Beyond the Buzz with David Stanley Marketing and Management Essentials To Grow Your Business

It’s hard to see the picture when you are inside the frame.

It’s easy for us to get wrapped up in our own perspective and think that we are communicating clearly. Scott Faircloth shared an amusing story about his six year old daughter’s “promotional” signage for her fashion show. He was kind enough to let me feature the sign here on the blog. Be sure to click this link to read his post. Scott brings out some excellent lessons that all marketers can apply. Here are a couple of additional thoughts for you to consider:

The Law of Unintended Consequences

The irony is that his daughter used some very sound marketing principles; certainly attention grabbing.  She would have likely pulled in a large crowd to her fashion show…just not the audience she wanted. You may think you are communicating a very clear marketing message, but what your audience is hearing is quite another.

Get an Objective Perspective Before Going Public

The daughter used a “plus sign” for the “and” which gave her sign an entirely different meaning. Before you send out a promotional message, take the time to have someone review it who can give you an “outside the frame” perspective. That extra step can be the difference between a positive ROI and a negative ROI. Little things do make a difference.

A big “Thank You” to Scott Faircloth for allowing me to share this story. Kids can be awesome teachers.

Consumer buying habits have changed. Nobody wants to pay full price anymore.

I heard this statement by a commentator on a CNBC yesterday. Then I get a marketing research newsletter by email summarizing a new study, entitled “Marketing to the Post-Recession Consumers,” by Decitica. The article states that the study “addresses the lasting effects of the recession in the way American consumers have internalized the recession experience. It’s particularly relevant in developing ‘positioning’ and marketing/merchandising/advertising strategies.” Sounds profound.  Here are some of the findings:

• The effects of the Great Recession on consumer behavior are so profound that many of the assumptions underpinning consumer segmentation are no longer valid; and
• Marketing strategies that do not fully recognize the diversity of consumers’ recession experiences won’t have the desired potency in the post-recession world.
• Many have accepted this radical change as the “new normal,” and not just a cyclical phenomenon.
• The recession has caused a profound, deep-rooted change in consumers’ spending habits in favor a more restrained approach.

There are four distinct consumer segments emerging from the recession according to the study, identified as:

• Steadfast Frugalists,
• Involuntary Penny-Pinchers,
• Pragmatic Spenders and
• Apathetic Materialists.

Price has become the dominant consideration in the purchase of all kinds of products, concludes the study. Of considerable significance is the fact that half of Pragmatic Spenders are looking at price before other features and one-third say that brand name products are not worth the extra price, heralding what will likely be a long uphill struggle by marketers to shift the focus away from price, says the report.

Don’t Bet The Farm On The Reported Consumer Behavior Change

There have been similar studies to this one reported recently. Taken at face value, it looks like its time for a monumental shift in your marketing approach. Be careful – take a moment to get some perspective before you rush to change your marketing plan based on this type of research.

Depending on research that asks people what they think they will do in the future is very dangerous to your brand. You cannot predict what people are going to do based on what they say. You can only measure what they have done. People will give you what they believe is an honest answer about what they think they will do, but they really don’t know until they are faced with the decision. It’s just human nature.

Study What People Actually Do

I’ve been fascinated by the studies which have found that people who change their lifestyle after a major health event like a heart attack often do change their behavior for a period of time, but the majority typically go back to their old behaviors as they move farther away from the crisis event.

There is no question that the folks that have been hit hard by the recession have made changes to their buying behavior. But is this really a long-term shift?

If you have ever spent time with people who went through the Great Depression, you’ve seen a frugality that has carried through for their entire lives. While the current recession has been hard on many people, especially the 10% that are currently unemployed, it’s not any where close to the experience of the Depression of the 1930’s. When the economy recovers, can we really be sure that consumer behaviors have permanently changed? Will price truly be the deciding factor?

Be Compelling

Going back to the quote we started with that people no longer want to pay full price. Have they ever wanted to pay full price? No! It’s not about price; it’s about perceived value. In the absence of a compelling reason to buy, price will win out. It’s called commoditization. All things being equal, price is the default.

Apple recently reported an increase of 47% in quarterly profits. Why? People are buying iPhones, iPods, and Macs. Apple doesn’t advertise discounts to sell its products. They create compelling product offerings.

Radio Shack, once thought to be on the brink of irrelevance, is gaining traction in the highly competitive consumer electronics industry by selling more expensive, and more lucrative, wireless products from a broad range of suppliers.

Casual dining chains have reportedly seen a significant decrease in sales and traffic, but not Chipotle. There are only three major items on Chipotle’s menu: burritos, tacos, and salads. In a U.S. News & World report article, Chipotle’s Secret Salsa, Founder and CEO Steve Ells sums up its business model in a single sentence: “Focus on just a few things, and do them better than anybody else.”

It’s too soon to know if consumer behavior is really shifting for the long-term. But it’s not too soon to improve how you do business. Lowering prices and cutting expenses is the easy thing to do. The harder work is creating a compelling product or service offering. Are you willing to do the hard work?

Nobody watches TV these days. Nobody listens to radio. Advertising doesn’t work any more. It’s all about social media and online connections.

If you spend any amount of time online today, you’ll run across these declarations over and over. But while the pundits have been prophesying, they’ve missed the reality of what people are actually doing.

The November 9, 2009 Research Brief from The Center for Media Research reports a Nielsen analysis of a media study conducted by the Council for Research Excellence. The study found that radio is the dominant audio device. Yes, the almost extinct radio is the most listened to audio device – even over the ever-popular iPod.

Here are some of the key findings reported in the blog post:

• 77% of adults are reached by broadcast radio on a daily basis, second only to television at 95%
• Web/Internet (excluding email) reached 64%, newspaper 35%, and magazines 27%

In deeper analysis of audio media titled “How U.S. Adults Use Radio and Other Forms of Audio” Nielsen found that:

• 90% of consumers listen to some form of audio media per day
• The 77% who listen to broadcast radio surpass the 37% who listen to CDs and tapes and the 12% who listen to portable audio devices.
• Almost 80% of those age 18 to 34 listening to broadcast radio in an average day
• Broadcast radio is the dominant form of audio media at home, work, and in the car (79.1% daily reach; 122 minutes daily among users)
• Audio media exposure has the highest reach among those with higher levels of education and income
• Broadcast radio reaches those aged 18-34 at rates equivalent to the general adult population

The emergence of portable audio devices like the iPod and other MP3 players has been considered a threat to traditional forms of audio. This study indicates that the new technology has had a positive effect on radio consumption. “Radio was found to have a higher reach (82%) among those who listen to portable audio devices, compared to the average reach for all audio consumers.”

Here are findings from the study for key “advertising-based” media platforms:

• Live television had the highest reach and daily usage among users (95.3%, 331 minutes)
• Broadcast radio (77.3% reach, 109 minutes)
• Web/Internet [excluding use of email] (63.7%, 77 minutes)
• Newspapers (34.6%, 41 minutes)
• Magazines (26.5%, 22 minutes)

Key takeaway: Turn on your buzz filter – pay attention to what people actually do, not what they say.

A web presence is important for almost every business. Social media is growing and will increasingly have a place in the marketing mix. For now though, social media has a lower ROI for most businesses due to the time constraints it takes to implement and maintain as well as limited audiences.

“Old media” is still a powerful medium to connect with customers. The key is making sure you’re brand message is relevant. Have the pundits distracted you, or have you been watching what people actually do?

It’s a rare occasion when visiting with a prospective client if they don’t bring up concerns about competing with the big boy companies. This is true in retail and service categories. Of course, the main issue always revolves around price. So is it possible for smaller companies to compete with the big boys? Short answer: YES!

Here are 3 keys for competing with the big boys:

1. Don’t Focus on Price

Competing on price makes the product or service a commodity game. Price will win if there are no other differentiators. Value is an over used word, but it simply means a customer perceiving a better solution. Changing your focus to product selection, expertise, and/or service provides big points of distinction and can represent true value. (You don’t have to have all three to compete.)

I have a client in the home improvement business. The company has to compete against big box stores like Lowe’s and Home Depot. Third-party surveys conducted at the end of each project often indicate that my client had the highest bid, yet they still got the business. Why? Because they gave the homeowners confidence with the premium product and service they provide.

Another client is a specialty shoe retailer licensee. Unfortunately for my client, the shoe manufacturer sells under the same brand name to retailers of all sizes. But, my client is winning because he offer’s a deeper selection of styles, sizes, and widths. He also has fit experts in the store. We have never advertised a sale in the 7 years he’s been open. (What retailer do you know that can say that?) The results? He has had consistent sales increases each year and has one of the highest profit margins among his peer group.

2. Recognize That Little Things Can Win The Battle

Recently, a screw came out of an expensive pair of sunglasses I own. Consequently, the lens fell out. I looked in the Yellow Pages for optical companies that mentioned frame repair. None of the chain names mentioned the service, but a local company did. I went to the local company. They fixed the glasses while I waited and didn’t charge me a dime. Guess where I’m going when I need glasses? Guess where I’m telling people to go when I hear them talking about needing eyewear or contacts?

I wrote in an earlier blog post of how a hotel employee went the extra mile and purchased a Diet Coke for my client when the catering division ran out. That simple action along with an overall customer-focused experience we had during our meeting have put them at the top of the list to host the next meeting.

3. Be A Better You

I was fortunate a few years ago to work on a consulting project with Randy Curtis, a former VP of Creative and Media at Wal-Mart. Randy’s advice to businesses that had to compete against Wal-Mart, or any big chain, was to “be a better you.”

It sounds simplistic, but the advice is right on. There are plenty of opportunities for smaller business to compete with big boys. The key is to focus on what you’re good at, find points of differentiation, and build relationships. Product depth, personalized service, and expertise are great places to start. Again, you don’t have to have all three stand out in the marketplace to compete with the big boys and grow your business.

The question becomes do you know who you are? Answer that question, stay focused on what you can control, and don’t worry about the big boys. You’ll sleep better and make more money.

Who would’ve believed it? Despite the growth of online sales and all the buzz over social media, the lowly catalog remains a key marketing tool for many businesses. Why? Because it still works.

Jeffrey Ball, The Wall Street Journal’s environment editor, wrote an article dealing with environmental issues involved in creating and mailing catalogs. What I found really interesting is the data presented in the article that indicates how effective catalogs continue to be.

Surprising facts?

The article presents some interesting facts from the latest survey by the Direct Marketing Association of its members.

Among retailers who rely mainly on direct sales, 62% say their biggest revenue generator is the paper catalog (from the latest survey by the Direct Marketing Association). Only a fifth of those retailers said they draw their biggest sales from their websites.

That is why virtually no one expects the mail-order catalog to go away – even though only 1.3% of those catalogs generated a sale, the survey found.

The “old” promotes the “new”

Of course the U.S. Postal Service is concerned about any efforts that would cause a decline in the catalog mailings because advertising mail helps pay for universal mail in America.

To protect its catalog revenue amid the recession, the post office recently hired a consultant to conduct a study that concluded that consumers who received catalogs from a retailer spent 28% more on that retailer’s Web site than those who didn’t get a catalog. “The more often you mail,” the study said, “the more sales you could see.”

Beware of hype – Study actual behavior

We’re paying the price for the recent real estate bubble – prices of real estate were never going down, “it’s a new world.” Prior to that, we dealt with the aftermath of the Internet bubble – “it’s a new economy.”

If you listen to the current buzz, you will only do business online and your marketing through social media. Beware of buzz. You’ve got to pay attention to what people actually do. People research online, yet still go to a bricks and mortar store to make purchases. People still like picking up catalogs and physically looking through them before going online to buy.

Advertising is not dead. “They” say radio is dead. I’ve got multiple clients growing their business in this recession with radio. The “old” media still works and helps drive the online experience. The key is understanding the strengths and weaknesses of each type of media and utilizing them correctly.

The Internet and social medial will continue to grow in their marketing role. I recommend having a website to every client I have. Just keep everything in perspective and don’t pour your dollars into the latest buzz.

Stay focused on making your brand relevant to your customer. Then you’ll find that “old” and “new” marketing both work just fine.

Fine Print

There was a lot of buzz last week over the FTC’s new guidelines for endorsements and testimonials. Reviews are mixed, but a big positive in the new guidelines is eliminating the “results not typical” disclaimer many businesses use.

You’ve seen the diet ads featuring a celebrity or consumer making an amazing weight loss claim and then use the disclaimer “results not typical” in fine print. It’s the kind of claim that’s been giving advertising a bad image ever since advertising began. Now, if they use such testimonials, they will have to disclose the results that consumers can reasonably expect. Wow, now they have to be real.

Don’t Use Mail-In Rebates Either

Mail-in rebates aren’t covered in the new FTC guidelines, and they shouldn’t be. They’re still deceptive. You see this big ad for a low price on something, and then find the mail-in rebate in fine print. The businesses that offer these know that a certain number of people will forget, and they make it cumbersome for customers to file for the rebate to help discourage redemption. That’s irritating and no way to build customer loyalty. Either offer a discount or don’t.

A couple of weeks ago it was time to get new cell phones for my sons. We went to the AT&T Store. The boys found the phones they wanted. The price on the sign made the phone look really affordable. The boys found the phones they wanted. The price on the sign made the phone look really affordable. Then came the fine print: with mail in rebate.

The saving grace in this situation that the sales person was kind enough to print a copy of the customer receipt and peal off the original UPC code that was required. Basically, he stapled everything together for me so all I had to do was mail it in. Outstanding service by him, but AT&T gets a doofus grade for making the price dependent on the mail-in rebate.

Make An Offer And Stand Behind It

You don’t have to make a huckster claim to get attention and cause people do want to do business with you. Make an offer that means something to the customer and back it up.

I have a client in the home improvement business. One of their manufacturers has a new product with a 15 year warranty, except it’s not a “true” 15 years. The warranty is filled with fine print. It’s really a pro-rated warranty that doesn’t sound so good when you read all the way through it. The lawyers are happy, but the customers won’t be. The thing is that it’s an excellent product. It would stand-up for the 15 years in more cases than not. They’re just running scared.

Bottom line: if you have to resort to gimmicks, you’ve got nothing. Find ways to be remarkable to your customers without hiding behind fine print. You’re bottom line will thank you and your customers will too.

Marty Neumeier, author of The Brand Gap, shares some great insights with a presentation on Slideshare. One slide that really caught my eye was the “focus test” slide. I discussed the importance of focus here. These three questions provide the foundation of focus to that will allow you to establish and grow your brand.

The Focus Test

1. Who are you?

2. What do you do?

3. Why does it matter?

Three simple questions: simple, but certainly not simplistic. If you want to grow your brand, you’ve got to have unambiguous answers to these three questions.

Who are you? What are you passionate about? Why are you in business? Passion is the fuel needed to drive success. If you’re in business just to be in business, you will not build a strong brand. Without passion and the focus that comes from it, you’re not going to withstand the competitive winds of the marketplace. You stand a real chance of being blown away. Do you want to build a sustainable business? Start by asking what gets you up in the morning?

What do you do? You need to clarify your reason for being: your core purpose. In their best selling book, Built to Last, Jim Collins and Jerry Porras define “core purpose” as the fundamental reason your company exists beyond making money. What is the one thing that’s not going to change about your company? Without a core purpose, a customer has very little reason to do business with you. Think of the dot-com bust. So many businesses were created that had intriguing “fronts” but no real substance behind them. They were in business for stock options, but had no real passion behind them.

Why does it matter? This is where most businesses get tripped up, which stifles the growth of their brand. Why should a customer do business with you? “We make a great product? Yeah? That’s what every business says. “We really care about service? Prove it. You’ve got to have a compelling answer to this question to maximize your brand’s potential. Again, it’s a simple concept, but one I find most businesses struggling to answer. It’s easier to turn inward and think your brand is important. A brand is not what you say it is, a brand is what a customer says it is. You don’t own your brand, the customer does.

Are You Passing Focus Test?

If you want to maximize your brand’s potential, you’ve got to have concise answers to these three questions. Make answering these questions your top priority. If you’re struggling, ask someone you trust to help. This exercise is one of the most important steps you can take to create a lasting brand.

The first response for many businesses in a difficult economy is to slash the price of their product or service. It’s rarely a good decision for the short-term situation and definitely has negative repercussions for the long-term success of the brand.

Give Them a Reason to Buy

Brandweek featured an article earlier this year that reported the results of the Dollars & Consumer Sense 2009 study by Yankelovich. The findings indicate “consumers often have a negative reaction when they see the price slashed for their favorite product or service.” Here are some of the key findings reported in the article:

• 70% of the respondents to the poll said such cuts probably mean the brand was overpriced in the first place
• 62% said they assumed that the product was old and they were just trying to get rid of it
• 64% of those polled said they assumed the product is either extremely popular or a good value if they maintain their price

Saks Fifth Avenue, once a very prestigious retailer, adopted a discounting strategy. They retreated from that pretty quickly after they lost nearly $100 million in Q4. They’re adding a mix of lower priced items instead.

J. Walker Smith is quoted in the article saying, “People are suspicious if you significantly discount your brand. If you make significant changes in your value proposition it can confuse them. You have to give them reasons to buy stuff as opposed to just lowering prices as a knee jerk reaction to the economy.”

Why Do You Discount?

Because it’s easy! Dropping the price is a much easier than creating a more compelling reason for a customer to do business with you. The Brandweek article went on to say this…

A potentially more damning result of lower pricing is deflationary expectations, per Yankelovich. This means consumers are postponing purchases in anticipation of prices falling further. Up to 60 percent of those polled believed companies that cut prices would continue to do so. “People are sitting around waiting for more discounts. That’s a really bad thing,” says Smith. “The deflationary cycle is very difficult to remedy once it takes hold.”

Just look at what has happened to the all-important Christmas retail shopping season. Retailers have trained shoppers to wait for big discounts. Now they have the vicious cycle of starting discounting even earlier in the season. These retailers are freaking-out till the last minute not being sure what is going to happen. Living and dying by the discount is not a way to do business.

Are You Creating a Discount Habit?

Discounting is like a drug habit. It takes more and more of a discount to have a noticeable impact if you continually discount over time. Stores that rarely have a sale can see an increase in top line sales if they have a sale event, but to get the same effect for the next one, they have to increase the amount of the discount. Discounting reduces sales, profits, and erodes market share. Most importantly, it can damage your credibility.

There is a time and place for discounting like clearing seasonal merchandise. So stop and think before you have a knee jerk reaction and pull the discount trigger. Do the hard work first of creating a more compelling value proposition—a reason for people to do business with you. It’s the best way to build a strong brand.

The best way to increase your market share in a difficult economy is to zig while your competitors zag. “Zag” rhymes with “lag” and lagging is what many businesses will be doing that choose to follow the conventional wisdom during an economic downturn. It’s seems that the first thing that businesses do when the economy begins to sour is to start cutting prices, services, and people.

Business leaders should always be diligent in determining if their costs are too high or if they are overstaffed. However, a challenging economy should not be the sole driver for evaluating these business basics. You can easily cut your way to a decreased market share or out of business entirely.

Add Value, Resist Discounting

The Wall Street Journal recently featured an article on Panera Bread. It’s a good example of a zig while your competition zags strategy. While conventional industry wisdom has been to discount heavily, Panera has been able to persuade customers to pay premiums because it has been improving the quality of its food.

Ron Shaich, Panera Chief Executive is quoted in the article saying, “Most of the world seems to be focused on the Americans who are unemployed. We’re focused on the 90% that are still employed.” Now that’s a different perspective than we hear from most businesses. Is it working?

Here are the results so far:

• Second-quarter sales at stores opened at least one year were flat (better than many in the category who have been reporting negative same-store sales)
• Same-store sales at company owned stores rose 2.8% in the first 27 days of the current third quarter
• Panera is projecting growth this quarter in its operating profit, average customer check and number of transactions

The article also notes that many of the stores in the casual-dining category have found that discounting has not only hurt margins, but also failed to lure as many customers as hoped. Brinker International attempted a promotion at its Chili’s Grill & Bar chain where it offered smaller portions of its menu items for under $7. When reporting earnings this month, Brinker said its customers “didn’t consider the deal a good value.”

You can’t discount your way to increased market share. Try adding value instead.

Increase Your Advertising Spend

Advertising is one of the first things your competitors will cut when the economy takes a downturn. That makes it a great opportunity to gain market share by increasing your advertising budget. Media providers are more flexible on pricing because they are loosing business. The old adage of “out of sight, out of mind” applies here. By staying in front of customers when your competitors go “dark” allows you to stay in their mind and keep a positive perception of your business going.

Paul Polman recently became CEO of Unilver, the No. 3 packaged-good retailer. During his second quarter as leader, the company achieved 4% organic sales growth and 2% volume growth that ended a recent streak of flat to negative. These results were better than the competition. An AdAge article quoted Mr. Poloman saying, “Unlike some of the competitive set, we have invested in [advertising and promotion] and spent behind our brands and innovation, and that has given us the growth.”

5 Steps You Can Take to Increase Your Market Share

1. Make sure you have products and services that people care about (good value proposition)
2. Resist discounting: find ways to add value like improving product quality and services
3. Make focusing on the customer a reality, not lip service
4. Increase your investment in advertising and marketing
5. Avoid creating layers of complexity—make it easy for people to do business with you

What are going to do to increase your market share? Are you going to zig or zag?

The goal of an effective advertising campaign should be to make the business the one the customer thinks of first and feels best about when their moment of need arises. Unfortunately, it seems that most of the advertising discussions today are focused on the need for “creative.” Often “creative” equals “clever.”

I scratch my head in amazement at some of the ads that win awards at major events. While the production value may be outstanding, the ad does nothing itself to cause a customer to think of that business first and feel best about it when their moment of need arises.

Simple is powerful. Laura Ries made a great statement in a recent blog post: “Powerful strategies are usually not very exciting. Driving for BMW. Reliability for Toyota. Cowboys for Marlboro.”

Ad Age just posted an interview with Jonathan Cahill, author of “Igniting the Brand: Strategies That Have Shot Brands to Success.” The title was “Key to Marketing in Complex Times: Simplicity.” One the conclusions featured in the interview is that “marketers and their agencies are trying so hard to devise strategies that they often look right past simple truths.” I would argue they are focusing on being creative.

One of the most effective ads I’ve ever done for a client was a radio spot for a home improvement company. It’s an industry known for having shysters and crooks. Building trust is critical to having long-term success in this industry. The owner serves as spokesperson and the opening line went like this: “We make mistakes. I wish we could say we didn’t, but that would not be the truth.” The ad went on say that they own up to their mistakes and what they do to make it right with the customer.

Why did this ad work so well? It was authentic. It was real. It acknowledged what people already knew. In short, it was simple.

There is a place for clever, funny and other “creative” in ads, but be careful. A simple concept that connects with people will be much more powerful over the long haul. If you’ve got money to flush down the toilet, by all means, go for “creative” ads. If you want ads that ring the cash register, give “simple” a try.