Monday, August 27, 2012

Move over to 'community marketing'

This is an excerpt from the HBR. It's not really an eye opener, but reinforces what we already know in the back of our minds. Read on....
Traditional marketing — including advertising, public relations, branding and corporate communications — is dead. Many people in traditional marketing roles and organizations may not realize they're operating within a dead paradigm. But they are. The evidence is clear.
First, buyers are no longer paying much attention. Several studies have confirmed that in the "buyer's decision journey," traditional marketing communications just aren't relevant. Buyers are checking out product and service information in their own way, often through the Internet, and often from sources outside the firm such as word-of-mouth or customer reviews.
Second, CEOs have lost all patience. In a devastating 2011 study of 600 CEOs and decision makers by the London-based Fournaise Marketing Group, 73% of them said that CMOs lack business credibility and the ability to generate sufficient business growth, 72% are tired of being asked for money without explaining how it will generate increased business, and 77% have had it with all the talk about brand equity that can't be linked to actual firm equity or any other recognized financial metric.

Third, in today's increasingly social media-infused environment, traditional marketing and sales not only doesn't work so well, it doesn't make sense. Think about it: an organization hires people — employees, agencies, consultants, partners — who don't come from the buyer's world and whose interests aren't necessarily aligned with his, and expects them to persuade the buyer to spend his hard-earned money on something. Huh? When you try to extend traditional marketing logic into the world of social media, it simply doesn't work. Just ask Facebook, which finds itself mired in an ongoing debate about whether marketing on Facebook is effective.
In fact, this last is a bit of a red herring, because traditional marketing isn't really working anywhere.
There's a lot of speculation about what will replace this broken model — a sense that we're only getting a few glimpses of the future of marketing on the margins. Actually, we already know in great detail what the new model of marketing will look like. It's already in place in a number of organizations. Here are its critical pieces:
Restore community marketing. Used properly, social media is accelerating a trend in which buyers can increasingly approximate the experience of buying in their local, physical communities. For instance, when you contemplate a major purchase, such as a new roof, a flat screen TV, or a good surgeon, you're not likely to go looking for a salesperson to talk to, or to read through a bunch of corporate website content. Instead, you'll probably ask neighbors or friends — your peer network — what or whom they're using.
Companies should position their social media efforts to replicate as much as possible this community-oriented buying experience. In turn, social media firms, such as Facebook, should become expert at enabling this. They can do this by expanding the buyer's network of peers who can provide trustworthy information and advice based on their own experience with the product or service.
For example, a new firm, Zuberance, makes it easy and enjoyable for a firm's loyal customers to advocate for the firm on their social media platform of choice. At the moment one of these customers identifies himself as a "promoter" on a survey, they immediately see a form inviting them to write a review or recommendation on any of several social media sites. Once they do, the Zuberance platform populates it to the designated sites, and the promoter's network instantly knows about his experience with the firm.

Find your customer influencers. Many firms spend lots of resources pursuing outside influencers who've gained following on the Web and through social media. A better approach is to find and cultivate customer influencers and give them something great to talk about. This requires a new concept of customer value that goes way beyond customer lifetime value (CLV), which is based only on purchases. There are many other measures of a customer's potential value, beyond the money they pay you. For example, how large and strategic to your firm is the customer's network? How respected is she?

One of Microsoft's "MVP" (Most Valuable Professional) customers is known as Mr. Excel to his followers. On some days, his website gets more visits than Microsoft's Excel page — representing an audience of obvious importance to Microsoft, which supports Mr. Excel's efforts with "insider knowledge" and previews of new releases. In return, Mr. Excel and other MVPs like him are helping Microsoft penetrate new markets affordably.

Help them build social capital. Practitioners of this new, community-oriented marketing are also rethinking their customer value proposition for such MVP (or "Customer Champion" or "Rockstar") customer advocates and influencers. Traditional marketing often tries to encourage customer advocacy with cash rewards, discounts or other untoward inducements. The new marketing helps its advocates and influencers create social capital: it helps them build their affiliation networks, increase their reputation and gives them access to new knowledge — all of which your customer influencers crave.

National Instruments used an especially creative approach with its customer influencers, who were mid-level IT managers at the companies they did business with. NI engaged with them by providing powerful research and financial proof points they could take to senior management, showing that NI solutions were creating strategic benefits. That got NI into the C-suite. It also increased the reputation of the mid-level advocates, who were seen as strategic thinkers bringing new ideas to senior management.

Get your customer advocates involved in the solution you provide. Perhaps the most spectacular example of this comes from the non-profit world. Some years ago, with the number of teen smokers nation-wide rising to alarming levels, the State of Florida thought anew about its decades-long effort to reduce the problem. What could be more difficult than convincing teen smokers to quit — a problem that Malcolm Gladwell had said couldn't be solved. Using the techniques for building a community of peer influence, Florida solved it. They sought influential teen "customers" such as student leaders, athletes, and "cool kids," who weren't smoking or who wanted to quit — and instead of pushing a message at them, they asked for the students' help and input.

Approached in this new way, some 600 teens attended a summit on teen smoking, where they told officials why anti-smoking efforts in the past hadn't worked — dire warnings about the health consequences of smoking, or describing the habit as "being gross," left them unimpressed. On the spot, the teens brainstormed a new approach: they were outraged by documents showing that tobacco company executives were specifically targeting teens to replace older customers who'd died (often from lung cancer). And so the teens formed a group called SWAT (Students Working Against Tobacco) who organized train tours and workshops, sold T-shirts and other appealing activities to take their message into local communities. The result: despite a vicious counterattack by Big Tobacco lobbying firms, teen smoking in Florida dropped by nearly half between 1998 and 2007 — by far the biggest success in anti-teen-smoking in history.

Put another way, Florida won half of the "non-buyers" of its anti-teen-smoking "product" away from its much bigger, much better funded competitor. They did so by tapping the best source of buyer motivation: peer influence.
So can you. Traditional marketing may be dead, but the new possibilities of peer influence-based, community-oriented marketing, hold much greater promise for creating sustained growth through authentic customer relationships.

More blog posts by Bill Lee

Thursday, January 19, 2012

Eating out in India

The Indian food retail industry is close to Rs.4.5 lakh crore, but only 2% of it constitutes organised sector. In such a scenario, it is tough to focus on value, and this means recently most of the organised fast food chains are focusing on volumes for growth.

The focus has moved from a menu with limited variety and expensive options to one with a wider variety on the menu and prices even as low as Rs.25/-. This is for those chains which are set at targeting youth - the college goers whose one time canteen meal would be limited to ~Rs.25/-.

Chains like KFC are infact also likely to position themselves as breakfast and after-dinner joints and not just meal hang-outs and is also considering home delivery. A move towards healthier grilled options and not just the deep fried hi-cal version of the chicken are also on the cards. All these will hopefully help them achieve their target of 500 stores across 50 Indian cities (right now the count is 150). Yet another challenge that these chains pose is that of retaining constant prices across stores/ cities when the input costs especially real estate widely vary.

Some of the competitors for KFC viz MCD, south african Nando and more local ones like Bangs, Hot Chix, Chic punch, BFC are eating into its share.

Meanwhile MCD which currently owns 240 stores, is shifting focus from children (through it's Ronald McDonald) to adults. It plans on moving from vibrant red and yellow as brand colours to the more muted ones which are likely to appeal to adults. Its offerings have evolved from the more kiddie friendly burgers and fries to include Mc. Spicy (Veg and Chicken variants). Mc.Flurry - a dessert filling enough to tide you between meals appeals to the adult palate with combination of textures - creamy(ice cream), chunky (chocolate bits), grainy (oreo) and serves as a meal by itself. Right now only prototypes in Delhi and Mumbai are experimenting with the new outlet colours, changed logo. And it is likely to go viral in the next 4 yrs.

Some quick facts about MCD :
  • MCD opens a new outlet every 4 hours
  • Serves over 46 million customers each day (0.5 mn just in India)
  • It has sold well over 100 million burgers till date
  • Ronald McD has different names based on the country - Uncle McD in Singapore, Donald McD in Japan (which has 3000 stores!!! - the largest market for MCD after US)
  • US is the largest market with 14000+ stores
  • In some places the items on the menu vary based on tastes and demand eg - rice burgers in Hongkong, Spaghetti in Philippines, Beers in Germany & Spain

Skeptics are not sure moving from a position of a store that appeals to kids to that for adults, will continue to enjoy strong franchise among kids. Hopefully it won't alienate them :)

Wednesday, April 06, 2011

Design Studios

Constantly innovating...
Brands viz Lenovo, Renault, Google, Yum restaurants all have an innovation centre. No age barriers - all you need is to be able to think out of the box, get creative....constantly. This is what helps companies invent, innovate and engage customers. Gone are the days when the RnD folks in their glass cabins hardly interacted with the customer. A recent instance I can recall, is when a company selling hair oils and shampoos decided to home visit the consumer and was aghast to see that there were some who put shampoo on their hair few hours before actually washing it off. This one would never know had one not entered the household and done a customer contact.
Huge monies are spent on innovation rooms/ design studios - to make them inspiring....a green patch (to soothe the senses), ample pure air, lots of space, the evils viz coffee/ tea, may be an area to stimulate thought for the smokers. Every company has studios across the world, primarily because the same design may not work across the world. There is an element of customization; which is important and that local flavour gets added on when the studio is local to the selected market.
What is new today, is forgotten tomorrow. Life is truly fast paced

Dating and mating

'Dating and then mating' - this is not about us humans, but about brands.
There used to be a time when there were brand loyalties, but a recent survey which conducted bathroom audits, proves otherwise. There were multitude of shower gels, toothpaste and soap brands found in two bathrooms which housed 3 ppl - pa, ma and a 10 yr old.
What this goes to show is that no longer is it true that 70% shop out of habit. Infact, what is now going to help the brand is whether it is present in the line of sight (say, at supermarkets), how well it is dressed up(packaged) vs its competitor, what zumba zumba (*remember the Reliance comm gym ad*) does it offer.
Customers now shop for similar rather than the same brand- either would do- a vaseline or a nivea, a Pantene or a L'Oreal or a Dove, a lifebuoy or a Santoor white, a pepsodent or a brands now need to build their muscles----so is it going to be a 6 or 8 pack for yours ?

Tuesday, March 08, 2011

Advertising and labeling

Advertising to children has always irked me. Pester power no doubt, but why at the cost of such innocent lives?! We are only helping shrink their childhood further - as if we did not do enough already.

Recently I read about some initiatives by Kraft foods, where they consciously refrain from advertising to below six year olds and to the older bunch six through eleven, they only use what may be referred as 'benefit for you' products which abide by the stringent norms laid by the food authorities. These are products that pass stringent nutrition norms. Isn't that a good initiative!

Another process they follow is a specification of 8 key ingredients in all products on the label - energy (calories), protein, total carbohydrates, sugars, fat, saturated fat, dietary fiber and sodium. They use front-of-pack labeling that delivers meaningful information at a glance and fits local needs.

Monday, February 21, 2011

Jobs-to-be-done marketing

I read this article recently and loved the idea of a 'jobs-to-be-done' marketing.

Apparently ~30,000 new consumer products are launched each year. Of these 95% fail to make a mark. Problem ? They all create products slot them into a product category or by a consumer demographic. Not every product works that way. Infact most don't.

A case in point. A company launched a milk shake targeted at a specific demographic. Post launch they conducted a survey to list out the characteristics of an ideal milkshake - thick, thin, chunky, smooth, fruity, chocalatey etc. It was found that most consumers picked up the milkshake because they all had a long boring commute between home and work and had to keep themselves busy, also make the commute more interesting.

Now that the Company realized the job to be done, it was easier to respond by creating a morning milkshake which was thicker and had more chunks of fruit - this lasted through the commute and also made it more interesting.

That's how the 'jobs-to-be-done' mechanism works.

Some indigenous examples I could think of :
  • Daag achey hain campaign- by Surf Excel
  • Learn English campaign- by Tata Sky
  • Maggi moving from just be instant noodles to noodles which are also nutritious (vegetables and atta)

Tuesday, February 08, 2011

The Indian Retail Story

Organized retail India is ~7% of the total retail industry. This includes food, beverages, clothing, personal care, electronics, food services, furn
iture, furnishings, health, sports goods, books, music and other typical departmental store items.

It seems like a growing retail story is having its share of hiccups in the form of :
  • Finding. training and retaining talent
  • Legal and bureaucratic hurdles
  • Developing and leveraging the right know-how
  • Using collaborations to scale up and for investment in back-end
How will overcoming these hurdles help :
  • it will benefit the key stakeholders : producers, employees, consumers
  • Producers : the farmers will receive higher margins than they do now, owing to many intermediaries between them and the consumer. A likely increase of 10-30% in their incomes
  • Employees : by improving their economic, social and financial status.
  • Consumers : who get to save ~5-10% on their monthly expenses through access to better deals, wider variety and better quality
The Indian retail story can have a happy end only through Global Integration and Financial Inclusion. Inclusion the true sense would be mean 'Economic inclusion' - through higher wages, 'social inclusion' - through acceptance in society - a nondiscriminatory attitude and 'financial inclusion'- through better access to financial channels It has always been believed that the growth in services sector (more specifically IT, BPO) is giving the country that much needed boost to help improve its GDP ; really ?

May not be. There is a mismatch in the demand and supply of labour. While most available labour is educated upto Class XI or below ; the need in the BPO / IT sector is for the XII+ educated individuals. So what 'demographic dividend' are we talking about.
If indeed we need to club this divide, it is the consistent growth in the retail sector that will help bridge this gap. This is the sector which looks for employees with less than XII class education. They are trained and even get high growth in their incomes and better social status.

So, why not lobby hard for the India Retail Story to lead the India Economic Growth Story and root for Inclusive Growth!

Friday, February 04, 2011

Consuming Middle India

Recent past has seen a drop in exports in teas, coffees, spices, fruits viz pomegranates. Interesting ? Thanks to the increasing incomes of the middle class, there is higher consciousness about 'what they consume'. The richer crust of middle India finds brands with the export quality sticker more suited for consumption be it - green tea, pepper, coffee from the finest beans , milk and dairy products etc.. The exporters of these items find it more lucrative to sell to Indians who are willing to pay more than the foreign counterpart. An indicator for increased consumption is the price increase for milk is ~20% while the demand has increased by ~7%. The perception is that 'higher price' = 'better quality'

Infact there is also growing demand for fruits like pomegranates owing to their medicinal properties and 'general goodness' to health. The middle class Indian does not mind paying over Rs.200/- for a kilo of pomegranate.

Is that a good or bad sign, I wonder. Isn't this going to affect food inflation?! Any thoughts ?