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Consumer Psychology: Understand your Customer

“…the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.” ~ Peter Drucker

Introduction
Markets have influenced our acquiring/buying habits from the earliest days of our evolution, perhaps as early as bartering systems in pre-historic times. One tribe had an excess catch from hunting; another tribe had an excess of hides from last season’s catch and the market is born. The exchange of goods is motivated by need and its reptilian drive, “survival of the fittest”.

Fast forward to today’s modern marketing. As the science of marketing has developed, several concepts have gained wide-spread application. The primary focus today is that fully understanding and tapping into the consumer’s motivation, which can be deeply subconscious, results in brand loyalty in purchasing products and services. An example is Clotaire Rapaille’s approach that to understand the “collective unconscious” and thereby articulate the “code” opens the way to desired marketing success.

The foundation of marketing science is based on market research strategy, to know the customer and to fill needs that need filling. Understanding the customer can produce high-quality products, such as Apple has done. On the other hand, some marketing approaches have turned into manipulative endeavors to sculpt the customer to believe they need what’s being sold. This form of marketing is distorted and disturbing. This BLOG post reviews the history and development of marketing as a science, then explores the power of modern customer-centric marketing updated for the digital age, and then looks at the downside of manipulative marketing.

Background – Development of Marketing as a Science
Early development of marketing as a science included Louis Cheskin and Neil Borden. Cheskin contributed the “customer-centric” approach, rather than the top down approach that had been previously popular. The earlier approach to marketing was top-down, where a company would create a new product with the assumption that it would sell. A customer-centric approach is based on consumer feedback, often through customer focus groups and observation. This approach defines the needs of the customer thereby providing products and services that meet those needs. For example, through customer research, Cheskin helped engineer the success of margarine by changing it’s color from white to yellow, and advertising it’s similarity to butter (Cheskin, 1959).

Borden, in his seminal article, “The Concept of the Marketing Mix,” named the 4Ps: Product, Price, Place and Promotion (Borden, 1964). The evolution of technology has brought with it increasing speed as well as additional Ps: People and Performance. We have moved from a top down approach, where the consumer was thought to be one amongst many and easily influenced, to a customer centric approach, where individuality, instinctual desires and inner drives have become the focus of marketers.

Purpose of Marketing
I believe there is a true purpose to the original intent of marketing. Discovering human needs and providing the products or services that support those needs is the most effective formula for exchange in the marketplace.

In Making Meaning: How Successful Businesses Deliver Meaningful Customer Experiences, the authors state, “We envision a time when customers increasingly make their purchase decisions based on deeply valued meanings that companies evoke for them through their products and services – in other words, meaningful consumption – as opposed to simply responding based on features, price, brand identity, and emotional pitches” (Diller, Shedroff, & Rhea, 2008, p. 1).

For example, Apple captured the MP3 market with the iPod and iTunes. The iPod became an emotionally constructed appendage that represents much more than just a music device. It has become a cultural icon that people purchase not only for usefulness but also for a sense of belonging, an image of appearing “cool,” and much like a stylistic piece of jewelry, it comes in hip colors and unique styles.

The Evolution of Marketing Research
Concept Engineering, a market research approach developed by Gary Burchill at MIT, uses an ethnological immersion process called “Voice of the Customer.” Key people on a new product team visit customers, interviewing and observing them in order to discern what the true need is. They are especially trying to discover “latent needs,” needs or wants that the customer has but is not consciously aware of. They then target their new product or service to fill that need or want. This process of listening to the customer allows the new product developers to make meaning of the consumer’s direct experience. Innovation and customer satisfaction can follow (Burchill & Brodie, 1997).

Apple – A Case Example

Apple is a great example of the power of understanding customer needs and providing products and services to fill those needs. Apple has become a cultural icon for our technological era and this digital age. As I wrote in this week’s forum post, Steve Jobs announced Apple’s newest, latest, greatest and COOLest product this past January with global fan-fare: the iPad.

In typical Apple marketing fashion, Apple required customers to wait several months for the iPad’s release. During this time Apple launched a marketing blitz, including an iPad frenzy on Twitter. iTunes has just launched an update for interfacing with the iPad, just in time for the iPad’s release. There was a Netflix app available for the new iPad even before the iPad’s release. Many people tweeted that they were downloading it in preparation for getting their iPad. There were 240,000 pre-orders awaiting the iPad.

Apple has found the “code” for “cool,” at least for this digital generation. Apple is a cultural phenomenon, as the MacHead photo illustrates – “the cult of mac.” There are many who are fervently dedicated. The iPod is jewelry in addition to music, an emotional as well as pragmatic piece of “cool,” coming in different colors and styles to match each person’s individual uniqueness. Apple understands its customers and has successfully tapped into their latent needs, capturing the market by storm.

Daniel and I picked up our iPads on Saturday, documenting and interviewing folks in line. On the whole, the Saturday crowd are early adopters who do respond to Apple’s advertising. There were 2 mechanical engineers and another student, among many others. The wait was short. The Mac Genius who waited on us was knowledgeable and responsive. We left with our questions answered, our iPads and leather cases in hand, and BIG SMILES.

The picture below shows four generations of Apple users: Stephanie, her Mom, her Grandmom, and her son. This was a family adventure for them. Their smiles and excitement might indicate a bit about their psychology. They said they considered this a bonding experience as they upgraded their technology together and supported one another. They were really enjoying playing with their “new toys.” 

Apple sold 300,000 iPads on Saturday according to reported figures. This first rush of purchases is the “early adopters” phase. Apple’s next marketing target is to reach more of the general population.

Downside of Manipulative Marketing
There is a downside to current day marketing. The episodes we watched from Frontline highlighted the hidden and manipulative side of marketing in our digital culture. For example, the use of “product placement.” Product placement is a form of embedded marketing.  Branded goods are placed, without explicit advertising, in the storyline of movies, TV shows, or other programming. This is often not disclosed at the time the product is being featured. (Wikipedia).

Consider that the star of this week’s episode of “Modern Family” is YES: The iPad.  On the eve of the iPad’s launch – Phil Dunphy, one of the main characters in this season’s runaway hit sitcom and touted to be the best new comedy of the year, celebrates his birthday. He is all encompassed in his desire for an iPad. His wife misses the early morning rush to stand in line at the Apple store, eventually getting there only to find they are “sold-out”. Message to audience: get there early, get there or you will miss out. Eventually, Phil’s son manages to get an iPad from one of Phil’s friends through social networking. Phil gets the iPad, everyone is happy, all is right with the world.

Advertising Age reports that this was just a very clever storyline; using Apple is like using a cultural icon, and not product placement. How it’s perceived is another thing though. Advertising Age states, “Even without Apple plunking down any cash, last night’s episode was tantamount to a huge wet kiss of approval for a product that has yet to be tested by actual consumer use (Steinberg, 2010).”

Whether it was product placement or not, it caused significant stirrings and fans perceived it as such reporting being furious. A typical post on IBDb forums stated, “Tuned in for comedy, sat through a 30 min iPad commercial (Bershad, 2010).” Consumers are becoming increasingly aware and critical of manipulative marketing, either actual or perceived.

Marketing’s Message: CONSUME

The message most marketing is driving home to the consumer is MORE IS BETTER. While this is a fallacy, the marketer’s job is to create more and more desire linking satisfaction or fulfillment to their product or service, to continuously consume.

In The Paradox of Choice: Why More Is Less, Barry Schwartz explores the world of excess and its impact on our daily lives. In a local supermarket, he found over 30,000 grocery items available, including 285 varieties of cookies. He concluded that having too many choices is bewildering, erodes our psychological well-being, and becomes restrictive rather than freeing (Schwartz, 2005).

So, in fact, this culture of consumerism is in a crisis of sorts. Product and service images come rushing towards us from every channel of media available, print, web, movies, tv, mail, email, and others. The message is clear and in many ways enticing. BUY! This onslaught has effected us and our culture. We have become a nation of consumers.

“If I were dictator of my own small island, it’s not capitalism that I would get rid of, it’s marketing. That ever-present force telling us we should be more beautiful, happier, drunker, skinnier, hipper, and whatever else it takes more money to attain.” ~ David “Oso” Sasaki

The Future of Consumerism

Internet marketing continues to develop forums for making the strong voice of consumers heard. Dee Dee Gordon, founder of Look-Look, an online trend tracker, focuses on the younger demographic, those 14 – 30. She is a key contributor to product development. She provides the voice for this younger digital generation by gathering data about their needs, wants, habits, and lifestyles, listening to them and describing their world.

Marketing will continue to be a major influence on our decisions. The more we understand our own motivations as well as the marketing techniques used by professionals, the more discerning we will become.

Source: catherineaseo.blogspot.com

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The future of 21st Century – Fashion Marketing

From selling to selling the right product, from just capturing more customers to having a satisfied customer, from luxury to sustainable luxury, from customer exploitation to customer awareness – the turn of the century saw a lot and has much more to come.

Selling the Right Product

With improved consumer consciousness and a higher level of education there has to be more concentration on product rather than the media communication. More importance is placed on capturing and retaining customers that promoting the right product. It is important to have a right product before have the right advertising. Right product does not just stand for quality and value for money but also the appropriateness of the product at a particular time.

The product should target the right customer base and should keep in consideration “the mood of the people”. For example at the time of recession, luxury should not be emphasized on in terms of advertisement. Such an advertisement could result in boycott of the brand. Concentration on getting the product right will not just result in satisfied customers but also will eventually attract more customers. Innovation of the product to build marketing into the product is the next step.

With increasing emphasis on ethics and corporate social responsibility the performance actions of a company that influence a consumer to buy the product are to change from the famous “4 P’s of Marketing” by Professor Neil Borden of the Harvard Business School to a new concept of “5 P’s of Marketing”.From Product, Promotion, Price, Placement to Product, Promotion, Price, Placement and Principle.

Principle – The code of conduct of the company, the social responsibilities and ethics will hold an important stand in the consumer’s decision of buying a product. More environmentally conscious products will penetrate the market. A customer would not like to buy a product if it is made by workers who are not paid sustainable wages or buy a product which is not dyed with eco friendly dyes. If a company is known for malpractice the consumer will put aside other factors and make a wise choice to stand against the product. Strategies like “one rupee to rural education on purchase of this product” will gain popularity.

With fashion moving from a common foundation for all at a certain period of time to individualism, targeting a common market could result in depriving the customer of choices and mass rejection. The customer would be more bold and independent; hence catering to customer preferences at a fast changing pace will be a necessity. The famous fifteen days lead time of Zara, the 300 new styles every week of Hennes & Mortiz are good examples to state here. Fashion symbolizes change; hence the common lead time of three to six months will gradually become unacceptable.

A concept of “by the customer, of the customer and for the customer” is emerging. An example of this would be “www.threadless.com”. In this one can design a shirt and put it for public view. The public can vote for the best design and that shirt would go into production. This gives the consumers satisfaction in terms of choice and also a sense of control. There is a dire need of innovation of processes that will allow the customer to choose their product or service.

Marketing on the internet started with online consumer surveys and moved to online retailing. A lot in this is still unexplored. In reference to the pace of technological advancements, in the later half of the century a 3D virtual shopping experience is a possibility. With the internet fast becoming a popular channel of retailing, the concept of e-tailing (electronic retailing) in fashion is captivating the consumers. Internet is catering to the convenience of the consumer. With e libraries, online catalogues and made to order the customers have a lot to choose from. With increasing value of time over money, a customer prefers to pay a little extra for delivery at doorstep. This is a topic of intense research in garments because for new customers fit preferences are difficult to infer.

Customer segmentation should not be based on differences but on similarities. The popularity of online social networking could help define a different league of customer segregation. With likeminded people forming groups and communities on Facebook, Orkut and other social networking sites a method of customer segregation could be devised based on the groups and communities.

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DIESEL, LIVE, BREATH AND WEAR PASSION

INTRODUCTION

Have you ever heard of passion in the marketing mix? How about people? Those two Ps never seem to figure alongside the famous four which you, will of course, know by heart. This case study shows that having the depth of passion and the right people are crucial missing links in binding the regular Ps together.

PRODUCT

Diesel sells nice jeans. Close, but no ‘A’. Actually, it’s not that close. The reason Diesel has grown is because it knows it is about a lot more than selling nice jeans. Diesel is a lifestyle: if that lifestyle appeals to you, you might like to buy the products. Renzo describes this as an end of the ‘violence’ towards the customer forcing them to buy and rather an involvement in the lifestyle.

The brandIt might be useful to ask a question – what actually is a brand? The answer could take a variety of routes and go on for pages but a useful way to think of a brand is as a set of promises. Those promises form the basis of the customer’s relationship with that company. In the case of Diesel those promises are very personal, very passionate.

The Diesel brand promises to entertain and to introduce customers to new, experimental experiences. Its product line now goes far beyond premium jeans and includes fragrances, sunglasses and even bike helmets.  These products complement, convey and support the promises of passion and experience made by the Diesel brand.

Being such a crucial element of its work you might imagine the product design team at Diesel to ‘plot’ in something akin to a war room, pushing little squadrons of well-dressed soldiers around with long sticks. Actually, this is where that elemental passion which created Diesel sets them apart from many others. The whole team at Diesel lives the brand. They are all incredibly passionate about their creations. So when it comes to expressing that passion, ideas come naturally. Living and breathing the set of promises the Diesel brand communicates means employees can listen to their instincts, creating products straight from within.

Diesel builds its entire existence around the passion for what it does. With a founder who sees his work as an art and not a science, the company has redefined how a brand sees and communicates with its customers since 1978. It is the Diesel story we will look at in this case study.

Diesel is a global clothing and lifestyle brand. With a history stretching back over 30 years, the company now employs some 2,200 people globally with a turnover of €1.3 billion and its products are available in more than 5,000 outlets. However, this list of numbers is far less interesting than the company, people and founder behind them. Diesel is a remarkable company with a unique mindset. A mindset which puts sales and profit second to building something special, something ‘cool’ and something which can change the world through fashion.

The story begins with a young Renzo Rosso passionate about the clothes he wears but disappointed in the options available to him in his home town Molvena, Italy. Acting on impulse, he decided to use his passion to make the clothes he wanted to wear. Renzo was drawn to the rebellious fabric of the 1960s and rock & roll: denim. It inspired him to create jeans which would allow him and others to express themselves in ways other clothing simply could not.

Proving popular, Renzo made more and more of his handcrafted creations, selling them around Italy from the back of his little van. The still-young Renzo is the proud owner and CEO of Diesel along with that impressive list of figures. That impulse and passion apparently paid off.

PROMOTION

‘Be stupid’With the launch of the recent marketing campaign around the phrase ‘Be Stupid’, Diesel took a look at what brought its current pipeline: it was Renzo Rosso, all those years ago, taking the ‘stupid’ move to make jeans he wanted to wear. Then he took the even more stupid move of trying to sell those jeans to others, believing he might not be the only fool in Molvena! As it turned out, there were quite a few more to be found and Renzo’s ‘stupid’ move ended up creating something which millions of people around the world now enjoy.

Promotion and marketing at Diesel takes a very different route to many other companies. It is always about engaging with the customer as opposed to selling at them: creating an enjoyable two-way dialogue as opposed to a hollow one-way monologue. All elements of Diesel’s promotion aim to engage the customer with the lifestyle. If they like the lifestyle, they might like the products.

For example, the Diesel team saw music as an inseparable part of that lifestyle and realised that exploring new music and new artists was all part of trying something different and experimenting with the unusual. 10 years later, Diesel:U:Music is a global music support collaborative, giving unsigned bands a place where they can be heard and an opportunity to have their talent recognised. It’s not about selling, it’s about giving people something they will enjoy and interact with.

Tied to Diesel:U:Music is an online radio station. It is another example of where Diesel unconventionality has created something which pushes conceptions and the usual ways of doing things. The radio station takes a rather unusual approach of not having a traditional play list but rather gives the choice to the resident DJ. This freedom is reflected in the eccentric mix of music which is played on the station.

Above- and below-the-lineIn promotion and marketing, we often talk about ‘above-the-line’ and ‘below-the-line’ methods of reaching consumers. Above-the-line marketing is aimed at a mass audience through media such as television or radio. Below-the-line marketing takes a more individual, targeted approach using incentives to purchase via various promotions. In this case passion again acts to blur and gel the boundaries between the two approaches. If we had to define this approach in terms of theory, we would call it ‘through-the-line’, i.e. a blend of the two.

The passion and energy embodied by the Diesel lifestyle is communicated through a mix of above-the-line and below-the-line approaches. The balance and composition of that mix is what the Diesel team hands over to their passion and feel for the company and brand. That energy guides the way this abstract theory is realised in projects such as Diesel:U:Music and the ‘Be Stupid’ campaign, which entertain and interact with their potential customers.

PLACE

Another, drier, way of describing ‘place’ in the marketing mix is ‘channel’ or distribution channel. The way a business chooses to offer its products to its customers has a huge impact on its success.

Only around 300 of the 5,000 global outlets which sell Diesel products are owned and managed by the company itself. The majority are large department stores offering many other brands or boutiques with a very specific style of their own. How do you maintain the quality of a product and its communication when dealing with so many different partners and distribution channels?

CultureThe strong culture within Diesel again holds the answer. Every employee is able to communicate the brand appropriately in their given role within the company. As such, the managers of the Diesel-branded stores know that their function is to act as a flagship. They focus on the core campaigns like ‘Be Stupid’ giving a solid focus and image for the brand. Employees in each of the stores all know the campaigns intimately and are very aware of the image they should put across to customers entering the stores.

Their retail partners such as the department stores are a crucial link in the chain. Diesel works closely with these partners to ensure they express the same level of passion when offering their products. This is done through separate and individual campaigns. These provide visitors with a unique experience which again encourages them to get involved with the Diesel lifestyle as opposed to forcing products on them.

DistributionThis approach to distribution can be seen as a mix of exclusive and selective distribution over intensive distribution. Exclusive distribution involves limiting distribution to single outlets such as the Diesel flagship stores. Selective distribution involves using a small number of retail outlets and partners to maintain the quality of presentation and communication to the customer. Intensive distribution, on the other hand, is commonly used to distribute low price or impulse goods such as sweets.

PRICE

The price of a product is so much more than a little, or rather big, number on a tag. The price of a product is the most direct and immediate tool a business can use to convey the quality of its product at the point of sale. If done right, the price reinforces the rest of the marketing, drawing in the target customers by conveying the appropriate quality.

Pricing strategiesDiesel uses a model based on premium pricing. As we have discussed, Diesel is far more a lifestyle than a clothing brand.  Through the vision and passion of Renzo Rosso, the company has created a whole new approach to engaging with its customers. The price of Diesel’s products needs to reflect the substance and value of that experience.

A strategy such as penetration pricing used by businesses making high-volume, relatively low-margin products would be inappropriate as it would undermine the quality association thus devaluing the brand and experience.

We do not pay a premium price for Diesel jeans because they are a premium quality, that is taken for granted. We pay a premium price because the jeans and the brand fit in with and even encourage a premium, dynamic lifestyle built ‘for successful living’, as Diesel would say.

The team at Diesel must be intimately in tune with that lifestyle so they can see how their diverse range of products from jeans to fragrances and even bike helmets fits within that lifestyle. That feel for what Diesel is and how we, the potential customers, interact with it allows the company to price those products in a way which complements and neatly fits into that lifestyle.

PEOPLE

Besides the fact Renzo has, let’s say, done alright for himself, he has inspired thousands of people who proudly work to build the brand through a shared passion and contagious ambition.

Looking at the structure within which all those people work can help us to understand just why they are so happy to be there. Renzo realised people and their ideas form the heart of the company. So that everyone’s voice can be heard and each person working for Diesel has an equal say, the company adopts a flat hierarchy. This means there are very few layers of management and everyone is encouraged to communicate with each other: sharing ideas, solving problems and trying to communicate that energy with people outside the company – the customers.

TeamworkWhen decisions are made in this flat hierarchy they are made as a team. The team as a whole can then track the progress of that idea and monitor the results. Feedback is important because if everything has gone to plan, the achievement has to be acknowledged so that everyone can take pride in what they have done. If something has not gone to plan, group feedback allows an evaluation of why and the ability to learn for the future.

MotivationImportantly, this acknowledgment or learning happens equally across the company so everyone is kept up to speed on the ups and downs of business. This sense of belonging both to a team but also to a particular responsibility is very important for employee motivation. The better you understand your work and your environment, the happier you are likely to be with your job. The happier you are, the less likely you are to want to leave and so this open approach has the very positive company-wide effect of high employee satisfaction and a low staff turnover. Specifically in the fashion industry this means that the people working for Diesel have a stronger sense of identity and a deeper understanding of the brand making them even better at what they do.

CONCLUSION

The marketing mix is all good and well but it doesn’t paint the full picture. To understand it we must look at the ‘touchy, feely’ elements of business which are less often discussed. Diesel has built its existence around that touchy, feely passion with every one of its 2,200 employees living the Diesel brand. Diesel is the perfect company to allow us to see how this dry theory actually works in real life: how the passion of a founder like Renzo Rosso can be communicated around a company and breathed into each and every one of its diverse products.

Diesel grew into a global household name for premium clothing but it all started from that one man wanting to do something unusual, something ‘stupid’. Stubbornly he stuck to his belief in doing the unusual and it has created a global company whose products are enjoyed by millions. More importantly, this has created a lifestyle – a whole new approach to the way we see a brand. Diesel is an experience which interacts with and entertains its customers – a far deeper relationship than most other brands.

Being driven by passion and the desire to do something special naturally ties these elements together. Understanding theory like the marketing mix in a company like Diesel can be difficult if we expect the elements of price, place, product and promotion to be separate from each other. It becomes easier if, like a magic eye picture, we look beyond the dry theory and realise all of these elements are inseparably bound together by the passion of people like Renzo Rosso who have dedicated their lives to treating their work as an artistic expression of their feelings.
Read more: http://www.thetimes100.co.uk/case-study–live-breathe-and-wear-passion–159-414-7.php#ixzz16R3XM1mV

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AIMS OF MARKETING DEPARTMENT

Marketing involves a range of processes concerned with finding out what consumers want, and then providing it for them. This involves four key elements, which are referred to as the 4P’s (the marketing mix). A useful starting point therefore is to carry out market research to find out about customer requirements in relation to the 4Ps.

Market research

There are two main types of market researchQuantitative research involves collecting a lot of information by using techniques such as questionnaires and other forms of survey. Qualitative research involves working with smaller samples of consumers, often asking them to discuss products and services while researchers take notes about what they have to say. The marketing department will usually combine both forms of research.

The marketing department will seek to make sure that the company has a marketing focus in everything that it does. It will work very closely with production to make sure that new and existing product development is tied in closely with the needs and expectations of customers.

Modern market focused organisations will seek to find out what their customers want. For example, financial service organisations will want to find out about what sort of accounts customers want to open and the standard of service they expect to get. Retailers like Argos and Homebase will seek to find out about customer preferences for store layouts and the range of goods on offer. Airlines will find out about the levels of comfort that customers desire and the special treatment that they prefer to receive.

A useful definition of marketing is the anticipation and identification of customer needs and requirements so as to be able to meet them, make a profit or achieve other key organisational objectives.

Source: Thetimes100.uk

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