MARKET LEADER q2 11 COVER AMI VERSION.indd

contentsIn thIs Issue1846ideas & issues10 technologyApple and Google go head-to-head butis there room for two in their arena?By Kieran Levis11 indiaThe power of brand building continues togrow for the emerging middle classesBy Hamsini Shivkumar13 Responses to possible scenariosTwo reactions to the recent article byC John Brady about potential changes thatcould hit the media landscapeBy Marco Rimini and Ashley Highfield14 How to make choice easierResearch has shown that less really is morewhen helping consumers to be decisiveBy Judie LannonR egulaRs08 BrainwavesOur selection of light reading from aroundthe world of marketing15 ViewpointMany innovations never see the light of daybecause firms do not accept an element of riskBy David Aaker16 chopping BlockEmotional responses do work – but how canthat be explained logically?By Jeremy Bullmore53 trendwatch‘Soft power’ gives much more strength thancoercion to methods of persuasionBy Melanie Howard54 Best in BriefBook reviews by Judie Lannon, Paul Feldwickand Kim Tasso plus an overview byAnthony Freeling56 letter from BrazilA new class of consumers is enjoying thedance with big brandsBy Silvina Moronta57 speaker’s cornerThe digital age is having an impact on TVprovision and transmissionBy Fru Hazlitt58 the last WordWhat do good comedians, marketers andbehavioural economics have in common?By Rory SutherlandfeatuR esCoveR StoRy18 new world order of global brandsMost global brands were invented for Westernconsumers, but consumers in emergingmarkets often prefer something differentBy Simon Silvester24 Products die but brands canlive foreverAn obsession with newness seems to obscurethe valuable payoff of long-standing brandsBy Laurie young30 Waiting for ‘Vodot’Many digital experts predict an imminenttransition to ‘video on demand’ (VOD) butwill it ever really arrive?By Patrick Barwise34 Marketers need more insightInsight teams are now commonplace incompanies, but the relationship withmarketing isn’t always clear enoughBy Melanie Howard38 Why doesn’t the bestalways win?Big brands enjoy a disproportionate advantageover smaller brands. And, not only do theyhave more customers, but their customers usethe brand more frequently. Network theorycan help explain how this advantage worksBy Kyle Findlay42 the value of creativityAn ingenious analysis of cases from the IPAawards and Gunn Report removes any doubtabout the effectiveness of creativityBy Peter Field46 it’s time to boldly leadAs social media gain influence over brands’success or failure, ‘bold’ companies areaddressing the role of marketing leadershipBy Shaun Smith and Andy Milligan50 uniqlo thrives on digitalmarketingThe Japanese clothes retailer has become anapparel empire by making the most of anoriginal online presence and appealing to amulticultural set of consumersBy tessa thornileyMarket leader Quarter 2, 2011 5

in this issuecontributorsMarket leadersdavid aaKer is vicechairmanof Prophet. Heis the creator of the AakerModel, and has publishedmore than 100 articles and15 books on brands andstrategy. His latest bookis Brand relevance: makingcompetitors irrelevant,published by Jossey-Bass,January 2011.PatricK Barwise is emeritusprofessor of managementand marketing at LondonBusiness School and chairmanof Which?. His latestbook, Beyond the Familiar:Long-Term Growth throughCustomer Focus and Innovation(co-authored with SeánMeehan, IMD), has just beenpublished by Jossey-Bass.JereMy BullMore is aformer chairman of JWTLondon and the AdvertisingAssociation and is currentlya member of the WPPadvisory board.Peter Field has been amarketing consultant for thepast 14 years. Prior to thathe ran the account planningdepartments at Bates andGrey. He has worked inmost categories and onmore than 100 brands. Heset up the IPA Databank in1996 and co-authored itsfirst progeny, Marketing in theEra of Accountability, in 2007.He is an honorary Fellow ofthe IPA.Kyle Findlay is a senior R&Dexecutive at the TNS GlobalBrand Equity Centre. As partof TNS’s Thought Leadershipteam, his goal is to bring thehard sciences to bear on thequestion of why people dowhat they do.Fru hazlitt is managingdirector of commercial,online and interactive atITV. She is responsiblefor broadcast revenues,multiplatform developmentand is leading the TotalValue and Pay strategyprocesses across the ITVgroup. Prior to that Hazlittwas chief executive ofGCap Media plc.Melanie howard is chairof the Future Foundation.She has been successfullyforecasting trends for twodecades and has workedwith consumer, publicsector and third-sectororganisations of all sizes.She holds several nonexecutiveand advisory roles.Kieran levis is the authorof Winners and Losers,Creators and Casualties ofthe Age of the Internet. Heis also principal of CortonaConsulting, which adviseson strategy in markets fornew media and technology.He has helped HP, Intel,the Open University and theBBC to evaluate new andvolatile markets.andy Milligan is aleading internationalconsultant on brand andbusiness culture. Hehas worked for almost20 years advising majororganisations on strategiesfor brand building,customer experience andinternal culture as wellas running seminars andconferences on brandalignment and employeeengagement worldwide.silvina Moronta has14 years of local, regionaland international brandstrategy experience withleading brands. She hasspecialised in developingbrand visions and developingbold innovation for regionaland global brands for LatAm,Europe, US, and Asia.haMsini shivKuMar isfounding partner ofLeapfrog StrategyConsulting, she has morethan 20 years of experienceobserving Indian consumers,working with brands andcommunication. Her previousroles include researcher,strategist and head ofplanning at JWT.siMon silvester is headof planning, Young andRubicam EMEA. He has localand international marketingexperience in 45 countries inAsia, Europe, Africa and theAmericas, and has workedwith major local companiesin Brazil, Russia, Indiaand China on their growthstrategies.shaun sMith is founderand partner in the customerexperience consultancysmith+co, which works withleading brands around theworld to design, developand deliver dramaticcustomer experiences.rory sutherland isexecutive creative director andvice-chairman of OgilvyOneLondon and Ogilvy GroupUK. He joined Ogilvy as agraduate trainee in 1988.After a spell as an accounthandler he became acopywriter in 1990, winninga few awards. He is formerpresident of the IPA andwrites for the Spectator.tessa thorniley is abusiness and travel journalistbased in Shanghai, China.She writes for newspapersincluding the Daily Mail,the Guardian, The Independent,and magazines includingWallpaper and Campaign Asia.She also writes for Beijingbasedwebsite Danwei andis co-writing a book aboutcontemporary China forEarnshaw Books (Shanghai).laurie young is aspecialist in the marketingand selling of services. Hedivides his time betweenconsultancy work (includingteaching on the ExecutiveEducation Programme ofWharton Business School,USA), public speaking andwriting. Previously he wasthe global marketing partnerof PricewaterhouseCoopers’$2bn corporate financedivision.To submit an article, emailthe editor at market_leader@warc.com6 Market leader Quarter 2, 2011

ainwavesDifferent thinkingBrainwavesOur selection of light reading from around the world of marketingWhy are there no ads on Big Ben?by winstOn fletcherwhy isn’t Big Ben’s clocktower covered with ads? It’sone of the most photographedand frequently televisededifices in the world; it’s seeneach year by zillions aroundthe globe. Ads on the homeof this humongous timepiecewould command massiverates, raising lots of lovelylucre for impecunious UKLtd. And surely some coollipstick ads would pretty upthe old face a bit.And it’s not only BigBen. There are no ads onBuckingham Palace, the Towerof London, or St Paul’s. Nor isthis just a British phenomenon.You’ll see no ads on theAcropolis, the Taj Mahal, oralong Venice’s Grand Canal.Even in ad-fervent USAyou’ll find no posters on theWhite House or the Statue ofLiberty. Why ever not? TheStatue of Liberty would makea fab poster site – possiblyeven better than Big Ben.So why are ads too vulgarto sully the world’s finestbuildings and monuments?Why are ads banned inTrafalgar Square but nearbyPiccadilly Circus is plasteredwith, and famous for, them?Devotees of new media mayfind these questions very oldeworlde. With new marketingcommunications bubbling upevery nanosecond, who needsto stick ads on Big Ben? Whowants to associate their brandswith aged buildings – evenif they could – when thereare so many trendy digitalopportunities out there?Well, the boring answer tothe question about Big Ben andthe rest is that it is the publicwho do not want ads on them.Imagine the public outcry ifsomebody tried to slap adson the Tower of London:off with his head! Researchshows people generally likeads – but this does not meanthey want to see them all thetime and everywhere. Theywant, and expect, advertisingto be controlled and kept in itsrightful places.This is not a newphenomenon. Billpostinghas been controlled sinceVictorian times, and evenadvertising on television – thatmost commercial of media –has been controlled in Britain(and in most countries) sinceits inception more than half acentury ago. Some places areSo why areads too vulgarto sully theworld’s finestbuildings andmonuments?right for ads, some are not. Inthe past, advertisers have triedout countless possible mediawhich failed, including books,records, telephones and evenpublic loos. The public didn’trespond to any of them.So we may yet find thatthe public does not want adscluttering up all their personaldigital communications,such as mobiles and socialnetworks. Maybe this explainswhy many of them havebeen surprisingly sluggishin building up ad revenue.Hard though this may be foradvertising and marketingguys to swallow – ads are notwelcome everywhere. nWinston Fletcher writesextensively on advertisingand marketing.Winstonflet@aol.com8 Market Leader Quarter 2, 2011

This muchI’ve learnedrita cliftOnthe best advice iever got …‘Be yourself because you’llnever be as good at trying tobe someone else.’ It didn’t suitme trying to ape a ‘kick ass’style of management. Passionand nurture came much moreeasily to me.the worst advice iever got ...A senior female executive toldme never to be seen at thephotocopier, making tea ordoing your own typing if youwanted to be taken seriously.Don’t underestimate ...The importance of lookingthe part, sounding the partand behaving like it. It neverceases to amaze me howpeople who work in marketingWhat you really meanl ‘We’ve got to keep theinertia going.’ (Nothing’shappening and I intend tokeep it that way.)l ‘Process re-engineeringhas just become ServiceQuality Improvement.’(Any generic phrase to justifywhat’s not happening to me.)l ‘This is the new little blackdress of marketing.’ (I amand comms give their clientsadvice about their brands’presentation but don’t feel thatit applies to themselves.Don’t overestimate ...That everyone knows whatthey are supposed to bedoing, supposed to be sayingor even what props to bringto a meeting.the experience thattaught me most ...Being CEO in a market thatwas going off a cliff. They dosay that you learn most fromadversity and it’s mainly true.Making people redundantwhom you have recruited,trained and spent time with isseriously tough. You have tomake hard decisions, and actearlier than you’d ideally like,for the sake of the company.the most fun i had ...Being a planner at Saatchi &Saatchi in its ‘maddest andbaddest’ period.the worst moment ...The worst research debriefI’ve ever sat in was when Ihad briefed the research buthadn’t had a pre-meeting withthe researcher. The first thinghe told the client was that theresearch had gone wrong andso the answer wasn’t validated.Peak career experience ...What I’m doing now. I have aportfolio of really interestingroles. Life is full and fulfilling– but who knows what’s next?Rita Clifton is chairman,Interbrand UKwww.interbrand.comsexist and capable only oftalking in riddles.)l ‘You can’t ease the throttleback after six months – youneed two years to get yourhead above the trench.’(Driving fast in a trench is along-term commitment.) nSource: The Fifth Little Bookof Business Bullshit – KevinDuncanDirect mail rules okin the internet era, is directmail still relevant? Researchsuggests yes.In collaboration with theCentre for ExperimentalConsumer Psychologyat Bangor University inWales, Millward Brownconducted an experiment thatused functional MagneticResonance Imaging (fMRI)to understand how thebrain reacts to physical andvirtual stimuli. The fMRIhighlights the brain regionsmost involved in processingwritten material. This showedmore emotional involvementwhen participants handledmaterial printed on cards thanwhen they viewed the samematerial online.fakes making a mintthe OrganisatiOn forEconomic Co-operation andDevelopment estimates thatbetween 2001 and 2007, fakebrands doubled in value toabout $250bn. By 2008, themarket in the US alone wasthought to be about $200bnannually. In January 2008,the New York Times reportedthat about 7% of the world’sgoods were estimated to becounterfeit.l In December 2009, fakebags and watches worth$1m were seized in NewYork City.l LVMH, owner of LouisThe research suggested thatgreater emotional processing isfacilitated by physical materialthan by virtual, which shouldhelp to develop more positivebrand associations.The real experience is alsointernalised, which meansthe materials have a morepersonal effect. nSource: Millward BrownVuitton, brought a suitagainst Google, claimingthat Google was infringingits trademark and promotingthe sale of counterfeitproducts by selling brandnamesearch terms. In March2010, the European courtcase was decided in favour ofGoogle, although the FrenchSupreme Court didn’t agree.l In May, Versace wona $20m suit filed againstmore than 100 people and70 retail shops in the UScharged with selling fakeVersace goods.l Also in May, ChristianLouboutin launched its‘Stop Fake Louboutin’website in an effort to exposecounterfeiters of its shoesand handbags.l In June, the EuropeanUnion gave brands thelegal means to pursuee-tailers who are illegallyselling a brand’s goods ormisrepresenting a brand’sname. nSource: Barry Silverstein,Brand ChannelMarket Leader Quarter 2, 2011 9

ideas & issuesover to youIdeas & issuesapple and Google areahead of the field – buttheir type of competition iscloser to Federer v nadalthan achilles v HectorTechnologyApple v Google: they’re rivals in manyways but it’s not quite a death matchFrom Kieran LevisRobeRT lane Greene haswritten a sparkling account inIntelligent Life, Winter 2010,of the growing rivalry betweenGoogle and Apple. For yearsSteve Jobs was an inspirationto Larry Page and Sergey Brin,and Eric Schmidt sat amicablyon Apple’s board until 2009.As Greene puts it: ‘Thecompanies could have been amatch made in heaven: Apple’sgorgeous devices runningGoogle’s miraculous services.’But when Google launchedAndroid and challengedthe iPhone in the glitteringsmartphone market, theybecame serious rivals and nowcompete on several fronts:operating systems, browsers,email, photos, app stores,cloud computing, even booksand music, although notexactly ferociously.Greene is particularlygood on what he calls theclash of cultures. The key tounderstanding Steve Jobs, hesuggests, is that calligraphywas the most important coursehe took in his brief time atcollege. Design is Apple’ssupreme value and Jobs hasalways been a perfectionist.His colleagues used to moanabout his reality distortionfield. Now that he’s a god,they simply venerate him.Google on the other handis a ‘herky-jerky place’,where engineers experimentendlessly, happy to put outbeta products that often fail.According to Eric Schmidt,‘the Apple view is coherentlyclosed. Ours is the inversemodel: the web, openness, allthe choices, all the voices.’Yes, but they’re doing verydifferent things. You don’tproduce beautiful objectslike the iPad and the iPhonethrough open source, nor isGoogle simply a mouthpiecefor the wisdom of crowds, anymore than YouTube is merelya platform for other people’svideos. Apple and Google arecompeting only obliquely, andtheir cultures and values havefar more in common thanwhat separates them.They are the shiningexceptions to the general rulethat, as companies becomelarge incumbents, they losethe ability to produce reallyradical innovations.HealtHy competitionApple and Google areexceptional – even by thestandards of start-ups they areway ahead of the field, andable to attract and inspire the10 Market leader Quarter 2, 2011

ideas & issuesover to youmost talented people. Theyare still driven by the visionsthat inspired them from thestart, much more than by howto keep Wall Street happy.They also greatly respecteach other. Schmidt recentlycalled Jobs ‘the best CEO inthe world by any measure’.This is more a contrast ofcultures than a clash and it’s along way from being a ‘deathmatch’; it’s closer to Federer vNadal than Achilles v Hector.Whoever wins won’t bedragging the mangled remainsof the other through the dirt.Android is on the way tobecoming the most popularoperating system, but iPhoneusers are likely to retain asignificant market share, likeRIM’s BlackBerry. The crucialdifference from the PC worldof the late 1980s is that Applewill not be cut off from themainstream as it was whenWintel became dominant.There could be only onedominant winner in thesmartphone market if oneplayer enjoyed enormousnetwork effects or switchingcosts. That isn’t yet the caseand John Gapper in theFinancial Times has made astrong case for suspecting thatit may never happen.Greene makes much ofthe fact that ‘there is no easyWhoever winswon’t drag themangled remainsof the otherthrough the dirtway out of Apple’s system . . .Apple’s offerings hardly everlet you down, but when theydo, you are stuffed, left withsunk costs and a reputationas an Appleist that you wouldpublicly have to disavow.’But this is not lock-in inthe way that most businessesare still stuck with Windowsand Office, because thecost of switching would beprohibitively high. Appleistshave chosen to be different andput up with inconvenienceslike iPods dying young, as theyused to do, because they simplyadore them. Some aspects ofthe cult may be ridiculous, butthis is true love. Brands don’tget any better than that.UniqUe companiesNeither of these two haveserious rivals in their coredomains. Despite disruptingnearly every part of the mediaindustry, the only adversaryGoogle has seriously soughtto displace is that master ofcustomer lock-in, Microsoft.Apple has learned to coexistwith the old enemy. Foryears Microsoft was its mostimportant software developerand even now Office forMac remains crucial for itscredibility as an alternativeto the PC. SurpassingMicrosoft’s market cap musthave brought enormoussatisfaction to Steve Jobs, butnow he has more importantthings on his mind.The recent announcementsthat Jobs is taking sick leaveagain and that Google ischanging its leadershipstructure raises intriguingcontrasts. One reason Jobshas been such a successfulCEO since his return in1997 is that he has had inTim Cook a COO whocomplements his mercurialbrilliance perfectly.Cook may have played asbig a part in the company’stransformation as its iconicleader. Until 2002 when theiPod took off, Apple wasbarely profitable and annualsales were stuck around $6bn.It has just announced anet profit of that amountfor the last quarter alone.Cook revolutionised Apple’sproduction processes andgave it the world’s mostefficient supply chain. Hehas been all but a partner toJobs since he joined fromCompaq, and if Jobs shouldnot come back he wouldprobably make as good asuccessor as Apple could find.The changes at Googleare timely. Having threepeople take all the importantdecisions worked well duringits extraordinary growthperiod, but has been cloggingthings up now that it is alarge company with manyaspirations. Blaming Schmidtfor supposed failures suchas not beating Facebook, assome have done, is ridiculous.If anything, Google should becriticised for trying to do toomany things at once. Whatis remarkable is how manyhave succeeded.The last thing eitherof these two needs is aconventional CEO whowould try to turn them intomachines for maximisingshareholder value. Long maythey continue to swim againstthe corporate flow. nKieran Levis is the authorof Winners and Losers,Creators and Casualtiesof the Age of the Internet(Atlantic Books, 2009).kieran@kieranlevis.comindiaBuilding brand power in emerging middle classesFrom Hamsini sHivKumarThe indian middle classes,numbering more than400 million people, are a largeconsumer force who are nowsolidly engaged in gainingupward mobility. This is trueperhaps of the middle classesin many emerging countries,especially in the BRICcountries. However, thereare specific nuances to theapproach to upward mobilityin India that arise from thenature of Indian society,which is a highly stratifiedsocial hierarchy.For centuries, socialmobility was frozen. Peoplewere born into a castewhich had its place in thesocial order, and livedand died there. Even afterindependence, the socialisteconomic model with lowGDP growth and a huge rolefor the State ensured that anindividual’s chances of movingup the social ladder in his orher lifetime were very low.However, the economicliberalisation process of thepast two decades, the growthof Indian industry and thecontinuing GDP growth at8.9%, have opened up avenuesfor every middle-class Indianto aspire to progress forwardand upward in their socialmilieu. Today, the energyand enterprise of a youthfuland hard-working populationcombined with a spirit ofoptimism and possibilitypervade the atmospheredespite the daily strugglesof coping with a host ofproblems, from rising pricesto failing infrastructure.The path to upwardmobility, expressed inmaterial terms, means thatcontinued on p12>Market leader Quarter 2, 2011 11

ideas & issuesover to youHow Brands manaGeto transFer valUenokia is the market leader and a power brand in the cellphonemarket in India. For the mass consumer, Nokia transfers all forms ofvalue. Nokia phones can be sold or exchanged in the second-handphone market for a better price than the competition brands.In this instance, the brand trust is not merely a reassurance ofproduct quality but an active contributor to the Nokia buyer’s stockof capital. By continuously innovating and offering a slew of productsas well as educating consumers, Nokia acts as a knowledge sourceabout a product category that they are very interested in. However,Nokia is unable to offer badge and network value to the samedegree as Apple and BlackBerry, especially to the upper-incomebuyers of smartphones.Raymond is an established Indian brand of men’s suiting fabric.It is the market leader in its product category and a power brand byall measures of brand equity. Raymond transfers four elements ofvalue to its buyers, especially in the mass segment. For the principalsuit-making and gifting occasion, ie weddings, the Raymond suit is awell-recognised status symbol. Hence the brand is able to charge asignificant premium and also to offer products that span a significantprice differential. However, for the younger consumers, Raymond lacksdistinctiveness compared with international men’s apparel brands and,for them, the brand transfers only the first three elements of value,but not beyond. For these consumers, Raymond does not add muchto their stock of social and cultural capital, whereas for the small-town,mass consumer, Raymond does. nBrands play the samesocio-cultural andpsychological rolesin india as theydo elsewherefiVe eleMenTs ThaT coMPRise a bRanded offeRingValue element Product role brand roleand powerTask value Quality/performance Trust and affinity markAdd-on value Offers and deals Trust and affinity markTalk value Continuous innovation Knowledge sourceBadge value Stylish design Status and identity,symbolism and meaningNetwork value Support the myth Icon, myth, legendand auraIndian families are workinghard to acquire all forms ofcapital – financial, social andcultural capital. Consumptionand exchange via tradeof products, services andknowledge are the preferredroutes to acquire theseforms of capital, as it is in allcapitalist-consumer societies.Two characteristics ofthe Indian mindset give theprocess of consumption andcapital acquisition a distinctlyIndian flavour. First, Indianslive and work in an extendednetwork of family, friendsand peers arranged in avertical hierarchy of socialrelationships. This networkis the contemporary versionof the traditional joint family.Much trading of products,services and knowledge takesplace within this network.Second, the Indian’sattitude towards consumptionis marked by a strong valueorientation. From the eliteand super rich to the manin the street, everyone triesto maximise the returnthey get on the money theyspend. Goddess Lakshmi isthe goddess of wealth in theHindu pantheon; it is believedthat the goddess showersblessings on those who respecther by not taking a cavalierattitude to money.Brand BeneFitsAs with aspiring middleclasses all over the world,the emerging Indian middleclasses value brands. Andthey value brands for thesame benefits that brandsprovide in all consumersocieties: brands function astrust marks; they are affinitymarkers of identificationwith like-minded people;they act as status symbols,as identity symbols and ascarriers of personal reputationand influence. Brands playthe same socio-cultural andpsychological roles in India asthey do elsewhere.However, the three singularcharacteristics of the IndianThe Indian’sattitude towardsconsumption ismarked by astrong valueorientationmiddle class highlighted hererequire that brand strategiststake a forensic approach todecoding value and its linkagesto the acquisition of financial,social and cultural capital.The table above setsout five elements of valuethat typically comprise anybranded offering, whether aproduct or a service, and therole of the product versus thebrand in delivering value tothe consumer.The most powerful brandsare those that are able totransfer more value elementsto the buyer for the price heor she pays. By transferringvalue, brands add to theconsumer’s stock of financial,social and cultural capital. Ifthe value transfer is real, notnotional, then the consumeris able to trade further downthe line, leveraging the brand’spower for personal profit. nHamsini Shivkumar is abrand consultanthamsini6@goolemail.com12 Market leader Quarter 2, 2011

ideas & issuesover to youconsuMeR behaViouRHow to make choice easierFrom Judie Lannonif any single word defines theconsumer benefit of a marketbasedsociety it is ‘choice’.It is rooted in our culture.Henry Ford’s car offerwouldn’t have echoed downthe decades as the definingjoke about the centrality ofindividualism if it didn’t hit aprofound cultural chord.Products, brands andservices are all forms ofself-expression and we learnfrom childhood how to makechoices. But you hardly needto be a psychologist to observethat choice in many marketshas run out of control and thatthere are psychological, notjust shelf-space, limits to howmuch choice we can manage.Jam every day?Sheena Lyengar is a Canadianwho has studied how wechoose. Her jam experiment isa famous example and a largelyunheeded warning about whathappens when people areoverwhelmed with choice.The experiment went likethis. Lyengar set up a situationin a speciality grocery storyin Menlo Park Californiawhere she had often shoppedbut found herself occasionallycoming out empty-handed,overwhelmed by the choiceavailable. She wondered ifothers had the same problem.To find out, Lyengar and hercollaborator, Mark Lepper, setup a jam-tasting booth near theentrance of the store. Everyfew hours, the booth switchedbetween offering an assortmentof 24 jams and offeringan assortment of six. Theresearchers wanted to knowwhich assortment attractedmore people and which onewould lead to higher sales.They observed the shoppersas they moved from the boothto the jam aisle, which boasted348 varieties.As might be expected, 60%of the incoming shoppersstopped when 24 jams weredisplayed, but only 40%stopped when six jams weredisplayed. Clearly, peoplefound the larger assortmentmore attractive. When theseshoppers went to the jam aisleto pick up a jar, the shopperswho had seen only six jamshad a much easier timedeciding what to purchase.The researchers discoveredthat the small assortmenthelped narrow down choices,whereas the large assortmentleft people unsure of theirown preferences. Of thosewho stopped by the largeassortment, only 3% endedup buying a jar of jam, whichis far fewer than the 30% whobought jam after stopping bythe small assortment. Lyengarand Lepper calculated thatpeople were more thansix-times as likely to buy jam ifthey saw the smaller display.a Better experienceIn a recent article inStrategy+Business, Lyengarexplores this idea and itsconsequences for marketersand retailers. She concludesthat people don’t want choice,they want a better choosingexperience. This may seem likea semantic quibble but it isn’t.People want to feel satisfiedwith their choice without theA small assortment helped narrowdown choices, whereas the largeassortment left people unsurefrustration and indecision thatgoes with rejecting possiblecandidates. She offers fourstrategies to help people havebetter choosing experiences.1Cut their options. This isthe obvious strategy butone not often followedfor fear of losing customers.In the mid-1990s, whenProcter & Gamble Companywinnowed its 26 varietiesof Head & Shoulders antidandruffshampoo down to 15,eliminating the least popular,sales jumped by 10%. Anotherexample comes from a 2001study that tracked an onlinegrocer that had made substantialcuts in the number of productsit offered, across 94% of all theproduct categories. Not onlydid sales rise an average of 11%across 42 categories, but 75%of its customer householdsincreased overall expenditures.2Create confidence throughrecommendations. Noone does this better thanAmazon and it is surprising thattheir techniques aren’t morewidely copied. Presumably mostpeople know what book, forexample, they want. However,for those who are searchingfor enlightenment on a subjectwithout knowing a specificauthor or title, the long andoften detailed reviews, whatothers bought, books on similarsubjects, reminders, all helpfocus and narrow choices.TripAdvisor.co.uk gets betterand better on this score.3Categorise the options.Where the novice sees100 different options, theexpert sees maybe seven or eightrelevant core qualities. The trickis to get the novice to see thingsas the expert sees them.The easiest way to do thisis to categorise. All winesellers categorise but a morecustomer-friendly approachis taken by the US companyBest Cellars. By consultingwith oenophiles in advance,it limits its variety to 100high-quality, reasonablypriced wines. Then, insteadof categorising by grape or byregion, Best Cellars dividesthe wines into eight simple‘taste’ categories, such as‘fizzy’, ‘juicy’ and ‘sweet’.4Condition them forcomplexity. For certainkinds of decisions you canset consumers up for successby encouraging them to learnfrom, and build upon, their ownprevious choices.For example, Lyengarconducted a study with a majorGerman car manufacturer.Researchers presented thefirst eight design choices indifferent sequences to differentgroups of car buyers.One group had first tochoose interior and exteriorcolour, with 56 and 26options, respectively. Fromthere, they chose featuresin descending order bynumber of options, endingwith interior decor style andgearshift style (which wereeach limited to four options).A second group of buyershad the same choices in reverseorder, starting with the designelements that offered thefewest options and ending withthe ones that offered the most.Although both groupseventually saw 144 totaloptions across eight categories,the buyers who moved fromhigh choice to low choice hada much harder time and settledfor the default – and ended upless satisfied. nFrom: A better choosingexperience by SheenaLyengar and KanikaAgrawal. Strategy+Business,December 201014 Market leader Quarter 2, 2011

viewpointdavid aakerWhy good conceptsare strangled at birthCompaniesneed to assessinnovations withoutprejudice, and withan acceptance ofsome risk, saysDavid Aakerone key to winning the brand-relevance battleby creating new categories or subcategories is toevaluate and select the right concepts to develop.In doing so there is a risk that a concept with highpotential is not funded or has its funding cut off.As a result a firm loses the opportunity to create acategory or subcategory in which the firm couldhold an ongoing advantage and a potential sourceof profits and growth. The problem is hard tocorrect because the results of such decisions oftenare forever hidden.What kills concepts with potential to make adifference with an innovative offering?1Many are terminated by a gloom-and-doom biasthat takes on several forms. Pessimism abouttechnological advances meant that GM killedthe EV1, a battery-operated car in 1998 just before abreakthrough in battery technology occurred. In 2005,GM CEO Rick Wagner said this was GM’s biggeststrategic blunder.Synthetic detergent wasunder developmentat P&G for five yearswhen the firm killed theproject. Luckily a P&Gscientist pursued theeffort without permissionor funding and five yearslater Tide was born. Hadthe firm enforced their decision, P&G would stillbe a soap company. In contrast, Toyota charged itsproduct team to come up with the Prius, despitethe fact that at the outset the technology wasinadequate. There was a commitment to find orcreate the necessary technology.2Market-size estimates are based on existingflawed products. Digital readers, termede-readers, were around for a decade butnever had traction, in part because accessing bookswas difficult and the units were clunky. Then inNovember of 2007, Amazon launched the Kindlewith its Whispernet fast download system, its30-hour battery life, a book-like reading experience,and a market buzz. The Kindle sold more than onemillion units in just over a year and made sales ofprevious products irrelevant as points of reference.3The belief that offering limitations is fatal.For example, Mint.com, the US personalfinance service, had trouble getting fundingbecause the judgement was made that no onewould provide personal financial information.However, it proved that judgement to be wrongbecause it was able to argue that its read-onlysystem was not vulnerable to moving moneyaround; that its track record of never having beencompromised was persuasive; and that its use ofthird-party brands such as VeriSign and Hackersafeensured safe communication.4Another problem is the failure to identify theright application. Intel, during the developmentof the 80286 microprocessor that began in1978, came up with 50 possible applications. Thepersonal computer, the ultimate application thatbecame the basis for the Intel business for decades,was not on the list. This failure was in part dueto an understandable inability to forecast thedevelopment of technologies and software programsthat made the PC a runaway success. A powerfultechnological breakthrough with the right creativeThe ultimate reason to killa potential offering is thatthe market is too small, butniche markets can groweffort will find an application.5In some cases, the wrong market istargeted. Joint Juice is a firm founded by anorthopedic surgeon who had the breakthroughidea of making glucosamine, which is effectivein reducing joint pain,available in a liquidform. The initial targetmarket, young tomiddle-aged athletes, wasdisappointing. However,a refocus on an olderdemographic, people whowanted lower-calorie, lessexpensiveproducts, resulted in a successful healthbusiness. At the early stages a variety of marketsshould be on the table.6The ultimate reason to kill a potential offeringis that the market is too small. For that reasonCoca-Cola avoided the water market for decades,a decision that was a strategic disaster in retrospect.Niche markets can grow and can go mainstream. Nike,Starbucks, and SoBe are examples of brands that havesuccessfully scaled their value proposition.Beware of snap decisions based on instinctor superficial metaphors and be willing toaccept some risk. The future is hard to forecast.But the upside of the creation of a new category orsubcategory can be strategically important and canjustify the acceptance of risk. It can provide abusiness platform for the future and a profit flowthat can support strategic growth. A firm needs totake care that a bias toward doom and gloom doesnot result in the wrong decision. nDave Aaker is chairman of Prophet and author ofBrand relevance: Making competitors irrelevant,Jossey-Bass, 2011.DAaker@prophet.comMarket Leader Quarter 2, 2011 15

chopping BLockjeremy bullmoreEmotion works?But that’s irrational!Jeremy Bullmorewrestles withthe catch-22of advertisingapprovalFact one: if it’s ever to see the light of day, atelevision commercial lasting half a minute mustsurvive, second for second, far fiercer scrutinythan any other piece of cinematography. Andthat includes Avatar, which runs for three hoursand cost $300m to make. Given the number ofhurdles, of both research and judgement, thatevery humble 30-second commercial has to jump– and given the number of people empoweredto amend or reject it – it’s a miracle that any getmade at all.Fact two: for at least ten years, serious doubtshave been cast on the traditional models ofhow advertising works. There has been slow ifgrowing recognition that, for many brands, the‘emotional’ element may be far more importantthan the ‘rational’. Yet still, more often than not,the ‘rational’ wins. Despite the evidence in supportof the ‘emotional’, advertising agencies and theirclients seem reluctant to move to a model thatcould greatly improve the return on investment oftheir advertising expenditure.Why should this be? I’ve a sneaking suspicionthat the reason lies less with the hope of makingadvertising that works and more with the need toget advertising approved.In the good old days, when USPs in their crudermanifestations ruled, the marketing director’spresentation to his board was relatively easy. ‘Goodmorning. I’m here to ask for your formal approvalto make this 30-second commercial for BurgripsMinidrops. Forty potential consumer propositionswere reduced to seven as a result of exposure to3,452 members of the core target group. Thoseseven, evenly rotated, were then exposed to asimilar number in animatic form. The winner, aclear 17 points above the category norm, was this[holds up board]: ‘Burgrips: the only Minidrops tocontain WD40. They brush your breath while theytease your tongue.’‘This commercial graphically demonstrates thatunique proposition while the voice-over reiteratesthe claim three times. We also super it up at theend. Preliminary results indicate unpromptedproposition recall at 63%, with purchase intentionin the top quartile.’What wonderfully reassuring numbers. Membersof the board don’t need to know anything aboutpeople, the market, the brand, the competitionor how advertising works. They don’t even needto exercise their judgement. It’s evident that thedecision to invest in this commercial is a highlyresponsible corporate act and one that will shieldthem forever from future criticism. The boardcongratulates the marketing director, signs off thefinal production estimate and moves on to the nextitem on the agenda, the acquisition of another 29%of an associate company in Taiwan.‘Rational’ advertising – heavily dependent ontested-to-destruction verbal propositions andthe measurement of that which can be easilymeasured – is relatively easy to sell. ‘Emotional’advertising isn’t. It’s now ten years since RobertHeath published The Hidden Power of Advertising –with its more useful subtitle, How low involvementprocessing influences the way we choose brands.When describing his findings, he wrote: ‘Aboveall, I found I had to accept that effective brandcommunication … involves processes which areuncontrolled, disordered, abstract, intuitive … andimpossible to explain other than with the benefitof hindsight.’Have pity, then, for today’s enlightenedmarketing director. ‘Good morning. I’m here to askfor your formal approval to make this 30-secondcommercial for Burgrips Minidrops. As is widelyaccepted, effective brand communication involvesprocesses that are uncontrolled, disordered,abstract, intuitive and impossible to explain otherthan with hindsight. So there’s no way of knowingif this commercial is any good until we’ve run it fora few months. But I think it’s bloody marvellous somay I have £750,000 to shoot it, please?’I suspect that the potential value of ‘emotional’advertising can be communicated to the scepticsonly by judicious reference to the persuasivepower of other emotional stimuli. Noël Cowardknew the potency of cheap music. As militaryleaders and the founders of religious faiths haveknown for centuries, expensive music can be evenmore potent. Big speeches still work. Can anyoneremember what David Cameron said at thatConservative Party conference? He said almostnothing and he said it without notes and the nextthing you know, he’s prime minister. Barack Obamamade a speech in Tucson, Arizona, last month. Ibet you that his day-after-recall score wouldn’t havelooked good but his approval ratings have soared.If I was asked to put the case for creationism ina formal debate, and knew that I’d be up against areading by Richard Dawkins from his book The GodDelusion, I wouldn’t try to defeat him on rationalgrounds. I’d play that tape of Timothy Westreading from the King James Version of the Bookof Genesis – with Handel’s Messiah for afters. Ithink I’d do quite well. nJjeremyb@aol.com16 Market Leader Quarter 2, 2011

gLobaL isMSimon SilveSterNew world orderIn the emerging markets, the sense ofoptimism is everywhere and the futurefor well-positioned brands looks bright18 Market Leader Quarter 2, 2011

gLobaL isMSimon SilveSterof global brandsmost global brands have been invented by Western companies forWestern consumers. emerging-market consumers are very different.simon silvester explains how to reach themOver the past two decades,Western brands have spreadacross the world. They nowfill the supermarkets of Brazil,Russia, India China, as well as Mexico,Indonesia, Vietnam and the other ‘next 11’emerging markets. Five billion of the world’sseven billion people buy them.But while they are all successful,these big global brands all have somethingelse in common: nearly all were inventedby Westerners for Westerners but theyare now being sold to customers whoearn $3,000 a year. It’s quite a leap. Theconsumer they were designed for looksnothing like the global consumer of today.Emerging market consumers aregetting richer of course, and rapidly so– consumer incomes in China, India andBrazil rise by 7% to more than 10% eachyear. But those consumers are not goingto be as rich as consumers in the West inthe foreseeable future.The Chinese economy will soon eclipsethe American economy with Chinesehousehold incomes being one-fifth ofthose in America. India will follow withincomes even lower than that. We areentering a new era where the tastes anddesires of poorer people are coming todominate the consumer goods business.These poorer people in emergingmarkets are very different fromWesterners. They have differentdemographics, different attitudes anddifferent priorities. The average humanbeing is a decade younger than theWestern consumer. They grew up withgeneration gaps greater than anythingever seen in the West; and they share apast – but it is not the past of rich people.So a brand designed to appeal to aWesterner is never going to be the rightbrand to appeal to the new generation ofyoung adults in the emerging world of thethe top ten:Most vaLuabLe Chinese brandsrank on brandvaluebrandZus$b1 China Mobile 562 ICBC Bank 383 Bank of China 224 China Construction Bank 225 China Life 186 Agricultural Bank of China 167 Petrochina 148 Tencent (portal) 129 Baidu 1010 Ping An (insurance) 8Source: BrandZ/Millward Brown 2010.>Market Leader Quarter 2, 2011 19

gLobaL isMSimon SilveSterFor most of the emerging world, the past 20years have been the best 20 years ever. Thesense of optimism, and that anything is possible,is everywhere. The brand mood needs to getwith the times and be positive and optimisticconsumersLast year Mrs Schmidt of Peoria, Illinois,USA received a 10% pay cut. As did hersister in Europe. And their partners losttheir jobs.Meanwhile, on the other side of theworld, Mrs Wong, Mrs Singh andMrs Martinez all saw their 2004 incomesdouble. As did their partners.For every Mrs Schmidt there are aboutseven Mrs Wongs, Mrs Singhs andMrs Martinezes. They are on average tenyears younger. And they want it all. And theywant it now.So who are you going to make yourglobal brand appeal to? Mrs Schmidt? Orthe future? n2010s. New brands are needed – brandsthat talk not to the rich, but massmarketbrands that talk to the lives andaspirations of the ‘average’ human being.Here are some principles which mayhelp you build one.l Think zeitgeist: in the emergingworld, the early 1990s was a dark time.In apartment blocks in Eastern Europe,pensioners were starving to death. MostChinese were subsistence farmers. ManyIndians had insufficient food to eat, noTV, no phone and no prospects.Over time, everything became better,and then it became better again. Indeed,for most of the emerging world, the past20 years have been the best 20 yearsever. The sense of optimism, and thatanything is possible, is everywhere. Youmay be managing your global brand froma depressed a post-credit crunch city inEurope or North America, but the moodof that brand needs to get with the timesand be positive and optimistic.l Think trial: over the past few decadesthe Western world has become older. Theaverage person in Italy is 43 years old. InJapan the median age is 44. That ageinghas slowly altered Western marketingculture – there aren’t many new adultsto recruit; but there are many existingcustomers to keep, so marketing budgetshave shifted from trial to retention.Globally, marketers are talking to amuch younger consumer. The average ageof Indians is 26. The average age in muchof the Middle East and Africa is under 20.Brands are marketing to billions of youngadults who are eager to try the fruits ofthe boom for the first time. And thatmeans that, globally, trial is absolutelycentral to marketing.l Think visual: there are hundreds oflanguages in use in the world today, soany brand that relies on its name meaningsomething in English has problems.Also, a big part of the world’s populationhas problems with reading. All of whichsuggests that to succeed in the worldtoday, a true global brand needs to beprimarily visual in nature.Do you think this will lead people tothink those brands are unsophisticated?Only if you believe that a modernsophisticated piece of technology wouldbe better called a ‘ZX 300 PK’ ratherthan simply having a big picture of anapple on it. Or a running shoe would bebetter off with writing on it than simply agraphic ‘swoosh’.l Think ‘youthquake’: in emergingmarkets, the generation gaps are muchgreater than anything seen in the Westin the 1960s. A typical 15-year-old girl inthe emerging world has grown up in thesame SpongeBob- and Dora-led culturethat Western kids have. But her mothergrew up poor, without a TV or toys, andher grandmother grew up a peasant, withno sense of personal free will. Globalbrands need to recognise and leverage thisgeneration gap.l Think status: in emerging markets,status symbols have a much greatersignificance than in the West. Youngadults in particular see the acquisition ofstatus and its symbols as the be all andend all of their existence. If they’ve paidextra for a logo, they want people to seethe logo. So the modest, understatednature of many Western clothing brandsis completely wrong for them.l Think small: most people in theemerging world have a lot less space athome than a typical Westerner; 60 sq min Asia is a big apartment. And the personliving in that apartment is unlikely to havea car at their disposal to do the shopping.So they tend to favour smaller, lighteritems that are easier to carry and store.l Think video: more than 98% ofChinese people have a TV at home,and TV penetration in India will reach90% by 2014. In China, people spendmore time watching video streams viathe internet than they do in the US.The conditions for a global mass market– the availability of cheap mass media –have arrived.l Think fast: while the West stagnates,the global consumer is living through thefastest changes in history. So don’t spendages trying to fit your product into past20 Market Leader Quarter 2, 2011

gLobaL isMSimon SilveSterconsumer trends. It doesn’t matter, andthey won’t understand.l Think service: marketers in richcountries tend to think that they are thebest when it comes to inventing brandsand delivering brand benefits, but thereality is that they aren’t very goodwhen it comes to services. Asian hoteland airline brands often offer betterstandards of service than their Westerncompetitors. Global service brandsshould be led from emerging markets,not from the West.l Think cultural neutrality: globalbrands that focus on American and northEuropean faces and attitudes can leave80% of the world thinking that ‘this is nota brand for me’. For anyone looking for acultural centre to their brands, the biggestconsumer market of the 2010s and 2020swill be China. So they need to work outhow it will play in Putonghua rather thanin Peoria, Illinois.l Think fake: fake brands are huge inemerging markets, and may be the maincompetitor to your brand. Work outhow to handle them. Google’s Androidis sweeping the emerging world at themoment without any problem at all withfakes – simply because it’s free.l Think Kiasu: this is a HokkienChinese word meaning literally ‘fearof losing’, used by South East AsianChinese to reflect their obsession withsuccess. Among the new middle classesof the emerging world, life is about beingambitious, getting up to the next leveland never being ripped off. Life is aboutpushing your children, and education,education, education. Brands needto reflect and celebrate their sense ofachievement.l Think cheap: Chinese and Indiancompanies are not succeeding byinnovating in the conventional sense.They are succeeding by working out howto deliver products and services such astelecoms and cars profitably at a smallfraction of the Western price. Westerncompanies dismiss them as price-cuttersat the moment – but they are followingexactly the same strategy that Japanesegoods used successfully in America andEurope in the 1970s.l Think value equations: priceconsciousness is an element of everybuying decision for the global consumer.This leads everyday brands to beperceived differently in the emergingworld from how they are seen in thethInk frugalThe biggest innovation trend of the 2010s, and the biggest threat to conventional marketerseverywhere is ‘frugal innovation’.Frugal innovation is being pioneered by Indian and Chinese companies. It involves strippingout 90% of the costs within a business, and offering the products and services that result tothe consumer for one-fifth to one-tenth of the existing market price.A classic example is in telecoms, where Indian companies have reduced the cost of calls andtexts by 90%, putting the mobile phone in the hands of peasant farmers and fishermen acrossthe country. And indeed now across Africa too, as Indian innovators roll services out across thecontinent. Another example is the Tata Nano – the car for US$2,200. Frugal innovationchanges the balance of consumption between developed and emerging markets, as it makeseveryday consumer goods affordable to people who earn much less.Will 80% price cuts catch on in the West too? Since the Great Recession turned everyWestern consumer into a price hawk, it’s very likely. nIn emerging markets,status symbols have agreater significancethan in the West. Ifthey’ve paid extra for alogo, they want peopleto see the logo. So theunderstated nature ofmany Western brandsis wrong for them>Market Leader Quarter 2, 2011 21

gLobaL isMSimon SilveSterFacebook hardlyexisted in Indonesiatwo years ago; today,30 million Indonesiansuse it. Global brandsneed to work out howto socialise themselves,not just to Westerners,but to the entire planetWest. In the US, McDonald’s is thecheapest meal you can buy. In Russia or inIndonesia, it’s a mixture of a family treat,a middle-class teen hangout and a datevenue. In the West, Ikea is the cheapestway of filling a home. But to most otherpeople in the world, Ikea is a mid-market,stylish option.l Think mobile: at the end of 2009,90% of all humans lived in areas wherethey could receive a cellphone signal,and there were 5.3 billion cellularsubscriptions in the world. Most of theplanet has a cellphone. After television,the mobile phone is the world’s mostpopular technology – and is becoming avital marketing medium.l Think social: social networks, accessedvia smartphones, are exploding in thedeveloping world. Facebook hardlyexisted in Indonesia two years ago; today,30 million Indonesians use it. Globalbrands need to work out how to socialisethemselves, not just to Westerners, but tothe entire planet.l Think B2B: ten years ago, if a poorfisherman caught 20 mackerel, he wouldthen have to choose a port, spend severalhours sailing to it, and then hope for agood price for his catch. If prices werelow that day, he had to sell anyway – orsail home with a boatload of rotting fish.Today the fisherman does his deal at seavia mobile phone. In the 2010s, peasantbusiness is real business.l Think innovation: societies in theemerging world are changing rapidly.Those in the West have stagnated. It’smuch easier and more fruitful to innovatein rapidly changing societies. Globalcompanies need to focus their innovationefforts on the emerging world.l Think about your origins: peoplerespect Mercedes Benz and BMW notbecause of any advertising they do butbecause they are made in Germany. Pradais stylish not because of the campaigns itruns in Vogue but because it comes fromItaly. For many brands, their country oforigin is their biggest asset. So manage theimage of your country of origin with care.l Think big ideas: many big companiesin China and India have built themselvesas conglomerates, rather than around astrong, single-minded business idea. Beinga conglomerate allows them to succeedwithin the complex business environmentof their home country, but it means thatthey have no equity when they decideto expand abroad. These big companiesneed to build big brand ideas aroundthemselves if they are to take on Westernglobal brands and win. nSimon Silvester is head of planning,Young and Rubicam EMEA. This is anabstract of the book ‘How To Dominatethe World’, which is available in full athttp://pubs.yr.com/dominateSimon.Silvester@yr.comthe 200-Year anomalYIn 1709, a maker of brass cooking utensils called Abraham Darby bought a shed inCoalbrookdale, England, and began experimenting with iron. Darby, his co-workers anddescendants developed techniques for ironworking that allowed cheap mass production.And those mass production techniques caused economic activity in Britain to rocket to almost40% of world output. Why the modern world came into existence in the village ofCoalbrookdale rather than in Hangzhou or Tientsin or Guangzhou is a bit of a mystery toeconomic historians. But one thing is certain: for the previous 20 centuries, China was theworld’s largest economy. And today it’s coming back. nA technique to produce cast ironcheaply, developed by Abraham Darbyin 1709, helped pave the way for massproduction of ietms in the UK22 Market Leader Quarter 2, 2011

andslaurie youngProducts diebut brands canlive foreverLaurie Young wonders why somany marketers and businessleaders seem to base theirinvestment strategies on a setof beliefs that are in completecontradiction to the factsThe obsession with newnessseems to have blinded manyin the marketing communityto the infinitely more valuablepayoff of long-standing brands – manythat are familiar today have startlinglyancient lineages.A few years ago I was returning froma marketing conference in America. Ihad heard speaker after speaker fill theirpresentations with an unchallengedconsensus: that markets were changingvery fast, that they were becoming moreglobal and customers were becomingmore demanding. As a result, competitionwas increasing and it was difficult tocreate enduring value. The ‘product youlaunch on a Monday is a commodityby Wednesday’.By the time I was at the airport, Iwas tired and hungry. As I looked atthe beers in the bar, I noticed the ageof Kronenbourg (1664). There werealso American beers such as Budweiser.I had never thought about its age andwas astonished to hear from the barmanthat it was at least a hundred years old(launched in 1886 in fact). I knew thatCoca-Cola was quite old and resolvedto look it up (also 1886, just beaten byDr Pepper 1885). Later, I wanderedinto duty free and was again struck bythe age of a number of brands we stilluse today. American whisky SouthernComfort (1874) or Jack Daniel’s (1866) satalongside perfumes such as Chanel N o 5(1925) or watches such as Breitling (1884).I spent the remaining time before myflight collecting the names of brandsthat I thought had been around a longtime so I could look them up. I have keptgoing since then and, a decade later, havea long and erratically compiled list thatcomprises the category, country of originand start date of brands still sold today.(Brands from 1850 to 1999 are listed onpp26–27.) I am not an historian nor anacademic but there seem to be severalobvious implications of this simple listfor both the nature of business and therole of marketing.There are surprisesI was surprised that Bailey’s Irish cream isso new (1974). I was not so surprised bythe age of some Champagnes and spirits– Veuve Clicquot (1805), Glenfiddich(1887), Jack Daniel’s (1866) – but I wastaken aback by Jim Beam (1795), RémyMartin (1724), Martell (1715) andBushmills (1608).I am astonished at the age of someof the beers that are around today. It’senough that a relatively new country suchas the USA has beer brands hundreds ofyears old (Schlitz 1849, for instance) butEurope can boast not only of Carlsbergbut also Greene King (1799), Guinness(1759), Lowenbrau (1383), Stella Artois(1366) and, astoundingly, Weihenstephan(1040). I have been on many courses inmy time, but not one has used a case studyof brands created around the time of theNorman Conquest.I knew that several banking brandswere quite old – HSBC (1865),Santander (1857) – but Barclays causedme to raise an eyebrow (1690). I knewthat tea (Twinings, 1706) and coffee(Douwe Egberts, 1753) were introducedto Europe in the 17th and 18th centuriesbut I was surprised by the age of someChinese tea brands (Pi Lo Chun has beenbrewed for 1,200 years) and the other24 Market Leader Quarter 2, 2011

andslaurie youngWhen tackling marketsravaged by recession, it issensible to understand thatsome ‘brands’ have survivedfor hundreds of yearsdrinks – Schweppes (1783), Cinzano(1757) and San Pellegrino (1200) – thatare around us today.Despite all this, I still find thetechnology brands the most surprising.IBM is celebrating its centenary this year.And it was interesting to find that Philips(1891), GE (1876), Ericsson (1876),Toshiba (1875), HP (1875) and Cable &Wireless (1869) have been moving withtechnical changes for so long. But mykids were amused by the age of Nintendo(1889) and I was stunned that Otiselevators originated at the time of theWild West (1861).The more I collected details about theages of familiar brands (or brands familiarto their target segments in foreignmarkets) the more the story of longevitybegan to emerge. It made the suggestionthat it is difficult to create enduring valueseem ridiculous.Brands are amazingly resilienTI have a list of more than 400 brands thatwere created before 1900 and some thatare around 1,000 years old. Some of theseentities have been doing what brands do(creating wealth by appealing, in a uniqueway, to a succession of human beings) forseveral centuries.When we are all trying to tackle marketsravaged by recession, surely it is sensibleto understand the implications of thefact that brands such as Courvoisier andHeal’s furniture are around 200 years old?I have never heard a business strategist,a marketing author or a media punditdeduce implications to investment fromthe fact that familiar entities such as Cow& Gate, Martell, Crosse & Blackwell andTwinings are around 300 years old. Andthe long life of those beer or food brands(such as Brie de Meaux dating from 774 orFontina from 1200) should surely attractthe attention of not only marketers butalso economists and business leaders.Admittedly, some of these offersmay not have had brand characteristicsthroughout their long life. Some (suchas Axminster 1755, Meissen 1705or Majolica 1405) were originally adescription of a regional or geographicalskill. It is also true, particularly for luxurygoods, that many were run by artisanswith a craft heritage and a commitmentto quality but perilous financial trackrecords. Nevertheless, this evidencesuggests that brand creation is a powerfulway to create substantial, sustainable,long-term businesses. It is striking,for instance, to find brands in modernChina, that were created several hundredyears ago, which have survived bothcommunism and the Cultural Revolution.Marketers have a responsibility to theirshareholders to convince their colleaguesto invest in this remarkable approach.Well-rounded markeTingTechniques Build BrandsIt would be easy to dismiss theseenduring wealth creators as theby-product of long-lost, heroicentrepreneurs, if they hadn’t beencreated by bog-standard marketing.Several modern marketing books implythat marketing was created after a ‘salesphase’ and ‘manufacturing phase’ inAmerica around the 1950s.However, brands such as Pears,Wedgwood, Sunlight (Lever), Heinz,Selfridges, and Coca-Cola were builtwell before that with techniquesincluding: quality obsession; viralmarketing; sustained advertising; PR;celebrity endorsement; internationalmarket penetration; clear segmentation;and direct marketing. Histories andbiographies (some of which are nowrare books or archived correspondence)written about 100 years ago are full ofcampaigns that we would recognise today.Market Leader Quarter 2, 2011 25

andslaurie younglaurie’s lisT: producT Brands 1999 To 1850Product category country date Product category country date Product category country dateProduct brands: 1950 to 1999Google Search engine USA 1998Dior: J’adore Perfume France 1998Renault: Espace Car France 1997Stella McCartney Fashion UK 1997Chanel: Allure Perfume France 1996Amazon Book retailer USA 1995Chupa Chups: SMINT Confectionery Spain 1994Shanghai Tang Fashion China 1994Viktor & Rolf Fashion Holland/ 1993FrancePrada: Miu Miu Fashion Italy 1992Vera Wang Fashion USA 1990Renault: Clio Car France 1990Unilever: Slim Fast Weight loss UK 1990(was Thompsonmedical)Dior: Fahrenheit Perfume France 1988Martin Margiela Fashion Belgium 1987Unilever: Magnum Ice cream UK 1987Christian Lacroix Fashion France 1986McVite: Hob Nob Biscuit UK 1985Donna Karan Fashion USA 1985Dolce & Gabbana Fashion Italy 1985Dior: Poison Perfume France 1985Dell Computers USA 1984Unilever: Vienetta(originally Wall’s) Ice cream UK 1982Unilever: Impulse Shampoo UK 1979(originally Pond’s)Versace Fashion Italy 1978Calvin Klein Fashion USA 1978Ben & Jerry’s Ice cream USA 1978(now Unilever)Unilever: Pot Noodle Snack food UK 1977Apple Computers USA 1976Rowntree: Yorkie Chocolate UK 1976Bailey’s Irish Cream Drink UK 1974Microsoft Technology USA 1973Molton Brown Cosmetics Uk 1973Nike Shoes USA 1971YSL: Rive Gauche Perfume France 1971Timotei Shampoo Sweden 1970(now Unilever)Virgin Consumer UK 1970servicesRussell Reynolds Executive USA 1969searchCif Household France 1969(now Unilever) cleanerRowntree: Confectionery UK 1968MatchmakersRalph Lauren Fashion USA 1967Dior: Eau Sauvage Men’s scent France 1966Boursin Cheese France 1965Nike Sports shoes USA 1964Unilever: Flora Soft margarine UK 1964Rowntree: Confectionery UK 1963Toffee CrispYves Saint Laurent Fashion/ France 1962luxury goodsJanet Reger Intimate UK 1961apparelWeight Watchers Health USA 1961P&G Pampers Nappies USA 1961P&G: Fairy Soap UK 1960Castello Cheese Denmark 1958Hush Puppies Shoes USA 1958Chupa Chups Confectionery Spain 1958Rowntree: Confectionery UK 1957MunchiesUnilever: Dove Soap USA 1955P&G: Crest Toothpaste USA 1955Chanel: 2.5 Handbag France 1955Pucci Fashion/ Italy 1954luxury goodsLladró Porcelain Spain 1953Chloé Fashion/ France 1952luxury goodsHavarti Cheese Denmark 1952Givenchy Fashion/ France 1952luxury goodsGreene King: Ale UK 1951Abbot AleClorets Breath USA 1951freshenerFlying Pigeon Bicycles China 1950Pierre Cardin Fashion France 1950Mentos Sweets Netherlands 1950(Part of Van Melle)Product brands: 1900 to 1949Pucci Fashion/ Italy 1949luxury goodsOnitsuka Tiger Sports wear Japan 1949(now ASICS)Longchamp Fashion/ France 1948luxury goodsRowntree: Polo Confectionery UK 1948Biro Ballpoint pens Hungary/ 1948ArgentinaLambretta Scooter Italy 1947Golden Wonder Snacks UK 1947Céline Fashion/ France 1947luxury goodsDior: Miss Dior Perfume France 1947Sony Electronics Japan 1946P&G: Tide Soap powder USA 1946Estée Lauder Perfume USA 1946Vespa Scooters Italy 1946Dior Fashion/ France 1946luxury goodsMcVite: Penguin Biscuit UK 1946Paul Weiss Law USA 1945White Rabbit Confectionery China 1943Ikea Furniture retail Sweden 1943Velcro Fastening Switzerland 1941Mars: M&M’s Confectionery USA 1941Coach Fashion USA 1941Vitasoy Milk China 1940alternative drinkMcVitie: Jaffa Cakes Biscuit UK 1939HP: Computers/ USA 1939Hewlett Packard techTeflon Kitchenware USA 1938(now part of Du Pont)Old Spice (now P&G) Aftershave USA 1938McDonald’s Fast food USA 1937Valextra Bags Italy 1937Rowntree: Rolo Sweets UK 1937and SmartiesPickwick Tea Netherlands 1937(Part of DouweEgberts)Orangina Drink France/ 1936AlgeriaLux Soap powder UK 1936Mars: Maltesers Confectionery USA 1936Rowntree: Dairy Box Confectionery UK 1936Quality StreetRowntree: Kit Kat Confectionery UK 1935and AeroP&G: Dreft Soap powder USA 1933Rowntree: Confectionery UK 1933Black MagicLacoste Fashion France 1933Mars: 3 Musketeers Confectionery USA 1932Tesco Retail UK 1931Joy by Patou Perfume France 1931Unilever: PG tips Tea UK 1930Birds Eye Frozen food USA 1930Allen & Overy Law UK 1930Mars: Snickers Confectionery USA 1930Fisher-Price Toys USA 1930Ryvita Biscuits UK 1930Peak Freen: Biscuits UK 1929TwigletsDomestos Bleach UK 1929(now Unilever)Brylcreem Hair gel UK 1928Harry Ramsdens Fish & chips UK 1928P&G: Oxydol Soap powder USA 1927Furla Fashion/ Italy 1927luxury goodsSpillers: Dog meal UK 1927WinalotPatisserie Valerie Food and drink UK 1926Harvard Business Management USA 1926ReviewmagazineGodiva Confectionery Belgium 1926Camay Soap USA 1926Unilever: Lux Soap UK 1925Corona Beer Mexico 1925Fendi Luxury goods Italy 1925Chanel N o 5 Perfume France 1925Belstaff Leather jackets UK/Italy 1924Primula Cheese Norway 1924Mars: Milky Way Confectionery USA 1923Q-tips Cotton bud USA 1923Russell Stover Chocolates USA 1923Time Magazine Magazine/news USA 1922BMW Cars Germany 1922Filofax Stationery USA 1921Gucci Leather goods Italy 1921McKinsey & Co Consulting USA 1920Allied Chemical Corp. Food/bio tech USA 1920Union Carbide Corp. Chemicals USA 1917Nikon Cameras Japan 1917Harry Winston Diamonds USA 1916Cadbury: Milk Tray Confectionery UK 1915Rolex Watches UK 1915Lipton Tea UK 1915Salvatore Ferragamo Shoes USA 1914Prada Fashion/ Italy 1913luxury goodsCamel Cigarettes USA 1913J.C. Penny Co. Inc. Retail USA 1913Aga Cookers Sweden 1912Jean Patou Fashion France 1912Mars Confectionery USA 1911IBM Electronics USA 1911Gauloises Cigarettes France 1910Hallmark Greeting cards USA 1910Samsonite Luggage USA 1910Peek Frean: Biscuit UK 1910BourbonRonwtree: Confectionery UK 1910Walnut WhipBritish Petroleum Oil UK 1909Mercedes-Benz Cars Germany 1909Audi Cars Germany 1909Teacher’s Whisky UK 1909Johnnie Walker Whisky UK 1909Red LabelSelfridges & Co. Retail UK 1909Lanvin Fashion France 1909Vogue Magazine USA 1909Bisto Gravy UK 1908Hoover Vacuum cleaner USA 1908Amoy Soy sauce China 1908Evian Bottled water France 1908(now owned byDanone)Spillers: Dog biscuit UK 1907ShapesUPS Courier services USA 1907Osram Lighting Gerany 1906(part of Siemens)Kellogg Company Corn flakes USA 1906Max Factor Make up USA 1906Warner Bros Entertainment USA 1906Xerox Copiers/printers USA 1906Honeywell Electronics USA 1906Van Cleef and Arpels Jewellery France 1906Cadbury: Dairy Milk Chocolates UK 1905Hellmann’s Mayonnaise USA 1905(now Unilever)Gillette Razors USA 1904Batavus Bicycles Netherlands 1904Kiwi Shoe polish UK 1904Burton Men’s tailoring UK 1904Ovaltine Nutritional drink Switzerland 1904Noritake Tableware Japan 190426 Market Leader Quarter 2, 2011

andslaurie youngProduct category country date Product category country date Product category country dateWaitrose Retail UK 1904Rolls Royce Cars UK 1904Werther’s Original Sweets Germany 1903Persil Soap powder Germany 1903(now Unilever)Typhoo Tea UK 1903Ernst & Young Accountancy UK 1903Gillette Male grooming USA 1903Ford Cars USA 1903Perrier Drink UK/France 1902Peak Freen: Biscuit UK 1902Pat-a-CakeUnilever: Marmite Food stock UK 1902(originally own brand)Monsanto Pesticides USA 1901Hornby Toys UK 1901Meccano Toys UK 1901The Tatler Society magazine UK 1901(named afterTatler of 1709)Lurpak Butter Denmark 1901Eveready Batteries USA 1900Van Melle Confectionery Netherlands 1900Austin Reed Clothing retail UK 1900Gossard Intimate apparel USA 1900Product brands: 1850 to 1899Aspirin Pharmaceutical Germany 1899Renault Cars France 1899Miele Domestic Germany 1899appliancesMorrison Grocery UK 1899Bassett: All Sorts Sweets UK 1899Bugatti Cars France 1899San Pellegrino(local since 1200) Bottled water Italy 1899Castrol Lubricants UK 1899(was Wakefield& Co)Dentyne Chewing gum USA 1899Dewar’s White Label Whisky UK 1899Pepsi Cola drink USA 1898Michelin Tyres France 1898Bergdorf Goodman Retail USA 1898Nabisco Biscuits USA 1898Lewin Shirts UK 1898HMV Entertainment UK 1897Chad Valley Toys UK 1897Jell-O Dessert USA 1897Dow Chemicals USA 1897Hornby Toys UK 1897HP Sauce UK 1896The Daily Mail News UK 1896Lifebuoy Soap UK 1894Barbour Clothes UK 1894Andrew’s Liver Salts Pharmaceutical UK 1894Famous Grouse Whisky UK 1894Hershey Confectionery USA 1894Mikimoto Pearls Japan 1893Maxim’s Restaurant/ France 1893luxury goodsHalls Cough sweets UK 1893Tholstrup Cheese Denmark 1893Rowntree: Confectionery UK 1893Fruit gumsAlfred Dunhill Men’s UK 1893accessoriesSears Roebuck Mail order USA 1893Shredded Wheat Food USA 1893McVitie: Digestive Biscuit UK 1892Maxwell House Coffee USA 1892Ingersoll Watches USA 1892Philips Electronics Netherlands 1891Fenwick Retail UK 1891Wrigley Confectionery USA 1891Parker Pens USA 1891San Miguel Beer China 1890Allianz Insurance Germany 1890Kendal Mint Cake Biscuit UK 1890Player Cigarettes UK 1890Canada Dry Drink Canada 1890American Tobacco USA 1890Hovis Bread UK 1890Nintendo Entertainment Japan 1889Paul Baker France 1889Dunlop Tyres UK 1889Sharwood Spices UK 1889Slaughter & May Law UK 1889Schwartz Spices Canada 1889Savoy Hotel UK 1889Woodbine (Wills) Cigarettes UK 1888Lee Kum Kee Food sauces China 1888National Information/ USA 1888Geographic membershipKodak Cameras USA 1888Bulmers Cider UK 1887Glenfiddich Whisky UK 1887Brighton rock Sweets UK 1886Smirnoff Vodka Russia 1886Verkade Chocolate Netherlands 1886Adler Jewellery France 1886Coca-Cola Drinks USA 1886Westinghouse Electronics USA 1886Avon Cosmetics USA 1886Del Monte Food USA 1886Whittard Tea UK 1886Anchor Butter UK 1886Raleigh Bicycles UK 1886Sketchly Cleaning UK 1885Lyle’s Golden Food UK 1885SyrupJohnson Controls Electronics USA 1885The Lady Magazine UK 1885Fabergé Jewellery Russia 1885Dr Pepper Drink USA 1885Marks & Spencer Retail UK 1884Bovril Processed food UK 1884(now Unilever)NCR Technology USA 1884UHU Glue Germany 1884Black and White Whisky UK 1884Jaeger Clothes Germany 1884Waterman Pens USA 1884Bulgari Jewellery/ Italy 1884luxury goodsBreitling Watches Swiss 1884Tiptree Jams UK 1883Sainsbury’s Retail UK 1882VAT 69 Whisky UK 1882Cerruti Watches Italy 1881Wharton Business Education USA 1881SchoolRowntree: Confectionery UK 1881Fruit PastellsScott’s Porridge oats UK 1880Sears Mail order USA 1880Maynard Confectionery UK 1880Hovis Bread UK 1880Philadelphia Cream cheese USA 1880Spear’s Games UK/ 1879(now Mattel)GermanyEu Yan Sang Chinese Malaysia 1879medicine productsListerine Mouthwash USA 1879D H Evans Retail UK 1879Ivory (P&G) Soap USA 1879J Walter Thompson Advertising USA 1878Quaker Oats Food USA 1878Boots Pharmacy retail UK 1877General Electric Consumer USA 1876(investors backing electronicsEdison’s experiments)Ericsson Technology Sweden 1876Budwieser Beer USA 1876Bissell Cleaners USA 1876Tufts Soda fountain USA 1876Toshiba Technology Japan 1875Liberty Retail UK 1875AT&T Communications USA 1875HP Sauce UK 1875Remington Typewriters USA 1874Southern Comfort Whisky USA 1874Church’s Shoes UK 1873Beck’s Beer Germany 1873Levi Straus Jeans Clothing USA 1873Chivers Jams UK 1873Horlicks Drink UK 1873Eijsbouts Bells Netherlands 1872Bloomingdale’s Retail USA 1872Stork (now Unilever) Margarine Netherlands 1872Folger Coffee USA 1872Adams Chewing gum USA 1871Penhaligon Men’s scent UK 1870De Beers Diamonds South Africa 1870Cable & Wireless Communications UK 1869Campbell Soup USA 1869Pillsbury Bakery products USA 1869Tabasco Sauce USA 1869Exchange and Mart Magazine UK 1868Saks Retail USA 1867KPMG Accountancy UK 1867Marshall Field Retail USA 1867Jack Daniel’s Whisky USA 1866Nestlé Babymilk/ Swiss 1866confectioneryNokia Electronics Finland 1865HSBC Banking UK/China 1865BASF Chemicals Germany 1865Bertolli Olive oil Italy 1865(now Unilever)Bovril Beef stock UK 1865Jacob’s: Biscuits Ireland 1865Cream CrackersFisherman’s Friend Lozenges UK 1865McDougal Flour UK 1864Quandude Food China 1864John Lewis Retail UK 1864Victory Lozenges UK 1864Robertson’s Marmalade UK 1864Heineken Beer Netherlands 1864Benedicitine Brandy France 1863London Underground Transport UK 1863Lillywhite Retail UK 1863H. Samuel Jewellery retail UK 1862Fray Bentos Processed food Uruguay 1862Bacardi Drink Cuba 1862Rowntree Chocolate UK 1862Heinz Processed food USA 1861(Horseradish first)Peek Frean: Biscuits UK 1861GaribaldiJ P Morgan Banking USA 1861Otis Elevators USA 1861Swan Vesta Matches UK 1861Paneri Watches Italy 1860Amaretti Virginia Biscuits Italy 1860Grenson Shoes UK 1860Peek Frean: Nice Biscuits UK 1860Vaseline Skin care UK 1860(now Unilever)Tag Heuer Watches Swiss 1860Chopard Watches Swiss 1860Tate & Lyle Sugar UK 1859Moretti Beer Italy 1859Canadian Club Drink USA 1858Macy’s Retail USA 1858Peak Freen Biscuits UK 1857Smith and Wesson Guns USA 1857Borden’s Condensed milk USA 1857Banco Santander Banking Spain 1857Credit Suisse Banking Switzerland 1856Burberry Clothes UK 1856Spiller’s: Pet foods UK 1855Dog foodMiller Beer USA 1855Daily Telegraph Newspaper UK 1855The Halifax Banking UK 1855Louis Vuitton Clothing/fashion France 1854Steinway Pianos Germany 1853Standard Chartered Bank UK/Asia 1853Le Bon Marché Retail France 1852Wells Fargo Financial USA 1852Reuters News UK 1851Moss Bros Retail UK 1851Pullman Rail services USA 1851Aquascutum Clothes UK 1851Kiehl’s Cosmetics USA 1851New York Times Newspaper USA 1851Singer Sewing machines USA 1851Bally Shoes/ leather Switzerland 1851Howden Engineering UK 1851productsLazzaroni Amaretto Liqueur Italy 1851Jacob’s Biscuits Ireland 1850Moss Bros Clothing UK 1850Eno’s Salts Pharmaceutical UK 1850(now part ofGlaxoSmithKline)Market Leader Quarter 2, 2011 27

andslaurie youngdispelling The myThsThe ‘product life cycle’ concept issurely utter nonsense. This irritatinglywell-known concept is taught in nearlyevery course on marketing and appears innearly every textbook.Young marketers are taught that thesales of individual products or servicesfollow a pattern over a period of timewhich can be represented by a simpleS-curve. They are born, grow, matureand die. Yet, although that idea has astrong hold on management thinking,and executives can often be heard totalk about their product as ‘mature’or a ‘cash cow’, it remains unprovenand controversial for many productsor services.It is seldom taught, for instance, thatafter nearly ten years of unsubstantiatedassertion, several credible pieces of workin the early 1970s debunked the idea ofthe product life cycle. In an article in theHarvard Business Review, two plannersfrom JWT (Dhalla & Yuspeh, 1976)pointed out that most advocates of theproposition had little empirical data.They said well-crafted research projectshad failed to find a correlation betweennumerous sales histories and an S-curve.Their article contains several data-drivenmodels that show no S-curve at all inindividual products or services.The knowledge that there are severalhundred entities that are hundreds ofyears old surely also calls this relativelynew idea into question. I am convincedthat the first question any marketer shouldask is ‘can I find any way to turn this intoa brand?’ not ‘at what phase is my productin its life cycle?’.define The producT or serviceOne way to get seriously rich is bycreating a brand. It is remarkable howmany of these brands are connected to thevision and determination of one businessleader or their relatives.Later in their life they may have beenbought and nurtured by trained brandmanagers , but names like Wedgwood,Heinz, Mars, Cadbury, Guinness andSinger have earned vast sums becausetheir founders had a vision for a productor service that they built over time.Josiah Wedgwood would roam hispremises smashing poor-quality productwith his walking stick and proclaiming it‘not fit for JW’. Heinz campaigned forquality in food production and MarshallField was obsessed with giving excellentcustomer service to Chicago shoppers 30years before Al Capone was on the scene.After nearly ten yearsof unsubstantiatedassertion, severalcredible pieces ofwork in the early 1970sdebunked the idea ofthe product life cycleTheir passion for creating an offerwhich served their customers well andtheir intuitive investment in sustained,high-quality marketing, helped themmake, like many brand icons, a fortune.When asked how he wrenched himselffrom abject poverty to the 18th century’sequivalent of billionairedom, Wedgwoodcalled his systematic use of brandingand marketing ‘the science of moneygetting’. These brand creators might nothave had the terminology available to ustoday but there is no doubt that they useddeliberate, systematic, brand-buildingtechniques to create enormous wealth.Another way to get seriously rich isby buying neglected or orphan brands.There are many neglected or starvedbrands that retain a cultural resonancein the memory of large groups ofpeople. Their owners could invest inthem to grow their wealth but haveneglected them. In some cases this isa result of short-sighted leadership. Inother cases it’s because of misguided ormisunderstood marketing strategy.They may, for instance, have been thesubject of a portfolio review that labelledthem as a cash cow. Terms like ‘cash cow’are far too easily and sloppily appliedand have, sometimes without analysis,prompted firms to neglect or denudebrands of capital investment.To teach young marketers (who arelikely to be in any job for a far shortertime than any of the products, services orcorporate brands they will handle) that itis routine to take money from long-termsuccessful entities to invest in creatingrisky innovations is daft and naive.The fact that smart entrepreneurshave been able to make millions (evenbillions) by buying up the resultantorphan brands suggests that there issomething fundamentally wrong withthis approach. It should not take new,visionary entrepreneurs to breath life intothem but many have; and they built theirown fortunes en route. Bernard Arnaultof LVMH, Sir Paul Judge (who led thebuyout from Cadbury) and Mika Jataniaof Lornamead are just a few entrepreneurswho have exploited the daft strategies ofmarketers or business leaders in this way.commodiTisaTion is noTalWays ineviTaBleTime and again I hear marketing peopletalk about their offer as a commodity. Inutilities or many technology companies,for instance, it is often an assumption thatthey cannot do much to their core offer toenhance its perceived value. Why is, forinstance, the telephone service of BT sosimilar to many of its competitors?Modern brands such as Virgin haveshown that it is possible to create wealththrough the visionary pursuit of a uniqueoffer. It has created a perception that itis possible to provide an airline, train orbroadband service that is truly different.But that is also the lesson of these longlivedbrands. I’m not a beer connoisseurand I am sure there is a differencebetween many of the products, but it isjust beer. Why then should Lowenbrau(1383) be able to hold its own against, say,Grolsch (1615) after 400 years?The message of the great, durablebrands is that none of us should acceptthe idea that commoditisation or pricecutting is inevitable. In the face of harshcompetition from China or India, manybusiness leaders in the West are assumingthat there is no way they can hold theirown and command a customer franchise;that you cannot build value in a changingcommoditised, international market.Wedgwood, Cadbury, Colt, Heinz andSinger must be spinning in their graves.Compiling the list of long-establishedbrands has given me a differentperspective on our craft. When Idiscovered that Stella Artois wasnearly 1,000 years old and that, in 701,article 12 of Japan’s Ganshi code wasconsumer protection legislation requiringmanufacturers to brand their goods asa quality safeguard, it prompted me tore-evaluate the significance of marketingand branding to wealth creation.After 30 years of trying to persuadeexecutives not to treat marketing as justan afterthought and to invest in brandequity, it is satisfying to find that one ofthe most enduring, differentiating andprofitable business techniques in humanhistory is ours. nLaurie Young is a writer and consultant.lauriedyoung@aol.com28 Market Leader Quarter 2, 2011

mediapatrick barwiseWaiting forWhy ‘video on demanMany digital experts predict animminent transition to non-lineartelevision – video on demand(VOD). Patrick Barwise clarifiesthe definitions and argues thatVOD will not happen on the scalethat some people envision and wecould be waiting in vainAmid aLL the excitement abouthow media are changing, oneof the most widespread issuesis the supposed imminenttransition from ‘linear’ to ‘non-linear’television. This is not just the idea thatpeople are occasionally watching varioustypes of video on demand (VOD),including some TV programmes – whichis true, if often exaggerated. I’m talkingabout the suggestion that, in the next fewyears, the main way that people watchtelevision will change to VOD.The previous UK Government’sDigital Britain report – a centre-pieceof its Building Britain’s Future plan –referred to the ‘not-distant point’ whenpeople switch from ‘passive [viewing]through the linear schedule’ to ‘active[consumption] using search and ondemand’.It predicted that, with universalaccess to video-quality broadbandproposed for 2012, and most householdshaving much greater bandwidth,‘streamed, downloaded or searched-forcontent will become the norm’. 1The new coalition Government has saidnothing that suggests it disagrees with thisview. On the contrary, it has repeatedlysaid that the Digital Britain proposals forbroadband were insufficiently ambitious.In 2008, the Guardian’s Emily Bellwrote that: ‘Within two years, audiencebehaviour has completely changed dueto the availability of broadband and thepenetration of the internet.’ 2A senior independent TV producerrecently told me that ‘in five years’ time,TV channels may no longer exist’.I believe that most of this talk is bothconfused and deluded. It’s confusedbecause the expression ‘non-linear TV’ ishardly ever defined and is used to meanvery different things. And it’s deluded30 market Leader Quarter 2, 2011

mediapatrick barwise‘Vodot’d’ won’t happenbecause the extent of change in whatand how people watch TV has been –and will continue to be – less than thehype suggests.In this article, I outline the evidenceand explain why I liken the VOD situationto Samuel Beckett’s absurdist play Waitingfor Godot, 3 in which the enigmatic andlong-awaited Godot never appears.What the future might holdWhen referring to ‘Vodot’, I mean largescale,commercially viable, standaloneVOD. A Vodot company would create oracquire TV content; market it; physicallydistribute it on demand through theinternet to consumers’ TVs and otherdevices; and generate more revenue thanits costs, from advertising, subscriptions,and pay per view. There are twoimportant things about this definition.First, it includes the words large-scale,by which I mean significant in termsof viewing time relative to television.Remember, Digital Britain referred topeople switching from passive viewingthrough the linear schedule to activeconsumption using search and ondemand,which ‘will become the norm’.The delusion I’m addressing is thebelief that mainstream TV viewing isundergoing revolutionary change. VODisn’t just a fad. I have no doubt that in2020 people will still be downloading andexchanging short video clips, probablyeven more than today. I also expect thatthe video retail and rental market willswitch from physical DVDs to onlinedelivery. But both of these will still beperipheral to people’s mainstream TVviewing. They’re not revolutionary anddon’t fall under my definition of Vodot.The other word I want to stress inthat definition is standalone. It maymake good commercial sense for Apple,Sony, Sky, Virgin Media, BT, Nintendo,Microsoft, Google, or Facebook toinclude VOD in their product offering ifit helps them increase the revenues andprofits of their main business. I have nodoubt that this will continue. For thesecompanies, it doesn’t matter if VODgenerates less revenue than its costs. Butfor the revolution that Digital Britain andothers envisage, large-scale VOD has tobe commercially viable in its own right,paying a fair market price for content,distribution and marketing.In Waiting for Godot, Godot neverappears. In ‘Waiting for Vodot’, we’re stillwaiting. Will Vodot finally appear? I sayno, but many would disagree. Most homesnow have broadband; VOD is increasinglygetting onto the main TV screen; andpeople in several countries are testinga wide range of technical and businessmodels. The jury is still out, but weshould have a verdict by the end of 2011or soon after that.making the changes happenIf, as I believe, the VOD bubble is aboutto burst, that doesn’t mean VOD willdisappear, any more than the internetdisappeared after the technology bubbleburst in 2000. Big technology and mediaplayers will still provide VOD alongsidetheir main products and services toincrease customer acquisition, retention,and willingness to pay – but not as a bigdirect revenue or profit source – andthere will also be niche services replacingphysical DVD retail and rental.But what we won’t have any time soon– or maybe ever – is Vodot as I’ve definedit or the death of so-called ‘linear TV’.This is despite the fact that the digeratihave been predicting these revolutionarychanges for more than 20 years.the tV reVolutionIn 1990, George Gilder wrote: ‘Televisionis a tool of tyrants. Its overthrow is athand.’ 4 He also predicted a new goldenage for newspapers thanks to online,which should tell you how much tobelieve his pronouncements. Five yearslater, Nicholas Negroponte, head ofthe MIT Media Lab, wrote: ‘What willhappen to broadcast television over thenext five years is so phenomenal thatit’s difficult to comprehend.’ 5 Nothingmuch happened.Part of this 1990s vision was that TVviewing would itself involve a lot ofThe delusion isthe belief thatmainstream TVviewing is undergoingrevolutionary changeinteraction. You’d be able to watch thematch from any seat in the stadium, clickon the screen to buy Jennifer Aniston’sT-shirt during Friends, or call up apotted history of Estonia when its primeminister was on the news. The distinctionbetween TV and other video contentwould disappear. Most viewing wouldbe non-live – what the technologistscall asynchronous. Most content choicewould use search and recommendationagents. All of this was supposed to becommonplace by the early 2000s.After the bubble burst in 2000, mostpeople accepted that the interactive bit ofthis vision – Jennifer Aniston’s T-shirt andall that – was nonsense. But as recently as2006, Janus Friis, the co-founder of Kazaaand Skype, and then about to launch theill-fated VOD site Joost, said: ‘People loveTV, but they also hate TV. They love the… amazing storytelling, the richness, thequality itself. But they hate the linearness,the lack of choice, the lack of basic thingslike being able to search. And whollymissing is everything that we are nowaccustomed to from the internet: tagging,recommendations, choice, and so on.’The idea that we’re going throughrevolutionary change in TV viewingis remarkably persistent. The Digital >market Leader Quarter 2, 2011 31

mediapatrick barwiseBritain report refers to it repeatedlyand VOD features in the new coalitionGovernment’s enthusiasm for superfastbroadband and local TV and its apparentlack of interest in universal basicbroadband and digital inclusion.defining non-linearIn the new TV environment, we candistinguish between four broad types ofviewing. Given the amount of confusionand the loose way in which people talkabout linear and non-linear TV, thesedistinctions matter.There’s live viewing of regular TV.There’s time-shifted viewing off thepersonal video recorder (PVR) orsomething similar. There’s catch-up TVsuch as the BBC iPlayer, which is alsotime-shifted but doesn’t require you topreset the recording. All three of these areevolutionary. They’re all about watchingregular linear TV from the regular linearschedule, either live or time-shifted.channels for something better; watch avideo cassette or DVD; or switch off theTV. They usually took the first option –partly because it required the least effort.Now, they no longer have to do this.There’s always something good, whichthey themselves have chosen, easilyavailable on the PVR. For most viewersin ‘converged’ homes, the PVR is themain backup to live TV, accountingfor more than half of the 20% non-liveviewing in these well-equipped homes.PVR penetration is still much lowerthan broadband penetration. As that gapdecreases, and as PVRs get bigger andsmarter, more homes will have their own,increasingly large, self-selected archives,reducing the value of both catch-up andon-demand TV. Note that the PVR reliesentirely on regular TV programmes fromthe linear schedule and doesn’t even needa broadband connection.There’s also catch-up TV for when youforgot to set the PVR or heard about theIn the new TV environment, we candistinguish between four types of viewing.Given the amount of confusion and the looseway in which people talk about linear andnon-linear TV, these distinctions matterFar from heralding the death of linearTV channels, they all depend on thosechannels for content.Only the fourth type of viewing – truevideo on demand – breaks away fromthe linear schedule. The content hereis a mixture of long-form movies andTV programmes (competing againstDVD retail and rental and some pay TVchannels) and short-form video clips onwebsites such as YouTube.fiVe reasons for scepticism1If you look at proper data about typicalviewers, a consistent picture emerges.If people have lots of channels, a PVR,and VOD, the first thing most of them do ifthey want to watch TV is still to see what’son live on their favourite channels. Live TVstill accounts for 80% of viewing in these‘converged’ homes and that percentage isfalling slowly, if at all. 6What about the other 20%? In the past,if there was nothing they liked on any oftheir favourite channels, viewers had fouroptions: watch the ‘least bad’ programmeon one of those channels; search the otherprogramme the next day. Catch-up TV isanother tough, free competitor to VOD.It does need broadband, but it’s still aboutregular linear TV content and channels.It’s not VOD.VOD is still tiny as a proportion oftotal viewing time, maybe 1% amongthe whole UK population and 2% of15- to 34-year-olds. It will increase overtime, but much more slowly than thehype suggests, and viewers’ willingnessto pay for it is very limited, even assumingthere’s little or no piracy – a necessaryassumption. Having VOD on the mainTV instead of a laptop or PC will help.But the initial evidence – including VirginMedia’s continuing coyness about thepercentage of true on-demand viewingin Virgin homes with PVRs as well ascatch-up and VOD – suggests that thebenefit isn’t that dramatic.2Surveys of why people watch onlineTV show that the main reasons are: towatch recent TV programmes that theymissed; to watch a TV programme or moviea second time; and to view something for freerather than paying. All of these are still abouttraditional linear content. Less importantreasons are: to see content that’s not availableon TV; to keep informed during a breakingnews story; and to see additional contentabout a programme. Even these are oftendriven by or derived from linear TV. 73Compared with broadcasting, theinternet is still an unreliable, lowquality,expensive video distributionchannel. To replace broadcasting – that’sabout five hours per home per day of,increasingly, HD-quality video – thetechnology will need to mature, and eitherviewers or advertisers will have to pay theinternet service providers the significantextra bandwidth costs. Neither seems keento do so, which is presumably why so manytechnology and media players want thetaxpayer, or BBC licence payer, to subsidisefast broadband.4Many people still don’t use the internetat all. These are mostly elderly and/orlow-income heavy TV viewers livingin areas with broadband access. By 2020,I expect them to be only a small minority,32 market Leader Quarter 2, 2011

mediapatrick barwisehow much, what, when, where, with whom,and even how, people watch tV haschanged surprisingly little since the 1960sgrowth has been on main sets in livingrooms: watching the main set is morecompelling than ever because of biggerand better screens, PVRs, and so on.Put simply, this is a well-served market.I simply don’t see large-scale, standaloneVOD services adding enough valueto enough consumers (and, therefore,advertisers) to generate enough revenueto cover the substantial costs of content,marketing and distribution any time soon,except at the margin as a replacementfor DVDs.We’ve waited a long time for Vodot.I don’t think he’s about to appear. nbut many of those who use the internet forsimple apps, such as email and search, stillwon’t be using it for watching TV, even ifthey have an internet-enabled set.5The final reason for my scepticismabout Vodot is that live and timeshiftedlinear TV are so compelling,and becoming more so. For more than 40years, viewers have watched an averageof three and a half hours of TV a day – amixture of drama, comedy, news, sport,documentaries, and general entertainment –mostly to relax, in the evening, in the livingroom, with other family members. Howmuch, what, when, where, with whom, andeven how, people watch TV has changedsurprisingly little since the 1960s. 8 The onlyreal change is that viewing is now spreadover hundreds of channels, although the topfive still capture just 50% of viewing.Oddly enough, we don’t really knowwhy people watch so much. Maybe theneuroscientists can explain it. My hunch isthat watching TV takes up enough mentalcapacity to take one’s mind off otherthings, but not enough to demand seriouseffort. We watch TV to take our minds offwhat we’re not doing – work and chores. 9In contrast, we mostly listen to the radioto take our minds off what we are doing –driving, cooking, ironing, and so on.Another reason for the average of almostsix hours a day that people spend watchingand listening is that broadcasting is suchgood value for money. Despite Moore’sLaw and all that, telecoms and the internetcost UK consumers more than a pound perconsumer hour. Television costs about 11p,radio a bit over 1p. 10and finally…Whatever the reasons why we watch somuch TV, it seems to work. Further,despite the growth of new media, TVviewing has actually increased in thepast few years. Some of that is due topeople spending less on out-of-homeentertainment during the recession anda growing proportion is combined withother activities. But, interestingly, all thePatrick Barwise is emeritus professor ofmanagement and marketing at LondonBusiness School.pbarwise@london.eduNotes:1. Digital Britain Final Report, June 2009,pp109, 135–6. www.official-documents.gov.uk/document/cm76/7650/7650.pdf2. ‘Happy fifth birthday BBC3, but will therebe many happy returns?’, Emily Bell, the TheGuardian, 11 February 2008. www.guardian.co.uk/media/2008/feb/11/bbc3. Pronounced ‘Goddo’. It was originally writtenin French and Godot may have been namedafter a low-ranking veteran racing cyclist calledGodeau.4. Life After Television: The ComingTransformation of Media and American Life,George Gilder, Norton, 1990, p49.5. Being Digital, Nicholas Negroponte, Knopf,1995, p54.6. BARB. Note, this is for homes with accessto a PVR and VOD. Among all UK homes,live TV still accounts for about 93% of totalviewing.7. Deloitte presentation at 2010 EdinburghInternational Television Festival.8. ‘Television: Back to the Future’, ByronSharp, Virginia Beal and Martin Collins,Journal of Advertising Research. 49, 2, June 2009.9. See ‘The Limited Capacity Model ofMotivated Mediated Message Processing’ byAnnie Lang, in Robin L Nabi and Mary BethOliver, eds, SAGE Handbook of Media Processesand Effects, SAGE, 2009, pp193–204. ProfessorAnnie Lang of Indiana University, an experton the psychology and physiology of mediaconsumption, says that TV ‘strongly influencesour automatic processing (defined as you can’tstop it happening) system, which is why it isso hard to stop watching’. Lang’s model helpsexplain why TV so successfully takes our mindsof other things but we then recall little of whatwe have seen.10. Based on Ofcom, CommunicationsMarket 2010.market Leader Quarter 2, 2011 33

M arketing insigHtmelanIe howardMarketers neeInsight teams are nowcommonplace in companies,yet the relationship withmarketing isn’t always clear.Melanie Howard looks atthe balance between the twofunctions and recommends waysin which they can work moreclosely together34 Market Leader Quarter 2, 2011

M arketing insigHtmelanIe howardmore insightTHe recent publication ofFuture Foundation’s The Futureof Insight report 1 argues for amore prominent role for theinsight function. This includes creatingmore senior champions and demonstrating areturn on investment.The natural assumption aboutmarketing and insight departments –given a common focus on the consumer/customer – is one of harmony andworking together towards a shared goal.To a considerable extent this is the case.But digging beneath the surface in the 40or so interviews that were conducted forthat study reveals a less rosy picture.This article looks at the tensionsand challenges that exist and exploreshow the functions can work moreeffectively together. Marketers shouldask themselves if they are making thebest use of insight across the entiremarketing function. A serious review ofthe relationship might pay dividends,particularly in exploring how insightsmight be more effectively distributedand communicated.We distinguish between the desiredimpact of insight delivery – the ‘Ahamoment’, as many survey respondentsdescribed it – and the process ofgenerating this through the insightfunction. This process uses many sourcesbeyond traditional market research togenerate fresh perspectives and translatethese into actionable intelligence aboutconsumer needs and behaviour. Thisdistinguishes it from the market-researchdepartment of old, whose job was largelyto measure and report, rather thananticipate and predict.GettinG closer to customersThe report argues that the creation andempowerment of the insight function canbe traced to the publication of Tom Petersand Robert Waterman’s seminal work InSearch of Excellence in 1982.Their in-depth analysis of successfulbusinesses identified that one of the mostimportant distinguishing characteristicsof the truly excellent companies was thatthey were close to their customers andcited examples such as HP, Disney andWalmart (then in its infancy).We highlight how, through theevolution of advertising planning, aswell as a number of other key shifts, themodern insight function has becomethe means by which companies and brandscreate and maintain customer closeness.Why not a part of marketinG?Surely this is a seminal starting point forall modern marketing. Marketing has alsobeen transformed over the decades froma command-and-control process – albeitslowly and imperfectly – to one that isincreasingly dictated by customer needsand preferences.Doesn’t this mean that the insightfunction should best be treated asa subset of marketing – rather thanattempting to raise its own profileon the board, or maintain a clearline of independence, as some of ourrespondents reported?We estimate that 60% of insight teamsreport into the marketing function, butthat leaves a hefty minority that don’t.The interviews reveal that insight teamsreport to a plethora of other functionsin organisations – including directlyto the CEO, also strategy directors,commercial directors, CRM directorsand knowledge directors.The question of where the bestreporting line might be can’t be answeredwithout a detailed analysis of whereinsight teams are judged to be the mosteffective and influential – which we willdo in a future exercise. But perhaps inthose companies where it isn’t placedin the marketing function, marketingdirectors should be thinking about whythat is the case and whether or not theycould be using insights to greater effect.An important clue that manymarketers are not getting to grips withinternally generated insight comes froman online survey of 172 companies 2 toquantify key issues from the interviews.The survey found that just 55% ofmarketers are regularly using the insight>Market Leader Quarter 2, 2011 35

M arketing insigHtmelanIe howardinsiGht must Be a ‘think tank’Once the emphasis shifts from knowledge acquisition and filtering to one of interpretation,integration and ultimately explanation, insight professionals have to create a framework ofexplanatory ideas for the organisation.These will create an intellectual structure into which evidence can be gathered and assessedand used to reduce risk. What had been the domain of the external think tank in the 1990s and2000s must now also become the terrain of the insight team – miles away from the work of themarket research manager only a few years before.More organisations are using the language and skills from the think tank world – from theCOI’s Big Thinkers Network to the IAA’s biennial Global Brand Think Tank. nBut the impression we got from ourinterviews is that this is still a workin progress rather than a done deal.Most insight teams are continuallyexperimenting and exploring new routesto improve integration and applicationof their outputs. This is a critical area forskills development for the future.While 60% of the survey respondentsdistribute insight outside theirdepartment on a weekly basis or morefrequently, there could be more andbetter use of the resources. The keycomponent to this is not just the sharingof knowledge but the interpretation andcreation of actionable insights – ideasthat can be readily implementedto improve marketing planning,communications, sales and results.Our analysis is that more can be donein this area to create shared processesand methods of improving the returnof investment on the insight-generatingprocess. Insight teams are keen to makesure that their work is properly usedand marketers need to know how todemand what it is they need in termsof frequency, format and terms ofengagement. It may be time to explorethis together.insight teams are keen that their work isproperly used and marketers need to knowhow to demand what they need in terms offrequency and format to make it workthat specialist teams provide in theirday-to-day jobs – a lower proportioneven than senior managers.Despite the commonality of purpose,the use of insight has not permeated theactivities of the marketing departmentto the degree that it should. If this isthe case, it is worth asking why. Surelymarketers should want to be exposed toevery possible source of inspiration andideas available.Good communicationOne of the hallmarks of goodrelationships is good communication. Astriking finding from The Future of Insightreport was the degree of time and effortthat the newly empowered insight teamsinvest in communicating their material tothe wider organisation and in engagingother teams to use it.This shows the value that is placedon insight across the wider organisationbeyond marketing, but also the need tofind ways of condensing complex thoughtsin a way that inspires creativity.the drive for innovationIn the interviews, we heard a rallyingcry to marketing and insight teams tocollaborate effectively. Meeting thepressure to innovate relies on the fuel ofgood insight, the insider knowledge ofthe brand and its distribution, providedby the marketing team, plus the structureand creativity provided by excellentinnovation processes.Increasingly, insight teams are beingrequired to take on board the innovationbrief in companies where this hadn’tbeen a function. This has simplified theprocess, but still requires the cooperationand engagement of the marketing team.A growing number of FutureFoundation’s clients are called ‘insightand innovation’ managers and 70% ofsurvey respondents use this internalresource in their innovation work. Butthat leaves 30% who don’t, and weoccasionally hear of marketers engagingexternal innovation consultancieswithout involving internal insightteams – although this is rare and reflectsa disappearing fault line.It is time to bring insight andmarketing together in the commoncause of maximising the organisation’sinnovative capacity, irrespective of thenature and structure of the reporting36 Market Leader Quarter 2, 2011

M arketing insigHtmelanIe howardlines. We believe that all businesses willbenefit from a re-examination of how thetwo can be more effective together.As management guru Peter Druckersaid in 2002: ‘Because its purpose is tocreate a customer, the business has two –and only two – functions: marketing andinnovation. Marketing and innovationproduce results. All the rest are costs.’Regular presentations and workshopsalready seem to be a key part of thesolution among many companies, whichhighlight the importance of face-to-faceengagement. Of these, 55% say they useworkshops in some way – although whatthis means must vary and best practicestandards are not clear.A project at Innovation RCA (RoyalCollege of Art) is sharing workshoppractice from across the college – theworkshop of workshops – and findingmuch commonality but also significantdifferences too. This area mightbenefit from a brighter spotlight inmany organisations, not least becauseworkshops are becoming ubiquitous andare delivering real value.strateGic contriBution at themost senior levelThe Future of Insight report found thatinsight is used strategically in the majorityof organisations. Only a quarter say that itis used more tactically than strategically.This again points to an opportunity formarketing to make greater capital fromthe insight function.In the battle for greater boardroominfluence for marketing directors, thisis an area in which the perception ofinsight as leading to the strategic highground at the most senior level couldbe of value.Interestingly this points to a sourceof tension, since one of our principalrecommendations in the report was forthe insight function to be representedat the most senior level on the board –fielding its own champion, as it were.We talked about the possibility ofchief insight officers becoming theessential conduit for intelligence aboutthe wider world to be represented at thislevel. Nick Howarth Pullen, strategy,planning and insight manager at Aviva,had an intriguing suggestion: ‘I wouldlike to see insight as absolutely centralalongside the marketing director, maybeeven a research or intelligence personin the boardroom in the way you wouldhave an intelligence person in yourwar room if you were conducting amilitary campaign.’tensions andchallenges existbetween functions – thequestion is how they can work togetherto benefit the organisationWe presume that many marketerssee this as their role and would notnecessarily welcome the elevation of theinsight function to the lofty heights ofboard membership. However, these issuesshould be reviewed and debated. If, as wehave argued, both have a common interestin ensuring the organisation is focusedon customers, it makes sense to worktogether as closely as possible.develop effective partnershipDespite the positive reports frommany respondents about the greatercontribution of insight to marketingand other key functions, there are stillmany other ways to increase the valueof a working partnership. More thantwo-thirds of respondents believe thatinsight is being taken more seriously thanit was three years ago.In companies where the insightfunction does not report to marketing,the reasons for this should beexamined and the marketing teamshould ensure that it is getting regularaccess to the insights needed to enhancethe operation. The onus in this case ison the insight team to communicate moreeffectively throughout, but marketerscan play a part in specifying outputs andengaging in creative idea-generationprocesses, particularly in the design anddelivery of workshops.It is from this common ground that itwill be possible for functions within anorganisation to form a stronger, mutuallybeneficial alliance. nMelanie Howard is chair of the FutureFoundation.melanieh@futurefoundation.netNotes:1. The Future of Insight report, November 2010,can be requested from www.futurefoundation.net/page/view/The_Future_of_Insight2. Drawn from the Future Foundation’sdatabase of clients and prospects, the IPAStrategy and Planning Group and theMarketing Society’s membership. Research wasconducted in September and October 2010.Market Leader Quarter 2, 2011 37

theorykyle findlAyWhy doesn’t thebest always win?Markets are not fair. Big brandsenjoy a disproportionateadvantage over smaller brands.And, not only do they have morecustomers, but their customersuse the brand more frequently.Kyle Findlay looks to networktheory to explain how thisadvantage worksIn order to understand howmarket share forms, we must agreethat markets are inherently socialconstructs. We either define ourselvesin terms of society (for example by theclothes we wear and the music we listento) or against it (perhaps by joining acounter-culture group such as punks orgoths, who, ironically, are often an evenmore homogeneous group than the generalpopulace). Either way, we cannot fullyescape the sculpting effect that society hason us. Indeed, it has been found that evenour risk of becoming obese is influenced bywhat our friends weigh.Society defines us, even as we definesociety’s structure and norms in return.Social influence is inescapable. Inaddition, we are faced with more socialinfluence than ever before in the digitalage thanks to social media platforms suchas Facebook and Twitter, search providerssuch as Google and Yahoo and onlineretailers such as Amazon. This makes itdifficult to make decisions in isolation.Background theoryNetwork theory helps us to understandthe ebb and flow of social influence.In addition to understanding whothe people are that act as informationgatekeepers or exert influence in asocial group, network theory helps us tounderstand how people group togetheraround specific ideas.When we consider that a brandis really just an idea – a bundle ofperceptions, associations and experienceswrapped around a functional product– we realise that network theory canhelp us understand how people grouptogether around conceptual focal points,linked by a common idea that we calla “brand”. In conventional marketingparlance, we call the group of people tiedtogether by a common usage experience,a brand’s ‘market share’.The funny thing about market shareis that it often doesn’t behave in the waywe expect it to. One might rationallyassume that a brand’s market share is afunction of its quality and how well itdelivers its product or service. One mightbe forgiven for assuming that the bestbrand always wins and that customerswill always have the prescience and goodjudgement to spot a ground-breakingnew market entrant, ensuring that iteventually comes to dominate the marketwith its own large market share.Although these assumptions mightseem reasonable, we know that they arenot 100% correct. In reality, the marketshare that a brand enjoys is as much afunction of timing and luck as it is afunction of quality and delivery. Thebest in the market doesn’t always win,and many new products fail to make adent in the market regardless of howgood they really are.For example, the Sony PlayStation 3might be the most technically advancedhome-console with the most featuresout of the box such as Blu-ray and wi-fisupport, but the Nintendo Wii, withits dearth of extras and its previousgenerationgraphical powers, stillmanaged to hit a sweet spot betweenprice and broad appeal that saw customersflocking to stores for units.the ‘douBle-whammy’ effectDespite brands’ best intentions andsuperior products, it is often very difficultto predict which ones will do well in amarket and, more often than not, newproducts fail. One might be forgiven forimagining that incumbent brands aresurrounded by unassailable fortificationsthat make it difficult for newcomers tochip away at their market share.Marketing wisdom does recognisethe ‘fortifications’ that form aroundbig brands’ market share. For example,38 Market Leader Quarter 2, 2011

theorykyle findlAymarketing scholars such as AndrewEhrenberg have long shown that thephenomenon of ‘double jeopardy’ appliesin most markets. Double jeopardydescribes the phenomenon whereby bigbrands benefit from a double benefit atthe expense of smaller brands: not onlydo big brands have more customers, buttheir customers use them more oftenthan small brand customers use theirrespective brands. This positive feedbackmeans that big brands tend to get biggerand small brands tend to get smaller.In other words, big brands areself-sustaining entities with an internalconsistency that lends itself to continuedgrowth in the future at the expenseof smaller brands. This feedback looprepresents the fortifications that new andsmall brands need to overcome in orderto survive and grow if they hope to reacha stronger position in the future.Thus, any marketing initiativethat wants to enact change needs tounderstand the opposing forces at playthat seek to reinforce the status quo.Any would-be competitor brand needsto overcome these forces by puttingmore energy into finding a crack inexisting defences or undermining themcompletely through the process knownas ‘disruptive innovation’ which mayinvolve product re-formulation and/ornew strategic departure in advertising/communication.like ‘natural selection’, a gene [brand] witheven a 1% advantage in its number ofsurviving offspring can quickly crowd outalternatives [competitors]Skewed marketSNetwork theory gives us a formalisedname for this phenomenon whereby bigbrands tend to grow bigger over time,crowding out their smaller rivals in theprocess. Indeed, there is a generic termfor the class of mechanisms that canproduce such a crowding-out effect.They are collectively referred to as‘generative mechanisms’, and one of themost well-known examples is ‘preferentialattachment’, which we will focus on forthe remainder of this article.Preferential attachment is a simpleconcept and it works like this: imagine astore shelf with five brands on it (see Figure1). The store shelf has ten facings. To beginwith, let us imagine that five brands starton equal footing with two facings each. Allother things being equal, each brand has a20% chance of being chosen according totheir number of shelf facings.Now imagine that, as luck would haveit, more customers buy brand 1 than anyother brand (perhaps because it is in thebest position, has great packaging or offersthe best value proposition). Regardless ofthe reason, when it comes to restocking >Market Leader Quarter 2, 2011 39

theorykyle findlAythe shelves (Round 2), the retailer seesthat brand 1 is their best seller andassigns the brand an extra facing. Brand1 now has three shelf facings. However,the shelf still has only ten facings in total,which means that brand 1’s extra facingcomes at the expense of one of the otherbrands. In our example, brand 5 loses afacing as a result.This shake-up on the store shelfchanges our brands’ purchaseprobabilities. Brand 1 now has anadvantage with a 30% chance of beingchosen, while the remaining brands have a20% chance, except for brand 5 which hasa 10% chance. This small initial differencecan quickly spiral downwards owing to afeedback loop that ensures that as brand 1sells more than its competitors, word ofmouth surrounding brand 1 spreads fasterthan its competitors and that increases itschances of being sold even more. Thus, itexpands across the shelf, crowding out theother brands.natural parallelEvolutionary psychologist and author,Steven Pinker, neatly describes the sameprocess in a biological context: ‘Naturalselection works like compound interest:The market share that a brand enjoys is asmuch a function of timing and luck as it is afunction of quality and delivery. Manyproducts fail to make a dent in the marketregardless of how good they really area gene [brand] with even a 1% advantagein the number of surviving offspring ityields [facings] will expand geometricallyover a few hundred generations, andquickly crowd out its less fecundalternatives [competitors]. Why didn’tthis winnowing leave […] us with thebest version of every gene [product]? …The world would be a duller place, butevolution doesn’t go out of its way tokeep us entertained.’People who use brand 1 may enjoythe product just as much as people whouse brand 2, but there are more peopletalking to their friends about brand 1 thanbrand 2. Consequently, word of brand 1spreads faster, again reinforcing thefeedback loop that will ensure that brand 1comes to dominate in the long run. Thisis the role of social influence in markets– a role that is amplified in a world withubiquitous connectivity and social mediaplatforms that make it easier than ever toshare one’s thoughts about brands.If we were to follow this feedbackloop for a long enough period of timeduring which the shelves are consistentlyrestocked, we would find that thedistribution of shelf facings could bedescribed by a class of skewed functionscalled ‘power laws’. Power lawdistributions are characterised by afew large observations at the headof the distribution and many smallerobservations in the long tail of thedistribution (in this case, a few brandswould have many shelf facings, while mostbrands would have few facings).Power law distributions stand in starkcontrast to the more familiar normaldistribution, or bell curve, that is anunderlying assumption of many traditionalstatistical approaches. What a normaldistribution might treat as an outlieractually becomes the most importantobservation in a power law distribution.So, the reason why markets aren’talways fair and why big brands tend to getbigger is because generative mechanismssuch as preferential attachment andsocial influence bias our behaviour ascustomers, thus shoring up big brands,making them bigger still at the expense ofsmaller competitors.theory v oBServationSThere is one more twist in the talethough. Once we’ve arrived at theconclusions described above, the nextlogical question is whether or notour market share data display thischaracteristic power law pattern.The short answer to this is, no, they donot show clear-cut power law distributionsin terms of market share. However,most markets do show clear inequalitiesin terms of the distribution of marketshare, with most markets containing afew large brands and many small brands,and these distributions tend to show thecharacteristic power-law-like drop-offfrom the market leaders to the nextbiggest brands.In markets that do not initially showclear inequalities between the marketleaders and other brands, the issue isusually one of market and categorydefinition. We often found in suchcases that we were looking at categoriesthat have not been sufficiently tightlydefined such that brands that do notcompete directly in customers’ mindsas supplementary products have beenlumped together.40 Market Leader Quarter 2, 2011

theorykyle findlAyA thought experimentRound 1Market shareBrand1Brand1Brand2Brand2Brand3Brand3Brand4Brand4Brand5Brand5Probability0.20.20.20.20.21 2 3 4 5Round 2Brand1Brand1Brand1Brand2Brand2Brand3Brand3Brand4Brand4Brand5Probability0.30.20.20.20.11 2 3 4 5Round 3Brand1Brand1Brand1Brand1Brand2Brand2Brand3Brand3Brand4Brand5Probability0.4 0.20.20.10.11 2 3 4 5We found that no market perfectlyreflected a power-law distribution, despitemost markets clearly displaying some formof inequality between the biggest brands inthe market and the smaller brands.Perfect power laws form only when thecost of distributing a quantity is low. Andwe know that in most markets, there isusually some form of ‘cost’ or trade-offinvolved when customers make a choicebetween brands, either in terms of theactual product price or in terms of thetime and effort required to find a productthat is poorly distributed.This means that power laws form infrictionless markets and, consideringthat most markets have some form offriction, all we are left with is a generalbiasing tendency towards market shareinequalities that rarely blooms into fullpower law distributions. However, thisdoes not diminish the value associatedwith understanding how these inequalitiesform over time in the first place. Thishelps us to understand why the best brandsdon’t always win and why it is so difficultto introduce new products into a market.In addition, it gives us some indicationof the inertia or gravity surrounding a bigbrand. This is useful to know as it giveslarge brands an indication of the ‘bufferzone’ they have to work with – howoften can they afford to disappoint theircustomers before they are abandoned?And, if I am a competitor brand, it isuseful for me to know how high and thickthe walls are that I need to besiege.What marketer can really afford not tounderstand the basic mechanics that drivetheir market? Understanding market-shareformation from a network perspectiveallows us to understand why customersdon’t always appear to act rationally andwhy business isn’t always fair. ■acknowledgementSA massive thanks to Anna Retief forher power law curve-fitting effortsacross these 46 datasets. In addition, abig thank you to Aaron Clauset of theSanta Fe Institute and Michel Goldsteinof Yahoo Research for their guidance inapplying the most appropriate method foridentifying power laws.Kyle Findlay is a senior R&D executiveat the TNS Global Brand Equity Centre.kyle.findlay@tnsglobal.comThis is an edited version of a winningpaper in the WPP Atticus Awards. Thefull paper and references are available atwww.esomar.org/web/publication/paper.php?id=2171figure 1: a thought experiment showing animaginary store shelf. as brand 1 expandsacross the shelf in three consecutive‘rounds’ it creates a skewed distribution interms of market share for the five brandsthat will eventually form a power lawMarket Leader Quarter 2, 2011 41

creativitypeter fieldThe value oPeter Field describes aningenious analysis of casesfrom the ipA awards andGunn report that puts to restany doubt about theeffectiveness of creativityThe practical aspect of the creativeprocess has been argued fordecades. For many agencycreative teams it was the onlything that mattered; for many clients it was adistraction from the business of selling.The gulf between clients and agencies inthis respect has narrowed in recent times,as evidenced by the launch of the CreativeEffectiveness Lions at the Cannes LionsAdvertising Festival – an event historicallydominated by creative categories. But thedivide persists in less-enlightened quarters.So, not surprisingly, when The link betweencreativity and effectiveness 1 was publishedit received a mixed response: enthusiasmfrom creative agencies and scepticism fromsome others. Both responses are entirelyappropriate for reasons I examine here.the golden eggThe study aims to provide the most robustexamination yet of the commercial benefitsof creativity in communications – not justfor traditional advertising, but online too.The analysis compares the hard businessresults of the 170 or so IPA for-profitcampaign case studies submitted since 2000that did not win any major creative awardswith the 40 or so that did win creativeawards (for online and offline).My source for the creative award winswas the globally respected Gunn Reportdatabase; my source for the hard businessresults was the similarly respectedIPA effectiveness databank. With oneexception, the two groups of campaignsare fairly evenly matched in terms of themyriad factors that can affect effectiveness(market share, maturity etc).The important mismatch is in therelative level of investment behind thecampaigns defined by their ‘extra shareof voice’ (ESOV), ie share of voice minusshare of market. ESOV has been widelyvalidated as a key driver of effectiveness– if it is positive then brands tend to growand if negative, shrink in proportion.The non-creative group of campaignsenjoyed on average nine percentage pointsmore ESOV than the creative group,giving them a huge potential advantagein terms of expected business results (forexample, around one point more marketshare growth per annum). In fact, they didnot realise this potential advantage – thecreative group out-achieved them acrossthe spectrum of business effects.6050Market share gain v ESOVSOM growth (%)403020100–60 –40 –20 0 20 40 60 80 100–10ESOV (%)–20–30–40figure 1: the relative efficiency of creativelyawarded and non-creative campaignsCreatively awardedNon-creatively awarded42 Market Leader Quarter 2, 2011

creativitypeter fieldf creativityThe most revealing comparisonwas between the efficiency of the twogroups of campaigns, measured by therelationship between share growth andESOV (see Figure 1). The non-creativegroup generated around 0.5 points of sharegrowth per ten points of ESOV (slightlylow by the standards of the IPA databank),but the creative group generated anastonishing 5.7 points of share growth perpoint of ESOV. In round terms, they wereabout ten times as efficient. Another wayof viewing the value of this is to projectwhat average level of share growth thecreative campaigns would have achievedwith the same level of relative investment(see Figure 2). Thus instead of merelyout-growing the non-creative campaignsby 1.5 share points as was the case, thecreative campaigns would have outgrownthem by more than six share points.WhY is creAtiVitY stArVed ofinVestMent?It is interesting to explore why thedemonstrably highly effective creativecampaigns were relatively starved ofinvestment. It cannot be simply explainedby suggesting that creativity was aconsequence of lack of available budget(‘we have no money, so we shall haveto think’) – if so, then the proportionof brand leaders among the creativecampaigns would have been lower thanamong the non-creative campaigns(which it was not), as brand size is a majordeterminant of budget.I believe two alternative explanations,the folly of which are both highlightedby the study. The first of these is thebelief by many in general managementthat creativity is risky. Highly creativecampaigns (if they are ever allowed tosee the light of day) are likely to bebudget-restricted until they have provedthemselves in the marketplace. In factthis study suggests that the opposite istrue – the levels of confidence in therelationship between share growth andESOV were greater for the creativecampaigns than non-creative ones. Thissuggests greater certainty of effect forcreative campaigns.The second explanation is widelyevidenced in case studies and is moreinexcusable. The conventional ‘logic’peddled by many advisers to clients is thatthe benefit of greater effectiveness is the15Not creativelyawarded1212.6CreativelyawardedMarket share growth (% points)967.35.8 5.830At actual ESOVAt same ESOVfigure 2: Market share growth at actualesoV and projected at the same esoV>Market Leader Quarter 2, 2011 43

creativitypeter fieldEffective success rate (%)100806040200figure 3: the impact of creativity on the broad business effectiveness success rate14121086420Average Gunn Report score59%Low 6%88%figure 4: greater creativity is associated with greater effectiveness0.8Not creativelyawardedCreativelyawardedHigh achievers on a lowbudget are the most creativeNumber of very largebusiness effectsLow 0–1 High 2+14121086420Low achievers on a highbudget are the least creativeability to reduce the budget and still meetthe brand’s targets.It is a seductive argument and one thatwill meet with enthusiasm by the CFO; itis also about the worst, most short-sightedpiece of advice you could give. For onething, the analysis shows that the benefitof creativity increases dramatically asthe budget rises (and can be completelynegated if it is cut too far).For another, consider what this ‘logic’actually means: it is the cutting ofinvestment behind a highly productivebut time-limited asset (even creative adswear out) so that it delivers the same levelof growth as a mediocre asset. Unlessyour business would genuinely be unableto supply the greater level of demand(perhaps true of automobile companies,but few others) then it must make senseto increase the media budget to ‘sweat’the asset while it is still potent. No agencycan guarantee to deliver a sequel with thesame power, so the study advises makingthe most of what you have.The analysis showed that the businessadvantages of creativity lie acrossthe spectrum of metrics. Taking theeffectiveness success rate (the proportionof campaigns that achieved any ‘top box’business effects scores – for example, pricesensitivity, penetration, profit growth) asa metric of broad business success, thestudy showed considerable uplifts in broadbusiness effectiveness within ESOV bandsamong creative campaigns (see Figure 3).As a final step in demonstrating the linkbetween creativity and effectiveness, thestudy looked at the link between levels ofcreativity (measured by the Gunn Reportscore – the number of major creativeawards won by the campaign) and thelevels of effectiveness (measured by thenumber of ‘top box’ business effects scoresachieved – which correlates closely withreturn on marketing investment).Again when the ESOV levels areaccounted for, it becomes very apparentthat greater creativity leads to greatereffectiveness among this group ofcampaigns (see Figure 4).hoW AWArds Were WonPerhaps the most practical facet ofthe study was the examination of whycreatively awarded campaigns outperformednon-creative ones.The analysis suggested that two factorswere involved. The lesser of these wasthe greater likelihood of the creativecampaigns to be emotional in terms ofmodus operandi.In the publication Marketing in theera of accountability 2 it was shown thatemotional campaigns outperformrational ones. So, by selecting in favourof emotional campaigns, creative awardsjudges would also have been selectingin favour of effectiveness. But this couldhave explained only a small part of thesuperiority of creative campaigns.The major factor was the very strong‘fame’ effect (ie, online and offline buzz)associated with creative campaigns – twicethe level of non-creative campaigns.Campaigns that generate buzz wereshown (also in Marketing in the era ofaccountability) to be the most effective of all,44 Market Leader Quarter 2, 2011

creativitypeter fieldso creative judges are again instinctivelyselecting in favour of effectiveness bytending to award campaigns that have whatit takes to get shared and talked about. Thestudy therefore offers a fairly convincingbody of evidence to support the linkbetween creativity and effectiveness and areasonably compelling explanation of whyit should exist. End of story?All thAt glisters is not goldThe study appears to have presented anopen-and-shut case for the pursuit ofcreativity. And in a sense that is true – theanalysis implies that a strategy executedcreatively is likely to be greatly moreeffective than the same strategy executednon-creatively.But let me side with the sceptics for amoment by inserting a note of cautioninto the interpretation of the findings.What the study actually demonstratesis that creatively awarded strategicallysound campaigns are much more efficientthan non-creative but strategically soundcampaigns (demonstrating strategicrigour is a major part of an IPA case studyauthor’s requirement). It does not suggestthat all creatively awarded campaigns areinevitably effective.In Donald Gunn’s landmark 1996 study(Do Award Winning Commercials Sell? –sadly unpublished), he found that around14% of creatively awarded campaignsfailed to show any commercial success –usually because the strategy was wrong. Ifone looked for the levels of commercialsuccess and of its proof that are expectedof IPA case studies, then the proportionof creatively awarded campaigns that areunable to demonstrate success is likely tobe much greater.No amount of pure creative geniuswill turn a misguided strategy intoa commercial success. The analysisdemonstrates that you need to focus onboth effectiveness and creativity to hit thesweet spot. And herein lies the danger ofthe enthusiastic response to this report bycreative agencies and the reason why thesceptics may have a point.An agency that targets creativeawards alone as its key output successmetric (as some may be tempted to do)runs a great risk of undermining the valueof that creativity, because the drive forcreative awards will mean de-prioritisingeffectiveness. This is Goodhart’s law inaction: when a metric is turned into atarget it loses its value as a measure ofsuccess. Perhaps this already happens.There are many conspicuously creativelyawarded campaigns that never seem tosubmit effectiveness case studies. If I werea client of one of these campaigns I wouldwant to know why.ProsPecting for successThe only wise response to this study is foragencies to pursue – and clients to reward– success in both creative and effectivenessawards competitions. Greater success inone of these should be taken as evidenceof room for improvement in the other anda need for better balance.Creative success without effectivenesssuggests poor strategic and/or channelplanningrigour, while effectiveness successwithout creativity suggests an overdependenceon budget and brand muscle.I greatly welcome the decision to includea creative effectiveness jury at Cannes thisNo amount of pure creative genius will turn amisguided strategy into a commercial success.You need to focus on both effectiveness andcreativity to hit the sweet spotyear. This has to be a good developmentand if replicated at other major creativeaward competitions will help promote thekind of balance that is needed to ensurethe general link between creativity andeffectiveness. It is unlikely to do awaywith the need for pure effectivenesscompetitions, because there are manyways other than creatively that agenciescan create value for clients – indeedincreasingly so in the proliferating multichannelcommunications environment.The important outcome is to find aproductive balance between the pursuitof creativity and of strategic effectiveness.The alternative is either a return to theoften ill-directed creative excesses of the1980s or to the deadening era of riskaverseaccountability of the noughties. nPeter Field is an independent marketingconsultant to the IPA databank initiativepeter.field@dsl.pipex.comReferences:1. The link between creativity and effectiveness,IPA, June 2010.2. Marketing in the era of accountability, Warc,June 2007.Warc, publisher of Market Leader, isthe official knowledge partner for theCannes Creative Effectiveness Lions.For more information, please visit www.canneslions.com/effectivenessMarket Leader Quarter 2, 2011 45

LeAderS hipshaun smIth and andy mIllIganIt’s time toAn example of users’ influence was whenVirgin galactic redesigned its spacecraftfollowing feedback from its customersboldly leadIn a world where digital, mobile and web technology has transformedthe media landscape into a bewildering array of possible channels,and social media are being used to punish brands or force them tochange everything from supply-chain policies to marketing tactics,Shaun Smith and Andy Milligan argue that it is time for a radicalapproach to marketing leadershipMArketerS fAce enormouschallenges. Targeting,locating, communicatingand maintaining any formof reliable relationship with customers orconsumers, has never been more difficult.The problem is not one of access, but oneof control. It is the marketing equivalent oftrying to slake thirst from a fire hose.The sheer volume of marketing ‘noise’means that for many new consumers,traditional above-the-line marketing is‘below the radar’ as more turn to viralmarketing and social networks for sourcesof inspiration. Nobody is sure exactly howthe communications and media landscapewill look in ten months let alone ten years.The nature of business models ischanging – some have been turned on theirhead by brands such as Six Senses Resortsand AirAsia X, for example (see box onp48), and some are broken for good. Themethods of distribution and exchange ofproducts, services and information haveradically shifted, and there are seriousquestions about the long-term viability ofbrands that use precious resources.Two conflicTing sTylesIn the midst of all this change –uncertainty or opportunity, depending onyour point of view – we have observed twodistinctly conflicting styles of leadershipin organisations attempting to survive andsucceed in this turbulent period.The first, most obvious and – in ouropinion – the most dangerous is thatof companies who become internallyfocused on financial re-engineering andmanagement restructuring. Balance-sheetrepairs, cost-cutting, trigger-happyredundancy programmes and poorlythought through acquisitions are thecorporate equivalent of rearranging thedeck chairs on the Titanic. They are allthe usual signs of a business with, in thewords attributed to former CEO of GEJack Welch, ‘its ass to the customers’.But we have also seen a different breedof organisation emerging. They succeedbecause they have the courage, confidenceor just sheer chutzpah to pursue apurpose that is beyond profit, to engage,entertain and educate their audiences.They see their customers and employeesas members of a like-minded community,who create an almost cult-like followingaround their brand – both within andwithout their organisation. These arecompanies that are not just different butdramatically different and who push tothe extremes the consequences of theirdesired positioning and strategy.Companies like this are often basedon the personality and values of thepeople who establish and lead them, butnot always. Sometimes their path hasbeen deliberately chosen by executivesto differentiate them from the samenessof companies in the sectors they share.They eschew typical ‘faceless’ corporatebehaviour and dare to put their46 Market Leader Quarter 2, 2011

LeAderS hipshaun smIth and andy mIllIganshareholders’ concerns behind those oftheir customers, their employees and theirobligations to the wider public.Even during the most difficult times– such as the global financial crisis fromwhich recovery will be long and painfulfor most – they are relentless in pursuit ofimprovement, zealous in communicationand take action in accordance with whatthey think is best for their brand not justtheir bottom line.But this is not some corporate Quixotictilting at windmills. These organisationsalso happen to be incredibly commercialand in most cases outperform theirsectors. In short, they are bold. Notreckless. Just bold. They stand out fromothers because they stand for something.We investigated companies that webelieve demonstrate boldness: how theydo it and, most importantly perhaps, whythey do it – their purpose. The result is abook called Bold: how to be brave in businessand win. It is the story of 14 inspiringThey see customers andemployees as membersof a community, whocreate an almostcult-like followingaround their brandbrands and their remarkable leaders.Brands such as Burberry, Virgin Galactic,Six Senses Resorts, Zappos, O2 andAirAsia X.We believe that being bold is anattitude of mind but is evidenced by whatpeople do and thus how any organisationacts. Anyone and, by extension, any typeof company can be bold if it wants. Thekey is that it must be willing to behaveaccordingly, not just claiming it does boldthings. As Gav Thompson of O2 says:‘Don’t tell me how funny you are; tell mea joke that makes me laugh.’ We looked athow these companies actually behave andwhat they do differently from others.We conducted intensive in-depthinterviews with a cross-section ofexecutives from the short-listedbrands. From these we identified eightkey practices and 40 behaviours thatseemed to explain ‘boldness’. Finally,we conducted a quantitative survey inthe US and UK to compare the boldbrands against other companies onthese practices.We found that the bold brandsoutperformed the comparison companiesby a significant degree on each of theeight practices. The bold companiesscored an average of 4.3 on our five-pointscales across the eight practices versus3.4 for the comparison companies. It isa dramatic difference in our experience.There is insufficient space in this article>Market Leader Quarter 2, 2011 47

LeAderS hipshaun smIth and andy mIllIgancAse sTudy: AirAsiA xAirAsia X has built a bold and successful business model for long-haul, low-cost flights based onrapid turnaround, unusual schedules but a real sense of entertainment. Its insight was that longhaultravel was built entirely round the needs of the premium traveller who is hard pressed fortime but not for cash. In contrast, Azran Osman-Rani, AirAsia X’s CEO, says: ‘We’ve built an airlinemodel around the price-sensitive, time-insensitive customer which was previously untapped.’ As aresult AirAsia X’s seat/kilometre cost, the key measure of airline productivity, is a mere 2.8 UScents per available seat-kilometre compared with the seven to eight cents of their competitors.And low cost doesn’t mean low quality – the airline’s flat beds work just fine. nBoldness cAn Be …l An heroic purpose – whether it be to fly into space or save the planet.l Doing things that are dramatically different from what has been done before – whether it be alogistics company that treats its employees as a key asset in a commodity market or a bank thatacts like a fashion store.l Sticking to your principles regardless of the ‘market norms’ – whether it be an advertisingagency that refuses to pitch for new business or a retailer whose sole purpose is to create ‘wow’moments for customers. nThe bold organisations (logos above) believethat there is a clear causal link betweenwhat you communicate, how you operateand how you protect your earningsto report these findings in detail but whatwe can do is to comment on some lessonsthat we can learn from the way the boldcompanies approach marketing.MArkeTing is eVeryThing, noTJusT An Add-on funcTionIn Market Leader Quarter 1, 2011, JohnKearon argued that the adoption of‘marketing science’ has been the enemy ofinnovation. We agree. In some importantaspects, our bold companies are quite oldfashionedin the way they think about theirbusiness: they stay extraordinarily close totheir customers and they ensure that thebrand is everything they do. Marketingtherefore describes a way of life rather thana function or set of processes.Marketing, for them, is primarilya way of engaging and entertainingcustomers or consumers, not a way ofpersuading them to buy a product. Theysee marketing as an integral part of thecustomer experience – the marketing ofthe product and the product itself are one.From our research, the bold brandsintentionally and relentlessly do thefollowing:1Clearly and honestlycommunicate the brand promiseand values to customers. Akey task of marketing is to getyour proposition over to the market aspowerfully as possible. These brands areboth bold and authentic in the way theydo this. They don’t use weak or watereddownpromises of quality, or bizarre andincomprehensible slogans.They use dramatic language that fixesclear expectations in the customers’minds. Whether it is Burberry’s‘Democratising luxury’, Zappos’ ‘Poweredby service’ or the Geek Squad’s slightlypithier ‘We’ll save your ass’, these brandsare honest in their communication andengaging in their tone.They dramatise this promise throughthe customer experience. They recognisethat consumers are increasingly cynicalabout big brands and traditionalabove-the-line marketing so they use thecustomer experience to demonstrate thepromise. For example, Umpqua, the UScommunity bank, has one of the boldestvisions in banking: ‘To make going to thebank, the best thing you’ll do today.’ It hasreinvented the banking experience from aseries of financial transactions conductedin a sombre and stuffy environment tosomething that looks more like the Gap.And the Umpqua experience doesn’t justhappen in the ‘store’, as they call thebranches. Umpqua has embraced what itcalls ‘handshake marketing’.By this the company means marketingactivity that is up-close, personal andin keeping with its positioning as acommunity bank. For example, employeesare encouraged to perform what the bankcalls ‘random acts of kindness’. They canpay for the bill for the customer behindthem in-line at their local Starbucks sothat when the customer goes to pay theyare presented with a small chit that says‘Your coffee today is on Umpqua’. It’s allpart of delivering on the Umpqua promiseand getting customers to talk about thebrand. Contrast this with one high-streetbank in the UK which broadly advertisesa list of customer commitments onlyto fall short on even the most basic ofinteractions with customers.2Actively involve customers inhelping to improve the brandand products. Bold brands donot believe their products are soperfect that customers can’t improve them.Nor are they so frightened by competitorsstealing their ideas that they won’t releaseanything until it’s foolproof. They seethe involvement of their customers in thedevelopment of their products as a key partof marketing them.An extreme example of this userleddesign is Virgin Galactic whichredesigned its spacecraft following earlyfeedback from its customers. Innocentinvites its customers into its offices tosuggest ideas and improvements as well asallowing them to recommend and createnew recipes. Sir Anthony Bamford, the48 Market Leader Quarter 2, 2011

LeAderS hipshaun smIth and andy mIllIganchairman of JCB, changes the smallestdetails on his diggers – for example, theway the petrol cap rotates – becausecustomers tell him that it matters.3Use innovative viral marketingtechniques to reach targetcustomers. We found that all of thebold brands use social media to tuneinto the views of their customers and digitalmarketing to reach them. Innocent doesthis through the simple words it uses on itspackaging that has encouraged people tospread the word about the brand.Burberry streams 3D live broadcastsof its runway shows to five cities aroundthe world and then publishes the showvia 80 partner websites, reaching apotential audience of 100 million whereasthe traditional catwalk show in Milanor London will be attended by 1,300exclusive clients. The customers’ can viewthe show on their iPad, click on a productand have it delivered within a few daysvia Burberry’s Worldstore portal. In thisway, Burberry delivers on its promise of‘Democratising Luxury’.4Achieve high levels of customeradvocacy or ‘fandom’ to drivereferral business. Communitiesof fans validate these brands; theyhelp to reinforce them, inform them andsometimes even to forgive them when theyget things wrong. O2 has created a strongbasis of fans by providing value that no otheroperator does. Access to events at the O2Arena and Rugby at Twickenham all helpto cement a strong relationship with thebrand and deliver its promise of ‘Helpingcustomers connect with the things in lifethat matter to them’.At the same time the brand has strippedout the restrictive contracts and weaselwords to make it easier for their customersto leave. Products such as Simplicity, aSIM-only offer, allow customers to havetotal control over their relationship withthe brand. Ronan Dunne, CEO of O2,explains: ‘If you give your customers thefreedom to leave, what you actually givethem is the confidence to stay.’5Create a cult-like culture. One ofthe characteristics that we found tobe significantly more evident in thebold brands was the kinds of culturesthey create. They invent their own words,use unusual hiring practices and then go toenormous lengths to ensure they protect theDNA of their brands.Tony Hsieh, CEO of US online retailerZappos, offers new recruits $2,000 toleave at the end of the first week oftraining. Why? To ensure that only thosepeople who are passionate about workingfor the brand stay. He says: ‘A company’sculture and a company’s brand are reallyjust two sides of the same coin. Brand isjust a lagging indicator of culture.’MAking The righT connecTionsThere has long been a belief in businessthat, put at its simplest, growingyour reputation and revenue (usuallythrough sales and marketing) could beseparated from protecting your assetsand profit (usually through operationsand finance). However, the boldorganisations believe that not only isthere a clear causal link between what youcommunicate, how you operate and howyou protect your earnings, they are infact interdependent and you can’t get anyone of them right unless you get them allBold companies are quite old-fashioned in theway they think about their business: they stayextraordinarily close to their customers andensure that the brand is everything they doright. As Dunne of O2 observes: ‘It onlyworks when it all works.’Robert Stephens of the Geek Squad,which provides computer-related servicesand accessories, used the expression:‘Marketing is a tax you pay for beingunremarkable.’ We believe that the pointhe was making, and one that is shared bythese bold brands, is that if you focus yourentire business on delivering a valuable,entertaining and engaging experiencefor your customers across multiplechannels then they will do the job foryou. You don’t need to waste additionalmarketing dollars on fancy or phonycampaigns that seek to shout louderthan your competitors and persuadeincreasingly cynical consumers that youare different or better. nShaun Smith is founder and partnerat smith+co.ss@smithcoconsultancy.comAndy Milligan is an internationalconsultant on brand and business culture.andy.milligan@thecaffeinepartnership.comYou can download a free ‘Bold’ appfrom the Apple Store to compare yourorganisation with the bold brands.Bold: how to be brave in business and winis published by Kogan Page in April2011. For more information go to www.boldthebook.comMarket Leader Quarter 2, 2011 49

digitaltessa thornileyUniqlo thrives ondigital marketingFor more than a decade, Uniqlohas been exporting its brandof Japanese low-cost, qualitycasualwear around the world.tessa thorniley describeshow the retailer has become anapparel empire by appealing toa multicultural set of consumerswithout losing its ‘Japaneseness’As Tadashi Yanai, the chain’sfounder and one of Japan’s mostdynamic businessmen, said in arecent interview: ‘We reallyhave to transform this company to besuccessful and compete. Before, wemanufactured in China and sold in Japan.Now we need to manufacture in the worldand sell to the world.’The transition to international brandpartly reflects the need to compete withlarger rivals Inditex of Spain (owner ofZara) and Sweden’s Hennes & Mauritz(H&M). It is also required to offsetslowing sales in its domestic market. Theshift has prompted a significant change inUniqlo culture from within the companyand externally in its marketing to theoutside world.In Japan, Uniqlo HQ has caused asensation by breaking with many ofthe conventions of Japanese corporateculture. Its parent company FastRetailing has said that English must bespoken at all business meetings whereforeigners are present and that by March2012 all email correspondence mustbe written in English. The number offoreign employees will overtake Japaneseworkers by 2015, the company has50 Market leader Quarter 2, 2011

digitaltessa thornileypledged, suggesting it is serious in itsmission to reform.Similarly, the company’s globaladvertising and marketing – its externalcommunications – have decisively shifted.Throughout the past half a decade, agrowing emphasis has been placed oncreative campaigns that include dance,music, colour and the internet ratherthan the spoken word and traditionalforms of marketing. It’s a tactic thatUniqlo has adopted to ensure maximum‘inclusivity’ in its approach to consumersand to ensure that existing and potentialcustomers can engage with the companyand understand its message no matterwhich country they are in.Daisuke Hase, Uniqlo’s public relationsand global marketing communicationsspokesman, explained: ‘Our emphasisis on digital marketing because we feelthat by harnessing the power of the webwe can overcome language barriers aswe expand globally. We also believe thatan image speaks a thousand words andimages and music transcend language.’‘UNIQLOCK’ – CONsIdered tO betHe breAKtHrOUGH CAMPAIGNUniqlo’s creative vision in the digitalsphere first grabbed the world’s attentionin 2007 when the company’s ‘Uniqlock’campaign took the online advertisingsector by storm.The viral marketing project, designedto build brand awareness internationally,featured a clock with spliced clips ofwell-choreographed dancing and catchylounge music. It ran all year round,24/7. In summer the girls dancing worepolo shirts; in winter, cashmere; and atmidnight they slept.Uniqlock swept the board at a raft ofmajor advertising awards in the followingyear, even scooping a Grand Prix atCannes. And the innovative but simpleexecution of the campaign helped to propela local clothing retailer, which even inJapan was not considered fashionable, tothe status of a hip marque in a few years.‘This campaign was all aboutcommunicating with customers in a waythat travels around the globe. The webtool, Uniqlock, was perceived as veryadvanced at the time. It included a blogwidget so the clock could be embeddedinto blog sites. We used dance because itis understood globally and has no barrierslike language does,’ Hase said.Uniqlo worked out that 70 millionblogs worldwide could be a powerfulbuzz-building medium and its widgetwas designed especially with bloggersin mind. By January the followingyear more than 27,000 widgets from76 countries were circulating, and thewidgets and website that accompaniedthe campaign had been viewed 68 milliontimes in 209 countries.Kentaro Katsube, the creativemanagement director at Uniqlo whohas been with the company since2005, was a key creative mind behindUniqlock (and many other digitalcampaigns since). He is credited withspotting the power of web-basedmarketing several years before Uniqlocktick-tocked its way to viral success. Heis also credited with convincing Yanai toembrace online marketing.Addressing a conference in 2009,Katsube urged other advertisers to usethe web as a ‘placeholder for ideas, whichin turn will become fodder for blogs andbloggers’. He also said creative conceptsmust be ‘unique, emotional’ as well as‘fun and entertaining’, principles that areevident in Uniqlo’s campaigns today.In the past few years, following thesuccess of Uniqlock, the digital elementto Uniqlo advertising campaignshas become increasingly important.According to a source close to Uniqlo,at the time Uniqlock was released, abouthalf the brand’s campaigns had a digitalcomponent. Now most do, even thoughthe objectives might differ between them.The 2008 international campaign‘Uniqlo jump’ followed in Uniqlock’sfootsteps, using quirky online audioand video to advertise the company’sautumn/winter collection; 696 Uniqloemployees from around the world werephotographed jumping in the newcollection, and the resulting images andfilms were distributed via Flickr, YouTubeand a blog site ahead of the launch of theofficial campaign site.‘LUCKY sWItCH’ – drIVING sALesBy 2009, as the Uniqlock campaignunderwent its sixth incarnation, thecompany’s digital marketing divisionwas in full stride, producing at least 11web-related projects – the most ever forthe company – that year. And some ofthe campaigns took on a sales-drivingelement as well as brand building.‘Lucky switch’, a campaign thatran in Japan to coincide with FastRetailing’s 60th anniversary, came outon 1 December 2009 for 31 days. Itaimed to promote the retailer’s end-ofseasonsale.‘Lucky switch’ turned the boringbanner advertisement on its head.What looked like a banner was insteada kind of blog badge (another widget)that transformed any website into aninstant-win Uniqlo lottery. To encourageblog owners to install the widget Uniqlopromised prizes to both the blogger andany visitor to a blog site who flipped awinning ticket.Uniqlo called it the ‘appreciation andgiving back campaign’ and combined‘Lucky switch’ with an instoreBy 2009, the company’s digital marketingdivision was in full stride, producing at least 11web-related projects – the most ever for thecompany – that year. Some campaigns took on asales-driving element as well as brand buildingcomponent. It ultimately generatedalmost three million clicks with morethan 4,000 blog badges installed. Thenumber of shoppers visiting Uniqlo’sonline retail site in Japan topped 46,396,which was two to three times higher thanthe usual monthly traffic.By building a digital presence, Uniqlois not simply driving more consumerengagement, it is also shifting itsadvertising from paid media to ownedmedia. In the long run this may be a moreeffective way for the brand to deepen itsrelationship with its customers.Also much-lauded in the advertisingsector was Uniqlo’s 2009 autumn/winter campaign to promote its autumncollection – Tokyo 2009 Collection.A simple website that was linked toUniqlo’s online retail sites in the US,UK, Korea and China ran alongsideTV advertisements. The site featuredan interactive catwalk that allowed webviewers to explore the clothing rangesworn by models. It created a personalfashion experience and a few clicks ledthrough to Uniqlo’s online retail storesfor shoppers in Europe, China, Japanand Korea who had spotted the modelswearing something they liked. The >Market leader Quarter 2, 2011 51

digitaltessa thornileyCAse stUdY: sINGAPOrePlunging into new territories can be daunting, especially in countries where brand awareness isrelatively low. Uniqlo’s experience in Singapore, where it launched the first of three stores inApril 2009, shows how the internet can be harnessed in creative ways to generate excitementover a brand, even one that is barely recognised.Shortly after Tribal DDB Singapore was given the brief to launch Uniqlo’s first store on theisland, the agency was shocked when an early survey revealed that just 16% of Singaporeans– known to be some of the most savvy shoppers in Asia – had heard of the brand.Jeff Cheong, the head of Tribal DDB Singapore, said: ‘When we started, 50% ofSingaporeans couldn’t pronounce the name Uniqlo properly. It was a tough brief for us, in theheart of the recession.’The first store was due to open in a mall in a satellite town frequented by ‘flip flop-wearing,casual shoppers’ near the airport, Cheong said. Uniqlo was a major tenant in the development.To set about generating a buzz about the new store opening, with the right consumers,Tribal DDB turned to the web. The agency set up an interim website because Uniqlo.com wasbeing reworked and it also planned to drive viewers to a Facebook page. But Tribal soondiscovered that someone had beaten them to it; a die-hard Uniqlo fan had already establisheda fan site.‘We decided to let him continue and we effectively joined him,’ Cheong explained. ‘We askedhim to put up certain information, but the rest of the work was his. It was more genuine thatway. After a week, Uniqlo had 5,000 Facebook fans in Singapore in the first social mediacollaboration of its kind that Uniqlo had undertaken..’As well as the fan site, Tribal DDB set up a one-page microsite featuring an interactivegacha-gacha game (similar to pachinko, a Japanese slotmachine) that allowed players to winsurprise prizes daily.‘UniqloSurprise.com stirred engagement and it was fun. One survey indicated that weachieved 100% brand awareness by the end of the campaign. Online and social media arewhere the social majority is found. More importantly, they are also the media where socialinfluence is spread rapidly. Word-of-mouth is the most important medium,’ Cheong said.More than 60% of Uniqlo’s Singapore launch campaign took place online, with outdooradvertising accounting for 25% and print just 15%. Tribal DDB said that opening-day sales atUniqlo Singapore were the highest the company had seen in Asia, beating both Hong Kong andChina. The microsite achieved 1.6 million page views during the course of the 12-weekcampaign and 10,000 shoppers registered and signed up for the loyalty programme.As Uniqlo beats a deeper path into existing and new territories in Asia over the coming years,the company’s focus on the social majority who favour Twitter, Facebook, YouTube and the webto fashion magazines, looks set to continue unabated.For the agencies with which the company collaborates on this expansion drive, the challengewill be to maintain the creative highs that have so far set Uniqlo’s online presence apart frommany of its rivals. ncampaign was praised at the time for being‘very simple and effective’: look, like, buy.In January 2010, when Fast Retailingannounced stellar first-quarter sales andoperating profits in Japan and the restof the world – up almost 40% and 49%respectively – the company highlightedthe success of products including Uniqlo’sneo-leather jackets, which had been amajor feature of the online fashion show.CHALLeNGes At HOMeRecent months have thrown up newchallenges to the digital-marketing-forthe-worldapproach. Since early 2010, theJapanese market has proved increasinglytricky for Uniqlo, and by the start of2011 the retail chain had reported fiveconsecutive months of falling sales. Acombination of factors, from a shift intofashion items that didn’t sell to a failureto stock enough basic items, were blamed.First-quarter sales in the three months toNovember 2010 at Fast Retailing weredown 35% at stores in Japan.Retail analyst Richard May, at the JapanConsumer Marketing Research Institute,said: ‘Uniqlo today is still all aboutJapanese consumers. It has 900-plus storesin Japan and 150-plus stores overseas.The problem is that there has been a shiftin buying attitudes in Japan, particularlyamong 27- to 31-year-olds, Uniqlo’starget consumers.‘Overall these shoppers are buying lessand increasingly looking for value. For awhile, Uniqlo led the flight to the bottomof the value chain. It introduced ¥900[approximately £7] jeans. But the chainhas discovered that no matter how low itgoes, others can go lower and still makemargins. I think Uniqlo is going to haveto undergo a process of pushing pricesback up. It could take two years or moreto have an impact on the bottom line.’May argues that, for its domesticbusiness, its digital work may need to berecalibrated; in its efforts to be a globalbrand, it may be distancing itself fromJapanese consumers. ‘As the chain startsto refocus, its online marketing strategyhas become very centred on overseas salesand promotions. The campaigns havebeen very clever and unique; the problemis that ultimately they aren’t speaking tothe post-bubble buyers in Japan, now intheir late 20s to early 30s. The campaignshave no meaning to these buyers, andthese are still some of the brand’s biggestconsumers,’ he said.OPPOrtUNItIes AbrOAdNon-Japanese sales in Uniqlo’s firstquarter (to November 2010) were up29%. Yanai has stated that his aim is toquadruple the number of Uniqlo storesworldwide to 4,000 by 2020 (including1,000 in China) as he looks to become theworld’s leading clothing retailer. Manyretail analysts point out that Fast Retailingis wise to target global growth given itshuge exposure at home.‘New territories are going be a big partof global growth going forward,’ Hasesaid. Uniqlo has announced plans to openits first store in Thailand this autumn.Hase said the emphasis on digital, viraland social marketing, especially incountries where Uniqlo has only a fewstores or is opening for the first time‘will continue’.Hase explained: ‘In places where wehave two or three stores, we don’t findTV advertising, for example – the mosteffective way to reach consumers. Peopledon’t pay attention in the same waythey do when they are online. Digitaladvertising engages the consumer.‘In Taiwan, for example, where internetpenetration is high, digital campaignsare more effective than traditionaladvertising in many ways. They help tocreate buzz around, for example, a newflagship store. That said, you will still seethe large outdoor hoardings go up nearour new stores, to drive traffic and drawshoppers’ attention.’ nTessa Thorniley is a business and traveljournalist based in Shanghai, China.thorniley+@gmail.com52 Market leader Quarter 2, 2011

trendwatcHmelAnie howArdHow to get more ‘softpower’ to your elbowAttraction andseduction, ratherthan dominationand coercion,are the keys topersuasion, saysMelanie HowardI’M devotIng this piece to what we call an nVitrotrend – newly hatched from our own trendslaboratory – which is a crossover from the politicalsphere but perfectly tuned to the consumerenvironment. We call it The Rise of Soft Power, aterm coined by Harvard academic Joseph Nye inhis 2004 book Soft Power: The Means to Success inWorld Politics.Nye argues that the means of achieving whatyou want in the modern world is not through thehistorical means of command, domination andcoercion, but by the powers of attraction and thusultimately subtle persuasion and seduction. Hewrites: ‘In individuals, soft power rests on the skillsof emotional intelligence, vision and communication.In nations it rests upon culture, values and policies.’Like many influential ideas it has taken timeto gain serious adherents although it was seen asbeing a key component of the Obama victory in2008. What is particularly interesting is that it playsstrongly in the emerging nations, which lack theheritage of military strength to get what they want.Brazil’s foreign minister, Celso Amorin, claimsthat Brazil’s greatest skill ‘is to be friends witheveryone’. China and India are similarly workinghard to woo rather than demand – although youmight argue that the economic cards are so clearlystacked in their favour that it gives them a launchpadfrom which to practise niceness.What are its commercial applications?For the multinational corporation there are manyexamples of how a soft-power approach is provingmore effective than a rigid, defensive stance whenthings go wrong. Contrast the abject apology ofToyota chairman Akio Toyoda when in mid-2010,the company was forced to recall a staggering8.5 million cars – ‘I myself, as well as Toyota, amnot perfect ... quite frankly I fear the pace at whichwe have grown may have been too quick’ – withthe ill-fated CEO of BP, Tony Hayward, whosehandling of the oil spill in the Gulf of Mexico wasso ill-judged. A failure to use soft-power techniquesmeant he lost all power and was inevitably replaced.As big brands attempt to spread throughoutthe globe, there have been many examples wherebrash neocolonialism has been rebuffed and a moreconsiderate and inclusive approach, often under theaegis of corporate social responsibility programmes,has paid dividends. Coca-Cola, McDonald’s,Starbucks and Unilever are shining examples ofengaging with local development programmes.For individual brands and more niche businessesthe value of soft power is clear too. Think innocentdrinks – possibly the best embodiment of soft powerin a single brand. The company’s determinedlynice approach has been lauded over the years. Forexample, in November 2009 it sponsored the ‘bigknit’ – paying 35p to Help the Aged for every woollyhat knitted for its smoothies in Sainsbury’s.The coverage praised the participation and thehats and did well for Sainsbury’s ‘niceness’ quotientas well. Incidentally, the craze for hand-knitteditems which is manifesting itself in many forms inearly 2011 is a perfect pointer to the strength ofthe current sentiment. Whether it is the guerrillaknitters in London or on the US West Coast,or fashionable household items from cushioncovers to lampshades, it seems that the continueduncertainties post recession are ensuring thatthe desire for comfort and help from brands andbusinesses will remain strong.Tesco’s continued trading on its highly successful‘Every little helps’ strap line and Kit Kat’s ‘Have abreak’ also play effectively to this sentiment. Notnew perhaps, but newly relevant. Brands cannotbe nice enough to their customers at the moment– not just in terms of discounts and offers forcustomers but in tone, manner and openness.As well as the communication of underlyingvalues and relevant helpfulness, maximising allforms of customer and stakeholder engagementwill remain paramount, particularly in the contextof the Big Society in which businesses will beexpected to help fill the gaps. For example, theCo-operative’s ‘renaissance’ – now in its thirdyear – continues to make capital from its long-termcommitment to mutualism and ethics as well ascommunity involvement. This demonstrates howsuch steadfastness can pay off when core values arestrongly held.Why this trend will continue to gather strengthis because getting it wrong will be so swiftly andpublicly punished. Social networking and media,as well the rapid mobilising power of mobiles(smart or otherwise) have resulted in, for example,previously popular Boots bearing the brunt ofdemonstrations for allegedly evading UK tax.Vodafone and Top Shop have been attacked forsimilar reasons.We believe that this phenomenon will be playingout in many forms over the coming decade – timefor every brand to question how it too can exert thesoft powers of attraction in 2011 and beyond. nMelanie Howard is chair of the FutureFoundation.melanieh@futurefoundation.netMarket Leader Quarter 2, 2011 53

BEST IN BRIEFBOOK REVIEWSChance favours the connected mindJUDIE LANNONSTEVEN JOHNSON is both an original and eclecticthinker. He has looked at innovation from anenvironmental perspective exploring the spacesthat historically have given rise to great surgesin innovation. And the central insight in thisexamination of how ideas happen is that innovationflourishes in connected spaces. But what makes thebook fascinating is the sheer sweep of territory hecovers to support his core thesis. Johnson drawsfrom the history of science and natural history andart and commerce. The book is dense with examples.Whether he is looking at biological spaces suchas intensely populated coral reefs or the greaterincidence of ideas in crowded cities compared tothe countryside, the conclusion is the same: spaceswhere life congregates produce more innovation.Writing in the Financial Times, Johnson said:‘Economists have a telling phrase for the kind ofsharing that happens in these densely populatedenvironments – “information spillover”. When youshare a civic culture with millions of people, goodideas have a tendency to flow from mind to mind,even when their creators try to keep them secret.’What marketers don’t knowPAUL FELDWICKThe book also deals with how workenvironments should be structured to maximisethe kinds of connections that collide to producesomething new such as open spaces of manycreative environments in Silicon Valley. Imagesof collision pepper the book: half-formedthoughts meeting other half-formed thoughts toproduce a whole greater than the sum of its partsis a common pattern of innovation. Johnson callsit the ‘slow hunch’. Other patterns he describesare how networks are formed and nourished, thewonderful unintended consequences of mistakes,the serendipitous discovery and using existingcomponents for an entirely different purpose.All of this, of course, links to the internet andwhile he acknowledges the views of its critics –that the internet makes us shallow with shortenedconcentration and a magpie-like approach toknowledge – its main value as an engine ofconnectivity excuses everything. ■Where good ideas come from, Steven Johnson,Riverhead (2010), £12.99BIGGER BRANDS are always big because morepeople buy them, not because they have higherweights of purchase – so growth strategies basedon heavy users or loyalty building don’t work.Customers in any category buy across all brandsin a predictable way, so segmentation doesn’t exist.Users perceive all brands pretty much the same, sothe quest for differentiation is pointless.These, and several other marketing heresies,are the results of a huge body of empiricalresearch into purchasing and other data, carriedout by the late Andrew Ehrenberg and his manydistinguished colleagues over 50 years. Theserobust, law-like patterns, replicable across time,geographies and categories, have long been in thepublic domain, but mostly in academic journalsor privately published papers.Now for the first time, professor Byron Sharp,head of the Ehrenberg-Bass Institute in Australia,has summarised this crucial body of marketingknowledge in a single, accessible volume. It is avaluable and important achievement.Practitioners now have a choice. They canfind arguments to disprove, or at least qualify,the strong and simple principles that the authorByron Sharp trenchantly presents, or they canbegin rethinking their practice to fit the realityof how markets really behave. The first courseis, I think, unlikely to succeed but the secondmay also prove challenging because the efficacyof segmentation, loyalty programmes, nichetargeting and price promotion are all calledinto question. Advertising, too, works not bycommunicating differentiating propositions,but by creating salience through ‘meaninglessdistinctiveness’, talk that will shock manycreatives almost as much as planners and clients.This view of advertising as ‘mere publicity’ haslong seemed to me a powerful one, and certainlymore useful than the message transmissionmodel, but I am not convinced that it tellsthe whole story. And the tone of dogmaticcertainty that characterises this book seemsto me less appropriate when it involves themore problematic topics of mental processing,emotions or aesthetics.How brands grow clears away many majormisconceptions and offers a practical agenda forchange, but it still doesn’t quite put its finger onjust why brand A performs so much better thanbrand B – nor, perhaps, should we expect to findsimple, generalisable answers to such questions.At least that will leave something for ad agenciesto puzzle over. Meanwhile, this book remainsessential reading. ■How brands grow: what marketers don’t know,Byron Sharp, OUP (2010), £22.5054 Market Leader Quarter 2, 2011

BEST IN BRIEFBOOK REVIEWSRound-up of essential strategy guidesANTHONY FREELINGOne of the problems with working is that there isnever enough time to read – even if you want to.In particular, there is never enough time to learnabout topics that are outside your immediate areaof interest. This lack of time is the best explanationI can find for the fact that marketers rarely seemto have read even the most important books onbusiness strategy. Here are a few books that I thinkare useful to any active marketer, with a strong biastowards short and easy-to-read ones.First, Michael Porter’s Competitive Strategyis a classic for the best of reasons. It introduceshis ‘Five Forces model’ which is a simple andpractical tool to evaluate markets and potentialprofitability. There have been many follow-upbooks, from Porter and others, but this remains asimple summary of what you need to know.Since marketers increasingly concernthemselves with innovation and a desire to befirst to market, a short book by Markides andGeroski, Fast Second, may be salutary. It shows infewer than 200 pages how being first to marketthrough radical innovation is often less profitablethan scaling up the markets created by others.There is also a love in the marketingcommunity of trying to copy successfulcompanies – sometimes in an informal way,sometimes through techniques such asbenchmarking. Before you embark on this course,please read a salutary text by Phil Rosenzweig,The Halo Effect. It demonstrates convincinglythat we tend to see successful companies asgood in all they do and unsuccessful companiesas uniformly bad – even the same companiesand people just a couple of years apart. He alsoidentifies eight other popular business delusionsthat I am sure we have all fallen for at some time.Marketers always need to balance analysiswith intuition. There is a lot written aboutanalysis in the marketing field, but less onintuition. One classic from the field of decisiontheory is The Power of Intuition by Gary Klein.He demonstrates convincingly how intuitioncan outperform analysis in many fast-movingsituations – but also how intuition can bedeveloped only through deep immersion in theenvironment in which decisions are going to betaken. This should give pause for thought to anymarketer who believes you can jump betweenindustries and still trust your gut.Finally, a recent book by John Kay, calledObliquity, pulls together thoughts on howgoals are more likely to be achieved whenpursued indirectly. This provides the basis ofan argument for why businesses should pursuecustomer satisfaction as a means to improveshareholder returns – so it should be requiredreading for marketers and their bosses. ■Evolution of technology servicesKIM TASSOLAURIE YOUNG is a leader – and writer of severalbooks – in UK professional services marketing andhis co-author is managing director of the BostonbasedITSMA (Information Technology ServicesMarketing Association). They have produced a tourde force that spans strategic management, servicesmarketing, branding, account management, serviceand quality management, innovation and marketingcommunications. But the focus is on how thesetools apply to the radically changing world oftechnology services.By their definition, this evolving sectorspans established technology companies andconsultancies and those services that exploit an‘installed base’ or infrastructure and thus extendsto the utility companies.While the first two chapters (defining thesector and introducing services marketing)and chapter nine (communicating withservice markets) might be considered basic,the remaining chapters are full of value evento seasoned marketers. Themes throughoutthe book include the importance of: publicrelations, addressing rational and emotionalneeds, investment in customer intelligence andintegration of marketing and sales.The 40-page appendix provides a summary ofthe best-known (and, as the authors point out,often misunderstood) analysis and marketing toolsand techniques. I enjoyed the challenges to someof the most commonly used marketing tools.Its 300 pages are crammed with academicrigour and valuable insight. The case studiesshow ideas in action among some of the world’sleading B2B and B2C service organisations.It’s a sophisticated, intelligent and challengingintroduction to services marketing for seniorpeople – especially those in larger organisations.However, I’m not sure it would do much exceptworry the many smaller technology or otherservice firms who are yet to embrace some of thetough strategic challenges the book addresses. ■Marketing technology as a service: Proventechniques that add value, Laurie Young andBev Burgess, John Wiley & Sons (2010), £34.99Market Leader Quarter 2, 2011 55

letter froM brazilsilvina mOrOntaBig brand ideas inspirehuge emerging marketOpportunitiesfor growth inBrazil come fromtargeting a massmiddle-class withbig brand ideas,according toSilvina MorontaWe all know that Brazilian culture is about danceand rhythm. And this goes for the economy, notjust the night-life. In 2010, Brazil’s GDP grew sixtimes faster than the UK’s (7% versus 1.2%). Thisgrowth is being driven by a dramatic change inthe income of Brazil’s 190 million inhabitants. Inthe past seven years poverty dropped from 35% to22%, real salaries grew by 40% and unemploymentdropped from 12% to 8%. This has led to thedramatic growth in middle-class consumers from37% to 50% of the population.But what does it take for brands to be successfuland join the growth in Brazil? Two of the keyprinciples of brand leadership we use at thebrandgym are particularly relevant.Follow the moneyConcentrating effort and money on the businesswhere there is a competitive edge is the mostfundamental characteristic of a leader brand. So,the first question to answer is which are the mostattractive targets/markets to focus on?A few years ago, to win in Brazil meant totarget two extremes. On one side there were theluxury seekers – the luxury goods market in Brazilrepresents US$2.3bn a year – and on the other sidethere was a huge mass of low-income consumers.Global companies such as Unilever respondedto this with price tiers, with affordable mixes andpremium offerings of key brands.For example, on the same personal-wash shelfwere two tiers of Lux brand: Lux Luxo and LuxSuave, a low-price/margin version. Despite thecommunication and innovation effort behind LuxLuxo, the lower-priced version is what grew.Today the picture has changed dramatically. Anattractive new target is the emerging lower-middleclass or ‘class-C’ consumer. They earn betweenUS$600 and US$2,600 a month and the grouphas increased to 95.4 million people, which is1½-times the UK population. These previouslylow-income consumers now have access to a newworld of brand alternatives and are becomingmore sophisticated.To see class C in action, head to the NovaAmerica Rio de Janeiro shopping mall. Thismall gets about 50% of its sales from the class-Cconsumer, buying everything from new homesto cars (about 400 cars are sold each weekend);and 40% of the Brazilian population (more thanthe UK population) are planning to changetheir mobiles in 2011. Many other categorieswith explosive growth projections for the nextfew years include banks, beverages, garments,airlines, technologies, telecommunications andcosmetic surgery.A good example of a company embracing theclass-C consumer with open arms is Ambev, theBrazilian beer giant. The owner of the threeleading brands (Skol, Brahama and Antartica) isplanning to launch Budweiser this year. It willbe positioned between the current mainstreamsegment and premium segment, called ‘core plus’and integrated by consumers whose tastes areevolving and becoming more sophisticated.Some companies are still focusing on productsfor low-income or high-end consumers. Whatare your marketing projects for the new class-Cconsumer? Are you dancing in some of thecategories with explosive growth projections, orstill deciding whether or not to join the party?Build Big Brand ideasWinning brands in Brazil, like successful brandsanywhere, have a big brand idea that goes beyondthe purely functional. The key in Brazil is to appealto people’s optimistic and colourful hearts. Thisexplains the local success of Persil/Omo’s global‘dirt is good’ campaign, which was in fact born inBrazil and then exported around the world. Twomore iconic Brazilian brands using this positiveoutlook on life are Natura and Havaianas.Natura is the leading brand in Brazil incosmetics, fragrances and personal care, and aBrazilian company that is growing globally witha turnover of more than US$2bn. The companypioneered using ordinary women rather thansupermodels in communication and having a newapproach to the massive anti-ageing trend. Itwas the inspiration for the Dove Global team todevelop the famous ‘Campaign for Real Beauty’.Havaianas has turned the commoditised categoryof flip-flops into a huge business with its relaunchin 1994. From being cheap sandals for fishermen,they became fashion articles for Hollywood starsand top models – proving again that there are nocommodity markets, just commodity thinking.Some brands are still offering a traditionalproblem-solving proposition in Brazil. Is yourbrand story inspiring enough for the emergingBrazilian class C? For your brand to join theparty you need to follow the money by targetingthe emerging class C and make sure you developan inspiring and positive brand idea so theseconsumers will want to dance with you. nSilvina Moronta, partner at brandgym LatAm.silvina@thebrandgym.com56 Market leader Quarter 2, 2011

spE akE r’s cornErfru hazliTTBeyond the long tail…Fru Hazlittdiscusses theanticipated andreal impact ofthe digital age onTV production,transmission andrevenue streamsEvEry so often a book comes along that soeloquently captures the media zeitgeist noself-respecting exec’s office is complete withouta well-thumbed copy. Way back when, it mighthave been Marshall McLuhan’s The Medium isthe Message, and more recently perhaps MalcolmGladwell’s The Tipping Point.A few years ago, at the start of media’s digitaljourney, the seminal ‘must-read’ text was ChrisAnderson’s The Long Tail. The argument wassimple and seductive: digital would drive mediadistribution costs close to zero and there wouldbe no cost barrier to making content availableonline. Therefore, any piece of content wouldhave to compete against not only everything elsebeing broadcast or published today but every bit ofcontent ever.At the same time, digital technology wouldallow publishers to leverage the economic powerof committed niche audiences as never before. Asa result, value would shift from the big blockbusterto the ‘long tail’, from ‘out now’ to archive. Theknock-on consequences across all aspects of media– and indeed our lives – would be profound.So far, so good. But some took Anderson’sargument even further. The trends identified in TheLong Tail would mean the end of established mediaaltogether. Mass would become passé, niche wouldbe the new black.Keeping it all in perspectiveTaken to this extreme, I have to give The Long Tailshort shrift. Mass media isn’t going anywhere.Indeed, people’s hunger for the big, live, sharedcommunal experience is as voracious as ever.And one of the most establishment of establishedmedia – television – is able to satisfy that hungerunlike any other. In the past year alone, we’ve seen18 million viewers gripped by The X Factor finaland 15 million together celebrating CoronationStreet’s 50th birthday.What’s more these kinds of mass TV programmeshave dominated all media – including digital. As wellas wall-to-wall coverage on radio and press, The XFactor was the number-one subject for the Twitterati,Facebookers and most of the other denizens of theblogosphere. And it wasn’t just light entertainment:last year, we were promised the first general electionto be fought online. Instead, the first leaders’ debateon TV drew ten million viewers and changed thecourse of the campaign.Whether it is entertainment, religion, sportor news, the big, live event is something weall continue to want to be a part of and massaggregators such as television help us fulfil thatemotional need. The death of the mass aggregatorand the audience it brings – which has been muchdiscussed and widely predicted – has never beenfulfilled, and never will be. This is because thehuman need to belong is and always will be one ofthe most powerful drivers of behaviour.As the poet John Donne famously put it: ‘Noman is an island, entire of itself.’ A consequence ofthat, in Deloittes’ slightly more prosaic language,is that television retains a ‘super-media’ status thatisn’t going to change anytime soon. However, everypart of the established TV value chain is beingtransformed – from transmission and production tothe way viewers consume programming. What wasonce a simple business – one channel, one meansof transmission, one revenue stream – is now morecomplicated. The TV advertising market may havebounced back in 2010, but that doesn’t mean thatITV can sidestep the digital revolution. We needto embrace it and make sure that our content isavailable wherever, whenever and however viewerswant to consume it – from games consoles andinternet-enabled TVs to smartphones and tablets.The way we monetise that content is alsochanging. We need to maximise our share of thetelevision advertising cake and continue to sell that‘super medium’. The opportunities are significant.We’re building our content business in the UKand internationally; delivering greater scale inonline advertising – video and display; leveragingtransactional revenues from voting, competitionentries and teleshopping; and looking to delivercontent micro-payments and pay subscriptionrevenues for the first time.But such complexity does not meanfragmentation. Overall, UK TV viewing increasedin 2010. ITV1 also increased its audience, withthe big blockbuster shows in particular growingyear on year. With the incremental reach deliveredby growing digital channel and online viewing ontop of this, the audience delivered across ITV isgreater still. And it is a more engaged audience,seeking out ITV content on multiple devices, inthe living room, on the laptop and on the move,and interacting directly with us, via phone voting,competition entries, or chatting online.Forget the ‘long tail’. The engaged, mass digitalaudience delivered by TV could be marketing’s‘holy grail’. nFru Hazlitt is managing director of commercial,online and interactive at ITV.fru.hazlitt@itv.comMarket Leader Quarter 2, 2011 57

the Last wordrory sutherlandHeard the one aboutgood comedians andbehavioural economics?rory sutherlandexamines thelink betweenbehaviouraleconomics andhumour, observingwhat the bestmarketing ideashave in commonwith jokes: theydon’t stand up torational analysisThis past week I have been reading How I EscapedMy Certain Fate by the fascinating and innovativestand-up comedian Stewart Lee. The book – a kindof autobiography – is extremely funny, but it is alsoremarkable in another way.Perhaps more than any other art form, it hasbecome axiomatic in comedy that ‘you can’t analysehumour’. A joke is believed to be a living thing – so‘once you dissect one, it dies’. Yet almost every pageof Stewart Lee’s book contradicts this. Just becausethe audience shouldn’t over-analyse jokes, thatdoesn’t mean that comedians can’t.Lee deconstructs, reassembles and analyses hisown (and other people’s) material with the precisionof a watchmaker. As an unintentional guide to thecreative temperament, the book is fascinating. Thesame analytic streak is found in other comedians.Jimmy Carr has co-authored (with Lucy Greeves,a copywriter and friend) The Naked Jape, a superbinvestigation into the nature of humour. The greatDouglas Adams, when writing his Hitchhiker’s Guideseries of novels, took individual sentences writtenby PG Wodehouse and spent hours picking apartevery word to work out what made them so funny.The analysis of comedy appeals to me becausehumour, like advertising, is something that can onlyproperly be judged behaviourally. A successful jokeresults in a human response – a laugh or smile –which is in many ways involuntary and automatic.Most likely the audience cannot explain why theyare laughing. But that very inability to explain whatis funny is irrelevant to the value of the joke.The mistake many conventional marketers seemto make is to require of any communication thatthe audience can explain how it works before it canbe considered effective. This is an extraordinarilyrestrictive approach. When researching anymessage, the act of asking the audience to explainits workings somehow destroys its effect.Creative people sometimes react to thisabsurdity by adopting a position at the oppositeend of the spectrum – claiming that great creativecommunication is incapable of any meaningfulanalysis, and that it can arise from an Amadeusstyleoutpouring of genius. This doesn’t help mucheither. Just because something may be apparentlyillogical does not mean that nothing is gainedthrough attempts to explain it.And it is for this reason that I find behaviouraleconomics a more promising line of enquiryfor marketers than the conventional marketingapproach. It is a much richer source of insightsthat the ‘go on, tell me why it’s funny’ approach ofpre-testing, because it encourages us to seek outthose very stimuli that achieve their effects withoutthe necessary intervention of conscious logic.Behavioural economics shows us something thatsuccessful comedians already know. Social proofreally matters. Whether people laugh or not dependsmassively on the reactions of the people aroundthem. Context really matters too. The nature andappearance of the joke teller really matters. Seeminglytrivial executional details can make or break a joke.It seems to me that the best marketing ideas havesomething in common with the best jokes. Theyhave a powerful behavioural effect for reasons theaudience may not be able to explain. Behaviouraleconomists find these aberrations fascinatingand worthy of study precisely because they defythe logic of the conventional economic model ofhuman preference. Here are a few examples whichparticularly fascinate me.l Did Red Bull find it easier to charge three-timesthe regular price for a carbonated drink because itmade the can smaller?l Why do people prefer to receive four BootsAdvantage points on every £1 spent than to receivea 4% discount?l Why, when telephone call charges have droppedby more than 70% overall, do we remember noneof these price drops – but we all remember Friends& Family, which gave us 10% off just ten numbers?l How many people would buy fabric conditionerif there wasn’t a special drawer for it in theirwashing machine?l Why is it much easier to spend £40 on a tie whenyou have already spent £80 on a shirt?l Why do we pay so much for cinema popcorn?l Would Spotify be more successful if it limitedthe number of songs it allowed you, rather thanoffering unlimited downloads?l Why is Amazon Prime more effective becauseyou have to pay for it?No focus group will ever answer any of thesequestions. Behavioural economists and goodcomedians, with their access-all-areas pass to theunconscious mind, can. Next time you have anNPD project, why not hire some of both? nRory Sutherland is executive creative director andvice-chairman of OgilvyOne London and OgilvyGroup UK. Rory.sutherland@ogilvy.com58 Market Leader Quarter 2, 2011