This is post number nine. Looks like I’m going to make my ten post goal for April. As always, you can subscribe to the blog by email. Thanks for reading.
I’ve had this thought rattling around in my head for awhile and after listening to the latest episode of Slate Money about brands I wanted to take a shot at writing it down.
One of my very favorite mental models in marketing is “satisficing.” The idea comes from Nobel Prize-winning economist Herbert Simon and is a portmanteau of “satisfy” and “suffice.” The basic idea is that a much more reasonable model of human behavior than utility maximization is that when we make decisions we ensure that we clear some arbitrary satisfaction threshold (satisfy) and then we give up excess utility for ease (suffice).
Here’s Simon from his 1956 paper “Rational choice and the structure of the environment”:
The central problem of this paper has been to construct a simple mechanism of choice that would suffice for the behavior of an organism confronted with multiple goals. Since the organism, like those of the real world, has neither the senses nor the wits to discover an “optimal” path — even assuming the concept of optimal to be clearly defined — we are concerned only with finding a choice mechanism that will lead it to pursue, a “satisficing” path, a path that will permit satisfaction at some specified level of all of its needs.
What does this mean for brands? Well, first and foremost it means that people are spending way less time thinking about your brand than you hope they are. In most situations brands are a means to an end: A way to ease the burden of choice we all face in our everyday lives. This doesn’t mean that marketing doesn’t matter in the decision-making process, just that we should generally assume people are spending way less time thinking about our brands than we like to think they are.
But I think there’s something much more interesting for marketing strategy at play here. (Please bear with me as I work through some thoughts out loud.) Satisficing says two important things about how people make purchase decisions: First, they ensure that whatever they’re buying clears the threshold and second that they sacrifice excess utility for ease of purchase. (As an aside, I always wondered why it was “suffice” instead of “sacrifice”.)
If that’s true (which I think it is), than you could argue there are only two true strategies for marketing a product: You either have to move the bar or you have to make your brand the easiest to buy. Let’s take those one at a time.
How do you move the bar?
Well, there’s not one bar, so let’s start there. But to be a mass product the bar represents the minimum set of requirements for a category of products. For toothpaste that’s pretty much price (around ~$3), taste (minty for most), and distribution (do they have it at Walgreens/CVS/Walmart/Costco or wherever it is you buy your toothpaste). For cars, where there are multiple categories, the first thing you have to do is narrow down your choices based on use case (compact, SUV, truck) and then price (cheap, regular, luxury). After you choose a category (say luxury SUV), there are a specific set of requirements that make up the threshold. (Four wheel drive? Leather seats? Sorry … not in the market for a luxury SUV, but hopefully you get my drift.)
If your product can’t hit that threshold for whatever reason you’re in trouble. Either you’ve got to change your product to break the bar, switch categories, or you’ve got to attempt to move the threshold.
Take airlines: You could argue Southwest (and Ryanair before it) moved the threshold down by pulling hard on the price lever. They said you don’t have to pay a lot for air travel, but to move the price down we’ve got to remove a bunch of the requirements that the category typically has like reserved seats, free baggage, and even flying into major airports (for Ryanair at least). On the other side, when JetBlue launched 20 years ago, they moved the bar up by saying every plane should have cable TV and tasty snacks.
While it seems like both of these moved the bar different directions (and, to be fair, that’s how I presented them), they actually both had the same effect: They raised the bar and made their competition unbuyable for some portion of the population. While Southwest did away with some of the luxuries of air travel, they raised the bar by saying a flight must be less than this amount. JetBlue, on the other hand, decided to play an experience game instead of a price game, but the outcome was the same in that they made their competition unbuyable to a specific target. The competition is left with the same set of choices: Rejigger their product or move the threshold, thereby making themselves buyable again.
One of my favorite current illustrations of this problem is Airbnb. They did such a great job differentiating themselves and their product that they made themselves unbuyable for business travelers. The threshold for most folks traveling for business is basically the opposite of what Airbnb markets: I want the same room in every city, with coffee in the same place, and most of all I don’t want to have to talk to anyone about my life when I arrive bleary-eyed at 1:30 in the morning with a meeting the next day at 7am. If you look at what Airbnb is trying to do with their Work product it’s basically to change their product by highlighting listings that meet these basic threshold requirements (automatic entry, fast wifi, working space if I remember correctly). The next step, of course, is to convince the world that those things actually constitute the bar.
So that’s the first marketing strategy: Find a way to move the threshold and make your competition less/un-buyable. In essence this is category definition/re-definition work.
Onto the second strategy …
How do you make yourself easiest to buy?
What about for situations where you can’t /don’t want to move the bar? This is where you have to make yourself the easiest to buy. The most obvious way to do this is to ensure you’ve got distribution in places people are and/or spend a ton of money on advertising and put yourself in the front of a shopper’s mind when they’re walking down the toothpaste aisle. This is basically the definition of physical and mental availability from Byron Sharp’s How Brands Grow.
But are there other ways to make yourself the most buyable that aren’t about mass reach and also don’t constitute moving the bar? (Again, competing on price, I would argue, is about moving the bar, not making yourself easier to buy.) I think the answer is pretty much no. Obviously there’s stuff like naming and packaging, but changing those can also have the opposite effect (see: Tropicana, 2009). There’s an interesting argument that some of these new ecommerce plays across every industry is about making things more buyable, but I’d actually argue getting a mattress delivered in a box or new razors at your door every month are the definition of moving the bar in an attempt to make your category competition unbuyable.
So what’s the conclusion?
Well, as usual, I’m thinking out loud and not totally sure. One of the interesting questions this raises is whether I’m thinking of things too zero-sum, but while we know consumers try lots of brands in a category, it’s safe to assume any single purchase is almost always zero-sum.
The other question is whether you can/should be doing both of these things at once? Should you be using your reach to try and move the bar. I think the answer to this is almost definitely yes. You should either be using your reach to move the bar or make yourself the easiest to buy and you should be very clear about which outcome you’re trying to drive. Of course, that raises the obvious question of whether you could use marketing to try and raise the bar while at the same time making yourself easier to buy and I think the answer is probably yes, but I’m not sure yet.
One thing it does clearly suggest is that it’s critical that everyone has a sober eye on the threshold requirements and an understanding of whether your product currently meets them or not. Another is that you shouldn’t try to persuade someone rationally if it isn’t towards the end of raising the bar of the category.
Anyway, fun to write some of this out and would appreciate any feedback. Comments are open and I’m @heyitsnoah on Twitter or you can find me via my contact form.
I’ve set (what I originally thought was) a reasonably modest goal for myself of writing 10 blog posts in April. Two more to go with one week left. Thanks for following along and please let me know what you think. Also, you can now subscribe to the blog by email. Sign up here.
Alright alright alright. Quick status check for me: Spent the week out in SF for Percolate’s Transition Conference where I gave a talk about how to use supply chain thinking and the Theory of Constraints to deal with the content marketing bottleneck (I’ll share the video when it gets online). We’ll be in London in early June, so if you’re around and interested in coming please reach out. I just finished the book Soldiers of Reason which is about the history of the RAND Corporation (I’ve got a half-written post I’ll try to get out about it). I’m taking a break from game theory and nuclear warfare with Andy Weir’s new book Artemis (which I haven’t heard was great, but I liked The Martian a lot and my library hold came through the day I finished the other book). Now onto the links.
The biggest story in advertising was Martin Sorrell’s departure from WPP, the largest holding company in the world. I spent a little time on Twitter looking back into the commentary around his original takeover of Wire & Plastic Products. The highlight: The company still makes wine racks.
Speaking of Wire & Plastic Products, here’s the history of the shopping cart, an under-appreciated invention.
On a more serious tip, The New Yorker had my favorite profile of Sorrell. For what it’s worth, I met him once or twice and emailed with him a few times and my takeaway were a) he knows his company and the ad industry inside out, b) he emailed me back immediately, and c) he was a good performer (it was a lot of fun to watch him interview folks on stage and make them wiggle a bit, especially media owners).
Two really excellent long-form pieces from this week:
- Wired on a group of video game hackers who took things too far.
- The Verge on the mostly failed One Laptop Per Child experiment (I’ve still got one somewhere around the house)
Matt Haughey (who, amongst other things, started one of my favorite sites Metafilter) wrote about his experience trying to recreate just one custom prop from Beyonce’s Lemonade as a way to illustrate her incredible attention to detail.
If you want to get a jump-start on my post about RAND, here’s an article from a few years ago by the author which covers many of the pertinent points (one of the amazing RAND facts is that they’ve had over 30 Nobel laureates as either employees or advisors in their ~70 years of existence).
A few weeks ago I shared an excellent Planet Money video about why Coke cost a nickel for 70 years. Well, here’s another about the economics of graveyards:
While we’re on videos, here’s one from Vox on China’s Belt and Road Initiative.
Continuing with the audio/visual theme, the best podcast episode I listened to this week exponent from a few weeks ago on Facebook.
Speaking of Facebook, I’m skeptical Zuckerberg doesn’t know what’s going on with the ad business as Wired suggests. The guy is very smart and runs a giant company who makes the vast majority of its money from advertising, I’d be pretty shocked if he just doesn’t know what’s going on as suggested (emphasis mine):
That isn’t to say the hearings went over perfectly, even at home. One mystifying thing to employees was that Zuckerberg frequently seemed to come up short when asked for details about the advertising business. When pressed by Roy Blunt (R-Missouri)—who, Zuckerberg restrained himself from pointing out, was a client of Cambridge Analytica—Facebook’s CEO couldn’t specify whether Facebook tracks users across their computing devices or tracks offline activity. He seemed similarly mystified about some of the details about the data Facebook collects about people. In total, Zuckerberg promised to follow up on 43 issues; many of the most straight-ahead ones were details on how the ad business works. It’s possible, of course, that Zuckerberg dodged the questions because he didn’t want to talk about Facebook’s tracking on national TV. It seemed more likely to some people on the inside, however, that he genuinely didn’t know.
My favorite headline this week: Someone Convince Me That an iPhone Wallet Case Isn’t the Dumbest Idea in the World.
The Register had a good primer on the current economics of bug bounty programs.
The always smart Tim Harford wrote about what made Stephen Hawking great. I particularly liked this bit, “First, he did not patronise his audience: presenting the most complicated ideas was a sign that he respected our intelligence. If we did not grasp everything, we would still be better off for having tried.” I have thought about this a lot in building Percolate, both internally and externally. It’s always been important to me to assume your audience is brilliant and work from there. At Transition over the years we’ve had talks on how cities grow like biological organisms, promise theory, and whether humans will follow the path of bacteria and hit the edge of the petri dish and die. The positive feedback I got on the most complex topics (told well) was always huge.
Finally, I wrote about The New Yorker, basketball, and the Gell-Mann Amnesia Effect earlier in the week and last week I wrote a piece about the idea of an information fiduciary and how it might be a good way to think about regulating Facebook. And, of course, here’s the Remainders post from last week.
Thanks for everything and have a great weekend.
Tide’s Super Bowl ads were too good not to spend a few minutes writing about. To help set the table for what’s going on with it, I’m going to crib the intro of a post I wrote in December:
One of my favorite marketing stories to tell is about how when I was working at an agency early in my career we were doing research for one of the big consumer electronics companies. Specifically, we were testing a new commercial another agency had put together. The commercial was “edgy” (it had snowboarders!) and got high marks by all the random consumers who got pulled into a room in the mall to watch it. That is, until they were asked the last question: “What brand was it for?” To which they all replied with the company’s biggest competitor. The moral is simple, after all that time and money, a commercial had effectively been made for another company. (One of the most well-known stories of this is the famous ad with a gorilla tossing around soft-sided luggage which was for … American Tourister.)
In Byron Sharp’s book How Brands Grow he talks a lot about ownable brand assets. These are the colors, iconography, and, increasingly, aesthetics that consumers associate with a single brand. The examples are endless: Tiffany’s has blue, Hermès orange, and UPS brown. Starbucks has the mermaid, Pepsi’s yin-yang, and McDonald’s golden arches. Coca-Cola has red, Spencerian script, polar bears, and Santa Claus (seriously, click through on that last one, it’s pretty amazing). There’s some evidence that the more unique assets a brand owns, the more valuable it is.
Sharp has made it pretty deep into the marketing world, particularly with consumer packaged goods companies like Procter & Gamble. Lots of them have taken his advice (and consulting hours) and applied it to how they approach building their brands, particularly media buying (MOAR REACH). But what I found especially interesting about the Tide Super Bowl takeover is that they took things one step further, finding a way to apply Sharp’s principles to both the media and creative execution.
The media part is simple: According to Sharp (and lots of research AND COMMON SENSE), big brands need to be bought by lots of people and, for that to happen, they need to reach lots of casual buyers who may or may not be in the market to buy them. For all the talk about the death of TV advertising (which is hugely overstated), the Super Bowl is an incredibly unique media opportunity. Not only is it a gigantic audience, but it’s also the only time and place they’re actually excited to see ads.
On the creative side what Tide did was pretty obvious (they did explain it after all), but definitely not simple to pull off (imagine convincing a client you’re going to spend $16 million worth of airtime doing nothing original). They used the visual language of advertising, especially Super Bowl advertising, and found a way to link it all back to the brand. The value wasn’t really in the ad itself, but that you were watching every other ad looking for the tropes (and clean shirts of course). If the main goal of advertising is to create and own “brand assets”, Tide went above and beyond by reinforcing their own and finding a way to effectively hijack everyone else’s. What’s more, by splitting things up across the game in the way they did, they made it so you could never watch too many commercials without being reminded that they might be a Tide ad.
Outside of Tide, every other commercial felt pretty unremarkable to me (other than the Dodge/MLK thing, of course). That’s partially because it’s very hard to be unexpected when another company has already predicted your behavior, and partially because most of the themes brands are experimenting with around are the same ones they were playing with last year. For all the talk about the speed of change, brands, especially the big ones, are moving slow as they try to find a safe space in our ever-more polarized world. I suspect the transition will continue to take time.
Until then, we’ll almost definitely get more ads like the one from Toyota, which put a Jew, Christian, Muslim, and Buddhist in a car together with the tag line “We’re all one team.”
Your strategy’s showing.
Yesterday I posted a few points in response to James Surowiecki’s New Yorker piece on the role of brand’s in a world of better information. I made a specific distinction between research-heavy products like cars and a product like soap or toothpaste, which people generally choose on brand alone. On Twitter someone asked whether that meant car brands are actually less valuable in this new world and I thought it was worth answering here as well as on Twitter.
First, the answer is no, they’re not less valuable even though research does even the playing field to some extent. But there are two important points about how people buy cars that need to be addressed. First, people generally choose out of a subset. If you want a “luxury” car you’re choosing between a BMW, Audi, or Mercedes. You don’t get to that point without brand. If you’re Kia right now, you’re advertising the hell out of your new car because you want to be in that decision set. While your ultimate decision may be purely on product merits (though it’s likely not), you have eliminated 99% of the other car options off brand alone.
Second, just want to reshare something I wrote a few months ago. This argument about brands is part of a larger anti-brand argument that’s best categorized by the quote “advertising is the tax you pay for being unremarkable.” Back in August I explained all the reasons this isn’t true and they still apply here.