The greening of marketing: the 60-30-10 rule

When I started MarkStra in 1995, the Guerrilla Marketing Handbook by Jay Levinson and Seth Godin provided ingenious, effective, practical and low-cost marketing thoughts and tips for my own company and our clients. Here is one:

"When planning a direct mail campaign, remember to follow the commonly known 60-30-10 rule.

• Sixty percent direct mail success lies in using the right mailing list;


• Thirty percent depends on your making the right offer (that is, an offer that satisfies the customer's needs better than the competitor and provides value to him or her);


• Ten percent depends upon your creative package"

Between 1995 and 2007, the price of oil (and consequently also of our marketing material) has risen from just over US$20 per barrel to US$100 and the environment is under pressure.

Have you stopped to evaluate if its worth it, both for your bottom line and for the environment, to produce some of the super-creative marketing material we marketeers strive for? Especially when you know that super-creative material is not exceedingly effective in attracting customers?

The Lecture Circuit

It seems like once you start lecturing, you keep on doing it. Besides lecturing at the University, I held two other presentations over the past 6 weeks:

For a group of marketing managers including several banks, fast food restaurants, home improvement stores on a short introductin to "Return on Marketing Investment" in September.

And for the Curacao chapter of the Hospitality Sales and Marketing Association International on "What exactly is Branding?", a session to encourage smaller companies to brand themselves better last week

Back to school: Market Research and Corporate Strategy

It's been back to school in two ways in the past few months:

First, later today I start teaching Marketing Research at the University of the Netherlands Antilles, using the same text book I had as an undergraduate student (Aaker/Day), albeit a much newer edition. It's a real pleasure to see the difference in the 2nd and 9th edition with regard to geographical scope. The chapters on secondary data sources are also expanded to reflect the abundance of timely, easily and inexpensively available secondary data that researchers now have access to. More emphasis on cost-benefit analysis before embarking on research is also a welcome addition, especially in our small markets. And lastly, obviously, the impact of the Internet on the market research function.

It will still be a challenge to translate the concepts to our smaller market and showing students how to be creative with their knowledge given the limitations. This while reminding them that we do live in a global world and they can more easily end up doing research for larger markets (while still sitting in Curacao) than ever before.

Back to (graduate business) school days also came in an assignment some time ago where we used Product Life Cycles, Boston Consulting Group Matrices and Ansoff growth models, the stuff specialization at The Wharton School was made up of. Now we used them to examine the existing and future potential of each brand as it relates to the client's bottom line and which marketing strategies to follow to realize that potential. Given the experience I have now, I could also develop some of my own strategies. Without doubt one of the more interesting assignments recently.

I realized the increased relevance of these concepts as marketing directors try to manage product portfolios that are ever expanding with new products and line extensions targeted to increasingly smaller segments.

It also made me realize how even more relevant these strategic concepts are to small markets. Marketing Directors are inclined to take on all (or many) extensions of their brand owners in their portfolios in an effort to fulfil the desires of their customers, who have access to global information and just know there is a product "just for them" even if, in a small market, they may be the only one in the segment. What is the MD to do?

Have you stopped to evaluate:

• the added benefit of a new extension to your clients
• the added contribution of a line extension to your bottom line, given the sometimes really small segments.
• how to duly support line extensions in the long run
• how to support the growth of extensions that will be more relevant in the future with present "cash cows"

Branding according to MarkStra

The word "branding" is in vogue by marketers and non-marketers alike to denot many things. Often it is to denote a "a not-independent" establishment (i.e. part of a global brand) or some major advertising effort.

But, what is branding really? The following is based among others on Jack Trout, Al Ries and Gerald Zaltman.

A brand is ONE word you own in the mind of the relevant consumer.
The key words are:
· One word (concept, belief, aspect)
· Ownership
· The relevant consumer
If done well that word enables you to differentiate yourself meaningfully from competitors in a way that consumers value and will pay for

That word and its ownership have value to you because they either:

• Enable you to command a price premium
• Drive volume
• Increase the lifetime value of every customer (among others through loyalty)
• Or a combination of these
• With an acceptable ROI
  

The ultimate goal of a branding exercise is to determine:

• what that word should be
• how to achieve its ownership (in all aspects and by all means)
• which consumer segment to weigh heaviest when seeking the above (because one cannot be all things to all people)

By this (true) definition of branding, every business, large or small, in a large market or a small market can embark on a branding excersize to "brand itself". For instance, even the smallest independent shoe store can brand itself as being the one with the most personal service. Let's assume that the customer values that. The store can achieve the ownership of this ONE word or concept for instance by remembering each customer's name, his sizes and preferences like no other shoe store does.

Even when a company is part of a larger group (a multinational, a chain, etc.), a company can still brand itself further for its specific market. For instance, being a Ritz Carlton hotel in Curacao is different from being a Ritz Carlton hotel in Aruba. If for nothing else, in Aruba the guest is more likely to be an American than in Curacao. In the same way, a Ritz Carlton in the city is different from a Ritz Carlton at the beach. Each can and should brand itself further (within company guidelines, of course). Otherwise, there is no difference for the guest if he chooses Ritz Carlton in Curacao or Ritz Carlton in Aruba. And, we know what than can mean for your revenue.

8 tips to increase marketing effectiveness in small markets

In a previous post I mentioned my small business client Cura-Peska, the fishing equipment specialty store. Most of my work is for larger companies in small markets. And most of it is "advising", not implementing. But, in this case I found myself planning and implementing marketing activities for a small business in a small market. The biggest challenge is scarce resources (time, energy, expertise and money) and the fact that after I am gone, the owner has to be able to do it himself.

Here is what I learnt:

1. Forget advertisements in mass media. Small businesses do not have the funds to get past the saturation in mass media, or any media for that matter. The question is if big businesses do.
2. Have a unique product and/or unique promotional event. That's Marketing 101. But, how often do we really consider what this can entail? A unique product and/or a unique promotional event is NEWS. That gains free publicity. Free publicity is more credible than your paid advertisement.
3. Focus and when you think you are done, focus again. There are events that create/develop brand awareness. But, small businesses do not have the resources to create brand awareness, as some larger brands/companies (still) do. And, how do you measure if you have succeeded? The ULTIMATE goal is always to generate sales or good leads. That should be your focus. If in the process awareness is created, that's nice.
4. Narrow down your target market and use that knowledge. What is needed to generate sales? People with an objectively verifiable interest. This means that they are already fishing, and not thinking about it (you know how long people can think and do nothing). They also have decision-making authority and money to buy. If people outside of this group catch on, that's nice.
5. Know the lifestyle (psychographics) of your target market. Where do they go when they are not fishing? What time of day? Who and what do they listen to, read, watch? Which of those influences them most?
6. Try different activities that fit our target market and goal. Keep rolling out innovative activities. Then you can see which is effective and which is not.
7. Measure your return-on-investment. This is important for all businesses, but more so for the small business. There is little room to waste resources (time, energy and money). And, for a small business, it is easier to measure your ROI: just ask people which activity led them to you and write it down next the their purchase amount. I am driving my dad, the owner, mad with ROI measurement.
8. Pay attention to quality. That is, quality of the customer. Please don't get me wrong. 10 people buying 100 dollars each yields the same as 100 people buying 10 dollars each. But, let's be honest, what you really want is more of the type that buys 100 dollars each. What is his profile? What led him to you? What keeps him with you?

Do you know what your customer REALLY values?

This is a story to show how sometimes companies emphasize some aspects of service that have no value to the customer and neglect the ones that do.

Two weeks ago on a Thursday morning, I called a company where I am a client to make, what I considered, a routine request for a document. I was in a session all afternoon, but my cell phone kept ringing off the hooks, showing a number I did not know. I came to the office to find several messages. My document was ready... already! This speed was way beyond my wildest expectations for I am not now (or will ever be) a VIP client.

"You can pick it up tomorrow", they said. "Well, thank you," I said, "but picking it up is quite inconvenient for me. Can you mail, fax or email it?" "No,", they said. "For xyz reason that's not possible."

So, a few days later I went to pick it up. It wasn't there! Actually, it was there, I later learnt, but it was with the person responsible for VIP's. And it just happened that that person had gone to the bathroom when I got there.

I picked up the document last Thursday: 2 weeks later!

The lessons?

1. I didn't care to be treated like a VIP. I just wanted that document mailed, faxed, delivered, emailed to me. Or, if all else failed, not have to make the trip twice. That is what was "valuable" to me, what helps me. Do YOU know what your customer finds valuable? It's not always what you think.
2. All this investment in "speed" at the front end, and the client still got the benefit two weeks later (and is "blogging about it), because you did not control the whole delivery process. What did it cost you to control that additional step? US$ 1.30 maximum?
3. Make sure the "VIP client" knows what to do when the "employee-in-charge-of-VIP's goes to the bathroom.

7 ways to use market research

Often we think of market research as a way to get insight from customers with regard to our own company. But, that's not its only use. Here are some ideas:

1. measure, rank and score yourself on issues that are important to your organization (Key Performance Indicators) or the customer (Customer Core Values). Don't bother measuring things that are not important to either you or the customer.
2. check out your competitors. So, you know who to copy (and in which way), whose customers to go after (because they are dissatisfied) or leave alone (because they are way too loyal). Maybe you are uncomfortable asking about your competitors, but an independent researcher is not.
3. find out if the perceptions that employees have of their organizations matches the perception of customers and make adjustments when and where necessary.
4. establish a common starting point (a common data-backed assumption) in your organization with regard to opportunities. This, so that innovative ideas are not shot down or delayed just because of different suppositions. This is especially true when the decision-makers have varying degrees of experience with the issue or look at it from different angles. An example: the director and supervisor may have different assumptions. Whose is most likely to be correct? Whose is most likely to "win" without independent insight.
5. determine desired ROI. For example: Based on the research data, can you gain 5% market share? What would be the source of this growth? How much would it cost? Is it worth the effort?
6. If your organization is not yet into ROI, you can use the data to set quantifiable and realistic objectives. Example: if the research shows that you have a 50% market share, is it realistic to set an objective of 25% growth over the next 12 months? In other words, you need to know what your market share is. Otherwise you can't determine if your growth objective is realistic.
7. create a unique value-added experience. Nowadays it's not just the product that is important. It is the experience when purchasing or perusing the product, online or offline, that is. Through research (mystery shopping) you can find out what customers find a "wow" experience.

What exactly is Return?

Return on investment is a relatively new term for marketers. At seminars it appears we are still trying to determine what the relevant indicators should be. But, there are some things we are certain about though.

I have heard marketeers speak of return in terms of:
"Our marketing investment was this amount and our marketing revenues (return) was this amount". Or, if it's a first effort to be accountable just "Our revenues were this amount.".

But, that is not the appropriate measure. It's not even the most relevant measure.
More appropriate would be to report or consider:

• Our marketing investment was this amount and our profit was this amount.
• What would our profit be if we had not made this investment?
• Would our profit be higher or lower had we made the investment in another vehicle?

I know, in a small market the figures might not always be encouraging. But, there lies our challenge. How do we allocate or re-allocate our marketing investments so that the figures become more encouraging?

What if personal relationships are the experience?

Last Saturday we celebrated the birthday of my friend Angelique with breakfast in Cafe Barista.

We arrived early, at 9 am. Within an hour the small cafe was buzzing with the happy chatter and laughter across tables of dine-in and take-away customers who all seemed to know each other and be part of the same party. I did not know that this was the Saturday morning ritual of "the regulars". But what an experience!

It also made me realize how easy it is to create (or have) a great experience in a small market, just because everybody knows everybody. It reminded me of why I preferred the Curacao carnival to the Trinidad carnival: in Curacao I knew lots of people standing at the roadside, people you danced with a little bit, posed for, or had a little chat with. That is a big part of the experience for me. In Trinidad I knew no one.

It made me wonder if a tourist or someone visiting alone or as a couple would have the same experience in our bars and cafe's or in our carnival. If not, how do we create it for them also?
How about that first-time customer, who does not know anyone and who is not yet loyal, what is his first experience? After you have invested money to lure him, after he has taken the plunge, is his experience good enough for him to come again and become a regular with a good lifetime return for your company?

Return on Marketing Investment in Small Markets

In 2006 I attended the Return on Marketing Investment (ROMI) Seminar of the Institute on International Research in Fort Myers. I will be posting a bunch of ideas discussed at that seminar. This is the first.

For some time now “branding” has been a focus for many brand teams. But it’s being challenged by the quest for a responsible ROI, a pressure to achieve better returns on marketing spending. The statement that I most remember from the ROMI seminar was this:

Branding has value if it:
· Enables you to command a price premium
· Drives volume
· Increases the average lifetime value of your customers
· Or a combination of these
All with an acceptable ROI. That’s a serious challenge in markets as small as ours. How can we go about it?

1. To understand how to face the challenge, we have to remind ourselves what a brand is. A brand is one word you own in the mind of the relevant consumer and which provides value to that consumer. The key words are: one word, ownership, value and the relevant consumer. Often, brand teams try to achieve ownership of that one word through advertising. This often involves highfixed costs (and therefore makes it harder to achieve an acceptable ROI). So, the larger the market, the better. But, what to do if you serve a small market?
2. We must realize that advertising is not the only way to achieve ownership of that one word. There are more tools in a marketing mix which can be used to differentiate ourselves from our competitors.

So, we should ask ourselves the following questions.

1. Are we unique (or different) in the way we: Conduct our direct selling, Manage and nurture our relationships, Provide customer care, Conduct our public relations, Are involved with our community, Price or distribute our products?
2. Does this uniqueness provide value to the consumer, which in turn will provide revenues for us, in the short or long run?
3. If we are not unique or different,is there a way we can be? In which area will this “uniqueness” provide the best return for us?

So, when you are next thinking about "branding", think further than "advertising"

I look forward to your comments.