Typhoon Haiyan and Filipino Brand Equity

As I write this post, my heart continues to grieve the loss of my countrymen.  A few weeks ago, the strongest typhoon recorded in history decimated a large portion of the southern islands in the Philippine archipelago.  As the wreckage piled up, the government rushed to calculate the economic destruction, but can you truly value human life?

I continue to pray for the recovery of my countrymen as we band together to weather the storm after the storm.

But great lessons have emerged from after the storm regarding brand equity.  The first is about our current president, Mr. Benigno Aquino.  There is no stronger brand in Philippine politics the the Aquino brand.  From class we know that brands can outlast lifetimes and ownership, and that is true for the brand that is Aquino.  In fact the brand seems to grow with strength as personas pass away (Benigno Jr. was assassinated which catapulted his wife Cory to the presidency in 86 and when Cory Aquino died in 2009, the surge in popularity propelled her erstwhile aloof son Pnoy to his status today).  The Aquino brand was impregnable and apparently indestructible.  Despite seemingly incapable, Pnoy has weathered snafu after snafu in stride.  His presidency was tested early on when he bungled a rescue operation of Hong Kong hostages which resulted in almost ten of them murdered, captured live on CNN and world television.  But Pnoy endured because of the Aquino brand.  (Heck his sister has a multi billion U.S. dollar showbiz career and shes been married thrice, admitted on national TV of contracting several STD from her numerous sexual partners.  Not exactly recipe for fame in the pre dominantly conservative roman catholic nation).

Haiyan would test that brand equity.

Three days after the killer typhoon struck, the president was nowhere to be found.  Worse yet, when he surfaced, he berated local officials who sought aid and the marines to restore peace and order after rampant looting had emerged as the city of Tacloban descended into anarchy.  Lastly, his response to international coverage of the storm aftermath was altogether embarrassing, blaming CNN anchors like Anderson Cooper for not using the broadcast profession to uplift the lives of the people.   Pnoy's ratings are expected to plummet as his weaknesses as a leader have been exposed.  Can his brand equity survive?

On the other side of the spectrum we find Manny Pacquiao, the Philippines' former rockstar boxer who had his own fall from grace.  Manny just a short three years ago was on top of the world.  He had won a string of fights and was labeled the best pound for pound fighter in the world.  A split decision here and a knock down there and he was history.  His political career was in shambles as he aligned with the opposition to support a key anti life bill pushed by Pnoy.  Lastly, his decision to abandon his roman catholic faith left many Filipino Catholics smarting.  Pacquiao fought last night against Bam Bam Rios and demolished him.  From the social media response it looks as if his stock is on the uptrend once more.  During the fight, Filipinos, battle-weary and still grief-stricken saw flashes of the Manny of old, and not an old Pacquaio.  Pac was indeed back.  The Philippines has always had to look to their heroes in times of crisis and today, Manny was the hero that Pnoy failed to be in the wake of Haiyan.

If there's one thing i learned about brand equity after the killer typhoon raped and pillaged my country, its that brand value and equity, no matter how seemingly impregnable can be impaired and destroyed, even with the slightest of miscalculations.  Furthermore, brand equity lost can be gained back but only through hard work, as shown by the Pac Man.  He trained hard for this fight and we could tell, as the aging 34 year old pranced around a man 8 years his junior.

Lastly, from this i do hope that the brand equity of the Philippines, 2013's darling of the emerging markets can bounce back like Pac Man as we've fallen from grace.  In my field of work, our stock market has lost almost ten percentage points since Haiyan and the currency is reeling.  We can bounce back, for my countrymen, for my Philippines.  Be strong Philippines, we are made from sterner stuff.  Super storms come and earthquakes strike, but what endures is the Filipino spirit.
 

Brand Value?

The concept of brand valuation takes us back to the video of Rory Sutherland wherein he talks about intrinsic value.  I would like to bring back that saying that I unearthed from my highschool days that “if you bought it, you can’t say you got ripped off”.  Every time you purchase something, you perceived some value, over and above, no matter how miniscule, above the cost of goods sold.  And this is what brands will do, they are that over the top thing that catapults a pair of flip flops into a life style worth paying good money for. 

All these intangible goods, the same concept of intrinsic value as alluded to by Rory in his video are what brands provide for the consumer.  And even if you and I both purchased a cup of coffee at starbucks for 3 bucks, the $3 that we each parted with is no clear indication of how much we both really value that cup of joe.  The price agreed upon by the buyer and the seller is the floor and the sky really is the limit as to how much each of us can view that cup of coffee.  For others the intrinsic value is ten cents over and above the three bucks they paid for it and anything above the three dollars makes that purchase worthwhile.  Brands provide that over and above factor and it’s the brand that gives you the most sky’s the limit experience is the brand that will stand the test of time and span the globe.

So how then do you put a dollar value on that?  The simple answer is, you can’t.  I may love paying three bucks for a cup of coffee for several reasons.  Perhaps the barista is extra cute and I get a kick out of seeing her everyday.  Perhaps I enjoy the extra zing from Starbucks that I don’t get from D&D, whether or not its truly biological or psychological.  There can be a million things and no exact dollar value that’s why there is but a bevy of different ways of measuring and attempts to put a number or brand value. 

But just because its all but impossible to put a number on it doesn’t mean we shouldn’t try.  I think that there various attempts presented in the paper are good proxies for measuring brand value and each may have their strengths and drawbacks.  But in the end there may be true measure for brand value it does have a value as manifested in the share price of stock as opposed to more tangible measures.  Just because its almost impossible to measure, doesn’t mean that we should stop trying.  Brand value is real.  Its like the dew, its hard to see and its hard to feel, but you know its there.  And in the morning, it’ll manifest itself on leaves and the flowers, just like brand value will manifest itself in the sales of a companies offering.  

Going about it all wrong in chasing the loyal ones

After reading the mismanagement of customer loyalty article, i can't help but feel a bit gladwelly about the whole reading.  Yes i did it, i used gladwell to describe a feeling.  But really, Malcolm is the master of looking at the glass and say, its not half empty, its not half full, its something else that he'll see in his mind which will totally make sense.  The article really reminded me of his book Outliers.  Outliers explains a radical way of looking at things and at success and in short he's telling us we're going about measuring and trying to gauge success, potential and talent all wrong.  The article does the same.

Brand's inherently provide value to consumers.  They stand for something.  For some people its quality.  For others it convenience.  But for whatever reason that you almost instinctively reach out for that particular product in a sea of competition on the shelf, you do so because you like what you get, each and every time.  And this is where brand loyalty comes in.

When you identify with a particular brand, everything else seems to get blurred in the background.  And this is honestly how i shop.  I buy Nike sneakers, always and forever.  After i wear out my running shoes, i head down to the closest mall (in the Philippines malls are like parks, they're at every corner) to check out the wall of the sporting goods store named Toby's.  Its a massive wall of different runners segregated by weight, cushion, support etc.  As a Nike addict, I only seem to see the Swoosh standing out as the other fade into the background.  And as always, i don't pick the shoe, it picks me.

Companies have forever attempted to single out the loyal apostles from the herds and shoppers out there.  One thing i noticed throughout the text book was that at each step of the way of formulating our marketing plan, we are always told: resources are going to be scarce, plan accordingly.  True, we will probably want the moon and the stars when it comes to a launch, but will it be an efficient outlay?  Will the dollars spent bring in much more in return?  Should we bend over backwards to get these clients if they're not in it for the long haul?  Of course not.  Thus, the study presented in the Mismanagement of Customer Loyalty sheds light on how to find our target and to seek them out.  In hindsight, of course it makes sense to target customers based on profit and not revenue, but when you're so used to doing one thing, its oftentimes hard to think differently.  Hence, the Gladwell moment.  But in any case, the study helps show companies who to invest in and by how much, and who simply to cut lose and forget about them.

As companies continuously strive to retain customers, grow market share and boost profits, the article allows for a new way of viewing who we should be running after and who, as we say in the Philippines (although the phrase is obviously lost in translation) waste our saliva on.  (It sounds so much better in my language).    

Sometimes brand is better than new

The topic and case of Cullinarian got me thinking about an advertisement i saw a couple of years ago for BMW pre-owned cars.  The tagline read "sometimes brand is better than new".  The witty ad does seem to capture pricing behavior for premium products likes BMW.  The brand reflects quality and prestige and thus price discounts are not expected, unless of course you are buying a second hand Bimmer.  And even then, you'd be willing to part with a hefty sum of money to own a piece of that German driving machine.

In the Philippines, its very rare that you have discounts on elite brands like BMW or Rolex.  Just like BMW, Rolex watches are sold in second hand stores.  What is really prevalent nowadays are second-hand hand bag stores in Manila.  I've seen these stores in Hong Kong as well but I've yet to spot any in the few recent visits I've had in New York.  These stores look just like a regular high end boutique shop along 5th avenue.  The thing is, the hand bags sold there are second hand Louis Vuitton pieces and the like.  Some brands I've never even heard off, but the grape vine does say you can purchase a small car with them.

When you've commanded a certain degree of prestige as a brand and you strive to protect this image as elite, price discounts may play a lesser role in moving sales even to the point of not being used at all.  In this case I do see VP Janus' apprehension to pricing discounts.  Imagine your brand is so renowned that a second hand vehicle of yours costs way more than a brand new Japanese make!  Don't car's depreciate exponentially when you roll it off the parking lot of the dealership?  And yet, as the ad says "sometimes brand is better than new".

In many cases prices are more about the perceived value or intrinsic value it can convey than the actual cost of goods sold.  This phenomenon occurs more so in premium products and thus promotions may be in the form of gift promotions so as not to damage the brand's reputation.

Culinarian

One of my many adventures of living in the U.S. was learning how to finally cook and to appreciate good cooking equipment.  Back home i never really had to do any of the cooking but living away from home alone forces you to learn quick.  In any case the Cullinarian case introduces us to pricing strategy in the case of a premium brand.  If the brand is known for being a premium offering, would a price discount help push sales?  The obvious answer would be yes it would as price, even for products in premium categories, is a major determinant in the consumption decision.  But we have to ask ourselves, how else can a price discount affect our brand?

From the case, the VP Janus seems allergic to anything that does with lowering prices as he feels it sort of belittles the brand and tarnishes the "American icon".  He even goes so far as to dislike ".99" pricing which i feel goes a bit too far.  I mean, if its going to cost me 999.99 for a 5-piece set of cookware, i don't care if there's a 99 cents there, thats a lot of money and i wouldn't associate the .99 pricing to being a budget item.

Anyways, on the other side of the spectrum you have the sales team lead in Brown who wants to expand market share and offer 30% discounts.

I'm a discount shopper but im also a branded shopper.  Let me explain this a little bit.  I usually go off and would like to buy the high end stuff, but i always always have to wait for a sale.  It may not have to be a good sale like a clearance type 50% off, but there's something at the back of my mind that screams, just wait until you "save a bit".  If im buying a premium product, i don't think that getting a 20% discount diminishes its prestige.  Or maybe im just happy to get the product for a little less.

As for the case, i think a brand like Cullinarian, that wants to protect an image, a small price discount on group sets would best be in-line with the goals set by Mr. Roux.  A discount of 10-15% on select lines that perhaps need a little push will not damage the reputation of these prestige brands.  I didn't particularly agree that the 2005 price promotion on the popular items was a good move.  I'm guessing the promo did well more so because they focused on the fast moving items.  If they're popular, maybe they need not be afforded a discount.  The group sets, possibly with only one or two of the "essential" items could be sold, which could increase market share, preserve the image and force buyers to want to buy the popular pieces like the 10-in frying pan to complete their set.  If sales are good, this will widen distribution as more trade partners will line up although they will have to fit the current line-up of high end outlets.

Pricing for premium stuff may be tricky, but customers and potential customers always welcome a little savings.

Magnum in the Manila

The Philippines is a tropical climate.  Man its hot over here.  We have two seasons: Hot and Hot and Sticky.  Oh you can probably add Hot and Flooded to that list but the government might have me arrested for spreading that information as they've gotten pretty sensitive about that issue.  Anyways, where was I, oh yes Manila is hot hot and hotter.  So being a tropical country , ice cream sells better than hot cakes.  You can get ice cream for as little as a dime, i kid you not.  That's how popular we have it.  Of course if you want some Hagen Daz thats a different story.

Anyways, ice cream bars and their counterparts are abound in Manila, selling for roughly 50 cents.  That was the going rate and nobody dared to stray from that norm.  People priced accordingly and companies would work around that assumption of price and made ice cream bars of quality that could fit this prize range.  Until Magnum arrived.

Magnum was the first "premium" ice cream bar outside Hagen Daz and they priced it at $3 a stick.  Now sure its still cheaper than Hagen Daz but initially consumers were appalled at the price point.  Three bucks for ice cream, is it made of gold people would ask.  But there was something about Magnum that got people curious.

Ads portrayed people eating Magnum as high society.  Or better yet, someone who had attained high society status.  Usually they showed a working class man enjoying the good life, mixing it up with celebrities and the rich folk.  Magnum was not available in your 7-11, you had to find a particular "high-end" supermarket that carried it.  And even if they did, it always seemed to be in short supply.  The whole thing about it from the wrapper down to the stick seemed a little more "high-end".  And people ate it up, all three dollars of it.

The ads, the channel distribution choice, the price point, the product and the packaging all contributed to the perception of value, glamor and prestige.  Now im unsure of how Magnum is perceived in other markets, but here in Manila, its known as all these.

It got so bad that nowadays in the Philippines, we refer to things as the "Magnum" of the beer world just as people have used the "rolls royce" of chocolate.  Magnum, for richer or for poorer, has been ingrained in Filipinos minds as value and prestige.  And they have a great integrated marketing communications strategy to thank.

Hond Prestige Cars

I remember writing a paper about Honda Cars Philippines when I was in high school because i felt that they had ever so cleverly played their cards right in the very competitive sedan market in the Philippines.  Back in the 90s, Honda was pretty much a motorcycle company.  Sure they were famous, but only if you were in the market for a set of two wheels and not four.  Toyota, Nissan and Mitsubishi had all been enjoying market share by virtue of first mover advantages.  Then out of nowhere, almost unnoticed Honda unveiled a car fleet.  The result was uninspiring that not too many people knew that Honda actually had cars.  A forgettable year went by and Honda Philippines unveiled a dandy.  Enter prestige cars. 

It was so clever because it was so subtle.  Honda Philippines dubbed themselves a prestige brand.  No government accreditation no nothing, they just called themselves as such.  They rolled out seemingly newer models and they were priced higher then the competition and yet they sold like hot cakes.  Everyone wanted a civic or an accord.  Everyone wanted a CR-V over the Rav4.  Amazing.  And all Honda had to do was to draw up a contract that all Honda car buyers had to sign that said that they would never sell their car to a taxi company or use the car for hire.  Boom.  For just the semblance of some legal protection the Filipino consumer latched on.  If i buy a Honda ill be part of the elite group of prestige car owners.  I wouldnt have to suffer the fate of Toyota or Mitsubishi owners who ran the risk of running around the metropolis in a car that looked like all the taxis out there.  I want a Honda!

This was exactly what everyone said in 1990 and Honda has not relinquished its top spot since.  Amazing what a non-binding contract can do to create value for the customer and catapult a car into a prestigious status symbol.

When in Quebec do what the French do?

The Cleo case brings to light the mistake of taking to market a product that you may assume to do well, without actually studying the target market itself.  I just concluded a class that took me to an in-country experience in China and I was able to witness firsthand how diverse markets across borders can be.

The Cleo case showcased several mistakes by management ranging from the type of strategy to the failure to partner with retailers.  But what I did wanna focus on was the mistake of Colgate Canada to assume that works for France would work in Quebec as well.  Going back to my class that took me to China, which was entitled transnational management.  Basically we studied cases wherein successful U.S. juggernauts had attempted to leverage their expertise and transplant their success overseas to countries like China.  Big companies like Walmart ran into all sorts of trouble, attempting to bring the business model lock stock and barrel to the mainland or far east.  The big lesson of the day is that we truly need to learn who we are selling to, understand what makes them tick before we attempt to sell them anything. 

The end results can be disastrous as we fail to sell the consumers what they really want or in the manner that they are looking for our product.  I feel that Colgate had assumed wrongly that since Quebec has ties to France, that the business model that had been a winner in France would fly in Canadian markets as well.  Now the French connection may of course have been tapped, but Colgate would have benefited from adapting the French model to the nuances of the Canadian market.

Polaroid Redux

I remember my dad telling me about his old camera: a polaroid.  He even showed it to me and I thought it was pretty cool.  The machine pretty much was a gadget to capture moments with the instantaneous gratification of seeing the moment that had just passed.  Be it a birthday party, a graduation, a nice scene whatever, Polaroid captured it and voila you got your picture in a minute.

I never actually did see the Polaroid in action, or the instant memory maker gadget, in action as back in Manila, nobody sold the cartridges.  Furthermore, Polaroids didnt take very "good" images if you compared them to standard film shots which, if shot like a pro, produced much better quality so by the time i was conscious, Filipinos were winding those disposable cameras.  While im on the topic, i did wanna mention that "Kodak" is synonymous to picture in the Philippines, even if most people use DSLRs nowadays.  Just another example of how brand equity can be so pervasive. 

So if Polaroids became extinct and gave way to the regular film cameras and then eventually film cameras died out as digital cameras became cheaper and cheaper, why has my good friend quit his job to open up a Polaroid shop?  I really can't explain but Polaroids are back!  Ok fine, they're called Instamax but heck its the same thing.

Resurrecting from the grave, Polaroids made a comeback maybe two years ago in Manila and have more or less started a cult following.  Im not sure if they are equally big in other markets but i guess Polaroids have filled in nicely for that segment of society that wants to be different.  It makes little sense to me as the cartridges are still relatively expensive (compared to digital flash cards) and although the quality of the prints have improved dramatically, you still dont have the luxury of digital photoshop or the otherwise never ending supply of mulligans when taking photos.  I guess Polaroid has come back to fill in a new need: the eccentric Manileno's desire to be different in how he or she takes photos.   

Levels of consumption Philippine Style

We consume every single day, its what we do as human beings. In the world of consumerism, i think buying things has been taken to a whole new level.

The Philippines is an archipelago in South East Asia and is by all means a third world economy.  We're a country that has been growing in the last two years but sadly our per capita income still lags neighbors such as Vietnam.  One peculiar thing about the Philippines is that despite its status as a developing economy, we have one an economic structure of a developed market.  We are, as many economists put it, a wanna-be U.S. economy where consumption--in tandem with the services sector-- is the main driver of growth. 

Filipinos simply love to consume.  In fact consumption drives almost 60% of the economy.  Forget about investment, buy things now is our motto.  This is where i think the levels of products comes into play at least in for my understanding. 

I may not be as goo goo ga ga over shopping or buying the latest gadget.  But i am a sucker for a good cup of coffee.  Now think about a cup of coffee as a product and I guess the core reason one may want to have this product can range from a) caffeine fix b) wake me upper c) status symbol.  For most Filipinos letter C drives a lot of the consumption for second wave coffee houses like Sbucks and Seattle's Best in the Philippines.  The Actual product of course is the latte itself and the augmented product im guessing is the personalized service you get from a place like Sbucks where baristas are supposed to know your name, your favorite drink and the type of milk you take in your coffee.  I'm tempted to say that an augmented product would be the specialty coffee drinks that you can only find in the particular store or the special discount cards that the particular coffee house offers.  Right around Christmas time, Starbucks will unveil its christmas drinks (toffee nut latte, peppermint mocha etc) and convince you that you need to drink 50 of them before this date to get a limited edition starbucks planner.  In the mad dash and frenzy i bought a 100 drinks, picked up two planners and have yet to open them.  Man did i fall for that.  But heck, they got me to buy all those drinks in that short a period of time. 

We are a world of consumption over here in Manila.  Live for today for tomorrow is another day to spend.  Somebody teach us how to save.

Rory and Revealed Preference

Revealed Preference

Watching the video of Rory Sutherland brought back memories of highschool economics.  I am a trained economist so these were indeed good memories as highschool was my first encounter with the profession I have chosen.  I don’t remember too much from the lessons save for one thing that my teacher said, a line that all of my classmates to this day will recite with a giggle.  Mr. Lirio said “you can’t ever be ripped off if you bought it”.  Now on first glance this phrase doesn’t seem to make a whole lot of sense.  Just getting back from China where most of the stores have “fixed” prices, there were several times that Kelley students found themselves shouting just that (Oh Sh*t I got screwed!!!) after they had found out that maybe they paid “too much”.  The phrase “I got ripped off” means that you paid too much for a physical good or the value of money you parted with is no way commensurate to the labor, capital and cost of resources to make the good.  But this phrase highlights Rory’s theory about intrinsic value. 

When you buy things, you do so by employing what an economist would term as “revealed preference”.  This goes back to Malcolm Gladwell video about focus group discussions and coffee.  Nobody in a room of people, in an environment of a fixed set of parameters, with guys hovering around with notebooks, will ever tell the “truth” with regard to their preference for coffee.  FGD’s may help in determining the explicit value of a good, the cost of the factors of production used to make the good or service, but it is in no way a viable gauge for intrinsic value, which oftentimes will vary wildly between consumers. (I really like my coffee dark and strong, seriously!)

Malcolm shares with us that people will not tell you what kind of coffee they like.  This is true, but their buying patterns with the product or other products may underscore the intrinsic values they cherish. 

Going back to Mr. Lirio’s statement that “you can’t be ripped off if you bought it”, I think he meant to say that as long as you bought it, at the time of the sale that the vendor and the buyer agreed on the price, the consumer stacked up all the value they perceived the good to have, both intrinsic and extrinsic.  When my sister buys a pair of $50 flip flops from Brazil I snicker and sneer knowing that I have the local brand, which is oftentimes of better quality and costs $3.  But perhaps my sister tacks on $42 worth of self-esteem with these Brazilian made footwear or she feels $42 richer and hotter when she wears them.  If she derives that from the flipflops, she’ll still feel “richer” and better off about buying the Brazilian made product compared to the $3 stuff I wear (although i do think they are actually made in China but heck its the logo that matters). 

Rory also had a very insightful example about potatoes and how to slightly modify consumer attitudes towards products.  Back in the 90’s, Toyota dominated the Philippine car market via first mover advantage.  Honda came in with its initial lineup and pretty much fell flat on their faces.  Sure Honda had a great name, if you were in the market for a motorbike but nobody wanted to buy a Honda car.  Then out of nowhere Honda decided to pull the potato trick.  Honda came back a few years later with a "revamped" line-up touting better looking models, seemingly better build quality and more powerful engines.  What did the trick however was to brand Honda Cars Philippines as “prestige cars” wherein buyers of Hondas in the Philippines were asked to sign a contract to never operate their vehicles for public transportation.  The mark of “prestige” in the end was nothing more than a gimmick as the government does not classify cars as such.  But the market ate it up as most people who wanted a BMW but could not afford one were now given a “new” choice for their luxury brand option.  The market may have never been able to communicate such a thing in a FGD but it sure did “reveal” it through their acceptance of a product.  The added intrinsic value was what moved people away from Toyota and to Honda.  The extra labeling caught on like wildfire and Honda has never relinquished its car segment dominance since then.  Subtle ways to alter consumer revealed preference can go a long way to shaping your company’s future.

So I guess the battle is knowing your market and why they buy things more so in the aspect of intrinsic value than the actual cost to manufacture a good because this is the real gauge and standard by which people shape their purchases.  

Data is power- But it aint that sexy.. yet

Its supposed to be a bye week but i guess i should dedicate one blog post to the video by Dr. Rosling.

Hans Rosling reminds me of a prof back from school so it was surreal watching the video.  Just like my economics professor, Hans Rosling talks about numbers like i talk about sports.  Its almost funny.  His fascination with numbers of course after watching his video is well-founded.

I guess what really struck me about the video was how he had showed us that what we think we know and what really is are usually very very very far apart.  The whole concept of pre-conceived notions and ideas struck me as I probably would have scored lower than the chimpanzee myself.

As an economist we are taught to use numbers to explain phenomena of human behavior.  Somewhere in the midst of all the data and econometrics i drowned.  But what i did know was that data can tell a compelling story, we just need to know HOW to get it across.

Data is power no doubt.  It can tell us what works and what doesnt.  It can debunk all that we used to think we know and more.  It can change the lives of the people of the world.

But data isnt sexy.  Heck I need to work with numbers for a living and to this day numbers scare me.  They're so hard to work with and they tend to overwhelm me no matter what software application is developed to make handling the stuff easier.  But data is power and this i feel is a great point he made.

If we knew how to sell the idea.  If we knew how to package it and make people know just how powerful data is, then we'd come up with the right solutions to the problems of the world.  But since people are stuck with bad data and their pre-conceived notions, we usually end up with political solutions that don't quite fit the problem in the first place.

Data is power.  Now we need to make it sexy. With Dr. Rosling, hopefully it will be.

The Fashion Channel Stumbling on Success, Shotgun Approach Wont Last Forever

The assigned readings of the Fashion Channel case and the reading on "market segmentation, target market selection, and positioning" sort of gave us both the theory and concrete example of how to go about figuring out who we're after, how we get to them and how to solve the problem they're looking to solve in the first place.

The Fashion Channel had initial success after a couple of years of simply "stumbling on success".  I find it amazing that they had no idea who their target market was and they had almost zero data on their viewership profile.  Sure they knew that ladies this age to that age watched the show but for a company like the Fashion Channel to not know their target market and as a result not have a positioning strategy just shows us how much more they could have done if they know exactly who they're after.

The reading gives a very clear and concise way of figuring out how one can go about slicing up the huge market into bite sized pieces so we can sift through to figure out who exactly is out there.  Once the market is diced up, whether it be vie segmentation via "benefits sought" or "observable characteristic" at the very least its a tad bit more manageable from this point forward.  I do think that both forms of segmentation should be carried out just so the company knows what people are looking for (which may be a little more up in the clouds) and on a more practical note, what can be observed.  It may be difficult to truly know what benefits our potential customers may seek, but it sure is more viable to segment from behavior exhibited and displayed.

Once we know how things are sliced up we can then decide who to hit and how they want to hit them.  Its very difficult to hit something that you can't see, but as the Fashion Channel showed, it can be done.  In the same vein, we can also see that even if FC did have initial success via the shotgun or fish net approach, it was unable to sustain the luck forever with CNN and Lifetime breathing down their neck.  Its much easier to build it if you know what they want to be built.  In short it doesnt matter if we build what we want to build or what we think the market wants us to build because in the end, it may be very far from what they desire in the first place!  Knowing who we're selling to and what exactly they want will help the group move on productively. The reading goes on to explain that once you have your target market, its easier to go about conception, production, marketing, finance and delivery.  Without a target market you're just firing your shotgun and hoping to hit something.

After knowing who we're selling to, what they want and how we can answer their needs, we have to make sure the market knows who we are and how we fit into the equation of making things work out for them.  You can have a product that fulfills their very needs but if they don't know it, they don't know that you're better than the competition then it wont really matter.  If you wanna think about it from the point of view of dating, you might like this girl, who's probably got a line out the door asking her out and you know what she wants and you know you can make her happy.  If she doesn't know then it doesn't matter.  If she doesn't know that you're better than Bob from next door then she just might choose to go out with him and not you. You have to position yourself and let her know, "tell her about it, tell her everything you feel..."

Lastly its nice to see how brand names have been able to transform to replace the nouns themselves.  In the Philippines we say Coke to refer to Soda (even Sprite is Coke would you believe), we call taking a picture Kodak and we say Magnolia to refer to ice cream.  Its a hallmark for any brand to achieve this status.

 

No longer just an afterthought

Going through the readings this week, it was good to finally get started on how the marketing plan gets broken down.  Just as in all things, its always beneficial to begin by knowing the lay of the land, taking a sniff and see where the wind is blowing.  Doing a quick, where we, who are we, what do we have going for us, what do we have going against us, what can we make use of and what can potentially mess this whole thing up always works wonders in starting off on the right foot.

I did notice that the whole mission-vision process is something that I would have, prior to this class associated with team buildings or annual planning sessions and the like.  Well that was usually where I'd hear those terms so I have to admit it was a bit "new" for me to see it from the point of view of the strategic marketing set of eyes.

I guess one thing that really stuck with me at the beginning of the class was when it was mentioned that in the past, the marketing plan was more of an afterthought.  It was that something that had to be done after all the planning and targets for the year were formulated by top management and oh ya, by the way, what's the marketing plan for that?  Sort of just an addendum to the whole planning session and compiled by the marketing department in the 27th floor of the building.  Nowadays its very different, as the marketing plan is integral to the entire business endeavor, tracing its roots in the mission-vision of the company and moving congruently in unison.  Of course you can't just tack it on like a phone case, its the marketing plan!  Perhaps that's why you got all sorts of advertisements, print, tv, radio, that never really made sense with the product or the company that it represented.  There was no flow and it just wasn't in sync.

For my work as an economist at one of our local banks, we meet every Monday with the top management of the bank to discuss the rates we'll be setting and the products we're going to need to offer or push.  As global interest rates have remained depressed for quite an extended period of time (although this might change all too soon!), banks in our markets have had to fight tooth and nail with the competition to get our clients.  We've resorted to slashing rates, all sorts of ad campaigns, a whole beggar-thy-neighbor attitude that would bring back vivid dark memories of the Lord of the Flies.  Anyways, after I deliver the usual round-up of economic matters I get to listen-in on what they're talking about and what the next product is going to be.  Thus its good to note that the marketing department is represented more so now in these meetings as they need to be consulted as to how we're going to sell the products and who exactly they wanted to target.  I'm sure in the past these finance people would not feel the need to develop the weekly strategy with inputs from the marketing department but things have indeed evolved and things have indeed changed.

Just last week our group conducted a huddle with the entire treasury group because we were getting beaten bloody to a pulp by the market and the competition with all the talk of the Fed taper and the Syrian crisis.  The treasurer ended telling us "Times have indeed change and the writing is on the wall, the sooner we adapt and change, the better for us all".  So i guess this ties up the whole need to develop and evolve as a financial institution and wherever our work will take us, but what is now more apparent is that the marketing plan is no longer a mere afterthought, no longer an addendum, no longer just an add-on.  But rather it forms an integral part of the success of the business as we face stiff challenges, not just from the competition but also from the ever volatile external environment.  

Not so great experience with Amazon, don't worry its just a glitch

Moving back to Manila had its drawbacks.  One major setback was the loss of broadband as we know it.  Broadband here is just broadband in name.  I guess everything is relative.

In any case, I attempted to carry out my first international experience with Amazon when i ordered text books for school.  Unfortunately part of the restriction for international orders is that you can't get used material to be sent over. 

To make a long story short my books never arrived.  The local postal carrier lost it.  So i had to order a new set after waiting for two weeks.  Of course that took forever so i finally get my books after a third shipment.  Good thing was that Amazon sent over the third shipment via UPS, bypassing the perils of the Philippine postal system. 

I guess that's whats going to keep Amazon from degenerating into the other online websites.  They listen to the customer and they try to stay two steps ahead.  Most other companies probably would have been all hands off with the situation.  I'm quite happy (although equally peeved about getting hold of my books more than midway through the term!), with the way Amazon handled the situation.  And i guess for all the great years of service, I let this one slide and deemed it just a hiccup in the process of getting better.  As Bezos noted, its day one and they'll work that kink out.  Because of their almost consistent commitment to my needs, it built such a good impression that one infraction was negligible for me. Constant attention to detail is noticed by the customer, and it creates a lasting image of a good company.  In short, i still value Amazon, because i feel they value me.

I guess thats how we have to live breathe die as business students.  Think customer first.  Think customer second.  Its all about providing value to our clients because ultimately thats also how we provide shareholder value, by providing customer value.  Kelley connect week for me was a constant barrage of Phil Powell up in your face threatening to hunt any of us down if we even thought about destroying value to customers and value to shareholders. 

It should be in our blood. Our DNA.  Whether or not we're going to go full time into strategic marketing or not.  Inventing on behalf of customers to provide value will be key in our success as leaders in our respective fields.

Amazon experience and the first breeze session

Being based in Manila, I am unable to attend Breeze sessions live and so i have to make do with catching up with watching the recorded sessions.  I guess it can be quite fun , being a spectator, watching the action play by play and reading what goes on in chat room.  Now i really wonder how this experience would have been if we had a real in person class because the breeze sessions seem to bring a whole new aspect to the learning because of the constant and instantaneous feedback the professor gets just from the chat room.  Its not like he can write a script as to what the next question will be or what one of the students will type in.  Its very interesting how the discussion would feed off what was being said.  If you notice Prof. John encouraged the discussion as its what really gives the class more life.

I discovered Amazon while living in the U.S. in 2006, transforming this man from Philippines into a full time avid online shopper.  I purchase the majority of the things i buy online and Amazon has been and appears to always be the benchmark for online shopping experience. (As the text book mentions, retail stores are worried about shoppers who check out and fit the products in the store simply to go home and purchase the goods on amazon--THAT'S ME! Guilty as charged).

I didn't quite understand it yet then, but Amazon just seemed to work the best for me compared to all the other shopping sites.  The interface was more user friendly.  Selection always seemed better. It was easier to compare, and hey they even offered free shipping.  Amazon, as correctly pointed out was selling you the "online shopping experience" and not the products available on their site.  If you think about it, this open up the market for Amazon to just about anyone who wants to buy just about anything.

If Amazon was just about selling books, they'd only cater to the niche crowd that was really into reading.  If they were in the business of selling towels online, then they'd only cater to people who needed towels at any given point in time.  However, because Amazon is about selling the best online shopping experience, their market is just about everyone.  That's a really big market.

Secondly, Amazon actively engages customers and all but tries to pry feedback from you.  After a purchase Amazon will ask you how they did.  They'll ask you if the shipping was efficient.  They'll even ask if the shipper used enough of those puff plastic bubble wrap or if the box for your AAA batteries was way too big or way too small.  Sometimes I laugh at how trivial the questions can get and how the company appears to fuss over the details but heck, no wonder they continue to be good at what they do.

Amazon has always been the standard for online shopping for me.  And since im one to shop online for almost all of my stuff, I patronize Amazon quite a lot.  Now that I've been introduced to Jeff Bezo's i understand why Amazon operates that way and why the online shopping experience has always been a little more fun and convenient through Amazon.  Its because they fuss over details. Its because they always engage people like you and me.  After they get in touch they figure out what you'll like next.  And they'll never give up on doing this, because as Jeff said, its always day 1..  

The week so far

Read chapter 1. Check. Watch video of Jeff Bezos. Check. Watch the first Prezi. Check.

Prior to this course C570 Manileno had one module as his "marketing background".  So suffice to say, he didnt know all too much.  Of course he was exposed to and oftentimes bombarded with several facets of integrated marketing communication, one of the elite courses at his university, but it was all a bit too hazy for him as its been ever since.

Somehow the first week so far sticks a bit deeper than his entire experience with marketing to date.  First of all C570 Manileno as you might have guessed is from Manila and thus he had no idea who Jeff Bezos was, even if he had on numerous occasions purchased books and consumer goods on Amazon.com.  The video was refreshing if not inspiring as this side of the world sorely lacks the type of enigmatic figures that typically challenge your core.  My ultra favorite "thing" that Jeff Bezos knows is that "its always day one".  It invites several themes that are most important to strategic marketing and I guess to life in general.

Its always day one suggests that there will always be room to innovate. There will always be room to grow and get better.  If every company or person had this mindset, to have the giddy little kid inside all pumped up for his first day of school, to have the puppy love butterflies in their stomach first day of a playground relationship then we'd never stop getting better.

At the same time, "its always day 1" can also encapsulate what we always say in financial markets, you may have gotten burned and lost millions today, but tomorrow is another day.  Another day we can make it back. Another day to get ahead in the market.

The second most pressing thing that captured my limited attention span would be that marketing is not a one way street, in fact its an perpetual process of learning about your market and then ensuring to cater to that market.  Its an on-going process of obsession with knowing who what when and where our customers are and then most importantly, letting the market know that we know who they are, not by words but through service.  This will truly help me not in strategic marketing but with the role i have in the financial markets.

So as I reflect on the first week's highlights, I smile fondly on the insights that it took me one week to pick-up after the years and years of being exposed to its very way of life.  Week 1 down.  So far, so great.