Helping a market grow as a segment shrinks

I grabbed the New York Times with lunch today and found myself very curious while reading today’s Advertising story about Miracle-Gro’s new campaign focusing on gardeners rather than gardening results. Why, I wondered, would the brand change course and begin trying to grow the total market rather than continue its decades-long push for greater and greater share? What was up?

I have to digress just a second here to explain my connection to this topic. I spent the bulk of my years in Minneapolis doing PR and marketing communications work for home and garden clients such as Weyerhaeuser, the Canadian Peat Moss Association and Toro. I approved the expense to have one of my staff members test for her Master Gardener certificate. I know a couple things about promoting gardening products. Second, I now have a lot of square feet of gardens at my house. ORGANIC gardens. So I decided to dig a bit.

And I dug up a couple clues to the macro trends that might be behind this effort.

Gardening, as a hobby and an expenditure, is growing slowly. The 2013 National Gardening Survey report from the National Gardening Association (NGA) showed a small increase, for the second year in a row, in lawn and garden participation and sales, with national chains continuing to dominate market share. Nationwide, the survey showed a increase of 2 million more households (2%) in 2012 compared with the year before. The study also reported that U.S. households spent $29.5 billion on their lawns and gardens in 2012 with average annual spending flat at about $347 per year. This data alone would lead industry associations to consider consumer campaigns to get more Americans to garden.IMG_0163

But then I found another, seemingly small statistic from 2008 Environmental Lawn and Garden surveys: The number of U.S. households that use only all-natural fertilizer, insect, and weed controls increased from an estimated 5 million households in 2004 to 12 million in 2008.  That’s a 2.4x increase.

Also interesting was why they only used natural fertilizers. The top 5 reasons given were:

  1. it’s better for the environment (73 percent);
  2. to reduce the risk of exposure to chemicals in my yard (59 percent);
  3. to reduce water pollution through fertilizer runoff (54 percent);
  4. it fits my way of life (43 per cent); and
  5. to produce my own, safe, fresh produce (37 per cent).

The Survey also asked respondents with a yard or garden how likely it is that they will start using all-natural gardening methods in the future. Of the estimated 100 million U.S. households with a yard or garden, 17% reported they definitely will start using all-natural gardening methods in the future, 22 % said they probably will, 28 % said they might or might not Only 10 % said they probably will not with just 2 % reporting they definitely will not start using all-natural gardening methods in the future.

Miracle-Gro does make organic fertilizers and sells bags of organic gardening and potting soil. But to most organic gardeners, natural fertilizers don’t come in bottles and bags. Don’t my word for it, check Wikipedia and read it for yourself. Given that, the gardening trends might be keeping the folks at Miracle-Gro awake at night. Now I understand the push to get more people gardening.

Planes, Trains and Automobiles — And Brand Consistency

We’ve been looking at a lot of these recently.

Driven by an acceptance that we really need a mountain-worthy car and it was time for the cute little sports car to go, in the last few days we took test-drives, sold a car to Honda, bought another from Subaru that won’t arrive for a month and arranged to borrow one from Nissan, part of our deal as Leaf leasers, if that’s a word.  A lot of automotive dealer conversations in a very short time.

And a few things stood out in the sales, customer service and brand consistency categories. The combined experience made me think about the realize – for the first time – how little brand consistency there is with a lot of automotive companies in terms of product families, brand image and customer experience. I’m going to pick on Nissan here for a second and focus on the brand family.

Everyone who knows me or has read this blog knows I have a Leaf, at least until Aug. There’s a lot to love about a Leaf, especially when you have your own garage and only have to plug the car into a wall socket to charge it every night. There are a few issues, like the heater that sucks the battery dry and the range that makes long days with multiple trips even in the city nerve-wracking as you watch the charge slip into the red zone. But for the most part, it’s fun to drive, comfortable and I love feeling like I’m trying to reduce my personal impact on the planet.

Part of the deal with leasing a Leaf is that Nissan will give you loaner cars when you want to take a trip the Leaf can’t handle, read: anything out of town and on a schedule. When we leased the car, the sales guy made it sound like we could borrow any Nissan we requested if it was available. But that’s not true. There are a couple models available and you take what you’re given. One Nissan we borrowed this summer was a genuinely awful car and a huge disappointment. An Altima we borrowed to take to Oregon last Sept. was great. It was comfortable, handled well and got decent mileage for a sedan of that size. But what really strikes me now is this: Nissan doesn’t make any other cars that really appeal to me. I went out of my way to get a Leaf but there’s nothing else in the lineup that fits me. Why, let’s start with some assumptions about how drives a Leaf.

Why drive a Leaf?

There are essentially two groups of people likely to lease or buy a Nissan Leaf. The first group is all about the environment and reducing their carbon footprint. They’re seeking high fuel-efficiency and maybe low impact manufacturing if they’re paying a lot of attention. Nissan’s new Sentra can get up to a respectable 40 mpg, but not best in class. Nissan’s hybrid Pathfinder gets 28 mpg on the highway, 4 less than our coming Subaru Forrester, which has just one engine under the hood to maintain. You won’t find the Nissan name on The U.S. Dept. of Energy’s list for best fuel efficiency  or Automobile Magazine’s list.

But it’s not only ecofreaks, as I refer to myself, to might go for a Leaf. Tech lovers unable to spring for a Tesla, wait for the Model S to come out or — like me! — fit it in their little garages are good Leaf prospects. If you wanted to get in early on EVs, you pretty much had to get a Leaf. Despite its “Innovation that Excites” slogan, Nissan isn’t the automotive industry’s leading edge technology company either.

So how does the Leaf fit with Nissan brand? Is someone considering a Leaf supposed to identify with the Rogue ads where the driver races up a ramp to land on top of a train to … You’ve seen it. What’s my takeaway? How does that fit in the same brand family as world’s leading EV?

If the family fit together, the loaner program would be a great way to get Leaf drivers to look at other Nissan vehicles and hook them on Nissan as their brand because it fits their personal brand values.

Granted, not every company can be Tesla with its brand spanking new and very clean brand image and there’s bound to be a lot of shaking out to come as carmakers decide what to do about the carbon footprint of their cars and manufacturing. Meanwhile, I confess confusion about what message most are trying to send.

 

Entrepreneurial Advertising? Yes, there is such a thing.

Summer School on The ClarityBlog: 15th Class

Can entrepreneurs afford to advertising? Yes.

I first wrote about Steven Clough’s guest lecture on digital advertising in 2011 after he visited the MBA class I was then teaching. Ever since then, he’s been a regular speaker for the undergrad class because he makes the students think about why they’d consider an advertising campaign and what they’d want out of it before they jump in and start creating Facebook ads. The focus on strategy first lines up well with the content of this presentation, What is Digital Strategy by Julian Cole, Head of Communications Planning at Bartle Bogle Hegarty, on Slideshare.

That focus on strategy is important since the lure of getting creative first and ignoring the “why?” part of planning is so tempting. It also helps combat the lemming effect — doing something just because a competitor or other company is doing it.

To put today’s advertising options into perspective, Steven runs through a terrific history of advertising parallelling, as it must, the evolution of media technology. “We started out writing on walls,” Steven says. Original writing on walls

From the first print ads to radio, broadcast television and the first computers, Steven tells the story of how advertising evolved as media evolved until, “now we’re back to writing on walls,” this time of the  Facebook variety. Both these images are from his slide deck.

We used to think of media as something published or broadcast by someone else. Today, we have to include “owned media,” such as a company’s website, YouTube channel, social network platforms, as well. Strategy setting has to consider a brand’s owned media, earned media (see my last post on PR for that one) and paid media — the realm of what most of us think of as traditional advertising. FacebookWalls

Advertising used to scare the inexperienced because of the money involved. Now, it’s often the technology that most daunts them. Yet it’s the technology that also makes trial and experimentation low risk and inexpensive. While you may discover you do best advertising on a particular social network like Facebook (exactly the experience of OfferUpNow CEO Nick Huzar), AdWords is a good place to start. Google offers a host of guides to help neophites gain confidence such as this “What is AdWords?” presentation. Bing offers a similar set of guides to help you get started.

And sometimes just getting started is the whole point. It’s also the focus on KISSmetrics’ How to Create a Profitable Google AdWords Campaign (from Scratch).

The checklist isn’t long:

  • Know your audience.
  • Know what you need them to do, what your objective is for advertising in the first place.
  • Give them a reason to care.
  • Research the search terms.
  • Set your budget.
  • Make sure you’re set up to track results so can learn from experience.
  • Start experimenting.
  • Study your results, make adjustments and experiment again.

 

 

 

 

PR: The Entrepreneur’s Secret Weapon

Summer School on The Clarity Blog: 14th Class

I believe it was Jay Conrad Levinson of Guerrilla Marketing fame who referred to PR as a secret weapon and, having spent decades working for PR firms, I naturally loved the reference.

Public relations is one of the most effective and most cost-effective tactics available to entrepreneurs promoting their businesses. It’s also got to be the most misunderstood.

Just a few weeks ago, British Entrepreneur Adam Pollard, co-owner of The Willoughby Book Club, wrote a terrific little piece for The Guardian’s small business network offering Top tips: how startups can harness the power of PR. Aside from thinking PR is part of advertising (marketing is the umbrella, Adam, not advertising), Pollard clearly understanding what PR has done for his business and can do for others. It’s quite a decent little primer.

The practice of PR has been changing rapidly with technology. In May, Startup Nation posted this tips piece by Melanie Rembrandt in May Small Business Public Relations Tips to Boost Sales Now, in which her top tip (which, I admit, would certainly not have been my #1) is to post a search engine optimized press release — something that was all over the PR, SEO and marketing news a week or so ago as Google issued new webmaster guidelines and stated that keyword-rich anchor text links within articles or press releases should be nofollows, just as they are in advertising. I saw dozens of posts asking if Google just killed press releases. This July 30 post by Barry Schwartz, Search Engine Land‘s news editor, helps explain what’s going on.

The mechanics of doing PR have changed dramatically as have the methods for integrating public relations activities and results with other marketing and brand management tactics, but the objective of PR hasn’t changed. PR is what people are talking about when they refer to “earned media.” The key lies in gaining an implied third-party endorsement because someone decided to write about you, talk about you, invite you to speak some place, give you an award or ask for your opinion — on the record. The objective of your PR program is incredibly simple:

Get other, credible people talking about you because you’ve earned their attention.

How?

  • Learn how to tell a good story.  PR firms used to largely populated by former journalists. Why? Because a huge part of a PR person’s job was dealing with media and knowing how journalists work, what makes a good story and how to write it well were critical job requirements. While being able to write a great tweet might now be equally important, the ability to know what makes a good story and how to be a good source are still top of the heap in getting traditional journalists, bloggers, conference planners and the world on social media to notice you and take you seriously.
  • Polish your expertise to expert status. Presumably, you know something about your business and your industry and are keeping up on what’s happening. What often separates everybody in your industry from those getting the most exposure is often the ability to provide a unique or at least interesting perspective and — don’t underestimate this — the ability to offer up a pithy soundbite.
  • Be credible. Honesty and integrity, always commodities too rare and precious, play a bit part in earning your right to be covered, quoted, consulted, friended, retweeted, invited and awarded.
  • Be genuinely remarkable. If you want the top journalists and top bloggers writing about you, the top social media folks in your industry pointing to you and the top conference planners asking you to speak, try being genuinely remarkable. Design fantastic products, offer amazing customer service, create a brand personality people can’t ignore. That’s really earning the attention.

These things are unlikely to change no matter where technology and integration take us. Beyond that, where is PR headed? PR Veteran Sally Falko wrote just today on Social Media Today wrote about the evolution of PR over the past 100 years and what’s next. Her advice is this:

… the one avenue that PR folk should be mastering is paid media. It’s a far cry from the old advertising model of banner ads or advertorial.  Pay attention to social advertising, promoted stories and recommended content. There are many opportunities for smart PR pros to syndicate their owned and earned content to new audiences, blogs and media sites.

Distribution Tips from Accelerate Marketing’s Elizabeth Andreini

Summer School on the ClarityBlog: 11th Class

How will you get what you’re selling to your customer?

That’s a subject Elizabeth Andreini, president of Accelerate Marketing, has tackled with the Entrepreneurial Marketing class at UW for many quarters now. Distribution Decisions

Elizabeth is a “secret weapon” many a CEO has turned to at key growth points when they need to transform marketing and product management to grow their customer base, increase revenue and scale their business. Herself a UW MBA with more than 25 years of experience in marketing, product management, business development and international sales, Elizabeth covers a lot of ground with the class!

When determining how you can best reach your defined target audience, the most important question to answer is perhaps: “What are you really selling?” Right behind that is: “What is the customer really buying?” Is it a standalone product or service? Is it a product with a continuing service that follows? Is it a product that’s even better as part of a set of products or services that make it way more valuable? Answer all these questions from the customer’s point of view.

“You have to first know what you’re truly selling,” Elizabeth says.

With that information in hand, she offers a comprehensive set of factors to consider in weighing your own distribution options, from building a direct sales effort or teaming with partners to help you sell.

7 Factors To Consider

  1. Product Characteristics. How complex is the product/service offering? What’s the planned price point or pricing structure? How long would it likely take a prospect to evaluate your offering against competitors? How risky for them is the decision to buy from a young company? Where are you in the adoption curve?
  2. Reach Needed. What segment(s) are you targeting? Are you planning to sell locally, regionally, nationally or internationally? Will distribution requirements differ between geographies or markets?
  3. Prospect Demographics. Are your prospects businesses, government agencies or consumers? If yours is a business-to-business operation, what size organizations are you targeting? How many prospects are there potentially? Where and what role do they have? How many decision makers and influencers are involved? What role do industry analysts and thought leaders play?
  4. Company’s Capabilities. What resources do you have internally – both financial and human – to manage distribution? Do the products or services to be sold require expertise that is only easily available internally?
  5. Company Credibility. Does your company have a track record already in the markets you are pursuing? What’s your product awareness? How’s your technology credibility? Any customer testimonials to leverage? Third-party endorsements?
  6. Competition. How are your solutions differentiated? How is market share divided between the competitors? What is your positioning compared to your primary competitors?
  7. Promotion Mix. How will you reach your prospects to tell them about your offering and where they can get it? Which direct marketing methods (mail, email, phone, text, etc.) are a good option? Advertising? PR? Social Media? What role do tradeshows play?

Every piece of the marketing puzzle has to fit together. Your channel decision has to be consistent with the offering and its other attributes. Elizabeth closes the class with this reminder:

“To be successful, it’s more than getting them to buy the product or service…it’s getting them to buy from YOU and getting them to buy NOW.”

How To Make Your Position Known

Summer School on the ClarityBlog: 9th Class

Even though we have not yet dealt with the important Ps of Price and Place, I here introduce a quick overview of the Promotion P in an attempt to spur students into getting going on their marketing plan team project! We get into more of the details as the quarter progresses. But my students have just turned in their midterm and need a little entertainment.

Let’s start with the Marketing Funnel, that lovely upside-down pyramid that illustrates the process of first making a prospect aware you exist all the way through creating the kind of customer loyalty that can turn into advocacy.

As Schindehutte, Morris and Pitt write in “Rethinking Marketing,” marketing communications post World War II was pretty simple. Your promotional mix consistently mostly of advertising, sales promotion, personal selling and public relations, which for most really meant publicity.  If you wanted to work in marketing you usually had to pick one of those specialties. The big money, of course, went to advertising.

“… marketing became almost synonymous with advertising in the battle for eyeballs on (television) in the living rooms of target households.”

Before we entered the digital era, the authors write, marketing was a marathon.

Today, it’s a frantic sprint with instant communication and, more importantly, instant and very public customer feedback. Technology has blurred the lines between marketing disciplines to the point where silos of activity are tough and not all that wise. Some of the positions most in demand deal with concepts that didn’t even exist when today’s college graduates were born – like social media or SEO managers.

Consumers are in control and they’re the ones reinventing “marketing communications.” Consumer-created videos become Super Bowl ads. Some of them are pretty darned good. Major brand TV ads may never been seen by a consumer on TV but are seen by thousands even millions on YouTube. A great example is AllState’s mayhem commercial featuring actor Dean Winters as an “emotionally compromised” teenaged girl driver. That one’s had more than 1.5 million views. On YouTube, they compete with consumer-made videos and news clips completely out of the marketer’s control and sometimes way outside their comfort zones.

Yet prospects still must be made aware a brand exists before they can become familiar with it, consider buying, make the decision, purchase and experience whatever it is they just bought and decide if they really like it.

Where to begin?

I’m a broken record on this, but here’s my answer: with your customer. Where do they typically get their information? Wherever that is, it’s where you want to be. Who influences their purchase decision? That’s the secondary audience you want to reach.

I don’t care who your target audience is, online is a given no matter what you’re selling. In May, the Pew Internet and American Life Project’s survey indicated 85% of Americans use the Internet. Three years ago, 78% of Pew’s respondents already reported they looked online for information about a product or service they were thinking of buying and in 2011 71% were buying a product online. FT_PI_13.06.06_CellphoneOwnership_420px

Mobile is justifiably getting a lot of attention. Last month, Pew reported 91% of Americans now own a mobile phone and more than half have smartphones.  

What you’re really doing is allocating where you’ll spend your precious resources. You’ve got a far stronger reason to focus on Pinterest if you want to reach women than if you’re targeting men, since women are 5 times more likely to use Pinterest. There’s little argument for using any social media network but Facebook to reach the 65+ women. But you won’t know that if you don’t understand your customers.  Here again, you’re trying to inform your intuition rather than have to go with your gut. Indicators may be all you have to go on versus hard data. But don’t skip trying to have reason for some certainty.

Look for leverage

To really wring as much value as you can out of every activity, every resource you expend, look for leverage. The book “Content Rules: How to Create Killer Blogs, Podcasts, Videos, Ebooks, Webinars (and More) That Engage Customers and Ignite Your Business” does a great job of illustrating how you can write once and repurpose many times. I wrote about the book in 2011 and continue to recommend it.

Campaigns can be really effective ways get your brain wrapped around this idea of leveraging activities and content. But we’ll leave that for another day. As usual, I’m running over.

Lessons from Radical Marketing

Summer School on the ClarityBlog: 7th Class

In my June 27th post, I mentioned Sam Hill and Glenn Rifkin’s book, Radical Marketing, which was published by Harper Perennial in 1999. It’s fun, well written and informative. Each profile is a snapshot of business history as well as a case study of radical marketing. The basic premise is a simple one:

Traditional marketing = big. Big ideas, big advertising, big audiences, big budgets.

Radical marketing = small, focused, innovative.

Radical marketers, the pair write, have a strong visceral connection with a specific target audience they know well. Their market research comes from talking to real customers rather than aggregated data (which they can’t afford). There’s a great deal there that will ring familiar to anyone who’s read about Genchi Gembutsu, Toyota philosophy of getting out of the  building and seeing for yourself discussed famously (at least in startup circles) in Eric Ries’ The Lean Startup. They’re focused on growth and expansion, not profit taking. And they’re forced to be innovative because they’re making do with budgets far smaller than their competition. Clearly, they have a great deal in common with entrepreneurs.

For the seventh class in my UW course, I have my students read the chapters on Harley-Davidson and Iams. Harley’s is a story of resurrection, a phoenix pulled from the impending ashes by an extremely committed management team that took on significant debt to buy the company back from corporate owners, completely revamped the manufacturing process with an enormous focus on quality improvement and control, and leveraged a powerful and dedicated fan base for the brand.

The Iams story starts at the point when Founder Paul Iams is recruiting Clay Mathile as CEO. Mathile takes the job after seeing what a sample of Iams’ food did for his dad’s aging dog. He thought his dad had gotten a new dog; the transformation was so dramatic.

There is no lecture, just a conversation. We explore what the students learned from these two stories as well as the previously read chapter on Boston Beer Company and discuss how entrepreneurial marketers can apply those lessons in today’s technology dominated market place.  Although we won’t officially talk about social media for several weeks, this class is a great introduction as the conversation always turns to how the evolution of social media has revolutionized that visceral customer connection. We talk about the fact that social media is about building and nurturing relationships as real people with real people, not about a company broadcasting messages to some anonymous audience.

I share Jay Conrad Levinson’s advice from Guerrilla Marketing to “find the inherent drama” in your offering and then pull up YouTube for one of BlendTec’s Will It Blend videos.

What?!? You haven’t seen them? I’m always surprised to discover a fair number of students haven’t either. We have to fix that right now. Just because CEO Tom Dickson is blending an iPhone (Hi, my name is Deb and I’m an Apple junkie), I use this one despite it being 6 years old. It’s had 11.8 MILLION views.

Want the back-story? Read Social Lens’ 2009 case study on BlendTec’s video series.

Inherent drama.

Innovative marketing.

Itty bitty budget.

Amazing ROI.

That’s radical marketing.

Positioning: Why will they buy?

Summer School on the ClarityBlog: 6th Class

“Positioning is not what you do to a product. Positioning is what you do to the minds of the prospects. That is, you position the product in the mind of the prospects.” – Positioning: The Battle for Your Mind, McGraw-Hill 1981, Al Ries and Jack Trout

Think about that for a second. You’re attempting to influence how your prospects think about your product. To do that, you have to know (or at least strongly believe you know) how they think. What do they think of your competition? How do they decide to purchase? Your research has to provide you with some solid clues on those two points to enable you to influence your prospects thinking.

In Marketing That Works (Wharton School Publishing 2007), authors Lodish, Morgan and Archambeau write that positioning answers the question of why someone in your target market would buy your product or service instead of a competitors and, equally important, what the perceived value of your offering should be when compared to your competition.

If those aren’t sufficiently strong reasons for you to position your product, service and business, here’s another thing to think about: if you don’t position you, someone else will do it for you. It could be a competitor. It could be a customer. But it won’t be you. That’s your brand perception you’re entrusting to someone else. I don’t want to be insulting, but that’s just nuts.

Positioning forms the core of your marketing strategy. It articulates why your prospects would buy from you. So make the effort to accurately and competitively position yourself. There are a lot of approaches to positioning but most all include three basic steps:

  1. Perception mapping – a visual representation of how your prospects as a group prioritize their options when making a purchase decision and where they’d place you and your competitors against their purchase criteria.
  2. Statement crafting – a structured statement that explains who you’re addressing, the category you want them to put you in, the benefit you deliver to them and the reasons why you’re able to deliver that benefit. The position statement is internal and can be edgy. It becomes a guidepost for all your marketing.
  3. Core messaging – the actual words you’d use to convey your position to your targeted prospects.

Here are a few tips on each of these.

Slide1Perception mapping: A simple matrix typically suffices with X representing the most important tradeoff your targeted prospect evaluates in making purchases in your category and Y representing the second most important trade off. Think of each axis as a spectrum and label each end point.

Statement crafting: I prefer this four-part format for developing positioning statements:

  • To: your targeted market segment as real people with unmet needs or wants
  • Brand is the: category in which prospects would place you
  • That: benefit your offering delivers to your targeted segment
  • Because: evidence, supporting points, reasons why you can deliver those benefits

Don’t confuse your vision or your mission or goals for your position. As Tong and Zagula state in The Marketing Playbook (Portfolio 2004):

“… positioning tells a story about staking a legitimate claim in the present. It takes all your vision and mission background, and points it directly at the reality of the market and how you are going to meet it.”

Another tip: don’t try to position your offering based upon its features. I don’t care how cool, how breakthrough, how mind blowing your features might be, they won’t be the reason your customer buys your product or service. They’ll buy because of what those features do for them. Customers buy perceived benefits. Period.

Core messaging: Imagine you step on to an elevator with someone important to your business, a VIP to you. All the buttons are pushed, so you have no idea when this VIP is getting off. The only safe assumption is that the first stop is theirs. You introduce yourself. This could be your one shot. What are you going to say? That should be your first key message. Imagine getting more floors and working your way into a conversation never knowing how long you have before your VIP exits.

Core messaging – the top 3 to 5 points you want to consistently make about your business – would let you make the most of that elevator ride. Your messages are built straight on top of your positioning statement. They’re all about the customer and why they’d buy from you. Each key message is an arrow in your quiver, ever ready to serve you. Skip the jargon. Use active language your customers would use.

Get to the point. The elevator doors are opening.

Segmenting and Targeting: What are you selling to whom?

Summer School on the ClarityBlog: 5th Class

I may have given you the impression on Tuesday that you get to magically jump from having done a bunch of research to inform your intuition straight to creating a customer characterization for your business so you can think about how a real (albeit imaginary) person would respond to your business decisions.

Sorry to break that bubble but it’s not magic. It’s more hard work and its called segmenting the market to identify which particular segment/s presents the best potential for sales now. LOHAS, those consumers focused on lifestyles of health and sustainability, are a segment of the broader market that buys local and organic products for a host of reasons. Katie is the embodiment of a LOHAS consumer. How do you get from all this unrelated data you’ve accumulated to Katie? By division.

Segmenting a market involves aggregating prospective customers in to groups of people with common wants or needs and who refer to each other in making purchase decisions. These are called market segments. From those, you pick target segments on which you’ll focus your marketing efforts. I make students pick a favorite, the one with the greatest potential for early sales that’s sizeable enough to generate some real sales, relatively easy to reach and, ideally, one capable of influencing the next targeted segment.

Any segmentation analysis has to answer a pretty standard set of questions including:

  • What’s being purchased? By whom? How? Where? For how much?
  • How much is being purchased?
    When is it being purchased?
  • Why is it being purchased?

We enter the segmentation discussion looking at a couple of very different cars: a minivan and a sports car. The students have no difficulty recognizing and defining the very different target market segments for each. That serves as an introduction to the ways you can approach segmentation using geography, demographic data, psychographic or lifestyle profiles (like those LOHAS) or behavior. Geographic and demographic segmentation is a little easier as the data is more available. Psychographic and behavioral is more challenging to gather if you can’t get your hands on a valid study. But even anecdotal information can be incredibly helpful and really important. The step after segmenting and targeting is positioning and since that happens in the minds of the targeted segment, you’re going to have to get inside their heads at some point. It’s always going to be well worth your time to go talk to some real people who represent your potential customers and actively listen to the problems they need solved.

For years now, the second half of this class has been a bit of a game, giving the students a chance to try their hand at selecting a target segment for the Tesla Model S sedan using a publicly available 2008 (yes, that’s ancient) segmentation analysis commissioned by a couple of foundations for an environmental nonprofit. Why? Because 1) free and rights-free segmentation studies aren’t that easy to find; 2) cars are a product to which pretty much everyone can relate; and 3) this particular study has a clear bias and isn’t exactly politically correct, which leads to some pretty interesting discussions about how you work with available data that isn’t precisely what you want or even need but can fill in a few of those puzzle pieces you’re seeking to understand the market place. Slide1

In real life, you would not base your decisions on a single data set like this study – especially not one researched for a very different purpose than your own. And now that students can see the Model S on Seattle’s streets, I’m going to have to retire the exercise. But it’s served us well ever since Tesla announced the Model S was coming. The team exercise isn’t about choosing the right target as there’s no way Tesla used this segmentation study to target a market segment. It’s about making the students think about why they’re making the choices they’re making and gaining some experience working with imperfect data without having a grade at stake.

Play along if you like. You can read “A Guide to American Social Values and Environmental Engagement,” the study produced by EarthJustice with research conducted by American Environics and Lake Research Partners.

Then, get familiar with the Tesla Model S, the all-electric luxury sedan that’s still in limited supply and starts, realistically, around $70,000. Click the link above to check out the specs for yourself.

The hard part of the assignment is choosing just one segment to target. No hedging allowed.

For extra credit, which segment do you think would have been best to target for the $100,000+ Tesla Roadster? Again, no hedging. Pick one.

Putting Research To Work

Summer School on the ClarityBlog: 4th Class

Geez these posts are long!

Last class, we talked about how to get smart about your prospective customers and competitors when you’re resource constrained. Now let’s talk about what to do with all that newfound knowledge!

Slide1

“In the final analysis, research makes possible the calculated part of calculated risk-taking.” – Rethinking Marketing

When you’re doing your research, you’re assembling pieces to a puzzle you can’t hope to fully complete but which you can complete enough to be able to recognize the picture. And what you’ve learned about your potential customers, how and where they buy, your competitors and industry influencers all comes in handy in so many ways. It will enable you to assess your ability to compete in your chosen sector reasonably well, to map the competition according to how your targeted customers evaluate their options and make their purchase decisions, and to make some critical decisions about initial pricing and distribution without relying solely on your gut!

We’re going to talk about segmenting and targeting on Thursday and positioning next Tuesday, both of which flow from the analyses I just mentioned. Meanwhile, before the holiday break, I believe I promised to talk about the idea of creating characterizations, or that amalgam Tong and Zagula referred to in The Marketing Playbook.

In Crossing the Chasm, Geoffrey A. Moore describes characterizations as “isolating a few high-quality images … to be archetypes of a broader and more complex reality.” He recommends working only with memorable images and reminds his readers we’re talking about characterizing a prototype customer, NOT the target market. The target market is a group and hopefully a sizeable one willing and able to make the purchase.

Every quarter, I recruit two local entrepreneurships to work with teams of my students who function as consultants and develop marketing plans against an assignment outline for that company. One of the young companies, which worked with my class this past quarter knew walking in the door that their target customers were in a recognized segment called LOHAS, named for their “lifestyles of health and sustainability.” I wouldn’t let the students use this as a citation but you look them up on Wikipedia.

There’s a good deal of data available on LOHAS consumers, which allowed the motivated student teams to focus their primary research on their project company’s specific offering. Some went to local farmers’ markets to interview shoppers. Some went to Whole Foods and our regional co-op PCC Natural Markets. They posted Facebook surveys. And through all that the teams collectively put some real meat on the bones of the local LOHAS consumers of interest to this particular company. The characterization might look like this:

Katie, a mid-30s homeowner in Seattle’s Wallingford neighborhood who lives with her boyfriend and earns about $70,000 a year in the tech industry, believes she casts her most powerful vote when she shops. Katie has an herb garden and grows a few vegetables in her yard, including some luscious tomatoes. She shops at the Wallingford Famers’ Market every weekend and otherwise buys her groceries at the PCC in the neighboring Fremont neighborhood. She buys local and organic. She would stop to consider the implications of her purchase if forced to choose between an organic apple imported from Chili or a non-organic apple from Washington. She’s confident every piece plastic in her kitchen is BPA-free. She goes out of her way to shop at neighborhood stores, turning to web purchasing only when she can’t find what she needs. She brings her own lunches to work. They look and smell great. She can ride the Metro bus to work and has a Zipcar account for trips outside the city. She spends her weekends hiking the nearby mountains, kayaking on Lake Union and cycling the Burke Gilman Trail. She loves the outdoor summer ZooTunes concert series at Woodland Park Zoo.

Target segments are a mass. It’s tough to consider how that mass might respond to a particular message or react to a complex partnership, for instance. It’s much easier to be able to ask yourself, as an entrepreneur, “What would Katie think of this?”

And that’s exactly the purpose of characterizations. A characterization takes an anonymous blob and turns it in to a person to whom a founding team can relate. For years, I worked with a media training team who’d advise spokespeople to get from the abstract to the concrete just as fast as they could when answering questions and telling stories. The same goes here. A targeted segment is a whole lot less abstract than the universe of potential customers. But that segment is massively abstract when compared to a single, representative characterized customer. You can get to know Katie. And just like you get to know real flesh-and-blood people over time, you have to get to know your characterized customer better over time as you learn more from real customers. The learning never stops.

“Keep in mind that customers are complicated and having needs that continually change. … Further, markets are complex, competitors are unpredictable, economic conditions fluctuate, and new (often disruptive) technologies keep emerging.” – Rethinking Marketing

Keep learning.

 
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