Golden Expectations

I've been thinking a lot about expectations recently. Must have been brought on by the dearth of gold for Australia and the subsequent sense of crushing disappointment that pervaded our nation. Well, our media outlets, anyway. Granted, we were beaten by Korea (13) and Italy and Hungary (8 each), which you hardly can imagine had the same budgets as Australia. But still, it is not the position (10th) on the Gold Medal Podium that is the problem, it is that we expected to have done better. It suddenly occurred to me that "expectation" pervades every part of our lives. How many relationships stumble because expectations are not being met? And of course, brands really are just a sum of "expectations". We set up those expectations in our communication activities and we work hard to make sure the brand can deliver on those expectations. Well, I hope we do, anyway. And we should, because a brand is not just the communication we thrust at people. Every time we interact with that brand, our expectations are either met or not, and our opinion of that brand adjusts accordingly. Brands are not, no matter how much we may wish they were, entities in their own right, created and maintained in the sterile environment of an advertising agency. They are living, breathing relationships. And like all relationships, when expectations aren't met, they begin to founder. The very concept of "value" is also entirely dependent on expectation. In the modern marketing environment, the economical model of setting price based purely on supply and demand has long been superseded by the idea that the ideal price is set based on what people would expect to pay. Value for money is determined by the difference between what people expect and what they get. When their experience with the brand is better than they expected, you get perceptions of excellent value. Conversely, when the brand experience is worse than they expected it is considered poor value. And in both these cases, this is regardless of the price people pay in the first place. Managing brands, then, must surely be a matter of managing expectations? When we take time to understand the gap between our consumer's expectation (which of course can be vastly different from our own) and their experience with our product, we may well be able to better deliver brands that people love to keep on using.

What about me, your customer, already?

It must be said that there are a lot of things that get my goat. But floating somewhere near the top is the practice of "discounting" for new customers. Pay TV is a prime culprit of this, offering a month's free viewing and free installation. I can understand the business case, but as a consumer I sit on my sofa staring at the TV in annoyance thinking, "what about me?". Here I am, your loyal customer, paying you month in and month out, and there you go rewarding the newbies. Credit cards are another culprit. Just recently I was shopping around for a new card, my decision making entirely dependent on rewards. I was offered thousands of rewards points for switching to other cards - the equivalent of a free domestic flight. Its tempting. Its nice, when you are new. But what about next year? Then I'll be last years news. I suppose there is a level of arrogance, especially in things like banks, where it is time consuming and annoying to switch and people are unlikely to bother. Or with pay TV, where you might fall into the trap of thinking (erroneously) that people don't have other options. This sort of thinking only leads people to go out and find other options. But wouldn't it be more profitable to build loyalty and commitment from those people you've already switched into your brand? Its expensive continually recruiting new customers. And if you annoy them enough that they leave you, you've just got to go out and find new customers to replace them -an endless cycle. Happy customers, surely, are more valuable? Not only do you save on recruiting costs year in and year out, they can also do a lot of newbie recruiting for you. Especially in this day and age. How about giving away some of those points to reward customers who are profitable for you? How about rewarding customers who encourage friends to switch into your brand? How about making your existing customers feel loved? Focusing on retention - maybe that's a good recruitment strategy, after all?

Insight culture or Research Culture?

Research is important - there is no doubt. But in todays fast-paced consumer centric society, are we doing the right research? To my mind, there are three types of research companies engage in - insight development (not a whole heap), knowledge development (a lot), testing (way too much). And really, the emphasis should be the other way around.

To take them in reverse order - there seems to be a propensity to test the heck out of everything before we take it to market. In some cases, this is important (like if you’re about to spend $5m on upgrading your factory) and in other cases it is, at the very least, time consuming, and at the worst, misleading. I think in particular of creative testing, where (despite what the experts say) we hardly have a handle on what makes for fantastic advertising, let alone are able to effectively determine whether it is the insight, the creative idea, the execution or the format which consumers are responding to. Of course, if that is not enough, we spend fortunes tracking our brand equity, our advertising cut-through, our reach and frequency (which alarmingly don’t appear to take into account the fact that half the audience may well be sitting on the loo instead of glued to the TV watching your carefully created ad). And all of this, of course, makes the rather big assumption, that it is TV advertising that is driving brand equity. Sometimes it seems we test because we have no faith in our own insight and understanding of our consumers. You want to know how your brand is doing? Get out there and talk to some people.

There is no doubt that research designed to increase our product and category knowledge is an important part of a brands ability to perform in the market place. How consumers shop a particular aisle, what their key drivers are in determining which brand or product variant to buy, how they read menu boards at fast food restaurants (which I think might be termed quick service restaurants by the business, but certainly not by Jo from Blacktown). It is important to have knowledge. But knowledge does not equal insight. Knowledge will tell you the rules, but not how to win, to cut through, to connect with consumers. Ask any of your creative agencies how inspired they got looking through the knowledge base you sent them last time you gave them a brief, and its likely they’ll say “not a lot”.

Insight development comes from connecting with consumers, from exploring who your target market is and what they are about. And doing it on a consistent and regular basis. Its a bit like dating. On the first date, you have no idea whether the girl sitting opposite you likes carnations or roses, Lindt Chocolate or lace underwear. Keep on dating that person, speaking with them, showing an active interest in them and you soon get to know what they like. And you know instinctively. When you have an insight culture in your place of business, then you don’t need to test everything. You know instinctively if the idea is going to fly. You can feel it. And that makes it easier to test the bits you might need to test.

Brand versus Product Advertising - does it matter?

There is a debate raging in our house at the moment, about the relative merits of brand versus product advertising. From how you define the difference, to how effective either option is. But, despite the multitude of examples supporting either strategy, it is, in truth, nothing more than a theoretical discussion which is irrelevant in the context of the consumer.

Because, at the end of the day, from a consumer perspective, there is no difference. From a consumer perspective, every piece of communication, however, we define it, is a brand ad. It tells consumers something about your brand, and leaves them (if you are lucky) with a perception of your brand. Advertising that we, as marketers, might define as “product ads” build brands too. And if you want those sort of ads to build rather than detract from your brand, its probably important to ensure the branding is clear, the personality and tone is authentic and the offer and product is in keeping with the overall strategic direction.

All too often we think and act in silos of marketing activity. We segment our actions and plans into innovation or core, into brand advertising or product advertising. We separate our budgets into communication or promotion, into above the line or digital. But consumers, in essence, don’t make those distinctions. Consumers just hear a piece of information, followed by another piece of information, followed by another... and that is, of course, if your creative is good enough to be heard. All the bits add up, and create an overall picture in their heads about what the brand is about.

Of course, it is not just communication that builds brands. This is merely the start point. Brands are equally created by the experience consumers (and their friends) have with the products and services those brands sell. And perhaps more importantly, brands can only be sustained and further built if there is a cohesiveness between the communication and the experience. Do these two touch points resonate and thus build a stronger more robust brand in line with our strategy? Or is there a disconnect between the promise and bluster of an ad, and the delivery of a service or product? In the case of the latter, all the hard work done by good communication is undermined.

Qantas can shout as loudly and as beautifully as it likes about still calling Australia home, but every time a consumer meets a grumpy ground crew member or is mistreated by belligerent stewards, that wonderful brand-ad is undermined by the experience of the product/service.

The key, is not to think in terms of “branding” as a job for a piece of communication. The brand should be the ethos by which the whole organisation operates. That way, brand values are authentic and it is easy to ensure that the consumer experience of the brand, whether through product usage or communication or engagement, is in line with the brand promise. And thus, all activity becomes brand building.

Inspiring talk from Procter and Gamble CEO

Without a doubt, Procter & Gamble are masters at the FMCG game. With a new product success rate of close to 50% (versus an industry average of 15-20%) and with strong brands and a premium positioning in most categories they play in, there is much to learn from their approach. The CEO of P&G, AG Lafley recently spoke to BusinessWeek in the US about managing through the recession (and beyond). His view is that continuing to invest in their core competencies will be key to their success in the economic downturn. And those core competencies are (in order): 1) understanding the consumer, 2) innovating and 3) branding. How refreshing to hear consumer understanding coming first in this list and to hear Mr Lafley talk about putting consumers at the centre of everything they do. You can see this philosophy in his description of innovation, describing it as linking creativity and invention to a product or service which meaningfully changes consumers lives. Brands are also essential to P&G’s success and their ability to ward off the threat from private label and competitors. And Mr Lafley contends that brands are built on understanding what represents value to the consumer. It is clear that the consumer sits at the heart of this organisation, and that this is not just fluffy business speak. P&G seem to take the time to listen to their consumers and actively seek to meet their needs and exceed their expectations. Read the full summary of the interview or watch the video on the BusinessWeek website by clicking on the following link: click here

Local v global

Should consumers be blamed for not buying locally made brands, as indicated by Pacific Brands CEO Sue Morphet on 60 minutes on Sunday night or does the blame lie with the companies who have not done enough to convince us consumers as to why we should buy Australian made products. Is the quality better? Is it about patriotism or giving your fellow Aussie a fair-go? What is it, about “Australian” that consumers care enough about to pay more for? If you are trying to flog a product that has no additional benefits (perceived or real) at a higher price than your competitors, by merely slapping an Australian made label on it, then of course consumers aren’t going to be prepared to buy it. And why should they. This is what branding is about - finding the insight that taps into something consumers perceive valuable (ie: worth paying for) and then helping consumers on that journey. That might be an image-led thing, it might be a quality or variety led thing or might be something more esoteric and community orientated. But whatever it is, if you’re going to try and flog “Australian made”, you have to explain to consumers the benefit to them, the consumer, of buying such a product. Its marketing 101.

Of course, Bonds is one of those “iconic”Australian brands - all seaside and sunshine, bronzed bodies and friendly holiday vibe. Which probably works fabulously overseas. But, since we live here, we get that just by waking up every morning. The opportunity to capitalise on such a positioning, locally, by talking about keeping Aussie’s in work, at this moment in time, was probably huge. Instead, Pacific Brands kept all eyes on the balance sheet and none on the consumer and have probably sounded a death knell for the Bonds brand here in Australia. It is hard to see how any amount of advertising could overcome the damage done to the “Australian” identity of Bonds here in Australia.