Americans have a certain arrogance when it comes to marketing. Over the past few decades, as growth has been stronger percentage wise in emerging markets relative to North America, some surprisingly large United States based powerhouses have struggled for success as they invaded new territories. Somehow, many feel that if the marketing, pricing, advertising or even the product itself worked well in the US and Canada, it should be a hit in vastly different cultures as well. What they failed to realize is that if you want to succeed across the globe you need the localize your company’s branding.
By now, most of you know that McDonald’s has done a fine job with cultural customization. In France, there are little bottles of vin ordinaire available, spaghetti is served in some Chinese locations, and in certain Indian provinces McDonald’s serves no beef! Heinz has over 80 varieties of ketchup available all carefully tuned to local tastes from very sweet to sour. Naming and logos can be a problem, too. Nike’s flaming air logo on their air trainers product were a hit in Arab countries AFTER they realized their logo look far too similar to an Arabic term for Allah. Tide goes by seven different names around the globe as the name would have different connotations in many languages.
So, rule #1 is to be flexible and listen to the locals. The big advertising holding companies have a huge advantage here as they have offices in well over 100 countries and can guide North American marketers as they enter local turf. The media mix can be drastically different, too. Newspapers are still strong in many parts of the world and, despite the rapid growth of Netflix, television often works as well as it did in the US a few decades ago. Your commercial may have to change drastically, however.
A big area that people really need to wrap their heads around is the product itself. The poster child of a case study would be the eventual success that Oreo is having in China. The Oreo is the largest cookie brand in the world and has been around since 1912. When then Kraft Foods (now Mondelez) entered China in 1996, they had to be licking their chops about going in to a market with over a billion potential customers and a rapidly growing middle class. By the end of 2005, they were thinking of pulling the plug as their market share was a paltry 3% of the “biscuit” category.
So, back to the drawing board. Some research indicated that the Oreo was too sweet for the Chinese palate, it was priced too high for the mainstream consumer and the cookie was too large. So, they reformulated with an offering that was smaller, less expensive and they had a wafer style alternative that was popular with the Chinese. And, they had new flavors such as strawberry and green tea which resonated with the Chinese consumer. By 2012, they were #1 with a 15% market share. This worked so well that they continue to customize Oreo flavors as they roll out around the world. THE ECONOMIST reported that Mondelez has dulce de leche Oreos in Argentina and orange ice cream Oreos in Indonesia. For the last several years, Oreos have been a billion dollar brand in emerging markets alone and the growth continues.
The success is centered around localization. American brands and pop culture do travel well but often only in a way that locals find easy to accept.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Monday, January 22, 2018
Tuesday, January 16, 2018
From Mass Marketing to Segmentation to Micro-Marketing
Things in the marketing world are moving faster than ever. The changes of the last 10 years have caused significant shifts in companies marketing and especially advertising mix. Amazingly, to me, there are still a number of players who cling not simply to old terms but actually an old mindset that is way out of step for 2018.
Recently, someone told me that his firm remained very firmly a mass marketer. I started laughing and with usual Don Cole diplomacy told him that I did not know that his company sold toilet paper (one would hope that usage would cover all market segments!). He seemed wounded and the conversation ended pretty abruptly. I was surprised as mass marketing seemed to begin in earnest with the national reach of railroads and the Sears Roebuck catalog in the 19th century. Radio and then TV made mass marketing even more popular. Yet 10 years ago, at a conference, I heard a P&G executive talk only about segmentation even for flagship brand Tide. For 60 years, Tide has been America’s #1 detergent and now it is the global king. The shrewd P&G marketer did not consider Tide, Crest, or Gillette to be mass market brands. Every one of their 30+ billion dollars brands was carefully targeted. To him, mass marketing was dead.
Early in my career in New York, segmentation was the big buzzword. Yet it was not a new thing in 1974. I vividly recall in graduate school at Boston College putting together a brief paper about General Motors chief Alfred P. Sloan. In 1924, Sloan stated that “GM has a car for every purse and purpose.” Way back then, more than 90 years ago, Sloan was in to segmentation with his Cadillac, Oldsmobile, Buick, Pontiac and Chevrolet brands each reaching a different socio-economic group. Forty years after Sloan, Segmentation began to really get some meat on the bones, as theorist William Lazar added “lifestyles” to the marketing dynamic. The broad thesis started with demographics—gender, age, income, education, race, occupation and household size. Layered on to that was geography—urban, rural, climate and region and then psychographics—attitude, values, lifestyle and cultural opinions. Looking at prospects this way helped define whether a segment was worth the effort (I am convinced this is a major reason why most new businesses and products fail as people do not look at segments potential harshly enough). If a few segments pop and you can afford it, you speak to each segment in a different way.
Over the last 10 years as internet marketing has blossomed two other entries are changing the face of consumer sales—big data and some amazing algorithms. As we spend more online, be it with Amazon or individual retailers, more and more detailed and EMPIRICAL information is being gathered about us as individuals. Additionally, the big players do 21st century modeling which can forecast better than ever before about whom else among their customer base may like the product(s) that we just purchased. As invasive as this seems to us baby boomers, I assure you that most millennials could care. They want convenience—NOW! So, marketers know your sweet spot. Consider shoe leader, Zappos (owned by Amazon). They can smoke out the budding Imelda Marcos clones among us and offer them shoe “deals” almost daily. They can track your last purchases and know when you are due for a new pair of athletic shoes. All of this has to be rough on advertising. Why spent a lot with buckshot approach (mass market) or even to a segment when you know the volumetrics of your current base so well? As a friend said to me, “today’s marketers know more about me than the IRS, CIA, NSA, and my girlfriend combined.”
A very wise economist I knew long ago told me that “bad ideas never really die in economics.” Try socialism or wage and price controls or protectionism. In a way, the same is true of marketing. Mass marketing is not dead yet although its utility is so limited that it cannot go it alone. Segmentation is still useful in many ways but that is being replaced with micro-marketing on a pinpoint basis.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Recently, someone told me that his firm remained very firmly a mass marketer. I started laughing and with usual Don Cole diplomacy told him that I did not know that his company sold toilet paper (one would hope that usage would cover all market segments!). He seemed wounded and the conversation ended pretty abruptly. I was surprised as mass marketing seemed to begin in earnest with the national reach of railroads and the Sears Roebuck catalog in the 19th century. Radio and then TV made mass marketing even more popular. Yet 10 years ago, at a conference, I heard a P&G executive talk only about segmentation even for flagship brand Tide. For 60 years, Tide has been America’s #1 detergent and now it is the global king. The shrewd P&G marketer did not consider Tide, Crest, or Gillette to be mass market brands. Every one of their 30+ billion dollars brands was carefully targeted. To him, mass marketing was dead.
Early in my career in New York, segmentation was the big buzzword. Yet it was not a new thing in 1974. I vividly recall in graduate school at Boston College putting together a brief paper about General Motors chief Alfred P. Sloan. In 1924, Sloan stated that “GM has a car for every purse and purpose.” Way back then, more than 90 years ago, Sloan was in to segmentation with his Cadillac, Oldsmobile, Buick, Pontiac and Chevrolet brands each reaching a different socio-economic group. Forty years after Sloan, Segmentation began to really get some meat on the bones, as theorist William Lazar added “lifestyles” to the marketing dynamic. The broad thesis started with demographics—gender, age, income, education, race, occupation and household size. Layered on to that was geography—urban, rural, climate and region and then psychographics—attitude, values, lifestyle and cultural opinions. Looking at prospects this way helped define whether a segment was worth the effort (I am convinced this is a major reason why most new businesses and products fail as people do not look at segments potential harshly enough). If a few segments pop and you can afford it, you speak to each segment in a different way.
Over the last 10 years as internet marketing has blossomed two other entries are changing the face of consumer sales—big data and some amazing algorithms. As we spend more online, be it with Amazon or individual retailers, more and more detailed and EMPIRICAL information is being gathered about us as individuals. Additionally, the big players do 21st century modeling which can forecast better than ever before about whom else among their customer base may like the product(s) that we just purchased. As invasive as this seems to us baby boomers, I assure you that most millennials could care. They want convenience—NOW! So, marketers know your sweet spot. Consider shoe leader, Zappos (owned by Amazon). They can smoke out the budding Imelda Marcos clones among us and offer them shoe “deals” almost daily. They can track your last purchases and know when you are due for a new pair of athletic shoes. All of this has to be rough on advertising. Why spent a lot with buckshot approach (mass market) or even to a segment when you know the volumetrics of your current base so well? As a friend said to me, “today’s marketers know more about me than the IRS, CIA, NSA, and my girlfriend combined.”
A very wise economist I knew long ago told me that “bad ideas never really die in economics.” Try socialism or wage and price controls or protectionism. In a way, the same is true of marketing. Mass marketing is not dead yet although its utility is so limited that it cannot go it alone. Segmentation is still useful in many ways but that is being replaced with micro-marketing on a pinpoint basis.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Monday, January 8, 2018
The Savings Rate and The Two-Tiered Economy
In 1789, the US government, as we know it, was formed. George Washington became our first president and the Congress and Supreme Court had their initial sessions. That same year, government officials first began to collect financial data. Their methods had to be simplistic compared to today but it is fascinating to look at historical information from both governmental and private sources. One statistic that I also tend to zero in on is the savings rate in a nation. Historically, in the U.S., the rate tended to hover around 10% for the first 190 years of our our republic. According to economic historians, many people faced both employment and economic uncertainty so it was wise to always have something stashed away for a rainy day. If the figures were accurate, that might go a long way to explaining the great economic expansion that our nation had for several generations.
Starting in the mid-1960’s and into the 1970’s, the savings rate began to fall. People borrowed a lot more for homes and vehicles and the credit card became ubiquitous in many American households. With the exception of the 1974-1975 period when we faced inflation, recession and Nixon’s resignation, the savings rate never saw 10% again. By 2006-2007, some private estimates had the savings rate at zero! Think about that all of you who maximize your 401k’s each year. If your savings rate is 10-15%, a large number of people had to be maxing out their credit cards or lines of credit to get the average to come in around zero. When the Great Recession clobbered the economy in 2008-2009, the savings rate bounced back to 5-7%. Remember, this was when the unemployment rate jumped from 4.8-11.8% so many could not save at all.
As our slow expansion proceeded in recent years, new Federal Reserve figures peg the savings rate at 2.9%, the lowest official figure since 2007. At first blush, it sounds great in the sense that people are feeling confident, secure about their jobs and are spending more. Yet, other reports of late contradict that. Moody’s reports that 2.3% of automobiles are being repossessed. Also, some 3.6% of credit cards are past due without even a minimum payment. Most ominously, the Mortgage Bankers Association has reported that 9.4% of FHA loans are now in default which is a large jump from last quarter’s 7.94%. Bloomberg Business wrote that most of these defaulted home loans are NOT from Texas and Florida which suffered mightily from hurricane damage. When I first saw the FHA stats, I assumed the adverse weather was the culprit. Not so!
What is going on? As is often the case, to me it is simple demographics. Some 51% of US either own equities via 401K or other deferred compensation plan or have some form of private holdings. As the Dow Jones continues to break records, people feel wealthier and optimistic. At the same time, some 49% of Americans have no equity positions and are struggling to get by to a large degree. That is where the late payments, delinquencies and defaults are largely coming from these days.
Marketers need to be alert. Things may be great for you, your family and your friends. The rising tide has not lifted all boats. Depending on your business and target audience, things may not be nearly as stable as they appear.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Starting in the mid-1960’s and into the 1970’s, the savings rate began to fall. People borrowed a lot more for homes and vehicles and the credit card became ubiquitous in many American households. With the exception of the 1974-1975 period when we faced inflation, recession and Nixon’s resignation, the savings rate never saw 10% again. By 2006-2007, some private estimates had the savings rate at zero! Think about that all of you who maximize your 401k’s each year. If your savings rate is 10-15%, a large number of people had to be maxing out their credit cards or lines of credit to get the average to come in around zero. When the Great Recession clobbered the economy in 2008-2009, the savings rate bounced back to 5-7%. Remember, this was when the unemployment rate jumped from 4.8-11.8% so many could not save at all.
As our slow expansion proceeded in recent years, new Federal Reserve figures peg the savings rate at 2.9%, the lowest official figure since 2007. At first blush, it sounds great in the sense that people are feeling confident, secure about their jobs and are spending more. Yet, other reports of late contradict that. Moody’s reports that 2.3% of automobiles are being repossessed. Also, some 3.6% of credit cards are past due without even a minimum payment. Most ominously, the Mortgage Bankers Association has reported that 9.4% of FHA loans are now in default which is a large jump from last quarter’s 7.94%. Bloomberg Business wrote that most of these defaulted home loans are NOT from Texas and Florida which suffered mightily from hurricane damage. When I first saw the FHA stats, I assumed the adverse weather was the culprit. Not so!
What is going on? As is often the case, to me it is simple demographics. Some 51% of US either own equities via 401K or other deferred compensation plan or have some form of private holdings. As the Dow Jones continues to break records, people feel wealthier and optimistic. At the same time, some 49% of Americans have no equity positions and are struggling to get by to a large degree. That is where the late payments, delinquencies and defaults are largely coming from these days.
Marketers need to be alert. Things may be great for you, your family and your friends. The rising tide has not lifted all boats. Depending on your business and target audience, things may not be nearly as stable as they appear.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
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