How to position a fashion label for growth

Segmentation frameworks based on demographics are broken. Yet, frameworks based on psychographic traits are just as broken, or at least totally unable to better predict what would work from a communication point of view. Clayton Christensen famously established a framework called Job-to-be-done that not only enables more efficient communication but also allows you to spot untapped market segments and expansion potential. What follows is an exercise applied to Tex clothing line, owned by Carrefour and sold worldwide. 

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7 Minutes of Wonder In October

Hello all! and welcome again to the 7 articles that caught my eye this month and gave me an "aha" moment. 

  1. This past month the automotive industry was shattered by the whole Volkswagen deal, showing the dark side of "software is eating the world": this NyTimes article reveals that car software may be the next hacker threat to our lives, a much dangerous threat than anyone previously thought. 
  2. A nice round-up of Internet trends in 2015, courtesy of KPCB. Useful no matter what industry you are in.
  3. A brief history of the corporation from 1600 to 2100 :) foreshadowing that corporations, as we know them, will cease to be the centre of our economic life. 
  4. What skills to look for and what to ask potential employees if you hire for a start-up or for a fast-growing company (i.e. what to look for in an ambiguous, changing environment). Read it in First Round.
  5. You've heard that stress it's bad for your health. True. But only if you think it so. In this TED video, Kelly McGonigall, a health psychologist, shows us the intricate hormonal balance that make your thoughts your reality when it comes to stress.
  6. How work life teaches us to be better partners in our private life - a quite nice reversal of ideas: how to learn, how to express truths without causing upset...how to listen to strange views.....how to be patient with fiddly things. Courtesy of Book of Life.
  7. How we are all here on this earth to serve yet serving has such a bad PR. How every company in this world is here to serve in some way, yet customer service is often the weakest point. How brands and marketing could be so much better by understanding the psychology of serving. Learn how to serve.

5 Reasons Why You Should Have a Full Marketing Team In-House

Summary: More and more companies are starting to bring in-house work, that was previously the domain of agencies. It's a move that confirms marketing is shifting and the only way companies can adapt to this shift is internalising talent. And the benefits are numerous.

Before I go ahead into what are the benefits of internalising work that was previously outsourced, please note that I am not against advertising agencies. I'm not saying they are not up to par. I'm just saying that nowadays, having full control over marketing may prove more beneficial to companies. And I'm also saying that the role of agencies should change, but more on this on a future post.

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The Curious Case of CEOs and Email

You know those times when you send an email out into the blue (often a first time communication with someone) and you get no answer?

And you know those times when you email a CEO/President for the first time and you get your request answered, either personally or through other means, in max 30 minutes?

This is the strange thing about email- in my experience:

  • CEOs/Presidents answer a first time email from someone in max 30min.
  • Managers and other executives - may take a day, two or about 1 week.
  • Staff lower than managers - you can forget about getting an answer from them, unless it's the CEOs PA.

Why is that? I know what that tells me, that CEOs got there by being very proactive, fast and decisive - but what about the rest? Is there somebody still thinking that not answering an email with a relevant/pertinent request is a good thing for your personal image and development?

What do you think? I'm dying to find out.

Marketing Mind Shift - Part 3

So here we are, at part 3 of this series of blog posts - hope you enjoyed it so far and I hope it made a dent in your marketing universe as well. We've seen how our brains make purchase decisions, we've seen also how context and the environment influence our purchase decisions. In this part we'll learn to to tweak our tools to influence consumer behaviour.

Optimise the path to purchase

The decision interface makes the difference. The decision interface is the sum of all elements that emit signals the brain perceives.

The commonly held view is that to change behaviour, you have to change attitudes first. This is wrong.

Value perception and decision making are influenced not only by what is presented but also by how it is presented. Interfaces can change behaviour without changing minds because they change the context of decision making.

Actions do not merely reveal preferences but rather create them. Attitude follows actions

Actions do not merely reveal preferences but rather create them. Attitude follows actions. This approach (decision interface optimisation) is actually the optimisation of the path to purchase: to increase perceived value and/or lower perceived barriers. E.g: car wash stamps with 2 already stamped drove more positive behaviour than empty cards. Framing the task as one that has already been started and is incomplete rather than one that has not yet begun leads to people being more committed to completing the task and moreover, complete it more quickly.

Another interesting fact is that prices activate the pain area in the brain, therefore prices without Eur sign performed better.

Lots of studies show that communicating what others do in similar situations has the power to change behaviour. The power of social norms increases if we relate them to the target audience as closely as possible (occupants of this room reuse towels).

Avoiding loss is value more highly than gaining something of the same monetary value. Loss aversion is one of the major barriers to people switching brands or adopting something new. The risk of losing something can be exceeded only by offering something twice the value.

Rules for tweaking interfaces:

  1. Tangibility - tangible and perceptible signals
  2. Immediacy - the autopilot prefers immediate rewards compared with future rewards
  3. Certainty - the autopilot prefers that safe, certain choice.

Tangibility - which signals are tangible along the purchase decision process? Which signals make reward and pain tangible? Which signals should be changed?

Window displays

Product displays 

Large price displays

Post purchase gifts…….

Immediacy - I want it now! How great is the distance in time and space to the tangible perception of value and cost? How can this distance be reduced (value more immediate) or increased (pain/cost further in the future?)

The shorter the distance to a product, the higher the value (no products behind displays).

Hyperbolic discounting - we have a very high discount rate for the future compared with the here and now.

Certainty - how big is the perceived certainty of value and cost?

Signals of scarcity increase the perceived value. “12% off, max 4/customer” works better than “12% off”. “12% off max 12/customer” worked even better because 12 acted as an anchor”. If a thing is in short supply and don;t know when it will be available again, our tendency is to hoard.

We value things we already own.

Flat rate bias. People often prefer flat rates even though they are not necessarily the optimal choice. 

The fact that we value the safe choice also explains our preference for for defaults. We very often go with whatever the default is because in most cased the default works fine. Also, it allows the brain to operate on autopilot, saving mental energy.

Applying this in store and online (see Groupon product page).

Adding focuses attention on increasing the price, whereas subtracting is all about reducing the costs. Implication: starting with a large nr of components or features and allowing consumers to scale down from there leads to the acceptance of a higher-priced product than starting with a basic product and asking consumers to build up from it. (pizza study, car study).

Lessons

  • How can we turn touch points into decision interfaces that work in our favour?
  • Our value propositions need to be perceivable though the senses and tangible, immediate and certain.

Goals

Wanting and liking are regulated by different neural circuits in the brain. We like the old bookstore, but we buy books from Amazon.

Willingness to pay: the more relevant a product or service is for an active goal, the higher the expected reward the and more we are prepared to pay. Neuroscientist call this the goal value. It is thanks to this goal value that our brain is able to decide which of the two completely unrelated things, or which competing brands we prefer. 

Only the number 1 brand in the consumer’s goal ranking will be chosen. It is not sufficient to be in a relevant consideration set. it’s important for a brand to be number one regarding specific occasions, or regarding a specific reward such as “attractiveness” in luxury lipstick or care. Consumers choose the brand with the highest fit to their dominant goal in a given situation.

Goals are a key concept to understand why we buy what we buy. Products and brands are instruments with which consumers achieve goals. The job the product is hired for. 

Job-defined markets are much larger than category-defined markets. Marketers who are stuck in the mental trap that equates market size with product categories, don’t understand whom they are competing against from a consumer’s point of view.

The consumer goal - not the customer or category - is the fundamental unit from which to define the market and inspire marketing strategies.

Goals drive attention

Products that promise to do the job best, get most attention. To achieve stand-out of our ads and impact on shelf we have to understand the goals consumers try to achieve with our products. Goal-based attention implies that the brand that springs to mind (top-of-mind) will depend on the consumers active goals. For positioning, this means that we have to link our brand to a relevant goal that is not yet owned by another brand.

Goals are assessed implicitly, by system 1, outside awareness.

Brands serve consumer goals

From a brain POV, brands are treated as objects, not as people with personalities. Therefore, brand personality is sort of the wrong concept to bet on. We do not buy body lotion because we want to become authentic or reliable. We buy body lotion because we want to pamper ourselves, to slim down, to have soft skin etc.

The nature of the relationship between consumer and brand is not that of an interpersonal relationship. Consumers buy the instrumentality of the brand.

We buy expected goal achievement

The reward centre of the brain is triggered particularly strongly based on expectation (opening the lid on a yoghurt pot). It is the rewards that we expect to get that drive valuation and hence motive the purchase. 

The opportunity of a new market

This is an article about Marigold Apothecary (my entrepreneurial venture), recently published in Biz Magazine. To all my English-speaking, I apologise for not being able to translate it at the moment.

Un hobby transformat in afacere, o nisa neexploatata intr-o piata sau pur si simplu o ocazie de business foarte buna pe care nu vor sa o rateze – oricare ar fi motivul pentru care un antreprenor alege sa schimbe domeniul de activitate, dezvoltarea noii afaceri este o provocare. Cand antreprenorul se orienteaza catre un domeniu foarte diferit de cel in care a activat inainte, schimbarea presupune, practic, invatarea unui nou business.

Alchimia retailului farma

Cand a vazut cum alearga o mama de la farmacie, la magazinul naturist si de la supermarket la un magazin cu alimente speciale, cand ii trebuie ceva pentru copil, Ileana Chermenschi s-a decis sa dezvolte un business in retailul farma. Este consultant in marketing si branding, asa ca a avut ochi sa vada oportunitatea unui domeniu nou de activitate si o nisa neexploatata in Romania – retailul farma specializat pe mame, bebelusi si copii. “Dincolo de freelancing, am dorit sa am si un business propriu pentru a construi ceva durabil. Freelancingul e bun, insa imi doream sa am contact cu mai multi oameni, sa influentez (sper eu in bine) mai multe vieti si sa pun bazele a ceva ce va dura ani”, isi aminteste Ileana Chermenschi momentul cand a s-a nascut Marigold Apothecary.

Spune ca retailul pharma este un segment ce are nevoie sa se reinventeze. |n mod traditional, retailerii functioneaza cu adaosuri foarte mari, pentru ca trebuie sa acopere cheltuielile cu locatiile, personalul, stocul etc. Acesta este motivul pentru care a decis ca va avea o singura locatie fizica si pariaza pe online pentru a oferi accesibilitate maxima mamelor ce nu se pot deplasa cu usurinta. Livreaza oriunde in Romania in 24-48 de ore si la preturi oneste, deoarece nu are cheltuieli operationale mari. Si, nu in cele din urma, drogheria importa o serie de produse speciale unice in Romania si chiar in lume, ce rezolva probleme stringente – spre exemplu, laptele de magarita, foarte bine tolerat de copiii cu alergii la laptele de vaca.

Daca in zona de marketing se simte confortabil datorita experientei, noul domeniu este o provocare. “Este un challenge imens pentru mine sa ma pun la punct cu toate aspectele unui business, de la logistica si vanzari pana la domeniul financiar-contabil, pentru ca inainte de a putea cere cuiva sa realizeze un lucru, trebuie sa stiu eu mai intai cum se desfasoara”, spune Ileana Chermenschi, adaugand ca orice fel de cunostinte ajuta mult, pentru ca din po­zitia de antreprenor trebuie sa te pricepi la toate.

O provocare este si modul in care se transpun in practica anumite insight-uri de business sau cunostintele teoretice. Spre exemplu, pornesti de la premisa ca un furnizor/distribuitor vrea sa vanda, dar in practica observi ca multi distribuitori nu iti raspund la telefon, uita sa trimita oferte, uita sa iti trimita informatiile necesare desi ei au fost cei care te-au contactat initial etc. Un alt exemplu este modelul de e-commerce – nu merge pe principiul “build it and they will come”. “Partea tehnica, partea de pricing, managementul stocurilor si canalele de comunicare trebuie gandite foarte atent si exista mai multe combinatii ale acestor elemente, astfel incat trebuie sa te asiguri ca ai ales «piesele» care sa se potriveasca impreuna”, spune antreprenoarea.

Daca ar fi sa dea un sfat pentru antreprenorii care vor sa dezvolte o afacere intr-un domeniu de activitate in care nu au experienta, Ileana Chermenschi il citeaza pe Ben Horowitz: managerii prosti isi atribuie succesul strategiei si marketingului minunat, iar managerii cu adevarat buni atribuie victoria faptului ca nu au renuntat. Asa ca persevereaza!



Marketing Mind Shift - part 2

Hello all, finally I got the time for the second part of my musings on the fantastic new thinking from Decoded. In the first part here, we saw how the brain makes purchase decisions. Now, we'll go on and analyse the interface (the surface of the world that sends out signals to our lazy brains).

Decoding the Interface

Knowing the rules and mechanisms that determine what we perceive (taller bottles hold more than wide bottles - it seems), enables us to design our interfaces (touch points) in an optimal way. Perception is based only on the blurred input from the periphery complemented by a small spot of high resolution. In other words, our conscious mind focus on just a small part of the world. The rest of the signals that surround us are processed by our System 1 brain.

So for example, if packaging changes are not perceivable though blurred vision, we should not expect any impact on sales.

Recognition - how does it work? Recognition is based on those signals with the highest diagnostic value. For example, for the chair, the four legs and back. Or charicatures. The key is to know the diagnostic cues - beyond that, we have freedom to change the packaging or layout. In other words, we have to keep those elements that define what a thing is, and we can play around only with those elements that are not 'core'.

Context is equally valid and important for recognition to work. We don’t recognize objects in a vacuum. This also explains why people often remember having seen things in a advert that are not there or having seen recently and ad that hasn’t aired for 5 years.

Concepts - signals we send - from colors to shapes to logos - are recoded into mental concepts based on learned associations in memory. Perceived value is based on the mental concepts triggered by brand and product. Purchase decisons are based on these mental concepts and not on signals as such. Think roses=love, SUV=status. The most important function of a product’s appearance for consumers, apart from bringing aesthetic pleasure, is the portrayal of mental concepts. > we should not judge packaging or ads on the basis of them being aesthetically pleasing but rather on what signals they give off and what concept they trigger. Maybe, if we manage to incorporate this thinking, it would bring objectivity in board rooms where most packaging decisions are based on "I don't know...I don't like it....it doesn't feel right to me"

We should not judge packaging or ads on the basis of them being aesthetically pleasing but rather on what signals they give off and what concept they trigger.

 

Familiarity - we know it is important for advertising effectiveness. Yet, to stay relevant we also have to change. What is the way out of this dilemma? If a signal was expected, our theory is confirmed, our neurons switch off to another activity (it makes sense not to spend energy on things we already know). The way out  - marrying consistency with newness - is to be consistent at the meaning level, but new at the signal level. Think of Axe advertising: be it a hoard of naked women, or Amazons, or beauty-pageant winners, the meaning is the same: using Axe will make you a desirable male in whatever setting.

The MAYA (most advanced yet acceptable) principle: a moderate degree of newness in cobination with some familiarity, is the most effective for marketing communication.

Value-based attention: what we want is what we see

Relevance is a key driver of attention: we see what we want. The point is that we need to signal the value that people are looking for in a way that the autopilot can detect and perceive. If people are looking for skimmed milk they will look for blue or green. If they look for a Coke, all red signals will be perceived more readily.

Attention is also driven by contrast: colors, shapes etc that stand out and “cut-through” clutter.

Perceptual fluency also adds value (e.g picture of cake with fork placed on right is more appealing than the fork on the left because we are accustomed to seeing things from the right). For perceptual fluency to work the visual, perceptible link between the TV ad, the packaging and the POS is crucial. Information written in capitals is more difficult for the autopilot to process.

Human faces also have value > attract attention.

Price perception has value. The way in which price presented is, in itself, a powerful lever, without even having to change the actual prices. To really make a perceived difference require less of an absolute price increase/decrease in low-priced categories than in high-prices categories. So when we reduce prices we should think about whether the propose discount really is making a difference or it just reduces our margins.

Lessons

  • Our brands communicate with consumers mainly through peripheral blurry images. We need to use signals which convey our messages even through blur.
  • The core driver of attention is the fit of peripheral signals with consumers goals. The higher the fit, the more we attract “pull”.