While driving down Boston’s Massachusetts Avenue one Saturday afternoon, it dawned on me that every bus stop shelter along this popular main artery sported advertising signage for Apple’s iPad 2. Assuming that many bus riders were not target customers for a product selling between $500 and nearly $900, the two of us in the car thought that spending advertising dollars at bus stops seemed like a waste of money.
We were wrong! Just get on any type of public transportation and what do you see? Almost everyone is clearly a prospective iPad customer. Thumbs are going at incredible speed, while others are talking on their cell phones, playing games on a smartphone or watching movies on a hand-held device. With white earbuds everywhere, it was all about music. Rather than a marketing mistake, bus stops can provide a perfect advertising venue for promoting the iPad.
Contrast all this with the huge number of businesses that don’t have a clue about marketing. Feeling desperate to do something, they sign up after hearing the latest sales pitch that offers a magical means for getting more customers. Rather than doing nothing, they write a check - and nothing happens.
The truth is that the communications environment is so dynamic today there are no firm marketing answers. This makes it incredibly important to avoid wasting marketing dollars. Here are thoughts that may be useful:
1. Don’t get mauled in the discount trap. One of the unintended consequences of the recession has been a discounting mindset that continues to shape consumer behavior. Groupon, as well as its imitators, thrives on consumer demand for discount deals and, as might be expected, there are apps for managing them.
One retailer, who had just signed up for a Groupon-type deal was attending a meeting and constantly checking sales on an iPad. He was only interested in the number of sales, rather than the impact they had on his bottom line, even though the net was rather small.
As a Harvard Business Review article pointed out, “ ... Merchants should be cautious and skeptical about these innovations. Even when sweetened with incentives for repeat purchasers, jazzed up with time- or item-specific discounts, or offered through location-aware mobile devices, all daily deals are simply price promotions... A steep price promotion can make consumers permanently price sensitive by lowering the reference price they expect to pay, and price promotions can distract customers from products’ benefits, causing irreversible damage to brands.”
Making an intense effort to portray the value of a product or service can create value without cutting the price.
2. Stay away from “ego-driven” marketing. When he answered the phone, the owner of a service company became fascinated with the idea of having a 30-second video commercial - not to mention being the “star.” Too much to resist, it was a slam-dunk deal, if there ever was one, even though there was no plan for using it.
When something catches the CEO’s fancy, that’s it, whether or not it has a role to play in the company’s marketing. This is called “ego-driven marketing.”
In the same way, businesses often tend to ignore questions about the purpose of an ad, its message or its utility.
Failing to have a marketing plan and spend time thinking through how each component fits into the overall picture is a tragic and costly mistake that wastes valuable marketing dollars.
3. All marketing is individual. The late U.S. House Speaker “Tip” O’Neil held that “all politics is local.” Such advice applies to marketing.
For decades, marketing often used a broadbrush approach: advertise in major daily newspapers, network TV stations and national magazines, and then toss in billboards and direct mail to the mix, just to make sure.
By 2000, such an approach was dead and technology threw in the last shovel of dirt. The ability to gather, analyze and use enormous amounts of consumer data has pushed the bar to the point that all marketing is individual.
With companies empowering customers to manage their individual marketing protocols, it’s all about the individual - and will become even more so. Today’s customers aren’t flooded with random marketing messages. The only messages Amazon.com customers receive are those that fit their profile.
4. The longer a company has been in business, the more it needs marketing. This runs contrary to the popular wisdom. The assumption is clear: because their customers know them well and their constituency believes in the brand, spending money on marketing is a waste.
This is a specious argument if there ever was one, since it’s easy to forget that the longer a company has been in business, the greater the need to replace existing customers. It’s also easy to ignore the fact that new competitors come into the picture, luring consumers easily with the “new and improved” pitch.
Without marketing, companies can become “dated” in the minds of even loyal customers.
That’s why Coca-Cola, a very old brand, still has one of the largest marketing budgets. What about Heinz ketchup, Levi’s and a host of others
5. Basing decisions on common sense is trouble. In fact, common sense is both untrustworthy and dangerous. “We don’t need to survey our customers,” says the head of the organization, who takes pride in knowing his customers. “If I ask a handful, they’ll tell me what we need to know” When the issue of continuing attrition comes up, he explains it away with such a “common sense” explanation as a downturn in the economy.
As so many marketing professionals know from bitter experience, it’s difficult to challenge the marketing views of those who succeed in business with facts, because their success serves to “validate” their views. This is why a book by the principal research scientist at Yahoo!, Duncan J. Watts, Ph.D., is valuable in helping to set the record straight. The sub-title to Everything is Obvious: Once You Know the Answer says it clearly: “How Common Sense Fails Us.”
Duncan contends, as Christopher F. Chabris writes in the Wall Street Journal, “Common sense is a shockingly unreliable guide to truth and yet we rely on it virtually to the exclusion of other methods of reasoning.” He points out that relying on common sense puts us in the position of dismissing and rejecting out of hand the objective testing of our decisions - including marketing and sales initiatives. When this happens, we can’t help wasting our marketing dollars.
CONCLUSION
Far too much of today’s marketing is based on what was popular in the past or what worked even a few years ago. These five principles provide guidelines for developing programs that produce positive results instead of wasting money.
John R. Graham is president of Graham Communications, a marketing services and sales consulting firm. He writes for a variety of business publications and speaks on business, marketing and sales issues. Contact: 40 Oval Road, Quincy, MA 02170; (617) 328-0069; e-mail: [email protected]; Blog: grahamcomm.com/wordpress; Web site: www.grahamcomm.com.