Archive for July 2011

Is Your Marketing Operating at Only 50% Effectiveness?

July 28, 2011

In my 38 years of practicing marketing and my 25 years of teaching it, I am amazed at the ineffectiveness of much of the marketing that is practiced. Of course, after thinking about why this might be, the reasons seem obvious. Most receive their marketing education from negative portrayals of marketing in movies and television or from professors that recycle the outdated concepts they have been taught using textbooks written by those that have little or no experience practicing marketing in the real world. In fact, there is a famous John Wannamaker quote in which he said, “Half of the money I spend on advertising is wasted; the trouble is, I don’t know which half.” One important reason why half of it doesn’t work is that most marketers learn the 4P’s of Marketing. In my view, the Marketing Periodic Table of Elements has 7 fundamental building blocks. This means that most marketers are missing some of the essential tools they need to create effective marketing.

The 4P’s of Marketing

I have taught for business schools at six different universities around the world — four in the US (USC, UCLA, CSUN, and Pepperdine) and two from Europe (Aalto University in Finland and the Copenhagen Business School). Most marketing professors I know teach the 4P’s of Marketing because this is what they learned when they went to school. The marketing they teach is stuck in the 1940’s when the 4P’s were invented. It is no wonder that too many marketers are unable to do effective branding, have trouble determining if their marketing strategies are working, and are finding it difficult to incorporate social media into their marketing strategies. The 4P’s, which include product, price, place (distribution) and promotion, are essential. However, there are 3 important fundamental concepts that are missing from this list – corporate image (P&G calls this projection to make it a P), positioning, and the marketing information system.

To do branding properly, it is critical to understand corporate image and positioning and how these two building blocks interact with each other in order to develop effective branding strategies. Furthermore, running a company without an effective marketing information system is similar to flying a plane or driving a car blindfolded and in handcuffs.

The Seven Building Blocks of Marketing.

I contend that to do marketing properly, marketers need to expand their fundamental elements to the following seven building blocks. I present them in the typical order in which they should be conceived.

  1. Marketing Information System. A system to research, monitor, collect, analyze, report, and take action on information from the marketplace. This system should be on 24/7, collect and report information in real time, and be able to distinguish legitimate information, or signal, from propaganda, or noise. The starting point for effective marketing is to research the market.
  2. Corporate Image. This is the image of the organization, division, or inventor that develops the products (goods and services) to be sold. Key CI strategies involve Creating, Protecting, and Enhancing this Image.
  3. Positioning. Positioning is comprised of two sub components that I call the lock and key. (1) Lock: Identifying the market segment with an unfilled need, and (2) Key: Creating an image of the product to fill that need better than competitors.
  4. Product. Products are goods and services you develop to meet the needs of your market targets and to achieve the goals of your marketing plan.
  5. Price. Price is the amount of money buyers are willing to pay and for which sellers are willing to sell their products. Once your product is defined, you can determine the cost to make and distribute it and use this information to devise your pricing strategy.
  6. Distribution (aka Place). Distribution is the process of making it convenient for market targets to find, buy and use your products. Organizations distribute products via well-defined channels that may or may not include resellers known as Distributors (Wholesalers) or Dealers (Retailers).
  7. Promotion. Promotion is the process of communicating the benefits of your “complete” product to the marketplace to generate a buying action. A complete product is one that incorporates elements of the other building blocks.

Good marketers use these building blocks (and their sub-components) to create marketing strategies to achieve the goals of their marketing plans.

Effectively using the 7 Building Blocks.

To create effective marketing that works, good marketers need to understand these building blocks and how they interact in the marketing mix much the same way that a good chef knows how ingredients interact to make customers happy.

Future posts will delve into more detail and apply these building blocks to creating effective marketing strategies that work to achieve the goals set forth in the marketing plan.

Related:

Structure of a Successful Marketing Communication

10 Steps to Building Better Brands

Memorable Mascots Make Marketers More Money

Ira Kalb is president of Kalb & Associates, an international consulting and training firm, and professor of marketing at the Marshall School of Business at University of Southern California (USC). He has won numerous awards for marketing and teaching, authored ten books and over 70 published articles, created marketing inventions that have made clients and students more successful. Various media frequently interview him for his expertise in branding, crisis management and strategic marketing. Follow him on Twitter.

image courtesy of Ira S. Kalb’s book Nuts & Bolts Marketing.

The High Cost of News Corp’s Growing Scandal

July 16, 2011

As the proverb goes, those that live by the sword die by the sword. This is what seems to be happening to News Corp. – the company that owns the now defunct News of the World tabloid accused of hacking voice mails of murder and terrorism victims and bribing police. Celebrities that have had their lives turned upside-down by tabloids must be smiling at the escalating misfortunes of the News Corp. empire.

At the first hint of this scandal, News Corp. has seemed inept at reacting to, and containing, the damage.

Procedures to contain damage

To properly contain image damage when there is a crisis, companies should follow the Fact or Rumor Procedures. If true, the fact procedure advises you to…

  1. Admit (what you did wrong)
  2. Apologize
  3. Limit the scope (put the transgression in perspective)
  4. Propose a solution so it will not happen again.

If not true, the rumor procedure advises that you should…

  1. Not publicize the rumor
  2. Promote the opposite
  3. Provide proof for support of your promotion in Step 2.

Damage not contained

In this case, without following either procedure, Rupert Murdoch quickly closed down the News of the World tabloid that has been operating in England for 168 years. He presumably did this to contain the image damage to his News Corporation empire that stretches around the world. However, when you so quickly shutter a business that has been part of the cultural fabric for so long, suspicions will arise that there must be a lot more scandal to surface. Instead of containing the damage, News Corp.’s rapid action to close the business did just the opposite.

As a result, the British Parliament and Scotland Yard have gotten involved. The US Congress and the FBI are also investigating allegations that News Corp. employees hacked the phones and emails of victims of the 911 terrorist attacks.

Giving further credence to the suspicions of a more widespread scandal, Les Hinton, a close confidant of Rupert Murdoch for 52 years and CEO of News Corp.’s Dow Jones division, resigned. This resignation came on the heels of the announcement that Rebekah Brooks, CEO of News International and Editor of News of the World under Hinton, did the same. Update: News reports from Britain say that Ms. Brooks was arrested.

More suspicions have been raised

Unlike most major newspapers, the News Corp.-owned Wall Street Journal failed to feature the scandal on its front pages. This is quite amazing given the fact that this is a major business story that is of great interest to the Wall Street Journal’s target audience. Avoiding the coverage calls into question the Journal’s editorial independence and only fuels more suspicion of the what News Corp may be hiding.

Resulting financial damage

As the scandal grows, so does the financial damage. Since news broke of the hacking of a murder victim’s voice mail in Britain, News Corp. shares have tumbled 13% according to Bloomberg Business Week. Additionally, as reported in the Wall Street Journal, shareholders are suing News Corp. for “…an egregious collection of nepotism and corporate governance failures, with a board completely unwilling to provide even the slightest level of adult supervision.” The scandal has also caused the Company to drop its $12.6 billion bid for full control of British Sky Broadcasting Group.

Expenses related to this scandal are expected to mushroom since News Corp. has hired criminal defense lawyer Brendan V. Sullivan Jr. of the D.C. law firm Williams & Connolly  (he was the attorney for Oliver North during the Iran-Contra scandal). It also retained Edelman, the world’s largest private PR firm, to help it manage its reputation as the scandal continues to unfold.

Lessons to be learned

For marketers and company executives there are numerous lessons to be learned from this unfolding scandal.

  1. As Google says in their mantra, don’t do evil.
  2. Proper policies need to be put in place.
  3. Once effective policies exist, employees need to be supervised from top to bottom to insure that they follow them.
  4. At the slightest hint of scandal, the company needs to contain the damage by employing the relevant fact or rumor procedures before the sparks turn into conflagrations.
  5. Companies that live by the sword have a high risk of dying by the sword.

Can News Corp.’s image be fixed? If so, what do you think the Company needs to do to fix the growing damage to its reputation?

Ira Kalb is president of Kalb & Associates, an international consulting and training firm, and professor of marketing at the Marshall School of Business at University of Southern California (USC). He has won numerous awards for marketing and teaching, authored ten books and over 60 published articles, created marketing inventions that have made clients and students more successful. He is frequently interviewed by various media for his expertise in branding, crisis management and strategic marketing. Follow him on Twitter.

image courtesy of flickr user, DonkeyHotey

Turning Customer Complaints Into a Powerful Marketing Machine

July 11, 2011

The way companies handle complaints can mean the difference between success and failure in our increasingly competitive world. Businesses that turn complaints into opportunities for building closer relationships with customers are the ones that are most likely to survive and prosper.

Complaints are opportunities to build a stronger business

The complaint is a signal that should not be ignored. When customers complain, they are giving your company an opportunity to fix what is wrong and improve your business. Why? Customers act in their own self-interest, and they are in a unique position to tell your company the unvarnished truth — something your employees are unlikely to do because it might reflect negatively on their performance or they may fear that you might “kill the messenger” rather than listen to the message. Just about every comprehensive study done on this subject points to greater success for companies that turn the negatives represented by complaints into positives.

TARP Studies

John Goodman did pioneering customer service research through TARP, the company he founded in 1971. He showed that, while customer service is typically a cost center in most companies, it could be turned into a powerful marketing machine to drive sales, repeat business and greater profits. His research showed that roughly 4% of customers (1 out of 26) that were “wronged” by a company complain. The other 96% (25 out of 26, or the silent majority) stop buying and tell 9 to 10 others within a week about their poor treatment. This means that a negative word of mouth pyramid averaging 250 is created. If the company is able to satisfactorily solve the problems of the 4% that complain (turn the negative into a positive), they will tell 6 to 7 others within a week that the company solved their problem and this will result in a positive word of mouth pyramid of 250 customers that say good things about the company. The positive group will also develop a closer relationship with the company. What can you do about the other 96%? You can go through your customer list and contact customers that have not bought products from you in a while and ask them why you have not heard from them. This will identify a good number of negatives that you can turn into positives. And, in cases where there were no negatives, the contact is another opportunity to generate more business.

Marriott research

In their book, Turned On, Roger Dow and Susan Cook describe the Marriott research done to identify which guests intended to stay at the Marriott again. They divided guest stays into 3 groups A, B, and C.

A = Nothing bad happened during their stay.

B = Something bad happened, but Marriott fixed the problem.

C = Something bad happened, but Marriott did not fix the problem.

The percentage of these three groups that intended to return to the Marriott were as follows:

A = 89%

B = 94%

C = 69%

This corroborated the TARP studies that showed that a fixed relationship creates a more loyal customer than one that was never broken. The more a company is able to fix what is wrong, the more they build a positive reputation.

Opinion Research studies

Opinion Research did studies that showed that when choosing between similar products, 87% of customers choose the product from the company with the better reputation. Companies get better reputations by taking exceptionally good care of their customers. Bloomsberg Business Week recently compiled a list of the top 25 companies in customer service.

Develop a system to handle complaints and turn them into positive outcomes

How can your company use this information to turn complaints into a powerful marketing force that improves your business and reputation?

  1. Train you people to look for complaints and view them as opportunities to neutralize negatives and build stronger relationships with customers.
  2. Record the complaint so that it can be electronically distributed.
  3. Send it to the appropriate person or department with the authority to fix what is wrong.
  4. Make sure they fix it as quickly as possible.
  5. Follow up with the customer to insure that they were satisfied with the fix. If not, expedite a solution.
  6. Give them a code to use when they purchase from you again or refer others (you can give them an electronic coupon or code so that when they buy again or refer others they will get a discount).
  7. Track their repeat purchases and referrals.
  8. Report statistics on repeat purchases and referrals stemming from the fixed problem.
  9. Calculate the ROI (return on investment) of the entire process.
  10. Use positive results and customer quotations in your marketing communications (after getting permission).

How might you turn complaints into a marketing force to improve your business?

Ira Kalb is president of Kalb & Associates, an international consulting and training firm, and professor of marketing at the Marshall School of Business at University of Southern California (USC). He has won numerous awards for marketing and teaching, authored ten books and over 60 published articles, created marketing inventions that have made clients and students more successful. He is frequently interviewed by various media for his expertise in branding, crisis management and strategic marketing. Follow him on Twitter.

image courtesy of K&A Press from Nuts & Bolts Marketing by Ira S. Kalb

Structure of a Successful Marketing Communication

July 11, 2011

To create successful marketing communications, a good starting place is to examine the ideas of great marketing masters, such as David Ogilvy and John Caples. Why? Rather than guessing or expressing opinions, they observed and cataloged what works and what doesn’t during their distinguished careers. The following structure of a successful marketing communication is based on the collective wisdom of the great marketing masters that appear in such classic books as Ogilvy on Advertising and Tested Advertising Methods.

Headline. On average, five times as many people (83.3%) read the headlines as read the body copy. Therefore the main points, expressed as benefits, should be in the headline. To help insure that the target audience reads the headline and finds out where they can buy the product, the headline should also “hook” or grab the reader so they do not turn the page, click the next link, or switch channels.

Body Text. The Body Text should provide more information and details for those that are interested to find out more about the product and company. Since only 16.7%, on average, get to this point, marketers should not rely on people reading the body text.

Close. The Close should

  1. Solicit a Buying Action (i.e. visit a Web site, return a business reply card, come in for a test drive),
  2. Tie-in with the Headline (repeat the benefits),
  3. End the communication,
  4. Contain a Marketing Information System code so the success of the communication can be measured when people respond (unique URL for Web visitors, unique phone extension for callers, and other unique code for those that visit a store or return a business reply card).

Photo & Graphic Elements. These should help to communicate the main unique benefits, be visually compelling, show the product looking as good as possible, sometimes function as a size reference, help to break up the Body Text into bite-sized pieces, and show before and after examples if appropriate.

Format. The Format should make it easy for busy or lazy members of the target audience to pick out and remember the main unique benefits of the communication without forcing them to read, listen to, or watch the entire communication.

Signature. The Signature (which typically includes the name, logo and slogan) should brand the communication and further the relationship between the target audience, the product, and the company so the prospect is more comfortable buying.

Everything Else. Good models have no more than 7 elements so this section includes the other considerations that may be important to your communication, such as design, color, fonts, size, shapes, selling psychology, empirical results, and putting the “WOW” into the communication so it will be better remembered and sell more effectively.

To give you an idea how this model can be applied to creating marketing communications, I have included a couple of successful communications I created for clients. The first is an ad I did for Qiagen (a client in Germany) that won a response award from Science Magazine. The second is an ad I did for the security software division of Hewlett-Packard.

What models have you employed to create a successful marketing communication for your organization?

Ira Kalb is president of Kalb & Associates, an international consulting and training firm, and professor of marketing at the Marshall School of Business at University of Southern California (USC). He has won numerous awards for marketing and teaching, authored ten books and over 60 published articles, created marketing inventions that have made clients and students more successful. He is frequently interviewed by various media for his expertise in branding, crisis management and strategic marketing. Follow him on Twitter.

image courtesy of Qiagen, Science Magazine, and Ira S. Kalb

10-steps to Building Better Brands

July 10, 2011

Brief History

The concept of branding goes back to ancient times when people in positions of power, ownership, and commerce labeled their possessions, products, and documents to identify them and let others know that they owned or created them. For purposes of branding, a symbol or name, also known as a logo, was created. This was fashioned into a design on a stamp, seal, branding iron, or ring that was used to make an impression on people, cattle, goods, and documents to signify ownership, membership, or origination.

Step 1Define your marketplace. After doing a SWOT analysis that match up your strengths with opportunities, define the marketplace — the one that incorporates the most promising opportunities that your strengths allow you to pursue.

Step 2Identify company-wide locks. At the company level, identify the market segments that have needs your organization can fill better than your competitors.

Step 3Create corporate-level key. If you need to create a corporate image either because you are new or your existing image is not working, you first need to establish your mission statement. Your mission statement should do the following:

(1) Identify the most promising target market segments your strengths enable you to pursue.

(2) Make it clear to those segments what your company does in as few words as possible.

(3) Communicate clearly what is unique about your company and why they should do business with you.

Step 4 Create corporate identity tools. The tools typically used to implement corporate identity strategies include: Name, logo, slogan, colors, type fonts, mascots, and jingles. These tools are then used on letterhead, business cards, Web sites, and all other communications vehicles.

Step 5Identify the product locks. For each of your goods and services, identify the target market segments with unfilled needs that each product can fill.

Step 6AInclude your company image in your product image? A critical decision marketers need to make is whether or not to combine the image of the company with the image of each product.

  • Case for inclusion. If it is clear that product sales will benefit from the image of the company and the corporate image will benefit from the product, you should put the two images together. Some examples include: Diet Coke, Microsoft Word, and Sony Walkman.
  • Case for exclusion or separation. You should separate the image of each product under the following conditions:
  1. One image might hurt the sales of the other. The product is risky, the company image is fragile, or either one has a bad image (Example: Disney uses the corporate brand only on movies that are deemed wholesome for kids, and other corporate brands, such as Touchstone, Hollywoood, or Miramax, on movies that have sexual, violent, or other potentially objectionable content).
  2. Very strong identification with one type of product. The company is too-closely identified with one type of product (Example: IBM is known as a computer company, and in the 1970’s they made an excellent copy machine that many thought was better than competitors, but it did not sell because people associate IBM with computers and not copiers. Xerox developed a good computer in the 1980’s but it did not sell because Xerox is known as a copier company. Both might have been successful, if they launched these products under a separate brand identity).
  3. Lock and Key Mismatch. If the company wants to get into new product areas that are in conflict with established market segments, they need to create a new brand identities for these products (Example: The Japanese automobiles, Toyota, Honda, and Nissan, had images as being small, ugly, affordable and fuel efficient and that worked well for college students in the 1970’s, but as those students aged and became more affluent, many wanted luxury cars. The Japanese automakers knew they had to create new product images so they created Lexus, Acura, and Infiniti for these evolved segments).

Step 6BCreate product keys. Once the decision is made whether or not to use the company image in the image of the product, unique keys should be established for each product. Why do they need to be unique? Uniqueness minimizes competition and enables the company to charge whatever is necessary to satisfy the expectation created by the image and make money to stay in business.

Step 7Avoid cannibalization. In establishing unique keys, care must be taken to avoid having the image of one product overlap with the others in the product line. Overlap causes confusion, and takes business away from oneself rather than other competitors because confused buyers usually don’t buy. Alka Seltzer confused its audience by introducing a new cold medicine they called Alka Seltzer Plus. Alka Seltzer is a stomach medicine, but most thought Alka Seltzer Plus was just a better-working version of the original causing Alka Seltzer sales to drop and the new product to have disappointing sales.

Step 8Create positioning tools. The tools typically used to implement positioning strategies include: Name, Logo, and Corporate Slogan. Examples: Coca Cola ClassicIt’s the real thing. Diet CokeJust for the taste of it. When introduced, these slogans were used on all product labels and in all other communications.

Step 9Communicate. Once keys are created for the locks, it is time to execute the strategies in all marketing communications. The company has to have someone (inside or outside the company) that understands the branding process well enough to direct those who will be implementing communications strategies.

Step 10Measure and analyze results and take corrective action. Once implemented, results should be measured and analyzed to determine what is and is not working and why. Strategies should be modified and refined.

By following these steps and executing them properly, marketers can build better brands that have a greater chance for success in the marketplace.

Do you have a process that works reliable to create your brands? Is it similar to the steps delineated above?

Ira Kalb is president of Kalb & Associates, an international consulting and training firm, and professor of marketing at the Marshall School of Business at University of Southern California (USC). He has won numerous awards for marketing and teaching, authored ten books and over 60 published articles, created marketing inventions that have made clients and students more successful. He is frequently interviewed by various media for his expertise in branding, crisis management and strategic marketing. Follow him on Twitter.

image courtesy of flickr user, Svadilfari

Memorable Mascots Make Marketers More Money

July 10, 2011

Mascots, or spokescreatures, are branding elements that can help people better remember your company and products. Often based on people, animals, or objects, mascots enable your target audience to better identify, remember, and understand your company and products. Unlike spokespeople that age, die, have affairs and do other things that can damage your brand, mascots are ageless brand representatives that help your target audience develop a closer relationship with your products. They do not ask for raises, take vacations, get sick, or get you into trouble. In fact, mascots can actually make money for you when they are sold as collectibles or toys.

Helping to remember the name.

AFLAC began in 1955 as a small family insurance company in Columbus, Georgia. The name is an acronym for American Family Life Assurance Company. It does not roll off the tongue easily or make a very pleasing sound. As a result, people in their target audience were having trouble remembering the name. That is not good for business or for creating a positive word-of-mouth pyramid. People have to be able to remember the name to buy the product and tell others about it. To solve this problem, they decided to experiment using a duck as a mascot since the brand name sounds like the “quack quack” sound a duck makes. Upon investing in advertising to promote the duck and the business, the result has been phenomenal with name recognition and profits soaring. In fact, name recognition has been at 91% – higher than big insurance companies MetLife or Cigna and in the same ballpark as behemoths McDonald’s and Coca Cola. The Aflac duck is its own cost center and all proceeds from the sale of merchandise go to the AFLAC Cancer Center at Children’s Hospital in Atlanta.

GEICO, also an acronym for Government Employees Insurance Company, began using the Gecko in TV commercials in 2000. As with AFLAC, the spokescreature was created to get members of the target audience to remember the name of the company. It is used in combination with the slogan repeated in each TV commercial, “15-minutes could save you 15% or more on car insurance.” It worked. In the first two years, subscribers jumped 16.7% and Warren Buffet CEO of Berkshire Hathaway, which owns GEICO, has said that he loves the commercials. Being a shrewd businessman, the main reason for his love is the Gecko commercials have brought in a lot more business.

 Helping to understand the product benefit.

The Energizer Bunny was introduced in 1989 TV commercials as the mascot of Energizer Holdings Inc. And, it has kept going and going ever since. It does a great job of positioning Energizer batteries as longer lasting – perhaps the most important benefit to battery consumers. Energizer attributed 7% of its sales rise in 1992 to the bunny.

Snap, Crackle, and Pop are mascots created to reinforce the sound Kellogg’s Rice Krispies cereal makes in milk. The benefits these mascots reinforce are freshness and crispiness. They also help to give identity to the cereal that targets young kids.

M&Ms mascots were invented to show the unique benefit that the individual candies “melt in your mouth not in your hands” per their slogan.

While many companies do not break out specific ROI data, the product brands represented by these mascots have been very successful, in no small part, due to the introduction of these spokescreatures.

 

What kind of mascots tend to be the most successful

Mascots work together with such other branding elements as names, logos, slogans, and jingles to increase the success of a product or company brand. The ones that tend to be most successful are the ones that help people understand and remember the …

In Forbes, Manhasset, New York-based Marketing Evaluations shares the results of their research that identified America’s 10 “most-loved spokescreatures.”

How might you employ mascots in the marketing of your company or products?

Ira Kalb is president of Kalb & Associates, an international consulting and training firm, and professor of marketing at the Marshall School of Business at University of Southern California. He has won numerous awards for marketing and teaching, authored ten books and created marketing inventions that have helped clients and students to be more successful. He is frequently interviewed by various media for his expertise in branding, advertising, crisis management and strategic marketing. Follow him on Twitter at @irakalb.

image courtesy of flickr user, Beverly & Pack