The Marketing Landscape is Shifting – Are You Adapting?

The marketing landscape is currently undergoing a monumental shift that will change how products and services will be marketed for many years to come. Technologies such as digital video recorders, the internet, and mobile phones have fundamentally shifted how people consume media, which changes the relationship between company and consumer. Here are some eyebrow raising stats.

  • There are 31 billion Google searches executed every month. In 2006, this number was 2.7 billion (1).
  • The number of text messages sent per day exceeds the world population (1).
  • Today 4 billion people in the world have mobile phones (2).
  • Nokia predicts that by 2012, 25% of entertainment will be created and consumed within peer circles (3).
  • About 34 percent of American households use a DVR of some sort to record shows for viewing later (4).

What this means, is that shouting at the consumer will no longer work. A one way dialog will no longer work. Companies will need to really communicate, which means a two way conversation. Do you embrace new marketing tools such as search engine optimization, blogs, social networks, and Twitter? Or are you sticking to what has worked in the past and believing that it will still get you enough business so that you won’t have to change your marketing? Remember, Charles Darwin said “it is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change”.

1 Did You Know 3.0 Video
2. Marketing Over Coffee Podcast Episode 3/25/09
3. Nokia Press Release
4. DVR Fallout: More People Delaying Season Premiere Watching The Tampa Tribune, March 12, 2009

Photo by Mark j Sebastian

This article was reposted with permission from The Executive Marketing Blog

The Japanese Way of Marketing

The marketing approach of Japanese companies contrasts starkly with the common practices in the US. We can learn a lot of valuable lessons from studying how the Japanese market their products, especially since companies like Toyota are crushing the competition. The last time I checked, the market cap of Toyota was around $600 billion while GM and Ford may not survive without government bailouts. The book Relentless describes some of the major differences in marketing strategy in Japan and how this approach can be extremely effective.

Intuition versus Market Research
Many companies in Japan rely on common sense and intuition when developing products for launch rather than lengthy and expensive market research. They will often follow their intuition and launch a new product on a small scale and then incrementally scale and improve it based on the feedback they get from actual customers. This makes a lot of sense when you consider that a high percentage of new products that flop despite extensive market testing and research. It is extremely difficult to accurately predict consumer behavior as even the best executed research can be dead wrong. Many internet companies take this approach by releasing a beta version of their site and continuously improving upon it.

Imitation and Churning
The authors of Relentless observe that Japanese companies are very adept at quickly imitating innovations. When one company launches a unique product, the competition is quick to go to market with similar versions. Churning refers to the fast cycle of innovation and imitation. Churning makes it difficult for anyone to maintain a first mover advantage but the positive is that consumers are less afraid to be early adapters since several companies have created a similar product. This helps the whole category to grow and this inherently helps the leader although there is less of a first mover advantage. This also creates an environment that encourages fast adoption of new technology.

The Buyer is the Master
There are obviously many differences in the culture in Japan, and one that can be striking is the relationship between buyer and seller. Too often in the US, the buyer is at the mercy of the seller, take auto mechanics or cell phone carriers for instance. Also, buyers in the US often have a confrontational approach with sellers who may try to push things they don’t need or charge the highest price possible. In Japan the buyer is the master and the seller is like a servant. This changes the whole dynamic of how products are sold and marketed. The seller is concerned with what the buyer wants, rather than what they want to sell. When the customer’s interest is put before the profit of the company, this can lead to strong and lasting relationships between the buyer and seller.

Many Japanese Companies do not have “Marketers”
In Japan, often marketing is part of everyone’s job in the company rather than a specialized department with specialized professionals in marketing. As a result many companies do not have marketing managers. While I don’t necessarily think US companies should get rid of their marketing departments, a lot of successful companies do little or no formal marketing. In Japan, the quality of their products speak louder than any commercial.

Image source luckygun

Recession = Time to Build Market Share

One of the secrets of the super successful is that they do the opposite of the crowd. When American’s wallets are getting tight and most companies are cutting their marketing spending, this can be one of the best opportunities to grow your brand. Some historic examples of this are Proctor & Gamble pushing Ivory soap during the Great Depression, and Walmart’s “Every Day Low Prices” during the post dot com slowdown [1].

The brandchannel article Brand Progression in a Recession quoted Harvard professor John Quelch who wrote “It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”

However according to Dr. Lilien of Penn State, it takes a special type of company to ramp up marketing during a recession . “If you think about a distance runner — if the distance runner is really strong, when the runner hits a hill, the runner is gonna speed up. What happens? The runner has the capacity, but he also has the strategy and the nerve to do it.”

It may be really tough to make a marketing push when you are on a diet of leaves and twigs, but if you can survive, it can pay off significantly when the market recovers. During a recession, the fat get skinny and the skinny die, and many weak marketing organizations may go extinct. If you are engaged in a war with a weaker competitor, a strong marketing push can be a knock out blow. If you are tied with a competitor, a strong campaign may give you a great advantage if they go AWOL with their marketing efforts during the recession period. If you are able and can handle the risk, increasing marketing during a recession can be a winning strategy.

1. Should You Up Your Marketing During a Recession Bnet
2. Brand Progression in a Recession brandchannel

The Best of Seth Godin

Seth Godin recently summarized the main ideas of his philosophy on good marketing on his blog.

-Anticipated, personal and relevant advertising always does better than unsolicited junk.
-Making promises and keeping them is a great way to build a brand.
-Your best customers are worth far more than your average customers.
-Share of wallet is easier, more profitable and ultimately more effective a measure than share of market.
-Marketing begins before the product is created.
-Advertising is just a symptom, a tactic. Marketing is about far more than that.
-Low price is a great way to sell a commodity. That’s not marketing, though, that’s efficiency.
-Conversations among the members of your marketplace happen whether you like it or not. Good marketing encourages the right sort of conversations.
-Products that are remarkable get talked about.
-Marketing is the way your people answer the phone, the typesetting on your bills and your returns policy.
-You can’t fool all the people, not even most of the time. And people, once unfooled, talk about the experience.
-If you are marketing from a fairly static annual budget, you’re viewing marketing as an expense. Good marketers realize that it is an investment.
-People don’t buy what they need. They buy what they want.
-You’re not in charge. And your prospects don’t care about you.
-What people want is the extra, the emotional bonus they get when they buy something they love.
-Business to business marketing is just marketing to consumers who happen to have a corporation to pay for what they buy.
-Traditional ways of interrupting consumers (TV ads, trade show booths, junk mail) are losing their cost-effectiveness. At the same time, new ways of spreading ideas (blogs, permission-based RSS information, consumer fan clubs) are quickly proving how well they work.
-People all over the world, and of every income level, respond to marketing that promises and delivers basic human wants.
-Good marketers tell a story.
-People are selfish, lazy, uninformed and impatient. Start with that and you’ll be pleasantly surprised by what you find.
-Marketing that works is marketing that people choose to notice.
-Effective stories match the worldview of the people you are telling the story to.
-Choose your customers. Fire the ones that hurt your ability to deliver the right story to the others.
-A product for everyone rarely reaches much of anyone.
-Living and breathing an authentic story is the best way to survive in an conversation-rich world.
-Marketers are responsible for the side effects their products cause.
-Reminding the consumer of a story they know and trust is a powerful shortcut.
-Good marketers measure.
-Marketing is not an emergency. It’s a planned, thoughtful exercise that started a long time ago and doesn’t end until you’re done.
-One disappointed customer is worth ten delighted ones.
-In the googleworld, the best in the world wins more often, and wins more.
-Most marketers create good enough and then quit. Greatest beats good enough every time.
-There are more rich people than ever before, and they demand to be treated differently.
-Organizations that manage to deal directly with their end users have an asset for the future.
-You can game the social media in the short run, but not for long.
-You market when you hire and when you fire. You market when you call tech support and you market every time you send a memo.
-Blogging makes you a better marketer because it teaches you humility in your writing.

Should We Keep it Simple Stupid?

One approach to communicating a marketing message to maximize effectiveness is to keep it really simple. The argument is that the human brain can only comprehend and retain a small amount of the total data so you should try to make your message as short and simple as possible. With this perspective you might be inclined to replay a single ad over and over again until you beat the message into the consumer’s brain.

The opposite approach is to have multiple messages and several simultaneous story lines. This would be the strategy of those who view consumers as intelligent beings capable of comprehending and recalling complex messages. One example is Geico’s campaign that tells a story of a disgruntled caveman, a cute British Gecko, and old-time celebrities doing voice overs which all tie back to the central theme of saving money on auto insurance. This approach trusts consumers to be able to follow multiple stories and interpret the underlying brand message.

What do you think? Is it better to have a really simple message play over and over, or tell multiple stories with an interwoven message like Geico?

Radiohead's New Strategy: Pay What You Want

In a brilliant marketing and PR move, the British band Radiohead is offering their new album for download at any price you want. You just go to their site and fill in the blank. I paid 1.25 pounds for music I wouldn’t have otherwise bought, just because I could. This is a great innovation for artists who usually receive a small royalty for each album sold and make most of their income from concerts. Terra Bite, a small coffee shop in Kirkland Washington, has a similar model in which customers can pay whatever they want for lattes and muffins. However this strategy is ideal for digital music which must have very low marginal cost.

While the recording industry is trying as hard as possible to get their customers to hate them, e.g. suing college students and putting bothersome copy protections on their products, artists are finding better ways to market themselves. Madonna signed with a concert promoter instead of a record label and Yahoo! Music General Manager Ian Rogers recently promised that Yahoo! will no longer be involved with DRM. These people realize that winning customers is about marketing that is customer centric not profit centric.

Buzz Soda

Jones Soda Company based in Seattle Washington is now taking pre-orders for a five-pack of soda titled Dirt, Sports Cream, Perspiration, Sweet Victory and Natural Field Turf. According to the company spokesperson Clare Bowles the “Perspiration Soda is kind of salty tasting” with a “stinky football sock” finish.

“A sip of Sports Cream Soda conjures up the experience of rubbing ointment into an aching muscle, while Natural Field Turf Soda is like ‘playing tackle football, and you get tackled really hard, you’re down on the ground and you get a little bit of the grass in your teeth,’ Bowles said. The only sweet soda of the bunch, Sweet Victory, has a berry flavor” (Business Week).

This from the company that brought you Green Bean Casserole Soda, Mashed Potato & Butter Soda, Fruitcake Soda, Cranberry Soda and Turkey & Gravy Soda in 2004. The Seahawks Collector’s Pack should make it to the buzz-worthy hall of fame. What a innovative and creative idea. Can you imagine what your management would say if you proposed such a radical idea. Seth Godin often talks about how most companies are afraid to take chances and are much more interested in defending the status quo. Jones Soda is not one of those companies.

The Most Innovative Pricing Strategy

What if you let consumers take whatever they want and pay whatever they want. That’s the pricing model at a coffee shop called Terra Bite in Kirkland, Washington. There is no obligation to pay at all, as baristas are instructed not to look at what people pay into the tip jar and the website states “we cheerfully serve those who can not pay in a non-stigmatizing customer setting”.

According to The Seattle Times the shop averages $3 dollars per transaction. What factors are motivating people to pay when they don’t have to? There are several possible reasons. Perhaps most people are generally honest and want to do the right thing. Social monitoring could motivate others to show the community they are honest. Others may desire to help the less fortunate who are unable to pay. Some may just think it’s a cool idea and want to be part of the social experiment.

I think the social element has a strong influence on the success of such a model. It would be interesting to see what would happen to the average transaction price if they left the cash register unattended. The question is whether people are more generous or selfish. What if this pricing model was extended to restaurants, convenience stores, or service businesses?

via Matt on Marketing

Marketing Diamonds to Guys

Steven Singer Jewelers is a jewelry store in Philadelphia’s jewelry row, the second largest jewelry district in the country. At first he tried traditional advertising with a $10,000 TV commercial featuring him behind the counter, but he says he got no business.

Then he found he could set himself apart by targeting guys and building the experience around what guys want. While most jewelry stores play classical music and promote a high class image, Steven’s store sponsors Chicken wing eating contests and hosts an annual bubble bath party in his store where women in lingerie wade through bubbles. The store built a reputation as “the most fun you’ll ever have buying a diamond.” This strategy has been incredibly successful and the store has produced some of the highest sales per square foot in the nation.

Steven Singer Jewelers

Anti-Customer Service

We always hear that companies are trying to improve customer service. But what if a company did the opposite? At Dick’s Last Resort resturants in San Antonio, San Diego, Chicago, and Dallas, the waiters are trained to be obnoxious, offensive, and rude to customers, and people love it! They will throw your silverware on your table and make fun of you or make faces at you, but it is all an act and it has made Dick’s a tourist destination. I’m not suggesting companies should adapt Dick’s customer service practices, but sometimes going completely opposite of your competition can really set you apart.

Dick’s Last Resort Website