Sunday, September 27, 2009

Price Points

The PriceSpy model takes a new twist - research widely, purchase as cheaply as possible. Dixon's, a price discounting retailer sends out an only marginally tongue in cheek message to customers. Of course Dixon's will have been affected by the web themselves.

The challenge for retailers who sell at full margin is to close the deal before the customer has a chance to go elsewhere. What kind of mechanisms and strategies are available to them?

Make it personal.
In the good old days customers were known by name to vendors. Of course that's not always practical in the 21st century, but it would be possible to harness technology and strategies to make customers feel they are indeed valued by the retailer. An old favourite amongst restaurateurs is to greet guests with 'Nice to see you again…" (even if they have never been to the place before), it elevates the customer's feeling of being special. Not being one to advocate disingenuity, I only use the example to make the point that people like to be acknowledged personally. When social connections are made then there is an emotional tie between the participants in the transaction.

VW PhaetonYears ago I worked on the Volkswagen advertising account. One the most interesting marketing initiatives was the introduction of the ill-fated Phaeton, a super luxury vehicle from the makers of 'The People's Car'. When a buyer ordered the Phaeton they would be sent a key to their vehicle with an invitation to be present at its 'birth' the final moments of its construction at the Die Gläsernen Manufaktur (The Transparent Factory) in Dresden. When the owner passed through the factory gates the key would send a signal and an elaborate welcoming procedure would be initiated. The whole process would not only reinforce both VW's commitment to the buyer's status and good taste, but also the sophistication of the technology inherent in the car.

Add value.

Adding value to a customer's experience doesn't necessarily mean giving them something tangible. One of the aspects of the ad (above) that spurred my thinking on this subject is the implication that the shop assistant (or clark, if you are North American) is actually indifferent to you - the pitch implicates that you ought not to be in their domain - a populist/tabloid pitch. The truth is that anyone's money is as good as anyone else's - a dollar/euro is a dollar/euro whether it is wielded by your mum or a footballer's wife. Your job as a marketer is to get your money out of their purse, whoever they are.

Of course value, as anyone who has studied Zen and the Art of Motorcycle maintenance will know, like 'quality' is an a priore concept. It is subject to prior experience and expectation and will, therefore, mean different things to different people. If you know you are paying a higher price than Dixon's will undoubtedly charge, what are the things you will value? Do I have to carry my purchase home - or will you deliver? If I buy a new flat-screen TV that is bigger than an iMax will I have to install it myself? If the picture quality of my new Sony Bravia is the reason I selected it will you help ensure I have the best settings and reception at home?

If I have chosen a Phaeton, or a Lexus with the idea that it sets me apart, makes me a member of an exclusive club of people with better discernment and taste, will you facilitate introductions to other people with similarly good taste through exclusive events and information.

If you are a wine merchant competing with low cost volume wine in the supermarket will you share your expertise with me, so my post purchase dissonance is balanced out with an uncanny knowledge about the habits of the winemaker or the specifics of the terroir. The Wine Vault in Auckland's Grey Lynn suburb does a fine job of this via Wine Vault TV

Make premium service exclusive.

If there are additional benefits for shopping with you (per above), merchandise them. Don't leave customers with the assumption that a higher price is simply extra profit for you. Reposition the competition with your own meme that emphasises why to buy from a store that doesn't just 'stack 'em high and watch 'em fly' (if I might indulge in a nostalgic retail expression.

Of course highlighting the added extras might also take a leaf from the Internet marketing book. To receive the care and attention of our sales staff you must register with us. This could take the form of discrete technological process - log on to the store's iMac and, fill out a short from and become a priority customer then and there. Old fashioned sales technique might also be of use. Qualifying a prospect before spending valuable time with them (our service is a premium offer remember), "if we can match you up with the right TV today sir, how will you be paying - cash, visa or would you care to apply for our store credit scheme' that will help sort the tyre kickers out from the people who genuinely intend to buy.

When all is said and done customers are people. They are as vain, insecure and proud as the next person. They want to be liked and treated with kindness and respect and not viewed simply as an economic unit. People will, ultimately, value what you value. If you take service and product knowledge for granted then so will your customers. Apple computers have created a theatrical retail concept that helps promote the idea that everything in store is worth the premium that Apple seems to command. The concept of Genius Bar in store - knowledgeable staff who will help you to choose a product or overcome a tech problem is, well, genius. It synthesises almost every point I have made.

Remember, wherever you sit on the price spectrum - no one buys anything from people they don't like.

Dixon's ad via Eaon Pritchard's blog Never Get out of the Boat

Friday, September 25, 2009

Toyota does the hard yards

This ad for Toyota is an excellent argument for making commercials that will create momentum - where people will do some of the marketer's work for them. There was a time when people who bought LandCruisers would have talked up their choice (post purchase dissonance), but now people like me (I don't have a Toyota Landcruiser) will happily embed the commercial on my blog - see above and then point people to it through Twitter - and a host of other social platforms.

It may cause a renaissance in advertising creativity, the sort of messages that were more common in the 70's and 80's, such as the classic Benson & Hedges ads (I'm not encouraging anyone to smoke) or John Smith's bitter. The commercials that people would discuss around the proverbial water cooler.

The Toyota commercial also demonstrates that advertisers are beginning to understand that 'viral' messages don't have to be low budget emulations of You Tube user's style of presentation (of which the recent V energy drink commercial is a good example - chap with rocket pack places road cone on the top of the Auckland Sky Tower).

, the video platform recently published a study of online video conducted by Dynamic Content detailing the kind of content that is more likely to go viral:

Laugh-Out-Loud Funny
Videos that are laugh-out-loud funny get passed along to friends.

Content that crosses some boundaries and challenges people gets good pass-along.

If the video captures your attention and holds it for the duration, it’s more likely that it will get passed along to friends.

Content with some non-pornographic sexual angle to it tends to go viral.

"The videos that get the widest viral distribution have these characteristics, but even with only one or two you’ll get more distribution than if the video does not have any of these elements. In niche markets, you’ll also see interest from fans and bloggers who may be motivated specifically by the topic."

Thursday, September 24, 2009

Social Media changes lives

Great video presentation about social media. Did you know that if Facebook was a country it would be the fourth largest in the world?

Monday, September 07, 2009

Tales of the Unexpected - don't give people what they think they want.

I’m told that the cover of the first edition of the newly relaunched New Zealand Marketing magazine had a cover personalised to its recipient. From what I can gather the extent of the customisation was simply to say something like ‘Hello David…’. I didn’t feel I had missed much. Mail-merged salutation is little more than a 90’s party trick in the era of web 2.0.

It reminded me of Saul Wurman’s comments about customisation in Information Anxiety 2 “There is a tendency to go overboard towards customising when you try to give people only what you think they want.” Wurman thinks customisation is a worthless idea – in the context of customised marketing, web experiences, newspapers and so forth because ‘people often buy what they didn’t know they wanted in what they didn’t know they were looking for’ – a serendipitous effect. If you only get what you thought you wanted, he argues, you don’t get much.

He brings the discussion round to the subject of creativity – the observation of patterns. Without a little meandering you don’t see the patterns in life that permit you to make new connections. As Wurman explains, “If I did a survey of people’s interests they would never list jugglers, etymologists, vibraphone players, or science advisors. But the jugglers, bug person, vibraphonist and science advisor to the ‘X-Files’ were what everyone remembered from the last year’s TED Conference.”

This construct interests me because I have often wondered why I can attend a meeting with a colleague, hear the same information, but come away with an entirely different interpretation of the business opportunity than my associate. We are programmed differently. He or she may have a sales or business management background that conditions them to respond literally to a client’s description of what is required to solve their problem. They are more likely to assume the client’s brief is an instruction – a literal description of their expectations. This corresponds to Wurman’s analogy about searching for ‘boxing’ information on the web. If only information about the kind of pugilism popularised by the likes of Sugar Ray Robinson or Cassius Clay is delivered then the opportunity to follow serendipitous threads and see patterns is lost “Maybe I am interested in violent sports or two person sports. Maybe I would be just as interested in Sumo wresting or tennis or chess?” My colleague is more likely to express a desire to give the client ‘what they asked for…” as a customised service response. Doing so can be a limitation on our effectiveness as a creative business.

When I use the term ‘creative business’ I don’t necessarily mean producer of hare-brained, random ideas – though the hare-brain and an element of randomness may play a key role in discovering solutions that might not be evident to other individuals or firms.

One of the characteristics of creative people, in my experience, is their interest in a wide range of topics. One of my favourite indulgences is to visit my local Borders book store, collect a pile of magazines covering topics I have no deep interest in like yoga, genealogy, model aeroplanes or fashion and to flip through them simply out of general interest and because there is the chance that a pattern, as described by Wurman, might emerge. It might be a social trend or the process might help offer up a solution to a problem I had sublimated earlier but not solved.

Returning to my colleague and client, the literal approach to problem solving – tailoring the solution exactly to the perceived problem is a significant business limitation – the opportunity to beat competitors with an innovation is lost if the problem isn’t taken more seriously.
Teaching design research methods one of the concepts I thought essential for my students to grasp was that of imponderability. To some extent there is no point in asking people what they want – especially in terms of new products and services – because they simply cannot express what they don’t know.

In business the unknown is often an idea that is regarded with some suspicion. Executives with MBAs are trained to analyse and manage the known, the finite resources available to a business. Processes are often conventions, accepted by the majority – and so, therefore, somehow correct, until they are overturned by a novelty or innovation.

The assumption that advertising agencies respond to customised client briefs for individual products led to my invention of Family Health Diary, an advertising product that permits many brands and advertisers to use a pre-formatted idea. It is now a multi-million dollar media product in New Zealand and Australia.

In the beginning my colleagues resisted the idea because it was ‘not what the client asked for’. But, of course, the client couldn’t ask for it because the idea did not exist. Nor would it have existed if I had not been exposed to some random, hare-brained stimulus – one of which was a flirtation with Amway with my then-wife.

Amway is an excellent training organisation and one of the ideas that stuck with me was that the most effective ways of succeeding is to do something once but be paid for it over and over again. As I worked late one night on the pitch for a large pharmaceutical account I found myself resenting the absence of my colleagues who did not have the required craft skills to help put the campaign into a tangible form for presentation. Not only that, but also I have a long held resentment of developing speculative ideas for clients who high-handedly decided from either my business or another’s but didn’t necessarily pay for the process. To complete the ‘perfect storm’ my wife, who worked for the same client’s advertising agency would complain to me about working on products whose budgets were so small that, by the time meetings were conducted to plan and discuss, concepts developed and produced – there would be nothing left for placing in media. It was a self-defeating problem. Because the agency valued the client’s higher spending brands and watched over the control of the account like a tigress tended her cubs, it was better to do nothing about the problem (which the client also assumed, with conventional wisdom, was a hopeless cause and so accepted the status quo).

When my partners and I won the new product launch the client made one significant condition that opened a serendipitous gateway for me. We could have the account on the proviso that we relinquish another pharmaceutical account we held. Little did they know it was dormant and had stopped spending on the product while the FDA investigated claims that it was lethal.

In order to get their hands on the millions attached to the drug launch we had pitched for my colleagues were more than happy to relinquish the languishing account – but I pitched in first: We would let go of the other company’s account if they would spend more with us. It was a risky gambit. We needed the account and would probably have folded if we hadn’t won the business. But the client manager simply said: ‘show me how’. Over the next weekend I mapped out Family Health Diary. It seemed logical to combine many small products under a unified banner and to present in a style that didn’t consume the kind of creative resource that would devour the budget before getting to the media.

Over the years the presentation format of Family Health Diary has changed but its essence has not and the premise remains as effective now as it was then. But the solution would not have ever come about if we had simply followed the instructions of the client – neither they, nor my colleagues could possibly have arrived at the solution because their inputs didn’t reveal the same patterns as mine and their approach to business is premised on matching a client’s perceived need with a tailored (customised) solution.

It seems counter-intuitive not to give people what they say they want. We’re conditioned to assume this is how business should be conducted. I’m not so sure. No market research would have uncovered the latent need for the iPod or iPhone, let alone Lego or the product I have in mind now (I can see the opportunity – but it’s not exactly what the client asked for – and it is vast).

Make room for a little meandering in your thinking. A linear approach will take you to the same destination as your competitors. That’s fine if you want to scramble after incremental changes in market share…but if you want to develop intellectual property that gives you some protection or such a significant head start on competitors that you will have the market to yourself (at least for a while), then maybe tailoring your ideas to a specific instruction might not be such good business after all?