Marketing Talk

News just before Christmas of the bankruptcy of Monitor, the consulting firm set up by Harvard Professor Michael Porter in 1983, had many rival strategy gurus rubbing their hands in  unseasonal schadenfreude. As the world’s most-cited (and highest-earning) business academic,  a household name in corporations, governments and business schools since the 1980s, (and a golfer of near-professional standard to boot), you can see how he might have attracted some measure of envy over the last three decades. Explanations of the collapse of his firm abound – a failure to adjust to conditions p0st-2008 , a reliance on methods which have outlived their relevance, even just something as simple as a lax attitude to costs in a very slow market.

But an uncomfortable question remains, in spite of all the post-hoc rationalisation. If the world’s most eminent strategist’s own business can come unstuck, what’s the point of strategy for the rest of us?

Perhaps part of the answer is to make sure we have the right expectations. Strategy can no more show us a failsafe future path than a crystal ball can. But it can help us to make more responsible decisions. Take Porter’s celebrated Five-Forces model, which first saw the light of day in the Harvard Business Review in 1979. It’s what sociologists call a ‘conflict theory’, depicting any given industry as a set of warring factions scrapping over available profit.  Porter’s background in economics made him aware that some industries are more attractive than others  in this respect, laying himself open to the misunderstanding that all you have to do  is choose the right industry and your strategy problems are solved. Even were anyone free to abandon their current  industry for something more attractive overnight , success is not so easy to come by. In fact the real (and to my mind genuine) value of the model is to help understand your own performance in whatever industry you find yourself, in such a way as to help improve decisions about your direction in the longer term.

Another Porter favourite  is the ‘generic strategy’ idea, whereby he advises there are only a limited number of ways to compete in any industry. A famous one is ‘cost leadership’ (epitomised by companies like Ryanair) where the name of the game is to do everything as cheaply as possible. Being a cost leader means that you can pass on your efficiencies to your customers as lower prices than those charged by rival firms (should you so desire). Again this is widely misinterpreted; this time as sanctioning competition as ‘a race to the bottom’ in which there are ultimately no winners. A more careful reading of Porter reveals that what is he is actually advocating is not so much being the cheapest, or even the best, in an industry, but being unique in some way that is valued by a sufficient number of customers to provide a viable, and sustainable, business. Competitive strategy can thus allow a thousand flowers to bloom, rather than descending into a zero-sum game.

Porter himself parted company with Monitor in 2011 (the same year it made a public apology for having done business with the Gaddafi regime in Libya) and was winding down his relationship with the firm well before the economic downturn. Since then his interests have turned increasingly to social issues — for example healthcare reform and corporate citizenship. So he can hardly be held responsible for Monitor’s doldrums. On the other hand, it has also been suggested that the bankruptcy was actually a  strategic move worthy of the master of positioning himself – smoothing the path for the firm’s acquisition (with most of its staff and client book intact) by another consultancy giant, Delloite…

I see in the paper that Waitrose has announced unprecedented demand for Halloween merchandise this year, making the annual end-of-October ghoulfest a close second to St Valentines Day as the biggest seasonal spending event after Christmas and Easter. Meanwhile in America, the National Retail Federation reckons consumers will splash out the equivalent of £5 billion on Halloween parties, fancy dress and food – an increase of about £5 per head  on what they managed in 2011.

I’ve never quite got the point of Halloween myself. But it’s clearly a marketing phenomenon of paranormal proportions. At the turn of the 20th century in the UK we barely spent £12 million on it. This year the figure is expected to reach over £300 million.

One of the reasons for its success is the way in which canny marketers are happy to be flexible about segmentation when it suits them. Segmentation, you’ll recall, is the marketing strategy that looks for  manageable sections (or segments) of a market with distinct needs and treats them on their own terms, rather than using a ‘one size fits all’ strategy. So, for example, your bank probably has a number of different current accounts available for people of different income brackets. Segmentation makes things more complicated for businesses by multiplying the number of products or services they have to offer (unless they choose to specialise in a particular niche). But it also leads to higher profits because we are willing to pay more for things that meet our needs more exactly than the alternatives available.

One of the most obvious, and best established, forms of segmentation is based on age. For example, children tend to want different things from adults when it comes to clothes, breakfast cereals and entertainment, so businesses treat them separately with profitable results in each of those markets. Or at least that used to be the case. Halloween marketing  in the UK  was once restricted to weird sweets and dressing-up clothes for tots. Now the grown-ups are getting in on the act, with full-size costumes jostling the kids’ ones for supermarket space, and seasonal booze promotions alongside the toffee apples and eyeball-style gobstoppers. To some extent this is American tv and film at work, though  the proximity of good old British Guy Fawkes night on 5th November has helped facilitate a party feel. However it is also symptomatic of a blurring of the boundary between adult and child marketing, as Halloween is increasingly pitched at an older audience.

Harry Potter, poster boy of the paranormal, pioneered this trend.  The surprising popularity with adult readers of what was originally launched as childrens fiction led to the simultaneous publication of ‘older’ and ‘younger’ editions of subsequent instalments, with book jackets to match.  And fiction is not the only market where this is happening, leading some commentators to bemoan the infantilisation of adult tastes in areas such as food and apparel which once had clear age appropriate demarcation lines.

I think British adults can be forgiven for wanting to stage a Halloween takeover this year, however. After a celebratory summer of sport and royal jubilee, the sudden shock of dark evenings on Greenwich Mean Time, together with a news diet of continuing economic gloom and depressingly sordid celebrity revelations, means that we could all do with some cheering up.  See you around the pumpkin.

Perhaps my brain is more receptive to ideas early in the day, but I’m still thinking about the role of partnership in innovation a fortnight on from our most recent OU Business Network breakfast briefing. Sharing the platform with our Chair in Innovation Dynamics James Fleck, Professor Steve Potter and Dr Clive Savory pointed to partnership as THE key success factor in getting new initiatives off the ground. Clive’s example, a stymied innovation in healthcare, showed how ideas can get scuppered through opposition born of habit. On a happier note, Steve demonstrated that involving interested parties from the outset not only improves an innovation but speeds its rapid acceptance.

His example, oddly enough, was the congestion charge. Not the first, or most attractive, thing that comes to mind when you hear the word ‘innovation’, but something new and useful nevertheless. And not, in this case, the one that’s been deterring Londoners from clogging up their city since 2003, but a scheme launched a year earlier, over 200 miles north of the capital, to cut traffic in the centre of historic Durham.

The scheme followed a number of failed initiatives involving parking restrictions and pedestrianisation in the quaint but narrow streets around the magnificence of Durham cathedral. Reviled by local business and residents, largely ignored by drivers, and half-heartedly enforced, they did little to address the problem. Traffic and safety problems continued, resulting in a number of injuries to pedestrians and inconvenience to all.

Radical innovation in search of a solution arrived at the turn of the century with the formation of a group of stakeholders working with the local authority. Together they introduced peak-time charging, with stiff fines for defaulters spotted on CCTV. This bold step, far from alienating citizens and shopkeepers, proved a popular alternative to a mooted total ban on traffic. The secret of its success (an 85% reduction in traffic) was the careful negotiation of the elements of the scheme from the outset to balance the interests of the relevant parties. In other words, partnership working.

Advocates of competition (i.e. the opposite of people working together in partnership) often point to its role in spurring innovation. The argument goes that, rather than losing business to a rival, an organisation will come up with something new that’s better, cheaper or more convenient. But Durham’s congestion charge story suggests that this way of thinking about innovation (led by individual rather than collective interests) is becoming outmoded in an increasingly interconnected world. If this is right, the first step in managing innovation may well involve changing mindsets rather than machinery.

Panorama, the BBC’s flagship documentary series, has aired the issue of excessive drinking by older people as a growing health problem in the UK, citing figures that suggest 50,000 elderly lives could be saved in the next ten years by simply increaasing the minimum consumer price of alcohol to 50p per unit.

We tend to associate alcohol abuse with rowdy youths, fighting and puking in city centres on Saturday nights. So it comes as a sobering thought that the majority of hospital admissions for alcohol-related injuries and illnesses in England last year were from over-65s rather than 16 – 24 year olds. In one sense that’s hardly surprising. There are, after all, 10.3 million people over the age of 65 in the UK, compared to 7.5 million 16 – 24 year olds, and the number of frail elderly within that population is rising.

However, as the proportion of older people in the UK grows, the health-fallout of drinking too much in later life can only get worse left unchecked. Raising the price per unit of alcohol on the proposed Scottish model (however unpopular with the drinks industry) is likely part of the remedy. But only part. Many older people can afford to pay a bit more for their drinks , though a price hike might render a tipple more of an occasional treat than a regular indulgence. As usual with any attempt to change behaviour, there is no magic bullet. We need to understand more about why people (of any age) drink too much.

One reason is social conditioning. Given the availability and relative cheapness of alcohol, I’d imagine most people who enjoy a drink would be taken aback by how little you have to imbibe to reach the government’s advisory daily limit (and even the concept of ‘daily limit’ could be taken to imply that it’s normal to drink every day). Another is the effect of loneliness, isolation, and boredom — again not limited to senior citizens but a problem for many of them through bereavement or lack of family nearby. Health-threatening behaviour may offer a temporary respite. Even the marketing industry makes it easy to forget about older people, in spite of their attraction as customers (unfettered by children or mortgages). With some notable exceptions, display advertising operates as if the world of consumers was uniformly under 40.

If the issue of excessive drinking in later life is going to be addressed effectively it needs an adjustment in thinking as well as in pricing.

Five years of social marketing were held to account in the Guardian last week  as the Kings Fund thinktank reported on the effectiveness of campaigns to support healthier behaviour in England 2003 – 2008. The study monitored change in four areas of activity which threaten long-term health (smoking, excessive drinking, poor diet and physical inactivity).

The good news (and it is good news) is that 2003 – 2008 saw a drop in the number of people indulging in three or more of these behaviours from a third to a quarter of the population. The bad news (apart from the fact that even this improvement leaves much life-shortening behaviour untouched) is that the gains have been restricted to the top end of society. The best-off and best-educated have been swift to embrace healthier lifestyles, leaving the poorer and less well-educated more or less where they were at the beginning of the period.

In traditional marketing terms the social composition of your customer base is less important than the fact they are buying your product. In fact many successful brands make their profits through being socially exclusive. Health isn’t like that, however. While it’s heartening to see an overall change towards healthier lifestyles, it’s in nobody’s interest for this change to be widening the gap between rich and poor. It’s morally miserable, socially divisive and wasteful of resources — both now and in the future treatment of avoidable conditions.

Today’s social marketers face straitened circumstances compared to a decade ago. But with less to play with, the challenge is to concentrate resources and creativity on closing the health inequality gap. This means turning standard marketing logic on its head. Instead of pursuing the most likely customers, health marketers need to prioritise the ones we used to call ‘hard to reach’ (a phrase which promotes the marketer’s view of the world, rather than meeting the customer on their own terms. You’re only hard to reach if nobody knows how to find you).

Rather than the ‘quick wins’ and ‘low hanging fruit’ beloved of management consultants, this gap is going to be a slow, tough nut to crack. But only by taking the long view, and acknowledging the difficulty, expense and time required, will policy makers ever hope to make an impact on the health behaviour of poorer and less well-educated citizens. If government really wants to bridge the widening health gap in society, it needs to close the gap between what we expect social marketing to achieve and the resources available to it.

Hands Off Our Packs (HOOP), the FOREST-funded campaign group, proudly announced last week (August 10) that over 235,000 people had signed its petition against proposals to make tobacco manufacturers use plain packaging for their products. What a coup for these doughty defenders of our freedom to sacrifice health for the sake of tobacco shareholders. Were it not for the sad fact that over 100,000 people die in the UK each year from smoking-related illnesses the list of signatories might have been even longer.

Prominent amongst the supporters of branded tobacco packaging is lobby group The National Federation of Retail Newsagents, whose objections to plain packaging include the danger that market share in this poisonous filth will be lost to counterfeiters and street traders. They add that plain packaging will double the time taken to sell a packet of fags. Imagine lengthening queues becoming restive in newsagents up and down the land as they witness exchanges like this:

‘20 of those ones please’

‘What, these ones?’

‘No those ones next to them’

These ones?’

No those ones’ etc.

You can see why they are worried.

I’m not sure if my local Tesco Express is a member of the NFRN but if so it needs to get on message. I noticed recently when fumbling for my ClubCard  that the cigarette display behind the counter has been revamped with deeper shelf-edging. There’s no branding on these shelf-edging strips – they are plain white (except for the price flashes) and they cut off a good deal of the visible packaging. Is this the thin(ish) edge of plain packaging unilaterally imposed by busybody retailers?

Actually, no. For you see, not only do the new shelf edge strips ensure that the packets don’t fall off the display, they also obscure the health messages which appear by government decree on the lower parts of the packet fronts to deter potential smokers and remind current addicts of the risks they are running (thus encouraging them to stop). Evidence, should you require it, of the resolve of Big Tobacco and its minions to foil democratically-determined marketing regulation aimed at improving the nation’s health.

It’s only a day since the confetti settled, mercifully, on the closing ceremony but Olympics withdrawal symptoms prompt me to blow the digital dust off the Marketing Talk blog for a nostalgic reflection on the 30th games.

There’s plenty of marketing we could talk about Olympics-wise: the hilarious legislation aimed at limiting the use of terms such as ‘London’, ‘gold’ and ‘medal’ to official sponsors, the exclusive deal struck with McDonalds over selling chips onsite (the 799 other food retailers could only do so if combined with fish – so British!), or the Byzantine pricing and distribution policies which left vast tracts of embarrassingly empty seats early on after droves of disappointed fans had been denied tickets.

What I want to talk about is, in fact, the Olympic marketing legacy… of tears. Can there ever have been such a lachrymose Olympics in the 116 years of the modern games? Weeping has become the new rock and roll for any self-respecting sporting hero – whether inconsolably because you’ve just won silver (!) like cycling superstar Victoria Pendleton, or uncomprehendingly like Chad le Clos (the one with the Dad) having pipped his hero Michael Phelps to the gold by a fingernail in the 200 metre butterfly. Spectators wept, commentators wept, even this blogger had to wipe away a furtive tear at key moments. It was emotional. It was cathartic. It brought us together as a nation. In fact, if you weren’t weeping on (or off) a podium, there might have been the suggestion you weren’t taking it seriously enough.

The podium antics of two of the record-breaking Jamaican sprint relay team were a case in point. Usain Bolt’s trademark ‘lightning’ stance and Yohan ‘The Beast’ Blake’s bizarre clawing routine seemed over-rehearsed next to the impassive but misty-eyed demeanour of their team mates Carter and Frater. And even Mo Farah — much, much credit as he is due — gave us a bit more ‘Mo Bot’ than we really wanted. Come on lads, stop messing about and shed some manly tears!

Given marketing’s concern with emotional impact, it’s surprising we don’t see more tears in advertising. Casting my mind back more decades than I care to count, I remember a touching TV ad featuring a small boy coming to the aid of his tearful grandma with a box of tissues (to the strains of the intermezzo from Cavalleria Rusticana). It turned out she’d been chopping onions, something Italian grandmothers apparently spend most of their waking hours doing, but the little lad’s generous instinct chimed with Kleenex’s then tag line ‘softness is our strength’. More recently, circa 2004, we’ve had people shedding appreciative tears over Clover (a buttery spread), as served up by their loved ones. A very popular ad, it underlined the strong connection between informal meal times and caring (by a mum, a husband and a wife). That I can remember these ads so many years later suggests their power (or my sadness) but, unless I’ve not been watching enough TV of late, it also suggests they stand out because of the sheer rarity of commercial crying.

Perhaps now that the Olympics have got us in touch with our tear ducts, that is all going to change and the floodgates of emotional marketing are about to open. A case of cry before you buy?

Today I had the pleasure of taking part in our PhD day — a get-together of all the students who have embarked on the intellectual marathon of getting a doctorate at the Open University Business School. The PhD day is a bit like one of the water stations where the weary runners are handed refreshments by enthusiastic volunteers. Today’s volunteers included Professor Nina Reynolds from Southampton with a very useful talk on how the various components of a research project are like a  jigsaw puzzle (i.e. they should  fit, rather than be forced together), my colleague Dr Andrew Lindridge on ethical problems presented by sensitive research topics (some pretty hair-raising stories there), and my humble self on the the power of the poster. Click the link to see my slides.

Poster presentation is a skill that budding researchers need to master to cut it in the world of academic conferences. Most of the stuff that’s been written on the subject is in medical or nursing journals. But posters are gaining popularity in business subjects as a way of disseminating research quickly and simply.

Most of my audience today had just been on a course about how to design and create posters and some  had actually produced entries for a poster competition to be judged on the day. Looking at the display I knew there wasn’ t much I could teach them about production, but the focus of my talk was on what posters are good at.

We all know, more or less, what posters are. Their simplicity is part of their strength. According to Wittich and Schuller, writing in the 1970s about educational media, they can be defined as a ‘visual combination of bold design, colour and message intended to catch and hold the attention of the passer-by long enough to implant or reinforce a significant idea in his or her mind’. You can see already that there is a strong overlap between what advertisers might want a poster to do, and what you might want your poster to do at an academic conference.

Asked what a poster might mean for a researcher, my audience came up with a list that included: summary, prop for talking, shop window, abstract and positive nightmare. I was pleased with that list because it conveyed the sense of how a poster sparks personal interaction between researcher and audience, and also how much planning and work is involved in producing one that’s effective and impactful.

First you need to decide the overall format of your poster. If you are presenting at a conference there may be instructions to follow. Or there may be a ‘normal’ approach for your subject area. But given the potential of a poster for getting your name known, you may want to defy convention and make a splash. It all depends on your objectives — what do you want the poster to do?

You should never underestimate the power of visual impact. A study of posters at medical science conferences concluded in 2011 that even indifferent science was seen as groundbreaking if it was expressed in a visually stunning poster. There are plenty of templates and ‘how to’ guides on the web to help you come up with something suitably amazing, using familiar packages like PowerPoint or Publisher.

But what about your role as presenter? Quite apart from what’s  pinned or velcroed to the display stand, you need a persuasive script. The average visit to a poster is between two and four minutes according to that 2011 study cited earlier. So you need to convey your message superfast. Script an ‘elevator pitch’ about your research. This is a statement between 30 seconds and two minutes long ( apparently the range of time people spend in lifts) which conveys who you are, what you’re doing, and why it’s so interesting and important to your audience. Harvard Business School has a nice formula with career openings in mind, but it can easily be adapted to academic earbending.

Preparing answers to likely questions will save time, and make you more confident. Handouts (not necessarily miniature reproductions of the poster but key points with your contact details) are an excellent idea. As is having some kind of freebie on hand to attract visitors. Even the simple offer of a sweet can stop a visitor in their tracks, and (if sufficiently chewy) silence them long enough to listen to your pitch uninterrupted.

I mentioned common ground between advertisers and academics when it comes to posters. Advertising research from Holland in 2009 makes a number of interesting points. Using a tachistoscope (a device which can show split-second images of posters or other material) researchers established that consumers needed less viewing time to be able to recall posters which had clear branding and novel information, short headlines, minimal clutter, photographs and predominantly blue colour schemes. They took longer to absorb messages from posters with a lot of text, complex images, humour, pictures of women, information about price and red colour schemes. I’m baffled about the women and the colour scheme (my wife will not be surprised to hear that). But it’s clear that the more complex the message, the more difficulty people have getting it. Might seem obvious but it’s good to know there is scientific evidence for the old adage of keep it simple when it comes to posters — academic or otherwise.

We live in a ‘presentation culture’ where if you can’t fit something on a screen in three bullet points and a piece of clip art, it’s hardly worth saying. As a result large slices of our working lives are spent in darkened rooms being subjected to near-death-by-powerpoint experiences by people telling us what they are going to tell us, telling us, then telling us what they have just told us, whether or not they had anything to say in the first place.

Now, where was I?

Arch-exponents of the visual aid congregate on the web at SlideShare, an invaluable site where you can upload and share your latest ‘deck’ (of slides) with your peers. It’s a handy stop for anyone keen to get a quick briefing on the ubertrendy in marketing and technology, and you can learn a lot from seeing how other people prepare their slides (both good and bad!).

SlideShare has just issued its ‘Zeitgeist’ summary for 2011, picking out key developments in presentation culture across the globe. The first thing to note is that, with 80% of all material uploaded from USA and Europe, planet SlideShare is heavily Western. Asia is bubbling under at 19%, but Africa still only accounts for 1% of content.

Asia leads the world in presentation length, however, with an average of 29 slides from Japanese contributors, followed closely by China with 27. The good news for fidgety exporters is that Japanese presentations are shrinking — down from a yawntastic average 42 slides in 2010. Spain appears to be the tersest nation — with an average of 20 slides per deck.

Bells and whistles are on the increase everywhere if file size is anything to go by. The most popular presentations (those rated highest by peers) weigh in at a mailbox-busting 9.2mb average (from 7.9mb in 2010). As you might expect from a previous post on Marketing Talk, men use more slides than women — 26 vs 22 as a rule.

So, what are all these presentations actually about? To help you find what you are looking for, their creators use tags — labels which identify content. The most popular this year, as last, is ‘business’, with ‘marketing’ and ‘design’ occupying second and third slots. Last year it was ‘markets’ and ‘research’. Perhaps unsurprisingly given the fact that SlideShare is all about sharing stuff on the web, the most frequently-named companies are Twitter and Facebook (between them counting for about 70% of all references to business) with Google in third place at 20%. Apple only manages about 4% — a worrying trend perhaps?

To conclude, if you want to be a power in the land of powerpoint you might want to take note of the following:

The charity trade paper Third Sector has just reported that the number of charity shops in the UK has shot up by almost a third since 2008 to just over nine thousand according to figures from a retail information company. Leading the field is Age UK with 876 shops (the number boosted, no doubt, by the fact that it includes outlets which respectively belonged to Age Concern and Help the Aged before they merged in 2009). Close behind is Oxfam, with about 700. Neck and neck for third place are the British Heart Foundation and Cancer Research UK with about 500 apiece.

We have Oxfam to thank for charity shops as we now know them. Although the Salvation Army was selling cheap second-hand clothes to the urban poor in the middle of the nineteenth century, it was Oxfam who pioneered the idea of fundraising through selling donated goods from a shop, opening their first branch in Oxford’s Broad Street in 1947. It’s still going strong. Oxfam has also led the way in subsequent developments like specialist shops dealing with books, furniture and music, though most of its competitors seem to prefer a mixed bag of merchandise. The biggest line by far is women’s clothes, followed by books. The latter are important in attracting the elusive male shopper which makes for a more varied clientele than most other retail outlets in these days of niche marketing.

Why the sudden boom in numbers, though? Is it because we’re more frugal dressers and readers since the global downturn? Or perhaps it’s greenness rather than meanness that is making us recycle our own stuff through charity shops, and give other people’s cast-offs a new lease of life? There’s also what’s going on in town centres of course. I suspect that many new charity shops are opening simply to fill all those premises standing empty on the high street. Their previous occupants have fled out of town, where shopper parking is not seen as the quasi-criminal offence it has become in most town centres. But I also think that charity shops themselves offer something that mainstream retailers lack. Basically they are a lot more fun. The volunteers behind the counter in my local hospice shop are always ready for a chat, and appear to be enjoying themselves (even when having a good moan!). The merchandise is like an aladdin’s cave of the vagaries of taste — sometimes good, and sometimes wonderfully bad. It’s amazing what people have had in their houses. Shopping there is like being licensed to look through other people’s wardrobes, book shelves, record collections and kitchen drawers. It’s a bit like being a very virtuous burglar (with the exception that burglars get even better discount).

A notable trend amongst the larger charities (who run something like three out of four charity shops) is their increasing attention to professional retailing design, layout and efficiency. That’s a welcome development if it means that donations can be turned into money more effectively (for example by getting donors to fill out Gift Aid forms so that the sale value of their gifts is enhanced. UK law treats such donations as if they were cash, which also explains why VAT does not apply to sales of donated goods). But it would be a shame if charity shops became obsessed with mainstream retailing practice. Some of the more sophisticated fundraising operations have attracted disgruntled comment from their commercial neighbours who don’t benefit from an 80% reduction in business rates as do charities and can’t persuade shopworkers to work for nothing (well, not yet). Actually, most major charities employ paid staff as shop and area managers, and many have moved into fresh areas of merchandise such as new rather than donated goods. But what makes them special, whether the big hitters like Age UK, or the local minnows like my hospice, is their mission to support good causes (not only financially but also through disseminating information and publicity). This is something that commercial retailers are beginning to learn from (even as some of them complain about the favoured status of charity shops). Increasingly they too are beginning to compete on values alongside value for money.

If you want to know more about retailing check out the popular new Open University Business School module An introduction to retail management and marketing. Or if you are more focused on fundraising through shops and other methods, have a look at Winning resources and support, a perenially popular choice with people working with good causes.