Brand Paradigms Harming CMOs?

There is a very thought provoking article recently published on Brand Channel, titled "The End of the Master Brand" which challenges the core paradigms that brand marketers have used to organize thinking about brand portfolios for the past 20+ years. Going beyond a critique of brand architecture as we know it and a suggested alternative way to view portfolios, the article suggests that the forced structure of brand architectures alienates marketers and may inhibit marketers from gaining a seat at the C-Level strategic table. Do you agree? I think that may be going a bit far, but it certainly raises an interesting question about whether force-fitting paradigms is harming strategic marketers, and we know that average tenure of CMOs is remarkably short. Linking those two thoughts - perhaps there is more here than meets the eye.

How to Maximize Competitive Intelligence

There is a simple thing you can do as a marketer to generate greater return on investment from your market research and competitive intellegence efforts. Marketers spend countless hours optimizing research methodologies, survey questions and analytics (rightfully so, too.) Competitive intelligence can come from many sources, extending beyond formal research to include press tracking, and even simple hearsay from the sales force. So what's the single most powerful thing you can do to improve return? Create an organized central clearinghouse to capture the information. Great insight results from crossing data points from multiple sources. Market analysis indicates Competitor X may be boosting short term sales, HR hears that a key executive from Competitor X may interviewing in the market, and your Regional Sales Manager say the CFO of Competitor X golfing with the President of Competitor Y. Acquisition or merger? You'll need to learn more, but clearly there is a situation to be explored, and only by crossing these points of information are you able to gain the insight. So...create a central repository of competitive information (paper or digital) and review it often.

Good competitive intelligence reads: Society for Competitive Intelligence, Primary Intelligence

Tale of 2 Books - Marketing Metrics

I read two books this month, both focused on metric marketing issues. The first was "Return on Marketing Investment" by Guy Powell. The second book was "Measure What Matters" by Laura Patterson of Vision Edge Marketing. While both authors share a common goal of guiding CEOs and CMOs to measure marketing more effectively to achieve desired outcomes, the two authors approach the topic in decidedly different manners. Powell argues that marketing investment should be evaluated like any other business investment - calculate the expected return on various marketing investments and compare the returns against defined hurdle rates. Apply high hurdle rates for more risky investments such as advertising versus more known marketing tactics such as direct marketing. While Powell's approach is logical and the quantitative model mathematically correct, he fails to fully address an effective way to set hurdle rates or how to effectivey define expected returns on new marketing efforts, other than to say that the hurdle should be higher for higher risk or less known programs.

In comparison, Patterson breaks the role of marketing into three core performance areas that link to business objectives: acquisition, retention, and monetization. She then proceeds to offer specific marketing metrics for each area that can be measured to determine how marketing programs contribute to these fundamental objectives. I particularly like her reference to those metrics that measure business output versus those that measure marketing activity. See my earlier comments about process v. results marketing metrics.

Both share the goal of linking marketing to business results. Patterson's book is an easier read and will be more palatable to most marketers. Powell's book is more academic and by it's very nature feels more like your Finance 101 text, yet offers relevant thinking. Read both and see what you think. Both believe in my favorite line, "Facts Find Funding"(sm).

iPhone Marketing

It will be interesting to follow the marketing of the iPhone and competitive products over the coming months. I took at look at the iPhone more than once this past week, including the first evening that it went on sale. Lots of great features, although my wife calls it just another gadget. It's pricey, but it should be as a first entrant. Is is really a first entrant? I think so. The combination of multiple functions with the level of integration and the new functional features is enough to consider it new. Pricing should be at a premium to capture the demand. Scale is essential, but there has been enough (too much!) pre-launch hype to generate significant early adopter demand. Over time, will Apple bring price down to compete with other new entries? Perhaps, but I wouldn't expect that any time soon. The partnerships created between wireless providers and software developers to create competitors will also be an interesting strategic marketing scenario to watch as it unfolds.

Retail Banking Shows Us How To Brand in a Commoditized Industry

By the way, there are lots of similarities between the issues faced by the commercial printing industry and the issues faced by the retail banking industry. Retail banking is just further ahead on the curve. Banks went through a period of years in which retail banking became viewed as a commodity and “all banks are alike” so “just give me the best rates”. As much as banks tried toaster giveaways, nothing worked. As much as banks screamed “we provide great service”, nobody listened. Only in the past couple of years have banks learned that with an integrated rebranding effort they could attract new customers. In their world, they began to distribute banking access to smaller retail outlets closer to their retail customers (which is why there seems to be a bank going up on every corner!) and they began to use their retail space as selling space...that is, as a store (not just a waiting line with ropes and maybe a few chairs to wait in). Today, a contemporary bank is fully branded with visually integrated sales materials, site layout, building design and furnishings, logos, signage, advertising, and programmed digital communications in the bank - all geared towards selling and cross-selling. While retail banking is a far cry from industries such as commercial printing, it does demonstrate that the future is bright for traditional industries that can embrace technology , leverage branding concepts and adapt to changing customer needs not only in the services they sell and production processes, but also in how they communicate. Successful banks are moving away from the threat of commoditization. It can be done in other industries facing commoditization.

Segmentation and Niche Marketing

An excellent article in the most recent issue of Adveritsing Age http://adage.com/cmostrategy/article?article_id=117005 summarizes a study by Booz Allen Hamilton that contains an interesting and compelling insight about the evolution of market segmentation. Using the statement that niche marketing is about narrow not small, the important concept is that traditional marketing segmentation looks for commonalities within a diverse group of consumers, while the philosophy today is to look for differences within a common group. Think about that for a moment. Instead of seeking common features among a broad base of consumers to define a segment, today marketers look at a common group of consumers and look for differences (niches). These niches represent comfort zones of consumers. Marketing to these consumers in ways that appeal to these zones makes the brand a part of their lives and lifestyles. Rather than trying to make a broader brand appeal to number of sgements by communicating in different ways, make the brand appeal deeply to a specific niche within a common group. Thought-provoking.

Sustainability and Spiral of Expectations

The "Greening" of consumable products will be subject to the same spiral of expectations described on Marketing Witz.
Marketing Witz: Marketing Witz: Spiral of Expectations. As companies race to make Green claims, consumers will increasingly expect performance in the area of environmental performance and sustainability. What today appeals to companies as a claim of competitive advantage will be but a cost of entry claim tomorrow. As consumers are increasingly educated on the issues surrounding sustainability, companies that pose by making inflated claims will be caught in the glare of consumer headlights. Companies must think and act at least one to two iterations ahead (or more!) of the curve. If a company chooses to make compelling envrionmental product claims, they must also make claims at the company level (How can the brand be environmentally friendly and support sustainability if the corporate entity cannot?) Forward thinking businesses will be aware of the spiral of expectations as applied to environmental consumer issues.

Marketing Executives are Short-term. How can Markerting survive?

A recent issue (June 2007) of Business 2.0 has a short but notable article that states that the average tenure of a CMO among the Fortune 100 is 23 months. We've all seen the turnover among some of the most senior marketing executives in the country over the past few years, but 23 months average tenure seems to be particularly brief.

Why be concerned? It stikes me as being a very limited period for marketing initiatives to turnover and be tested. Sure, a new CMO needs to come aboard and have immediate impact. However, in many organizations marketing programs are locked in 6-9 months before the programs launch. So a new CMO has 3 months to craft a new approach in order for the programs to hit the market within a year. A year later and the CMO is gone. Is this really sufficient time to implement, learn, revise, and execute? It certainly doesn't allow time to cycle through the learning to make adjustments.

Marketers must adjust to this new reality. Perform now or die. It makes sense to demand performance, and marketers should certainly be held accountable for results. But we run the risk of driving marketing programs back to the short-term discounting behaviors that we all strive to avoid. After all, price-cutting to gain volume is as old as marketing. It may boost short-term numbers but it's a long-term death spiral. Marketers are human (really!) and behavior will tend toward the path of least resistance - and that means short-term promotional behavior.

How to Ask Naked Questions - Marketing Smarts

Naked Questions. It sounds a bit risque, but it's not. Marketers must always ask the 'naked questions' when formulating marketing strategy if they want to achieve solid marketing ROI. The term comes from Aesop fable in which the emperor wore no clothes. Remember the child who calls out "The emporor isn't wearing any clothes."? For marketers, defining sales and marketing strategies means asking the core questions about the business drivers without making assumptions that management already knows the answers. Often, the business has built a set of assumptions that define the way it operates. Those assumptions become so ingrained that senior management assumes the assumptions are fact based. Marketing ROI cannot be achieved if strategy is based on unproved assumptions. A "Naked Question" asks a fundamental question about the business that exposes management assumptions.

What are some of the "Naked Questions" that marketing strategy should ask? The basics might include: How does the company make money? How does the company generate positive cash flow? Who are the key stakeholders in the business and what defines their success?

My favorite is to ask what business the compnay is really in. Traditional banks and credit unions are in the financial services business, but today many will tell you they are in retail. Are the airlines in the transportation business or are they in a customer experience business? Dell may be in the computer hardware business, but they thrive on being a retail service business. Ad agencies are traditionally in the business of creating advertising and placing the advertising in the media (and earning repeated income from the ad based on promoting higher media spending). That model is largely a dinosaur. Ad agencies (who still call themselves that) are in the marketing strategy business and increasingly focus on adding value by helping clients define marketing strategies will deliver sales and marketing ROI. (Note that in the old model the ad agencies didn't focus on sales measurement so much as they focused on media spend levels to drive cash flow).

So....always look for and ask the Naked Questions. It's fun, and you might learn something about the business.

How to Think of Sports Leagues as Brands

Sports leagues as Brands have changed dramatically over the years. It's interesting to consider the major sports leagues as competing brands chasing the dollars spent by sports fans across the country, and internationally. The National Hockey League has struggled for years to grow out being a distant fourth to the NFL, NBA, and MLB. Truth be told, it's actually a distant 5th because NASCAR has been a high growth brand for many years and continues to gain loyal consumers (fans). The NFL is a share leader while the NBA has seemingly declined from being a shining star. The NBA has let its brand equity slide by allowing its product image to become tarnished. The NFL has been on the verge of the same thing. MLB has its struggles maintaining a strong brand equity as it faces the imminent prospect of Mr. Bonds hitting #755.

As you sit and enjoy your next game on TV, consider the strength of league as a brand.

Marketing Witz: Spiral of Expectations

Marketing Witz: Spiral of Expectations

Spiral of Expectations

I've spoken often on the topic of the "Spiral of Expectations" in marketing and customer service. My use of the phrase evolved from the "Rational Expectations" theory of economics. As it relates to marketing, it is intriguing to note that consumer expectations continually spiral up. We've all seen it. We all do it. Once a company offers better service, better prices, faster delivery, extra toppings, larger quantities, fresher ingredients, bigger guarantees (and on and on) we come to expect that level of performance from all companies. Not only from other companies in the same category, but from companies in other categories. If Hertz can check me out and process payment right at my car without a visit to the counter shouldn't the airlines be able to scan my ID as I board without my ever needing to stop at a counter or gate check-in? If the grocery store lets me use self checkout for my convenience (is it really for my convneience?) shouldn't I be allowed to self-scan at Lowes or Home Depot ( I can). I can't wait for the day when I can self-serve at the dry cleaner rather than wait for the clerk to search for shirts (which always seem to be at the other end of the automated hanger rack).

As marketers, we need to be aware of what is happening in the lives of our customers across all categories, not just our own. Consumers don't segment their lives into our product categories. We shouldn't set our service expectations by our category definition. It's a trap.