Mass merchandiser channel Tag

[caption id="" align="alignright" width="243"]Lady Gaga performing on the Fame Ball tour in ... Image via Wikipedia[/caption]
For some time, marketing has been dominated by the theory that the way to success is getting your most loyal consumers to buy more. As a result, it’s become popular for marketing “guru”s to declare the end of mass marketing. There’s just one problem: it’s not true. The best discussion of this reality that I’ve seen recently is found in Byron Sharp’s book “How Brands Grow” (2010, Oxford). Let me share a few of the realities I found in this excellent, and challenging, read. Remember the “80/20″ Rule? It’s Wrong. In the 1930′s an Italian economist named Pareto suggested that 80% of a country’s wealth come from 20% of its citizens. Since then, this suggestion has been applied where it shouldn’t and been turned into a “rule”. (One such rule might be that “80% of manufacturing errors come from 20% of the process” – something that is sometimes true.) In marketing, the 80/20 rule has come to claim that 80% of a company’s sales come from 20% of its consumers. Marketers use this to claim that the fastest way to increase profit is to convince the 20% to buy more – an idea that glorifies niche marketing and loyalty programs.

In Marketing...there Are Fundamental Problems With the 80/20 Rule.

Sharp analyzed this rule with hard marketing numbers from a large number of client campaigns. Let me note three findings:
The most loyal 20% of consumers drive only 50% of purchases – not 80. The top 20% are the most expensive (in marketing dollars) way to increase sales. I’ve found they are often fully satisfied and don’t want/need more from your brand. Today’s loyal are tomorrow’s disloyal. Sharp documents the human animal’s polygamous brand tendencies – making purchases from a wide range of brands. One result of brand polygamy is that a very large number of today’s loyal customers will be less loyal in the future.
Net out: Loyalists may just be the worst place to invest a large portion of your communication dollars. So How Do Big Brands Succeed? Sharp suggests part of the answer is in the Double Jeopardy Law:
“Small brands have far fewer customers and those customers buy slightly less often.”
So brands that grow big do so by reaching out and expanding their base of consumers. For a taste of what Sharp has to say, see his presentation in this Ted video. Sharp points to Apple as an example. Tech competitors blame Apple success on fanboys. But Apple has become big because my neighbors have iPods, iPhones and now iMacs. (Just look at the vast amount of Apple hardware on airplanes owned by people you’d never expect to buy Apple.) This is true of brands like Nike and even, I suspect a brand who makes loyalty the centerpiece of their marketing like Nordstrom. In a category close to my heart, it’s true for DeWalt drills. Yes, a lot of contractors buy them. But contractor sales don’t make DeWalt huge. DeWalt is huge because suburban garages are filled with DeWalt drills. Doesn’t Social Media Show Niche Marketing is More Powerful? Not when you analyze the total communication picture around social media. “New media success stories” are mostly mass media success stories given additional legs in social media. How so? In most cases, new media’s role is to create enough awareness to get mass media outlets to deliver coverage in TV, print, newspaper, radio, etc… Then, and only then, does the big impact start. It's amazing what a little print can do for a business. If done well, it can drastically change the outcome of any campaign. For two examples look at Susan Boyle’s record sales or Lady Gaga’s massive YouTube numbers – both are the result of traditional media exposure. (Just notice how much print space Gaga gets.) And the recent Old Spice campaign generated

In its infancy, advertising was an interruption. Ads were part of the price of watching TV or flipping through a magazine. More recently, brands have experimented with ways to make their messages desirable in their own right, via social engagement and branded content. But at a Social Media Week event at the Time-Life Building in New York City this month, Gabe Zichermann argued that in the future, brands will use game mechanics to go beyond just getting a customer’s attention. Instead, they will make themselves a part of the rhythm of their customers’ lives. Games are “a process, not a destination,” Zichermann argued. Zichermann said he defines “gamification” as the use of game mechanics and game-based thinking to solve problems and create user engagement. But more broadly, he explains, a solid game-based marketing program is really just the final incarnation of the loyalty programs businesses have been using for almost 200 years. In the first phase of loyalty programs, customers were given free merchandise for buying a set amount of product. Think of those cards that promise you a free pizza after you buy nine pizzas at the regular price. These are still the most common form of loyalty program, he says, but they’re not the most effective. They tend to offer incentives

If you think that social networks free you from needing to use blogs to get your message out, think again said Technorati CEO Richard Jalichandra during his 2011 Blogging Success Summit keynote address. Technorati’s annual State of the Blogosphere report finds that consumers trust blogs more than ever. A few of the survey’s findings:
  • Blogs are in, traditional media is out. More than a third of consumers said that blogs are becoming a more valued source of information. In addition, 39% predict that in the next five years, blogs will be a major source of news and entertainment over traditional media.
  • In blogs we trust. Blogs ranked about the same as traditional media when consumers were asked which sources they trusted for brand and product recommendations. These groups were only secondary to

CPG and Retail Companies Must Wean Shoppers Off Price-Only Related Merchandising for Future Success
Magnificent Mile Apple Store
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CHICAGO, Jan. 20, 2011 - The new year creates an opportunity to review product and retail strategies with a view toward continuous improvement. Nowhere is this more relevant or important than in merchandising strategies. To take a closer look at these strategies, SymphonyIRI Group released its current issue of Times & Trends, “Merchandising Trends: Achieving Differentiation with a Shopper-Centric Approach,” which explores current and emerging merchandising trends that CPG marketers have embraced during the last few years in an ongoing effort to satisfy shoppers’ rapidly changing definition of value. SymphonyIRI anticipates shoppers will remain conservative in their purchasing habits, but evolve their definition of “value” slowly away from the almost singular focus on price that has shaped behavior for the past three years. The new focus will be one that integrates other factors, such as ingredients to support increased health and wellness, packaging and convenience. “Approaching CPG merchandising from a shopper-centric perspective is critical and will become increasingly

Image representing Facebook as depicted in Cru...
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SmartPulse — our weekly reader poll in SmartBrief on Social Media — tracks feedback from leading marketers about social-media practices and issues. Last week’s poll question: Do you think Facebook gets more attention than it deserves?
  • It does not deserve this much attention — 47.62%
  • It is worth all the attention it’s getting — 31.22%
  • I don’t pay attention to all the hype around Facebook — 21.16%
Whether it’s offline or online, everywhere we turn someone is talking about

Netflix
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This morning’s New York Times reports on the the 2010 Nielsen wrap up. And the summary? “TV Viewing Continues to Edge Up” (click for link). In fact, TV prognosticators, programmers and ad practitioners today have to sort out the contradiction between: (a) the venture funded hype about internet TV, (b) the legitimate possibility that some kind of internet distribution could harm the TV business, (c) the good consumer value that might be created with various kinds of internet distribution, and (d) the continuing health of traditional TV. (Beyond the Times, last week we received this solid report about cable subs from Time Warner.) TV clearly will be changing. But will it be destructive change like has happened to newspapers? I doubt it. TV is a very healthy industry – there’s lots of money and