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Post-Materialism refuses to go away
Monday, October 3, 2011 - 19:33

At the start of the 2008 recession, we had featured a series of entries in this blog about the post-materialism trend of consumers willing to do more with less, and being very comfortable with it. This trend has not only sustained, but seems to have become resurgent in the face of the continuing economic woes.

This just in today from the Wall Street Journal in a piece titled, Frontier of Frugality [WSJ Subscription Required]. We quote:

“Retailers are coming to terms with a new reality: the consumer who traded down during the recession and never came back.

Buffeted by high unemployment, heavy debt loads, falling home values and high food and gas prices, these shoppers have been whipped into a permanent state of consumer caution. They buy only what they need, avoid premium labels, clip coupons and scour sales.”

So if you are selling to such consumers, buckle up. It is going to be an even bumpier ride.

Our advice:

  • Be maniacally focused on a chosen segment of consumers. We don’t mean a particular demographic. We mean a segment defined by consumers in a context with a need. Households making $50,000 - $75,000 in a year is a class of consumers. Parents that wish to give meaningful, memorable and economical holiday gifts to their families define a consumer segment. Pour all your energies in understanding and delivering to segments. Also read: Less is more in driving organic growth.

  • De-position your competitors: It is the survival of the fittest. If you wish to be recognized as responsible and meaningful, cast your competitors as frivolous and irresponsible. When done correctly, you can use your competitors marketing investments against them. Also read: De-position your competition off the shelf.

  • Innovate furiously: Create a series of experiences that uniquely delivers against the needs of your target consumer. If retailers would use a fraction of the money they spend in discounting merchandize towards true innovation that addresses their target shopper, they would be way ahead of the game.

Post-materialism is here to stay. Are you prepared to live up to its challenges?

The Invisible Assumptions
Monday, September 26, 2011 - 20:32

The scenario where we have perfect data lives only in the textbooks of management theory. In the real world we all make assumptions. Usually there is just not enough data and most often, not enough time, money and resources to go get that data. So we rely on a combination of experience and gut instinct to make assumptions both of the external world as well as internally about the business we work in.

This approach has some serious downfalls:

  • Much of the knowledge in an organization can be anecdotal or hopelessly outdated.

  • We don’t know what we don’t know.

  • The retort, “We tried that. It doesn’t work” becomes the by-line for shooting down new ideas.

Worse, we often end up taking some pretty big decisions with serious implications for the business, based on assumptions and relying only on our past knowledge. Not only does this happen with alarming frequency, it happens without even the conscious recognition of the assumptions we are making.

So here’s an idea that you could action right away. The next time you are involved in a strategy or planning decision, initiate a conversation in your team about the assumptions you are making that underlie the strategy/plan. You are likely to find the discussion illuminating. The assumptions could be about:

  • What market do we serve?

  • Do we understand industry issues from our customer’s perspective?

  • Do we understand the implications of our actions on competitors and how they are likely to react?

  • Will channel partners continue to support us?

  • Do we have the ability to execute our strategies?

We tried it recently in our team. We were in the process of developing our growth playbook for the next three years and went through the usual discussions on growth strategies. When the conversation turned to assumptions, we had the usual, “we think the customers need that” or “we believe there is too much competition in that space”. But then the team kept digging and we realized after a while that we were making some fundamental assumptions about our business model that were not necessarily valid. And if we changed those assumptions, we could get into some highly profitable adjacencies.

We also realized that some assumptions did not require a long and elaborate research project to valid. Half a dozen customer interviews that could be done in a matter of a couple of days was all it took to validate some assumptions and that was a very easy investment to make.

Assumptions are dangerous, especially when they are below the water and made without almost unconsciously. Shine the light on your assumptions and you may find it to be the most illuminating aspect of your decision-making process.

Living in the Age of Discounting
Monday, September 19, 2011 - 19:51

The latest survey run by Reuters published last week revealed that a majority of Americans are planning to spend less this year over the holiday season than last year. I can almost see the bumper sale stickers from over-wrought retailers already.

We live in an age of “give-aways”. 50% off at Groupon and sale weekends…..just about every other weekend. Discounting has sunk to unthinkable depths. The other day I bought a 50% off deal at OpenTable the online restaurant reservation website. I paid $15 for the right to dine at a local Italian restaurant for up to $30. When my wife and I went to the restaurant a couple of weeks later we took our own bottle of wine along as well. The restaurant was lovely, the service great and the food authentic. But the real clincher came when we were presented with the dinner bill.........for all of 38 cents! I cannot imagine how that restaurant serves dinner for two along with the customer’s wine for all of $15.38 and hopes to stay open for long.

While such discounting is great for consumers, it is brutal when you are a seller. What are businesses to do in the face of such price-based competition? The answer while relatively straightforward is anything but simple. Companies have to find a way to choose which customers to serve, innovate and offer their chosen customers a unique promise. Whether it is through new and varied choices, more functional products, better service or just plain going the extra mile, businesses have to take their destiny into their own hands.

Whether it is Five Guys Burger (check them out if you haven’t already!) or Pop-Chips, innovative providers are finding their way into our wallets without having to shed prices. Nor are they doing it only by coming up with whiz-bang new technologies like Apple or Amazon.

It requires courage, discipline and fortitude to be an innovator in today’s world. But only the bold will survive the rough waters of today’s discounted world.

The Dangers of Centralization
Friday, September 2, 2011 - 13:27

Many companies, especially in the financial services industry, are centralizing in a fury of cost-cutting and "rationalization". The savings look compelling when presented on a consultant’s slides and many such initiatives are being pitched as attempts to create Centers of Excellence (CoE) that will theoretically improve quality and scale. However companies need to be aware of the hidden costs to such moves.

One company that we are familiar with, centralized into CoE’s in response to the crisis of 2008. This involved moving many of the functions such as customer insights, pricing, risk management, IT, new product development and others out of the businesses and into corporate CoE’s. More than two years hence the company finds itself dealing with many of the consequences of such a move:

  • The CoE’s have become bottlenecks for work and a constant source of frustration for the businesses.

  • The organization has become a lot more silo’d than it was before with new disconnects between the businesses and the CoE’s, as well as the CoE’s themselves. Depite the fact that the CoE’s are all in the same location and sometimes on the same floor, their engagement with the businesses is very choppy and quite disconnected.

  • The CoE's do not feel engaged in the businesses. They find themselves being kept at arms-length from the businesses and feel very litle sense of ownership or partnership in meeting their results.

  • The organization has become a lot slower to respond to the demands of the market and has in fact become more inward-focused .

While demand has re-surfaced in many of the segments the company operates in, it finds itself struggling to make the most of the growth opportunities because of the structural barriers created by the centralized model. Yet because of the obvious cost-benefits it is finding it hard to revert to give up the CoE structure.

While some companies may find it imperative to centralize and reduce their cost structure because of market conditions, they should get into it with their eyes open. Remember the old adage - There aint no such thing......

Megatrends – The Opportunities at the Bottom of the Pyramid
Tuesday, August 9, 2011 - 16:39

The future of growth in many emerging markets is being shaped by significant megatrends. The fundamental driver of these trends is the global population that is expected to have reached 7 Bn. already and is expected to increase by another billion souls within the next 20 years. 

While this population strains resources for the entire world, the problem is particularly acute in highly populous emerging markets such as China, India and Brazil. While this “emerging” crisis is daunting, hidden within it are the seeds of many opportunities. The most significant opportunities are in addressing the fundamental needs of the millions of people at the bottom of the population pyramid, those that individually make less than $2 a day but collectively represent a huge untapped market. Here are three megatrends that identify severely unmet needs in this market:

  1. Food Production: Agricultural output must double by 2050 to adequately feed the 9.3 billion people expected to live on this planet. (Source: United Nations). This increased productivity will need to occur as available arable land and resources remain unchanged, or in many areas, decrease. Worldwide, more than one in six people are already starving and half the world’s population is considered “malnourished,” lacking suitable amounts of nutrients, vitamins and minerals to ensure good health. As the world population grows, more people will go hungry and fewer will have access to the nutrients their bodies need – unless innovation can meet the needs of people in different places around the world. While companies such as Pioneer Seeds are helping to improve nutritional value and yields, technology providers such as IBM are using mobile technologies to reduce waste between farm production and markets.

  2. Alternative Energy: Emerging markets are soon becoming some of the largest energy consumers in the world. Rising populations and standards of living in these markets are going to have a dramatic impact on already stretched fossil fuel sources. New business models and innovations are needed to generate, store and distribute renewable energy to hundreds of millions of customers being priced out of the market today. This could easily be the fastest growing sector in the energy market for the next 20 years. Interesting business opportunities are emerging in energy-deficient countries such as India where the over 300,000 telecom towers in the country run on diesel-based gen-sets today and could be supplemented with sustainable and eco-friendly energy sources.

  3. Access to Fresh Water: Nearly a billion people, mostly in emerging markets, have no access to clean water, and 3.3 million people die from water-related health problems each year. The need to trap, conserve and efficiently distribute clean water is unleashing many forms of grassroots innovation – see more at www.nationalgeographic.com/freshwater.

The businesses that want to tap these megatrends have to be prepared to re-invent their offerings and focus on innovations and business models that can address problems at scale. The prize is immense and the cause could not be nobler.

 

The positioning of marketing
Thursday, June 9, 2011 - 11:36

Peter Drucker famously commented that:

- "Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions: marketing and innovation."

- “Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business."

Why did one of the founders of modern business management make such a bold statement? Why did he attribute such an important role to marketing, and how does that relate to all the other things that a business organization does? We believe the answer lies in the definition of marketing as two essential components:

  1. Making a compelling promise to select customers.
  2. Keeping that promise.

To put it another way, the role of marketing is to make compelling promises that we can keep and to ensure that we keep the promises we have made. Marketing therefore extends far beyond the marketing function. When done in accordance with its strategic purpose, marketing is an essential capability that involves everyone in the organization.

The attributed role of most marketing functions is to help communicate the promise in order to generate demand. When given the occasion to be strategic, marketers identify and choose target customer segment(s). Based on insights into the needs of these customers, marketers craft a relevant, unique, and credible promise. However, this is only one half of the intended purpose of marketing.

The second, and often overlooked, role of marketing is in helping the organization keep the chosen promise to target customers.Think about your own organization and employees outside the marketing function – the operators in the call center, the sales person calling on your customers, the machinist on your shop floor. How many of them:

  • Know the promise you are making to target customers?
  • Are inspired by that promise in a way that unleashes their collective energy and creativity?
  • Know what they are supposed to do and not do in order to keep that promise?

If your organization is aligned behind a compelling promise, it is well on its way to marketing excellence.

Mobile on the Move - Keeping Up with Mobile Consumers
Friday, March 4, 2011 - 09:28

 The mobile market is growing and changing at a phenomenal rate. Innovative marketers aren't waiting for perfect solutions, because there aren't any. They're jumping in, testing options, learning from results, and listening to their customers - wherever they go...

We offer the following up-to-the-minute market overview to help you evaluate your mobile strategy.

Widespread usage and rapid growth, especially in smartphones

According to Nielsen, there are now over 223 million U.S. cellphone users over the age of 13, and an estimated 40-50% of mobile devices sold in 2010 were smartphones. Nielsen expects smartphones to overtake feature phones in the U.S. by the end of 2011. Meanwhile, according to Informa Telecoms & Media, worldwide smartphone traffic will increase by 700% over the next 5 years. We can expect smartphones to be ubiquitous in the very near future.

Mobile ad network power plays
The mobile advertising network is in a similar state of rapid flux. Even as online ad spending surpasses newspaper ad spending for the first time in history, most experts believe mobile advertising will soon overtake both markets. Google's AdMob holds the lead with an estimated 59% of the market, but there are more than a dozen mobile ad networks, each with a unique value proposition. For a recent overview, check out this infographic. You can also find a continuously updated guide to mobile ad networks at mobiThinking.

So, what exactly are mobile users doing with their phones?
Here are some of the latest facts and figures about mobile consumer habits:

  • In Q2 2010, 10% of mobile users -- that's 22 million Americans -- watched video on their phones. That's still a tiny fraction compared to TV watchers, but it's a 43% increase over 2009. (Nielsen)
  • In a survey of consumers on the AdMob network, 45% of respondents said they used their mobile device for 2010 holiday shopping. 53% said they had used their phone to look up information on a product while in a store, and then later purchased the product online.
  • 61% of smartphone owners and 52% of feature phone owners reported utilizing a games app in the past 30 days. (Nielsen)
  • Smartphone app downloaders now have an average of 27 apps on their phones, up from 22 in December 2010. iPhone users have the highest average at 40 apps. (Nielsen) 
The Silver Wave: Aging Boomers Demand Attention
Thursday, February 10, 2011 - 07:49

As the first boomers turn 65, they have more influence – and money - than any generation in history, and they won’t be settling down to suck on their dentures anytime soon.

1. The Silver Wave The “age wave” is officially upon us. Bolstered by rising life expectancies and declining fertility rates, the 76 million American boomers continue to hold unprecedented workforce, marketplace, and political power as they pass into traditional retirement age. By 2015, 45% of the population will be 50 or older (AARP), and by 2030, nearly one in five Americans will be 65 or older (U.S. Census).

Clearly, as marketers, we can no longer dismiss older consumers to focus exclusively on the 18-49 age bracket. Here’s some of the latest data on the restless, affluent, savvy and dominant boomer market:

  • Boomers have higher median household incomes than pre- or post-boomers. (ThirdAge)
  • They dominate 1,023 out of 1,083 consumer packaged goods categories. (Nielsen)
  • They watch the most video at 9:34 hours per day. (Nielsen)
  • They embody more than 50% of all discretionary spending. (ThirdAge)
  • They buy 77% of all prescription drugs and 61% of OTC medication. (ThirdAge)
  • The 50+ boomers have $2.4 trillion in annual income, which accounts for 42% of all after-tax income (US Consumer Expenditure Survey.)Almost 80% own their own homes. (U.S. Census)
  • 62% of working boomers expect to work at least 9 more years. (Center for Work-Life Policy)
  • 80% of boomers are pessimistic about the current direction of the U.S. (Pew Research Center)
  • Boomers spend more on technology than Gen X or Gen Y – an average of $650 per month. (Forrester Research)
  • Boomers account for 32% of all Internet traffic, and 70% go online every day. (Pew Internet & American Life Project)
  • 91% of boomers use email, 88% use search engines, 78% research health information, and 74% get news online. (Pew)
  • One in five 50-64 year olds now use social media every day, up from 1 in 10 in 2009. (Pew)
  • 66% of boomers send text messages. (Deloitte)
  • As you ride this demographic wave, a few reminders to help you stay out front:
  • Boomers see themselves at young-at-heart and not as old or “seniors.
  • As parents and grandparents, boomers are eager to stay relevant and connected to the younger generations (see above). This is a key driver behind the growth in boomer social media usage.
  • Like any large demographic, Boomers are not monolithic. There is a wide variety and diversity of needs, insights and interests that need to be understood to be successful.
  • Don’t assume brand loyalty. Unlike previous generations, boomers are used to having their changing needs addressed and will quickly try something different if they’re not satisfied.

 

 

What’s your take?

How does the aging of America impact your business? What are your most effective strategies for marketing to boomers? Share your thoughts by commenting on this blog post. 

Trends and Trajectories that Matter for Marketers
Thursday, December 16, 2010 - 06:55

After a rocky 2010 dominated by the Great Recession, we're gearing up for big things in 2011. EMM Group has identified seven developments that we believe will have a significant impact on how companies, clients, and customers interact over the new year.

1. The Silver Tsunami

The youngest boomers turn 65 in 2011. By 2030, the population of Americans 65 and older will increase from 13% to 19% - nearly one in five.1 As the healthiest, longest-lived, best-educated and most affluent elders in history, aging boomers will continue have a huge influence on every market from healthcare and financial services to housing and technology.

2. Mobile

There are now over 223 million U.S. cell phone users over the age of 13, and an estimated 40-50% of mobile devices sold in 2010 were smart phones.2 Consumers are expressing a clear demand to manage their lives on the go, placing increasing pressure on products and services that have not yet mastered the mobile market.

3. The Cloud

As Microsoft, Amazon, Google, and other majors continue to build out the cloud, companies benefit from increasingly flexible infrastructure and deep interconnection. At the same time, staying competitive in such a fluid environment means constantly re-evaluating the value you deliver to customers. In 2011, you may have to ask yourself more than once: "What business are we really in?"

4. Everyone is a Star

The explosion of social media, blogs, and user-generated video has now expanded well beyond the teen market. As consumers of all ages get accustomed to being stars in the movies of their own lives, they are demanding ever-higher levels of personalization in the products and services they buy. Marketers must figure out how to compete for "product placement" in these individual and ongoing movies.

5. Location, Location, Location

At least 4% of online Americans – and 8% of online adults ages 18-29 - are now using a location-based service like Foursquare. Driven by the forces of #2 and #4 above, this trend will become relevant to virtually every business as more consumers experience and evangelize the benefits of personalized experiences based on where they are at any given moment.

6. Simplicity

Constantly inundated by information, but short on time, customers and clients will respond best to products that don’t require a user guide and services that filter out irrelevant details and make their lives easier.

7. Sustainable Green

The days of paying a premium to be environmentally sensitive are waning. People want to be green, but they’re tired of waiting for green products that work just as well and cost the same as non-green products.

Introducing EMM Group's Marketing Training Services
Tuesday, September 7, 2010 - 11:18

We are excited to launch the Center for Marketing Excellence. CME brings together top marketing consultants from around the world, having driven growth at global brands, and best practice marketing intellectual property and case studies from EMM Group. Our mission is to help organizations develop their marketing skills around core competencies and traditional strengths.

The CME marketing training workshops are customized for each organization and designed to codify your organization's marketing processes and best practices. Our work at GE, Clorox, Gillette, and other Fortune 500 companies, shows that an integrated marketing approach can drive the next big phase of growth.

We invite you to explore our Marketing Training website, call us at 877-203-6500, or e-mail us.

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