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SEPTEMBER 2011
QUARTER 4
N E W
T H I N K I N G ,
D I F F E R E N T
P E R S P E C T I V E S
How to pick a
winner
Luke Johnson
QUARTER 4
SEPTEMBER 2011
cover.indd 1
AESTHETICS,
JUGS AND
ROCK'N'ROLL
Paul Feldwick
GLOBAL KNOWLEDGE,
LOCAL DELIVERY
Graham Mackay
IGNORE CULTURE AND
BRAND FIT AT YOUR PERIL
Terry Tyrrell
9/19/2011 12:17:43
market leader q3 2011 DATAMINE ad.indd 1
8/30/2011 16:00:58
E d i to r i a l
What not to do
WhEn pEoplE submit articles for Market Leader, I try to ensure that,
given our readership of practical marketing folk, the article gives a clear
idea of what the reader should do, having read it. This mostly happens,
directly or indirectly and the ‘to do’ points are usually helpful. But I’ve
always had a sneaking feeling that telling people what not to do may be
more effective.
So, I recommend serial entrepreneur Luke Johnson’s cover article
in this issue. Few people know as much about the tricky business
of spotting winners as he does and his experience and mistakes
make his advice about what to avoid in sizing-up an entrepreneurial
venture particularly valuable. Should you be thinking of starting an
entrepreneurial venture yourself, here is a solid-gold list of mistakes
to avoid. And for the non-entrepreneurs in the audience, the list of
what makes a bad business plan could also be headed ‘what makes a bad
strategy document’ since the skills of clarity, conciseness, engagement
and plausibility are central to persuasion of any sort.
Another collection of mistakes to avoid can be found in Jonathan
Richman’s discussion of why so many digital campaigns fail and why
the aspirations behind them are often pure fantasy. One would like to
think the reasons are complex, subtle and sophisticated. Richman says
no. It’s very simple: most digital campaigns are terminally boring. The
competitive frame for a digital campaign isn’t just other companies in
the sector; it’s everything that people would prefer to do rather than
to study your website. Put that way, failure is hardly surprising, but
making a campaign interesting, surprising, likeable and shareable is
another thing.
In the ‘never thought of it that way’ category, Paul Feldwick treats
us to a delightful essay on the role of aesthetics in creativity. The
essence of this nuanced examination is that the conventional definition
of creativity – originality – may not quite cover it: aesthetics need to
be part of the equation. Indeed, the artistry in the execution may be
more important. Proponents of the ‘big idea’ school of advertising
should take note.
The role of marketing is prominent in three other pieces in this
issue. Ruth Saunders argues that marketers need more boardroom
credibility, and Terry Tyrrell supports this view with an analysis of
why so many M&As fail – ie insufficient attention to the culture and
brand fit of the companies involved. However, on a more positive note,
Mhairi McEwen and Andy Bird extol the importance of marketing as
one of the key growth drivers.
Judie Lannon, Editor
[email protected]
Market leader Quarter 4, 2011
3 editorial.indd 3
3
8/24/2011 16:01:17
QUARTER 4, 2011
PUBLISHED IN ASSOCIATION WITH
THE MARKETING SOCIETY BY WARC
EDITOR
Judie Lannon
EDITORIAL BOARD
Roger Banks, Hugh Burkitt, Matthew Coombs,
Martin Deboo, Paul Feldwick, Anthony Freeling,
Roger James, Laurie Young
EDITORIAL ADVISORY BOARD
Professor Paddy Barwise LONDON BUSINESS SCHOOL
Stephen A. Carter CBE ALCATEL-LUCENT INC
Simon Clift CONSULTANT
Hugh Davidson CRANFIELD SCHOOL OF MANAGEMENT
Martin Glenn BIRDS EYE IGLO
Sir Paul Judge THE MARKETING COUNCIL
Sir Chris Powell NATIONAL ENDOWMENT FOR
SCIENCE, TECHNOLOGY AND THE ARTS
Richard Scase UNIVERSITY OF KENT AT CANTERBURY
Mark Sherrington QUIRK EMARKETING AGENCY
Dianne Thompson CAMELOT GROUP
PRODUCTION EDITOR
Helen Devonshire
PUBLISHER
Matthew Coombs
ADVERTISING
Diana Pounsford
EDITORIAL & ADVERTISING OFFICE
Warc, 85 Newman Street, London WIT 3EX, UK
Tel: +44(0)20 7467 8137 Fax: +44(0)20 7467 8101
Email: [email protected]
SUBSCRIPTIONS
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Unit 160, Milton Park, Abingdon,
Oxfordshire OX14 4SD, UK
Tel: +44(0)1235 465574
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Email: [email protected]
Web: www.warc.com/marketleader
32
PO
CU
I
Annual subscription rates:
£245, €405, $370
Market Leader is published quarterly by Warc in association with
The Marketing Society.
ISSN 1463-0877
The views expressed in contributions to Market Leader are not
necessarily those held by the publishers or The Marketing
Society.
Printed by Pensord Press
Copyright © Warc and The Marketing Society 2011. All rights
reserved. Reproduction in whole or in part without written
permission is strictly prohibited.
4
4 contents2.indd 2
Market Leader Quarter 4, 2011
8/31/2011 12:43:41
contents
In thIs Issue
24
ideas & issues
12 creativity
TheannualCannesfestivalofcreativity
highlightedissuessurroundingpopularity,
innovationsandecosystems
By Julian Boulding
14 communication
Isnarrativestorytellingstillausefulpartof
theadvertisingarsenal?
By Simon Glynn
15 ehrenberg revisited
Despitemuchunacknowledgedwisdomabout
marketingeffects,Ehrenberg’sworkdoesn’t
havealltheanswers
By David Cowan
56 speaker’s corner
Brandlinkswiththewrongnamecandamage
yourimageintheeyesofyourcustomers
By Keith Lucas
58 the last Word
Embarrassment,andpeople’sfearofit,causes
consumerstomodifytheirbehaviour
By Rory Sutherland
f e at u r e s
CovER StoRY
Isitimportantforyourbrandtofollowtrends
orshouldyouattempttoinfluenceinstead?
By Joseph Gelman
ThishandbookdoesitsownSWOTanalysison
popular‘tools’usedinthesector
By Laurie Young
19 Brand ethics
Perceptionsofhow‘good’productsand servicesarewillinfluencehowconsumersfeel
aboutthem.Andthemselves
By Jane Asscher
regulars
08 Brainwaves
Aselectionofwhat’sgoingonfromaround
theworldofmarketing
By Elen Lewis
20 chopping Block
Scepticismisaveryhealthytrait–intheright
placeandattherighttime
By Jeremy Bullmore
22 Viewpoint
Ifmarketerswanttobetakenmore
seriouslyintheboardroom,theymustraise
theirgame
By Ruth Saunders
Stewart-Allen,JohnKearon,MerryBaskin
24 How to pick a winner
Predictingsuccessfromapoolofpotentialsis
almostimpossible.Orisit?
By Luke Johnson
28 ignore culture and brand fit at
your peril
Thecauseofmanymergerandacquisition
failuresisalackofmarketingduediligence
By terry tyrrell
32 strength in numbers
Thestrategyof‘co-opetition’helpsstruggling
foodandagribusinessfirmstojoinforceswhen
necessarywhilealsoremainingcompetitive
By Damien McLoughlin, Mary Shelman and
David E Bell
35 on size doesn’t fit all
BasedonarecentIPAreport,thisarticle examineshowadvertiserscopewith
integratedcommunicationsstrategies
By Kate Cox, Denise turner, John Crowther
and tracy Hubbard
38 aesthetics, jugs and rock’n’roll
Thewords‘creative’and‘original’areoften
usedinterchangeably,butthey’renotthesame
By Paul Feldwick
41 smarter campaigns
Marketersandagenciesfantasiseaboutmaking
theirdigitalstrategies‘thenextbigthing’
By Jonathan Richman
52 trendwatch
44 global knowledge, local delivery
Despitetheeconomicdownturnglobally,
lifestylesoftherichandfamous‘wealthsirens’
stillinfluenceconsumeraspirations
By Melanie Howard
53 letter from Bangalore
TheIndian‘nationofshopkeepers’isthriving
Market leaderQuarter 4, 2011
4 contents.indd 3
17 consumer behaviour
18 Marketing techniques
44
54 Best in Brief
ReviewsbyWinstonFletcher,Allyson
acrossretailandinnovation
By Prasad Narasimhan
Globalismforinternationalbrandsisnotalways
appropriate.Somecategorieswillalwaysbelocal
By Graham Mackay
48 accept the challenge
Deliveringgrowthinthecurrenteconomic
climatemeansthatthisisachallenging–and
exciting–timetobeamarketer
By Andy Bird and Mhairi McEwan
5
8/24/2011 17:08:59
in this issue
contributors
Market leaders
Jane assCher is founder
and chairman of integrated
agency 23red.com. She has
been responsible for the
strategic development of
many innovative behaviourchange campaigns on a range
of topics.
david e bell is George
M Moffett professor of
agriculture and business
and senior associate dean at
Harvard Business School. He
chairs the annual Agribusiness
Seminar for industry executives
from around the world.
andy bird is co-founder
and executive director of
Brand Learning, global
experts in building marketing
capabilities. His career
includes roles with Unilever in
the UK, Singapore and India.
Julian bouldinG is president
of thenetworkone, which
works with more than 350
innovative and creative
independent communications
agencies in 80 countries.
Jeremy bullmore is a former
chairman of JWT London and
the Advertising Association
and is currently a member of
the WPP advisory board.
david Cowan specialises in
helping large businesses grow
organically. His clients include
Unilever, United Biscuits,
Volkswagen, Carphone
Warehouse, Vodafone and BT.
kate Cox is head of
integration (and orchestration)
at MPG Media Contacts.
6
6 contributors.indd 6
John Crowther is managing
partner of Creston Unlimited.
He has been a planner in a
number of agencies, most
recently as strategy director at
Publicis London. He’s worked
with businesses including
Kraft, Weetabix, P&G, Airbus,
and Pernod Ricard.
Paul FeldwiCk is an
independent consultant,
working with organisations on
communication, creativity and
change. He writes a monthly
column for Admap.
JosePh Gelman is a partner
with Prophet, a strategic brand
and marketing consultancy that
helps clients win by delivering
inspired and actionable ideas.
melanie howard is chair
of the Future Foundation.
She has been successfully
forecasting trends for two
decades and has worked with
consumer, public-sector and
third-sector organisations.
traCy hubbard is now senior
consultant at MetrixLab.
She has more than 20 years’
research agency experience,
specialising in brand and
communications research –
from fmcg to telecoms.
luke Johnson is chairman
of Risk Capital Partners, a
private equity house. He is
part-owner and chairman
of Superbrands, Giraffe
Restaurants, Patisserie Valerie,
and Baker and Spice.
keith luCas is CEO of
brand strategy consultancy
Lucasbrand. Clients include
luxury Swiss-watch brands, fine
fragrances, automotive, media
and professional services.
Graham maCkay is CEO of
SABMiller. He joined The
South African Breweries
Limited in 1978 and was
appointed chief executive upon
its listing on the LSE in 1999.
and business-driven brand
strategies.
mary shelman is director of
the agribusiness programme
at Harvard Business School
and has authored more than
50 case studies on challenges
facing leaders in global food
and agribusiness sectors.
rory sutherland is
and CEO of Brand Learning.
She has had marketing and
sales roles with Unilever in
the UK, France and Egypt,
VP marketing for PepsiCo
Europe and Walkers.
executive creative director and
vice-chairman of OgilvyOne
London and Ogilvy Group
UK. He was formerly
president of the IPA and
currently writes a column for
The Spectator.
damien mClouGhlin is
professor of marketing at
UCD Michael Smurfit
Graduate Business School in
Ireland. He has designed and
led executive-development
programmes for leading
organisations.
denise turner has spent
20 years in communications
research and strategy, starting
in full-service agencies BBH
and Leo Burnett, before going
to media agencies, Zenith and
Starcom. She now works at
MPG Media Contacts.
Prasad narasimhan is the
managing partner Asia for the
brandgym, a global network of
senior brand coaches. He has
also worked on brands across
several global companies.
terry tyrrell is worldwide
chairman and co-founder of
The Brand Union, a part of
the WPP Group. He works
across a global network to
deliver brand-led business
solutions. He is also retained
as a consultant on brandrelated issues to many CEOs.
mhairi mCewan is co-founder
Jonathan riChman is group
director, insights and planning
for Possible Worldwide. He
helps lead digital marketing
strategy for a number of
clients and writes pharma
industry-leading blog, Dose
of Digital.
ruth saunders is founding
partner of Galleon Blue. She
helps companies develop and
implement customer-focused
laurie younG is a specialist
in the marketing and selling of
services. He divides his time
between consultancy work
(including teaching), public
speaking and writing.
To submit an article, email
the editor at market_leader@
warc.com
market leader Quarter 4, 2011
8/24/2011 15:37:31
market leader q3 2011 DATAMINE ad.indd 1
8/23/2011 10:37:42
b r a i n wav e s
DiFFerent thinking
Brainwaves
Our selection of light reading from around the world of marketing
Mad Men versus the real Mad Avenue circa 1950
by winstOn Fletcher
How Honest and truthful
(we’ll ignore legal and
decent) is the TV programme
Mad Men? We can answer
this question with some
confidence because there is
a terrific book, published in
1958, which tells it like it
really was. Madison Avenue
USA, by journalist Martin
Mayer, was a worldwide best
seller, and in its original
foreword David Ogilvy wrote:
‘This is the best book about
advertising ever written.’
Ogilvy withdrew his
generous accolade five years
later when he published his
own worldwide best-seller
Confessions of an Advertising
Man. The great Scotsman
had numerous admirable
qualities, but modesty was not
one of them.
Sadly, Mayer’s picture is
less glamorous than the one
painted by the TV series.
After the 1930s recession and
the Second World War, in the
1950s advertising boomed.
More importantly,
particularly in the USA,
television swiftly came
from nowhere to become
the biggest and brawniest
advertising medium of all. It
grew much larger, and much
faster, than the internet, but
that’s another story.
The new medium was
ascribed with almost
supernatural powers. I recall,
as a student, attending
a debate on the motion
‘Television commercials can
sell anything and everything
to anybody and everybody’.
8
8 brainwaves.indd 8
(Eat your heart out, ITV.) The
ad industry, naturally, loved
being seen as all-powerful,
and fostered the image. But
in reality it was struggling to
understand exactly what made
television advertising tick.
Consequently, as Mayer
shows, on Madison Avenue
conflicting theories and
philosophies of how
advertising works abounded,
each propounded by its own
agency. And each agency
claimed its own approach was
the only one that really did
the business.
Led by Rosser Reeves,
Ted Bates proposed its
Unique Selling Proposition;
at Norman Craig Kummel,
founder Norman B
Norman plunged deep
into psychoanalysis;
Marion Harper, founder
of Interpublic, was much
After the 1930s
recession and
the Second
World War,
in the 1950s
advertising
boomed
motivated by motivational
research; David Ogilvy was
the high-priest of high-class
imagery; Bill Bernbach at
DDB promulgated witty,
Judaic self-deprecation… and
so it went on. These guys
were clever, and worked their
butts off. As their agencies
surged forward, their staff
were expected to kowtow to
their masters’ philosophies
zealously. And they did.
During those heady years,
each evening in the 21 Club
and Maud Chez Elle, young
Mad Avenue admen argued
fiercely about the different
agency philosophies. Nor
were they above mildly
malicious backbiting. For
example: ‘Ogilvy’s a snob,
so he just gives his products
snob appeal’; ‘Marion will
make Interpublic the biggest
in the world… for about ten
minutes’; ‘Reeves taught me
everything I know about
advertising. Pity nobody
could teach him a thing.’
How does Mad Men reflect
all this? Not very well.
None of the above-named
guys was much of a boozer.
They weren’t notorious
philanderers. And they weren’t
especially dapper dressers.
Sure, they cared about making
big bucks, but they wanted to
do it by making great ads. But
then Mad Men is fiction. And
fiction is, well, fictional. n
Winston Fletcher writes
extensively on advertising
and marketing.
[email protected]
Market Leader Quarter 4, 2011
8/24/2011 14:10:01
b r a i n wav e s
DiFFerent thinking
don’t underestimate …
The importance of long-term
relationships.
don’t overestimate …
A bad situation. You can
diffuse things just as quickly.
Blogbytes: lessons from
the herd with NOTW
the experience that
taught me most …
Is being lucky enough to have
my own agency and building it
up with my partners.
the most fun i had …
This much
I’ve learned
nicOla MenDelsOhn
the best advice i got …
Was from John Hegarty:
do interesting things and
interesting things will happen.
the worst advice i got …
Was from a creative director
who told me to go out and sell
a creative campaign to a client
and not to come back till the
job was done.
Was, and is, developing the
culture at Karmarama.
the worst moment …
Was unsuccessfully investing
in a property scheme. Stick to
the things you know.
My peak career
experience …
Karmarama winning Agency
of the Year, Sunday Times best
company to work for, and
becoming IPA president in the
same month.
Nicola Mendelsohn is
chairman and partner at
Karmarama
[email protected]
ThoughT for The day
froM benjaMin frankLin’s diary
Market Leader Quarter 4, 2011
8 brainwaves.indd 9
tHe Most popular Marketing
Society blog article over the
summer was by Alex Batchelor
on lessons in normative herd
behaviour from the News of
the World.
He wrote: ‘Amid the
hysteria surrounding the News
of the World (NOTW), what
interests me are the lessons
in human behaviour. We are
a herd species (cf Mark Earls,
author of HERD) and our
behaviour continues to be
affected by those around us.
This current story, however it
plays out, is a lesson in group
behaviour.
‘Next time, as a marketer,
or as a member of any group,
you see something that you
strongly believe is wrong,
being perpetrated with a
sketchy justification, how are
you going to react?
‘What we are really seeing
in all the discussions are the
pernicious effects of suspicion
in undermining any resolution
to disputes. When I am
suspicious of the intentions of
those involved I can be blind
to outcomes that I would
accept in a less-emotional
environment – and I can
see even well-intentioned
proposals as hostile.
‘As Antonio Damasio,
professor of neuroscience at
the University of Southern
California, says: “We are
feeling machines that also
think and not thinking
machines that also feel.”
Suspicion, once created,
lingers for a very long time
and this shows the importance
in all walks of life of a
reputation for honesty and
fairness.
‘I can promise that the
fastest way to prolong the
feelings of anger, contempt
and sadness is if we feel that
actions of those involved are
insufficiently penitent, or if
we feel that their penitence is
insincere.
‘So, the sad lessons for
marketing are that you should
never underestimate the value
of a reputation for honesty
and fairness (although you
may not think you need them
until it is too late) – and that
suspicion and democracy are
powerful weapons against
even the most powerful.’ n
Alex Batchelor is the COO of
BrainJuicer
http://blog.marketing-soc.
org.uk
Brainwaves pages are edited
by Elen Lewis, editor of
The Marketing Society
[email protected]
9
8/24/2011 14:10:03
b r a i n wav e s
DiFFerent thinking
Words worth
Golden brands of 1961
Unless you live in westward ho! or saint-louisdu-ha!ha!, use exclamation marks sparingly
here, the Marketing society digs into its archives of
50 golden brands: a year of lemon, Fairy and Jaguars
in CHekHov’s short
story The Exclamation Mark,
a civil servant trying to
get to grips with the rules
of punctuation develops a
paranoid fantasy in which
everyday objects transform
themselves into malevolent
exclamation marks.
I’m with F Scott Fitzgerald
who wrote: ‘Cut out all
those exclamation marks. An
exclamation mark
is like laughing at
your own jokes.’
Elmore Leonard
wrote of
exclamation
marks: ‘You are
allowed no more
than two or three
per 100,000 words
of prose.’
LeMon. if there was one word
geT a grip
An exclamation mark is like
shouting or whooping. It’s
like screaming, ‘I REALLY
MEAN THIS’, after you’ve
spoken. And in business
writing, exclamation marks are
not to be encouraged, aside
from special occasions.
Too many emails use
exclamation marks, and
they’re especially irritating
when used in groups of two or
three. Admittedly, email has
seen exclamation marks make
something of a comeback.
Before the 1970s, typewriters did not have anything akin
to an exclamation mark on
the keyboard, which may have
been another reason for their
rarity. It was a lot of effort
to type a full stop,
then back space,
push the shift key
and type an
apostrophe.
So, when to
use exclamation
marks? Use them
sparingly and then
they will have the impact you
need. They should be used to
demonstrate surprise, anger
or joy. That’s all. And, if
you’re not sure, use a full stop
instead. So is ‘Thanks!!!’ more
grateful than ‘thanks’? I don’t
think so. n
Elen Lewis
[email protected]
five ways To… lisTen
1 silence. Spend three minutes a day in silence. This will reset your
ears and help you recalibrate so you can hear the quiet and the subtle
again.
2 the mixer. Differentiate the noise. How many channels of sound can
you distinguish in a coffee bar? In the street? At a lake? This exercise
will improve the quality of your listening.
3 savouring. Learn to enjoy mundane sounds, from the waltz of your
tumble dryer to the coffee grinder. Mundane sounds can be richly
fascinating if you pay attention: discover the hidden choir.
4 Listening positions. We listen through filters, most powerfully our
intention. Change your listening position and it can change your world.
5 rasa. This acronym is also the Sanskrit word for juice or essence.
RASA stands for Receive (pay attention to the person); Appreciate
(make noises like hmm, oh, okay); Summarise (the word ‘so’ is
important in communication); and Ask (ask questions afterwards).
Watch Julian Treasure of The Sound Agency on TED.com.
For more, visit www.juliantreasure.com.
10
8 brainwaves.indd 10
that summed up marketing
and advertising in 1961, it was
lemon.
In the US, a VW print
campaign was causing ripples
across the advertising industry.
Using simple headlines like
‘Lemon’ or ‘Think Small’,
VW and its creative agency
Doyle Dane Bernbach were
masterfully persuading the
American public to fall in
love with a German car in the
shadow of World War II.
Breaking conventions,
this creative style was based
on the subtle sell, and it
marked a new approach for ad
agencies – pairing copywriters
and art directors as part of an
equal team.
This side of the Atlantic,
an altogether sleeker-looking
car was causing waves –
the E-Type Jaguar, Britain’s
affordable answer to the flashy
Italian Ferrari.
It was snapped up by
celebrities such as footballer
George Best and George
Harrison from The Beatles.
And it wasn’t the only
British brand innovating in
that year. Wilkinson Sword
began to attract attention
internationally for the first
time, with the launch of a new
and revolutionary Tefloncoated blade.
Two iconic strands of
British advertising also debuted
this year. Fairy Liquid’s
memorable slogan ‘Now hands
that do dishes can feel soft
as your face, with mild green
Fairy Liquid’, sang onto the
screens. And there was a new
kid in town – Nestlé’s Milky
Bar Kid. n
1961 snapshoT
Current affairs: John F Kennedy becomes US president, the Vietnam
War officially begins, construction of the Berlin Wall, and Tottenham
Hotspur wins the League and Cup Double.
films: West Side Story, Breakfast at Tiffany’s.
books: Catch 22 by Joseph Heller.
Music: The Beatles perform at The Cavern Club for the first time; the
careers of The Beach Boys and The Temptations begin.
births: Diana, Princess of Wales, George Clooney, Ricky Gervais.
deaths: Ernest Hemingway, Vanessa Bell, George Formby.
www.50goldenbrands.com
want to keep your competitors up at night? hire gapingvoid for
your next campaign, and sign up to the free daily Cartoon at
www.gapingvoid.com
Market Leader Quarter 4, 2011
8/24/2011 14:10:04
b r a i n wav e s
DiFFerent thinking
My seven wonders
alan giles
aLan GiLes is the former
CEO of the HMV Group.
Now chairman of Fat Face
and board member of The
Marketing Society, he tells
Elen Lewis about the seven
wonders of his world.
1
View. From my seat
at Madejski Stadium,
home of Reading FC.
My spirits soar when I see this
1
view, at least until we concede
the first goal.
Work of art. OK
Computer by Radiohead.
Fourteen years after
it was released, it is still an
astonishingly varied, beautiful
and challenging album.
Journey. Cycling from
Hambleden to Christmas
Common. An exhilarating
2
3
ride through the wonderful
rolling scenery of the Chilterns,
with one long, steady climb to
raise the heart rate.
Book. Birdsong by
Sebastian Faulks. Moving,
harrowing, and thought
provoking, it is the best work of
one of the most talented writers
of the modern era.
City. San Francisco.
An inspiring, vibrant
blend of cultures with
a stunning setting. Compact
enough to walk around, with
stunning food, buildings and an
all-pervasive ‘can do’ attitude.
4
5
4
6
7
8 brainwaves.indd 11
7
2
3
Market Leader Quarter 4, 2011
6
Building. Mob Quad,
Merton College,
Oxford. A sense of
timeless tranquillity and
scholarship, with the humbling
thought that little has changed
not just since I was an
undergraduate, but since the
13th century.
Hotel. The Sanctuary
on Camelback,
Scottsdale, Arizona.
Stylish, peaceful, great
cooking and a spectacular
view. I relax immediately upon
arrival, and I have booked my
next trip already.
5
11
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ideas & issues
over to you
Ideas & issues
the annual festival of creativity is an indicator for the state of the
global economy and the state of marketing communications
creativity
Iterative marketing and ecosystems
From julian boulding
the annuaL Cannes festival
of creativity is a significant
indicator for two issues that
concern us all: the state of
the global economy; and
the state of the marketing
communications business.
On the first metric, the
global economy has bounced
back. The 2011 awards
contests received a record
number of entries and
the number of registered
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12 ideas and issues new pic.indd 12
delegates was almost 9,500,
close to the all-time high of
10,000 in 2008.
Seminars were packed.
You had to get there early for
Google, or you could forget
about seeing Eric Schmidt.
Latecomers would be in
the balcony of the overflow
theatre watching the live
video feed.
But what about the
marketing communications
business? The top creative
awards went to an interesting
mix of traditional advertising
from ‘new’ markets, such as
Romania, China and South
Africa; and innovative,
technology-driven work from
established markets including
the US and Korea. And that’s
a pretty fair reflection of the
business today.
But behind – and beyond
– the parties and the prizes,
what was being talked about
and what did we all learn?
last year compared
with this year
The talk in Cannes in 2010
was all about the ‘what’. What
is the industry doing? What is
the role of brands? And, most
of all, what should companies
stand for?
This year was all about the
‘how’. In an interconnected,
Market Leader Quarter4,2011
8/24/2011 15:43:21
ideas & issues
over to you
interactive, collaborative,
mobile world, the key
challenge is how to engage
with consumers in a creative
and original way.
Essentially we heard three
schools of thought.
1
The intuitive approach
Fortunately, there are
still some renegade
geniuses to remind us that
creativity is unpredictable and
does not arrive through logical
distillation of facts.
John Hegarty gave his
great speech about zagging
when others zig, illustrated
by famous BBH TV
commercials. Everyone else
plays the full 30 seconds – or
the 90-second directors’ cut,
or the three-minute video
explanation of why the idea is
creative. Hegarty plays only
the first six or seven seconds,
because everyone immediately
recognises and remembers
them. Arrogant, but awesome.
Chuck Porter and his
team from Crispin Porter +
Bogusky (CPB) talked about
‘method advertising’. Like
Stanislavsky’s ‘method acting’,
this means getting fully
into character by using the
products and brands you’re
working on, before allowing
your intuition to create stories
about them.
CPB walked the talk by
throwing out all their Macs
when they won the Microsoft
account. The FedEx-style
order-tracking system they
developed for Domino’s pizza
has to be one of the greatest
creative uses of technology,
and you have the feeling it
probably didn’t come out of a
focus group.
2
The process-driven
approach
Ogilvy invited Sir
Ken Robinson, an author
of several books, to give
a commemorative lecture
to mark David Ogilvy’s
centenary.
Robinson defines creativity
as ‘the process of having
Market Leader Quarter4,2011
12 ideas and issues new pic.indd 13
original ideas that have value’.
If you think creativity is a
process, forget BBH and CPB,
Ogilvy is the agency for you.
Ogilvy, like many WPP
companies, has bet big on
data. The CEOs of large
corporate clients keep their
jobs by predicting their
quarterly earnings accurately,
which means they hate
uncertainty. Data appeals, as it
reduces uncertainty.
Also, data is now far
more widely and deeply
available than ever before,
thanks to the internet. It’s
a natural preserve of the
media companies that control
most of the cash flow in the
marketing communications
industry (such as Universal
McCann and its clients,
which devoted its seminar to
glorifying data).
The problem is that many
marketing companies still use
data reactively. They look at
what the consumer did last
month, or last year, to predict
what they will do next. The
problem is not just that things
move faster today – although,
of course, they do – but
that the nature of data has
changed. Traditional research
is simply being sidelined.
Today’s metrics are YouTube
views and Facebook ‘Likes’.
3
The iterative approach
Of all the topics raised
at Cannes 2011, this was
the big one. For ‘iterative’
read: carry on until you get it
right, and then make it better.
And it profoundly impacts
the nature of marketing
creativity today.
The artists of the European
Renaissance instigated a new
view of the world: a world of
perfectly composed stasis, seen
from a defined and unmoving
perspective. Jazz, cubism and
other movements in the fine
arts moved this on many years
ago, but advertising and data
stayed put.
‘Snapshot’ research fixed the
consumer in a point of time,
allowing advertisers the time
In an interactive,
mobile world,
the challenge is
how to engage
with consumers
in a creative way
to craft a perfect message.
Remember when it routinely
took a year to create a new
campaign? A lot of people
would be more comfortable if
our industry still worked this
way, but it doesn’t.
Creativity – indeed,
marketing itself – is now
iterative, and many of the best
seminar speeches discussed
this. Jonah Lehrer put it
succinctly: the recipe for
success today is to ‘fail fast
and fix it’.
Some people view this as
a source of concern. Paul
Polman, CEO of Unilever,
feels that the industry is ‘like a
deer in the headlights’, not
knowing where the next trend
will be. He is buying time by
doing away with quarterly
results announcements
(hooray!) and hedging bets
by shifting the marketing
balance from ‘one-Unileverglobal’, to more local activity.
Keith Weed, his CMO, said
‘we want to be the most
local of the global players’,
but his acknowledgement of
‘the challenges of managing
complexity’ was refreshingly
candid.
Some people sit on the
fence: the 70/20/10 model
seems to be the new norm,
where 70% of the marketing
budget goes to what you
know all about, 20% goes to
promising new initiatives,
and 10% is devoted to things
you know nothing about, but
which sound interesting and
trendy. Amazing and revealing
to hear more than one of the
world’s leading marketers
confess to this.
Other people were more
positive. Malcolm Gladwell
put forward the view that
the world belongs to the
‘tweakers’. This means not
only the Chinese, adapting
and exploiting western ideas,
but also people such as Steve
Jobs, adapting and modifying
the PC, and the inventors
of Google improving on
the early search engines like
Alta Vista.
Coca-Cola’s concept of
‘liquid and linked creativity’,
discussed elsewhere in this
issue (page 35), makes the
same point from a different
perspective.
For example, Google tried
its advertising on YouTube
before risking it on television
in the Super Bowl. CEO Eric
Schmidt said: ‘Successful
business models are iterative…
if we want to change our
website, we test it on 10%
of users. When we make a
change, we leave 10% of users
with the old version.’
it’s all about
platforms – or is it?
If marketing is iterative,
then the future belongs to
the flexible platforms. Of
course, it helps if you own the
platform. In that case, you
let others do the work while
you collect the money – as
Facebook does with Zynga,
another frequently quoted
example.
To reference Schmidt
again: Facebook, Apple,
Amazon and, of course,
Google are all platforms.
So is Unilever’s ice-cream
vending machine that
recognises smiles and starts a
relationship with consumers.
(Thanks to SapientNitro for
that one.)
And so too is Nike. Bob
Greenberg of R/GA explained
how he had helped the
company to move beyond
the Nike + platform to a
‘functional ecosystem’. This
was done by incorporating
GPS into the kit, so runners
know where their friends
>
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ideas & issues
over to you
actually are, not simply that
they are getting fit.
If you really want to know
where our business is going,
the best idea is usually to pitch
up and listen to Bob. And this
year, again, his speech was the
best. It’s a shame that he hasn’t
agreed for it to be posted on
the Cannes Lions website, as
most speakers have.
Basically, as Bob sees
it, the world of marketing
communications first moved
from horizontal integration
(global campaigns) to vertical
integration (co-ordinated
campaigns) and is now about
If marketing is
iterative, the
future belongs
to flexible
platforms. Of
course, it helps
if you own
the platform
to move forward again, to
functional integration.
Essentially, this means
moving from platforms –
already yesterday, for Bob,
just when the rest of us had
started to work them out – to
ecosystems, where product,
brand, company, technology
and consumer are all crucial
participants. As agencies
become skilled in technology
as well as creativity, they will
become more than agencies
– they will become business
consultants.
Their role will be to help
marketing companies develop
brands that ‘create value
for consumers, like Google;
rather than simply enjoyment,
like Coca-Cola’ (his words,
not mine).
So, circle back for a
moment: enjoyment
comes and goes, but value
continuously develops.
In today’s marketing, there
is no ‘establishment’. The
future belongs to the people
who keep moving. n
Julian Boulding is president
of thenetworkone.
julian.boulding@
thenetworkone.com
coMMunication
Story power + experience = brand legends
From simon glynn
in the article ‘Storytelling
in a virtual world’ (Market
Leader, Quarter 3, 2011),
Julian Saunders argues that
the decline of advertising is
endangering the storytelling
that brands such as Orange
and Nescafé have historically
used so memorably. And he
laments this danger because
storytelling is so fundamental
to how humans communicate
and relate to each other.
Our research and
experience confirm the
declining role of traditional
advertising-based storytelling.
In today’s radically
transparent world, brands
don’t get to tell their own
story much, and the reality
of the customer experience
dominates. But what’s
declining is the narrative
storytelling isolated from
the ad campaign. A new
storytelling is emerging that’s
more authentic and linked
to the brand experience,
creating the stories that
people spontaneously pick
up and retell. It’s this that
will be at the core of building
tomorrow’s brands.
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12 ideas and issues new pic.indd 14
Brand legends
are great
stories based
on a truth
their direct experience. The
successes, the ‘brand legends’,
are those that score well
above average for their sectors
on both storytelling and
experience: legends are great
stories based on a truth.
examples of success
When we measure a brand,
we look at two dimensions of
customer perception: ‘story
power’, which describes how
favourably consumers at large
rate the brand; and ‘experience
power’, which describes how
much the brand is loved
by the people who actually
use it and know it through
Brand legends in our most
recent UK research include
O2 in telecoms, Apple in
electronics, and BMW in
automotive. By contrast the
‘brand myths’ are those that
score above average on story
power only: myths are great
stories that are not based on a
truth. Not surprisingly, we find
that the financial performance
of brand legends is consistently
stronger than that of brand
myths: an average of 8%
annual growth in revenues for
brand legends in the UK, for
Market Leader Quarter4,2011
8/24/2011 15:43:22
ideas & issues
over to you
example, compared with an
average of -1% annual decline
in revenues for brand myths.
Instead of spending most
of their money telling stories
directly, the brand legends
create branded experiences
that stimulate people to
discover and retell their
stories for them: the reward
treatment and treats from O2,
the physical delight of using
Apple products, and the thrill
of perfection from BMW.
Are these the sort of
values-based stories that Julian
Saunders is craving? Arguably
they are. Behind O2’s
indulgences is an enlightened
belief in investing in longterm customer relationships
rather than short-term
exploitation; behind Apple’s
delight is an appreciation of
pure design craft and usability
over technological gizmos
and features; behind the
BMW thrill is the reward that
comes from their perfectionist
engineering of every detail.
To create such strong,
branded experiences, a
focus on the brand story is
crucial. But that brand story
is no longer the advertising
narrative. It’s the succinct
expression of the brand idea
that is so simple and relevant
that people can relate to it,
and want to retell it because
it’s touched them emotionally.
It is so purposeful that people
want to attach themselves to
its values, and so tangible that
it permeates the experience
and gives customers something
real, not just myth, to love.
The form of the story may
have changed, but the need for
it has not. Brands that embrace
the new digital channels as
ends in themselves, not as
new means of storytelling,
will become bland. Digitalconversation tactics won’t
work without a ‘being-worthtalking-about’ strategy. n
Simon Glynn is a senior
partner and European head
of Lippincott.
[email protected]
Market Leader Quarter4,2011
12 ideas and issues new pic.indd 15
ehrenberg revisited
How brands grow: work in progress
From david cowan
the baying and mooing of
marketing sacred cows being
slaughtered can be heard
emanating from the pages
of Professor Byron Sharp’s
book Howbrandsgrow:what
marketersdon’tknow. Deeply
held marketing ideas and
widespread practices are
denounced and derided –
marketers likened to medieval
doctors, with their principles
and practices compared to
those of blood letting.
The book is an accessible
compendium of the work of
the late Professor Ehrenberg
and his colleagues. It has
been reviewed in Market
Leader (Quarter 2, 2011) but,
given its iconoclastic nature
and that it is based on more
than 50 years of scholarship,
it requires much attention
and some challenge by the
marketing community.
loyalty programmes
don’t work
I am a partial convert to
Ehrenberg’s ideas and have
been since the early 1970s.
However, in Sharp’s book there
are areas where in my view
his ‘evidence’ fails to convince
and there are key issues that he
doesn’t address at all.
A central Ehrenbergian
assertion, with only minor
caveats, is that a brand’s share
is determined by the number
of users is has. To grow, it
must get more users; it can’t
grow by inducing existing
users to use more. Ehrenberg/
Sharp have studied hundreds
if not thousands of brands
in different markets and
geographies and nowhere do
they find brands with greater
loyalty than their competitors.
Their deduction is that
‘more from existing users’, an
oft-stated marketing strategy,
never works.
Although there are some
major unanswered questions
Their deduction
is that ‘more
from existing
users’, an oftstated strategy,
never works
about this, I have always felt
comfortable with putting
penetration as the header
objective if growth is to be
achieved. It seemed to me to
be a corollary of the Parfitt
and Collins (1967) trial and
repeat-purchase model of
how new brands become
established in the first place.
I also have no problem
with his evidence that light
brand users are of great
importance for both current
and future sales and therefore
relationship marketing and
CRM programmes that ignore
them are a bad idea.
And I agree with his
evidence and argument that
loyalty programmes have weak
effects on brand share and are
unprofitable. I have always
thought the provenance of
these programmes suspect.
They have usually originated
in the HarvardBusiness
Review or the like before
being picked up and sold
around the world by the large
management consulting and
IT firms but their evidential
foundation has always
appeared dubious to me.
It is therefore particularly
gratifying to read the
demolition job done on the
article (Reichheld and Sasser
in HBR 1992) that claimed
that companies can boost
their profits by almost 100%
by retaining just 5% more
customers. Sharp shows that
although this may be true,
arithmetically it is nonsense
and can never happen.
The chapter on price
promotions is particularly
worth reading. He also
demonstrates how advertising
can be working even if sales
don’t increase. And I have
always found the Ehrenberg
assertion that the main
role of advertising is to
reinforce memory structures
compelling. And there is much
more good in the book – it is
essential reading.
two fingers to
orthodoxy
Sharp’s audacious objective is
to overturn the precepts that
underlie today’s marketing
orthodoxy, and the reader is
likely to have the disturbing
feeling that much of what they
believe is being proved untrue.
This is not the case. The
impression is created through
a combination of destroying
straw men, exaggeration and
going beyond the evidence.
There is also a major flaw in
the whole project that is not
acknowledged.
The first object of
attack is the ‘ideology’ that
‘differentiated brands should
sell to different groups of
people’. He presents academic
evidence to show that brand
usage is not related to
customer personality type
and presents many tables for
a large number of brands
showing that brand users don’t
differ much by demographics,
media habits or general values,
by which he means TGI type
statements – for example,
‘I can’t bear untidiness’ or
‘children should express
themselves freely’.
This may disturb some
marketers but this is a straw
man. The concept of target
group – ‘different groups of
people’ – means people who
want or who are attracted to >
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8/24/2011 15:43:22
ideas & issues
over to you
slightly different functional or
symbolic things, not people
who are different in the ways
being described (although
there may be correlations with
demographics etc).
The professor may think
he is addressing this point
when he attacks Philip Kotler
for saying that different
flavours of soft drinks, such
as Coke, Lilt, Fanta, cater to
different people. A position he
demolishes by showing that
large proportions of Lilt and
Fanta buyers buy Coke.
This is another ‘straw man’
created through a combination
of Kotler’s exaggeration and
an unwillingness to embrace
the spirit behind Kotler’s idea.
Sure, the buyers of Coke, Lilt
and Fanta are not completely
different people but I am sure
there are people who have
a hankering (a need-state)
for Lilt more often than for
other brands and/or who
would buy it more often if
it were available or available
in the right size or simply
people who are in the mood
for one or other of these
drinks at different times. If
this is the case, is it so silly to
conceptualise these people as
Lilt drinkers? I think not.
major heresy
Fire is then turned on
the most sacred of sacred
marketing cows – the
importance of brands. The
attack is made on seven or
eight fronts. The first attack
is on the named versus blind
product test, a cornerstone
in the argument for branding
importance which has received
a significant boost in recent
years with reports that brands
stimulate brain activity
in the hippocampus and
other areas concerned with
cultural knowledge. This is
dismissed as being a symptom
of familiarity rather than
anything else but he presents
no substantial evidence.
Ehrenberg/Sharp
acknowledge that there is
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12 ideas and issues new pic.indd 16
fire is turned on the
most sacred of sacred
marketing cows – the
importance of brands
such a thing as brand loyalty
but they assert that this is a
phenomenon of the product
sector, a habit adopted by
humans to make life simpler.
This is undoubtedly true.
They quote experiments
that show that under test
conditions, consumers show
loyalty to trivial differences
– for example, loaves of bread
labelled as L, M, P and H.
However, to establish the
case that brands in the normal
sense of the word don’t
contribute to loyalty, it would
be necessary to show that
under similar conditions – for
example, perfect distribution
– the levels of loyalty were
no higher than to the trivial
alphabetic brands. This has
not been done.
Furthermore, the most
important point about brands
– that they command higher
prices – is not addressed.
Qualitative research
among brand users who show
emotional attachment to
brands is dismissed as myth
originating from interrogating
small samples of biased
customers who are paid for
interviews and reported by
biased researchers.
Despite this scornful
dismissal, Sharp acknowledges
that brand fanatics do exist
but asserts without proof
that all brands have them in
proportion to market share
and that even for iconic
examples like Apple and
Harley Davidson they have
little impact on loyalty. The
customer advocacy effect
on recruitment is said to be
negligible due to the small
number of fanatics but again
no evidence is presented.
glaring weakness
The glaring weakness of the
Ehrenberg/Sharp project is
that it is a static analysis. It
compares competing brands
with different market shares at
fixed moments in time. They
have never studied how brands
become established in the first
place and the mechanisms by
which the largest acquired the
greatest number of users – so
the book is not about how
brands grow.
Studying how growth has
actually come about gives an
insight into growth that a
static analysis can’t give.
At one point in the book,
Kotler is taken to task for
saying that brands should
target specific segments but,
according to Professor Sharp,
segments don’t exist.
Let’s take a dynamic
case – how Dove deodorant
grew. Dove deodorant’s share
plateaued a year after launch.
A new scent variant was
introduced but it cannibalised
the original and the total
hardly increased.
In year four, a variant for
sensitive skin was launched
followed two years later by
one ‘with added moisturiser’
and then one called Invisible
that didn’t leave marks on
clothes. Each benefit was
advertised and market share
grew and stayed up with each
introduction and there was
negligible cannibalisation.
By year ten, market share
had doubled.
An Ehrengbergian
snapshot, say over a six-month
period, is highly likely to
reveal that buyers of the
variants have bought the
original too and their analysis
would conclude that there are
no segments. I would submit
that the brand grew because
there were consumers who
had a predisposition towards
a product for sensitive skin,
another group who wanted
moisturiser and a third
interested in Invisible. The
new scent found no significant
segment and, therefore, failed
to grow the brand.
Throughout his long career,
Andrew Ehrenberg strove to
make himself clear, believing
that this was the way to win
acceptance for his ideas. But
this was the wrong diagnosis.
Professor Sharp’s book is
admirably clear but despite
what could be described
as a tourdeforce I am still
only a partial convert. The
problem isn’t lack of clarity,
the problem is that at its heart
the analysis is one dimensional
and therefore incomplete. n
David Cowan is founder of
Forensics. [email protected]
eu.com
‘How brands grow: what
marketers don’t know.’
Professor Byron Sharp,
OUP (2010)
Market Leader Quarter4,2011
8/24/2011 15:43:23
ideas & issues
over to you
consuMer behaviour
Should my brand be following the latest trend?
From joseph gelman
coMpanies, especiaLLy
those in the fmcg world,
have a profound interest
in understanding where their
consumers are heading. Cool
hunters, trend watchers,
urban influencers: all of
these subjects have become
a known and relevant part
of the corporate world,
with the objective of better
understanding how consumers’
lives are evolving and how this
can translate into innovative
products and services.
Typically, a company will
put effort into identifying
these consumer trends and
use this knowledge as one of
the inputs into the innovation
process. When confronted
with these trends, companies
usually embrace them and
try to respond to them. In
some cases, they are able
to become first movers or
shape consumer behaviour by
owning a certain trend at the
appropriate time and with the
right propositions.
right place, right time
Trend identification is not an
exact science. Evaluating the
relevance (and even existence)
of a specific trend can be
increased with systematic
observation and non-traditional
research methodologies.
Yet, even if a trend is
identified and understood, a
company needs to reflect on
some key questions before
using it as a guiding light for
evolving its brand:
l Is this trend real and does it
have staying power?
l Will it be relevant in my
category?
l Does my brand have
the permission/capacity to
respond to this trend?
l Will focusing on this trend
affect my current positioning
and therefore alienate my key
consumer groups?
Market Leader Quarter4,2011
12 ideas and issues new pic.indd 17
Answering these questions
will help a company define
the relevance (if any) that a
specific trend should have on
the innovation process and,
ultimately, over its brand.
One approach is to embrace
the trend. Some brands have
been very successful in doing
this. A good example is IKEA,
which understood early on
the intersection between the
‘do it yourself’, ‘simplicity’,
and ‘modern look and feel’
consumer trends and made
them the basis for its products,
price points, and overall
consumer experience.
We could say that IKEA
has been so successful at
this that it has actually
become the trendsetter that
other companies in their
category have followed,
with special emphasis on the
‘do it yourself’ part of the
equation (today it feels like it
is impossible to buy furniture
in Europe that one does not
need to assemble at home).
Another good example
is how McDonald’s has
responded to the ‘healthier
lifestyle’ trend by reshaping
its menus, being more
transparent about its products,
and even starting to change
its look and feel towards a
palette that is dominated by
the colour green. It’s likely
that McDonald’s still makes
most of its money by selling
Big Macs and fries, but it has
gone through an evolution
based on its views on how
consumers are changing. Does
this mean that every brand
should adopt new trends in
such a transformational way?
Not necessarily.
know your consumers
Consumers are complex, and
their needs are not uniform.
On the one hand, there will be
segments of consumers that
will not follow a certain trend
and, on top of that, other
consumers will embrace trends
differently based on product
category or even specific
consumption occasions.
This means that every trend
has an implicit ‘anti-trend’
associated with it, and there
are opportunities for brands at
both ends of the spectrum.
Table 1 provides some
examples of opposing
consumer needs that can result
in a trend and an anti-trend.
We know that the anti-trenddriven consumer needs to
feel counter-intuitive, but the
reality is that a good number
of brands have been very
successful in following them.
In the fast-food example, it
is clear that Burger King has
achieved success by following
the anti-trend; it’s all about
the all-American eating
experience versus the healthy/
good citizen approach that
McDonald’s has taken. And
they are both doing well.
be selective
We need to consider that
trends that at first glance
appear to be antithetical, can
actually co-exist. For example,
there is a key consumer
trend around the ‘need for
mobility’, which has resulted
in numerous easy-to-consume,
single-serving and on-the-go
products that are very much in
tune with the 20-something’s
lifestyle (or so we would think).
At the same time, Heineken
has developed a keg beer for
at-home consumption, which
seemingly goes against the
trend, unless there is some
specific trend about spending
more time at home sharing
with friends versus going out
to clubs. Confusing isn’t it?
It is important for brands
to pay attention to trends, but
observations and responses
need to be systematic,
avoiding oversimplification
that leads to superficial
analysis or hasty reactions.
After understanding the
trend, you must understand
if it is a relevant one for your
category and brand. If it is,
use it as one of the inputs for
the innovation process. If it
isn’t, think of the possibility
of following the anti-trend
and make your brand different
from all the others. n
Joseph Gelman is a partner
with Prophet
[email protected]
tabLe 1: exaMpLes of opposing consuMer needs that can resuLt in a
trend and an anti-trend
trend-driven consumer need
Living a healthier lifestyle
Participating in the ‘eco’ movement via consumption
Looking for the best consumption experience
(pure, high-quality, sensory experience)
Knowing more about the product, becoming an expert
anti-trend-driven consumer need
Searching for pleasure and indulgence (regardless
of health)
Believing that eco impact has been exaggerated,
not paying more for eco
Focusing on products that meet basic needs,
whatever is available
Disregarding product information or regulation
17
8/24/2011 15:43:23
ideas & issues
over to you
Marketing techniques
Which is the sharpest tool in the marketer’s box?
From laurie young
Writing a book is not
easy but the one I have just
finished was particularly hard.
It started out as such a simple
idea. Like all marketing
people, I have used different
ideas, tools and concepts
throughout my career.
Yet, during the past 30
years, so much has changed
that I wondered how solid
many familiar terms (such
as ‘product life cycle’ or
‘positioning’) are and where
they came from. I wanted
to write a series of essays
on their relative strengths
and weaknesses. It’s been so
difficult that I am convinced
that it has broken my brain. Yet
it’s taught me something quite
fascinating, which is that many
concepts that are routinely and
effectively used by marketers
are to be found, neglected, at
the back of the toolbox.
Take, for example, viral
marketing. During the advent
of the internet, many of us
were tempted to try out this
remarkable technique in the
virtual world. Some of us
messed up until we learnt to
integrate it with other media
and to institutionalise the
skills that make it work.
Now, many routinely use
it with other communication
methods to build brands,
generate leads or communicate
with buyers. Although pundits
such as Seth Godin and
Malcolm Gladwell put this
new version on the map, it has
been around a long time. John
Pears was certainly not familiar
with the term but he used
viral marketing to kickstart a
300-year-old brand by getting
18th-century schoolchildren
to run around London with
catchphrases.
And, in the same period,
Japanese traders (such as
Mitsokusi) used it to market
18
12 ideas and issues new pic.indd 18
high-end goods alongside
hand bills. So, why, after a
hundred years of so-called
marketing science are young
professionals just being taught
it? It would have helped many
of our predecessors to know
that successful business people
have, intuitively, used this
technique so effectively.
neglected ideas
One of the most worrisome
examples of this neglect is
‘thought leadership’. This is
common currency in leading
global firms such as IBM,
Microsoft, Deloitte, Clifford
Chance or Accenture. Many
see it as their prime method
of marketing and have made
millions from it over the
past decades alone. Serious,
smart people have made up
concepts like ‘shareholder
value’ or ‘CRM’ to sell to their
customers.
Moreover, it is another
tool that has been used for
centuries. People such as Josiah
Wedgwood, William Lever
and Robert Woodruff used
it to persuade their intended
customers that they needed
a new idea as much as a new
product or brand.
It is one of the most useful
ways of stimulating demand
from latent markets and is
responsible for the ubiquity
of much that we take for
granted today (particularly
technology). There is even a
credible argument that it has
been as effective and influential
as advertising. So, why doesn’t
‘thought leadership’ appear in
any marketing textbook?
Another term familiar to
many is ‘value proposition’.
People arrive at these valuable
constructs in different ways
but they are routinely used to
remind marketing and sales
people that life is about more
Brands set a
firm apart from
competitors and
create a unique
bond with
customers; they
create margin
and profit
largely on our own. My
original sense that, after years
of experience, we have to
come to our own judgement
about the viability of these
concepts was right. There
really is no canon of marketing
knowledge; and we are a long
way from having the armoury
of professionally verified
tools that, say, architects or
lawyers have. For me, the best
include: value propositions,
viral marketing and thought
leadership.
branding is top
than price discounts and fights
for market share.
In some major global
companies, such as Fujitsu,
sales people are not allowed to
approach customers with a deal
unless they have been through
a ‘value-prop workshop’.
Agencies and marketers
dedicate enormous amounts
of time and effort into getting
their heads around the right
mix of price and features.
Properly executed, value
proposition development
maintains margins and
safeguards profit. Again, this
idea is normally at the back of
the box.
It is strange that these
tools have been virtually
ignored by theorists. They
are supposed to work out
what we all do and condense
our successes into concepts
or techniques that will help
subsequent generations.
However, it’s impossible to
avoid an impression that they
have built a closed world view
about accepted marketing
thinking. This view holds onto
long-standing ideas (like ‘the
four Ps’ or ‘Boston matrix’) and
more recently ‘relationship’ or
‘services’ marketing, some of
which are shockingly suspect.
So, it seems that we are
The exercise of writing the
book has made me an even
bigger fan of branding. For a
long time, this was also at the
back of the box, mixed up with
‘packaging’ or ‘promotion’.
Now there is a plethora of
insightful publications on it.
This is the tool I most value,
the most useful contribution
that marketing skills have ever
made to businesses. Not only
do brands set a firm apart
from competitors and create a
unique bond with customers,
they also create margin and
profit. And they are durable.
In researching the book,
I found 100s of brands sold
today that have been in
existence for over 100 years.
In an era when many business
people believe that it’s difficult
to create enduring value, these
brands have been commanding
attention for many generations.
To a great extent, marketing
is branding and, for me, not
much else matters. It’s clearly
the sharpest tool in the box. n
Laurie Young is a writer and
consultant.
[email protected]
‘The Marketer’s Handbook:
Reassessing Marketing
Techniques for Modern
Business.’ Wiley, 2011.
Market Leader Quarter4,2011
8/24/2011 15:43:23
ideas & issues
over to you
brand ethics
How important is it for
brands to be ‘good’?
From jane asscher
When is a consumer durable
not a consumer durable? The
answer, of course, is when it’s
an indispensable status symbol
that just happens to double-up
as something useful. But
what if that same status
symbol happens to have been
manufactured in a sweatshop
by poorly paid workers?
Should it change how we
relate to it? The findings of a
new research study* suggest
that it should.
The study asked 2,000
people about their attitude
to brand ethics and how it
impacts their buying decisions.
Of those polled, 91% said
the way a company behaves
towards its customers and
communities is influential
when considering a purchase;
74% said they like to know
about the behaviour of a
company before buying;
60% said that awareness
of a company’s ethics –
environmental record,
sourcing, employment
policies, charitable donations,
etc – affected their purchasing.
Although attitudes tend
to exaggerate intended
behaviour, these are high
numbers. It seems we are
becoming more inclined
to judge ourselves by the
company we keep, and that
includes the brands to which
we might attach our loyalties.
where should we look
for explanations?
We can first thank the arrival
of the internet. In a world
where everything is accessible
in real time, there is nowhere
to hide. If a brand makes false
claims or behaves unethically,
sooner or later it will find its
way into the blogosphere,
Market Leader Quarter4,2011
12 ideas and issues new pic.indd 19
Most of us like
to support a
brand that does
good because, by
extension, we are
also doing good
leaving damning and indelible
digital fingerprints.
In addition, the economic
turmoil of recent years has
resulted in a breakdown
of trust in authority and a
greater reliance on personal
communities. In an age of
austerity, we understand that
brands value our money, and
this knowledge empowers us.
As individuals we may lack
muscle; collectively, however,
we can control a brand’s
economic fate. Most of us like
to support a brand that does
good because, by extension,
we are also doing good.
But what does it mean for
brands? Essentially, they must
up their game – not only
by doing good but also by
providing information to show
when and how they are good.
This means delivering
a joined-up message, as
Unilever found to its cost
when it attracted criticism over
its Dove ‘For Real Beauty’
campaign. The Dove campaign
sought to highlight and
counterpoint the exploitative
portrayal of women in
advertising; while a parallel
campaign for Unilever’s Lynx
deodorant appeared to be
trading on the very image of
women that Dove claimed to
reject. As advertising pundit
Russell Davies observed: ‘I
know what Dove believes in,
and I know what Lynx believes
in. I just have no idea what
Unilever believes in.’
So this begs the question:
what is being ‘good’? Our
research suggests it goes
beyond conventional norms of
corporate social responsibility
(CSR) – ie self-regulation
and compliance with ethical
standards. ‘Goodness’ has
tended to be associated
rather narrowly with
environmentalism (with
complicated price trade-offs)
but we believe that it is much
broader and may not involve
price trade-offs at all.
in the marketplace
We are experiencing a
seachange, a new ethos of
engagement, but one that
has yet to become universally
embedded in companies.
The highly successful
EveningStandard (ES) Get
London Reading initiative is
one example of this cultural
shift. ES chose a subject that is
not only directly relevant to its
brand but intrinsic to it. Unlike
a cause-related marketing
(CRM) or CSR programme
where there’s merely a neat
alignment, the topic of
illiteracy is fundamental to ES.
Having grasped the nettle of
the embarrassing incidence of
London children who couldn’t
read, the brand mobilised
commercial partners as
enablers of literacy, including
A-list celebrities, Mumsnet
and Argos. Most importantly,
it recruited ES readers,
encouraging them to volunteer
as mentors and fundraisers,
not only giving them an active
role – as any proper CRM
campaign should – but also
an involvement that creates
a virtuous circle with readers
reading about themselves
doing good in the pages of ES.
Involvement in a
worthwhile cause can
generate massive publicity,
both for the cause itself and,
by association, a brand. To
achieve this we know that a
brand’s marketing and CSR
goals must be aligned with its
communications in a credible
way, and not just bolted on.
Communicating an ethical
initiative effectively has always
been as important as the
initiative itself, but the new era
of ‘good’ behaviour requires
more than this. The brand
needs to use the new social
media tools to enable people
to become collaborators in the
cause. Brands that are seen to
collaborate – with customers,
staff and the world at large
– make us feel good about
connecting with them.
Successful brands also
make it their business to
maintain a flow of relevant
and transparent content – in
abundance. It means going
beyond traditional advertising
– communicating in forums,
generating word of mouth,
buzz marketing, social media,
local marketing, gaming,
entertainment, events and
more – while continuously
evaluating these channels to
measure performance.
At the heart of the new
corporate good is a move
towards consumer-driven
behavioural change. Brands
that recognise this and
structure their businesses
around genuine principles will
benefit. Being good gives a
brand a competitive advantage;
it gives consumers another
reason to buy; it makes people
believe passionately in their
work and, most importantly,
it’s great for society. n
* Market research by
Trajectory, conducted across
the UK in June 2011,
commissioned by 23red.
Jane Asscher is founder
and chairman of integrated
agency 23red.com
19
8/24/2011 15:43:24
c h o p p i n g B Lo c k
jeremy bullmore
In praise of scepticism
Jeremy Bullmore
says we shouldn’t
worry if people are
sceptical about
marketing, it’s
scepticism about
the police that
should concern us
20
20 bullmore.indd 3
You’d expect, wouldn’t you, that any prolonged
and evolving drama, starring journalists, lawyers,
politicians and policemen, while certainly leaving
some of them worse off in the public’s estimation,
would surely burnish the reputations of others?
After all, what draws us to drama is white hats and
black hats; the knowledge that some will win and
some will lose; that good will triumph over evil or
vice versa. Yet, astonishingly, the phone-hacking/
News of the World/Murdoch/Cameron/Coulson
drama left every single protagonist a loser. It’s like
the joke ending of an Elizabethan tragedy: a cast of
thousands and every one of them dead on stage.
I haven’t seen any new poll rating for the respective
standing of professions involved, but it seems
inconceivable that any have prospered. Perhaps their
only comfort is that most of them started at such
lowly levels that they didn’t have far to fall.
Some years ago, when the Today programme
sponsored a poll, the ten least-respected professions
were: MPs, estate agents, government ministers,
lawyers, journalists, footballers, advertising
executives, car dealers, company directors and
accountants. Traffic wardens and call-centre staff
comfortably trumped them all.
Of all the professions involved in the latest
shenanigans, the police have by far the most to
lose. Traditionally, the police score well – up
there with farmers and doctors and teachers and
soldiers and vets. And the reason, I believe, that
these occupations share such positive ratings, and
what distinguishes them from the lower-scoring
professions, is certainly something called Trust: but
more helpfully, it’s the lower levels of scepticism with
which we believe they can be engaged.
Scepticism is a seriously underrated instinct.
Scepticism is not, as many suggest, the halfway stage
to cynicism: the two are almost unrelated. Cynics
have made up their minds: their minds are closed.
Sceptics have open, speculative minds. Just as pain
serves to protect us from further injury, scepticism
serves to protect us from the consequences of
naivety. Scepticism is evidence of both intelligence
and experience. Scepticism is informed wariness.
Scepticism cultivates discernment. Scepticism does
not signify distrust; just the absence of blind trust.
Scepticism should be taught in schools.
It is right and proper and deeply beneficial for
absolutely everyone that journalists and politicians
and marketing executives and estate agents and
lawyers and car dealers should be the subject of
scepticism. We should all rejoice that that’s the
case. Healthy, educated scepticism is cost-free and
serves to monitor trading far more effectively than
most legislation. Laws quite often inhibit initiative;
scepticism allows the competitive trader to trade
competitively, to push his luck, to try things out, to
test the limits of persuasion. Laws are top-down,
indiscriminate and inflexible; scepticism is bottomup stuff, exercised individually.
The existence of scepticism – necessary, benign
scepticism – means that the lowly rated trades, of
which marketing is one, are destined to remain
lowly rated. Careers advisory departments and
status-conscious parents may regret this fact but we
shouldn’t. We should all stop wistfully wishing that
we attracted the unconditional respect enjoyed by
farmers and veterinarians. We never will; and if we
ever did, we’d live to regret it.
When people have dealings with bankers or
grocers or insurance salesmen, when we buy just
about anything including our power and water,
we’re doing a deal. We know what’s in it for us; and
we know that there’s also something in it for them.
We just hope that the deal is a fair deal and we’re
watchful to see that it is. Competition helps to keep
it that way – and so does scepticism.
We know that people’s motives, more often than
not, are not pure but mixed. Plumbers provide an
essential service and we’re grateful to them for that.
We don’t expect them to replace our thermostat for
nothing; we expect them to make a living. But we’re
right to remain unconvinced when they tell us that
what we really need is a new boiler.
We don’t believe that what motivates the
investigative journalist is an undiluted, selfless
dedication to the truth. We know that vanity, the
pursuit of fame, scoops and sales come into it as
well – and that sometimes those pressures may
corrupt the outcome. Scepticism doesn’t negate our
admiration – but it usefully tempers it. A competitive
world without scepticism would be utterly
unworkable. Scepticism, painlessly, keeps us all, just,
on the right side of the fair deal. We need to learn to
love it. To be rated way down on the respectability
scale is a very small price to pay for such a bonus.
But now let’s think of those more respected trades:
of doctors and nurses and teachers and soldiers. And
the police. The reason that we rate them so highly
is because we believe that scepticism about them is
much less necessary. And so it should be. There’s no
social value whatsoever to be gained from popular
scepticism centred on the police. Yet through their
behaviour, that’s exactly what they’re beginning to
make inevitable. We should be a lot more concerned
about that than the status of marketing. n
[email protected]
Market Leader Quarter 4, 2011
8/24/2011 14:01:35
market leader q4 2011 ipa ad.indd 1
8/15/2011 16:45:59
viewpoint
ruth saunders
How marketers need to
raise their game
Marketers need
more boardroom
credibility. ruth
Saunders advises
on how to improve
performance
the average lifespan of a company, according to
the Standard & Poor’s 500, has dropped from 65
years recorded in the 1920s to only 15 years today,
showing how quickly established companies can
underperform, so much so that it’s estimated that
by 2030 over 75% of the companies in the S&P
500 will be ones we don’t know today1.
One of the reasons for a company’s demise is
often its lack of customer-led growth. Strategies for
growth tend to differ from company to company –
with some focusing on organic growth and others
on mergers and acquisitions. But in both cases,
strong marketing strategy is pivotal. In Market
Leader (Q2, 2011), Hugh Davidson identified 12
levers for generating profitable growth, half of
which are the primary responsibility of marketing,
with marketing contributing significantly to the
others. Similarly, in this issue, Terry Tyrrell (see
page 28) attributes the failure of many mergers and
acquisitions to the poor fit and management of the
acquired brands, which is an area where marketing
acumen is critical.
So, are marketers sufficiently commercially
sophisticated to develop strong growth strategies
that the business can deliver profitably? Are they
a key driver in the boardroom discussions and
decision-making process? Can they galvanise
the business to implement the growth strategies
successfully?
How marketing is seen today
To have the impact needed in the boardroom, 93%
of senior managers in our 2011 survey said it was
very important for marketers to be commercially
aware. Yet only 78% of senior marketing managers,
49% of middle managers and 18% of junior
managers are perceived to be so.
This lack of commercial awareness has in part
contributed to CMOs having the lowest tenure of
any boardroom member (28 months versus CEOs
at 54 months, CFOs at 51 months and CIOs at
52 months2) with such a high turnaround that
50% of all executive searches are commissioned
to replace CMOs3. Given this, it’s unsurprising
that only 30% of marketers aspire to the CMO
role, with the other 70% aspiring to general
management4; only 4% of all UK CEOs have a
marketing background4.
Of more concern:
l A recent Research International study showed
that marketing’s reputation as a discipline has
dropped to the bottom of the pile with a huge gap
between it and the next worst.
l The CMO Council believes that ‘only 40% of
22 22 viewpoint.indd 22
CEOs rate their CMOs as strong’ with ‘nearly
two-thirds of CEOs thinking that their marketers
don’t provide adequate evidence of ROI to gauge
marketing’s true performance’.
l The Marketing Society’s ManifestoforMarketing
states: ‘Many chief executives believe that their
marketers are not stepping up to the challenge as
they lack the discipline and capabilities to drive
profitable growth.’
tHe divide between tHe board and
marketing
To be successful, it is important for marketers to
have three key mindsets:
l A creative mindset that intuitively understands
customers, and builds strong brands, breakthrough
innovation and distinctive marketing campaigns for
the future.
l A risk-taking mindset, with the bigger the
innovation or creative leap, the bigger the rewards
but also the bigger the risk.
l A mid- to long-term mindset, taking time to
build and deliver truly breakthrough ideas that will
lead to step-change growth.
Yet to protect and manage the company
successfully, it is important for the board to have:
l An analytical mindset that focuses on growing
shareholder value by delivering profitable,
sustainable growth.
l A risk-averse mindset, optimising the net
present value (NPV) of new initiatives, using
testing and in-market tracking to course correct
quickly when needed.
l A short- to mid-term mindset, looking for ways
to grow the business now, along a proven timeline
and with a proven cost to achieve a proven result.
While these differing mind sets are important for
company success, they can create a divide between
marketing and the board day to day. CEOs are often
frustrated with the following: marketing’s lack of
financial rigour, especially the difficulty in measuring
ROI of new product ideas and in-market activities;
desire to take risks, committing huge sums of money
to seemingly unproven marketing campaigns; and
long-term mind set, often expecting marketing
campaigns to take a while to ‘take off’, rather than
delivering the quick wins that the business demands.
bridging tHe divide
‘ThenatureofthedeepreformthatIbelievebusiness
mustleadisnothinglessthanashiftfromwhatIcall
quarterlycapitalismtowhatmightbereferredtoas
Market Leader Quarter4,2011
8/24/2011 15:46:08
viewpoint
ruth saunders
long-termcapitalism(atleastfivetosevenyears)…This
meanschanginghowweviewbusiness’svalueandits
roleinsociety.’
Dominic Barton, managing partner, company,
‘Capitalism for the Long Term’
Since marketing’s strength is in delivering midto long-term growth, boards increasingly need to
understand the importance and value of marketing.
But this will not happen until marketers themselves
have greater credibility. This credibility will come
from improving performance in a number of areas
including the following:
Developing marketing strategies that are
proven to deliver profitable quick wins that
build trust with the board as well as mid- to
longer-term business growth – by working closely
with cross-functional teams to identify quick wins,
select which products, customers, geographies,
channels and brands to focus on, and understand
the barriers and costs of being customer centric,
thus developing value propositions that will deliver
profitable growth.
For example, a telecoms company identified
that two of its five customer segments were
key to its business growth as they bought their
biggest-selling profitable products, yet only
30% of the company’s spend was directed to this
group. Additionally, one of the reasons for these
segments dropping out of the purchase process
was poor call-centre performance (ie it took a long
time to get through, they were sent the wrong
information, contact details were difficult to
find). Thus, by focusing on improving call-centre
performance as well as refocusing spend on
the two most important customer segments
the CMO was able to deliver quick wins and
sustainable growth.
Building a compelling business case that
the board can buy into – one that is structured
in an easily accessible top-down way,
supported with strong business financials to make it
a robust and clear business case.
For example, a financial services company
struggled to get board buy-in to a brand name
change three times, primarily due to the lack of
financial rigour, such as the commercial upside
for the business, and the timeline, costs and risks
of doing it. By building a strong business case and
syndicating it individually with each board member
early on, the marketing director got approval when
it next went to the board.
Tracking in-market performance to
manage risk – including measuring the ROI
of in-market activities and quickly killing
underperforming ones, closely tracking in-market
performance and quickly course correcting when
needed, and continually testing and learning
in-market to identify the best performing activities.
For example, when an fmcg company launched
a cosmetics brand in a test market, the marketing
team went out to the test market area in week one
1
2
3
Market Leader Quarter4,2011
22 viewpoint.indd 23
to watch how people shopped at the in-store fixture
and to run focus groups to understand how well
the advert was working. By doing so, they quickly
realised that the on-shelf presence was sub-optimal,
and the advertising was poorly branded and so they
were able to fix these issues quickly.
It’s tougher than ever for companies to grow,
and marketing is increasingly important in helping
companies achieve this. Yet, marketing teams
often struggle to have the commercial impact they
need in the boardroom to be successful. To be
commercially credible, marketers need to be better
at showing how their marketing strategies will build
shareholder value, building compelling business
cases that the board can buy into and tracking
in-market performance to manage risk. n
Cmos need to have a
creative and risk-taking
mind set to make the
most of big rewards
available from taking a
gamble on products or
marketing plans
Ruth Saunders is founding partner at
Galleon Blue
[email protected]
Sources:
1. ‘Creative Destruction’ by Richard Foster
2. Spencer Stuart Survey, 2008
3. CMO Council
4. Robert Half Survey, 2009
23
8/24/2011 15:46:10
entrepreneurs
luke johnSon
How to pick
a winner
E
ntrepreneurs are a poorly
understood breed. If academics,
investors, civil servants and
politicians were more familiar
with the entrepreneur tribe, returns on
capital would improve and industrial
policy would be more effective. Founders
are by nature individualistic and hard
to analyse. Literature on the subject is
neither extensive nor profound; given
the importance of entrepreneurs to
job and wealth creation, it is a costly
omission. Academics have tried over the
decades to categorise entrepreneurs to
provide insight into their motivations and
likelihood of success.
For example, Robert Hornaday
proposed a simple division between
‘craftsmen’, ‘promoters’ and ‘professional
managers’. The first type take great pride
in the technical aspects of their products;
the second are ‘wheeler dealers’ who
concentrate on making money; the final
sub-species have a structured approach
to their trade, adopting many of the
habits of large corporations. Craftsmen
are passionate about quality, but often
insufficiently ambitious. Promoters lack
a long-term perspective. Professional
managers can build scale, but may be
too inflexible.
Orvis Collins predated this work, with
a study in the early sixties. In Enterprising
Man (Michigan State University Press,
1964), he and his colleague David Moore
wrote about ‘trained’ entrepreneurs,
who study MBAs; ‘like father, like son’
types, who inherit a family business; and
‘opportunistic’ entrepreneurs, who seize
chances as they arise.
And in the work of researcher
Douglas Gray we find an extensive
set of typologies, including soloists,
inventor-researchers, acquirers,
speculators, lifestyle entrepreneurs
24 24 Johnson.indd 24
Successful entrepreneur
Luke Johnson acknowledges
that researching the psychological
make-up of entrepreneurs is
difficult, but here he offers some
tips on how to identify, and make
the most of, potential
and conglomerators. In all this work
there is a degree of confusion between
personality types and outcomes. For
example, a ‘promoter’ might become
a ‘conglomerator’, and a ‘professional
manager’ might be an ‘acquirer’ or an
‘inventor-researcher’. It all seems rather
academic, in every sense of the word.
Rule bReakeRS
What interests me most are psychologies,
backgrounds and spotting winners. Of
course, actual people do not fit into
theoretical definitions. By their nature,
entrepreneurs are rule breakers who do
not conform to sets of rules about their
traits and what inspires them. If their
magic could be simply identified, it would
be a straightforward matter to recognise
and back future business champions. Any
venture capitalist will tell you how hard
it is to know in advance which business
prospects will turn into the big hits, and
which will stumble and fail.
I like to think my judgment about
prospective business partners is getting
better, as it should after decades of
trying. But there are no guarantees. The
most impressive characters can suffer
commercial disasters, and the most robust
can have breakdowns. I read endless lists
of what to look for and what to guard
against. But that sort of perfection is
impossible in the real world; we are all
flawed and, anyway, many of the true stars
would never tick all the boxes.
However, I do hold one firm view
about entrepreneurs: strengths are
more important than weaknesses. If you
have one or two remarkable talents,
they may carry you to the top in spite
of many shortcomings. So, if you are
a wonderful salesman, or a brilliant
inventor, or a phenomenal picker of
people – it might be enough, even if you
are a poor general manager.
Entrepreneurs are not typically
well-rounded human beings. Like
artists, writers and other creative people,
entrepreneurs have a mission and a
skill they feel an overwhelming urge to
pursue. In addition, drive and energy
are necessary attributes, while luck and
a special ingredient such as those listed
above are also required. Even with a
comprehensive databank that enabled an
exhaustive examination of every living
entrepreneur, no one could deliver
sure-fire predictions. The sheer breadth
of personalities who ascend to the summit
shows that there is no single gene for
success. I think we can all take comfort
from that.
Should I InveSt?
There are five questions I ask myself
before investing.
How good is the management
team? The quality of the
management of a business is the
acid test. If I do not like the people
who run the show, forget it. I do not
ignore instinct – if my gut feeling tells
me the operators are useless, I walk away.
Management must have achieved things in
their careers. Do not back mad no-hopers
who are always punting a crazy new idea.
These types will lose you money. Look
1
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8/24/2011 15:47:11
entrepreneurs
luke johnSon
for winners who are obsessive about their
business and who can demonstrate past
performance.
Make sure the management team is
honest. Working with crooks as partners
is a gruesome experience. I recall putting
a small amount of money into a tiny
print company. Unfortunately, as soon as
I invested the sales collapsed, although
the business continued to use a constant
amount of paper. The operator was doing
business off the books, avoiding the
taxman and me. I very quickly sold him
my shares at a loss.
Managers must have high energy levels
and be totally motivated. If they are sickly
then the enterprise is doomed – no one
who is ill can cope with the demands
of building a profitable undertaking.
Most importantly, the managers must
have knowledge and experience of the
trade: they must know the technology,
customers, competitors and the best staff.
Finally, many of the best management
Market Leader Quarter4,2011
24 Johnson.indd 25
have a large part of their wealth tied up
in the enterprise. Most entrepreneurs are
at least partly motivated by money, and
to have cash at risk helps focus the mind
and management’s interests with those
of shareholders.
Is this company going to win
big? Rather than dealing in and
out of endless marginal situations,
I look for investments that have
the potential to grow substantially, where
I can double, treble or quadruple my
money. These are the investments that
really make the difference to me.
Ideally, I want to see companies
that can expand their sales, margins
and their multiple. In other words,
I pursue situations that will attract a
higher P/E ratio over time, having
demonstrated significant organic growth
in sales and profits.
Generally, I ignore nice, safe little
businesses with limited upside. An
investment portfolio will only really
any venture capitalist will tell you how hard
it is to know in advance which business
prospects will turn into the big hits, and
which will stumble and fail
2
>
25
8/24/2011 15:47:14
entrepreneurs
luke johnSon
The hardest thing in
business is to build
sales from scratch –
so I prefer to support
an entrepreneur who
understands the
marketplace and how
to satisfy it
perform once it’s found a few of the fabled
‘ten-baggers’ (stocks which rise tenfold).
Such investments will allow you to end
up with excellent returns despite several
miserable performers.
Both Peter Lynch and Warren
Buffett – two of the legendary investors
of our time – agree that longer-term
investing in outstanding companies
produces above-average returns. The
effective private investor focuses on a few
sound businesses, running winners and
dropping losers.
Have they found a solid
niche? It’s unusual to find big
new British companies growing
rapidly. I am much more likely to
identify opportunities with a vast upside
among small, specialist companies. Such
businesses should possess decent barriers
to entry, be it a brand, patent, contracts,
franchise or other proprietary situation.
Ideally, the company should be unique,
since it must compete against large
competitors which will be better financed.
In the real world, such companies
should have products or services that are
evolutionary rather than revolutionary,
since markets can take years to accept
radical changes. Such drawn-out plays can
produce low annualised returns that fail to
match those produced by small companies
delivering follow-on, adapted technology
that is usually quicker to profit.
Is this firm making sales today,
or hoping for sales in future?
I want companies that have sales
and can market. I tend to avoid
entrepreneurs with marvellous gadgets
with no proven commercial potential.
The hardest thing in business is to build
sales from scratch for a new business – so
I prefer to support an entrepreneur who
understands the marketplace and how to
satisfy it.
I avoid research-and-development
specialists who do not understand the
importance of distribution and coping
with the competition.
Do management understand the
numbers? Do I understand them?
I read all available information
about the prospective project – be
it an annual report, a prospectus, business
plan, budget or management accounts.
They need to clearly explain the key facts
about the profitability, balance sheet and
cash flow of the company.
They should identify any obviously
scary items, and get me comfortable with
them – or give up. There will always be
another deal. If the transaction reveals
3
4
5
26 24 Johnson.indd 26
itself as a stinker, I will walk away, no
matter how much time and effort I have
devoted to the proposal.
I must believe the numbers, and
know how the funding and cash cycles
and margins will work for the business
in question. Only then can I make
sensible valuation comparisons with
other opportunities and make the right
yes/no decision.
bad buSIneSS planS
I spend a lot of my time studying business
plans from entrepreneurs who are looking
for investment. Many are impressive,
but some are ghastly. Among the worst
offences are the following:
Aggressive confidentiality clauses and
an over obsession about non-disclosure
agreements. I find this sort of pushy legal
stuff very off-putting, especially for startups. Often you are expected to sign-up
to very rigid terms without even knowing
anything about the proposition. In such
circumstances, I just turn the deal down
flat. If the entrepreneurs distrust me
that much, they ought to seek backing
elsewhere. Would-be restaurateurs are
often the worst offenders – would I really
bother stealing their idea?
Overly technical documents. Business
plans should be written in layman’s
terms and avoid all jargon and endless
acronyms. They should be readable and
accessible, not obscure. Inventors can get
too wrapped up in their subject – they
forget that there are always thousands of
projects seeking money. And promoters
often use long-winded gobbledegook to
disguise a fundamentally bad idea. If I
can’t understand the deal, then I don’t
get involved.
Lack of focus. Plans that cover too much
territory and companies that try to do
too much at once don’t appeal to me.
Successful concepts are mostly simple,
and successful entrepreneurs generally
concentrate on a finite market and
product range.
Preposterous valuations. Obviously,
things that are far too expensive go
straight in the bin. Such plans usually
work back from a daft conclusion based
on wild future projections, or spurious
comparisons. Instead, valuations should
be based on sensible estimates of what
investors would actually pay. Of course,
this means you miss the odd Facebook,
but I can live with that.
Biographies. These should be honest
and full. They are perhaps the single
most important part of the entire
Market Leader Quarter4,2011
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entrepreneurs
luke johnSon
proposal. I want to really know the
owners and individuals who will make the
thing happen. Vague or brief CVs make
me suspicious. The chief executive and
finance director’s résumés are the ones
that matter: big-name non-executives
cannot compensate for weak executive
management who are actually running
the business.
The numbers. This is really critical.
The funding requirement, the estimated
returns, and the cash-flow projections –
these must be attractive and sufficiently
ambitious to be worthwhile. No one is
going to put huge effort into a project
that will never grow beyond ‘one man
and his dog’. The figures should all be
stated up-front in an uncomplicated
format. Do not bury them at the back
of the pack. Everyone knows whatever
you budget will be wrong, but a target
to aim for is better than nothing. The
key calculation is your cash break-even
point; once you hit this revenue and cost
combination, you know you can survive –
then you can build.
Details of the competition. All capable
entrepreneurs know their competition
well. If they say they have none they are
fooling themselves. A solid business plan
has plenty of specifics about their rivals,
and why their particular proposition has a
genuine competitive advantage.
Perfection. Every situation is flawed,
and if you look for an opportunity with
no drawbacks then you will never invest
in anything. I quite like deals with a
known problem, because then it can be
addressed and the price can be adjusted to
compensate.
Huge appendices and too many
spreadsheets. These might be necessary
for loan applications, but equity investors
tend to decide based on a few key
points. All the supportive evidence and
background material can be supplied later
if the proposal is of real interest. Don’t
bury the hooks with padding.
Getting someone else to write it. It
shows when advisers rather than principals
author a plan – it lacks authenticity. By all
means have experts critique your work but
actually do the first draft yourself.
Make sure it can be emailed. Do not
rely on the post, or present would-be
backers with voluminous amounts of
paper. Just get their email address and
send them the core presentation online.
Catch their attention early and it may lead
to something.
Unbelievable margins, profits and
returns. Plans that suggest your company
Market Leader Quarter4,2011
24 Johnson.indd 27
will quickly achieve operating margins
of 35%, returns on capital of 100% and
so on are not credible. Be realistic and
conservative and you are more likely to be
taken seriously.
Writing a compelling business plan is
an art. It should give a venture the best
possible chance of securing finance and it
is worth taking huge care over the task.
a lISt of don’ts
There are quite a few advisers out there
helping start-up companies – banks,
accountants, small-business agencies.
Much of what they say is sensible enough,
but few of these mentors have actually
done it themselves. So allow me to present
to you a handful of things entrepreneurs
should not do when taking the plunge
into self-employment.
beginner’s handbook. By gaining a solid
understanding of these disciplines you
will make better-informed decisions.
For complex matters, such as a 120-page
lease, you will need advice, but simple
things like registering a company you can
do yourself.
Do not take on partners in a rush. By
all means work with others, but tread
cautiously before actually setting up
in business with someone. You need to
know someone well – their motivation,
their ambition, their honesty – before
embarking on such a journey together.
Running a company is often a
demanding affair, and incompatibilities
soon come out. Work initially on a trial
basis as a partnership before making
binding commitments.
Do not go ahead if your spouse or
partner is against it. Make sure they
Use PR. There are so many media outlets
now, thanks to the digital revolution, that any
new product or service can get some editorial
coverage if you try hard enough
Do not leave your job. Do not rent
fancy commercial premises. Initially use
your home or garage. And if you have
to get space, make sure it’s short term,
like serviced offices. In 1975, Bill Gates
dropped out of Harvard and started
Microsoft in an Albuquerque motel room.
Do not be vain about such matters – low
costs are everything.
Do not be put off by the prospect of
a downturn. Many great companies
are founded when times are tough, and
often remarkable opportunities arise
despite the economy struggling. I took
control of Pizza Express in 1992 – when
Britain was in recession – and it changed
my career.
Do not spend money on advertising.
Especially for fledgling enterprises; PR
is a much better bet. There are so many
media outlets now, thanks to the digital
revolution, that any new product or
service can get some editorial coverage if
you try hard enough. And not only is PR
much cheaper – editorial attention has
much more impact.
Do not engage expensive advisers.
Teach yourself the basics of commercial
law, accountancy, property and so forth.
All these professionals will charge
substantial fees to tell you things
you can discover easily online or in a
are totally supportive of your plans.
It is almost impossible to succeed in
the challenging task of building a new
business if you have huge domestic
upheaval too.
Don’t be over ambitious. By all means
dream of reaching the stars, but start on a
realistic scale and grow. Develop a pilot,
make it work, prove the concept, and
then seize the day. There will always be
unexpected problems and obstacles. Learn
how to overcome them while operations
are small.
Don’t be lazy or impatient about
research and homework. Know your
market intimately. Study your prospective
customers and rivals obsessively. Learn
everything you possibly can about your
scheme: the costs, technical issues, staff
needs, pricing, marketing and so on.
Prepare a comprehensive business plan,
even if you don’t need finance, simply as
a discipline. n
Luke Johnson is chairman of Risk
Capital Partners Ltd
[email protected]
This is an edited extract from the book
‘Start it up: Why running your own
business is easier than you think’,
published by Portfolio Penguin, 2011.
27
8/24/2011 15:47:14
g r o w t h s t r at e g i e s
terry tyrrell
terry tyrrell argues that the
mismatch of cultures and failure
to examine brand fit lies at the
root of the problem with strategies
of many mergers and acquisitions.
A more prominent role for
marketing in the due diligence
would help
Ignore culture an
fit at your peril
M
erging or acquiring is
a perfectly sensible strategy
for growth and one that, on
the face of it, would seem to
promise faster and more secure earnings
than an organic-growth strategy. But
despite the successes, the overall record is
surprisingly poor.
‘I’m into murders and executions,’
says the character of Patrick Bateman
in Brett Easton Ellis’ gruesome tale of
1980s Wall Street. A tongue-in-cheek
twist on his daytime activities of mergers
and acquisitions, the insightful remark
from AmericanPsycho is somewhat on
the money.
M&As are considered by many to
be ‘murders most foul’ with a body
count that includes AOL-Time Warner,
HP-Compaq, Alcatel-Lucent, Daimler
Benz-Chrysler, Mattel-The Learning
28 Company and Novell-WordPerfect, to
name but a few.
Some mergers failed so spectacularly
that the combined company went belly
up; others ensured the demise of their
masterminds; some companies struggled
to reverse their fortunes but not without
substantial cost; while others were simply
bad ideas doomed from the outset.
Don’t just take my word for it. Much
research also supports this gloomy
outlook. According to some reports,
up to 80% of M&As were considered
disappointing, with the main reason
being the deterioration of their stock
market value. To start with, two-thirds
of big mergers lose value on the stock
market. Less than half the mergers
created in the 1980s and 1990s have
created value for shareholders, according
to The Conference Board. Perhaps most
Market Leader Quarter4,2011
g r o w t h s t r at e g i e s
terry tyrrell
d brand
shockingly McKinsey & Co found that
80% of mergers don’t earn back the costs
of the deals themselves.
The problems aren’t just a matter of
P&L. Hewlitt Associates’ research also
shows that less than 10% of management
time is spent on brand fit during
M&A due diligence; and 70% of failed
mergers are due to poor communication
and integration issues (Roffey Park
Management Institute). The number-one
cause of acquisition failure is due to cultural
differences not being addressed (Mitchell
& Holmes); and anticipated economies of
scale do not always materialise.
In the real world
At worst, operating results deteriorate
instead of simply maintaining value and
shareholders suffer all round.
On paper it might sound as simple as
Market Leader Quarter4,2011
combining computer systems, integrating
a few departments and using brute size
to force down costs etvoilà, a more
profitable giant post-merger. But if
this was the case, how do things like
‘ChryslerDaimler – a marriage doomed
from the start’ end up splattered across
the headlines?
Mergers and acquisitions are very
much back in the headlines. McKinsey
reports that this year there will be an
upturn in M&As on the back of renewed
boardroom optimism and struggling
businesses ripe for the picking. But
there’s nothing headlines love more than
a failed merger.
However, it need not be all bad news.
Dieter Zetsche, DaimlerChrysler’s
outgoing CEO, said in the aftermath
of Chrysler’s failed union with Daimler
Benz: ‘We obviously overestimated the
potential of synergies. I don’t know if any
amount of due diligence could have given
us a better estimation in that regard.’
I disagree: 360° due diligence would
have identified the pitfalls ahead prior to
embarking on an M&A, had it put brand
at the centre of its strategy.
why brand?
One of the primary objectives of any
M&A strategy should be to increase brand
equity. Your brand is your reputation,
and reputation sells. Consideration
of the reputations of the two merging
organisations is critical in ensuring the
success of the organisation, post-merger.
Like it or not, the world will judge the
new brand partly on the ‘why’ behind the
merger. Do you and your employees know
the answer?
Intangible assets, for example a
company’s goodwill, make up most of
the value of M&A deals, with brand
making up a considerable portion of that
asset value. It’s worth remembering that
Google, a brand with lean traditional
assets, is ranked first on BrandZ’s top 100
Most Powerful Brands list with an eyewatering brand valuation of $114,260m.
Having acknowledged the value of
brand on the balance sheet, why is it that
consideration of brand strength and brand
migration issues is typically left until
after the deal is done? Sorting out the
combined companies’ brand portfolios is
rarely part of due diligence and is typically
evaluated post-paperwork and under the
heading of ‘cost structures’.
Acquisition is typically motivated by
product or market synergies. Deals are
brokered and wars are waged round
boardroom tables by investment bankers
and lawyers, grey ‘suits’ who do not
necessarily represent the cultures of the
companies in their corner. While not
all M&As fail, those that ignore brand
issues and cultural differences are putting
themselves in danger of failing.
The brands should be part of the central
organising principle, with thorough
reviews of positioning compatibility and
brand migration strategy of the betrothed
brands from the outset. After all, the
‘soft issues’ can cause hard landings if not
properly addressed.
brand forensIcs – how to avoId
the bloodbath
It is imperative to consider brand impact
early on. Ask the following questions:
What are the combined
drivers of reputation that
can add value? Apart from
the obvious operational
synergies, strategically aligned brand
reputations and their reach can lead
to attractive revenue synergies. For
example, enhancing the acquirer’s sales,
enabling it to operate in new markets
and increasing the likelihood of success
when introducing new products. This
was one of American Kraft’s primary
motivators behind its hostile acquisition
of British Cadbury.
How will the new company
position itself? Is it merely a
matter of combining two sets
of reputational assets, or a new
opportunity to reposition the combined
business, where 1 + 1 = 3?
Will the acquirer have the
majority of the target company’s
voting stock to acquire
complete brand control? This
will prevent nasty surprises around brand
control. Volkswagen learned this lesson
the expensive way ($400m to be exact)
when it overlooked the small print and
bought a pile of Rolls-Royce metal and
not the Rolls-Royce brand.
What are the relative brand
strengths of the two entities?
Consider this in the due diligence
process. This will help guide
both short- and long-term brand strategy
and future brand transitions. The recent
Continental-United Airlines merger
indicates that the new brand will feature
the United name recast in Continental’s
font, a move we hope is not simply
cosmetic and all veneer.
>
1
2
3
4
29
g r o w t h s t r at e g i e s
terry tyrrell
5
What are the other values that
brand analytics offer? An audit
of brand product portfolios and
overall brand architecture and
understanding strengths, weaknesses
and synergies will be vital in ‘selling’ the
merger to shareholders.
the rules of engagement
Perhaps the single most important area
for review is cultural fit. This could
make or break the long-term success
of the deal. Among the minefield of
problems when bringing two companies
together, is a difference in corporate
cultures. Companies are like families,
each having their own habits and rituals.
If not acknowledged, the outcome can
be resentment, an unwillingness to work
together and shrinking productivity.
According to some reports, up to 80% of
M&As were considered disappointing, with the
main reason being the deterioration of their
stock market value. To start with, two-thirds of
big mergers lose value on the stock market
Cultural fit is vital to talent retention,
which is in turn vital to reputation
management. After all, your people are
your biggest asset – people are your
brand. More than half of the respondents
to a recent CIPD survey who had
recently undergone an M&A said they
actively thought about leaving their jobs,
citing ‘I find myself in a job I did not
pick, working for an organisation I did
not choose to work for’. The departure
of Phil Rumbol, marketing director at
Cadbury and mastermind behind the
‘Cadbury’s gorilla’, is the latest in a lineup of departing executives in the wake
of the Kraft takeover. I would hazard a
guess that the reasons extend beyond
‘relocation difficulties’.
While culture may seem like a soft issue
when evaluating mergers, compared with
product, market and resource synergies,
the opposite is actually true because culture
is pervasive. From the post-room staff to
payroll to the principal, it permeates every
pore of your business. It affects how the
everyday procedures are done, whether
there is shared understanding during
meetings and in promotion policy, how
priorities are set and whether they are
30 uniformly recognised, whether promises
that get made are carried out, whether the
merger partners agree on how time should
be spent, and so forth.
Cultural conventions emerge to
make individual firms more efficient
by creating a shared understanding
that aids communication and action.
However, when disjointed, conflict and
misunderstanding are added hurdles to
realising economic efficiencies.
hearts and mInds
Vision and communication are at the
heart of brand building, which is also
at the heart of successful integration.
When intercultural differences are
ignored during the evaluation and
negotiation stages of a merger, integration
inevitably fails.
Train your leaders, managers and HR
personnel of companies in intercultural
competency. Through sensitively
managed interviews, questionnaires
and communication audit (internal and
external), assign a metric that allows
identification of synergies and gaps across
key cultural areas:
l senior management style;
l management style and culture;
l employee attitude and engagement;
l brand alignment – strategic;
l brand alignment – work environment;
l brand alignment – employee
engagement; and
l brand ‘touchpoint audit’ alignment.
An essential part of your risk
management is knowing ahead of time
what issues can inform the decision
to pursue the M&A and inform the
integration strategy. You need to consider
what the added value of combining a
company’s two best bits is. Also, consider
the end point at the beginning and have
the best goal in mind from the start and
map your strategy towards it.
This exercise should not be seen
as reactive damage limitation but as a
positive, proactive means of creating
cohesion, maximising efficiency and
building a competitive advantage. It’s vital
to get your people onside early. After all,
coups originate from within a country’s
own army. If you haven’t got the civil
service onside, no prime minister can
build an empire. n
Terry Tyrrell is worldwide chairman at
The Brand Union
[email protected]
Market Leader Quarter4,2011
market leader q3 2011 DATAMINE ad.indd 1
8/22/2011 17:38:01
fooD MarkEting
DAmien mCLoughLin, mAry SheLmAn AnD DAviD e BeLL
Companies find it hard to
co-operate. They should try
harder. A strategy of working
together can help national
competitors to sell internationally
by increasing the potential
markets and taking advantage
of shared economies of scale,
say Damien McLoughlin,
Mary Shelman and David E Bell
T
hE roLL-caLL of food and
agribusiness firms of global
scale is noteworthy but short.
‘Co-opetition’ is a strategy
that invites competitors to compete in
some areas and co-operate in others.
The advantage, from an indigenous firm’s
perspective, is that scale can be relatively
cheaply and quickly assembled. The
authors use two Harvard Business School
case studies1 to demonstrate the strategy’s
potential.
international business 2020
and ‘Co-oPetition’
Few crystal-ball gazers in 2000 could
have predicted both the mayhem and
the opportunities that exist in the
global business environment today.
Looking ahead from 2011, what is more
predictable is that global food markets
in the next ten years will have a number
of qualities in which scale will be a very
useful asset. Primary among these is the
location of growth. While most Western
economies appear to be returning to their
somewhat normal economic pattern,
the location of higher economic growth
has undoubtedly shifted to Asian, South
American and African economies.
The first principle of a growth strategy
is to be in the markets of highest growth.
These economies offer the greatest
potential but working there requires
a level of time commitment, resource
investment and risk that is challenging for
all but the largest firms.
Second, the so-called ‘hell’ curve of
the market is likely to continue to punish
those who are neither the lowest-cost
producer nor recognised as producers of
the highest quality. Achieving the former
is very difficult for food companies outside
those with scaled national production,
32 32 McLoughlin et al.indd 32
Strength
in numbers
while the latter requires a brand that
provides the opportunity to secure a price
premium, cope with the power of the
retail trade and drive consumer demand.
Third, the understanding and
appreciation of risk has changed since
the financial crisis. Firms expect higher
levels of volatility and a greater frequency
of so-called ‘Black Swan Events’ – those
that happen with little warning but which
are capable of rapidly changing the rules
of the game. While risk management and
environmental-scanning techniques are
developing to meet the revised concern for
volatility, a certain level of scale is required
to buffer organisations from these shocks.
Food and agribusiness firms face two
options before putting new growth plans
in place: wait until their scale allows
them to meet the challenges outlined
above, or find a way to get around them.
In our opinion, ‘co-opetition’ is the best
way to do this; it offers a speedier option
than organic growth and a cheaper
option than acquisition.
Put some ZesPri into your
strategy
Following a second catastrophic collapse in
prices for New Zealand kiwifruit in 1992,
a government-sponsored review pointed
to the need for the kiwifruit industry to
adopt a greater customer focus and place
less emphasis on commodity trading.
This ultimately led to the establishment
of Zespri, a ‘corporatised co-operative’
with three aims: produce kiwifruit with
consistent quality and taste; increase the
size of the global kiwifruit market; and
improve the returns for the large and
small kiwifruit growers who owned the
organisation. One important factor in
Zespri was that while growers and packers
competed for sales in Australia and New
Zealand, they decided that international
markets had to be tackled as one.
Market Leader Quarter4,2011
8/24/2011 15:50:27
fooD MarkEting
DAmien mCLoughLin, mAry SheLmAn AnD DAviD e BeLL
New Zealand is not the largest producer
of kiwifruit in the world (China and Italy
are larger and Chile is also a significant
producer) nor the cheapest (its production
costs are estimated to be 50% more
expensive than Chile due to expensive
land, labour and transportation). It was
therefore forced into a strategy that would
allow premium pricing.
The Zespri brand name was launched in
1997 as a response to consumer research
which found that consumers saw kiwifruit
as ‘ugly as sin and tasty as hell’ and the
desire to capture this uniqueness.
To fuel its brand, Zespri ‘virtually’
operates an integrated supply chain
linking New Zealand growers to
consumers around the world.
Every year, Zespri delivers the world’s
best kiwifruit by enforcing a common
set of standards in areas such as quality,
traceability and sustainability. It also
invests in product innovation. In 1998
Market Leader Quarter4,2011
32 McLoughlin et al.indd 33
it launched Zespri ‘Gold’, which is an
intellectual-property protected yellowfleshed (rather than green) kiwifruit
with excellent taste and superior farm
productivity. The premiums that this and
other new products (eg organic versions of
Zespri Green and Zespri Gold) produce
are essential to support the brand story,
fund additional research and maintain the
premium price paid to growers.
Genuine customer focus is important
for Zespri because it enables the brand
to be sold at different price points
and have different positions in the
international markets in which they work.
For example, in Japan, consumers are
willing to pay a 30% premium for Zespri
Gold because of its sweeter taste and
perceived health benefits.
Customer focus is also important
because grower-led organisations are
most often focused on supply concerns
(returning the highest price to the
farmer) rather than demand builders
(investing in innovation and branding),
which inevitably limits their ability to
drive profitable growth in geographically
diverse markets.
Aligning its economic interests with
those of distributors and retailers, Zespri’s
ambition is to maximise retailer returns
on shelf-space through higher prices
(and correspondingly higher margins),
more frequent inventory turns and lower
waste. In return, it seeks partners who will
support the product at the store level.
Zespri’s support for retailers comes
in a variety of forms including strong
local TV advertising campaigns, driving
the benefits of kiwifruit which are most
prominent in the market, and an active
programme of in-store sales promotions
and product demonstrations.
In 2010 Zespri held 30% global market
share for kiwifruit by volume, but 70%
by value with exports to 60 countries. It
enjoyed strong growth in Asia, helped
greatly by its Gold variety, and had
a number of new technology-based
initiatives in the pipeline to support the
global brand. Its ambition is to double
sales by 2025.
Putting musCle onto the irish
beef industry
The challenge facing the Irish food and
agribusiness sector is similar to New
Zealand’s (both have very small domestic
markets), but with an added twist. The
post-2008 bursting of a property bubble
in Ireland led the country to the brink
Food and agribusiness
firms face two options
before putting growth
plans in place: wait until
their scale allows them
to meet new challenges,
or find a way to get
around them
of economic collapse and a bailout from
the EU/IMF. The Irish government
looked to the indigenous food industry
and its potential to expand exports into a
rising global food market as one route to
economic recovery.
To meet this objective, the Irish Food
Board (An Bord Bia) commissioned a
study by two Harvard Business School
agribusiness specialists. Their report,
PathwaysforGrowth2, identified ‘coopetition’ as one of four strategic actions
that the industry could take to increase its
share of global food markets.
Taking beef as our focus (perhaps
surprisingly, Ireland is the world’s fourthlargest exporter), the greatest potential
for ‘co-opetition’ lies, inevitably, in
the areas of most difficulty. Like many
traditional agricultural nations, Irish
pasture-based beef farming lacks scale
(the average herd size is 18) and has
been late in adopting new technology.
Beyond the farm, the processing industry
is overbuilt, with overcapacity as high as
50% in off-peak production times. There
is also a strong enmity between the beef
processors and farming organisations
that makes it difficult to work together to
achieve consistently higher quality.
While the industry with the
support of the Irish Food Board
has been successful in introducing a
(voluntary) national quality mark and
an innovative programme to measure
the environmental impact of beef
production, it lacks a differentiating
feature beyond being grass-fed and
coming from an island known for its
green and clean environment.
These latter advantages have
strong potential, but exploiting them
internationally would require a unified
>
33
8/24/2011 15:50:29
fooD MarkEting
DAmien mCLoughLin, mAry SheLmAn AnD DAviD e BeLL
approach including mandatory quality
standards and investment in a brand
identity that can be leveraged to drive
demand for Irish beef.
While the advantages of working
together seem clear, the landscape for
‘co-opetition’ in the Irish beef industry is
very different from that faced by Zespri.
Most notable is that most of the larger
Irish beef processors are profitable and
have been in recent years. It is also
unlikely that a collapse of the kind the
New Zealand kiwifruit industry faced
on a number of occasions could prevail
in the EU.
Rather than coming together to secure
survival, the Irish beef industry’s task is
to work together to take advantage of
global opportunities. Many obstacles
stand in the way. Besides those mentioned
above, historical rivalries among Irish
beef processors are especially damaging.
All of the major firms are privately
owned, so family history plays a big role
in decision-making and disagreements
and defeats tend to be remembered for
longer. While the industry has been very
successful in building a base of customers
among the leading European supermarket
chains, these retailers are generally quick
to use the intensity of this rivalry to bid
down Irish beef prices.
However, in the six months after the
publication of PathwaystoGrowth, two
of the largest players in the beef industry
adopted a strategy of ‘co-opetition’ in
response to a situation that threatened not
only individual players but the industry as
a whole. During the past few years, Irish
farmers have found it more profitable to
sell calves abroad to be raised in other
countries rather than feeding them to
maturity. Increasing exports of live calves
has two effects on Irish beef processors.
First, it reduces the actual volume
of beef available for processing –
exacerbating existing overcapacity
problems and putting at risk their
ability to supply European retailers
and restaurant chains who require a
guaranteed supply of beef. Second, it can
lead to a reduction in product quality as
there are fewer beef cattle in the supply
chain and older dairy cows become a
greater proportion of input.
To counter this downward spiral, Kepak
and Irish Food Processors developed a
‘co-opetition’ programme in October
2010 that basically guarantees farmers a
set price for their cattle in two years that
covers their costs and awards a bonus if
34 32 McLoughlin et al.indd 34
they meet certain quality standards. To
make this work for the processors as well
as the farmers, the two firms secured a
contract from a leading food service firm
to buy the beef at a set price reflecting
the costs of both farmers and processors.
With an initial programme for 30,000
head of beef cattle per year, this classic
‘co-opetition’ initiative puts in place a
structure that ensures the sustainability of
the Irish beef processing industry.
lessons for marketing
Although the pathway followed by Zespri
and the Irish beef industry was not an easy
one, its history and that of other examples
of successful ‘co-opetition’ in food and
agribusiness suggest that there are several
conditions present to enable competitors
to work together.
A common enemy. The benefit of a
common enemy is that it provides a way
to ‘rally the troops’ and take the focus off
perceived competition with the farmer or
firm next door. For Zespri the common
enemy was the rise of Chilean kiwifruit
growers which threatened the existence
of the high-cost New Zealand industry.
The emergence of ‘co-opetition’ in the
Irish beef sector was based on a less
immediate threat to survival but one that
all players saw as having great potential
for disruption.
Vision. The creation of a common
vision, which all of the parties can buy
into, is vital. It helps if the vision leads to
a ‘bigger pie’ that can be shared rather
than a reallocation of existing business.
The New Zealand kiwifruit industry
was able to create and convey a vision of
world leadership through superior quality,
innovation and branding that would lead
to category growth and higher prices.
Zespri makes sure that every grower and
every supply-chain partner understands
the market opportunities that come from
working together. In the Irish situation
the initial vision of a differentiated Irish
beef brand was an external one, which was
sponsored by the Irish Food Board.
Measurable benefits. In the case of
Zespri these benefits are accrued in
financial form (through higher farm-gate
prices and institutional ownership
shares and dividends) and non-financial
forms (research inputs that enable
the development of new varieties of
kiwifruit which themselves achieve higher
premiums and create a virtuous cycle). In
the Irish beef situation the initially small
programme to support Irish supply had
measurable benefits for farmers in price
terms and processors in terms of their
enhanced relationship with a food-service
customer but the highly scalable nature
of the programme meant that each party
could also see a long-term future in the
‘co-opetition’.
Permission to act. The apparently
spontaneous emergence of a joint buying
programme in the Irish beef industry
was observed by an industry leader
as being a result of the ‘permission’
that the Irish Food Board gave to the
industry to experiment with the practice
of ‘co-opetition’. This permission was
important in identifying a reason and a
method to overcome historical enmity.
It also removed a misunderstanding that
working together with a competitor
would be viewed legally as anticompetitive practice.
Find neutral ground. Both the New
Zealand kiwifruit industry and the Irish
beef industry came to ‘co-opetition’ on
the back of a crisis, albeit of different
natures and magnitudes. In both situations
the ‘co-opetition’ strategy got a foothold
by focusing on neutral ground. For the
New Zealand industry it was an explicit
focus on international markets; for the
Irish beef industry, it was a new initiative.
Co-operation doesn’t come easily but
the benefits are well worth the effort. n
Damien McLoughlin is professor of
marketing at UCD Michael Smurfit
Graduate Business School
[email protected]
Mary Shelman is director of the Harvard
Business School agribusiness programme
[email protected]
David E Bell is George M Moffett
professor of agriculture and business at
Harvard Business School
[email protected]
References:
1. Zespri, Jose Alvarez and Mary Shelman,
Harvard Business School case 511-001,
December 2010; KepakandtheFutureofthe
IrishBeefIndustry, David E. Bell, Damien
McLoughlin and Mary Shelman, Harvard
Business School case 511-070, December 2010.
2. PathwaysforGrowth, David E Bell and
Mary Shelman, Bord Bia, May 2010, www.
bordbia.ie/industryservices/information/
publications/corporatepublications/pages/
pathwaysforgrowth.aspx
Market Leader Quarter4,2011
8/24/2011 15:50:29
i n T e g r aT e D C o M M u n i C aT i o n
KAte Cox, DenISe turner, John Crowther AnD trACy huBBArD
One size doesn’t fit all
Kate Cox, Denise Turner, John Crowther and Tracy Hubbard examine how advertisers have coped with
the notion of integrated communication strategies. Based on a new IPA report, the article describes a range of
models. Significantly the analysis shows that the choice of model should be on a ‘horses for courses’ basis
A
reCenT gLobaL report
by Aprais*, the marketing
relationship management
company, highlighted the
critical importance that marketing
professionals now place on delivering
integrated solutions, and their
increasing frustration with their agency
partners, who they perceive as failing to
lead the complex process of delivering
solutions across channels. This leadership
role falls to the marketing team, as it is
viewed as ‘too important to leave to the
rhetoric of agencies’.
The Aprais analysis also investigates
the perspective of agencies, especially
those working in the US, UK or with
multinational clients. Agencies recount
the sheer complexity of working in
integrated agency teams across six to
eight different marketing specialisms,
especially when they admit they are
‘genetically programmed to compete’.
Furthermore, as agencies tend to be paid
on time spent related to implementation,
they cite the ownership of the idea as
a critical route to achieving their own
business success.
Marketing practices in this area have
yet to be fully established across the
industry, with many clients using bespoke
methods to achieve integration. There
is also evidence that these approaches,
developed in the mid-2000s, are now in
a considerable state of flux due to the
increasing dominance of digital channels
opening up new ways of connecting brands
and people, as demonstrated by CocaCola’s new strategy, ‘Liquid and Linked’.
CoCa-Cola’s ‘liquid and linked’
strategy
‘Liquid and Linked’ is Coca-Cola’s
new strategy to deal with integration
in the digital age. The springboard
for this approach was the response to
the fragmentation of traditional media
and the mass reach of the plethora of
digital channels. Brands need strong
‘contagious’ ideas that spread across
multiple platforms in order to amplify
the idea and increase brand engagement.
Market Leader Quarter 4, 2011
35 Cox.indd 35
Coca-Cola has developed an approach
it calls ‘liquid and linked’ to cross-media
marketing. ‘Liquid’ relates to the need
for a brand to be aware of the constant
changes in the marketing and media
landscape and be able to adapt its
approach accordingly in near ‘real time’.
‘Linked’ relates to the idea that all
brand messages, in whatever consumer
touchpoint, need to belong to an
overarching brand strategy. Coca-Cola
aims to tell dynamic brand stories across
all these touchpoints – developing an
engaging narrative first and then working
out which channel tells which part of
the story best. Channel planning for
Coca-Cola is thus a more tailored way
of engaging people across channels in
longer narratives.
different models
A recent publication from the IPA,
New Models of Marketing Effectiveness:
From Integration to Orchestration, aims
to shed light on the murky area of
integrated marketing communications
planning for the marketing and
agency community.
It contains deep analysis of more than
250 cases from the IPA Effectiveness
Awards, and aims to put a ‘stake in the
ground’ for the industry by defining the
different ways of integrating marketing
activity, or ‘models’ of integration,
observed in recent years – also assessing
their relative effectiveness in terms of
driving results. Importantly, it aims to
quantify the additive benefits of seeking to
integrate across channels versus planning
each channel separately to specific
channel objectives – arguably a far easier
task to coordinate for marketing clients
and their agency partners.
The report identifies four different
ways in which marketing campaigns
have been organised and proposes
that creating and delivering effective
integrated campaigns is becoming
increasingly like conducting an
orchestra. This trend has increased in
the past couple of years as the digital
age continues to open up the potential
for millions of conversations, and as
advertisers and their agencies look for
ways to make the growing multitude
of channels work in harmony together.
This move towards ‘orchestration’ is
then compared with more established
models to try to understand the most
effective methods of structuring
marketing activity.
from integration to
orCHestration
The analysis uncovered four distinct ways
that campaigns were integrating messages,
exemplified in the IPA case studies.
No integration where a
campaign either used a single
advertising channel or took
a laissez faire approach to
merging channels.
Advertising-led integration around
a common creative platform. This
ranges from visual identity only –
the so-called ‘matching luggage’
approach – to a full-scale advertising
creative idea across multiple disciplines,
including non-advertising channels.
Brand idea-led orchestration
where there was unification
around a shared brand concept or
needstate platform. Within this
segment, the creative work does not look
united by a common advertising idea, yet
the audience is able to decode the strands
as part of one brand’s message.
Participation-led orchestration
where the goal between brand
and audiences is to create a
common dialogue, co-creation,
experience or ‘conversation’.
1
2
3
4
The IPA Databank of case studies
contains numerous celebrated
examples across all segments including
Dove’s ‘Campaign for Real Beauty’,
Johnnie Walker’s ‘Keep Walking’,
Honda’s ‘The Power of Dreams’, O2’s
‘The O2’, Cadbury Wispa’s relaunch in
social media and Walkers crisps’ ‘Do Us a
Flavour’ co-creation approach.
The results of this analysis have a
number of interesting implications
>
35
8/24/2011 14:30:38
i n T e g r aT e D C o M M u n i C aT i o n
KAte Cox, DenISe turner, John Crowther AnD trACy huBBArD
DiagraM 1: anY VerY Large HarD buSineSS
eFFeCT bY orCHeSTraTion MoDeL
74%
DiagraM 2: anY VerY Large SoFT buSineSS
eFFeCT bY orCHeSTraTion MoDeL
70%
65%
54%
No integration
Any integration or
orchestration model
source: ipa databank
Any integration or
orchestration models
source: ipa databank
DiagraM 3: eFFeCTiVeneSS SuCCeSS raTe
bY orCHeSTraTion MoDeL
74%
No integration
72%
79%
DiagraM 4: eFFeCTiVeneSS SuCCeSS raTe aCroSS
anY HarD buSineSS MeTriC
79%
74%
72%
38%
No integration
Advertisingled
source: ipa databank
for marketers and their agencies,
especially around working practices and
ways of structuring client and agency
relationships.
integration is not neCessarily
more effeCtive
Increasingly, it has been assumed
that integrated campaigns must
deliver more success than so-called
non-integrated campaigns. However,
one of the revelations of our analysis
was that campaigns with no obvious
integration device are on average just as
successful as the majority of campaigns
in the IPA Databank, as measured by the
achievement of at least one very hard
business effect.
This is defined as a brand achieving
one of a number of different success
measures, including: sales gain, market
share gain, reduction of price sensitivity,
customer retention/loyalty, customer
36
35 Cox.indd 36
Brand idea-led
No
integration
Advertisingled
Brand
idea-led
Participationled
source: ipa databank
acquisition, profit gain or market share
defence. See diagram 1.
The relative success of the nonintegrated approach makes sense when
considering that such a strategy can be
a reactive and flexible solution, as each
channel and marketing discipline is given
the freedom to develop ideas to deliver
focused goals. For example, advertising
can be used to drive brand consideration
in combination with direct marketing mail
shots to close the sale. However, when
viewed through softer measures of business
success such as brand awareness, fame,
differentiation or strengthening brand
values, it can be seen that integration does
have significant additive benefits over a
non-integrated approach. See diagram 2.
Again, it can be argued that the benefits
of additional frequency of the same
idea delivered in a consistent way across
channels will increase the likelihood of
correct brand recognition and attribution.
However, these findings have
interesting implications for the industry,
as they start to suggest that a slavish
pursuit of the perfect integrated campaign
may not be the best way to achieve
more effective communications in all
circumstances. The addition of more
communication channels, which are given
separate tailored campaigns, may actually
be an easier route to business success.
This is a factor often omitted from the
literature around integration; if achieving
perfect message integration produces a
better impact than a pragmatic approach,
but requires significantly more marketing
resource to manage, is it still an effective
route to pursue at a business level?
The answer to this question lies in the
degree of additional success achieved. It
may deliver business results greater than
the additional investment in marketing
resource, or it may not. Since the
IPA Databank does not directly capture
Market Leader Quarter 4, 2011
8/24/2011 14:30:41
i n T e g r aT e D C o M M u n i C aT i o n
KAte Cox, DenISe turner, John Crowther AnD trACy huBBArD
the full costs of creating and managing
different communications strategies by
channel, this is a factor that cannot be
evaluated here. The idea that it may be
more efficient to develop separate unique
media campaigns rather than attempt any
form of integration is a provocative one,
and worth exploring elsewhere.
tHe power of a big brand idea
to orCHestrate aCtivity
The IPA Databank analysis suggests big
brand ideas are better at delivering business
results than other ways of organising
marketing activity. They are also effective
at driving softer brand metrics such as
brand fame, awareness and differentiation
versus campaigns with advertising-led or
no integration. See diagram 3.
This is an important lesson as it
demonstrates that generating a hard
business response does not require
‘matching luggage’. There are many
pragmatic reasons why brand ideas
win over visual advertising-led ideas.
Interviews with leading marketing
practitioners and entrants to the IPA
Effectiveness Awards suggest that this
approach may not always be the output of
the communications planning philosophy,
but rather a function of the timescales
required to deliver the activity.
The advertising-led model requires
campaigns to be built around a common
visual identity and demands that a strong
central creative work is developed which
can then be sequenced across different
media. However, sometimes there simply
isn’t time for this approach, and work
needs to be developed in parallel around a
loose and higher-order idea.
integration Can evolve into an
orCHestration model
The IPA Databank records many longrunning campaigns, including several
of the brands in the interviews, namely
HSBC, which had run for ten years, O2
for eight years and Audi for 27 years.
With these sorts of campaigns, often
they had developed and changed en
route. For example, the HSBC paper
entered in the awards in 2010 described
a ten-year journey. The ‘World’s Local
Bank’ started life as an advertising
idea, but the requirement to deliver
meaningfully against the promise in the
creative execution rapidly turned it into a
brand idea that has grown and developed,
and now permeates business strategy
around the bank.
Market Leader Quarter 4, 2011
35 Cox.indd 37
The addition of more
communication
channels, with separate
tailored campaigns,
may be an easier route
to business success
The Johnnie Walker global case
study also demonstrates this point with
an 18-month launch period that used
advertising channels almost exclusively
to introduce the ‘Keep Walking’ brand
concept across the globe. This was opened
up and developed into a more orchestrated
brand idea-led approach using local
sponsorships, PR and CSR initiatives to
tailor the activity to each individual market.
As campaigns bed-in and show
effectiveness, confidence grows and often
very executionally led campaigns gain
the freedom to become more conceptual.
The passage of time also allows the
development of an initial advertising
idea into something more powerful and
longer-lasting for the brand.
partiCipation-led model is yet
to prove its wortH
A further surprising finding of this
analysis was the relatively less successful
performance, in terms of hard business
effects, of the newly emerging model of
participation-led activity. This segment
contained famous examples of modern
marketing such as Cadbury’s use of social
media to relaunch the Wispa chocolate
bar and Walkers crisps’ ‘Do Us a Flavour’.
On the other hand, participation-led
orchestration was the most effective model
at delivering softer effects, and also the
most effective route for a brand pursuing
fame as a key objective. See diagram 4.
The analysis showed that the
participation-led model was excellent
at achieving market share defence but
less successful at driving new customer
acquisition, suggesting that campaigns that
demand higher levels of engagement need
to be built on a degree of existing love
for the brand and are therefore usefully
employed by large, mature or declining
brands needing a shot of brand fame.
In these cases it is harder to
demonstrate large business effects because
even very successful years tend to be
measured in fractional percentage gains
in market share rather than huge lifts
in sales. It is also true that our ability to
measure this activity probably lags the
development of ideas in this space.
It is possible that these campaigns
are a newly emerging hybrid of two
communications disciplines – advertising
and direct marketing – and that the link
through to sales has yet to be made from
a direct marketing perspective. This
makes measures such as customer lifetime
value impossible to apply. However, these
campaigns tend to fall short of traditional
measures of advertising business
effectiveness, such as econometric
modelling, due to the length of time the
activity is in market.
This is useful knowledge when
considering a participation-led
approach. Interviews with leading
practitioners highlight the considerable
extra investment in time to deliver this
model, and the requirement for a major
change in behaviour from both clients
and agencies. Participation demands
a collaborative approach to campaign
development, with the client closely
involved throughout the process.
While this can be said of other model
types, the demand is heightened when
participation is required. Not only do
lines between roster agencies blur but
the distinction between client and agency
also fades. There is a sense that for this
to work, everyone has to be in it together
and egos have to be banished. n
‘IPA Datamine 3, New Models of
Marketing Effectiveness: From
Integration to Orchestration’, was coauthored by Kate Cox ([email protected]
com), Denise Turner of MPG Media
Contacts ([email protected]),
John Crowther of Creston Unlimited
([email protected]) and
Tracy Hubbard of i to i research, with
advice from marketing consultant Peter
Field. It is available to purchase from
www.ipa.co.uk/Content/Datamine-3New-Models-of-Marketing-Effectiveness
or www.warc.com/newmodels.
* The study ‘Timelines, Bottom Lines
and Egos: How to Manage the Creation
of Effective Integrated Communication’
is the result of 50 in-depth agency and
marketing management interviews, and
datamining of 8,000 individual Aprais
relationship evaluations. www.aprais.com
37
8/24/2011 14:30:41
c r e at i v i t y
paul feldwick
Aesthetics, jugs
and rock’n’roll
definitions of ‘creativity’ are
elusive. Here, Paul Feldwick
examines what exactly aesthetics
contribute to our appreciation
of the world – concluding that
creativity might be better
defined as an aesthetic quality
rather than originality
38 38 Feldwick.indd 38
I
was in my kitchen one day last
summer, wondering what to talk about
at the TEDx New Street conference
I’d been invited to, when my eye fell
on two jugs on the top shelf of the dresser.
You can see them in the picture.
They’re both British, modern studio
pottery, and I’d bought them both in the
past few years.
What interested me about these two
jugs was this. I was noticing that I’ve
always liked one of them much more
than the other. Yet they’re basically very
similar – hand-made, earthenware, about
the same size, same general shape, and
with a similar origin.
At the TEDx talk I invited the
audience to express their own preference.
Slightly to my surprise, not everyone
made the same choice as me – but it did
seem that most people found it easy to
make a choice.
The left jug comes from John Leach
pottery in the Somerset Levels. The right
jug is made by Svend Bayer, who works
down in darkest Devon. For me, there’s
something about the Bayer jug that puts it
in a different class from the Leach. For me,
it’s easily more – what? creative? beautiful?
special? rewarding? Certainly if I had to
keep only one of them, this would be it.
But it’s not easy to say exactly why my
response to the two jugs is so different.
I can try to put it into words: I like the
sexy roundness of the Bayer, I like its
distinctive texture, it seems to have been
made with some kind of energy that I
don’t get from the Leach. But even these
comments don’t go far to explaining my
response; we seem to be in the realm of
very subtle, sensual differences which
resist analysis or definition.
Now I want to propose that the way I
make this choice between the two jugs
represents an important aspect of many
consumer choices. Indeed, if the jugs were
in a shop together they could be an actual
consumer choice. And I know which I
would pay more for.
Value added View
I propose that the principal dimension on
which I’m making this choice between the
two jugs is aesthetic. According to Ken
Wilbur, since the 18th century we have
made a separation in our minds between
three sets of values – the moral, the
instrumental, and the aesthetic.
l Moral – is it right, ethical?
l Instrumental – does it work, is it
effective?
l Aesthetic – is it beautiful (or grotesque,
comic, sublime)?
My experience is that in organisations,
it’s instrumental values that dominate.
And conversely, ‘aesthetic’ is not a word
that commands much respect. Maybe its
associations with Oscar Wilde and the
‘aesthetic movement’ haven’t helped: it
carries historical overtones of elitism,
effeminacy, impracticality. But more
fundamentally the word means something
highly subjective, something resistant
to analysis and control – therefore, it is
something with which organisations feel
uncomfortable.
So we don’t hear the word ‘aesthetic’
used much in business. A word we do
hear quite a lot, although it’s still treated
with some suspicion, is creativity. It’s
commonly said that this is a good thing
and business needs more of it. Ad agencies
and others hail it as their core value. To
some extent, I believe the word ‘creativity’
stands in for ‘aesthetics’.
But to get inside corporate HQ – even
to get inside the ad agency – the word
creativity has been redefined to mean
something that is very different from what
I mean by aesthetics. And I think by doing
Market Leader Quarter4,2011
8/24/2011 15:52:18
c r e at i v i t y
paul feldwick
neither jug is original or innovative.
their beauty, energy, and aesthetic
quality have nothing to do with novelty
this, we have put ourselves in danger of
missing something very important – and
something that business really needs.
a matter of opinion
I’ve read a lot of management and
academic literature on the subject of
‘creativity’, and I’ve also observed first
hand how the word is used in advertising
and marketing. And I’ve noticed two
things that are almost universal, but which
I find increasingly odd:
l creativity is defined as involving
originality or innovation;
l it’s nearly always linked with the phrase
‘the creative idea’, as if the output of
creativity is always ‘an idea’.
Sternberg and Lubart, at the start
of their massive academic Handbookof
Creativity, define ‘creativity’ as ‘work
that is novel, original, unexpected’. The
Royal Society of Arts’ report onCreativity
inOrganisations talks of ‘creativity and
innovation: words we treat as synonymous’.
Elsewhere, it equates creativity not just
with novelty but with ‘new ideas’.
The commonest image for ‘creativity’ is
the lightbulb going on – the ‘bright idea’.
People in ad agencies universally talk
about ‘creative ideas’. James Webb Young
Market Leader Quarter4,2011
38 Feldwick.indd 39
‘Aesthetic’ is not a
word that commands
much respect: it carries
historical overtones of
elitism, effeminacy,
impracticality
called his famous book ATechniquefor
ProducingIdeas. You can find examples just
about any week in Campaign, such as the
feature ‘How Advertising’s Big Ideas Are
Born’. The IPA’s booklet, JudgingCreative
Ideas, uses the same type of language on
every page. And I’ve just opened chapter 1
of HegartyonAdvertising, ‘Ideas’, which
begins: ‘Ideas are what advertising is built
upon. We worship them, we seek them,
fight over them, applaud them and value
them above everything else.’
You may be so used to these ways
of talking that they seem natural and
sensible, and of course, they come on
powerful authority. Yet to me they
seem increasingly strange and even
wrongheaded. Not just in terms of what
the word creativity means to me, but
in terms of what, in reality, I think it
contributes to business success.
I can illustrate this by applying these
thoughts to my two jugs. I might say that
Bayer’s jug is more ‘creative’ than Leach’s.
But this makes no sense if ‘creativity and
innovation are synonymous’. Neither jug
is original or innovative. Bayer is working,
as far as I can see, in a tradition of ancient
Devonshire ceramics that goes back
centuries. This jug could almost be 200
years old. Its beauty, its energy, its aesthetic
quality have nothing to do with novelty.
Neither does it make any sense to me
to talk about the ‘creative idea’ behind
either jug. The idea is – what? – a vessel
made of clay for holding and pouring
liquid? Such banalities add nothing to our
understanding of what makes them good.
Creativity here does not belong in an idea,
it is in the thing itself.
applying the ideas
Are my jugs an exceptional case? I don’t
think so. The same is true of almost
any cultural artefact. Take, for instance,
Gehry’s Guggenheim Museum in Bilboa. >
39
8/24/2011 15:52:19
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paul feldwick
if you listen to a recording by elvis
presley, it’s the same three-chord
sequence that is behind a million
rock and blues songs. whatever
makes this exciting, memorable
or moving isn’t innovation, still
less a creative idea. it’s taste,
timing, energy, presence, artistry
Here, you could certainly claim a high
degree of innovation or originality. But is
it good merely because it’s original?
Or are we here looking at something
that happens to be original, and good?
And what is the ‘creative idea’ here? Any
answer to this would represent, at best, an
early stage in the architect’s imaginative
process: applied to the actual building, it’s
probably an absurd question.
We needn’t limit ourselves to the
field of architecture. If you listen to an
early recording by Elvis Presley – such
as ‘Money Honey’ – musically, you hear
nothing new. It’s the same three-chord
sequence that is behind a million rock
and blues songs, there’s little melody
to speak of and the rhythm is regular
and predictable. Whatever makes this
exciting, memorable or moving isn’t
innovation, still less a creative idea. It’s
taste, timing, energy, presence, artistry.
As with my jugs, we can try very hard
to put it into words, and ultimately
never succeed.
What is the creative idea behind
a painting by Kandinski, or Monet’s
WaterLilies, or Schubert’s Unfinished
Symphony, or Jimi Hendrix’s ‘Voodoo
Chile’? The fact is, we don’t respond to
‘ideas’. We respond to actual buildings,
paintings, musical performances. Or
actual advertisements.
the purest form
Our common notion of ‘creativity’ has
been redefined so as to airbrush aesthetic
quality right out of the picture. Yet I
argue that it is this aesthetic quality
that generally makes most of the
difference when people choose designs,
advertisements, or brands.
Aesthetic doesn’t have to be a dirty
word. Its original sense, from the Greek,
was of ‘perception through the senses’.
The idea that we can know and respond
to things directly through the senses,
not just through abstract reasoning,
was developed in the 18th century
by Giambattista Vico, as a challenge
to Descartes’ idea that the mind was
somehow separate from the body.
Modern writers have suggested a
definition of aesthetic as ‘emotional
response to a perceived stimulus’. This
should sound familiar to us: we now have
more and more evidence suggesting that
human choice is fundamentally affective,
holistic, non-analytic, a subconscious,
emotional response to sensual stimuli.
Paul Watzlawick argues that it is ‘analog’
40 38 Feldwick.indd 40
communication – largely non-verbal,
based on gesture and nuance, beyond
analysis – that influences our relationships
with people or things.
If we understand ‘aesthetic values’ in
this context – a direct, emotional response
to sensual stimuli, that may take place
subconsciously and that normally resists
analysis – they may well be central to how
people prefer and choose one design over
another, one package, one brand, one
advertisement.
If that’s so, our present discourse
about ‘creativity’ is misleading and
counterproductive. Based on our
improved understanding of how people
make choices, we ought to redefine
creativity, so that it is primarily about
aesthetic quality rather than originality
for its own sake. And we need to
recognise that it is manifested in tangible
images, sound and performance, not in
abstract ideas.
I’m convinced this is what Bill Bernbach
meant when he said: ‘Is creativity some
obscure, esoteric art form? Not on your
life, it’s the most practical thing a business
man can employ.’
A successful ad from the 1920s for a US
music school’s correspondence course had
the famous headline: ‘They laughed when I
sat down at the piano but when I started to
play!’ Bernbach commented: ‘What if this
ad had been written in different language?
Would it have been as effective? What
if it had said: ‘They admired my piano
playing…’ Would that have been enough?
Or was it the talented, imaginative
expression of the thought that did the job?’
‘The difference,’ he concluded, ‘is
artistry – the intangible thing that
business distrusts.’ And maybe that’s
a word we should value more today. I
urge you to prove this to yourself, by
considering any highly successful artwork,
advert, pack design or brand. Ask yourself
honestly – what makes this excellent,
powerful, moving? Hardly ever will it be
its degree of originality. Nor will it be that
meaningless abstraction, the creative idea.
It will be the aesthetic quality, the artistry
of the whole. n
Based on a talk given at TEDx New Street
on 9 October 2010.
www.tedxnewstreet.com/paul_feldwick.
html
Paul Feldwick is an independent
consultant
[email protected]
Market Leader Quarter4,2011
8/24/2011 15:52:20
d i g i ta L M a R k e t i n g
jonAthAn richmAn
Smarter campaigns
Every day, marketers and their
agencies devise their next big
digital marketing programme: the
websites will be visited by millions,
their iPhone app will rise to the
top of the Apple store, and videos
will go viral. Jonathan Richman
explains why most of these
expectations are fantasies
L
et’s fiRst try to understand
why it is so difficult to make
something that people even
notice these days. When we
marketers sit around and devise our
plans we like to analyse our competition.
It makes sense. Who is doing what?
Which products have advantages over
ours and which have weaknesses? When
we do these exercises, our definition of
‘competitor’ is usually pretty narrow. You
can’t account for every product in the
world in your SWOT analysis after all.
While it may be appropriate to
narrowly define our competitors when
we’re talking about devising our key
messages, our in-store product placement,
or even our packaging and branding, you
don’t have the same luxury when it comes
to digital. The simple reason is because
when it comes to digital, everything is
your competitor.
Your competitors in digital are
everything else that takes time away from
your digital programme. Your competitors
aren’t just a product in the same category
or even brands in the same industry.
It’s everything. That means that your
competition online isn’t just your arch
nemesis’ brand site, it’s also missed TV,
blogs and friend networks.
You need to think of these types of
digital properties as your competitors
Market Leader Quarter 4, 2011
41 Richman.indd 41
because when it comes to your customers’
time, there isn’t much of it to go around.
Every minute they spend doing something
else online means another minute they
won’t be spending on your site, with your
app, or perusing your Facebook page.
Social media: the new ‘porn’?
The old adage that many people became
used to hearing over the years was that
pornography was the most popular
activity online. Whether or not you
believe the numbers is up to you but,
suffice to say, it was a pretty big segment
of online traffic. Times have changed,
so you don’t need to worry quite as
much about losing time to this set of
competitors. Instead, you have a bigger,
fiercer rival that seems to have universal
appeal: Facebook.
A recent Nielsen study showed that
social media surpassed the number-two
online activity (gaming) two fold:
22.7% of Americans’ online time was
spent on social media in June 20101.
That’s a lot of status updates and ‘Like’
buttons clicked.
The point is that you now have even
more competition for your customers’
time and attention and it’s getting worse
every day. You need to reframe how you
think about your competition in order to
be successful. Here it is: if your customers
>
41
8/24/2011 15:53:13
d i g i ta L M a R k e t i n g
jonAthAn richmAn
can do it online or with a digital device,
it’s a competitor. Why would someone
spend hours learning about every detail
of the molecular composition of your
motor oil when they could spend it
watching videos of dogs on skateboards on
YouTube? That’s your challenge.
no guaranteeS... or are there?
The cynics among us would say it’s
impossible to know in advance what will
work. The fickle internet population
cannot be understood. The optimists
might suggest that we simply follow our
research and we’ll be loved. Sadly, they’re
both wrong, but there is good news.
Determining if your programme will be a
success is fairly straightforward. It doesn’t
require spending millions of dollars in
research, complex mathematical formulas,
or understanding some inscrutable,
semi-secret algorithm.
Knowing if your programme is going to
be successful or not comes down to one
thing: will people ‘Like’ it? My choice of
‘Like’ with a capital L was intentional.
Can you picture anyone clicking the
Facebook Like button to indicate their
appreciation or love of your programme?
The tremendous growth of Facebook and
the almost ubiquitous Like button make
our research pretty simple.
Of course, to do this research correctly,
you need a few things. First, you need a
completely objective mind. It might help
to think this way: would I ever click the
Like button myself for this programme?
You may as well be honest since it’s your
reputation on the line if you launch a
tremendous digital flop. If the answer is
‘no’, give yourself two points for honesty,
but now head back to the drawing board.
Second, you need to understand what
people are actually willing to do for you
and your brand. This ranges from one
extreme where you might find your brand
evangelists getting tattoos of your logos
to the other where your brand is nothing
but a splattered speck on your customers’
windshield of life.
Most people these days don’t have a
lot of patience online. We hate filling out
forms and clicking seven times to get to
what we’re trying to find (assuming we
can ever find it). Powerful search engines
have given us the luxury to jump from
site to site if we don’t almost instantly
find what we expected. Cap this with our
shrinking attention spans that drive us
with an almost primal force to seek out
something even better than what we’re
42
41 Richman.indd 42
Knowing if your
programme is going to
be successful or not is
down to one thing: will
people ‘Like’ it?
seeing right now. When you put it all
together, you see that most people don’t
have the time or interest you need them
to have for your ideas to work. That’s why
you need to think differently.
the four big blunderS
When making digital marketing
programmes, often the same four mistakes
are made over and over again.
l Blunder #1: trying to do it all. I get
asked one question a lot. The question
is: what is the worst website you’ve ever
seen? As someone who has seen his fair
share of terrible sites and beautiful ones,
this is a difficult question to answer. The
reality is that there are a lot of ‘worst’
websites out there and they mostly all
have one defining characteristic.
No white space. It’s got everything in
it, which makes it impossible to see or
focus on anything. You have all your ‘key
messages’, probably a few ‘call to action’
boxes or links. You’ve also got some giant
images from the photoshoot on which
you spent a small fortune. You’ve got
links to your other sites and to your brand
extensions. You’ve got a call-out or (ugh)
a pop-up featuring your latest promotion.
You also certainly have a few different
boxes imploring me to ‘Like’ your page or
share it with friends and I know you have
a sign-up box for your email program.
l Blunder #2: random targeting. For
most big brands, you can probably find a
study lying around that cost well into the
six figures that was commissioned to help
identify ‘the target’ – the people who are
the ideal audience for your brand messages.
We pick the right age of people to show up
in our TV commercials and pick the right
magazines in which to place our print ads.
But, when it comes to digital marketing,
we seem to forget who our target really is.
Just because it’s digital doesn’t mean that
‘Marketing 101’ rules don’t apply.
Too often we don’t bother to
understand what our target audience really
does online and what it is likely to do. If
the average person in your target audience
doesn’t own a smartphone, it doesn’t make
much sense to create an iPhone app.
l Blunder #3: bored to death. Many
of the digital marketing programmes I
see have a common, fatal flaw. They’re
boring. And not just a little boring, but
mind-numbingly boring. This blunder is
as simple to recognise as it is difficult to
avoid. Creating interesting content isn’t
easy. It’s a skill and a gift. There’s a reason
why about 30% of all videos on YouTube
have fewer than 100 views, and 55% have
fewer than 5002. The reason: they are not
remotely interesting to watch.
l Blunder #4: one for all and... one for
all. There is nothing more frustrating to
your customers than this final blunder.
In a digital world where they are used to
being able to easily search (and find) what
they want, read reviews from friends, and
customise their viewing experience online,
your customers don’t react well when all
of this power is suddenly taken away.
This is another by-product of the new
expectations your customers have for all
digital content. They expect to be able to
see what they want, when they want, and
exactly how they want. They want to be
able to view it anytime whether online or
off. They want it in whatever format they
feel like at that moment whether it be
on their laptop or fancy new iPad. They
expect this because they get it from other
websites and it’s exactly the experience
that they’re used to with mobile apps.
big SolutionS for big problemS
There are four big solutions to each of
our four big blunders.
l Solution #1: do one thing really well.
The good news is that this solution is
one of the simplest to understand of the
four I’ll offer you. The bad news is that
it might the hardest for most marketers
to implement. The concept is simple
after all. Instead of creating an app, for
example, that does ten things, each in a
mediocre way, create something that does
one thing really well. Simple, right?
It’s hard because you have to make
difficult choices. Of all those brilliant
features you dreamed up and all the
things your customers told you that they
wanted when you did research, which do
you focus on? That’s actually easy. Pick
the one that you can do the best. That
might not be the one that’s the top need
for your customers, but it’s better to put
out your best effort than something that’s
just average.
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8/24/2011 15:53:14
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jonAthAn richmAn
My favourite example for an app that
does one thing and does it really well
is the ‘Sit or Squat’ application from
Charmin. It helps you find a clean, public
restroom no matter where you are. Of
course, you’re not going to use the app
every day, but you’ll be really thankful
that you have it when you need it. That’s
all the app does. It does this simply and it
works every time.
l Solution #2: apply some digital
savviness. The idea is to understand what
digital technologies members of your
target audience use and are comfortable
with and to focus there. I call this digital
savviness. I break each person’s digital
savviness into four categories. You could
be high (ie really savvy) in one category
and low in the others or high or low in all
of them. There’s no one right answer and
no single answer for everyone. You just
need to understand where your customers
are in each category.
Social: how people connect with others.
This means everything from email to
photo sharing to social media.
Entertainment: how your customers
have fun online – watching videos,
playing games, or reading blogs.
Navigating: how your customers get
around online and what hardware and
software they use – which browsers
they use or whether or not they have
broadband or an iPhone.
Productivity: how your customers use
technology to make life a little simpler
such as online shopping and banking
and online auctions such as eBay.
For each category, rank your target
customer as high, medium, or low then
match your digital programmes to
customers’ savviness level in the category.
l Solution #3: create ‘Likeable’ content.
Does it excite you or bore you? As a first
step, honestly ask yourself that question. If
it does bore you, then you need to reassess
what you’ve created. If you wouldn’t share
it with your friends on Facebook, then you
might need to reconsider.
The rest of the test is a bit more
subjective. There are a couple of things
you should check, especially when it
comes to video, but it also applies to
applications and websites. First, are you
eliciting any emotion with what you’ve
created? When most people think of
‘viral videos’, for example, they think of
videos that are funny. Well, that’s just
one possible emotion. A few others to
consider: joy, fear, wonder, anger, jealousy,
sadness, hope, grief, disappointment,
Market Leader Quarter 4, 2011
41 Richman.indd 43
affection and so forth. The more your
content can cause one (or more) of these
emotions, the more successful it will be.
And here’s the final check: will anyone
click the Like button for this? That’s
a big distinction from simply ‘liking’
(lower-case ‘l’) because when you Like
(upper-case ‘L’) something, you’re
announcing to all your friends that this is
something worth checking out.
l Solution #4: personalise and
individualise. You need to create
individualisation. It should elicit this
response from people: ‘Wow. They wrote
this just for me.’ Not ‘someone like me’
and not ‘every other man in Ohio’. No.
Just For Me.
Of course, you wouldn’t write it just
for him or her. That gets prohibitively
expensive in the time and money
categories. You just need to invest
enough effort in your back-end systems
Customers expect to be able to see what they
want, when they want, and how they want.
They want to be able to view it anytime, in
whatever format they feel like at that moment
to allow this to happen automatically
and dynamically. That means it happens
without you doing anything and it happens
in real time. Your system should know and
figure out things about me and match this
to your products and offers. Among the
best in the world at this is Amazon.
You don’t need a complex back-end
system like the one that powers Amazon’s
recommendations, but you do need to
invest in ways to ensure that what people
get from you appeals to them on a very
individual level. n
Jonathan Richman is group director,
insights and planning for Possible
Worldwide
[email protected]
com
This is an edited version of the winning
entry in the digital category of the WPP
Atticus Award 2010.
References:
1. Source: http://blog.nielsen.com/nielsenwire/
online_mobile/what-americans-do-onlinesocial-media-and-games-dominate-activity/
2. Source: http://techcrunch.com/2010/01/30/
context-is-king-how-videos-found/
43
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i n t e r n at i o n a L
GrAhAM MAckAy
Global knowledg e
Since the 1970s, many consumer goods companies have been moving
brands towards global propositions, but this is rarely appropriate for brands
embedded in the cultures of individual countries. Graham Mackay
describes why SABMiller is the most local of global brewers
T
wenty-eiGht years ago, Ted
Levitt, editor of the Harvard
BusinessReview, wrote one of
the first articles to popularise
the concept of ‘globalisation’. He asserted
that a global proposition would ultimately
always win over the local proposition. That
the superiority of a global offer – both the
product and the marketing – would eclipse
the cultural variants that country managers
always asked for. And he predicted that a
centrist corporate movement would prevail
based on a creed of one product: one
brand: one voice: one ad campaign.
There seem to be, in essence, two
interlinked arguments behind this
proposition: one based on emotional
association, or aspiration; and the other
on management practicalities. The first
asserts that consumers will naturally
aspire to, and drift over time towards,
international brands simply because they
are international. They are self-evidently
better because people all over the world
have sought them out. The second
argument is that it is practically impossible
– unmanageable or unaffordable – to
replicate at a local level the quality, look
and feel of global brands so the local brands
don’t look as good or perform as well.
In the course of my career in consumer
goods I have encountered many examples
of individuals and companies that believe
Levitt’s thesis explicitly. Successful
products, companies and careers have
been built on it. An example of the first
driver would be in cigarettes where
international brands such as Marlboro
have delivered better quality – originally,
anyway – and a higher cachet through
sophisticated marketing when compared
with local alternatives. Another obvious
example is Coca-Cola. By contrast,
household and personal care are
categories where consumers lack much
44 44 mackay.indd 44
emotional connection but welcome global
brands with a more sophisticated look and
better functionality.
Beer is different
Alcohol is a mood-altering substance
and beer in particular has a history as
old as civilisation. The highly emotional
characteristics of beer brands themselves
and their long history and association with
place, will always dictate a high degree of
localism that sets beer brands apart in the
fmcg universe. This is reinforced by the
economics of producing and distributing
what is a bulky, perishable product.
That’s not to say that the brewing
industry has been immune to the forces of
globalisation. At the turn of this century,
the top ten brewers around the world
accounted for just over one-third of beer
sales volumes. Since then a mass of local
and regional brewers, many of them
still family owned, have been subsumed
into four big players – namely ourselves,
Anheuser-Busch Inbev, Heineken and
Carlsberg. These four account for almost
half of global beer sales volumes, and
about three-quarters of the profit pool.
This period of intense consolidation has
undoubtedly driven the adoption of global
best practice in many areas – from brewing
production, to packaging and distribution.
But when it comes to brand marketing,
each of the brewers has a different take on
where they stand in the ‘global versus local’
debate. To fully understand our perspective
and why it differs from the consensus, it’s
necessary to understand where we, as a
company, have come from.
from south AfricAn Beginnings
Today, SABMiller is the biggest drinks
business on the London Stock Exchange,
with interests in 75 countries across six
continents and more than 200 brands.
You’ll recognise some of them – such as
Grolsch, Peroni Nastro Azzurro, Pilsner
Urquell and Miller Genuine Draft – but
many more of them will be unfamiliar to
you despite being powerful local brands in
their respective home markets.
Since coming to London in 1999, our
sales and revenues have grown by over
seven-times to $26.3bn and our market
capitalisation has increased eightfold. This
is from a company whose served markets
(as I was fond of saying in our early days
in London) did not cover the Palace of
Westminster, Times Square or the Eiffel
Tower but did include Dracula’s Castle,
the Gobi Desert, Timbuktu and the
Source of the Nile.
Undoubtedly the global success
of SABMiller is built upon the firm
foundations and sound business principles
Market Leader Quarter4,2011
8/24/2011 17:00:27
i n t e r n at i o n a L
GrAhAM MAckAy
g e, local delivery
realised that higher-quality beer was
dependent on a particular type of water,
giving rise to great brewing towns such
as Burton-on-Trent, Pilsen in the Czech
Republic or Timisoara in Romania.
Today, however, we can manipulate
water to create whatever conditions
we like. Hops can be processed and
transported across the world. New barley
strains are supporting local suppliers
in markets with no previous brewing
tradition, and the company itself is
experimenting with a new generation of
beers which rely on a different set of raw
materials and production techniques. Yet
beer remains resolutely local.
the role of internAtionAl Beers
that were laid down many years ago in
South Africa.
The springboard for our expansion was
the advent of democracy in South Africa,
a cause actively supported by SABMiller.
This freed us to invest outside the
country just at the moment when wider
geopolitical changes were throwing up
new opportunities across Eastern Europe,
Asia and Africa.
In the early days, we acquired breweries
from governments wanting to privatise.
These assets had often been badly
neglected under public ownership, so
we focused on bringing them up to
scratch, applying the disciplines that we
had learned in South Africa: to enhance
quality, drive down costs and improve
distribution. Our approach to marketing
was, where possible, to build existing
Market Leader Quarter4,2011
44 mackay.indd 45
local brands through strengthening
their associations with local heritage and
cultural icons.
Brewing is essentiAlly A
locAl Business
Despite the rapid consolidation in the
beer industry over the past ten years, the
beer market has remained stubbornly
diverse. And brewing has remained at
its heart a very local business, steeped in
culture and tradition that from its earliest
beginnings has been associated with place.
Until not many years ago, most beer
brands were simply the name of the
town where they were brewed. In many
countries that remains the case – notably
in Germany, which is why the German
brewing industry is still very fragmented.
As the industry evolved, brewers
Of course, as consumers become wealthier
and the middle-class grows, they look for
more sophisticated products, and some
are seeking out international brands.
We do cater for that with four distinct
international premium brands that talk
to consumers’ emotional connections
to place or culture, whether it is the
Italians’ unquestionable ownership of style
typified by Peroni Nastro Azzurro, the
quality and provenance of Czech brewing
found in Pilsner Urquell, the charismatic
eccentricity of the Dutch reflected in
Grolsch or the American urban cool of
Miller Genuine Draft.
Despite the array of imported beers
that you see in the UK, brands consumed
outside their country of origin actually
still account for only about 5% of world
beer volumes, and that proportion has
changed little over the past ten years.
Truly international brands, such as
Heineken or Corona, have global market
shares in the low single digits, and you
need to combine more than 60 of the
top beer brands to amass half of total
world volumes.
Aspiring consumers are nowadays just
as likely to turn to local premium beers,
many of which speak to the burgeoning
sense of pride and identity that comes
with social and economic progress and,
particularly in sophisticated western
markets, to crafts and speciality beers.
For example, in the US the expansion >
45
8/24/2011 17:00:29
i n t e r n at i o n a L
GrAhAM MAckAy
Here are three of SABMiller’s brands,
to illustrate what we have, through
detailed research, come to understand
about how different groups of people
relate to their national identity.
tyskie is rooted in what it
means to be polish, with
a heritage dating
from 1475
tyskie gronie
of craft brewers, and in the UK the
resurgence of cask-conditioned ale, are
aligned with the same concern for local
provenance that we have seen in the food
industry. But equally it is about place,
identity and belonging.
why Beer BrAnds Are so tied to
locAl provenAnce
My explanation is that they are emotional
constructs, far more than they are physical
ones. While there are undoubtedly some
highly important functional attributes to
which one can appeal in beer – refreshment
being the most common – in reality the
intrinsic differences between different
lagers of the same alcoholic strength and
temperature are subtle. After a pint you
would be hard pressed to tell two lagers
apart in a blind tasting, but a consumer
will, on most occasions, have a clear
preference. Although they will generally
aver that their chosen beer is the one that
tastes best, this is simply a rationalisation of
an instinctive, emotional choice.
In our view the human motives of
friendship, male bonding or national
pride can’t be accurately applied
from one culture to the next without
reinterpretation, and local sensitivity
and local intimacy are critical to
understanding the unarticulated, intuitive
relationship that people have with the
beer in front of them. For many men,
beer is possibly the most important brand
in their repertoire of personal products,
when it comes to defining who they are.
But the male psyche, how men bond
and what they aspire to, finds radically
different expressions in different parts
of the world. In many parts of Africa,
46 44 mackay.indd 46
For many men, beer is
possibly the most
important brand in
their repertoire of
personal products
when it comes to
defining who they are
fatherhood and the familial responsibility
that surrounds it, is highly aspirational to
young men. But while beer campaigns in
the UK do appeal largely to men, one that
emphasised fatherhood, I fear would be
doomed to failure.
We believe that deep, rich and rigorous
consumer insight is critical to brand
building. I am sure that many of our
competitors would say precisely the
same. However, we take it to a level of
granularity that borders on the obsessive
in order to understand and assimilate those
attitudes towards beer which are – from a
consumer’s perspective – indefinable.
As a topical aside, even understanding,
and combating the drivers of, alcohol
misuse force an appreciation of the highly
cultural nature of drinking. In the UK we
have an undeniable problem among young
people for whom drinking to intoxication
is entirely acceptable – if not glamorous.
Travel to Italy, however, where alcohol is
typically considerably cheaper than here
in the UK, and drinking to excess is taboo
and considered socially unacceptable.
As Poland’s largest beer brand with
a market share of 18% and heritage
dating back to 1475, Tyskie is rooted in
what it means to be Polish. But while
Poland’s history is rich with great artists,
composers and philosophers, it is the
15th century and not the 21st that is
thought to be the ‘golden age’ of Polish
culture. Instead, its recent history is
darker and more troubled, characterised
by a succession of devastating wars, which
means little from the past 150 years stands
in its original place.
Consequently, Poles feel that they
have lost a link to the heritage of their
forefathers. They feel destined for
greatness, but need external affirmation
to feel positive about being Polish. So
they will take an avid interest in the
performance of Polish players in the
English football leagues or hold up Robert
Kubica, the Formula 1 driver, as a national
hero, because of his success on a global
stage. They want proof – validated by a
global audience – that Poles can be great.
So Tyskie seeks to create and tell
narratives that allow Poles to feel
better about themselves, providing them
with grounds for genuine pride. One
example is when we changed the livery
of the trucks exporting Tyskie to the UK
to demonstrate the brand’s status as an
export brand and its popularity overseas.
pilsener in ecuAdor
In Ecuador, national identity embraces
all epochs of its history – combining
Catholicism, pagan symbolism and a more
secular ideology. When native inhabitants
were forced to convert to Catholicism
by the Spanish, the conversion was often
not entirely pure, with the result that
indigenous elements, such as a polytheistic
belief in ‘spirits’, became part of the new
religion. The Spanish conquerors brought
populations from Bolivia, Guatemala and,
ultimately, Africa as slaves, and they too
brought their beliefs and traditions.
This combination of influences is
most powerfully exhibited in the many
thousands of fiestas that take place
around the country, from the Fiesta of
La Mama Negra, which aligns the power
of a volcano to the mercy of the Virgin
Mary, to the Corpus Christi celebrations
Market Leader Quarter4,2011
8/24/2011 17:00:31
i n t e r n at i o n a L
GrAhAM MAckAy
of Pujili, which combine the Catholic
celebration of Holy Communion with
traditional celebrations of the harvest and
offers of thanks to Inti, the Inca sun god.
Pilsener is our ‘national’ brand in
Ecuador, growing lustily and with an 80%
market share. Its television commercials
seek to reflect the complicated and
deep-rooted connection of the people to
their ancestors and the land.
cAstle in south AfricA
With the football World Cup taking
place in South Africa last year, we took
the opportunity not to showcase a global
brand to the watching world, but rather to
unite South Africans behind our flagship
local brand, Castle Lager, and build brand
equity and loyalty with local consumers.
With 11 languages and a multiplicity
of cultures and political affiliations, the
Rainbow Nation has been trying to forge a
common national identity since the demise
of the apartheid state. While most people
will acknowledge their South African
identity at some level, this fails to compete
with powerful racial, geographic and tribal
loyalties still very much in evidence today.
South Africa is a country still searching
for a voice that encapsulates the country’s
diversity, while demonstrating a strong
sense of unity to the rest of the world.
Our research found that one
characteristic that unites all South
Africans – regardless of their background
– is the enormous pride taken in their
reputation for hospitality and openness.
Castle Lager, sponsor of the national
football team Bafana Bafana, created a
commercial that encapsulated this in the
build-up to the World Cup.
Having been in decline for many years,
Castle has not only stabilised, but is now
in double-digit growth long after the
tournament has ended and makes up
nearly one-fifth of our total portfolio in
South Africa.
A responsive mArketing
eco-system
The results reinforce the importance of
putting consumer insight at the heart
of any brand strategy, and having a
marketing eco-system that can remain
sensitive to the idiosyncrasies of local
culture, while simultaneously deploying
the most effective and efficient marketing
and sales techniques.
We have worked long and hard to
develop such a system within SABMiller.
One that gives local marketing teams the
autonomy they need to respond locally,
Market Leader Quarter4,2011
44 mackay.indd 47
but which utilises the expertise, skill and
learnings available across the business. It
is an important part of how we can add
value and leverage the scale of the group.
This combination of discipline and
freedom is cultural, as much as it is
structural. Our instincts are to employ the
complete individual and empower them
to develop bespoke solutions. This avoids
the trap inherent in less-flexible systems,
which lead to ideas that in theory fit all
markets but in reality suit none.
In conclusion, we have embraced
globalisation, but with qualifications,
as we believe that the beer business is
inherently local and will remain so.
Our determination to build brands
that resonate with local consumers is
a key point of differentiation between
SABMiller and its competitors. We
recognise that our approach is more costly
and more complex to manage. And, in
many ways, we are ‘swimming against the
tide’ identified all those years ago by Ted
Levitt. But we are attempting to use the
best of what we know globally to enhance
our offering and delivery locally. In short,
we believe we are the most local of the
global brewers.
And while much of the global consumer
goods industry is focused on identifying
the ways in which everyone is the same,
SABMiller is trying to work out what it is
that makes everyone different. n
during the world cup in south Africa,
sABmiller took the opportunity to unite
south Africans behind its flagship local
brand, castle lager, and build brand equity
and loyalty with local consumers
Graham Mackay is chief executive of
SABMiller
This is an edited version of the
Marketing Society Annual lecture,
28 March 2011.
47
8/24/2011 17:00:34
g row t h d r i v e r s
andy bird and mhairi mcewan
delivering growth is the key
challenge facing organisations
across the globe. in their book
The Growth Drivers, Andy Bird
and Mhairi Mcewan argue that
there has never been a more
challenging – or a more exciting
– time to be a marketer
T
he worLd is changing fast.
The breathtaking pace of
technological advances and the
advent of social media have
prompted an unprecedented growth in
‘people power’. In parallel, the urgency
of achieving environmental sustainability,
the shift in economic power to emerging
markets and the cultural implications of
globalisation are transforming the world
in which we live.
The speed and scale of these
changes are having a major impact on
all organisations. Yet, as businesses
everywhere strive to keep pace with
these challenges, they remain under
more pressure than ever to drive
profitable, sustainable growth and deliver
shareholder value – creating a significant
growth challenge. As organisations
struggle to weather the storms of
economic recession, the focus for many
is on the financial drivers of shareholder
value, on cost reduction, efficiencies,
staff severance and budget restrictions.
But costs can only be cut so far. There
is now a growing recognition of the need
to embrace new market opportunities,
to create value in new ways and to
drive growth in a more proactive and
sustainable way that addresses the needs of
all stakeholders – customers, shareholders,
employees and society as a whole.
We believe that the most urgent
priority facing all organisations striving
to drive growth today is to pay as much
attention to the marketing drivers of
performance as they have traditionally
paid to the financial ones. In TheGrowth
Drivers™ we focus in detail on the critical
contribution of three key, interrelated
drivers of business growth.
l Marketing: the discipline and practices
of marketing, which enable companies
to create better value for their customers
and thereby drive sustainable, profitable,
demand-led growth.
48 48 McEwan.indd 48
Accept the
challenge
The Brand Learning WheelTM is a simple model to help organisations appreciate what building
marketing excellence requires in practice and helps them prioritise the core capability drivers
Marketers: the people who are
responsible for specialist marketing tasks
and activities – however these are defined
in any specific organisation.
l Marketing capabilities: the ability
of people, teams and organisations as a
whole to manage the marketing activities
needed to create better customer value
and drive demand-led growth.
Of the three, marketing capabilities
deserve particular attention because
without focus on developing and
sustaining these, the potential impact
l
of the other two on commercial
performance is unlikely to be realised.
The challenges facing marketers are
considerable. Let’s be under no illusions,
it’s a demanding job. As markets mature,
competition intensifies, and the pace
of technological and social change
accelerates, the relentless search for
cut-through innovation and better
value to maintain competitive edge is
increasingly difficult to achieve.
For companies to succeed and flourish,
investment in building the marketing
Market Leader Quarter4,2011
8/24/2011 15:55:57
g row t h d r i v e r s
andy bird and mhairi mcewan
capabilities of their people, teams and
the organisation as a whole needs to
be an important strategic priority. At a
time when many organisations are facing
unprecedented challenges in driving
growth in today’s global networked
markets, this call to action has never
been more timely or more important to
commercial success.
Finding The Way ForWard
Investing in ‘training’ is not enough.
Organisational leaders who want to drive
demand-led growth need to take a more
strategic, holistic and integrated approach
to the development of marketing
capabilities. By investing greater time,
effort and resources in building marketing
capabilities, they will be better equipped
to improve commercial performance and
drive growth.
In our experience, marketing capability
development needs to be approached in
a way that is focused on supporting the
marketing capability needs and strategy
of operating teams, business units
and the whole organisation – not just
individuals within it.
The drivers oF MarkeTing
CapaBiLiTy
Early on in our work with multinational
companies, we realised the outdated
concept of ‘training’, as opposed to
capability development, was so deeply
entrenched in some quarters that we
needed a simple way to challenge that
thinking and to explain the power of
a more holistic approach. This would
move beyond the focus on individual skill
development and training to embrace
the impact of a range of other important
drivers of capability that influence the
way marketers work in practice.
We explained this new approach by
creating the Brand Learning WheelTM.
This simple model helps organisations
appreciate what building marketing
excellence requires in practice and helps
them assess and prioritise each of the
core drivers of their own organisational
marketing capability.
deFining a MarkeTing
CapaBiLiTy sTraTegy
Given the acknowledged importance of
marketing capabilities as a key growth
driver within an organisation, we
believe that strong senior leadership and
proactive development of a strategy to
build marketing capabilities is essential.
Market Leader Quarter4,2011
48 McEwan.indd 49
Yet this is often not the way capability
development is managed in reality.
In order to define the best marketing
capability development strategy for any
particular organisation, it is vital that two
golden rules are followed.
l Golden Rule number one:
Marketing leaders must lead
marketing capability development. In
our view, it is the direct responsibility of
the marketing leader and leadership team
to drive the strategic marketing capability
agenda because it is they who are
ultimately accountable for marketing’s
contribution in terms of driving growth
for the business. If they are to ensure
the contribution of the function is in
line with the requirements of senior
management, they need to manage their
expectations appropriately and build the
capabilities needed to succeed.
In all the work that we’ve done with
our clients over the years, the single
biggest factor that has influenced the
effectiveness of marketing capability
programmes has been the extent to
which senior management and marketing
leaders have seen these programmes as
a strategic means of proactively driving
business growth.
l Golden Rule number two: Marketing
capability development must be
planned strategically. It is critical to
apply the same rigour and discipline to
the development of a marketing capability
strategy and plan as that which lies at
the heart of effective marketing strategy
and planning. There are many such ways
in which the approach to marketing
capability development can draw from
marketing disciplines but this is one of the
most important.
sTraTegiC pLanning sTages
The key stages of defining a marketing
capability strategy are similar to the
development of any effective strategy.
l Step 1: Define the vision for
marketing. To lead a programme of
effective change, the first step is to begin
with a clear and compelling vision of the
future which sets ambition and context,
inspires people with a sense of possibility
and engages them emotionally to commit
their energy to making the vision a reality.
So, marketing leaders wanting to
drive change in the capabilities of their
people, teams or organisation, need to
define an inspiring vision for the role of
marketing in the business. They need
to align other stakeholders in helping to
asTrazeneCa
AstraZeneca launched a marketing
capability ‘Health Check’ for its new Global
Marketing teams using a mountaineering
analogy with powerful emotive and visual
imagery. People were initially inspired with
examples of world-class marketing from
other industry sectors and then the teams
worked together, led by their senior
manager, to rank themselves on a fivepoint scale across a set of the eight key
areas within AstraZeneca’s own marketing
capability framework.
“It was good for us because there were
new teams coming together and it allowed
them to have really good discussions about
what they do, how they do it and their
ambitions for the future. It helped us
identify key capability gaps and themes for
our programme to focus on.”
tim Bailey, head of marketing
academy, AstraZeneca
shape that vision and establish the scale
and scope of the marketing capability
development needed.
l Step 2: Conduct a marketing
capability situation analysis. Once key
stakeholders have agreed on the vision for
the role that marketing will play in driving
organisational performance, the next
step is to assess how well the marketing
function, and potentially the broader
business, is equipped to deliver this vision
in practice.
l Step 3: Define and align objectives.
Having defined the main marketing
capability issues facing the business,
marketing leaders must then establish
a clear and ambitious view of the
role they want marketing capability
development to play and the related
objectives and metrics.
At the highest level, we have found
it is helpful to start by crafting a simple
statement of the overall goal or mission of
the programme.
Marketing capability mission
statements define clearly and simply
what the marketing capability
programme is setting out to achieve.
They help align other stakeholders
and sharpen the focus of subsequent
strategy and programme development.
However, it is also important to drill
down objectives to a more detailed level,
defining specific, measurable targets and
key performance indicators (KPIs) that >
49
8/24/2011 15:55:57
g row t h d r i v e r s
andy bird and mhairi mcewan
experT opinions
‘We live in an environment that is changing hugely. Competition is continuously more challenging,
the fusion of media and technology is transforming the relationships between brands and
consumers, and there is a need for brands to possess a social integrity beyond their economic
intent. So it is critical, if we are to continue to deliver results and win in our categories, that we
build up stronger specialist marketing capabilities across the organisation.’
Mark Baynes, global chief marketing officer, Kellogg
‘Training in a traditional sense wouldn’t apply in our business because it’s a whole change
programme we need to go through – changing processes, changing attitudes, changing
behaviours, a whole raft of things. It is not something that happens just over one workshop or
attendance at one programme, but it happens in people’s day-to-day tasks and that needs to be
embedded over a period of time. It takes many months, even years to achieve that, but when you
get there it makes a significant impact on the business.’
Navjot singh, global marketing manager – recruitment and hr communications, shell
‘It’s not something to be undertaken lightly. You have to be single minded and determined that
you want to bring a level of consistency across the globe and across the brand. I do think it is very
helpful, maybe even critical, that you get a number of the functions joined up here because if
people had seen The Diageo Way of Brand Building (DWBB) as just a marketing thing, the
opportunity to chip away at it would have been huge. But the fact that there are a number of
people joined together that are really driving this is very important.’
Nick rose, former chief financial officer, diageo
MarkeTing CapaBiLiTy
deveLopMenT – Missions
‘To help build great hotels guests love by developing best in class skills and processes in hotel
brand management, sales and marketing.’
intercontinental hotels group
‘Giving marketers the confidence to outperform.’
Unilever
can be used to help set direction and
track progress over time.
The ultimate measure of success of a
marketing capability programme relates
to its impact in creating better customer
value and driving profitable business
growth. However, to be meaningful,
objectives and KPIs need to differentiate
the unique impact of capability building
activities from the other drivers of
business performance.
l Step 4: Develop the marketing
capability strategy. Having defined
and aligned clear, focused capability
development objectives, the next step is to
develop the marketing capability strategy.
Up to this point, there may be clarity on
‘why’ a marketing capability initiative is
needed, but not on what that initiative
will comprise.
50 48 McEwan.indd 50
Underpinning the strategic decisions
taken at this point are usually some
guiding principles or beliefs that emerged
in discussion with senior executives
during the earlier stages of the strategy
development process.
l Step 5: Build the implementation
plan. The final step in defining a
marketing capability development
strategy is to agree all the core
elements of the capability programme
implementation plan. What will it look
like in practice? What will be its scope,
impact, timing and resources? What will
be the key deliverables such as priority
processes, best practice or mandatory
tools, job role profiles and blended
learning programme elements (for
example, workshops, virtual classrooms,
online portals)?
There will also need to be a time
plan, an engagement plan and clarity
on the budget scope and responsibility.
Another important component is
a clear explanation of the internal
roles and responsibilities for making
things happen.
With significant resources invested
in global brand innovation and
communication campaigns, organisations
are becoming well aware that small
improvements in the quality of these
activities can make a big difference
to the return on investment delivered
from marketing.
Martin George, managing director for
group development at Bupa, explains:
‘Inside a business it’s a war for resource.
The CEO only has so much money and
so many people, so either we get them in
marketing or the HR director gets them
or finance get them. The person who
ultimately succeeds in securing resource
will be the person who is going to add
most value to the bottom line. Profit is
the common denominator; that is what
you’ve got to learn to focus on.’
in ConCLusion
There has never been a more challenging
time to be a marketer – or, one could
argue, a more exciting time. However
challenging the developments facing
organisations, as in many earlier periods
of revolution, they are creating enormous
growth opportunities for businesses to
seize the moment and actively shape
their future.
But marketers must first build the
engine to drive the growth. The growth
itself will come from effective marketing,
but it is the capabilities needed to drive
better marketing performance that
will provide the energy and momentum
for success. n
Andy Bird and Mhairi McEwan are
the co-founders of Brand Learning
and authors of The Growth Drivers™:
The Definitive Guide to Building
Marketing Capabilities (John Wiley &
Sons). Readers can pre-order the book
from www.wiley.com and receive a 20%
discount with the code VB528. Brand
Learning is a global leader in building
organisational marketing capabilities.
www.brandlearning.com.
Extract: with the kind permission of
Wiley.com. ©Andy Bird & Mhairi
McEwan 2011.
Market Leader Quarter4,2011
8/24/2011 15:55:57
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melanie howard
Following wealth sirens
of the global economy
austerity Has prompted widespread shifts in
Since the 2008
banking crisis
and recession,
the mood of the
country has been
one of austerity.
But the megarich still influence
aspirations, says
Melanie Howard
behaviour away from the frothy consumerism of
the Noughties. So it seems paradoxical to suggest
we turn our attention to the activities and shopping
choices of the 2% that own more than half of
the world’s total domestic wealth for ideas and
inspiration of what is coming next.
Trendspotting in the 1980s meant hanging about
on street corners to predict which branded goods
were about to become the next must-have designer
label or sports shoe to benefit from the global
wave of youth mass consumption. But now, with
the spread and globalisation of the ‘wealth sirens’
(our moniker for the super rich) it is incumbent on
the assiduous contemporary trendspotter to hang
around on La Croisette for inspiration and ideas.
It seems certain that the mega-rich population
will swell, as will that of the medium-rich. This is
essentially a story about what such consumers will do
with their prosperity at every upward-income stage
through which they ascend. Despite our own belttightening, there is no sign that our human interest
in the lifestyles of the mega-rich is diminishing. The
strength of demand for celebrity as content in the
mushrooming global media environment is being
accelerated by the mingling of the super-rich with
the super-famous and super-beautiful.
Significantly, the activities of the mega-rich
go far beyond the West. Of the world’s 1,011
billionaires recorded by Forbes Magazine in 2010,
as many are from Asia as from Europe. For the
first time ever, each region has its own cohort of
billionaires represented in this globally influential
niche, thus broadening their appeal and role as
inspirational icons to billions. And it seems that
there is no end to the ambitions that took the
billionaires to the top in the wealth stakes. Not
only do they spend on a spectacular scale, they are
increasingly seeking power and influence in new
ways beyond being benefactors and de facto patrons
in their own regions.
What they buy
The implication of the wealth siren theme is that
what the mega-rich devour every day the rest
of us would like to taste at least once in a while.
Their appetites are characterised by customised
exclusivity, artisanal perfection, the best whatever
the price or seeming ludicrousness. In Russia, for
example, the annual Millionaire Fair showcases
some of the world’s most expensive items, such
as a Fissler cooking pot inlaid with more than
200 diamonds, with price tags that would be
excruciating to most people.
52
52 trendwatch.indd 52
Joselito ages its Ibérico Gran Reserva ham for
68 months and, in an upgrade, each ham comes
with a black leather and red silk presentation case
designed by Andres Sarda, propelling the product
further into a realm of exclusive luxury. Retailing at
around £3,000, this delicacy is the opposite of fast
food. As the numbers of the mega-rich grow over
the decade to come, we believe that their influence
will trickle down in more modest forms.
For example, so-called ‘concierge brands’ have
begun to offer affordable concierge-style solutions
that give consumers a small taste of the VIP world.
Gilt Groupe, Vente privee, Rue La La and Ideeli
are some of the online clubs that specialise in flash
sales of designer wares. Jetsetter and Voyage Privé
give members access to exclusive holiday and travel
offers ranging from boutique hotels to luxury villas
and island getaways along much of the same lines.
Politicians and PhilanthroPists
The mega-rich are not merely self-indulgent
consumers, they form a political class with serious
expectations of influence over public policy
everywhere. Roman Abramovich’s role as Governor
of Chukotka is well known, as is his penchant for
premiership football as another route to influence.
More philanthropically, the world’s richest man,
Carlos Slim, has ‘$4bn of investments ready
to promote education, health and other great
challenges’ in his own eponymous Foundation.
Some 165,000 young Mexicans have apparently
been helped through university by the Carlos Slim
Foundation. He has invested more than $2bn in the
renovation of inner Mexico City, and his personal
website is totally presidential in tone.
The INGKA Foundation was formed by the
owner of IKEA, Ingvar Kamprad, to promote
innovation in design. It can spend up to €45m per
annum – a fraction of its total monetary value – on
charitable causes. The endowment of the Gates
Foundation – with its pro-health and anti-poverty
agendas – runs to over $30bn, the equivalent of the
US’s entire annual overseas aid budget.
It seems that the mega-rich and the legions of
average-rich following behind represent a throbbing
human dynamic inside the forward march of the
global consumer society as well as demonstrating
how we can behave as concerned global citizens.
They become, everywhere, more important, more
numerous, more influential every year. n
Melanie Howard is chair of the Future Foundation
and a non-executive director of TCA.
[email protected]
Market Leader Quarter 4, 2011
8/24/2011 15:57:02
l e t t e r f r o m b a N g a lo r e
prasad narasImhan
A nation of shopkeepers
Prasad
Narasimhan
considers how
the explosion of
innovation in India
can take the
next step to
become thriving
brand ideas
NaPoleoN famously (and dismissively)
called England ‘a nation of shopkeepers’. Much
indignation followed, to be mollified only by his
later defeat at the hands of the English.
In India though, ‘nation of shopkeepers’ has
taken on a different meaning altogether. With
about 11 retail shops for every 1,000 people, or
one shop for every 20 to 25 families, India is truly
a nation of shopkeepers. Shoppers are everywhere
and there are shops in every nook and corner,
reflecting the new economic buzz in which India
is basking. In large cities, the shop density is
sometimes as high as 45 shops per 1,000 people;
Napoleon’s nation of shopkeepers has only four
shops for every 1,000 of its population.
The fact is, Indians have traditionally taken to
entrepreneurship easily – some communities more
than others. The Patels have made their mark as
shopkeepers extraordinaire both in Europe and
the US. And there are the ubiquitous Malayalis;
one story has it that it was a Malayali who served
Edmund Hillary chai when he first scaled Mount
Everest. Over half of Indians are self-employed,
with a majority taking to small retail trade.
There is a new kind of shop
It is, however, a new avatar of ‘setting up shop’
that is today taking India by storm, fuelling its
economic engine with new energy. Emerging
from India’s huge, conservative, middle-class
community is a new set of shopkeepers. Smart,
very educated and unafraid global citizens, these
entrepreneurs are following their dreams and
‘setting up shop’ in new ways – creating bold
start-ups that are seizing opportunities in India
and the world.
From software to solar power, mobile to media,
rural to robots, internet to infrastructure, such
shops are springing up everywhere.
The excitement is palpable. Magazines and TV
channels cover this repeatedly. These guys are
India’s new superstars, the stuff of urban legend.
So much so that many fresh graduates are skipping
employment altogether, starting their careers as
entrepreneur ‘shopkeepers’.
This is just the tip of the iceberg. The
‘movement’ has just reached a tipping point. All
the ingredients are in place: an economy growing
at 8% to 10%, strong educational base, easy access
to funding, new incubator infrastructure and strong
technological skills, just to mention a few.
But what does it take for this movement to truly
turbocharge India’s growth? Three key principles
of brand leadership are particularly relevant.
market leader Quarter 4, 2011
53 letter from bangalore.indd 53
1
Follow the money. Concentrating effort and
money where there is a competitive edge is
the most fundamental trait of a leader brand.
Where would these start-ups be best off ‘setting up
shop’? Early successes have typically come largely
from software and mobile application spaces.
And venture capitalist (VC) funding has followed.
Last year alone, VC funding grew by more than
150% over previous years as per industry sources.
Big sell-outs such as MakeMyTrip.com have only
helped. These are spaces where Indians can create
competitive advantage, and they’re great start points.
But there are many new areas where we can expect
the next wave to impact – health, biotech, medical
tourism, higher education, holistic school education,
rural development, clean-tech, distributed energy
and rural credit, to mention a few.
Build big brand ideas. Despite the sheen,
these entrepreneurs are often little more than
overgrown technocrats. The original genius
has resulted in a single-product company, but the
struggle going forward is one of marketing and scale.
Brand thinking is often absent. It’s no wonder we
often encounter businessmen who feel they have hit
a roadblock, without realising that the ‘sausage’ of
their brilliant product/service needs brand ‘sizzle’.
India is an emerging economy, but people’s
desires are by no means emerging. They want the
best brands. In a luxury-brands survey conducted in
March 2011 by The Nielsen Company, India ranked
third after Greece and Hong Kong in the list of
most brand-conscious countries in the world. Brand
building is a priority for these businesses to grow.
Return on ideas. The Indian innovation psyche
has often been equated more with inventiveness
(jugaad) than innovativeness. It is about
cleverly manoeuvring situations, creating solutions
and managing outcomes – less about a structured
approach to innovation. While this will help create
the first big invention, it is often insufficient
to build big companies. Entrepreneurs will do
well to find ways to maximise the return on their
ideas – setting bold visions, exploding the original
idea in new ways, engaging with external coaches,
and hiring very different (stable, experienced?)
employees, to name a few requirements.
Bill Bryson has laconically said: ‘We used to build
civilizations; now we build shopping malls.’ In
India, we are building a civilization through these
shopping malls. May these shoppers prosper. n
2
3
Prasad Narasimhan is managing partner at
brandgym Asia.
[email protected]
53
8/24/2011 14:34:16
B E ST I N B R I E F
BOOK REVIEWS
Never astride a fence
WINSTON FLETCHER
JOHN HEGARTY doesn’t sit on fences. He says what
he means and manifestly means what he says.
In a business notoriously prone to compromise
and equivocation his feisty honesty helps explain
his success. But the fundamental reason for his
exceptional success is his exceptional creative talent.
Consequently, as he says in Hegarty on
Advertising, the aspect of current advertising
management that most winds him up is the
‘tissue meeting’. In tissue meetings, agencies
present clients with a ragbag of rough
campaign ideas, and everyone chews them over:
compromise and equivocation personified.
Worse still, tissue meetings negate creative
talent like his because everyone present is
encouraged to throw their tuppence-worth into
the ring. Had Leonardo’s Mona Lisa suffered
a tissue meeting, John playfully suggests, she
would have ended up with an apple on her head
‘to get people wondering’. His uncompromising
view is that ‘whoever came up with the
completely stupid idea of tissue meetings should
be taken out and shot’.
John deplores tissue meetings because
they are wimpish. However, there is a more
fundamental reason for deploring them. They
concentrate on ‘ideas’ rather than execution.
But brilliant ideas succeed only when they are
brilliantly executed, as BBH has consistently
demonstrated. Think how subtly the memorable
BBH campaigns have been crafted, such as
Levi’s 501s; sexy Häagen-Dazs; and brutal
Barnardo’s. The ‘ideas’ would have been
destroyed by cack-handed execution.
Hegarty on Advertising is in two halves. The
first summarises John’s beliefs about advertising,
branding, creativity and agency management.
The second is autobiographical, highlighting key
moments in his dazzling career. For my money,
the second half is the better because his career
is fascinating; while his thoughts on advertising,
creativity and the rest are forthright, vigorous
and a good read, they are rarely unorthodox.
Yes, he believes creativity is advertising’s magic
ingredient, thinks creatives should question
briefs, considers old and new media must be
integrated and so on – but who doesn’t?
Reading his vehement – and entertaining
– diatribe got me wondering: might tissue
meetings be the smoking gun that has triggered
the much discussed, and much lamented, demise
in the quality of British advertising? Sounds
depressingly likely, to me. ■
Hegarty on Advertising, John Hegarty, Thames &
Hudson, £16.95
Rewards for bravery
ALLYSON STEWART-ALLEN
SHAUN SMITH and Andy Milligan’s latest book, Bold:
How to Be Brave in Business and Win, follows the
successful format of many business books: get a
range of corporate leaders to tell you how they do
it so the rest of us can replicate their DNA.
The book is easy to read, with each chapter
organised as a mini case-study of an international
B2B or B2C champion applying bold ideas to
engender customer, staff, supplier and overall
loyalty to a memorable brand relationship. URLs
are sprinkled throughout as useful signposts to
more information on the concepts or companies.
Companies studied include Virgin Galactic,
JCB, Burberry, O2, Zappos.com, WWF, with a
range of leaders interviewed. While most carry
typical job titles – managing director, marketing
director, CEO, founder – a few are hilarious such
as Geek Squad’s minister of propaganda.
While the book gives us in its penultimate
chapter the what, why and who for ‘bold’ business,
what’s missing is the how. Knowing that the
authors are in the consultancy business, clearly
those who complete the final chapter’s 40-item
‘Bold practice survey’ can get Shaun and Andy to
help with the execution of their bold plans along
54
54 books.indd 54
the lines of several categories including: keep the
main thing the main thing; demonstrate zealous
leadership; dramatise the customer experience; be
in pursuit of ‘wow’. The book is also embedded
in an iPad app, claimed by the authors to be a
publishing first
Hopefully, that execution of this book’s ideas
will be led by more than just the marketing
function since being bold and doing right by the
customer requires a joined-up organisation, a
strategy and a culture that encourage risk-taking
and, one assumes, values the customer. Perhaps
we’ll see the British tabloid newspapers applying
this flavour of bold which would perhaps
contribute to their long-term sustainability, an
implied lesson of the book.
As my former professor Peter Drucker is
meant to have said: ‘Culture eats strategy for
breakfast.’ Let’s hope Shaun and Andy’s next
book (Bold 2?) gives us more specifics on how to
do it simply and profitably. ■
Bold: How to Be Brave in Business and Win,
Shaun Smith and Andy Milligan, Kogan Page,
£16.99
Market Leader Quarter 4, 2011
8/24/2011 15:57:52
B E ST I N B R I E F
BOOK REVIEWS
Round-up of inspirational titles
JOHN KEARON
OVER THE past decade we’ve seen many books that
challenge in one way or another the conventional
notions of what motivates us and how we make
decisions. These are the five that inspired me most,
together with the impact they’ve had on me.
2010 Obliquity: Why Our Goals Are Best Achieved
Indirectly by John Kay. Impact: Never forget
happy customers always precede happy investors.
There are some things in life that cannot be
pursued directly, like happiness. Happiness is the
consequence of other things like a rewarding job,
family, hobby etc. Profits are the same. Do not
manage your business for shareholder value but
do something you’re passionate about. Delight
your customers and profits will follow.
2010 Drive: The Surprising Truth About
What Motivates Us by Daniel H Pink. Impact:
Inspiration to make sure BrainJuicer is a juicy
place to work. Most jobs are a hangover from
the Industrial Revolution where we bribe people
to do dull work. In the 21st century, jobs should
allow people to do something they’re passionate
about, providing them with the mastery and
autonomy to do it well.
2005 Stumbling on Happiness by Daniel Gilbert.
Impact: Challenges everything market research
(MR) thought it knew about how people make
choices. It shatters deeply held convictions
about how your own mind works, and about
happiness. The book has become our inspiration
for translating breakthroughs in behavioural
economics and psychology into MR tools that
better understand and predict human behaviour.
2004 The Wisdom of Crowds: Why the Many Are
Smarter than the Few by James Surowiecki. Impact:
The inspiration for challenging 80 years of MR
dogma. If people in a large, diverse crowd are asked
their opinion, and those opinions are aggregated,
they will be consistently more accurate than experts
or scientifically sampled audiences. Six years
and 500 head-to-head experiments later, we’ve
confirmed that a crowd buying and selling shares
in ‘ideas’ will be as accurate, more discriminating
and better able to spot breakthrough ideas, than
classic research approaches.
2003 Emotions Revealed: Understanding Faces and
Feelings by Paul Ekman. Impact: The inspiration
for exhorting brands to get emotional about
advertising. There are seven universal emotions
we recognise in people’s faces. Ekman’s work is
used in the US in airport screening. We used it to
create MR’s first universal measure of emotions
and have spent the past five years proving that
the degree to which an advert moves people
emotionally is a better predictor of effectiveness
than traditional persuasion-based metrics. ■
If society is broken, can brands fix it?
MERRY BASKIN
IN 1971, Stephen King’s definitive essay – ‘What
is a brand?’ – described the role of the brand as
providing reliability and guaranteeing quality in
an uncertain world. He puts Andrex’s spectacular
growth in market share down to the fact that it ‘has
been formed into a brand that is valued highly by
consumers’. He goes on to explain how marketing
has created this added value.
Fast-forward 40 years, and buzzwords today
include ‘integration’, ‘behavioural economics’,
‘social media’, ‘engagement’ and ‘sustainability’.
This book is focused on the latter two, about
how trusted brands are (still) highly valued by
customers. This is a stimulating (if pedagogical)
read about the role that valued brands can, and
conceivably should, play in making lifestyles more
sustainable. It is a well-considered perspective on
the dodgy ground brands stand on in championing
sustainability. Apparently, 98% of green claims
made by 2,200 US products in 2008 were false,
misleading or exaggerated. This isn’t sustainable
under any definition of the term, but the
opportunity for brands remains to take a proactive,
meaningful and enduring role in developing a
better (healthier, happier) consumer society.
Market Leader Quarter 4, 2011
54 books.indd 55
Building high ‘social capital’ is a term you
will read frequently in this book. The authors
believe this should be the primary focus of
successful brand strategies, over and above
mere sustainability. Social capital is defined as
‘the strength and inherent value in our societies
through qualities such as dialogue, shared thinking
and widespread trust’ and, guess what, these are
the very values deployed by any successful brand
engaging with consumers.
The premise that the disintegration of social
capital (‘trust’) lies at the root of society’s problems
points up the role for socially valued brands:
to deliver imaginative, compelling ideas that
bring people together. This has been facilitated
by the explosion of social media channels that
are changing the way communities connect and
interact with each other. An idea whose time has
come perhaps. The premise of Brand Valued is a
worthy and interesting addition to the canon and
provides some answers to the question: ‘What
should the brand be in society today?’ ■
Brand Valued by Guy Champniss and Fernando
Rodés Vilà, John Wiley & Sons Ltd, £19.99
55
8/24/2011 15:57:54
speaKer’s corner
keith lucas
Think before you link...
What does the man who plays a Steinway
Keith Lucas
looks at the
dangers of
alienating
consumers with
inappropriate
product tie-ins
56 56 speakers corner.indd 56
Concert Grand drive to the concert? Would
you be surprised if it were a shiny black BMW
7-Series? Probably not. Now, what about the
driver stepping out of his Bentley Continental,
what do you suppose he’s wearing on his wrist? A
large and impressive-looking Breitling perhaps?
Some brands seem made for each other, and
mutually reinforcing shared values seems natural.
Others leave you wondering just what they were
thinking. Can anyone, for example, make any
sense of the ‘Aston Martin Edition’ of the ‘Nike
Hyperdunk Kobe Bryant’ trainer? When Lady
Gaga (pro-gay pop star) signed an exclusive tie-in
with Target (US traditional values retailer) it
seemed bizarre (even for Lady Gaga). Target’s
customers were as outraged as her fans. Had
she sold out? ‘I did it to reform them,’ she later
taunted, after the whole charade bit the dust.
Image makers make mIstakes
No one, it seems, is above making brand
miscalculations. Branding titans Coca-Cola
(ubiquitous American soft drinks) and L’Oréal
(sassy French haircare and cosmetics) are each
masters within their respective categories, but
when they got together to concoct an improbablesounding ‘nutraceutical’ drink called Lumaé
(which sounds disturbingly like a potion from a
Harry Potter story), audiences for both brands
assumed it must be some kind of elaborate hoax.
Problems generally arise when rational analyses,
based on objective measures (such as audience
correlation data), are allowed to override an
intuitive sense of what feels right for the brands
in question.
David Ogilvy famously noted that brands
are defined not only by their constituent parts
(product, packaging, logo, advertising, etc) but by
the people with whom they are associated. Brand
stereotypes can be enduring and persistent. By
way of illustration imagine, if you will, a young
woman, dressed in a blue anorak, jeans and slip-on
shoes, drinking a coffee outside a café, with a dog
sitting at her feet.
Now, what if I told you that the woman in
question was actually wearing a Barbour quilted
jacket, Armani jeans and Gucci loafers and that
she was drinking a macchiato outside Patisserie
Valérie in Chelsea with a black labrador at her
feet. I suspect you have a rather more focused
picture in your mind’s eye.
What if I said that she was wearing an FCUK
parka, Bench jeans and Adidas slip-on trainers and
that she was drinking a latte outside Wimpy in
Romford with a Staffordshire Bull Terrier at her
feet, you might have another, similarly focused,
but quite different image in mind.
In both illustrations the essential, objective,
facts remained identical but the brands (including
the place name and dog breed) are enough to
change the mental picture and the inferred
lifestyle of the young woman.
Would you sense the dissonance if I told you
that the first woman was wearing ‘Intimately
Beckham’ perfume and that her favourite drink
was a Bacardi Breezer? Or that the second was
wearing ‘24 Faubourg’ by Hermès and her
favourite tipple was Pimm’s?
Of course, such a vividly polarised image
makes it relatively easy to spot when
something simply doesn’t fit; perhaps because
it overtly links the brand with the personality
of its users. Unfortunately, many classically
trained marketers often fail to take account of
such apparently ephemeral sensibilities when
signing-up brand partnerships, focusing instead
on a theoretical overlap of target audience
demographics.
Of course, some brand partnerships will be
less critical than others; after all, either of our
Market Leader Quarter4,2011
8/24/2011 16:00:00
speaKer’s corner
keith lucas
Problems generally arise
when rational analyses,
based on objective
measures (such as audience
correlation data) are allowed
to override an intuitive sense
of what feels right for the
brands in question
caricatures might drive a Mini Cooper, carry
a Visa card or use an iPhone. But an assiduous
brand owner will not leave this to chance.
Marketers considering entering a partnership
between their brand and another (or thinking
about incorporating a ‘brand inside’ their own –
such as Intel, Bosch, Pininfarina, etc) should ask
themselves if they sense an instinctive emotional
fit between the audiences of the two brands. If
they can’t decide, then perhaps they ought to get
to know their brand better.
ConsIder the bIgger pICture
There are ways in which any brand’s distinctive
emotional values can be teased out and captured
for future reference. Whatever you do, don’t
rely on traditional audience demographics. For
example, if you think your brand appeals to ABC1
females, aged 20 to 35, living in London, earning
£30k+, who are Facebook users and listen to
Capital FM, think again. Both women described
earlier could fulfil such criteria and if one is a
good fit for your brand, there is a reasonable
chance the other may not be.
Ultimately, we should remember that brands do
behave very much like people. We get on best with
those who understand us and reflect our values
Market Leader Quarter4,2011
56 speakers corner.indd 57
(or sometimes the values to which we, perhaps
secretly, aspire) and as the relationship grows so
do trust and loyalty.
But when a friend suddenly acts out of character
or announces a commitment to a third party,
who is conspicuously unlike us, we can feel
angry, confused, even betrayed. And that is how
customers can feel when a brand they thought
they knew behaves out of character and breaches
their trust.
The picture broadens when we appreciate
that brands are not the preserve of consumer
goods marketing, they are also built around
individuals, places and political parties, among
many other things.
Consider, for instance, how passionately
many Liberal Democrat supporters felt, perhaps
irrationally, when their party appeared to have
compromised its essential values by joining a
coalition with the Conservative party.
However compelling the strategic rationale,
many supporters felt betrayed and, as a result, the
party was punished at the earliest opportunity; its
share of the vote collapsing from 17% to just 4%
in less than a year, resulting in an ignominious fall
from second to sixth place.
Now, much of this is to do with the software
of communications rather than the hardware of
strategy and decision-making, but politicians seem
no less guilty than marketers when it comes to
understanding such ephemeral sensibilities.
To parody an old TV commercial: think before
you link before you dive. n
Keith Lucas is CEO at Lucasbrand
[email protected]
57
8/24/2011 16:00:00
t h e L ast wo r d
rory sutherland
Would you ask someone
to give up their seat?
If I were to mention the Milgram experiment, most
rory sutherland
describes
how potential
embarrassment is
an underestimated
force in marketing
58 58 last word.indd 58
people reading this would think of the electric
shock experiments on obedience and authority
conducted in 1961. Less well-known, however, but
almost as interesting, were a series of experiments
from the 1970s, in which he asked his students
to travel around on the New York subway asking
strangers to surrender their seats.
In the end the experiment revealed you could
get up to 68% of people to give up their seat when
asked. But far more interesting was the effect the
experiment had on his students.
When proposed to one of his graduate classes,
they refused. Finally, one student, Ira Goodman,
volunteered to try it with a partner. But instead
of coming back after 20 trials as he had promised,
the pair returned with only 14. When Dr Milgram
asked what had happened, he said that it was just
too emotionally painful to go through with it.
Belittling his students’ fears, Dr Milgram set
out on his own. But when he approached his first
seated passenger, he gagged. ‘The words seemed
lodged in my trachea and would simply not emerge,’
he confessed. In some instances, other people
attempting the experiment were offered seats
without uttering a word, since the act of summoning
up courage to ask made them appear physically ill.
These findings seem to support the belief that we
are social animals to our core. But, even more, they
support a comment Dr Nick Southgate made to the
effect that the fear of mild social embarrassment is
one of the most underestimated forces in marketing.
So, of all the marketing benefits of the internet,
one of the most significant (and least celebrated)
is that it enables customers to engage in complex
interactions without fear of the many social pitfalls
you encounter when you deal with fellow humans:
the freedom to ask questions without the risk of
looking stupid; to chase low prices without the risk
of looking mean; to act like a demanding customer
without the risk of looking like a prat.
Imagine, for a moment, the last time you booked
travel online. You may have investigated the prices
of perhaps 17 flights on four different airlines. Now
imagine the same interrogation performed over
the telephone or face to face with a travel agent.
After investigating perhaps three possibilities, sheer
awkwardness would prevent us asking after a fourth.
Or imagine the question: ‘How much is it for
a larger room or a suite?’ Simply by asking this
question, we have become a hostage to the hotelier.
We can of course say: ‘No, at £900 a night, the
suite is a bit pricey, I’ll stick with a standard room.’
But only at the cost – viscerally felt – of a minor
loss of self-respect. Online, however, you can ask
the cost of the Presidential Suite and risk not a
shred of embarrassment.
If you doubt this, ask yourself how many times
you have bought something even after discovering
at the till it is far more expensive than you thought,
simply to avoid the mild discomfort of handing it
back. (One of my daughters, when aged three, owed
her adored $150 cashmere cardigan to this effect.)
The strong feelings evoked in all of us when we
deal with other people can make or break products
– some great ideas that fail because they make
the user feel a little weird. Yet because they are
products of our unconscious minds, these dangers
may not emerge in conventional research.
When working for easyJet, I suggested that
Speedy Boarding would work best if those who
had paid to board in advance were given an orange
hat visibly to mark them out from everyone else.
Experience suggests I was right – as things stand,
priority boarding on low-cost airlines is a social
nightmare occasioned by the fear of being thought
to be a queue-jumper, even when you have paid £15
specifically to jump the queue.
With hotels, I have long recommended they
abandon the practice of insisting on carrying your
luggage to your room. People generally feel uneasy
about losing sight of their luggage, yet refusing the
offer makes you feel like a crank or a neurotic.
But the greatest source of personal social
unease in any sales environment must be the car
dealership. What should be a fun visit is turned into
a terrifying experience through fear of unwanted,
pressurising human contact.
There are, after all, two sales processes in buying
a car. The act of being sold a car is one – but, more
important perhaps, is the more private process of
selling the purchase to yourself. Unwanted attention
generally prevents the second stage from taking
place. Car dealerships could perhaps learn from
my frivolous easyJet suggestion – supplying a range
of brightly coloured hats at the entrance, on the
understanding that nobody wearing one of these hats
will be approached under any circumstances. n
Rory Sutherland is executive creative director and
vice-chairman of OgilvyOne London and Ogilvy
Group UK. [email protected]
Market Leader Quarter4,2011
8/24/2011 14:36:10
market leader q3 2011 DATAMINE ad.indd 1
8/25/2011 17:00:04
market leader q3 2011 DATAMINE ad.indd 1
8/22/2011 17:49:31

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