Category Archives: Uncategorized

Location, location, location…

Image representing iPhone as depicted in Crunc...
Staring at this instead of the shelf?

We’ve posted often about the importance of segmentation, that one size no longer fits all, etc.  But all that’s old hat now because there’s new stuff afoot.

What still holds true, however, is that around 70% of all purchasing decisions are made in store.  In fact, the new apps we discuss below help support that impulse adage.  Long the mantra for buying real estate, “Location, location, location”  has now also become a marketing buzzword.  

Recently, we’ve watched the popularity of in-store radio grow:  a very old medium that has been revitalized by innovative systems like VOXPOP (see 2/11 post) that not only time the message to the moment (and specific store), but also provide lift data post-promo. 

As they’ve long said about advertising:  50% of it is wasted…but which 50%?  Now, we’re closer to knowing.

We also know that with shopping/social mobile apps such as Foursquare, GroupOn, and others,  the ability to pinpoint exactly where customers are at any given time is going to become a key strategy. 

 There is an acronym for this:  LBS (location-based service) and you’re going to be hearing a lot more about it.  According to Applied Predictive Technology, LBS or mobile marketing is being  quickly adopted by major restaurant and retail chains.  

As an example, General Mills offers a two-for-one coupon for its cereals to the iPhone of a consumer standing in the middle of the aisle.  Another example is for drink deals broadcast to anyone walking within a block of a 7-Eleven.

The venture capital crowd has allegedly invested heavily in these LBS companies in expectation that these services will displace more traditional couponing channels, such as newspaper inserts.   The Mobile Marketing Association (MMA) also claims that consumer interest in mobile coupons continues to grow (but then, they have a vested interest here…)

Lest we abandon all oldies-but-goodies to climb onto this new bandwagon, let’s not forget that no single element a program makes.  The key to effective marketing is applying integrated tactics that work together to achieve maximum impact.

Just like with social media, all this input can quickly reach a saturation point with consumers.  They’ll just turn off their phones or simply ignore the texts.  On top of that, dealing with all this actionable stuff simply adds more time to to the shopping experience, and evidence points to the fact folks want to spend less — not more — time inside stores.

The benefit of  “old-fashioned” in-store audio, of course, is that shoppers can’t turn it off but they can tune it out if they wish.  It’s not an invasive technology but more of a subconscious influence.  Also, it doesn’t take time away from shelf surfing, which is something retailers need to look at.  More time staring at your iPhone = less time spending!

Importantly, LBS enthusiasts need to remember that whatever the hot new technology used to deliver the message is, they still need a compelling USP.  In fact, it needs to be even better than before because customers need to be driven to take immediate action. 

Manufacturers seem to want to control this new marketing technology themselves namely because they claim they can do it all in-house, with no need for agencies.  They’re wrong, of course, because there are few corporate suits (read:  brand managers) with the zany mind to do this well.  This means that the creative strategy part of the marketing plan has never been more important.

In summary: the message is the medium and, despite all the latest gizmos, will always be.

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Rewriting retail rules

Apple Computer
Temptation greater than Adam & Eve's fruit

Lately, we’ve been focusing on some of the new things that are making us look at marketing in a different way.  We’ve discussed social media, shopping apps, on-line gaming and auctions, plus the myriad ways marketers make money by using badly-disguised “tricks”.

Yet one thing missing here lately has been report of innovative bricks-and-mortar retailing.  Not surprising, as we read about the consistent quarterly downturn of majors such as Walmart, The Gap and so many others.

While savvy chains like Target, Tiffany, Costco, Publix — plus our frivolous favorite, Gumps — are doing well or just holding their own,  let’s admit it, many chains haven’t added any real “Oomph!” to their operations in a while.

But there is one company you really never thought of as a retailer which  is now making the corporate suits at the chains tremble, and that’s Apple.  From all trade reports, not since Adam and Eve has there been such excitement over an opening.

Ten years after its first Apple Store opened its door, the company has grown “faster than any retailer in history”, fawns a recent feature on USA Today, heralding the opening of their latest New York emporium.  With sales last quarter topping $ 3.2B — an increase of over 90% YTD — Apple is said to be rewriting the rules of retail. (Darn, and we were just learning them!)

What’s amazing is that this growth comes when the entire category (computer retailing) appears to be dying.  Witness the list of chains that have already shuttered all or some stores, or plan to:  Gateway, Circuit City, CompUSA, and Best Buy.  In contrast, Apple plans to add 40 new stores to their current total of 330, all expected to create the camp-outside-night-before-opening fervor they inspire in their fans.

To us, the Apple Store mystique is not entirely new.  We were already onto them way back on 8/24 when we posted about how fun they were.  After parting with beaucoup bucks for an iPad at one last year, well, we simply became groupies like the others…  

Not that we actually hang for hours at these stores, sitting at different terminals, writing a book (as apparently one customer did) or flirting with the quirky Genius Baristas (their “geek” sales team).  After all, we do have a business to run!

But we sure like to visit them.  The stores exude excitement and coolness, like a hot, stylin’ nightclub where you’re a VIP and from where you’ll never be bounced, and finally emerge, hours later, drunk on new tech.

Then, one day, not long ago, the iPad developed a serious problem:  the on/off switch stuck.  So we bundled the baby up and rushed it to the nearest Apple Store.  Like an efficient paramedic, a Genius Barista immediately came by, looked at it grimly and rushed it back-stage.  We feared the worst…

But it was just minutes later that the young Genius emerged with a brand, new iPad.  No muss, no fuss, no questions, and certainly no request for more money.  Could retail be any sweeter?!  

(Did we even bother to ask why the thing stuck in the first place?  The answer is an equivocal “No”.  We simply took the new unit and ran…)

The person responsible for this retailing nirvana is none other than former Target merchandiser-in-chief,  Ron Johnson.  Focusing on the the customer experience and sound assortment strategies that made Target a great place to shop, Johnson did what many said was impossible:  he turned a great computer-maker into a great retailer.

Marketers like to say:  “Well, we focus on our core competency, nothing else. ”  Heck, we’re guilty of that same sentiment.   But we admit we may be wrong here, as many apparently were about Apple. 

It’s not that they even had to go into retail.  Or, as though they weren’t already on top of their game with their numerous “iProducts” and now, the brand new, barrier-breaking iCloud.   And it’s not like Steve Jobs isn’t already a guru, if not a god, becoming more so with each re-appearance of his ravaged body at new product launches.  

It’s just that this is a company that decided to take total control of their brand.

That’s why Advertising Age just named Apple “Marketer of the Year”.   If they’re also named “Retailer of the Year”, well, then the rules really have to be rewritten.

Working it in store

supermarket 70774
Where impulse will get'cha

The proof is in the pudding, as the saying goes, and especially so when you are talking ROI for marketing programs.  We’ve posted often enough about the value of metrics and measurement, and nothing is quite as satisfying for a marketer than to see those sales needles jump in-store.

That’s because no matter how brilliant or elegant your marketing plan is, if it doesn’t play in Peoria (or wherever your target market is) then you’ve failed.  The ability to have it work in-store — where the rubber meets the road — is where it counts.

This is especially so when you consider that in-store marketing has recently surpassed the $18 billion mark and is projected to grow significantly in the next five years.  Regardless of the relevance and performance of  primary drivers (see last week’s post), over 70% of buying decisions are said to be made in-store .

Savvy retailers then partner with their vendors to ensure they are keeping a sharp eye on the results of their programs.  Unfortunately for most retailers, developing a program template that achieves reliable results is still a work in progress.  According to MarketingLab, most claim less than half of programs are successful, but as with much of media, the question is:  which half?

The chart below reflects the interesting results of  what promotions and merchandising activities seem to work best:

To us it’s not surprising that “Seasonal Programs” are the  most effective , with almost 30% of responses.  After all, if most shopping is done on impulse then “what’s hot now” is certainly a key motivator.  We would combine this with the “Short Term” stat because, again, it’s the now-or-never inpulse that drives sales.

Within the seasonal focus we would add themed promotions.  We’ve found that when you build an event and display around a well-executed theme — even ones as mundane as “Christmas in July” “Winter Wonderland”, “Fruitful Fall”, or even “Fiesta Days” –customers are drawn in by the visuals (retailtainment)  and the promise of a bargain.

When it comes to the second most effective in-store tactic being media-specific, again, we are not surprised.  Radio, especially, which does not require shoppers’ active attention and plays a strong subconscious influence, is the most cost-effective and easily-measurable.  

VOXPOP, a leading in-store media company, reports that over 40% of shoppers who listen to in-store radio are influenced to buy differently.  They also report 300%+  lifts from their campaigns.

Finally, the higher percentage of success with in-store as well as department-specific programs reinforces that a cohesive effort that goes across all store departments is the best.

SPECIAL SERIES-Post #5: Mastering Metrics

This is the fifth and final of a “back to basics” review series of the marketing process.  For series introduction, see 4/5 post.

We’ve often posted that being able to analyze and measure the effectiveness of a marketing program is critical.  We’ve also noted that industry experts say that about half of all advertising dollars spent is wasted:  the key is knowing which half (few do).  So, how do you know what works?

With most marketers today understandably concerned about keeping their jobs or clients, they may be loathe to actually find proof  their programs don’t work or have a negative ROI.  Yet knowing how to present metrics masterfully in this climate of fear can work to great competitive advantage. 

Every market researcher knows that it is not the actual study findings that count but how you present the numbers.  Statistics can be interpreted in numerous ways, and research firms are sure to present theirs in a manner that at least shows there is opportunity out there for their clients.  Or, at least they suggest a follow-up study to ensure they will be rehired…

There is also now the element of social media, where readily-available stats for websites, blogs and tweets are daily reminders of  direction.  Importantly, clients can easily access those too, so marketers are no longer the lone gatekeepers of metrics.  

In fact, the new social media metrics are a world unto themselves, with new lingo such as buzz rate (see post below re ambush marketing which beautifully illustrates this.  We’ll address the new social media metrics in a later post.  Remember:  this is a “back-to-basic” series…)

We’re also not going to address complicated econometrics and regression analyses here.  Leave those for the academicians or those pesky auditors.  

Then, there are clever analysis programs that come under the umbrella of  the “path to purchase” where each stage of the sales-actualization process is measured independently.  Good stuff for the big packaged goods guys, as many of the smaller marketers don’t have the time or tools to do this effectively.

Instead, below are some planning tools, plus analyses and metrics that  anyone can use to determine whether a marketing plan is delivering anything:

  • COST-PER-INCH ANALYSIS.  Perhaps one of our very favorites and a standard at PR agencies, it involves the counting of  total inches or minutes your product/company received in “free” publicity from press releases, feature stories, PSAs etc. sent distributed by you.  That is then coverted to actual dollars (based on the media’s highest card rate) to arrive at the savings from not actually buying that media.  Or, how we prefer to present it:  the value added to the program.  Works best if your program has no advertising component…
  • TOTAL IMPRESSIONS.  This is another one used often by PR agencies involving the addition of the total circulation, times the projected bonus readership (i.e. most  publications have what is termed “pass-along” readership).  Often marketers will call this IMPACT, using the standard equation of:  REACH + FREQUENCY = IMPACT.  This is one that only works with specific benchmarks (i.e.  you increase your goals each year).
  • COST PER STORE.  We kinda like this one if we are doing multi-store or chain programs where we can look at the store traffic count (# customers) and evaluate what it cost to post the POP, stage the demos or the promotional event. etc.   Dividing the cost of your marketing effort by the total store or traffic count can help determine which chains/stores deliver the best ROI.
  • CPU/CPM.  Standard measurement of media, the cost-per-unit  or cost-per-thousand (broadcast rate) is typically measured against sales gained via that media.  The goal is to show you spent mere cents or fractions thereof reaching your target audience. (the “which half of the ad dollars is wasted?” quandary…)  This is  traditional mass media measurement, slowing going by the wayside in the wake of social media…
  • COST PER CUSTOMER.  This is a common tool used by sales management, where the cost of servicing the customer via visits, phone calls, baseball tickets, etc.  is pitted against sales to him/her.  Then, typically strategies whether to up-sell, maintain or “divest” the customer are made. (The figure varies but most companies peg the average B2B sales call today at $500+).  Sales being a component of marketing, savvy marketers need to handle this delicately with the sales managers…
  • ACV.  We wrote about this recently:  how knowing the all-commodity volume of the market and chains you are targeting  makes clear sense before making a marketing investment.  Lots have been spent on only few,  just like some salespeople spend way too much time trying to sell widgets in Montana…(check out the state’s ACV.) Again, the key here is ensuring your efforts are in line with the potential of the market.
  • BDI/CDI.  Another potential-measurement tool is the Brand Development Index vs. Category Development Index.  This is a more complex matrix exercise where you plot, using sales data, the position of your product’s total category sales (all competitors, including you)  in the marketplace vs. your own product’s sales (your brand).  The resulting matrix illustrates whether the category is saturated or whether there is hope for your brand to grow.  More complicated, and deserves its own post, but suffice it to say that marketers should know about these tools even if they never (or pray they never) get to use them.

We hope you have found this small series of five posts helpful. (Selfishly, they will be part of a book by your blogger some time…time permitting)   Let us know if you would like some more of these series in the future and which topics are of special interest!

SPECIAL SERIES-Post #3: Retaining the Retailer

This is the third of a “back to basics” review series  of the marketing process.  For series introduction, see 4/5 post

With the average supermarket carrying around 45,000 SKUs that need to be sold during economic doldrums,  many retail chains today face an uphill battle.  Savvy marketers know that to ensure their own success they need to help retailers win the war.

In marketing there are two key strategies that work in tandem for an effective program:  push and pull.  The “push” is the call-to-action message via advertising, publicity and promotion.  The “pull” is the ability to draw interest:  people come to you because they see you have something of value to offer.

Retaining retail accounts is thus a pull strategy that ensures you sell your stuff.   By partnering up with your customers to deliver real-time information or tools valuable to them makes you an invaluable resource.  This way you retain your position on the short list of vendors:  no small stuff with today’s pressured buyers.

These are some of the strategies smart marketers use to ensure retailer loyalty:

  • DON’T SHORT.  Suppliers willing to sacrifice the long-term loyalty of a tried-&-true account for short-term profits from a new and exciting prospect often lose in the long run.  (See previous post about this)  Retailers today want to ensure consistent supplies at a fair price, regardless of market conditions.  Good retail partners will help ensure you also profit, but not at their expense.
  • POINT OUT PROBLEMS & SOLUTIONS.  Retailers who want to stay atop their game appreciate it when a vendor mentions that something is amiss at one of their stores,  be it bad quality, display, personnel, pricing. etc.   Although many get out to the stores to see  for themselves, the days of large retail merchandising teams canvassing all chain stores are over.  They need your help here.  But don’t just point out the problem:  provide a viable solution so your chain contact can be a hero.
  • BECOME CATEGORY CAPTAIN.  Per point above, since chains now lack personnel to oversee all store activities they count on suppliers to do that.  They also count on you to review sales data and make recommendations to increase category performance.  Seizing the moment by offering category management programs (carpe categoria?) that ensure your product delivers sales and profits makes you an invaluable partner.  Better yet, become a “category captain” by designing a plan for all products within your category, including your competitors’.
  • PROVIDE THIRD-PARTY SERVICES.  Along the same theme as being category captain, many suppliers offer buying services, personnel training,  in-store merchandising/store re-set or even auditing functions in their bag of customer-retention tools.
  • DELIVER USP.  Retailers need to promote key points of difference about their stores against the competition.  By ensuring your product delivers an USP (unique selling proposition) and by offering “exclusives” with new launches, even for a short time,  help set your retailer apart from the fray.

NEXT POST:  The retailer’s point of view.

SPECIAL SERIES-Post #2: Aceing ACV

This is the second of a “back to basics” review series  of the marketing process.  For series introduction, see 4/5 post

Now that your multi-element marketing plan is in place, you need to take it on the road.  The question is: where to?  

Allocating marketing dollars is one equation everyone struggles with at some point.  As one famous ad man quipped:  “Half of all advertising spending is wasted.  The key is knowing which half.”

We were gratified for the recent opinion of a blogmaster (those who write these for a living:  the easy life!) that echoed what we wrote about on 11/11 and then again on 3/10 about…fishing.  Daniel Scocco (daniel@dailyblogtips.com) guest-posted on Copyblogger, and we paraphrase that here because it is worth repeating…ad nauseum:

Go where the fish are!

What is the most important factor you need to have if you want to go fishing?
Most people will say the fishing rod. Others will say the bait, or a boat. Interestingly enough, they are all wrong.  The most important element of the equation is the presence of lots of fish.  If you have a lake full of fish but don’t have a fishing rod or bait, you can probably still improvise something that would let you enjoy a fish dinner tonight.  But no matter how great your bait or how cutting-edge your equipment, if there aren’t any fish, there’s no fish dinner…That means…[you need to] target known customers willing to spend money.

 

Remember that we wrote about on 3/10 how ACV — all-commodity volume — is the retail segment keystone because it measures actual sales activity, not just population.  When you target a market with high ACV, you simply have a larger number to bite your bait.  After all, 1% of  millions is something.
 
 Yet there are times when marketers want to go to smaller ponds.  Fact is, high-ACV (“A” markets) such as Los Angeles, Chicago etc, are expensive.  Media costs and, in fact, costs to implement promotional programs there are typically much higher than in B or C markets.
If your budget does not allow this, or if you have a very specific product niche, then focusing on a smaller market makes sense.  But here the key is to know the specific demographic of your target to ensure no wasted dollars.
We urge you to invest in market research (primary and secondary), scanner data and psychographic studies that tell you all about your target.
Segmenting the market is the key to success today, and one that giants like Unilever have down pat with their excellent studies on ethnic and generational groups.  Then, you can tailor your message accordingly.
In short,  if you want to be a successful fisherman today, you’ve got to ace ACV.
NEXT WEEK:   The retailer’s angle…

SPECIAL SERIES: Back to basics

Over the past several months we’ve noted that our posts that “remind” readers of the basics aspects of good marketing get the most views.   We also see in the stats these are referred to repeatedly over time.

It’s not that readers don’t appreciate the newer stuff, such as our unique marketer’s angle on current events (such as the tanking of Tiger Woods), or even our willingness to sometimes sacrifice sacred cows (like last week’s view on the PTI).   

Yet our more loyal readers say they appreciate most the “oldies but goodies”, or reminders of some of the marketing basics they learned in school, but so often forget to employ.  Or, strategies and tactics they don’t want to admit are no longer sexy (in this new era of sexting…) even though they still work.

 Well, we are listening, and are launching this short series of posts once a week over the next few weeks that will hopefully serve as a refresher.  Our goal is to remind us that there are benchmarks and guidelines that should be followed for any marketing plan, even post-Twitter ones.  (Yes, Gen Y’ers, this is for you, too!)

We are also inviting some of our regular contributors and other marketing mavens to share their insights into what still works and what no longer flies via guest posts or comments.  Importantly, we will try to keep these short & sweet.

Check back next week for our first real post on this short special series!