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.
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.
Over at the Percolate blog I wrote up a two part series around a talk I gave at our client summit on the history of brand management and the need to create a new system of record for marketing. Part one opens:
Late last week James wrote a post called Moving from Installation to Deployment, where he laid out a framework for thinking how technology moves throughout history and where our modern age fits into the puzzle. As part of his post he introduced some ideas from an economist named Carlota Perez, who argues that each technological revolution (of which we’re in our fifth) follows a similar pattern of installation, where we essentially lay out the new technology in the form of infrastructure, followed by deployment, where we finally get a chance to build upon that infrastructure and realize its value.
Whereas part two dives into the implications and a framework for building this new system of record for marketing:
To approach the problem of scaling marketing at the rate of technology to address the increasing complexity, we have to take a page out of the P&G brand management playbook, Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble. It points out how “P&G recognized that building brands is not exclusively or even primarily a marketing activity. Rather it is a systems problem.” This is fundamental. When you’re dealing with a huge amount of change and complexity as tempting as it is to answer the question with a one off solution, the systemic path is always more powerful. This is where we have to start in solving the challenge of rethinking marketing for this new age.
Check out both parts.
Part two of my strategy presentation is coming soon. In the meantime, a few months ago I went down a rabbit hole of looking for the first mention of various marketing terms and ideas in the New York Times archives. I particularly liked this first mention of brand strategy from 1955:
To eliminate confusion, an agency should set up a four-point plan when handling a product … The Plan would be outlined in a document known as a “brand strategy” containing a concept of operation; an analysis of the opportunities for the product or service; agreement on an immediate plan of action, and agreement on a long-term strategy.
Here’s what it looked like in the newspaper:
Also amusing was that in 1967 we were having problems we’re still seeing today. From coverage of a symposium of agencies and clients:
A couple of the ideas that seemed to get repeated were that both sides should cut through the red tape of advertising approval and that there should be more involvement of creative people in agency-client relations.
At the beginning of December I gave a talk at Google’s Firestarters event that built on some of the ideas I wrote up in my post about strategy as algorithm. Rather than posting the whole deck, which at some point I will do, I thought I would try to share the slides in groups of a few at a time and tell the story over a number of posts. This is a bit of an experiment and mostly because I’m trying to get all the posts I can out of the deck, so thanks for bearing with me.
What is strategy? Anyone who works in and around brand has run into something called strategy, but seldom do we step back and actually ask ourselves what it is and what it means. A few weeks ago I posted this definition from Lawrence Freedman’s book Strategy: A History (via Martin Weigel):
Strategy is much more than a plan. A plan supposes a sequence of events that allows one to move with confidence from one state of affairs to another. Strategy is required when others might frustrate one’s plans because they have different and possibly opposing interests and concerns… The inherent unpredictability of human affairs, due to the chance events as well as the efforts of opponents and the missteps of friends, provides strategy with its challenge and drama. Strategy is often expected to start with a description of a desired end state, but in practice there is rarely an orderly movement to goals set in advance. Instead, the process evolves through a series of states, each one not quite what was anticipated or hoped for, requiring a reappraisal and modification of the original strategy, including ultimate objectives. The picture of strategy… is one that is fluid and flexible, governed by the starting point and not the end point.”
Despite that, most of what we talk about when we’re discussing strategy is actually a small set of tools that were all developed before 1970:
- Market Segmentation (1920): “General Motors CEO Alfred P. Sloan managed GM’s car models through loosely monitored “divisions,” which operated as separate companies with Sloan’s oversight, laying the groundwork for today’s corporation.”
- Customer Funnel (1959): “The progression through the four primary steps in a sale, i.e., attention, interest, desire and action, may be compared to that of a substance moving through a funnel.”
- Scenario Planning (1967): “The practice involves envisioning multiple future events and developing plans for responding to them. Shell first experimented with scenario planning in 1967, helping it navigate the oil shock of the 1970s.”
Ultimately a strategy is an approach for solving a problem. In the case of marketing, a strategy is generally the formula a brand develops to identify the best mix of activities and messages to communicate the positioning of the product or company with the goal of driving growth (either in sales, price, or purchase occasion). Strategy, then, is not the activities, but rather the framework a brand uses for choosing (and not choosing) those activities. (We will come back to this point later.)
For strategy to live in the world it must be paired with execution. The problem with strategy is that it doesn’t work in a vacuum. Strategy without execution is just words on a slide. For our purposes, then, when we talk about strategy we are talking about two things: The approach to solving the business problems and the coordination of resources to execute on that approach.
In the next installment I’ll dive into execution, how it’s changing, and why that matters a lot for strategy. Stay tuned.
I like this thought from Andrew Crow, head of design at Uber, on the difference between being scrappy and shipping scrappy:
There’s no such thing as minimal viable quality. Each product iteration must stem from a principled approach of creating great experiences regardless of scale or milestone. If it’s a mockup, the level of fidelity typically indicates the level of “doneness”. If it’s a prototype, the level of detail needs to be appropriately matched to the sophistication of the hypothesis you’re testing. If it’s an MVP, the quality put into the product must be at a level that results in the maximum learning for that stage of development. The quality of product you finally ship reflects the caliber of your company and is a measure of the respect you have for your customer.
I think of this as being thoughtful. Every interaction you design should be made with care and respect for the user’s time and attention. Details make design and there isn’t a detail too small to pay attention to.
As Andrew points out, not spending the time and attention on details at early stages can be detrimental in unexpected ways as it might provide you with bad data back on usage (ultimately design choices and brand effect experiences). I think there’s an important lesson here that most people don’t consider (and came up in the old brand vs utility debate). Ultimately things like brand, utility, and design in products are entirely too closely coupled to disconnect. In fact, utility is actually a measure of the relative satisfaction a person gets from consuming something. Since satisfaction is about how much something fulfills your expectations, the utility and brand are inextricably linked.
I really liked this quote Martin Weigel posted from Stephen King (the marketing guy, not the horror filmmaker) on how marketing companies must evolve:
Marketing companies today… recognize that rapid response in the marketplace needs to be matched with a clear strategic vision. The need for well-planned brand-building is very pressing. At the same time they see changes in ways of communicating with their more diverse audiences. They’re increasingly experimenting with non-advertising methods. Some are uneasily aware that these different methods are being managed by different people in the organisation to different principles; they may well be presenting conflicting impressions of the company and its brands. It all needs to be pulled together. I think that an increasing number of them would like some outside help in tackling these problems, and some have already demonstrated that they’re prepared to pay respectable sums for it. The job seems ideally suited to the strategic end of the best account planning skills. The question is whether these clients will want to get such help from an advertising agency.
That sums up a bunch of stuff I’ve been thinking about/we’re trying to do with Percolate quite nicely.
Meant to post this last week, but didn’t get to it. Felix Salmon wrote a great post on how wine is one of the few things in the world you can buy for happiness. I’m fascinated by stuff like this:
The more you spend on a wine, the more you like it. It really doesn’t matter what the wine is at all. But when you’re primed to taste a wine which you know a bit about, including the fact that you spent a significant amount of money on, then you’ll find things in that bottle which you love. You can call this Emperor’s New Clothes syndrome if you want, but I like to think that there’s something real going on. After all, what you see on the label, including what you see on the price tag, is important information which can tell you a lot about what you’re drinking. And the key to any kind of connoisseurship is informed appreciation of something beautiful.
This is the messy part of branding. All those factors play into how we feel about brands, products, and just about everything else.