Dick Martin Blogs

What happened?

My New Year's resolution is to get back to blogging regularly.  So I'll start with last year's biggest story: an outsider, dismissed by practically every professional prognosticator as an amusing sideshow, won the presidency. How'd he do it?

I think he did it by exploiting an old marketing technique: build a fire under the question to which you are the answer.  

In the 2016 campaign, such a question was already smoldering, but too few candidates noticed the smoke. Whether by instinct, chance, or study, Donald Trump became a human, high-decible fire alarm.

Trump recognized that many voters were angry that the country's best days were behind it. He articulated those feelings in a slogan that would fit on a baseball cap: "Make America Great Again." And he threw gasoline on the question implicit in it -- "Why are our best days behind us?" -- by fingering the culprits voters already suspected, from bad trade deals and Wall Street speculators to out-of-touch elites and dishonest media.  

The big story of 2017 is likely to be whether the marketing strategy that was so successful in a political campaign will work in governance. 

 

The Ethics of Mac 'N Cheese

Sometimes you can lie by not saying something. Sometimes you’d be lying if you did.

That was the position Kraft found itself in when it eliminated artificial flavors, preservatives, and dyes in its venerable mac and cheese. To keep its yellow-orange hue, Kraft substituted natural spices like paprika, annatto, and turmeric for yellow dyes number 5 and 6. Instead of chemical preservatives, it uses salt.

In fact, the new ingredients showed up on 50 million boxes of the stuff before Kraft called attention to the change. No claims of “we’re going natural,” no “new, improved.” What gives?

The company actually announced its intention to make the changes way back in April 2015. It even announced the changes would take place in January 2016. But then it said nada.

Like generations of marketers, the good folks at Kraft and its ad agency were seriously spooked by the brouhaha surrounding the introduction of “New Coke” back in 1985. They had nightmares about people pouring the “new” Kraft mac ‘n cheese down sewer grates, millions signing Facebook petitions to “bring back the old mac, and supermarket shelves piled high with iconic blue and orange boxes nobody wanted.

So they pulled a fast one and waited the introduction out. Some would call that a “soft launch.” Others might wonder if it’s even ethical.

To my mind, it’s perfectly ethical. Kraft announced its plans in advance. But it also knew that making a big deal about the changes would cause many consumers to perceive a change in flavor that wasn’t really there. In fact, some people claimed the product “tasted different” after the 2015 announcement, even though nothing had changed yet.

Waiting to confirm the recipe changes had been made protected consumers (and the company) from that psychological quirk. The proof that it was ethical is that no one noticed. Of course, if lab tests had found taste differences, or if it had substituted potentially harmful ingredients to save money, this would have been a whole other story.

But as it is, Kraft responded to many parents’ concerns about artificial ingredients. And that’s an ethical practice in itself.

Elements of Trust

Fortune magazine editor Alan Murray hosted a couple of dozen CEOs at dinner last Friday. They were all at the World Economic Forum in Davos, Switzerland, and apparently in a philosophical mood because the topic for discussion was "what big business can do to rebuild its trust with a global public that has clearly grown skeptical."

The topic is not too surprising: it's one of Murray's favorite questions. But the first suggestion to come from the discussion is promising.

As Murray reported it, his dinner companions quickly agreed on the importance of "putting purpose as well as profit at the center of a company's strategy."

That's promising on two scores. First, purpose is by definition long-term, and if this means CEOs want to take a longer view than next quarter's financial results, we'll all be better off. 

But even more importantly, it signals CEOs understand that "purpose," defined as what companies and brands actually mean to their stakeholders, is an essential element of trust.

But purpose or meaning is only one leg of the stool. The other two are competence and affinity.  And all three are defined, not by companies, but by their publics.

Competence

Trust starts as a judgment of someone’s competence to accomplish a specific task. Trust is context specific. I would trust my cardiologist to administer my electrocardiogram and to recommend changes to my lifestyle as a result.  But I’m not sure I’d trust him to fix my car.

Competence is largely a rational judgment, but it has an emotional undertone. It not only refers to people’s judgment of someone's capacity to accomplish a task, but also of the sincerity of their willingness to do so.  I know my doctor is competent – it says so right on his Board Certification. But my trust in him is also based on the judgment that he sincerely wants to keep me healthy. 

And that’s where trust leaves the realm of the purely rational. 

Affinity

Affinity is more than familiarity, it’s likability. It is sharing something with a brand at a deep psychological level. In some cases, it’s a feeling of security; in others, the bond of common values; in still others, a strong sense of identification.

Some brands have been around so long they have a strong emotional connection with consumers right out of the chute. How people feel about Coca-Cola, for example, can actually be seen in a functional magnetic resonance machine. Newer brands have to work hard to make those emotional connections. For example, everything from Red Bull's labeling and packaging to its advertising and sponsorships associate it with young people's unconscious appetite for rebellious fun.  

Affinity, like competence, is context-specific. And the context of both depends on a brand's meaning.

Meaning

Meaning is purpose, but purpose as others see it, not as a brand defines it. What role do people think a brand plays in their lives? This may be the most consequential question a brand can address. Harvard Business School professor Ted Levitt famously said, “People don’t want to buy a quarter-inch drill. They want to buy a quarter-inch hole.”  

A former student and disciple, Clayton Christensen expanded this insight into a jobs-to-be-done framework. He suggested the traditional ways of segmenting markets by demographics, geography, psycho-analytics, etc. misses the point. People don’t base their purchase decisions on factors like those. On the contrary, they hire products to do a job they want to accomplish.

That job can be functional, like a quarter-inch hole. Or it might be emotional, social, or even aspirational such as appearing to others as a professional wood worker. That's the brand's real purpose, its meaning.

Public relations and marketing are all about creating meaning. Finding a product’s most meaningful purpose is an essential step. Procter & Gamble, for example, found a way to give everything from Pampers diapers to Pringle’s potato chips salient meaning. Pampers are not just a container for solid and fluid waste. They’re an article of clothing that plays an important role in baby’s development, from her first days in the hospital nursery to her last day of toilet training. And Pringle’s might be of dubious potato lineage, but customers have no question it’s slice after slice of unexpected joy.

Meaning, competency, and affinity are the elements of trust. But they only work when they are in alignment. And that alignment begins with definition of higher purpose, as portrayed in the drawing above.

For a fuller description of the Elements of Trust, see a paper I wrote for the Journal of Business Strategy: Towards A Model Of Trust.  

 

 

 

Web journalism arrives

The Internet ran over journalism. And a lot of people are just waiting for the victim to stop twitching so they can bury it. 

There are plenty of reasons to despair that it was a hit-and-run. Advertising and readers fled print media to go online. Traditional newrooms emptying or shutting down completely. PR people now outnumber reporters 5 to 1 and make 40% more.

Worse, most of what runs on the leading "news" websites are repurposed stories from the remaining legacy media. Endless "listicles" seem to be the web's most signifiant contribution to the trade. Otherwise, partisanship reigns in online echo chambers of conspiracy hounds and smear mongers. Elsewhere the newsweb exhbits a weird fascination with cute pets, ordinary people being stupid, and celebrities behaving badly.

But now a ray of hope has emerged from that dark cloud -- a one-man story factory named Steven Brill partnered with Huffington Post on invesigative journalism worthy of the likes of Upton Sinclair and Seymour Hersh at their best.

 "America's Most Admired Lawbreaker" is a 15-part narrative about Johnson & Johnson's marketing of the anti-psychotic drug Risperdal for "off-label" ailments like dementia in the elderly and autism in children. 

Brill is a lawyer-turned journalist-turned entrepreneur who founded American Lawyer magazine in  1979 and Court TV in 1989. After that, he turned his attention to other ventures, some of which failed (e.g., Brill's Content) and some of which succeeded (e.g., Journalism Online, sold to R. R. Donnelly for $45 million in 2011). Inbetween, he has written book-length invesigations into everything from America's public schools to its healthcare system.

Brill can type faster than most of us can write. His output is prodigious and its quality is first-rate. When he dives into a subject, he descends to the depths of an unmanned submarine and he turns over rocks embedded in the seabed for millennia.  

I should add here that I have no idea if the accusations he makes about J&J are accurate. But I should also note that the company has settled federal, state, and private suits over its marketing of Risperdal to the tune of more than $2.5 billion. 

But what's remarkable about Brill's story is not only its length, but the way it exploits all the capabilities of the web. This story was carefully constructed with sidebar links to videos, trial transcripts, depositions, and other primary source material that expands on the narrative and gives readers an opportunity to make their own judgments.

It's a devestating chronicle, exactly the opposite of shoveling content online. And an example of what web journalism may one day be. It also represents both a challenge and an opportunity for public relations practitioners. 

The opportunity of course is to use the same techniques to tell an organization's own story. The challenge is what to do when someone else uses them to tell a story about you.

J&J alas may be a case study of the latter. And every public relations practitioner should read and view "America's Most Admired Lawbreaker," not for schandenfreud's sake but as an object lesson in the power of new media.

 

 

 

Beth Comstock

The big danger in writing a book that profiles leaders in any field is that they won't be in their current position by the time the book comes out. That's especially true in marketing where the lifespan of the typical CMO is about the same as a fruit fly's.

So I started writing Secrets of the Marketing Masters with some trepidation. Sure enough, by the time the book was published, only one of the six marketers I profiled was still on the job. 

But my book's lonely exception proved my contention that marketing is not about downstream functions like sales or advertising but about satisfying customers' upstream needs, values, and aspirations. It's less about selling something than figuring out what customers need and how to provide it.

Beth Comstock had just become GE's chief marketing officer when I interviewed her more than a decade ago. And that was clearly her philosophy, not only in rhetoric but in practice.

She's not only still at the company, she was just appointed one of four vice chairs reporting to CEO Jeff Immelt.  She's still CMO, but her responsibilities have been broadened to include the entire purview of "Business Innovation." 

This excerpt from Secrets of the Marketing Masters helps explain how it came to be:

In a company with fabled bench strength, [GE CEO Jeff Immelt] made his top public relations executive the company’s first chief marketing officer since Welch had abolished the position 20 years before.  Immelt charged her with driving innovation throughout the company’s ranks. 

At first, her appointment as CMO had people outside the company, as well as some GE lifers, scratching their heads.  The fast-talking 42 year-old had begun her career covering the Virginia state legislature for a local news service, and later moved to GE's NBC, working in media relations in Washington and New York. ... By 1996, Ms. Comstock was NBC's chief spokeswoman, before becoming senior VP-NBC corporate communications. ... About two years later, in August of 1998, perhaps thinking about the imminent launch of his successor, Welch appointed her the company’s vice president of corporate communications.

An autodidact throughout her career, when Immelt broadened Comstock’s responsibilities to include marketing, she gave herself 90 days to figure out what she was supposed to do. She studied best practices at companies from Procter & Gamble to FedEx and 3M. She brought in a raft of marketing gurus and peppered them with questions.  And most importantly, she spent time with the company’s business leaders.

GE’s structure was the other reason people wondered why the company needed a chief marketing officer. Each of the conglomerate’s divisions handled its own marketing and was fiercely independent. Their mantra was “if you tell me what to do, you can also take responsibility for my numbers.”  That’s what had led Welch to eliminate the position in the first place. What would a chief marketing officer do at GE, other than preside over quarterly show-and-tell sessions that led nowhere?  

But Immelt had a little more than that in mind. ... In the fall of 2003, Immelt emerged from a series of long-range strategy sessions with his division leaders and told Comstock he was struck how often the environment and climate change came up in their discussions of emerging trends that would impact their businesses over the next five to ten years.  “I think there’s something there,” he told her, but I don’t know what. See what you can do with it.” 

To Comstock, taking on environmental issues seemed like a big leap for a company that had spent much of the previous decade refusing to excavate toxic chemicals it had dumped into the Hudson River (which was legal when GE did it).  What was widely perceived as the company’s “arrogance” had made it one of the environmental movement’s favorite targets.    

But she dutifully began an 18-month investigation of the issue, bringing in some of GE’s biggest customers for what she billed as “discovery sessions” with the company’s top leaders. In the course of the two-day sessions, 35 customers at a time, in industries such as energy, aviation or water debated market and technology trends with senior GE executives, including Immelt.  In effect, they were asked to imagine life in 2015—and the products they would need from GE.

Comstock and the other GE executives took away a clear message: rising fuel costs, ever tighter environmental regulations and growing consumer expectations will translate into demand for cleaner technologies across all of the company’s infrastructure businesses, which represented nearly 90 percent of revenue. ...

The company’s “ecomagination” campaign grew out of these sessions.  But Comstock hesitated to move too quickly.  Instead she began a year long “listening tour” among employees, customers, investors, activists and public officials. The basic idea had come from customers, but they cautioned the company not to get too far ahead of them, especially in talking to public officials.  Not too surprisingly, the other constituencies were all somewhat skeptical, especially the company’s own employees. 

“Our internal audience was the toughest,” Comstock remembers.  “They were worried it was just a PR campaign, that it wasn’t real. Some doubted we could deliver.  And they were all aware of the company’s very public battle to keep from removing PCBs from the Hudson River.”  To Comstock, this was a make or break issue.  “If employees don’t buy in, customers won’t either,” she says. “Marketing is all about culture — internally and externally. You can’t create something that sticks unless you get into the culture.” 

Skepticism was not limited to lunchbox toting rank-and-file employees.  Immelt told Vanity Fair magazine that by his count eight out of ten of the company’s senior executives “were against the plan” when they first heard about it in December of 2004. Comstock remembers the boardroom presentation as an audience of frowns that got deeper with every PowerPoint slide.  Over the following months, Immelt and Comstock laid out the argument for the program.  The company had already invested in it – as the number one producer of power-plant equipment, airplane engines and locomotives, it had little choice. 

Years of R&D had already given it the most efficient large-scale energy technologies on the market.  ... With the exception of the Hudson River controversy, GE actually has a good record on environmental performance.  Yale University's Center for Environmental Law and Policy gave the company plaudits for setting high standards and for holding managers accountable for meeting them. Finally, clean energy was vital in the overseas markets GE had already targeted for 60 percent of its growth and where major customers were subject to the Kyoto Protocol. 

Immelt summed up his pitch in a slogan that may have sealed the deal internally, as well as among other skeptical constituencies – “Green is green,” he says.  One thing GE employees do understand is the company’s relentless focus on revenue and profit.  “Ecomagination” was not being adopted because it was trendy, or even the moral thing to do.  It was about making money by giving customers what they need.

Immelt himself launched the “ecomagination” campaign in mid-2005, repeating his “green is green” slogan during simultaneous news conferences in Washington, DC, Brussels and Tokyo. Comstock says it resonated even more powerfully than she expected.  There were a few critics who sniffed “greenwash,” but by and large the environmental community took a wait and see attitude.  Immelt’s decision to negotiate an agreement with the Environmental Protection Agency to clean up the Hudson River obviously contributed to the cease-fire. 

But the campaign also rang true to most people.  The case histories were modest and believable.  GE salespeople were armed with “score-cards” that told customers in dollars and cents exactly what the lower emissions and higher fuel efficiency of a new GE product meant to them in fuel savings. And, in typical GE fashion, the company integrated the campaign into its business processes ... with targets and metrics to track progress.  Overall, GE set a very public goal to increase revenue from clean energy products from about $10 billion in 2005 to $20 billion in 2010. 

GE beat that goal. By the middle of 2014, the Harvard Business Review was able to declare, "The company has reaped $160 billion from the program since 2005. These revenues grew twice as fast as total company sales, providing a critical crutch in the post-financial-meltdown years (GE gets about half its business from financial services)."

And that is why Beth Comstock was made vice chair of GE. 

By the way, Secrets of the Marketing Masters was just published in Mandarin. Somewhere in China some young marketer is looking at Beth Comstock as a model to imitate. Not a bad idea for us all. 

 

 

Like a girl

Everyone knows sexism is wrong. Yet company after company stumbles into situations like the ads Bic posted on Facebook and then took down in the heat of a subsequent firestorm.

Is it because sexism is a matter of taste and highly subjective?  Or is it because, like many ethical issues, few people understand the principles by which to judge something right or wrong, good or bad? 

Make no mistake: sexism is an ethical issue, not simply a question of taste or manners.

Bic's ad is sexist because it's built on a demeaning series of stereotypes - literally de-meaning because they rob women of what it means to be female. It denies their full human possibilities.  It essentially says that to succeed women have to dress and act like pretty girls, while hiding the fact that they can think and work like men.  

That violates the three major ethical theories of virtue, duty, and consequences. Not to mention contemporary feminist ethics. It is uncaring, unjust, and obnoxious.

At the other end of the spectrum are ads promoting Always feminine hygiene products.

I have no inside information on the thinking behind the Always campaign, but I suspect it wasn't entirely idealistic.

Always' marketing team probably despaired of convincing women to switch away from the brand they had been using since puberty. So they chose to focus on their daughters and selected a message that would resonate with both -- girls can do anything, and they shouldn't let anyone put them down by saying they throw, run, or do anything "like a girl."

It's great branding. And ethically, it was a home run.  

 

 

 

Why legacy media went off the rails

Why did legacy media go off the rails?

It was operator error. But it was on the business side, not in the newsroom.

In their migration to the digital world, legacy media have been fairly successful in digitizing their content, but they've failed to exploit the real driver of revenue -- digital media's targeting capability.

Advertisers haven't flocked to digital media because they prefer bits to atoms, but because digital media can marry their messages to receptive audiences.  An ad in the New York Times theoreticaly can "reach" millions of readers, but only a handful actually notice it and even fewer are interested in the product or service advertised.

Google Ad Words has long matched ad messages to people searching for a specific topic. Now, new apps from the likes of Apple and Facebook will match ads, people, and some of the best journalism available.

The recently announced Apple News app will curate articles from mainstream media, feed it to people with a pre-determined interest in them, and accompany them with ads targeted to their past buying behavior, demographics, and attitudes. Of course, Apple will share ad revenue with the source of the article. Ditto Facebook's Instant Articles feed.

Both apps promise to give readers highly personalized feeds tailored to their interests, something legacy publishers like the New York Times have been unable -- or loath -- to do.

Legacy media's inability to make money from their content hasn't been a failure of journalism, but of the business side that's supposed to feed it. The closest the business side has come to producing a new revenue stream is "native advertising," which is essentially an effort to disguise ads as  journalism. 

Meanwhile, many publications are willing to give up 30% of the ad revenue associated with the stories Apple and Facebook decide to publish.

Prediction: they'll get hooked on that revenue, Apple and Facebook will reinforce their positions as dominant information channels, and that 30% share will shrink. 

 

 

 

Preview of coming attractions

The image above is our future. It portrays the U.S. population in five-year age increments over the coming decades.

We go from a lumpy pyramid with lots of young people at the base and a few old codgers at the peak (as in 1950) to more of a rectangle with pretty even age distributions, except for a really large group of octogenarians-plus at the top (as in 2060).

I won't be around to see it, but what happens between now and then has implications for marketing, public relations, and politics that are worth considering.

• Daniel Moynihan attributed the turmoil of the 1960s to the large cohort of adolescents and 20 year-olds produced by the Baby Boom in that period. How will the huge cohort of Boomers entering their 50s over the next few years change our culture and politics?
• By 2060, there will be almost as many people over 85 as younger than 5. Will that create greater division or less? Our experience so far is that young and old don't purchase, vote, or think alike. Will that continue? 
• At the same time the population turns gray, it's also becoming multi-colored. By 2042, we will be a minority-majority population. That's already true in four states and in our 18 larhest metro areas. Do our communications reflect that yet?  

 For more questions (and a few answers), I recommend the Pew Research Center's latest report, Next America.

 

 

The ethics of advertising drugs

In the world of communications ethics, most discussions focus on lying in its multifarious forms -- spinning, obfuscating, deflecting, etc. 

But totally truthful communications can also raise ethical questions.

For example, here's an issue I've been pondering lately: do the risks of advertising prescription drugs directly to consumers outweigh the benefits?

On the one hand, direct to consumer advertising helps educate patients and makes them more likely to take the drugs a doctor prescribes.  But since pharmaceutical companies advertise only their newest and most expensive drugs, it contributes to the rising cost of drugs.

Furthermore, many physicians complain that patients pressure them to prescribe advertised drugs even though they don't understand the potential risks. In fact, physicians are far more skeptical about direct to consumer advertising than patients.

And there are other questions:

• To what extent has direct to consumer advertising promoted an attitude that good health is the product of drug consumption rather than healthy habits?
• Has direct to consumer advertising made the consumption of presecription drugs seem "normal," rather than an extraordinary intervention to cure an abnormal condition? 
• Are recent increases in direct to consumer drug advertising, prescription drug abuse, and heroin usage simply coincidental or correlated?

Industry spending on direct-to-consumer advertising rose tenfold in the last five years. Prescriptions written for opioid painkillers such as Vicodin and OxyContin rose more than 500 percent in the same period. There's no question that a lot of those drugs are eventually used for non-medical reasons. As a result, more than 100 Americans die of a drug overdose every day, more than twice the number ten years ago. 

And as prescription drugs become more expensive, harder to get, or simply less effective, they have become a new pathway to heroin addiction. According to the National Institutes of Health, one in 15 people who take non-medical prescription pain relievers will try heroin within 10 years. 

Drug overdoses and heroin addiction in suburban New Jersey have increased so dramtically the state issued a stark warning last year:

"We now live in a state where abuse of prescription pills serves increasingly as a primary route to the unlawful world of heroin, an intersection of the legitimate and the illicit that constitutes a crisis whose devastating consequences are plain for all to see."

Pharmaceutical companies -- many of which make their headquarters in New Jersey -- need to get ahead of this developing crisis. Part of their agenda should include studying the societal effects of direct to consumer advertising. We know that when characters smoke in movies and on TV the rate of smoking among teens increases. Might the same thing be happening here?

Big Pharma may be on the slippery slope Big Tobacco plowed a few decades ago. 

 

 

Trader Joe's Fearless Flyer

A great example of branded content landed in my dead tree mailbox the other day. Trader Joe's Fearless Flyer is published every now and then by the grocery chain of the same name. 

The Fearless Flyer (get it?) looks like it was put together by stock boys with access to Victorian era clip art and a word processor. 

My copy ("Always free and worth every penny") ran to 24 magazine-sized pages of very cheap-looking paper. ("Printed on 100% recycled paper with soy-based inks. For mental consumption only," it says in tiny type along the spine.) 

The soy ink apparently comes in three biodegradable colors because the flyer is chock-a-block with stories printed in red, blue, or black. Some stories are circled with a think line of the same color. "Gluten Free Mac & Cheese" warranted highlighting; "Gluten Free Greeting Cards" didn't.

The chain itself describes the Flyer as a cross between Mad magazine and Consumer Reports. But it's really much more.

It's a semi-private communication with the chain's cult-like followers. And it's just what they would expect. 

Not only does it announce that it's selling Organic Tomato Basil Sauce for "Just $2.29!" as any grocery flier would, it describes just how it's made -- "simmered in small batches to bring out the bright flavors of the fresh ingredients" exclusively for Trader Joe's.

There are also short articles on subjects like Poutine, "a mess of good things" from rural Quebec, 4 Kouigns Amann, "a classic French pastry" that is "the darling of the food scene right now," Pa Jeon, scallion pancakes made especially for the chain in South Korea, Quince Paste, made for the chain in New Zealand, and Barramundi Fillets, a mild white fish native to Australia, but grown just for Trader Joe's "in low- density farms, on sustainable feed, with the utmost consideration given to cleanliness and sustainability."

The flyer also advises on the history and correct pronunciation of its "carefully cut camembert (that's cam-em-BEAR)" and the difference between a serum and a lotion or a cream ("Boy, are we glad you asked that question.).

Add National Geographic to that mix of analog publications. 

Plus, on page 13, there's a pre-printed shopping list of all 87 items mentioned in the flyer, organized by department and cued to the page on which they're described. Ever helpful, if quirky, the editors also provide space on the list for "Things You Don't Need."

It all works for some reason. (There's also an electronic edition, with the same steampunk graphics, but it doesn't have the same tactile, low-rent quality as the print version.)

The Joe in Trader Joe's hasn't been around since he sold the business to a German retailer back in 1979. But all the store's "crew members" still wears Hawaiian shirts just like he did, and the in-store signage still has the vibe of a South Seas trading post.

It's a company that knows what it is and what it stands for. And it communicates that character by exercising it, not by advertising. It hires extroverted people to staff the stores (want to wear a Hawaiian shirt year-round?), stocks a fraction of the groceries the big chains do, but compensates by offering products unavailable anywhere else. About 80% of its goods are private labled.

In fact, a lot of it sounds like it came straight out of the cargo hold of some world weary vessel that just washed up on the beach.

All of which gets to the essence of effective branded content -- it reflects a brand's character and higher purpose, the fundamental reason it's in business and the unique approach it takes to fulfilling that purpose. It's a customer service, not an ad.

Higher purpose doesn't have to be high-falutin', but it does have to be deeply rooted in customers' needs, aspirations, and values.

Trader Joe's customers care about low prices, organic and sustainable products that are sometimes unusual and almost always unique (e.g., miso ginger broth from Japan, botantical foaming hand soap, and organic coconut sugar). 

That's what Trader Joe's is all about, from its inventories to its pricing. And even its occasional Fearless Flyer.

 

What's your product's job?

Harvard Business School professor Clay Christensen says business people should ask what job customers hire their products to do.

It's a clever way of applying an observation one of his professors at the same school made. "No one buys a quarter-inch drill bit," Ted Levitt told his students, "they buy a quarter inch hole."

I was reminded of all this by a story in today's Wall Street Journal. Despite reporting a quarterly loss of $4.4 billion, Blackberry's stock price went up 15.5% yesterday.

Why? Because the CEO promised that the company would redirect its attention from designing and manufacturing smartphones to developing the software and services on which they run.

In fact, I had lunch with a friend yesterday who sheepishly pulled a Blackberry out of his pocket. "I'm only using this," he said, "because my IT people won't let me use anything else. They say other networks aren't secure."

He's a lawyer and one of millions of professionals and business people who don't buy wireless phones simply to make calls or check email, but primarily to ensure their communications are secure. That's what they were hiring Blackberry to do.

But then the company wandered away from that job to follow some flashy new things that seemed popular, sending sales (and its stock price) into freefall. Its stock price has started recovering because smart investors believe the company has seen the error of its ways.

One of the PR department's biggest responsibilities is to help senior management stay in touch with the job customers hire the company to do. 

 

Three-dimensional thinking

We live in a three-dimensional world (four if you count time), yet much of our thinking is two-dimensional. That's partly because so many consultants use two-by-two matrices to show relationships between different factors.

I've gotten into the act myself over the years. Recently, I suggested that trust is a function of rational and emotional factors, most specifically people's feelings of affinity and judgments of competence.

I stand by that theory but it occurs to me that the context within which this happens matters enough to warrant the addition of a third dimension.

Trust remains theoretical until it meets the job that people want done. That job can be functional, emotional, or social. Every job has meaning, but some have higher significance to people than others. For example, for some people, a drink that contributes to their sense of identity has higher meaning than one that simply quenches their thirst. 

A brand's higher purpose occupies the quadrant of a three-dimensional model where its recognized competencies are applied to a meaningful job people really care about. 

Market leaders have figured out how they can make a difference in people's lives. It is their higher purpose -- the reason they're in business, beyond making money. 

Higher purpose doesn't have to be high-minded, but it does have to be deeply rooted in an understanding of people's needs, values, and aspirations within a company's areas of competency.

Determining a brand's higher purpose is not a job for the company wordsmiths. A brand's higher purpose defines its very business strategy. It needs to permeate every function, system, and operation.

But the organization most associated with managing stakeholder relationships and articulating the company's values is often best positioned to help lead such a definitional effort, integrating different perspectives across the C-Suite. And helping to ensure that the brand's higher purpose reflects that fourth dimension -- time -- as people's needs, values, and aspirations change. 

 

 

Better smart than right

Elon Musk is a smart guy.

He can do math. And by his count, despite the current brouhaha, his electric car is safer than the typical gasoline-engine car.

His math: a gasoline car goes up in flames for every 20 million miles driven.  But so far his Tesla Model S cars have had only one fire per 100 million miles. And one of those fires happened after a drunk driver jumped the curb, took out several feet of concrete wall, and then hit a tree. Any car would have burst into flame after that. (No one has been hurt in any of the fires.)

Nevertheless, after initially trying to defend his electric cars with data, Musk is taking a smarter approach:

• He expanded the car's warranty to cover all fires (even those caused by drivers).
  
• He rolled out an over-the-air update to the air suspension to give the car greater ground clearance at highway speeds, reducing the chances of underbody impact damage. A January update will give drivers even greater control over ground clearance.
  
• And he's invited the National Highway Traffic Safety Administration to conduct a full investigation into the fires, pledging to make any changes they recommend to improve fire safety both in new cars and as a free retrofit to all existing cars.

As I said, he's a smart guy. He understands that his customers' trust is a product of both logic and emotion. He can address people's logical cognitive processes with data, but as Daniel Kahneman and others have noted, that part of our brain is slow, costly, and lazy. 

The faster, cheaper, and far more compelling part of our brain doesn't respond to facts and figures. It runs on memories, associations, and feelings. It's subject to all kinds of illusions and faulty rules of thumb. But it usually gets the job done while the more logical part of our brain is still trying to get in gear, espcially if there's any risk involved.

So Musk is almost certainly right -- based solely on their power source, electric cars are inherently safer than gasoline cars. But he'd be wrong to depend only on that fact to win his case.

It's always better to be smart than right.

Branded content invades the news

My latest column in the Conference Board Review is on brand journalism, which is the new-fangled term for "sponsored content."

The idea is that advertisers can break through the clutter of print and electronic media by offering content that is useful and somehow connected to their core competency. It's the latest shiny new thing in marketing.

Of course, it's hard to believe branded content could ever invade the "real" media like the network evening news programs. Except it's happening. And the perpetrators are the news divisions themselves.

Last Thursday on the CBS evening news, for example, Scott Pelley devoted three minutes to excerpts from an upcoming "60 Minutes" story he did on Lanborgheni's 50th anniversary. It included just enough of his whitknuckled time on the company's test track to pique viewers' interest. 

This morning, NBC's "Meet the Press" ran part of a Matt Lauer interview with Bernard Kerick, New York City's disgraced Police Commissioner. Kerick actually had some interesting things to say about the way minimum sentencing guidelines are crowding prisons with people convicted of nonviolent drug crimes. But the issue was given so little time on the program that the excerpt's real purpose was evident -- to promote the "Today" show on which it would run the next morning.

The network news divisions are entitled to run as many cross-program promotions as they like. But when this kind of "sponsored content" gets in the way of real news, it's no better than "human interest" stories featuring puppies and babies. 

Ironically, the news divisions are violating the cardinal rule of brand journalism -- be useful and, if you can't be useful, be interesting. Otherwise, don't.

While I was out

I've been away visiting friends and enjoying warm Southern hospitality all the way from Little Rock to Toad Suck, Arkansas, with a terrific stop at the Crystal Bridges Museum in Bentonville.

While I was away, my latest column for The Conference Board Review came out.

It surveys the shiny new thing in marketing variously called "native advertising," "brand journalism," or "sponsored content."

You can read my column here.

Ironically, the advertising column in today's New York Times notes that the development has begun to attract the interest of folks over at the Federal Trade Commission.

All in all, I think that's a good thing. Whether "native" or "sponsored," content created by "brand journalists" won't work unless (1) it's genuinely useful and (2) its source is clear. 

But it can be a powerful way to deepen customer relationships, which is what marketing should be all about.  

 

P&G Part Two

I haven't blogged for a while because I've been working on a project that has totally occupied my time. (More on that in due time.)

But a piece in today's Wall Street Journal about P&G prompted some rethinking of my second-to-last book, Secrets of the Marketing Masters.

I spent some time discussing P&G's marketing strategies in that book. Generally, I thought they were masterful. But since the book came out, the company installed a new CEO and the chief marketing officer left. It was hard to tell whether the steep decline in market share and stock price that followed was the product of those changes or of the Great Recession.

Well, now we may find out. The old CEO is back and one of his first big moves will apparently be reorganizing the company into four groups. The Journal thinks that will help identify and test his possible successor. That may be.

But it will also give us some insight into his business strategy. Here's what I mean. 

P&G markets a very broad product line, from diapers to laundry and personal grooming. The Journal suggests the company will group those products by common ingredients. "Paper-based products like Bounty paper towels, Charmin toilet paper, Pampers diapers and Always feminine care products are likely to end up in one sector," it writes.

If the company thinks its major problem is on the manufacturing end, that might make sense.  After all, Pampers and Tampax both start as trees.

But if the company realizes that the root of its problem is in understanding and serving consumers, it will take a very different approach.

Pampers and Luv diapers ($11 billion businesses) will stand on their own with the goal of figuring out how to better serve babies and their parents.  Feminine beauty products like Clairol, Puffs, and Cover Girl will be in a separate group with similar goals. Same thing for masculine grooming. Etc.

That may end up creating more than four groups, but it will focus the company on what really matters -- staying in touch with customers and their changing needs.

That's the biggest secret of the marketing masters. And the company that taught it to us is P&G itself.

 

Time to go

The older I get, the more I relearn the same lessons.

Luckily, these days, it's usually at someone else's expense.

Case in point: Time Warner's decision to spin off its publishing unit, the venerable Time, Inc.

It's not hard to understand why the TV and movie company would want to rid itself of a declining business like print magazines. It doesn't need the drag on earnings growth. Plus, spin-offs are a golden opportunity to beef up the balance sheet by extracting a special dividend and casting off debt.

The more interesting question is how Time, Inc. got itself into this position.

Some say it was inevitable -- much of the advertising that sustained magazines like Time, People, Fortune, and Sports Illustrated were siphoned away by the likes of Google.

But I think Time, Inc.'s problem was more fundamental: the company never really understood what business it is in. It bought AOL because it saw a natural fit between its business (content) and AOL's (electronic delivery).

But in fact, AOL was in three businesses -- dial-up Internet access, communications services such as email and instant messaging, and a portal or home page from which unsophisticated users could begin their exploration of the Internet.  At the time of their merger, the first of those businesses was about to go the way of buggy whips, the second had no relevance to Time, Inc., and the third hid behind a "walled garden" that was easily -- and quickly -- displaced.

Time, Inc. didn't even understand its own business, which was more than raw "content" as defined by copyrights and trademarks. The company was actually in at least three businesses -- branded journalism, advertising sales, and magazine distribution.

When the Internet came along, the company shoveled all its branded journalism onto a single platform called "Pathfinder," as if it was the electronic equivalent of its print distribution network. Its storied titles wern't allowed to build their own presence on the 'net. And the audiences that trusted them went elsewhere. So did advertisers.

The spin-off of Time, Inc. represents an opportunity to correct those mistakes. But the company's success depends on two things. First, that the new management really understands what businesses it's in. And two, that it has the financial capability to invest in them.

I hope the company learned those expensive lessons from the likes of AOL and AT&T. 

Related articles

Time Warner to spin off magazine business this year

Time Warner Spinning Off Time Inc. Magazines

Pondering the Fate of Time Inc.

Time Warner Is Spinning Off Time Inc. Magazines

Poll diving

There's lots to learn from the recent election, both in the way the campaigns were run as well as from all the polling data.

In this post, I do a little poll diving.

The best presentation of the presidential exit polls I've seen is over at Fox News. 

I'll be digging through the results for the next few days, looking for insights that might have application in public relations and marketing. Here's one consideration that companies should ponder: 

The pollsters asked people who had just voted, "Which one of these four candidate qualities mattered most in deciding how you voted for president?"

                                                   Total      Obama        Romney

    Shares my values                       27%          42%            55%

    Is a strong leader                       18%          38%            61%

    Has a vision for the future          29%          45%            54%

    Cares about people like me         21%          81%            18%

Governor Romney did better than President Obama on the first three, but Obama blew him away (81 percent to 18 percent) on the fourth, which was regarded as most important by 21 percent of the respondents. In fact, Obama's margin on that single characteristic trumped Romney’s combined margins on the other three qualities.

Similarly, on the question of "who is more in touch with people like you?" Obama has a ten point lead over Romney (53% to 43%).

On the critical issue of who would best handle the economy, Obama and Romney were essentially tied (48% and 49% respectively). 

The touch-feely question of who cared more appeared to be the tie-breaker.

Big Business, which may have been one of the big losers in this election for reasons I'll get into in future postings, should pay heed.

  

Global business leadership

What does it take to be a global business leader, to jump out of one pond into another? 

The Harvard Business School's "Working Knowledge" blog has a good posting on the essential qualities required.

They count five:

1. Good understanding of the global business context,
2. A perspective that is simultaneously global and local, 
3. A bias for "non-dominant" thinking (i.e. outside HQ),
4. A knack for cross-border partnering and,
5. The ability to develop strong internal and external networks.

It's a good list.

It comes courtesy of Bill George, currently a professor of management and ethics at Harvard and formerly CEO of Medtronic.

But with apologies to Prof. George, who has probably forgotten more about globalization than I will ever know, I think it misses the single quality that underlies all the ones he lists.

Empathy.

The ability to see the world as others do, to feel what they feel, is the key to successful leadership. It's what enables business leaders to see beyond what customers say to what they really mean. It's what enables them to see beyond differences to what we have in common.  

Empathy is hard-wired into all of us. Scientists have even found its biological seat in the neurons of our brain. But its natural range is relatively short. We have little trouble empathizing with members of our immediate family or close friends. But empathizing with people outside that tight circle is more problematic.

Learning to draw that circle larger is possible, however. Empathy can be developed and refined. That's the real secret to business success. And it's even more important when the ratio of difference to familiarity is high, as in global markets.

 

Ale to the chief

People supposedly vote for the candidate they'd most like to have a beer with.

So tavern photo ops have become a campaign staple, as President Obama demonstrates in the photo above.

Governor Romney, a Mormon, says he hasn't had a beer since he was a teenager. But he demonstrates his "regular guy" creds by scarfing hot dogs every chance he gets. Bending elbows with pint in hand has been delegated to vice presidential nominee Paul Ryan, who hails from a brewery-rich state.

Vice president Biden drinks only non-alcoholic beer. So President Obama has compensated by releasing the formula for a brew he and a White House chef concocted.

Things have reached the point where the National Journal has analyzed consumer data to determine the politics of beer drinkers.  See below.

Coming next: boxers or briefs, and what they say about how you'll vote.

Brand Power

Kids are more likely to drink milk if it comes in a cup with Ronald McDonald's photo emblazoned on the side.

It seems something similar happens in politics.

Bill Bishop reports on a new poll of rural voters in several swing states.  The poll gave voters two different positions on immigration and asked them which they preferred. In some cases, the positions were attributed to the Democratic and Republican parties; in others, there were no party labels.  The result:

Rural voters supported the Republican position when the statements were labeled “Republican” or "Democratic." 

 When the same positions didn't have party labels, rural voters supported for the Democratic position.

See the chart below, from The Monkey Cage. (Red and Blue bars refer to each party's position, not to the political affiliation of the voters.)

Pole dancing the news

I confess to occasionally reading "The Drudge Report."

This morning's edition featured a headline in the finest tabloid traditions: "Traffic signs in New Zealand destroyed by pole-dancing prostitutes..." 

Drudge linked to an item in the Telegraph of London, which curiously hedged a bit by casting the story in the  passive voice.

In the paper's original story, "More than 40 poles have been bent, buckled or broken in the past 18 months in one area of south Auckland, New Zealand, it is claimed." 

The "claim" was attributed to a local official who alleged that prostitutes use the street signs "as part of their soliciting equipment" and often snap them. "Some of the prostitutes are big, strong people," she said.

Obviously.

True, false, or exaggerated, for my money, Drudge's headline is right up there with the classic New York Post headline: "Headless body in topless bar."

That headline inspired a movie, a German rock album, and a book on homicides in strip clubs (725 cases as of the first printing). Not to mention all the papers it sold.

The perpetrator -- of the afore-mentioned decapitation, not the headline -- was denied parole earlier this year. The editor who actually came up with the headline has never been identified, though many have claimed credit.

Now, the pole-bending-prostitute story was not the lead item on Drudge. And it may have already slipped off the site's home page by the time you read this. But I think it tells us something about news on the web. And it's not a lesson to be drawn exclusively from right-leaning web sites.

This morning's left-leaning Huffington Post home page featured the headline "Circus tiger urinates on wealthy patrons." The actual story, in which the tiger "pees on wealthy patrons," was based on reports from the New York Daily News and Novosti-Kazakhstan, where the "pee-formance," as Huff termed it, actually occured.

The Huff Post "breaking news" story of events now four days old featured a video, a Google map of the town where the "pee-culiar" event occured, and a blogger's first-hand description of tiger urine  as "very savory, like yeast and salt and an added mix of strong herbs simmering in rotten meat broth." 

TV news used to follow the adage "if it bleeds it leads" because producers knew that Neilsen ratings would soon follow, as would -- like lemmings -- advertisers. Web site producers, who don't have to wait for Neilsen,  simply follow clicks in real time. 

Drudge and Huff Post are an agglomeration of tabloid headlines, designed to incite clicks. The headlines that get the most clicks move up on the home page. The laggards drop off. 

The world's Daily Newses, Novosti-Kazakhstans, London Telegrams, and legions of other dying newspapers complain that they are not being compensated for their content, whether it is sliced and diced (as in the circus tiger "story") or simply hijacked (as in the New Zealand pole-bending story).

They have a legitimate gripe. But the real losers are all the people who look to the likes of Huff Post and Drudge for the filtering and aggregation of their news. 

According to Pew Research, half the top ten "news sites" are tied to so-called legacy news organizations, such as the New York Times, CNN, or Fox. The other half are online-only outfits, such as Huff Post and Drudge.

The question is whose business model -- curate for clicks or report for news -- will prevail.

 

Born digital

Back when I was in my twenties, we were warned not to trust anyone over 30.

There was a huge values gap between my generation and those that came before. It was reflected in the sexual revolution, feminism, civil rights, and especially the Vietnam War protests.

It got quite noisy, kind of like Occupy Wall Street on steroids (or, more appropriately for the times, amphetamines). 

A similar gap is opening, albeit more quietly, between those of us over 30 and our children and grandchildren.

Anyone born after 1980 -- today's 32 year-olds and younger -- was born into a digital world.  They have never known life without personal computers, cell phones, email, texting, web sites, or on-demand media. 

They are more tightly connected to each other –more than eight out of ten send text, email or instant messages; more than half use social networks of some kind. 

They are natural multi-taskers and expect everything to happen quickly. The meritocracy and openness of the Internet made them very impatient with hierarchy and information hoarding.

Most of them lived through the dot.com, stock market and housing booms, as well as the busts. They grew up adapting to innovation and change.  They don’t draw a sharp line between work and the rest of their life. They want to enjoy both.

But they don't live in a world of linear entertainment and information. They watch less TV than previous generations, go to fewer movies. The news they consume is tailored to their interests and arrives through social media or the web. And what scripted entertainment they do watch is much more likely to reach them on-demand than on a distributor's schedule. They’re media savvy and trust their friends more than ads or third parties.

The “born digital” generation is also more culturally diverse -- one out of three is Hispanic, African American, or Asian. They’re socially conscious and more aware of the world around them than previous generations. And they're more open to new social and moral standards, such as births out of wedlock, interracial and gay marriage, and even abortion under certain cirecumstances.  

Anyone who isn't seriously considering the implications of these cultural changes for their brand, their company, or their community is in for a lot of trouble. As Dorothy told Toto, "We aren't in Kansas anymore."

 

Great to see you out

We'd all like to think the actions corporations take are guided by doing what's right.

Those of us who worked on executive row know the real world is a lot more complicated.

But one question seems to consistently resolve the thorniest moral dilemma: which action has the better payoff?

So a recent story in the Wall Street Journal may explain why more companies are paying attention to their gay customers.

It quotes Bob Witeck, a consultant who has studied the gay community for 20 years. He estimates there are roughly 16 million gay adults in the U.S. with projected spending power of $790 billion this year, or roughly $49,000 each.

That compares to annual per capita spending of about $26,000 for the overall market.

Add the millions of people who support greater inclusiveness based on sexual orientation, and it helps explain why companies like J.C. Penney, Target, and Miller/Coors are suddenly becoming OtherWise. 

 

 

OtherWise P&G

P&G is one of the most OtherWise companies in the world.

It demonstrated that again today by announcing that it will move the headquarters for its personal care business to Singapore, where its baby care business is already headquartered.  

Only about 20 people will make the actual move, but it's another sign that the company's future growth is outside the U.S., particularly in Asia.

P&G was relatively late to foreign markets, at least compared to its chief competitor, Unilever. But it quickly learned that it couldn't simply peddle products designed for the U.S. market in other countries.

In fact, P&G built its market leadership in countries like China by sending researchers to live with local families, observing how they did the dishes, changed the baby, washed the laundry, etc. Then it reformulated its products to meet local needs, tastes, and customs.

Today, almost every global consumer company knows that it must take that OtherWise approach to foreign markets.

But few have reduced it to such an art as P&G.