End of year report 2010

The end of the year is often a time for review and forecasts for the coming year. So what happened in 2010 and what does 2011 hold in store?

Last year our review of 2009 picked on similar topics to those that featured again throughout 2010. Marketing budgets were under pressure - they still are - the importance of content was discussed  as was social media and the decline of print as content moves online. We noted that the year ended with the coldest pre-Christmas weather for years (until this year that is) and  the growing interest in green marketing. Well green marketing was not mentioned in 2010 but social media and video was. We started in January with 'The year of video?" and suggested video had a growing and important role in online marketing. Few clients have actually embraced this although most acknowledge the benefits and YouTube was the third most visited site in 2010. It is an area where investment in professional video production is noticeable in terms of quality and few have so far committed budget to this.  It was a matter we covered later with "Do it yourself or hire a professional?" blog noting the limitations of much in-house production quality to save money - the marketing budget issue again. In fact we said that marketing budgets must evolve to allocate investment for new and evolving marketing tools.

It is fair to say that amongst our b-2-b clients little has changed with regard to adoption of social media, at all in most cases. For those who have an emerging social media policy it is still early days with modest interest by their customers at best. We asked "Is it time to redefine target audience classification?" to address the individualistic social media 'club'. We also raised the importance of market research for b-2-b companies. One interesting insight from market research for one client is that although unsurprisingly the web was the preferred source for product information, some three quarters already knew which web sites to go to and only a quarter searched on generic terms. A strong argument for on and offline branding.

A recent report suggests that b-2-b marketers are using social media to:-

1. Build brand awareness
   
2. Increase web traffic
   
3. Generate sales leads
   
4. Provide deeper engagement
   
5. Improve search results
   

Experience so far suggests that goals 1 to 3 are general aims not specific to social media there is no clear evidence that Facebook for example is contributing to this from a review of Google Analytics or that any but a handful of people are engaged in the 'conversation'.  What we can confirm is that blog links are being picked up and ranked highly which must help with search results.

So maybe 2011 will see more b-2-b companies adopting a social media policy, but it will require allocating marketing budget to do this properly. 

Features may not be benefits

Product features are often assumed to also be benefits, but this may not be true.

Because features and benefits are often linked together, there is an implied assumption that all features also have a benefit and this thinking then extends to the belief that potential customers will be able to figure out for themselves why those product features are beneficial to them. Marketing text that talks about 'feature packed' products may be interpreted by customers as suggesting the product is likely to be complicated and difficult to understand.

The problem is that adding features has become something of a tactical 'arms' race to outstrip the competition and meet or exceed specification criteria. Charts listing a whole range of features with ticks to indicate where a product excels and others fall short are quite popular for technical products from cars to consumer electronics and of course b-2-b products too. But these are what the product does. The reality is that the more complex - feature packed - the product, the less the features actually get used. Just look at a control surface that has been used for a while - a remote, key board, control desk - and the pattern of wear and grime will reveal which keys are regularly used and which are pristine and untouched.

Benefits may be based more on an emotional consideration than an analysis of how the features stack up. The decision to purchase a television may depend more on what it might look like in the living room, the quality of the picture and how much it costs. There is an implied assumption it will do a few other things like hooking up to a sat. box and DVD, but beyond that the extensive range of other features are unlikely to sway the argument.  Mobile phones have become feature rich, but in terms of sustaining a telephone conversation in an area of poor coverage or when a train plunges into a tunnel remain just as challenging to the user as they were in the early days. In the b-2-b sector product development has too often been driven by what features  the competitors offer, then going one better. The rationale is to create differentiated products rather than compete in a commodity market on price alone. But unless the features are translated into customer benefits and explained in a way that the prospective customer understands and appreciates, these features risk being excluded from the purchase decision.  

What the marketing messages should focus on is convincing the prospective customers that the product has benefits that they can relate to and can actually appreciate. Features that make the product easy to use, improve productivity, save money, even bestow prestige - what they don't want is a list of features. We recently took delivery of a new television that offers a handbook only on screen which tantalisingly lists its 'features' some about its own proprietry system but unfortunately no explanation of how to access or use them.   

The story of the sweet shop

In difficult economic times there are two main targets for cuts - marketing and stock. One drives enquiries and the other provides goods customers want, now.

We have previously commented on the dangers of cutting marketing investment during tough times and allowing competitors to gain market share while advertising space costs are lower. But attracting customers then failing to deliver the product is not going to create loyalty and repeat business. So the temptation is to review product sales and delete the less popular from the range as a stock reduction strategy. This in itself in some manufacturing business models will  cause their contribution to factory overheads to be transferred to the more popular products, in turn increasing their cost and reducing margin.

However there is an important marketing issue here as well - one of presenting choice. The chairman of a company I worked for some years ago had a cautionary tale about the owner of a sweet shop of the old fashioned type that displayed sweets in a range of jars arranged on shelves behind the counter - a merchandising method for confectionary that appears to be enjoying a revival incidentally.  Each week the shop owner decided he would delete the least popular confectionary item and remove that jar from the shelves. After a few weeks he was able to clear a whole shelf, but as he worked to delete jars from the next shelf he began to notice that sales of the popular lines were declining and so was footfall. In short he was loosing business.  Customers, especially young children actually enjoyed the opportunity to have a big choice, but as stock rationalisation proceeded the choice reduced inversely to a point where customers perceived that there were only the most common and popular types on display and they could get those anywhere.  Although they usually purchased their favourites, part of the shopping experience was savouring what else was on offer and when that went, so did their custom.

A direct b-2-b analogy was with the marketing of floodlighting products. The main sellers were floodlights that lit wide areas, rather than narrower beam spotlights that could illuminate a small defined feature. In particular a very tight beam model that could illuminate a clock on a church tower which not surprisingly sold in small numbers. But of course the thing was that having that 'tool' in the range demonstrated that the company understood the challenges facing lighting designers and in doing so helped create specification for the more common products as part of the package. A purely accounting analysis would simply eliminate the specialist product whereas a marketing analysis would look at package sales and understand that volume alone was not the whole story.

Has Christmas been re-branded?

Has "Christmas" been re-branded as "Holidays"? Judging by the flow of e-mails and greetings particularly from the USA, the word 'holidays' features prominently in subject lines, even in sender addresses, while Christmas is not mentioned.

Winston Churchill is attributed with the observation that Britain and America were "two nations divided by a common language" although even the origin of this quote is questioned. In England there remains a general acknowledgment that Christmas is essentially a Christian festival from which the ethic of giving and good will to  all men has been transformed into a focus on promoting the sale of  goods that can form the gift element. Holidays are an entirely different product generally recognised as a travel and accommodation vacation package more commonly associated, but not exclusively, with the summer. Would Bing Crosby's 'White Christmas' have proved so popular and enduring as 'White Holidays'?

The problem is that the Church of England's Christmas brand has in marketing terms become generic and no longer properly associated with their own well defined product. This is a problem that others have discovered to their cost when their brand becomes descriptive of a class of products, often a category they have pioneered. Hoover is a classic example where people commonly refer to their vacuum cleaner as a 'Hoover'. In the theatre the Strand Leko was so popular that all spotlights were commonly known as 'Lekos'. Of course supermarkets deliberately create generic brands - Cola for example - to position against, but priced beneath the leading brands. Electrical wholesalers also benefit from the product development efforts that bring buyers to the trade counter through promotion and specification where they are then encouraged to switch brand and save money. 

Protecting brand names through trademarks may not be adequate protection when the brand name becomes a product descriptor. May be the term 'holidays' will allow the church to reclaim their ownership of Christmas after all. 

How well do companies merchandise products online?

With the web site often the first sight of a product, it is important that prospects get a complete and positive view to convert visitors to buyers. And yet few b-2-b companies fully exploit the possibilities of photography, video and user reviews, relying instead on one low resolution product image and text description to turn prospect interest into a conviction to buy. Some times there isn't even a picture!

There are 4 important opportunities for presenting a product to best advantage - product description, photographs, video and user views. Unlike a 'hands on' opportunity, at an exhibition, potential buyers cannot touch, explore and test a product online. Take most electrical products - it is just as important to see round the back, to see what sockets there are, to understand how it is installed and these features can easily be shown by offering other static views of the product. Instead of the traditional product shot from the front, why not show other important views - the inside, the fixing locations, connections to other systems, profile views? If however the product has performance features such as how it works, opens up, transforms for different tasks, then these are better shown in a video. It is also important to offer independent reviews. Case studies can provide valuable third party endorsement and the views of recognised authorities carry considerable weight. 

Finally, a full technical specification and content highlighting and differentiating the product should not be forgotten - plus of course a 'call to action'. Having virtually demonstrate the product you still need customers to call and place the order and this should be made simple to do and a seamless part of the process to close the sale. 

Is it time to redefine target audience classification?

It is unwise to ignore statistics particularly those that claim significant growth in new communications channels that could become important marketing tools.

So it comes as little surprise that the consumption of social media now accounts for 25% of all time spent online - by far the biggest defined activity, with others such as email (7%) in single figure percentages. Likewise it is not surprising that Facebook, YouTube and Twitter are ranked as the top 3 most popular web sites. By now even the most laggard business has acknowledged that a web site is an essential marketing tool. But statistics like this tend to support the view of sceptics that the Internet is somehow frivolous and not a serious marketing channel. The real question is, where are your customers spending time in this space? Facebook claim 500 million accounts globally. But how many are active accounts? Anecdotally I have observed that some people I know discover Facebook, embrace it with great enthusiasm, add a lot of information, make friends with total strangers, then just as rapidly lose interest.  Others of course remain loyal and regularly communicate with friends. Data from Facebook shows 57% of members are female and 43% male. Based on Facebook's charts over two thirds are under 35 years of age too. The largest group is 18 - 34 (approximately 54%). For many b-2-b companies in the industrial and engineering sectors for example this may not correspond with the profile of their customers. A quick look round a typical engineering exhibition suggests the audience is mainly male, older and judging by dress code, conventional and possibly not a Facebook convert.

The thing is, it is unlikely the average b-2-b company has profiled their target audience in this way. Much more likely the target audience is classified, where it is thought about at all, by job functions, specification authority, industry sector - not by age and gender demographics.  It is easy to see big numbers and assume the media is essential, but quite another to have realistic data that it will deliver the audiences that specify and buy products and services from b-2-b enterprises. It calls for research to find out. It is no good waiting until competitors have stolen a march as many did when web sites were the coming thing. On the other hand why invest marketing pounds in channels that may be irrelevant?

But it is not just social media that may hold opportunities or not, other tools are on the up as well. The UK has seen 70% increase in smart phone ownership over the last 12 months - far greater than our European neighbours - and with it a big surge in mobile search. It prompts another question - how many web sites are mobile friendly?