The Reason Promotion Fails and Product Rules April 9, 2007Posted by shahriar amin in The WOW Factor.
In the beginning there was 4P. Once they (Product, Price, Promotion, Place) were the in-thing, the rule of the game, the mandate of marketing game. Those were the days when engineers made the product, and marketers created advertisements to sell it in numbers. Those were the days when Promotion was seen as the key task of the marketers. But those days are about to be condemned to the past. There has been a long drawn debate on the viability of the 4Ps in the 21st century – the cornerstone of modern market theory. There was strong criticism that the 4Ps did not focus enough on the customers. As a replacement of the 4Ps, 4As were proposed. Another school of thought evolved where it was clearly enunciated that no marketing plan can be done in isolation without taking competition into account. However, the biggest change was taking place somewhere else. In the midst of all the propositions and controversies, one P among the 4 is rising fast above the rest. The Evolution If facts alone can dictate, there is little doubt Product is the center of the 4P universe. If the top management focus, total time spent, total budget spent, importance in yearly
Marketing Plan etc. is taken into account, Promotion more often than anything else, takes the cake.
If you try to put a stop to the inevitable, you can only delay it. The product is taking over the marketing spectrum as advertisements are losing effectiveness day by day. Advertisements are losing its credibility value. And on any given day, there are just too many advertisements to pay attention to. The solution lies not in breakthrough advertising to gather attention, but breakthrough product itself. Need examples? Here are a few. In the first quarter of 2006 that ended March 31, Apple sold 5.3 million i-Pods worldwide. The incredible sales story is credited to fantastic innovation and design, not to advertising. In Body Shop, sales from the 2085 stores now located in 53 different countries came in at £327.4 million ($571.7m), reflecting 18 months of consecutive improvements. This is achieved with little or no advertising. The key – exotic product ingredients, and quality image. Not to mention, all of these are Product attributes. In GrameenPhone, more than 6 million subscribers are acquired in 9 years, not because the company has shown exceptional taste in advertising (Promotion), but because it has superior network coverage nationwide and state-of-the-art network quality that outperform any competitor. The fact that GrameenPhone produced some of the most memorable advertising of all time in
Bangladesh is a delightful plus to have, but by no means the Unique Selling Proposition. Falling Short In the beginning there were 4P, and there were independent departments that looked after those individual P’s. The process was simple. After the initial market research input, the R&D team develops the product. The pricing are usually set by top management. And after test marketing the viability of the product, then, and only then, the marketing guy enters the picture. His job – to create attractive promotional program around the product to sell the product to the target market. Then the sales people go out to the market using different channels. This presents us 3 key marketing shortcomings
- Marketers principal job was to create advertisements, not maintaining the total value chain
- Marketing managers are not necessarily Product Managers and therefore they cannot influence Product decisions all that much
- In every company there is a separate Marketing Director and a separate Sales director and they all report independently to Chief Marketing Officer
A little light on these shortcomings. The first one is straightforward.
Marketing managers spend most of their time in designing attractive promotions to sell the product, not in designing the product itself. In fact, they are usually given a product with the given assumption that with super advertising can make an average sell like hotcakes. The assumption holds true at times, but not necessarily this should be the order of the day. In fact, marketing managers should spend most of their time preparing a remarkable offering / product for the market. The third shortcoming is somewhat tricky. In a company if there is a separate R&D Director, a Marketing Director and a Sales Director, then the “Best” thing that can be expected from them is that the company will have separately a super product, a separate super advertisement, and a separate super sales campaign. But it will never guarantee that the company will have a super product which itself will guarantee super advertisements built around it and which in the end will guarantee huge sales. Because none is accountable for the total value chain, starting from needs identification, to product development to actual sales. Rather everyone is responsible for a part of it, with least consideration for the rest of the chain. To account for such accountability problem, Brand Managers were created who will look after the entire value chain. Unfortunately, the problem lingered on as Brand managers became obsessed with sales figure and attractive promotions, rather than the actual product offering. The Magic Wand called Brand Brand is the single most misunderstood concept in the entire marketing program. That however, is a different debate altogether. What is more related, is to analyze what actually branding stands for in the mind. Branding is often associated with killer advertisements, sometimes even to selling programs, but never with innovation or other product attributes. I believe this is limiting the potential of Brand and a sure-shot way of the demise of Brand. Products die, categories evolve, advertisements disappear. But Brands should remain as a potent force. And for that Brands should be about product first, not advertisements. Nike is one of the most well-known brands in the world and they have some fantastic advertising not to mention one of the most popular advertising slogans of all time. But where most people gets it wrong is that, Nike is built around product innovation, not catchy advertising. It is a fantastic manufacturer of best quality shoes (product attribute). Therefore Product is the core. Advertising is the extension, the “good to have”. And it should never be interpreted as vice versa.
The Emergence of Services & Emotional Advertising In the past decade, the emergence of service marketing has created a sort of transitional phase in our mind. As most of the Branding school of thoughts are circled around consumer packaged goods, it became more and more difficult to use conventional marketing wisdom in day to day marketing decisions. There has been a common understanding that customers are making more and more purchase decisions based on emotions, not on logic. The thought holds ground and is true – but subject to interpretation. It is true that customers are buying into Brand they “Like” or “Trust” or “Identify with”, but it is only because the products are becoming increasingly similar with little or no differentiation. Therefore the differentiation comes through communication. And most often or not, differentiated communication means “emotional advertisements that everyone likes”. Here is the newsflash – in the absence of a powerful product benefit hat differentiates itself from competition, differentiated communication alone will not ensure sales. But the reverse is practiced day in day out. In paper it looks very simple. Brand X in category A looks exactly like all other products in Category A. Therefore focus on the emotional side of the Brand with powerful emotional advertising, so that customer “likes” the Brand X much more than others. But there are some flaws in the logic
- “Liking” the brand does not necessarily mean “Purchasing” it.
- When everyone starts doing “Emotional advertising”, all brands appear same. Take a look at the automobile category. With some of the biggest advertising budget of them all, the biggest car brands produce absolutely similar advertising. Same goes to Perfumes. Does anything stand out?
- Emotion in product can sell the product. Emotion in advertising will not do it. In the absence of a superior product that appeals to the senses of the customer, no amount of creative advertising can save the brand.
Rise of the Product Product is the most important P of all. It may have been Promotion before. Not any more. And nothing demonstrates it better than Beetles. The original Beetle, which achieved cult status in the 60’s was a poster child of advertising. Beetle was losing money steadily until they taught the world to “Think Small”. This memorable ad campaign did wonders for the brand and Beetles was profitable in
United States for fifteen years. But a few decades later, when the new Beetles created storm in market, it was not because of the advertising at all. It was the definitive design, huge word of mouth created from test driving and the unbeatable car reviews that did the thing for Beetles. Beetles continued to be the symbol of countercultural movement, but the vehicle (no pun intended) that was used has changed overtime. It was advertising in the 60’s. It is the product itself now. To put it in a simple manner, as quoted by Seth Godin in his new book “Purple Cow”, “The Old rule was this: Create safe, ordinary products and combine them with great marketing The new rule is: Create remarkable products that the right people seek out”. And that’s all there is left to do.