There’s one skill that as business leaders we’re going to need now more than ever before ... COMMUNICATION.
I’m sure you’ve been communicating much more than normal throughout the entire crisis, but that’s got to continue. Your communication needs to be wholly honest, and share with people exactly the situation you and the organisation finds itself in, because we’re all in uncharted waters.
Number one priority has to be your employees. You need to be sharing with them very regularly, honestly exactly what’s going on.
All of us throughout these last months have suffered from different levels of anxiety. Your staff have been anxious about catching the COVID virus. They have been anxious about their relatives and friends catching the virus. They have been anxious about their jobs. They have been anxious about the country. They have had all kinds of anxieties. It’s something we need to recognise, and it’s something that we need to be helping with as far as we’re able, whilst always keeping our focus on our organisation and taking it forward to the new bright future.
Say to them: “I don’t know what’s going to happen in the future. It’s a new world we find ourselves in. But I promise you that I’m going to be working my hardest to try and ensure that the business gets back to where it was and kicks forward from there. I promise you that I am going to keep you informed throughout this period, and I will be absolutely as honest with you as I can”
I would recommend that you use video and it needs to be you, the boss, they see. They deserve to hear directly from the horse’s mouth.
Have a look at this video of Badar Khan, the CEO of National Grid in the USA speaking to his employees about recent events in there.
I think it’s an excellent example of employee communication that we should all aspire to and I’m indebted to my good friend Michael Dodd for sharing it with me.
So, who is the next priority after employees to communicate to? It must be your customers. I would suggest you need to be talking to your customers in a way you never have done before - be honest with them also.
You may need to say to them, “I hope you’ll understand, but at the moment, we aspire to but may not be achieving the sort of service levels we used to achieve with you. Please bear with us. We are working very hard to get back to where we were”
Share with them honestly what’s going on, but also ask for their advice. People generally respond to being asked for advice.
Maybe, “We’re thinking about moving into this sector, changing the way we do things from this to this.” Maybe for example, it’s doing more online. “What do you think about that? I’d love to have a chat with you about your views on the direction that we should go in as a business. I would value that.”
I have a classic car that I work on and one of the companies that I buy from regularly online is Car Builder Solutions. I was impressed by this note from them recently - just being honest and keeping their customers in the picture.
Your communication doesn’t need to be complex. It just needs to be from the heart.
I suggest that you need to be communicating with them like never before. They are your lifeblood - so treat them as a member of your family!
Share with them what you're doing. Share with them things that they might find reason to feel optimistic about. If nothing else they will certainly look upon you more favourably than other of their customers.
You need to be sharing with them also exactly what’s going on. But most importantly, your strategy for the future, your optimism about what you believe you can achieve, how you’re going to change the organisation, maybe new markets, new products new ways of doing things - to be successful from here on.
Also what you want from now - and maybe in the future.
I can’t finish without reminding you of some of the things that Juanita and I talked about in our last newsletter:
There have been some markets, some sectors that have been irretrievably damaged through this period. There are big companies and organisations that have simply disappeared.
There’s a golden rule of business: “Sell to people who’ve got money”.
You need to find who they are - and they may not be the same people as before. There have been sectors and companies that have thrived through this period and are doing extremely well - focus on them.
By the way, Juanita and I have an ongoing list of the “winners” and “losers” here.
Sales & Marketing
We cannot emphasise this strongly enough:
What you and your organisation need now more than ever before are basic sales and marketing skills.
Your company needs to be knocking on both new and old doors and If you believe you or your people have not had the training they need on basic sales skills, get them that now. Invest in them. Invest in yourself, because that is what is needed now.
You need to get the business thriving again.
Finally, please keep smiling. The media, in my opinion, have simply been a disgrace throughout this entire period. They have been wholly negative about everything. They really haven’t helped individuals, organisations or nations move forward. We now need to be positive. We now need to be smiling.
A colleague of mine, Roger Martin-Fagg is an economist, regularly does economic forecasts, and rarely gets it wrong. Here is his latest which you’ll see is remarkably upbeat.
Some of this report is somewhat technical but even if you just read the headlines, it should make you feel better because we may just be coming out of this nightmare much faster than any of us think and be in a position where we can really kick on forward thereafter.
Please try and enjoy everyday. Please try and make sure every one of your employees, as far as possible, enjoy everyday!
The FMCG giant plans to invest more of its marketing spend on “communication that is explicitly purposeful” as part of its growth framework for the next few years.
By Sarah Vizard on Marketing Week
Unilever is doubling down on its investment in brand purpose, saying it is important for both the short- and long-term growth of its brands that “stand for more”.
The focus on brand purpose is one of five key growth fundamentals for the company as it looks to boost both its growth rate, which has hovered close to 3% over the past four years, and improve its profit margin.
The investment in brand purpose comes alongside work Unilever has done to measure how brand purpose is perceived by the consumer and whether people truly understand this at the point of purchase.
“[Brand purpose] is important for the short-term, but also to ensure our brands remain relevant for generations to come,” said Unilever’s CEO Alan Jope, speaking on an analyst call on30 January to discuss its annual results.
“We are investing more of our marketing spend on communications that are explicitly purposeful as we have extremely strong data on the link between both purposeful communication and short- and long-term growth.”
Jope said Unilever gets the “biggest bang for its buck” when it has a high-quality innovation and motivates people to buy through purpose-led brand communications. “Then we see a multiplier in the effectiveness of our spend, it doesn’t require more [investment],” he explained.
With that in mind, innovation is another area where Unilever wants to “step up its impact” to focus on new products that can drive growth at a total category level. That means Unilever will be more decisive on which innovations to prioritise, make faster decisions on whether to accelerate, pivot or kill projects, and reduce focus on smaller projects.
We are investing more of our marketing spend on communications that are explicitly purposeful.
Alan Jope, Unilever
At the moment, around a third of its innovations are successful, a third it walks away from and a third need a pivot to see if they can be successful. Jope said he is “happy with that ratio”.
“We really know after 100 days with a high level of certainty which are the winners we should back and where we should cut our losses quicker on something that is not working,” he added.
Unilever is also focusing on improving penetration, which it defines as the number of households buying a product in a given period and where there is a direct correlation between market share and growth. That means Unilever will be addressing the long-tail of buyers, rather than core, loyal customers.
“We need to build the mental and physical availability of our brands through improvements in the quality of our advertising and strength of distribution,” Jope explained.
The final two areas of focus are designing for channels and providing fuel for growth, with Unilever able to invest in its brands due to savings from initiatives such as zero-based budgeting and organisational restructures.
Those restructures include, for example, the creation of Unilever’s 38 digital hubs and content studios, as well as its data centres. While the company admits building these has come at a “huge cost”, it was still 30% cheaper than buying in the expertise from outside and means it is set-up for growth in the future.
“With these five growth fundamentals we are trying to lay out a very important growth lever for us – execution. This is the easiest growth to unlock, but requires a step up in areas like the quality of our advertising and distribution,” said Jope. “That is what the five growth fundamentals are all about.”
Unilever expects brand and marketing investment to “step up” this year, both as an absolute number and a percentage of its turnover. In 2019 it was up €70m (£59.2m) in terms of spend, but flat as a percentage as it finds efficiencies in marketing spend from new digital tools and “rigorous” tracking of effectiveness.
By: Jeroen Kraaijenbrink on Forbes
Strategy is a mess. I mean the way of thinking about strategy that we know from our textbooks and that is taught at MBA programs all over the world. It is the approach to strategy that is driven by missions and visions, relies heavily on external and internal analysis, is supported by numerous tools, and targets at formulating and implementing an inspiring strategy that will beat the competition over the next three years.
If you don't know what I mean, have a look at the most recent edition of Johnson, Scholes & Whittington's (2017) "Exploring Strategy: Text and Cases" and browse its contents. With over a million copies sold, it is one of the most popular strategy textbooks ever and has basically set the standard. As such, it provides a good idea of the dominant way of thinking about strategy.
The clearest indicator that strategy is a mess is the high failure rates reported in academic studies. Depending on which study you read, failure rates between 50 and 90 % are reported. So the range is wide. But even if a critical examination would cut this number in half, this failure rate is still extremely high and something we certainly wouldn’t accept from any other business process—or of anything else.
Another indicator that strategy is a mess is that the approach—as well as the field in general—is heavily criticized by many experts in business, consulting and academia. I'd like to single out one criticism because it is interesting due to its age. The approach above was already called "traditional" and "distorted" in 1984 (in a Long Range Planning article by Roy Wernham.) This is 35 years ago and the same year that the first edition of Johnson's textbook appeared. Ever since, similar criticisms have been voiced by numerous experts.
While slightly updated, the essence of the approach has remained pretty identical over the past decades. Furthermore, take a random alternative strategy textbook and you find basically the same contents. Of course, there are differences, but the canonical ideas of what business strategy is all about have remained remarkably stable over all those years.
This is interesting. It means we are stuck with an approach of which we know it doesn't work, but that we keep on promoting and teaching anyway. The main reason, I think, is that it is based on a set of myths about strategy that are so strong and convincing that we keep them alive, no matter what. The strength and broad acceptance of these myths make that we hardly dare to challenge them or look for alternative approaches.
Instead, we all do strategy as we are supposed to do and thereby perpetuate the myths.
To help break through the cycle, I will discuss in this series of articles the ten most important myths about strategy. They are:
The first three myths concern the essence of what strategy is all about. As I will argue in those articles, strategy is not about war, not about planning and foresight and not about achieving predefined goals and purposes. The next two myths concern the key characteristics that strategy is supposed to have: that it is high-level and generic and that it is simple and easy. I will explain why it is a mistake to believe this. Myths #6 through #9 concern who should make strategy and how it is made. Discussing these four myths will show that strategy needs to be made in a different way than we usually assume. Finally, myth #10 challenges the whole idea of strategy as a noun, the idea that organizations need a definable strategy that can be formulated and executed.
Along with the demystification of these ten myths, the next ten articles will sketch an alternative view to strategy that, so I hope and think, helps break the dogmatic insistence on the traditional strategy approach as we know it.
By Martin Zwilling on Forbes
How is it that only a few business leaders and entrepreneurs seem to drive exceptional results and disruptive innovation in this rapidly changing market economy (marketquake)? These few seem more adept at executing market and technology turns, not just incremental evolution. They consistently take bold steps to stay ahead of the curve, often contrary to conventional wisdom.
Steve Jobs of Apple may have been the most visible example of this ability to “see around the corner,” but others often mentioned include Richard Branson (Virgin Group), and Howard Schultz (Starbucks). Most of you could suggest one more, but not many.
While searching for some structure that could facilitate learning the process, I came across a recent book by G. Shawn Hunter, “Out Think,” which offers a step-by-step outline for executives to achieve this stage of creativity. It suggests that they need to shed outmoded management and organizational biases, to foster an atmosphere where disruptive innovation becomes the norm.
Here is my summary and interpretation of the ten processes that he outlines as key to driving the disruptive innovations that entrepreneurs and startups all dream about:
Exceptional innovation or “seeing around the corner” does not come from closing your eyes and jumping into the unknown. It comes from a focus on learning and following the processes proven by other great entrepreneurs and leaders. Even creativity alone is not enough to deliver real innovation, unless it is teamed with the tendency and tenacity to execute. How well are you executing on the drive to exceptional outcomes in your business?
By Gihan Perera
I sometimes go out to breakfast or lunch with my 20-year-old stepdaughter, Abbey. As soon as the food arrives, she – like many others of her generation – pulls out her smartphone, takes a photo, and shares it with her friends on social media (And, to her credit, she then puts away her phone for the rest of the meal).
Of course, knowing that I have a futurist sitting across the table from me, I’m always curious about her behaviour, so I ask what she’s doing. She recently told me that she’s stopped posting these photos on Snapchat, and has now gone back to sharing them on Instagram. Why? Because Instagram’s recent update made it more attractive to post there, and she and her friends have all made the switch.
Abbey and her friends are happy to keep using whatever works best, and they don’t complain about the constant changes to platforms, apps, and technology in general. In fact, it’s quite the opposite: They crave change, rather than resisting it.
How different this is from the way many people think in business!
What about you?
Do you love change or loathe it?
Do you embrace it as an opportunity or resist it as a threat?
Do you sigh and call on your reserves of resilience, or get excited and shout, “Bring it on!”?
Resilience is not enough.
We hear a lot about the importance of resilience, which is about bouncing back, standing up every time you fall down, and getting back on your feet after every setback. But the problem with only being resilient is that you end up being reactive. Even the most resilient person, team, or organisation is still at the mercy of what’s happening around them.
And let’s face it – it’s no fun being constantly knocked down! As good as you are at bouncing back, facing a constant barrage of punches eventually wears you down.
That’s why you need something more than resilience – for yourself, your team, and your organisation.
Instead of just being resilient, build change management into your strategy, so you thrive in chaos rather than being battered by it.
The best organisations are “antifragile”.
In 2012, author Nassim Nicholas Taleb introduced the word “Antifragile”, in his book of the same name. Something is antifragile when it thrives on chaos. In other words, far from just resisting change or recovering from it, it actively grows and thrives in a chaotic, ever-changing environment.
When it comes to managing stress, chaos, and an ever-changing business environment, there are four kinds of teams:
Which of these applies to you and your team?
Now is the perfect opportunity to set a new direction for your team: Be more antifragile.
What does this mean in practice?
Here are three things you can do to get started:
Since the acquisition of tech startup Dynamic Yield in March, McDonald’s has been rapidly building its tech capabilities to improve the customer experience and boost revenues.
By Molly Fleming, Marketing Week
A Happy Meal and AI might not be the most obvious pairing but 2019 has seen McDonald’s hit the headlines for its fast-paced investments in tech.
In March, it acquired online personalisation startup Dynamic Yield for more than £232.8m with the goal of creating a customisable drive-thru experience that could be tweaked to fit weather, traffic and popular items of the day.
This sparked a series of acquisitions, paving the way for what seems like the beginning of a journey for the iconic fast food chain to become the Amazon of food.
A month later, it bought a 9.9% stake in mobile software company Plexure in a deal valued at about £3.8m, according to reports. The New Zealand-based company already helps with McDonald’s mobile app but this surge of investment will see the chain have unprecedented access to Plexure’s new tech for its app.
If this wasn’t enough, in September it bought Apprente to bring voice technology to its drive-thrus. This purchase was combined with the creation of McD Tech Labs – a Silicon Valley-based tech hub headed up by Apprente’s co-founder Itamar Arel.
Tech Labs promises to be the hub of McDonald’s new tech empire. It is already expanding its team by hiring engineers, data scientists and other tech experts to ensure that McDonald’s doubles down on its tech innovations through continued research and development.
Why does McDonald’s need tech?
McDonald’s Velocity Growth Plan contains three key pillars: retain – keeping current customers; regain – recruiting lost customers; and convert – attracting new customers. Within these there are three key accelerators McDonald’s looks to in order to drive growth and stick to its three goals. Each has technology firmly at its centre.
First is ‘digital’, which is about re-shaping McDonald’s interactions with the customer at every touchpoint. Second is ‘delivery’ and offering it to customers; and lastly is ‘experience of the future’, which is about elevating the customer experience in the restaurants through technology.
When rooted in this broader picture, it is clear McDonald’s investments fit squarely in each key accelerator.
The truth is that McDonalds is making up for lost time. On a call to investors in July the CEO admitted: “We were keenly aware that the pace of change inside McDonald’s [was] being eclipsed by the pace of change outside our business.”
His comments reflect the fact that smaller fast food companies such as Five Guys are growing fast and adapting to changes in the fast food market. This, plus consumer trends towards healthier alternatives has meant that, although the giant is doing better than rivals in terms of revenue such as Yum Foods, which owns Taco Bell, Pizza Hut and KFC, it has dipped below analysts expectations.
McDonald’s global revenue was $5.4 bn this quarter compared to the $5.5 billion it expected. However, global same-store sales were up at 5.9% vs. 5.6% expected. In contrast, Yum Foods earnings were up by $1.31 bn vs. $1.28 bn expected while same-store sales: up 5% vs. 3.01% increase expected buoyed by KFC’s investment in plant-based burgers.
Alexa, would you like fries with that?
Fast-forward to the brand’s latest quarterly earnings and McDonald’s tech investments dominated analysts question – specifically how can McDonald’s ensure these investments pay off?
McDonald’s chief financial officer Kevin Ozan assured those listening that this was all about “setting ourselves up for sustainable long-term growth”.
He noted: “Our belief is those who aren’t investing in technology, at some point will be behind and will need to catch up. And we’d rather be a little bit ahead of the curve and spend the right amount that we think will drive future growth.”
To prove this, the business has been rolling the new technology out. Dynamic Yield’s service is now in use in more than 9,500 US drive-thrus, with full roll-out to nearly every US restaurant with an outdoor digital menu board expected by the end of the year.
Easterbrook explained: “The beauty of this is there is nothing the customer has to adjust to, they almost don’t know this experience is happening for them as we’ve got dynamic digital menu boards.
“And effectively as they start to place their order, the menu boards respond to that ordering process and therefore are more likely to suggest items a customer will want and less likely to show items that customers are less likely to want.”
Technology is not just about serving the customer, McDonald’s is also using AI to optimise its recruitment strategy. In September, McDonald’s launched its Apply Thru initiative in which owners of Amazon Alexa or Google Assistant devices can begin job applications using standard “Alexa” and “OK Google” voice commands.
McDonald’s has promised to continue to invest in digital technology, although it will not necessarily be in acquisitions. The next quarter will see it growing McDonald’s Tech Labs in order to harness acquisitions and grow R&D.
For the most part, changes to the customer experience will be tangible but incremental, although McDonald’s is testing out even more dramatic steps, like robotic fryers. McDonald’s is investing to ensure it is one-step ahead of the pace of change to make consumers lives easier and become the fastest fast food chain for the digital age.
By Erik Huberman - Entrepreneur.com
If you want your company to navigate change successfully, learn to thrive on uncertainty.
Even the big guys get it wrong sometimes: Microsoft has a rich history of promising big tech but failing to deliver -- a failing that has made audiences hesitant to take the tech giant at its word.
While Apple keeps its finger on the pulse of consumers, Microsoft often falls behind in translating innovative ideas (such as tablets and smartphones) to demand. Remember the Windows phone? What about Microsoft’s early tablets before the iPad blew everyone, including Microsoft, away?
Perhaps that software giant will turn the tide on its next consumer device; but if it wants to outsell Apple, it will need to evolve its strategy.
Whether you're a large or small company, you can’t maintain the status quo during periods of growth and expect things to work out. When it’s time to scale, you can either adapt quickly -- or watch the competition outmaneuver your outdated tactics.
Growing startups become entirely new companies.If you don’t adapt, your entire business could crumble.
When you hire your first employee, you'll see a big shift in how you work. Your second employee will be more of the same; and your third employee will change things again. When you get to eight, another shift will occur. At 16, you'll see yet another shift. When you double your revenue, another one will occur.
Every time you hit a new threshold, your business processes and culture can either evolve or stagnate. Evolution won’t happen on its own, though: You have to take charge of your own growth.
If you don’t keep your team updated, your people won’t know what to do with themselves. When your business model begins to hinder your profits, you can either double down on something you’ve outgrown or make the radical change necessary to keep pushing forward. The same is true of your marketing style and production methods: As your company scales, so must your processes.
How to know when it’s time to change.Tipping points don’t announce themselves. To adapt to change, you must understand that change is constant -- so your evolution must be constant, too.
Unfortunately, you can’t watch your peers go through change and use their notes to guide your strategy, because every company is different. You have to watch what’s happening within your company and understand which changes will address your current challenges.
Say your sales volume starts to skyrocket, but your customer satisfaction rates begin to dip. Do you need more customer service representatives or more people in order-fulfillment to ship packages? Only you know the answer.
As the leader of a growing startup, your job is more about managing the business than it is about selling or designing products. To scale sustainably and position your company to handle new growth, you must rethink how you anticipate and respond to change.
Prepare to adapt.For years, our company kept all employees on the phones, assuming that direct contact with clients was best. As it turned out, our creative people hated talking on the phone and weren’t very good at it. We thought we were brilliant, but we had actually created a situation where team members spent 33 percent of their time on a process that lost us clients and lowered our productivity. When we got bigger, we hired account managers, and everything became much smoother.
Follow these tips to avoid the unnecessary pains of scaling:
1. Build an organic plan -- but know it will change.
Draw out expectations for your revenue forecasts, profit expectations and business model, then extrapolate those numbers to predict the team needed to meet them. After that, check back on that plan every few months and adjust it to match the reality of your situation.
According to research in the Harvard Business Review, physically writing down a business plan increases the chance of its success by 16 percent. When my company received a buyout offer, I wrote down a plan for the next three years while I considered the option to sell. In the end, we didn’t sell, but a few years later, we had the exact team size we predicted -- plus an in-house lawyer, which along the way we'd discovered we needed.
2. Monitor growth costs against operating costs.
As you grow, working capital and marketing expenses outpace the lag on returns. When that happens, you have either too few people during your busy months or too many people during the slow ones. Keep an eye on those numbers to grow evenly.
Uneven growth can happen to anyone: Take, for instance, Crumbs Bake Shop, which invested in expansion -- until waning interest in cupcakes and the high cost of those physical stores forced the company to close all its locations. Avoid this fate yourself: Scale methodically.
3. Hire for culture and check in along the way.
When you scale quickly, sometimes you’ll take any warm body. Don’t sacrifice culture for immediate hires, though, or you’ll hurt your growth in the long run.
Facebook has purposely maintained its original culture, even after evolving from college startup to global empire. Netflix, too, follows the same key values it did when it made its money mailing DVDs in 2009.
4. Factor management into employee costs.
Managers cost more than entry-level employees. In people-heavy businesses, head count does not scale linearly. Keep at least one manager for roughly every seven skilled employees.
Make these hires ahead of time to save money. SHRM has reported that the average cost per hire is $4,129 and that the average position takes 42 days to fill. The faster you move, the more you save.
During our company's early days, I made 85 percent of our sales. We recognized the revenue cap that that created and spent nine months to hire and train an entire team of salespeople and marketers. Today, I’m responsible for only 3 percent of sales, and our team can scale with our needs.
Scaling can be scary, but that’s part of the fun. Embrace the unknown and plan for growth before it happens. Follow these tips to keep your company ahead of the game and to ensure that you drive your growth -- so that your growth doesn’t drive you.
Author: Gary Z. Bizzo
Originally published on Equities.com
For the past 60 or so years marketers have consistently tried to find the ultimate way to entice consumers to buy the products they are flogging.
The traditional marketing industry believed that people made buying decisions based on rational, conscious thought processes.
Science turned that fundamental belief on its head and has proven most decision-making happens at the subconscious level. The subliminal mind makes people decide one way or another. Neuroscience continues to research how to change our buying decisions.
What does this mean to the young marketing executive hired by the startup founder to have his product on the mind of everyone and to make his company successful?
It means an understanding of consumer behavior must take into account everything from the psychological reasons to purchase as well as the sociological and anthropological, and a lot more – phew!
So, what types of consumer behavior affect buyers in the shopping mall?
Programmed or routine purchases probably are at the top of a marketers mind. You know the product that you pick up as you speed through the drug store after a tough day at work. You needed toothpaste and grabbed the closest to the cart in the aisle. It doesn’t matter; toothpaste is all the same, right? It could also mean that the toothpaste you chose is always in that same spot on the shelf and it’s a no-brainer decision. You’ve had past experience with purchasing it and automatically make the decision to purchase again. Brand recognition, whether it’s just a familiar color or shape) plays a large part in routine response behavior.
Occasional purchases are limited decision-making ones. You need ice for the BBQ, you find it at the front of the store where you’d expect and the decision is made.
Complex decision-making product purchases are where marketers show their magic. What part of purchasing that car or a new laptop will be affected by emotion and/or rational thinking? Here’s where the psychological nuances, the belief systems and the attitudes come into play.
And then there’s most dangerous buying decision for the consumer – impulse buying. Impulse buying disrupts the normal decision making models in consumers' brains. Research suggests that emotions and feelings play a decisive role in purchasing, triggered by seeing the product or upon exposure to a well-crafted promotional message. Marketers and retailers tend to exploit these impulses that are tied to the basic want for instant gratification.
Impulse buying is based on emotion not reason and relies more on the merchandising of the product by the store rather than the manufacturer. They are the products on the end of an aisle in the store with 10% off or those inexpensive ‘stocking stuffers’ people seem to find everywhere running up to Christmas. Retailers rely on your unchecked impulses to spur sales.
Ok, so now that I’ve explained the types of behavior that go into buying a product let’s talk about the decisions and actions that complete the transaction. There’s about four of them:
How do marketing campaigns work? They know by consumer behavior how to motivate the buyer into putting money in your pocket. Blue suggests honesty, red is power, and positioning a product mid height on a shelf is more conducive to purchasing it (it also helps that it is at the average height for most people to easily reach). Marketers need to know how to motivate.
Perception is based on a feeling the product is exclusive; worth the money or not worth the effort. Evoking a feeling or emotion will sell every time. American Express has the most famous modern example of exclusivity in advertising with the tagline: “Membership has its privileges.” Rolls Royce has the dibs on most prestigious auto.
Learning to buy in a marketing campaign comes from Pavlov’s experiments. Consumers "learn" their buyer behavior through drives, cues, responses, and reinforcement. Drives are strong internal stimuli that create calls for action and the response to the drive is the action – to purchase.
A simple example is when people hear the ice cream truck music they run to the street to buy an icy treat. Just like Pavlov’s dog we learn to respond to a stimuli.
A campaign that offers an experiential feel to it will sell product. It is often called engagement marketing. I remember watching Felix Baumgartner‘s jump from a balloon in 2012 from an altitude of 128,000 ft. Called the ‘Stratos’ jump, it was sponsored by Red Bull. For a few seconds I felt that man’s plummet to earth and images of drinking Red Bull giving a person the power to do it rang in my head.
Through our daily activities, we build beliefs and attitudes that influence our buying behavior. A consumer's beliefs are descriptive thoughts that they have about something, while attitudes are a consumer's "relatively" consistent evaluations, feelings, and tendencies toward an object or idea. Changing a consumer's attitudes and beliefs usually will require us try to change many other perceptions and attitudes in other areas of the consumer's mind. Often it is easier to position a product into an existing attitude, than to fight against them and try to change them.
Marketers need to understand these beliefs and attitudes in order to best position their messaging in front of the target consumer. With this understanding they can understand how to launch focused messaging campaigns to change beliefs about our products and brands.
Economic conditions obviously affect consumer behavior. In 2008, in Vancouver, the lower end restaurants (sorry McDonalds) and the luxury restaurants seemed unaffected by the recession. Poorer people and rich people still ate at their usual haunts while the middle class tightened belts. I almost bought a beer distribution company in 2008 because while people were keeping investments close to their chest people still wanted to ‘drown their sorrows’ with beer. Deciding not to purchase it was probably good for my waistline.
Ok, personal preferences must come into the mix and there is often no accounting for taste but it is based on our preferences. Do you prefer toothpaste with a red label or a blue one? Do you like the white branding of Apple products in the Apple Store? Marketers are watching, listening and responding to what they perceive is your preference to a certain color, sound, feeling and more.
The biggest influence on consumer behavior is cultural and group influences. The latest shoe, dress, trend is based on others close to us promoting it. Ethnicity, cultural mores, geography also determine the buying patterns of consumers. Selecting the perfect spokesperson hinges on the culture that the campaign is targeting. India has cricket stars and America has basketball icons.
So, you’ve developed a product, hired great staff, you consider your startup ready for business then someone tells you about how consumer behavior is influenced by psychological, sociological and anthropological issues – what?