Dick Martin Blogs

Brand Lobes

Here's a book that will definitely be on my wishlist for Christmas: Mindfield by science writer Lone Frank.  It purports to explain "how brain science is changing our world."  I don't know about that, but based on the excerpt in the Scientific American Mind blog, she certainly does a good job of explaining how brain science should influence marketing. 

Frank (what's the story behind her first name "Lone"?) retells the now familiar story of Baylor University's "Pepsi Challenge" fMRI studies, but her background as a neuroscientist allows her to explain its full significance.  Something I wish I had done better in my last two books.  "The medial prefrontal cortex," she explains, "is not just any old brain region."  It's where our very sense of identity resides.  If strong brands light it up, it's only because we identify with them, they fit into the picture we have of ourself. 

She didn't use the term, but I will -- what those fMRI scanners have discovered is our brand lobe.

 

CEOs Beware Failing Business Media

Portfolio magazine is history.  The Wall Street Journal is turning into a general interest newspaper. The New York Times business section shares space with the sports columns on most days (and is almost always less insightful). CNBC is business reporting with a roller derby attitude.  BusinessWeek, Fortune and Forbes could show up on ebay any day.

Should CEOs care?  Bill Holstein thinks so.

Holstein is a business writer who has covered the waterfront. His book, Managing the Media (Don't Let the Media Manage You), should be on every CEO's bedside table.  It's small enough to fit next to the clock radio and short enough for most titans of industry to read before Letterman gets to his musical guest.  

Holstein's astute observations on how the decline in business journalism will impact CEOs are not in the book.  For that, turn to the latest issue of Strategy + Business, published by Booz & Company.

According to Holstein, cost-cutting in business media means most CEOs will be dealing with younger, less knowledgeable reporters. Believe it or not, that's bad news -- very bad news. Inexperienced reporters are more easily manipulated by a company's competitors and third-party opponents.  (What large company doesn't have third-party opponents?)  

Furthermore, it means there are fewer credible platforms for telling a company's story.  And therefore, fewer places a CEO can find stories from which he or she can learn something. And finally, the decline in the quality of business media makes it less likely that the really serious policy questions will get much coverage -- like whether globalization is a net positive force in the world, what government constraints on business are legitimate, etc. 

Holstein also gives some generally solid advice on what a CEO can do differently in this environment.  I say "generally" because one piece of advice he quotes -- "seek out the smartest and most experiences journalists ... to do serious and in-depth reporting about (the) company" -- may be on the naive side. 

But who can argue with one of his central recommendations?  "It falls to PR professionals to spend more time explaining how a company fits into a broader social or economic trend -- articulating their company's stories in a way that the reporters can understand and appreciate."  

Ironically, Holstein himself would have argued with that advice three years ago when he was editor of Chief Executive magazine. In those days, he didn't think too much of PR people.  "PR people don't understand your business," he warned his readers in an unusual editorial rant.  "If they did, they wouldn't be PR people."

We all learn.  Must have been the lunch we shared at the Overseas Press Club when he was researching his book.  (He paid.)

Real Service Is Personal

If I were rewriting Secrets of the Marketing Masters, I would definitely include the chief marketing officers of nonprofits.  And at the top of my list would be Catrina Boisson who does marketing for the New Jersey Performing Arts Center.  (Full disclosure: I used to be on NJPAC's board.)   

All nonprofits face unusual challenges these days, including the weak economy, slim resources, and stiff competition from equally compelling good causes. In NJPAC's case, add proximity to the cultural offerings of Manhattan, which is a short train ride away, and the less-than-inviting-if-largely-undeserved reputation of its location in downtown Newark. 

Nevertheless, NJPAC recently completed one of its most successful seasons. One of the reasons -- unusually sophisticated Customer Relationship Management.  CRM is one of those acronyms that consultants like to throw around, but Boisson and her colleagues have turned it into the way they do business.

Thanks to a ticketing system that captures information such as the number of events a household attends, the number of tickets they buy, and how much they pay, Boisson's team was able to score all NJPAC patrons by their lifetime value.  That led to a unique customer loyalty program for the 4000 households that were most critical to the center's success.  Interestingly, not all of the most valuable households bought subscription tickets and not all were "members" or donors.  Some, in fact, had not been to the center for two seasons.

Boisson's team assigned a personal representative to each of the 4,000 households. The idea was to give them personalized end-to-end service for everything from ticket purchases, to parking, restaurant reservations, and gift-buying from the center shop. Armed with information such as the last performance their client attended, how long it had been since their last visit and their entertainment preferences, their personal representative could even call to let them know of upcoming shows.

The results?  Customer churn is down.  Attendance has stabilized. Ticket sales are up. And a whopping 97 percent of the households with personal representatives say they would recommend NJPAC to others?

Here's the kicker -- serving all 4,000 households took a total of four personal representatives. You can read more about NJPAC's customer loyalty program here. 

Jon Fine, who writes about the media for BusinessWeek, has discovered one of the Marketing Masters' secrets:  "intensive research that aims at wreathing a kind of grandiosity of purpose around everyday products to a degree that may seem somewhat silly to outsiders."  

Forgive me for assuming that Fine is one of the outsiders, but he has enough common sense to recognize a strategy that works.  He quotes the chief marketing officer of General Mills who poses the key question: "What is the bigger job this brand does in a consumer's life?"  But then he reduces it to the brand's "story line." 

"Marketing," he tells us, "is a business in which the best story that's most aggressively  deployed wins."   But that's only part of the secret.  The real trick is designing products that serve a higher purpose and then making sure that everything that follows is aligned with it.  That's something General Mills has mastered across its product line, from its iconic cereal brands to its yogurt and baked goods.  Maybe that's why its revenue is up 8 percent and its operating profit rose 4 percent.

Demon to Darling

Today’s Wall Street Journal (subscription required) marvels at Wal-Mart’s recent transformation “from Demon to Darling.”  It credits the company’s transformation to communications czar Leslie Dach, a former Democratic operative and executive at Edelman PR.  Dach deserves a lot of credit, but the roots of the company’s makeover is more than skin deep and it’s not the product of wordsmithing or sharp elbowed “truth squads.” 

Wal-Mart tried that early in Dach’s tenure when it began punching back at critics out of a political campaign-like “war room” and built its own front groups.  Nothing seemed to work.  In fact, some of the stealth campaigns backfired when the media tumbled to them. 

Ironically, it took a hurricane to help the company realize that actions spoke louder than words. When Wal-Mart was quicker than the government and many charitable organizations to get relief supplies to Hurricane Katrina’s victims along the Gulf Coast, CEO Lee Scott realized that it had the power to positively influence communities. 

He decided to rebuild the company’s reputation by taking credible action on two burning issues – sustainability and health care.  The retailer offered lower cost health insurance to its own employees, started selling generic drugs for $4, and opened in-store health clinics, which offer low-priced services from vaccinations to cholesterol screening.  It set aggressive targets for energy conservation and reduced waste, became the world’s largest buyer of organic cotton, sold more organic milk and produce than any other retailer, sold more green-friendly products like energy-saving fluorescent bulbs, and made selling local produce a priority. 

Jim Prevor, a long-time Wal-Mart observer, who publishes a newsletter called The Perishable Pundit, found the secret behind the company’s greening.  "Helping the environment is an area where Wal-Mart felt culturally comfortable,” he said. “It could maintain its core values of eliminating waste and driving costs down while reducing packaging and creating energy-efficient stores."  Plus, he might have added, it was good for the bottom line. 

Wal-Mart’s actions were not a cynical attempt to distract its critics.  They were the product of a new understanding of a company’s place in society.  The company isn’t perfect, but it deserves credit for its efforts.

Buckle Up

Jim Stewart writes the Wall Street Journal's "Common Sense" investing column.  It's not the first place you'd look for marketing tips, but the folks at Gap should read today's column, assuming they have a subscription. Stewart discusses the stock of a retailer headquartered in Kearney, Nebraska, of all places.  Called "Buckle," it serves the notoriously fickle teenage market through 390 stores in 40 states. 

Since competitors like Abercrombie, American Eagle and The Gap are sucking wind, Stewart was initially skeptical that Buckle would be a good investment.  So he drafted his college-age niece and her sorority sisters to check out its stores.  

Their verdict: "The salespeople] are always really attentive and friendly and they always end up bringing you so many other cute jeans and shirts to try on ... and then you end up buying more than you planned on." "I shop there to buy Silver jeans. They are the only brand that fits me, and last many years. I also like the type of clothing they have, which is different from other places like AE [American Eagle Outfitters], Hollister, A&F [Abercrombie & Fitch]. ... I feel the clothes they sell are definitely worth the price."

From feedback like that, Stewart deduced Buckle's marketing strategy: fit, selection, and service make "medium to better-priced merchandise" a good value.  That may be why, in a market roiled by quirky fashion trends and reeling from the Great Recession, Buckle has racked up 21 consecutive months of double-digit sales gains.  It's stock is up and it's planning to expand into the Northeast.  Gap, are you listening?

Recession Marketing

Today's New York Times has an interesting article about all the food brands that are using a "value" message to attract consumers during the Great Recession.  It offers the May 18 issue of People magazine as Exhibit A.  In that issue, Oscar Meyer wieners claim to be “deli fresh, but without the deli counter price.” Lean Cuisine claims to be "good for you and good for your wallet." Chips Ahoy cookies team with Capri Sun juice drinks to assure consumers they needn't "snackrifice."  Elsewhere, Frito-Lay is adding 20 percent more chips to selected bags of Chitoos, Fritos and Tostitos, without raising the price.  Del Monte shows how canned fruits and vegetables can "stretch" food budgets.  And French's is offering larger jars of mustard at lower prices. Stretching dollars is a timeless message, but I wonder if it doesn't put brands on the wrong battlefield.  "Value" messages have a way of devolving into "price" claims. 

Frog Design's Tim Leberecht suggests marketers should create a deeper meaning for their brands.  His argument in a nutshell: "As brands face an unprecedented level of competition, transparency, and consumer empowerment on the social web, 'meaning' is becoming the new powerful currency that connects brands with their brandholders in the 'share economy.' "Lots of buzzwords there, but I think what he means is that marketing leaders need to reconnect their brands with their original purpose, i.e. how they help improve people's lives.  He expands on the idea in a provocative slideshow, which is available at  SlideShare.  His blog, iPlot, expands on the topic.

Canned

 Pepsi kicked off 2009 by introducing a new logo for its flagship soft drink to what can only charitably be called mixed reviews.   The new design was supposed to suggest a smile, but most people saw it as a rip-off of the logo Obama used in his presidential campaign. 

Then the company redesigned the packaging for its Tropicana orange juice, putting it into a carton that looked so generic consumers couldn't find it in the dairy case.   That was such a disaster, the new design had to be pulled. 

Shades of New Coke. 

The folks at Coca-Cola, on the other hand, are introducing a series of specially-designed cans to celebrate summer. Maybe they learned something back in 1985 because the new designs manage to be arresting and contemporary, yet classic and "real Coke," at the same time. Watch them fly off your grocer's shelves. 

The difference? 

Understanding your brand values and knowing how to communicate them viscerally.

 

Nice or necessary?

What stuff do you really need?  That's the question the Pew Research Center asked a bunch of Americans and here's how they answered this year compared to 2006. As you might expect in the middle of the Great Recession, many people think they can do without the dishwasher or the microwave if push comes to shove. But two findings are a little surprising.

First, I'm amazed that people seem to value their landline telephone more than their cell phone (though Pew only asked about landline phones this year).  Watch for those numbers to reverse over time, as AT&T and Verizon have already realized. 

Second, note that cable and satellite TV are considered less necessary, i.e., more of a luxury, than high-speed Internet service.  Watch that gap grow over time. Young people, in particular, are getting used to watching their favorite TV shows online. But marketers shouldn't cope by throwing TV-like ads online.  People aren't as forgiving about interruptions online as they are on broadcast media.  Online is all about communities. Marketers need to earn the permission to join online communities by offering something of value.

Higher Purpose

Seth Godin has one of the sharpest minds in marketing.  His blog is an endless source of insight and practical advice.  I often wonder how he can churn out such a steady stream of pointed observations, while simultaneously writing a best-seller nearly every year. Not to mention regularly speaking to enthusiastic audiences.  

But then not every posting can be a home run.  Recently, he opined on "business models," a subject that became topical when Internet pioneers realized they didn't have one, as in how to turn eyeballs into money (or in business lingo, "monetize their traffic).  Step one, Godin advises, is figure out "what compelling reason exists for people to give you money? (or votes or donations)."  The other steps he lists are equally focused on a transaction, whether fending off competitors or acquiring prospects. All of which is well and good, as far as it goes.

But my own research with marketing leaders suggests they think more broadly than maximizing transactions.  They focus on building relationships, and that requires a different kind of thinking.   P&G's Jim Stengel, for example, encourages marketers to find their "higher purpose" -- that is, how they can improve people's lives.  Sounds high-falutin', but he says it was the secret behind P&G's success in everything from Pampers diapers to Pringle's potato chips. And it will be the topic of a book he's writing, titled Packaged Good, based on world-wide research he's conducting.  Based on the preview he gave me in the research for own book, Secrets of the Marketing Masters, I can't wait to read it.  Stengel says he wants to start a movement. Count me in.

  

Interactive

One way Estee Lauder has decided to deal with the recession is by posting prices at the cosmetic counter, according to the Wall Street Journal (subscription required). Potential customers looking for "affordable luxuries" are apparently too intimidated to ask how much they would have to shell out for that tube of lipstick.  

Meanwhile, Forrester Research reports that advertisers are moving money by the cartload from "traditional" channels into interactive media.  Analyst Shar VanBoskirk says the switch "is due to marketers seeking lower cost, more accountable channels which are also widely used by their customers."  But before marketers pour money into interactive media, they would be wise to take a cue from Estee Lauder.  Even a busy cosmetic counter isn't really interactive until you take the time to figure out what's going on in a customer's mind when she's standing in front of it. 

Brand-Aid For America

Jeff Yang, over at Salon, posted a piece analyzing which presidential candidate would do the most for Brand America if he/she won the election.  It must have hit a nerve because in the first few hours of its posting, it evoked 43 letters.  (Potential conflict alert: I'm quoted extensively, but Jeff brings his unique perspective to the issue and also quotes people far more qualified than yours truly. Even some of the letters present valuable perspective.)  Of course, improving America's image around the world isn't the biggest challenge the next president will face, but it's way up there.  And we've elected presidents for less noble reasons. 

The Year of the Mouse

Capitalizing on some astrological good fortune, Disney will mark China's Year of the Rat, which begins on Feb. 7, by suiting up its own house rodents, Mickey and Minnie, in special red Chinese New Year outfits. 

It's all part of Disney's effort to glocalize its Hong Kong park.  According to the Wall Street Journal (subscription required), last summer, Disney executives took a page from P&G's playbook by conducting research in the homes of Chinese consumers to get a handle on their lifestyle habits as busy families.

"We are working as the 'Chinese' Walt Disney Company -- ensuring that all the people who work in Disney understand the Chinese consumer to forge a deeper emotional connection with the brand," says the park's managing director. 

Now, in addition to Mickie and Minnie's makeover, vendors hawk deep-fried dumplings and turnip cakes, the Main Street parade features a dragon dance with bird, flower and fish puppets, all set to traditional Chinese music. And the gods of wealth, longevity and happiness -- all major figures in Chinese New Year celebrations -- join the regular Disneyland gang. 

Take a cue from the candidates

We used to complain that politicians were sold like soap.  Now it seems, the marketers of soap -- and other products -- can take a cue from politicians.  Fast Company has an interesting summary of the ways political candidates are using social media. 

Re-bundling Anyone?

In researching my new book on marketing, I’ve interviewed the heads of major industry associations, the top executive recruiters specializing in CMO searches, and advertising veterans on both the agency and client side.  They all agree that marketing has never been more challenging.  Media has fragmented, consumers have unprecedented control over their sources of entertainment and information, and technology is undermining the business models of old. No one knows where it’s all going. None of that is too surprising.  I would have heard the same thing five or even ten years ago.  Though perhaps with less panic in their voices.

But what may be different now is a pervasive belief that intellectual capital in marketing has moved from agency to client.  Clients have always been in charge.  After all, they pay the bills.  But most of them leaned on their agencies for insight and counsel.  Apparently those days are gone.

Some blame the rise of agency holding companies with their relentless focus on cutting costs and boosting earnings. Some blame the shortsightedness of clients who treat agencies like vendors of just another commodity.

They’re probably both right.  Both developments conspired to wring slack time out of the advertising process.  But it was in that slack time that Big Ideas took seed, germinated and blossomed.  “It’s hard to identify more than a handful of really breakthrough brand campaigns today,” one highly placed marketing executive told me.  “They’re all transaction oriented. Creativity has become focused on the short-term.”

I wonder if that’s not what lay behind yesterday’s announcement that Dell and WPP have agreed to build a new kind of agency to serve the computer maker’s global marketing needs. The new agency’s staff of more than 1,000 will handle marketing functions from creative, to media planning, to customer relationship management, and public relations. Only media-buying duties will be handled separately, so Dell can capitalize on the economies of scale that come from working with a buyer that handles many large media budgets.

This follows reports that Publicis is about to restructure itself into profit and loss centers by client brand.  The executive who Publicis believes best understands the brand will lead each client account.  Everyone else – whether an account manager at Saatchi, a creative director at Leo Burnett, or a media planner at Starcom – will report to that person.   As Ad Age reported last week, Proctor & Gamble is taking the same “re-bundling” approach on some of its brands at all four agency holding companies.

Maybe what depleted agency intellectual capital was the disaggregation of its capabilities into separate P&L centers focused not on clients, but on the agency’s own bottom line. Maybe re-bundling those capabilities around client brands will allow agencies to regain the critical mass they need to become expert in their own business again.

Our Semi-flat World

Harvard's Pankaj Ghemawat takes issue with Tom Friedman's famous dictum that "the world is flat" in his own book on the marketing implications of globalization. Setting aside metaphorical conflations of  geometry and geography, Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter lays out a practical action plan for global businesses.  You can get a good overview in Harvard Business School's Working Knowledge blog.

Chefmanship

Jairo Senise is CEO of Gruma, a Mexico-based maker of flatbreads. In Strategy+Business, he explains the importance of adapting products to local tastes, which he calls "chefmanship."  (Okay, it could be "chefpersonship" I guess.)  He also demonstrates how local local can be.

Who knew that Texans generally like their tortillas fluffy, while Californians like them elastic and in Arizona they like them chewy?  The principle applies equally well to automobiles and detergents, he says.

Can You Hear Me Now?

Here's a tidbit from today's Wall Street Journal that must have application to the practice of marketing -- people speak about 200 words a minute, but can understand from 400 to 3000 words a minute.  So most of the time we're supposedly listening, we're actually thinking of something else because we're bored. 

Learning from Mickey

European bloggers have lots to say about travel to the U.S. and little of it is good.  For example, in this posting the London Telegraph's travel writer, Francisca Kellet, asks "why are American airports so dreadful?"  She gets no argument from her readers -- over two dozen took time to add their own horror stories.

But there may be hope.  Miami International Airport has begun to invest in customer service improvements.  It's sending staff to the Disney Institute in Orlando to learn how the Magic Kingdom does it.

Miami International Airport is a gateway to and from the Caribbean and Latin America. About 32.5 million passengers passed through the airport in 2006, including more than 14 million international passengers. But among 18 U.S. airports with 30 million or more passengers per year, only three airports performed worse in J.D. Power and Associates' 2007 North America Airport Satisfaction Study.

Most observers consider it a smart move on the airport's part, despite the cost ($15,000 for a half-day).  Now if only the customs and immigration service would sign up.

Glocal for Ramadan

Rebuilding Brand America encourages international companies to "glocalize" their brands, i.e., to adapt to local customs and tastes while respecting core values.

One good current example is Starbucks, which introduced new coffee flavors and packaging across the Middle East to celebrate the holy month of Ramadan.  Among the new flavors -- a date Frappucino and a special selection of Arabian coffees.  The cups even have a special holiday design of crescents and mosques. Read more in Al Bawaba out of the United Arab Emirates.

Things taste better under the Golden Arches

A small study purports to show that advertising to kids can change their taste perceptions.  Researchers at Stanford gave 63 three to five year-old kids identical portions of hamburger, French fries, carrots and milk, half in plain wrappers and half in McDonald's packaging. They then asked the kids which samples tasted better.

There was no significant difference between the hamburgers, but the kids preferred the French fries, carrots and milk in the McDonald's wrappers, in some cases by three to one. And the differences were greater among those kids who lived in homes with more television sets, leading the researchers to conclude that their preference for anything in a McDonald's wrapper was the result of advertising exposure.

"Marketing to young children should be regulated," they huffed and many in the media were quick to trumpet the results, generally ignoring the fact that most responsible marketers have already taken steps to limit ads directed to kids.

But the researchers may have missed the real point of their study. Three quarters of the kids ate in McDonald's restaurants regularly. Their brand preference was not so much the product of the chain's advertising as their own experience in the stores. The study simply confirms what many marketers already know -- the essence of McDonald's brand isn't "hamburgers and fries," otherwise the kids would have preferred the burgers in the McDonald's wrapper. McDonald's brand means "food, family and fun," which is why even carrots -- which the chain doesn't sell in the U.S. -- taste better under the Golden Arches.

Many academics and public officials confuse branding with advertising. Brand preference is the product of experience, not the residue of being bombarded with ads.

M'm M'm Good

I've been using P&G as the easy-to-understand example of how important it is to "localize" global brands. (Some Crest toothpaste in China has a jasmine tea flavor to capitalize on the local belief that tea is good for bad breath).  Now courtesy of the Wall Street Journal, I have another good example.

Campbell's failed to sell much condensed soup in China and Russia in the 1990s because consumers there refused to spend hard cash on something they could easily make themselves. Besides, the Chinese and the Russians take justifiable pride in the quality of their homemade soups. 

Rather than throw out the kettle with the soup stock, as it were, Campbell's sent cultural anthropologists into the kitchens of typical Chinese and Russian consumers. They watched how they made their soup and discovered that increasingly busy Russian and Chinese cooks would be interested in flavorful "starter stocks" they could use as the base for soups and other dishes.  You can read the whole story here (subscription required).

My Next Book -- A Work In Progress

I've agreed to write another book for the American Management Association. Without giving too much away, I can say that the general subject is "best marketing practices." If all goes well, it will hit book shelves in the spring of 2009.

This will be my third book for the American Management Association and I've decided to open the process a bit.  I'll be posting about my progress on the book over the course of the next year, including observations about people I meet, books I read and maybe even some of the first draft. The earlier post, "Marketing Lessons" just below, is a short example of some recent reading. 

I'm doing this is the hope readers of the blog will comment as I go along, perhaps even suggesting marketing and thought leaders I should talk to or offering their own examples of best practices. What accounts for the success of our best marketing people? Do they know something the average marketeer doesn't? What can we learn from their success?

If you have thoughts, you can post them here or, if you prefer, you can send me an e-mail . Thanks in advance for your interest.

Marketing Lessons

The Wall Street Journal's "Small Business Link" for July 2 demonstrates that great marketing is not limited to large companies that can afford to hire superstar marketeers. The Journal features three small businesses that built strong brands through innovative marketing. (Subscription required to see it on-line. Otherwise, go to the library and look it up on page B4.)

Steven Singer Jewelers used sophomoric stunts and edgy advertising on radio programs such as Howard Stern's to make its store stand apart from its rivals in the minds of the young males -- even at the expense of offending others. Chicken wing eating contests, anyone? How about a bubble bath in the store with models in lingerie? Lesson: build a brand for your target not someone else's.

Narragansett Beer rebuilt a brand with deep New England roots that had been allowed to wither by developing personal relationships with the people who run and frequent the bars where it's sold. But rather than trying to cover every bar from Block Island to Bar Harbor, it revisited the same bars to create "epicenters" of loyal users.  Lesson: go deep before you try to go broad.

Blendtec put everything from golf balls to iPods in the commercial blenders it manufactures, videotaped the results, and posted them on You Tube. The videos were so popular companies are paying to have their products blenderized just for the publicity value. Even the kooky rebuttals serve the cause of creating buzz.  Lesson: social media can put other people to work for your company.