Pay attention to your customers, not to your competition

«I emphasize to my people not to pay attention to competitors. Even when I visit the United States, I don’t spend much time visiting other stores because those companies operate by their own philosophies. Many people try to copy something good about competitor’s stores, but if you have your own philosophy from the ground-up, you cannot just pick up a few little ideas here and there. Instead of visiting other convenience store chains, just go back to your basic starting point: see your customers, not your competitors.»

Toshifumi Suzuki, former Chairman and CEO of Seven-Eleven Japan Co., Ltd

OnePageMkt 1.31: Consumer Insights

The best way to test your understanding of the consumer is to assess how powerful are the Consumer Insights¹¹ you are using in your marketing strategies. Consumer Insights are neither testimonials nor catching phrases heard in focus groups; they are neither taglines nor advertising slogans. They are distilled thoughts coming from consumer information.

Consumer Insights

Finding strong and useful Consumer Insights, in my experience, is the result of a deep analysis and understanding of all information available about your intended consumer. There is a tool (among others) that I find useful and might help, the Consumer Insight Funnel, shown in  Chart 4:

Chart 4: Consumer Insight Funnel

The funnel starts with The What, which includes the hard data, facts and relevant qualitative information. e.g. market share, penetration, top of mind, purchase frequency, purchase drivers, purchase barriers, consumer’s psychographic and demographic profile, plus other additional information that helps understanding better consumer’s attitudes and behaviors related to the category.

The Why is the process of linking and crosschecking the information available, finding explanations to causes and consequences, obtaining conclusions, “humanizing” and typifying the data, while generating stories related to the category around the consumers, based on the analysis of the information available.

Deep Consumer Insights are a summary of the key findings, expressed in consumer language from the consumer point of view. They bring consumer needs, wants and demands to life, and establish a connection to your product’s benefits. They are intuitive and become obvious when they come to life. It is recommended to use two or three insights, no more, the most important ones, to focus your strategies.

The 4 Rs are related to a brief checklist, easy to remember, to ensure strong and deep Consumer Insights are being built.

• Reality: the insights are deep truths
• Relevant: to the brand and business.
• Resonance: that strikes a chord to the consumer, an “aha” moment.
• Reaction: it calls to action, leads to a differentiated idea, powerful enough to change behavior.

Some Examples

Gerber’s Jar Baby food:

«There is no doubt that everything I do for my baby includes my love and special touch, but I know that there are certain things she needs that I cannot do alone.”

“It is important for me that my baby learns to eat all kinds of food as fast as possible, to get the nutrition she needs.”

 “My food is an extension of my love.”

Its Applications

Most of the time they are used in brand communication, including Consumer Insights in an Advertising Campaign Brief to the agency is a must. But it goes beyond communication, it provides the lead to your Brand Architecture, Product Portfolio, therefore, it helps to develop your new products pipeline.

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¹¹ Insight: an understanding of the motivational forces behind one’s actions, thoughts or behavior; self-knowledge. 

OnePageMkt 1.30: Deep Consumer Understanding

Most Fast Moving Consumer Goods Companies (FMCGCs) claim that consumers are in the center of all their business decisions, but not all of them comply. Everybody knows that any process or activity of the organization should be focused on adding value to the consumers, and those which don’t add any value, should be eliminated.

Eventually, consumers will not pay for inefficiencies of the company, they will switch brands. It sounds obvious, but too many companies just miss it, and sooner or later they pay the price. This is not a discussion about Lean Operations, but it is about really understanding the consumer, assign resources to do it so, and be able to develop solutions that not only satisfy her Needs, Wants and Demands⁸ but also   develop experiences that delight her and reinforce her loyalty. In the long run, this is much more cost effective.

The Impact

There are well known examples of companies, which at some point in time had the preference of a vast majority of people, but their success played against them, they ignored the trends of their users’ behavior, who simply abandoned them. Remember the big three American carmakers a few years ago, two of them needed the support of the government to reborn; other more recent examples are Blackberry or Nokia, or previously Zenith, Sears, K Mart or Gigante supermarkets in Mexico; they just missed the train of consumer oriented innovative solutions.

On the opposite side, Apple, Hyundai or Starbucks, and more recently Samsung or Cinepolis in Mexico, have in common their profound knowledge and understanding of what their consumers want, intuitively or fact based. Other well known companies and industries have a long tradition and robust processes to ensure their consumer knowledge is updated, such as P & G, Nestlé, Coca Cola Company and the National Football League (NFL), just to mention a few.

The Application and The Results

When I was marketing responsible in Gerber Mexico, my new boss at that time asked me if we had a deep consumer understanding of the Gerber shopper, I replied, “well, off course”. When she started to ask me why Moms bought Gerber, what were the drivers, what where the barriers, what they really wanted about baby nutrition, what was her roll as mom when she fed her baby, what were the main Consumer Insights, so on and so forth, I realized that we didn’t have all the answers. We had a good set of consumer research, more than 40 years of experience in the jar baby food category in the country and a very strong number one position in the market; the brand had also an impeccable equity, but this was not enough to face the brand’s new challenges to ensure a sustainable healthy growth in the future.

It took us more than one year to set up a market research program and cover all the gaps of information we needed, a Deep Consumer Immersion. We did qualitative and quantitative studies, e.g. Ethnographics, Focus Groups, Uses and Attitude Studies, among others. The purpose was to find key Consumer Insights to generate ideas for developing a strong Value Proposition⁹ and a Brand Positioning¹⁰. As a result, a long term new products pipeline was developed, as well as a sound communication strategy for the brand, which helped preempt and overcome successfully the entrance of competitors while maintaining the brand’s strong leadership of the category, until now.

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⁸ Needs are the basic human requirements. People need food, air, water, clothing and shelter to survive. People also have strong needs for recreation, education and entertainment. Needs become Wants when they are directed to specific objects that might satisfy the need. Demands are wants for specific products backed by an ability to pay. Marketers DO NOT CREATE needs: Needs preexist marketers. Marketers, along with other societal factors, influence wants. Source: Kotler, Philip. Marketing Management. Eleventh Edition. Prentice Hall.

⁹ A well defined Value Proposition statement should answer the following questions: What bundle of products and services are we offering to each consumer segment? which consumer needs we are satisfying? what value we are delivering to the consumer? why consumers would prefer our products instead of others? Source: Osterwalder, Alexander and Pigneur, Yves. Business Model Generation (Canvas). Wiley.

¹⁰ In marketing, Brand Positioning is the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization.

OnePageMkt 1.23: Market Research, The Science Side

As a key element of the Marketing Intelligence System of a company, Research in Marketing is a very useful tool for the decision-making process. Companies do research to feed with information their planning processes, to pre-test ideas, either for new products or new communication concepts, to measure performance of their activities, to measure the effectiveness of a promotion or a specific campaign, to track the health of their brands⁶, to develop business strategies, to track competitors’ activities, or to validate hypothesis.

Chart 3⁷ shows a common Market Research Process, from the objective of the study, to the actions to be taken based on the information received. Companies usually hire research agencies to conduct their studies, but with current technology, social media is becoming a popular tool to conduct surveys in-house.

Chart 3: Market Research Process

In any case, it is recommended to follow the process, you still need to define an objective, the variables you want to measure, the deliverables you expect from the study (no surprises); weather it is a qualitative or quantitative study, depending on the objective; who is you target and what is the most efficient way to reach it for the survey; what measurement tools you will use, what information you need to produce, based on the data gathered; and again what actions you are going to take using the information of the study.

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⁶ The Brand Health can be measured by a series of Key Performance Indicators (KPIs), such as brand awareness (Top of Mind, Share of Mind), brand penetration, product trial, repurchase index, brand loyalty, brand’s word of mouth recommendation.

⁷ Source: Design and Marketing of New Products. Second Edition. Urban L., Glen – Hauser, John R. Page 180

OnePageMkt 1.22: The Decision-Making Spiral

I understand the decision-making process as a spiral. We make decisions every day, constantly. Some are simple, almost mechanic, some other much more complex, which require analysis of facts and reflection. We develop alternatives of solutions, and finally we choose one, which we believe is best.

This decision take us to actions, these actions deliver results, and these results provide us learnings; weather the outcome was as expected or not, we always learn something. These learning give us experience for the next decision-process, which will start at a higher level of understanding than the previous one. This is the spiral.

The more we make decisions, the more we learn from previous experiences. Though, every situation is different, new information needs to be gathered, facts as well as context.

Fact Based Decisions

Experience and even intuition are important elements in the decision-making process, but it is too risky for the organization to support all the decisions only on subjectivity. It is important to develop the culture and the discipline to support as much as possible the most relevant business decisions with information, with educated arguments, with informed common sense.

OnePageMkt 1.21: Marketing Intelligence

Market Research has been a strategic marketing tool for many years, and its role and fundamentals remain the same; though, there has been a dramatic evolution in how the information is gathered and processed, therefore, decision-making processes have changed as well.

The technological quantum leap that occurred during the last couple of decades has triggered significant changes in how marketing activities impact is measured. Nowadays almost everything can be measured, last century’s quote “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half” by John Wanamaker² is neither valid, nor an excuse any more. New tools have been developed to measure consumer reactions to different stimuli, frequently in real time.

Actually, the challenge that we face today is to select the most relevant information for our businesses; what tools, methodologies, techniques and other different sources of information, will better help us support our business decisions. Marketing Intelligence “… is the everyday information relevant to a company’s market, gathered and analyzed specifically for the purpose of accurate and confident decision-making in determining market opportunities, market penetration strategies, and market development metrics”³. Chart 2⁴ shows a simplified diagram of the content of a marketing intelligence system for a business organization.

It starts with what key elements of the market you will need to deeply understand, such as the consumer, customers, competition, context, key dynamics and trends. The information sources can be grouped in three categories, as shown in the chart. The first category called Archive Research is related to the information available, both internally and externally, very often this information has no cost.

Internally we could include financial or other type of reports generated by specific areas of the organization, relevant for the business decision-making process. Externally, we could find information from government and/or public sources. Internet has become the main source of public information nowadays, since most of the individuals and organizations release and consult information in this media. Syndicated⁵ Studies are also a common source of information.

The specific market research acquired by a company could be Qualitative and Quantitative. The main purpose of qualitative studies is to probe the consumer with open questions in order to better understand her attitudes and behaviors. Quantitative studies are used mainly to obtain statistic representation of a specific group of consumers, related to an industry or a product category.

Chart 2: Marketing Intelligence System

Developing a Marketing Intelligence System require resources, a solid process and a clear understanding of what information is relevant for the business to constantly read the pulse of the market.

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² Considered by some to be the father of modern advertising and a pioneer in marketing.

³ Source: http://en.wikipedia.org/wiki/Marketing_intelligence

⁴ Source: Design and Marketing of New Products. Second Edition. Urban L., Glen – Hauser, John R. Page 176 to 200

⁵ Syndicated Studies are done by research agencies in order to be acquired by a group of companies, needing the same information, e.g. Nielsen’s Retail Index report.

OnePageMkt 1.20: Organizational Wisdom

The ability to learn for a person and for an organization is probably one of the most important competencies to be constantly developed. Knowledge is dynamic, changes constantly and advances. Everyday something happens in the market where we compete, client preferences evolve, new competitors appear and new technologies come to the surface. Best practices and overall business success are built upon organizational cumulative knowledge, which is grounded in the ability to learn.

Stephan Haeckel¹ describes the process of acquiring organizational knowledge in his Haeckel’s Hierarchy model, shown in Chart 1. He says, “Knowledge is subjective. People, not technologies, are the repositories of knowledge”. The process to develop not only knowledge, but also wisdom in the organization starts with the observation and registration of facts and events, this process generates data. Information is created by the application of context to data, which produces meaning in the form of patterns that relate the data. Applying filters based on concepts and models, to produce information, does the interpretation of this data.

Intelligence (applied to business), is produced by the application of inference to information. It is the second stage of interpretation. The inferencing process may be logical or intuitive, conscious or subconscious. It is not only intelligence and experience, but also talent that distinguish good analysis. The conviction that we know something requires a certain level of certitude. Knowledge is a context that we accept with conviction, however, it is subjective. It needs to be internalized and accept its validity.  Wisdom is formed, when multiple areas of knowledge are synthesized into a framework of thought. This requires integration of the context, inferences and convictions associated with each piece of knowledge, it is about linking the dots

Chart 1: Haeckel’s Hierarchy

All resources destined to gather business information should be focused into decision-making processes, which are organizational mechanisms by which knowledge is transformed into actions. Allocating resources involves assigning them to individuals, who are made accountable for applying them to produce the outcomes specified by the decision.

The intention and commitment to constantly learn from the market is a survival process. This knowledge needs to be documented, safeguarded and transmitted within the organization, to serve its purpose.

Does your organization have a robust «Wisdom Development» process?

¹ The Development & Application of Organizational Knowledge. Haeckel, Stephan H. IBM Advanced Business Institute, 1997.

OnePageMkt 1.10: Introduction

When people ask me about what is Marketing, the first response that comes to my mind is «it’s about strategy», but I know that it is also about intuition; it is about what you want to achieve with your business, and how to do it; it’s about common sense, but also about technique and expertise; it’s about creating value for everyone, about influencing people (internally and externally), but also about freedom of choice among different alternatives; it’s about making money, but also about creating jobs, about helping boost the economy and developing new industries.

It requires personal and institutional ethics, strong principles and values. Marketing DOES NOT create needs (read Maslow and Kotler), all needs are inherent to human nature. Marketing helps to satisfy consumer demands. Marketing in the 21st century can not be understood without helping to create shared social conscious and responsibility, sustainability, ecology awareness and action.

All companies need to be closer to their customers and consumers, walk with their shoes, understand better their needs, wants and demands. Doing the opposite is suicidal.

Cheers,

Ernesto

OnePageMkt 1.00: Marketing for Everyone

Welcome to OnePageMkt 1.00, a blog where fundamentals of Marketing are shared and discussed, together with its main processes, principles, definitions, concepts, and most importantly, real marketing stories and applications; for those who have not been deeply exposed, but are interested in learning and understanding better the topic.

The content is based on more than 6 thousand days (around 48 thousand hours) of personal work experience in the field, and being exposed to customers, consumers, peers and subordinates; having discussions with bosses, advertising creatives, research agency executives and regulators; dealing with competitors, (permanent) economic crises, sales quotas, the end of the month and the year closing; preparing (lots of) new product introductions, marketing plans and business budgets; participating in strategy discussion sessions, inspiring experiences and (fortunately) being near to very talented people.

The content will also be based on research of real marketing stories, from different industries and companies, always with the purpose of trying to portray the application of the marketing principles and its results.

I hope this blog serve its purpose: to transmit the passion and excitement that marketing provides.

Enjoy!

Ernesto