EGF Branding

Spice Maker McCormick Sprinkles Health Messages Into Marketing

2012-01-25T19:13:00.000-05:00

Dominating a Market Category during 123 years. For most of McCormick & Co.'s 123-year history, the spice and herb giant's marketing has been full of flavor. Or as their executives like to say: "Our mission is to save the world from boring food." But lately, the company seems intent on saving people from bad health. McCormick is spending aggressively on TV and print ads that tout the antioxidant prowess of cinnamon, pepper, oregano and others. On the website, it suggests that its products can do everything from reduce inflammation to curb hunger and boost metabolism. The health messaging, which some nutrition advocates say goes too far, is aimed at adding more casual cooks to the marketer's core base of recipe fanatics. The goal is to reach "people who maybe weren't superinvolved cooks … but were still interested in healthy eating," said Jill Pratt, VP-marketing for consumer products. The company looked at some common meals "and found a way to make them a little bit healthier by amping up the antioxidants in them," she said. For example, Ms. Pratt said, one spot encourages people to "add antioxidants to your morning scramble" by sprinkling pepper on scrambled eggs. Another "invites antioxidants to dinner," plugging oregano for grilled cheese. But why should McCormick advertise at all? It already dominates the spice and seasonings category, controlling at least half of the North American market, according to Morningstar. It has 49% share of the $169 million U.S. pepper market, for instance, compared with private-label brands at 35% and ACH Food Cos. at about 3%, according to SymphonyIRI, which tracks grocery sales, excluding Walmart Stores. The health-centric campaign appears more about growing the category with new users than stealing market share. For instance, while McCormick has long targeted men with its Grill Mates collection, the new ads seek to lure more men by plugging spices for everyday use. The health-focused marketing, which began with a print and digital campaign in 2008, is backed by a growing ad budget. McCormick's measured-media spending jumped to nearly $70 million in 2010 from $49 million in 2009, according to Kantar Media. The latest TV spots, from longtime agency Sawtooth Group of New Jersey, direct viewers to a section on McCormick's website "Spices for Health," which touts the health benefits of 12 "super spices." A section on turmeric says it contains curcumin, which "emerging evidence suggests … may help inhibit the growth of cancer cells, reduce inflammation and safeguard our brain." McCormick sources various studies, including one by University of Texas researchers that states curcumin "has been shown to exhibit antioxidant, anti-inflammatory, antiviral, antibacterial, antifungal and anticancer activities." Still, some health advocates contacted by Ad Age are skeptical. "Even though some studies may show some benefit with certain herbs, it is usually not in typical dietary amounts nor in humans, which makes shaking a spice bottle over your dinner not a realistic path to disease prevention," said Susan Levin, a dietitian and director of nutrition education for the Physicians Committee for Responsible Medicine. Stephen Gardner, litigation director for the Center for Science in the Public Interest, indicated that McCormick is violating federal laws that prevent food items from being promoted like drugs. It is illegal to claim that "food products can be used to prevent, cure, treat or mitigate disease," Mr. Gardner said. "That is precisely what they are saying on the website." In a statement, McCormick said it is "very careful not to make any health claims in our communications. We provide information on the amount of antioxidants in specific spices and herbs and the benefits of antioxidants." Linda Goldstein, an ad-industry lawyer with Manatt Phelps & Phillips who is not affiliated with McCormick, said that the tactics are legal and "pretty mild stuff. "They are not saying 'If you eat this, you will avoid this or have this medical result,'" Ms. Goldstein said. E.J. Schultz, January 23, 2012

Rewarding Customers With Prizes Is No Guarantee of Loyalty

2012-01-25T18:27:00.002-05:00

Today's More Complex Consumers Respond to a Quality Product Made by a Company They Can Feel Good About We hear repeatedly in surveys that CMOs' No. 1 goal is to increase loyalty among existing customers. The most typical strategy is a "rewards program" offering benefits, points and prizes. But, depending on your type of business, loyalty rewards are not always the best way to grow customer loyalty. In sectors such as travel or financial services, where increased frequency and value of transactions heighten the rewards, the programs have worked. But in other cases rewards have had the effect of diluting profitability. This is because they are targeted at profitable customers, who are already loyal and less price-sensitive. Consumers are bombarded with programs, benefits, points and prizes. According to recent surveys, 1.8 billion loyalty-program memberships exist in the United States, with the average household participating in 14.1 programs. Yet more than half of those memberships are inactive, meaning the customer has stopped paying attention to the program and possibly even the brand itself. Our firm's research suggest that CMOs should avoid the race to rewards and think in terms of a wide array of options. A successful loyalty strategy is underpinned by the consumer's emotional affinity with the brand, so the goal of should be to create sustained demand. Here are leading factors to consider in determining how best to achieve this: Consumers are becoming ever more demanding and more complex, as they depend less on label alone and require clearer value and product superiority. They are trained to hunt for rewards and incentives, and they like a branded experience, especially if it's a digital one, that is rich with content, tools and community. The consumer definition of value has changed. The consumer sees the reward program as part of an entire package when purchasing a product. This includes not just functional benefits, but also how he or she feels about the company itself. For example, is your company a leader on environmental sustainability both with your products and within your company? If that's the case, sharing that information can improve your value to the customer. Brand equity-building and preference-building ideas will win against discount- or points-only approaches, and have lasting effect on brand loyalty. Offering customers the opportunity to purchase advance tickets for special events for example, or asking them to participate in a product feedback panel, is valuable in building their loyalty. A points program alone is not a big or unique idea. While it may be a cost of entry, or a tipping point for some segments, there needs to be a "wow" branded idea that sits on top of it. It also must be something that brand stewards and customer relations-management gurus can agree on. Understand how to stem brand-franchise defection. The real payback of a loyalty strategy is in managing existing customers, winning back lapsed customers and increasing the value of customers who might switch loyalties between brands on a regular basis. The key is conducting research with each of these groups, getting their input and developing strategies that are highly targeted to their unique position in your customer-relations efforts. Be sure to understand all available assets inside and outside your company through an audit to unlock your toolkit -- free touch points like a monthly bill, or product packaging or a value exchange from vendors with a mutual interest such as direct-mail packages or e-newsletters aimed at millennial moms with toddlers. Complementary companies with shared audiences will increasingly work together. This "consortium" approach to loyalty is a trend. Enfamil and Pampers, as well as General Mills and Nestle, are good examples of companies taking this approach. The Jigsaw Consortium, for example, leverages a shared database between several companies to effectively target like minded-brand loyalists and also reduce their individual costs for data analytics. Brands are profoundly vulnerable to social media. Loyalties can shift fast, as communities rally behind or rail against brands. Brands must be monitoring, influencing and promoting themselves in social forums, including your own company's Twitter or Facebook pages, etc. to ensure that social channels help, and not hurt. For example, if there is a perceived problem with your product that is being inaccurately reported by the media and shared in social media circles, make sure that you find other media outlets or experts that are reporting the full and accurate story, and connect these accounts to your social-media fan base. The winning approach involves a comprehensive and deeper understanding of the way your brand meets the needs of your most important and loyal customers, not just giving them points for being on your side. Martin Reidy,January 23, 2012

Management Can't Function Independent of Marketing

2012-01-17T18:14:00.000-05:00

From the General Electric Co. in New York to the Walt Disney Co. in Los Angeles, a velvet curtain has descended across the country separating marketing from management. The early history of Federal Express illustrates the difference between the management approach and the marketing approach. Take Chrysler, for example. Last year, Chrysler sales fell 7% and the company lost $1.5 billion. Which is why Daimler virtually gave away the company to Cerberus Capital Management. So what did Cerberus do? They hired a new CEO, Robert Nardelli, to lead the company out of the wilderness. And what is Robert Nardelli's expertise? According to most media reports, he's a "cost-cutting manufacturing" expert. "They got it," Nardelli said of Chrysler management, which plans to cut 13,000 jobs. "If we can do it faster, if we can do it more efficiently, that's what we want to do." Faster? More efficiently? Is that what Chrysler's problem is? Any marketing person knows what Chrysler's problem is. It's not a manufacturing problem and it's not a pricing problem. Name one reason to buy a Chrysler? I can't, can you? Chrysler's problem is a branding problem. Making cheaper Chryslers faster is not going to solve the company's problem. As a matter of fact, Chrysler products, on a comparative basis, are already cheaper than Toyotas, Hondas or Nissans. From a marketing point of view, most Chrysler brands are a mess. What's a Chrysler? Is it an inexpensive PT Cruiser or an expensive Chrysler 300? What's a Dodge? It's a cheap, or expensive, car or truck. Why Jeep works The one Chrysler brand with a powerful perception is Jeep. Why do most companies think they need a range of products to market under each of their brand names? When Chrysler bought American Motors years ago, that company also was a mess. The only American Motors brand with a powerful perception was Jeep. (And even then, American Motors thought its Jeep dealers needed to also sell Eagle, a car brand that very few consumers bought.) After the acquisition, the only American Motors brand that Chrysler kept was Jeep. The rest were parked in history's garage. There are two takes to almost every deal you read about in the papers. A "management" take and a "marketing" take. Nine years ago, when Daimler-Benz bought Chrysler for $36 billion, it was "a landmark deal initially hailed as a blueprint for the future of the global auto industry," according to the International Herald Tribune. What does that sound like to you? To me, it sounds like a typical management take. The marketing take is just the opposite: "A German/American car company selling cheap/expensive vehicles? That doesn't make sense." According to our calculations, the $36 billion that Daimler paid for its Chrysler acquisition is now worth only $1.6 billion. Another management disaster. Don't blame marketing Very few companies get in trouble because of marketing mistakes. They get in trouble because of management mistakes that management usually blames on marketing. Management wants to build sales. Since you can sell anything if it's cheap enough, management's emphasis is on cost-cutting and manufacturing expertise. Marketing wants to build brands. Often the best way to build a brand is to make it more expensive than the competition. That way you create the perception that your brand must be "better." (Examples: Starbucks, Red Bull, Absolut, Grey Goose, Rolex, Lexus, Mercedes-Benz and dozens of other brands.) A higher price is not necessarily a negative. One definition of a brand is a product or service that consumers will pay more for than an equivalent commodity. (Of course, the world is full of ersatz brands, brands that are nothing more than commodities with names attached.) If consumers won't pay more for your brand than they would for a commodity, then you really don't have a brand. All you have is a commodity with a name on it. The FedEx example The early history of Federal Express illustrates the difference between the management approach and the marketing approach. In other words, the difference between competing on pricing and competing on branding. Early on, Federal Express tried to compete with air-cargo leader Emery Air Freight by undercutting them on price. Each of Federal Express' three services (overnight, two-day and three-day) was priced lower than the comparable Emery service. It didn't work. In its first three years, Federal Express lost $29 million. Then Federal Express switched to a branding approach. It narrowed its focus to overnight delivery and increased its advertising budget five fold. "When it absolutely, positively has to be there overnight." The turnaround was astonishing. Federal Express went on to dominate the overnight-delivery business and became a much larger company than Emery. The irony in the story is that Federal Express never did give up its two-day and three-day delivery services. These alternatives can still be found on the company's air bills. Yet FedEx is still perceived as the "overnight" delivery service. Management and marketing are poles apart when it comes to evaluating a company's strategy. Management's first thought is usually to expand the business. At Home Depot, one of Robert Nardelli's first moves was to spend more than $6 billion to acquire some 25 wholesale suppliers in order to expand its building-supply business. (A business that Home Depot is currently in the process of selling.) Marketing's first thought is usually to narrow the focus. You can't build a brand if you don't stand for something in the mind. Often the best way to stand for something is to isolate a single service or attribute you can dominate. Where would FedEx be today if the company had hired a "cost-cutting, manufacturing expert" as its chief executive officer? Probably in the same situation as Chrysler. Let's lift the velvet curtain. When you absolutely, positively need to build your company's brand, hire a marketing expert instead. Al Ries September 04, 2007

Think Category First, Brand Second

2012-01-17T18:05:00.000-05:00

A brand is the tip of an iceberg. How big and how deep the iceberg is will determine how powerful the brand is. The iceberg is the category. If it melts, the brand will melt too. The Eastman Kodak Co. has been devastated by its brand-oriented approach. Take Kodak, for example. Just eight years ago, Interbrand ranked Kodak as the 16th most valuable brand in the world, worth $14.8 billion. Every year since, the Kodak brand has fallen in both rank and value. This year, Interbrand ranked Kodak No. 82, worth just $3.9 billion. What's a Kodak? It's the world's best film-photography brand. Unfortunately for Kodak, the film-photography iceberg is melting as the world turns digital. Brand stands for 'trust' Years ago I was discussing the situation with a Kodak marketing manager. It was no secret then that digital photography was starting to replace film. You're going to have to launch a second brand, I said. Not so, the marketing manager replied. The Kodak brand stands for more than just film. It stands for "trust." Trust Kodak for film photography. Trust Kodak for digital photography. That seems to make sense. Furthermore, Kodak invented the digital camera and introduced the first model, the Kodak DCS, in 1991. Sense doesn't matter in marketing. The Kodak name was the tip of the film-photography iceberg. And so far no brand, including Kodak, has managed to climb to the top of the digital-photography iceberg. As a matter of fact, all the digital camera products (Sony, Nikon, Olympus, Pentax, Casio, Samsung, Panasonic, etc.) are line extensions from other icebergs. Nobody is thinking category. Everybody is thinking brand. "How do we take advantage of our well-known brand to carve out a piece of this new iceberg?" The Eastman Kodak Co. has been devastated by its brand-oriented approach. Compare the past with the present. In the last six years of the 20th century (1995 to 2000) the company had sales of $87.3 billion and net profits after taxes of $6.7 billion, or a 7.7% net profit margin. In the first six years of the 21st century (2001 to 2006), Eastman Kodak had sales of $80.4 billion and managed to lose $296 million. (No wonder the stock market has lost its trust in the Kodak brand.) Dominate a category The objective of a marketing program is not to build a brand, but to dominate a category. Red Bull dominates the energy-drink category. Starbucks dominates the high-end coffee category. Google dominates the search category. Does it surprise you that these relatively recent brand successes were started by entrepreneurs, not by established companies? It shouldn't. Big companies are busy burnishing their brands while entrepreneurs are looking for ways to dominate new categories. Brands are important, but they have value only to the extent they stand for categories. Take Coca-Cola, the world's most valuable brand, according to Interbrand. But the value of the Coca-Cola brand has been steadily falling. It was worth $83.8 billion in 1999. Today it's worth only $65.3 billion. Why is the value of the Coke brand falling? Because the cola category is losing its share of the soft-drink market. A brand is only valuable to the extent it stands for a category. The Marlboro brand, according to Interbrand, is worth $21.3 billion. As smoking continues to decline, someday the brand is going to be essentially worthless. (Maybe the nicotine-flavored chewing gum category will make the Marlboro brand worth a few dollars.) As a category iceberg melts, so does its brand melt too. As the minicomputer disappeared, so did the value of the Digital Equipment brand. As the word processor disappeared, so did the value of the Wang brand. As instant photography slowly disappears, so does the value of the Polaroid brand. Most companies are so brand-oriented their first thought is, "How do I save my brand?" So Digital Equipment launched a line of personal computers with the Digital name, as did Wang with the Wang name. And Polaroid launched a raft of new products including conventional cameras and film, printers, scanners, medical imaging systems, security systems, videotapes, etc. With the Polaroid name, of course. All for naught. Polaroid went bankrupt in 2001 and through a series of transactions wound up in the hands of the Petters Group in 2005. That year, when the new chairman was asked what would Polaroid be like in the year 2010, he replied, "It's a consumer electronics leader known for really cool products that offer quality and value." There's no iceberg out there in the consumer ocean named "cool products that offer quality and value." So expect Polaroid's second reincarnation to be no more successful than its first one. There are two types of icebergs. The first type is narrow and deep. The second type is broad and shallow. While the second type might offer greater sales potential, the first type offers greater profit potential and greater brand stability. Brands that are narrow and deep are almost invulnerable to competitive attacks. Furthermore, they usually are incredibly profitable. Think Rolex in expensive watches, for example. But there are many other brands that fit this description: Hellmann's in mayonnaise Campbell's in canned soup Heinz in ketchup Orville Redenbacher in popcorn Tabasco in pepper sauce Gatorade in sports drinks. Visa in credit cards Someday your brand's iceberg might start to melt. So what. You can always look around for a new iceberg to dominate. With a new brand name, of course. Al Ries, October 08, 2007

Take a Holistic Approach to Your Messaging

2012-01-17T12:13:00.000-05:00

Holism is the concept that the whole has a reality independent and greater than the sum of its parts. Marketing people should pay more attention to this concept. Take Tiger Woods' endorsement of Buick. On the surface, this might seem like a good idea. A young, charismatic, world-class athlete drives a Buick. How could this not improve the perception of the brand? But wait. According to Forbes magazine, Tiger Woods made $115 million last year, including $90 million in endorsements. More money than any other athlete in the world. He owns a $20 million, 155-foot yacht. And he drives a Buick? Highly unlikely. Nor is Tiger Woods' endorsement working in the marketplace. Buick sales in the U.S. have declined every year for five straight years, from 432,017 vehicles in 2002 to 185,791 vehicles in 2007. Last year, even Subaru outsold Buick. Another point: If Tiger Woods endorses Buick, who is left to endorse Cadillac? God? It's a stretch, but Tiger in a Cadillac is a plausible endorsement. To quite a few people, the best American cars are on a par with the best European and Asian cars. So if Tiger drives the "best" American car, it would be a Cadillac, of course. That's holism at work. Look at the big picture, not just the details. Take Tiger Woods' endorsement of Nike, the No. 1 athletic brand in the world. That also makes sense. But suppose he had endorsed Reebok instead. Would that have worked? Of course not. And how about the mathematicians and computer scientists who developed the art and science of risk management on Wall Street. They hired Ph.D.s to build sophisticated systems to comb through complicated mortgage portfolios to analyze everything that could possibly go wrong. Now it looks as if they missed about $700 billion worth of things that could go wrong. Why didn't they look at the big picture? When you put a person with no down payment (or a low down payment) in a home that costs hundreds of thousands of dollars, you are asking for trouble. No computer is as smart as a human being with a holistic point of view. After World War II, a shortage of cars created a seller's market. Prices skyrocketed. Then things returned to normal, as they usually do, and many people found themselves with vehicles worth less than their car loans. A number of young guys I knew owned cars that were underwater. So they went out and "burned" them before they were repossessed. They deliberately over-revved the engines to destroy them. I wonder how many houses have recently burned down in mysterious fires. Everything is interconnected. When you make a change in one area, you also affect many other areas. Take the 1982 launch of Diet Coke, the "new product of the decade." As successful as Diet Coke is, the company has paid a big price. Regular Coca-Cola sales have declined substantially. The Coca-Cola Co. considers Diet Coke and Coca-Cola Classic to be two separate brands. But consumers connect the two and not always favorably. For many consumers, regular Coke has "too many calories" and Diet Coke "doesn't taste good." To solve that problem, Coca-Cola introduced "C2," a cola with half the calories of regular Coke. That might be logical from the company's point of view, but not from the consumer's holistic point of view. If consumers want "taste," they buy Coke. If consumers want "low calories," they buy Diet Coke. If consumers want ....., they buy C2. (Try to figure out what word to put in that last sentence.) More choice often puts consumers in a bind. They often wind up with a "none of the above" reaction. Take the launch of Sugar-Free Red Bull. That solved a problem many Red Bull drinkers never knew they had. "Geez! I didn't know that Red Bull was loaded with calories." Take the launch of Red Bull in 12-ounce cans. That put many Red Bull drinkers on the horns of a dilemma. "The 8.3-ounce cans look expensive compared to the 12-ounce cans. On the other hand, I'm used to drinking Red Bull in the smaller cans. Now what?" Campbell's Soup has introduced chicken noodle soup with "25% less sodium." What does that say about Campbell's regular chicken noodle soup? That it has too much sodium? Then there's Campbell's Healthy Request line of soups. What does that say about Campbell's regular soups? That they're unhealthy? Then there's Campbell's Chunky soups. What does that say about Campbell's regular soups? That they're thin and watery? Then there's Campbell's Chunky Fully Loaded soups. What does that say about Campbell's regular Chunky soups? That they're not really chunky? Recently Campbell's has introduced the Select Harvest line of soups. Full-page, full-color newspaper ads compare Progresso ("Made with MSG") with Campbell's Select Harvest ("Made with TLC"). That might impress the few people who buy Progresso soups, but how about the large number of people who buy Campbell's other soup products? If Campbell is making a big deal out of "no MSG" in Select Harvest, then the other Campbell soups must contain MSG. I'm sure that's not what Campbell intended to say. Every single product introduction has "unintended consequences." While companies have marketing people focused on individual brands like Diet Coke, consumers are holistic. They see the big picture. Why should the marketing people at Buick care what the marketing people at Cadillac are doing? Because consumers see a hierarchy of brands at General Motors from Saturn at the bottom to Cadillac at the top. Or is it Chevrolet at the bottom and not Saturn? Who knows? Apparently the people at General Motors haven't figured this one out yet. No wonder consumers are confused, too. What happens when a company runs a sale? Far too often, a consumer thinks, "Their regular prices are too high." Run enough sales, and nobody is going to buy at regular prices, a problem currently facing the middle-of-the-market department-store chains. What happens when a company issues a coupon? Same problem. Charmin became the leading brand of toilet paper by focusing on "softness." The package said "squeezably soft," and the TV commercials featured Mr. Whipple warning consumers to "Please don't squeeze the Charmin." So now Charmin comes in an "ultra soft" version. Does that mean regular Charmin is not really soft? Are we going to see an "ultra safe" vehicle from Volvo? Or a "super ultimate driving machine" from BMW? Consumers are usually more holistic than company representatives. Look at how Lehman leaders handled the company's recent financial troubles: September 2007: "Our liquidity position is stronger than ever." -- Christopher O'Mara, chief financial officer, Lehman Brothers. December 2007: "We have come through the current downturn very well positioned on a competitive basis." -- Erin Callan, the new CFO, Lehman Brothers. June 2008: "We do not expect to use proceeds of this equity offering to further decrease leverage, but rather to take advantage of future market opportunities. Over all, we stand extremely well capitalized." -- Erin Callan. September 2008: "We have materially reduced our residential mortgage exposure and marked our remaining holdings to levels that make future write-downs unlikely." -- Ian T. Lowitt, the new CFO, Lehman Brothers. Sept. 15, 2008: Lehman Brothers declares bankruptcy. It wasn't what Lehman financial executives said that made a deep impression on investors. Rather it was: Why are they saying this? It's only when a company gets in trouble that it need to reassure investors that it's not in trouble. Warren Buffett never issued a statement declaring that Berkshire Hathaway was "extremely well capitalized." Before you say anything in a marketing program, ask yourself, "How are consumers who look at things holistically going to interpret this message?" The hole in many marketing programs is the lack of holism. Al Ries, October 01, 2008

The Principles of Marketing Can Be Summarized in One Word 'FOCVS'

2012-01-17T11:52:00.000-05:00

A number of people have asked us to summarize our marketing principles in a simple, easy-to-remember way. Good thought. Having written (or co-written) 11 books on the subject, I can see how our basic principles can get buried in a blizzard of examples and case histories. What's the No. 1 principle of marketing, at least as far as we're concerned? It's the principle of focus. You narrow the focus in order to own a word in the mind of the consumer. Without a focus, it's very difficult to build a strong brand. And without a strong brand, any company's future is in doubt. While focus should be the key ingredient in any marketing campaign, it's not the whole story. So we developed an acronym called FOCVS that does sum up our key thoughts. "FOCVS," a word using the original alphabet of the Roman Empire, consists of five key elements. F IS FOR "FIRST" Nothing works better in marketing than being the first brand in a new category in the mind. Starbucks in high-end coffee. Red Bull in energy drinks. BlackBerry in wireless e-mail. There are two issues, however, that many people miss. The first issue is what we mean by being first. It's the first brand in the mind that matters, not the first brand in the category. Powells.com was the first internet bookstore, but not in the mind. The first brand in the mind was Amazon. The second issue is focus. It's always possible to become the first brand in a new category by narrowing your focus. Take Dell, which became the world's No. 1 brand of personal computer. Dell wasn't the first personal computer in the mind. (Apple, IBM and a host of other brands got into the mind long before Michael Dell's creation.) Dell Computer narrowed its focus to direct sales only, the first brand to do so. This was the key decision that made the Dell brand a worldwide success. Dell didn't get started until 1984, nine years after the first personal computer hit the market. By 1984, the market was saturated with computer manufacturers. As Business Week reported in its Aug. 8, 1983, issue: "Pounding on corporate doors are more than 150 makers of personal computers." Suppose you had said to one of these 150: "Let's narrow the focus to direct sales only." That's probably the opposite of what they wanted to do. "We need more distribution, not less," might have been the likely response. It gets worse. In that same issue, Business Week reported: "Computer and office automation companies are beginning to pitch comprehensive office systems that offer everything from personal computers to large central computers as well as the communications to connect all the equipment. This list of companies includes Burroughs, Data General, Digital Equipment, International Business Machines, Sperry and Wang." Narrow the focus? Everybody was doing exactly the opposite. Expansion, not contraction, was the order of the day. It's also the order of today's day. You've probably noticed that Dell has joined the expansion crowd with predictable results. What mystifies many marketing mavens is how two companies can use the same strategy with diametrically different results. One is successful; the other is not -- a mystery that can be solved by assuming that the successful company has superior products. And we're left with the same old canard: The better product wins in the marketplace. Hewlett-Packard is expanding its product line at the same rate as Dell. By 2006, the two companies had virtually identical worldwide PC market shares: Dell had 17.1%; Hewlett-Packard had 17%. Three years later, Hewlett-Packard's market share is 19.9% and Dell's market share is 12.8%. Even more ominous is Dell's drop in net profit margins. In the decade ending in 2006, Dell had a net profit margin of 6.2%. Last year it was 4.1% vs. Hewlett-Packard's 7%. What differentiates Hewlett-Packard from Dell? Hewlett-Packard is perceived as the leader in personal computers. And "leadership" is the most important aspect of a marketing program. You lose your leadership (as Dell has done) and you lose your marketing power. Dell used to mean "direct." What does Dell mean today? A company with problems. O IS FOR "OPPOSITE" What if you can't be first in a new category? Is there no hope? Sure, there is. Just be the opposite of the brand that did get into the mind first. Red Bull came in 8.3-oz. cans, so Monster came in 16-oz. cans and rapidly became the No. 2 energy-drink brand with 25% of the U.S. market. A number of years ago, all perfume brands were feminine. So Revlon introduced "Charlie." For three straight years in a row, Charlie was the world's best-selling perfume. The Home Depot is a messy, male-oriented home improvement warehouse, so Lowe's became neat, clean, female-oriented and a strong No. 2 brand. Walmart is "cheap," so Target became "cheap chic" and a strong No. 2 brand. Stuck in the mushy middle was Kmart, which went bankrupt. Coca-Cola is the old, established cola brand, the real thing. Your parents drank Coca-Cola. So Pepsi-Cola focused on the younger crowd. The Pepsi Generation. (An idea Pepsi needs to reprise.) Look at the numbers. The last flickering of the Pepsi Generation idea was in 2002, when Pepsi-Cola ran the rather insipid campaign "Think young. Drink young." That was the year Pepsi was 35% behind Coca-Cola in sales. In 2003, Pepsi switched to: "The joy of Pepsi." In 2004: "It's the cola." In 2009: "Refresh everything." Today, Pepsi is 41% behind Coca-Cola in sales. In marketing, the rich get richer and the poor get poorer. Why is this so? Because the rich generally own a word in the mind (leadership) and the poor do not. Refresh everything? Pepsi should be trying to refresh something. My choice would have been the younger generation. C IS FOR "CATEGORY DOMINANCE" What is the primary objective of a marketing program anyway? Is it to increase sales? To increase profits? To build a brand in consumers' minds? All of these things are important, but they are only markers on the road to success. The primary objective of any marketing campaign is to dominate a category. When you can do that, your long-term success is almost guaranteed. (Until the category evaporates, but that's another story.) Take Sony, for example. In a recent survey of 3,600 Asian consumers, the No.1 brand was Sony. In a recent survey of 1,500 American consumers, the No.1 brand was Sony. Like most Japanese electronics companies, Sony is heavily line-extended. Sony puts its brand name on TV sets, videocassette recorders, digital cameras, personal computers, cellphones, semiconductors, camcorders, DVD players, MP3 players, stereos, broadcast video equipment, batteries and a host of other products. In which categories is Sony the leader? I don't know, and I'm pretty sure that most consumers don't know either. Sony's lack of a leadership perception in any individual category, in my opinion, is the reason for Sony's lackluster financial performance. In the past 10 years, Sony has had revenues of $681.6 billion and net profits after taxes of $9.5 billion, or a net profit margin of just 1.4%. Which is one reason Sir Howard Stringer is now Sony's CEO. (When a Japanese company is run by an Englishman, you know the Japanese company is in trouble.) Compare Sony with Nintendo, the company that dominates the video-game player category. In the past 10 years, Nintendo has had revenues of $75.3 billion and net profits of $11.5 billion, or a net profit margin of an astonishing 15.3%. Ask a few marketing managers which is the stronger brand, Sony or Nintendo? Don't be surprised if most of them say "Sony." In category after category, well-known, highly admired global megabrands are trying to compete with narrowly focused brands. Invariably the narrowly focused brands are the winners. Take Duracell, the leader in appliance batteries. Sony, Kodak, Toshiba and other companies with well-known brand names have tried to compete with Duracell in the battery business with little to show for their efforts. The category is the key to success. The brand is only a tool to facilitate that process. V IS FOR "VISUAL HAMMER" The verbally oriented left-brainers who run most major companies don't seem to understand the power of a visual. Take Boston Chicken, which early in its history changed its name to Boston Market and promptly went bankrupt. Why in the world would they have done that? Boston Chicken was the first food chain to feature "rotisserie chicken," an easy-to-visualize concept. But how do you visualize "market?" Every brand needs two things: (1) A verbal nail to preempt a conceptual idea and (2) A visual hammer to hammer that conceptual idea into consumers' minds. Some effective verbal nails and their associated visual hammers: "The real thing" and the hobble-skirt Coke bottle. "Marlboro country" and cowboys. "Not from concentrate" and the straw in the orange. "The shoe that breathes" and the smoke from a Geox. "Engineered like no other car in the world" and the TriStar logotype. "King of Beers" and the Clydesdales. One important point: The verbal decision should come first, not the visual. That's true even though the visual is often more powerful than the verbal. Take the Marlboro cowboy. While the American cowboy is a universally admired symbol, it would be useless for a brand that didn't want to hammer the "masculine" idea into consumers' minds. The Budweiser frog and the Aflac duck are striking visuals, but what words do they hammer into prospects' minds? In Budweiser's case, the "Bud . . . weis . . . er" slogan was redundant. In Aflac's case, "We've got you under our wing" is a relatively weak slogan. S IS FOR "SECOND BRANDS" In the boardrooms of corporate America, you seldom hear the word "focus." A common perception is that focus means sacrifice, and what left-brained CEO wants to do that? What you do hear a lot of is the word "expand." How do we expand our brand into more categories, more price points, more distribution outlets, etc.? The FOCVS answer to that question is the "second brand." Keep your existing brand focused and launch a second brand to exploit a new market. As Levi's did with Dockers. As Toyota did with Lexus. As Black & Decker did with DeWalt. As Hanes did with L'eggs. Another common perception is that the launch of a second brand requires a major advertising investment. Not true. When you study the histories of famous brands, you are struck by how slowly those brands took off. That is true whether the brands were initially supported by massive advertising or not. It took Red Bull nine years to reach $100 million in sales. It took Microsoft 10 years to reach $100 million in sales. It took Walmart 14 years to reach $100 million in sales. It took Gatorade 18 years to reach $100 million in sales. A successful new brand (Red Bull, for example) is usually based on a new category (energy drink.) At first, consumers are leery of buying such brands because they don't fit into existing buying patterns. Advertising doesn't have the credibility to break down those barriers. The best way to launch a new brand is with PR. Unlike advertising, PR has credibility with many consumers. Then, too, PR drives word-of-mouth, which is the ultimate in brand credibility. Since a PR campaign is usually far less expensive than an advertising campaign, PR is a better fit with the slow growth pattern of a new brand. Ultimately, of course, any new brand runs out of PR potential. That's the time to switch to advertising. F ... O ... C ... V ... S... That's a summary of our marketing principles in a simple, easy-to-remember way. Al Ries, January 05, 2010.

Social Media Will Usher in Golden Age of Global Branding

2012-01-17T11:22:00.000-05:00

If Marshall McLuhan were alive today, what would he say about social media? What's the message of social media? And are companies using the medium correctly? I wonder. Recently, the One Club for Art and Copy in New York named 10 digital campaigns as the best in their field in the past decade. The big winner: Burger King. Two of its campaigns, "Subservient Chicken" and "Whopper Sacrifice," both by Crispin Porter & Bogusky, were in the top 10. That's not surprising. Burger King is also a big winner in the advertising trade press, which has avidly covered its innovative campaigns. What the coverage has missed, of course, are the results of all this innovation. And the results are not good. According to Nation's Restaurant News, Burger King's percentage gains in sales per unit in the past decade was 14% -- behind Wendy's, Carls Jr., Jack in the Box, McDonald's and Whataburger. In addition to falling behind the big national chains, Burger King is also losing ground to a number of smaller "hot" hamburger chains. Last year, for example, Burger King's average sales-per-unit fell 3%, while Five Guys Burger and Fries was up 14%. And Five Guys is expanding faster than any other fast-food chain. Last year, the chain increased its number of units by 45%. (Burger King increased its number of units by less than 1%.) Don't get me wrong. The two Burger King digital programs deserved the awards. Individually considered, they were great advertising campaigns. But as Bill Bernbach once said, "A great ad campaign will make a bad product fail faster." A great ad campaign will also make a bad marketing strategy fail faster. What should Burger King's marketing strategy have been? And what is the role of social media anyway? The first global medium Unlike newspapers, magazines, radio and TV (which are primarily regional or national media), the social medium knows no borders. It's free to travel around the world as easily as it is to travel around a country. The consequences are enormous. Each new medium, according to McLuhan, is an extension of ourselves. "The social consequences of any medium ... result from the new scale that is introduced into our affairs." That's certainly true for the internet and its many manifestations. In promoting the telephone, AT&T used to say: "Reach out and touch someone." Today, we use the internet to reach out and touch a lot of people. From word of mouth to word of fingers. Instead of reaching out and talking to someone, today you reach out and communicate with many. That's the new scale introduced into our affairs. But what's the message or social consequences? It's homogenization. Or in McLuhan's words: "With instant electric technology, the globe itself can never again be more than a village." A monolithic world is a happy hunting ground for brand builders. Imagine seven billion people all eager to adopt the latest, hottest brand. We are entering the golden era of global branding. Here are some examples. Today, we have global motion pictures, global books, global product brands, global hotel brands, global accounting firms, global advertising agencies. We even have global advertising campaigns (e.g. McDonald's "I'm Lovin' It"). In xenophobic Japan, eight of the 20 most-popular consumer brands are now American brands. What's happening globally is also happening nationally. The country is becoming less different and more monolithic. Driven by media generally and social media specifically, it's a trend that is bound to continue for decades to come. Forget about fragmentation and market segments. To be successful in the long run, a brand needs to narrow its focus, not to broaden it. In particular, a brand needs to resist the temptation to develop different products for different market segments. What will drive social-media chatter? That's the question the brand's owner should be asking. What single, unique idea can we develop for our brand that will capture the imagination of the public and drive social-media chatter? Ask yourself, is a 140-character tweet (28 words or so) big enough to hold your positioning statement along with an endorsement of the sender? And is it unique and different enough for anyone to bother tweeting? You should buy a Chevy because Chevrolet runs deep? I don't expect too many tweets along those lines. Years ago, a company worked with its advertising agency to develop a marketing strategy to use in all of its external communications: advertising, sales promotion, direct mail and PR. Too often, the result was a grandiose statement that warmed the hearts of the company's management but did little to penetrate the minds of consumers. That's not the right approach. In a monolithic world driven by social media, you need to bring your positioning statement down to earth. You need to make it specific and tangible enough to get consumers excited. And then you need to say it with words the average person might use. Suppose you were setting up a shoe store on the internet. The usual approach is to first decide what segment of the market you want to appeal to -- men, women, children, etc. -- then decide whether to go upscale, downscale or perhaps somewhere in the middle. The right idea That's not what Zappos did. Instead, it tried to find an idea related to shoes that would catch fire on social media. What's stopping people from buying shoes online? They might not fit and then the consumer would have to go to the expense of sending them back. "Free shipping. Both ways." I can't imagine an established company buying an idea like this. It's too simple, too costly and too easily copied by competition. It's also brilliant and, in my opinion, it's the single idea that in a decade turned an internet startup into the largest online shoe seller. And last year turned a number of entrepreneurs into multimillionaires when the company was acquired by Amazon for $1.2 billion. Yet "free shipping, both ways" was barely mentioned in CEO Tony Hsieh's new book "Delivering Happiness," a book that has been on a top 10 list in The New York Times for 27 straight weeks. Management tends to take a down-to-earth concept and bury it with a layer of abstraction, turning, for example, "free shipping, both ways" into "delivering happiness." What will the thousands of management people who read "Delivering Happiness" take away from the book? Something that most of them already believe: that the way to build a big, successful brand is to deliver the best possible customer service. "And then all we have to do is to tell prospects about our wonderful customer service." "Free shipping, both ways?" "We can't do that. It's too simple, too costly and too easily copied by our competition." Back to Burger King. After a decade of award-winning advertising, how does Burger King rank among the seven large national hamburger chains? In average sales-per-unit, they're in last place. What should Burger King have done? In a monolithic world, you need a monolithic message. Why in the world was Burger King fooling around with subservient chickens anyway? A better direction, in my opinion, would have been a cowardly cow. If you want to be a strong No.2 brand, you need to be the opposite of the leader. As McDonald's expanded its line, Burger King should have gone in exactly the opposite direction -- narrow its line. And with a name like Burger King, the obvious strategy was to focus on "burgers." Several decades ago, we worked for Burger King. At the time, the new CEO said to me, Al, you'll be a hero if you help us solve two problems. "What are the two problems?" "Breakfast and chicken." Wait a minute, I said. Let's go outside and look at the sign. What does that sign say? I think Burger King should focus on "burgers." Over the decades, Burger King has had three great burger campaigns: "Home of the Whopper," "Have it your way" and "Broiling, not frying." Any one of these, continued over the years, would have made an excellent campaign for the brand. A monolithic world demands a monolithic brand with a monolithic message. Al Ries, January 10, 2011

THE CURSE OF PRODUCT CONVERGENCE

2012-01-17T10:51:00.000-05:00

Why is so much advertising so deadly dull? Perhaps it's the lack of real product innovation. Products that are new and different and serve a real need. One culprit, in our opinion, is the concept of product convergence. Instead of trying to create exciting new products, companies are spending billions trying to combine existing products. Here are some recent examples: The combination handheld computer/mobile phone (Palm, Visor) The combination mobile phone/Internet access (Nokia, Motorola, Ericsson) The combination TV/Internet access (WebTV, Ultimate TV, AOLTV, ZapStation) The combination TV/personal computer (Gateway, Apple, Toshiba, Philips) In spite of massive marketing programs, none of these convergence products have become big successes in the marketplace. Consumer products Convergence thinking is not limited to high tech. Many consumer marketers are enthralled with the possibilities of combining two products (and sometimes two brands) into one. So now we have: Crest toothpaste with Scope mouthwash. Jell-O Oreo No Bake Dessert. The Chevrolet Avalanche and the Cadillac EXT, both models combining a sedan with a truck. With the press, the pundits and the high-tech community firmly behind the convergence concept, who could possibly doubt that one day it will all happen? Any student of history, that's who. "Those who cannot remember the past," wrote George Santayana, "are condemned to repeat it." Remember when TV first appeared on the scene? Everyone thought the future belonged to those companies who could combine magazines and newspapers with TV. Good Housekeeping and many others failed in these efforts, most notably USA Today on TV, which lost $15 million the first year and was canceled during its second season. 'All hat and no cattle' Remember all the hype about multimedia? Just what in the world is multimedia? A newspaper is still a newspaper, a magazine is still a magazine, radio is still radio, TV is still TV, a PowerPoint presentation is still the same boring presentation we used to do with slides. But multimedia? As they say in Texas, "All hat and no cattle." Remember the "all-in-one" computer printer, copier, scanner and fax machine? In spite of all the advertising, most people still have separate computer printers, copiers, scanners and fax machines. And how come the washer didn't converge with the dryer, the microwave with the oven, the phone with the fax, the VCR with the TV, the printer with the PC? The truth is, products and services don't converge. They diverge. Radio used to be just radio. Today we have AM radio and FM radio. Also portable radios, car radios, headset radios, clock radios, cable radio and satellite radio. Radio didn't combine with another medium. It diverged. TV diverged TV use to be just TV. Today we have broadcast TV, cable TV, satellite TV and pay-per-view TV. TV didn't combine with another medium. It diverged. The telephone use to be just the telephone. Today we have regular phones, cordless phones, car phones, mobile phones and satellite phones. Also analog and digital phones. The telephone didn't combine with another product. It diverged. The computer used to be just a computer. Today we have mainframe computers, midrange computers, servers, personal computers, notebook computers and handheld computers. The computer didn't combine with another product. It diverged. Why do things diverge? Divergence is consistent with the laws of nature and convergence is not. New species, reported Charles Darwin, are created by divergence of existing species not by convergence. Few catdogs and chickenducks As a result, we have hundreds of varieties of dogs and hundreds of varieties of cats, but very few catdogs or chickenducks or cowhorses. What would help the economy, the high-tech industry and the marketing community the most is a rejection of the convergence concept and a return to divergence thinking. Thinking that built new markets and new brands. Al Ries October 14, 2002.

WHY JAPANESE COMPANIES MAKE EVERYTHING EXCEPT MONEY

2012-01-17T10:31:00.000-05:00

The Importance of Focusing a Brand Building a brand and building a profitable brand are two different things. Take Sony, for example. If you did a survey, you would probably find that Sony is the world's most admired electronics brand. Way ahead of whoever might be in second place. Terrific for owners of Sony products. But how about the owners of Sony stock? Does the company make any money? The sad fact is no. Net profits after taxes of Sony Corp. are small. Very small. In the last 10 years, Sony Corp. had revenues of $519.2 billion. But net profits after taxes were only $4.0 billion. That's eight-tenths of 1% of sales. It's hard paying off your bank loans, not to mention paying dividends to investors, with that kind of return. Of course, this is Japan, so who pays off its bank loans, anyway? In 1999, the Bank of Japan cut its benchmark short-term rate effectively to zero. Like most Japanese companies, Sony is heavily line extended. Sony puts its brand name on TV sets, videocassette recorders, digital cameras, personal computers, cellphones, semiconductors, camcorders, DVD players, MP3 players, stereos, broadcast video equipment, batteries and a host of other products. PlayStation Yet Sony's most profitable product is the PlayStation video game, a brand which makes only marginal use of the Sony name. (As powerful as the Sony brand might be, PlayStation is even a better brand name because it stands for something in the prospect's mind.) Compare Sony with Dell Computer Corp. Sony makes personal computers and a lot of other products. Dell just makes personal computers (until recently, when they added printers). In the last 10 years, Dell had sales of $140.3 billion and net profits after taxes of $8.5 billion, or a net profit margin after taxes of 6.1%. That's not fair, you might be thinking. To compare with Sony, you picked a company (Dell) that is exceptionally profitable. Actually that's not true. Dell is in a highly competitive business where profit margins are thin. (IBM has never made money in the personal computer business and Hewlett-Packard's PC business is barely profitable.) As a result, Dell's 6.1% profit margin is not spectacular. Net profit margins at the average Fortune 500 company were 4.7% of sales during the last 10 years. (If you leave out the last two years, which were mostly disasters, the percentage jumps to 5.7%.) I have preached against the perils of line extension ever since Jack Trout and I wrote Positioning: The Battle for Your Mind some two decades ago. And ever time I bring it up, someone always says, "What about the Japanese, they do the exact opposite of what you are recommending and they are extremely successful." Japanese losses Are they? In the last 10 years, Hitachi had revenues of $708 billion and managed to lose $722 million. NEC had revenues of $397 billion and lost $1.3 billion. Fujitsu had revenues of $382 billion and lost $1.6 billion. Toshiba had revenues of $463 billion and a net profit margin of just 0.15%. Large unfocused companies make very little after-tax profits. And if you don't make money, you can't pay off your bank loans. And if you can't pay off your bank loans, the banks are in trouble. And if the banks are in trouble, a country's economy is in trouble. And if a country's economy is in trouble, the country's political system is in trouble. The top of the Japanese economic system is weak because the base is weak. Japanese companies, for the most part, make everything except money. Why is it so difficult for large, unfocused Japanese companies to make money? It can't be product quality. Most Japanese companies have a worldwide reputation for high quality. A reputation that, for the most part, they deserve. My conclusion is that line extension inhibits the branding process. When a company makes and markets a broad range of products under one name, it is extremely difficult to build that name into a powerful brand. Focused brands make money Don't any Japanese companies make money? Companies whose brands are relatively focused do much better. Sharp (1.8%), Toyota (3.1%), Honda (3.3%) and Canon (3.8%). I have followed the financials of Japanese companies for many years. I find that the average large Japanese company has a net profit margin after taxes of about 1% compared with the average large American company at 5%. But even that result is peanuts compared with companies whose brands are highly focused. As a general rule, the more focused the brand, the higher the profit margin. Some examples: Nokia (10.6%), Intel (21.6%) and Microsoft (31.8%). Now tell us again why line extension is such a good thing. Al Ries May 12, 2003.

WHAT BOTOX AND VIAGRA TEACH US ABOUT ADVERTISING

2012-01-17T10:20:00.000-05:00

Last month, the U.S. suspended a TV advertising campaign designed to win over the hearts and minds of the world's Muslims. "State Department officials," according to The Wall Street Journal, "said the U.S. recently decided to emphasize public relations rather than TV and print ads." Advertising is a powerful tool for keeping a mind from changing, but not for changing a mind. Advertising works best when the reader or viewer already agrees with the message and is looking for validation and support. When a beer drinker sees a Budweiser commercial with the Clydesdales and the old-fashioned beer wagon, he or she thinks, Yes, Budweiser is the king of beers, an authentic brand with a long history. The commercial reaffirms and reinforces an idea already in the mind. When a car buyer sees an ad with a smashed up vehicle and the headline "We design every Volvo to look like this," he or she thinks, Yes, Volvo is the safest car. With these campaigns (and many others) advertising is an effective force for maintaining brands built by other means. But changing a mind (which is what you need to do when you launch a new brand) is a different matter. And here is where advertising has failed the test. Hundreds of dot-coms never made it because they relied on advertising to build their brands. The dot-coms that did make it (Amazon, Priceline, Yahoo!, eBay, Google and others) made it into the mind primarily with great publicity. As a matter of fact, all the recent brand successes have been basically PR successes, not advertising successes. Red Bull, Harry Potter, JetBlue, Linux, Palm, Starbucks, PlayStation, Microsoft's Xbox, to name a few. Success of Botox No new brand is as clearly a PR success as Botox. Imagine trying to use advertising to introduce a new product with the theme "Let us inject a toxin made from the bacteria that causes botulism into your forehead to cure your wrinkles." Yet PR did just that. In eight years, with no advertising at all, Botox became a $300 million brand. And last year, Allergan announced a $50 million advertising campaign to promote its Botox brand. (After PR has put a brand into the mind, you need advertising, and often massive advertising, to maintain that brand.) Before Botox, there was Viagra, which followed the same game plan. PR first to change a mind, advertising second to keep that mind from changing. Folly of advertising The folly of trying to fight a mind-changing war with a weapon like advertising is illustrated by a number of recent corporate bankruptcies. When US Airways went bankrupt, it ran full-page newspaper advertisements with the headline, "Foundation for the Future." When United Airlines went bankrupt, it ran full-page newspaper ads with a "Chapter 11" headline scratched off to read "Chapter 1." Cute, but did that change many minds about flying United? We think not. When Arthur Andersen got in trouble over the Enron mess, it ran full-page newspaper ads with the headline, "An Open Letter from Joe Berardino, Managing Partner and CEO, Andersen." Joe Berardino didn't survive the negative Enron publicity, nor did Arthur Andersen. The PR pen is mightier than the advertising sword. When Kmart got in trouble, the company announced it would spend $50 million on an advertising campaign with the theme "The stuff of life." The stuff of life? What Kmart needs is PR, not advertising. Like the "cheap chic" publicity generated by its competitor Target, or as Oprah Winfrey has said, "Tarzhay." Wait, you might be thinking, Target has wider aisles, cleaner stores and designer merchandise. Exactly. A public relations program normally starts by first changing the product or service (and sometimes the name) and then moving the new message into the media. The good thing about advertising (and the bad thing about advertising) is that you can always run an ad without changing anything. When Merrill Lynch got in trouble over its investment research (and paid a $100 million fine to the state of New York), it ran two-page newspaper ads featuring both President Stan O'Neal and Chairman David Komansky that read: "Lately, you've been hearing a lot about Merrill Lynch. Now you're going to hear from us." Translation: The media got it all wrong and we're going to straighten you out. How believable is that? As a matter of fact, when a reader sees a full-page advertisement in one of the big national newspapers signed by a company's chief executive, his or her reaction is likely to be, "Uh-uh, another company in trouble." Advertising is a useful marketing tool, but not when it's used at the wrong time for the wrong purpose. Al Ries, February 17, 2003.

Ries' Pieces of Slogan Savvy

2012-01-17T09:50:00.000-05:00

Have you seen the advertising campaign for "the new Chrysler"? Slogan: "If you can dream it, we can build it." Sounds like an ad for a California custom shop. But more important, is the slogan memorable? In this day and age, it doesn't matter how well-crafted the words are; if the slogan isn't memorable, it's just a waste of space. "It's all inside" is the slogan of a department store. Maybe everything you might want to buy is inside that department store, but who is going to remember that forgettable line? It's the slogan of JCPenney, a brand without a clear identity. If you want an effective, long-term rallying cry for your brand, you need a slogan that sticks in the mind. A sticky slogan can live forever. "Liberte. Egalite. Fraternite" was the slogan of the French Revolution more than 200 years ago. Yet the slogan still stirs the hearts of freedom-loving people everywhere. On the other hand, the slogan of the American Revolution, "Don't tread on me," is mostly forgotten today. Even a minor war, such as the Spanish-American war of 1898, can generate a memorable slogan: "Remember the Maine." And the first World War will always be remembered by the unforgettable slogan "The war to end all wars." What makes a slogan memorable or sticky? Here are four mental "glues" that can help paste your message in the consumer's mind. Rhyme and alliteration Gerry Spence is known as the "best trial lawyer in America." In 41 years, he never lost a criminal jury trail. According to one source: "He no sooner makes the decision to take on a client than he drafts his closing statement, coming up with a catchphrase he repeats throughout the trial." "Let us select a phrase, a theme, a slogan that represents the principal point of our argument," Mr. Spence wrote. "The theme can summarize a story that stands for the ultimate point we want to make." In one case, he told the jury a story about a man who brought a lion onto his property that somehow escaped and mauled his neighbor. Mr. Spence related that story to a case against Kerr-McGee Corp., which, he claimed, had stored an inherently dangerous substance on its premises. "If the lion gets away, Kerr-McGee must pay." And it did. That was the same strategy used by Johnnie Cochran in the O.J. Simpson case: "If it doesn't fit, you must acquit." Alliteration is a good strategy for choosing brand names. Some examples: Coca-Cola, Bed Bath & Beyond, Grey Goose, Magic Markers, Chris Craft, California Closets, Dirt Devil. Combining an alliterative brand name with a slogan that rhymes or trips off the tongue can be particularly powerful. Think: "Roto Rooter. That's the name. And away go troubles down the drain." Or M&Ms: "Melts in your mouth -- not in your hand." And then there's Timex: "Takes a lickin' and keeps on tickin'." Lexus scores with "The passionate pursuit of perfection." (Mercedes-Benz should have pre-empted that idea years ago.) Then there's Ace Hardware's longtime slogan "Ace is the place with the helpful hardware man." Because of the gender problem, the slogan was shortened to "The helpful place." You know what? "The helpful place" might be shorter, and it might communicate the same benefit, but it loses the poetry and is not as memorable as the original. "Don't squeeze the Charmin" says the same thing as "Please don't squeeze the Charmin," but it isn't as memorable. Double entendre Another effective mental glue is the double entendre. Some examples: "Nothing runs like a Deere"; "Nothing can stop a Trane"; "When it rains, it pours"; "A diamond is forever." "We must hang together," Benjamin Franklin once wrote, "or assuredly we will all hang separately." It's a political statement that still sticks in many people's minds. Perhaps the most effective political slogan ever written was conceived by Saatchi & Saatchi on behalf of the Conservative Party before the 1979 U.K. general election. "Labour isn't working," said the headline on an ad that pictured a long, winding line of people in front of an unemployment office. (Margaret Thatcher won that election.) Even brand names can use double entendres. Take Staples, the office superstore, for example. When a word like "Staples" has two different meanings, it activates two separate places in your mind. First you think of one meaning (a U-shaped piece of metal) and then another (everything a business needs). The vibration between the two meanings helps lock the word into your memory. Cuba Libre is the name of a mixed drink of rum, Coke and lime juice. It also means "Free Cuba." For years I have felt that Bacardi, a liquor company that was thrown out of Cuba by Fidel Castro, should promote rum and Coke under the banner of "Cuba Libre": Drink Bacardi rum and Coke and pray for the day Cuba will be free again. Repetition Of the four mental glues, repetition is the slogan strategy that is most underused. I suspect it's because of the pressure to simplify, simplify, simplify. Federal Express didn't get off the ground with the slogan "When it has to be there overnight." Rather, the ad agency Carl Ally added two words that made all the difference: "When it absolutely, positively has to be there overnight." Even today, you'll find the words "absolutely, positively" used in news stories about FedEx. Newcastle Brown Ale is "The one and only," not just "The one." Reversals In literature, memorable ideas often are expressed in polar opposites, or reversals. "To be or not to be: that is the question" is perhaps Shakespeare's most famous line. "And so, my fellow Americans, ask not what your country can do for you ..." is the first half of Jack Kennedy's most famous line. Reversals are memorable for the same reason double entendres are memorable: They vibrate between two meanings, forever embedding a concept in consumers' minds. Charles Dickens: "It was the best of times, it was the worst of times." T.S. Eliot: "This is the way the world ends. Not with a bang but a whimper." Robert Frost: "Some say the world will end in fire, some say in ice." The late Charles Revson borrowed from Frost and introduced Revlon Fire & Ice, which became the cosmetics company's most successful product line. Also memorable are a Holiday Inn slogan that ran for quite a while, "The best surprise is no surprise," and Reese's Peanut Butter Cups' "Two great tastes that taste great together." Then there's Fresh Direct, a company that took Webvan's concept of grocery delivery and made it work. Fresh Direct's slogan: "Our food is fresh. Our customers are spoiled." You might think these four mental glues are obvious slogan-building strategies, and they are. But it's surprising how few slogans use any of these strategies. In my random collection of 266 advertising slogans, I found only 19 that used any of the four strategies. And some of them were silly. For example, EDS used the slogan "Globalize, informationalize and individualize," since changed to "Expertise. Answers. Results" (which still doesn't have the soul-stirring cadence of "Liberte. Egalite. Fraternite"). The pass-along market A sticky slogan is only half the battle. If you want your marketing program to be exceptionally effective, your slogan should contain words consumers can use to pass along your brand's message. As a general rule, more people are influenced by people than are influenced by marketing. So to generate word-of-mouth, it's extremely helpful to put pass-along words into your sticky slogan. "The ultimate driving machine" encourages people to say, "Buy a BMW; it's a fun car to drive." But what is a car buyer to think of the latest Saturn campaign, "Rethink"? Who is going to say to a friend or neighbor, "You should rethink Saturn?" Even worse is Mazda's long-running campaign "Zoom-Zoom." How can anyone put those words into a sentence directed at adults? Perhaps the best advertising slogan ever written, in terms of the pass-along market, is McDonald's slogan "You deserve a break today." "Let's go to McDonald's. You deserve a break today." That's music to the ears of mothers everywhere. Al Ries, June 02, 2008.

Do You Have Everything Except a Marketing Strategy?

2012-01-17T09:35:00.000-05:00

Communications Tactics Will Not Take You Far Enough Who decides: 1) What products and services to offer; 2) What to name those products and services; and 3) What distribution channels to use to sell those products and services? In my opinion, these are primarily marketing issues. Yet in our work with companies large and small, we don't see many marketing people calling the shots on 1) Products; 2) Names; and 3) Distribution. Instead, marketing people tend to focus on "communications" issues. They spend most of their time figuring out how to interest prospects in their companies' current product lines. Sure, communications are important, but they are only the tactics of a marketing program. The other half, the more important half, is strategy. The two are related. In order to improve the communications, it often is necessary to make changes in strategy. In products, names, pricing, distribution, etc. And who is in a better position to suggest such changes than an experienced marketing person? Yet who is calling the shots on marketing strategy? Mostly top management people. What's the strategy of Hewlett-Packard? As best as I can determine, here is H-P's new strategy as outlined in an interview The Wall Street Journal conducted with its new CEO Leo Apotheker. Invest more in software, networking and storage. Emphasize systems that combine these functions. Increase spending on research. Focus on cloud computing. Build a business helping companies build cloud-computing setups. Increase sales to telecom firms. This is typical of a top-management approach to strategy. Let's increase sales by expanding the brand in all directions. Now, how is marketing going to execute Hewlett-Packard's new strategy? By positioning the company as a leader in "software, networking, storage and cloud computing"? And, of course, personal computers. Most companies take a similar approach. What's the strategy of Dell, the world's third-largest seller of PCs? Same as H-P. Expand the brand in all directions. What's the strategy of Wells Fargo? According to the Journal, "Wells Fargo plans insurance growth." "The effort comes at a time when loan demand remains tepid and, given the size of Wells, growth in banking is hard to achieve," reported the Journal. "Other units the bank is expanding include securities brokerage and investment banking." Insurance makes up a tiny portion of the bank's revenues, last year, about 2.5%. Didn't Wells Fargo study what happened when Citicorp merged with Travelers Group to form Citigroup? (Four years later, Citigroup spun off Travelers in an IPO.) Maybe this is heresy in a world smitten with the line-extension religion, but why doesn't Wells Fargo focus on banking? It's the smallest of the big four, after Citigroup, Bank of America and JPMorgan Chase. I would think Well Fargo would want to move up the banking ladder before trying to climb the insurance ladder. What's the strategy of Romney, Bachmann, Cain, et al? So far, there are eight Republican presidential candidates: Mitt Romney, Michele Bachmann, Herman Cain, Ron Paul, Newt Gingrich, Tim Pawlenty, Rick Santorum and Jon Huntsman. Do you know the verbal position of any of these eight? I don't think they have any. Doesn't anyone remember "Change we can believe in?" After Barack Obama's victory in 2008, I would have thought that any future presidential candidate would summarize his or her campaign with a few memorable words. But so far, no one has. Apparently, nobody wants to be tied down to a single idea or concept. Everybody wants to be free to expand their campaigns in all directions, depending on which way the wind blows. Take Jon Huntsman. "He resigned just 11 weeks ago as the U.S. ambassador to China," reported The Journal, "but already Jon Huntsman has a logo, a musical theme, a small arsenal of promotional videos, a Hollywood narrator and a line of travel mugs, lapel pins, baseball caps and T-shirts emblazoned with the distinctive H of his infant presidential campaign. He even has a generation named after himself. Generation H, his campaign calls it." Jon Huntsman has everything except a marketing strategy. What is strategy anyway? Dictionary definition: "The science of planning and directing large-scale military operations, specifically maneuvering forces into the most advantageous position prior to engagement with the enemy." And what is the most advantageous position? According to Carl von Clausewitz, the world's most-famous military strategist, "Keep the forces concentrated in an overpowering mass. The fundamental idea always to be aimed at before all and as far as possible." Strategy is like a garden hose with an adjustable nozzle. Turn it one way to increase the concentration and out comes a powerful stream of water that could knock down a child. Turn it the other way and out comes a fine mist that wouldn't harm a butterfly. Almost every military strategist recommends "concentration of forces," while almost every business strategist recommends "scatteration of forces." We used to run a series of seminars entitled "Marketing Warfare." One of our luncheon speakers was William Westmoreland, the four-star general who commanded U.S. military operations in Vietnam. After watching some of our presentations, Gen. Westmoreland expressed surprise that marketing people found anything new in our lectures. Everybody knows these military principles, he said. Not so. Hewlett-Packard has just 17.5% of the world market for personal computers. One would think the company would focus on making Hewlett-Packard a dominant brand like Windows (90%) or Google (75%) or iPod (70%) before trying to expand in all directions. Everything about marketing strategy parallels military strategy. The principle of force. The superiority of the defense. The advantage of flanking. And most importantly, the principle of focus. There is one difference. Marketing is about brands, not companies. You can successfully expand a company, but not usually a brand. Apple has become the world's second most-valuable company, not by expanding the Apple brand, but by launching new brands: Macintosh, iPod, iPhone, iPad. Al Ries, August 02, 2011

You Can't Win a Revolution With a Line Extension

2012-01-11T15:10:00.000-05:00

In the last decade, we've had two wars (Iraq and Afghanistan), two automobile bankruptcies (General Motors and Chrysler) and two radically new social-media sites (Facebook and Twitter). We've had a housing crisis, a banking crisis and a dot-com bubble. Three of our four leading airlines have gone bankrupt. And the fourth one (American Airlines) is losing money. We've witnessed the incredible rise of Google and Apple. And the incredible fall of A.I.G. and Lehman Brothers. "Everything has changed" is the message marketers have been reacting to recently. And because everything has changed, marketers believe they have to change everything in their marketing programs. Take the automobile industry. Coming down the road at a rapid rate of speed is the electric car. Every major automobile manufacturer in the world is busy developing and introducing electric cars. Some recent announcements. The Nissan Leaf The Chevrolet Volt The Mini E The BMW Megacity The Hyundai BlueOn The Mitsubishi i-MiEV In addition, Toyota, Honda, Daimler, Volkwagen and Audi have declared their intentions to introduce electric vehicles. So the cry goes up, "Change the marketing. Let's let the world know our brand is the one that is pioneering the electric vehicle." Witness the massive marketing campaign for the Nissan Leaf featuring the advertising industry's old, reliable spokes-animal, the polar bear. The theme: "Innovation for all." "The Leaf is the most recent example to believe that Nissan is an innovative company," said Jon Brancheau, VP-Marketing in a recent conversation with Ad Age. Nissan and the other electric-car wannabes are missing a major opportunity. Nissan is a gasoline-engine brand. Not an electric-engine brand. And given the history of similar developments, it's going to be difficult to move the brand from one to the other. Take the personal computer. Like the electric car, the first personal computers arrived with a massive dose of publicity. So almost every high-tech company in the world responded in a similar way. "Change the marketing. Let's let the world know our brand is the one that is pioneering the personal computer." So almost every high-tech company in the world introduced a personal computer (under their own brand names, of course): AT&T, Burroughs, Dictaphone, Digital Equipment, IBM, ITT, Lanier, NCR, NEC, Siemens, Sony and Xerox, among others. So which one of these high-tech companies is the world leader in personal computers? No one, of course. For a number of years, the world leader in personal computer was Dell Computer, a startup that traces its origins to 1984, when Michael Dell was a second-year student at the University of Texas at Austin. That was three years after the launch of the IBM PC. The current world leader in personal computers is Hewlett-Packard, which might elicit an "Ah-hah. That proves a high-tech company can launch a line-extension and become the world leader." Not exactly. In the year 2000, the world leader in personal computers was another startup, Compaq Computer, with 12.1% of the market. Like Dell, Compaq was founded after the launch of the IBM PC. In the year 2001, Hewlett-Packard bought Compaq and began its rise to the top. Furthermore, the previous year Hewlett-Packard spun off its test and measuring equipment into a new company named Agilent Technologies, leaving HP as a company focused on computers and computer printers. But that's not the whole story either. By its thoughtless marketing decisions over the years, Dell gave a big boost to Hewlett-Packard. First by moving into the consumer field and destroying its business focus. And second, by introducing line extensions including TV sets, handheld computers, digital audio players and printers, all under the Dell name. One could argue it was better products, not better brands, that built Compaq and Dell into their leadership positions. But is this logical? Two startups that got into the game late could build "better" personal computers than high-tech companies like IBM, Xerox, Digital Equipment, Siemens and Sony? But "the better product wins in the marketplace" is a concept so deeply embedded in management thinking that the facts alone will never change this perception. Take the smartphone. Like the personal computer, the first smartphones were line extensions introduced by Nokia and Ericsson, traditional mobile-phone manufacturers, and by Palm, the handheld computer company. They all reacted in a typical way. "Change the marketing. Let's let the world know our brands are the ones that are pioneering the smartphone category." After a while, Dell and Hewlett-Packard joined the smartphone pack with line extensions of their own. So who is winning the smartphone battle? The leading mobile-phone manufacturers or the leading personal-computer makers? Silly question. When a category is a truly revolutionary category, line extensions almost never work. In January of this year, Nokia and Motorola together had just 7% of the U.S. smartphone market while BlackBerry and the iPhone together had 68% of the market. Today, Nokia is in serious trouble. Since Apple introduced its iPhone in January 2007, Nokia shares have fallen 65%. Its CEO has been fired and the head of its smartphone business has resigned. So why didn't Nokia use a second brand name to launch its lines of smartphones? Having worked with many high-tech companies in similar situations, I would expect the same response: "It's not the brand name that matters. It's the product." Sure. And Lexus would have been just as successful if it had called its brand "Toyota Supreme." And L'eggs would have been just as successful if it had called its brand "Hanes Too." And the Geek Squad would have been just as successful if it had called its brand "Best Buy repair service." And Dockers would have been just as successful if it had called its brand "Levi's Tailored Classics." (Which was the original name until the company wised up.) And DeWalt would have been just as successful if it had called its brand Black & Decker Pro." (Which was also its original name.) Unfortunately, when you start to document the success of second brands, you rapidly run out of examples. Almost all new products launched today are line extensions. Yet when you look at recent successes, they invariably are new brands launched by established companies or startups: Red Bull, Google, Facebook, YouTube, Twitter, Starbucks, Amazon, iPod, iPhone, iPad, Red Box, Netflix, eBay, Activia, Fusion, Zappos, Zara, Oracle, SAP, Flip, Fresh Express, Geox, Grey Goose, Home Depot, Horizon, Five Guys. Line extensions almost never become a big deal. This is not a recent development. Take the automobile, which made its appearance at the beginning of the 20th century. At the time, the leading bicycle company was Columbia. So what do you suppose Columbia did? "Change the marketing. Let's let the world know our brand is the one that is pioneering the automobile." As you might expect, the Columbia automobile went nowhere. Instead, the Ford Model T, a vehicle produced by a startup company, went on to dominant the industry for decades. Until General Motors pioneered its multiple-brand strategy. So now we're into the 21st century and it's Ford's turn to make a decision about its electric car. So what strategy is Ford planning to use? Silly question. The same strategy Columbia used. "Change the marketing. Let's let the world know that the Ford Focus Electric is the brand that is pioneering the electric-car category." Reminds me of the song in the movie, Casablanca. Play it, Sam. You must remember this A kiss is just a kiss, a sigh is just a sigh. The fundamental things apply As time goes by. So, too, with marketing. The fundamental things apply . . . as time goes by. Al Ries, October 04, 2010

Apple's IPad a Great Example of Divergent Thinking Marketers Should Ask, 'What Can We Do Without?'

2012-01-11T14:59:00.000-05:00

What's the difference between an iPad and a tablet computer? Well, you might be thinking, an iPad is a tablet computer. Not exactly. If I remember correctly, a tablet computer was a laptop computer with a screen that doubled as an electronic notepad. You could use a stylus to write directly on the screen or you could type on the keyboard. You could save your handwriting as a visual file or you could convert it into typed text. Earlier in the decade, the launch of the tablet computer was a big deal. Microsoft invested a reported $400 million developing the operating system and companion handwriting-recognition tools. Fourteen computer makers signed up to produce tablet computers including Compaq, Hewlett-Packard, Toshiba, Hitachi, Fujitsu, NEC and Acer. "It's the ultimate evolution of the laptop," said Bill Gates. "Within five years," he predicted, "it will be the most popular form of PC sold in America." It never happened. The original tablet computer and today's version couldn't be more different. The two products illustrate an important conceptual idea. The tablet computer of 2002 was a convergence product. It combined the functions of a pen computer with the functions of a standard laptop computer. The tablet computer of 2010 is a divergence product. It's as if Apple took a laptop computer and cut off the keyboard and threw it away, then put a handful of the laptop's more important components into the screen itself. What remained was a new type of computing device. Lighter, easier to use and almost totally focused on the visual functions of a conventional laptop. History repeats itself The first computer was a mainframe. Then the mainframe computer diverged into dozens of difference categories including mid-range computers, servers, desktop computers, laptop computers and today's tablet computer. Almost every product category follows a similar path. Early on, an inventor develops a unique idea and creates an entirely new category -- the incandescent light bulb, for example, invented by Thomas Edison. As time goes on, the category diverges. And today we have a host of different types of lighting: fluorescent, neon, halogen, LED, OLED and laser, among other types. No convergence in lighting, only divergence. Some divergence products, of course, are failures, including the original pen computer, although it's likely that someday someone will solve the difficult problem of handwriting recognition and develop a practical pen computer. Without a keyboard, of course. What can we do without? That's one of the secrets to creating a successful divergence product. To create the iPhone, Apple eliminated the keyboard used on other smartphones. That doubled the area available for a screen, making the iPhone much more useful as an internet device. (To compensate for the lack of a keyboard, Apple uses a touchscreen. But this was not a new idea, since touchscreen technology was developed in the early 1970s, around the time of the introduction of the first personal computer.) And unlike what some industry experts have predicted, the iPhone and other smartphones are not replacing the personal computer. Worldwide PC shipments, for example, were up 10.3% in the latest quarter. I must admit, I didn't think the iPhone would be successful because I initially viewed it as a convergence product, a combination cellphone/computer. In reality, the iPhone and other smartphones are "divergence" devices. We used to have one type of mobile phone and now we have two types: cellphones and smartphones. Will the smartphone replace the cellphone? Highly unlikely, since the two types are at opposite ends of the spectrum. A cellphone is a relatively inexpensive device for making phone calls. A smartphone is a relatively expensive device for surfing the internet and sending emails, along with a secondary function of making phone calls. (Many iPhone owners also own cellphones for making calls.) Study other revolutionary developments and you'll usually find they were initiated by asking the question, "What can we do without?" Take the supermarket industry, pioneered by Michael Cullen. His King Kullen chain on Long Island in New York eliminated one of the most expensive services of a typical grocery store: the clerks who fetched the products from the shelves at the request of consumers. But the self-service feature was only his first step. Without the clerks, it made sense to have much larger stores that were more efficient and allowed even lower prices. King Kullen's slogan: "Pile it high. Sell it low." It might seem illogical, but the original supermarket chains carried even fewer items than a grocery store. King Kullen, for example, carried only 1,200 items. A grocery store felt obligated to carry everything a customer might ask for. With self-service, consumers made choices from what they saw on the shelves. In a way, those early supermarkets were more like Costco (some 4,000 stock-keeping units) instead of today's typical supermarket (with 30,000 to 40,000 SKUs). Today, the supermarket industry is in trouble. It's getting hammered at the low end by Walmart and at the high end by Whole Foods. When was the last time a supermarket operator asked, "What can we do without?" Instead, the typical operator seems driven by the opposite question: What can we add to serve our customers better? A delicatessen, a bank, a pharmacy, a bakery, you name it. Typical convergence thinking. What's a company in business for? To marry its customers and take care of their every need ... to have and to hold from this day forward, for better for worse, for richer for poorer, in sickness and in health? It sounds so obvious and so logical that it's a shame to say convergence doesn't work. Take Kroger, the nation's largest pure supermarket chain, although Walmart has overtaken it in grocery sales. The numbers tell the story. In the past 10 years, Kroger had sales of $610.7 billion and net profits after taxes of $7.9 billion, or a net profit margin of only 1.3%. Whole Foods had twice the profit margin of Kroger. On sales of $53.9 billion, the company had profits of $1.4 billion, or a profit margin of 2.6%. Walmart is even doing better than that. On sales of $3,063.2 billion, the company had profits of $103.8 billion, or a profit margin of 3.4%. Ask not what more you can do for your customers. Ask what less you can do for them. What can you eliminate that will help you build a narrowly focused, more profitable brand? Oddly enough, Walmart, the supermarket industry's nemesis, is also making the same mistake. The chain is repeating what happened to Sears Roebuck years ago. Sears had exactly the same "low cost" position as Walmart before beginning an expansion program that included insurance, real estate and stock brokerage, among other things. "From socks to stocks" was the battle cry. "From socks to soup," in my opinion, is going to eventually undermine the Walmart brand. What Apple didn't do Apple didn't take care of the millions of consumers who were using conventional MP3 players. Instead it focused the iPod on the high end, a thousand songs in your pocket at a much higher price. Apple didn't take care of the millions of consumers who were using their smartphones primarily as an email device. Instead it introduced the iPhone as a smartphone without a keyboard. The only recent Apple launch that went nowhere is Apple TV. And guess what? Apple TV is a typical convergence product, the result of trying to marry the internet with the TV set. For more than a decade, high-tech companies have been trying to put the two together, egged on by the media. "Is it tellynet or netelly" was the headline of an article in the Dec. 13, 1997, issue of The Economist. "If ever two media were meant to wed, they are television and the internet." Adding the function of one device to another device, of course, doesn't mean the two devices are converging. Radio has not converged with the automobile in spite of the fact that most automobiles have radios. And even if every TV set is able to surf the internet, it doesn't mean that any convergence has taken place. The essence of convergence it's when two categories come together and become one category. For example, the personal computer and the TV set. You might not remember when this was viewed as a distinct possibility, when dozens of companies were working on putting the two together. As one prominent media pundit put it 15 years ago: "Don't worry about the difference between the TV set and the PC, in the future there will be no distinction between the two." Oddly enough, that might well have happened except for another phenomenon. Over time, every category evolves as well as diverges. Today's TV set isn't the same as yesterday's TV set. Today's TV sets are getting bigger and less portable. It's not unusual to find 40, 50, 65, even 73-inch TV sets. Today's personal computer isn't the same as yesterday's personal computer, either. Desktops are disappearing and laptops are getting smaller and lighter. Who wants to carry around a 73-inch combination TV set and laptop computer? A decade of convergence hype Early in the 1990s, the world witnessed an explosion of convergence hype. Following is a typical quote, from Fortune magazine (Nov. 29, 1993): "Convergence will be the buzzword for the rest of the decade. This isn't just about cable and telephone hopping into bed together. It's about the cultures and corporations of major industries -- telecommunications (including the long-distance companies), cable, computer, entertainment, consumers electronics, publishing, and even retailing -- combining into one mega-industry." As the decade came to a close, Forbes ASAP, in an issue entitled "The Great Convergence," (Oct. 4, 1999) editorialized as follows: "The emerging idea of our time is convergence. It is the governing metaphor of the turn of the millennium." I'm hoping the business media will set the record straight by designating the next 10 years as the decade of divergence, perhaps with a quote that goes something like this: "The emerging idea of our time is divergence. It is the governing metaphor of the next decade. It is the reason why the world has witnessed an array of new categories and new brands: Google, Facebook, YouTube, Twitter, Amazon, iPod, iTunes, iPhone, iPad, BlackBerry, Red Box, Netflix, AOL, Yahoo, eBay, Zappos, Wikipedia, LinkedIn, Flickr, Craigslist, PayPay, Groupon, Zynga. With many more to come." I'm hoping, but I'm not holding my breath. Al Ries, December 06, 2010

Want to Expand Your Business? You Should Narrow Your Focus

2012-01-11T14:39:00.000-05:00

Recently, the Conference Board asked 704 CEOs to rank a number of business priorities. The No.1 priority of their list: "Business growth." Who can argue with that objective? But the real question is "How?" Conventional wisdom suggests the way to grow the business is "More." More products, more services, more markets, more distribution. Look at AOL. In 2010, revenue was down 26%. In 2009, revenue was down 22%. In the past three years, AOL reported $2.1 billion in losses on revenues of $9.9 billion. So with all the bad news from the past, what is AOL's current marketing strategy? More, of course. "Tim Armstrong, AOL's chief executive," as reported in a February Reuters article, "has been trying to transform the company into a media and entertainment powerhouse." How do you transform a company into a media and entertainment powerhouse? Apparently, you buy the parts and put them together. Like The Huffington Post for $315 million. StudioNow, an online platform for creating, storing and distributing video for some $36 million. The technology blog TechCrunch for about $30 million. Patch Media, a network of local-community sites for $7 million (plus a commitment of $50 million to build out the network). AOL is not an isolated example. More and more business leaders base their strategies on "more," yet history suggests that the road to success is "less." What many business leaders are missing is the effectiveness (or lack of effectiveness) of brands. When you expand your brand, you weaken your brand. When you narrow your brand, you strengthen your brand. Take AltaVista, the first search engine. But "search" wasn't good enough for AltaVista, so it added email, directories, topic boards, comparison shopping and loads of advertising on the home page. It also spent more than a billion dollars to buy a portal-services company, Shopping.com, a comparison shopping site, and Raging Bull, a financial site. In essence, it turned AltaVista into a portal. Hasta la vista, AltaVista. By focusing on search, Google became the fourth most-valuable brand in the world (after Coca-Cola, IBM and Microsoft), worth, according to Interbrand, $43.6 billion. So what did Google do next? Naturally, it expanded the Google brand into a host of new businesses, including targeted ads in TV, radio and newspapers. But here's the difference between AOL and Google. Expanding a weak brand like AOL won't make the brand successful. Expanding a strong brand like Google will weaken the brand, but the Google brand itself is so strong that the differences are going to be hard to measure. The three most valuable brands in the world (Coca-Cola, IBM and Microsoft) have all been expanded. Yet these brands were exceptionally strong before the line extensions took place. Take Google. Potentially, the most valuable Google expansions are not Google brands at all. They are YouTube and Android, both the result of acquisitions. Currently, Android leads all smartphone operating systems with 33% of the market. BlackBerry is second with 29% and the iPhone is third with 25%. It's odd. If a company buys another company, it normally keeps using the acquired company's brand names. If a company develops a product or service internally, it normally introduces the development as a line extension. Why the difference? There seems to be a feeling that if you introduce an internally-developed product with a new brand name, you are in some way "disloyal" to your company. But loyalty or disloyalty has nothing to do with it. Brands don't even make their primary residences inside your own company. A brand is nothing more or less than a name that stands for something in consumers' minds. That determines the value of a brand, not the opinions of insiders. Friendster, MySpace and Facebook Take the first big social-media sites. Friendster was launched in 2002, MySpace in 2003 and Facebook in 2004. Facebook has become a powerful brand, valued at $82.9 billion on a secondary exchange, SharesPost. The other two sites are worth a small fraction of the value of Facebook. What did Facebook do differently than the other two sites? The same thing that Dell, Enterprise, FedEx, Subway and dozens of other brands have done: Facebook started with a narrow focus. Facebook membership was initially restricted to students of Harvard, and within the first month, more than half the university's students were registered. Then it was expanded to other colleges in the Boston area, then the Ivy League, then Stanford University. Facebook also launched a high-school version and later expanded its eligibility to employees of several companies, including Apple and Microsoft. Finally, it was opened to everyone ages 13 and older with a valid email address. Early on, as compared to Friendster and MySpace, Facebook was perceived as more exclusive, an extremely important attribute for a social-media site. It's only human nature to want to join the more-exclusive club. That's exactly the strategy that has built many dominant brands. First, start narrow and build the brand. Then expand the distribution only after you have built a strong brand. In grocery products, for example, you might restrict distribution to Whole Foods. In hardware products, you might restrict distribution to Home Depot. Instead of a national launch, you might consider a regional launch. Or perhaps launch the new brand in one city only. And then, after its initial success, roll out the brand to additional cities. Invariably, today's strong brands started narrowly and expanded only after winning the initial branding battle. You can't expand your way to success. You can only narrow your way to success and then hope you don't spoil that success by overexpanding the brand. Al Ries, May 09, 2011

Have We Killed Brand Advertising?

2012-01-11T14:29:00.000-05:00

Brand advertising seems to be on its way out. Take Starbucks, which used to advertise its coffee shops. And very effectively, too. Today, the brand is strongly positioned at the top of the coffee-shop market. What's next for Starbucks? The company's recent decision to drop the words "Starbucks coffee" from its logotype seems to indicate where the company is going. According to media reports, Starbucks is in the midst of a transformation from a coffee company to a food and beverage organization. Starbucks is following a well-worn path. Build a brand that stands for something and then try to figure out what other products you can hang the brand name on. Take Crest, a Procter & Gamble brand that used to stand for cavity-prevention toothpaste. Today, Crest is a toothpaste, a toothbrush, a mouthwash, a dental floss and a tooth whitener. There is no such thing as a Crest advertising program. And if there were, what would the message be? Probably some variation of the slogan used on the Crest website: "Healthy, beautiful smiles for life." It's not that Procter & Gamble doesn't advertise. In 2009, P&G was the largest advertiser in America, spending $4.2 billion. They just don't advertise brands. They advertise various products their brand names are attached to. That's typical of many categories. Consider automobiles. When was the last time you saw an automobile brand advertisement? Automobile companies don't advertise brands, they advertise individual models and hope you form a favorable impression of the brand by osmosis. Take a typical Ford advertisement featuring the "all-new Focus," which is likely to be a big success. But what does it do for the Ford brand? Not much, especially with one of the weakest slogans in the automotive field: "Drive one." There are 23 automobile brands on the American market that each sold more than 100,000 vehicles last year. It must be extremely difficult for an automobile prospect to differentiate between 23 advertising campaigns for these 23 brands. But that's not the real problem. These 23 brands encompass 205 different models and almost all automobile advertising is "model" advertising rather than "brand" advertising. And I suspect most of this advertising is ignored because there is no way for the average consumer to find positions in the mind for so many different models. Once in a while, an automobile company finds a reason to advertise its brand rather than one of its models. In January 2009, Hyundai launched its Assurance program, offering to take back cars sold to customers who lost their jobs. This idea created enormous awareness for the Hyundai brand. But campaigns like that one are rare. It's not the fault of the advertising agency. How can you run an advertising campaign for an automobile brand that sells cheap cars and expensive trucks (and everything in between) under the same brand name? No, the fault lies with the company that expands the line into oblivion, and then expects to run an advertising program to enhance the value of the brand. Years ago, Procter & Gamble pioneered the "new-and-improved" philosophy. Every few years, each brand was updated with one of the latest developments created in P&G laboratories. Not only did these developments keep the brand ahead of the competition, but they also provided ammunition for the brand's advertising. Today, the philosophy has changed: Introduce the new-and-improved version, but also keep the "old-and-obsolete" version on the shelves. That way, the company gives the consumer more "choice" and, equally important, allows the new-and-improved version to sell for more money. In the process, the strategy also creates more "facings" for the brand on the shelves. Look at Campbell's tomato soup. With all the negative publicity about sodium, the company wisely introduced versions with "25% less sodium than our regular product." But it also kept the regular product on the shelves. (Now it turns out that the company didn't really mean to compare the low-sodium product with its regular soup, but with the average sodium content of the soup category.) You pay a penalty when you do this. The consumer assumes the 25%-less-sodium product doesn't taste as good as the regular product and the regular product has too much sodium, otherwise why introduce a 25%-less-sodium product? Now the consumer has no reason for buying either the regular soup or the low-sodium version. Then there's Campbell's Healthy Request tomato soup with "0g trans fat per serving" advertised on the front of the can. But Campbell's regular tomato soup also has zero grams of trans fat per serving. (At Publix, the Healthy Request version sells for 50% more than the regular tomato soup.) Instead of playing verbal games with consumers, a better strategy, in my opinion, would be to eliminate trans fat in all Campbell's soups, reduce the sodium content and then run a massive advertising program with the general theme, "All Campbell's soups are now new and improved." Nothing to advertise It's strange. With all the innovations that have occurred over the years, very few brands have anything to advertise, except the merits of individual models or products. In today's overcommunicated society, this "model" strategy is wasteful and ineffective. And so it goes. As a brand expands into different varieties and different categories, the brand itself loses its ability to stand for anything specific. And if a brand cannot stand for something specific, it cannot be advertised in an effective way. Al Ries, June 02, 2011

The Most Effective Way to Sell Brand USA's Image

2012-01-11T14:01:00.000-05:00

Brand USA, a partnership of the travel industry and federal government, plans a $200 million campaign to attract visitors to the country. The theme: "United States of Awesome Possibilities." Suppose Brand USA spent $200 million in each of the next five years promoting its "awesome possibilities" idea. Five years from now, how many people are likely to associate "awesome" with the United States? Not very many. That's the problem with marketing today. Almost every campaign starts with a press conference and a blaze of publicity about a new logotype (the letters "USA" spelled out with multicolor dots), a new website (discoveramerica.com) and an inspirational message (United States of Awesome Possibilities). "We will be able to reach audiences around the world by showcasing the best of America and spreading the message that we welcome visitors with open arms," said Chris Perkins, Brand USA's chief marketing officer. Nice thought, but its weakness is communicated by the phrase "showcasing the best of America." No marketing campaign can do that. The best any marketing campaign can do is to emphasize a single word or concept. And oddly enough, the loftier the word and the more abstract the concept, the more difficult that is to accomplish. Other countries going the "awesome" route: Brazil is "sensational." Germany is "simply inspiring." Korea is "dynamic." Greece is the "true experience." Singapore is "unique." Kenya is "magical." India is "incredible." And dozens more. Only one approach has a chance of working in a message-saturated society: Bring your slogan down to Earth. Take the launch of Apple's iPhone 4S. The operating system has 200 new features, including deep integration with Twitter and the ability to edit photos. It has an eight-megapixel camera with a greatly improved sensor, a five-element lens and a wider aperture. It has 4G-class download speeds and an improved voice-call reception because the phone can switch between two antennas to pick up the best signal. Wow! What an opportunity for the wordsmiths at TBWA Media Arts Lab to capture the essence of this awesome, sensational, unique, incredible phone. Instead, they concentrated on a single feature. Headline of a typical ad: "Will I need an umbrella this weekend?" Copy: "You speak. Siri helps. Say hello to the most amazing iPhone yet." Try to say everything and you end up saying nothing. Make your message real, and you not only connect with people but entice them with the suggestion that there is more to learn about your brand. What psychologists call "the halo effect" marketing people call "positioning." When you focus on one concrete thing, consumers are inclined to attribute good qualities to your product. It's what "Driving" did for BMW. It's what the "Slowest ketchup in the West" did for Heinz. It's what "Please don't squeeze" did for Charmin. It's what "Pizza. Pizza" did for Little Caesars. It's what "Curiously strong" did for Altoids. It's what "Not from concentrate" did for Tropicana. It's what "Free shipping. Both ways" did for Zappos. Yet what do most slogans try to convey? Everything. Guess what companies are using these slogans. "Truth in engineering." "The power to do more." "Solutions that matter." "For those who do." "Ideas for life." "Bring your challenges." "Make. Believe." "Ready for real business." From top to bottom: Audi, Dell, FedEx, Lenovo, Panasonic, Prudential, Sony and Xerox. Here's the paradox. Even if massive advertising programs were successful in associate these slogans with the companies' brand names, so what? Would you buy an Audi because you thought the company told the truth about its engineering? And no slogan will work for a brand that covers a wide range of products or services. Before you can bring your slogan down to Earth, you need to bring your brand there so it stands for something. "If you asked a Subaru dealer or an employee or the press what Subaru was all about, it was pretty confusing," George Muller said in 1993, when he took over as president of Subaru of America. He chose to focus on four-wheel-drive vehicles. Advertising theme: "The beauty of all-wheel drive." (What the auto industry calls "all-wheel drive," people call four-wheel drive.) It was an exceptionally bold decision because at the time four-wheel-drive vehicles represented 48% of Subaru's sales. But the company had lost $250 million the previous year, so something had to be done. It didn't take long to turn the brand around. Three years later, Subaru was essentially a four-wheel-drive brand, and sales were up 16%, to 120,748 units. Subaru registered a sales increase in 12 of the 14 years between 1996 and 2010. It sold 263,820 vehicles in the U.S. in 2010, more than Volkswagen, Lexus, Mercedes, BMW, Mazda, Chrysler, Buick, Cadillac, Acura and, of course, "Truth in engineering" which moved only 101,629 units. (If Subaru had a better name, it would probably have been even more successful.) Brand USA should take a tip from iPhone. It's impossible to sum up a smartphone's features. Apple has built its marketing program for the device on Siri, the feature that has received the most publicity and the most attention from consumers. What feature of the U.S. would most foreign visitors be interested in? Look at it from the point of view of other countries. What do most first-time visitors to France want to see? Or those to the U.K.? Or to Italy? Paris, London and Rome. What do most first-time visitors to America want to see? New York City. The Siri of Brand USA is New York. It should be the focus of a marketing campaign to attract foreign visitors. Furthermore, the Big Apple has the perfect symbol for "spreading the message that we welcome visitors with open arms." The Statue of Liberty. Al Ries, January 9 2012

Hi-Lo: How You Can Target Both Ends of the Market

2012-01-11T13:50:00.000-05:00

In certain circles, "Hi Lo" is a popular poker game. One particularly good Hi Lo strategy is to try to scoop the pot by winning at both the high end and the low end. Not a bad strategy in marketing circles either. Developing two brands, one at the high end and one at the low end, is probably an easier task than trying to take on the market leader in the middle of the market. Procter & Gamble has been playing this game for a number of years. "As the middle class shrinks," reported The Wall Street Journal recently, "P&G aims high and low." At the high end, P&G is moving its Olay skin-care brand upmarket. In 2009, the company introduced Pro-X with a starter kit costing about $60. Previously, the Olay line sold for no more than about $25. At the low end, P&G launched Gain dish soap last year. It sells for half the price of Dawn, its premium brand. Where I would differ with the Journal is the reason for the developing opportunities at the ends of the spectrum. It's true, the middle class is shrinking. But that's only a partial reason for adopting a Hi Lo strategy. Every consumer is an individual who doesn't necessarily buy what he or she is supposed to buy. Typically, a consumer might buy an expensive automobile, but then the cheapest brand of paper towels. It's a category issue, not a branding issue. Some consumers care an awful lot about what brand of automobile they drive. Others don't. As a glittering generality, if you care about the category, you want the "best" you can afford. If you don't care about the category, you want the "cheapest." Nobody says, "I want something mediocre. Not too cheap. Not too good." That's why at the high end, you want to load your brand with as many goodies as you can think. And at the low end, the opposite is true -- you want to strip your brand to sell at a low price. In seven months, less than 16,000 Fiat 500s have been sold in America, a rate that is about half the 50,000-a-year goal for the Fiat brand. The least-expensive Fiat 500 is $15,500, about $2,600 more than a Toyota Yaris. The top of the line, the Fiat 500 Lounge edition, is $19,500. Why the high price for a cheap car? According to industry reports, Fiat management thinks American buyers want deluxe interiors and other added features that economy-car buyers in Europe do not. And it's true. They do, but not necessarily on a cheap car. Then there's the marketing program. Jennifer Lopez in a Fiat 500? That's almost as bad as Tiger Woods in a Buick. Then there's the advertising theme: "Simply more." "Simply less" with a stripped-down car and a lower price would have been a better direction. So what is Fiat doing next? Introducing a souped-up version of the car, the Fiat 500 Abarth arriving next spring. Estimated price: $23,000. What's a Fiat 500? Another Volkswagen Beetle or another marketing disaster? I'd say the latter. Compare the Kindle Fire with the Fiat 500. Amazon obviously aimed the product at the iPad, and I think it's going to be a big winner. Everything about the Kindle Fire is "simply less." A smaller size (4.7 by 7.5 inches) as compared with the iPad's 7.3 by 9.5 inches. No cameras, half the memory and less battery life. The killer feature of the Kindle Fire is its price: $199 vs. $499 for the cheapest iPad. Even though it was the first high-end Japanese import in the market, Acura lost out to Lexus because its cars weren't expensive enough. In its introductory years, Acura automobiles sold for an average price of about $20,000 vs. $29,000 for the vehicles sold by Lexus. You can't build a high-end reputation unless your vehicles are expensive enough. Look at the success of Rolex. Years ago, the high-end watch market was dominated by Longines-Wittnauer, whose watches were priced at about $200. Then Rolex came into the market at substantially higher prices and became the market leader. And look at the success of Vertu, the high-end smartphone introduced by Nokia. In the past 10 years, more than 300,000 Vertu smartphones have been sold at an average price of $6,800. I'm not suggesting you inflate the price of your products to appeal to high-end markets. What I am suggesting is that you inflate the value of your high-end products with better materials and added features. Lexus marketed only six and eight-cylinder cars while Acura was selling only four and six-cylinder cars. Vertu phones use a sapphire crystal as their screen surface. One analyst said buying a Vertu is more like buying jewelry than buying a mobile phone, which is exactly what has happened with Rolex watches. In the decades to come, I predict that what happened in watches will also happen in smartphones. If so, then a high-end brand like Vertu will become an even more profitable operation for Nokia. Hi Lo is unlikely to be widely adopted because most managers are company-oriented, not brand-oriented. (At Walmart, they think of themselves as a low-end company. At Tiffany, they think of themselves as a high-end company.) For a high-end company to launch a low-end brand and vice versa is going to be difficult. That's not the way managers think of their companies. That's why we have been trying to get managers to become more brand oriented and less company oriented. The future belongs to brands, not companies. And to play the Hi Lo game, you have to think brands first, company second. Al Ries, December 07, 2011

THE GOOGLING OF THE MARKETING INDUSTRY And What We Can Learn From It

2012-01-11T13:35:00.000-05:00

The last time I checked, Google was worth $125 billion on the stock market. More than four times as much as General Motors and Ford combined. Not bad for two Stanford University graduate students who started the company in 1998 (and never did get their PhDs). What made Google one of the world's most valuable brands and in the process made 1,000 of its employees millionaires? It wasnt advertising. Last year, Google spent just $5 million on marketing. (General Motors and Ford spent $6.4 billion in the U.S. alone.) What made Google worth $125 billion? Round up the usual suspect, the better mousetrap. Google designed the better search engine. If you asked the average person, the average manager or the average CEO, what is the key criteria for success in business today, you always get the better mousetrap answer. It's the better product or service than wins in the marketplace. Every marketing professional should think through this issue very carefully. If the better product wins in the marketplace, then what is the role and function of marketing in the overall scheme of things? How can marketing create better products or services? What is disturbing to me is that the marketing profession seems to be aligning itself with the "better mousetrap is the answer" to all marketing problems. Recently, the American Marketing Association Foundation announced the recipients of its 2005 Berry-AMA Book Prize. The winners: Patrick Barwise and Sean Meehan, authors of Simply Better. Simply better? Is that the answer to your marketing problem? I think not. Which scenario seems more likely to you? Scenario a): Company develops a better product or service that goes on to overtake the market leader. Scenario b): Company is first to launch a brand in a new category and becomes the market leader, fending off dozens of competitors that try to take away its leadership by introducing better products or services. Which scenario best describes brands like Starbucks, Red Bull, iPod and BlackBerry? Or going back a few years: IBM, Hertz, Coca-Cola, Lipton, Nescafe, Intel, Jell-O, Kleenex, Xerox and dozens of other leader brands? Scenario "b" fits the facts better. The first brand in a new category goes on to dominate that category over an extended period of time. Scenario "a" fits the perceptions of the average person, the average manager and the average CEO better. CEOs even acknowledge that the first brand in a new category generally goes on to dominate that category. As a result, the brand is widely perceived to be the better product or service, proving Scenario "a" right. The better product wins in the marketplace. It's the death-row dilemma. If you say you're innocent, we execute you because you show no remorse for your terrible crimes. If you say you're guilty, we execute you anyway, secure in the knowledge we didn't send an innocent person to the hereafter. The marketing dilemma operates the same way. If you're first and become the market leader, you had the better product. If you're not first and didn't become the market leader, you didn't have the better product. Back to Google. This is the one of the most interesting case histories of all, because Google wasn't first and did become the market leader, apparently overturning all of my marketing concepts and proving once again that the better product wins in the marketplace. I say "apparently" because when you dig behind the facts it paints a different picture. The first search engine in the mind wasn't Google. It was AltaVista. But "search" wasn't good enough for AltaVista, so they added e-mail, directories, topic boards, comparison shopping and loads of advertising on the home page. They also spent more than a billion dollars to buy a portal services company, Shopping.com, a comparison shopping site, and Raging Bull, a financial site. In essence, they turned AltaVista into a portal. The site was later sold to CMGI, an Internet holding company and eventually sold to Overture. Overture was later sold to Yahoo, which restored AltaVista to its original vision as a search engine. But by then it was too late. Google had arrived. The second search engine in the mind wasn't Google, either. It was GoTo.com, which actually invented the pay-per-click model. Then greed entered the picture and GoTo.com decided to syndicate its search service to MSN.com, Netscape and AOL. The syndication service was so much more profitable than the destination site that GoTo.com decided to change its name to Overture and focus on its syndication service. Bad move. When you have a choice between building a brand and building a business, it's always better to focus on the brand first. The business can follow. The third search engine in the mind was Google and the rest is history. What gives me great confidence in the first law of marketing ("It's better to be first than it is to be better") is not from the study of those brands that clearly confirm the concept. It's from the study of leader brands like Google that weren't actually first and still became the market leader. You can learn more from the failures of AltaVista and GoTo.com than you can from the success of Google. Thousands of marketing people literally let opportunities slip through their fingers because they don't recognize the nuances of the law of leadership. It's not enough to be first, you have to keep the brand focused or it might lose its leadership. It happened to AltaVista. It happened to GoTo.com. And it happened to hundreds of other brands that could have wound up winning the stock market lottery. Take Acura, the first Japanese luxury car to be imported into America. So why isn't Acura the leading luxury car brand? Like any profession, marketing is best understood by the study of history. Let's look at the history of Japanese luxury cars brands in the U.S. market. The first Acura was sold in March 1986. The first Lexus wasn't sold until September 1989, three-and-a-half years later. The first Infiniti wasn't sold until December 1989. Acura started like gangbusters. In its first full year (1987), Acura became the best-selling luxury import, outselling Volvo, Mercedes-Benz, BMW, Audi and Jaguar. It was ranked No. 1 in customer satisfaction by J.D. Power & Associates. So you might expect the sales order of Japanese luxury brand today to be: (1) Acura, (2) Lexus and (3) Infiniti. But it was Lexus, not Acura, that won this particular battle. What happened to Acura? Like AltaVista and GoTo.com, Acura didn't have the courage of its convictions. It wasn't a "pure" luxury car. The year Lexus was introduced, Acura sold two models: The four-cylinder Integra with a list price of $11,950 to $15,950 and the six-cylinder Legend with a list price of $22,600 to $30,690. Lexus also sold two models, but they were six- and eight-cylinder cars. The ES 250 with a list price of $21,050 and the LS 400 with a list price of $36,000. On average, Lexus cars were more luxurious. They had bigger, more powerful engines and they cost 40% more. (Adding two cylinders to a four-cylinder car doesn't make it a luxury model, of course. But automotive designers generally match the size of the engine to the car's design. Six-cylinder cars are generally larger and more luxurious than four-cylinder cars.) As Starbucks, Grey Goose, Haägen-Dazs, Rolex and a host of other high-end brands have demonstrated, you need a high price to build a luxury brand. Cheap is the enemy of chic. Rome wasn't ruined in a day, either. In spite of its flawed strategy, Acura held its high-end leadership for 12 straight years. It wasn't until 1999 that Lexus passed Acura to become the leading Japanese luxury vehicle (185,890 to 118,006 units). (During the 1990s, I wonder how many Lexus executives were saying to their Toyota management, "We need less-expensive four-cylinder cars in order to compete with Acura?") Since 1999, Lexus' sales kept climbing. Today, Lexus is the biggest-selling luxury vehicle in America. Here are unit sales of the six leading brands for the first 11 months of 2005: Lexus: 267,709 BMW: 239,736 Cadillac: 212,056 Mercedes-Benz: 192,877 Acura: 190,989 Infiniti: 123,545 Some commentators credit the SUV with the success of Lexus. And it's true that Lexus has a much higher percentage of SUV sales (50%) than does Acura (27%). But what's more important, selling an SUV or having a high-end brand? There are a lot of low-end automobile brands with SUVs, which is the segment of the market many Acura models compete in. But there are only a handful of high-end brands with SUVs, a fact which accounts for the recent sales spurts of both Cadillac and Porsche. Marketing is psychology in practice. It can take a long time to change minds. (Witness the decades some people spend with their therapists.) You need patience to succeed. And if you can't be first, you can often reach the top of the leadership ladder by keeping your focus while others lose theirs. Al Ries, January 03, 2006

Sometimes Saying 'No' Is Your Strongest Asset

2012-01-11T12:40:00.001-05:00

Creative Wouldn't Have Been Enough to Save Isuzu. Another famous advertising icon is just about to fade from the American scene. Isuzu recently announced that next January the automaker is going to withdraw from the U.S. market. Sales have been dismal. Last year, only 7,098 Isuzu were sold. Al Ries doesn't want to argue over Isuzu's creative -- just that the name was terrible. Al Ries doesn't want to argue over Isuzu's creative -- just that the name was terrible. "Lying Joe" once was as famous as Britney, Lindsay or Paris. Advertising Age selected the Joe Isuzu program as the 83rd best advertising campaign of the 20th century, one notch ahead of "The ultimate driving machine." (In case you haven't noticed, BMW is still with us. As a matter of fact, BMW is the largest-selling European import.) What went wrong with Isuzu? According to my favorite publication, "The cause of its death: failure to innovate, misjudgment of the market and woeful underspending on marketing." Am I missing something? Really? Am I missing something here? An automobile is like a bottle of beer. It's a badge you wear that tells people who you are and what you stand for. "I drive a Mercedes-Benz" makes a statement to your friends and neighbors. "I drive an Isuzu" -- what does that say about your status in life? First, and most important of all, Isuzu is a terrible name. Consumers can't spell it; consumers can't pronounce it. (The name is pronounced "e-suzu," not "i-suzu.") Isuzu isn't the first import with a terrible name to drop out of the American market. Peugeot dropped out in 1991. Yugo in 1992. Daihatsu in 1993. Daewoo in 2002. Isuzu, Peugeot, Yugo, Daihatsu, Daewoo. What do these names have in common? To an English-speaking person, these names are not euphonious. They just sound bad. Would it surprise you to learn that Isuzu sold 650,734 vehicles last year? Isuzu Motors Ltd. is the 18th-largest automobile manufacturer in the world. They just didn't happen to sell many vehicles in the U.S., the largest automobile market in the world. They did happen to sell a lot of vehicles in countries where English is not the spoken language. 'The name is the hook' Back in 1981, Jack Trout and I wrote a book with this quote: "The name is the hook that hangs the brand on the product ladder in the prospect's mind. In the positioning era, the single most important marketing decision you can make is what to name the product." This quote has been picked up many times, by many authors. But not necessarily followed by the marketing community. Even worse, every time a brand with a terrible name bites the dust, the critics never seem to blame the name. They always blame the product. The Isuzu case history is particularly interesting because Isuzu was widely perceived by the advertising community as a bad name. Before Joe Isuzu made advertising history, the brand was promoted by a series of advertisements that made fun of the name. Here are three typical headlines: "How do you know if you have Isuzu?" "What do Isuzus do?" "How's your ol' Isuzu?" The advertisements were signed: "Opel Isuzu. Sold by Buick." With three names to choose from (Opel, Isuzu and Buick), why would you choose the one bad name in the bunch? The high-water mark for Isuzu sales in the U.S. market was the year 1986, when the brand sold 127,630 vehicles. Coincidentally, that was also the year the Lying Joe Isuzu campaign was launched. After that, sales slowly drifted downward, until the dismal results of the last few years. My point is not to argue with the creativity of Lying Joe. Whether it was the 83rd best advertising campaign of the 20th century or the 23rd best advertising campaign, it really didn't matter. The name was a terrible hook to try to hang on the product ladder in the prospect's mind. A partner's important finction Advertising and PR agencies want to be marketing partners with their clients. That's how it ought to be. But the most important function of a partner is the willingness to say "No." An advertising partnership should operate in much the same way as a marriage partnership. When my wife says "No," that's pretty much something we won't do. You can't build a brand with a weak name. It's like building a house on sand. Advertising agencies should say no when a client approaches them with a bad name. This is particularly true when dealing with clients whose first language is not English. (A bad brand name in America might be a dynamite brand name in Japan.) It can be difficult, however. In my agency days, I can remember when our most important client said in no uncertain terms, "We do the positioning. You do the advertising." But you can't do great advertising unless you get the foundation right. And the foundation of every brand is its name. That's the one word that has to stick in the prospect's mind if you are going to build a great brand. Names are tricky. A bad-sounding name can be a great name if the product is right. "Orville Redenbacher" is a bad name for an automobile, but a great name for a popcorn. Many, many brands currently on the market can never become successful brands because of name issues. In our consulting work, we have recommend name changes for almost half the companies and brands we have worked with. Fix the problem, not the advertising In my opinion, too many advertising agencies are concerned with fixing the advertising when their first concern should be fixing the problem. Some problems seem so obvious they're really hard to miss. Take Miller Clear, a loony line extension once considered by Miller Brewing. Before its launch in 1992, the chief executive called me and asked me what I thought about a clear beer. Not exactly a difficult question to answer. "Forget it," I said. "It will never sell." (I couldn't visualize Joe Sixpack sitting at a bar drinking a clear liquid in a beer glass.) Miller went ahead with the launch anyway and it was a bust. My question is, Why didn't Miller's advertising agency tell the client that a clear beer would never sell? Why didn't Coca-Cola's advertising agency tell the client that New Coke would never sell? Why didn't Pepsi-Cola's advertising agency tell the client that Crystal Pepsi would never sell? It's never easy to say no, but isn't that what a true partnership is all about? I got into the advertising business because I read Frederic Wakeman's classic book "The Hucksters." In the book, the hero quits the advertising agency business when he found himself saying "Yes, sir" to the client before anybody else in the boardroom did. The day that happens to me is the day I quit the consulting business. Al Ries, April 1 2008

The Difference Between Building a Business and Building a Brand

2012-01-11T12:33:00.000-05:00

Are you building a business? Or are you building a brand? Silly questions, you might be thinking. Naturally, you are trying to do both. But that might be a mistake. What's good for the business is not necessarily good for the brand. And vice versa. What's a brand anyway? It's a word that stands for something in the mind of prospects. That definition, by the way, is at odds with conventional thinking. Most managers equate a brand with its celebrity index. The more famous the brand, the more powerful it is. "Making our brand name well-known" seems to be the conventional approach to brand building. Chevrolet is one of the world's best-known automobile brands, but how valuable is the Chevrolet brand? Not very. Chevrolet doesn't make Interbrand's list of the 100 most-valuable global brands. Chevrolet, like many other exceptionally well-known names, isn't worth much because it doesn't stand for anything. It's not just Chevrolet. The U.S. automobile industry markets 14 vehicle brands: Buick, Cadillac, Chevrolet, Chrysler, Dodge, Ford, GMC, Hummer, Jeep, Lincoln, Mercury, Pontiac, Saab and Saturn. I would guess that every one of these brands (with the exception of GMC) is exceptionally well-known with a recognition score in excess of 90%. Except for a house or an apartment, an automobile is the most expensive product a person might buy in his or her lifetime. In addition, an automobile has enormous street visibility. These factors combine to give automotive brands a huge advantage in the battle for the consumer's mind. It's not surprising that 11 automobile brands made Interbrand's most valuable list. But just one of those 11 brands was an American brand. (Ford at No. 49.) The other 10 were European and Asian brands. Why? The European and Asian brands stood for something. Toyota (No. 6): Reliable Mercedes-Benz (No. 11): Prestige BMW (No. 13): Driving Honda (No. 20): Reliable (second to Toyota) Volkswagen (No. 53): Practical Audi (No. 67): Advanced technologies Hyundai (No. 72): Cheap Porsche (No. 75): Sports cars Lexus (No. 90): Luxury Ferrari (No. 93): Expensive sports cars Keep in mind, these are global brands. Volkswagen is not doing particularly well in the U.S. market, but it's No. 1 in Germany. Also, Audi suffers in the U.S. market because of its unfortunate name, but that's not a disadvantage in many countries where English is not the spoken language. How do you build a brand? Almost every successful brand in the world started as a narrowly focused brand that stood for a single idea. Then the business builders took over. First objective: Expand the business. Dell Computer started as a narrowly focused business-to-business company selling personal computers direct. Dell got off the ground by owning the word "direct." Michael Dell wrote a book that outlined his company's rise from obscurity to fame. The title? "Direct From Dell." In the first quarter of 2001, Dell became the world leader in personal computers. (And not just in sales, but in profits, too. In the 1990s, for example, Dell had the best stock market performance in Standard & Poor's index of 500 leading American companies.) What did Dell do next? It forgot about building the brand and started building the business. First Dell moved into consumer personal computers, undermining its position as the "business" PC specialist. ("Dude, you're getting a Dell.") Then Dell moved into consumer electronics, undermining its position as the "personal-computer" specialist. Then Dell moved into retail distribution, undermining its "direct" distribution position. In 2003, Dell Computer Corp. dropped "computer" from its name and became Dell Inc. (That's always a bad sign.) Did all these business-building moves work? Sure. Sales steadily increased from $31.9 billion in 2000 to $61.1 billion in 2007. While Dell sales went up, the Dell brand went down. Dell, formerly the world leader in personal computers, is now second to Hewlett-Packard. (In 2007, HP had 18.2% of the market and Dell had 14.3%.) Dell's net profit margin, a good indicator of a brand's value, also went down. From 6.8% in 2000 to 4.8% in 2007. Where Dell went wrong, in my opinion, was that it forgot what built the brand and instead focused its efforts on building its business. Yet that's not the conventional wisdom. "Where Dell Went Wrong" was the title of a Feb. 19, 2007, article in BusinessWeek. "In a too-common mistake, it clung narrowly to its founding strategy instead of developing future sources of growth." Scott Thurm, writing in The Wall Street Journal, said essentially the same thing: "Dell couldn't diversify its business, making it vulnerable once Hewlett-Packard matched its expertise." That's the way it is in corporate America today. Everybody is looking for ways to build their businesses by expanding into other categories. Their real strategies should be to build their brands by dominating their categories. And often the best way to do that is by contracting their brands so they stand for something. What's the most reliable measure of the power of a brand? It's not making the Interbrand list. The most reliable measure is market share. Powerful brands dominate their markets. In the U.S., Tabasco has 90% of the hot-pepper-sauce market. Campbell's has 82% of the canned-soup market. TurboTax has 79% of the income-tax software market. Starbucks has 73% of the high-end coffeehouse market. The iPod has 70% of the MP3-player market. Taco Bell has 70% of the Mexican fast-food market. Google has 68% of the search market. When your brand dominates a market, it is in an exceptionally strong position. In a mature market, a dominant brand is highly unlikely to ever lose its position. (Think Kleenex, Gatorade, McDonald's, Budweiser and many other dominant brands.) Even more important, dominant brands usually generate exceptionally high profit margins. Compare Intel, the dominant microprocessor brand, with Advanced Micro Devices, the No. 2 brand. In the last 10 years, Intel has had sales of $319.6 billion and net profits of $62.2 billion. Intel's net profit margin was an astounding 19.5%. In the last 10 years, Advanced Micro Devices had sales of $42.7 billion and net profits of ... well, they didn't make any money. They lost $4.1 billion. You see the same relationships on Interbrand's list of the 100 most-valuable global brands. No.1 brands are worth far more than No.2 brands. Coca-Cola is worth $66.7 billion. Pepsi-Cola, $13.2 billion. Nokia is worth $35.9 billion. Motorola, $3.7 billion. Nike is worth $12.7 billion. Adidas, $5.1 billion. The personal computer was the most important new product of the 20th century and it's likely to remain that way for decades to come. Someday some brand will be the Coca-Cola or Nokia or Nike of personal computers with a market share of 40% or so. That company is unlikely to be either Hewlett-Packard or Dell. You can't dominate a category if you expand your brand into many other categories. (That's why IBM is no longer the dominant PC brand.) You can only dominate a category by keeping your brand focused. Building a business or building a brand? That's the most important question in marketing. Al Ries, January 5 2009

Un Slogan no es Posicionamiento

2012-01-09T12:09:00.002-05:00

Muchas veces pensamos que con crear un slogan estamos posicionando una marca. Esto es incorrecto. Posicionar significa establecerse en un nicho cerebral del consumidor con un significado único y memorable. Si Nissan dice "Shift the way you move" eso es simplemente un slogan que invita a probar la marca. Cuando Kia dice "The Power to Surprise" implica que puede haber novedades con la marca, nada más. Cuando Chevrolet dice "siempre contigo" busca rescatar un sentimiento de que la marca Chevrolet te ha acompañado por muchos años lo cual es verdad en muchos casos, porque Chevrolet domina el 50% del mercado ecuatoriano. Sin embargo su diferenciación se basa exclusivamente en su poder de mercado, con un suave toque emocional. Esto podría acercarse a un posicionamiento, siempre y cuando no lo cambien en el futuro y más bien lo refuercen. El posicionamiento debe actuar de manera holística frente al cliente. Una serie de elementos de deben reunir para que se alcance una posición única y diferenciada en la mente de las personas. Por ejemplo, BMW ha sostenido por muchos años que es "the ultimate driving machine" lo cual significa desempeño deportivo, adrenalina y emoción. Sucede que el producto es así en todos sus modelos y ese hecho fortalece la promesa y se convierte en un claro y fuerte posicionamiento de deportividad. Todos los elementos de la promesa coinciden y se soportan mutuamente de una manera holística: motor deportivo=comportamiento deportivo=auto deportivo=adrenalina. En ese campo ninguna otra marca supera a BMW a menos que entremos en el terreno de lo especial, elitista y carísimo, como una Ferrari, una Masserati o un Aston Martin. Sin embargo en un rango de precios de 40k a 80k (precios promedio USA) nadie supera a BMW en desempeño deportivo. Toyota ha cambiado su slogan muchas veces, al punto que estamos perdiendo la cuenta de lo que dice Toyota, pero en investigación de mercado en Ecuador, se lee claramente que Toyota es "Confiabilidad" y nada más. Ser el dueño de este atributo en un vehículo automotriz tiene un valor inconmensurable, que se puede ir deteriorando cuando prometemos cosas diferentes y muchas veces irrelevantes a través del tiempo. Manejar una marca es una de las tareas más complejas del mercadeo, pero justamente ese mercadeo solo tiene un objetivo fundamental: construir y preservar marcas. Algunos autores sostienen correctamente en mi opinión, que la palabra "Marketing" debería cambiarse por "Branding". El verdadero capital del empresario está en el valor de sus marcas.

Las Estrategias "Blue Ocean"

2009-06-17T13:39:00.007-05:00

Su negocio opera en un ambiente “Blue Ocean” o “Red Ocean”. Generalmente estamos en un espacio de mercado existente. En él se encuentran la mayoría de las compañías y sus aguas están ensangrentadas por la dura batalla competitiva. Son los mercados Red Ocean. Sin embargo, existen compañías que crean nuevos espacios de mercado con nuevas propuestas de valor, altamente innovadoras, lo cual hace que la competencia sea irrelevante. En estos nuevos espacios, las aguas son calmas y azules, prometedoras y apacibles. Son mercados Blue Ocean, creados por usted. En ellos, usted es el 100% de la categoría. Son los negocios que no existen hoy. En los mercados Blue Ocean, su creador establece las reglas y capitaliza las ganancias. La mejor manera de vencer a la competencia es no compitiendo. La innovación en la creación de valor se da afectando favorablemente la estructura de costos de la compañía y realzando la propuesta de valor para los compradores. En esa medida la creación de valor es mucho más que “innovación”. Veamos estadísticas: 86% de todos los lanzamientos de producto compiten en océanos rojos. 14% restante crean valor en océanos azules. Este 14% concentra el 62% de las utilidades. Los océanos azules crean espacio de mercado, hacen que la competencia sea irrelevante, crean y capturan nueva demanda, quiebran el síndrome de "a mayor valor, mayor costo", alinean el sistema total de actividades de la compañía en la búsqueda de diferenciadores y menores costos. Cirque der Soleil rompió el paradigma de altos costos y márgenes reducidos en los circos, eliminando las grandes estrellas y los animales salvajes entrenados, para priorizar la coreografía, la narrativa, la música y la producción temática, a precios altos. Eso elevó márgenes y redujo costos significativamente. Yellow Tail abandonó el esquema de enología, alta calidad mediante envejecimiento en barricas de roble, reputación de las regiones geográficas y prestigio de los viñedos, cambiando los “drivers” de valor para un vino de gama sencilla, agradable de beber y fácil de seleccionar, con un espíritu joven y aventurero. Una fórmula para un vino de costo moderado, precio atractivo y rentabilidad superior. Las recomendaciones para desarrollar mercados Blue Ocean son: 1.Reconstruir las fronteras del mercado 2.Enfocarse en el negocio macro y su fundamento 3.Extenderse más allá de la demanda actual 4.Estructurar una secuencia estratégica de manera correcta Adicionalmente, es necesario superar las barreras organizacionales y construir los aspectos ejecucionales dentro de la estrategia, asegurando alineamiento y armonía. También es importante dimensionar y planificar el manejo del riesgo, para atenuarlo. Southwest Airlines se remontó a una época en la que no hablábamos de “Blue Ocean Strategies” y diseñó su negocio con maestría, cambiando la manera de pensar en el mundo de la aeronavegación comercial. No más competencia de aerolíneas con otras, sino promoviendo la sustitución del automóvil por un servicio más rápido, puerta a puerta. Su éxito ya lleva 40 años incontestados. “El alma siempre piensa con imágenes” Aristóteles.

Fortaleza y Estatura de una Marca

2009-06-12T15:31:00.004-05:00

Su marca debe tener fortaleza y estatura. Dentro del concepto de fortaleza juegan la diferenciación y la relevancia. La estatura está dada por la familiaridad y la estima que demuestra el consumidor. En otras palabras, si usted reconoce los beneficios de una marca como únicos y éstos son muy importantes para usted y si por otra parte usted se siente próximo a la marca, la conoce y ha desarrollado un cariño especial por ella, esa marca estará camino al liderazgo con el grupo de consumidores que sienten su presencia como usted. Esa es la esencia del marketing tal como lo comprendemos hoy y para mantenerlo vital es necesario el flujo permanente de comunicación con la base de clientes. En la racionalidad y en la emoción de la vida se encuentra el camino al éxito.

Cuando las Marcas se llenan de Sensaciones

2007-08-14T11:56:00.000-05:00

La cadena de cafeterías Starbucks lleva el pasmoso promedio de inauguración de tres locales al día. Tiene 5.118 cafés en los Estados Unidos, 68 en Japón, 362 en el Reino Unido, 30 en Arabia Saudita y los números siguen hasta sumar 27 países y 3 mil tiendas. Howard Schultz, responsable del negocio a escala global, planteó algunas pistas sobre el crecimiento de la marca: "Starbucks entiende el valor de brindar una constante experiencia multisensorial de alta calidad". La experiencia multisensorial a la que se refiere hace pie en la combinación de elementos que cada vez más espacios incorporan a su servicio: estímulos a la vista, el oído, el tacto, el gusto y el olfato. Para Mariela Mociulsky, directora de consumer trends del grupo CCR, la incorporación de estos conceptos en el desarrollo de marcas es tan coyuntural como necesaria: "El crecimiento de la cultura spa, los masajes y los aceites responde a la necesidad del consumidor de gratificarse a través de todos los sentidos. Es una tendencia global que se manifiesta en cada país y en cada nivel socioeconómico con sus particularidades. No es lo mismo el hedonismo de la clase alta que el de la media-baja". Mientras que los productos masivos se desdoblan en funciones (de las cremas que te hacen "sentir la seda en tu piel" a los postres con cero calorías pero con gusto a torta de chocolate y dulce de leche), las experiencias de consumo de más alto perfil también apuntan a las sensaciones múltiples. El Faena Hotel & Universe es uno de los lugares donde este concepto tiene relevancia. Florencia Vrljicak, responsable de la comunicación del complejo, explica: "Todo el proyecto fue pensado integralmente partiendo de la concentración de los sentidos. Cada espacio es un set: cada lugar tiene su soundtrack, su vista particular y sus texturas para estimular el tacto. Hay mucha investigación detrás de los espacios ". Entre todos esos estímulos, la primera señal que se recibe es el aroma: la entrada huele a un blend de esencias de madera especialmente desarrollado para el lugar y que pronto estará a la venta en sus tiendas. En los EE.UU., empresas como Synesthetics Inc. se dedican a la medición del impacto sensorial que los productos generan en los consumidores. La consultora trabaja para marcas de cosméticos como Revlon y Shideido y también para alimenticias como Kraft. Su fuerte es la relación entre los olores y el resto de los estímulos sensoriales de los envases y los contenidos. La incorporación de la variable fragancia se está volviendo cada vez más importante. Martín Bonadeo, licenciado en publicidad, escribió el libro "Odotipo: historia natural del olfato y su función en la identidad de la marca" (Universidad Austral). Dice: "Si agarrás un libro de percepción —hay manuales psicológicos, la escuela Gestalt trabajó mucho el tema— se habla de la sinestesia de todos los sentidos, pero en general luego se olvidan el tacto, el gusto y el olor. Las hipótesis que fui manejando para el libro se relacionan con el iluminismo y racionalismo y cómo se fue vinculando la razón con el sentido de la vista y con el hombre; mientras que la emoción, el olfato y la mujer estaban vinculados entre sí. Fue siempre considerado un sentido inferior, pero los olores están emparentados mucho con la identidad de las cosas. Noté que el olor que había en los espacios de venta, es el olor de los productos con que limpian el piso. Gastan fortunas en iluminación, decoración, y el olor lo dejan librado a la persona que fue al súper y eligió entre fragancia pino o limón". En su repaso de casos aparece el Patio Bullrich como pionero en la búsqueda de la representación (en este caso, de clase) a través del olfato. "Fue uno de los primeros lugares en prestarle atención al tema, a fines de los '80. La gerente general quería que hubiera olor a señora de determinado nivel económico, entonces averiguó cuál era el perfume usado por ese target y mandó a hacer un olor parecido", cuenta. En el último tiempo, diferentes locales de ropa (de Kosiuko a María Cher) incorporaron fragancias que se relacionan directamente con sus locales, buscando una especie de fascinación inconsciente. Mociulsky aporta un ejemplo que ilustra este efecto narcótico: "Hay marcas que descubrieron que las mujeres tenían casi una adicción a algún perfume. Una de las primeras fue John L. Cook, que tenía un olor característico. No estaba muy claro por qué, pero ese olor era algo que las estimulaba a comprar. Con el uso, el perfume de la ropa se iba yendo y ellas necesitaban volver a comprar más".

Lo que importa es la Experiencia

2007-06-22T18:32:00.000-05:00

El "marketing experiencial" es un término de moda entre los especialistas de este sector. La idea es que los consumidores relacionen un determinado producto con una experiencia placentera, con todo el valor agregado que ello implica. Las librerías Barnes & Noble, de los EE.UU., fueron pioneras en el desarrollo de espacios que reprodujeran la sala confortable de una casa para que los clientes se sintieran a gusto comprando libros.

Las grandes cadenas argentinas, como Yenny-El Ateneo, tomaron nota y trabajan sobre esta estrategia. La sucursal de Yenny de Santa Fe y Callao, donde estaba el cine Gran Splendid, es un paraíso de aplicación de estas técnicas y es la sede de la cadena que más vende.

Posiblemente el caso más famoso sea el de la cadena de café Starbucks, nacida en Seattle. Una nota de principios del 2004 de la revista especializada Campaign explicó la clave del éxito: llegan a Starbucks un hombre de 50 años, un treintañero de la generación X y un adolescente. El de 50 trabajó duro para ascender en su carrera empresarial y cree que se merece una taza de café cara. El de 30 espera encontrarse ahí con un amigo para compartir media hora de conversación y hacerse el bohemio. El adolescente está convencido de que el café es cool y además sale más barato que ir al cine. ¿Conclusión? Los tres compraron el mismo café mocha de 4 dólares. Sólo que creyeron que estaban comprando algo diferente.

Convirtiendo un producto en una experiencia, Starbucks consigue que millones de personas gasten 1.000 dólares al año en café (haga la cuenta: cuatro dólares por cada uno de los 250 días laborales del año) prácticamente sin darse cuenta. El mes pasado, aumentaron los precios sin que hasta ahora se haya notado una disminución de las ventas.

En la Argentina, el marketing experiencial está creciendo. Son muchas las marcas que intentan asociarse a una experiencia placentera y que auspician spas, balnearios u hoteles en lugares turísticos. Los hoteles temáticos ligados a marcas (como el de Gancia o el de Axe) son otro caso. Las promociones que proponen una experiencia en la calle, en el supermercado o en el transporte público también están creciendo.

En los EE.UU. hay una nueva palabra en el diccionario del negocio: transportainment, la mezcla de transporte y entretenimiento que tentó a empresas como Nortel a invertir 70 millones de dólares en auspiciar un tren de Las Vegas para posicionar su nombre. A nivel local, firmas como Fernet Branca (cuando esté en Buenos Aires, pruébelo mezclado con coca-cola o con vermouth y soda) suelen contratar móviles que recorren lugares de veraneo promoviendo una experiencia que vincule la bebida alcohólica con una sensación atractiva.

En el Ecuador, Nestlé acaba de contratar y pintar todo el fuselaje de un avión Boeing de la compañía Aerogal, con la marca Nescafé. Este avión crea experiencias con el producto como parte del servicio al pasajero. Es el marketing experiencial que ya está con nosotros. Su límite es nuestra creatividad.

Marketing Sensorial, intro a la vivencia

2007-05-24T06:34:00.000-05:00

Estamos presenciando el amanecer de una nueva forma de entender el Marketing. Al mundo de lo Relacional, de los Servicios y del One to One vamos a añadir un nuevo elemento: los sentidos.

Se trata de un mundo de sentimientos y emociones que debe generar experiencias gratificantes. Sabemos que el color oro da más valor a los objetos que envuelve o contiene, que el azul nos trae sensaciones de frescor, que los olores a tabaco, madera o almizcle recuerdan al varón y que olores más suaves nos recuerdan a la mujer. Hace años que existen terapias basadas en los sentidos: Cromoterapia, Aromaterapia, Musicoterapia.

Nadie discute actualmente la conveniencia de usar ciertos colores en ambientes, para facilitar o controlar determinados estados anímicos. La AEP (Asociación Española de Psicoterapia) recomienda el uso de determinados aromas para combatir ciertos estados anímicos. Algunas famosas campañas de Publicidad en España: las burbujas doradas de Freixenet, el aroma de mi hogar de Heno de Pravia, la suavidad de Mimosín, el aroma a café-café de Marcilla, etc., incitan a los sentidos. En el punto de venta se utilizan olores, colores, música... y formas de decoración que generan sensaciones acordes con los productos y sus mundos, estimulando su venta. Es una manera de reforzar con los sentidos transmitiendo sentimientos y emociones alineados con la estrategia, como la potencia salvaje de Audi o la seguridad de Volvo, el "Just do it" de Nike; o "la chispa de la vida" de Coca Cola, que evocan experiencias sensoriales. Para comprender la importancia de los sentidos como motores sensoriales, debemos profundizar en la psicología del consciente y del subconsciente, comprender como se generan las emociones y qué relación tienen con el comportamiento humano. Toda la información del mundo exterior la recibimos a través de los cinco sentidos.

Toda esta información llega a nuestro cerebro a través de impulsos electromagnéticos o vibraciones. La luz se proyecta en nuestra retina y ésta descompone los colores en distintas frecuencias, mandando a través del nervio óptico toda la información al nódulo del cerebro donde percibiremos la imagen. El sonido hará vibrar nuestro tímpano y transmitirá esta vibración a través de un complejo recorrido hacia el cerebro, donde también se almacenará en el nódulo correspondiente. Si este sonido va asociado a una imagen, la asociación se almacenará de forma electromagnética en otro nódulo y así sucesivamente. Los datos que almacenamos, separada o asociadamente, forman un complejo archivo de sensaciones almacenadas: Éstas irán enriqueciéndose a lo largo de nuestra vida y por ello podemos recordar un lugar de veraneo a través de un olor, por ejemplo. Lo que ocurre es que además somos capaces de combinar, a voluntad propia, toda esta información a través de nuestra capacidad de imaginar, creando nuevas sensaciones que nos provocan. La capacidad de imaginar y crear puede afectarnos de forma tanto positiva, como negativa y producir sentimientos y emociones agradables o desagradables.

Nuestro subconsciente cumple funciones vitales y es el organizador de todo nuestro cuerpo: la memoria celular, la memoria genética, el control de las hormonas, los procesos biológicos, los instintos básicos, todo ello pertenece a la memoria en el subconsciente. No se ubica sólo en el cerebro, sino también en cada una de las células de nuestro cuerpo. Esta memoria del subconsciente se alimenta, además, de nuestros sentimientos y emociones, creando comportamientos, carácter y dotando de personalidad propia a cada individuo. El subconsciente nos obedece en todo, en lo que provoca placer y bienestar y en lo que genera frustración y dolor, ya que al recibir las órdenes (procedentes de la imaginación y sus correspondientes emociones y sentimientos), pone en marcha los mecanismos físicos y mentales necesarios para que ello se realice. De ahí proceden los actos inconscientes como por ejemplo, los pensamientos involuntarios llamados intuiciones. El ser humano posee la capacidad de asociar sensaciones, procedentes de los cinco sentidos y relacionarlas con conceptos e ideas que a su vez generan sentimientos y emociones que tienen que ver con nuestras experiencias vivenciales. Estamos hablando de psicología aplicada al Marketing. Después del paso que Daniel Goleman imprimió al mundo empresarial, hablándonos de la Inteligencia Emocional, hemos tomado más conciencia de las sensaciones y sus correspondientes emociones. Bernd Schmitt nos dice: El marketing da un nuevo giro. El cliente no elige un producto o servicio sólo por la ecuación costo-beneficio, sino por la vivencia que ofrece antes de la compra y durante su consumo. Si su comercialización brinda una experiencia agradable y que satisface sus necesidades, el éxito está asegurado. La comercialización sensorial implica crear la vivencia adecuada del producto.

El objetivo del Marketing Sensorial es crear una vivencia, pero eso no significa que deba utilizar recursos costosos. En ciertos momentos la experiencia se crea haciendo las cosas más sencillas. Por ejemplo, Singapur Airlines ofrece un excelente servicio, pero a veces hay que dejar al cliente solo, no molestarlo. También eso puede ser excelente servicio.

Tomando como referencia a Bernd Schmitt, tenemos cinco vías para crear experiencias: Percepción, Sentimiento, Pensamiento, Acción, Relación. Percepción: Nos ubicamos en la piel del cliente y comprendemos que percibe colores, formas, rostros, percepciones auditivas, olfativas, táctiles, algunas son más sutiles y son percepciones que nos llegan a través de los símbolos verbales y/o visuales (nombre, logotipos, marca), configurando un marco de referencia. Ferrero Roché es un buen ejemplo. Sentimiento: Estados anímicos o emocionales. Los estados anímicos, son más débiles e irracionales (café despierta y anima, música relaja y excita, velas son románticas...). Las emociones son más fuertes y se generan en base a experiencias (amor-odio, alegría-tristeza, orgullo-humildad...) y son mucho más difíciles de generar. Las emociones debemos generarlas con el transcurso de la Relación y del Servicio, no podremos transmitirlas con una simple sensación. Un buen ejemplo sería Singapur Airlines. Pensamiento: Lo relevante es que incite a pensar. Hacer pensar a los clientes es un tema delicado, no todos lo desean, pero hay momentos en que es necesario, como en el caso de muchas ONG, temas relacionados con la ecología, la política y otros valores sociales. Recordemos las campañas de Benetton. Acción: Tiene que ver con momentos y estilos de vida, con conductas, acciones razonadas, percepciones personales e interacciones. Nike vende una forma de actuar y de vivir, con su música, su decoración, su estilo particular dinámico y rítmico. Relación: Son vivencias sociales, que implican sentimientos comunitarios, valores culturales, grupos, clubes, identidades colectivas, movimientos o tendencias. Este tipo de experiencias acostumbran a ser muy fuertes y a hacer que los individuos, colectivamente, se identifiquen con ellas. El Beetle de Volkswagen logró crear una experiencia sensorial a través de formas y colores inusuales a las que agregó un sentimiento, “te hace sonreír” y así alude a las cosas divertidas de los años 60, le agrega un componente de acción y recuerda a las generaciones de ese momento, buscando la relación con los encuentros periódicos de los que poseen un ejemplar parecido, al puro estilo Harley Davidson. El Marketing sensorial, apela a los cinco sentidos, a las emociones y sentimientos, al intelecto. Crea experiencias que comprometen a los consumidores creativamente, demuestra modos alternativos de hacer las cosas, apela a la percepción. Definir la personalidad de nuestros productos, servicios y locales, utilizando los sentidos, es la tarea que hemos de emprender, para llegar más lejos.

Engagement Marketing

2007-05-20T13:30:00.000-05:00

El paisaje de la comunicación de marketing en Inglaterra ha cambiado más en los últimos cinco años que en los últimos cincuenta. Lea y prepárese para lo que viene en su mercado.

Los métodos tradicionales de marketing están perdiendo su eficacia a una tasa alarmante. Publicidad, eventos y marketing directo, proporcionan una fracción del ROI (retorno sobre inversión) que generaban hace apenas dos años.

Los consumidores han cambiado más allá de lo reconocible.

Su comportamiento es más complejo, sus hábitos de medios son diferentes y ellos son más francos para expresarse. Tienen una relación diferente con las marcas y son menos tolerantes y sumisos.

Anteriormente, los vendedores podían definir sus marcas dirigidas a diferentes tipos de consumidores. Podían hacer un comercial para televisión y pasarlo en algunos de los principales shows de TV, donde millones de consumidores lo podían ver, ¡y el trabajo estaba hecho!.

Hoy, los consumidores están definiendo las marcas, incluso re-definiéndolas. Ya no es suficientemente bueno producir un maravilloso comercial de TV o cualquier otra cosa que exalte las virtudes de una marca, si las afirmaciones de la marca no coinciden con la experiencia real del consumidor con ella.

Los consumidores actuales tienen mucho más control, e intercambian sus experiencias buenas y malas en la web. Los vendedores deben mostrar enorme respeto si quieren tener alguna esperanza de que adopten sus marcas.

Por otra parte, los canales de comunicación están explotando y fragmentándose.

El término medios masivos amenaza con convertirse en pasado. Las audiencias están disminuyendo porque le están dando más opciones, más distracciones que antes.

No es que la publicidad interruptiva no funcione, sino que con una súper proliferación de comunicaciones interruptivas combinadas con la fragmentación del entorno de medios, solamente el mejor marketing interruptivo puede trabajar cuando se combina con grandes inversiones.

En el Reino Unido tres mil millones de libras esterlinas se gastan en publicidad. Globalmente esos números aumentan a cien mil millones en la comunidad de las naciones.

Esto es un montón de interrupción, en un tiempo en el cual los consumidores están queriendo y logrando mayor control de cómo y cuándo consumir información, entretenimiento o cualquier otra forma de contenido.

La televisión está en transición de ser una economía feudal de provisión a una economía de mercado de demanda. La televisión de múltiples canales, la Internet y los DVDs están desintermediando el rol del emisor tradicional.

Con un 45% de los hogares del Reino Unido siendo hogares multi-canal, entre treinta y dos y cientos de canales disponibles, la audiencia está siendo transformada de espectadores a consumidores de programas.

Ahora tienen otros caminos para elegir los programas que quieren, ya que cada nuevo canal digital fuerza a que la elección de la televisión recaiga sobre el televidente, erosionando su mundo analógico familiar, en el que estaban agradecidos por lo que recibían.

Tradicionalmente hay diez herramientas de comunicación disponibles para el proveedor:

1. Venta personal

2. Publicidad

3. Promoción de ventas

4. Marketing directo

5. Esponsorización

6. Exhibiciones

7. Packaging

8. Punto-de-venta & merchandising

9. Recomendaciones personales

10. Identidad corporativa

Esas herramientas de comunicación constituyen el mix de comunicación del marketing tradicional, pero cada una de las diez herramientas tiene que ver con comunicaciones "interruptivas", las cuales son costosas financieramente y cada vez menos efectivas.

Desde hace varios años, la Web ha cambiado radicalmente la visión tradicional de la publicidad y de los medios de comunicación tal como los conocíamos. La Web proporciona un canal eficiente para publicidad, para marketing e inclusive para distribución directa de ciertos bienes y servicios, mientras el teléfono móvil está emergiendo como el otro jugador clave en este panorama de marketing de rápidos cambios.

En un libro reciente The Future of Competition: Co-Creating Unique Value With Customers escrito por C.K. Prahalad y V. Ramaswamy, el punto de vista de los autores es que los consumidores están desafiando la lógica corporativa de la creación de valor.

Incentivado por la cultura centrada en el consumidor -con énfasis en la interactividad, velocidad, individualidad y apertura- la influencia del consumidor en la creación de valor nunca ha sido tan grande y está abarcando todos los puntos en la cadena de valor.

El desafío real es ajustarse a esos grandes cambios y generar una propuesta estratégica beneficiosa para ambas partes, tanto para los negocios como para los consumidores. Esta propuesta está basada en la noción de que los consumidores pueden y deben convertirse en socios en la co-creación de experiencias para las marcas que apoyan.

C.K. Prahalad y Venkatram Ramaswamy citan el ofrecimiento de BMW de un coche personalizado, despachado en 12 días, donde una elección de 26 diseños de rueda y 123 opciones de consola están disponibles en el Z3 Roadster.

Las computadoras individualizadas Dell construidas bajo pedido han generado un éxito fenomenal para la compañía, donde el valor es co-creado

De La Interrupción Al Compromiso

Hasta ahora, la publicidad siempre se ha basado en la interrupción.

Ya sea que esté yendo al trabajo, leyendo su periódico favorito, viendo TV o simplemente yendo a sus ocupaciones cotidianas, los consumidores están siendo constantemente interrumpidos por mensajes de publicidad. Pero el poder de esos mensajes interruptivos se está desvaneciendo, simplemente porque hay tantos alrededor de nosotros.

Cuanto más interrupciones, más confusión y consecuentemente menos poder para cada mensaje individual, en su capacidad para destacarse y lograr ser recordado.

No es sorpresa entonces que los comerciantes estén despertando a una nueva forma de construir su marcas: no por Interrupción, sino por Compromiso.

El llamado Engagement Marketing o Marketing de Compromiso, se convierte en una fuente de entretenimiento que amplía a las marcas en vez de comunicar interrumpiendo. En términos simples, se trata de salir de la tanda publicitaria y meterse en el mundo del contenido, de la construcción de activos y propiedades de la marca.

Las marcas que están creando contenido por compromiso mutuo están siendo recibidas por el consumidor como una expansión de sus vidas cotidianas en vez de una interrupción.

Las nuevas herramientas de comunicación comprometidas incluyen...

Contenido de marca o contenido relacionado con la marca
Entretenimiento, propiedades de info-tenimiento, edu-tenimiento
Experiencias significativas de marca
Servicios especializados de información de marcas
Esponsorización incluida vs. esponsorización pasiva

Estas propiedades visibles asumen que es una ecuación de valor, tanto para el negocio como para el cliente.

También están expuestas en el principio fundamental que el marketing debería ser una conversación en vez de un mensaje interruptivo, en una sola dirección, el cual despersonaliza la relación y se convierte en una barrera a la comunicación, exactamente lo opuesto a conducir una relación valiosa con el cliente.

Estamos siendo testigos de una convergencia sin precedentes de un número de industrias globales, por ejemplo telecomunicaciones, entretenimiento, computación y electrónica, junto con la fragmentación y la desaparición de la efectividad de los medios tradicionales.

Sabemos que los consumidores están buscando relaciones con las marcas para proveer experiencias complementarias, significativas y relevantes conducentes a su lealtad.

También sabemos que los propietarios de las marcas están reconociendo cada vez más la importancia del marketing de relación, integrado y concluyendo que la comunicación convencional de marcas ya no es más la respuesta.

En términos de Von Clausewitz la era de la competitividad por escenarios ha terminado. El marketing convencional interruptivo ya no tiene el beneficio de la autenticidad y por lo tanto tiene muy poca credibilidad.

El futuro para las marcas, debe ser la creación del contenido y de los activos de la marca.

Esto puede crear un espacio de mercado, generando nuevas corrientes de ingresos, brindando un mayor retorno en la inversión. Crear valor para los clientes a través de información, entretenimiento, experiencia, velocidad de envío y flexibilidad de distribución.

También es cada vez más probable que para crear estrategias efectivas, éstas deberán ser la experiencia de la marca que le permita al cliente conectarse, experimentar e interactuar intensamente con una marca.

La rápida adopción e integración de estrategias de Engagement Marketing puede ser crucial para el éxito en los mercados emergentes en un futuro cercano.

Diferenciación

2007-05-01T14:18:00.000-05:00

Diferenciación, Clave de la Supervivencia Theodore Levitt arrojó el guante cuando dijo “Los commodities no existen. Todos los productos y servicios pueden ser diferenciados”. Para él los commodities eran productos en su estado más simple, esperando una redefinición. Frank Perdue, productor de una de las marcas más famosas de pollo en los Estados Unidos, diría, “Si usted puede diferenciar una gallina muerta, usted puede diferenciar cualquier cosa”. De hecho, Frank Perdue descubrió que la gente prefería la carne de pollo amarillenta a la blanca y creó una ración alimenticia que producía esa coloración. Lo demás es historia (el pollo Perdue es líder en muchos Estados de la Unión y el consumidor paga un precio entre 10% y 15% más alto por él). Hace algunos años una hoja de afeitar decidió desafiar a Gillette en el Brasil, en función de su determinación de co-participar con ellos en el mercado. El producto no era superior a Gillette, tampoco tenía un precio inferior, el empaque no era más atractivo o funcional, la campaña publicitaria no presentaba ninguna propuesta diferencial y no daban mejores descuentos en los canales de distribución. No preciso comentarles que fracasaron estrepitosamente. No existía una sola razón para cambiar de marca. Tom Peters propone que debemos ser diferentes o extinguirnos (“be distinct or extinct”). Él mismo sentenciaba: “The surplus society has a surplus of similar companies, employing similar people, with similar educational backgrounds, coming up with similar ideas, producing similar things, with similar prices and similar quality”. Jack Trout en su libro “Diferénciese o muera”, muestra docenas de maneras en las que las compañías han diferenciado productos, servicios, experiencias o imágenes en la mente del consumidor. Muchas veces las diferencias están en la construcción y percepción de imagen de la marca, ya que todos los atributos tangibles de la categoría del producto, han sido utilizados masivamente por diferentes ofertantes en el mercado. Todos los pañales desechables de marcas de prestigio, tienen las características apropiadas de absorción de líquidos y cuentan con barreras y cintas pega y despega de calidad equivalente. Todos son anatómicos y confortables y todos cuentan con ingredientes protectores de la piel del bebé como el áloe vera. Frente a esta situación, la marca Panolini de ZaiMella con el apoyo de G&G Consulting, optó por estudiar y conocer profundamente a la madre en la relación con su bebé y con el pañal, lo cual produjo una memorable campaña publicitaria en la que los bebés vestidos al estilo de la mafia, hablan con una dicción perfecta y debaten la importancia de que la “mama” realice sus sueños y no tenga que hacer el trabajo “sucio” de la casa. La solución es Panolini. El slogan de la campaña... “Panolini, y la mamá tranquila”. Panolini se posiciona claramente como el pañal que se preocupa por el bienestar de la mamá, con singular éxito. Nada mejor para una madre, que su bebé demuestre su preocupación por ella. La diferenciación de productos de acuerdo a Philip Kotler, se puede dar a nivel del producto físico (características y atributos), del servicio brindado por la marca (entregas, mantenimiento, reparaciones), de la capacidad del personal que atiende al cliente (cortesía, credibilidad y confiabilidad) y de la imagen que proyecta la marca (símbolos, temas y percepciones comunicadas). No cabe duda que la construcción de una marca depende de su diferenciación relevante en la mente del consumidor. Coca-Cola refresca, Volvo es seguridad, Nivea es cuidado de la piel y Panolini es una mamá tranquila y apreciada por su bebé. Una marca no diferenciada es probablemente un producto de calidad inferior y sin valor aparente. A falta de diferenciación significativa, el empresario acaba vendiendo muy barato y agregando descuentos, promociones y productos adicionales sin costo, para mantener un volumen razonable de ventas en el mercado. Son propuestas de negocios sin retorno. La Diferenciación es el punto de partida del Posicionamiento Estratégico.

Nichos de Mercado

2007-05-01T14:15:00.000-05:00

Diferencie con Nichos del Mercado Si usted persigue a dos liebres, no cazará a ninguna. Las compañías con sabiduría se enfocan. Los mercados masivos están construidos por la sumatoria de muchos nichos. Si usted ataca a un mercado masivo en su totalidad, incentivará a otros empresarios a servir nichos de ese mercado, satisfaciendo las necesidades particulares mejor que usted. Los clientes en un nicho de mercado están felices porque alguien les presta atención. Existe por lo menos una compañía que satisface sus necesidades específicas y lo hace bien. Si su trabajo es consistente, usted se adueñará de ese nicho. Si bien el volumen es menor en un nicho, la rentabilidad es mayor. Los competidores se mantendrán alejados porque el volumen es muy pequeño para sustentar a dos proveedores. Si usted “nichea”, ¿qué debe hacer en una segunda instancia? Ante todo, evite convertirse en un generalista. Existen tres estrategias sólidas: 1. Venda más productos y servicios en el mismo nicho. USAA nació con la misión de vender seguros de automóviles a las fuerzas armadas de los Estados Unidos. Con el tiempo, agregó seguros de vida, tarjetas de crédito, programas de inversión y financiamiento, siempre a los oficiales de las fuerzas armadas americanas. 2. Busque miembros adyacentes en el nicho. USAA extendió su negocio ampliando los servicios a los familiares de los oficiales. 3. Hágase dueño de un portafolio de nichos. Es la mejor manera de crecer y proteger su posición de mercado. Identifique nuevos nichos y aduéñese de ellos. Johnson & Johnson se ha convertido en una fuerza poderosa porque domina en algunos nichos de mercados de consumo y de otros mercados relacionados y especializados en B2B (Business to Business). Aquellos que “nichean” no son necesariamente compañías pequeñas. El Profesor Hermann Simon en su libro “Hidden Champions” da varios ejemplos de empresas medianas en Alemania que gozan de participaciones de mercado superiores al 50% en nichos globales muy bien definidos. Steiner Optical posee un 80% de participación en el mercado mundial del vidrio utilizado en el campo militar. Tetra Food tiene un 80% en el mercado de la alimentación de los peces tropicales. Becher produce más del 50% del mercado de los paraguas gigantes utilizados en hoteles y en los campos de golf. Todas estas compañías son altamente rentables. Ellos persiguen nichos identificados y muy bien definidos que son poco visibles para el público en general. En nuestro medio, Confiteca exporta golosinas a más de 80 países del mundo y su negocio fuera del Ecuador ha sido desarrollado en los últimos diez años. Va camino a convertirse en un conglomerado global en su área de especialidad: confitería. Mientras eso sucede, un número importante de personas e instituciones renegaban de las fallidas negociaciones del Ecuador con los Estados Unidos para acordar un Tratado de Libre Comercio. Decían que los americanos nos querían dominar y acabar con nuestra "soberanía". ¿Se imagina los nichos que existen en los Estados Unidos? Es cuestión de buscar nichos dentro de nichos y especializarse mucho más. Es hora de salir del síndrome del proteccionismo y del complejo de país débil. Somos tan fuertes como nuestra capacidad para investigar e innovar y esa es la fuente de la competitividad. Hilasal (www.hilasal.com), comenzó a vender toallas de alta calidad a México en 1978. La empresa fue fundada en la República del Salvador (Textiles San Andrés). En esa época, Hilasal ya marcaba una fuerte presencia en el nicho de las toallas finas, estampadas y bordadas, en los Estados Unidos. Su grupo directivo estaba en El Salvador, sus fábricas en México y su comercializadora en la Florida. El algodón utilizado provenía de Egipto y del Perú (las dos mejores calidades conocidas de algodón). Con el tiempo Hilasal fijó domicilio en México y amplió sus operaciones en el área de NAFTA. Hoy es una compañía Mexicana con capital mixto (mexicano y salvadoreño), pero no podemos olvidar que su ADN es salvadoreño. Hilasal es líder mundial en toallas con estampado reactivo (que permite reproducir -por ejemplo- escenas a full color de Spiderman en la toalla). La misión de Hilasal es “Hacer las mejores toallas del mundo”... y de verdad que lo han logrado en un orden de magnitud significativo. Por eso el viejo refrán: “Aquellos que dicen que no se puede hacer, que no se interpongan en el camino de los que lo están haciendo”. Sentirse disminuido por ser un país chico y sentirse perseguido por el pez mayor, es la mejor manera de ser pequeño e insignificante. Eleve su autoestima, aproveche los nichos de mercado del hemisferio norte y globalice sus operaciones. Un nicho en California vale más que la CAN (comunidad andina de naciones).

Crear Valor

2007-05-01T14:10:00.000-05:00

Cree Valor con el Consumidor La convergencia de tecnologías e industrias, los mercados emergentes y la conectividad, han cambiado muchas facetas del mundo de los negocios. Los consumidores están más informados, conectados, activos y globales. Estas tendencias permiten una nueva manera de crear valor a través de la creación compartida o co-creación de Valor. En esta nueva modalidad, el valor no es creado en la empresa para posteriormente intercambiarlo con el cliente, sino que es co-creado por el consumidor y la empresa simultáneamente. En el sistema tradicional es el empresario quién decide lo que es valioso para el cliente. En él, los consumidores tienen poca o ninguna participación en la creación de valor. En las últimas dos décadas, los gerentes han encontrado formas de dividir parte del trabajo hecho por la empresa y de pasárselo para que lo realice el consumidor. En algunos casos es una auto comprobación de la calidad del producto o servicio, en otros, el involucramiento de un grupo de clientes en el desarrollo del producto. La nueva visión está centrada en la experiencia de la creación compartida de valor. Estas interacciones de alta calidad que permiten al cliente co-crear experiencias únicas, son la llave para abrir nuevas fuentes de ventaja competitiva. En mayo de 1999 Shawn Fanning creó NAPSTER, el primer emprendimiento que permitió a la gente compartir música digitalizada en Internet. En vez de ser una clásica empresa que determinaba el valor para sus clientes, NAPSTER creó una nueva y poderosa experiencia para el consumidor, enfocada en accesibilidad, capacidad de escoger y una visión centrada en el individuo acerca del valor. La compañía atrajo más de 40 millones de consumidores antes de ser cancelada judicialmente por la industria de la música. Podríamos debatir sobre los aspectos legales y morales infringidos por NAPSTER, pero jamás sobre su popularidad. El verdadero concepto detrás de NAPSTER fue: “Yo, el consumidor, puedo escoger y utilizar la música que me gusta y como se me antoje”. De una cierta manera, NAPSTER demostró que el consumidor realmente valora los productos musicales y desea consumirlos en una mayor cantidad, pero a su manera. Ellos querían accesar libremente las librerías musicales a fin de seleccionar y vivir la experiencia de las piezas preferidas por cada uno de ellos. ¿Habrían pagado por esa música? Probablemente sí, pero la industria no ofrecia mecanismos para hacerlo a su manera. Steve Jobs probó este punto años después con iPod y iTunes, que han facturado miles de millones de dólares. La historia de NAPSTER demostró que la tensión entre la industria y los consumidores se centró en la calidad de la interacción entre ambos. Los consumidores no están dispuestos a seguir comprando música pre-empacada por la industria, sino las piezas musicales que ellos seleccionen. Considere el caso de las cámaras digitales. Representan un avance tecnológico increible porque trabajan sin film, evitando los viajes al minorista en fotografía para revelar, copiar y comprar más film. Además las fotos se ven inmediatamente y las que no agradan pueden ser eliminadas en ese instante. Pueden recortar y mejorar electrónicamente aquellas que atesoran, imprimirlas en la casa o verlas en la pantalla y compartirlas con los amigos en el Internet. A pesar de todos estos atributos, el verdadero valor reside en la facilidad de uso, prácticamente intuitivo y sin necesidad de aprender de los intrincados manuales de operación. Si la mamá lleva la cámara a la playa, pasa media hora aprendiendo a operarla, tiene dificultades en pasar las fotos de sus hijos al computador e involuntariamente borra una de sus fotos preferidas, la compañía que fabricó la cámara habrá creado una experiencia negativa para esa consumidora. ¿Para qué sirvió tanta tecnología y maravillosos atributos del producto? Mamá está interesada únicamente en la calidad de la experiencia con su nueva cámara. Los consumidores del siglo XXI sueñan con la libertad de escoger, interactuando con la empresa a través de un rango amplio de experiencias. Ese es el camino de la co-creación de valor: el acceso a las experiencias del consumidor. Pasos de la Creación Compartida de Valor: 1. Definir los objetivos 2. Imaginar el perfil de los clientes apropiados para el producto

Marketing Experiencial

2007-05-01T11:58:00.000-05:00

Un 80% de las empresas cree estar generando una experiencia al cliente superior a la media. Solamente el 8% de los clientes está de acuerdo (encuesta realizada con 362 empresas en los Estados Unidos, año 2005). Es la trampa de la grandeza dominante. A mayor la participación de mercado, mayor es el riesgo de dar por hecha la lealtad de sus clientes. El flujo masivo del dinero confunde a los ejecutivos, que llegan a pensar que dinero es sinónimo de lealtad. No se dan cuenta que los clientes más rentables, a veces son los más disgustados con la compañía. Los clientes no son una estadística como parecería indicar la investigación de mercado. Frecuentemente los datos de encuestas ofuscan la capacidad del gerente para escuchar la voz del cliente. El 8% de los clientes que efectivamente se sienten atraidos por una experiencia superior, son el producto de estrategias empresariales con tres imperativos: 1. Diseño de propuestas de valor y experiencias apropiadas para esos clientes 2. Delivery o entrega del valor prometido, con colaboración interfuncional de la empresa como un todo 3. Desarrollo de las competencias necesarias para deleitar a sus clientes una y otra vez, como por ejemplo la mejoría de procesos, entrenamiento en la creación de propuestas de valor y responsabilidad asignada por la experiencia del cliente. Cada una de estas tres “D” exige y refuerza a las otras dos. En conjunto, las tres “D” transforman a la compañía dirigida e informada por las voces de sus clientes. Diseño de propuestas de valor y experiencias apropiadas Más allá de dividir clientes en segmentos y diseñar propuestas de valor por segmento, estas compañías diseñan el negocio de una manera única, identificando tendencias evangelizadoras de los clientes, a favor de la compañía. Dicha evangelización es medida por la diferencia entre el score de los promotores, menos el score de los detractores. Esta medición es facilmente comprendida por todos los miembros de la organización. Por supuesto que las experiencias que llevan a clientes pasivos a convertirse en evangelizadores, difieren entre segmentos de mercado. Lo que cautiva a algunos puede descorazonar a otros. En esa medida la segmentación debe ser realizada por actitudes y personalidades más que por datos demográficos y hábitos de compra, que no son suficientes para explicar los comportamientos diferentes. Vodafone es un buen ejemplo en Inglaterra. Ellos dejaron de categorizar por domicilio como normalmente lo realizan las compañías de celulares, para segmentar en “Jóvenes divertidos”, “Usuarios ocasionales” y otros. Los “Jóvenes divertidos” recibieron “Vodafone live” que es un servicio a un nivel superior, que provee desde juegos y ring-tones con canciones pop, hasta noticias y deportes. Los “Usuarios ocasionales” recibieron “Vodafone Simply”, un servicio sin complicaciones y por ende una gran experiencia de posesión. La organización comprendió de esta manera cómo debía crear valor en cada caso. El diseño de las propuestas de valor consideraba la experiencia total del cliente. No podían transformar a sus clientes en evangelizadores leales, a menos que tomasen en consideración la experiencia en cada punto de contacto, como la compra, el servicio y el mantenimiento, los accesorios y upgrades y la facturación. Parte del diseño de la propuesta era la creación de condiciones apropiadas para entregar dicho valor. Delivery o entrega del valor prometido La propuesta de valor más brillantemente diseñada sería impotente si su ejecución fuese pobre. Para comenzar, los líderes formaban equipos multifuncionales y creaban las condiciones para su motivación. Su actuación se extendía por toda la cadena de valor, con la finalidad de alcanzar la totalidad de la experiencia del consumidor. La interacción con los clientes fue considerado un recurso de valor incalculable. Más allá de los sistemas de data mining y CRM, el último test era lo que los clientes les contaban a otros. Las mejores compañías encuentran maneras para estar a tono con la voz del cliente todos los días. Una excelente compañía en este campo es Superquinn (cadena irlandesa de comestibles) cuyo fundador y presidente, Fergal Quinn, camina por los corredores de cada una de sus tiendas en cada mes, conversando con los clientes. Dos veces al mes invita a doce clientes para una mesa redonda de dos horas y él personalmente les pregunta sobre el nivel del servicio, los precios, la limpieza, la calidad de los alimentos, nuevos productos, publicidad y promociones realizadas, etc. El señor Quinn también pregunta acerca de los productos que sus clientes adquieren de sus competidores y por qué sucede esto. Quinn utiliza la información obtenida para evaluar a sus gerentes y para mejorar el desarrollo y la ejecución de sus estrategias. En una ocasión descubrió que un 25% de sus clientes no compraba en sus panaderías. Eso le permitió estimular el pensamiento de sus empleados de las panaderías para generar ideas creativas que mejoraran el tráfico de clientes. Los clientes rápidamente se sintieron atraídos por el aroma de los donuts recién horneados. En la actualidad el 90% de sus clientes compran algo en sus panaderías, todas las semanas. El personal que tiene contacto con los clientes de Quinn es cuidadosamente seleccionado, entrenado y tratado, para lograr los resultados deseados. Desarrollo de las competencias necesarias Las propuestas de valor no pueden ser estáticas, estando sujetas a innovación regularmente. Lo mismo sucede con la entrega del valor. Toda compañía debe mejorar su desempeño gradualmente y los líderes exitosos han identificado competencias clave para estimular la innovación: 1. Herramientas que ayudan al enfoque en el cliente en planificación y ejecución 2. Mediciones de desempeño basadas en el cliente 3. Incentivos focalizados en la satisfacción del cliente Las compañías que evidencian un alto desempeño, crean procesos para obtener retroalimentación inmediata del cliente, enfocados en la innovación y en el desempeño. American Express por ejemplo, llama inmediatamente a sus clientes que demoran en activar sus nuevas tarjetas para corregir cualquier problema que existiese. ¿Cuáles son sus clientes prioritarios? Si usted responde “los más rentables” usted se queda corto. Son igualmente importantes los clientes evangelizadores que estimulan a otros clientes a comprar sus productos. Estudiando la rentabilidad y la evangelización por cliente, usted puede segmentar de la siguiente manera: 1. Promotores que ofrecen altas utilidades (es imposible prescindir de ellos) 2. Detractores que ofrecen altas utilidades (debemos corregir los problemas) 3. Promotores que ofrecen bajas utilidades (son diamantes en bruto) 4. Detractores que ofrecen bajas utilidades (no se puede complacer a todos)