Advertising

90% of new products are not going to make it to the third year in the marketplace...

...and yet we still rely on consumer research techniques that were designed by statisticians in the 1950s. I'm not a psychiatrist, but it seems to be that there is something vaguely neurotic about an industry that continues to do the same thing, at great expense, knowing full well the outcome will have a 90% probability of being wrong. Innovation needs a fundamentally new and different approach.

Why does the traditional statistics based research not work?

I think the problem has more to do with the real lives of people in a world that is much less predictable than it once was. In the case of a high frequency CPG, let’s say toothpaste, it is almost impossible for someone to accurately predict how they will react when they are in the store buying toothpaste, unless they are rigidly brand-apathetic (that is, they always use the same brand no matter what, which is generally because it is easier to stay with what they are doing than try to figure out all the other alternatives).

For instance, a respondent might say in anticipation of buying toothpaste (in a research or interview or any other setting – even in-store) that he definitely will or is somewhat or very likely to buy a new product, even if it costs ten cents more. However, when I am actually in the process of buying the product, my actual decision will be based on a number of unanticipatable variables: how much money do I have in my pocket, how full is my basket and how much have I already spent, am I feeling frugal today, is the toothpaste only for me or is it for the family, what other brands are on sale, and so on.

Clearly people’s projection of buying behavior, which we call buying intent, is necessarily unreliable. In a simpler world, when brands behaved in an orderly fashion and consumers lived in a rigidly budgeted, regulated world, this may have been different.

What is the alternative?

Simply put, people’s predictions of amalgamated behavior is likely to be much more accurate than their prediction of their own behavior. This is at the heart of the economic principle captured in James Surowieki’s book, The Wisdom of Crowds.

ProteanPrediction Collective Wisdom Engine is a proprietary process that integrates this theory into a very practical market-ready system. As a component of any innovation development strategy it can be used to guide development teams in incremental steps, rather than quantum (and very expensive, but very risky) leaps.

The Collective Wisdom Engine is particularly powerful when used as a mechanism to involve the entire organization in the process. I am not sure there is any proof positive, but it makes sense that the collective wisdom of the people who work with the product and brand on a daily basis is likely to be more interesting than the collective wisdom of a random or specific external crowd (although, not necessarily more accurate). It can also be accomplished at a fraction of the costs of traditional, research based methodologies.

The New Luxury Consumer

A new sense of discretion in customers who once bought extravagance with pride

When the recession ends, there will be some fundamental changes. The luxury consumer is off the treadmill now. They're thinking about 'what do I need, what do I really want?' For high-end shoppers, the hottest must-have accessory for 2009 is not the 10 carat diamond bracelet or a python leather purse -- it's the plain paper bag. Top luxury marketers note a new sense of discretion. Instead of that coveted shopping bag with an iconic brand name, some are asking for something a little less ostentatious. As the global recession drags on, luxury brands and retailers are contemplating deep price adjustments and are focused on impeccable service to prove their worth. The larger question being asked by luxury marketers is whether a shift away from extravagance might be more permanent with significant consequences on consumption.

That seems to be the consensus of a recent Wharton panel discussion titled, "Can Luxury Survive the Economy". In the past, wealthy consumers would buy a product just to get the bag with an up-market label. But profligacy isn't what it used to be. These days, even the wealthy are feeling pangs of recession. Since the economy has soured, consumers of luxury items have scaled back on their spending and those still shopping are being more discreet. According to some luxury marketers, wealthy customers are asking for plain bags, no boxes, or requesting goods be delivered later. They don't want everyone to know nor do they want to flaunt their brands. Another study argues 62% of wealthy consumers say openly flaunting wealth is out.

Impact of the global downturn

The global downturn has claimed a high-profile brand in the fashion world. Christian Lacroix, a leading French fashion design house, has filed for protection from creditors citing a drastic drop in demand for luxury goods as the reason, according to the Financial Times.

Sales of luxury goods worldwide could fall by as much as 10% this year, according to some surveys. In the U.S., with a third of all luxury goods sold worldwide, the market is expected to drop by 15%. A recent report states 62% of wealthy consumers say the economy has changed their views on luxury purchases. Some are watching their budget more closely. Others say that flaunting luxury right in uncertain times is insensitive. These consumers would rather help others than spend on themselves.

Luxury at half price

Price-cutting is the new normal for luxury retailers. Some have slashed as much as 70% off designer fashions that usually don't get marked down until the end of the season. Discounting at luxury department stores made it tough for designers. Given that the price of craftsmanship doesn’t change, a drop in prices can have a significant impact on profitability. For example, Bottega Veneta, the Italian leather house, a subsidiary of the Gucci Group, is famous for their woven leather accessories like handbags, shoes and wallets. The brand saw its sales drop 8.8% in the last quarter of 2008.

Fashion designers are not the only luxury marketers who believe discounting is dangerous. Even restaurants are feeling the heat. The trend is resist a drop in prices, a sign of weakness, and target customers who are willing to spend to keep the integrity of the product they are being offered. Cutting prices could cause long-term problems for a luxury brand. Automotive News reported in April that sales of Maserati, a division of Turin, Italy-based Fiat, slid about 30% in the first quarter of 2009. Most marketers agree that if you drop prices, it's a big challenge to raise prices again. It isn’t easy to drop prices and add value. A strategy being adopted is to focus on the customer experience and value. For example, a Maserati is hand-built. That's where the value still is in the luxury business - not downgrading your product, focus on being inspirational.

Downsizing expectations

Some businesses that cater to the luxury market are modifying their products to make them more affordable. For example, restaurant customers are opting for inexpensive wines over cocktails. In response, restaurants may add new items to the menu. Another example of adding to a product line is the 'baby' version of the Rolls-Royce Phantom. According to the panel, Rolls-Royce sales dropped about 5% to 174 cars in the first quarter of 2009. The new smaller 200EX Sedan, set to hit the streets in 2010, will come equipped with many of the classic touches of its larger counterpart, but instead of a $400,000 price tag, it will sell for under $300,000. The new version is designed to appeal to existing customers as well as bring in new ones according to Rolls-Royce Motor Cars. They say a lot of owners see the smaller car as their everyday car. Offering a smaller version of a standard product, opening up a brand to a different segment.

Aside from trying to bring in new customers, luxury brands are also working harder to please their existing customers with flawless service. The focus is on being perfect, especially when responding to a request, retailers listen more intently. Superior services sets apart luxury brands. Customers will come back for the relationship with their sales associate. Luxury brands are also focusing on their existing customers.

The super-rich are also focused on frugality. Luxury brands are looking for new ways to stay viable. Some luxury retailers on the panel say they have had to cut prices, while others are wooing customers with new, more affordable products. Most argue that any type of discounting and price reduction would permanently hurt their brands. There is a significant shift in focus from glamour to hyping value and superior service.

A permanent shift away from extravagance?

The luxury industry is concerned that there has been a permanent shift away from extravagance. The recovery may happen differently for different types of luxury brands. It may be faster for Restaurants, because they offer a social event. But the recovery might be slower for retailers of luxury apparel and accessories. Consumers are starting to buy a lot less and are more discriminating. And deep discounts at mainstream stores may have permanently changed the perception of high-end retail. Consumers are questioning how much things should really cost more often. They are redefining the balance between the intrinsic value and emotional value of brands and experiences. Is a $5,000 suit really worth $5,000? The trend in discounting has led the customer to ask if these brands were really worth that much in the first place.

Additional Reading
Dreaming of Luxury Sales Amid Recession
Luxury retailers seek to rekindle the desire to shop
When not cutting prices becomes a luxury
The Forever Sale: Retailers Slow Pace of Markdowns
Getting to the Points

Nothing to Hide

I saw this tv spot for Air New Zealand last night on Youtube and thought it was hilarious. The airline has a humorous delivery on the idea they don't have any hidden fees when it comes to additional charges for services such as food and drink, booking seats online and baggage allowances.

Created by .99 New Zealand. Music is “Under My Skin” by Auckland singer Gin Wigmore.

A cheeky approach that gets the point across.

Enough! Please stop! No more! I can't stand it!

There are times when there is no possibility of being constructive when writing about the absurdities inflicted on an innocent world by others in our field. There are even times when, as honest proponents of our business, we have no choice but to call it like it is. And this, Ladies and Gentlemen, is one of those times. (By the way, stop me if you've heard this one!)

I am referring to the Province of Alberta rebranding project -- the one (I am not sure whether it is for tourism or just for the sake of doing it) which has as its tag line: "Alberta. Freedom to Create. Spirit to Achieve". Normally, as those who know me would expect, I would let a slogan as completely mysterious and meaningless and nonsensical as this pass with barely a snide comment. But this isn't normally.

Seems the marketers in Alberta (or whoever is responsible for this) took the "Freedom to Create" part literally, and "created" a beach and coastline for the province in order to make a point in an ad. Yes, I kid you not. They used a scene from a beach in Northumberland as the image in an advertisement. More than just the beach, they also used the image of two English girls romping on the beach.

Not surprisingly, they were caught out in the blogosphere, and this is where the fun really starts. It turns out that the image, over which the Alberta logo and the tag line appear written large, is not meant to depict Alberta -- it is meant to be a visual depiction of Albertans' concern for the future of the world (this according to Olga Guthrie of Alberta's public affairs bureau). It is likely that the intent of the campaign may be to counter the idea that Alberta's oil sands extraction process is an economic depiction of Albertans' lack of concern for the future of the world. If that is the case, then wouldn't the fact that they could not find a pristine example of concern-for-the-world in their own backyard, rather prove the critics right?

Apparently not. The Prime Minister's head of media relations (sorry, but what the hell is the Prime Minister involved in this for?), helpfully points out that, "There's no attempt to mislead here. The picture used just fitted the mood and tone of what we (we? we?) were trying to do." Obviously, whatever Alberta is trying to do, is something they can't do, if they can't find a picture to fit the mood and tone of whatever it is, in Alberta. Whatever happened to authenticity?

The little English girls, too, were not meant to deceive -- they are meant to be British girls because (implicitly) only English girls are suitable "symbols of the future." (Olga again).

If you don't believe me, here is a link to a PDF of the article in The Guardian Weekly.

Need I say more? Have we achieved absolutely nothing in the marketing world? Has everything we've been trying to do and say really been so tediously boring that it is totally ignored? I am desolate, disappointed and going to Mexico!

A Changed Vowel that is oh so Fowl….

Have you ever had one of those moments? You know, one of those brilliant moments where you come up with a campaign for a brand that is genius? You realize that perhaps your campaign idea may be fruitless because you don’t even work with the brand but because you love what you do, you can’t help yourself. Well this time I think I have done it, I really have. And this one should fly…

iTrade Canada, (formally E*Trade Canada) launched their rebranding campaign in early March with creative print executions, a new spot and host of other initiatives. All fine and dandy, but here is my big campaign idea: I propose that they re-launch the current campaign but instead of featuring a red Scotia power ball as seen here , the new executions should feature a common but highly underutilized animal, the chicken.

Beavers have been done (RIP Frank and Gordon) and thanks to TAXI’s long legged ingenuity, Telus has used just about every animal one can think of without it getting tired, BUT to my knowledge they haven’t used chickens yet. Come on Capital C, grab those chickens before TAXI does….

So where did this fowl campaign idea come from?

In July of 2008 Scotia Bank purchased E*Trade Canada for the tidy sum of $442 million U.S. dollars, immediately making them a legitimate player within the Canadian discount brokerage business, after years of trying. No offense to the anemic Scotia Direct or Trade Freedom brand, which are also owned by Scotia, intended here but E*Trade was the crown jewel.
The key for Scotia in this transaction was not the $4.7 billion in assets under management that came with E*Trade, but rather the undisclosed number of customer accounts that made up the $4.7 billion in AUM. Within the online brokerage business, the highest value customers are your heavy traders. Those select individuals who trade upwards of 50+ times a month are worth big bucks, and they are the hardest ones to get. Although it is not known just how many high volume trading accounts Scotia picked up from E*Trade, one can certainly guess that it was enough to justify the price tag. On an important side note, $442 million dollars presumably* also bought Scotia the rights to the once ubiquitous E*Trade Canada Brand.

Now this was a good brand, possibly even a great brand, especially when compared to the rest of stodgy category. It had a fun, cheeky personality; it was the anti bank (oh the irony of a bank purchasing the anti-bank and then axing it…). E*Trade Canada was the place with attitude that knew and understood the mindset of the self directed active trader. The recent US baby campaign is a fantastic demonstration of the brand’s DNA. E*Trade is also famous for starting the great Canadian price war. Thanks to them, lucky day traders are paying south of $10 bucks per trade today at their respective brokerages. But no matter, even though the singing baby is absolutely hilarious and the price has always been right at E*Trade, it is child’s play when compared to the chicken rebranding I propose…

When the news broke of Scotia acquiring E*Trade Canada, amongst the people for whom it really mattered, active traders and clients of E*Trade, the response seemed quite clear. Keep the brand intact, keep the trading platforms intact. Keep the E*Trade we love. Evidence of this sentiment is easily found on various sites – the comments and feedback from this CBC story are quite telling. Although it is only a small cross section of opinion, it would've certainly raised a red flag for me were I Scotia.

At every step of the rebrand from E to I, the signs must have been very clear to those involved...Some logical points that would have been raised are listed below:

"Maybe rebranding E*Trade Canada, a brand with more than 11 years of Canadian presence, a rich pedigree and brand recall scores that are through the roof, may not be the best idea."

"Perhaps the rationale of amalgamating our existing splintered trading platforms with E*Trade and eventually introducing a new trading platform, primarily to E*trade clients, because they now make up the bulk of our accounts, doesn’t make sense."

"None of these clients asked for a new brand or a new trading platform, they were happy with E*Trade."

Somehow the rationale listed above was addressed adequately - it must have been in order to proceed with the rebranding. No matter I say, chickens will fix it all!

And I say chickens because key people were too afraid to take a stand behind the E*Trade Canada brand. Perhaps they were afraid of the decision maker at the very top, the one who put the gauntlet down and said, “We are changing the vowel to “I” and that is final!”

Or maybe they were afraid because after doing all of the rebranding work, it finally dawned on them. A simple vowel change does not transfer the equity from one brand to another. “How can our red power ball compete with singing exchange trading babies?” They must have asked. Of course by the time they asked the latter question, too many red balls were in motion. Eating crow and reverting back to E*Trade was not an option.

Of course the competition is happy, probably even ecstatic. If the boys at Disnat and TD Waterhouse were consulted, they would’ve agreed with Scotia’s decision to scrap E*Trade Canada. “Why eat crow?” they would’ve said, “Chicken tastes much better and none of us have to worry about the anti-bank anymore. Trust us Scotia; you are doing a good thing by not listening to your new clients…”

* Scotia continued to operate under the E*Trade brand for several months, signing up new accounts until iTrade launched in March of this year.

Marketing With A Sense of Humour

According to the Financial Post, in advertising products associated with potentially embarrassing bodily functions, marketers’ most typical offering either bores or euphemizes. But humour, even irony, can be a grabber.

Examples of such ads include those promoting Tena brand incontinence products – a cross-promotional campaign with Volvo Cars of Canada using the tongue-in-cheek tagline “Protecting You”. Urinary shields and cars make an odd match for protecting consumers’ safety, but it works. Last month, Tena announced the “Laugh Away with Tena” contest in partnership with the Just for Laughs comedy festival, encouraging consumers to enjoy life and freely let loose without having to change their underwear – apparently there’s a direct link between laughing and light incontinence.

According to research, incontinence strikes a surprising number of people who are not in the nursing-home age bracket. One out of four women over the age of 35 experiences bladder weakness, as do one in 10 men over the age of 45, and the prevalence increases with age. It is, therefore, not surprising that the brand touting incontinence products is talking to boomers in a humourous and relevant way instead of communicating with them like an older segment. Pushing boundaries and venturing into the unexpected help the brand resonate emotionally with boomers.

Top Ad Exec – The Winners!

The third year of Canada’s Next Top Ad Exec Competition recently wrapped up - with 2 lucky students, Matt Daigle and Elizabeth-Ann McLeave from the University of New Brunswick taking the top prize - shiny new Volkswagen Golfs [each].

The competition, hosted by McMaster University’s De Groote School of Business, clearly has taken on a life of its own, as evidenced by the following statistics:
• Competition registrations grew from 147 in 2007 to 560 in 2009
• The actual qualified submissions in turn grew from 45 in 2007 to 143 in 2009 – representing schools across the country
• Approximately 30 judges participated in the various judging stages

The challenge for students in this year’s competition was to develop an experiential campaign for the Volkswagen Routon. The theme was “Face the Fear”, and the top 10 finalists who pitched their campaign to a panel of industry and academic judges did just that. The presentations and closing ceremonies took place March 31 at the Meridien King Edward, with the winners being revealed following dinner and a reception.

Memorable comments during the evening presentations included Dean Bates of the DeGroote School of Business who reminded students to “THINK BIG” and Garry Lee, President of Cundari who asserted that “great brands give back”.

Bruce Rosen, Director of Marketing at Volkswagen described the Volkswagen brand as being “approachable with iconic models and passionate about the youthful consumer”, which explains why 4000 Golfs are produced weekly, and 26 million have been sold to date.

The keynote message from Laurence Bernstein, Partner, BC3 Strategies was about “getting our heads around change”, with respect to not only current economic conditions but traditional brand building that has, until recently, stood the test of time. Signalling new media as a game changer, he challenged students to “prepare the path for those who will come after you – and equally important, you need to rescue us from our collective ignorance, to tell us what it means, to show us how it works, to forcibly pull our collective heads out of the sand and help us build the brands and businesses that will populate the world in the future – the day after tomorrow.”

Pretty scary stuff -- although the student audience didn't blink an eye.

Twitter IDs are the New Domain Names

It's 2009, so I would hope by now that any marketer reading this article online understands the importance of securing your company's brands as domain names. In other words, Acme Furniture should own and control the domain name acmefurniture.com (and, if it's a Canadian company, acmefurniture.ca as well) even if you don't yet have a Web site.

My question for you today is, "Have you done the same for Twitter?"

Twitter is a micro-blogging platform that is growing in popularity at an astonishing rate. The purpose of this article is not to explain or promote the benefits of Twitter; that topic has been covered by others: you can read all of the various articles about Twitter on the CMA blog here.

What I want you to understand today is that Twitter IDs (or "user names" or "handles") are the equivalent of domain names.

For instance, the Twitter ID for my personal brand, Bill Sweetman, is @billsweetman (which corresponds with the URL http://www.twitter.com/billsweetman) and for my corporate brand, YummyNames, it is @yummynames.

Even if you don't understand Twitter or don't think it has a role to play in your company's marketing efforts today, I strongly urge you to still secure your Twitter ID now.

In my case, I do all my Tweeting (as its called) as @billsweetman but I made sure that I registered all my other professional brands as Twitter IDs so that when and if I want to use Twitter for those other brands I already have the most intuitive Twitter ID.

I predict that over the next few years, millions of dollars will be spent by companies buying, selling, and fighting over Twitter IDs. I have already seen a number of nasty legal spats develop, and I have personally brokered the sale of several Twitter IDs already. And this is only the very beginning...

If you are Acme Furniture, you should make sure you get your hands on @acmefurniture right away. Since there is no fee to register a Twitter ID, you have no excuse not to do this. Simply head on over to http://www.twitter.com and sign up for a free account.

Don't be the person who in a year or two is having to explain to their company President why you didn't secure the company name as a Twitter ID. Take two minutes and do it today.

One final tip: Twitter will eventually suspend an account if it has not been used for six months, so make sure you post something once a month just to keep your account active and not risk losing your valuable Twitter ID.

Designing Better Ads – Stop Readers In Their Tracks

I recently attended a webinar on Designing Better Ads conducted by Susan Down, Director Marketing at the Canadian Newspaper Association. Susan inferred from extensive market research and readers’ surveys by epic advertising research organizations. She advised on what generally works and makes print ads stand out from the clutter. Many of us would be aware of the points she highlighted and may be putting some of these in practice. It was, however, useful to get an affirmation and systematic refresher. I share the information with you, as I gathered, adding my two cents’ worth on few points.

Ad Size & Color

1. Ad size matters. Full page ads are noticed 48% more than smaller ads
2. There is no difference in the visibility of ads between right hand side and left hand side page positions. If the ad is attractive, it will get noticed on any page.
3. Color ads are noticed 33% more than black & white ads. The impact of color ads has grown over the time. Susan showed a bar chart to highlight this fact. She also informed that women notice color ads more than men.

Creative

4. Simple creative with one idea (message) per ad works better than putting several ideas in one ad. Similarly, shorter headlines catch readers’ attention.
5. Make ad topical. News is fresh so keep the ad current too. Leverage current events and developments. I see this strategy is being used often these days by alluding to the economic downturn in ads.
6. Match your message with the editorial section of the newspaper. This, I believe, reinforces the message of the ad and also increases the probability of it being noticed by the reader. A person who is reading an article will possibly notice the relevant ad in the same section.
7. Link the message with the brand. There should be a clear connection between ad message and the brand. The tone and feel of the ad should reflect the DNA of the brand. For example, if a brand promises good health or fun, the ad should reflect this through use of aspirational copy, candid graphics and bright colors.

Visual

8. According to the research shared in the webinar, visual makes an impact on readers because mind retains visuals 30% more than text. Bigger visual works better and one visual per ad is recommended.
9. Visuals of children, celebrities and animals work better. Though there should be a clear connection between visuals, copy and the advertised brand.

Ad Appeal

10. Build curiosity in your ads because newspaper readers are information seekers. However, as copy increases the notice-ability decreases. Thus a balance is needed in using the right number of words to present a story. People generally crave for food, health and sex. These elements could be used to enhance ad appeal. Add color to increase ad appeal. Moreover, the research showed that ads with contrast colors grab attention.

Don't worry. Be optimistic.

A couple weeks ago, the cover story of the Sunday New York Times was about an executive who went from a $70,000 a year middle management job to a $12 an hour janitorial job for a friend's company.

Over the last year (and just this week), I've heard so many stories about friends and acquaintances, business associates and former colleagues and staff getting laid off. They range from intermediate to senior level. And certainly, it's happening more than any time in my lifetime. So, it got me wondering. Do people really know what to do when they get let go? Do they know how to pull themselves up by their bootstraps and carry on?

I've had to lay many people off in my career as a Creative Director and unfortunately, all too often, it wasn't for performance related issues. A client consolidated their business somewhere else or "New York" insisted we "hit a number" that probably wasn't realistic in the first place.

However, today good people are being let go everywhere because of the economy and it must feel like there's no end in sight. And yet, there is hope.

Here's some of what I've learned (from people wiser than me and from my own excellent adventure) over the last year since I left the agency world and started my own creative consultancy.

1. Clients want to work with people who project a positive attitude – even on the days you're not feeling particularly positive. This might seem basic, but it's easy to forget -- especially when the news is all bad. Someone gave me this advice before I had even one client, but it's proven to be the best advice I've gotten.

2. Decide early on what you're going to focus on, then focus on that one thing. I knew I wanted to start my own business. So that's what I focused on. If I had divided my attention between that goal, talking to recruiters for another agency job or changing careers completely, I wouldn't have accomplished anything.

3. Network in the way you feel most comfortable. Not everybody likes to cold call or go to industry events and shake a lot of hands. Email, Facebook and Linkedin are great ways to break the ice. It gives your contact an opportunity to be thoughtful about their response and lets you craft your words more carefully than you might over the phone -- or worse, in a voice mail that inevitably ends up being way too long-winded.

4. Journal your experiences, thoughts and feelings. Whatever you're thinking makes more sense when you get it down on paper. It also helps you shake yourself out of a funk when you see that you've been throwing yourself your own pity party for way too long.

5. Exercise. It's a great way to deal with stress and whatever anxiety you're dealing with. If you're like most people I've spoken to over the last year, you wake up in the morning thinking you'll never work again. By noon you're worried about how you're going to handle all the work on your plate. Exercise gives you the fortitude to deal with both kinds of stress.

If you're reading this and you've recently been "economized", take solace in the fact that you're not alone. In fact, there are far too many people going through exactly what you're going through right now and they're not hard to find. So find them and commiserate.

Then decide what you're going to do next and get on with it. You might just discover, as I did, that your decision was the best one you ever made.

Does it pay to be good? The challenges with Corporate Social Responsibility strategies

Today, CMOs are asking how they can differentiate their brands with a socially responsible differentiation strategy. Companies are investing heavily in socially responsible practices without first testing key assumptions about whether consumers will actually reward good corporate behaviour.

Marketers say customers tend to claim they pay more for ethically produced products. Is that what happens when they actually buy things? Are consumers likely to demand a discount for unethically produced products and pay a premium for ethically produced products? If so, by how much? Most existing research assumes a positive, direct link from corporate social responsibility to corporate performance.

Today companies face some crucial questions regarding their procurement strategies. Ethical sourcing such as fair price, organic produce, and socially responsible practices are likely to increase costs. But if a company pursues a fair trade and socially responsible differentiation strategy, what sort of consumer will it appeal to? It is important to understand the role the consumer plays in ultimate company profitability through revenue generated by the prices that consumers are willing to pay for the company’s products.

The problem with existing CSR research and strategies

Most marketing research has focused on the relationships between corporate associations or expectations and consumer response. But the attention has been on the relationship between favourable corporate actions and consumer behaviour. Research addresses the question of how consumers react to positive CSR activities. And yet one of the most generally accepted and far reaching phenomena in psychology is the asymmetry in the way people react to positive and negative information about the subject. Consumers treat positive and negative information differently. Individuals react more strongly to negative information than to positive information.

New research on CSR

Typically, research has addressed these questions with surveys of consumer attitudes. Not surprisingly, those do not always reflect actual behaviour because linking actual consumer spending behaviour in the market to specific company decisions is very difficult.

New research from the Richard Ivey School of Business shows that the negative effects of unethical behaviour have a substantially greater impact on consumer willingness to pay than the positive effects of ethical behaviour. The surprising insight is consumers can demand a substantial discount from companies that product goods in an unethical manner. Consumer responses also suggest that a small degree of ethical production “pays off” as much as a heavy investment in ethical production.

This is the first study to find that consumers use price to punish unethical companies more than they use price to reward ethical companies, and that the ethicalness of a company’s behaviour is, indeed, important consideration for consumers. The conclusion is clear: Doing good will lead to doing well, and to ultimate profitability.

Difficult questions

Will consumers pay an adequate premium to recoup the increase in production costs? If less than 100% of a company’s products are from fair trade or sourced locally, can the company still maintain its socially responsible positioning? CSR may have supplanted maximizing shareholder value at any cost but as companies consider and strive to limit the negative impact of their operations on society, some questions remain unanswered: Will consumers punish unethical acts? How ethical does a company really need to be seen as ethical by consumers? Is it “greenwashing” if less than 50% of a company’s products are ethically produced? Should a company focus on the process of ethical procurement or reduce waste in the production process if it cannot afford to do both?

Our firm's sustainability study confirms that while just 17% of consumers are willing to pay a premium for ethically produced products (they have higher ethical expectations of companies), 65% of consumers expect a significant discount from companies that market unethically produced products. Therefore, while fewer consumers may be willing to pay a premium for ethically produced products, a significantly higher percentage of consumers are likely to pay less for unethically produced products.

The Science of Persuasion

I had the pleasure of attending the 2009 Best New Product Awards conference yesterday (managed by Brandspark). The awards were handed out last night; more on this next time.

The conference theme was 'persuasion in CPG marketing.' The conference was really a crash course (or refresher course) on how to win-over consumers, by following six simple principles - the truth is, many of these principles can just as effectively be applied to win-over your boss, colleagues, friends & neighbours. Before getting to the 6 principles....

There were a number of ah-ha moments, a few to share here. First, we learned from Drew Boyd, Director of Marketing Mastery, Johnson & Johnson (the conference leader/instructor), that contrary to the popular mantra that a brand is a promise...."a brand is really an expectation of someone or something delivering a certain feeling by way of an experience." Another is that "more than anything else, people are willing to follow your recommendations if they see that you like them" (at first, this appears a little counter-intuitive - yet useful to understand). Tom Asacker, author of "a little less conversation" and "A Clear Eye for Branding" - brought today's market into perspective: "Individuals quest for control and happiness - a balancing act within self and through others" - a far cry from what marketing and advertising had to contend with just a decade or two ago.

The course Drew led about the Six Principles is based on the research of Robert Cialdini, PhD. Throughout the day, Drew incorporated plenty of studies to back-up the principles - compelling evidence even for cynics.

Six Principles of Persuasion (cliff notes version)

1.Reciprocity: People give back to people who give to them (giving a gift sets the context for a future relationship - the key to making gifting work is giving the gift first)

2.Liking: People tend to say yes to those they know and like (focus on aspects you genuinely like in others, look for similarities, ways to cooperate, give praise)

3.Consensus: Look to what others are doing as evidence (people tend to base their decisions on what is appropriate for them to do by examining what others are doing - provide compelling evidence/proof or testimonials from individuals who are most similar to the prospect you are trying to influence)

4.Authority: Defer to the advice of experts (provide visual cues that trigger an authoritative position - also useful is admitting to a weakness, which then gives confidence about your honesty). Barak Obama does this very successfully as he often and repeatedly has said "I will make some mistakes," but I will learn from them and move on, or something to this effect.

5.Consistency: There is a personal pressure to stay consistent (people like to behave consistently to what they have said or done, so get them to make a commitment; best if the commitment is said in public, that it is voluntary, ie, a personal investment in it, and actively sought out - ask for the commitment)

6.Scarcity: An opportunity is more valuable when it is less available (this not only applies to things, but information too; present the offer as rare or dwindling, by what one stands to lose if they don't take-up the opportunity, provide exclusive information)

TV Commercials 2.0

For some time now parts of the marketing world have been wondering if the growing problem advertisers are having getting their commercials seen by their intended targets is not a problem of their own making.

One only needs to look at the Clio awards to see some great commercials being produced that stop traffic (and drive sales?), but these are the showcase creative executions that do not reflect the main stream advertising that is broadcast day in and day out. And that’s part of the problem, its push based advertising and some of it is not as good as it could/should be. This started me to wonder if we might see greater success (on many levels) if we adopted a google customer voting approach to TV commercials.

So here’s the idea:
What if we allowed consumers to come to the program/station website to preview and select which commercials they would like to see? They’ld have an opportunity to pick from a pool of let's say 10 commercials from which they select their final 5. The “Top 5” commercials with the most votes get aired, the rest…

Now the financial model for the networks would be based on 3 streams.
1. A fee from advertisers who wish to be submitted into the pool, plus a second fee for each commercial viewed and voted on.
2. A subsequent fee for the airing of the winning commercials.
3. Free analytics for the winners while losers would have to pay.

The station/program have an opportunity to wrap a contest around the voting event, spike program interest with teasers and get important viewer data in advance of the airing. Those ads that don’t make the cut, can try again – but if it fails to solicit a customer following then the advertiser has learned something about their commercial execution. Consumers could be encouraged to watch the aired commercials by participating in some on-screen promo/QR code event.

If you think this is a little far fetched – have a read of a similar approach being taken by Pepsi for the Super Bowl as they seek to get consumer input on which spots consumers will get to see. Pepsi Tries Super Bowl Spot Selection 2.0

So what do you think?
If consumers could pick which commercial they would see, would that:
1) Raise the level of commercial entertainment/communication value of the ads
2) Provide additional value to advertisers and revenue for broadcasters
3) Increase the % of viewers that watch and retain the messages being broadcast to them
4) Give consumers a sense of 'programming control' that would help broadcasters 'engage' their audience

Or do you feel it's too little, too late.

The Kindle. Yawn?

I’m still catching up on my year-end reading. You know, all those magazines that come out with their Year In Review issues. They’re stacked on my nightstand like so many left over holiday cards, begging to be read or recycled.

The best of the bunch is the Newsweek with Obama on the cover. It had a brief mention of something that caught my eye -- Jeff Bezos’ brainchild, The Kindle. It’s described on Wikipedia as “… an e-book reader, an embedded system for reading electronic books (e-books), launched in the United States by prominent online bookseller Amazon.com in November 2007.”

Most reviews are glowing. You can carry a whole library around in your briefcase. Amazing. Apparently, it’s even been endorsed by the big “O” (Oprah, not Obama), making it to her Favourtie Things List of ’08.

You can’t get it in Canada yet. But when I asked several of my U.S. friends how the Kindle has captured the imagination of our neighbours to the south, the response was something close to a tree falling in a forest.

So here are the tough questions: With a nod to Malcolm Gladwell, why hasn’t it tipped? Why isn’t it, according to my U.S. friends, dotting subway cars and park benches and restaurants like ubiquitous iPhones, iPods, and dare I say it, real books? Where are the cool commercials with U2 or Feist singing its praises? Why aren’t there spoofs about it on YouTube? Why aren’t the “Millennials” snapping them up? And will Canadians be a better market for the Kindle when it does arrive on our shores?

Perhaps the secret is revealed in Newsweek’s backhanded compliment… “Amazon’s electronic reader is awesome, but the early adopters skew old, while kids opt for point-and-click.”

That excerpt is interesting for two reasons. Early adopters? The Kindle has been available since 2007. Would the iPhone be considered a success if it took this long to capture the imagination of its intended audience? I'm not talking about just dollars and cents here. There was the day before the iPhone launched in Canada. And there was the day after, when it seemed everyone on the TTC had one or was looking over the shoulder of the person next to them who had one. Can an e-book reader capture the imagination in the same way as an “e-music player”? There's a very specific difference today between capturing the collective imagination and selling units. Arguably, the former is much harder to do and predict than the latter.

And ‘skews old’? I guess Oprah viewers don’t influence the zeitgeist anymore the way some think they do.

The day will come when Canadians will be able to get their hands on a Kindle. The question is, will the “right” target audience (Millennials?) want one?

So from a business perspective, can Amazon continue making and selling them if they remain the technological equivalent of a television series like “NCIS”? It’s there, and by some measure successful, but does anyone care?

Tell me I’m wrong!

The deeper we get into this cyclical (yes, Dorothy, there still is an economic cycle) recession, the more bleating I hear about changed paradigms, new economies, death of TV, death of print, and so on.

On friday afternoon I packed my brief case to go home for the weekend. I had trouble stuffing it full of the “dead medium” reading material that I receive just about every week (Marketing, Strategy, Contact Management, Applied Arts magazine, VUE (MRIA Magazine), Argyle (A lifestyle quarterly), Backbone (Business, Technology, Lifestyle), Driven (Fashion, Automobiles, Electronics, Fiction, Travel, Men’s Lifestyle), Report on Business Magazine, Midtown Post, not to mention three daily newspapers for Friday(I try to avoid the Sun on Friday). On Saturday around two hundred pages of newspaper landed on my doorstep (and I only read the Post and the Star on Saturday), and the list seems never to end.

Every one of these gems is supported to varying degrees by advertisers.

I watched the news on TV on Friday evening (twice, actually), 60 Minutes on Sunday, several Sunday Morning news shows, and, I confess, a rerun of Boston Legal on CITY. All of these are supported by advertisers. When I look out of my urban window I see, if it’s not snowing, billboards, superboards, backlit boards. All supported by advertisers. I took the subway to the movies last night and between the two I was barraged by more ads than I could count…I could go on forever, but I think you get the point.

New paradigm?

Talking of which, the Facebook site for “Advertising Week” in November, had, at its peak, 274 members: 4 news posts all describing the event; three posts to the “discussion board” all of them appearing to be ads for unrelated products and 7 posts on the wall, all of which seem to be shills posted by the organizers. The group was started at least two months ahead of the event. All of this, and Facebook is a social site, not a business site.

Which reminds me. The linked in site for the same event achieved 41 members, many of whom were speakers or presenters at the event.

If somebody doesn’t call the “experts” on their expertise soon, there will be seriously disruptive results. The marketing communication and persuasion industry is in the middle of a Tornado of cloudlike idiocy, propagated by people who should know better! So far, this has led to an obsession about measurement that will destroy strategic and advertising creativity, but not lead to any increase in business. Brand loyalty (in which, as you know, I hardly believe), or brand loyal-like behavior (in which I totally believe) will be reduced to short term bribery, and profitability and margins will be shot to hell. But mostly, we will all live in a dull, HTML driven world of bland pantone numbers, formulated letters making up “tested” sentences to "drive" immediate, "trackable", on-line behavior that matches the results predicted by the "modeling" programs..

Call me a Luddite, or anything else you want. But before you do that, prove to me that I’m wrong.