand and loyalty is formed. Here comes the science: The loyalty some people feel for brands is not all that different from the love they feel for each other. read >>
November 1, 2012 Comments
Brand gamification can change the world if it embraces engagement. By Jason Bice. Gamification. As I write this, there are probably no fewer than 25 books on the subject and 50 speakers making the various circuits about how this is “the next big thing” in branding.
The use of game-design techniques to solve problems, motivate and engage people is not new. We’ve seen it in loyalty programs, brand-sponsored contests and elementary school fundraisers. What’s new is the technology that allows game elements to be applied to virtually any experience. It is in the places where this technology lives that the game and brand universes have finally intersected.
As it currently exists, gamification is still somewhat of a novelty. Most “gamified” applications or services employ systems of badges, achievements and levels, but lack interactions containing any degree of behavioral complexity. This complexity is key to creating the gamer’s state of intense engagement or “blissful productivity.” As author and game designer Jane McGonigal said in a TED talk: “Gaming can make a better world.” read >>
September 1, 2012 Comments
Strengthen your brand through storytelling. By Jim Hauptman. In 1936, Leon Leonwood “L.L.” Bean wrote in his fishing catalog, “These flies are the result of years of testing to determine the ones most effective in New England waters. Have decided that eight flies in two sizes are all that are necessary and in many cases, three or four will answer nicely. When salmon won’t take one of these flies, you may as well call it a day.”
Few brands would be so bold as to make this pronouncement. But L.L. knew the importance of being knowledgeable and straightforward with his customers, and for 100 years they’ve rewarded him with their loyalty. L.L. was a genuine storyteller. He knew then — and many companies are realizing now — that consumers are looking for honest, truthful dialogue. They don’t want to be sold a product; they want to be told a story. With so much information available today to product-savvy consumers, the challenge of weaving it all together in a meaningful way — across multiple channels — has become increasingly complex. read >>
July 1, 2012 1 Comment
Groupon has succeeded where similar concepts haven’t because it taps so cleverly into consumer psychology. Groupon, as you probably know, “offers for sale a deep discount coupon from a business in your town,” but honors it only if a specified number of others also buy into the deal.
The first bit of cleverness is the local angle, because Groupon inherently gears its offers to neighborhood establishments. The next clever thing is that Groupon makes even a relatively small discount feel like a big deal. Then there’s the “tipping point” aspect, which “adds a certain thrill to the proceedings. You’re invested in the outcome"… read>>
May 1, 2011 Comments
The future of retail is whatever and whenever shoppers want. A discussion featuring Karl Haller of Brooks Brothers, Shawn Dennis of American Girl, Dan Flint of University of Tennessee and Paul Price of Acosta Sales & Marketing.
Where is the magic in retail today? A lot of the magic is happening at non-traditional retailers. Probably the biggest thing that’s happening — at least in fashion retailing over the last three years — is the growth of the flash-sale sites such as Gilt, RueLaLa, HauteLook, and Ideeli.
It’s almost like a blue-light special, where the retailer makes a good product from a good brand available for a limited time. It’s a great opportunity that no one was tapping into previously, and I’ve been amazed with how quickly these flash-sale retailers have scaled up … read >>
March 1, 2011 Comments
Global marketing chief Jim Farley makes innovation the powertrain at Ford. By Tim Manners. The phone buzzes and it’s Jim Farley on the line. “Hey, Jim! How’re you doing?” “Me?” says Jim. “I’m high as a kite!” After a deft pause for comedic effect and a mischievous chuckle, Jim says he’s just having fun. “If we can’t have fun,” he says, “then what the heck!”
No question but that Jim Farley, global marketing chief of the Ford Motor Company, is having fun. And if he’s not high as a kite, he has every right to be. Two years after stunning the auto industry by leaving high-flying Toyota for low-hanging Ford, he and his compatriots do indeed seem to be defying gravity.
How did that happen? Well, it’s kind of complicated, but it does have a lot to do with a single, simple word: innovation … read >>
January 1, 2011 1 Comment
Largely fueled and propelled by technology, innovation is now commonplace, expected, cost-of-entry, taken-for-granted, table-stakes and, oftentimes, not differentiating for brands.
We ask ourselves as marketers, what purpose (if any) does innovation most serve today? Where can it provide the most value and growth potential for a business? Beyond manufactured news by brands, how do we harness and leverage the true power and potential of innovation? … read >>
January 1, 2011 Comments
September 1, 2010 Comments
The Hub Profiles: Twelve of the boldest and brightest in marketing share their stories. Six years and 37 issues ago, when we launched the Hub, our vision was for a different kind of magazine. We looked around and saw an industry of ideas and a culture of thought leadership that needed a home. We saw an opportunity to create conversations where they otherwise might not happen.
We also knew that we would need the spirited voices of the boldest and brightest in the business to realize our vision. If the Hub were to live up to its promise to explore innovation as the ultimate driver of success in business, we needed to collaborate with some really outstanding movers and thinkers.
The Hub would be their opportunity to create and sustain a thought-leadership message over time, and build their reputations through white papers, research reports, roundtables and essays. They could create conversations and make connections with the top marketers at America’s largest companies … read>>
September 1, 2010 Comments
Soccer and Philosophy
Jean-Paul Sartre, the existential philosopher, was a big soccer fan, reports John Heilpern in a Wall Street Journal review of Soccer and Philosophy, a collection of essays edited by Ted Richards (6/9/10).
Sartre called the game “football,” of course, but in his “Critique of Dialectical Reason,” he wrote: “In a football match, everything is complicated by the presence of the other team.” Indeed. And then there’s that other great existentialist, Albert Camus, a goalkeeper in his youth, who wrote: “All that I know of morality I learnt from football.”
In one of the book’s essays, “Robert Northcott discusses Kierkegaard’s concept of anxiety in relation to penalty shots.” American baseball fans likely will appreciate Jonathan Crowe’s essay, in which he observes that “the referee who errs badly is within the rules of the game, because the rules of the game allow him to err badly.”
The difference is that baseball fans can forgive such errors; the “football fan is so passionately committed to the game … that he never forgives or forgets (and the lonely referee never explains). Or, as the great philospher Yogi Berra once put it: “Think! How the hell are you gonna think and hit at the same time?”
The Invisible Gorilla
Everyday illusions “cause us to place undeserved trust in our instincts and intuition,” writes David A. Shaywitz in a Wall Street Journal review of The Invisible Gorilla, by Christopher Chabris and Daniel Simons (6/11/10).
Ten years ago, the authors ran an experiment in which Harvard students were asked to watch a minute-long film of basketball players passing a ball and count the number of passes. For about nine seconds in the middle of the film, a man in a gorilla suit walks through the players, pounds his chest, and moves on.
Half of the viewers were so busy counting passes that they didn’t notice the gorilla. Christopher and Daniel have all kinds of studies and statistics demonstrating that this type of illusion is one of many to which we fall prey in our daily lives.
These include the illusion of memory, in which our vivid recollections are actually “based only loosely on reality.” The illusion of knowledge is that “we know less than we think — and the illusion of cause, where we mistake correlation for causation.”
The mother of all illusions might be the illusion of confidence, which is that “we profoundly underestimate our capacity to be fooled.”
We also tend to overestimate the confidence of others. When someone speaks with confidence, we tend to trust them, but confidence is just a trait “that “has relatively little to do with one’s underlying knowledge or mental ability.”
The Great Oom
“Pierre Bernard was an example of a fascinating American type: the spiritual entrepreneur,” writes Christine Rosen in a Wall Street Journal review of The Great Oom, by Robert Love (4/23/10).
Pierre — who was “born Perry Baker in Leon, Iowa in 1876” — was “one of yoga’s earliest promoters … whose talent for self-invention rivaled that of P.T. Barnum.” Pierre happened to learn yoga from an Indian tutor in 1889 and made a name for himself as a hypnotist.
He reportedly once put himself in a trance and then had pins pushed through his cheeks and earlobes, and a hatpin rammed through his tongue. Such spectacles helped make him “a sought-after guru to wealthy San Francisco residents,” and earned him rock-star status among his young female disciples.
Pierre managed to attract the Vanderbilt family, who bankrolled him as “he established a yoga center on an old Nyack estate.” This thrived for a time, and then Pierre’s enterprise, along with his Vanderbilt connection, fell apart during the Depression.
But by the time he died in 1955, yoga was moving mainstream, and Pierre’s “life reminds us that the appeal of spiritual cures that promise practical results is not a new phenomenon; it is an enduring part of our country’s history.”
June 23, 2010 Comments
Project Impact does not appear to be the “win” that Walmart expected.
One of the most important criteria used by retailers to evaluate a proposed shopper-marketing initiative is the extent to which it is designed to benefit all stakeholders — meaning the retailer and its customers — as well as the sponsoring brands. As everybody knows, this is called a “win-win-win.”
It goes without saying that Walmart is especially insistent on this. As a result, most suppliers pull all stops to ensure that everything they present to Walmart is structured to be a win-win-win — and perhaps even a little overboard on the “win-win” segments meant for Walmart and its customers.
Now let’s flip the coin and take a look at Walmart’s Project Impact through the same lens. To what extent is Project Impact a “win-win-win” — for Walmart, its customers and suppliers? To what extent did Walmart consider its suppliers when it blocked-out the objectives and strategies for Project Impact?
To put this in perspective, one first needs to know a little bit about what Project Impact is and how it came about.
Between 1999 and 2003, Walmart’s fierce determination to be the low-price leader enabled it to operate profitably on gross margins (read: “retail sales prices”) that were actually lower than the operating expenses of its leading grocery competitors — Kroger, Safeway and Albertson’s.
In other words, regardless of the number of hi-lo pricing machinations these competitors conjured-up, the bottom line is that they were mathematically unable to compete with Walmart on price — which is no doubt why millions of shoppers during these years migrated to Walmart and why Walmart enjoyed consistent double-digit growth.
Then, for the first time in 2004, Walmart’s gross margin nudged above Kroger’s operating expenses. From then on, in what turned-out to be a steady pattern every year for the next six years, Walmart had to increase its gross margins to cover higher and higher operating expenses while Kroger was able to reduce its margins as it became more and more effective at getting its costs under control.
The result is a significant reversal of the advantage that Walmart enjoyed in the early years: Now at 24.8 percent for Walmart versus 23.2 percent for Kroger, Walmart’s gross margin is at a serious 1.6 percentage point disadvantage versus Kroger’s — a difference just too big for recession-pressured competing shoppers to ignore for long.
The object lesson of the Walmart-Kroger pricing scenario is that, for whatever reason, Walmart allowed itself to deviate from its core strategy (“Always Low Prices”) and thereby enabled a major competitor to get its nose under the tent.
The bottom line, after six years of a steadily widening margin gap, is that in FY 2010 (which ended at the end of January for both Walmart and Kroger), Walmart’s US same store sales declined by -0.7 percent — the first decline in Walmart’s history — while Kroger’s increased by 2.1 percent.
Walmart attributes this decline to “deflation in certain merchandise categories” — and gives various other explanations as to why Wall Street and stockholders shouldn’t really be concerned. But, as we will see, the jury is still out.
In any case, Walmart has not been unaware of its issues. In fact, it is precisely because of Walmart’s dissatisfaction with its US supercenter performance that it unveiled Project Impact in the fall of 2008 with the following objectives:
• Improve traffic, same-store sales and margins in Walmart US supercenters while simultaneously reducing operating costs and — specifically — inventories.
• Upgrade Walmart’s shopper base to include middle-class moms, boomers and “aspirationals” while continuing to attract and hold Walmart’s core customers.
• Better leverage Walmart’s power and scope (i.e., global reach) in all activities, including sourcing and supplier negotiations.
Walmart intends to achieve these objectives through the simultaneous implementation of three strategies, which — again — call for significant departures from traditional approaches, specifically:
“Save Money. Live Better.” Walmart has replaced “Always Low Prices” with “Save Money. Live Better” as its mantra and messaging platform. This enables Walmart to broaden its message beyond price to talk about the quality of life that its lower prices make possible — and ensure relevance by varying its message to touch upon the environmental, health and wellness issues that are most relevant to its customers (and potential customers) at different points in time.
Additionally, it allows Walmart to leverage the legacy of “Always Low Prices” by making claims like, “Undisputed Price Leadership” and “Unbeatable” without, however, actually having to gut its margins to guarantee absolute across-the-board low-price leadership.
Another facet of “Save Money. Live Better.” is Walmart’s determination to make its Great Value private label brand a major factor in each of the categories in which it competes. This is because Walmart believes that Great Value is key to achieving its margin objectives while also building customer loyalty by providing reliably consistent high quality at low cost.
As a first step, Walmart began to reformulate approximately 750 Great Value SKUs last March — mostly food items — and is now extending this to HBA as we write this. Although Walmart has not yet done much in the way of significantly increasing merchandising support for Great Value since the start of Project Impact, one can safely assume that such a push will be substantial and inevitable.
“Win/Play/Show.” Walmart now uses “Win/Play/Show” as a matrix to assign category roles or make decisions about which brands/SKUs to keep and which to delist. Walmart calls this “a more strategic approach to merchandising” and freely acknowledges that not all categories will be treated equally in the application of these criteria.
In fact, the role that Walmart assigns to a category based on this matrix will no longer be dependent on purely “objective” analytics: What Walmart is doing is combining objective and subjective criteria in order to “place bets” on certain categories based on “growth potential, scale advantages and alignment with Walmart’s image.” These are factors that suppliers can “enhance” depending on the degree of support they are willing to provide.
How does one know why (or why not) one’s category is placed in the Walmart “Win” quadrant? That’s exactly the point. While Walmart does publish the criteria for its “Win” quadrant, it leaves this relatively open-ended, couched in subject-to-interpretation phrases like, “Consumers see Walmart as a credible destination” or “Volume contributes to price leadership position,” and so forth.
In other words, there is no longer a fact-based approach upon which one can rely. While there are obviously certain basics that must be in place even to be considered for Walmart’s “Win” quadrant, by leaving the final decision open to certain subjective evaluations, Walmart cleverly sets-up a competition among suppliers.
In this environment, “winning” will almost certainly include the extent to which category suppliers are willing to go “over and above” to help Walmart achieve its objectives. Translation: When all else is equal, adding incremental marketing or merchandising support can make the difference between being assigned to the dark-and-damp “Show” quadrant versus the sunny-and-eternally-productive “Win” quadrant.
Where one lands is critical because Walmart is using its “Win/Place/Show” criteria to achieve its inventory reduction and margin enhancement objectives. To this end, Kantar Retail estimates that since the start of Project Impact, Walmart has delisted approximately 12 percent of its total SKUs, which, based on an average of 142,000 SKUs per store, translates to more than 17,000 items.
Importantly, it should be understood that these delistings did not just include tangential or redundant SKUs that flanked core brand offerings. In some cases, they included entire brands — like Hefty One Zip Food Storage Bags — and even entire departments (e.g., fabrics).
“Fast/Friendly/Clean.” This third component of Project Impact is primarily focused on improving the in-store shopping experience to improve loyalty, increase basket size and upgrade Walmart’s shopper base to include middle-class moms, boomers and “aspirationals.”
To achieve these objectives, Walmart has implemented its version of Target’s “Clean Store” policy — meaning that it has eliminated all displays and point-of-sale materials in all areas of all Project-Impact-converted stores that would in any way impede traffic flow, visibility or access to any department or any part of any shelf.
As Bill Simon, EVP & COO of Walmart US notes, “The net effect is you open up the customer space, you improve the shopping experience, you provide access to and visibility to departments that were previously difficult to shop — like apparel.”
In Walmart’s case, this “clean sweep” includes — literally — millions of square feet of pallet displays that used to populate Action Alleys. This includes displays that traditionally comprised high-volume impulse or elastic items like salty snacks, beverages, cereals, candy, cookies, diet products and DVDs.
Additionally, although Project Impact was “officially” implemented in only 32 percent of stores by the end of March of 2010, many store managers did not wait and took the initiative to clean out their Action Alleys before their stores were converted.
While there is a great deal more to Project Impact than what we are able to discuss here, the net of the above is that Walmart appears to have adopted a course of action based more on imitating competitors than on capitalizing on its intrinsic strengths.
In fact, much of this has the aura of being outsider-driven — e.g., the “cuteness” of barely adequate “Win/Play/Show” criteria — that flies in the face of Walmart’s rock-solid and dependable traditional approaches. Specifically:
• Whereas Walmart has been traditionally known as a “house of brands,” it is now gearing up to provide record support for the relaunch of its Great Value private-label brands which it sees as crucial to achieving its profit and differentiation objectives.
• Whereas Walmart has traditionally positioned itself as a “one stop shop” — wherein busy shoppers could get everything done for their entire family in one stop at a Walmart supercenter on a Saturday morning — Walmart appears to be subordinating this positioning to its objective of reducing inventories via the elimination of SKUs and in-aisle displays. These actions may so anger its traditional customers that they may actually begin to explore other alternatives.
• Whereas Walmart built its reputation (and its business) via an unwavering determination to always be the lowest price competitor in a market, the indications are that Walmart has made a conscious decision to relinquish this lead. This is suggested by the fact that Kroger has had lower gross margins than Walmart for the past three years — something we are 100 percent confident that Walmart follows intensely.
• Lastly, whereas Walmart has always been known as the beacon of fairness and fact-based decision-making in manufacturer/retailer collaboration, this injection of constantly moving subjective elements into the “Win/Play/Show” equation appears to have transformed what used to be a reliable process into a virtual crapshoot — a process that Walmart itself describes as “Placing Bets.”
So, given all of this, how does Project Impact stack up as a “win-win-win” proposition — for Walmart, its customers and suppliers?
Walmart: Project Impact does not look like the “win” that Walmart expected. After eight consecutive quarters of same-store sales increases through recessionary times — a record equaled by almost no other retailer— Walmart’s sales began to slow soon after it converted 600 Project Impact stores in the spring of 2009.
In its second quarter, ending July 31, 2009, same-store sales fell -1.5 percent; third quarter dropped another -0.5 percent; and fourth quarter (the holiday season!) to -2.0 percent.
Overall, for the first time in history, Walmart’s US same-store sales dropped to -0.7 percent for its fiscal year ending 1/31/2010 (versus +3.2 percent year ago) — and then dropped again to -1.4 percent in Q1, 2011. Finally, despite its draconian delistings and display elimination, Walmart US’s FY2010 operating expenses actually increased 0.4 points.
Other, separate, confirming data indicate that, over the past 12 months, Walmart’s US dollar sales growth did not keep pace with the industry in total and, in fact, grew more slowly than all other major channels. In other words, Walmart US lost share.
Walmart’s response to these numbers is that they are fundamentally a product of price deflation and recession — certainly not the result of any bad decision-making having to do with the implementation of Project Impact.
In support, Walmart points to the fact that during the 12 months ending January 31, it was able reduce inventories by 7.6 percent or $1.8 billion and — most important — grow operating profits by 5.2 percent to a record $19.5 billion.
While these latter results are impressive, we have a long-standing belief that one has to be effective before one can afford to be efficient. So, until Walmart’s same store sales turn around for two consecutive quarters, all else is conversation.
Walmart’s Customers: Based on Walmart in-house surveys, Project Impact is reported to be a hands-down “win” for customers who shop in the converted stores. In 2009, Walmart US customer traffic rose 1.3 percent.
Even at these higher traffic levels, Walmart achieved “the highest customer satisfaction scores ever” in its converted stores during the critical 2009 fourth-quarter holiday-shopping season.
Walmart’s recent actions, however, lead one to suspect things may not be as rosy as claimed:
The Chicago Tribune reports that Walmart is counting on sharp price cuts — such as $1 bottles of ketchup and cases of soft drinks for under $4 — in essential food categories as it looks to regain the upper hand when it comes to a low-price reputation. At the same time, as previously reported, the retailer is restoring some items that it previously eliminated in its SKU rationalization effort that was designed to streamline stores and make them more profitable … but instead sent a lot of its customers to the competition looking for products they could no longer find at Walmart. (Source: Morning Newsbeat, 6/1/10).
Bottom line on Walmart’s customers: The jury is still out.
Walmart’s Suppliers: Project Impact has been a “worst nightmare” scenario for any supplier who lost distribution or whose growth is primarily dependent on Action Alley displays.
Even for the big guys, this has been hard. For example, in the second half of calendar 2009, Kraft noted that it had experienced declines in biscuits, Chips Ahoy, Triscuits and Maxwell House “due to reduced merchandising at a key customer.”
One customer whose actions can determine the success or failure of a national brand. Maybe we need a Robinson-Patman for retailers.
Think about it.
Beyond these specifics, we can hardly imagine that the infusion of agenda-driven subjectivity into the “Win/Play/Show” product selection or category merchandising criteria is conducive to building trust and confidence in the supplier community.
Just wait until Walmart delists your products — and then tells you eight months later
that perhaps they were too hasty — or that you might get back in if you were to pony-up some advertising dollars proportional to Walmart’s share of your business.
Meanwhile, what did you do with all of those employees you had sitting around in the middle of a recession with little or no hope of finding another job? Do you now have to hire them back?
No — Walmart’s tinkering is definitely not a win for most suppliers.•
CHRIS HOYT is president of Hoyt & Company, a Scottsdale, Arizona-based marketing/sales consulting and training organization that specializes in shopper marketing. Chris may be reached at (480) 513-0547 or at chrishoyt -at- hoytnet.com.
June 23, 2010 Comments
Shoppers expect brands to meet their needs anytime, everywhere.
The advertising industry espouses many points of view on the best way to win shoppers and buyers. The 30-second television commercial was once considered the best avenue. More recently, employing former Procter & Gamble CEO Alan G. Lafley’s “First Moment of Truth” concept, agencies have focused on the in-store environment to heighten the appeal of products at that key moment when a consumer makes a buying decision at the shelf.
Then, as the Lafley concept evolved, it generated the notion of store back — when an idea is executed first in the retail environment before focusing on other communication touch-points. Today, we need to recognize the enormous impact of technology and how it can create many interactions between a consumer and a brand before the consumer ever sees a product on the shelf. Shoppers simply aren’t limited any longer to what’s on any retailer’s shelf because now everything is available online.
Even shopping for something as mundane as grocery products isn’t as simple as before. Many shoppers now add the steps of collecting online coupons and perusing product reviews written by other consumers before heading to the store. They turn to Facebook for recommendations by friends on various products and services. We need to evolve our thinking again beyond store back to assimilate this new world that faces shoppers and our brands.
Enter shopper back. It’s a philosophy that begins with a holistic view of the shopper and her behavior, and works back from there. It puts her on center stage, starting with an individual shopper and her very personal shopping journey. Understanding who that shopper is, what she values and what she expects from the shopping and buying processes is the foundation.
This approach requires understanding her as a human being, a consumer and a shopper. It’s about her behavior, including shopping and buying triggers as well as the barriers and the joys she experiences — everything that influences her behavior on this journey.
From there, we must let our knowledge of the shopper and her behavior drive the role that various shopping channels and media touch-points will play. We must understand the role of each channel and touch-point in closing the sale — or bringing her closer to the sale — because we can’t expect shoppers to come to the channels where our brands advertise any longer.
With the knowledge of how the shopper evaluates and makes choices among her various channel options for buying, we can work with retailers to help them determine how best to meet and exceed the shopper’s expectations. Ultimately, the goal is to be able to engage a shopper across all of the shopping and buying channels with the right messaging and communication to influence her behavior.
Every Shopper is Different
While we can generalize to some level using segmentation models, ultimately every shopper is different. Arc Worldwide’s own research reveals six shopper archetypes based on shopping attitudes and motivations (“Precision, Passion & Prudence,” The Hub, Nov/Dec, 2009). Today, shoppers have heightened expectations of the shopping experience and desire a process that they can control.
For example, for the efficient sprinter shopper, who will readily pay more for convenience, a consumer packaged-goods online retailer such as Alice.com might prove especially appealing. Alice.com sells home goods such as toilet paper, trash bags and toothpaste directly from manufacturers. It even offers an iPhone app that provides a more convenient way to shop and save time, thus employing technology to take away the chore and hassle of household shopping — perfect for the efficient sprinter.
On the other hand, a highly discerning shopper who needs to experience products firsthand — a quality devotee — might prefer the experience of shopping offered by Swiss watchmaker Tissot. Recently, as part of an advertising campaign at London’s Selfridges on Oxford Street, Tissot made hi-tech touch screens available and store employees handed out wristbands with markers to passersby.
Shoppers tried on a range of Tissot watches by holding up their wrist to the camera and seeing each watch appear on it. This augmented reality-marketing approach provided an engaging interactive experience for shoppers who are motivated by the desire to try before they buy.
It’s All About Her Behavior. Next we must consider the shopper’s behavior, which varies by category and may involve shopping and buying across multiple channels. Shoppers now choose their information and product touch-points to suit their needs.
Unlike the past, when shoppers started with a retailer in mind, they often start now by “Googling” a product or brand. They concentrate on getting what they need rather than on the channels or retailers that they shop. They move fluidly from one channel to another, and these channels simply serve as the tool for landing the brand or product of their choice.
For instance, a shopper may visit a drug store to pick up a newspaper so that she can review the ads and coupons. But she may never even consider going into the personal-care aisle to buy her hand lotion while there. Another shopper may select a jacket from a catalog but not make the purchase until she’s tried it on at a store.
Follow Her Path. For each shopper, different needs emerge in different categories. The way she shops for shoes, for instance, will vary from the way she shops for a new washer and these needs dictate the channel mix she will use. It’s rarely a direct path and it varies by category, depending on the risk/reward profile for that category. Her path may involve multiple channels and touch-points, all of which help her accomplish her shopping and buying goals.
Depending on where your category falls with risk/reward, your shopper may use more or fewer channels along her purchase path. A highly rewarding and highly risky category like skincare may drive her to consider and shop multiple channels (online, store, catalog, etc.) while a less rewarding and less risky category may limit her use of multiple channels.
For instance, let’s assume your dentist recommends that you buy a power toothbrush and offers you the chance to buy one then and there. The cost, however, is higher than you expect, so you decide to shop around. You go to Target, but you are overwhelmed by the product options and decide you need to do some research.
You go to the Sonicare and Oral-B websites to learn more. Then you go to drugstore.com to read consumer reviews. Now you are ready to see the product before making your final choice. You return to Target to view the product, but decide to wait for a sale. You receive the Costco coupon booklet with a discount on a different toothbrush so you decide to switch to this product. You go to Costco to buy it. Now you keep your eye out for future sales on the product that you tried and liked.
What this example illustrates is that we must understand each step within that journey, including the barriers that prevent our shopper from purchasing as well as her joy and pain points. We must ascertain how she views and what she brings to each step to best understand and influence her behavior. Reasons exist for why she buys and why she doesn’t.
Put Her in the Driver’s Seat. Savvy brands will use their knowledge of a shopper’s behavior at the various points in her shopping journey to guide their creative and messaging decisions. To do this, they must determine what’s required to communicate to her at certain points to get her closer to purchase or to close the sale. The goal is to engage with each shopper by delivering relevant information at key points and places in her journey.
It’s also essential to understand who and what comprises a shopper’s key influencers — those people and experiences that help mold her buying decisions, whether they emanate from word-of-mouth, professional and friend circles, or memories of prior brand experiences.
But while people want counsel from other shoppers and sources, they also want to share their experiences and look for validation before — or even after — making a purchase. That’s where technology advances have had a huge impact. They have helped fashion a new shopper-defined path to purchase that truly puts her in the driver’s seat.
For example, Diesel, the watch and accessories maker, created an interactive installation in a Diesel store in Spain that permitted users to share the moment of buying with their Facebook friends. The installation lets consumers take pictures and publish them directly onto their very own Facebook account.
The ultimate goal with shopper back is to provide a consistent and holistic brand experience for your shopper regardless of channel. Why? Because she doesn’t have an online and an offline life — she simply lives her life and expects to shop fluidly across online to mobile to catalog to store and any other channel she may choose. Those brands that recognize this and best understand the shopper’s journey will truly benefit by gaining her trust and loyalty. They’ll close the sale.•
KARUNA RAWAL is svp, retail strategy director, at Arc Worldwide, the marketing services arm of Leo Burnett Group, specialists in shopper, digital, promotion and direct marketing. She may be reached at karuna.rawal -at- arcww.com.
June 23, 2010 Comments
Mass customization offers irresistible opportunities to re-think brand identity.
Retail and manufacturing gurus alike predict that “mass customization” will shape the future of what — and how — consumers buy. They may be right. Wikipedia — the mass-customization resource for looking up what mass customization means — defines it as the “production of personalized or custom-tailored goods or services to meet consumers’ diverse and changing needs at near mass production prices.”
Enabled by technologies and lean production, mass customization promises the ultimate stage in market segmentation, where every customer can have exactly what he or she wants. At its limit, it is the mass production of individually customized goods and services. At its best, it provides strategic advantage and economic value.
Innovators from Amazon to Apple to BMW have already made mass customization techniques a successful part of their moments-of-truth experiences. A moment-of-truth experience is what building brand and building loyalty is all about.
The process of mass customization may be more important than the actual product itself. For both producers and consumers, mass customization may be less valuable as an innovative medium for producing “better” products or services than as a platform for personalizing and individualizing self-expression.
Creating new chances for consumers to personalize and individualize brands creates opportunities to deepen their relationship and brand loyalty. Everyone may want the “same thing” but — especially in an austerity economy — the desire to individualize is greater than ever before.
We talk so much today about giving consumers control and listening to consumers through social networks. Mass customization takes these conversations to entirely new levels by inviting greater consumer involvement at the richest point-of-engagement. If the end game of all marketing and selling is to create loyal users, this refocus of mass customization gives brands the greatest array of options at the best possible price.
What personalization and individualization interactions should marketers, manufacturers, or retailers invite? How can we brand them? How can we co-create with the consumer and the shopper at the product and service level?
Different Like Everyone Else
The concept of mass customization is attributed to Joe Pine’s 1992 book by that title. However, the idea of mass customization has been around for many decades. In both industrialized economies and emerging markets, consumers from the youngest ages have the desire to personalize and customize their purchases and possessions.
If you are around my age, you may remember the Cabbage Patch doll phenomenon where we mailed away for a part plastic/part fabric doll that was supposed to resemble our own features in a cotton-foam stuffed offspring. This has given way to the American Girl Doll and Build-a-Bear workshops of today with a much more hands-on interactive experience.
LEGO is a global leader that spans these generations and led the way into the digital DIY — Do-It-Yourself — customization category. LEGO-loving children use their blocks to express their creativity, ingenuity, and personality. LEGO’s products and website are built to facilitate personalization and self-expression. They have brilliantly taken a generic plastic building piece and made it the foundation for endless construction possibilities, making every child a true architect of his or her own play.
The ability to personalize, differentiate, and creatively express one’s self is the real core of customization. Features, functionality and price are important, but more consumers want more ways to put themselves into their chosen brands. Consumers are all gravitating to the same mass products — from automobiles, sneakers, handbags, mobile devices, healthy foods, beverages — while benefiting from the ability to express individual style. What we’re seeing emerge are “individualization and customization eco-systems” around core products, services and brands.
For example, while Apple supplies utility, must-have products, other companies are benefiting from giving consumers the ability to make them their own from skins to apps to ear-bud covers. Of course, some of these elements of customization are more cosmetic versus substantive. Some are more personalized and individualized while others are available to a broader audience.
The core similarity and continuity is that companies are connecting more deeply with consumers by allowing them to make them unique — just as ringtones signal the desire to give our identity its own ring. As denim jeans exploded in popularity in recent years, the original — Levis — gave consumers the ability to self-tailor to their individual preference and cut. Nike ID led the way in custom-designed sneakers (see page 22).
Over the past few years, Crocs became a wildly successful fad in footwear. Yet the real genius was in the company that came up with the accessories that cleverly fit into the design of the shoe. The Schmelzers (bet you’ve never heard of them) started a basement business called Jibbitz to sell mini faux flowers, buttons and charms for Crocs. They were eventually purchased by Crocs for $20 million in December 2006.
These companies discovered the power of making consumers an innovation partner and platform for their brands. By doing this, they create a deeper connection to establish loyalty and brand preference. Today, the ability to make ubiquitous products individualized and personalized will further fuel the opportunity to exploit this trend.
People also become human billboards for these brands. When people are empowered to express their signature identity through your products there is no stronger endorsement of brand identification. The internet makes this model available to more companies and the possibilities become endless. It also elevates to a global opportunity when consumers around the world have equal access to the ability to customize a brand, service or experience online.
There’s no shortage of global examples for inspiration and emulation, from bivolino.com (a European apparel company that has enabled large retailers to offer customized items within established e-commerce sites) to mymuesli (first company to allow users to custom-mix and mail-order their favorite cereal and ingredients).
Zazzle is a great example of this — whether it’s how the platform has enabled anyone in the world to open his or her own merchandising store with a custom assortment online, or how the platform has allowed established brands to enable mass customization online.
The Retail Opportunity
A chain like Whole Foods taps into aspects of mass customization through its bulk bins and salad bars. Retailers need to explore more how they can use their environment to inspire and enable opportunities for customization.
This is an area ripe for manufacturer and retailer co-creation. When brands like G (Gatorade) allow Mom to pick her assortment of flavors, or when Frito Lay allows her to mix-and-match her exact combination of snack packs, an unmet need is being fulfilled in a simple way. The new fountain-drink dispenser found in some quick-serve restaurants that allows for hundreds of unique flavor combinations begins to tap into this mass customization movement, as well.
One way to innovate at retail is through customer service. The role of sales clerk to facilitate a customized experience transforms the retail experience. Take Sephora, where the sales people sample products and will give consumers a full make-over demonstration designed just for them.
Or, imagine if Whole Foods had nutritionists on staff who designed a weekly food plan for the family, complete with shopping list. Best Buy tapped into this with its Geek Squad and are now further enhancing it with its Blue Label, where they partner with consumers and brands to build custom laptops.
Manufacturers have long known that the ability to give retailers “limited time only” customized editions of their products enhances the value. Bringing the consumer into this equation further enhances the connectivity, the stickiness, the engagement/experience and, ultimately, the loyalty.
The use of ‘technology’— whether the internet, software or mobile — facilitates the ease of this model and the ability to adopt it quickly. Retail is often more of a battleground than a shared space when it comes to building brands. There is inherent tension between who owns the “shopper” — the retailers or the manufacturers. What is more important: building the retailer brand or the myriad of brands that make up the selection within the retailer?
Ultimately, both need to thrive in order for business to grow and mass customization may be a critical tool to bridge both. The purest examples come from retailers where the brand and retail channel are one — such as flagship and experience stores.
Take stores like Niketown, Nokia, T-Mobile, Lacoste, and Louis Vuitton, where the mix of interactive media and craftsmanship creates entirely new experiences for the consumer. When the retail channel is aligned with the online channel to create personalized service, you have a virtuous cycle of one-to-one individualized and yet mass-relationship management.
This trend permeates every type of product and service. Mini Cooper exploited it brilliantly with its Nike ID cars. Daimler’s Smart microcar just recently launched a highly successful customer co-creation contest where consumers created more than 50,000 custom designs within just weeks. This type of thinking — that goes beyond a brand by consumer co-creation of services, experiences, and products — is the ultimate in mass customization innovation.
Pandora.com creates thousands of personalized music streams every day based on an automated music recommendation system. Pandora makes it simple for users to personalize their music repertoire and has helped transform the entertainment industry as result.
Clearly, mass customization taps into a deep-rooted human need and desire. Consumers want much of what everyone else does; that has not changed. Mass products and services have not lessened in the marketplace, but the ability to personalize and customize enhances value exponentially.
Virtually every brand and service can be put through this filter to inspire innovation. However, this is innovation that is created and co-created by consumers themselves — or the salesperson. The beauty of this is it cuts across age groups, demographics, psychographics and cultures. It also serves R&D, manufacturing, retail/sales, and marketing.
All companies and marketers should be considering how to configure and structure their business model to give people choice, variety and, more important, freedom to self-express and personalize. All of this can now be done without a corresponding increase in cost or supply-chain production.
Think of the consumer insight this yields. No longer do you need to guess at the innovations your consumer desires or how to satisfy micro targets while you are serving mass appeal. That is the power of a mass-customization model. •
BETH ANN KAMINKOW is president and chief operating officer of TracyLocke. A strong advocate of insights-inspired marketing programs, she is a pioneer in strategic-planning research methodologies. Contact: bethann.kaminkow -at- tracylocke.com or (203) 857-7616.
June 23, 2010 Comments
Three principles of smart planning can protect brand identity.
At this point in the year, many large and otherwise sophisticated companies are doing “re-plans” of their annual plans. Of course, most companies are “re-planning” the plan that was just deployed six months or so ago, and not finalized until nine months ago. So within a year, companies are thinking and then re-thinking brand and portfolio objectives and strategies.
Sure, occasionally tremendous fluctuations of outside factors — factors that could not have been easily anticipated — can be the cause of the re-plan. But these are extraordinary events. For example, due to the Icelandic volcano eruption and cabin crew strike, British Airways has good reasons to re-plan. But for most companies, changes of such magnitude are rare, and the need for a re-plan should be just as infrequent.
The only logical conclusion is that the need for major re-plans demonstrates that there is something very, very wrong with the way we plan to begin with.
I don’t need to detail here the huge costs to companies stemming from bad planning: the many marketing dollars wasted amid the inevitable financial chaos as companies rebalance portfolios or the time that could have been spent developing innovations and executing with excellence spent instead calculating causals and justifying poor results. The point is to do something about it.
We are proposing three principles that not only improve planning, but also lead directly to more informed investment decisions across brands and portfolios.
1. Understand how much of your volume and revenue results are driven by controllable versus uncontrollable factors. By controllables, we mean factors such as marketing spending, product quality and benefit delivery, advertising effectiveness, pricing, in-store presence (including assortment, shelving and trade promotion), and the like.
Uncontrollables are factors such as competitive activity and general economic conditions as well as circumstances specific to particular businesses, such as the rate of housing starts, incidence of certain diseases or conditions, or the weather. Defining these factors — what they are and exactly how much they count — should be quantitative and precise. Today, we have the tools to decompose the impact of each variable, enabling both a granular view of what contributed to past volume and the basis for simulating future volume.
It is absolutely critical to make the distinction between factors that are truly uncontrollable and those that are simply out of control. For example, we can analytically determine the amount of volume we lose to competition or gain from advertising.
Those simple numbers are, however, often only a reflection of the relative power of what we, the marketers have, or haven’t done. Have we spent to optimal levels in advertising? Is the advertising strategy right and the execution persuasive? Are we losing to other brands because we are not offering the consumer a compelling value; that is, an appropriate benefit/price relationship?
The temptation that must be avoided during the planning (and, for that matter, the re-planning) periods is to rely on incomplete information and the justification of a number rather than an objective determination of why the number is what it is, and therefore what can be done to change it.
2. Demand that marketing plans maintain or improve the relationship between controllables and uncontrollables. The central question in a marketing plan should always be: How can we maximize the impact of the controllables and minimize the uncontrollables? Answering that question requires us to first examine each factor both individually and then also in combination with all the other factors. This latter point is important. Few factors operate entirely independently, yet we frequently use independent data points to evaluate them and therefore effectively act as though they are independent.
Further, each component of the marketing plan is seldom evaluated in terms of its impact on the overall brand strategy. For example, a leading over-the-counter pain relief brand recently revamped its entire brand proposition after several years of stagnant growth. The brand marketing team took a very broad view of the pain management market, and redefined a precise position in the market that the brand could own.
The new strategic position for the brand led to multiple changes in marketing strategy. These included increased advertising, the identification of new innovation opportunities, new pricing and promotion strategies, a more productive assortment of brand items and more relevant retail shelf-sets for the category. In total, this tilted the brand much more to controllable versus uncontrollable factors and therefore better and more predictable results. Without question, these results would never have been achieved if the marketers had just continued to make marginal adjustments to the prior year’s plan.
This is where the rubber meets the road if we truly want to affect the predictability and reliability of our strategic and operating plans. Unfortunately, this is where there is frequently a breakdown in the planning process between what we want to happen and what is likely to happen. This is where plans become top-down plans jiggered to meet pre-determined financial goals instead of plans built up from a reliable, analytic assessment of consumer response.
And it’s unnecessary. We have the analytic tools to simulate the likely results of a plan’s ability to change consumer behavior and identify the volumetric and revenue impact for each factor and for the plan in total. We can then ascertain the controllable versus uncontrollable proportions.
If followed, this process can additionally isolate the sensitivity of each factor to the changes we are planning (that is, how we intend to improve the relationship between the controllables and the uncontrollables). Thus, we should also be able to produce a risk assessment for each brand and each portfolio.
3. Be hard-nosed in assessing the investment in brands or portfolios that are tipped to uncontrollables and appear unable to alter that dynamic. Too often, marketing investment plans are built on what was spent before or what was done before. Individual parts of a brand or a portfolio are reviewed in isolation, separate from the rest of the portfolio.
In fact, however, if we have simulated plans with a real and comprehensive analysis of the underlying consumer dynamics, then we can make fact-based choices across all the brand and portfolio investment opportunities using the same criteria. Further, the risk assessments that are part of this process enable us to balance the portfolio plan not only in terms of forecasted returns, but also in terms of risk.
A brand that continuously has a disproportionate amount of its results dependent on uncontrollables is not a rational investment choice; these are brands that should be de-prioritized and ultimately eliminated.
Philips’ decision to exit the television business in the U.S., while directing its investment resources towards profitable, growing, wellness-focused brands such as Avent and Sonicare, is an example of shifting a portfolio away from businesses driven by uncontrollables. This has allowed Philips to free itself from the dramatic, economy-driven swings of the television business to focus on its high-growth businesses with more predictability.
Continuing to invest in brands that are heavily dependent on uncontrollables is tantamount to playing the lottery with your financial returns. Management should insist on predictive, measurable plans, in which resources are focused against the parts of the portfolio where you control your fate. The benefits are both better plans and improved results. •
JAYNE EASTMAN is a managing director with Henry Rak Consulting Partners. Jayne previously was a marketing vice-president with Kraft Foods and EVP of strategy with Wells Rich Greene. She can be reached at (843) 200-3001 or jeastman -at- hrcpinsights.com.
June 23, 2010 Comments
Mashup offers new brand opportunities in China.
Mashup began as the artistic practice of creating a new song by mixing two or more existing, and often dramatically different, songs together — a style that has exploded in popularity in recent years because of digital technologies. Although mashup began in the music world, it has since found its way into video and fashion. Even brands are getting in on the trend.
Mashup is popular in many places, but in China it’s everywhere. Disparate and conflicting influences mix in every cultural and commercial medium to create the new and distinctive. China is the mashup nation.
It makes perfect sense that China would embrace and elevate mashup the way that it has. As far as paradoxical places go, China is possibly the most striking. It’s a communist country that does capitalism better than most capitalists; a global superpower with one of the lowest per capita GDPs in the world; a nation of impressive economic growth that is sadly, in turn, creating massive environmental problems; and a land where a growing sense of nationalism butts heads with an increased curiosity about individuality.
The interesting part for brands in China is how consumers — especially those in the younger generation — are not only managing, but thriving, within the context of these persistent paradoxes.
In recent years, Chinese consumers have been exposed to a sudden onslaught of intense marketing and innovation. But far from shying away from or rebelling against this sudden influx of consumer culture, Chinese consumers are embracing it, engaging with it, demanding more from it, and shaping it in their own images. In short, they are creating mashups.
The emergence and fast popularity of China’s Back Dorm Boys serves as a kind of milestone. The group, which first appeared in 2005, comprises two Guangzhou Arts Institute students who posted videos of themselves lip-synching Backstreet Boys songs on YouTube. They quickly achieved global celebrity and spawned a plethora of international imitation.
The Back Dorm Boys phenomenon indicated the emergence of a new attitude among Chinese youth — they were no longer simply in awe of Western popular culture but were actually shaping it into something distinctly their own. And in the process, they captured the world’s — and eventually, markets’ — attention. The Back Dorm Boys signaled the end of an era when foreign brands could simply slap a Chinese name on existing products and, with some basic advertising support, succeed in the market — if, in fact, this was ever really possible at all.
While there is a lot of originality in China, in yet another realm of the mashup spectrum is the nation’s adeptness at drawing on what works in the West and combining it with what works best at home. This process results in products and brands that, while similar, are truly new and different — and often more appealing to local consumers.
One commonly mimicked product is the iPhone — imitations of which are similar to, but sold for less than, the Apple-branded devices. Not only do these mashups often have superior functionality and more features than the originals, but the added attributes are also tailored to specific Chinese needs and desires.
This type of innovation is rare in the Western world but common in emerging economies. Because anyone with the proper skills and the motivation can take the initiative to create and sell an improved-upon, localized version of a popular product, evolutionary-style competition ensues: As in the natural world where only the strongest survive, only the best ideas and innovations are left in the end in China.
Innovative mashup extends well beyond the technology spectrum: One excellent example is Chinese footwear designer Kim Kiroic, who launched the high-fashion brand KIROIC in 2006. In collaboration with a Korean designer, he created a much buzzed-about shoe style that combined Western sneaker sensibilities with a Chinese preference for open-toed sandals to create something unique and on the leading edge of global trends.
Of course, there are also plenty of the blink-once-and-you’ll-miss-the-difference, so-called shanzhai, or imitation, brands that bear striking resemblance to familiar Western ones (ever heard of sportswear manufacturer IVIKE? Or how about the fast-food chicken restaurant KFG?).
Although many of these may have started with the sole goal of tricking the customer into believing them authentic, the idea behind mixing Chinese notions with Western brands is an important one that has led to innovation and art, as well as true localization of non-Chinese brands and products.
Drawing further on the brand-identity blending trend is a mashup style that’s about aesthetics. It involves taking multiple Western brand identities — especially from the luxury sector — and combining them to make something new.
For example, instead of making faux Prada bags, a knockoff designer might create a mashup of multiple Western luxury brands. The designer may borrow parts of Prada, Porsche, and Armani to create a totally new identity — a luxury designer mashup — with which to decorate and label clothes and accessories.
In the art world, mashup of Western and Chinese influences is also happening frequently. One interesting example of this comes from the Beijing-based graffiti crew, the KwanyYin Clan, which combines one of the more archetypal and traditional Chinese art and craft forms — blue-and-white ceramics — with the Western art of graffiti to create something distinctive that draws clearly from both historical and modern craft, and across cultures.
But what does mashup mean for brands in or entering the Chinese market? Innovation in any market is rarely driven by a single trend. Opportunities lie in the intersection of multiple trends and in the combining of different cultures — and this is ubiquitous in China. Mashup multiplies a great idea’s chances for success because the best aspects of many concepts are combined to create something superior. How can brands use mashup and tap into trends in the changing Chinese market?
1. Encourage consumers to “own” your brand. Mashup, by nature, is anti-establishment. China is currently confronting the establishment of world power and is succeeding. Allow consumers to control rather than be controlled; the more you try to impose order, the more customers will rebel. By encouraging flexibility and manipulation of your brand, you engage in a dialogue with consumers. The brand becomes a part of the peer group.
One dynamic example of this user ownership model at work is the U.S.-based T-shirt business, Threadless. Anyone can submit a design, which is voted on by fellow customers. Designs with the most votes are produced and sold, and the winning artists are compensated.
The company’s design and development work is continuous and consumer generated, and since the creators are also the buyers, failures are rare and costs are minimized. The company is more of a social network than a traditional manufacturer — a brilliant business model for targeting China’s booming youth market.
2. Don’t make technology an afterthought. Technology enables mashup. By providing a place for like-minded people to come together regardless of their geography, technology allows the free flow of ideas and the ability to influence niche cultures. Websites should not be thought of simply as moving brochures — they should allow users to interact with and shape content.
In the spirit of the 2008 Beijing Olympics and before the games began, Coca-Cola invited consumers to visit its “Design the World a Coke” website to create their own artwork to decorate its iconic bottle. In addition to allowing for customization, the site encouraged people from all over the world to collaborate on artwork and even create mashups of their different designs. Without a website, this global mashup activity would have been nearly impossible.
3. Talk to the mashosphere’s main players to capitalize on trends. Talking to the creators of mashup is a straightforward and cost-effective way of understanding consumers and the culture they are creating. Consumers of all ages have their own take on mashup. Whether they are mixing formal and casual fashion to create a new style, or combining opera with dance music, mashup is being made everywhere and by all kinds of people.
While artists, designers, performers, and opinion leaders on the leading edge of cultural trends might be difficult to reach in more developed markets, in China they are still easily accessible — so talk now, and talk frequently, before this changes.
When the Back Dorm Boys captured the attention of China and then the rest of the world, they caught marketers’ eyes as well. Savvy brands recognized that these web celebrities had the power to inspire and influence consumers.
Motorola made the Back Dorm Boys its Chinese spokespeople, sponsored one of their viral videos, and, appropriately, hired them to host a lip-synching contest. Beijing-based talent agency Taihe Rye signed the Back Dorm Boys, securing them spots on TV shows and deals with brands such as Pepsi, which also featured them in its advertising.
One Pepsi campaign promoted a 2006 contest that invited customers to create their own commercials starring Asian pop superstar Jay Chou. While the Back Dorm Boys may have started off as web celebrities known worldwide for their comedic videos, they are now full-fledged Chinese stars with lucrative sponsorships deals.
4. Create stories and experiences, not products and advertising. Great brands are built on great experiences, great experiences create great stories, and great stories underlie all great brands. In our media-immediate world, what consumers tell one another about their experiences with brands is also important.
Word-of-mouth is the most powerful media today, and its reach is magnified exponentially through the internet. But it is dependent on customers having something interesting to say to one another. For China’s consumers, not weaned on decades of traditional marketing, the need for brands to create these testimonial-inspiring stories and experiences is pronounced. In a consumer culture emerging from a mashup of Chinese and Western influences, feeling ownership over brands is crucial in attracting and retaining customers.
Both Pepsi and Nike have been especially successful at blending influences and, as a result, creating memorable, word-of-mouth-worthy experiences that resemble art and popular culture more than traditional marketing. Both have mixed quintessentially American brands with Chinese youth trends, arts, and culture and have been embraced by Chinese consumers as a result.
When Nike entered the Chinese market it stopped projecting itself as an entirely American brand. It marketed itself at China’s youth in their realm and on their terms. Nike not only targets its marketing, but it also designs new products that aren’t sold anywhere else in the world specifically to meet the needs and desires of Chinese consumers. Nike is an American brand mashing up its successful global products with China’s distinctive wants to create something especially for the Chinese consumer.
Pepsi is known globally for its viral video campaigns and other non-traditional youth-targeted marketing, and pursues this especially diligently in China. The brand has not approached mashup as a campaign or promotion but has made blending the main way it markets its beverages. The brand sponsors musicians and concerts and conducts user-generated content campaigns, calling on China’s youth consumers to participate in its marketing by submitting custom art, and even photos of themselves, to feature on its cans.
As we speak, a disparate range of influences is reshaping China. In the midst of these collisions, opportunities lie — especially if Chinese consumers are encouraged to shape and interact with brands. Empowering mashup will mean increased relevance in a market that is changing and developing more quickly than any other in history. •
MICHAEL IP is president, greater China and Southeast Asia, based in the Hong Kong office of Landor Associates, where he leads Landor’s operations and provides senior-level strategic consulting. He may be reached at michael.ip -at- landor.com.
June 23, 2010 Comments