Beyond Conventional Marketing
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Beyond Conventional Marketing: Q&A We recently sat down with the founder of Syal Consult, Verinder Syal, to gain a better understanding of how to go beyond conventional marketing. These are a few highlights from that interview. There are so many different definitions of marketing flying around; it can be difficult to grasp what marketing truly means. What exactly is marketing? Is it TV commercials or magazine Ads, billboards, or signs plastered to storefronts? That is a great question. All the things that you mentioned are products of marketing. But they are not marketing itself. The classic definition is from Professor Phil Kotler: “The analysis, planning, implementation, and control of carefully formulated programs designed to bring about voluntary exchanges of values with target markets for the purpose of achieving organizational objectives.” Wait, run that by me again? Yes, it is a bit dry. I chuckle at the “voluntary exchanges.” I like this one quite a bit better… “My definition of marketing is to find out what your customers want and then give it to them.” – Tim Cohn (Marketing Consultant and Author) Marketing is ultimately about solving a problem for the customer, or filling his un-met need. What then are the key components of marketing? In classical marketing, they talk about the 4 P’s, which are essentially: product, place, pricing, and promotion. A lot of emphasis is placed upon these by most companies. What is the product? How should we distribute it? How much should we charge for it? And of course, how do we promote
it – what kind of advertising should we use, that is to say, in which medium, how often, what “sale” to have, etc. Okay, that makes more sense, but how does a company know what works? How do they decide how much to spend, and on what? John Wanamaker once said, “I know half of my money is wasted on advertising, I just don’t know which half.” Essentially what he is saying is that we know marketing works, but the trick is to figure out which parts work for specific companies or products. That is the key; it is part art, part science, and the processes involved are constantly changing as we adapt to the wants and needs of the customers. Ad agencies love blockbuster commercials; commercials that will win them awards. Think Super Bowl commercials. The question is, do they sell any products? Time and time again, people will be able to describe the story line of such a commercial but won’t remember what product it was for. The ad may win various awards but it doesn’t help the company if no one associates that amazing commercial with their product. There is a false notion that too much precision automatically ensures a better outcome – like doing a calculation to the sixth decimal place. Ad agencies, smart MBAs, and complicated spreadsheets provide a comfort that allows for this delusion; embellishment replaces simplicity and often the fundamental message is lost in the fray of sophisticated techniques. What’s missing is the basic question: Why does the customer buy the product? What need is the company fulfilling? What problem is it solving?
Beyond Conventional Marketing It sounds like it should be a no-brainer. If a company is selling a product, then shouldn’t it know why its customers are purchasing it? Hasn’t it already figured out what the customers want? Therin lies the problem: superficiality. Too often, businesses look at the surface and not beneath it. Understanding what motivates a customer is a quest for knowledge. It requires discipline and it certainly doesn’t seem fun compared to making an eye-popping commercial. Peter Drucker explained it as the following: The customer is not just buying a product or a service. They are buying a utility! It’s what the product DOES for a person that is the key, not the product itself. Think about the profoundness of that statement. It is not about the features and benefits. It is about what that product does for them. So you have to actually understand that the reasons a customer purchases a product are not onedimensional. Often the customer cannot even explain it. You have to observe, intuit, experiment, and solve. Prof. Theodore Levitt captured this same dilemma this way: “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.” A drill company keeps trying to figure out how many sizes of drills to sell, what voltage, what handle style, where to place them in the store, and so on. Why? Because they sell drills and that is what they are focused on. You can understand why a large selection of multicolored drills with diamond studded handles might be a bit overwhelming to a customer who ONLY wants to make a quarter inch hole in the wall, quickly, easily, and inexpensively. Think about the phone companies. A customer wants probably three key things: to make and receive calls, to check emails, and to send and receive text messages. I would imagine that covers probably 90% of what a customer really wants. Now look at the phone companies – are they focused on making it easy for their customers to do that?
-2Just look at the plans they offer – they are certainly not models of clarity and simplicity. Most people end up feeling frustrated or swindled. How much loyalty is there? How many people love AT&T, as opposed to their iPhone, for example? That’s true for me; I definitely delayed getting my iPhone for about 3 years to avoid having to deal with AT&T. But I digress; so let’s say I want to start a new company. How do I figure out what a customer really wants? The easiest way to find out what a customer wants is to simply ask them, and more importantly, listen to what they have to say. I recently read an article about a brand manager who had taken over running a great old brand “Hamburger Helper,” owned by a great marketing company – General Mills. Sales had been anemic for a couple of decades and everyone was growing vexed. Then she did something brilliant. She asked several users of the products if company representatives could come tome their homes and watch the product being made, served, and enjoyed. Guess what happened? They were able to learn a ton of new things, applied them to their strategy, and the brand is regaining its former luster. Amazing – this notion of seeing it through the eyes of a customer. Let’s talk more about this notion of “utility” that Drucker enunciated. Some years ago there appeared in Harvard Business Review a very insightful article called “Marketing Malpractice.” In it the authors suggested: “With few exceptions, every job people need or want to do has a social, a functional, and an emotional dimension.” That is the utility that Drucker was talking about. I think I can follow; can we have some more examples please? Sure. Let’s start with something simple. Jeans. Susan Yara wrote an article in Forbes a few years back called “The Most Expensive Jeans.” Here are some interesting facts from this article: “…a pair of Levi’s can be bought for less than $20 at Wal-Mart Stores… Yet many women--and men--are willing to pay as much as $145 without
Beyond Conventional Marketing giving it a second thought, increasingly, designer lables are offering jeans ranging from $300 to as much as $4,000… It is not just the age, the label or a flattering fit that drives up the price of today’s most expensive jeans. Much of the added cost comes from the decorations and fixtures, such as 14-karat gold or silver rivets and diamond buttons. The jeans that top our list come from Escada’s couture line. They start at $7,500 and have no price cap. So far, the most expensive pair they have made cost is $10,000 and were studded from top to bottom with Swarovski crystals.” Jeans. What do they represent? For most of us they are a functional clothing. In some cases perhaps there is a social element attached. And then there’s the time when they most likely fill an emotional need – perhaps that of a celebrity or a wannabe celebrity. Interestingly, most of these jeans are probably made in the same province in China. Different customers have different needs and therefore require different levels of fulfillment. Still need more examples? Watches. You can get one that will tell you accurate time for the next 50 years or so for about $20. A Google search showed an article written in infibeam: “Top 10 World’s Most Expensive Watches in 2009” that ranked the Patek Philippe Sky Moon Tourbillion as #1 with a price of $1.49 million sold in an auction in Hong Kong (oh by the way, you’ll be comforted to note that only two such watches are made every year, one in platinum and one in rose gold). There is time, and then there is endless time. The list is endless too. The cheapest car currently runs a little udner $11,000 – like the Kia Ryo, Hyundai Accent, Chevrolet Aveo, and the Toyota Yaris. The most expensive: Bugatti Veyron 16.4 which runs a cool (or should we say hot) $1,700,000. The maximum speed limit in most states is still about 75 mph. My head is reeling with several more examples, but I want to ask another question. Does any of this explain why Toyota and Honda
-3have been so successful while the government now runs General Motors? Actually, it does partially. To the marketing question, you have to add hubris, arrogance, incompetence, and abdication. When I first came to the United States in 1971, the word “Cadillac” stood as the symbol of the finest and the best. People talked about other products as being the “Cadillac of the industry.” General Motors had a market share of 50%. There were few foreign cars on the roads. The saying was that what was good for General Motors was also good for the United States. So what happened? It seemed that General Motors liked every business except the automobile business. Instead of focusing on the needs and wants of their customers, they were focused on “bigger” things. I suspect they felt that they had done everything necessary for the customer – after all, the path from the bottom of the demographic scale to the top had been clearly laid out: you were to start with a Chevrolet when you were young and poor, over time with age and hopefully more money, you went on to a Pontiac, then a Buick, and when you were either very rich or pretty old, you bought a Cadillac. You couldn’t have more than a 50% market share, they reasoned, so they started to buy other businesses, because they fancied themselves as great businessmen. They bought Hughes and then EDS. Their board was the bluest of the blue chip boards and these solons of capitalism all nodded in agreement. As for cars, well, they could make much more money by cost cutting, by sharing engines and parts between different brands, and occasionally lopping off advertising when necessary. Unions would, with precise regularity, threaten to strike and their cooperation was bought off with higher wages, restrictive work rules, and platinum health care benefits. All of this was occuring while quality was slipping. The word on the street was that cars made on a Monday or a Friday were to be avoided. But the management reckoned that what was good for GM was good for the US. The first oil crisis hit. There seemed to be a demand for smaller cars. The Japanese – Toyota, Honda, Mazda, Datsun (now Nissan), started to
Beyond Conventional Marketing dip their toes in this water. But GM reasoned that no one would buy a foreign car. Gradually people started asking themselves: should I buy a shoddy, higher priced, American made car, or should I consider these small foreign cars that are cheaper and, apparently according to trusted sources, run for longer periods of time without trouble? Slowly but surely, customers started to place their own interest and pocket books above the tugs of emotional Detroit commercials; they started to buy the better made, less expensive, foreign cars. What was Detroit’s response? They demanded more time to gear up to compete with the Japanese. The government obliged and placed import quotas. How did Detroit use this time? They did nothing for the customer; rather they raised prices, even as their quality lagged further and further behind. The Japanese companies saw opportunities and started setting up plants in the U.S. They understood the needs of customers for better quality, lower prices, and smaller cars. Their dealers were less arrogant and more responsive to the customers. Detroit had reasoned that American workers could never match the quality of the Japanese. Again they were wrong. A few years back, a Camry made in Lexington, Kentucky, had the highest quality of any Camry manufactured in the world. Today, GM (perhaps to be officially renamed Government Motors) is bankrupt. Toyota has the leading market share in the United States and the world, and its market value is $135 billion, even in this depressed stock market. So it’s really a contrast between good versus poor – or perhaps more aptly described as indifferent – marketing. The true focus should be on the customer as opposed to the company. If I had to summarize the essence of marketing now, it would be: Solve a customer’s problems or meet his needs. Ask them what they want. Dig deeper, because it is not only about the product or the price. And of course, respect and cherish the customer. Would you agree?
-4I couldn’t have said it better. Perhaps you should run this company and teach my class. Thank You. Interview conducted by: Vicki Syal