Tuesday, February 23, 2010

Emotional communication from a technology company

A first impression when one reads this headline is that it is either for an insurance company since a insurance companies are one of the highest spenders after FMCG and telecom at present or it is for a may be it is for a healthcare giant such as Fortis or Apollo or Wockhardt to name a few. But most people would say it is for an insurance company.

Why would a technology company like Siemens put up advertisement with a headline meant for a product/ service for the end consumer? The body cop talks of energy efficient technology and IT solutions which are used in hospitals. Thus it is a business-to-business service. How is it related to the end consumer? Is the consumer going to check what IT solutions and equipments the hospital has before getting admitted?

I think the marketing managers are thinking of something more than the obvious. They are trying to increase the brand equity of Siemens as a brand for the end consumer although their product/ service is not directly sold to them. Just like how IBM talks of green and environment consciousness, Siemens too wants to tread that path. They want to be known as a ‘caring’ company not only for the environment but also the people through its clean technology. It wants to attract the best of employees.

If one really wants to think out-of-the-box and try to read too much between the lines, then may be Siemens wants to get into insurance or healthcare sector. And this is an attempt to sow the seeds in that direction.

Friday, February 19, 2010

Difficulty in catching the attention of the youth in this cluttered market:

Self reference criteria (SRC) has been one of the major reasons for companies failing when they have decided to open businesses in different countries with different culture and socio-economic and infrastructural parameters. Be it Wal-mart in South America or Kellogg’s when it launched in India (it failed since cornflakes are eaten with cold milk in the US and Indian people drink hot milk) thinking of India as the country with half a billion population of middle class ready for consumerism. But they failed since the Indian population behaved in a different way from the way a developing country population has in history.

A week back I met my school friends after a ling time. Some of them were working fro IT companies, some in manufacturing, some in finance and some in services. While we were talking, I mentioned about the broking firms such as Motilal Oswal and Angel broking. They were not aware of it. I asked them in astonishment that did they not see so many ads in TV or print about these companies. And they casually brushed it off saying who watches ads in TV or who reads newspapers. They never read magazines. The marketer in me suddenly woke up and I started to read between the lines. These young people do not read newspapers. They change channel during commercial breaks. They have a very small attention span and like all people while growing up, are restless.

How is it possible then for marketers to catch their attention and build a loyalty? These people, as per the latest fad, are heavily into social networking. A lot ha been said about the future of advertising being on social networking and this is the place to be. I am a bit skeptical about it. It seems to be a passing phase. Once the novelty factor wears off, social networks would also be just ‘one of the media’.

This is a self reference criteria which I am looking at. But I don’t think I would be totally off the mark. The general behavior of the youth seems to be like that. Thus it seems that it would get increasingly difficult to get returns for your advertising spends on mass media. It would require more a focused approach especially if the product/ service is for this young audience.

Monday, February 15, 2010

Love-Hate relationship between the ‘Creative’ and ‘Servicing’ in an ad agency

As the famous saying goes “Women- you can’t live with ‘em, you can’t live without ‘em”. Don’t jump to the conclusion that I am a Male Chauvinist. It’s just that I want to draw an analogy with the advertising world. Creatives and Client Servicing can’t stand each other but they can’t help it. Because without the other, neither of them can do anything. There is a Love-Hate relationship between the two. The occasions when the creative and servicing has agreed are far and few.

But without the servicing guys, the creative won’t have the client to work for and without the creatives, the servicing won’t have any one to do the creatives for. An advertising agency should be creative because that is what advertising is for. Creativity should, therefore, ideally take precedence over other things. Alas ‘ideal’ things never happen. In an ultra competitive environment where the client calls the shots and has all the bargaining power over agencies, except for the top 3-5 agencies, the client has to be taken care of. Thus it becomes a tight rope walk for the servicing guys. Neither can they offend the creatives nor can they say ‘no’ to the client for a particular rendition of the creative. And this is where the love-hate relationship blossoms (with a tinge of sarcasm).

Creatives complain that the servicing guys do not know how to sell the creative to the client. Servicing guys say that the creatives are not able to give what the client wants according to the brief. Let’s make an attempt to understand both the sides. Advertising is a service which is offered to the client. To be more precise, a ‘creative’ service. Advertising helps to promote the product of the client in a creative manner which the client himself cannot do. Thus it is outsourced to a specialist which is the ‘advertising agency’.

The process starts first with understand the needs/ wants of the client. Servicing does that for the agency. The process is then continued with the creative rendition by the creatives which is facilitated by the ‘creative brief’ by the servicing. The marketing brief of the client is transferred into the creative brief. Thus the end product does not just have to be creative but also in sync with the marketing objective of the client. The creatives have to be made aware that we are not in an art competition where the best creativity is praised. The creativity has to result in sales for the client or brand building. If the creative isn’t in sync with the objectives, how can the servicing sell it? On the contrary, the servicing guys too need to be able to convince the client that the creative rendition is the apt for the set objective.

This however is a very subjective issue and varies with each client, each servicing guy and each creative. Thus the love-hate relationship will continue to be there.

Saturday, February 13, 2010

How do we define ‘luxury’ for a marketer?

For any product/ service which has become a success, the natural progression is towards becoming a luxury product which becomes a source of pride or show-off for the user. This helps the company charge a premium for that particular product. The important question is that what can be defined as a luxury? Is it a tangible or intangible quality?

Luxury can be categorized in three types- accessible, aspirational and absolute. As we go from accessible luxury to aspirational luxury, the product/ service qualities become tangible and intangibly high, the price increases, the premiumness increases, the promotion becomes more focused and the distribution becomes exclusive.

As the name suggests, accessible luxury means the product has just the right amount of differentiation to charge a premium. Accessible luxury is for a product which a person normaly uses quite often. The consumer uses this accessible luxury to just satisfy his materialistic wants. E.g. a lower middle class family going to a multiplex once a month to watch a Rs. 200 per ticket movie is accessible luxury or in terms of a FMCg product, buying a Hide & Seek biscuit over a Parle G.

Aspirational luxury has the highest number of products falling in this category. This is for the upper middle class who have the means to continuously increase their standard of living. They are the most materialistic in nature. E.g. a family renovating their house with a decorative false ceiling and having a refurbished modular kitchen which is done once a decade. This type of luxury works best for consumer durables, cars, apparels, vacations and hospitality. E.g. a dinner at a five star hotel once a fortnight or a branded jeans like Levis or branded shoes like Nike, Reebok or Woodland. Slightly higher on the aspirational radar would be brands such as Mercedes or BMW.

Absolute luxury is absolutely absolute. There is no comparison. Very few own it. Very few dare to think of it. A Rolls Royce or a Private jet like the Gulfstream. Designer apparels by internationally acclaimed designers such as Dolce Gabbana or designer shoes by Jimmy Choo. Absolute luxury is difficult for brands to achieve if it has fallen ever in aspirational luxury let alone accessible luxury category. Absolute luxury show set the user distinctly apart from the crowd.

Finally, as we go from accessible to absolute luxury, the tangible part decreases and the intangible part increases in value.