Tuesday, July 18, 2006
Amid complex strategic choices, leaders, managers go for ‘laws’
In the midst of information overload on the so- called “best”, “time-tested” and “fail-safe” marketing strategies and tactics, you can almost hear confused and exasperated leaders and managers saying: “Enough!”
This is one phenomenon of the age. In this complex world, people thirst for the simple- and, yes, the elemental. With the avalanche of choices, people yearn for old-fashioned order.
Imagine the chief marketing officer or a CEO bewitched, bothered and bewildered by so many tactics offered by numberless consultants, innumerable books- and his irrepressible board!
This explains the widespread hunger for a set of principles, leaving tactics and methods to the leader and the manager.
And this explains the drawing power of the “Al Ries Brand Marketing Conference,” held recently at the Philippine Plaza.
The father-and-daughter tandem, Al and Laura Ries talked about the “immutable” laws- meaning, unchanging, forever relevant, and eternally constant principles.
Take the “Law of Leadership,” for example. The Rieses have a one-liner to explain it: “It’s better to be first than it is to be better.” And they cite known brands- Coca Cola, McDonald’s, and IBM. That looked unarguable, at first glance.
And there is another law that seemed to contradict the first, according to one participant- the “Law of Opposite”- which is also a one-liner: “If you’re not the leader, then you need to be the opposite.”
They cited Pepsi Cola, which became the cola of the “younger crowd”- and thus was born the “Pepsi Generation.” Coke is 120 years old.
So, on the midst of such seeming contradictions, why are the Rieses so credible? The reason could be that one law works for one, and another law works for another. They are not actually contradictory; they may be stand-alone laws that work.
Another particular pointed out the seeming conflict between the laws of “focus” and of “divergence”. The focus law stipulates: “Every company needs to resist the temptation to keep adding products and services.”
The Rieses, underscoring the need to focus, compared the success of Southwest Airlines, which they called a “one-fork” airline- no other destinations but business, no other class but coach, and no other flights but domestic.
The other airlines take the best of many worlds. They observed: Southwest is currently worth $12.4 billion, or more than three times the other airlines.
In another breath, though, they offered the “Law of Divergence,” with this explanation: “Over time, a category will diverge and become two or more categories.
Taking off from Charle’s Darwin’s “Origin of the Species,” they explained: “A species starts out as a single species and then, over time, diverges…Divergence has created new categories of automobiles such as the sport utility vehicle and the mini van.”
The Rieses have been observing the marketplace and have come up with the “natural laws” that govern the market- and gave each law a name.
These laws seemed to have stood the test of time simply because they provided some “anchors” or “principles” to market players. In turn, these players took these principles to heart- and their actions were blessed with success. A principle that has spawned many successes must be a valid one.
That is the reason behind the ever growing following of the speaking, writing and consulting tandem. Such activities reinforce one another.
The books that precede their visits country-to-country or city-to-city continue to have a growing following. Thus when a conference is organized with them at center stage, such a gathering is consistently assured with great success.
There is actually a heart warming quality that Al and Laura share: While they are mentors to over half a million people around the globe, they are also enthusiastic learners.
That’s the secret behind their success. Their capacity to listen is as huge as their capacity to be heard in a very compelling and inspiring way.
Monday, July 17, 2006
Communicate in a ‘recession’ or be a victim of ‘depression’
Principle has not changed; it pays to advertise during hard times
THE FOLKSY STATEMENT- “OUT of sight, out of mind”- is the best argument among couples that being apart too long would be detrimental to a relationship. This is also a compelling argument for branded products to remain on the shelf- and be visible at all times- to solidify customer loyalty.
Being within sight- and within reach- are also time-tested marketing principles, which the uninitiated or the backslider can ignore at their own peril. And yet, this truism- to advertise, publicize or perish- is soon forgotten when hard times strike, and the knee jerk response of companies is to cut down on such essential functions as advertising and public relations.
In the late 70’s and early 80’s, there were already persuasive arguments in favour of advertising during a recession. In fact, in a section in my MRR (Management Research Report, the equivalent of a master’s thesis) at the Asian Institute of Management, I argued in favour of advertising in the midst of a recession that was already felt then in the early 80’s.
It was supposed to be a compelling logic for organizations to seize the communication initiative when hard times strike. I cited a study made by the Laboratory of Advertising Performance (LAP) of McGraw-Hill Research covering the period 1974-1975.
Advertising equals sales
In the study findings, McGraw-Hill vice president for research, Dr. David Forsyth, cited the “common experience of companies that continued advertising”: In 1974-1975, their sales grew 15 percent higher than those who cut advertising. By 1978, companies that continued advertising had sales of 132 percent above 193 sales levels. Those who trimmed advertising managed a mere 79 percent over 1973 levels.
These figures are, of course, dated. The latest figures from the same McGraw-Hill Research analyzed 600 companies in the US between 1980 and 1985. The results showed that business-to-business firms that “maintained or increased their advertising expenditures” during the 1981-1982 recession averaged “significantly higher sales growth” both during the recession and for the following three years.
And in 1985, the sales of companies that were “aggressive recession advertisers “were 256 percent higher than those which “did not keep up their advertising.” This is a higher figure compared to the 132 percent advantage in 1978.
There is a more encouraging fact, established by a study of another research firm – Meldrum & Fewsmith. The findings are conclusive: Aggressive advertising did not only grow revenues; it even increased profits.
More recently, as pointed out by Dave Donelson, author of “Creative selling: Boost Your B2B Sales,” we should not be perturbed by post-Sept. 11 jitters. “The best way to combat paralysis is to get on with the business of living,” he said. And the business of living includes the “for-profit businesses” as we know them.
Donelson continued, as he zeroed in on advertising: “Numerous studies, including one by the AAA (Association of Accredited Advertising Agencies) of the recessions from 1948 to 1982, show that consumer spending actually grows from the quarter when the economy peaks to the quarter in which it bottoms.” That’s one to really think about.
Preference, awareness
A more comprehensive study is one conducted by the Cahners Research and the Strategic Planning Institute (PIMS). The institute stated: “As awareness increases, preference increases.”
The study, mind you is not without basis. It was based on a survey made in July- September of 2001, covering 88,000 businesses in the US and based on the responses of 23, 341 businesses. The survey sought to correlate preference levels of awareness.
There is direct relationship (researchers call it “correlation”) between awareness and customer preference. Susan Mulcahy, PIMS vice president for research, shared these key insights: As awareness increases from 25 percent to 35 percent, the preference increases from 10percent to 15 percent. As awareness grows from 35 percent to 45 percent, the leap in preference is greater- from 15 percent to 23 percent.
And the largest jump occurs when awareness is 85 percent to 95 percent: preference rises to 56 percent to 71 percent. Such awareness can only be “driven” by the communication discipline of advertising and public relations.
In the same 2001 study, the marketing expenditures of the surveyed companies are channelled to the following: print advertising, 33 percent; sales/promotion materials, 22 percent; television, 11 percent; trade shows, 10 percent; and others include Web advertising, direct mail (print and e-mail), seminars, newsletters and billboards.
Principles the same
What is the message of these figures? The principle has not changed- whether in the ‘70s or the ‘80s- and, in a post 9/11 era. It pays to advertise during hard times or even a recession.
Where does the practice of public relations- or, more specifically, publicity-come in? At the turn of the century, companies have taken the wiser step of using a mix of advertising and public relations to increase sales, expand market share, and build a corporate brand.
A new discipline also emerged: “below the line of advertising.” It is obvious that the phrase was coined by advertising people- showing that the discipline with clout, is still advertising. That this influence may change through time is arguable.
So, how does one make of the audacious statement of Al Ries and Jack Trout, which is also the title of their book: “The Rise of PR and the Fall of Advertising’? Did the tandem sound the death knell of advertising? Far from it, they quickly add. They just underscored the increasing value of PR.
PR, Ries and Trout say, “builds a brand”; while advertising” maintains the brand”.
Vivian Lines, Asia Group president of Hill and Knolton, told a group of PR professionals recently: “Both PR and advertising build brands.”
Advertising builds recall with its complete control of form and content; PR uses the power of third party endorsement. Actually, even this attempt at drawing the lines is still open to challenge.
Dr. Atichart Suntharos, executive vice president, strategic planning of Lowe Lintas & Partners states: “Branding is even more critical in times of crisis. There’s also a need to gain insight into consumer’s changing values.” It may be said that this agency man is biased, but his message is compelling.
And harder to ignore is this advice: In good times, communicate to stand apart; in a recession, communicate to gain unbeatable advantage.
Speaking of a recession, a celebration author once distinguished it from a depression: “In a recession, your neighbour loses his job; in a depression, you lose yours!”
It may be good to consider communicating- via advertising or public relations- or else, you will be overtaken by our own “recession” or “depression”!
THE FOLKSY STATEMENT- “OUT of sight, out of mind”- is the best argument among couples that being apart too long would be detrimental to a relationship. This is also a compelling argument for branded products to remain on the shelf- and be visible at all times- to solidify customer loyalty.
Being within sight- and within reach- are also time-tested marketing principles, which the uninitiated or the backslider can ignore at their own peril. And yet, this truism- to advertise, publicize or perish- is soon forgotten when hard times strike, and the knee jerk response of companies is to cut down on such essential functions as advertising and public relations.
In the late 70’s and early 80’s, there were already persuasive arguments in favour of advertising during a recession. In fact, in a section in my MRR (Management Research Report, the equivalent of a master’s thesis) at the Asian Institute of Management, I argued in favour of advertising in the midst of a recession that was already felt then in the early 80’s.
It was supposed to be a compelling logic for organizations to seize the communication initiative when hard times strike. I cited a study made by the Laboratory of Advertising Performance (LAP) of McGraw-Hill Research covering the period 1974-1975.
Advertising equals sales
In the study findings, McGraw-Hill vice president for research, Dr. David Forsyth, cited the “common experience of companies that continued advertising”: In 1974-1975, their sales grew 15 percent higher than those who cut advertising. By 1978, companies that continued advertising had sales of 132 percent above 193 sales levels. Those who trimmed advertising managed a mere 79 percent over 1973 levels.
These figures are, of course, dated. The latest figures from the same McGraw-Hill Research analyzed 600 companies in the US between 1980 and 1985. The results showed that business-to-business firms that “maintained or increased their advertising expenditures” during the 1981-1982 recession averaged “significantly higher sales growth” both during the recession and for the following three years.
And in 1985, the sales of companies that were “aggressive recession advertisers “were 256 percent higher than those which “did not keep up their advertising.” This is a higher figure compared to the 132 percent advantage in 1978.
There is a more encouraging fact, established by a study of another research firm – Meldrum & Fewsmith. The findings are conclusive: Aggressive advertising did not only grow revenues; it even increased profits.
More recently, as pointed out by Dave Donelson, author of “Creative selling: Boost Your B2B Sales,” we should not be perturbed by post-Sept. 11 jitters. “The best way to combat paralysis is to get on with the business of living,” he said. And the business of living includes the “for-profit businesses” as we know them.
Donelson continued, as he zeroed in on advertising: “Numerous studies, including one by the AAA (Association of Accredited Advertising Agencies) of the recessions from 1948 to 1982, show that consumer spending actually grows from the quarter when the economy peaks to the quarter in which it bottoms.” That’s one to really think about.
Preference, awareness
A more comprehensive study is one conducted by the Cahners Research and the Strategic Planning Institute (PIMS). The institute stated: “As awareness increases, preference increases.”
The study, mind you is not without basis. It was based on a survey made in July- September of 2001, covering 88,000 businesses in the US and based on the responses of 23, 341 businesses. The survey sought to correlate preference levels of awareness.
There is direct relationship (researchers call it “correlation”) between awareness and customer preference. Susan Mulcahy, PIMS vice president for research, shared these key insights: As awareness increases from 25 percent to 35 percent, the preference increases from 10percent to 15 percent. As awareness grows from 35 percent to 45 percent, the leap in preference is greater- from 15 percent to 23 percent.
And the largest jump occurs when awareness is 85 percent to 95 percent: preference rises to 56 percent to 71 percent. Such awareness can only be “driven” by the communication discipline of advertising and public relations.
In the same 2001 study, the marketing expenditures of the surveyed companies are channelled to the following: print advertising, 33 percent; sales/promotion materials, 22 percent; television, 11 percent; trade shows, 10 percent; and others include Web advertising, direct mail (print and e-mail), seminars, newsletters and billboards.
Principles the same
What is the message of these figures? The principle has not changed- whether in the ‘70s or the ‘80s- and, in a post 9/11 era. It pays to advertise during hard times or even a recession.
Where does the practice of public relations- or, more specifically, publicity-come in? At the turn of the century, companies have taken the wiser step of using a mix of advertising and public relations to increase sales, expand market share, and build a corporate brand.
A new discipline also emerged: “below the line of advertising.” It is obvious that the phrase was coined by advertising people- showing that the discipline with clout, is still advertising. That this influence may change through time is arguable.
So, how does one make of the audacious statement of Al Ries and Jack Trout, which is also the title of their book: “The Rise of PR and the Fall of Advertising’? Did the tandem sound the death knell of advertising? Far from it, they quickly add. They just underscored the increasing value of PR.
PR, Ries and Trout say, “builds a brand”; while advertising” maintains the brand”.
Vivian Lines, Asia Group president of Hill and Knolton, told a group of PR professionals recently: “Both PR and advertising build brands.”
Advertising builds recall with its complete control of form and content; PR uses the power of third party endorsement. Actually, even this attempt at drawing the lines is still open to challenge.
Dr. Atichart Suntharos, executive vice president, strategic planning of Lowe Lintas & Partners states: “Branding is even more critical in times of crisis. There’s also a need to gain insight into consumer’s changing values.” It may be said that this agency man is biased, but his message is compelling.
And harder to ignore is this advice: In good times, communicate to stand apart; in a recession, communicate to gain unbeatable advantage.
Speaking of a recession, a celebration author once distinguished it from a depression: “In a recession, your neighbour loses his job; in a depression, you lose yours!”
It may be good to consider communicating- via advertising or public relations- or else, you will be overtaken by our own “recession” or “depression”!
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