Monday, April 7, 2014
In our world of military aviation (a lifetime ago) we termed it "hangar flying.” This refers to talking about flying when out of the cockpit regardless of whether we aviators were together enjoying a brew at the O-Club bar, on the beach with our dates, where ever and when ever. Mike Meyers, of Saturday Night Live and later movie fame, spoke of it as “coffee talk.” For the purpose of this article we’re calling it “Marketing Musings.”
These musings are the product of “hangar flying” among two highly seasoned and successful marketers engaged in “coffee talk.” After all, Greg (currently a CEO) and I were talking marketing over a cup of Starbuck’s coffee. We exchanged experiences and reflected on learning, sharing our insights and stretching the boundaries of our perspectives over a wide range of marketing matters. Here are a few of our musings:
On Market Share
Market share growth came-up as proof of achievement. It seems, however, that some companies are abandoning the use of market share, or discounting its importance, in assessing performance. Market share is giving way to profits. The quest for the bottom line is dominating attention. Yet market share growth is, in many instances, a better indicator of competitiveness and, to a certain degree, underlying business health. Many companies and brands are growing profits by slashing marketing funding. This is not a way to remain, no less become more, competitive nor build a healthy brand.
If the brand has or is losing market share it would suggest that it has become or is becoming less competitive relative to its competitors. Greg interjected the notion of “relevance.” Specifically, he opined that market share is an indication of relevance. Loss of market share suggests a loss of relevancy to its target-customers. Relevancy can be a function of losing meaningful differentiation either through competitors’ advances that close the gap between their brands and yours or, as noted above, reduction in customer engagement.
Now market share, to be a meaningful indicator of competitiveness, health and relevancy needs an appropriate context and that context is the market segment as opposed to the entire category. For example, Starbuck’s share of the entire coffee category is probably relatively small but among retail coffee houses it would have the lion’s share in the U.S. Apple Corporation represents another worthy example. While it has a relatively small share of the personal computer market (about 10 – 12%) it holds more than a 90% market share among computers selling for more than $1,000.
Greg talked about his successful experience managing a portfolio of laundry care products in Eastern Europe following the fall of the Soviet Union. The concept of a brand “portfolio” is a most interesting one. We all know that it means that there is more than one brand competing in the same category. We all (profess to) know that these products should be targeted at different customer segments, satisfying distinctly different needs with distinctly different, yet relevant for that segment, benefits. Yet many organizations lack portfolio-positioning strategies. So they go after the same customers with the same benefits. Unfortunately, too, while they may start out serving different target-customer segments they tend to merge over time to compete against one and other for the same customers. Think GM and its sprawling divisions in the 1970’s and 1980’s.
When Greg became a Director of the laundry care portfolio he inherited a brand whose market share had fallen to 17% as a result of new major competitors entering the market. The brand contained bleach to help get white clothes whiter, a differentiated role in the company’s laundry care portfolio. However, while occupying a competitive position in the global laundry care portfolio, the benefit lost its luster amongst the onslaught of those major new competitors promising the same benefit.
So, what might one do to enhance the brand’s relevancy? Well, as Greg tells it, it was a time in many Eastern European countries, not unlike America in the 1950’s, where consumers strove for upward mobility and to demonstrate their successes. So he and his team capitalized on the consumer insight fueling this trend with the brand’s ability to deliver on it. They moved from what had become an undifferentiated, and not entirely meaningful, claim of “get whites whiter” to “make all colors brighter (product benefit) to keep them looking newer (customer benefit).” While his marketing team did a number of things right, this change in positioning and messaging grew the market share to >30%.
Global versus Local
One would have thought that Greg and his team would have been lauded for their astute marketing and obvious success in basically doubling the market share for the subject brand. However, while they were recognized in Eastern Europe for this significant achievement (after all, how many marketers can boast doubling the business for an established brand during the entry of major new competitors?), Global managers in the U.S. deplored them for not sticking with the “whiter” strategy. Ah, there’s the rub, Global versus Local.
It seems to us that Global is a good place to start, with strategies and messaging. But it does not make sense to follow blindly (particularly messaging) and not consider differences in the culture, customers, competitive landscape, company capabilities, market dynamics, regulatory environment and product performance that exist at the local level. Marketing’s responsibility is to better satisfy customer needs toward creating brand loyalty and building a sustainable business. Also, markets may very well have different Marketing and Communication Behavior Objectives. Developed markets may require “switching” in order to grow whereas emerging markets demand adoption. For example, it we want customers to adopt a new practice such as flossing, or treating adults with ADHD, then we must talk about the benefits of (or consequences of not) adopting the practice. On the other hand, if customers are engaged in the practice but we want them to switch to our brand then we must communicate our advantage. It is not relevant to push Global messaging directed at switching to a local market in need of adoption.
We believe in the thoughtful and intelligent use of marketing research. It serves as a conduit to the voice of the customer and, as such, can be truly invaluable in helping us marketers make the right choices. Keep in mind, however, that marketing research is not infallible. The business building, 17-year old “Priceless Campaign” failed in copy testing. However, research results do not excuse marketers from not digging deeper to determine the true meaning of the results.
If a substantial change is in the works we need to research the potential acceptance and outcome. If it is a product or packaging change then one needs to look beyond customer acceptance and check for potential customer alienation. We’ve not seen many examples where a brand change that creates alienation among the current customer base is able to make-up for defections by bringing in many more new customers. So when assessing “purchase intent” we look for statistically significant differences in Top-2 Box ratings (i.e., Definitely and Probably will Purchase, Prescribe or Use) at the 95% confidence level. At the same time, we scrutinize the bottom two boxes (i.e., Probably Will Not and Definitely Will Not Purchase, Prescribe or Use) for alienation, using a lower confidence level. A lower confidence level will better reveal slight changes that can have a significant impact on alienating current customers. If you detect any level of alienation then take heed. Perhaps, if this practice had been followed there would not have been the New Coke, Tropicana packaging or J.C. Penney debacles that shook the marketing world. We imagine there would have been far fewer debacles.
Certainly, we need to understand what any research is telling us. Prior to my involvement in the acquisition and national launch of the REACH Toothbrush from DuPont (from a very limited controlled store test of about 20-stores in each of two markets) a blind comparative one-week in-home use test was conducted. By “blind” I mean that the name of the toothbrush was sanded-off REACH and the market leader, Oral-B. Well, the Oral-B toothbrush was preferred 60/40, an overwhelming margin. Everyone perceived this as a loss and with it his confidence in the prospects for potential success of REACH waned. Everyone, including the company’s chairman (although I believe it was a rhetorical question from him), questioned me about the loss to Oral-B. But digging deeper in search of making sense of the results I realized that 40% of the tested subjects favored the REACH Toothbrush to the category, not Oral-B. Oral-B was a straight handle brush as was every other brush in the category. Only REACH Toothbrush, at the time, had a distinct angled handle. In short, an angled handle toothbrush had the opportunity to capture 40% of what was a straight handle toothbrush market.
We went on to acquire REACH Toothbrush and launch it nationally. It became the leading selling toothbrush in the category in its first Nielsen bi-monthly retail audit despite double-digit out-of-stocks due to unprecedented consumer demand. The REACH Toothbrush message of cleaning better to help fight cavities, along with its unique shape serving as compelling reason-why support, proved most relevant to consumers. It was relevancy that had not gone undetected by a large segment of consumers (namely 40%) participating in the blind product in-home use test marketing research program.
BOATS & HELICOPTERS:
1. Ignore market share at your own peril – Market share is an indicator of brand competitiveness, health and relevancy. Yes, it is critically important to deliver bottom line profits (if you want to keep your job!) but doing so at the cost of market share is at best milking or, at worse, strip mining the business.
2. Differentiate internal brand offerings – If you have more than one brand in your product portfolio competing in the same category, develop a brand portfolio-positioning matrix to ensure each addresses a distinctly different customer segment. In this way we increase relevancy and competitiveness, minimizing cannibalization and commoditizing your offerings.
3. Find relevancy in the marketplace – This is about serving customer needs. Not generic needs. Instead, at minimum, seek to satisfy important needs better than the competition. Better yet, identify and satisfy new needs as Greg and team accomplished with getting colors of clothes bright to keep them newer looking.
4. Discover a customer insight – A customer insight can serve to help you create relevancy. The insight needs to be both “legitimate” and “productive.” Legitimate in being sourced from one of three areas: a) perceived or real weakness of competition; b) attitudinal barrier to overcome in the customer’s mind regarding your brand; and c) untapped compelling belief. In order to be productive we must have the ability to deliver on the insight!
5. Go Global but think Local – We should not blindly follow Global. Global strategies are an important starting point, one we should not ignore, particularly regarding brand positioning. However, if we ignore the unique aspects cultures, customers, competitive scenario, marketplace dynamics, etc., at the local level we may very well limit the potential for success. The goal is not efficiency derived from spending less but effectiveness in as measured by getting the biggest bang for every unit of currency employed in support of marketing. Global managers, at the least, consider differences in developed and emerging markets, and resultant behavior objectives, when developing messaging. Do not try to develop messaging that cuts across both because it will likely prove unsuccessful.
6. Utilize marketing research to help inform decisions – What we think we know is a hypothesis. Check it out with target-customers. Importantly, make sure you understand what the research really and truly means. For significant decisions follow marketing research with in-market testing. In market testing is the final arbiter of what is correct action.
7. Value and respect your customers – Think twice, no as many times as it takes to discourage you, about doing something that will alienate your current customer base in hopes of attracting many more new users. It is unlikely to work out the way you hope!
8. Engage in hangar flying and coffee talk to generate your marketing musings – This is a way to learn and grow.
Thanks Greg for sharing your insights and experiences with me. I look forward to sharing a cup of coffee with you in the near future. As promised I’ll be sending a complementary copy of COMPETITION POSITIONING your way.
Richard Czerniawski and Mike Maloney
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