Wednesday, January 21, 2009

Everything Must Change: 10 New Rules for Marketers to Live By

Yesterday’s inauguration of Barack Obama as our 44th president signals a clear change for our country and the world. The inauguration is no stand-alone catalyst, but takes place within the context of a complete upheaval of our worldview as we knew it. Amid the crushing reality of failed banks, over-speculated real estate, a crippled financial system, reduced consumer confidence and mounting job losses, a new reality has emerged for businesses and consumers. Depleted natural resources and irrefutable evidence of green house effect are forcing people and nations worldwide to find alternative and renewable energy resources while simultaneously preserving the natural resources that remain. Democrats hold majority seats in both chambers of Congress setting the stage for domestic and geo-political landscape to undergo a major policy overhaul effecting finance, transportation, education, housing, energy and much more. Moreover, all of this change is taking shape within the context of a global explosion of mass, social and personal communication mediums that only serve to accelerate the exchange of information and hence the pace of change.

Within the context of the dizzying array of changes and conflicts underfoot, I have come to the conclusion, regardless of your industry focus, specialization or geography, that many of our assumptions about “what works” or “this is the way we’ve always done things” must be challenged. Hence, a new set of rules—and opportunities-- are emerging for those marketers paying attention and ready to challenge long held assumptions. Here are 10 new rules for marketers to live by:

Change #1) Authenticity Rules: On one level, it’s absurd to even have to make this statement, but with so many consumers burned by the false promises offered by real estate speculators, “sure thing” investments and overly-leveraged CDOs, marketers can no longer assume that customers will be content to sit back and lap up whatever gruel is being served up. These ill-conceived business practices have undermined consumer trust. The anecdote: Be real. Be authentic. Brands that do so will be rewarded with customers who are engaged and therefore have the potential for loyalty. See Hyundai’s latest efforts to build trust. In the age of disintermediation, what could be more valuable than loyal customers?

Change #2) Born to Serve: A faltering economy brings with it the seeds of increased empathy and desire to help others. Look no further than the thousands of service programs spawned in honor of MLK Day to get a glimpse of the emotional power and deep satisfaction derived from service. Non-profits should pay close attention: rather than gnashing of teeth about big donors snapping their purses shut, they might do well to follow the example of candidate Obama and tap into the much broader donor base that awaits them through effective use of social medial and networking. Witness the groundbreaking work of Beth Kanter and the example she is leading with in using social networks to drive donor contributions in the non-profit sector.

Rule #3) Surviving not thriving: Multiple sectors of our society will shift from aspirational consumerism to survival mode. This will be especially true for boomers, seniors and millennial’s who have no secondary education (of which 50% of the population can be counted). Post-war education modality in the US (i.e. educate kids to reach the minimum standard or lowest common denominator) combined with the evaporation of high-wage/low-skill blue collar employment opportunities leaves many ill equipped to tackle the complexity of competing in the context of a global economy. Marketers that offer education, re-training and skills advancement are in line to make significant gains (and most likely will have government programs to assist in funding re-training efforts). Simultaneously, these same consumers, and those who by necessity re-trench their spending habits, will continue to purchase “indispensable goods” (e.g.: consumables, alcohol, energy, and most forms of entertainment) even while in survival mode. Marketers that appeal to thrift, while maintaining dignity, will come out ahead.

Change #4) The road to riches has been re-defined: As a college grad in the 80’s the path many of my college friends took to the road to riches was Wall Street and the financial markets. Certainly some found fame and fortune. More importantly, however, it was the “promise” of riches that led them and their considerable talents to the financial sector and away from other creative, and potentially profitable, endeavors. What’s an out of work securities analyst to do? (Hopefully lots!) But more importantly, this fact gives rise to the promise that rather than draining our talent pool to create yet another generation of financial and legal experts that fueled the explosive growth-- and over-speculation-- of the US stock market, what should emerge are large numbers of graduates—as well as mid-career make-overs—applying their talents to real businesses—ones that generate real jobs, real products and real promise to our economy. Marketers and businesses that identify this trend should be in line for a serious talent upgrade and leverage these skilled workers to new standards in innovation and performance for the respective industries.

Rule #5) Retail Re-Invention: The rules of creative destruction are already taking hold. Over expansion (Starbucks, Circuit City), tired/irrelevant concepts (Sears, Sharper Image), non-distinguishable brands (Macy’s, Kmart) better buckle up and get ready to take your medicine. The winners will continue to provide relevance, access and resonate with the needs and lifestyles of today’s consumers and most importantly be vigilant to avoid the irrelevance syndrome: striving be everything to everybody (often at the demand of Wall Street not smart marketers) can often equate to becoming nothing to no one.

Rule #6) Price trumps all: Consumers want more for less. Period. Marketers who deliver will grow share in a down market. Consumers: See McDonald’s “More Hoity, Less Toity” coffee campaign; Subway “five dollar foot long” spots; Staples, and Sprint.

Rule #7) Color Me A Rainbow: Look no further than the election of Barack Obama (and photos of his extended family) along with Hillary Clinton’s historic campaign to see that the role models most Americans identify with are no longer white or male. Yet it astounds me how many marketers still rely on the visual clichés of white dad, white mom and fluffy dog when promoting their brands. Get over it! Marketers that reflect and authentically engage with the unique cultural identities that are now represented in post-millennial America will win the hearts, minds and wallets of consumers.

Rule #8) Competition is global: Forget the old idea of looking within your borders for your competition. Your competition- especially for knowledge workers—is literally worldwide. As was exhaustively documented by Thomas Freidman, the world is indeed flat and the implications have changed the rules—forever. At a recent technology industry event I attended, I had the privilege to meet a very polished business development representative for a product engineering firm based in India who is competing quite successfully and winning computer programming work among America’s top corporate giants. Fortunately just a few feet away another engineering professional was sharing stories how his eight person team of US engineers are creating new products for major corporations and charging competitive rates while securely ensconced in their offices in downtown Seattle. Too many marketers have fallen prey to the notion that American companies can only win when we compete on price. But this overlooks the greatest asset we still hold as a nation: Innovation. The salesman from India is selling services TO innovative American companies; therefore let’s make innovation our greatest export. Think IBM, Boeing, Google. Innovation is our value play and is never traded on price alone.

Rule #9) Green is not a slogan: The auto industry made the mistake relegating the development of green products to a marketing slogan they could simply tag to a vehicle. Toyota got it right and was rewarded with market dominance. IBM is also getting it right with their current “making a difference” campaign. Being green is not a marketing initiative, but rather must be an integral part of the entire manufacturing and product cycle strategy – from womb to tomb. Green must be authentic. Green must be real. Products that disingenuously play the green card risk irrelevance at best, elimination at worse.

Rule #10) It’s not always about the money: Seemingly a contradiction to the other changes above, but as consumers comes to terms with the flawed assumption that having a job equals security, and the fallibility in relying on money for “emotional security” they will begin to place greater trust in brands, people and institutions (esp. faith communities and wellness organizations) who reward them not with dollars and cents, but with a sense of renewal, prosperity and health. Marketers would do well do invest in brands that deliver on these essential, yet often overlooked, human needs.

Summary: Challenge all the assumptions: A broad statement I realize, but I would recommend marketers look hard at your brand and every pending promotion with new eyes and think through the implications of all the changes underfoot and ask yourself these questions: Is the brand/product/service still relevant? To whom? Are we targeting the right customer? How has the customer changed/been impacted by recent events? This is not to suggest we should be paralyzed, but quite the opposite: succinct analysis and reflection should provide insight for new opportunities to grow loyalty among customers and the resulting revenues that come with increased loyalty.

Extra credit:

Resurgence of micro-businesses and temporary workers: When the going gets tough the tough get going. Whether food services, work for hire, housekeeping, temp accountants, field sales workers, network marketing, etc. as economies tighten the workforce will be forced to become increasingly entrepreneurial and will set out on their own. This change will probably first show up as a reduction in the number of unemployment claims. While fewer folks will be on the dole, they will not be finding full time work, just merely making it up as they go along. Marketers would do well to equip and train these workforce wannabes.

Forget venture funding; find an angel: For a period of time venture capital firms enjoyed a prestigious role in the ecosystem of founding and building great companies. However, the entire premise of venture funding—invest a relatively small amount to get an outsized return-- is completely broken. Due to the fact that too few companies deliver outsized returns, instead of seeing dividend checks, limited partners in VC funds are getting capital calls. Exposing portfolios to ever-greater risks for LPs has become intolerable and therefore capital raises for VCs impossible. With most major corporations in belt tightening mode for the next 2-3 years, there will be few opportunities for M&A exits and even fewer exits via IPO. Therefore, unless a venture backed company is cash flow positive during its Series A, start-up entrepreneurs should start polishing up their resumes and not waste time trying to secure B round funding. The alternative: Angel investors with long time horizons look more attractive than ever.

Darkness lurks: As jobs tighten and survival becomes paramount, we will see more crimes of opportunity. Brands and marketers focused on protecting assets – real and imaginary—will see uptake in demand for their products and services.

Please add your comments or feedback below.


Sarah said...

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Mark Ippolito said...

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