The ‘Marketing Alchemy’ that reversed the value of gold and iron.

The ‘Marketing Alchemy’ that reversed the value of gold and iron.

Jul 29, 2019 | Marketing, Strategy

1813, in Prussia, princess Marianne convinced people to turn in their gold jewelry to fund the war against France, and be given an iron replica in return. The replica jewelry was stamped with the words ‘Gold gab ich fur Eisen’ which means ‘I gave gold for iron’. Substitute iron jewelry produced by the Royal Berlin Foundry became the symbol of not just wealth and status, but of patriotism, .

Gold has an intrinsic value, it can be used, and reused, but its real value is in the belief we share that it has value in other ways, beauty, a symbol of wealth, luxury, status, and all the rest of the stuff we value.

The status of iron replica  jewelry was conjured to become higher than that of the gold originals.

Possession of gold signals things, but those signals can be reversed, because they are all about perception. It just takes a  bit of psychology, mixed in with the change of context and perception, achieved by marketing.

Marketing Alchemy.

The Prussians must have a skill for this stuff, despite their dour characterisation.

Frederick the Great achieved the opposite effect with his bit of alchemy with spuds. Frederick, who ruled Prussia from 1740 to 1786, was concerned that his people had only one source of carbohydrate, wheat. In a conflict, which he was pretty good at inciting, wheat fields could be devastated, and take a long time to be replaced, meanwhile his people would starve. The antidote was potatoes, which would provide a quick growing and reliable alternative  source, but Prussians would not eat potatoes, under any circumstances. After all, dogs would  not eat them, why should people?

Fred tried every form of coercion that he, as an absolute monarch, could dream up, but nothing worked. Then he found some magic marketing alchemy somewhere, and had his gardeners plant a potato garden which he decreed as Royal potatoes, reserved exclusively for the tables of royalty. He put a guard around his garden, but quietly he instructed the guards to be slack, and not enforce the security. This meant that the locals could nick in and knock off some royal potatoes pretty much without any real risk, while defying the king.

The net result was that potatoes quickly became a staple in the German diet.

Marketing alchemy at work!

Devising this sort of marketing alchemy is not easy, and is not always sensible at first glance. It is always different, counterintuitive, and will have more than its fair share of knockers. ‘It will never work’ they chorus, usually because they cannot see out of their status quo box. When you need some alchemy in your business, call an alchemist.

Header photo: iron jewelry in the Victoria and Albert Museum, London

 

 

Solving the paradox of marketing measurement.

Solving the paradox of marketing measurement.

Jul 22, 2019 | Branding, Marketing, Strategy

A bigger brain than mine observed that ‘You get what you measure’. This has been proven to be true time after time.

Our lives are run by those who make the rules based on what has been, simply because it is easy to quantify.

However, what do you do when you want an outcome you cannot measure?

Like ‘good parenting’. We all know the kid benefits, as does the family, and community, from good parenting, but what is the measure?   It is particularly challenging if you choose to try and measure good parenting in real time.

Like ‘Culture’.

We all want a great culture, but how is it measured? There are consultants flogging all sorts of snake-oil dressed up in pretty graphs and dashboards, but I am yet to see one that is of any demonstrable value.

Like ‘Great marketing’. ‘I will know it when I see it’ is simply not good enough!  How do you predict which marketing strategy will be great, and which will be a steaming pile of crap?

If a PhD candidate was to compare the balance sheet valuation to the market cap of the top 1000 listed companies of 1998, I would bet my house that there would be a far closer correlation then, than a similar comparison done in 2018. In those 20 years, capital markets learned to factor into their valuations the future value of intangible assets. 

Facebook paid 19 Billion, yes Billion US in 2014 for WhatsApp, when it was owned and run by 12 people in a garage, supported by a VC investment. At the time it was seen as an insane price by most pundits, the same ones who are now saying it was the purchase of the century.

Intangibles now make up a significant proportion of the market cap of most successful companies, and where do Intangibles come from?

Marketing!!

But what is the measure?

We can see the value with the great benefit of hindsight, but hindsight is not available to us as we do the planning.

So, the question becomes: ‘How do we generate quantitative links between cause and effect?‘

 Such links will provide the connections between Foresight and Hindsight, so we can learn and accumulate wisdom as we go, make resource allocation decision based on what should happen, rather than what we hope may happen, or even worse, an assumption that the future will look just like the past?

Even then, we need to remember the sage words of Einstein who knew a bit about measuring things, when he said ‘Not all things that are important can be measured’

 

Header cartoon courtesy of Hugh McLeod at www.gapingvoid.com

Marketing is dead; Long live marketing

Marketing is dead; Long live marketing

Jul 15, 2019 | Branding, Marketing

 

In 1973 I graduated with a marketing degree, something few had heard of. My father was appalled, as I had set out to get an accounting degree, but had been waylaid by some  new age nonsense that would not get me a job.

Several years later, after quenching my wanderlust, I went looking for a job back in Australia. At that time, marketing was becoming important in a couple of areas, the food industry, and FMCG more generally, being the leader.

I was lucky and scored a job in an environment  which would give rise to one of the (formerly) great Australian brands; Meadow Lea.

Brands had become important through the 20th century in food, as they were a mark of quality, and reassurance that there were no nasties in there that would terminally stunt your growth.  Pretty important in food that you have not grown yourself,  and it is where the big brands emerged, creating the cycle of scale.

Large volumes enables capital expenditure,  and advertising, which exploded when TV emerged in the 50’s, creating massive consumer brands that dominated the landscape of our lives. The corollary is  that there were also many smaller brands, yapping around the edges, stealing a crust here and there, and generally keeping the big blokes honest.

Supermarkets built their scale for the same reasons, delivering price and convenience to consumers, then progressively they  set out to capture some of the proprietary margin of the big brands by leveraging their distribution muscle, by launching house brands in the 80’s. The very first one was a ‘No Frills’ margarine, launched by Franklins in Sydney, supplied by what became Meadow Lea Foods.

Then came the marketing ‘Big Bang’, the arrival of the internet.

I remember seeing the first fax around 1983, and thinking ‘this will change the world’ and it did, but not how I expected, and the fax was nothing compared to the disruption 20 years later.

Suddenly there were thousands of ways to communicate, TV remained, and still does remain an important vehicle, but like an aged boxing champion, is unable to deliver the impact of his youth against a horde of more agile, and stronger contenders who learn on the job every day.

The big brand owners, not wanting to miss out on this new wave of communication channels chucked money and their established ways of doing things at them, and wondered why they were being ignored. At the same time, supermarkets doubled down on housebrands, setting out to market their retail brands as someone you could trust to deliver quality and integrity, while consumers recognised that health regulations made putting nasties in food products a thing of the past.

Who needs brands anymore?

Well, the answer to that question is just about anyone who needs to offer a sense of security, certainty of performance, and a guarantee that they will stand behind their products performance,  to their customers and potential customers. That means anyone pushing the established boundaries of production, distribution, or technology.

Obviously Google, Facebook, Apple, et al fall into this category, and they have built huge global brands in less than 20 years, but those brands look nothing like those of my early years.

They have been built using new channels, as well as reimagining the old ones and executing at scale in ways unimaginable to incumbents. Apple is now the most successful bricks and mortar retailer in the world, when measured on the retailers own key KPI, margin per square foot of retail space, Amazon Go, and Whole Foods are rethinking FMCG retailing, and their bookstores are popping up in places where Dymocks,   Borders, et al closed down a decade ago.

The challenge is that the new marketers emerging now have no idea of how to really build a real brand. FMCG brands are largely irrelevant, so that training ground has gone, the new places to get marketing experience is in tech, and financial services. Tech is building brands despite themselves, simply because they are replacing the old ways with new ones, and financial services, well,  look how puny and irrelevant their brands are in the face of profit pressures, and simply nobody will believe them anymore.

Trust is zero.

Brands cost money to build, and take time building them is an investment in the future, and will not pay off until the future arrives. Unless you have the skills now, the future is looking bleak.

Fortunately there are a few old heads around who still remember, and recognise the ‘4 P’s’ still apply, and a few new heads, not seduced by the newest, shiny tech tool that skates across the surface of brand building

Brands are everywhere, without them, chaos will prevail, but to build one today, you need to be smarter than the next bloke, not just be lucky enough to have more resources and distribution scale. Genuine, creative and forward looking marketing is getting another lease of life.

 Call me when you need a dose of invaluable experience.

 

Header cartoon courtesy Tom Fishburn at www.marketoonsist.com

 

 

 

 

 

 

Genuflecting at the tomb of the unknown customer

Genuflecting at the tomb of the unknown customer

Jul 12, 2019 | Branding, Marketing

More money is thrown at the tomb of the unknown customer than any other source of marketing waste.

Unless you can define very well indeed who your customer is, you will be wasting most of any time, effort, and money you spend.

Defining who your ideal customer is involves choices, as you also  have to determine who is not, and therefore you will not spend resources trying to reach and influence them. This is really difficult for most, especially smaller businesses, to whom turning away a potential customer is an appalling thought.

Over 35 years ago I took over as Marketing Manager of the newly formed General Products Division of Dairy Farmers.

The brand of yoghurt we had was Ski, market leader in a small, and slowly growing market. When I joined, Yoplait had just launched, and the market had exploded.  Ski’s volumes were about the same, but share had dropped to single figures as Yoplait had, rightly,  taken all the growth for itself.

During a qualitative research project aimed at understanding who was buying yoghurt, which brands they preferred and why, the researcher asked the respondents to describe each of the major brands in human terms.

Yoplait was an educated, hip, self reliant, confident young woman who had her life in order the way she wanted it.

Ski was a reliable 50 year old farmer in wellies.

The advertising plan that was in place when I arrived was just more of the same old stuff, trying to convince ‘Miss Yoplait’ that the wellie wearing farmer was a good choice for her.

Might not have worked very well, so it was changed, and Ski started on a 5 year roll of product innovation that led to market leadership.

25 years later, Chobani came along and has done the same thing, again, as the so called marketers who followed, lost sight of the consumer, leaving the field open for a better targeted offer from a newcomer.

Need some help thinking this challenging stuff through? Give me a call.

The huge power of relative risk in sales.

The huge power of relative risk in sales.

Jun 28, 2019 | Communication, Sales

‘Risk’ is an emotive word, it immediately conjures up danger, and an instinctive reluctance to avoid it, if at all possible.

Relative risk is often used in a selling situation as a means to motivate the potential buyer to take that last step, and buy, immediately. The risk may be of missing out, of a price rise, or of an unpleasant event happening, and many other things that might incite a sense of urgency. Unless you apply some added, and not usually made available logic, you can be seduced by the size of the stated risk, and buy, when it may not be a logically consistent decision to do so.

When you see the word ‘Risk’ in a brochure, offering research numbers that demonstrate how much this new ‘whizzo’, newly developed after much research,  will reduce your risk, do not take them at face value.

For example, if I was selling a new medication aimed at older fathers, of which there is an increasing number, I might use something like the copy following.

‘For men of 50 fathering children, there is an 18% greater chance of those children suffering seizures, than children of a father of 30′. New ABC medication from XYZ company can more than halve this risk’

This first part of this copy would be alarming to any man in this group, but misleading. It is a relative risk, comparing one group to another. It does not tell you how likely it is that an individual child will have a seizure, which is an absolute risk. The second part, promises a huge reduction in this risk as an inducement to buy, but again, very misleading, because the reduction in risk is relative.

Had the copy been complete, it would also have told the reader:

The child of a father aged 30 has a risk of seizure of .024%, 24 out of 100,000 children.

The child of a father aged 50 has a risk of seizure of .028%, 28 out of 100,000 children.

(Data source new scientist November 2018)

An increase of 18% to the risk of children of fathers over 50 suffering seizures, compared to that of fathers of 30 sounds shocking, but when you consider it is 4 children in 100,000, it is less so. Equally, the reduction coming from new ABC medication is less impressive when viewed as an absolute reduction, from 4 to 2, and the (poor) statistician in me tells me it is within the boundaries of statistical error in any event.

Daniel Kahneman in his great book ‘Thinking Fast & Slow’ uses a number of examples similar to the one above, and in addition would apply the question: ‘How much would you pay to reduce the risk of your child having seizures from 4/100,000 to 2/100,000’? to get a better measure of the price difference between a purely rational decision, and an emotional one.

Emotion sells way, way better than rationality, so the usual way to present data will almost  inevitably be relative. Watch out for it, and ask the appropriate questions before you jump to a purchase decision. 

 

Header cartoon courtesy of Scott Adams and ‘Dilbert’ https://dilbert.com/

Where to easily find the real value in Facebook

Where to easily find the real value in Facebook

Jun 26, 2019 | Marketing, Social Media

 

Facebook has made organic reach virtually (pun intended) impossible in the quest to empty marketers pockets of advertising funds, at which they have been astonishingly successful. This is despite their appalling management of privacy and enabling some pretty dodgy, some would call it reprehensible, activity.

The only option left, and it is a good one, is to take advantage of the groups that Facebook has encouraged to flourish.

Marketers should be taking advantage of groups, but to do so requires a greater level of discipline and investment than many seem to be able to muster. 

Following are the three main considerations.

Common interest.

Groups are by definition places where there is a common interest that draws members. However, common interest is not enough to generate the engagement that marketers need, there needs to be collaboration amongst the members, that creates its own two sided discussion. If the levels of two way discussion fall, so will the interest levels of participants, who will then wander off, digitally speaking. For marketers prepared to put in some leg work, selectively adding value to the groups specifically around your value proposition can be very useful.

Group control.

Anyone can create a group, for any reason, and manage the settings to your own agenda. I am a member of a local SME networking group that has three Facebook groups that serve different purposes. The first is a ‘public‘ group, where anyone can see and interact with posts, the second is a private group where only members of the network can  post and view the activity of others in the group. The third is a ‘secret’ group that has the current committee as its only members, and only those few can see anything posted, and respond. The first is a group that can  attract potential members and contributors to the activities of the group, the second is a collaboration of members where we can help each other in a myriad of ways, and the third is a very convenient communication channel for the committee to consider the manner in which the group is managed. The combination works well, and is very simple to set up. 

For a purpose.

Given it is easy to set up a group, when there is a specific purpose, you can set it up and leverage the potential reach amongst those who have an interest in your purpose. This can be anything from a product launch, technical forum to a personal interest, and everything in between. The challenge of course is to market the group to those who may buy into the purpose, and have something to contribute. Without a flow of quality content, such groups will have a very short life, but they have the potential to deliver considerable value to the group owner and members.

 

Groups are not the answer to most marketing challenges, at best they are a partial answer to some common questions, and can be a valuable part of a wider strategy. At least they can deliver a pathway to your own digital asset, your website that should remain a cornerstone of every  marketing activity. It is inevitable that Facebook will change the rules again, squeezing the algorithms that make groups useful, in order to keep the revenue flowing. However,  you  may as well use it while you can.

Almost exactly the same set of observations can be made about the group functions in other platforms. While the details differ, and none are anywhere near as sophisticated or provide the same sort of potential reach, they are all on the same path, monetising their access to your eyeballs in order to sell your details to advertisers.