Changes in Retail Marketing

Where is retail headed?

The folks over at Retail Systems Research (RSR) recently summarized a conference focused on the next generation of retailing.  The key take-away is the blurring of what is retailing, or marketing in general, and what is technology.   With the smart phone now the de facto decision support platform, shopping has a decidedly cyborg nature to it.

The article lists 16 different themes in the emerging storyline.   Some that caught my attention:

1. "Consumers don't 'see channels" - the sooner we stop thinking in terms of channels (multi-, cross- or omni-) the better.   The appropriate device, channel combination will be determined by the consumer, the context and the intent at the moment.
2. "retailers need to understand the path to purchase" - given the interactive nature of digital, the path is only evident in the rear view mirror.   The implication is that we have to design programs that provide different types of content at different times.  Thus, we're moving from 1:1 to Many:One communication planning to cover pre-to-post shopping.  
3. "Big Data is often 'dirty', and ...  more exploratory in nature ('tell me something I didn’t know before')" - suggests a complete rethinking the role (and funding) of analysis functions.   For the advanced companies, it will be just like a phone system.  You don't ask what the ROI of making phone calls, do you?

 The rest is also worth a read....particularly around transparency and the social aspects of shopping.

Guidelines for Developing a Big Data Strategy

Where should we begin?

Yesterday the DMA was bookended by two well-attended sessions on Big Data.   In the morning Bruce Biegel of Winterberry Group covered the flow of ad spend and the trends they are seeing.  In afternoon Yahoo and Acxiom collaborated on a discussion of linking display ads to offline sales.  In combination they provide some structure for developing a big data strategy for marketing.

An organization must address the following areas.

1. Use Cases: defining your area of focus within the marketing landscape helps not only navigate and prioritize the business requirements but also highlights organizational alignment challenges.   Calculating ROI via cross-channel attribution in order to make media mix decisions to reach audiences based on their behavior in real-time while staying compliant needs a fresh perspective. 
2. Acceptable Use:  the most critical step is to articulate the boundaries of permission, tolerance, risk and privacy by each combination of channel and audience.   Three distinct lenses need to be applied to each area - consumer, marketer, and publisher.   For some use cases safe harbor functions need to be created and probably from scratch since firms aren't typically organized across such large gulfs. Communication of your intentions must be transparent along with sufficient choice mechanisms given to each of the other parties in the system.  
3. Integration: the alignment of anonymous behavior with personally identifiable information requires a new way of thinking about data structures, management and analysis that is neither digital nor direct to consumer focused.   The current key to linking sales and activity is the email address since it satisfies both requirements marketers have - recognition and activation.   The data architecture must start from a much higher level than any delivery mechanisms used today as well as cover new forms of content that typically were beyond the remit of the data team.

For example, while the idea of replicating direct mail online sounds simple the governance and integration issues are vastly different.

Still a good time to be a marketing technologist.  

Styles of Campaign Management Platforms

How should we approach campaign planning?

Here at the DMA I watched three vendors address the same retail campaign scenario - use multiple channels to invite customers to an event, follow-up and track their responses.  At one level the pltatforms are very much the same.   They use templates, flow charts, and allow for a variety of data integrations.    What struck me though was the underlying philosophies of these companies as well as those in the exhibit hall.

First, some grew via acquisition while others grew internally.   This is similar to the HR policy of hire the best talent or promote from within.   Neither approach is inherently good or bad, but they do indicate the kind of relationship and challenges you will have with any integration.  With the acquisition path the portfolio will likely have the functionality but integration may only be perceptual.  With home grown, what you see is what you get and it will be tightly linked to one point of view; often the vision of the founder.   Early adopters and risk takers may prefer the lateral thinking of the horizontal tools.   Those looking for consistency and less technical risk may like the vertical stack.

Second, there are two philosophies circulating as to how to build a campaign.  In one camp are the "build to rules" platforms.   In essence these allow someone to implement what others have decided.   In the other camp are the "explore to build" platforms that provide the marketer with the ability to take action directly as part of the planning process.   This functionality comes from the genesis of these tools - they were analysis platforms first.  

Both of these differences impact the adoption of campaign management within an organization because they tie directly to the skills, roles and responsibilities of the user community.

So, what are we trying to accomplish and what we will empower the team to do?

DMA 2012 Overview

What's in store this year in Las Vegas?

The tag line for the 3-day annual conference is: big data, customer engagement and marketing accountability. The nine tracks give a sense of how the direct marketing association views the world. Here's a snapshot of the sessions starting today.

• Aquisition and Lead Generation - although in this day and age where consumers have more control the idea that we are "leads" doesn't seem to strike the right balance.
• Brand Content and Social Marketing - still unchartered territory for most of us, particularly in terms of connecting all the dots.
• Creative and Production - a focus on both the online and offline worlds to ensure a consistent and seamless message.
• Cross-channel Strategy - asking us to rethink the design of campaigns in the light of channel blur.
• Data, Measurement and Attribution - focused on the changing velocity, volume and variety of data. Hope the sessions shed light on dark data.
• Direct and Digital Fundamentals - it wasn't too long ago that the DMA had the Interactive Pavillion in a separate hall on the other side of a dark tunnel in San Francisco. Glad to seem them merge.
• Connected Customer Straregy - all things mobile. As the new, personal decision support platform the path to purchase is getting interesting.
• Real-time and Triggered Marketing - clearly need to rethink the role and place for analytics. No longer are they projects done by the folks in the back room; they embedded into marketing operations.
• Retention and Loyalty - given that 40-70% of customers never repeat this topic should foster loyalty among attendees.

Looking forward to learning what others are thinking. I'll be posting more throughout the conference.

The Evolution of Marketing Channels

Where does a channel lead us?

At one time channels were divided between sales channels, e.g. brick 'n mortar, catalog, and ecommerce, and marketing channels, e.g. email, direct mail, advertising, and search.  Over the years the term 'channel' has taken a lot of twists and turns as it has coursed its way through the marketing landscape.  The evolution has gone thru several stages.

• Channel: when used in the singular it refers to an isolated, uncoordinated communication; the term eblast or catalog sales sums up this thinking.
• Multichannel: implies the coordinated publication of a message to reach consumers through several individual channels; the use of preferences reflects this period as does varying assortment by outlet.
• Cross-Channel: refers to a sequence of integrated messages delivered based on a single view of the consumer and her journey; understanding the path-to-purchase is characteristic of this era.
• Omnichannel: exists when both marketing and buying platforms each have not only awareness of the others but are in fact hard-wired together; this is the future and a hot topic of discussion in the retail conference world.

In their Retailing: 2020 report PwC describes one characteristic of omnichannel marketing as the notion that consumers are channel-agnostic.  While directionally correct, it misses the larger point - consumers don't think in terms of 'channels' at all. What they want is a frictionless (and enjoyable) experience commensurate with their own expectations where information flows and transactions happen seamlessly.

Because of this blurring, the sooner we demote "channel" to a minor, technical decision based on consumer intent and context the better.   As a marketing term it is past its sell-by date. 

Four Opportunities to Leverage Data

Why is the interest in leveraging data rising so quickly?

Marketing is awash with a deluge of dark data and needs to figure out how to utilize it.

Yet data-driven marketing isn't new.   In fact its been around for decades ever since we used shoe boxes of customer records, profiled postal areas with census data or looked at bi-monthy audits of sales data.  But the interest in 'big data' took off in the last twelve months as reflected in search traffic on Google Trends.

"Three technology trends — media fragmentation, addressability, and interactivity — are converging on the world of marketing and advertising. .... analytical strategies grounded in deep audience knowledge will rise to predominance."

That was written in a Forrester report entitled "Left Brain Marketing" back in 2004.  Based on newsletters, conferences and posts it appears that convergence is accelerating.  And that change in pace is likely because digital technology has reached critical mass - not to mention having a simple moniker that sounds cool. "Big Data" has a ring to it and conjures up the kinds of imagery that technology marketers just love to leverage.

From a marketing perspective, digital technology...

• moves the decision point about what to deliver to late in the planning cycle because things can be assembled based on business rules utilizing a portfolio of assets.  Content can now be seamlessly repurposed to create new packages that are served to consumers.  Social aggregation strategies like Flipboard and Paper.li are new forms in the delivery of personalized content.  For a synopsis of twitter see the "The Brand Strategy". 
• changes our thinking from Plan - Execute - Track to a world of Execute - Track - Adjust based on refining rules. The emergence of trading desks and real-time-bidding in the digital advertising world exemplify this shift.  An unintended consequence of real time is the increased reliance (not to mention relevancy) of using first-party data as opposed to traditional third-party data which has a natural lag time associated with it. 
• represents a major environment for the consumption of information.  From smart phones to ipTV the delivery platform is addressable.  Thus, the power of targeting will extend to formerly broadcast or published media.
• leaves breadcrumbs that need to be handled differently. The volume, velocity and variety of data is so different than traditional marketing data that it requires a regime change in thinking.   Aggregated and anonymous behavior of segments is a better approach than trying to guess at the identity of a consumer.  And the use of personal information in targeting is likely a non-starter for most companies.

What is truly different however is that marketing now owns the processes that spawn 'big data'.  In the past data were borrowed from other areas of the businesses or licensed from suppliers and thus provided a supporting role to 'solving needs profitability.'   The rise of digital marketing changed all that.   We now generate our own data and thus are responsible for figuring what it means and what to do with it.  There is no curtain to hide behind anymore.

So, where are the opportunities?

In a recent white paper Winterberry Group (reg required) explored four avenues.

• Audience Optimization - identifying who is (could be) interested and reaching out to them appropriately
• Channel Optimization - leveraging the touch points along the path-to-purchase to reduce friction
• Advertising Yield Optimization - maximizing value of inventory thru identification and alignment with high-value audiences
• Targeted Media Buying - purchasing media based on common interests and implicit/explicit behavior 

Since those topics can be viewed as variations on the same theme, the insights need to be drawn from a collective, holistic point of view.

Using Mobile to Pay for Parking

Is there an app for that?

My colleague Brady Murphy at TC Media recently did a webinar on our solution for using mobile technology to pay for parking in Montreal, Canada.

Key learning:

• Adoption driven by iTunes, QR and SMS in that order
• Be ready for feedback (positive and negative)
• User Experience compliant with PCI (credit card) is a must
• Avg. Revenue per User unlocks support and further investment
• Use push messaging to improve consumer experience

The PSA for Stationnement de Montreal is from YouTube.

Using Lenses to Segment

How can we align segmentation with the business view of customers?

We know that segmentation, targeting and personalization are the right thing to do - well most of the time anyway.  And we know that this logic can ultimately lead us to potentially segments of one.  And we know all too well that we can't manage the business at that level.  So, where do we start along the path of segmentation?

In marketing 101 we should have learned that a segment is simply a group of consumers with common needs who can be reached efficiently via marketing tactics.  And if we make the assumption that behavior is a reasonable substitute for needs then we can leverage purchase history (or digital breadcrumbs) as the basis for segmentation.

Now comes the challenge of sorting that data into useful buckets in order to fuel the targeting of campaigns as well as understanding their impact.   A good place to start is to identify the ways the business currently views customers and use these lenses as the basis for straight-forward segmentation.

Here are some typical ways a business could look at a consumer:

    •    Value and transaction history
    •    Product and category usage
    •    Interaction and engagement

Each of these lenses reflect two separate dimensions resulting in a classic 2*2 matrix that is easy to explain. For example, the Value - History pair results in a variant of RFM segmentation (recency, frequency, monetary) and it looks like the following:

In this example, the break points are typically the average/median values for each metric, i.e. above and below the average spend plotted against above and below the avg. number of orders.  We typically trim the outliers so as not to skew the results too much. 

The "Best" customers spend more and shop more frequently whereas the "Uncertain" are literally that - too few transactions and too little revenue to know where they are heading.  While sounding a bit like "duh" it is amazing that few companies actually design their campaign tactics around the simple economic value of their customers.  

For the second lens of Product and Category usage, the variables might be the number of categories shopped vs. the number of individual products bought per visit.

    •    Multi-category:  high categories, high products
    •    Cherry Picker: high categories, low products
    •    Intensive Buy: low categories, high products
    •    Top Up Staples: low categories, low products 

And the list can go on.  

A set of simple segmentation schemes that cover the basic business points of view can result in a large number of potential segments.   A recent project using a similar approach using four different stakeholder views resulted in 256 possible ways that a consumer could be classified.  In this case, that was plenty of variations to drive the initial communication blueprint and creative needs for starting a 1:1 program.

A "Frequent - Cherry Picker" would likely get different offers, incentives than a "Spender - Top Up Staples".

Understanding the Customer Journey

Why are analytics important?

For merchandising and channel operations, a transaction is the end goal - either the purchase or delivery of products, or the sale of products.

For marketing, the transaction is where their work begins.

The above quote came from a recent research report among retailer marketing executives conducted by RSR and highlights why marketing is a different breed of animal.  Marketers are paid to change history, or at least improving the odds of a consumer choosing the products they're charged with growing. 

As such, marketers are in the business of influence.  And to do that they must understand how consumers come to buy a product or service in the first place.  Today's shopping experience consists of a myriad of ways and places that might lead a consumer along a path-to-purchase.  And those paths are probably very different across the major marketing campaign objectives.

• Acquire: how do people become aware and put us in the consideration set?
• Retain: what convinces them to stay with a brand?
• Migrate: why are they willing to give us a larger share of wallet?
• Convert: at what point do they consider themselves loyal?  how do they show their loyalty?
• Win Back: given they have a history with a brand, what entices them to return?

In a digital world where everything is interactive, all of the above happens pretty much haphazardly.  In fact, the path-to-purchase is only evident in hindsight via the breadcrumbs consumers leave behind. 

To provide structure to this fragmented landscape, it is helpful to think about four specific things a marketer can leverage.

• Touch Points - where along the path-to-purchase is the decision made?
• Content - is it brand stories or promotional offers that trigger the decision?
• History - how does previous experience with the brand change the way decisions are made?
• Social - what role does influence and self-expression have on the decision?

These questions are precisely the kind of things analysts get excited about.  We are adept at breaking complex things like the consumer journey into composite parts in order to understand them.

Because, if we understand we can influence.

Football Metrics and Marketing KPIs

What's wrong with ranking on simple metrics?

A common way to rank things is based on a straightforward metric.  For example, football teams are ranked on their total, offensive and defensive performance.   Consider the Tampa Bay Buccaneers; they are currently ranked 1st in the NFL in terms of being the stingiest defense based on the yards allowed per game - a measly 47 yards per game or about 2 feet per minute played. 

Are they that good or is that the result of something else? 

In contrast, when viewed in terms of pass defense they rank dead last giving up more yards per game than any other team.  This ranking in turn comes from two contributing factors: the opposition completes both longer plays and a higher percentage of attempts.  The result is 353 yards given up by passing.

So, could it be that they are ranked so well in terms of rush defense simply because other teams know they can be successful passing the ball?  It turns out that opponents run the ball 32% of the time (5th lowest). So, yes the numbers are skewed based on the distribution of the events themselves.  They have good run defense metrics in part because teams don't run the ball.

We tend to like simple numbers, but they can be hiding something important or possibly misleading.  Consider typical marketing metrics:

• Conversion rate
• Response rate
• Attribution
• Market share

All are highly summarized metrics, just like 'yards per game' that attempt to roll up the details into a comparable key performance indicator.  Thus, they all run the risk of hiding the important insights; and it is the insights that drives changes in marketing plans.

The trick to communicating insights is to find the right way to present the information; and that usually comes in story book form.

And by the way, Tampa Bay does give up the fewest yards per attempt in the league so they may be that good. 

UPDATE: Stats found here http://www.teamrankings.com/nfl/

10 Different Kinds of Shopping Trips

Why do we go shopping?

A recent white paper by Jim Barnes of BMAI Strategy describes 10 different scenarios for shopping at the mall, each with different goals.

1. Recreational: where the outing and entertainment choices are what's important
2. Purposive: planned and with a goal in mind to buy something specific
3. Social: spending time with others is more important than actually buying things
4. Reconnaissance: looking for inspiration or 'what's new'
5. As a Treat: driven by a mood and desire to reward oneself
6. As a Quest: looking for a 'great find' is the end result
7. As Entertainment: people watching and window shopping
8. Word-of-Mouth: following up directly on the advice of others
9. Event-Based: a subset of 'purposive trips' where an occasion drives the search and purchase
10. "Going-to-the-Mall": the place itself is the attraction.  Like Starbucks, it is the "third place"

Many of these types also relate to individual retail stores and on-line shopping.  And in all cases the information needs of the consumer are very different. As a result a mix or blend of content is required to help them decide.  For those trips where transacting is actually the goal some are emotional (Reward) and some are promotional (Quest) while others are informational (Purposive) or communal (Word-of-Mouth).

So in addition to thinking about channel and device as part of our communication blueprint we need to look how we can serve the right blend of content in these situations.   And yes, we have to figure out intent and context first.

Marketing Ecosystem: Direct-to-consumer

What does the landscape look like?

The marketing landscape is cluttered.  Just look at any of the Lumascape diagrams (here is their one for social) and we're astounded by the sheer numbers of players involved and thus the complexity of it all.   A spate or recent discussions about partnerships, competition, positioning, and offerings all led for the need to put some sort of structure together that covered the major types of players as well as their respective offerings as it relates to direct-to-consumer marketing.  

Here's a synopsis of where we ended up...

The offerings were divided into consulting versus implementation and the players were allocated to one of four types.

• Management Consulting - focused on crafting unique solutions based on a practice
• Business Consulting - delivering the infrastructure, including organizational, to execute
• Agency, Boutique Firms - charged with taking a brief and transforming it into campaigns
• Platform Providers - providing the execution and tracking tools

Now it is clear that a given company may span up and over in order to grow and increase its own value proposition, e.g. enterprise platforms adding professional services.  And it is likely that start-ups will look at one of the deliverables from a fresh perspective as a way to define their white space. 

The implication is one needs to understand the core business itself when looking at a company from the outside, either as a potential client or a competitor/partner.  Depending on the frame of reference, there will be trade-offs and distinctive points-of-view.   Certain options provide unique or exclusive solutions while others provide economies of scale.  

There are a few dimensions missing from this view, maybe another post...

More Cowbell is Not the Answer

Is the best way to understand consumers to collect more data?

The idea for this came from note sent by a colleague who spoke at the CMA "Evolution of Direct Marketing Conference" this week.  The closing keynote was on the future of marketing where the answer is not more data, but rather the algorithm.  Alex Leavitt talked about the need to tell stories with data so what you do with it, and how, is more important than the amount of data on hand.

The digital world leaves an unimaginable amount of breadcrumbs that we should try to use to infer intent and context in order to improve consumer engagement.   Yet the vast majority is what can be considered "dark data" - we know its out there but have no idea where or how to use it.   So maybe we should be asking ourselves some qualifying questions first:

• Where along the journey are we likely to have the most impact?
• What decisions can we operationalize and embed in the appropriate touch points?
• What do we need to know as opposed to what could we know?

To contradict Christopher Walken in the famous SNL skit the prescription isn't more cowbell (data).

  

Targeting vs. Personalization

What is the difference between targeting and personalization?

Last week we got into a discussion over whether the mantra of CRM - right person, right channel, right time, etc. - was a question of targeting or one of personalization.  It is clear both ideas resonate in any consumer-centric marketing:   What do they actually mean?   Here's where I netted out:

• Personalization - the use of content that the consumer should recognize as 'hers'.   This runs the gamut from contact information and preferences to product purchase history.   It is a subset of the whole idea of customization that includes selection of content that she might not recognize as hers, e.g. up-sell opportunities. 
• Targeting - the identification of a group, and that includes the idea of a group of one, that should be managed and addresses as a single entity.  It offers the ability to alter the content delivered while still maintaining the ability to scale the solution.  In short, this is what one does with segmentation. 

Personalization is about content; targeting is about selection.

Now implementing either or both personalization and targeting requires an increase in dedicated resources to figure it out and implement.  So, it is still a matter of analysis as to whether or not this produces sufficient return on investment to warrant the costs involved.  

Customer Strategy - Get Emotional

Where should the emphasis be in the planning cycle?

Yesterday Jim Barnes, author of Build Your Customer Strategy, came around after a customer advisory event to share his thoughts.  His emphasis on understanding the emotional reason for shopping as well as the mechanics of developing a marketing plan was a good reminder to remember what marketing is all about - satisfying needs to everyone's mutual benefit.

His three oxymoron points were also worth a note or two.

1. Planned Spontaneity - the idea is to recognize a consumer problem that she doesn't know she has and then solve it.  Customer service stories abound around this topic but there is merit in thinking about how intermittent reinforcement as a strong motivator actually transforms into word-of-mouth.  We tell everybody about these events.
2. Future Memories - this is often the real reason we buy, particularly when it comes to disposable income.   That $50 jar of squid ink wasn't just used to make fresh pasta with octopus, it was for a dinner party with friends. 
3. Proactive Hindsight - by understanding what a consumer will think about after the purchase we can orchestrate the present help to avoid bad decisions.  This often involves providing advice and guidance as much as a product, e.g. financial services.

 In the end, it is about understanding context.

The Marketing of Beef

How does muscle become marketable meat?

In "The Art of Living According to Joe Beef: A cookbook of sorts" the owner relays a story about beef.  The restaurant is proud to serve local products and when their 'Alberta Beef' is revealed as Australian heads role.  While a good restaurant story, a key question emerges from a marketing perspective:  How did Australian beef go from obscurity to being served as a unique product at one of Montreal's best restaurants?

In the last century, beef, as a category, has gone from the tragic world of Upton Sinclair's The Jungle to specialty breeds like wagyu that command a significant price premium. This journey started as a means of protecting consumers when the US passed the Meat Inspection Act over 100 years ago.

Today, the processing of the muscle into meat has to meet minimum requirements which includes on-site inspectors and voluntary grading. The high fixed cost of inspection and the creation of minimum standards has led to an industry focused on supply chain and cost efficiency as a means of producing as much acceptable beef as possible.  There has been little in the way of differentiation until recently with the rise of ranch brands - often based on how the cattle are treated and fed rather than the meat itself.

Australia took another path to market.  While they have stringent quality control, they also focus a lot on consumer preferences.  In fact they have an Eating Quality Assurance program that strives to understand what consumers want to experience when eating meat.  An ethereal quality like tenderness can't be reduced to a formula based on age and marbling (although it can be measured by sheer force).  The other preferences they focus on include juiciness, flavor and overall liking.  

It is likely that it is consumer focus (and its 1,000,000 interviews) more than hard rules that has helped Australia become a major exporter of beef.

The Impact of Other Online Reviews on our Own

Do online product ratings reflect only our own experience?

As social creatures, online reviews and recommendations certainly influence our decisions.  Recent research in the Journal of Marketing goes beyond confirming that "what we read shapes what we write" to focus on the interaction between existing reviews and our own rating of a product experience.   Using a highly-rated category - hotels - the authors identified scenarios where we might increase our rating and ones when we might decrease them.

So, imagine the product has a positive rating and you go to write yours.   Here is what is likely to happen based on your experience:

Thus, it appears that social influence of existing reviews mitigates or accentuates our own ratings creating a self-adapting system.   The implication is that we need to understand the context in which the rating was given and act accordingly.   Clearly we should reach out in the event of bad experiences; it has a good chance of correcting overly strong reactions while at the same time building goodwill.

The surprise is that we should be communicating with those who are positive - because their desire to use self-expression to be unique can bring down our rating.

Our contribution to communal content is just that, a reflection of the community.


Paper is entitled: Social Influence Effects in Online Product Ratings by Sridhar and Srinivasan

What CMOs Should Learn from Chefs

What chef-like attributes are worth adopting?

First, just like launching new products restaurants may be one of the hardest markets to exist in.  The urban myths are that 90% of restaurants and 80% of new products fail. The reality is that the success rate in both categories is well above 50% for the first year.  So while the odds of success are longer than those in Las Vegas, they are still worthy pursuits and quite possibly have things in common. 

There seems to be a common set of characteristics that chefs bring to the table...

• Clarity and focus - the passion, single mindedness and very often the standards are what makes them leaders.  
• This is no different than insisting on a clear, crisp brand promise.
• Consistency - eating is a ritual, we come back for the memories, we don't want to be rudely shocked and have to reevaluate our choice.  
• This is no different than guaranteeing a consistent message and experience along the shopping journey. 
• Customer satisfaction - the best have a relentless goal of ensuring guests are enjoying themselves.  
• This is no different than being the voice of the customer. 

Some of the most interesting thinking and inspiration (not to mention food) comes from those developing street food or running food trucks.  Here are two videos of chefs talking about their craft.

• Richie Nakano of  Hapa Ramen talks about goal driven and focus based on the love of his craft.
• Roy Choi of Kogi BBQ embodies the mixing of emotion into the product and exudes a passion for what he wants to eat.

What is clearly different is that this is very personal for the chef and possibly only a day job for the CMO.

Marketing Must Deal with Turbulent Times

Why is marketing getting harder?

There is an underlying implication behind media fragmentation, social expression, and digital interactions that it is tough to be a marketer these days.  A recent report by Boston Consulting Group on how to deal with turbulence confirms this trend at the macro, industry level. 

Change is happening faster.

Over the past several decades four measures of financial performance have become  more volatile.

1. Demand is increasingly unpredictable
2. Positioning is more unstable
3. Profitability swings are larger
4. Market expectations are over/under-stated

The report goes on to highlight firms that have done better than average during turbulent times and describes five potential success factors.  Two of the five, recognizing signals and experimentation, are clearly marketing functions.   The other three, organizational, systems and ecosocial, are more likely the responsibility of the CEO.

Identifying market-changing signals can either be at the macro-level or individual level.   Services like trendwatching offer insights into how consumers are changing.  And internally, customer behavior can often be used to isolate shifts in life-stages, as Target's work on identifying pregnancy illustrates.  The function responsible for bringing insights to the table is typically in the marketing research, consumer analytic areas of the company.

Taking products to market that leverage insights is clearly a marketing function.  However, coming up with ideas to take advantage of those insights in the first place should not just be a marketing function.  It should be in the fabric of the corporate culture.   3M and Google are known for their allocation of 'think time' so that people can work on problems that interest them.   This then becomes a social exercise.   And supporting that claim, McKinsey just reported that the majority of the value of social technologies will be found in facilitating internal collaboration.  

An interesting approach would be the creation and use of 'human libraries' where the business can check out an expert.  Originating as a way to discuss prejudices, the idea easily extends to the corporate environment where new perspectives are valuable in solving challenges.   A recent viewpoint in Marketing News (not yet online) described several cases of using subject matter experts from varied disciplines - including jazz musicians to discuss improvisation with a multi-product manufacturer that had several sales people calling on one retailer. 

While marketing may be harder because what used to work might not work now, it is still filled with opportunities to help both consumers and thus companies.

Vendors Need to Think Beyond the Report

Where does a vendor's value lie?

One of things we do at work is to distribute our clients' promotional content thru a number of channels and platforms.  And a recent project we were requested to work on was simply entitled 'extract business insights'.   Since we already produce reports on activity, this left us wondering just what that might mean. 

A bit of brainstorming left us with three potential questions that could form the basis of the analysis.

• Tactical:  What worked and what should I do next?
• Acquisition: Who is a good customer and where do I find more of them?
• Strategic:  How do I compare to other players in the category?

Each of these questions could produce answers that change how we market, and thus qualify as 'insights'.  Plus, they seem to cover the potential range of interests a marketer is likely to have.   And if we can answer them satisfactorily then we have the opportunity to be a consultative partner rather than just a vendor.

Since we're a 3rd party, one of the advantages we have is to look across the market as consumers interact with various brands.   This normative view, even without identifying brands by name, is one of the key things of value we can bring to the table. 

The data requirements and time horizons are likely to be quite different than traditional reporting solutions provide.   For tactical questions - it is granular, short term and requires financial knowledge.  Did last week's offer of 'grapes' generate store traffic and sales?  Would it be better to promote 'lettuce'?  At the other end of the spectrum, strategic questions take a longer term and higher level view.  Is our merchandising strategy engaging customers better than other approaches?   In between lies the acquisition work - what consumer characteristics appear to be associated with events generated by digital content? 

Each of the questions is framed to foster discussion.  And in the end, that should be the goal of any vendor with a professional services staff.

Yet, there are still things to consider and work on:

• How does consumer behavior change over time?   (this requires a means of identifying someone across time and space)
• What is the ROI of not only the promoted item, but the basket? (this requires linking from the offer all the way thru to the basket)
• Are deal sensitive consumers valuable in the long term? (this requires both of the above fixes)