How to pick a winner - The Marketing Society

QUARTER 4 SEPTEMBER 2011N E W T H I N K I N G , D I F F E R E N T P E R S P E C T I V E SHow to pick awinnerLuke JohnsonQUARTER 4 SEPTEMBER 2011AESTHETICS,JUGS ANDROCK'N'ROLLPaul FeldwickGLOBAL KNOWLEDGE,LOCAL DELIVERYGraham MackayIGNORE CULTURE ANDBRAND FIT AT YOUR PERILTerry Tyrrellcover.indd 1 9/19/2011 12:17:43

EditorialWhat not to doWhEn pEoplE submit articles for Market Leader, I try to ensure that,given our readership of practical marketing folk, the article gives a clearidea of what the reader should do, having read it. This mostly happens,directly or indirectly and the ‘to do’ points are usually helpful. But I’vealways had a sneaking feeling that telling people what not to do may bemore effective.So, I recommend serial entrepreneur Luke Johnson’s cover articlein this issue. Few people know as much about the tricky businessof spotting winners as he does and his experience and mistakesmake his advice about what to avoid in sizing-up an entrepreneurialventure particularly valuable. Should you be thinking of starting anentrepreneurial venture yourself, here is a solid-gold list of mistakesto avoid. And for the non-entrepreneurs in the audience, the list ofwhat makes a bad business plan could also be headed ‘what makes a badstrategy document’ since the skills of clarity, conciseness, engagementand plausibility are central to persuasion of any sort.Another collection of mistakes to avoid can be found in JonathanRichman’s discussion of why so many digital campaigns fail and whythe aspirations behind them are often pure fantasy. One would like tothink the reasons are complex, subtle and sophisticated. Richman saysno. It’s very simple: most digital campaigns are terminally boring. Thecompetitive frame for a digital campaign isn’t just other companies inthe sector; it’s everything that people would prefer to do rather thanto study your website. Put that way, failure is hardly surprising, butmaking a campaign interesting, surprising, likeable and shareable isanother thing.In the ‘never thought of it that way’ category, Paul Feldwick treatsus to a delightful essay on the role of aesthetics in creativity. Theessence of this nuanced examination is that the conventional definitionof creativity – originality – may not quite cover it: aesthetics need tobe part of the equation. Indeed, the artistry in the execution may bemore important. Proponents of the ‘big idea’ school of advertisingshould take note.The role of marketing is prominent in three other pieces in thisissue. Ruth Saunders argues that marketers need more boardroomcredibility, and Terry Tyrrell supports this view with an analysis ofwhy so many M&As fail – ie insufficient attention to the culture andbrand fit of the companies involved. However, on a more positive note,Mhairi McEwen and Andy Bird extol the importance of marketing asone of the key growth drivers.Judie Lannon, Editormarket_leader@warc.comMarket leader Quarter 4, 2011 3

QUARTER 4, 2011PUBLISHED IN ASSOCIATION WITHTHE MARKETING SOCIETY BY WARCEDITORJudie LannonEDITORIAL BOARDRoger Banks, Hugh Burkitt, Matthew Coombs,Martin Deboo, Paul Feldwick, Anthony Freeling,Roger James, Laurie YoungEDITORIAL ADVISORY BOARDProfessor Paddy Barwise LONDON BUSINESS SCHOOLStephen A. Carter CBE ALCATEL-LUCENT INCSimon Clift CONSULTANTHugh Davidson CRANFIELD SCHOOL OF MANAGEMENTMartin Glenn BIRDS EYE IGLOSir Paul Judge THE MARKETING COUNCILSir Chris Powell NATIONAL ENDOWMENT FORSCIENCE, TECHNOLOGY AND THE ARTSRichard Scase UNIVERSITY OF KENT AT CANTERBURYMark Sherrington QUIRK EMARKETING AGENCYDianne Thompson CAMELOT GROUPPRODUCTION EDITORHelen DevonshirePUBLISHERMatthew CoombsADVERTISINGDiana PounsfordEDITORIAL & ADVERTISING OFFICEWarc, 85 Newman Street, London WIT 3EX, UKTel: +44(0)20 7467 8137 Fax: +44(0)20 7467 8101Email: market_leader@warc.comSUBSCRIPTIONSSubscriptions Dept, Marston Book Services Ltd,Unit 160, Milton Park, Abingdon,Oxfordshire OX14 4SD, UKTel: +44(0)1235 465574Fax: +44(0)1235 465556Email: subscriptions@marston.co.ukWeb: www.warc.com/marketleader32Annual subscription rates:£245, €405, $370Market Leader is published quarterly by Warc in association withThe Marketing Society.ISSN 1463-0877The views expressed in contributions to Market Leader are notnecessarily those held by the publishers or The MarketingSociety.Printed by Pensord PressCopyright © Warc and The Marketing Society 2011. All rightsreserved. Reproduction in whole or in part without writtenpermission is strictly prohibited.4 Market Leader Quarter 4, 2011

contentsIn thIs Issue2444ideas & issues12 creativityThe annual Cannes festival of creativityhighlighted issues surrounding popularity,innovations and ecosystemsBy Julian Boulding14 communicationIs narrative storytelling still a useful part ofthe advertising arsenal?By Simon Glynn15 ehrenberg revisitedDespite much unacknowledged wisdom aboutmarketing effects, Ehrenberg’s work doesn’thave all the answersBy David Cowan17 consumer behaviourIs it important for your brand to follow trendsor should you attempt to influence instead?By Joseph Gelman18 Marketing techniquesThis handbook does its own SWOT analysis onpopular ‘tools’ used in the sectorBy Laurie Young19 Brand ethicsPerceptions of how ‘good’ products andservices are will influence how consumers feelabout them. And themselvesBy Jane Asscherregulars08 BrainwavesA selection of what’s going on from aroundthe world of marketingBy Elen Lewis20 chopping BlockScepticism is a very healthy trait – in the rightplace and at the right timeBy Jeremy Bullmore22 ViewpointIf marketers want to be taken moreseriously in the boardroom, they must raisetheir gameBy Ruth Saunders52 trendwatchDespite the economic downturn globally,lifestyles of the rich and famous ‘wealth sirens’still influence consumer aspirationsBy Melanie Howard53 letter from BangaloreThe Indian ‘nation of shopkeepers’ is thrivingacross retail and innovationBy Prasad Narasimhan54 Best in BriefReviews by Winston Fletcher, AllysonStewart-Allen, John Kearon, Merry Baskin56 speaker’s cornerBrand links with the wrong name can damageyour image in the eyes of your customersBy Keith Lucas58 the last WordEmbarrassment, and people’s fear of it, causesconsumers to modify their behaviourBy Rory SutherlandfeaturesCovER StoRY24 How to pick a winnerPredicting success from a pool of potentials isalmost impossible. Or is it?By Luke Johnson28 ignore culture and brand fit atyour perilThe cause of many merger and acquisitionfailures is a lack of marketing due diligenceBy terry tyrrell32 strength in numbersThe strategy of ‘co-opetition’ helps strugglingfood and agribusiness firms to join forces whennecessary while also remaining competitiveBy Damien McLoughlin, Mary Shelman andDavid E Bell35 on size doesn’t fit allBased on a recent IPA report, this articleexamines how advertisers cope withintegrated communications strategiesBy Kate Cox, Denise turner, John Crowtherand tracy Hubbard38 aesthetics, jugs and rock’n’rollThe words ‘creative’ and ‘original’ are oftenused interchangeably, but they’re not the sameBy Paul Feldwick41 smarter campaignsMarketers and agencies fantasise about makingtheir digital strategies ‘the next big thing’By Jonathan Richman44 global knowledge, local deliveryGlobalism for international brands is not alwaysappropriate. Some categories will always be localBy Graham Mackay48 accept the challengeDelivering growth in the current economicclimate means that this is a challenging – andexciting – time to be a marketerBy Andy Bird and Mhairi McEwanMarket leader Quarter 4, 2011 5

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ainwavesDiFFerent thinkingThis muchI’ve learnednicOla MenDelsOhnthe best advice i got …Was from John Hegarty:do interesting things andinteresting things will happen.the worst advice i got …Was from a creative directorwho told me to go out and sella creative campaign to a clientand not to come back till thejob was done.don’t underestimate …The importance of long-termrelationships.don’t overestimate …A bad situation. You candiffuse things just as quickly.the experience thattaught me most …Is being lucky enough to havemy own agency and building itup with my partners.the most fun i had …Was, and is, developing theculture at Karmarama.the worst moment …Was unsuccessfully investingin a property scheme. Stick tothe things you know.My peak careerexperience …Karmarama winning Agencyof the Year, Sunday Times bestcompany to work for, andbecoming IPA president in thesame month.Nicola Mendelsohn ischairman and partner atKarmaramanicola@karmarama.comThoughT for The dayfroM benjaMin frankLin’s diaryBlogbytes: lessons fromthe herd with NOTWtHe Most popular MarketingSociety blog article over thesummer was by Alex Batcheloron lessons in normative herdbehaviour from the News ofthe World.He wrote: ‘Amid thehysteria surrounding the Newsof the World (NOTW), whatinterests me are the lessonsin human behaviour. We area herd species (cf Mark Earls,author of HERD) and ourbehaviour continues to beaffected by those around us.This current story, however itplays out, is a lesson in groupbehaviour.‘Next time, as a marketer,or as a member of any group,you see something that youstrongly believe is wrong,being perpetrated with asketchy justification, how areyou going to react?‘What we are really seeingin all the discussions are thepernicious effects of suspicionin undermining any resolutionto disputes. When I amsuspicious of the intentions ofthose involved I can be blindto outcomes that I wouldaccept in a less-emotionalenvironment – and I cansee even well-intentionedproposals as hostile.‘As Antonio Damasio,professor of neuroscience atthe University of SouthernCalifornia, says: “We arefeeling machines that alsothink and not thinkingmachines that also feel.”Suspicion, once created,lingers for a very long timeand this shows the importancein all walks of life of areputation for honesty andfairness.‘I can promise that thefastest way to prolong thefeelings of anger, contemptand sadness is if we feel thatactions of those involved areinsufficiently penitent, or ifwe feel that their penitence isinsincere.‘So, the sad lessons formarketing are that you shouldnever underestimate the valueof a reputation for honestyand fairness (although youmay not think you need themuntil it is too late) – and thatsuspicion and democracy arepowerful weapons againsteven the most powerful.’ nAlex Batchelor is the COO ofBrainJuicerhttp://blog.marketing-soc.org.ukBrainwaves pages are editedby Elen Lewis, editor ofThe Marketing Societyelen.lewis@gmail.comMarket Leader Quarter 4, 2011 9

ainwavesDiFFerent thinkingWords worthUnless you live in westward ho! or saint-louisdu-ha!ha!,use exclamation marks sparinglyin CHekHov’s shortstory The Exclamation Mark,a civil servant trying toget to grips with the rulesof punctuation develops aparanoid fantasy in whicheveryday objects transformthemselves into malevolentexclamation marks.I’m with F Scott Fitzgeraldwho wrote: ‘Cut out allthose exclamation marks. Anexclamation markis like laughing atyour own jokes.’Elmore Leonardwrote ofexclamationmarks: ‘You areallowed no morethan two or threeper 100,000 wordsof prose.’geT a gripAn exclamation mark is likeshouting or whooping. It’slike screaming, ‘I REALLYMEAN THIS’, after you’vespoken. And in businesswriting, exclamation marks arenot to be encouraged, asidefrom special occasions.Too many emails useexclamation marks, andthey’re especially irritatingwhen used in groups of two orthree. Admittedly, email hasseen exclamation marks makesomething of a comeback.Before the 1970s, typewritersdid not have anything akinto an exclamation mark onthe keyboard, which may havebeen another reason for theirrarity. It was a lot of effortto type a full stop,then back space,push the shift keyand type anapostrophe.So, when touse exclamationmarks? Use themsparingly and thenthey will have the impact youneed. They should be used todemonstrate surprise, angeror joy. That’s all. And, ifyou’re not sure, use a full stopinstead. So is ‘Thanks!!!’ moregrateful than ‘thanks’? I don’tthink so. nElen Lewiselen.lewis@gmail.comfive ways To… lisTen1 silence. Spend three minutes a day in silence. This will reset yourears and help you recalibrate so you can hear the quiet and the subtleagain.2 the mixer. Differentiate the noise. How many channels of sound canyou distinguish in a coffee bar? In the street? At a lake? This exercisewill improve the quality of your listening.3 savouring. Learn to enjoy mundane sounds, from the waltz of yourtumble dryer to the coffee grinder. Mundane sounds can be richlyfascinating if you pay attention: discover the hidden choir.4 Listening positions. We listen through filters, most powerfully ourintention. Change your listening position and it can change your world.5 rasa. This acronym is also the Sanskrit word for juice or essence.RASA stands for Receive (pay attention to the person); Appreciate(make noises like hmm, oh, okay); Summarise (the word ‘so’ isimportant in communication); and Ask (ask questions afterwards).Watch Julian Treasure of The Sound Agency on TED.com.For more, visit www.juliantreasure.com.Golden brands of 1961here, the Marketing society digs into its archives of50 golden brands: a year of lemon, Fairy and JaguarsLeMon. if there was one wordthat summed up marketingand advertising in 1961, it waslemon.In the US, a VW printcampaign was causing ripplesacross the advertising industry.Using simple headlines like‘Lemon’ or ‘Think Small’,VW and its creative agencyDoyle Dane Bernbach weremasterfully persuading theAmerican public to fall inlove with a German car in theshadow of World War II.Breaking conventions,this creative style was basedon the subtle sell, and itmarked a new approach for adagencies – pairing copywritersand art directors as part of anequal team.This side of the Atlantic,an altogether sleeker-lookingcar was causing waves –1961 snapshoTthe E-Type Jaguar, Britain’saffordable answer to the flashyItalian Ferrari.It was snapped up bycelebrities such as footballerGeorge Best and GeorgeHarrison from The Beatles.And it wasn’t the onlyBritish brand innovating inthat year. Wilkinson Swordbegan to attract attentioninternationally for the firsttime, with the launch of a newand revolutionary Tefloncoatedblade.Two iconic strands ofBritish advertising also debutedthis year. Fairy Liquid’smemorable slogan ‘Now handsthat do dishes can feel softas your face, with mild greenFairy Liquid’, sang onto thescreens. And there was a newkid in town – Nestlé’s MilkyBar Kid. nCurrent affairs: John F Kennedy becomes US president, the VietnamWar officially begins, construction of the Berlin Wall, and TottenhamHotspur wins the League and Cup Double.films: West Side Story, Breakfast at Tiffany’s.books: Catch 22 by Joseph Heller.Music: The Beatles perform at The Cavern Club for the first time; thecareers of The Beach Boys and The Temptations begin.births: Diana, Princess of Wales, George Clooney, Ricky Gervais.deaths: Ernest Hemingway, Vanessa Bell, George Formby.www.50goldenbrands.comwant to keep your competitors up at night? hire gapingvoid foryour next campaign, and sign up to the free daily Cartoon atwww.gapingvoid.com10 Market Leader Quarter 4, 2011

ainwavesDiFFerent thinkingMy seven wondersalan gilesaLan GiLes is the formerCEO of the HMV Group.Now chairman of Fat Faceand board member of TheMarketing Society, he tellsElen Lewis about the sevenwonders of his world.1View. From my seatat Madejski Stadium,home of Reading FC.My spirits soar when I see thisview, at least until we concedethe first goal.2Work of art. OKComputer by Radiohead.Fourteen years afterit was released, it is still anastonishingly varied, beautifuland challenging album.3Journey. Cycling fromHambleden to ChristmasCommon. An exhilaratingride through the wonderfulrolling scenery of the Chilterns,with one long, steady climb toraise the heart rate.4Book. Birdsong bySebastian Faulks. Moving,harrowing, and thoughtprovoking, it is the best work ofone of the most talented writersof the modern era.5City. San Francisco.An inspiring, vibrantblend of cultures witha stunning setting. Compactenough to walk around, withstunning food, buildings and anall-pervasive ‘can do’ attitude.6Building. Mob Quad,Merton College,Oxford. A sense oftimeless tranquillity andscholarship, with the humblingthought that little has changednot just since I was anundergraduate, but since the13th century.7Hotel. The Sanctuaryon Camelback,Scottsdale, Arizona.Stylish, peaceful, greatcooking and a spectacularview. I relax immediately uponarrival, and I have booked mynext trip already.1234 567Market Leader Quarter 4, 2011 11

ideas & issuesover to youIdeas & issuesthe annual festival of creativity is an indicator for the state of theglobal economy and the state of marketing communicationscreativityIterative marketing and ecosystemsFrom julian bouldingthe annuaL Cannes festivalof creativity is a significantindicator for two issues thatconcern us all: the state ofthe global economy; andthe state of the marketingcommunications business.On the first metric, theglobal economy has bouncedback. The 2011 awardscontests received a recordnumber of entries andthe number of registereddelegates was almost 9,500,close to the all-time high of10,000 in 2008.Seminars were packed.You had to get there early forGoogle, or you could forgetabout seeing Eric Schmidt.Latecomers would be inthe balcony of the overflowtheatre watching the livevideo feed.But what about themarketing communicationsbusiness? The top creativeawards went to an interestingmix of traditional advertisingfrom ‘new’ markets, such asRomania, China and SouthAfrica; and innovative,technology-driven work fromestablished markets includingthe US and Korea. And that’sa pretty fair reflection of thebusiness today.But behind – and beyond– the parties and the prizes,what was being talked aboutand what did we all learn?last year comparedwith this yearThe talk in Cannes in 2010was all about the ‘what’. Whatis the industry doing? What isthe role of brands? And, mostof all, what should companiesstand for?This year was all about the‘how’. In an interconnected,12 Market Leader Quarter 4, 2011

ideas & issuesover to youinteractive, collaborative,mobile world, the keychallenge is how to engagewith consumers in a creativeand original way.Essentially we heard threeschools of thought.1The intuitive approachFortunately, there arestill some renegadegeniuses to remind us thatcreativity is unpredictable anddoes not arrive through logicaldistillation of facts.John Hegarty gave hisgreat speech about zaggingwhen others zig, illustratedby famous BBH TVcommercials. Everyone elseplays the full 30 seconds – orthe 90-second directors’ cut,or the three-minute videoexplanation of why the idea iscreative. Hegarty plays onlythe first six or seven seconds,because everyone immediatelyrecognises and remembersthem. Arrogant, but awesome.Chuck Porter and histeam from Crispin Porter +Bogusky (CPB) talked about‘method advertising’. LikeStanislavsky’s ‘method acting’,this means getting fullyinto character by using theproducts and brands you’reworking on, before allowingyour intuition to create storiesabout them.CPB walked the talk bythrowing out all their Macswhen they won the Microsoftaccount. The FedEx-styleorder-tracking system theydeveloped for Domino’s pizzahas to be one of the greatestcreative uses of technology,and you have the feeling itprobably didn’t come out of afocus group.2The process-drivenapproachOgilvy invited SirKen Robinson, an authorof several books, to givea commemorative lectureto mark David Ogilvy’scentenary.Robinson defines creativityas ‘the process of havingoriginal ideas that have value’.If you think creativity is aprocess, forget BBH and CPB,Ogilvy is the agency for you.Ogilvy, like many WPPcompanies, has bet big ondata. The CEOs of largecorporate clients keep theirjobs by predicting theirquarterly earnings accurately,which means they hateuncertainty. Data appeals, as itreduces uncertainty.Also, data is now farmore widely and deeplyavailable than ever before,thanks to the internet. It’sa natural preserve of themedia companies that controlmost of the cash flow in themarketing communicationsindustry (such as UniversalMcCann and its clients,which devoted its seminar toglorifying data).The problem is that manymarketing companies still usedata reactively. They look atwhat the consumer did lastmonth, or last year, to predictwhat they will do next. Theproblem is not just that thingsmove faster today – although,of course, they do – butthat the nature of data haschanged. Traditional researchis simply being sidelined.Today’s metrics are YouTubeviews and Facebook ‘Likes’.3The iterative approachOf all the topics raisedat Cannes 2011, this wasthe big one. For ‘iterative’read: carry on until you get itright, and then make it better.And it profoundly impactsthe nature of marketingcreativity today.The artists of the EuropeanRenaissance instigated a newview of the world: a world ofperfectly composed stasis, seenfrom a defined and unmovingperspective. Jazz, cubism andother movements in the finearts moved this on many yearsago, but advertising and datastayed put.‘Snapshot’ research fixed theconsumer in a point of time,allowing advertisers the timeIn an interactive,mobile world,the challenge ishow to engagewith consumersin a creative wayto craft a perfect message.Remember when it routinelytook a year to create a newcampaign? A lot of peoplewould be more comfortable ifour industry still worked thisway, but it doesn’t.Creativity – indeed,marketing itself – is nowiterative, and many of the bestseminar speeches discussedthis. Jonah Lehrer put itsuccinctly: the recipe forsuccess today is to ‘fail fastand fix it’.Some people view this asa source of concern. PaulPolman, CEO of Unilever,feels that the industry is ‘like adeer in the headlights’, notknowing where the next trendwill be. He is buying time bydoing away with quarterlyresults announcements(hooray!) and hedging betsby shifting the marketingbalance from ‘one-Unileverglobal’,to more local activity.Keith Weed, his CMO, said‘we want to be the mostlocal of the global players’,but his acknowledgement of‘the challenges of managingcomplexity’ was refreshinglycandid.Some people sit on thefence: the 70/20/10 modelseems to be the new norm,where 70% of the marketingbudget goes to what youknow all about, 20% goes topromising new initiatives,and 10% is devoted to thingsyou know nothing about, butwhich sound interesting andtrendy. Amazing and revealingto hear more than one of theworld’s leading marketersconfess to this.Other people were morepositive. Malcolm Gladwellput forward the view thatthe world belongs to the‘tweakers’. This means notonly the Chinese, adaptingand exploiting western ideas,but also people such as SteveJobs, adapting and modifyingthe PC, and the inventorsof Google improving onthe early search engines likeAlta Vista.Coca-Cola’s concept of‘liquid and linked creativity’,discussed elsewhere in thisissue (page 35), makes thesame point from a differentperspective.For example, Google triedits advertising on YouTubebefore risking it on televisionin the Super Bowl. CEO EricSchmidt said: ‘Successfulbusiness models are iterative…if we want to change ourwebsite, we test it on 10%of users. When we make achange, we leave 10% of userswith the old version.’it’s all aboutplatforms – or is it?If marketing is iterative,then the future belongs tothe flexible platforms. Ofcourse, it helps if you own theplatform. In that case, youlet others do the work whileyou collect the money – asFacebook does with Zynga,another frequently quotedexample.To reference Schmidtagain: Facebook, Apple,Amazon and, of course,Google are all platforms.So is Unilever’s ice-creamvending machine thatrecognises smiles and starts arelationship with consumers.(Thanks to SapientNitro forthat one.)And so too is Nike. BobGreenberg of R/GA explainedhow he had helped thecompany to move beyondthe Nike + platform to a‘functional ecosystem’. Thiswas done by incorporatingGPS into the kit, so runnersknow where their friends >Market Leader Quarter 4, 2011 13

ideas & issuesover to youexample, compared with anaverage of -1% annual declinein revenues for brand myths.Instead of spending mostof their money telling storiesdirectly, the brand legendscreate branded experiencesthat stimulate people todiscover and retell theirstories for them: the rewardtreatment and treats from O2,the physical delight of usingApple products, and the thrillof perfection from BMW.Are these the sort ofvalues-based stories that JulianSaunders is craving? Arguablythey are. Behind O2’sindulgences is an enlightenedbelief in investing in longtermcustomer relationshipsrather than short-termexploitation; behind Apple’sdelight is an appreciation ofpure design craft and usabilityover technological gizmosand features; behind theBMW thrill is the reward thatcomes from their perfectionistengineering of every detail.To create such strong,branded experiences, afocus on the brand story iscrucial. But that brand storyis no longer the advertisingnarrative. It’s the succinctexpression of the brand ideathat is so simple and relevantthat people can relate to it,and want to retell it becauseit’s touched them emotionally.It is so purposeful that peoplewant to attach themselves toits values, and so tangible thatit permeates the experienceand gives customers somethingreal, not just myth, to love.The form of the story mayhave changed, but the need forit has not. Brands that embracethe new digital channels asends in themselves, not asnew means of storytelling,will become bland. Digitalconversationtactics won’twork without a ‘being-worthtalking-about’strategy. nSimon Glynn is a seniorpartner and European headof Lippincott.simon.glynn@lippincott.comehrenberg revisitedHow brands grow: work in progressFrom david cowanthe baying and mooing ofmarketing sacred cows beingslaughtered can be heardemanating from the pagesof Professor Byron Sharp’sbook How brands grow: whatmarketers don’t know. Deeplyheld marketing ideas andwidespread practices aredenounced and derided –marketers likened to medievaldoctors, with their principlesand practices compared tothose of blood letting.The book is an accessiblecompendium of the work ofthe late Professor Ehrenbergand his colleagues. It hasbeen reviewed in MarketLeader (Quarter 2, 2011) but,given its iconoclastic natureand that it is based on morethan 50 years of scholarship,it requires much attentionand some challenge by themarketing community.loyalty programmesdon’t workI am a partial convert toEhrenberg’s ideas and havebeen since the early 1970s.However, in Sharp’s book thereare areas where in my viewhis ‘evidence’ fails to convinceand there are key issues that hedoesn’t address at all.A central Ehrenbergianassertion, with only minorcaveats, is that a brand’s shareis determined by the numberof users is has. To grow, itmust get more users; it can’tgrow by inducing existingusers to use more. Ehrenberg/Sharp have studied hundredsif not thousands of brandsin different markets andgeographies and nowhere dothey find brands with greaterloyalty than their competitors.Their deduction is that‘more from existing users’, anoft-stated marketing strategy,never works.Although there are somemajor unanswered questionsTheir deductionis that ‘morefrom existingusers’, an oftstatedstrategy,never worksabout this, I have always feltcomfortable with puttingpenetration as the headerobjective if growth is to beachieved. It seemed to me tobe a corollary of the Parfittand Collins (1967) trial andrepeat-purchase model ofhow new brands becomeestablished in the first place.I also have no problemwith his evidence that lightbrand users are of greatimportance for both currentand future sales and thereforerelationship marketing andCRM programmes that ignorethem are a bad idea.And I agree with hisevidence and argument thatloyalty programmes have weakeffects on brand share and areunprofitable. I have alwaysthought the provenance ofthese programmes suspect.They have usually originatedin the Harvard BusinessReview or the like beforebeing picked up and soldaround the world by the largemanagement consulting andIT firms but their evidentialfoundation has alwaysappeared dubious to me.It is therefore particularlygratifying to read thedemolition job done on thearticle (Reichheld and Sasserin HBR 1992) that claimedthat companies can boosttheir profits by almost 100%by retaining just 5% morecustomers. Sharp shows thatalthough this may be true,arithmetically it is nonsenseand can never happen.The chapter on pricepromotions is particularlyworth reading. He alsodemonstrates how advertisingcan be working even if salesdon’t increase. And I havealways found the Ehrenbergassertion that the mainrole of advertising is toreinforce memory structurescompelling. And there is muchmore good in the book – it isessential reading.two fingers toorthodoxySharp’s audacious objective isto overturn the precepts thatunderlie today’s marketingorthodoxy, and the reader islikely to have the disturbingfeeling that much of what theybelieve is being proved untrue.This is not the case. Theimpression is created througha combination of destroyingstraw men, exaggeration andgoing beyond the evidence.There is also a major flaw inthe whole project that is notacknowledged.The first object ofattack is the ‘ideology’ that‘differentiated brands shouldsell to different groups ofpeople’. He presents academicevidence to show that brandusage is not related tocustomer personality typeand presents many tables fora large number of brandsshowing that brand users don’tdiffer much by demographics,media habits or general values,by which he means TGI typestatements – for example,‘I can’t bear untidiness’ or‘children should expressthemselves freely’.This may disturb somemarketers but this is a strawman. The concept of targetgroup – ‘different groups ofpeople’ – means people whowant or who are attracted to>Market Leader Quarter 4, 2011 15

ideas & issuesover to youslightly different functional orsymbolic things, not peoplewho are different in the waysbeing described (althoughthere may be correlations withdemographics etc).The professor may thinkhe is addressing this pointwhen he attacks Philip Kotlerfor saying that differentflavours of soft drinks, suchas Coke, Lilt, Fanta, cater todifferent people. A position hedemolishes by showing thatlarge proportions of Lilt andFanta buyers buy Coke.This is another ‘straw man’created through a combinationof Kotler’s exaggeration andan unwillingness to embracethe spirit behind Kotler’s idea.Sure, the buyers of Coke, Liltand Fanta are not completelydifferent people but I am surethere are people who havea hankering (a need-state)for Lilt more often than forother brands and/or whowould buy it more often ifit were available or availablein the right size or simplypeople who are in the moodfor one or other of thesedrinks at different times. Ifthis is the case, is it so silly toconceptualise these people asLilt drinkers? I think not.major heresyFire is then turned onthe most sacred of sacredmarketing cows – theimportance of brands. Theattack is made on seven oreight fronts. The first attackis on the named versus blindproduct test, a cornerstonein the argument for brandingimportance which has receiveda significant boost in recentyears with reports that brandsstimulate brain activityin the hippocampus andother areas concerned withcultural knowledge. This isdismissed as being a symptomof familiarity rather thananything else but he presentsno substantial evidence.Ehrenberg/Sharpacknowledge that there issuch a thing as brand loyaltybut they assert that this is aphenomenon of the productsector, a habit adopted byhumans to make life simpler.This is undoubtedly true.They quote experimentsthat show that under testconditions, consumers showloyalty to trivial differences– for example, loaves of breadlabelled as L, M, P and H.However, to establish thecase that brands in the normalsense of the word don’tcontribute to loyalty, it wouldbe necessary to show thatunder similar conditions – forexample, perfect distribution– the levels of loyalty wereno higher than to the trivialalphabetic brands. This hasnot been done.Furthermore, the mostimportant point about brands– that they command higherprices – is not addressed.Qualitative researchamong brand users who showemotional attachment tobrands is dismissed as mythoriginating from interrogatingsmall samples of biasedcustomers who are paid forinterviews and reported bybiased researchers.Despite this scornfuldismissal, Sharp acknowledgesthat brand fanatics do existfire is turned on themost sacred of sacredmarketing cows – theimportance of brandsbut asserts without proofthat all brands have them inproportion to market shareand that even for iconicexamples like Apple andHarley Davidson they havelittle impact on loyalty. Thecustomer advocacy effecton recruitment is said to benegligible due to the smallnumber of fanatics but againno evidence is presented.glaring weaknessThe glaring weakness of theEhrenberg/Sharp project isthat it is a static analysis. Itcompares competing brandswith different market shares atfixed moments in time. Theyhave never studied how brandsbecome established in the firstplace and the mechanisms bywhich the largest acquired thegreatest number of users – sothe book is not about howbrands grow.Studying how growth hasactually come about gives aninsight into growth that astatic analysis can’t give.At one point in the book,Kotler is taken to task forsaying that brands shouldtarget specific segments but,according to Professor Sharp,segments don’t exist.Let’s take a dynamiccase – how Dove deodorantgrew. Dove deodorant’s shareplateaued a year after launch.A new scent variant wasintroduced but it cannibalisedthe original and the totalhardly increased.In year four, a variant forsensitive skin was launchedfollowed two years later byone ‘with added moisturiser’and then one called Invisiblethat didn’t leave marks onclothes. Each benefit wasadvertised and market sharegrew and stayed up with eachintroduction and there wasnegligible cannibalisation.By year ten, market sharehad doubled.An Ehrengbergiansnapshot, say over a six-monthperiod, is highly likely toreveal that buyers of thevariants have bought theoriginal too and their analysiswould conclude that there areno segments. I would submitthat the brand grew becausethere were consumers whohad a predisposition towardsa product for sensitive skin,another group who wantedmoisturiser and a thirdinterested in Invisible. Thenew scent found no significantsegment and, therefore, failedto grow the brand.Throughout his long career,Andrew Ehrenberg strove tomake himself clear, believingthat this was the way to winacceptance for his ideas. Butthis was the wrong diagnosis.Professor Sharp’s book isadmirably clear but despitewhat could be describedas a tour de force I am stillonly a partial convert. Theproblem isn’t lack of clarity,the problem is that at its heartthe analysis is one dimensionaland therefore incomplete. nDavid Cowan is founder ofForensics. david@forensics.eu.com‘How brands grow: whatmarketers don’t know.’Professor Byron Sharp,OUP (2010)16 Market Leader Quarter 4, 2011

i deas & issuesover to youconsuMer behaviourShould my brand be following the latest trend?From joseph gelmancoMpanies, especiaLLythose in the fmcg world,have a profound interestin understanding where theirconsumers are heading. Coolhunters, trend watchers,urban influencers: all ofthese subjects have becomea known and relevant partof the corporate world,with the objective of betterunderstanding how consumers’lives are evolving and how thiscan translate into innovativeproducts and services.Typically, a company willput effort into identifyingthese consumer trends anduse this knowledge as one ofthe inputs into the innovationprocess. When confrontedwith these trends, companiesusually embrace them andtry to respond to them. Insome cases, they are ableto become first movers orshape consumer behaviour byowning a certain trend at theappropriate time and with theright propositions.right place, right timeTrend identification is not anexact science. Evaluating therelevance (and even existence)of a specific trend can beincreased with systematicobservation and non-traditionalresearch methodologies.Yet, even if a trend isidentified and understood, acompany needs to reflect onsome key questions beforeusing it as a guiding light forevolving its brand:l Is this trend real and does ithave staying power?l Will it be relevant in mycategory?l Does my brand havethe permission/capacity torespond to this trend?l Will focusing on this trendaffect my current positioningand therefore alienate my keyconsumer groups?Answering these questionswill help a company definethe relevance (if any) that aspecific trend should have onthe innovation process and,ultimately, over its brand.One approach is to embracethe trend. Some brands havebeen very successful in doingthis. A good example is IKEA,which understood early onthe intersection between the‘do it yourself’, ‘simplicity’,and ‘modern look and feel’consumer trends and madethem the basis for its products,price points, and overallconsumer experience.We could say that IKEAhas been so successful atthis that it has actuallybecome the trendsetter thatother companies in theircategory have followed,with special emphasis on the‘do it yourself’ part of theequation (today it feels like itis impossible to buy furniturein Europe that one does notneed to assemble at home).Another good exampleis how McDonald’s hasresponded to the ‘healthierlifestyle’ trend by reshapingits menus, being moretransparent about its products,and even starting to changeits look and feel towards apalette that is dominated bythe colour green. It’s likelythat McDonald’s still makesmost of its money by sellingBig Macs and fries, but it hasgone through an evolutionbased on its views on howconsumers are changing. Doesthis mean that every brandshould adopt new trends insuch a transformational way?Not necessarily.know your consumersConsumers are complex, andtheir needs are not uniform.On the one hand, there will besegments of consumers thatwill not follow a certain trendand, on top of that, otherconsumers will embrace trendsdifferently based on productcategory or even specificconsumption occasions.This means that every trendhas an implicit ‘anti-trend’associated with it, and thereare opportunities for brands atboth ends of the spectrum.Table 1 provides someexamples of opposingconsumer needs that can resultin a trend and an anti-trend.We know that the anti-trenddrivenconsumer needs tofeel counter-intuitive, but thereality is that a good numberof brands have been verysuccessful in following them.In the fast-food example, itis clear that Burger King hasachieved success by followingthe anti-trend; it’s all aboutthe all-American eatingexperience versus the healthy/good citizen approach thatMcDonald’s has taken. Andthey are both doing well.be selectiveWe need to consider thattrends that at first glanceappear to be antithetical, canactually co-exist. For example,there is a key consumertrend around the ‘need formobility’, which has resultedin numerous easy-to-consume,single-serving and on-the-goproducts that are very much intune with the 20-something’slifestyle (or so we would think).At the same time, Heinekenhas developed a keg beer forat-home consumption, whichseemingly goes against thetrend, unless there is somespecific trend about spendingmore time at home sharingwith friends versus going outto clubs. Confusing isn’t it?It is important for brandsto pay attention to trends, butobservations and responsesneed to be systematic,avoiding oversimplificationthat leads to superficialanalysis or hasty reactions.After understanding thetrend, you must understandif it is a relevant one for yourcategory and brand. If it is,use it as one of the inputs forthe innovation process. If itisn’t, think of the possibilityof following the anti-trendand make your brand differentfrom all the others. nJoseph Gelman is a partnerwith Prophetjgelman@prophet.comtabLe 1: exaMpLes of opposing consuMer needs that can resuLt in atrend and an anti-trendtrend-driven consumer needanti-trend-driven consumer needLiving a healthier lifestyleSearching for pleasure and indulgence (regardlessof health)Participating in the ‘eco’ movement via consumption Believing that eco impact has been exaggerated,not paying more for ecoLooking for the best consumption experienceFocusing on products that meet basic needs,(pure, high-quality, sensory experience)whatever is availableKnowing more about the product, becoming an expert Disregarding product information or regulationMarket Leader Quarter 4, 2011 17

i deas & issuesover to youMarketing techniquesWhich is the sharpest tool in the marketer’s box?From laurie youngWriting a book is noteasy but the one I have justfinished was particularly hard.It started out as such a simpleidea. Like all marketingpeople, I have used differentideas, tools and conceptsthroughout my career.Yet, during the past 30years, so much has changedthat I wondered how solidmany familiar terms (suchas ‘product life cycle’ or‘positioning’) are and wherethey came from. I wantedto write a series of essayson their relative strengthsand weaknesses. It’s been sodifficult that I am convincedthat it has broken my brain. Yetit’s taught me something quitefascinating, which is that manyconcepts that are routinely andeffectively used by marketersare to be found, neglected, atthe back of the toolbox.Take, for example, viralmarketing. During the adventof the internet, many of uswere tempted to try out thisremarkable technique in thevirtual world. Some of usmessed up until we learnt tointegrate it with other mediaand to institutionalise theskills that make it work.Now, many routinely useit with other communicationmethods to build brands,generate leads or communicatewith buyers. Although punditssuch as Seth Godin andMalcolm Gladwell put thisnew version on the map, it hasbeen around a long time. JohnPears was certainly not familiarwith the term but he usedviral marketing to kickstart a300-year-old brand by getting18th-century schoolchildrento run around London withcatchphrases.And, in the same period,Japanese traders (such asMitsokusi) used it to markethigh-end goods alongsidehand bills. So, why, after ahundred years of so-calledmarketing science are youngprofessionals just being taughtit? It would have helped manyof our predecessors to knowthat successful business peoplehave, intuitively, used thistechnique so effectively.neglected ideasOne of the most worrisomeexamples of this neglect is‘thought leadership’. This iscommon currency in leadingglobal firms such as IBM,Microsoft, Deloitte, CliffordChance or Accenture. Manysee it as their prime methodof marketing and have mademillions from it over thepast decades alone. Serious,smart people have made upconcepts like ‘shareholdervalue’ or ‘CRM’ to sell to theircustomers.Moreover, it is anothertool that has been used forcenturies. People such as JosiahWedgwood, William Leverand Robert Woodruff usedit to persuade their intendedcustomers that they neededa new idea as much as a newproduct or brand.It is one of the most usefulways of stimulating demandfrom latent markets and isresponsible for the ubiquityof much that we take forgranted today (particularlytechnology). There is even acredible argument that it hasbeen as effective and influentialas advertising. So, why doesn’t‘thought leadership’ appear inany marketing textbook?Another term familiar tomany is ‘value proposition’.People arrive at these valuableconstructs in different waysbut they are routinely used toremind marketing and salespeople that life is about moreBrands set afirm apart fromcompetitors andcreate a uniquebond withcustomers; theycreate marginand profitthan price discounts and fightsfor market share.In some major globalcompanies, such as Fujitsu,sales people are not allowed toapproach customers with a dealunless they have been througha ‘value-prop workshop’.Agencies and marketersdedicate enormous amountsof time and effort into gettingtheir heads around the rightmix of price and features.Properly executed, valueproposition developmentmaintains margins andsafeguards profit. Again, thisidea is normally at the back ofthe box.It is strange that thesetools have been virtuallyignored by theorists. Theyare supposed to work outwhat we all do and condenseour successes into conceptsor techniques that will helpsubsequent generations.However, it’s impossible toavoid an impression that theyhave built a closed world viewabout accepted marketingthinking. This view holds ontolong-standing ideas (like ‘thefour Ps’ or ‘Boston matrix’) andmore recently ‘relationship’ or‘services’ marketing, some ofwhich are shockingly suspect.So, it seems that we arelargely on our own. Myoriginal sense that, after yearsof experience, we have tocome to our own judgementabout the viability of theseconcepts was right. Therereally is no canon of marketingknowledge; and we are a longway from having the armouryof professionally verifiedtools that, say, architects orlawyers have. For me, the bestinclude: value propositions,viral marketing and thoughtleadership.branding is topThe exercise of writing thebook has made me an evenbigger fan of branding. For along time, this was also at theback of the box, mixed up with‘packaging’ or ‘promotion’.Now there is a plethora ofinsightful publications on it.This is the tool I most value,the most useful contributionthat marketing skills have evermade to businesses. Not onlydo brands set a firm apartfrom competitors and create aunique bond with customers,they also create margin andprofit. And they are durable.In researching the book,I found 100s of brands soldtoday that have been inexistence for over 100 years.In an era when many businesspeople believe that it’s difficultto create enduring value, thesebrands have been commandingattention for many generations.To a great extent, marketingis branding and, for me, notmuch else matters. It’s clearlythe sharpest tool in the box. nLaurie Young is a writer andconsultant.lauriedyoung@aol.com‘The Marketer’s Handbook:Reassessing MarketingTechniques for ModernBusiness.’ Wiley, 2011.18 Market Leader Quarter 4, 2011

i deas & issuesover to youbrand ethicsHow important is it forbrands to be ‘good’?From jane asscherWhen is a consumer durablenot a consumer durable? Theanswer, of course, is when it’san indispensable status symbolthat just happens to double-upas something useful. Butwhat if that same statussymbol happens to have beenmanufactured in a sweatshopby poorly paid workers?Should it change how werelate to it? The findings of anew research study* suggestthat it should.The study asked 2,000people about their attitudeto brand ethics and how itimpacts their buying decisions.Of those polled, 91% saidthe way a company behavestowards its customers andcommunities is influentialwhen considering a purchase;74% said they like to knowabout the behaviour of acompany before buying;60% said that awarenessof a company’s ethics –environmental record,sourcing, employmentpolicies, charitable donations,etc – affected their purchasing.Although attitudes tendto exaggerate intendedbehaviour, these are highnumbers. It seems we arebecoming more inclinedto judge ourselves by thecompany we keep, and thatincludes the brands to whichwe might attach our loyalties.where should we lookfor explanations?We can first thank the arrivalof the internet. In a worldwhere everything is accessiblein real time, there is nowhereto hide. If a brand makes falseclaims or behaves unethically,sooner or later it will find itsway into the blogosphere,Most of us liketo support abrand that doesgood because, byextension, we arealso doing goodleaving damning and indelibledigital fingerprints.In addition, the economicturmoil of recent years hasresulted in a breakdownof trust in authority and agreater reliance on personalcommunities. In an age ofausterity, we understand thatbrands value our money, andthis knowledge empowers us.As individuals we may lackmuscle; collectively, however,we can control a brand’seconomic fate. Most of us liketo support a brand that doesgood because, by extension,we are also doing good.But what does it mean forbrands? Essentially, they mustup their game – not onlyby doing good but also byproviding information to showwhen and how they are good.This means deliveringa joined-up message, asUnilever found to its costwhen it attracted criticism overits Dove ‘For Real Beauty’campaign. The Dove campaignsought to highlight andcounterpoint the exploitativeportrayal of women inadvertising; while a parallelcampaign for Unilever’s Lynxdeodorant appeared to betrading on the very image ofwomen that Dove claimed toreject. As advertising punditRussell Davies observed: ‘Iknow what Dove believes in,and I know what Lynx believesin. I just have no idea whatUnilever believes in.’So this begs the question:what is being ‘good’? Ourresearch suggests it goesbeyond conventional norms ofcorporate social responsibility(CSR) – ie self-regulationand compliance with ethicalstandards. ‘Goodness’ hastended to be associatedrather narrowly withenvironmentalism (withcomplicated price trade-offs)but we believe that it is muchbroader and may not involveprice trade-offs at all.in the marketplaceWe are experiencing aseachange, a new ethos ofengagement, but one thathas yet to become universallyembedded in companies.The highly successfulEvening Standard (ES) GetLondon Reading initiative isone example of this culturalshift. ES chose a subject that isnot only directly relevant to itsbrand but intrinsic to it. Unlikea cause-related marketing(CRM) or CSR programmewhere there’s merely a neatalignment, the topic ofilliteracy is fundamental to ES.Having grasped the nettle ofthe embarrassing incidence ofLondon children who couldn’tread, the brand mobilisedcommercial partners asenablers of literacy, includingA-list celebrities, Mumsnetand Argos. Most importantly,it recruited ES readers,encouraging them to volunteeras mentors and fundraisers,not only giving them an activerole – as any proper CRMcampaign should – but alsoan involvement that createsa virtuous circle with readersreading about themselvesdoing good in the pages of ES.Involvement in aworthwhile cause cangenerate massive publicity,both for the cause itself and,by association, a brand. Toachieve this we know that abrand’s marketing and CSRgoals must be aligned with itscommunications in a credibleway, and not just bolted on.Communicating an ethicalinitiative effectively has alwaysbeen as important as theinitiative itself, but the new eraof ‘good’ behaviour requiresmore than this. The brandneeds to use the new socialmedia tools to enable peopleto become collaborators in thecause. Brands that are seen tocollaborate – with customers,staff and the world at large– make us feel good aboutconnecting with them.Successful brands alsomake it their business tomaintain a flow of relevantand transparent content – inabundance. It means goingbeyond traditional advertising– communicating in forums,generating word of mouth,buzz marketing, social media,local marketing, gaming,entertainment, events andmore – while continuouslyevaluating these channels tomeasure performance.At the heart of the newcorporate good is a movetowards consumer-drivenbehavioural change. Brandsthat recognise this andstructure their businessesaround genuine principles willbenefit. Being good gives abrand a competitive advantage;it gives consumers anotherreason to buy; it makes peoplebelieve passionately in theirwork and, most importantly,it’s great for society. n* Market research byTrajectory, conducted acrossthe UK in June 2011,commissioned by 23red.Jane Asscher is founderand chairman of integratedagency 23red.comMarket Leader Quarter 4, 2011 19

chopping BLockjeremy bullmoreIn praise of scepticismJeremy Bullmoresays we shouldn’tworry if people aresceptical aboutmarketing, it’sscepticism aboutthe police thatshould concern usYou’d expect, wouldn’t you, that any prolongedand evolving drama, starring journalists, lawyers,politicians and policemen, while certainly leavingsome of them worse off in the public’s estimation,would surely burnish the reputations of others?After all, what draws us to drama is white hats andblack hats; the knowledge that some will win andsome will lose; that good will triumph over evil orvice versa. Yet, astonishingly, the phone-hacking/News of the World/Murdoch/Cameron/Coulsondrama left every single protagonist a loser. It’s likethe joke ending of an Elizabethan tragedy: a cast ofthousands and every one of them dead on stage.I haven’t seen any new poll rating for the respectivestanding of professions involved, but it seemsinconceivable that any have prospered. Perhaps theironly comfort is that most of them started at suchlowly levels that they didn’t have far to fall.Some years ago, when the Today programmesponsored a poll, the ten least-respected professionswere: MPs, estate agents, government ministers,lawyers, journalists, footballers, advertisingexecutives, car dealers, company directors andaccountants. Traffic wardens and call-centre staffcomfortably trumped them all.Of all the professions involved in the latestshenanigans, the police have by far the most tolose. Traditionally, the police score well – upthere with farmers and doctors and teachers andsoldiers and vets. And the reason, I believe, thatthese occupations share such positive ratings, andwhat distinguishes them from the lower-scoringprofessions, is certainly something called Trust: butmore helpfully, it’s the lower levels of scepticism withwhich we believe they can be engaged.Scepticism is a seriously underrated instinct.Scepticism is not, as many suggest, the halfway stageto cynicism: the two are almost unrelated. Cynicshave made up their minds: their minds are closed.Sceptics have open, speculative minds. Just as painserves to protect us from further injury, scepticismserves to protect us from the consequences ofnaivety. Scepticism is evidence of both intelligenceand experience. Scepticism is informed wariness.Scepticism cultivates discernment. Scepticism doesnot signify distrust; just the absence of blind trust.Scepticism should be taught in schools.It is right and proper and deeply beneficial forabsolutely everyone that journalists and politiciansand marketing executives and estate agents andlawyers and car dealers should be the subject ofscepticism. We should all rejoice that that’s thecase. Healthy, educated scepticism is cost-free andserves to monitor trading far more effectively thanmost legislation. Laws quite often inhibit initiative;scepticism allows the competitive trader to tradecompetitively, to push his luck, to try things out, totest the limits of persuasion. Laws are top-down,indiscriminate and inflexible; scepticism is bottomupstuff, exercised individually.The existence of scepticism – necessary, benignscepticism – means that the lowly rated trades, ofwhich marketing is one, are destined to remainlowly rated. Careers advisory departments andstatus-conscious parents may regret this fact but weshouldn’t. We should all stop wistfully wishing thatwe attracted the unconditional respect enjoyed byfarmers and veterinarians. We never will; and if weever did, we’d live to regret it.When people have dealings with bankers orgrocers or insurance salesmen, when we buy justabout anything including our power and water,we’re doing a deal. We know what’s in it for us; andwe know that there’s also something in it for them.We just hope that the deal is a fair deal and we’rewatchful to see that it is. Competition helps to keepit that way – and so does scepticism.We know that people’s motives, more often thannot, are not pure but mixed. Plumbers provide anessential service and we’re grateful to them for that.We don’t expect them to replace our thermostat fornothing; we expect them to make a living. But we’reright to remain unconvinced when they tell us thatwhat we really need is a new boiler.We don’t believe that what motivates theinvestigative journalist is an undiluted, selflessdedication to the truth. We know that vanity, thepursuit of fame, scoops and sales come into it aswell – and that sometimes those pressures maycorrupt the outcome. Scepticism doesn’t negate ouradmiration – but it usefully tempers it. A competitiveworld without scepticism would be utterlyunworkable. Scepticism, painlessly, keeps us all, just,on the right side of the fair deal. We need to learn tolove it. To be rated way down on the respectabilityscale is a very small price to pay for such a bonus.But now let’s think of those more respected trades:of doctors and nurses and teachers and soldiers. Andthe police. The reason that we rate them so highlyis because we believe that scepticism about them ismuch less necessary. And so it should be. There’s nosocial value whatsoever to be gained from popularscepticism centred on the police. Yet through theirbehaviour, that’s exactly what they’re beginning tomake inevitable. We should be a lot more concernedabout that than the status of marketing. nJjeremyb@aol.com20 Market Leader Quarter 4, 2011

viewpointruth saundersHow marketers need toraise their gameMarketers needmore boardroomcredibility. ruthSaunders adviseson how to improveperformancethe average lifespan of a company, according tothe Standard & Poor’s 500, has dropped from 65years recorded in the 1920s to only 15 years today,showing how quickly established companies canunderperform, so much so that it’s estimated thatby 2030 over 75% of the companies in the S&P500 will be ones we don’t know today 1 .One of the reasons for a company’s demise isoften its lack of customer-led growth. Strategies forgrowth tend to differ from company to company –with some focusing on organic growth and otherson mergers and acquisitions. But in both cases,strong marketing strategy is pivotal. In MarketLeader (Q2, 2011), Hugh Davidson identified 12levers for generating profitable growth, half ofwhich are the primary responsibility of marketing,with marketing contributing significantly to theothers. Similarly, in this issue, Terry Tyrrell (seepage 28) attributes the failure of many mergers andacquisitions to the poor fit and management of theacquired brands, which is an area where marketingacumen is critical.So, are marketers sufficiently commerciallysophisticated to develop strong growth strategiesthat the business can deliver profitably? Are theya key driver in the boardroom discussions anddecision-making process? Can they galvanisethe business to implement the growth strategiessuccessfully?How marketing is seen todayTo have the impact needed in the boardroom, 93%of senior managers in our 2011 survey said it wasvery important for marketers to be commerciallyaware. Yet only 78% of senior marketing managers,49% of middle managers and 18% of juniormanagers are perceived to be so.This lack of commercial awareness has in partcontributed to CMOs having the lowest tenure ofany boardroom member (28 months versus CEOsat 54 months, CFOs at 51 months and CIOs at52 months 2 ) with such a high turnaround that50% of all executive searches are commissionedto replace CMOs 3 . Given this, it’s unsurprisingthat only 30% of marketers aspire to the CMOrole, with the other 70% aspiring to generalmanagement 4 ; only 4% of all UK CEOs have amarketing background 4 .Of more concern:l A recent Research International study showedthat marketing’s reputation as a discipline hasdropped to the bottom of the pile with a huge gapbetween it and the next worst.l The CMO Council believes that ‘only 40% ofCEOs rate their CMOs as strong’ with ‘nearlytwo-thirds of CEOs thinking that their marketersdon’t provide adequate evidence of ROI to gaugemarketing’s true performance’.l The Marketing Society’s Manifesto for Marketingstates: ‘Many chief executives believe that theirmarketers are not stepping up to the challenge asthey lack the discipline and capabilities to driveprofitable growth.’tHe divide between tHe board andmarketingTo be successful, it is important for marketers tohave three key mindsets:l A creative mindset that intuitively understandscustomers, and builds strong brands, breakthroughinnovation and distinctive marketing campaigns forthe future.l A risk-taking mindset, with the bigger theinnovation or creative leap, the bigger the rewardsbut also the bigger the risk.l A mid- to long-term mindset, taking time tobuild and deliver truly breakthrough ideas that willlead to step-change growth.Yet to protect and manage the companysuccessfully, it is important for the board to have:l An analytical mindset that focuses on growingshareholder value by delivering profitable,sustainable growth.l A risk-averse mindset, optimising the netpresent value (NPV) of new initiatives, usingtesting and in-market tracking to course correctquickly when needed.l A short- to mid-term mindset, looking for waysto grow the business now, along a proven timelineand with a proven cost to achieve a proven result.While these differing mind sets are important forcompany success, they can create a divide betweenmarketing and the board day to day. CEOs are oftenfrustrated with the following: marketing’s lack offinancial rigour, especially the difficulty in measuringROI of new product ideas and in-market activities;desire to take risks, committing huge sums of moneyto seemingly unproven marketing campaigns; andlong-term mind set, often expecting marketingcampaigns to take a while to ‘take off’, rather thandelivering the quick wins that the business demands.bridging tHe divide‘The nature of the deep reform that I believe businessmust lead is nothing less than a shift from what I callquarterly capitalism to what might be referred to as22 Market Leader Quarter 4, 2011

viewpointruth saunderslong-term capitalism (at least five to seven years)… Thismeans changing how we view business’s value and itsrole in society.’Dominic Barton, managing partner, company,‘Capitalism for the Long Term’Since marketing’s strength is in delivering midtolong-term growth, boards increasingly need tounderstand the importance and value of marketing.But this will not happen until marketers themselveshave greater credibility. This credibility will comefrom improving performance in a number of areasincluding the following:1Developing marketing strategies that areproven to deliver profitable quick wins thatbuild trust with the board as well as mid- tolonger-term business growth – by working closelywith cross-functional teams to identify quick wins,select which products, customers, geographies,channels and brands to focus on, and understandthe barriers and costs of being customer centric,thus developing value propositions that will deliverprofitable growth.For example, a telecoms company identifiedthat two of its five customer segments werekey to its business growth as they bought theirbiggest-selling profitable products, yet only30% of the company’s spend was directed to thisgroup. Additionally, one of the reasons for thesesegments dropping out of the purchase processwas poor call-centre performance (ie it took a longtime to get through, they were sent the wronginformation, contact details were difficult tofind). Thus, by focusing on improving call-centreperformance as well as refocusing spend onthe two most important customer segmentsthe CMO was able to deliver quick wins andsustainable growth.2Building a compelling business case thatthe board can buy into – one that is structuredin an easily accessible top-down way,supported with strong business financials to make ita robust and clear business case.For example, a financial services companystruggled to get board buy-in to a brand namechange three times, primarily due to the lack offinancial rigour, such as the commercial upsidefor the business, and the timeline, costs and risksof doing it. By building a strong business case andsyndicating it individually with each board memberearly on, the marketing director got approval whenit next went to the board.3Tracking in-market performance tomanage risk – including measuring the ROIof in-market activities and quickly killingunderperforming ones, closely tracking in-marketperformance and quickly course correcting whenneeded, and continually testing and learningin-market to identify the best performing activities.For example, when an fmcg company launcheda cosmetics brand in a test market, the marketingteam went out to the test market area in week oneto watch how people shopped at the in-store fixtureand to run focus groups to understand how wellthe advert was working. By doing so, they quicklyrealised that the on-shelf presence was sub-optimal,and the advertising was poorly branded and so theywere able to fix these issues quickly.It’s tougher than ever for companies to grow,and marketing is increasingly important in helpingcompanies achieve this. Yet, marketing teamsoften struggle to have the commercial impact theyneed in the boardroom to be successful. To becommercially credible, marketers need to be betterat showing how their marketing strategies will buildshareholder value, building compelling businesscases that the board can buy into and trackingin-market performance to manage risk. nRuth Saunders is founding partner atGalleon Bluersaunders@galleonblue.comSources:1. ‘Creative Destruction’ by Richard Foster2. Spencer Stuart Survey, 20083. CMO Council4. Robert Half Survey, 2009Cmos need to have acreative and risk-takingmind set to make themost of big rewardsavailable from taking agamble on products ormarketing plansMarket Leader Quarter 4, 2011 23

e ntrepreneursluke johnSonHow to picka winnerEntrepreneurs are a poorlyunderstood breed. If academics,investors, civil servants andpoliticians were more familiarwith the entrepreneur tribe, returns oncapital would improve and industrialpolicy would be more effective. Foundersare by nature individualistic and hardto analyse. Literature on the subject isneither extensive nor profound; giventhe importance of entrepreneurs tojob and wealth creation, it is a costlyomission. Academics have tried over thedecades to categorise entrepreneurs toprovide insight into their motivations andlikelihood of success.For example, Robert Hornadayproposed a simple division between‘craftsmen’, ‘promoters’ and ‘professionalmanagers’. The first type take great pridein the technical aspects of their products;the second are ‘wheeler dealers’ whoconcentrate on making money; the finalsub-species have a structured approachto their trade, adopting many of thehabits of large corporations. Craftsmenare passionate about quality, but ofteninsufficiently ambitious. Promoters lacka long-term perspective. Professionalmanagers can build scale, but may betoo inflexible.Orvis Collins predated this work, witha study in the early sixties. In EnterprisingMan (Michigan State University Press,1964), he and his colleague David Moorewrote about ‘trained’ entrepreneurs,who study MBAs; ‘like father, like son’types, who inherit a family business; and‘opportunistic’ entrepreneurs, who seizechances as they arise.And in the work of researcherDouglas Gray we find an extensiveset of typologies, including soloists,inventor-researchers, acquirers,speculators, lifestyle entrepreneursSuccessful entrepreneurLuke Johnson acknowledgesthat researching the psychologicalmake-up of entrepreneurs isdifficult, but here he offers sometips on how to identify, and makethe most of, potentialand conglomerators. In all this workthere is a degree of confusion betweenpersonality types and outcomes. Forexample, a ‘promoter’ might becomea ‘conglomerator’, and a ‘professionalmanager’ might be an ‘acquirer’ or an‘inventor-researcher’. It all seems ratheracademic, in every sense of the word.Rule bReakeRSWhat interests me most are psychologies,backgrounds and spotting winners. Ofcourse, actual people do not fit intotheoretical definitions. By their nature,entrepreneurs are rule breakers who donot conform to sets of rules about theirtraits and what inspires them. If theirmagic could be simply identified, it wouldbe a straightforward matter to recogniseand back future business champions. Anyventure capitalist will tell you how hardit is to know in advance which businessprospects will turn into the big hits, andwhich will stumble and fail.I like to think my judgment aboutprospective business partners is gettingbetter, as it should after decades oftrying. But there are no guarantees. Themost impressive characters can suffercommercial disasters, and the most robustcan have breakdowns. I read endless listsof what to look for and what to guardagainst. But that sort of perfection isimpossible in the real world; we are allflawed and, anyway, many of the true starswould never tick all the boxes.However, I do hold one firm viewabout entrepreneurs: strengths aremore important than weaknesses. If youhave one or two remarkable talents,they may carry you to the top in spiteof many shortcomings. So, if you area wonderful salesman, or a brilliantinventor, or a phenomenal picker ofpeople – it might be enough, even if youare a poor general manager.Entrepreneurs are not typicallywell-rounded human beings. Likeartists, writers and other creative people,entrepreneurs have a mission and askill they feel an overwhelming urge topursue. In addition, drive and energyare necessary attributes, while luck anda special ingredient such as those listedabove are also required. Even with acomprehensive databank that enabled anexhaustive examination of every livingentrepreneur, no one could deliversure-fire predictions. The sheer breadthof personalities who ascend to the summitshows that there is no single gene forsuccess. I think we can all take comfortfrom that.Should I InveSt?There are five questions I ask myselfbefore investing.1How good is the managementteam? The quality of themanagement of a business is theacid test. If I do not like the peoplewho run the show, forget it. I do notignore instinct – if my gut feeling tellsme the operators are useless, I walk away.Management must have achieved things intheir careers. Do not back mad no-hoperswho are always punting a crazy new idea.These types will lose you money. Look24 Market Leader Quarter 4, 2011

e ntrepreneursluke johnSonfor winners who are obsessive about theirbusiness and who can demonstrate pastperformance.Make sure the management team ishonest. Working with crooks as partnersis a gruesome experience. I recall puttinga small amount of money into a tinyprint company. Unfortunately, as soon asI invested the sales collapsed, althoughthe business continued to use a constantamount of paper. The operator was doingbusiness off the books, avoiding thetaxman and me. I very quickly sold himmy shares at a loss.Managers must have high energy levelsand be totally motivated. If they are sicklythen the enterprise is doomed – no onewho is ill can cope with the demandsof building a profitable undertaking.Most importantly, the managers musthave knowledge and experience of thetrade: they must know the technology,customers, competitors and the best staff.Finally, many of the best managementhave a large part of their wealth tied upin the enterprise. Most entrepreneurs areat least partly motivated by money, andto have cash at risk helps focus the mindand management’s interests with thoseof shareholders.2Is this company going to winbig? Rather than dealing in andout of endless marginal situations,I look for investments that havethe potential to grow substantially, whereI can double, treble or quadruple mymoney. These are the investments thatreally make the difference to me.Ideally, I want to see companiesthat can expand their sales, marginsand their multiple. In other words,I pursue situations that will attract ahigher P/E ratio over time, havingdemonstrated significant organic growthin sales and profits.Generally, I ignore nice, safe littlebusinesses with limited upside. Aninvestment portfolio will only reallyany venture capitalist will tell you how hardit is to know in advance which businessprospects will turn into the big hits, andwhich will stumble and fail>Market Leader Quarter 4, 2011 25

e ntrepreneursluke johnSonThe hardest thing inbusiness is to buildsales from scratch –so I prefer to supportan entrepreneur whounderstands themarketplace and howto satisfy itperform once it’s found a few of the fabled‘ten-baggers’ (stocks which rise tenfold).Such investments will allow you to endup with excellent returns despite severalmiserable performers.Both Peter Lynch and WarrenBuffett – two of the legendary investorsof our time – agree that longer-terminvesting in outstanding companiesproduces above-average returns. Theeffective private investor focuses on a fewsound businesses, running winners anddropping losers.3Have they found a solidniche? It’s unusual to find bignew British companies growingrapidly. I am much more likely toidentify opportunities with a vast upsideamong small, specialist companies. Suchbusinesses should possess decent barriersto entry, be it a brand, patent, contracts,franchise or other proprietary situation.Ideally, the company should be unique,since it must compete against largecompetitors which will be better financed.In the real world, such companiesshould have products or services that areevolutionary rather than revolutionary,since markets can take years to acceptradical changes. Such drawn-out plays canproduce low annualised returns that fail tomatch those produced by small companiesdelivering follow-on, adapted technologythat is usually quicker to profit.4Is this firm making sales today,or hoping for sales in future?I want companies that have salesand can market. I tend to avoidentrepreneurs with marvellous gadgetswith no proven commercial potential.The hardest thing in business is to buildsales from scratch for a new business – soI prefer to support an entrepreneur whounderstands the marketplace and how tosatisfy it.I avoid research-and-developmentspecialists who do not understand theimportance of distribution and copingwith the competition.5Do management understand thenumbers? Do I understand them?I read all available informationabout the prospective project – beit an annual report, a prospectus, businessplan, budget or management accounts.They need to clearly explain the key factsabout the profitability, balance sheet andcash flow of the company.They should identify any obviouslyscary items, and get me comfortable withthem – or give up. There will always beanother deal. If the transaction revealsitself as a stinker, I will walk away, nomatter how much time and effort I havedevoted to the proposal.I must believe the numbers, andknow how the funding and cash cyclesand margins will work for the businessin question. Only then can I makesensible valuation comparisons withother opportunities and make the rightyes/no decision.bad buSIneSS planSI spend a lot of my time studying businessplans from entrepreneurs who are lookingfor investment. Many are impressive,but some are ghastly. Among the worstoffences are the following:Aggressive confidentiality clauses andan over obsession about non-disclosureagreements. I find this sort of pushy legalstuff very off-putting, especially for startups.Often you are expected to sign-upto very rigid terms without even knowinganything about the proposition. In suchcircumstances, I just turn the deal downflat. If the entrepreneurs distrust methat much, they ought to seek backingelsewhere. Would-be restaurateurs areoften the worst offenders – would I reallybother stealing their idea?Overly technical documents. Businessplans should be written in layman’sterms and avoid all jargon and endlessacronyms. They should be readable andaccessible, not obscure. Inventors can gettoo wrapped up in their subject – theyforget that there are always thousands ofprojects seeking money. And promotersoften use long-winded gobbledegook todisguise a fundamentally bad idea. If Ican’t understand the deal, then I don’tget involved.Lack of focus. Plans that cover too muchterritory and companies that try to dotoo much at once don’t appeal to me.Successful concepts are mostly simple,and successful entrepreneurs generallyconcentrate on a finite market andproduct range.Preposterous valuations. Obviously,things that are far too expensive gostraight in the bin. Such plans usuallywork back from a daft conclusion basedon wild future projections, or spuriouscomparisons. Instead, valuations shouldbe based on sensible estimates of whatinvestors would actually pay. Of course,this means you miss the odd Facebook,but I can live with that.Biographies. These should be honestand full. They are perhaps the singlemost important part of the entire26 Market Leader Quarter 4, 2011

e ntrepreneursluke johnSonproposal. I want to really know theowners and individuals who will make thething happen. Vague or brief CVs makeme suspicious. The chief executive andfinance director’s résumés are the onesthat matter: big-name non-executivescannot compensate for weak executivemanagement who are actually runningthe business.The numbers. This is really critical.The funding requirement, the estimatedreturns, and the cash-flow projections –these must be attractive and sufficientlyambitious to be worthwhile. No one isgoing to put huge effort into a projectthat will never grow beyond ‘one manand his dog’. The figures should all bestated up-front in an uncomplicatedformat. Do not bury them at the backof the pack. Everyone knows whateveryou budget will be wrong, but a targetto aim for is better than nothing. Thekey calculation is your cash break-evenpoint; once you hit this revenue and costcombination, you know you can survive –then you can build.Details of the competition. All capableentrepreneurs know their competitionwell. If they say they have none they arefooling themselves. A solid business planhas plenty of specifics about their rivals,and why their particular proposition has agenuine competitive advantage.Perfection. Every situation is flawed,and if you look for an opportunity withno drawbacks then you will never investin anything. I quite like deals with aknown problem, because then it can beaddressed and the price can be adjusted tocompensate.Huge appendices and too manyspreadsheets. These might be necessaryfor loan applications, but equity investorstend to decide based on a few keypoints. All the supportive evidence andbackground material can be supplied laterif the proposal is of real interest. Don’tbury the hooks with padding.Getting someone else to write it. Itshows when advisers rather than principalsauthor a plan – it lacks authenticity. By allmeans have experts critique your work butactually do the first draft yourself.Make sure it can be emailed. Do notrely on the post, or present would-bebackers with voluminous amounts ofpaper. Just get their email address andsend them the core presentation online.Catch their attention early and it may leadto something.Unbelievable margins, profits andreturns. Plans that suggest your companywill quickly achieve operating marginsof 35%, returns on capital of 100% andso on are not credible. Be realistic andconservative and you are more likely to betaken seriously.Writing a compelling business plan isan art. It should give a venture the bestpossible chance of securing finance and itis worth taking huge care over the task.a lISt of don’tsThere are quite a few advisers out therehelping start-up companies – banks,accountants, small-business agencies.Much of what they say is sensible enough,but few of these mentors have actuallydone it themselves. So allow me to presentto you a handful of things entrepreneursshould not do when taking the plungeinto self-employment.Do not leave your job. Do not rentfancy commercial premises. Initially useyour home or garage. And if you haveto get space, make sure it’s short term,like serviced offices. In 1975, Bill Gatesdropped out of Harvard and startedMicrosoft in an Albuquerque motel room.Do not be vain about such matters – lowcosts are everything.Do not be put off by the prospect ofa downturn. Many great companiesare founded when times are tough, andoften remarkable opportunities arisedespite the economy struggling. I tookcontrol of Pizza Express in 1992 – whenBritain was in recession – and it changedmy career.Do not spend money on advertising.Especially for fledgling enterprises; PRis a much better bet. There are so manymedia outlets now, thanks to the digitalrevolution, that any new product orservice can get some editorial coverage ifyou try hard enough. And not only is PRmuch cheaper – editorial attention hasmuch more impact.Do not engage expensive advisers.Teach yourself the basics of commerciallaw, accountancy, property and so forth.All these professionals will chargesubstantial fees to tell you thingsyou can discover easily online or in abeginner’s handbook. By gaining a solidunderstanding of these disciplines youwill make better-informed decisions.For complex matters, such as a 120-pagelease, you will need advice, but simplethings like registering a company you cando yourself.Do not take on partners in a rush. Byall means work with others, but treadcautiously before actually setting upin business with someone. You need toknow someone well – their motivation,their ambition, their honesty – beforeembarking on such a journey together.Running a company is often ademanding affair, and incompatibilitiessoon come out. Work initially on a trialbasis as a partnership before makingbinding commitments.Do not go ahead if your spouse orpartner is against it. Make sure theyUse PR. There are so many media outletsnow, thanks to the digital revolution, that anynew product or service can get some editorialcoverage if you try hard enoughare totally supportive of your plans.It is almost impossible to succeed inthe challenging task of building a newbusiness if you have huge domesticupheaval too.Don’t be over ambitious. By all meansdream of reaching the stars, but start on arealistic scale and grow. Develop a pilot,make it work, prove the concept, andthen seize the day. There will always beunexpected problems and obstacles. Learnhow to overcome them while operationsare small.Don’t be lazy or impatient aboutresearch and homework. Know yourmarket intimately. Study your prospectivecustomers and rivals obsessively. Learneverything you possibly can about yourscheme: the costs, technical issues, staffneeds, pricing, marketing and so on.Prepare a comprehensive business plan,even if you don’t need finance, simply asa discipline. nLuke Johnson is chairman of RiskCapital Partners Ltdluke@lukejohnson.orgThis is an edited extract from the book‘Start it up: Why running your ownbusiness is easier than you think’,published by Portfolio Penguin, 2011.Market Leader Quarter 4, 2011 27

growth strategiesterry tyrrellterry tyrrell argues that themismatch of cultures and failureto examine brand fit lies at theroot of the problem with strategiesof many mergers and acquisitions.A more prominent role formarketing in the due diligencewould helpIgnore culture anfit at your perilMerging or acquiring isa perfectly sensible strategyfor growth and one that, onthe face of it, would seem topromise faster and more secure earningsthan an organic-growth strategy. Butdespite the successes, the overall record issurprisingly poor.‘I’m into murders and executions,’says the character of Patrick Batemanin Brett Easton Ellis’ gruesome tale of1980s Wall Street. A tongue-in-cheektwist on his daytime activities of mergersand acquisitions, the insightful remarkfrom American Psycho is somewhat onthe money.M&As are considered by many tobe ‘murders most foul’ with a bodycount that includes AOL-Time Warner,HP-Compaq, Alcatel-Lucent, DaimlerBenz-Chrysler, Mattel-The LearningCompany and Novell-WordPerfect, toname but a few.Some mergers failed so spectacularlythat the combined company went bellyup; others ensured the demise of theirmasterminds; some companies struggledto reverse their fortunes but not withoutsubstantial cost; while others were simplybad ideas doomed from the outset.Don’t just take my word for it. Muchresearch also supports this gloomyoutlook. According to some reports,up to 80% of M&As were considereddisappointing, with the main reasonbeing the deterioration of their stockmarket value. To start with, two-thirdsof big mergers lose value on the stockmarket. Less than half the mergerscreated in the 1980s and 1990s havecreated value for shareholders, accordingto The Conference Board. Perhaps most

growth strategiesterry tyrrellbrandshockingly McKinsey & Co found that80% of mergers don’t earn back the costsof the deals themselves.The problems aren’t just a matter ofP&L. Hewlitt Associates’ research alsoshows that less than 10% of managementtime is spent on brand fit duringM&A due diligence; and 70% of failedmergers are due to poor communicationand integration issues (Roffey ParkManagement Institute). The number-onecause of acquisition failure is due to culturaldifferences not being addressed (Mitchell& Holmes); and anticipated economies ofscale do not always materialise.In the real worldAt worst, operating results deteriorateinstead of simply maintaining value andshareholders suffer all round.On paper it might sound as simple ascombining computer systems, integratinga few departments and using brute sizeto force down costs et voilà, a moreprofitable giant post-merger. But ifthis was the case, how do things like‘ChryslerDaimler – a marriage doomedfrom the start’ end up splattered acrossthe headlines?Mergers and acquisitions are verymuch back in the headlines. McKinseyreports that this year there will be anupturn in M&As on the back of renewedboardroom optimism and strugglingbusinesses ripe for the picking. Butthere’s nothing headlines love more thana failed merger.However, it need not be all bad news.Dieter Zetsche, DaimlerChrysler’soutgoing CEO, said in the aftermathof Chrysler’s failed union with DaimlerBenz: ‘We obviously overestimated thepotential of synergies. I don’t know if anyamount of due diligence could have givenus a better estimation in that regard.’I disagree: 360° due diligence wouldhave identified the pitfalls ahead prior toembarking on an M&A, had it put brandat the centre of its strategy.why brand?One of the primary objectives of anyM&A strategy should be to increase brandequity. Your brand is your reputation,and reputation sells. Considerationof the reputations of the two mergingorganisations is critical in ensuring thesuccess of the organisation, post-merger.Like it or not, the world will judge thenew brand partly on the ‘why’ behind themerger. Do you and your employees knowthe answer?Intangible assets, for example acompany’s goodwill, make up most ofthe value of M&A deals, with brandmaking up a considerable portion of thatasset value. It’s worth remembering thatGoogle, a brand with lean traditionalassets, is ranked first on BrandZ’s top 100Most Powerful Brands list with an eyewateringbrand valuation of $114,260m.Having acknowledged the value ofbrand on the balance sheet, why is it thatconsideration of brand strength and brandmigration issues is typically left untilafter the deal is done? Sorting out thecombined companies’ brand portfolios israrely part of due diligence and is typicallyevaluated post-paperwork and under theheading of ‘cost structures’.Acquisition is typically motivated byproduct or market synergies. Deals arebrokered and wars are waged roundboardroom tables by investment bankersand lawyers, grey ‘suits’ who do notnecessarily represent the cultures of thecompanies in their corner. While notall M&As fail, those that ignore brandissues and cultural differences are puttingthemselves in danger of failing.The brands should be part of the centralorganising principle, with thoroughreviews of positioning compatibility andbrand migration strategy of the betrothedbrands from the outset. After all, the‘soft issues’ can cause hard landings if notproperly addressed.brand forensIcs – how to avoIdthe bloodbathIt is imperative to consider brand impactearly on. Ask the following questions:1What are the combineddrivers of reputation thatcan add value? Apart fromthe obvious operationalsynergies, strategically aligned brandreputations and their reach can leadto attractive revenue synergies. Forexample, enhancing the acquirer’s sales,enabling it to operate in new marketsand increasing the likelihood of successwhen introducing new products. Thiswas one of American Kraft’s primarymotivators behind its hostile acquisitionof British Cadbury.2How will the new companyposition itself? Is it merely amatter of combining two setsof reputational assets, or a newopportunity to reposition the combinedbusiness, where 1 + 1 = 3?3Will the acquirer have themajority of the target company’svoting stock to acquirecomplete brand control? Thiswill prevent nasty surprises around brandcontrol. Volkswagen learned this lessonthe expensive way ($400m to be exact)when it overlooked the small print andbought a pile of Rolls-Royce metal andnot the Rolls-Royce brand.4What are the relative brandstrengths of the two entities?Consider this in the due diligenceprocess. This will help guideboth short- and long-term brand strategyand future brand transitions. The recentContinental-United Airlines mergerindicates that the new brand will featurethe United name recast in Continental’sfont, a move we hope is not simplycosmetic and all veneer.>

growth strategiesterry tyrrell5What are the other values thatbrand analytics offer? An auditof brand product portfolios andoverall brand architecture andunderstanding strengths, weaknessesand synergies will be vital in ‘selling’ themerger to shareholders.the rules of engagementPerhaps the single most important areafor review is cultural fit. This couldmake or break the long-term successof the deal. Among the minefield ofproblems when bringing two companiestogether, is a difference in corporatecultures. Companies are like families,each having their own habits and rituals.If not acknowledged, the outcome canbe resentment, an unwillingness to worktogether and shrinking productivity.According to some reports, up to 80% ofM&As were considered disappointing, with themain reason being the deterioration of theirstock market value. To start with, two-thirds ofbig mergers lose value on the stock marketCultural fit is vital to talent retention,which is in turn vital to reputationmanagement. After all, your people areyour biggest asset – people are yourbrand. More than half of the respondentsto a recent CIPD survey who hadrecently undergone an M&A said theyactively thought about leaving their jobs,citing ‘I find myself in a job I did notpick, working for an organisation I didnot choose to work for’. The departureof Phil Rumbol, marketing director atCadbury and mastermind behind the‘Cadbury’s gorilla’, is the latest in a lineupof departing executives in the wakeof the Kraft takeover. I would hazard aguess that the reasons extend beyond‘relocation difficulties’.While culture may seem like a soft issuewhen evaluating mergers, compared withproduct, market and resource synergies,the opposite is actually true because cultureis pervasive. From the post-room staff topayroll to the principal, it permeates everypore of your business. It affects how theeveryday procedures are done, whetherthere is shared understanding duringmeetings and in promotion policy, howpriorities are set and whether they areuniformly recognised, whether promisesthat get made are carried out, whether themerger partners agree on how time shouldbe spent, and so forth.Cultural conventions emerge tomake individual firms more efficientby creating a shared understandingthat aids communication and action.However, when disjointed, conflict andmisunderstanding are added hurdles torealising economic efficiencies.hearts and mIndsVision and communication are at theheart of brand building, which is alsoat the heart of successful integration.When intercultural differences areignored during the evaluation andnegotiation stages of a merger, integrationinevitably fails.Train your leaders, managers and HRpersonnel of companies in interculturalcompetency. Through sensitivelymanaged interviews, questionnairesand communication audit (internal andexternal), assign a metric that allowsidentification of synergies and gaps acrosskey cultural areas:l senior management style;l management style and culture;l employee attitude and engagement;l brand alignment – strategic;l brand alignment – work environment;l brand alignment – employeeengagement; andl brand ‘touchpoint audit’ alignment.An essential part of your riskmanagement is knowing ahead of timewhat issues can inform the decisionto pursue the M&A and inform theintegration strategy. You need to considerwhat the added value of combining acompany’s two best bits is. Also, considerthe end point at the beginning and havethe best goal in mind from the start andmap your strategy towards it.This exercise should not be seenas reactive damage limitation but as apositive, proactive means of creatingcohesion, maximising efficiency andbuilding a competitive advantage. It’s vitalto get your people onside early. After all,coups originate from within a country’sown army. If you haven’t got the civilservice onside, no prime minister canbuild an empire. nTerry Tyrrell is worldwide chairman atThe Brand Unionterry.tyrrell@thebrandunion.com

fooD M arkE tingDAmien mCLoughLin, mAry SheLmAn AnD DAviD e BeLLCompanies find it hard toco-operate. They should tryharder. A strategy of workingtogether can help nationalcompetitors to sell internationallyby increasing the potentialmarkets and taking advantageof shared economies of scale,say Damien McLoughlin,Mary Shelman and David E BellThE roLL-caLL of food andagribusiness firms of globalscale is noteworthy but short.‘Co-opetition’ is a strategythat invites competitors to compete insome areas and co-operate in others.The advantage, from an indigenous firm’sperspective, is that scale can be relativelycheaply and quickly assembled. Theauthors use two Harvard Business Schoolcase studies 1 to demonstrate the strategy’spotential.international business 2020and ‘Co-oPetition’Few crystal-ball gazers in 2000 couldhave predicted both the mayhem andthe opportunities that exist in theglobal business environment today.Looking ahead from 2011, what is morepredictable is that global food marketsin the next ten years will have a numberof qualities in which scale will be a veryuseful asset. Primary among these is thelocation of growth. While most Westerneconomies appear to be returning to theirsomewhat normal economic pattern,the location of higher economic growthhas undoubtedly shifted to Asian, SouthAmerican and African economies.The first principle of a growth strategyis to be in the markets of highest growth.These economies offer the greatestpotential but working there requiresa level of time commitment, resourceinvestment and risk that is challenging forall but the largest firms.Second, the so-called ‘hell’ curve ofthe market is likely to continue to punishthose who are neither the lowest-costproducer nor recognised as producers ofthe highest quality. Achieving the formeris very difficult for food companies outsidethose with scaled national production,Strengthin numberswhile the latter requires a brand thatprovides the opportunity to secure a pricepremium, cope with the power of theretail trade and drive consumer demand.Third, the understanding andappreciation of risk has changed sincethe financial crisis. Firms expect higherlevels of volatility and a greater frequencyof so-called ‘Black Swan Events’ – thosethat happen with little warning but whichare capable of rapidly changing the rulesof the game. While risk management andenvironmental-scanning techniques aredeveloping to meet the revised concern forvolatility, a certain level of scale is requiredto buffer organisations from these shocks.Food and agribusiness firms face twooptions before putting new growth plansin place: wait until their scale allowsthem to meet the challenges outlinedabove, or find a way to get around them.In our opinion, ‘co-opetition’ is the bestway to do this; it offers a speedier optionthan organic growth and a cheaperoption than acquisition.Put some ZesPri into yourstrategyFollowing a second catastrophic collapse inprices for New Zealand kiwifruit in 1992,a government-sponsored review pointedto the need for the kiwifruit industry toadopt a greater customer focus and placeless emphasis on commodity trading.This ultimately led to the establishmentof Zespri, a ‘corporatised co-operative’with three aims: produce kiwifruit withconsistent quality and taste; increase thesize of the global kiwifruit market; andimprove the returns for the large andsmall kiwifruit growers who owned theorganisation. One important factor inZespri was that while growers and packerscompeted for sales in Australia and NewZealand, they decided that internationalmarkets had to be tackled as one.32 Market Leader Quarter 4, 2011

fooD M arkE tingDAmien mCLoughLin, mAry SheLmAn AnD DAviD e BeLLNew Zealand is not the largest producerof kiwifruit in the world (China and Italyare larger and Chile is also a significantproducer) nor the cheapest (its productioncosts are estimated to be 50% moreexpensive than Chile due to expensiveland, labour and transportation). It wastherefore forced into a strategy that wouldallow premium pricing.The Zespri brand name was launched in1997 as a response to consumer researchwhich found that consumers saw kiwifruitas ‘ugly as sin and tasty as hell’ and thedesire to capture this uniqueness.To fuel its brand, Zespri ‘virtually’operates an integrated supply chainlinking New Zealand growers toconsumers around the world.Every year, Zespri delivers the world’sbest kiwifruit by enforcing a commonset of standards in areas such as quality,traceability and sustainability. It alsoinvests in product innovation. In 1998it launched Zespri ‘Gold’, which is anintellectual-property protected yellowfleshed(rather than green) kiwifruitwith excellent taste and superior farmproductivity. The premiums that this andother new products (eg organic versions ofZespri Green and Zespri Gold) produceare essential to support the brand story,fund additional research and maintain thepremium price paid to growers.Genuine customer focus is importantfor Zespri because it enables the brandto be sold at different price pointsand have different positions in theinternational markets in which they work.For example, in Japan, consumers arewilling to pay a 30% premium for ZespriGold because of its sweeter taste andperceived health benefits.Customer focus is also importantbecause grower-led organisations aremost often focused on supply concerns(returning the highest price to thefarmer) rather than demand builders(investing in innovation and branding),which inevitably limits their ability todrive profitable growth in geographicallydiverse markets.Aligning its economic interests withthose of distributors and retailers, Zespri’sambition is to maximise retailer returnson shelf-space through higher prices(and correspondingly higher margins),more frequent inventory turns and lowerwaste. In return, it seeks partners who willsupport the product at the store level.Zespri’s support for retailers comesin a variety of forms including stronglocal TV advertising campaigns, drivingthe benefits of kiwifruit which are mostprominent in the market, and an activeprogramme of in-store sales promotionsand product demonstrations.In 2010 Zespri held 30% global marketshare for kiwifruit by volume, but 70%by value with exports to 60 countries. Itenjoyed strong growth in Asia, helpedgreatly by its Gold variety, and hada number of new technology-basedinitiatives in the pipeline to support theglobal brand. Its ambition is to doublesales by 2025.Putting musCle onto the irishbeef industryThe challenge facing the Irish food andagribusiness sector is similar to NewZealand’s (both have very small domesticmarkets), but with an added twist. Thepost-2008 bursting of a property bubblein Ireland led the country to the brinkFood and agribusinessfirms face two optionsbefore putting growthplans in place: wait untiltheir scale allows themto meet new challenges,or find a way to getaround themof economic collapse and a bailout fromthe EU/IMF. The Irish governmentlooked to the indigenous food industryand its potential to expand exports into arising global food market as one route toeconomic recovery.To meet this objective, the Irish FoodBoard (An Bord Bia) commissioned astudy by two Harvard Business Schoolagribusiness specialists. Their report,Pathways for Growth 2 , identified ‘coopetition’as one of four strategic actionsthat the industry could take to increase itsshare of global food markets.Taking beef as our focus (perhapssurprisingly, Ireland is the world’s fourthlargestexporter), the greatest potentialfor ‘co-opetition’ lies, inevitably, inthe areas of most difficulty. Like manytraditional agricultural nations, Irishpasture-based beef farming lacks scale(the average herd size is 18) and hasbeen late in adopting new technology.Beyond the farm, the processing industryis overbuilt, with overcapacity as high as50% in off-peak production times. Thereis also a strong enmity between the beefprocessors and farming organisationsthat makes it difficult to work together toachieve consistently higher quality.While the industry with thesupport of the Irish Food Boardhas been successful in introducing a(voluntary) national quality mark andan innovative programme to measurethe environmental impact of beefproduction, it lacks a differentiatingfeature beyond being grass-fed andcoming from an island known for itsgreen and clean environment.These latter advantages havestrong potential, but exploiting theminternationally would require a unified>Market Leader Quarter 4, 2011 33

fooD M arkE tingDAmien mCLoughLin, mAry SheLmAn AnD DAviD e BeLLapproach including mandatory qualitystandards and investment in a brandidentity that can be leveraged to drivedemand for Irish beef.While the advantages of workingtogether seem clear, the landscape for‘co-opetition’ in the Irish beef industry isvery different from that faced by Zespri.Most notable is that most of the largerIrish beef processors are profitable andhave been in recent years. It is alsounlikely that a collapse of the kind theNew Zealand kiwifruit industry facedon a number of occasions could prevailin the EU.Rather than coming together to securesurvival, the Irish beef industry’s task isto work together to take advantage ofglobal opportunities. Many obstaclesstand in the way. Besides those mentionedabove, historical rivalries among Irishbeef processors are especially damaging.All of the major firms are privatelyowned, so family history plays a big rolein decision-making and disagreementsand defeats tend to be remembered forlonger. While the industry has been verysuccessful in building a base of customersamong the leading European supermarketchains, these retailers are generally quickto use the intensity of this rivalry to biddown Irish beef prices.However, in the six months after thepublication of Pathways to Growth, twoof the largest players in the beef industryadopted a strategy of ‘co-opetition’ inresponse to a situation that threatened notonly individual players but the industry asa whole. During the past few years, Irishfarmers have found it more profitable tosell calves abroad to be raised in othercountries rather than feeding them tomaturity. Increasing exports of live calveshas two effects on Irish beef processors.First, it reduces the actual volumeof beef available for processing –exacerbating existing overcapacityproblems and putting at risk theirability to supply European retailersand restaurant chains who require aguaranteed supply of beef. Second, it canlead to a reduction in product quality asthere are fewer beef cattle in the supplychain and older dairy cows become agreater proportion of input.To counter this downward spiral, Kepakand Irish Food Processors developed a‘co-opetition’ programme in October2010 that basically guarantees farmers aset price for their cattle in two years thatcovers their costs and awards a bonus ifthey meet certain quality standards. Tomake this work for the processors as wellas the farmers, the two firms secured acontract from a leading food service firmto buy the beef at a set price reflectingthe costs of both farmers and processors.With an initial programme for 30,000head of beef cattle per year, this classic‘co-opetition’ initiative puts in place astructure that ensures the sustainability ofthe Irish beef processing industry.lessons for marketingAlthough the pathway followed by Zespriand the Irish beef industry was not an easyone, its history and that of other examplesof successful ‘co-opetition’ in food andagribusiness suggest that there are severalconditions present to enable competitorsto work together.A common enemy. The benefit of acommon enemy is that it provides a wayto ‘rally the troops’ and take the focus offperceived competition with the farmer orfirm next door. For Zespri the commonenemy was the rise of Chilean kiwifruitgrowers which threatened the existenceof the high-cost New Zealand industry.The emergence of ‘co-opetition’ in theIrish beef sector was based on a lessimmediate threat to survival but one thatall players saw as having great potentialfor disruption.Vision. The creation of a commonvision, which all of the parties can buyinto, is vital. It helps if the vision leads toa ‘bigger pie’ that can be shared ratherthan a reallocation of existing business.The New Zealand kiwifruit industrywas able to create and convey a vision ofworld leadership through superior quality,innovation and branding that would leadto category growth and higher prices.Zespri makes sure that every grower andevery supply-chain partner understandsthe market opportunities that come fromworking together. In the Irish situationthe initial vision of a differentiated Irishbeef brand was an external one, which wassponsored by the Irish Food Board.Measurable benefits. In the case ofZespri these benefits are accrued infinancial form (through higher farm-gateprices and institutional ownershipshares and dividends) and non-financialforms (research inputs that enablethe development of new varieties ofkiwifruit which themselves achieve higherpremiums and create a virtuous cycle). Inthe Irish beef situation the initially smallprogramme to support Irish supply hadmeasurable benefits for farmers in priceterms and processors in terms of theirenhanced relationship with a food-servicecustomer but the highly scalable natureof the programme meant that each partycould also see a long-term future in the‘co-opetition’.Permission to act. The apparentlyspontaneous emergence of a joint buyingprogramme in the Irish beef industrywas observed by an industry leaderas being a result of the ‘permission’that the Irish Food Board gave to theindustry to experiment with the practiceof ‘co-opetition’. This permission wasimportant in identifying a reason and amethod to overcome historical enmity.It also removed a misunderstanding thatworking together with a competitorwould be viewed legally as anticompetitivepractice.Find neutral ground. Both the NewZealand kiwifruit industry and the Irishbeef industry came to ‘co-opetition’ onthe back of a crisis, albeit of differentnatures and magnitudes. In both situationsthe ‘co-opetition’ strategy got a footholdby focusing on neutral ground. For theNew Zealand industry it was an explicitfocus on international markets; for theIrish beef industry, it was a new initiative.Co-operation doesn’t come easily butthe benefits are well worth the effort. nDamien McLoughlin is professor ofmarketing at UCD Michael SmurfitGraduate Business Schooldamien.mcloughlin@ucd.ieMary Shelman is director of the HarvardBusiness School agribusiness programmeMShelman@HBS.eduDavid E Bell is George M Moffettprofessor of agriculture and business atHarvard Business SchoolDbell@HBS.eduReferences:1. Zespri, Jose Alvarez and Mary Shelman,Harvard Business School case 511-001,December 2010; Kepak and the Future of theIrish Beef Industry, David E. Bell, DamienMcLoughlin and Mary Shelman, HarvardBusiness School case 511-070, December 2010.2. Pathways for Growth, David E Bell andMary Shelman, Bord Bia, May 2010, www.bordbia.ie/industryservices/information/publications/corporatepublications/pages/pathwaysforgrowth.aspx34 Market Leader Quarter 4, 2011

inT egraT e D Co MMuniC aT ionKAte Cox, DenISe turner, John Crowther AnD trACy huBBArDOne size doesn’t fit allKate Cox, Denise Turner, John Crowther and Tracy Hubbard examine how advertisers have coped withthe notion of integrated communication strategies. Based on a new IPA report, the article describes a range ofmodels. Significantly the analysis shows that the choice of model should be on a ‘horses for courses’ basisAreCenT gLobaL reportby Aprais*, the marketingrelationship managementcompany, highlighted thecritical importance that marketingprofessionals now place on deliveringintegrated solutions, and theirincreasing frustration with their agencypartners, who they perceive as failing tolead the complex process of deliveringsolutions across channels. This leadershiprole falls to the marketing team, as it isviewed as ‘too important to leave to therhetoric of agencies’.The Aprais analysis also investigatesthe perspective of agencies, especiallythose working in the US, UK or withmultinational clients. Agencies recountthe sheer complexity of working inintegrated agency teams across six toeight different marketing specialisms,especially when they admit they are‘genetically programmed to compete’.Furthermore, as agencies tend to be paidon time spent related to implementation,they cite the ownership of the idea asa critical route to achieving their ownbusiness success.Marketing practices in this area haveyet to be fully established across theindustry, with many clients using bespokemethods to achieve integration. Thereis also evidence that these approaches,developed in the mid-2000s, are now ina considerable state of flux due to theincreasing dominance of digital channelsopening up new ways of connecting brandsand people, as demonstrated by Coca-Cola’s new strategy, ‘Liquid and Linked’.CoCa-Cola’s ‘liquid and linked’strategy‘Liquid and Linked’ is Coca-Cola’snew strategy to deal with integrationin the digital age. The springboardfor this approach was the response tothe fragmentation of traditional mediaand the mass reach of the plethora ofdigital channels. Brands need strong‘contagious’ ideas that spread acrossmultiple platforms in order to amplifythe idea and increase brand engagement.Coca-Cola has developed an approachit calls ‘liquid and linked’ to cross-mediamarketing. ‘Liquid’ relates to the needfor a brand to be aware of the constantchanges in the marketing and medialandscape and be able to adapt itsapproach accordingly in near ‘real time’.‘Linked’ relates to the idea that allbrand messages, in whatever consumertouchpoint, need to belong to anoverarching brand strategy. Coca-Colaaims to tell dynamic brand stories acrossall these touchpoints – developing anengaging narrative first and then workingout which channel tells which part ofthe story best. Channel planning forCoca-Cola is thus a more tailored wayof engaging people across channels inlonger narratives.different modelsA recent publication from the IPA,New Models of Marketing Effectiveness:From Integration to Orchestration, aimsto shed light on the murky area ofintegrated marketing communicationsplanning for the marketing andagency community.It contains deep analysis of more than250 cases from the IPA EffectivenessAwards, and aims to put a ‘stake in theground’ for the industry by defining thedifferent ways of integrating marketingactivity, or ‘models’ of integration,observed in recent years – also assessingtheir relative effectiveness in terms ofdriving results. Importantly, it aims toquantify the additive benefits of seeking tointegrate across channels versus planningeach channel separately to specificchannel objectives – arguably a far easiertask to coordinate for marketing clientsand their agency partners.The report identifies four differentways in which marketing campaignshave been organised and proposesthat creating and delivering effectiveintegrated campaigns is becomingincreasingly like conducting anorchestra. This trend has increased inthe past couple of years as the digitalage continues to open up the potentialfor millions of conversations, and asadvertisers and their agencies look forways to make the growing multitudeof channels work in harmony together.This move towards ‘orchestration’ isthen compared with more establishedmodels to try to understand the mosteffective methods of structuringmarketing activity.from integration toorCHestrationThe analysis uncovered four distinct waysthat campaigns were integrating messages,exemplified in the IPA case studies.1No integration where acampaign either used a singleadvertising channel or tooka laissez faire approach tomerging channels.2Advertising-led integration arounda common creative platform. Thisranges from visual identity only –the so-called ‘matching luggage’approach – to a full-scale advertisingcreative idea across multiple disciplines,including non-advertising channels.3Brand idea-led orchestrationwhere there was unificationaround a shared brand concept orneedstate platform. Within thissegment, the creative work does not lookunited by a common advertising idea, yetthe audience is able to decode the strandsas part of one brand’s message.4Participation-led orchestrationwhere the goal between brandand audiences is to create acommon dialogue, co-creation,experience or ‘conversation’.The IPA Databank of case studiescontains numerous celebratedexamples across all segments includingDove’s ‘Campaign for Real Beauty’,Johnnie Walker’s ‘Keep Walking’,Honda’s ‘The Power of Dreams’, O2’s‘The O2’, Cadbury Wispa’s relaunch insocial media and Walkers crisps’ ‘Do Us aFlavour’ co-creation approach.The results of this analysis have anumber of interesting implications>Market Leader Quarter 4, 2011 35

inTegraTeD CoMMuniCaTionKAte Cox, DenISe turner, John Crowther AnD trACy huBBArDDiagraM 1: anY VerY Large HarD buSineSSeFFeCT bY orCHeSTraTion MoDeL74%70%DiagraM 2: anY VerY Large SoFT buSineSSeFFeCT bY orCHeSTraTion MoDeL54%65%No integrationsource: ipa databankAny integration ororchestration modelNo integrationsource: ipa databankAny integration ororchestration modelsDiagraM 3: eFFeCTiVeneSS SuCCeSS raTebY orCHeSTraTion MoDeL79%74%72%DiagraM 4: eFFeCTiVeneSS SuCCeSS raTe aCroSSanY HarD buSineSS MeTriC79%74% 72%38%No integrationBrand idea-ledNointegrationBrandidea-ledAdvertisingledAdvertisingledParticipationledsource: ipa databanksource: ipa databankfor marketers and their agencies,especially around working practices andways of structuring client and agencyrelationships.integration is not neCessarilymore effeCtiveIncreasingly, it has been assumedthat integrated campaigns mustdeliver more success than so-callednon-integrated campaigns. However,one of the revelations of our analysiswas that campaigns with no obviousintegration device are on average just assuccessful as the majority of campaignsin the IPA Databank, as measured by theachievement of at least one very hardbusiness effect.This is defined as a brand achievingone of a number of different successmeasures, including: sales gain, marketshare gain, reduction of price sensitivity,customer retention/loyalty, customeracquisition, profit gain or market sharedefence. See diagram 1.The relative success of the nonintegratedapproach makes sense whenconsidering that such a strategy can bea reactive and flexible solution, as eachchannel and marketing discipline is giventhe freedom to develop ideas to deliverfocused goals. For example, advertisingcan be used to drive brand considerationin combination with direct marketing mailshots to close the sale. However, whenviewed through softer measures of businesssuccess such as brand awareness, fame,differentiation or strengthening brandvalues, it can be seen that integration doeshave significant additive benefits over anon-integrated approach. See diagram 2.Again, it can be argued that the benefitsof additional frequency of the sameidea delivered in a consistent way acrosschannels will increase the likelihood ofcorrect brand recognition and attribution.However, these findings haveinteresting implications for the industry,as they start to suggest that a slavishpursuit of the perfect integrated campaignmay not be the best way to achievemore effective communications in allcircumstances. The addition of morecommunication channels, which are givenseparate tailored campaigns, may actuallybe an easier route to business success.This is a factor often omitted from theliterature around integration; if achievingperfect message integration produces abetter impact than a pragmatic approach,but requires significantly more marketingresource to manage, is it still an effectiveroute to pursue at a business level?The answer to this question lies in thedegree of additional success achieved. Itmay deliver business results greater thanthe additional investment in marketingresource, or it may not. Since theIPA Databank does not directly capture36 Market Leader Quarter 4, 2011

inT egraT e D Co MMuniC aT ionKAte Cox, DenISe turner, John Crowther AnD trACy huBBArDthe full costs of creating and managingdifferent communications strategies bychannel, this is a factor that cannot beevaluated here. The idea that it may bemore efficient to develop separate uniquemedia campaigns rather than attempt anyform of integration is a provocative one,and worth exploring elsewhere.tHe power of a big brand ideato orCHestrate aCtivityThe IPA Databank analysis suggests bigbrand ideas are better at delivering businessresults than other ways of organisingmarketing activity. They are also effectiveat driving softer brand metrics such asbrand fame, awareness and differentiationversus campaigns with advertising-led orno integration. See diagram 3.This is an important lesson as itdemonstrates that generating a hardbusiness response does not require‘matching luggage’. There are manypragmatic reasons why brand ideaswin over visual advertising-led ideas.Interviews with leading marketingpractitioners and entrants to the IPAEffectiveness Awards suggest that thisapproach may not always be the output ofthe communications planning philosophy,but rather a function of the timescalesrequired to deliver the activity.The advertising-led model requirescampaigns to be built around a commonvisual identity and demands that a strongcentral creative work is developed whichcan then be sequenced across differentmedia. However, sometimes there simplyisn’t time for this approach, and workneeds to be developed in parallel around aloose and higher-order idea.integration Can evolve into anorCHestration modelThe IPA Databank records many longrunningcampaigns, including severalof the brands in the interviews, namelyHSBC, which had run for ten years, O2for eight years and Audi for 27 years.With these sorts of campaigns, oftenthey had developed and changed enroute. For example, the HSBC paperentered in the awards in 2010 describeda ten-year journey. The ‘World’s LocalBank’ started life as an advertisingidea, but the requirement to delivermeaningfully against the promise in thecreative execution rapidly turned it into abrand idea that has grown and developed,and now permeates business strategyaround the bank.The addition of morecommunicationchannels, with separatetailored campaigns,may be an easier routeto business successThe Johnnie Walker global casestudy also demonstrates this point withan 18-month launch period that usedadvertising channels almost exclusivelyto introduce the ‘Keep Walking’ brandconcept across the globe. This was openedup and developed into a more orchestratedbrand idea-led approach using localsponsorships, PR and CSR initiatives totailor the activity to each individual market.As campaigns bed-in and showeffectiveness, confidence grows and oftenvery executionally led campaigns gainthe freedom to become more conceptual.The passage of time also allows thedevelopment of an initial advertisingidea into something more powerful andlonger-lasting for the brand.partiCipation-led model is yetto prove its wortHA further surprising finding of thisanalysis was the relatively less successfulperformance, in terms of hard businesseffects, of the newly emerging model ofparticipation-led activity. This segmentcontained famous examples of modernmarketing such as Cadbury’s use of socialmedia to relaunch the Wispa chocolatebar and Walkers crisps’ ‘Do Us a Flavour’.On the other hand, participation-ledorchestration was the most effective modelat delivering softer effects, and also themost effective route for a brand pursuingfame as a key objective. See diagram 4.The analysis showed that theparticipation-led model was excellentat achieving market share defence butless successful at driving new customeracquisition, suggesting that campaigns thatdemand higher levels of engagement needto be built on a degree of existing lovefor the brand and are therefore usefullyemployed by large, mature or decliningbrands needing a shot of brand fame.In these cases it is harder todemonstrate large business effects becauseeven very successful years tend to bemeasured in fractional percentage gainsin market share rather than huge liftsin sales. It is also true that our ability tomeasure this activity probably lags thedevelopment of ideas in this space.It is possible that these campaignsare a newly emerging hybrid of twocommunications disciplines – advertisingand direct marketing – and that the linkthrough to sales has yet to be made froma direct marketing perspective. Thismakes measures such as customer lifetimevalue impossible to apply. However, thesecampaigns tend to fall short of traditionalmeasures of advertising businesseffectiveness, such as econometricmodelling, due to the length of time theactivity is in market.This is useful knowledge whenconsidering a participation-ledapproach. Interviews with leadingpractitioners highlight the considerableextra investment in time to deliver thismodel, and the requirement for a majorchange in behaviour from both clientsand agencies. Participation demandsa collaborative approach to campaigndevelopment, with the client closelyinvolved throughout the process.While this can be said of other modeltypes, the demand is heightened whenparticipation is required. Not only dolines between roster agencies blur butthe distinction between client and agencyalso fades. There is a sense that for thisto work, everyone has to be in it togetherand egos have to be banished. n‘IPA Datamine 3, New Models ofMarketing Effectiveness: FromIntegration to Orchestration’, was coauthoredby Kate Cox (kate.cox@mpg.com), Denise Turner of MPG MediaContacts (denise.turner@mpg.com),John Crowther of Creston Unlimited(jcrowther@crestonunlimited.com) andTracy Hubbard of i to i research, withadvice from marketing consultant PeterField. It is available to purchase fromwww.ipa.co.uk/Content/Datamine-3-New-Models-of-Marketing-Effectivenessor www.warc.com/newmodels.* The study ‘Timelines, Bottom Linesand Egos: How to Manage the Creationof Effective Integrated Communication’is the result of 50 in-depth agency andmarketing management interviews, anddatamining of 8,000 individual Apraisrelationship evaluations. www.aprais.comMarket Leader Quarter 4, 2011 37

creativitypaul feldwickAesthetics, jugsand rock’n’rolldefinitions of ‘creativity’ areelusive. Here, Paul Feldwickexamines what exactly aestheticscontribute to our appreciationof the world – concluding thatcreativity might be betterdefined as an aesthetic qualityrather than originalityIwas in my kitchen one day lastsummer, wondering what to talk aboutat the TEDx New Street conferenceI’d been invited to, when my eye fellon two jugs on the top shelf of the dresser.You can see them in the picture.They’re both British, modern studiopottery, and I’d bought them both in thepast few years.What interested me about these twojugs was this. I was noticing that I’vealways liked one of them much morethan the other. Yet they’re basically verysimilar – hand-made, earthenware, aboutthe same size, same general shape, andwith a similar origin.At the TEDx talk I invited theaudience to express their own preference.Slightly to my surprise, not everyonemade the same choice as me – but it didseem that most people found it easy tomake a choice.The left jug comes from John Leachpottery in the Somerset Levels. The rightjug is made by Svend Bayer, who worksdown in darkest Devon. For me, there’ssomething about the Bayer jug that puts itin a different class from the Leach. For me,it’s easily more – what? creative? beautiful?special? rewarding? Certainly if I had tokeep only one of them, this would be it.But it’s not easy to say exactly why myresponse to the two jugs is so different.I can try to put it into words: I like thesexy roundness of the Bayer, I like itsdistinctive texture, it seems to have beenmade with some kind of energy that Idon’t get from the Leach. But even thesecomments don’t go far to explaining myresponse; we seem to be in the realm ofvery subtle, sensual differences whichresist analysis or definition.Now I want to propose that the way Imake this choice between the two jugsrepresents an important aspect of manyconsumer choices. Indeed, if the jugs werein a shop together they could be an actualconsumer choice. And I know which Iwould pay more for.Value added ViewI propose that the principal dimension onwhich I’m making this choice between thetwo jugs is aesthetic. According to KenWilbur, since the 18th century we havemade a separation in our minds betweenthree sets of values – the moral, theinstrumental, and the aesthetic.l Moral – is it right, ethical?l Instrumental – does it work, is iteffective?l Aesthetic – is it beautiful (or grotesque,comic, sublime)?My experience is that in organisations,it’s instrumental values that dominate.And conversely, ‘aesthetic’ is not a wordthat commands much respect. Maybe itsassociations with Oscar Wilde and the‘aesthetic movement’ haven’t helped: itcarries historical overtones of elitism,effeminacy, impracticality. But morefundamentally the word means somethinghighly subjective, something resistantto analysis and control – therefore, it issomething with which organisations feeluncomfortable.So we don’t hear the word ‘aesthetic’used much in business. A word we dohear quite a lot, although it’s still treatedwith some suspicion, is creativity. It’scommonly said that this is a good thingand business needs more of it. Ad agenciesand others hail it as their core value. Tosome extent, I believe the word ‘creativity’stands in for ‘aesthetics’.But to get inside corporate HQ – evento get inside the ad agency – the wordcreativity has been redefined to meansomething that is very different from whatI mean by aesthetics. And I think by doing38 Market Leader Quarter 4, 2011

creativitypaul feldwickneither jug is original or innovative.their beauty, energy, and aestheticquality have nothing to do with noveltythis, we have put ourselves in danger ofmissing something very important – andsomething that business really needs.a matter of opinionI’ve read a lot of management andacademic literature on the subject of‘creativity’, and I’ve also observed firsthand how the word is used in advertisingand marketing. And I’ve noticed twothings that are almost universal, but whichI find increasingly odd:l creativity is defined as involvingoriginality or innovation;l it’s nearly always linked with the phrase‘the creative idea’, as if the output ofcreativity is always ‘an idea’.Sternberg and Lubart, at the startof their massive academic Handbook ofCreativity, define ‘creativity’ as ‘workthat is novel, original, unexpected’. TheRoyal Society of Arts’ report on Creativityin Organisations talks of ‘creativity andinnovation: words we treat as synonymous’.Elsewhere, it equates creativity not justwith novelty but with ‘new ideas’.The commonest image for ‘creativity’ isthe lightbulb going on – the ‘bright idea’.People in ad agencies universally talkabout ‘creative ideas’. James Webb Young‘Aesthetic’ is not aword that commandsmuch respect: it carrieshistorical overtones ofelitism, effeminacy,impracticalitycalled his famous book A Technique forProducing Ideas. You can find examples justabout any week in Campaign, such as thefeature ‘How Advertising’s Big Ideas AreBorn’. The IPA’s booklet, Judging CreativeIdeas, uses the same type of language onevery page. And I’ve just opened chapter 1of Hegarty on Advertising, ‘Ideas’, whichbegins: ‘Ideas are what advertising is builtupon. We worship them, we seek them,fight over them, applaud them and valuethem above everything else.’You may be so used to these waysof talking that they seem natural andsensible, and of course, they come onpowerful authority. Yet to me theyseem increasingly strange and evenwrongheaded. Not just in terms of whatthe word creativity means to me, butin terms of what, in reality, I think itcontributes to business success.I can illustrate this by applying thesethoughts to my two jugs. I might say thatBayer’s jug is more ‘creative’ than Leach’s.But this makes no sense if ‘creativity andinnovation are synonymous’. Neither jugis original or innovative. Bayer is working,as far as I can see, in a tradition of ancientDevonshire ceramics that goes backcenturies. This jug could almost be 200years old. Its beauty, its energy, its aestheticquality have nothing to do with novelty.Neither does it make any sense to meto talk about the ‘creative idea’ behindeither jug. The idea is – what? – a vesselmade of clay for holding and pouringliquid? Such banalities add nothing to ourunderstanding of what makes them good.Creativity here does not belong in an idea,it is in the thing itself.applying the ideasAre my jugs an exceptional case? I don’tthink so. The same is true of almostany cultural artefact. Take, for instance,Gehry’s Guggenheim Museum in Bilboa.>Market Leader Quarter 4, 2011 39

creativitypaul feldwickif you listen to a recording by elvispresley, it’s the same three-chordsequence that is behind a millionrock and blues songs. whatevermakes this exciting, memorableor moving isn’t innovation, stillless a creative idea. it’s taste,timing, energy, presence, artistryHere, you could certainly claim a highdegree of innovation or originality. But isit good merely because it’s original?Or are we here looking at somethingthat happens to be original, and good?And what is the ‘creative idea’ here? Anyanswer to this would represent, at best, anearly stage in the architect’s imaginativeprocess: applied to the actual building, it’sprobably an absurd question.We needn’t limit ourselves to thefield of architecture. If you listen to anearly recording by Elvis Presley – suchas ‘Money Honey’ – musically, you hearnothing new. It’s the same three-chordsequence that is behind a million rockand blues songs, there’s little melodyto speak of and the rhythm is regularand predictable. Whatever makes thisexciting, memorable or moving isn’tinnovation, still less a creative idea. It’staste, timing, energy, presence, artistry.As with my jugs, we can try very hardto put it into words, and ultimatelynever succeed.What is the creative idea behinda painting by Kandinski, or Monet’sWater Lilies, or Schubert’s UnfinishedSymphony, or Jimi Hendrix’s ‘VoodooChile’? The fact is, we don’t respond to‘ideas’. We respond to actual buildings,paintings, musical performances. Oractual advertisements.the purest formOur common notion of ‘creativity’ hasbeen redefined so as to airbrush aestheticquality right out of the picture. Yet Iargue that it is this aesthetic qualitythat generally makes most of thedifference when people choose designs,advertisements, or brands.Aesthetic doesn’t have to be a dirtyword. Its original sense, from the Greek,was of ‘perception through the senses’.The idea that we can know and respondto things directly through the senses,not just through abstract reasoning,was developed in the 18th centuryby Giambattista Vico, as a challengeto Descartes’ idea that the mind wassomehow separate from the body.Modern writers have suggested adefinition of aesthetic as ‘emotionalresponse to a perceived stimulus’. Thisshould sound familiar to us: we now havemore and more evidence suggesting thathuman choice is fundamentally affective,holistic, non-analytic, a subconscious,emotional response to sensual stimuli.Paul Watzlawick argues that it is ‘analog’communication – largely non-verbal,based on gesture and nuance, beyondanalysis – that influences our relationshipswith people or things.If we understand ‘aesthetic values’ inthis context – a direct, emotional responseto sensual stimuli, that may take placesubconsciously and that normally resistsanalysis – they may well be central to howpeople prefer and choose one design overanother, one package, one brand, oneadvertisement.If that’s so, our present discourseabout ‘creativity’ is misleading andcounterproductive. Based on ourimproved understanding of how peoplemake choices, we ought to redefinecreativity, so that it is primarily aboutaesthetic quality rather than originalityfor its own sake. And we need torecognise that it is manifested in tangibleimages, sound and performance, not inabstract ideas.I’m convinced this is what Bill Bernbachmeant when he said: ‘Is creativity someobscure, esoteric art form? Not on yourlife, it’s the most practical thing a businessman can employ.’A successful ad from the 1920s for a USmusic school’s correspondence course hadthe famous headline: ‘They laughed when Isat down at the piano but when I started toplay!’ Bernbach commented: ‘What if thisad had been written in different language?Would it have been as effective? Whatif it had said: ‘They admired my pianoplaying…’ Would that have been enough?Or was it the talented, imaginativeexpression of the thought that did the job?’‘The difference,’ he concluded, ‘isartistry – the intangible thing thatbusiness distrusts.’ And maybe that’sa word we should value more today. Iurge you to prove this to yourself, byconsidering any highly successful artwork,advert, pack design or brand. Ask yourselfhonestly – what makes this excellent,powerful, moving? Hardly ever will it beits degree of originality. Nor will it be thatmeaningless abstraction, the creative idea.It will be the aesthetic quality, the artistryof the whole. nBased on a talk given at TEDx New Streeton 9 October 2010.www.tedxnewstreet.com/paul_feldwick.htmlPaul Feldwick is an independentconsultantpaulfeldwick@yahoo.co.uk40 Market Leader Quarter 4, 2011

digitaL M a R ketingjonAthAn richmAnSmarter campaignsEvery day, marketers and theiragencies devise their next bigdigital marketing programme: thewebsites will be visited by millions,their iPhone app will rise to thetop of the Apple store, and videoswill go viral. Jonathan Richmanexplains why most of theseexpectations are fantasiesLet’s fiRst try to understandwhy it is so difficult to makesomething that people evennotice these days. When wemarketers sit around and devise ourplans we like to analyse our competition.It makes sense. Who is doing what?Which products have advantages overours and which have weaknesses? Whenwe do these exercises, our definition of‘competitor’ is usually pretty narrow. Youcan’t account for every product in theworld in your SWOT analysis after all.While it may be appropriate tonarrowly define our competitors whenwe’re talking about devising our keymessages, our in-store product placement,or even our packaging and branding, youdon’t have the same luxury when it comesto digital. The simple reason is becausewhen it comes to digital, everything isyour competitor.Your competitors in digital areeverything else that takes time away fromyour digital programme. Your competitorsaren’t just a product in the same categoryor even brands in the same industry.It’s everything. That means that yourcompetition online isn’t just your archnemesis’ brand site, it’s also missed TV,blogs and friend networks.You need to think of these types ofdigital properties as your competitorsbecause when it comes to your customers’time, there isn’t much of it to go around.Every minute they spend doing somethingelse online means another minute theywon’t be spending on your site, with yourapp, or perusing your Facebook page.Social media: the new ‘porn’?The old adage that many people becameused to hearing over the years was thatpornography was the most popularactivity online. Whether or not youbelieve the numbers is up to you but,suffice to say, it was a pretty big segmentof online traffic. Times have changed,so you don’t need to worry quite asmuch about losing time to this set ofcompetitors. Instead, you have a bigger,fiercer rival that seems to have universalappeal: Facebook.A recent Nielsen study showed thatsocial media surpassed the number-twoonline activity (gaming) two fold:22.7% of Americans’ online time wasspent on social media in June 2010 1 .That’s a lot of status updates and ‘Like’buttons clicked.The point is that you now have evenmore competition for your customers’time and attention and it’s getting worseevery day. You need to reframe how youthink about your competition in order tobe successful. Here it is: if your customers>Market Leader Quarter 4, 2011 41

digitaL M a R ketingjonAthAn richmAncan do it online or with a digital device,it’s a competitor. Why would someonespend hours learning about every detailof the molecular composition of yourmotor oil when they could spend itwatching videos of dogs on skateboards onYouTube? That’s your challenge.no guaranteeS... or are there?The cynics among us would say it’simpossible to know in advance what willwork. The fickle internet populationcannot be understood. The optimistsmight suggest that we simply follow ourresearch and we’ll be loved. Sadly, they’reboth wrong, but there is good news.Determining if your programme will be asuccess is fairly straightforward. It doesn’trequire spending millions of dollars inresearch, complex mathematical formulas,or understanding some inscrutable,semi-secret algorithm.Knowing if your programme is going tobe successful or not comes down to onething: will people ‘Like’ it? My choice of‘Like’ with a capital L was intentional.Can you picture anyone clicking theFacebook Like button to indicate theirappreciation or love of your programme?The tremendous growth of Facebook andthe almost ubiquitous Like button makeour research pretty simple.Of course, to do this research correctly,you need a few things. First, you need acompletely objective mind. It might helpto think this way: would I ever click theLike button myself for this programme?You may as well be honest since it’s yourreputation on the line if you launch atremendous digital flop. If the answer is‘no’, give yourself two points for honesty,but now head back to the drawing board.Second, you need to understand whatpeople are actually willing to do for youand your brand. This ranges from oneextreme where you might find your brandevangelists getting tattoos of your logosto the other where your brand is nothingbut a splattered speck on your customers’windshield of life.Most people these days don’t have alot of patience online. We hate filling outforms and clicking seven times to get towhat we’re trying to find (assuming wecan ever find it). Powerful search engineshave given us the luxury to jump fromsite to site if we don’t almost instantlyfind what we expected. Cap this with ourshrinking attention spans that drive uswith an almost primal force to seek outsomething even better than what we’reKnowing if yourprogramme is going tobe successful or not isdown to one thing: willpeople ‘Like’ it?seeing right now. When you put it alltogether, you see that most people don’thave the time or interest you need themto have for your ideas to work. That’s whyyou need to think differently.the four big blunderSWhen making digital marketingprogrammes, often the same four mistakesare made over and over again.l Blunder #1: trying to do it all. I getasked one question a lot. The questionis: what is the worst website you’ve everseen? As someone who has seen his fairshare of terrible sites and beautiful ones,this is a difficult question to answer. Thereality is that there are a lot of ‘worst’websites out there and they mostly allhave one defining characteristic.No white space. It’s got everything init, which makes it impossible to see orfocus on anything. You have all your ‘keymessages’, probably a few ‘call to action’boxes or links. You’ve also got some giantimages from the photoshoot on whichyou spent a small fortune. You’ve gotlinks to your other sites and to your brandextensions. You’ve got a call-out or (ugh)a pop-up featuring your latest promotion.You also certainly have a few differentboxes imploring me to ‘Like’ your page orshare it with friends and I know you havea sign-up box for your email program.l Blunder #2: random targeting. Formost big brands, you can probably find astudy lying around that cost well into thesix figures that was commissioned to helpidentify ‘the target’ – the people who arethe ideal audience for your brand messages.We pick the right age of people to show upin our TV commercials and pick the rightmagazines in which to place our print ads.But, when it comes to digital marketing,we seem to forget who our target really is.Just because it’s digital doesn’t mean that‘Marketing 101’ rules don’t apply.Too often we don’t bother tounderstand what our target audience reallydoes online and what it is likely to do. Ifthe average person in your target audiencedoesn’t own a smartphone, it doesn’t makemuch sense to create an iPhone app.l Blunder #3: bored to death. Manyof the digital marketing programmes Isee have a common, fatal flaw. They’reboring. And not just a little boring, butmind-numbingly boring. This blunder isas simple to recognise as it is difficult toavoid. Creating interesting content isn’teasy. It’s a skill and a gift. There’s a reasonwhy about 30% of all videos on YouTubehave fewer than 100 views, and 55% havefewer than 500 2 . The reason: they are notremotely interesting to watch.l Blunder #4: one for all and... one forall. There is nothing more frustrating toyour customers than this final blunder.In a digital world where they are used tobeing able to easily search (and find) whatthey want, read reviews from friends, andcustomise their viewing experience online,your customers don’t react well when allof this power is suddenly taken away.This is another by-product of the newexpectations your customers have for alldigital content. They expect to be able tosee what they want, when they want, andexactly how they want. They want to beable to view it anytime whether online oroff. They want it in whatever format theyfeel like at that moment whether it beon their laptop or fancy new iPad. Theyexpect this because they get it from otherwebsites and it’s exactly the experiencethat they’re used to with mobile apps.big SolutionS for big problemSThere are four big solutions to each ofour four big blunders.l Solution #1: do one thing really well.The good news is that this solution isone of the simplest to understand of thefour I’ll offer you. The bad news is thatit might the hardest for most marketersto implement. The concept is simpleafter all. Instead of creating an app, forexample, that does ten things, each in amediocre way, create something that doesone thing really well. Simple, right?It’s hard because you have to makedifficult choices. Of all those brilliantfeatures you dreamed up and all thethings your customers told you that theywanted when you did research, which doyou focus on? That’s actually easy. Pickthe one that you can do the best. Thatmight not be the one that’s the top needfor your customers, but it’s better to putout your best effort than something that’sjust average.42 Market Leader Quarter 4, 2011

digitaL M a R ketingjonAthAn richmAnMy favourite example for an app thatdoes one thing and does it really wellis the ‘Sit or Squat’ application fromCharmin. It helps you find a clean, publicrestroom no matter where you are. Ofcourse, you’re not going to use the appevery day, but you’ll be really thankfulthat you have it when you need it. That’sall the app does. It does this simply and itworks every time.l Solution #2: apply some digitalsavviness. The idea is to understand whatdigital technologies members of yourtarget audience use and are comfortablewith and to focus there. I call this digitalsavviness. I break each person’s digitalsavviness into four categories. You couldbe high (ie really savvy) in one categoryand low in the others or high or low in allof them. There’s no one right answer andno single answer for everyone. You justneed to understand where your customersare in each category.Social: how people connect with others.This means everything from email tophoto sharing to social media.Entertainment: how your customershave fun online – watching videos,playing games, or reading blogs.Navigating: how your customers getaround online and what hardware andsoftware they use – which browsersthey use or whether or not they havebroadband or an iPhone.Productivity: how your customers usetechnology to make life a little simplersuch as online shopping and bankingand online auctions such as eBay.For each category, rank your targetcustomer as high, medium, or low thenmatch your digital programmes tocustomers’ savviness level in the category.l Solution #3: create ‘Likeable’ content.Does it excite you or bore you? As a firststep, honestly ask yourself that question. Ifit does bore you, then you need to reassesswhat you’ve created. If you wouldn’t shareit with your friends on Facebook, then youmight need to reconsider.The rest of the test is a bit moresubjective. There are a couple of thingsyou should check, especially when itcomes to video, but it also applies toapplications and websites. First, are youeliciting any emotion with what you’vecreated? When most people think of‘viral videos’, for example, they think ofvideos that are funny. Well, that’s justone possible emotion. A few others toconsider: joy, fear, wonder, anger, jealousy,sadness, hope, grief, disappointment,affection and so forth. The more yourcontent can cause one (or more) of theseemotions, the more successful it will be.And here’s the final check: will anyoneclick the Like button for this? That’sa big distinction from simply ‘liking’(lower-case ‘l’) because when you Like(upper-case ‘L’) something, you’reannouncing to all your friends that this issomething worth checking out.l Solution #4: personalise andindividualise. You need to createindividualisation. It should elicit thisresponse from people: ‘Wow. They wrotethis just for me.’ Not ‘someone like me’and not ‘every other man in Ohio’. No.Just For Me.Of course, you wouldn’t write it justfor him or her. That gets prohibitivelyexpensive in the time and moneycategories. You just need to investenough effort in your back-end systemsCustomers expect to be able to see what theywant, when they want, and how they want.They want to be able to view it anytime, inwhatever format they feel like at that momentto allow this to happen automaticallyand dynamically. That means it happenswithout you doing anything and it happensin real time. Your system should know andfigure out things about me and match thisto your products and offers. Among thebest in the world at this is Amazon.You don’t need a complex back-endsystem like the one that powers Amazon’srecommendations, but you do need toinvest in ways to ensure that what peopleget from you appeals to them on a veryindividual level. nJonathan Richman is group director,insights and planning for PossibleWorldwidejonathan.richman@possibleworldwide.comThis is an edited version of the winningentry in the digital category of the WPPAtticus Award 2010.References:1. Source: http://blog.nielsen.com/nielsenwire/online_mobile/what-americans-do-onlinesocial-media-and-games-dominate-activity/2. Source: http://techcrunch.com/2010/01/30/context-is-king-how-videos-found/Market Leader Quarter 4, 2011 43

Global knowledg einternationaLGrAhAM MAckAySince the 1970s, many consumer goods companies have been movingbrands towards global propositions, but this is rarely appropriate for brandsembedded in the cultures of individual countries. Graham Mackaydescribes why SABMiller is the most local of global brewersTwenty-eiGht years ago, TedLevitt, editor of the HarvardBusiness Review, wrote one ofthe first articles to popularisethe concept of ‘globalisation’. He assertedthat a global proposition would ultimatelyalways win over the local proposition. Thatthe superiority of a global offer – both theproduct and the marketing – would eclipsethe cultural variants that country managersalways asked for. And he predicted that acentrist corporate movement would prevailbased on a creed of one product: onebrand: one voice: one ad campaign.There seem to be, in essence, twointerlinked arguments behind thisproposition: one based on emotionalassociation, or aspiration; and the otheron management practicalities. The firstasserts that consumers will naturallyaspire to, and drift over time towards,international brands simply because theyare international. They are self-evidentlybetter because people all over the worldhave sought them out. The secondargument is that it is practically impossible– unmanageable or unaffordable – toreplicate at a local level the quality, lookand feel of global brands so the local brandsdon’t look as good or perform as well.In the course of my career in consumergoods I have encountered many examplesof individuals and companies that believeLevitt’s thesis explicitly. Successfulproducts, companies and careers havebeen built on it. An example of the firstdriver would be in cigarettes whereinternational brands such as Marlborohave delivered better quality – originally,anyway – and a higher cachet throughsophisticated marketing when comparedwith local alternatives. Another obviousexample is Coca-Cola. By contrast,household and personal care arecategories where consumers lack muchemotional connection but welcome globalbrands with a more sophisticated look andbetter functionality.Beer is differentAlcohol is a mood-altering substanceand beer in particular has a history asold as civilisation. The highly emotionalcharacteristics of beer brands themselvesand their long history and association withplace, will always dictate a high degree oflocalism that sets beer brands apart in thefmcg universe. This is reinforced by theeconomics of producing and distributingwhat is a bulky, perishable product.That’s not to say that the brewingindustry has been immune to the forces ofglobalisation. At the turn of this century,the top ten brewers around the worldaccounted for just over one-third of beersales volumes. Since then a mass of localand regional brewers, many of themstill family owned, have been subsumedinto four big players – namely ourselves,Anheuser-Busch Inbev, Heineken andCarlsberg. These four account for almosthalf of global beer sales volumes, andabout three-quarters of the profit pool.This period of intense consolidation hasundoubtedly driven the adoption of globalbest practice in many areas – from brewingproduction, to packaging and distribution.But when it comes to brand marketing,each of the brewers has a different take onwhere they stand in the ‘global versus local’debate. To fully understand our perspectiveand why it differs from the consensus, it’snecessary to understand where we, as acompany, have come from.from south AfricAn BeginningsToday, SABMiller is the biggest drinksbusiness on the London Stock Exchange,with interests in 75 countries across sixcontinents and more than 200 brands.You’ll recognise some of them – such asGrolsch, Peroni Nastro Azzurro, PilsnerUrquell and Miller Genuine Draft – butmany more of them will be unfamiliar toyou despite being powerful local brands intheir respective home markets.Since coming to London in 1999, oursales and revenues have grown by overseven-times to $26.3bn and our marketcapitalisation has increased eightfold. Thisis from a company whose served markets(as I was fond of saying in our early daysin London) did not cover the Palace ofWestminster, Times Square or the EiffelTower but did include Dracula’s Castle,the Gobi Desert, Timbuktu and theSource of the Nile.Undoubtedly the global successof SABMiller is built upon the firmfoundations and sound business principles44 Market Leader Quarter 4, 2011

internationaLGrAhAM MAckAye, local deliveryrealised that higher-quality beer wasdependent on a particular type of water,giving rise to great brewing towns suchas Burton-on-Trent, Pilsen in the CzechRepublic or Timisoara in Romania.Today, however, we can manipulatewater to create whatever conditionswe like. Hops can be processed andtransported across the world. New barleystrains are supporting local suppliersin markets with no previous brewingtradition, and the company itself isexperimenting with a new generation ofbeers which rely on a different set of rawmaterials and production techniques. Yetbeer remains resolutely local.that were laid down many years ago inSouth Africa.The springboard for our expansion wasthe advent of democracy in South Africa,a cause actively supported by SABMiller.This freed us to invest outside thecountry just at the moment when widergeopolitical changes were throwing upnew opportunities across Eastern Europe,Asia and Africa.In the early days, we acquired breweriesfrom governments wanting to privatise.These assets had often been badlyneglected under public ownership, sowe focused on bringing them up toscratch, applying the disciplines that wehad learned in South Africa: to enhancequality, drive down costs and improvedistribution. Our approach to marketingwas, where possible, to build existinglocal brands through strengtheningtheir associations with local heritage andcultural icons.Brewing is essentiAlly AlocAl BusinessDespite the rapid consolidation in thebeer industry over the past ten years, thebeer market has remained stubbornlydiverse. And brewing has remained atits heart a very local business, steeped inculture and tradition that from its earliestbeginnings has been associated with place.Until not many years ago, most beerbrands were simply the name of thetown where they were brewed. In manycountries that remains the case – notablyin Germany, which is why the Germanbrewing industry is still very fragmented.As the industry evolved, brewersthe role of internAtionAl BeersOf course, as consumers become wealthierand the middle-class grows, they look formore sophisticated products, and someare seeking out international brands.We do cater for that with four distinctinternational premium brands that talkto consumers’ emotional connectionsto place or culture, whether it is theItalians’ unquestionable ownership of styletypified by Peroni Nastro Azzurro, thequality and provenance of Czech brewingfound in Pilsner Urquell, the charismaticeccentricity of the Dutch reflected inGrolsch or the American urban cool ofMiller Genuine Draft.Despite the array of imported beersthat you see in the UK, brands consumedoutside their country of origin actuallystill account for only about 5% of worldbeer volumes, and that proportion haschanged little over the past ten years.Truly international brands, such asHeineken or Corona, have global marketshares in the low single digits, and youneed to combine more than 60 of thetop beer brands to amass half of totalworld volumes.Aspiring consumers are nowadays justas likely to turn to local premium beers,many of which speak to the burgeoningsense of pride and identity that comeswith social and economic progress and,particularly in sophisticated westernmarkets, to crafts and speciality beers.For example, in the US the expansion>Market Leader Quarter 4, 2011 45

internationaLGrAhAM MAckAytyskie is rooted in what itmeans to be polish, witha heritage datingfrom 1475of craft brewers, and in the UK theresurgence of cask-conditioned ale, arealigned with the same concern for localprovenance that we have seen in the foodindustry. But equally it is about place,identity and belonging.why Beer BrAnds Are so tied tolocAl provenAnceMy explanation is that they are emotionalconstructs, far more than they are physicalones. While there are undoubtedly somehighly important functional attributes towhich one can appeal in beer – refreshmentbeing the most common – in reality theintrinsic differences between differentlagers of the same alcoholic strength andtemperature are subtle. After a pint youwould be hard pressed to tell two lagersapart in a blind tasting, but a consumerwill, on most occasions, have a clearpreference. Although they will generallyaver that their chosen beer is the one thattastes best, this is simply a rationalisation ofan instinctive, emotional choice.In our view the human motives offriendship, male bonding or nationalpride can’t be accurately appliedfrom one culture to the next withoutreinterpretation, and local sensitivityand local intimacy are critical tounderstanding the unarticulated, intuitiverelationship that people have with thebeer in front of them. For many men,beer is possibly the most important brandin their repertoire of personal products,when it comes to defining who they are.But the male psyche, how men bondand what they aspire to, finds radicallydifferent expressions in different partsof the world. In many parts of Africa,For many men, beer ispossibly the mostimportant brand intheir repertoire ofpersonal productswhen it comes todefining who they arefatherhood and the familial responsibilitythat surrounds it, is highly aspirational toyoung men. But while beer campaigns inthe UK do appeal largely to men, one thatemphasised fatherhood, I fear would bedoomed to failure.We believe that deep, rich and rigorousconsumer insight is critical to brandbuilding. I am sure that many of ourcompetitors would say precisely thesame. However, we take it to a level ofgranularity that borders on the obsessivein order to understand and assimilate thoseattitudes towards beer which are – from aconsumer’s perspective – indefinable.As a topical aside, even understanding,and combating the drivers of, alcoholmisuse force an appreciation of the highlycultural nature of drinking. In the UK wehave an undeniable problem among youngpeople for whom drinking to intoxicationis entirely acceptable – if not glamorous.Travel to Italy, however, where alcohol istypically considerably cheaper than herein the UK, and drinking to excess is tabooand considered socially unacceptable.Here are three of SABMiller’s brands,to illustrate what we have, throughdetailed research, come to understandabout how different groups of peoplerelate to their national identity.tyskie gronieAs Poland’s largest beer brand witha market share of 18% and heritagedating back to 1475, Tyskie is rooted inwhat it means to be Polish. But whilePoland’s history is rich with great artists,composers and philosophers, it is the15th century and not the 21st that isthought to be the ‘golden age’ of Polishculture. Instead, its recent history isdarker and more troubled, characterisedby a succession of devastating wars, whichmeans little from the past 150 years standsin its original place.Consequently, Poles feel that theyhave lost a link to the heritage of theirforefathers. They feel destined forgreatness, but need external affirmationto feel positive about being Polish. Sothey will take an avid interest in theperformance of Polish players in theEnglish football leagues or hold up RobertKubica, the Formula 1 driver, as a nationalhero, because of his success on a globalstage. They want proof – validated by aglobal audience – that Poles can be great.So Tyskie seeks to create and tellnarratives that allow Poles to feelbetter about themselves, providing themwith grounds for genuine pride. Oneexample is when we changed the liveryof the trucks exporting Tyskie to the UKto demonstrate the brand’s status as anexport brand and its popularity overseas.pilsener in ecuAdorIn Ecuador, national identity embracesall epochs of its history – combiningCatholicism, pagan symbolism and a moresecular ideology. When native inhabitantswere forced to convert to Catholicismby the Spanish, the conversion was oftennot entirely pure, with the result thatindigenous elements, such as a polytheisticbelief in ‘spirits’, became part of the newreligion. The Spanish conquerors broughtpopulations from Bolivia, Guatemala and,ultimately, Africa as slaves, and they toobrought their beliefs and traditions.This combination of influences ismost powerfully exhibited in the manythousands of fiestas that take placearound the country, from the Fiesta ofLa Mama Negra, which aligns the powerof a volcano to the mercy of the VirginMary, to the Corpus Christi celebrations46 Market Leader Quarter 4, 2011

internationaLGrAhAM MAckAyof Pujili, which combine the Catholiccelebration of Holy Communion withtraditional celebrations of the harvest andoffers of thanks to Inti, the Inca sun god.Pilsener is our ‘national’ brand inEcuador, growing lustily and with an 80%market share. Its television commercialsseek to reflect the complicated anddeep-rooted connection of the people totheir ancestors and the land.cAstle in south AfricAWith the football World Cup takingplace in South Africa last year, we tookthe opportunity not to showcase a globalbrand to the watching world, but rather tounite South Africans behind our flagshiplocal brand, Castle Lager, and build brandequity and loyalty with local consumers.With 11 languages and a multiplicityof cultures and political affiliations, theRainbow Nation has been trying to forge acommon national identity since the demiseof the apartheid state. While most peoplewill acknowledge their South Africanidentity at some level, this fails to competewith powerful racial, geographic and triballoyalties still very much in evidence today.South Africa is a country still searchingfor a voice that encapsulates the country’sdiversity, while demonstrating a strongsense of unity to the rest of the world.Our research found that onecharacteristic that unites all SouthAfricans – regardless of their background– is the enormous pride taken in theirreputation for hospitality and openness.Castle Lager, sponsor of the nationalfootball team Bafana Bafana, created acommercial that encapsulated this in thebuild-up to the World Cup.Having been in decline for many years,Castle has not only stabilised, but is nowin double-digit growth long after thetournament has ended and makes upnearly one-fifth of our total portfolio inSouth Africa.A responsive mArketingeco-systemThe results reinforce the importance ofputting consumer insight at the heartof any brand strategy, and having amarketing eco-system that can remainsensitive to the idiosyncrasies of localculture, while simultaneously deployingthe most effective and efficient marketingand sales techniques.We have worked long and hard todevelop such a system within SABMiller.One that gives local marketing teams theautonomy they need to respond locally,but which utilises the expertise, skill andlearnings available across the business. Itis an important part of how we can addvalue and leverage the scale of the group.This combination of discipline andfreedom is cultural, as much as it isstructural. Our instincts are to employ thecomplete individual and empower themto develop bespoke solutions. This avoidsthe trap inherent in less-flexible systems,which lead to ideas that in theory fit allmarkets but in reality suit none.In conclusion, we have embracedglobalisation, but with qualifications,as we believe that the beer business isinherently local and will remain so.Our determination to build brandsthat resonate with local consumers isa key point of differentiation betweenSABMiller and its competitors. Werecognise that our approach is more costlyand more complex to manage. And, inmany ways, we are ‘swimming against thetide’ identified all those years ago by TedLevitt. But we are attempting to use thebest of what we know globally to enhanceour offering and delivery locally. In short,we believe we are the most local of theglobal brewers.And while much of the global consumergoods industry is focused on identifyingthe ways in which everyone is the same,SABMiller is trying to work out what it isthat makes everyone different. nGraham Mackay is chief executive ofSABMillerThis is an edited version of theMarketing Society Annual lecture,28 March 2011.during the world cup in south Africa,sABmiller took the opportunity to unitesouth Africans behind its flagship localbrand, castle lager, and build brand equityand loyalty with local consumersMarket Leader Quarter 4, 2011 47

growth driversandy bird and mhairi mcewandelivering growth is the keychallenge facing organisationsacross the globe. in their bookThe Growth Drivers, Andy Birdand Mhairi Mcewan argue thatthere has never been a morechallenging – or a more exciting– time to be a marketerAccept t hechallengeThe worLd is changing fast.The breathtaking pace oftechnological advances and theadvent of social media haveprompted an unprecedented growth in‘people power’. In parallel, the urgencyof achieving environmental sustainability,the shift in economic power to emergingmarkets and the cultural implications ofglobalisation are transforming the worldin which we live.The speed and scale of thesechanges are having a major impact onall organisations. Yet, as businesseseverywhere strive to keep pace withthese challenges, they remain undermore pressure than ever to driveprofitable, sustainable growth and delivershareholder value – creating a significantgrowth challenge. As organisationsstruggle to weather the storms ofeconomic recession, the focus for manyis on the financial drivers of shareholdervalue, on cost reduction, efficiencies,staff severance and budget restrictions.But costs can only be cut so far. Thereis now a growing recognition of the needto embrace new market opportunities,to create value in new ways and todrive growth in a more proactive andsustainable way that addresses the needs ofall stakeholders – customers, shareholders,employees and society as a whole.We believe that the most urgentpriority facing all organisations strivingto drive growth today is to pay as muchattention to the marketing drivers ofperformance as they have traditionallypaid to the financial ones. In The GrowthDrivers we focus in detail on the criticalcontribution of three key, interrelateddrivers of business growth.l Marketing: the discipline and practicesof marketing, which enable companiesto create better value for their customersand thereby drive sustainable, profitable,demand-led growth.The Brand Learning Wheel TM is a simple model to help organisations appreciate what buildingmarketing excellence requires in practice and helps them prioritise the core capability driversl Marketers: the people who areresponsible for specialist marketing tasksand activities – however these are definedin any specific organisation.l Marketing capabilities: the abilityof people, teams and organisations as awhole to manage the marketing activitiesneeded to create better customer valueand drive demand-led growth.Of the three, marketing capabilitiesdeserve particular attention becausewithout focus on developing andsustaining these, the potential impactof the other two on commercialperformance is unlikely to be realised.The challenges facing marketers areconsiderable. Let’s be under no illusions,it’s a demanding job. As markets mature,competition intensifies, and the paceof technological and social changeaccelerates, the relentless search forcut-through innovation and bettervalue to maintain competitive edge isincreasingly difficult to achieve.For companies to succeed and flourish,investment in building the marketing48 Market Leader Quarter 4, 2011

growth driversandy bird and mhairi mcewancapabilities of their people, teams andthe organisation as a whole needs tobe an important strategic priority. At atime when many organisations are facingunprecedented challenges in drivinggrowth in today’s global networkedmarkets, this call to action has neverbeen more timely or more important tocommercial success.Finding The Way ForWardInvesting in ‘training’ is not enough.Organisational leaders who want to drivedemand-led growth need to take a morestrategic, holistic and integrated approachto the development of marketingcapabilities. By investing greater time,effort and resources in building marketingcapabilities, they will be better equippedto improve commercial performance anddrive growth.In our experience, marketing capabilitydevelopment needs to be approached ina way that is focused on supporting themarketing capability needs and strategyof operating teams, business unitsand the whole organisation – not justindividuals within it.The drivers oF MarkeTingCapaBiLiTyEarly on in our work with multinationalcompanies, we realised the outdatedconcept of ‘training’, as opposed tocapability development, was so deeplyentrenched in some quarters that weneeded a simple way to challenge thatthinking and to explain the power ofa more holistic approach. This wouldmove beyond the focus on individual skilldevelopment and training to embracethe impact of a range of other importantdrivers of capability that influence theway marketers work in practice.We explained this new approach bycreating the Brand Learning Wheel TM .This simple model helps organisationsappreciate what building marketingexcellence requires in practice and helpsthem assess and prioritise each of thecore drivers of their own organisationalmarketing capability.deFining a MarkeTingCapaBiLiTy sTraTegyGiven the acknowledged importance ofmarketing capabilities as a key growthdriver within an organisation, webelieve that strong senior leadership andproactive development of a strategy tobuild marketing capabilities is essential.Yet this is often not the way capabilitydevelopment is managed in reality.In order to define the best marketingcapability development strategy for anyparticular organisation, it is vital that twogolden rules are followed.l Golden Rule number one:Marketing leaders must leadmarketing capability development. Inour view, it is the direct responsibility ofthe marketing leader and leadership teamto drive the strategic marketing capabilityagenda because it is they who areultimately accountable for marketing’scontribution in terms of driving growthfor the business. If they are to ensurethe contribution of the function is inline with the requirements of seniormanagement, they need to manage theirexpectations appropriately and build thecapabilities needed to succeed.In all the work that we’ve done withour clients over the years, the singlebiggest factor that has influenced theeffectiveness of marketing capabilityprogrammes has been the extent towhich senior management and marketingleaders have seen these programmes asa strategic means of proactively drivingbusiness growth.l Golden Rule number two: Marketingcapability development must beplanned strategically. It is critical toapply the same rigour and discipline tothe development of a marketing capabilitystrategy and plan as that which lies atthe heart of effective marketing strategyand planning. There are many such waysin which the approach to marketingcapability development can draw frommarketing disciplines but this is one of themost important.sTraTegiC pLanning sTagesThe key stages of defining a marketingcapability strategy are similar to thedevelopment of any effective strategy.l Step 1: Define the vision formarketing. To lead a programme ofeffective change, the first step is to beginwith a clear and compelling vision of thefuture which sets ambition and context,inspires people with a sense of possibilityand engages them emotionally to committheir energy to making the vision a reality.So, marketing leaders wanting todrive change in the capabilities of theirpeople, teams or organisation, need todefine an inspiring vision for the role ofmarketing in the business. They needto align other stakeholders in helping toasTrazeneCaAstraZeneca launched a marketingcapability ‘Health Check’ for its new GlobalMarketing teams using a mountaineeringanalogy with powerful emotive and visualimagery. People were initially inspired withexamples of world-class marketing fromother industry sectors and then the teamsworked together, led by their seniormanager, to rank themselves on a fivepointscale across a set of the eight keyareas within AstraZeneca’s own marketingcapability framework.“It was good for us because there werenew teams coming together and it allowedthem to have really good discussions aboutwhat they do, how they do it and theirambitions for the future. It helped usidentify key capability gaps and themes forour programme to focus on.”tim Bailey, head of marketingacademy, AstraZenecashape that vision and establish the scaleand scope of the marketing capabilitydevelopment needed.l Step 2: Conduct a marketingcapability situation analysis. Once keystakeholders have agreed on the vision forthe role that marketing will play in drivingorganisational performance, the nextstep is to assess how well the marketingfunction, and potentially the broaderbusiness, is equipped to deliver this visionin practice.l Step 3: Define and align objectives.Having defined the main marketingcapability issues facing the business,marketing leaders must then establisha clear and ambitious view of therole they want marketing capabilitydevelopment to play and the relatedobjectives and metrics.At the highest level, we have foundit is helpful to start by crafting a simplestatement of the overall goal or mission ofthe programme.Marketing capability missionstatements define clearly and simplywhat the marketing capabilityprogramme is setting out to achieve.They help align other stakeholdersand sharpen the focus of subsequentstrategy and programme development.However, it is also important to drilldown objectives to a more detailed level,defining specific, measurable targets andkey performance indicators (KPIs) that>Market Leader Quarter 4, 2011 49

growth driversandy bird and mhairi mcewanexperT opinions‘We live in an environment that is changing hugely. Competition is continuously more challenging,the fusion of media and technology is transforming the relationships between brands andconsumers, and there is a need for brands to possess a social integrity beyond their economicintent. So it is critical, if we are to continue to deliver results and win in our categories, that webuild up stronger specialist marketing capabilities across the organisation.’Mark Baynes, global chief marketing officer, Kellogg‘Training in a traditional sense wouldn’t apply in our business because it’s a whole changeprogramme we need to go through – changing processes, changing attitudes, changingbehaviours, a whole raft of things. It is not something that happens just over one workshop orattendance at one programme, but it happens in people’s day-to-day tasks and that needs to beembedded over a period of time. It takes many months, even years to achieve that, but when youget there it makes a significant impact on the business.’Navjot singh, global marketing manager – recruitment and hr communications, shell‘It’s not something to be undertaken lightly. You have to be single minded and determined thatyou want to bring a level of consistency across the globe and across the brand. I do think it is veryhelpful, maybe even critical, that you get a number of the functions joined up here because ifpeople had seen The Diageo Way of Brand Building (DWBB) as just a marketing thing, theopportunity to chip away at it would have been huge. But the fact that there are a number ofpeople joined together that are really driving this is very important.’Nick rose, former chief financial officer, diageoMarkeTing CapaBiLiTydeveLopMenT – Missions‘To help build great hotels guests love by developing best in class skills and processes in hotelbrand management, sales and marketing.’intercontinental hotels group‘Giving marketers the confidence to outperform.’Unilevercan be used to help set direction andtrack progress over time.The ultimate measure of success of amarketing capability programme relatesto its impact in creating better customervalue and driving profitable businessgrowth. However, to be meaningful,objectives and KPIs need to differentiatethe unique impact of capability buildingactivities from the other drivers ofbusiness performance.l Step 4: Develop the marketingcapability strategy. Having definedand aligned clear, focused capabilitydevelopment objectives, the next step is todevelop the marketing capability strategy.Up to this point, there may be clarity on‘why’ a marketing capability initiative isneeded, but not on what that initiativewill comprise.Underpinning the strategic decisionstaken at this point are usually someguiding principles or beliefs that emergedin discussion with senior executivesduring the earlier stages of the strategydevelopment process.l Step 5: Build the implementationplan. The final step in defining amarketing capability developmentstrategy is to agree all the coreelements of the capability programmeimplementation plan. What will it looklike in practice? What will be its scope,impact, timing and resources? What willbe the key deliverables such as priorityprocesses, best practice or mandatorytools, job role profiles and blendedlearning programme elements (forexample, workshops, virtual classrooms,online portals)?There will also need to be a timeplan, an engagement plan and clarityon the budget scope and responsibility.Another important component isa clear explanation of the internalroles and responsibilities for makingthings happen.With significant resources investedin global brand innovation andcommunication campaigns, organisationsare becoming well aware that smallimprovements in the quality of theseactivities can make a big differenceto the return on investment deliveredfrom marketing.Martin George, managing director forgroup development at Bupa, explains:‘Inside a business it’s a war for resource.The CEO only has so much money andso many people, so either we get them inmarketing or the HR director gets themor finance get them. The person whoultimately succeeds in securing resourcewill be the person who is going to addmost value to the bottom line. Profit isthe common denominator; that is whatyou’ve got to learn to focus on.’in ConCLusionThere has never been a more challengingtime to be a marketer – or, one couldargue, a more exciting time. Howeverchallenging the developments facingorganisations, as in many earlier periodsof revolution, they are creating enormousgrowth opportunities for businesses toseize the moment and actively shapetheir future.But marketers must first build theengine to drive the growth. The growthitself will come from effective marketing,but it is the capabilities needed to drivebetter marketing performance thatwill provide the energy and momentumfor success. nAndy Bird and Mhairi McEwan arethe co-founders of Brand Learningand authors of The Growth Drivers:The Definitive Guide to BuildingMarketing Capabilities (John Wiley &Sons). Readers can pre-order the bookfrom www.wiley.com and receive a 20%discount with the code VB528. BrandLearning is a global leader in buildingorganisational marketing capabilities.www.brandlearning.com.Extract: with the kind permission ofWiley.com. ©Andy Bird & MhairiMcEwan 2011.50 Market Leader Quarter 4, 2011

warc.comWarc is the go-to resourcefor the latest knowledge andtrends in marketing and brandcommunicationReynold D’Silva, Global Brand Director, Pond’s, UnileverSign up fora FREE trial atwww.warc.com/trialFollow us on twitter@warceditors

trendwatcHmelanie howardFollowing wealth sirensof the global economySince the 2008banking crisisand recession,the mood of thecountry has beenone of austerity.But the megarichstill influenceaspirations, saysMelanie Howardausterity Has prompted widespread shifts inbehaviour away from the frothy consumerism ofthe Noughties. So it seems paradoxical to suggestwe turn our attention to the activities and shoppingchoices of the 2% that own more than half ofthe world’s total domestic wealth for ideas andinspiration of what is coming next.Trendspotting in the 1980s meant hanging abouton street corners to predict which branded goodswere about to become the next must-have designerlabel or sports shoe to benefit from the globalwave of youth mass consumption. But now, withthe spread and globalisation of the ‘wealth sirens’(our moniker for the super rich) it is incumbent onthe assiduous contemporary trendspotter to hangaround on La Croisette for inspiration and ideas.It seems certain that the mega-rich populationwill swell, as will that of the medium-rich. This isessentially a story about what such consumers will dowith their prosperity at every upward-income stagethrough which they ascend. Despite our own belttightening,there is no sign that our human interestin the lifestyles of the mega-rich is diminishing. Thestrength of demand for celebrity as content in themushrooming global media environment is beingaccelerated by the mingling of the super-rich withthe super-famous and super-beautiful.Significantly, the activities of the mega-richgo far beyond the West. Of the world’s 1,011billionaires recorded by Forbes Magazine in 2010,as many are from Asia as from Europe. For thefirst time ever, each region has its own cohort ofbillionaires represented in this globally influentialniche, thus broadening their appeal and role asinspirational icons to billions. And it seems thatthere is no end to the ambitions that took thebillionaires to the top in the wealth stakes. Notonly do they spend on a spectacular scale, they areincreasingly seeking power and influence in newways beyond being benefactors and de facto patronsin their own regions.What they buyThe implication of the wealth siren theme is thatwhat the mega-rich devour every day the restof us would like to taste at least once in a while.Their appetites are characterised by customisedexclusivity, artisanal perfection, the best whateverthe price or seeming ludicrousness. In Russia, forexample, the annual Millionaire Fair showcasessome of the world’s most expensive items, suchas a Fissler cooking pot inlaid with more than200 diamonds, with price tags that would beexcruciating to most people.Joselito ages its Ibérico Gran Reserva ham for68 months and, in an upgrade, each ham comeswith a black leather and red silk presentation casedesigned by Andres Sarda, propelling the productfurther into a realm of exclusive luxury. Retailing ataround £3,000, this delicacy is the opposite of fastfood. As the numbers of the mega-rich grow overthe decade to come, we believe that their influencewill trickle down in more modest forms.For example, so-called ‘concierge brands’ havebegun to offer affordable concierge-style solutionsthat give consumers a small taste of the VIP world.Gilt Groupe, Vente privee, Rue La La and Ideeliare some of the online clubs that specialise in flashsales of designer wares. Jetsetter and Voyage Privégive members access to exclusive holiday and traveloffers ranging from boutique hotels to luxury villasand island getaways along much of the same lines.Politicians and PhilanthroPistsThe mega-rich are not merely self-indulgentconsumers, they form a political class with seriousexpectations of influence over public policyeverywhere. Roman Abramovich’s role as Governorof Chukotka is well known, as is his penchant forpremiership football as another route to influence.More philanthropically, the world’s richest man,Carlos Slim, has ‘$4bn of investments readyto promote education, health and other greatchallenges’ in his own eponymous Foundation.Some 165,000 young Mexicans have apparentlybeen helped through university by the Carlos SlimFoundation. He has invested more than $2bn in therenovation of inner Mexico City, and his personalwebsite is totally presidential in tone.The INGKA Foundation was formed by theowner of IKEA, Ingvar Kamprad, to promoteinnovation in design. It can spend up to €45m perannum – a fraction of its total monetary value – oncharitable causes. The endowment of the GatesFoundation – with its pro-health and anti-povertyagendas – runs to over $30bn, the equivalent of theUS’s entire annual overseas aid budget.It seems that the mega-rich and the legions ofaverage-rich following behind represent a throbbinghuman dynamic inside the forward march of theglobal consumer society as well as demonstratinghow we can behave as concerned global citizens.They become, everywhere, more important, morenumerous, more influential every year. nMelanie Howard is chair of the Future Foundationand a non-executive director of TCA.melanieh@futurefoundation.net52 Market Leader Quarter 4, 2011

letter from baN galoreprasad narasImhanA nation of shopkeepersPrasadNarasimhanconsiders howthe explosion ofinnovation in Indiacan take thenext step tobecome thrivingbrand ideasNaPoleoN famously (and dismissively)called England ‘a nation of shopkeepers’. Muchindignation followed, to be mollified only by hislater defeat at the hands of the English.In India though, ‘nation of shopkeepers’ hastaken on a different meaning altogether. Withabout 11 retail shops for every 1,000 people, orone shop for every 20 to 25 families, India is trulya nation of shopkeepers. Shoppers are everywhereand there are shops in every nook and corner,reflecting the new economic buzz in which Indiais basking. In large cities, the shop density issometimes as high as 45 shops per 1,000 people;Napoleon’s nation of shopkeepers has only fourshops for every 1,000 of its population.The fact is, Indians have traditionally taken toentrepreneurship easily – some communities morethan others. The Patels have made their mark asshopkeepers extraordinaire both in Europe andthe US. And there are the ubiquitous Malayalis;one story has it that it was a Malayali who servedEdmund Hillary chai when he first scaled MountEverest. Over half of Indians are self-employed,with a majority taking to small retail trade.There is a new kind of shopIt is, however, a new avatar of ‘setting up shop’that is today taking India by storm, fuelling itseconomic engine with new energy. Emergingfrom India’s huge, conservative, middle-classcommunity is a new set of shopkeepers. Smart,very educated and unafraid global citizens, theseentrepreneurs are following their dreams and‘setting up shop’ in new ways – creating boldstart-ups that are seizing opportunities in Indiaand the world.From software to solar power, mobile to media,rural to robots, internet to infrastructure, suchshops are springing up everywhere.The excitement is palpable. Magazines and TVchannels cover this repeatedly. These guys areIndia’s new superstars, the stuff of urban legend.So much so that many fresh graduates are skippingemployment altogether, starting their careers asentrepreneur ‘shopkeepers’.This is just the tip of the iceberg. The‘movement’ has just reached a tipping point. Allthe ingredients are in place: an economy growingat 8% to 10%, strong educational base, easy accessto funding, new incubator infrastructure and strongtechnological skills, just to mention a few.But what does it take for this movement to trulyturbocharge India’s growth? Three key principlesof brand leadership are particularly relevant.1Follow the money. Concentrating effort andmoney where there is a competitive edge isthe most fundamental trait of a leader brand.Where would these start-ups be best off ‘setting upshop’? Early successes have typically come largelyfrom software and mobile application spaces.And venture capitalist (VC) funding has followed.Last year alone, VC funding grew by more than150% over previous years as per industry sources.Big sell-outs such as MakeMyTrip.com have onlyhelped. These are spaces where Indians can createcompetitive advantage, and they’re great start points.But there are many new areas where we can expectthe next wave to impact – health, biotech, medicaltourism, higher education, holistic school education,rural development, clean-tech, distributed energyand rural credit, to mention a few.2Build big brand ideas. Despite the sheen,these entrepreneurs are often little more thanovergrown technocrats. The original geniushas resulted in a single-product company, but thestruggle going forward is one of marketing and scale.Brand thinking is often absent. It’s no wonder weoften encounter businessmen who feel they have hita roadblock, without realising that the ‘sausage’ oftheir brilliant product/service needs brand ‘sizzle’.India is an emerging economy, but people’sdesires are by no means emerging. They want thebest brands. In a luxury-brands survey conducted inMarch 2011 by The Nielsen Company, India rankedthird after Greece and Hong Kong in the list ofmost brand-conscious countries in the world. Brandbuilding is a priority for these businesses to grow.3Return on ideas. The Indian innovation psychehas often been equated more with inventiveness(jugaad) than innovativeness. It is aboutcleverly manoeuvring situations, creating solutionsand managing outcomes – less about a structuredapproach to innovation. While this will help createthe first big invention, it is often insufficientto build big companies. Entrepreneurs will dowell to find ways to maximise the return on theirideas – setting bold visions, exploding the originalidea in new ways, engaging with external coaches,and hiring very different (stable, experienced?)employees, to name a few requirements.Bill Bryson has laconically said: ‘We used to buildcivilizations; now we build shopping malls.’ InIndia, we are building a civilization through theseshopping malls. May these shoppers prosper. nPrasad Narasimhan is managing partner atbrandgym Asia.prasad@thebrandgym.commarket leader Quarter 4, 2011 53

BEST IN BRIEFBOOK REVIEWSNever astride a fenceWINSTON FLETCHERJOHN HEGARTY doesn’t sit on fences. He says whathe means and manifestly means what he says.In a business notoriously prone to compromiseand equivocation his feisty honesty helps explainhis success. But the fundamental reason for hisexceptional success is his exceptional creative talent.Consequently, as he says in Hegarty onAdvertising, the aspect of current advertisingmanagement that most winds him up is the‘tissue meeting’. In tissue meetings, agenciespresent clients with a ragbag of roughcampaign ideas, and everyone chews them over:compromise and equivocation personified.Worse still, tissue meetings negate creativetalent like his because everyone present isencouraged to throw their tuppence-worth intothe ring. Had Leonardo’s Mona Lisa suffereda tissue meeting, John playfully suggests, shewould have ended up with an apple on her head‘to get people wondering’. His uncompromisingview is that ‘whoever came up with thecompletely stupid idea of tissue meetings shouldbe taken out and shot’.John deplores tissue meetings becausethey are wimpish. However, there is a morefundamental reason for deploring them. Theyconcentrate on ‘ideas’ rather than execution.But brilliant ideas succeed only when they areRewards for braveryALLYSON STEWART-ALLENSHAUN SMITH and Andy Milligan’s latest book, Bold:How to Be Brave in Business and Win, follows thesuccessful format of many business books: get arange of corporate leaders to tell you how they doit so the rest of us can replicate their DNA.The book is easy to read, with each chapterorganised as a mini case-study of an internationalB2B or B2C champion applying bold ideas toengender customer, staff, supplier and overallloyalty to a memorable brand relationship. URLsare sprinkled throughout as useful signposts tomore information on the concepts or companies.Companies studied include Virgin Galactic,JCB, Burberry, O2, Zappos.com, WWF, with arange of leaders interviewed. While most carrytypical job titles – managing director, marketingdirector, CEO, founder – a few are hilarious suchas Geek Squad’s minister of propaganda.While the book gives us in its penultimatechapter the what, why and who for ‘bold’ business,what’s missing is the how. Knowing that theauthors are in the consultancy business, clearlythose who complete the final chapter’s 40-item‘Bold practice survey’ can get Shaun and Andy tohelp with the execution of their bold plans alongbrilliantly executed, as BBH has consistentlydemonstrated. Think how subtly the memorableBBH campaigns have been crafted, such asLevi’s 501s; sexy Häagen-Dazs; and brutalBarnardo’s. The ‘ideas’ would have beendestroyed by cack-handed execution.Hegarty on Advertising is in two halves. Thefirst summarises John’s beliefs about advertising,branding, creativity and agency management.The second is autobiographical, highlighting keymoments in his dazzling career. For my money,the second half is the better because his careeris fascinating; while his thoughts on advertising,creativity and the rest are forthright, vigorousand a good read, they are rarely unorthodox.Yes, he believes creativity is advertising’s magicingredient, thinks creatives should questionbriefs, considers old and new media must beintegrated and so on – but who doesn’t?Reading his vehement – and entertaining– diatribe got me wondering: might tissuemeetings be the smoking gun that has triggeredthe much discussed, and much lamented, demisein the quality of British advertising? Soundsdepressingly likely, to me. ■Hegarty on Advertising, John Hegarty, Thames &Hudson, £16.95the lines of several categories including: keep themain thing the main thing; demonstrate zealousleadership; dramatise the customer experience; bein pursuit of ‘wow’. The book is also embeddedin an iPad app, claimed by the authors to be apublishing firstHopefully, that execution of this book’s ideaswill be led by more than just the marketingfunction since being bold and doing right by thecustomer requires a joined-up organisation, astrategy and a culture that encourage risk-takingand, one assumes, values the customer. Perhapswe’ll see the British tabloid newspapers applyingthis flavour of bold which would perhapscontribute to their long-term sustainability, animplied lesson of the book.As my former professor Peter Drucker ismeant to have said: ‘Culture eats strategy forbreakfast.’ Let’s hope Shaun and Andy’s nextbook (Bold 2?) gives us more specifics on how todo it simply and profitably. ■Bold: How to Be Brave in Business and Win,Shaun Smith and Andy Milligan, Kogan Page,£16.9954 Market Leader Quarter 4, 2011

BEST IN BRIEFBOOK REVIEWSRound-up of inspirational titlesJOHN KEARONOVER THE past decade we’ve seen many books thatchallenge in one way or another the conventionalnotions of what motivates us and how we makedecisions. These are the five that inspired me most,together with the impact they’ve had on me.2010 Obliquity: Why Our Goals Are Best AchievedIndirectly by John Kay. Impact: Never forgethappy customers always precede happy investors.There are some things in life that cannot bepursued directly, like happiness. Happiness is theconsequence of other things like a rewarding job,family, hobby etc. Profits are the same. Do notmanage your business for shareholder value butdo something you’re passionate about. Delightyour customers and profits will follow.2010 Drive: The Surprising Truth AboutWhat Motivates Us by Daniel H Pink. Impact:Inspiration to make sure BrainJuicer is a juicyplace to work. Most jobs are a hangover fromthe Industrial Revolution where we bribe peopleto do dull work. In the 21st century, jobs shouldallow people to do something they’re passionateabout, providing them with the mastery andautonomy to do it well.2005 Stumbling on Happiness by Daniel Gilbert.Impact: Challenges everything market research(MR) thought it knew about how people makechoices. It shatters deeply held convictionsIf society is broken, can brands fix it?MERRY BASKININ 1971, Stephen King’s definitive essay – ‘Whatis a brand?’ – described the role of the brand asproviding reliability and guaranteeing quality inan uncertain world. He puts Andrex’s spectaculargrowth in market share down to the fact that it ‘hasbeen formed into a brand that is valued highly byconsumers’. He goes on to explain how marketinghas created this added value.Fast-forward 40 years, and buzzwords todayinclude ‘integration’, ‘behavioural economics’,‘social media’, ‘engagement’ and ‘sustainability’.This book is focused on the latter two, abouthow trusted brands are (still) highly valued bycustomers. This is a stimulating (if pedagogical)read about the role that valued brands can, andconceivably should, play in making lifestyles moresustainable. It is a well-considered perspective onthe dodgy ground brands stand on in championingsustainability. Apparently, 98% of green claimsmade by 2,200 US products in 2008 were false,misleading or exaggerated. This isn’t sustainableunder any definition of the term, but theopportunity for brands remains to take a proactive,meaningful and enduring role in developing abetter (healthier, happier) consumer society.about how your own mind works, and abouthappiness. The book has become our inspirationfor translating breakthroughs in behaviouraleconomics and psychology into MR tools thatbetter understand and predict human behaviour.2004 The Wisdom of Crowds: Why the Many AreSmarter than the Few by James Surowiecki. Impact:The inspiration for challenging 80 years of MRdogma. If people in a large, diverse crowd are askedtheir opinion, and those opinions are aggregated,they will be consistently more accurate than expertsor scientifically sampled audiences. Six yearsand 500 head-to-head experiments later, we’veconfirmed that a crowd buying and selling sharesin ‘ideas’ will be as accurate, more discriminatingand better able to spot breakthrough ideas, thanclassic research approaches.2003 Emotions Revealed: Understanding Faces andFeelings by Paul Ekman. Impact: The inspirationfor exhorting brands to get emotional aboutadvertising. There are seven universal emotionswe recognise in people’s faces. Ekman’s work isused in the US in airport screening. We used it tocreate MR’s first universal measure of emotionsand have spent the past five years proving thatthe degree to which an advert moves peopleemotionally is a better predictor of effectivenessthan traditional persuasion-based metrics. ■Building high ‘social capital’ is a term youwill read frequently in this book. The authorsbelieve this should be the primary focus ofsuccessful brand strategies, over and abovemere sustainability. Social capital is defined as‘the strength and inherent value in our societiesthrough qualities such as dialogue, shared thinkingand widespread trust’ and, guess what, these arethe very values deployed by any successful brandengaging with consumers.The premise that the disintegration of socialcapital (‘trust’) lies at the root of society’s problemspoints up the role for socially valued brands:to deliver imaginative, compelling ideas thatbring people together. This has been facilitatedby the explosion of social media channels thatare changing the way communities connect andinteract with each other. An idea whose time hascome perhaps. The premise of Brand Valued is aworthy and interesting addition to the canon andprovides some answers to the question: ‘Whatshould the brand be in society today? ’ ■Brand Valued by Guy Champniss and FernandoRodés Vilà, John Wiley & Sons Ltd, £19.99Market Leader Quarter 4, 2011 55

speaK er’s cornerkeith lucasThink before you link...Keith Lucaslooks at thedangers ofalienatingconsumers withinappropriateproduct tie-insWhat does the man who plays a SteinwayConcert Grand drive to the concert? Wouldyou be surprised if it were a shiny black BMW7-Series? Probably not. Now, what about thedriver stepping out of his Bentley Continental,what do you suppose he’s wearing on his wrist? Alarge and impressive-looking Breitling perhaps?Some brands seem made for each other, andmutually reinforcing shared values seems natural.Others leave you wondering just what they werethinking. Can anyone, for example, make anysense of the ‘Aston Martin Edition’ of the ‘NikeHyperdunk Kobe Bryant’ trainer? When LadyGaga (pro-gay pop star) signed an exclusive tie-inwith Target (US traditional values retailer) itseemed bizarre (even for Lady Gaga). Target’scustomers were as outraged as her fans. Hadshe sold out? ‘I did it to reform them,’ she latertaunted, after the whole charade bit the dust.Image makers make mIstakesNo one, it seems, is above making brandmiscalculations. Branding titans Coca-Cola(ubiquitous American soft drinks) and L’Oréal(sassy French haircare and cosmetics) are eachmasters within their respective categories, butwhen they got together to concoct an improbablesounding‘nutraceutical’ drink called Lumaé(which sounds disturbingly like a potion from aHarry Potter story), audiences for both brandsassumed it must be some kind of elaborate hoax.Problems generally arise when rational analyses,based on objective measures (such as audiencecorrelation data), are allowed to override anintuitive sense of what feels right for the brandsin question.David Ogilvy famously noted that brandsare defined not only by their constituent parts(product, packaging, logo, advertising, etc) but bythe people with whom they are associated. Brandstereotypes can be enduring and persistent. Byway of illustration imagine, if you will, a youngwoman, dressed in a blue anorak, jeans and slip-onshoes, drinking a coffee outside a café, with a dogsitting at her feet.Now, what if I told you that the woman inquestion was actually wearing a Barbour quiltedjacket, Armani jeans and Gucci loafers and thatshe was drinking a macchiato outside PatisserieValérie in Chelsea with a black labrador at herfeet. I suspect you have a rather more focusedpicture in your mind’s eye.What if I said that she was wearing an FCUKparka, Bench jeans and Adidas slip-on trainers andthat she was drinking a latte outside Wimpy inRomford with a Staffordshire Bull Terrier at herfeet, you might have another, similarly focused,but quite different image in mind.In both illustrations the essential, objective,facts remained identical but the brands (includingthe place name and dog breed) are enough tochange the mental picture and the inferredlifestyle of the young woman.Would you sense the dissonance if I told youthat the first woman was wearing ‘IntimatelyBeckham’ perfume and that her favourite drinkwas a Bacardi Breezer? Or that the second waswearing ‘24 Faubourg’ by Hermès and herfavourite tipple was Pimm’s?Of course, such a vividly polarised imagemakes it relatively easy to spot whensomething simply doesn’t fit; perhaps becauseit overtly links the brand with the personalityof its users. Unfortunately, many classicallytrained marketers often fail to take account ofsuch apparently ephemeral sensibilities whensigning-up brand partnerships, focusing insteadon a theoretical overlap of target audiencedemographics.Of course, some brand partnerships will beless critical than others; after all, either of our56 Market Leader Quarter 4, 2011

speaK er’s cornerkeith lucasProblems generally arisewhen rational analyses,based on objectivemeasures (such as audiencecorrelation data) are allowedto override an intuitive senseof what feels right for thebrands in questioncaricatures might drive a Mini Cooper, carrya Visa card or use an iPhone. But an assiduousbrand owner will not leave this to chance.Marketers considering entering a partnershipbetween their brand and another (or thinkingabout incorporating a ‘brand inside’ their own –such as Intel, Bosch, Pininfarina, etc) should askthemselves if they sense an instinctive emotionalfit between the audiences of the two brands. Ifthey can’t decide, then perhaps they ought to getto know their brand better.ConsIder the bIgger pICtureThere are ways in which any brand’s distinctiveemotional values can be teased out and capturedfor future reference. Whatever you do, don’trely on traditional audience demographics. Forexample, if you think your brand appeals to ABC1females, aged 20 to 35, living in London, earning£30k+, who are Facebook users and listen toCapital FM, think again. Both women describedearlier could fulfil such criteria and if one is agood fit for your brand, there is a reasonablechance the other may not be.Ultimately, we should remember that brands dobehave very much like people. We get on best withthose who understand us and reflect our values(or sometimes the values to which we, perhapssecretly, aspire) and as the relationship grows sodo trust and loyalty.But when a friend suddenly acts out of characteror announces a commitment to a third party,who is conspicuously unlike us, we can feelangry, confused, even betrayed. And that is howcustomers can feel when a brand they thoughtthey knew behaves out of character and breachestheir trust.The picture broadens when we appreciatethat brands are not the preserve of consumergoods marketing, they are also built aroundindividuals, places and political parties, amongmany other things.Consider, for instance, how passionatelymany Liberal Democrat supporters felt, perhapsirrationally, when their party appeared to havecompromised its essential values by joining acoalition with the Conservative party.However compelling the strategic rationale,many supporters felt betrayed and, as a result, theparty was punished at the earliest opportunity; itsshare of the vote collapsing from 17% to just 4%in less than a year, resulting in an ignominious fallfrom second to sixth place.Now, much of this is to do with the softwareof communications rather than the hardware ofstrategy and decision-making, but politicians seemno less guilty than marketers when it comes tounderstanding such ephemeral sensibilities.To parody an old TV commercial: think beforeyou link before you dive. nKeith Lucas is CEO at Lucasbrandkeith.lucas@lucasbrand.comMarket Leader Quarter 4, 2011 57

the Last wordrory sutherlandWould you ask someoneto give up their seat?rory sutherlanddescribeshow potentialembarrassment isan underestimatedforce in marketingIf I were to mention the Milgram experiment, mostpeople reading this would think of the electricshock experiments on obedience and authorityconducted in 1961. Less well-known, however, butalmost as interesting, were a series of experimentsfrom the 1970s, in which he asked his studentsto travel around on the New York subway askingstrangers to surrender their seats.In the end the experiment revealed you couldget up to 68% of people to give up their seat whenasked. But far more interesting was the effect theexperiment had on his students.When proposed to one of his graduate classes,they refused. Finally, one student, Ira Goodman,volunteered to try it with a partner. But insteadof coming back after 20 trials as he had promised,the pair returned with only 14. When Dr Milgramasked what had happened, he said that it was justtoo emotionally painful to go through with it.Belittling his students’ fears, Dr Milgram setout on his own. But when he approached his firstseated passenger, he gagged. ‘The words seemedlodged in my trachea and would simply not emerge,’he confessed. In some instances, other peopleattempting the experiment were offered seatswithout uttering a word, since the act of summoningup courage to ask made them appear physically ill.These findings seem to support the belief that weare social animals to our core. But, even more, theysupport a comment Dr Nick Southgate made to theeffect that the fear of mild social embarrassment isone of the most underestimated forces in marketing.So, of all the marketing benefits of the internet,one of the most significant (and least celebrated)is that it enables customers to engage in complexinteractions without fear of the many social pitfallsyou encounter when you deal with fellow humans:the freedom to ask questions without the risk oflooking stupid; to chase low prices without the riskof looking mean; to act like a demanding customerwithout the risk of looking like a prat.Imagine, for a moment, the last time you bookedtravel online. You may have investigated the pricesof perhaps 17 flights on four different airlines. Nowimagine the same interrogation performed overthe telephone or face to face with a travel agent.After investigating perhaps three possibilities, sheerawkwardness would prevent us asking after a fourth.Or imagine the question: ‘How much is it fora larger room or a suite?’ Simply by asking thisquestion, we have become a hostage to the hotelier.We can of course say: ‘No, at £900 a night, thesuite is a bit pricey, I’ll stick with a standard room.’But only at the cost – viscerally felt – of a minorloss of self-respect. Online, however, you can askthe cost of the Presidential Suite and risk not ashred of embarrassment.If you doubt this, ask yourself how many timesyou have bought something even after discoveringat the till it is far more expensive than you thought,simply to avoid the mild discomfort of handing itback. (One of my daughters, when aged three, owedher adored $150 cashmere cardigan to this effect.)The strong feelings evoked in all of us when wedeal with other people can make or break products– some great ideas that fail because they makethe user feel a little weird. Yet because they areproducts of our unconscious minds, these dangersmay not emerge in conventional research.When working for easyJet, I suggested thatSpeedy Boarding would work best if those whohad paid to board in advance were given an orangehat visibly to mark them out from everyone else.Experience suggests I was right – as things stand,priority boarding on low-cost airlines is a socialnightmare occasioned by the fear of being thoughtto be a queue-jumper, even when you have paid £15specifically to jump the queue.With hotels, I have long recommended theyabandon the practice of insisting on carrying yourluggage to your room. People generally feel uneasyabout losing sight of their luggage, yet refusing theoffer makes you feel like a crank or a neurotic.But the greatest source of personal socialunease in any sales environment must be the cardealership. What should be a fun visit is turned intoa terrifying experience through fear of unwanted,pressurising human contact.There are, after all, two sales processes in buyinga car. The act of being sold a car is one – but, moreimportant perhaps, is the more private process ofselling the purchase to yourself. Unwanted attentiongenerally prevents the second stage from takingplace. Car dealerships could perhaps learn frommy frivolous easyJet suggestion – supplying a rangeof brightly coloured hats at the entrance, on theunderstanding that nobody wearing one of these hatswill be approached under any circumstances. nRory Sutherland is executive creative director andvice-chairman of OgilvyOne London and OgilvyGroup UK. Rory.sutherland@ogilvy.com58 Market Leader Quarter 4, 2011